The General Court has annulled the European Commission’s decision that Valencia Club de Fútbol (Valencia CF) received over €20m in unlawful state aid. Oxera undertook the financial analysis that supported Valencia CF’s appeal to the General Court, and which underpinned the annulment of the European Commission’s decision.

In 2016, the European Commission concluded that Spain illegally granted state aid to Valencia CF. The European Commission’s investigation focused on a guarantee on a €75m credit facility provided by the state-owned financial institution Instituto Valenciano de Finanzas (IVF) to the Fundación Valencia, an organisation associated with the football club. The credit facility was used by the Fundación Valencia to purchase a majority equity stake in Valencia CF. In return, the Fundación Valencia paid a fee for the guarantee to the IVF, and provided its equity stake in Valencia CF as collateral for the guarantee.

The General Court annulled the European Commission’s state aid decision for two reasons.

• The Commission incorrectly concluded that no equivalent guarantee was available on the market. The General Court concluded that the European Commission was incorrect to assume that there were no equivalent guarantees available on the market that could be used as a reference to assess whether the guarantee fee was in line with the market economy operator principle (MEOP). Furthermore, the General Court concluded that in its assessment, the European Commission failed to take into account the value of the equity stake in Valencia CF that was given by the IVF as collateral for the guarantee.

• The Commission incorrectly calculated the aid quantum. The General Court concluded that the European Commission was incorrect to presume that the shares in Valencia CF that served as collateral for the guarantee had a value ‘close to zero’ when an extension to the guarantee was granted in 2010. According to the General Court, the European Commission should have taken into account the club’s significant own equity and positive profits before tax in 2010 in order to assess the value of the collateral underpinning the guarantee. The General Court concluded that this error led to the European Commission overestimating the aid quantum, potentially leading to an erroneous conclusion of state aid in relation to the extension of the guarantee in 2010 in the first place.

The financial analysis undertaken by Oxera on behalf of Valencia CF, which was submitted to the General Court during the appeal process, covered each of the above points. The Oxera team was led by Nicole Robins, Partner and Head of Oxera’s Brussels office. As a result of this judgment, Valencia CF is no longer required to meet the €20m aid recovery demand.

Contact: Nicole Robins