Commission Decision (EU) 2019/2120 of 24 June 2019 on State aid granted by Belgium to JCDecaux Belgium Publicité (SA.33078 (2015/C) (ex 2015/NN)) (notified under document C(2019) 4466)Text with EEA relevance.

Notwithstanding §1, for advertising displays of less than 4 m2, taxation shall be by tranche or fraction of 0,25 m2 at the fixed rate divided by 4.

(c) For advertising displays with several screens the tax rate shall be multiplied by the number of screens.

a.

For advertising displays with a system allowing the succession or scrolling of several advertisements on the same screen, the tax rate shall be doubled.

(d) When the size of the advertising displays differs from the visible advertising area, the tax shall be calculated on the basis of the visible advertising area.

.

(139) The Commission considers that the tax regulations for advertising displays should have applied automatically to displays governed by the 1984 contract kept in place until later, and that the tax exemption provided for by those tax regulations for the 1984 displays kept in place until later derogates from the reference system.

(140) It should be noted that the City of Brussels initially considered, pursuant to a tax exemption for City of Brussels advertisements

(147) Furthermore, the Commission expressed serious doubts as to the compatibility of the additional measures with Commission Decision 2005/842/EC (the 2005 SGEI decision)

Commission Decision 2005/842/EC of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (OJ L 312, 29.11.2005, p. 67).

and the 2012 SGEI decision relied on by the Belgian authorities. In particular, the Commission doubted that the monitoring of the concession carried out by the Belgian authorities (which monitored the costs of the operation but not the revenue in detail) were sufficient to avoid any overcompensation. The Commission also had doubts as to the precise arrangements for allocating advertising revenue from contracts negotiated nationally by JCD to the Villo concession as applied in JCD’s cost accounting.

(148) For all the above reasons, the Commission decided to initiate the procedure provided for in Article 108(2) TFEU in respect of the measure concerned, and called upon the Belgian authorities and any interested parties to submit any relevant information and comments on the measure.

4.2.

Comments submitted by interested parties on the opening decision

(149) The Commission has received comments from several interested parties (CCB, JCD and a third interested party wishing to remain anonymous), which are summarised below.

4.2.1.

Comments submitted by CCB

(150) The Commission received comments from CCB by letter of 16 July 2015.

(151) CCB takes the view that JCD received State aid to operate the Villo concession and puts forward arguments especially regarding the criteria of State resources and advantage conferred.

4.2.1.1.

State resources

(152) By granting JCD the right to occupy and use public property for advertising purposes without payment (see recitals 19 to 22), the Belgian authorities have waived public revenue and conferred an economic advantage on JCD that constitutes State aid

See paragraph 33 of the Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (OJ C 8, 11.1.2012, p. 4).

.

4.2.1.2.

Advantage

(153) CCB contends that the compensation awarded to JCD does not satisfy any of the tests established by the Altmark judgment.

First Altmark test

(154) CCB is of the opinion that the operation of the Villo service does not constitute a public service task involving the supply of services which, if it were considering its own commercial interest, an undertaking would not assume or would not assume to the same extent or under the same conditions

Ibid., paragraph 47.

; CCB refers to a number of other European cities in which automated cycle hire services are already satisfactorily provided on commercial terms

Barcelona and Antwerp are cited as examples.

.

Second Altmark test

(155) It is apparent from the specifications that essential aspects such as the length of the concession, the financial arrangements for the service and the contribution to the financing of the service by the contracting authority were defined very vaguely

For example, as regards financing the specifications state that the contracting authority is open to different financial approaches.

and that the specifications did not therefore establish the main parameters of the system for financing the service clearly and transparently.

Third Altmark test

(156) CCB takes the view that there was no scrutiny, either ex ante or ex post, of the extent of the advantages conferred on JCD for the Villo concession and that the precise financial impact of the tax exemptions allowed to JCD remain unknown. Hence it cannot be guaranteed that there was no overcompensation.

Fourth Altmark test

(157) CCB notes that JCD was awarded the Villo concession after a negotiated procedure with prior publication, which can be considered sufficient to satisfy the fourth Altmark test only in exceptional cases. In CCB’s opinion, since additional measures relating to essential aspects of the concession (such as exemption from municipal taxes) were decided on after the call for tenders, it cannot be concluded that such a call for tenders allows selection of the operator providing the service of general economic interest at the lowest cost.

4.2.1.3.

Compatibility

(158) CCB contests the Commission’s conclusion in the opening decision that the compatibility of the measures should be assessed in light of the 2012 SGEI decision.

Applicability of the 2012 SGEI decision

(159) CCB argues that the compensation awarded to JCD for operation of the Villo concession is in the order of several tens of millions of euros per year, hence above the annual EUR 15 million threshold determining the applicability of the 2012 SGEI decision

See Article 2(a) of the 2012 SGEI decision.

. In particular, CCB considers that, in addition to the advertising revenue, the prices paid by users and the exemptions from taxes and charges, account also has to be taken of the advantages enjoyed by JCD due to the exemption from paying for the occupancy and use of public property for advertising purposes.

Compliance with the conditions of the 2012 SGEI decision

(160) In addition, CCB contends that several conditions laid down in the 2012 SGEI decision have not been met in this instance.

(161) Entrustment: CCB disputes that the entrustment requirements set out in Article 4 of the 2012 SGEI have been fulfilled. Firstly, the order of 25 November 2010 governing the operation of the public Villo service was issued approximately two years after the Villo concession was awarded

Order of 25 November 2010 governing the operation of an automated cycle hire public service, published in the Moniteur belge on 7 December 2010, Article 2.

. Secondly, the Villo agreement was extended to 17 years 4 months, even though in the agreement the duration was set at 15 years. CCB disputes that that duration was justified by the scale of investment required, as stated in recital 99 of the opening decision. CCB notes that, according to JCD’s annual accounts, the costs for the bicycles provided under the Villo system are amortised at a rate of 20 % per year and hence they were fully amortised five years after their installation.

(162) Compensation: the description of the compensation mechanism and the parameters for calculation, control and revision of the compensation is inadequate. In that connection, as regards the allocation of advertising revenue, CCB considers it essential for the Belgian authorities to take account of the gross rating point (GRP)

The GRP is an index determining the commercial value of an advertising screen according to its capacity to reach as many consumers as possible and the frequency of visual contacts between the screen and the target consumer.

for Villo advertising screens, and not the average revenue generated by all screens operated by JCD in its networks. As regards the costs to be taken into account when calculating the compensation, CCB emphasises that, according to Article 5 of the 2012 SGEI decision, these are only the costs incurred in operating the service of general economic interest, a definition that excludes any costs relating to the installation and operation of advertising displays.

(163) Control of overcompensation: as indicated above (see recital 156), CCB considers that there is no control of the absence of overcompensation for JCD in the operation of the Villo concession. Moreover, according to CCB’s calculations, JCD has been substantially overcompensated.

4.2.1.4.

