In its recent decision in the SMI case ( Germany v Commission, 29 April, 2004), the European Court of Justice was asked to assess the buyers’ potential obligation to repay state aid received in the past by the company they had subsequently acquired. In this case, the European Commission (EC) had attempted to extend this obligation to the buyers, but the court disagreed, allowing them to escape the commission’s wide net.
The decision provides some comfort to good faith buyers and it is difficult to disagree with its reasoning. However, applying its lessons in practice may be another story. What appears to be legally sound reasoning is not necessarily easy to reconcile with normal business considerations at play in commercial acquisitions involving some form of non-disclosed state aid.
