Action brought on 12 November 2019 – Sheldon and Kingfisher International v Commission

(Case T-775/19)

(2020/C 45/49)

Language of the case: English

Parties

Applicants: Sheldon Holdings Ltd (London, United Kingdom) and Kingfisher International Holdings Ltd (London) (represented by: G. Motta and N. Baeten, lawyers)

Defendant: European Commission

Form of order sought

The applicants claim that the Court should:

i. annul the Commission Decision (EU) 2019/1352 of 2 April 2019 on the State aid SA.44896 implemented by the United Kingdom concerning CFC Group Financing Exemption (OJ 2019 L 216, p. 1) in its entirety;

ii. alternatively, annul Commission Decision (EU) 2019/1352 insofar as it concludes that section 371ID of the Taxation (International and Other Provisions) Act 2010 amounted to unlawful State aid for the purposes of Article 107(1) of the Treaty on the Functioning of the European Union;

iii. alternatively annul Articles 2, 3 and 4 of Commission Decision (EU) 2019/1352;

iv. in any event, order the European Commission to bear all costs incurred in respect of this application.

Pleas in law and main arguments

In support of the action, the applicants rely on eleven pleas in law.

1. First plea in law, alleging that the Commission selected an invalid reference system for the purposes of its selectivity analysis. Judged against the appropriate reference system, the group financing exemption scheme (‘the contested measure’) is not a derogation and is not selective.

2. Second plea in law, alleging that the Commission fundamentally misunderstood the nature of the primary objective of its chosen reference system and failed to take into account all objectives of that system, leading it to apply an incomplete and hypothetical reference system.

3. Third plea in law, alleging that the Commission fundamentally mischaracterised the role of the contested measure, seemingly on the inappropriate basis of regulatory technique. As properly understood, the contested measure is not a derogation from the Commission's chosen reference system.

4. Fourth plea in law, alleging that the Commission was incorrect to conclude that the contested measure differentiated between undertakings which, in light of the objectives of its chosen reference system, were comparable.

5. Fifth plea in law, alleging that the Commission failed to recognise that the contested measure does not constitute a selective advantage because it derives from the guiding principles and flows from the nature of the Commission's chosen reference system and is an inherent mechanism necessary for that system's functioning and effectiveness.

6. Sixth plea in law, alleging that the Commission decision exceeds the Commission's powers in the field of State aid, contrary to the United Kingdom's fiscal sovereignty.

7. Seventh plea in law, alleging that the Commission's conduct of its investigation into the contested measure breached Article 108(2) of the Treaty on the functioning of the European Union and Article 6 of Regulation (EU) 2015/1589, (1) as well as its duty of good administration under Article 41 of the Charter of Fundamental Rights of the European Union.

8. Eighth plea in law, alleging that the Commission breached its duty to give reasons under Article 296 of the Treaty on the Functioning of the European Union.

9. Ninth plea in law, alleging that the Commission failed to recognise that section 371ID of the Taxation (International and Other Provisions) Act 2010 was entirely justified and did not constitute a selective advantage.

10. Tenth plea in law, alleging that recovery should not be ordered as, following Case C-196/04 Cadbury Schweppes, (2) it would breach general principles of EU law relating to the fundamental freedom of establishment.

11. Eleventh plea in law, alleging that recovery should not be ordered because the Commission's directions in respect of recovery are ultra vires and breach general principles of EU law relating to the recovery of unlawful State aid.

(1) Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9).

(2) Judgment of the Court of 12 September 2006, Cadbury Schweppes plc and Cadbury Schweppes Overseas Ltd v Commissioners of Inland Revenue (Case C-196/04, EU:C:2006:554).