Amounts of compensation

(164) CCB contests the amounts resulting from exemption from municipal taxes as mentioned in the opening decision. It contends that the exemptions increased substantially once the Villo concession was fully operational from 2014, totalling at least EUR 650000 per year, i.e. well above the proposed maximum of EUR [250 000-350 000] per year (see recital 22).

(165) Furthermore, CCB is of the opinion that the use of advertising displays free of charge in itself constitutes State aid. It considers that the value of each advertisement should be quantified and, referring to its own contract with the City of Antwerp, concludes that JCD’s exemption from any payment is equivalent to aid of nearly EUR 8 million per year.

4.2.2.

Comments submitted by the second complainant

(166) The Commission received comments from an anonymous third party on 17 July 2015. That party also emphasises that the Villo agreement grants JCD State aid.

(167) In particular, the anonymous third party disputes that the tests of the Altmark judgment are satisfied in the present case, since the parameters of the compensation were not established clearly and transparently beforehand. Furthermore, no control system was put in place to avoid overcompensation, which precludes possible compatibility on the basis of the 2012 SGEI decision.

(168) Finally, the anonymous third party firmly disputes the view of the Belgian authorities that there is an allocation formula as powerful as the GRP for the allocation of advertising revenue to Villo advertisements (see recital 196).

4.2.3.

Comments submitted by JCD

(169) JCD forwarded its comments on the Commission’s opening decision by letter of 17 July 2015.

4.2.3.1.

Existence of State aid

(170) JCD maintains that the Villo agreement is financed exclusively by private resources and does not confer any economic advantage on it. Therefore the Villo agreement does not include State aid. The only public resources involved in this instance result from the exemption from regional charges and the price revision clauses in the agreements signed with municipalities. In JCD’s view, those measures should be classed as compensation for a public service covered by the Altmark principles. In particular, JCD adduces the following arguments:

First Altmark test

(171) According to the order governing the operation of the service provided under the Villo agreement, the service comprises the organisation of an automated cycle hire scheme for personal transport throughout the Brussels Capital Region. In JCD’s view, the requirements for this service essentially involve setting up a cycle hire network continuously accessible to the whole population, for an attractive payment, and laying down obligations for maintenance of the network, for example availability in the relevant area and replacement of bicycles with defects. Thus JCD considers that compliance with the criterion of performance of public service obligations does not present any difficulty in this instance.

Second Altmark test

(172) JCD stresses that the requirement to define the parameters of the compensation beforehand does not mean that the compensation is to be calculated by a specific formula. JCD argues that the main parameters for the financing system were in fact listed objectively and transparently in the specifications, which provide, inter alia:

(i) that the concession holder is liable for the operating risk;

(ii) that the contracting authority prefers a tender not requiring any financial contribution from the Region; and

(iii) that in no circumstances will the Region make a fixed recurring financial contribution.

(173) JCD also takes the view that the way in which the exemption from regional charges operates allows its amount to be calculated precisely beforehand by multiplying the fixed amount of the charge by the number of displays installed.

(174) As regards the price revision clauses, their financial impact is known beforehand, since they are designed to offset the increase in municipal taxes, irrespective of the fact that it was naturally impossible to predict future changes in those taxes.

Third Altmark test

(175) JCD maintains that there can be no overcompensation, because:

(i) exemption from the charge for the occupancy of regional property for advertising purposes was granted as a consideration for its acceptance of a more substantial loss arising from the reduction in the number of advertising displays that could be installed under the Villo agreement;

(ii) the price revision clauses signed with the municipalities were designed solely to safeguard the balance of the contract initially established in the Villo agreement, with a very limited financial impact: less than EUR [0-50 000] for the 2013 financial year and less than EUR [0-50 000] for the 2014 financial year;

(iii) the clause to neutralise changes in regional taxes is a standard clause that has never been implemented;

(iv) the Villo agreement is strictly monitored by the Belgian authorities; the number of advertising displays that can be installed under the concession is defined precisely by the Villo agreement, which lays down strict requirements for the operation of the system; JCD is required to provide the Region’s authorities with information on the implementation of the agreement; the agreement places an obligation on JCD to submit an annual report to the management committee on the system use data; every three years the management committee draws up a report on the technical and technological condition of the bicycle fleet; the order governing the operation of the service provided under the Villo agreement provides for an annual review by the Regional Government and Parliament of the performance of the concession contract; furthermore, according to Article 21 of the Villo agreement, failure by JCD to comply with the legislation in force and the ethical rules for advertising is subject to a penalty of EUR 4000 per day;

(v) the Villo agreement is unprofitable.

Fourth Altmark test

(176) JCD submits that the call for tenders leading to the signature of the Villo agreement was indeed open, transparent and non-discriminatory, and that there is no doubt that the Region chose the bidder capable of providing the public service at the lowest cost to the community, since, even taking account of the additional measures adopted after the award procedure, JCD’s tender was still by far the most advantageous.

4.2.3.2.

Compatibility

(177) If the Commission should decide that the exemption from regional charges and the price revision clauses constitute State aid, JCD argues that they are compatible with the internal market on the basis of the 2012 SGEI decision.

Applicability of the 2012 SGEI decision

(178) Article 2(1)(a) of the 2012 SGEI decision limits its scope to aid not exceeding EUR 15 million annually. JCD notes that compensation for a public service is defined as any advantage granted from public funds and that advertising revenue and payments by users cannot therefore be taken into account in applying that provision. Accordingly, JCD considers that the annual amount of aid alleged in this instance is well below that threshold and therefore falls within the scope of the decision.

Compliance with the conditions of the 2012 SGEI decision

(179) JCD is of the opinion that the Villo agreement complies with the provisions of the 2012 SGEI decision and adduces the following arguments.

(180) Entrustment: JCD refers to recital 73 of the opening decision, which states that the public service obligations on the concession operator are set out in the Villo agreement and in the order of 25 November 2010 adopted by the Regional Parliament.

(181) As regards the duration of the entrustment, JCD considers the 15-year period justified given the scale of the investment required. The installation of stations and the supply of bicycles require substantial investment, while the Villo agreement restricts the number of advertising displays that can be installed and the indexing of user prices. Furthermore JCD notes that the 2005 SGEI decision, which was applicable at the time the Villo agreement was signed, contained no provisions on the duration of the concession.

(182) JCD does not consider that it was necessary in this case for the entrustment to lay down recovery arrangements for any overcompensation, since any risk of overcompensation was eliminated as soon as the Villo agreement was signed, in particular because the contract was awarded on the basis of an open, transparent and non-discriminatory call for tenders.

(183) Compensation: JCD submits that, in so far as the operation of the concession has been unprofitable up to now, there can have been no overcompensation. It is therefore not necessary to calculate JCD’s operating margin to determine whether it can be considered reasonable and hence it is not necessary to ensure that the reference value used to determine the absence of overcompensation is not overestimated.

