The Court of Justice of the European Union (ECJ) has upheld a General Court ruling from 2018 annulling the European Commission’s state aid recovery decision on milk quality tests. The judgment delivered on 10 March 2022 dismisses the Commission’s subsequent appeal in its entirety.
In 2015, the Commission had classified the state funding to ensure neutral testing of milk quality as unlawful state aid. As a result, it had ordered the repayment of the funds in question – in total over EUR 40 million. A large number of Bavarian dairies were affected by the Commission’s recovery decision.
The Court’s judgment confirms that the Commission’s recovery decision infringed the rights of the parties in the administrative procedure, because it also included state funds or types of financing that were not mentioned in its decision to initiate proceedings. This constitutes a breach of an essential procedural requirement, which in itself justifies the annulment of the Commission’s decision. The ECJ thus fully endorsed the arguments submitted by Gleiss Lutz and the Free State of Bavaria. The judgment is of fundamental importance because it strengthens the rights of participation in the proceedings before the Commission, and ensures effective legal protection in the event of serious procedural errors.
Gleiss Lutz had previously represented the Free State of Bavaria in the state aid proceedings before the Commission, and secured the annulment of the recovery decision at first instance in 2018. The initial proceedings marked Bavaria’s first action before the European courts.
The case was handled by Dr. Ulrich Soltész (partner, EU state aid) and Dr. Harald Weiß (counsel, EU state aid, both Brussels). Gleiss Lutz has advised extensively on EU state aid for many years, and has extensive experience in litigating before the European Courts in Luxembourg.
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