The European Commission did not fail to exercise due diligence in its evaluation of the land made available to the American firm Scott Paper by the French department of Loiret and the city of Orléans with a view to determining whether state aid had been granted. With this judgement, handed down on 2 September, the Court of Justice set aside the General Court’s ruling of 29 March 2007 that the EU executive had committed methodological and calculation errors, particularly in determining the acquisition price of the land and evaluating the improvements made as an incentive for Scott Paper to install a manufacturing plant (Case T-366/00).

With a decision of 12 July 2000, the Commission found that the state aid granted to Scott Paper was incompatible with EU law. It ordered the French authorities to recover the non-notified aid, estimating its updated value at €12.3 million. The executive appealed the General Court’s judgement before the Court of Justice.

PRIVATE INVESTOR CRITERION

The Court of Justice acknowledges that to check whether the land sale constituted state aid, the Commission rightly applied the criterion of the private investor in a market economy to determine whether the price paid by the aid beneficiary corresponded to the price that could have been set by a private investor acting in normal market conditions.

It based its initiative on the estimate of the property’s value contained in the minutes of the Orleans City Council rather than on an appraisal by Scott or the French authorities.

Furthermore, re-establishing the value of the land 13 years after its sale on the basis of the acquisition and improvement costs necessarily results in an approximate estimate. The court notes that the General Court’s review is limited to “verifying whether the rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or misuse of powers” and may not “substitute its own economic assessment for that of the Commission”.

Although the General Court identified a miscalculation and certain approximations in the Commission’s method and assessments, it failed to demonstrate that the Commission had committed a manifest error of judgement in determining the value of the land and overstepped its review authority.

The Court of Justice overturned the General Court’s ruling and referred the case back to the General Court.

The judgement is available at www.europolitics.info > Search = 277787