On 2 March 2012, the General Court ("GC") has partly upheld ING's appeal against a Commission decision of 2009 regarding various forms of aid granted by the Dutch State to the banking group ING in the context of the latter's restructuring plan during the financial crisis.
The ING group had benefited from three state aid measures implemented by the Dutch government during the financial crisis in 2008: (i) a capital injection of € 10 billion via hybrid securities without voting rights or dividend entitlement to which the Dutch State fully subscribed; (ii) an exchange of cash flows applied to impaired assets; and (iii) a number of public guarantees given on ING medium-term liabilities. In return for these support measures, ING submitted a restructuring plan providing for the separation of its insurance and investment activities, as well as the sale of its online banking activity in the US.
The terms on which the securities could be repurchased by ING were, however, amended a year later to the extent that the redemption premium was lowered. Such amendment was negotiated by the Dutch State to bring the conditions of the repayment plan into line with those imposed on two other Dutch banks.
In a decision dated 18 November 2009, the European Commission considered the three aid measures compatible with the common market, subject to a number of commitments, including a reduction of 45% in ING's balance sheet and a price leadership ban. In its assessment of the aid received, the Commission held in particular that ING received additional aid in the amount of approximately € 2 billion following the amendment to the repayment terms for the capital injection. The decision noted that the lowered redemption premium in the amended repayment terms amounted to an additional advantage to ING.
The Dutch State and ING contested the Commission's qualification of the modification of the capital injection repayment terms as additional aid before the GC. According to the GC, the Commission could not limit itself to finding that the amendment to the capital injection repayment terms amounted to state aid for the sole reason that it resulted in a loss of resources for the Dutch State. The GC held the Commission liable for not having established that the amendment to the repayment terms for a capital injection conferred an advantage on ING which a private investor in the same situation would not have granted. The market economy investor principle test required the Commission indeed to examine whether a private investor in the same situation would reasonably not have agreed to such a change of conditions, taking account of the financial climate at the time of the initial repayment terms and during the period of the amended terms.
The GC engaged itself in an economic analysis of the facts, concluding that the Commission had erred in finding that ING had received additional aid during the financial crisis by up to € 2 billion. For this reason, the GC annulled the Commission decision in so far as the amendment to the repayment terms for the capital injection constitutes additional aid. Accordingly, given the incorrect assessment of the aid, the GC also annulled the annex to the Commission decision containing a number of commitments imposed on ING by the Commission.
This first judgment in relation to a banking state aid decision taken by the Commission during the financial crisis clearly shows the GC's ongoing critical scrutiny of the Commission's analysis, which must be well substantiated taking into consideration the appropriate standards, despite particular economic circumstances requiring swift decisions.
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