Executive Summary:
- Although the Commission is under duty to explain sufficiently its decisions, it does not have to assess in detail every aspect of a state aid measure, if it is not necessary for the reasoning of its decision.
- Although the Commission must take into account all relevant information, it does not have to seek information that does not appear to be relevant to the state aid measure it assesses.
- Interested parties do not have a right to access the information in state aid files, as the notification of state is a bilateral procedure between the Commission and Member States.
Table of Contents:
- Introduction
- Case I: C-173/25 P, Agropalma Holdings and others v Commission
- Was the decision of the Commission sufficiently reasoned?
- Were the appellants undertakings?
- Legitimate expectations
- Case II: C‑348/25 P, PGI Spain and others v Commission
- What evidence must the Commission consider in its assessment?
- Access to information by interested parties
- Should the commission have had serious doubts as to the effects of the measure in question?
Introduction
This article reviews two recent judgments of the Court of Justice. The first case concerns mostly the obligation of the Commission to provide sufficient reasons for its decisions. The second case examines two related issues: the information that the Commission must or ought to take into account and the value of the views of interested parties.
Case I: C-173/25 P, Agropalma Holdings and others v Commission
The appellants asked the Court of Justice of the EU [CJEU] to set aside the judgment of the General Court in case T-716/22, Administradora Fortaleza and others v Commission, by which the General Court dismissed their action for annulment of Commission decision 2022/1414 on state aid scheme SA.21259 concerning the Madeira Free Zone [Zona Franca da Madeira (ZFM)]. That scheme had been approved by the Commission in 1987. Subsequent extensions of the scheme were also approved by the Commission. The objective of the original scheme and its successors was to incentivise investment in the ZFM by providing operating aid in the form of reduction of corporate income tax and exemption from several local and other taxes. The CJEU delivered its judgment on 8 October 2026.1
In decision 2022/1414, the Commission found that the scheme had been misapplied. The jobs that were claimed to have been created were not genuine new jobs [aid recipients counted part-time positions as full-time equivalent and also included jobs created at their suppliers] and at the same time they claimed the ZFM tax credit on income earned outside the ZFM, in mainland Portugal. For these reasons, the Commission found the aid to be incompatible with the internal market and ordered its recovery. About 50 companies challenged that decision before the General Court but none of them was successful. The appellants in the present case chose to to appeal before the CJEU.
The appellants were all Brazilian companies in the form of “sociedades gestoras de participações sociais” [SGPS] which is roughly translated as holding companies or private equity companies.
Was the decision of the Commission sufficiently reasoned?
Although the Commission enjoys wide discretion in determining the compatibility of state aid, it is still obliged under Article 296 TFEU to sufficiently justify its decisions. The appellants argued that the General Court committed an error, under Article 296 TFEU, by not finding that the Commission failed to provide adequate explanations in its decision. They claimed that the Commission decision did not identify SGPS explicitly.
The CJEU, first, noted that the General Court found that the Commission had provided the Portuguese authorities with the necessary, but also sufficient, information enabling them to identify the beneficiaries. [paragraph 20 of the judgment]
Moreover, it was sufficiently comprehensible to follow from the same recitals of that decision that the Commission had implicitly, but necessarily, taken the view that the condition of creating or maintaining jobs in the RAM applied to all undertakings registered in the ZFM, and, therefore, subsequent decisions approving extensions of the original scheme had not authorised any derogation from that condition. [para 21]
The CJEU also observed that the Commission had not recognised as existing aid, within the meaning of Article 1(b)(ii) of Regulation 2015/1589, to aid that was paid without complying with the condition relating to the creation or maintenance of jobs in RAM. [para 22]
The CJEU went on to state that those were the reasons why the General Court held that that statement of reasons was sufficient to enable the appellants to assess the merits of the Commission decision and to enable the General Court to exercise its power of review. The General Court therefore concluded that the Commission had not infringed the second paragraph of Article 296 TFEU. [para 23]
Therefore, the CJEU found that the General Court did not infringe Article 296 TFEU and recalled the relevant case law. The statement of reasons required by Article 296 TFEU must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of that article must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. [para 24]
Therefore, the CJEU concluded that the General Court was right to hold that the Commission had implicitly, but necessarily, taken the view that the condition relating to the creation or maintenance of jobs in RAM applied to all undertakings registered in the ZFM, including the SGPS, and that the statement of reasons was sufficient to enable the appellants to assess the merits of that decision. [para 25]
Were the appellants undertakings?
