08.04.2015 | KPMG Law Insights

European Court of Justice deliberates on the conformity of state measures with state aid law

Dear Readers,

With today’s issue, we would like to present you with the latest news from the areas of EU state aid, subsidies, higher education and public procurement law.

We wish you interesting reading.

Sincerely yours

Public Sector Team of KPMG Rechtsanwaltsgesellschaft mbH

Mathias Oberndörfer


Dr. Anke Empting

Attorney at Law


Irrelevance of Social Purpose for Conformity of State Measures with State Aid Law

The social purpose of a state measure is irrelevant for the question of its conformity with EU state aid law. In his opinion of March 17, 2015 (C-39/14) before the European Court of Justice (ECJ), the responsible Advocate General Cruz Villalón justified this as follows: In the examination of whether a state measure fulfills the elements of state aid, it is not a matter of the objectives pursued by the state body granting the aid or the reasons for the aid. The only decisive factor is whether the measure constitutes aid in terms of its effect, i.e. in particular whether it favors a company.

Any social or other valid objectives of an aid measure could at most be relevant at the next level – namely in the context of a possible justification. However, the question of possible justification could only be answered by the EU Commission within the framework of a formal investigation procedure; the national authorities and courts were not authorized to do so.

However, aid that falls within the scope of a legal exception, in particular within the scope of the so-called General Block Exemption Regulation (GBER) of June 17, 2014, is excluded from this basic allocation of responsibilities.

Constitutional complaint against obligation to admit students

A Hamburg university is defending itself before the Federal Constitutional Court in Karlsruhe against the admission of students who have sued for their university places. The first- and second-instance courts relied on long-standing administrative-court jurisprudence on capacity exhaustion at institutions of higher education, according to which the quality of education in a degree program may have to be lowered “to the point of inoperability” in order to accommodate additional freshmen.

It remains to be seen whether the Federal Constitutional Court will allow the constitutional complaint and comment on its content.

University hospital may participate in tender

In its judgment of December 18, 2014 (Rs C-568/13), the ECJ determined that a public hospital facility – in the underlying case, a university hospital – may participate in a tender even if it is not exposed to competition because of the public funds it receives.

The Region of Lombardy (Italy) launched a tender process in October 2015 to award data processing services for the external evaluation of the quality of medicines. A university hospital from the Tuscany region was awarded the contract thanks to the low overall price. The runner-up claimed that the university hospital, as a public institution, was not allowed to participate in a public tender at all. In addition, the price had been unusually low.

The “Council of State,” Italy’s highest administrative court, referred the question to the ECJ. This pointed

pointed out, among other things, that the participation of public institutions in tenders was generally recognized under its previous case law. Moreover, it is an essential objective of Union law to ensure competition as comprehensively as possible.

According to the court, public contracting authorities are entitled under certain circumstances to take into account subsidies – in particular subsidies that do not comply with the contract – in the tendering procedure. In doing so, the ECJ states that a bid can be excluded if it contains inadmissible EU subsidies in favor of the bidder. When calculating a bid, universities and research institutions must therefore ensure that, as a matter of principle, no public funding may be applied to the services to be offered as part of the tender.

Clients have wide discretionary powers

Two recent decisions emphasize the freedom of public contracting authorities to make decisions in award procedures at their own discretion. This applies both to the suitability test (according to the OLG Koblenz, decision of February 25, 2015 – Verg 5/14) and to the bid evaluation (according to the ECJ, judgment of March 18, 2015 – T-30/12). The consequence in both cases is that the decisions made on suitability and award can only be reviewed by the courts to a limited extent.

Erasmus mobility reaches new high

More than 40,000 Germans were abroad with Erasmus in the 2013/2014 academic year. These figures were recently announced by the Federal Ministry of Education and Research. The most popular host countries for German Erasmus students to study abroad last year were Spain (5,339 sponsored), France (4,877) and Great Britain (3,140).

On average, students spend 5.5 months abroad, compared to 4.4 months for interns and about 7 days for university staff.


Horizon 2020: New funding program for the commercialization and exploitation of advanced ideas

News in brief

As part of the Horizon 2020 research program, there is a new funding program called “Fast Track to Innovation”. It is designed to turn innovative, already advanced ideas into market-ready products, services or business models, etc. in a timely manner.

Companies of any kind from industry, universities and non-university research institutions are eligible to participate, whereby at least 60 percent of the budget must be earmarked for industrial partners or a minimum number of industrial partners must participate.

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Mathias Oberndörfer

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