State Aid Uncovered Blog

A shareholder loan cannot be simply compared to a bank loan because the shareholder also benefits from improvements in the future profitability of the borrower. Introduction When a public authority grants a loan to a company, the methodology in the 2008 Commission communication on reference and discount rates can be used to determine whether the loan contains State aid. However, […]

Contractual obligation to provide compensation that does not exceed the loss of income is not State aid. Introduction When is a company entitled to compensation by the state? The easy answer is “when the state is liable for damage”. However, it may be possible for a company to claim compensation from the state when the state has assumed contractual obligations. […]

Risk finance measures for the support for large enterprises or SMEs which operate for longer than seven years fall outside the GBER and must be notified individually to the Commission. Introduction Since the State aid modernisation and the new rules that were introduced in 2014, only a handful of risk finance measures [7-8?] have been notified to the European Commission […]

Progressive tax rates that are consistent with the objective of the tax system are not necessarily selective. Introduction Member States are free to design their corporate tax systems as long as they do not grant State aid or infringe fundamental internal market freedoms. A question that arises in discussions on what Member States may or may not do when designing […]

A competitor must show that it is substantially affected by State aid approved by the Commission in order to challenge the Commission’s decision. Merely being affected by the aid is not enough. To show that aid has a substantial impact, it is first necessary to define the relevant market. This is different from the “distortion of competition” in the meaning […]

A Commission decision that affects the legal position of an undertaking is actionable before EU courts. The opening of the formal investigation procedure must lead the Member State concerned to suspend the aid measure and may result in a recovery ruling by a national court. The Commission must be consistent in its reasoning. If it cannot use certain information at […]

Discretion in the form of intervention can remove it from the control of the state.   Introduction Suppose a thug puts a gun to your head and demands your wallet. Because you have sentimental photos in your wallet, you offer instead the keys to your car. You would rather lose the car than the wallet. Can the thug claim in […]

Assurances from granting authorities cannot guarantee the legality of State aid. Aid recipients must verify that the aid is granted correctly.   Introduction The Commission must stop its misguided policy of not making public the answers it provides to Member States on questions of interpretation of the General Block Exemption Regulation [GBER]. This is one of the consequences of a […]

Introduction State aid that is incompatible with the internal market has to be paid back, unless the repayment would be contrary to a general principle of EU law. Last November the Court of Justice ruled in case C‑622/16 P, Scuola Elementare Maria Montessori v European Commission that “(79) the principle that ‘no one is obliged to do the impossible’ is among the […]

A private investor may invest in a troubled company that is restructuring is order to increase its future profitability.   Introduction   The answer to the question posed above is short and simple: everything relevant. A private investor does not ignore anything that can affect the profitability of the prospective investment.This implies that the other side of the coin is […]