(184) As regards the allocation of advertising revenue under the Villo agreement, JCD states that it values the displays installed according to population covered, audience performance and number of screens, without taking account of the contractual origin of the screens, and having regard to the competitive situation and their location in a strategically important city. It does not consider it appropriate to assess the real value solely on the basis of the GRP, as CCB claims (see recital 162), since advertisers looking for countrywide coverage are not interested in a screen sold on its own, even with a very high GRP.

(185) Control of overcompensation: JCD considers that the operational checks provided for in the Villo agreement (see recital 175(iv)) do indeed ensure that there is no overcompensation.

4.2.3.3.

Amount of compensation

(186) As regards the exemption from the charge for occupancy of regional public property, JCD explains that, in the negotiations prior to the conclusion of the Villo agreement, JCD agreed to reduce the number of advertising displays proposed in its tender for installation under the public service concession.

(187) The number of separate 2 m2 displays and the number of 8 m2 displays were reduced by 25 units. In exchange, the Region allowed JCD exemption from the charge for the occupancy of regional public property by 8 m2 displays installed under the Villo agreement.

(188) That exemption totals not more than EUR [50 000-150 000] per year (see recital 22).

(189) As regards the neutralisation of changes to municipal taxes, JCD explains that the financial impact is in fact very limited. It depends both on the charging of the taxes concerned and the invoicing by JCD. In practice the charges reinvoiced by JCD in application of the price revision clauses totalled less than EUR [0-50 000] per year up to 2017.

4.3.

Comments submitted by Belgium

4.3.1.

Comments submitted by Belgium on the opening decision

(190) The Belgian authorities sent their comments on the opening decision by letter of 21 May 2015.

4.3.1.1.

Existence of State aid

(191) The Belgian authorities confirm their initial view that the measures provided for in the Villo agreement signed with JCD satisfy all the tests of the Altmark judgment and that those measures consequently do not constitute State aid.

(192) In particular they submit the following arguments.

First Altmark test

(193) By promoting an ecological means of transport that offers a response to mobility problems in Brussels, the Belgian authorities consider that the availability to the public of an automated cycle hire scheme indisputably pursues objectives of general interest.

Second Altmark test

(194) The Belgian authorities consider that the specifications on the basis of which JCD and CCB drew up their detailed tenders set out the main parameters of the financing system:

(i) all the scheme’s revenue to be from private sources;

(ii) no direct subsidy or direct compensation for losses from the concession; and

(iii) the entire operating risk to be borne by the concessionaire.

Third Altmark test

(195) Firstly, the Belgian authorities take the view that the concession was awarded on the basis of an open, transparent and non-discriminatory competitive invitation and it can therefore be assumed that there was no overcompensation. In so far as the Region had expressly ruled out payment of a direct subsidy in exchange for the concession, the open, transparent and non-discriminatory character of the procedure necessarily excluded any risk of overcompensation.

(196) Secondly, the financial measures provided for by the concession did not result in any overcompensation by JCD. The Belgian authorities consider that:

(i) JCD’s exemption from charges for occupancy of public property in the Region, totalling not more than EUR [50 000-150 000] per year, covered only a small part of the total operating costs for the concession, equal to [0-5] % of those costs in 2012;

(ii) neutralisation of any future changes in regional taxes (see recital 22) is a standard clause in long-term concession agreements, justified particularly by the Region’s entitlement to raise its own taxes and the fact that no compensation is provided for in the event of losses from the operation of the concession; taxes and regional charges were not increased in this instance and therefore the neutralisation clause has never been applied;

(iii) the price revision clauses in bipartite agreements signed with local authorities (see recital 22) merely provide for an independent corrective to balance the contract and in no way affect the level of local tax, which the local authorities remain free to revise; as indicated in recital 82 of the opening decision, the neutralisation is equivalent to a maximum of between EUR [50 000-100 000] and EUR [250 000-350 000], depending on the comparison rate used;

(iv) for the allocation of advertising revenue, JCD applies a valuation coefficient to each contract corresponding to the added value for average revenue per screen, a methodology that is in line with current practice in the field; and

(v) the concession agreement is systematically monitored: firstly, a management committee

The management committee is set up by Article 6 of the Villo agreement and is composed equally of at least two members appointed by the Minister for Mobility from the Brussels mobility department and at least two members appointed by JCD.

and a support committee, to which JCD reports annually on the operation of the scheme, are responsible for monitoring the performance of the agreement; and secondly, the order of 25 November 2010 provides for annual scrutiny of the implementation of the concession agreement by the Government and Parliament of the Brussels Capital Region.

Fourth Altmark test

(197) In the opinion of the Belgian authorities, the Villo concession was awarded to JCD by an open, transparent and non-discriminatory procedure. The financial measures added after the call for tenders (see recital 22) were designed merely to offset the reduction in the anticipated advertising revenue and to safeguard the balance of the contract for the future.

4.3.1.2.

Compatibility

(198) If the measures provided for in the Villo agreement do constitute State aid, the Belgian authorities take the view that they can be considered compatible with the internal market on the basis of Article 107(3)(c) of the Treaty, given that:

(i) by promoting an ecological means of transport as an alternative to cars, the supply of self-service bicycles constitutes a well-defined objective in the interest of the community;

(ii) the financing of the concession almost entirely from private funds is appropriate and proportional, and has an incentive effect; and

(iii) the distortions of competition and the effects on trade are limited, since the concession results from an effective and transparent competitive procedure of purely local application.

4.3.2.

Comments submitted by Belgium on the comments of interested parties

(199) The Belgian authorities sent their comments on the comments of interested parties by letter of 2 October 2015.

(200) The Belgian authorities reject the arguments put forward by the complainants. They contend that the measures provided for by the Villo agreement satisfy all the tests of the Altmark judgment and consequently do not constitute State aid. In the alternative, the Belgian authorities take the view that the measures are compatible with the internal market on the basis of:

(i) Article 107(3)(c) of the Treaty; and

(ii) the 2012 SGEI decision.

4.3.2.1.

Existence of State aid

(201) CCB maintains that the Brussels Capital Region conferred on JCD the right to occupy and use public property for advertising purposes without any charge; the Belgian authorities reject that claim, and submit that the consideration for the use of the advertising displays is the provision of the cycle hire public service, as specified in the call for tenders.

(202) Furthermore, the Belgian authorities uphold the view they stated in their letter of 21 May 2015 that the Altmark tests are satisfied in this case (see recitals 191 to 197). They put forward further arguments on the first two tests of the Altmark judgment (see recitals 203 to 204).

First Altmark test

(203) According to the Belgian authorities, CCB’s claim that a cycle hire service similar to the Villo system is already provided in other European cities without having been expressly classified as a service of general economic interest is not relevant in this case. They say that the concept of a service of general economic interest is a relative notion that depends on circumstances. In this instance the Brussels Capital Region has to deal with particularly heavy vehicular traffic, calling for the adoption of ambitious and effective measures. In the example of the city of Antwerp cited, the Belgian authorities submit that the operator concerned (CCB) receives a direct subsidy.

