Editor's note
Zlatka Koleva is a graduate from the Erasmus University Rotterdam and is currently an Intern at the ASSER International Sports Law Centre.

The decision on appeal in the case of O’Bannon v. NCAA seems, at first sight, to deliver answers right on time regarding the unpaid use of names, images and likenesses (NILs) of amateur college athletes, which has been an ongoing debate in the US after last year’s district court decision that amateur players in the college games deserve to receive compensation for their NILs.[1] The ongoing struggle for compensation in exchange for NILs used in TV broadcasts and video games in the US has reached a turning point and many have waited impatiently for the final say of the Court of Appeal for the 9^th circuit. The court’s ruling on appeal for the 9^th circuit, however, raises more legitimate concerns for amateur sports in general than it offers consolation to unprofessional college sportsmen. While the appellate court agreed with the district court that NCAA should provide scholarships amounting to the full cost of college attendance to student athletes, the former rejected deferred payment to students of up to 5,000 dollars for NILs rights. The conclusions reached in the case relate to the central antitrust concerns raised by NCAA, namely the preservation of consumer demand for amateur sports and how these interests can be best protected under antitrust law.

Facts and proceedings 

The case is brought before the district court by Ed O’Bannon, a former American basketball player at the University of California, Los Angeles (UCLA).[2] In 2008 he visited a friend’s house, where he saw his friend’s son playing a video game depicting him as a player in a college basketball competition.[3] The producer, Electronic Arts (EA), based video games on the concept of college football and men’s basketball.[4] O’Bannon saw an avatar with a striking resemblance of himself, playing for UCLA with his jersey number 31. He never consented to the use of his likenesses nor did he receive any financial remuneration for its usage.[5] For this reason, O’Bannon filed a lawsuit against the NCAA (National Collegiate Athletic Association) and the CLC (Collegiate Licensing Company) for using his NILs for commercial purposes.[6] The main argument supported by his legal counsel was that the NCAA restrictions on compensation for student athletes beyond university scholarships impose a limitation on trade under Section 1 of the Sherman Antitrust Act.[7] In June 2014 the claims based on antitrust law found a solid ground and the case was sent to the district court.[8] The court at first identified two markets where the NCAA rules can have a significant impact, namely the college education market and the group licensing market.[9] Afterwards, it applied the three-step Rule of Reason test in order to determine whether the NCAA restrictions on compensation for the usage of NILs violate antitrust laws.[10] After weighting the anticompetitive and procompetitive purposes of those rules, the court took the decisive third step in pursuit of less restrictive alternatives available to the NCAA in the attainment of its final goal – preserving the nature of amateur college games.[11] It ruled that there are two alternative routes, which preserve amateurism and, at the same time, protects the NILs rights of college athletes: stipends to the full cost of attendance or deferred payments as portions of the license agreements concluded between third party licensing companies and universities upon completion of their college education.[12] The NCAA objected to the district court’s decision on the ground that the court in the Board of Regents[13] declared the NCAA rules a matter of law and compensation norms, falling outside of the scope of a commercial activity, and therefore not covered by the Sherman Act. Finally, the association claimed that the plaintiffs failed to demonstrate injury as a result of the restrictions on compensation.[14] The Court of Appeal for the 9^th circuit ruled on the case as follows.

The judgment of the Court of Appeal for the 9^th circuit

Preliminary questions

The court started the legal discussion by answering to some preliminary legal questions before ruling on the substance. It rejected the notion that Board of Regents automatically renders the NCAA’s rules valid as a matter of law.[15] In fact, “a restraint that serves a procompetitive purpose can still be invalid under the Rule of Reason”.[16] Thus, procompetitive rules are not necessarily deemed lawful.[17] Moreover, rules designed to promote competitiveness “surely affect commerce” and, therefore, fall under the scope of the Sherman Act, according to the reasoning of the Court of Appeal in the 9^th circuit.[18] Finally, the court disagreed with NCAA in finding that the plaintiffs have no standing for failing to demonstrate the injury inflicted by the compensation rules.[19] On the contrary, the plaintiffs have shown willingness and readiness by video game producers to pay for their NILs rights have they possessed these rights, which means that the requirement of antitrust injury in this case is satisfied.[20]

Rule of Reason test

Judge Bybee then continued with the application of the Rule of Reason as assessed in relation to the restrictive measures towards compensation of student athletes.

