District Court of Overijssel: JCDecaux not favoured by a concession for outdoor advertising

Zwolle JCDecaux

In a final judgement dated 5 February 2020 (Dutch only), the District Court of Overijssel (Court) ruled that JCDecaux did not receive any unlawful State aid in connection with an outdoor advertising concession granted by the municipality of Zwolle (Municipality). The fee paid by JCDecaux for this concession was considered to be in line with market conditions.

The case

Wall Nederland B.V. (Wall) entered into an agreement with the Municipality in 2003 on the basis of which Wall was granted the right to exploit outdoor advertising objects within the Municipality for a period of 20 years. In 2007, JCDecaux acquired all the shares in Wall. As a result, JCDecaux became a contracting party to the 2003 concession. This concession was amended in 2009, in the sense that JCDecaux would install a public toilet, 12 (additional) city information points and an water pillar free of charge.

After learning from an external consultant that the annual fee payable by JCDecaux was probably too low, the Municipality had an investigation carried out. After an expert confirmed the opinion of the consultant, the Municipality claimed that JCDecaux had received and was still receiving unlawful State aid. JCDecaux contested this. Therefore the Municipality brought the matter before the Court and demanded a subsequent payment for the past and an increase in the fee for the future.

In two interlocutory judgements, the Court found “for argument sake” that JCDecaux had received unlawful State aid. In order to establish whether JCDecaux had actually benefited from the agreements, the Court appointed an expert.

Expert report


The expert took the view that the agreement concluded in 2003 could not be dissociated from the agreements that Wall had concluded with the municipality in 1990, which were still in force at the time. Since the latter agreements had to be regarded as a given fact, the expert reformulated the Court’s question. He examined whether the 2003 agreement granted “an additional advantage (a ‘delta’) to the undertaking concerned which could not be regarded as being in line with market conditions”. A similar approach was applied to the 2009 addendum.

2003 agreement

In order to establish whether JCDecaux did indeed receive an additional advantage, the expert first calculated the internal rate of return (IRR) that Wall could expect in 2003 under the 2003 agreement. The expert then set this against (i) Wall’s weighted average cost of capital (WACC) in 2003 and (ii) the benchmark of the expected return on comparable contracts concluded by Wall and JCDecaux with municipalities between 2000 and 2012.

On the basis of this comparison, the expert concluded that there was no reason to suspect that the 2003 agreement provided Wall with a ‘particularly high rate of return‘.

Addendum of 2009

With regard to the 2009 addendum, the expert made a similar comparison.

On the basis of the benchmark in particular, the expert concluded that the return which JCDecaux was entitled to expect by the 2009 addendum ‘apparently constituted a regular (‘normal’) market return for‘ JCDecaux.

Judgement of the Court

The Court adopted the expert’s findings. On this basis, the Court concluded that the 2003 agreement and the 2009 addendum did not constitute unlawful state aid. Consequently, the claims of the Municipality were dismissed.


Assessment method

The method used by the expert to determine the market conformity of the fee to be paid by Wall and JCDecaux, respectively, is used more frequently in State aid cases. In the Communication on the concept of State aid, the European Commission (Commission) refers to the calculation of the rate on return (IRR) as a “widely accepted standard methodology to determine the market conformity”. In the Commission’s view, it is an appropriate method for example, in cases were “an investor seeks to generate a profit by investing in undertakings” (marginal 102-103). In this context, the expert referred to a Commission decision of 1 October 2014 (Brussels South Charleroi Airport). The Commission did indeed apply the IRR method in that particular case, in order to establish the profitability for the grantor of the concession (marginal 419). However, the expert used this method to assess the concessionaire’s profitability.

The Court had asked the expert to examine whether the fee to be paid by Wall and JCDecaux respectively was in line with market conditions. In such a situation, in the Commission’s view, “it is normally appropriate to consider measures of central tendency, such as the average or the median of the set of comparable transactions”. In addition, the Commission considers that “the presence of complementary valuation methodologies corroborating each other’s findings will be considered a positive indication when assessing whether a transaction is in line with market conditions” (marginal 104 to 105). In view of this, would it not have been logical for the expert also to include in his assessment the fees paid by competitors of Wall and JCDecaux for comparable concessions? From this point of view, it is striking that the expert only took Wall’s and JCDecaux’s financial positions into consideration.


The Municipality can still appeal to the Court of Appeal of Arnhem / Leeuwarden. The question is whether that is wise. The correctness of a number of the rulings of the Court in the interlocutory judgements can be doubted.

In the first place, the limitation period. In the Arriva Italia judgement, the Court of Justice ruled that State aid is granted “from the moment when the right to receive support, provided through State resources, is conferred on the beneficiary under the applicable national legislation”. The actual transfer of the resources in question is therefore not decisive (recital 36). It then follows from the Eesti Pagar judgement that the limitation period must be determined in accordance with national law, unless the aid was co-financed by a European structural fund (recital 116). In view of this, it cannot be ruled out that the Municipality’s claims are in any event time-barred.

Secondly, in the event that Wall was favoured by the 2003 agreement, it may be relevant whether JCDecaux paid a market price for the shares in this undertaking. If so, the advantage may have been retained by the former owners of Wall. See in this context the blog: State aid and outdoor advertising: the Zwolle vs JCDecaux case.

And finally, the possible violation of the notification obligation. The Municipality argued that it had granted unlawful state aid to Wall and JCDecaux respectively. In so doing, the Municipality implies that it infringed the standstill obligation laid down in Article 108(3) TFEU. This (implied) infringement may entail that the Municipality should first have notified the 2003 agreement and the 2009 addendum to the Commission before initiating legal proceedings against JCDecaux.

* The picture below the title is part of the photo ‘‘Sassenpoort Zwolle” by FaceMePLS, Attribution 2.0 Generic (CC BY 2.0). The city map is added by me.

door | 21 april 2020 | Staatssteun

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