Second Altmark test

(204) The Belgian authorities consider that if a method of financing a public service had to be defined precisely as soon as the contract notice appeared, a competitive procedure would be pointless, since bidders would have no margin of manoeuvre. The Belgian authorities maintain their view that the specifications set out the parameters for financing the service objectively and transparently (see recital 194).

4.3.2.2.

Compatibility

Applicability of the 2012 SGEI decision

(205) Although there is no valuation of any aid that the Belgian authorities accept, they consider that the total amount of the alleged aid is in any case well below EUR 15 million, since the purely private revenue (such as advertising revenue) must not be included in the calculation of the aid. Accordingly, the Belgian authorities are of the opinion that the annual amount of the alleged aid does fall within the scope of the 2012 SGEI decision.

Compliance with the conditions of the 2012 SGEI decision

(206) According to the Belgian authorities the extension of the concession period (see recital 161) aligns the period of the first phase with that of the second phase (see recital 20). The alignment is justified for two reasons: the longer than expected duration of the various procedures required, the wish to align the two phases in the interests of good management, the need to compensate for a reduction in the number of advertising displays, and the wish to provide a service to the public for an adequate length of time.

(207) The Belgian authorities take the view that the Villo concession was awarded to JCD with a clear and explicit entrustment act which defines the parameters of the compensation and enables any overcompensation to be avoided (see recitals 193 to 197).

(215) While stressing the limited relevance of the GRP, JCD notes that a comparison of GRP and the price per screen between its largest national network and its largest Brussels network results in premiums of [10-20] % and [20-30] % respectively, similar to the correction coefficient for the screens operated under the Villo agreement, which is [20-30] %.

(216) As regards the costs incurred in implementing the Villo agreement, JCD considers that the figures obtained by CCB are not correct, owing to:

(i) the fact that CCB’s method takes no account of the investments required for the installation of the necessary infrastructures at the start of the concession;

(ii) the use by CCB of an annual cost per bicycle of EUR 1450, a figure taken from JCD’s tender and thus based on estimates.

(217) JCD does not recognise the amounts cited by CCB for the neutralisation of municipal taxes (see recital 164). According to JCD, the difference between CCB’s estimated figures and the actual amounts is due to:

(i) the use of incorrect rates: contrary to CCB’s calculations, only a few municipalities apply a tax rate on advertising displays of more than EUR 75 per scrolling m2 per year;

(ii) application of the mechanism to municipalities that are not involved: CCB seems to have applied the revision mechanism to the municipalities of Etterbeek, Schaerbeek and Saint-Josse, when the bilateral agreements with those municipalities do not incorporate that clause;

(iii) automatic application of the mechanism: in practice JCD receives sums due under the revision mechanism only after it has invoiced the municipalities for the charge; some time can elapse between the installation and use of the advertising displays and the time at which the sums are collected in accordance with the revision clauses.

(218) As regards the amount of advertising revenue, CCB underestimates JCD’s discount; the discount rate is around [60-70] %, not 40 %. When the correct rate is applied, the advertising revenue is considerably lower the estimates given by CCB, at just over half.

(219) JCD also disputes the figure given by CCB for the operation of the advertising displays free of charge (see recital 165). According to JCD, CCB disregards the fact that the operation of the advertising displays provided for by the Villo concession is inseparable from the provision of the cycle hire public service: the advertising revenue is intended to finance the public service.

(220) JCD considers that the use of the advertising displays is taken into account in the financing of the Villo concession, since it operates the Villo displays in exchange for the substantial costs generated by the provision of the cycle hire public service.

4.5.

Additional comments submitted by Belgium

(221) In regard to the duration of the Villo agreement (see recital 161), the Belgian authorities also argue that the 2005 SGEI decision, which was applicable when the agreement was signed, did not lay down any provisions on the period for which the public service was to be provided (see recital 181). Furthermore, the Belgian authorities consider that the extension of the Villo concession period was justified, for three reasons:

(i) circumstances beyond the control of the parties had delayed the implementation of the agreement;

(ii) the wish to align the two phases of the Villo agreement: the phases, whilst started at different times, were originally scheduled to last 15 years; in practice that would have resulted in two separate expiry dates for phase 1 and phase 2 (as indicated in the preamble to the amendment); and

(iii) the number of street furniture advertisements operated by JCD had been reduced as a result of the amendment to the Villo agreement.

4.6.

Second amendment to the Villo agreement

(222) The Government of the Brussels Capital Region and JCD signed an amendment to the Villo agreement on 29 March 2018. The amendment was added in order to allow more accurate and regular monitoring of the absence of overcompensation.

(223) The amendment states that the results of JCD’s separate cost accounting will be forwarded to the Region. The results will show the revenue from the Villo concession, broken down into revenue from user payments, advertising revenue, exemption from the regional charge and neutralisation of municipal tax increases, and the costs of the concession broken down into operating costs, management costs and amortisation of the investments related to the Villo service.

(224) The amendment states that every year the statutory auditor (commissaire aux comptes) responsible for checking JCD’s annual accounts is to verify that the accounting separation principles applied by JCD comply with the 2012 SGEI decision. After verification by the statutory auditor the results of the separate accounting are to be sent to the independent auditor (réviseur).

(225) Every year the independent auditor will verify that the ratio of the cumulative annual operating results (EBIT) divided by the cumulative annual costs (since 2009) related to the operation of the Villo concession is not above the threshold of [10-20] %

Corresponding to a standard ratio of [10-20] % on revenue.

. If it exceeds the threshold, and to the extent that it does so, the amount of the regional charge from which JCD is exempt, plus the amount resulting from the impact of the measures related to municipal taxes, will be paid retroactively in full or in part for the previous year.

(226) The amendment also states that the statutory auditor is to establish that there is no overcompensation for the 2009-2017 period using that method, and to draw up a compilation report for the management committee. The report was to be drawn up as soon as possible after the signature of the amendment.

4.7.

Assessment of measures before the second amendment

(227) In its assessment, the Commission will distinguish between the period before the amendment (see recital 222) and the period after the amendment.

4.7.1.

State aid within the meaning of Article 107(1) TFEU

(228) The criteria for determining the existence of State aid are set out in recitals 70 to 71. Recitals 229 to 249 assess whether those criteria are met in respect of each of the measures: the exemption from regional charges for occupancy of public property, the neutralisation of the municipal tax increase, and the regional taxes hardship clause (see recital 22).

4.7.1.1.

Imputability and State resources

(229) The criteria for determining imputability and the existence of State resources are set out in recitals 72 and 73.

Imputability

(230) It is not contested that the Brussels Capital Region awarded the Villo concession and that the Region introduced the additional measures after the concession was granted (see recitals 19 to 22). The contested measures are thus imputable to the State.

State resources

(231) The loss of revenue to the Brussels Capital Region and the various municipalities it comprises which is associated with the contested measures is revenue forgone by the public authorities and hence constitutes State resources transferred to JCD.

