The Commission Must Examine the Presence and Compatibility of Indirect State Aid

In this article, author Phedon Nicolaides (State Aid Uncovered) discusses a significant CJEU ruling on whether the European Commission must examine indirect state aid when assessing notified measures. The case C-59/24 P concerned the Netherlands’ prolongation of gambling licences to organizations that distribute proceeds to charities. While the General Court had annulled the Commission’s decision for failing to assess whether charities receiving these proceeds gained an indirect advantage, the Netherlands appealed, arguing the Commission had no such obligation when the notification concerned only direct beneficiaries.

The CJEU distinguished between indirect and secondary beneficiaries, citing the Commission’s 2016 Notice on the Notion of State Aid. Indirect beneficiaries are identified or specified parties to whom direct aid recipients must pass on benefits, whereas secondary beneficiaries experience mere economic spillover effects without being specified in the aid measure. The Court emphasized that indirect advantages exist when a measure is designed to channel effects toward identifiable undertakings, such as when aid is conditional on purchasing from certain producers.

Regarding admissibility, the CJEU rejected the Netherlands’ claim that the General Court failed to explain why it considered the EGBA’s complaint admissible. The Court held that since neither the Commission nor the parties disputed admissibility, the General Court could examine the complaint on its merits without explicitly addressing admissibility first. The CJEU also clarified that the obligation to state reasons requires only that the reasoning be sufficiently clear to allow parties to understand the decision and permit judicial review, not that every argument be exhaustively addressed.

On the substantive issue of indirect state aid, the CJEU upheld the General Court’s finding that the Commission should have examined whether the measure conferred an indirect advantage on charities receiving gambling proceeds. Since the Dutch legislation explicitly required licence holders to remit proceeds to designated charities, and the Commission based its no-advantage finding on this very obligation, the Commission had sufficient information to assess potential indirect aid. The Court found that the Commission’s failure to examine whether these charities were undertakings or received an indirect advantage constituted a serious difficulty that should have triggered the formal investigation procedure…