1. Anticompetitive effect

The court concluded that the NCAA’s rules have an anticompetitive effect on the college education market and invalidated the association’s arguments.[21] It further examined whether the rules produce a procompetitive effect on the market and concluded that the district court has indeed undermined the importance the NCAA pays with regard to the preservation of amateurism in college competitions.[22]

2. Procompetitive purposes

Henceforth, the court outlined two procompetitive purposes of the NCAA’s restrictions: integrating academia with athletics and fostering the popularity of NCAA by promoting amateurism.[23] Nonetheless, it was highlighted that not every restrictive rule preserves the nature and distinctive character of college amateur sports.[24] For this reason, it should be examined whether there are any substantially less restrictive measures available to attain the goals intended by NCAA.[25]

3. Substantially less restrictive alternatives

The appellate court concurred with the district court on the first alternative, namely the grants-in-aid up to the full cost of attendance. The court for the 9^th circuit stated that “the district court did not clearly err in its judgment”[26] and “indicated that raising the grant-in-aid cap to the cost of attendance would have virtually no impact on amateurism”.[27] In fact, “there is no evidence that this cap will significantly increase costs”,[28] since NCAA already granted permission to schools to fund athletes to the full cost of attendance.[29] Nevertheless, the court rejected cash compensation beyond college scholarships to athletes on the ground that if amateur sportsmen receive a payment, they lose their amateur status.[30] The central question which needs closer attention is whether payments to amateur athletes promote amateurism more than the lack of any such remuneration.[31] The court, thus, contended that the comparison between smaller and larger sums and their respective impact on the market is irrelevant, since this is not a point of discussion in this analysis: it would not crystalize whether “paying students small sums is virtually as effective in promoting amateurism as not paying them”.[32] It further rejected the analogy with professional baseball and the Olympic Games, when in 1970s there was a strong opposition against the raising salaries of baseball players and the Olympic Committee permitted the participation of professional athletes in the Games.[33] The court, however, did not agree with this line of reasoning, since the Olympics have not been so impacted by the introduction of professionalism as college sports would be.[34] Finally, the imposition of a 5000-dollar yearly ceiling of deferred payments to college athletes lacks solid argumentation.[35] Neal Pilson, a former sports consultant at CBS and an expert witness for the NCAA, did not opine on how cash compensation relates to the promotion of amateurism and his ‘offhand comment’ does not grant sufficient support for such a revolutionary turnover in the NCAA’s practice.[36] Consequently, the deferred payment alternative failed the Rule of Reason test and was, thus, rejected.[37]

On these grounds, the court concluded that a stipend beyond sports scholarships up to the full amount of college attendance is a substantially less restrictive measure, which withstands the Rule of Reason test, while the cash compensation argument failed the assessment. 

Commentary

This judgment demonstrates a remarkable, yet confusing line of reasoning followed by the appellate court. On the one hand, albeit already affirmed by the NCAA itself, the decision confirms the right of schools to provide compensation up to the full amount of attendance to college athletes. On the other hand, however, the court could have outlined more clearly the instances in which an athlete can qualify for such full compensation and those cases in which student athletes risk violating their legal status of amateurs. A clear example of the court’s reluctance to give more specific guidelines with regard to this subject matter is the rejection of the argument raised by the district court in relation to the compensation received by college tennis players. Although they still qualify as amateurs, tennis competitors earn arguably around 10,000 dollars yearly in prize money.[38] The court conveniently circumvented this argument without stating opposing views or contesting the afore-mentioned statement. It directed its full attention on how the substantially less restrictive measures can contribute to the promotion of amateur college sports instead. In fine, there are two legal points that need further examination. Firstly, amateurism is a relevant concept as long as it relates to consumer demand in antitrust claims.[39] The question at step 3 should, thus, be reformulated to whether less restrictive alternatives are virtually effective in preserving consumer interest in college sports as those prohibiting extra compensation to amateur athletes.[40] In this respect, popular demand by consumers should be the decisive factor in antitrust cases within the sports sector. Secondly, what should also be taken into more careful consideration is that the court on appeal has skipped an essential step in the Rule of Reason analysis and, thus, arguably misapplied the concept.[41] Upon identification of less limiting measures for the attainment of the main goal, one has to balance the harm those alternatives might produce against the benefits there might be if such measures were not implemented. This final stage is necessary as to provide an objective cost-benefit analysis of a legal rule, which in turn determines whether it withstands the reasonableness test. Had the court applied the Rule of Reason in such a manner, the outcome of the case would have potentially differed significantly; the court would have weighted the cost of paying cash compensation to student athletes for their NILs rights against the lack of such additional educationally unrelated payment in the attainment of the NCAA’s final aim, namely preserving amateurism in college sports. [42]  Rather, as Chief Judge Thomas stated in his opinion, it is important to underline that, in the light of US antitrust rules, it is the preservation of popular demand for college sports which should be the key factor in the legal analysis of competition issues in such a scenario.[43]