(232) The State resources in question are, specifically, (i) the loss resulting from exemption from the charge for occupancy of public property in the Brussels Capital Region for 8 m2 advertising displays, totalling up to EUR [50 000-150 000] per year; (ii) the loss of revenue arising from the neutralisation of any change to regional taxes, equal to the amount resulting from that increase; and (iii) the loss of revenue arising from the neutralisation of any change to municipal taxes, equal to the amount resulting from that increase and totalling up to EUR [250 000-350 000] per year (see recital 22).

(233) The Villo cycle hire scheme is also financed by the management and use of advertising displays and by customer payments. Advertising revenue and payments from users of the concession are purely private resources and cannot be classed as State resources.

(234) The Commission is of the opinion that the advertising revenue received by JCD clearly does not constitute State resources, because the revenue is derived from private contracts between JCD and its clients in which the State has no involvement.

(235) Furthermore, it cannot be assumed that when the Brussels Capital Region does not itself engage in an economic activity it is necessarily waiving State resources. Such an approach to State resources would be extremely broad and would prevent the State from authorising activities in its territory without first establishing that it could not carry out the activity itself.

4.7.1.2.

Existence of an economic advantage

(236) The criteria for determining whether a selective economic advantage is conferred are set out in recitals 82 and 83.

(237) In the present case, the exemption from regional charges and the neutralisation of the increase in municipal charges enable JCD not to incur costs that it would normally have had to bear out of its own financial resources, and therefore do indeed give it an advantage.

(238) However, the Belgian authorities take the view that the additional measures should be regarded as compensation for a public service covered by the case-law in the Altmark judgment.

(239) In the Altmark judgment, the Court of Justice of the European Union stated that compensation granted through State resources for costs relating to the supply of a service of general economic interest do not constitute an advantage if all of four conditions are satisfied

Judgment of the Court of Justice in Case C-280/00, Altmark Trans and Regierungspräsidium Magdeburg, ECLI:EU:C:2003:415, paragraphs 87 to 95.

:

(i) the recipient undertaking must actually have public service obligations to discharge, and the obligations must be clearly defined;

(ii) the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner;

(iii) the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations; and

(iv) where the undertaking which is to discharge public service obligations is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided, would have incurred in discharging those obligations.

(240) As regards the second Altmark test, the Commission notes that the financial impact for the Brussels Capital Region of the additional measures provided for in the agreement only after the invitation to tender, and in particular a measure such as the increase in municipal charges, was unknown at the time the measure was granted, since it depended entirely on future variations in municipal charges. In the absence of a limit on the maximum financial impact of the measure, the Commission does not consider it fully transparent.

(241) With regard to the third Altmark test, it was not verified beforehand, at the time the additional measures under examination were granted, that the compensation received by JCD while the concession was in operation would not exceed what was necessary to cover all or part of the costs generated by the performance of the obligations arising from it, taking account of the relevant revenue and a reasonable profit for the performance of those obligations.

(242) Finally, with reference to the fourth Altmark test, the Commission is of the opinion that given that certain measures were added after the call for tenders it is not clear that the objective of the call for tenders from the point of view of the Altmark judgment, which is to select the operator capable of providing the service at the lowest cost to the community, can be considered to have been achieved. If not all the compensation measures are incorporated into a call for tenders it is difficult to conclude that the call makes it possible to select the operator providing the service of general economic interest at the lowest cost, even if the call for tenders procedure is in itself transparent.

(243) For the reasons explained in recitals 240 to 242, the Commission does not consider that the Altmark tests have been satisfied in this instance, and concludes that the additional transfers of State resources decided on after the call for tenders do confer an economic advantage on JCD.

(244) As for the calculation of the amount of the advantage, the Belgian authorities initially estimated that the neutralisation of municipal taxes would be equivalent to no more than about EUR [50 000-100 000] per year. However, that calculation allowed for the fact that local authorities generally apply a lower tax rate to public services than commercial operators, which have to pay a higher standard rate. The Belgian authorities consider that the only advantage conferred is the difference between the more favourable tax level granted to public services generally and the level of taxes actually applied to JCD under the Villo concession. The Commission, on the other hand, considers that the advantage actually conferred on JCD is equivalent to the difference between the standard rate and the rate applied to JCD, which, according to the initial calculations by the Belgian authorities, may total up to EUR [250 000-350 000] per year

See recital 82 of the opening decision.

.

(245) In all, JCD enjoys an advantage of up to EUR [400 000-500 000] per year (EUR [50 000-150 000] from the exemption from the charge for occupancy of public property in the Brussels Capital Region and EUR [250 000-350 000] from the application of the price revision clause for municipal taxes, see recital 22.

4.7.1.3.

Selectivity

(246) The criteria for assessing the selectivity of a measure are set out in recital 97.

(247) Since the contested measures constitute individual aid measures, the identification of the economic advantage (see recitals 236 to 245) is sufficient to support the presumption that they are selective

Judgment of the Court of Justice of 4 June 2005 in Case C-15/14 P, Commission v MOL, ECLI:EU:C:2015:362, paragraph 60; judgment of the Court of Justice of 30 June 2006 in Case C-270/15 P, Kingdom of Belgium v Commission, ECLI:EU:C:2016:489, paragraph 49; judgment of the General Court of 13 December 2017 in Case T-314/15, Hellenic Republic v Commission, ECLI:EU:T:2017:903, paragraph 79.

. In the absence of any indication to the contrary, that presumption applies here and is enough for the measures to be declared selective.

4.7.1.4.

Distortion of competition and effects on trade between Member States

(248) For the same reasons as are set out in recitals 103 to 121, the additional measures allowed to JCD for the Villo concession have effects that could potentially distort competition and trade between Member States.

4.7.1.5.

Conclusion on the existence of aid

(249) In light of the foregoing, the Commission takes the view that in respect of the additional measures related to the operation of the public Villo service concession by JCD in the Brussels Capital Region all of the criteria for State aid are met, and those measures accordingly constitute State aid within the meaning of Article 107(1) TFEU.

4.7.2.

Lawfulness of the aid

(250) The Commission notes that the additional measures referred to in this part of the complaint, which constitute State aid within the meaning of Article 107(1) TFEU, were not notified in accordance with Article 108(3) TFEU.

(251) However, the Belgian authorities consider that, although they constitute State aid, they are compensation for a public service which is compatible with the internal market under the SGEI decision applicable at the material time (at the time the measures were granted, the text in force was the 2005 SGEI decision, which was later replaced by the 2012 SGEI decision). Both texts provide for an exemption from notification for measures that comply with their tests of compatibility

See Article 3 of the 2005 SGEI decision and of the 2012 SGEI decision.

.

(252) In order for the measures to be regarded as compatible, it is sufficient for them to meet the conditions laid down in the 2005 SGEI decision, which was applicable when they were granted. Compatibility with the 2005 SGEI decision is assessed below.

4.7.3.

Compatibility of the aid on the basis of the 2005 SGEI decision

4.7.3.1.

