Introduction

The European Court of Justice (ECJ) has, across the spectrum of EC law, been a notorious miser in granting third party complainants legal standing to challenge acts of the EU institutions. The ECJ's strict approach has also been seen in third party challenges to European Commission (Commission) state aid decisions.

Broadly, a person who wishes to challenge a Commission decision will have to demonstrate that the decision is of direct and individual concern to him. Traditionally, this can be demonstrated by satisfying two criteria, namely: (i) that the complainant has played an active role in the Commission's administrative procedure (i.e the process by which the Commission determines whether the aid is compatible with the common market or whether it is illegal); and (ii) they have suffered competitive harm/market detriment due to the (potential) granting of illegal state aid.

In the case of Sniace, however, the ECJ (the EU's supreme court) confirmed that participation in the Commission's administrative investigation, whilst potentially important, is not a necessary condition for a finding that that the decision is of direct and individual concern to the applicant. It does, though, remain the case that a complainant must be able to demonstrate that its position on the market was substantially affected by the granting of the illegal state aid.

Sniace v Commission – the facts

In the Sniace case, a Spanish company (Sniace) sought to challenge a Commission decision that indirect guarantees and fixed land prices- provided by the Austrian authorities to support a new factory for the production (by Lenzing) of lyocell- did not constitute state aid for the purposes of the EC Treaty. At first instance, the European Court of First Instance (the CFI) held that Sniace did not have "standing" to challenge the Commission's decision as it was not directly and individually concerned by it for the following reasons:

i) it had played only a minor role in the Commission's administrative procedure, it did not make a complaint and had submitted only limited comments to the Commission; and

ii) its market position was not adversely affected by the decision. On this the CFI noted that it was for Sniace to provide pertinent reasons to show that the Commission's decision may adversely affect its legitimate interests by seriously jeopardising its position in the market in question. The CFI considered that Sniace had failed to do this, specifically because it did not compete in the same product market as lyocell and had failed to provide convincing (empirical) evidence that it has suffered competitive harm.

The ECJ took issue with the CFI's approach to the extent that it had appeared to regard participation in the Commission's administrative procedure as a necessary condition for standing. This was not necessary, in the ECJ's view, though it confirmed that Sniace was required to demonstrate that its position on the market was substantially affected. On this, the ECJ agreed with the conclusions reached by the CFI.

Final Thoughts

Notwithstanding the ECJ's ruling, it undoubtedly would strengthen the position of a third party complainant if it were to play an active role in the Commission's administrative procedure. In particular, it could potentially operate to lower the evidential bar in relation to demonstrating that there will be competitive/commercial harm. Somewhat ironically, Lenzing (the recipient of the state aid in this case) previously successfully challenged a Commission decision approving the grant of certain aid measures by the Spanish authorities to Sniace! Lenzing had been the original complainant before the Commission and was able to demonstrate that its market position had been significantly affected by the contested aid.