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State aid elements in sales of land and buildings by public authorities

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State aid elements in sales of land and buildings by public authorities

This European Commission communication provides guidance concerning sales of land and buildings by public authorities in compliance with EU competition rules.

ACT

Commission Communication on state aid elements in sales of land and buildings by public authorities (Official Journal C 209 of 10.07.1997, p. 3-5).

SUMMARY

Background

In line with the approach taken in most EU countries, where provision is made for rules ensuring that public property is, in principle, not sold below its value, the Commission has taken the initiative of providing EU countries with some guidance:

  • describing a procedure for handling sales of land and buildings in a way that automatically precludes the existence of state aid;
  • specifying clearly the cases of sales of land and buildings that should be notified to the Commission so as to enable it to assess whether or not a given transaction contains aid;
  • enabling the Commission to deal expeditiously with any complaints or submissions from third parties.

This guidance concerns only sales of publicly owned land and buildings. It does not concern the acquisition or the letting or leasing by public authorities of land and buildings.

Scope

The communication relates to any sale of land and buildings by public authorities.

Sale through an unconditional bidding procedure

As part of an open and unconditional bidding procedure, a sale of land and buildings must be sufficiently well publicised so that the selling price is determined by the market value. An offer is sufficiently well publicised when it is repeatedly advertised over a reasonably long period (two months or more) in the national or international press and when the intended sale of land and buildings may attract investors operating on a Europe-wide or international scale.

An offer is unconditional when the buyer of the land and buildings can decide how to use them.

If the unconditionality and sufficient publicity criteria are met, the sale does not involve any element of state aid. If, however, the sale is made without an unconditional bidding procedure being held, an asset valuer must be appointed to establish the selling price.

Sale without an unconditional bidding procedure

In such cases an evaluation should be carried out by one or more independent asset valuers on the basis of generally accepted market indicators and valuation standards. The market price thus established is the minimum purchase price that can be agreed without granting state aid. The asset valuer must be a person of good repute and must be independent.

If it is clear that the value set by the valuer cannot be obtained, a divergence of up to 5% from that value can be deemed to be in line with market conditions. If the land and buildings cannot be sold even at this juncture, a new valuation must be carried out.

Notification procedure and complaints

Without prejudice to the de minimis rule, EU countries must notify the Commission of

  • any sale that was not concluded on the basis of an open and unconditional bidding procedure, accepting the best or only bid; and
  • any sale that was, in the absence of such procedure, conducted at less than market value as established by independent valuers.

A third party may contact the Commission if it suspects that an agreement for the sale of land and buildings by public authorities comprises a state aid element.

22.01.2015

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