EUROPEAN COMMISSION
PRESS RELEASE
Brussels, 27 March 2014
State aid: Commission finds that German land
development scheme does not involve state aid
The European Commission has concluded that a German scheme providing direct grants
for the development and revitalisation of land does not constitute state aid. The
Commission has found that the development of land by local authorities is part of their
public tasks and therefore outside the realm of EU state aid rules.
The German land development scheme is aimed at making land ready to build, ensuring
that the territory is connected to utility (water, gas, sewage and electricity) and transport
networks (rail and roads). It does not concern the construction of buildings or the
management of land.
The Commission's examination showed that developers are selected through an open,
transparent and non-discriminatory public procurement procedure. Moreover, the land is
sold either through a tender procedure or after an independent expert evaluation of the
land, in line with the Commission's communication on land sales (see further here). This
ensures that developers are remunerated on market terms and that purchasers of land
pay the market price. Since neither developers nor the final purchasers receive an
advantage through the measure, there is no state aid involved.
This decision provides an important clarification as regards the notion of state aid under
EU law because it confirms that the development of land by a local authority is a public
task and that this qualification has not changed after the Leipzig/Halle judgments of the
EU Courts (joined cases T-443/08 and T-455/08 and case C-288/11 P).
IP/14/332
Background
Germany first notified the land development scheme in 2002. In July 2003, the
Commission found that it did not constitute state aid. Although the essence of the
measure has not changed since the Commission's 2003 decision, Germany decided to renotify the scheme in light of the Leipzig/Halle judgments of the EU General Court (Joined
cases T-443/08 and T-455/08) and the EU Court of Justice (case C-288/11 P). Germany
considered that the financing did not involve state aid but notified the measure for legal
certainty.
In the Leipzig/Halle judgments, the courts held that the construction of infrastructure that
is inextricably linked with its subsequent economic use constitutes an economic activity in
itself and that therefore EU state aid rules apply to the financing. On the other hand, the
performance of public duties is outside the scope of the state aid rules. Following these
judgments, there has been some legal uncertainty as regards the applicability of EU state
aid rules to land development. Today's decision confirms that land development by public
authorities is part of the performance of public duties, namely the provision and
supervision of land infrastructure in line with local urban and spatial development plans.
The Commission is planning to adopt in the near future a Communication on the notion of
state aid, which will further clarify the notion of state aid pursuant to Article 107(1) of the
Treaty on the Functioning of the European Union on the basis of the jurisprudence of the
EU Courts and the Commission's decision-making practice. The Commission held a public
consultation on the draft Communication earlier this year (IP/14/30).
The non-confidential version of the decision will be made available under the case number
SA.36346 in the State Aid Register on the Commission's competition website once any
confidentiality issues have been resolved. New publications of state aid decisions on the
internet and in the Official Journal are listed in the State Aid Weekly e-News.
Contacts :
Antoine Colombani (+32 2 297 45 13, Twitter: @ECspokesAntoine )
Yizhou Ren (+32 2 299 48 89)
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