C‑239/09 Seydaland Vereinigte Agrarbetriebe v BVVG

This case concerned the interpretation of the  Commission Communication on State aid elements in sales of land and buildings by public authorities (OJ 1997 C 209, p. 3), which inter alia provides that land and buildings are to be sold by public authorities following either a sufficiently well-publicized, open and unconditional bidding procedure or 'an independent evaluation … carried out by one or more independent asset valuers prior to the sale negotiations in order to establish the market value on the basis of generally accepted market indicators and valuation standards’.

In order to adapt the system of ownership over agricultural and forestry land of the new Länder to Germany’s legal system, Germany adopted the Indemnification and Compensation Act of 27 September 1994. That law included a programme for the acquisition of land, subsequently implemented by the Land Purchase Order, Art. 5(1) of which provided that:

‘The market value of agricultural land under Paragraph 3(7) … of the AusglLeistG shall be determined in accordance with the Land Valuation Order of 6 December 1988 … Where there are regional reference valuations of arable and pasture land, the market value shall be determined according to them. The regional reference valuations shall be published by the Federal Finance Minister in the Bundesanzeiger [Federal Gazette]. The potential purchaser or the Privatisation Authority may seek a determination of the market value which differs from those valuations by means of an expert report prepared by the competent regional valuation committee, established under Paragraph 192 of the Federal Law on Construction, where there is genuine evidence that the regional reference valuations are not a suitable basis for determining market value.’

Seydaland was a company operating in the agroindustrial sector. BVVG was a whollyowned subsidiary of the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (the federal body responsible for special tasked connected with German reunification), responsible for the privatisation of agricultural and forestry land.

By contract dated 18 December 2007, BVVG sold land for agricultural used to Seydaland. The total selling price was EUR 245 907.91, of which agricultural land accounted for EUR 210 810.18.

As it considered that the price it paid was excessive, Seydaland sought reimbursement of part of the selling price of the land, claiming that, calculated on the basis of the regional reference valuations, that selling price was only EUR 146 850.24. According to Seydaland, BVVG ought to have calculated the selling price of the land at issue on the basis of the regional reference valuations, or to have referred to the valuation committee pursuant to Paragraph 5(1) of the Land Purchase Order. Seydaland also claimed that, in any event, it was not permissible to determine that selling price on the basis of the prevailing market situation, as BVVG did.

Seydaland brought an action before the Landgericht Berlin seeking reimbursement. The Landgericht Berlin asked the Court of Justice whether Art. 87 EC must be interpreted as precluding national legislation laying down calculation methods for determining the value of agricultural and forestry land, being offered for sale by public authorities in the context of a privatisation programme, such as those laid down in the second and third sentences of Paragraph 5(1) of the Land Purchase Order.

The Court first of all reiterated that the notion of aid might include not only positive benefits such as subsidies, loans or direct investment in the capital of undertakings, but also interventions which, in various forms, mitigated the charges which were normally included in the budget of an undertaking and which therefore, without being subsidies in the strict sense of the word, were of the same character and had the same effect (see, inter alia, Case C‑156/98 Germany v Commission [2000] and Joined Cases C-341/06 P and C-342/06 P Chronopost and La Poste v UFEX and Others [2008]).

The Court furthermore reiterated that in relation to the sale by public authorities of land or buildings to an undertaking or to an individual involved in an economic activity, such as agriculture or forestry, such a sale might include elements of State aid, in particular where it was not made at market value, that was to say, where it was not sold at the price which a private investor, operating in normal competitive conditions, would have been able to fix (see, to that effect, Case C290/07 P Commission v Scott [2010] on which I wrote this post).

The Court held that where the national law established rules for calculating the market value of land for their sale by public authorities, the application of those rules must, in order to comply with Art. 87 EC, led in all cases to a price as close as possible to the market value. As that market value was theoretical, except in the case of sales accepting the highest bid, a margin for variation on the price obtained as compared with the theoretical price must be tolerated.

As regards the provision at issue in the present case, the Court held that in cases in which the method based on the regional reference valuations did not include a mechanism for updating those valuations which would allow the selling price of the land to reflect in so far possible, the market value of that land, especially when prices were rising sharply, that method was not suitable for reflecting the actual market prices in question.

The Court held that it was therefore for the referring court to examine whether Paragraph 5(1) of the Land Purchase Order could be interpreted in a manner consistent with Art. 87 EC, in particular, in the light of other provisions of national law which might be applicable. The Court added that even if the referring court were to find that Paragraph 5(1) of the Land Purchase Order was consistent with Art. 87 EC, it could not be ruled out that, in certain instances, the method laid down in that provision of national law might lead to a result far removed from market value.