INspiRE Jean-Monnet-Centre of Excellence - Case Law: Magic Mountain Kletterhallen-Case
Magic Mountain Kletterhallen-Case
In this case, the Federal Administrative Court had to decide, whether a decision by the Commission during an examination of a possible violation of the standstill obligation according to Article 108 (3), sentence 3, of the TFEU has a binding effect on a national court, meaning this court would only be obliged to engage in a limited factual and legal examination.
The subject-matter of this dispute was the support measure for a climbing gym of the German Alpine Association (Deutscher Alpen Verein – DAV), which the Plaintiff, a competitor to the above mentioned climbing gym, classified as competition distorting and impermissible under European law. According to Article 108 (3), sentence 3, of the TFEU a Member State is not allowed to put a measure into effect until the Commission has made a decision about the compatibility of the State aid with the internal market. Due to this, the Plaintiff filed a (national) prohibitory injunction and at the same time an action for annulment in front of the Administrative Court Berlin. Following this complaint, the Commission issued an order on 5 December 2012, stating that the measure is compatible with European law. An action for annulment in front of the General Court against the Commission order was rejected by judgment of 9 June 2016 (T-162/13, EU:T:2016:341).
In the parallel German proceedings the Higher Administrative Court Berlin-Brandenburg (of 18 February 2015, 6 B 24.14), concerned with the complaint against the judgment in the first instance, decided that the support measure violates the standstill obligation of Article 108 (3), sentence 3, of the TFEU and is therefore unlawful up to the Commissions decision. The OVG assumed it is bound by the Commissions decision, due to the general principle that legislative acts by European institutions are presumed to be lawful and due to the fact that there were no doubts about the State aid nature of the measure. The OVG further assumed, that is was not obliged to examine if the measure constitutes a State aid, as it is bound by the assessment of the Commission. Only in a case of obvious doubt a further examination would have been necessary.
The Federal Administrative Court (judgment of 26 October 2016, 10 C 3.15) further decided, that the Court of Appeal on points of fact and law violated its obligation to engage in an extensive factual and legal examination. The Commission examines the compatibility of the measure with the internal market, but the examination of the State aid nature is only preliminary according to Article 4 of the Procedural Regulation and is not decided in a final, formal proceeding. On the cooperation between Commission and national courts, the Federal Administrative Court stated: ‘Whilst the Commission is responsible solely for deciding on the compatibility of the State aid measure with the internal market, the national courts protect the rights of individuals from a possible Member State violation of the standstill obligation until a final decision is issued by the Commission’ (mn. 20). The national court has to decide on the State aid character of the measure according to Article 107 (1) of the TFEU in this specific proceeding on the basis of their own, final examination.
The Federal Administrative Court reasoned its decision moreover with the fact that the Commission only has limited evidence. Furthermore, the examination of the Commission according to Article 13 (1), sentence 1, Article 4 of the Procedural Regulation did not include a hearing of the grantee, which denies him his right to effective legal protection and thus violates Article 19 (4) of the Basic Law.
A binding effect of the Commissions decision on the national court cannot be derived from the principle that legislative acts by European institutions are presumed to be lawful, as this only applies to the legal validity of these measures. Nonetheless, the separation of powers already leads to the conclusion, that the courts examining the measure cannot be bound to the interpretation of the European institution, as the court is the check in place for the respective institution. The duty of loyalty (Article 4 (3) of the TEU) also does not constitute such a binding effect of the Commissions decision: national courts can ask the Commission for an opinion, should they have doubts about the decision, or they can request a preliminary ruling by the ECJ. Consequently, the Higher Administrative Court stated, that the national courts are still obliged to independently and thoroughly examine the State aid nature of the disputed measure and that the duty of loyal cooperation does not stand in the way of that.
In summary it can be said, that the Federal Administrative Court decided that the Higher Administrative Court had no reason to limit their examination to a plausibility check of the Commissions decision. In particular, the Higher Administrative Court is not bound to the decision of the Commission and should have conducted their own examination of the State aid nature of the measure.