The appellants argued that they were not undertakings, because of their special legal status, and, therefore, the prohibition of state aid did not apply to them.
The CJEU, first, noted that in order to substantiate their arguments, the appellants referred to a the legal regime of SGPS without, however, specifying whether it prevented them from carrying out an economic activity. They argued that the type of activity which they were authorised to carry out in the ZFM was that of pure holding companies, i.e. for entities that did not administer, monitor or manage other entities. [para 31]
At this point, it is worth recalling the established principle that a shareholder is not an undertaking if it only exercises the prerogatives of shareholding without being involved in the day-to-day management of the company in which it holds shares, even majority shares.
However, the CJEU rejected this plea because it was not competent to interpret the Portuguese law on SGPS regime. [paras 32, 33, 50 & 51]
Legitimate expectations
The appellants alleged infringement of the principle of the protection of legitimate expectations, in so far as the aid they received [i.e. the tax reduction with respect to SGPS dividends] was not accompanied by an obligation to create jobs in the ZFM.
The CJEU observed that the appellants were in fact again asking the CJEU to re-examine the General Court’s assessment of the facts without, however, claiming that the General Court distorted those facts. Thus, in accordance with settled case-law, that assessment was not subject to review by the CJEU in the context of an appeal. [para 73]
Moreover, the CJEU recalled that an appeal had to indicate precisely the contested elements of the judgment which the appellant sought to have set aside and the legal arguments specifically advanced in support of that appeal. Otherwise, the appeal would be inadmissible. [para 74]
In the present case, it was sufficient to note that the appellants merely put forward considerations of a general nature, without identifying the error of law allegedly vitiating the judgment of the General Court, with the result that that complaint had to be rejected as inadmissible. [para 76]
Since none of the pleas was successful, the CJEU dismissed the appeal in its entirety.
Case II: C‑348/25 P, PGI Spain and others v Commission
PGI and four other companies appealed against the judgment of the General Court in case T-596/22, PGI Spain and others v Commission, by which the General Court dismissed their action for annulment of the Commission decision on state aid SA.102454 concerning an adjustment mechanism for the reduction of the electricity wholesale price in the Iberian market. The mechanism was adopted by both Portugal and Spain and aimed to reduce the wholesale electricity price by supporting the input costs of fossil fuel technologies. The aid measure was approved by the Commission on the basis of Article 107(3)(b) without opening the formal investigation procedure.
The measure was to be financed through a compulsory contribution [levy] by buyers of electricity on the wholesale market. Interestingly, the buyers on both the wholesale and retail market that had entered into long-term power purchase agreements [PPAs] at fixed prices were exempted from the compulsory levy. Normally, an exemption from a compulsory levy would constitute state aid. Yet, in this case the Commission found that the exemption did not amount to state aid because those buyers could not benefit from the measure. The prices they had to pay had been contractually fixed. The CJEU delivered its judgment on 22 October 2026.2
What evidence must the Commission consider in its assessment?
The appellants argued that the Commission had ignored relevant evidence in its assessment.
The Court of Justice of the EU [CJEU], first, recalled what the General Court had held: “(32) the lawfulness of a decision not to raise objections taken at the end of a preliminary examination procedure falls to be assessed by the EU judicature, in the light not only of the information available to the Commission at the time when the decision was adopted, but also of the information which could have been available to the Commission … the legality of an EU measure is to be assessed on the basis of the facts and the law as they stood at the time when the measure was adopted, such that measures subsequent to the adoption of a decision cannot affect the validity of that decision”.
Then the CJEU ruled that “(33) the General Court rejected the evidence and related arguments submitted by the appellants … on the ground that, …, measures subsequent to the adoption of a decision not to raise objections taken at the end of the preliminary examination procedure cannot affect the validity of that decision.”
Therefore, the CJEU dismissed that part of the appeal.