Scope

(253) The 2005 SGEI decision applies only to services that can be classed as services of general economic interest. According to the case-law, in the absence of sectoral rules on that issue at Union level, Member States have wide discretion to decide which services may be classed as services of general economic interest. The Commission’s role is to ensure that there are no manifest errors.

(254) In this instance the Commission does not consider that there was a manifest error, in so far as the service meets a public need that would not be met in the same way without State intervention (for example, the amount paid by users is not sufficient to cover the costs of the service). It is also worth noting that the Belgian Constitutional Court has considered the issue and confirmed that the Villo automated cycle hire scheme is a public service

See judgment 68/2012 of the Belgian Constitutional Court of 31 May 2012.

.

(255) According to Article 2(1)(a), the 2005 SGEI decision applies to State aid in the form of compensation for a public service of less than EUR 30 million per year, granted to undertakings with an average annual turnover before tax, all activities included, of less than EUR 100 million during the two financial years preceding that in which the service of general economic interest was assigned.

(256) The total amount of aid granted to JCD in the form of exemption from the charge for occupancy of public property and neutralisation of municipal tax increases is well below the threshold of EUR 30 million per year; according to the estimates of the Belgian authorities it does not exceed EUR [400 000-500 000] per year (see recital 245). Furthermore, annual turnover was significantly less than EUR 100 million in the period 2006-2007. Hence the 2005 SGEI decision is applicable on that basis.

4.7.3.2.

Compliance with conditions

(257) Article 4 of the 2005 SGEI decision stipulates that responsibility for operation of the service of general economic interest shall be entrusted to the undertaking concerned by way of one or more official acts, the form of which may be determined by each Member State. The act or acts shall specify, in particular … the arrangements for avoiding and repaying any overcompensation.

(258) A clear and explicit description of the arrangements for recovering and avoiding overcompensation was included in JCD’s entrustment act only from 29 March 2018, when the second amendment to the Villo agreement was adopted (see recitals 222 to 226). Consequently the Commission is of the opinion that that condition of the 2005 SGEI decision was not met, and that the aid in question is not compatible with the internal market on the basis of the 2005 SGEI decision.

4.7.4.

Compatibility of the aid on the basis of the 2012 SGEI decision

4.7.4.1.

Scope

(259) Article 10(b) of the 2012 SGEI decision provides that any aid put into effect before the entry into force of this Decision that was not compatible with the internal market nor exempted from the notification requirement in accordance with Decision 2005/842/EC but fulfils the conditions laid down in this Decision shall be compatible with the internal market and exempt from the requirement of prior notification. In view of the foregoing, the Commission therefore considers that the aid should be assessed in the light of the 2012 SGEI decision.

(260) As explained in recitals 253 and 254, the Commission does not consider that there has been any manifest error in the definition of the service of general economic interest. According to Article 2(1)(a), the 2012 SGEI decision applies to State aid in the form of public service compensation of not more than EUR 15 million per year. The Belgian authorities estimate the total amount of aid granted to JCD to be well below that threshold (see recital 245). Hence the 2012 SGEI decision is applicable on that basis.

4.7.4.2.

Compliance with conditions

(261) Article 4 of the 2012 SGEI decision (like Article 4 of the 2005 SGEI decision) stipulates that Operation of the service of general economic interest shall be entrusted to the undertaking concerned by way of one or more acts, the form of which may be determined by each Member State. The act or acts shall include, in particular: the arrangements for avoiding and recovering any overcompensation.

(262) As explained in recital 258, the Commission considers that that condition of the SGEI decision is not met, and the aid in question is consequently not compatible with the internal market on the basis of the 2012 SGEI decision.

4.7.5.

Compatibility of the aid on the basis of the 2012 SGEI framework

4.7.5.1.

Scope

(263) According to paragraph 7 of the Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (the 2012 SGEI framework)

OJ C 8, 11.1.2012, p. 4.

, The principles set out in this Communication apply to public service compensation only in so far as it constitutes State aid not covered by [the 2012 SGEI decision]. The Commission therefore considers that the aid should be assessed in the light of the 2012 SGEI framework.

(264) According to paragraph 69 of the 2012 SGEI framework, The Commission will apply the principles set out in this Communication to unlawful aid on which it takes a decision after 31 January 2012 even if the aid was granted before this date. The 2012 SGEI framework is therefore applicable from the start of the Villo concession.

4.7.5.2.

Compliance with conditions

(265) The Commission will verify that the aid is compatible with the conditions laid down in section 2 of the 2012 SGEI framework, with due regard to the fact that, according to paragraph 61 of the framework, The principles set out in paragraphs 14, 19, 20, 24, 39, 51 to 59 and 60(a) do not apply to aid which meets the conditions laid down in Article 2(1) of [the 2012 SGEI decision]. As shown above (see recital 260), the aid in this case meets those conditions.

Genuine service of general economic interest

(266) According to paragraph 12 of the 2012 SGEI framework, The aid must be granted for a genuine … service of general economic interest as referred to in Article 106(2) of the Treaty. The Commission considers the implementation of the Villo agreement to be a genuine service of general economic interest (see recitals 253 to 254).

Need for an entrustment act specifying the public service obligations and the methods of calculating compensation

(267) According to paragraph 15 of the 2012 SGEI framework, Responsibility for the operation of the SGEI must be entrusted to the undertaking concerned by way of one or more acts, the form of which may be determined by each Member State. According to paragraph 16, the act must include, in particular, the content and duration of the public service obligations; the undertaking responsible and, where applicable, the territory concerned; the nature of any exclusive or special rights assigned to the undertaking; the description of the compensation mechanism and the parameters for calculating, monitoring and reviewing the compensation; and the arrangements for avoiding and recovering any overcompensation.

(268) The Belgian authorities defined the Villo concession as a public service concession in the Villo agreement. Furthermore, on 25 November 2010 the Regional Parliament adopted an order on the operation of the public Villo service.

(269) The Villo agreement defines the public service as the provision of an automated cycle hire scheme for the whole of the Brussels Capital Region, at the concessionaire’s expense and risk, under the authority of the Government and subject to minimum conditions laid down by the latter. It sets out the public service obligations on the concession operator. The act describes the nature, geographical scope and operation of the service. It also describes the pricing system applicable to users.

(270) Duration of entrustment act: the duration of the concession was set at 15 years and was extended by 2 years and 4 months (see recital 161) by an amendment to the concession on 9 June 2011. That duration is justified by the scale of the investment required. This is illustrated in particular by the fact that JCD incurred considerable financial losses and started to earn profits only from 2016 (see Table 1 below).

(271) Compensation parameters: the parameters of the compensation in the aid measures in question (the additional measures) are clearly defined in the Villo agreement.

(272) Verification of the absence of overcompensation: the establishment of checks on the absence of overcompensation is a condition for compatibility under both the 2012 SGEI decision (see Article 4(e)) and the 2012 SGEI framework (see paragraph 16(e)). The Commission has concluded in recital 262 that the requirement in Article 4(e) of the 2012 SGEI decision was not met in this instance. However, the checks carried out by the audit firm KPMG show that there was no actual overcompensation in the period 2009-2017 (see Table 1 below).