At the end of the day, the NCAA’s dilemma is solved by the appellate court by exempting the association from further financial obligations towards college athletes. Both parties have 90 days after the release of the court’s decision to “weigh their options” for appeal before the Supreme Court.[44]

[1] Edward O'Bannon, Jr. v. National Collegiate Athletic Association (the NCAA) and Electronic Arts, Inc and Collegiate Licensing Company (CLC) 14-16601 (2015) [hereinafter referred to as ‘O’Bannon v NCAA (2015)’]; O’Bannon v. NCAA 7 F. Supp. 3d 955 (N.D. Cal. 2014) [hereinafter referred to as ‘O’Bannon v. NCAA (2014)’].

[2] Ibid, p 12.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Section 1 of Sherman Antitrust Act of 1890 15 U.S.C. states that ‘every contract, combination… in restraint of trade or commerce’ should be prohibited.

[8] O’Bannon v NCAA (2015) (n 1), p 14.

[9] O’Bannon v. NCAA (2014) (n 1), paras 956-968.

[10] Ibid., paras 984-1009.

[11] Ibid., paras 1005-1006.

[12] Ibid.

[13] NCAA v. Board of Regents of the University of Oklohoma 468 US 85 (1984).

[14] O’ Bannon v. NCAA (2015) (n 1), p 25.

[15] Ibid., p 26.

[16] Ibid., p 31.

[17] Ibid., p 32.

[18] Ibid., p 36: “We simply cannot understand this logic. Rules that are “anti-commercial and designed to promote and ensure competitiveness” […] surely affect commerce just as much as rules promoting commercialism.”

[19] Ibid., pp 37-43.

[20] Ibid., p 43.

[21] Ibid., pp 47-48.

[22] Ibid., pp 48-52.

[23] Ibid., p 51.

[24] Ibid., p 52.

[25] Ibid.

[26] Ibid., pp 54.

[27] Ibid.

[28] Ibid., p 56.

[29] Ibid.

[30] Ibid., p 57: “But in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs”.

[31] Ibid., p 56: “The question is whether the alternative of allowing students to be paid NIL compensation unrelated to their education expenses, is “virtually as effective” in preserving amateurism as not allowing compensation.”

[32] Ibid., pp 58-59.

[33] Ibid., p 59.

[34] Ibid.

[35] Ibid., p 60.

[36] Ibid: “But even taking Pilson’s comments at face value, as the dissent urges, his testimony cannot support the finding that paying student-athletes small sums will be virtually as effective in preserving amateurism as not paying them.”

[37] Ibid., p 63 : “The Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.”

[38] O’Bannon v. NCAA (2014) (n 1), para 1000.

[39] Chief Judge Thomas, concurring in part and dissenting in part, p 68.

[40] Ibid.

[41] Carrier M (2015) How Not to Apply the Rule of Reason: The O’Bannon Case. Rutgers University School of Law – Camden. http://ssrn.com/abstract=2672256. Accessed 20 October 2015.

[42] O’ Bannon v. NCAA (2015) (n 1), p 59: “The district court adverted to testimony from a sports management expert, Daniel Rascher, who explained that although opinion surveys had shown the public was opposed to rising baseball salaries during the 1970s, and to the decision of the International Olympic Committee to allow professional athletes to compete in the Olympics, the public had continued to watch baseball and the Olympics at the same rate after those changes”.

[43] Supra n 39, Chief Judge Thomas: “Rather, we must determine whether allowing student-athletes to be compensated for their NILs is ‘virtually as effective’ in preserving popular demand for college sports as not allowing compensation”.

[44] Tracy M and Strauss B, Court Strikes Down Payments to College Athletes (The New York Times.com, 30 September 2015). http://www.nytimes.com/2015/10/01/sports/obannon-ncaa-case-court-of-appeals-ruling.html?_r=0. Accessed 2 October 2015.

