Nike’s attempt to block EU investigation into illegal state aid dismissed

Today (14 July) the EU’s General Court dismissed an action brought against the Commission’s decision to initiate the formal investigation into Dutch tax rulings that may constitute illegal state aid, writes Catherine Feore. 

The EU’s investigation concerns tax rulings issued by the Netherlands tax administration to Nike European Operations Netherlands (‘Nike’) in 2006, 2010 and 2015, and to Converse Netherlands (‘Converse’) in 2010 and 2015.

Nike and Converse are subsidiaries of a Dutch holding company, owned by Nike Inc. The tax rulings concerned royalties which did not correspond to the amount that would have been negotiated under market conditions for a comparable transaction between independent companies. Companies are expected to apply an ‘arms length principle’ as if they are not part of the same group. 

According to the Court, the contested decision contains a clear and unequivocal statement of reasons by the Commission that cannot be described as ‘incomplete’.

Nike argued that the Commission’s actions were prompted by the publication of an investigation by an international consortium of journalists in November 2017 and the ensuing political pressure that the Commission sent several further requests for information. They claimed that this “targeting” was unfair as they claim that the Netherlands issued 98 tax rulings similar to those of Nike.

The Court replied that the aim of initiating the formal investigation procedure was to enable the Commission to obtain all the views it needs in order to be able to adopt a definitive decision and was not bound beforehand to establish this. 

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