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Why did Coventry City FC’s State aid claim fail?

In this blog for LawInSport, Marc Delehanty analyses and reflects on the recent State aid decision relating to Coventry
City FC’s previous stadium, the Ricoh Arena.

Background

The High Court recently handed down
judgment
in a challenge brought by the owners of Coventry City Football Club (“Coventry”) against the legality of a £14.4m loan that
Coventry City Council (the “Council”) provided to the
leaseholders of the Ricoh Arena (“ACL”) – the stadium that
Coventry used to play its home games at until 2013.

Allegation that the loan was an unlawful subsidy

The claim failed; Hickinbottom J held
that provision of the loan was lawful. The action was by way of a
judicial review of the decision of the Council – a public body – to make
the loan and the main substance to the challenge was that the loan
amounted to State aid (i.e., subsidy) within the meaning of Article 107(1) of the Treaty on the Functioning of the EU (“TFEU”).
Any such State aid would have had to have been notified to the European
Commission in advance, as required by Article 108(3) TFEU.
 

Essentially, the claim was that a
rational private investor in the shoes of the Council would not have
made the loan in the amount and on the terms (fixed interest rate of 5%
and a 41 year term) agreed with ACL.

 Click here to read the full blog

 
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