Court backs European Commission; dismisses OPAP state aid case

The General Court of the European Union has ruled that Greece’s decision to award gambling monopoly OPAP with the exclusive right to operate 35,000 video lottery terminals (VLTs) and thirteen games of chance did not constitute state aid, backing an earlier decision by the European Commission.

The case relates to the notification by the Greek government to the Commission in 2011 over two measures in favour of OPAP – an exclusive €560m licence to operate 35,000 VLTs for a period of ten years and a ten-year extension (from 2020 to 2030) to the exclusive rights to operate thirteen games of chance, pursuant to an addendum to an agreement concluded in 2000.

In April 2012, several casino operators (including Club Hotel Loutraki) in Greece filed a complaint with the Commission on the grounds that the VLT agreement entailed the grant to OPAP of state aid incompatible with the internal market.

They claimed that the Greek government would have been able to receive an amount higher than the €560m it received from OPAP, if it had granted more than one licence to operate the VLTs and organised a public international call for tenders for their allocation.

In its ruling in October 2012, the Commission held that there was no advantage as the government had left OPAP with only the minimum return necessary for an average company to cover its operational and capital costs.

To arrive at that conclusion, the Commission determined the net present value of both the VLT agreement and the extension for the rights to 13 games of chance, and then compared that value with the consideration paid by OPAP.

In its decision, the Commission evaluated both agreements separately and also conducted a joint assessment, since they had been notified jointly by Greek authorities and concerned the granting of exclusive rights to the same company at the same time for very comparable activities, and taking account of the announced privatisation of OPAP in the short-term.

In order to assess compliance of the VLT agreement with competition law, the Commission relied on a study provided by Greek authorities, which was based on sales projections by an independent company specialising in the gambling sector. The Commission found that OPAP had overpaid for the addendum, with the operator paying a lump sum of €375m and a levy of 5 per cent of the gross gaming revenue generated.

The Commission took the view that OPAP would pay the government an amount higher than the joint value of the exclusive rights granted by the VLT agreement and by the addendum, concluding that the agreements did not confer an advantage on OPAP.

The Greek casino operators brought an action before the General Court of the EU in January 2013 against the Commission’s decision.

They claimed that the Commission misused its power by failing to initiate the formal investigation procedure, and that it failed to fulfil its obligation to state reasons and infringed the right to good administration. The casinos also claimed that the Commission infringed the right to effective judicial protection and, that it did not correctly assess the question of the existence of an advantage for OPAP.

In a decision Thursday, the court recalled that the Commission has the power to adopt, following the preliminary investigation stage, a decision by which it finds that there is no state aid but takes note of the commitments of the Member State.

“It may also engage in dialogue with the state and align its position with the results achieved without that alignment establishing the existence of serious difficulties,” said Judges Wiszniewska-Białecka and Ulloa Rubio in the ruling. “The court finds that, in its assessment of the notified measures, the Commission did not face serious difficulties and was not therefore required to initiate the formal investigation procedure.”

The court concluded that the omission of economic data in the non-confidential version of the contested decision did not prevent the casino operators from understanding the reasoning followed by the Commission, nor from challenging the decision in court, or preventing the Court from exercising its judicial review in the present action.

“The applicants’ rights to effective judicial protection and the Commission’s obligation to state reasons have therefore been respected,” said the court.

Finally, the court considered that the casino operators had not demonstrated that the Commission committed an error of law by jointly assessing the VLT agreement and the addendum, those two agreements having been concluded at the same time with OPAP in view of its privatisation.

As a result, the court dismissed the action in its entirety and confirms the Commission’s previous decision. The casino operators - Club Hotel Loutraki AE, Vivere Entertainment AE, Theros International Gaming, Inc., Elliniko Casino Kerkyras, Casino Rodos, Porto Carras AE and Kazino Aigaiou AE - must bear their own costs and pay those incurred by the Commission and OPAP.