Table 1

Verification of the absence of overcompensation

(273) CCB has submitted several comments on the verification of the absence of overcompensation.

(274) Firstly, CCB does not consider that the costs relating to the installation and use of the advertising displays can be taken into account in calculating the compensation awarded to JCD (see recital 162). Furthermore, CCB considers that the use without charge of public property for advertising (as it terms the exemption from the charge for occupancy of municipal public property) should be quantified in relation to the value of the advertising displays (see recital 165).

(275) The Commission is of the opinion that the advertising displays must be taken into account in verifying overcompensation. The Commission will do so by taking account of the revenue and costs actually generated by the displays. There is no need here to refer to a valuation of the screens, which itself would depend on the revenue and costs that such displays might generate (see Table 1 above). If the operational value of the advertising displays exceeds what is necessary to bear the costs resulting from the implementation of the Villo concession, the imbalance arrived at by this calculation must lead to a finding that there is overcompensation.

(276) CCB disputes the amount of aid generated by the exemption from municipal taxes (see recital 164). JCD has identified several errors in CCB’s calculations (see recital 217). Nevertheless, the Commission notes that, even if the amount of aid were considered to be EUR 650000 a year, as stated by CCB, the public service task would still be unprofitable overall in the period 2009-2017.

(277) As regards CCB’s claim that the costs incurred by JCD in the implementation of the Villo agreement were significantly lower than initially declared (see recital 209), it need only be pointed out that the verification of the absence of overcompensation is based on the actual costs incurred by JCD and not on projections or estimates.

(278) The Commission concludes that JCD was not overcompensated for the provision of the Villo service of general economic interest between 2009 and 2017.

(279) In the Commission’s view, the existence of a mechanism to monitor the absence of overcompensation is in reality indispensable only in order to declare aid compatible on the basis of the 2012 SGEI decision, where the State is responsible for monitoring the absence of overcompensation, or to declare aid compatible under the 2012 SGEI framework, for notified measures, in so far as the monitoring mechanism provides the basis on which the Commission eliminates the possibility of future overcompensation and the Commission does not carry out any checks ex post. When the Commission does indeed verify the absence of overcompensation ex post, that formal criterion loses its point, which is to prevent potential overcompensation. If the Commission carries out ex post checks, any overcompensation found must be recovered regardless of whether any monitoring has taken place, and, conversely, the absence of overcompensation is sufficient to satisfy the relevant compatibility requirements of the 2012 SGEI framework.

(280) In that case the Commission considers that when there has been no overcompensation, incomplete supervision by the Member State in the past is of limited significance, because the aim of the condition, which is the absence of overcompensation, has in fact been achieved. It should be noted that in those cases where the Commission has taken a negative decision and ordered the recovery of public service compensation (where there was no manifest error in the definition of the public service), the aid to be recovered was confined to the overcompensation calculated by the Commission, regardless of the quality of the supervision put in place by the Member State

On that point, see in particular the decision of 25 January 2012 in Case SA.14588 and the decision of 10 July 2018 in Case SA.37977.

. In all those cases the monitoring of overcompensation by the Member State was either non-existent or faulty (hence the presence of overcompensation). In such circumstances the alternative would have been to require recovery of all the public service compensation awarded to the public service operator even though the operator had in fact provided the public service, solely on the basis of the lack of a satisfactory monitoring system, irrespective of the actual amount of overcompensation.

(281) In the abstract that approach could even lead to the recovery of all public service compensation awarded to an operator when there had been no overcompensation at all. In the Commission’s view, that alternative would be contrary to the principles of the TFEU on the essential roles of services of general economic interest in the European Union, and in particular Article 14 TFEU, which provides that the Union is to take care that services of general economic interest operate on the basis of principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions.

(282) The Commission is therefore of the opinion that the requirement of verification of the absence of overcompensation may be considered to have been satisfied in this instance.

Compliance with Commission Directive 2006/111/EC

Commission Directive 2006/111/EC of 16 November 2006 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (OJ L 318, 17.11.2006, p. 17).

(283) Pursuant to paragraph 18 of the 2012 SGEI framework, Aid will be considered compatible with the internal market on the basis of Article 106(2) of the Treaty only where the undertaking complies, where applicable, with Directive 2006/111/EC.

(284) As regards accounting separation, there was some uncertainty as to JCD’s cost accounting, particularly in relation to the way in which revenue generated by nationally negotiated contracts was allocated to displays that are part of the Villo concession (see recital 184). Following the adoption of the second amendment to the Villo agreement (see section 4.6), the statutory auditor will check the accounting separation principles applied by JCD each year. Such checks have also been carried out for the whole of the previous period (2009-2017), and following the explanations by the Belgian authorities and JCD (see recitals 196, 214 and 215) the Commission takes the view that the cost accounting system complies with the requirements of Directive 2006/111/EC and that the check on the absence of overcompensation (see Table 1 above) was carried out on the basis of appropriate accounting separation.

Absence of overcompensation

(285) Pursuant to paragraph 49 of the 2012 SGEI framework, Member States must ensure that the compensation granted for operating the SGEI meets the requirements set out in this Communication and in particular that undertakings are not receiving compensation in excess of the amount determined in accordance with this the requirements set out in this section.

(286) As explained in recital 272, JCD was not overcompensated for the previous period.

Conclusion

(287) In light of the foregoing, the Commission concludes that the aid measures granted to JCD under the Villo agreement are compatible with the internal market on the basis of the 201 SGEI framework for the period of the Villo concession before the adoption of the second amendment, i.e. 5 December 2008 to 29 March 2018.

4.8.

Assessment of the measures after the second amendment

4.8.1.

State aid within the meaning of Article 107(1) TFEU

(288) Since the second amendment does not alter the measures granted to JCD under the Villo agreement, the Commission’s assessment of the existence of State aid (see recitals 229 to 249) remains unchanged.

4.8.2.

Compatibility of the aid on the basis of the 2012 SGEI decision

(289) The second amendment corrects the defects identified in the previous entrustment act (see recital 262) by adding a clear and explicit description of the arrangements for recovering and avoiding any overcompensation.

(290) Article 6 of the 2012 SGEI decision states that Member States shall ensure that … the undertaking does not receive compensation in excess of the amount determined in accordance with Article 5 [amount of compensation not exceeding what is necessary to cover the net cost incurred in discharging the public service obligations, including a reasonable profit]. They shall provide evidence upon request from the Commission. They shall carry out regular checks, or ensure that such checks are carried out, at least every 3 years during the period of entrustment and at the end of that period.

(291) Article 6 also states that Where an undertaking has received compensation in excess of the amount determined in accordance with Article 5, the Member State shall require the undertaking concerned to repay any overcompensation received.

