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Nike Loses Procedural Challenge to Commission’s State Aid Case

Nike has lost a challenge to Commission’s State aid case on formal grounds, the General Court of the EU ruled on 14 July in Case C-648/19 (Nike European Operations Netherlands BV & Converse Netherlands BV v European Commission). Nike alleged incorrect assessment of the character of the State aid; incorrect assessment of the nature of an APA in Netherlands law; and, breach of the principles of good administration and equal treatment. The second plea alleged breach of the obligation to state reasons and incorrect assessment of selectivity. The third plea alleged breach of the applicants’ procedural rights; and, premature initiation of the formal investigation procedure. The Court dismissed Nike’s arguments on incorrect assessment of selectivity, citing established case-law, such as Commission v MOL: in the case of individual aid, the identification of the economic advantage is, in principle, sufficient to support the presumption that it is selective. The presumption of selectivity operates independently of the question whether there are operators on the relevant market in a comparable factual and legal situation. Only when examining an aid scheme it is necessary to identify whether the measure in question, notwithstanding the finding that it confers an advantage of general application, does so to the exclusive benefit of certain undertakings or sectors (Judgment of 4 June 2015, Commission v MOL, C‑15/14 P, paragraph 60).
On the procedural arguments, the Court established that the Commission was entitled to initiate the formal examination procedure and did not breach the principles of equal treatment and good administration. As a result of this judgment the Commission will continue its investigation into the APAs issues by the Dutch tax administration from 2006 to 2015, establishing levels of royalty paid by the Nike/ Converse subsidiaries for use of the IP belonging to the group company for products sold in the EMEA regions. 
Ref. CFE’s Tax Top 5 – 19 July 2021