The European Commission’s decisions of 4 July 2016 to order the recovery of the State aid granted to seven Spanish professional football clubs[1] were in a previous blog called historic. It was the first time that professional football clubs have been ordered to repay aid received from (local) public authorities. Less attention has been given to five other decisions also made public that day, which cleared support measures for five football clubs in the Netherlands. The clubs in question were PSV Eindhoven, MVV Maastricht, NEC Nijmegen, FC Den Bosch and Willem II.

Given the inherent political sensitivity of State aid recovery decisions, it is logical that the “Spanish decisions” were covered more widely than the “Dutch decisions”. Furthermore, clubs like Real Madrid and FC Barcelona automatically get more media attention than FC Den Bosch or Willem II. Yet, even though the “Dutch decisions” are of a lower profile, from an EU State aid law perspective, they are not necessarily less interesting.

A few days before entering the quiet month of August, the Commission published the non-confidential versions of its decisions concerning PSV Eindhoven, Willem II and MVV Maastricht (hereinafter: “MVV”). The swiftness of these publications is somewhat surprising, since it often takes at least three months to solve all the confidentiality issues. Nonetheless, nobody will complain (especially not me) about this opportunity to analyze in depth these new decisions.

In the case of PSV, the Dutch State argued successfully that the measure implemented by the city of Eindhoven was in line with the so-called ‘Market Economy Investor Principle’ (MEIP), thereby not constituting a selective advantage to PSV. In other words, the measure did not fulfill the criteria of Article 107(1) TFEU and was not considered State aid. The aid measures granted by the cities of Tilburg and Maastricht to Willem II and MVV respectively were considered compatible State aid under Article 107(3)c) TFEU. Interestingly enough, in the Willem II and MVV cases, the Dutch authorities also argued that the respective measures did not confer any selective advantage to the clubs, but they failed to convince the Commission.

A comparison between the PSV decision on the one hand, and the other “Dutch” decisions on the other, taking into account the definition and operation of the MEIP in the (professional) football sector, will be left for a future blog. This two-part blog, instead, will focus on the compatibility assessment under Article 107(3)(c) done by the Commission in the Willem II and MVV cases and explain why it considered the State aid measure justified.

Part one will serve as an introduction on the two cases. It will provide background information on the compatibility assessment. In part two, the compatibility assessment conducted by the Commission in the two decisions will be analyzed. As will be argued, the conditions set out by the Commission can serve as a blueprint for all public authorities within the EU willing to grant State aid to football clubs in financial difficulties.  

Background

Willem II

In 2004, the municipality of Tilburg and football club Willem II concluded a contract, by which Tilburg became the owner of Willem II’s stadium and the club obtained a lease for the use of the stadium.[2] The annual rent of the stadium was established at €1 million, based on a depreciation period of 30 years, investment costs and an interest rate of 5.5%.[3]

In May 2010, Willem II found itself on the verge of bankruptcy. The municipality was quick to realize the potential negative effects a bankruptcy could have for Tilburg. These negative effects consisted of (1) the loss of rental income; (2) the absence of a tenant for the stadium; (3) the absence of professional football in Tilburg; and (4) the necessity to demolish the stadium and all the costs it would entail.[4] As a result, on 31 May 2010 the municipality decided to lower the rent to €905,000 per year and to decrease the variable costs. Both measures were taken with retroactive effect till 1 July 2004, which resulted in Willem II receiving a total of €2.4 million from the municipality.[5]

Tilburg’s rescue operation of Willem II was never notified to the Commission.[6] Instead, a citizen informed DG Competition shortly after the measure was implemented by means of a letter. This prompted the Commission to send a request for information to the Netherlands on 14 March 2011.[7]

In response to the Commission, the Dutch authorities argued that the new rent agreement was in conformity with the current municipal calculation methods and that the basic principles of the 2004 agreement were still respected. Moreover, the costs Tilburg would suffer for letting Willem II go bankrupt would be higher than the rescue costs. Consequently, the municipality believed it acted in accordance with the so-called ‘Market Economy Investor Principle’ (MEIP).[8] Moreover, the municipality imposed a restructuring plan that aimed at restoring the club’s long-term viability. The conditions of this plan included finding a way to clean up its balance sheet and the need to respect the national football association's norms for salaries of players.[9]

In its decision to open a formal investigation, the Commission counter argued that the depreciation of the stadium’s rent was already adjusted in 2007, and would not justify the retroactive application until 2004. Additionally, the lowering of the variable costs with retro-active effects ended up to be lower than the actual maintenance costs for that period, and should therefore be considered as State aid in accordance with Article 107(1) TFEU.[10] Finally, at the time the Commission launched the formal investigation, it nourished doubts whether the aid measure could be considered compatible with the internal market pursuant Article 107(3)(c). Having received no notification of the rescue measure, the Commission was unable to carry out a proper compatibility assessment. 