Access to information by interested parties
The appellants argued that they had been deprived of information that was significant to their case. As is well known, however, interested parties have no access to file because the assessment of the existence and/or compatibility of state aid is a bilateral process between the Commission and Member States.
Again, the CJEU began by referring to the findings of the General Court: “(48) the General Court held as follows: To enable the Court to determine whether it is conducive to the proper conduct of the procedure to order the production of certain documents, the party requesting production must identify the documents requested and provide the Court with at least minimum information indicating the utility of those documents for the purposes of the proceedings … Thus, that party must, inter alia, provide precise and relevant evidence to explain how the documents in question could be relevant to the resolution of the dispute … First, it must be pointed out that the applicants had access to the text of the notified measure and, …, that the notified measure is based on a clear logic founded on the distinction between purchases on the wholesale and retail markets. … Second, the applicants’ request … seeks, by its scope, to have the documents in the Commission’s administrative file added to the proceedings, despite the fact that the applicants, even in their capacity as interested parties, do not have a right of access to that file”.
The CJEU held that “(53) the General Court did not infringe the appellants’ procedural rights” and went on that plea too.
Should the commission have had serious doubts as to the effects of the measure in question?
The appellants argued that the Commission should have had doubts as to the impact of the measure on broader competition and should have opened the formal investigation procedure.
The CJEU once more recalled the ruling of the General Court as regards the objective of the notified measure. The measure aimed “(65) to reduce the wholesale electricity price in the Iberian Peninsula by supporting the input costs of fossil fuel technologies … the objective of the notified measure is to bring about a reduction in electricity prices in the context of strong upward pressure on fuel prices, which is linked to a series of crises which national and international energy markets have had to face, and, second, that the measure seeks to attain that objective by supporting certain sources of electricity in order to achieve a reduction in wholesale market prices, which should, as a consequence, lead to a reduction in retail market prices. … the notified measure seeks to attain that objective by supporting certain sources of electricity in order to achieve a reduction in prices on the wholesale market, which should in turn lead to a reduction on the retail market. Furthermore, …, the passing on of the reduction in prices on the retail market, with the exception of regulated contracts, is a product of competition on that market.”
“(66) Accordingly, the appellants’ argument that the General Court recognised that the objective of the notified measure was to reduce prices on both the wholesale and retail markets is based on a misreading of the judgment under appeal. The General Court found that the objective of the notified measure was to bring about a reduction in the price on the wholesale market, and that it was only as a consequence of that reduction that it might be passed on to the retail market, depending on how competition operated on that market.”
In its decision “(67) the Commission noted that that measure was intended to lower wholesale electricity prices in the Iberian electricity market by supporting part of the fuel costs incurred by fossil fuel power plants, in light of the fact that they have a key influence over the prices in the electricity market. That assessment is borne out by the description of the nature and form of the notified measure, …, and of the way in which it is financed”.
“(68) It is true that a reduction in electricity prices on the retail market was also desired. Nevertheless, as the General Court rightly found …, such a reduction was to result from competition and not from the notified measure as such. It follows that the notified measure neither provided for nor guaranteed a corresponding reduction in the price of electricity on the retail market. Accordingly, as the Commission and the Spanish Government rightly contend, the appellants attribute too broad an objective to the notified measure.”
“(69) Since the appellants did not provide the General Court with any evidence showing that the Commission had, or could have had, information concerning the specific situation of buyers of electricity on the retail market which had entered into financial PPAs, it cannot be held that the Commission was under an obligation to seek, of its own motion, information concerning a possible extension of the scope of the exemption from the contribution to economic operators active in the retail market, particularly since that exemption does not, according to the Commission’s assessment, constitute State aid.”
“(70) In accordance with well-established case-law, although the Court of Justice has held that, when the existence and legality of State aid is being examined, it might be necessary for the Commission, where appropriate, to go beyond a mere examination of the facts and points of law brought to its notice, it cannot be inferred from that case-law that it is for the Commission, on its own initiative and in the absence of any evidence to that effect, to seek all information which might be connected with the case before it, even where such information is in the public domain”.
The CJEU dismissed this plea as well and went on to dismiss other pleas concerning the application of a regulation and a directive concerning the functioning of the electricity market.
Since none of the please was successful, the CJEU rejected the appeal in its entirety.