(292) The second amendment stipulates that an independent auditor is to check every year that the amount of compensation does not exceed what is necessary for the performance of the public service, including a reasonable profit. If it does exceed that amount, and to the extent that it does so, JCD is to pay the excess amount retroactively (see recital 225).

(293) For the reasons explained in recitals 289 to 292, the Commission concludes that the aid measures granted to JCD under the Villo agreement are compatible with the internal market on the basis of the 2012 SGEI decision with effect from the adoption of the second amendment.

(294) It should be noted that that verification is based on the comparison of a profit on costs with a reference margin of [10-20] %, corresponding to a standard margin on revenue of [10-20] % considered reasonable on the basis of discussions with CCB and JCD

See also recital 109 of the opening decision.

. A margin on costs was preferred to a margin on revenue in order to take account of CCB’s comments (see recital 213).

1. RECOVERY OF INCOMPATIBLE AID RELATED TO ADVERTISING DISPLAYS GOVERNED BY THE 1984 CONTRACT

(295) In accordance with the TFEU, when the Commission finds that aid is incompatible with the internal market, it has power to decide that the Member State concerned must abolish or alter it

Judgment of the Court of Justice of 12 July 1973 in Case C-70/72, Commission v Germany, ECLI:EU:C:1973:87, paragraph 13.

. Similarly, the European Union courts have ruled, in settled case-law, that the obligation on a Member State to abolish aid deemed by the Commission to be incompatible with the internal market is aimed at re-establishing the previously existing situation

Judgment of the Court of Justice of 21 March 1990 in Case C-142/87, Belgium v Commission, ECLI:EU:C:1990:125, paragraph 66.

.

(296) The Union courts have taken the view that that objective has been achieved when the beneficiary has repaid the unlawfully granted amounts of aid. With that repayment, the recipient forfeits the advantage it had enjoyed over its competitors on the market, and the situation prior to payment of the aid is restored

Judgment of the Court of Justice of 17 June 1999 in Case C-75/97, Belgium v Commission, ECLI:EU:C:1999:311, paragraphs 64 and 65.

.

(297) In accordance with that case-law, Article 16(1) of Regulation (EU) 2015/1589 provides that where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary.

(298) Accordingly, since the measures in question were implemented in breach of Article 108(3) TFEU and are deemed to be unlawful and incompatible aid, they must be recovered in order to restore the situation existing on the market before they were granted. The recovery must cover the period from the time at which the aid was made available to the beneficiary to its actual recovery, in accordance with the method set out in recitals 131 to 141. The amounts to be recovered must generate interest until they are actually recovered.

1. SUMMARY OF CONCLUSIONS

6.1.

Advertising displays governed by the 1984 contract

(299) The Commission is of the opinion that, as regards the use by JCD of certain advertising displays installed in the City of Brussels governed by the 1984 contract and kept in place after the removal date specified in annex 10 to the 1999 contract without payment of rent or tax, all the criteria for State aid are met, and that measure therefore constitutes State aid within the meaning of Article 107(1) TFEU.

(300) As regards the lawfulness of the aid measure, the Commission finds that the measure referred to in this part of the complaint, which constitutes State aid within the meaning of Article 107(1) TFEU, was not notified pursuant to Article 108(3) TFEU, and has been implemented. It therefore constitutes unlawful aid.

(301) The Commission also considers that that aid is incompatible with the internal market, and it should therefore be recovered, including principal and interest, in accordance with the CELF case-law of the Court of Justice

Judgment of the Court of Justice of 12 February 2008 in Case C-199/06, CELF and Ministre de la Culture et de la Communication (CELF I), ECLI:EU:C:2009:79.

.

6.2.

Villo

(302) The Commission considers that the measures provided for in the Villo agreement constitute State aid on the basis of Article 107(1) TFEU.

(303) The measures provided for in the Villo agreement are nevertheless compatible with the internal market on the basis of Article 106(2) TFEU.

(304) In regard to the period from the start of the concession on 5 December 2008 to the signature of the second amendment on 29 March 2018 (see section 4.6), the Commission considers that the measures provided meet the conditions of the 2012 SGEI framework (see section 4.7). They are therefore not to be recovered, although they are unlawful aid in that they were not notified in accordance with Article 108(3) TFEU.

(305) In regard to the period from the date of signature of the second amendment to the end of the concession on 16 September 2026, the Commission considers that the conditions of the 2012 SGEI decision have been met, subject to strict compliance with the conditions laid down in that amendment (see section 4.8),

HAS ADOPTED THIS DECISION:

Article 1

The State aid to JCD, in an amount equivalent to the rent and taxes not paid on the advertising displays installed in the City of Brussels governed by the 1984 contract and kept in place after the removal date specified in annex 10 to the 1999 contract, granted by Belgium unlawfully between 15 September 2001 and 21 August 2010 in breach of Article 108(3) of the Treaty on the Functioning of the European Union, is incompatible with the internal market.

Article 2

1. Belgium shall recover the aid referred to in Article 1 from the beneficiary.

1. The sums to be recovered shall generate interest from the date on which they were made available to the beneficiary until their actual recovery.

1. The interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EU) 2015/1589 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 140, 30.4.2004, p. 1).

.

Article 3

1. The recovery of the aid referred to in Article 1 shall be immediate and effective.

1. Belgium shall ensure that this decision is implemented within four months of the date of its notification.

Article 4

1. Within two months of the notification of this decision, Belgium shall forward the following information to the Commission:

(a) the total amount (principal and interest) to be recovered from the beneficiary;

(b) a detailed description of the measures already taken and planned in order to comply with this decision;

(c) the documents showing that the beneficiary has been given notice to repay the aid.

1. Belgium shall keep the Commission informed of the progress of the national measures taken in implementation of this decision until the aid referred to in Article 1 has been recovered in full. It shall immediately submit, on simple request from the Commission, information on the measures already taken and planned to comply with this decision. It shall also provide detailed information on the amounts of aid and the interest already recovered from the beneficiary.

Article 5

1. The measures provided for in the Villo agreement constitute State aid on the basis of Article 107(1) of the Treaty on the Functioning of the European Union.

1. In regard to the period from 5 December 2008, when the Villo agreement was signed, to 29 March 2018, when the second amendment to the Villo agreement was signed, the measures provided for in the Villo agreement meet the conditions of the 2012 SGEI framework

Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (OJ C 8, 11.1.2012, p. 4).

and are compatible with the internal market. That aid is unlawful since it was not notified in accordance with Article 108(3) TFEU.

1. In regard to the period from 29 March 2018, when the second amendment was signed, to 26 September 2026, the end of the concession, the measures provided for in the Villo agreement meet the conditions of the 2012 SGEI decision

Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (OJ L 7, 11.1.2012, p. 3).

and are compatible with the internal market subject to strict compliance with the conditions laid down in the second amendment to the Villo agreement.

Article 6

This decision is addressed to the Kingdom of Belgium.

Done at Brussels, 24 June 2019.

For the Commission

Margrethe Vestager

Member of the Commission