MVV

In 2010, football club MVV was facing severe financial difficulties: its total debt amounted to €6.5 million, including €1.7 million to the municipality of Maastricht. As a means of aiding its local football club, the municipality decided to waive its claim of €1.7 million and bought the stadium for €1.85 million.[11] The municipality held that the purchase was done in accordance with the MEIP and that the stadium would be used for multifunctional purposes. The parties agreed that MVV would use the €1.85 million to finance preferential claims, such as taxes and pensions.[12] 

The Commission opened a formal investigation procedure, because it was unable to conclude on the basis of the available information (the rescue measures were not notified[13]) that the behaviour of the municipality had been that of the typical creditor in a market economy.[14] Firstly, it doubted whether a total remission of the claim (€1.7 million) was entirely necessary, since other creditors transformed their claim into a claim on future income from transfer payments or “only” waived 50% of their claim. Secondly, according to the Commission, the purchase price of the stadium was estimated on the basis of replacement value rather than the real market value. It further raised doubts as to whether the municipality acted in accordance with the MEIP since investing in a football stadium depending on one captive user entails a very high risk, even when claiming that you want to make it multifunctional.[15] Similar to the Willem II case, no compatibility assessment of the aid measure in favour of MVV was carried out, because the measure was not notified.[16] 

The rules on compatibility

Pursuant to Article 107(3)(c) TFEU, aid to facilitate the development of certain economic activities, where such aid does not adversely affect trading conditions to an extent contrary to the common interest, may be considered compatible with the internal market. Only the Commission has the competence (subject to control by the EU Courts) to determine whether or not certain aid merits derogation from the general prohibition of Article 107(1).[17] However, it is settled case law that it is up to the Member State to invoke possible grounds of compatibility and to demonstrate that the conditions for such compatibility are met.[18] Due to its own wide discretion to assess the compatibility, the Commission has developed its own methodologies and approaches over the years, found in the decisional practice, policy documents[19] and sector specific guidelines.[20] 

The Rescue and Restructuring Guidelines

The Community Guidelines of 1 October 2004 on State aid for rescue and restructuring firms in difficulty (hereinafter: “Rescue and Restructuring Guidelines”) primarily serve as a tool for the Commission to assess similar cases in a similar way.[21] The criteria and conditions laid down in the Guidelines are mostly based on the Commission’s own experience in dealing with cases involving State aid in favour of firms in difficulty and case law by the Court of Justice of the EU. Due to the continuous developments in the area of EU State aid law, the Guidelines are regularly updated.[22] In the Guidelines, the Commission sets out the conditions under which State aid for rescuing and restructuring undertakings in difficulty may be considered compatible with the internal market. These conditions include the notification obligation for the Member State,[23] as well as demonstrating that the firm qualifies as ‘a firm in difficulty’. As is stipulated in point 11 of the Guidelines, a firm is considered to be in difficulties where the usual signs of a firm being in difficulty are present, such as increasing losses, diminishing turnover and mounting debt.

In order to rescue a firm from bankruptcy, the Member State has to show that it limits the amount of aid provided to that which is strictly necessary to keep the firm in business.[24] Section 3.2 of the Guidelines requires that the grant of the aid must be conditional on the implementation of a restructuring plan that restores the long term viability of the firm.[25] The restructuring plan needs to be approved by the Member State concerned and communicated to the Commission.[26]

The Member States granting the restructuring aid will have to limit the amount and intensity of the aid to the strict minimum of the restructuring costs necessary to enable restructuring to be undertaken in the light of the existing financial resources of the firm. This also means that the beneficiaries are expected to make a significant contribution to the restructuring plan from their own resources.[27] The Commission will normally consider the following contributions to the restructuring to be appropriate: at least 25 % in the case of small enterprises, at least 40 % for medium-sized enterprises and at least 50 % for large firms.[28]

The Guidelines also stipulate that, in case the firm in difficulty is considered a medium-sized enterprise or larger[29], compensatory measures must be taken by the Member State that grants the rescue and/or restructuring aid in order to ensure that the adverse effects on trading conditions are minimized as much as possible, so that the positive effects pursued outweigh the adverse ones.[30] These last two conditions (i.e. limiting the aid to what is strictly necessary and introducing compensatory measures) have the aim of ensuring that the State aid measure is proportionate to the objective tackled, namely rescuing and/or restructuring a firm in difficulty.

