Brussels raises prospect of illegal state aid if DB land was below market price

The European Commission has suggested that if the sale of land at St George’s Bay was not tagged at the market price, this could constitute a case of illegal State aid. 

Commissioner Marie Vestager was answering a question by Green MEP Ska Keller, on the transfer of the St George’s Bay land at the former ITS college to the DB group for the construction of City Centre high-rise hotel, at the behest of Alternattiva Demokratika. 

The land, 24,000 square metres of public land in Pembroke, was transferred in February 2017 to DB for a total of €15 million that would be payable over a span of seven years, at no interest. The land was transferred without a formal tender but with a request for proposals issued through the government’s public-private partnerships arm Projects Malta. 

But the market value of the site in question was quoted by the government’s now defunct masterplan for Paceville at €8,500 per square metre, or €204 million in total. 

Keller asked the EC whether the entire procedure had put Silvio Debono’s DB group at a considerable advantage over other companies. 

In its reply, the European Commission said that the transfer of land had not been notified to the Commission by the Maltese authorities, nor had any competitor raised any complaint on the transfer. 

“Consequently, the Commission is not in a position to pronounce itself on whether that transfer resulted in the grant of State aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union (TFEU).” 

However the Commission made reference to the market price of such a land transfer. 

“As a general principle, the mere fact that a public tender process is not carried out is, in itself insufficient to conclude that a transfer such as this entails the grant of State aid. What ultimately matters is whether the public authority acted in its capacity as a private seller in concluding the transaction and that the land was sold to the buyer at a market price.”