Last but not least, the so-called ‘one time, last time’ principle has to be applied. According to this principle, rescue aid should only be granted once.[31] 

In the coming days, the key part of the Commission’s decisions, the compatibility assessment, will be discussed in part two of this blog.

[1] Real Madrid (twice), FC Barcelona, Valencia CF, Athletic Bilbao, Atlético Osasuna, Elche and Hércules.

[2] Commission Decision on State Aid SA.40168 of 4 July 2016 implemented by the Netherlands in favour of the professional football club Willem II in Tilburg, para. 10.

[3] Commission Decision SA.33584 of 6 March 2013 – The Netherlands Alleged municipal aid to the Professional Dutch football clubs Vitesse, NEC, Willem II, MVV, PSV and FC Den Bosch in 2008-2011, para. 29.

[4] Ibid, para. 30.

[5] Ibid.

[6] Ibid, para. 67.

[7] Ibid, paras. 3-4. To find out how a citizen’s letter can instigate a preliminary State aid investigation, see Ben Van Rompuy and Oskar van Maren, “EU Control of State Aid to Professional Sport: Why Now?” In: “The Legacy of Bosman. Revisiting the relationship between EU law and sport”, T.M.C. Asser Press, 2016.

[8] The essence of this principle is that when a public authority invests in an enterprise on terms and in conditions that would be acceptable to a private investor operating under normal market economy conditions, the investment is not State aid.

[9] SA.40168, para. 12.

[10] SA.33584, paras. 29-31 and 51-53.

[11] Ibid, para. 32.

[12] Ibid, para. 57.

[13] Ibid, para. 67.

[14] Commission Decision on State Aid SA.41612 of 4 July 2016 implemented by the Netherlands in favour of the professional football club MVV in Maastricht, para. 12.

[15] SA.33584, paras. 54-57.

[16] SA.41612, para. 11.

[17] According to settled case law, national courts do not have the power to declare a State aid measure compatible with the internal market. See e.g. C-354/90, Fédération Nationale du Commerce Extérieur des Produits Alimentaires and Syndicat National des Négociants et Transformateurs de Saumon v French Republic, ECLI:EU:C:1991:440, para. 14.

[18] SA.41612, para. 42; see also Case C-364/90, Italy v Commission, ECLI:EU:C:1993:157, point 20.

[19] See for example Communication from the Commission COM(2012) of 8 May 2012 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU State Aid Modernisation (SAM), para. 12.

[20] See for example the Communication from the Commission OJ C25/01 of 26 January 2013 on the EU Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks, paras. 32-34.

[21] In July 2014, the Commission published new Guidelines on State aid for rescuing and restructuring undertakings in difficulty, but they are not applicable to aid granted in 2010.

[22] The Rescue and Restructuring Guidelines published in 2014 are the fourth of its sort after earlier versions published in 1994, 1999 and 2004.

[23] Communication from the Commission of 1 October 2004 (2004/C 244/02) Community Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, point 25(c).

[24] Ibid, point 25(d).

[25] Ibid, poins 34-37.

[26] Ibid, point 59. In this regard, it should be noted that the Commission does not need to endorse the restructuring plan.

[27] By “own resources” the Commission also understands funding from external financiers at market conditions.

[28] Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, points 43-44.

[29] The Commission’s definition of Small and Medium-Sized enterprises (SMEs), as stipulated in the Annex of the Commission Recommendation concerning the definition of micro, small and medium-sized enterprises, is also used in the Rescue and Restructuring Guidelines. Pursuant to Article 2 of the SME Recommendation, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed €10 million, whereas a medium-seized enterprise is defined as an enterprise which employs fewer than 250 persons and which has an annual turnover not exceeding €50 million, and/or an annual balance sheet total not exceeding €43 million.

[30] Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, point 38.

[31] Ibid, point 25(e) and section 3.3. In practice, this actually means that rescue or restructuring aid can only be granted once every 10 years.