State Aid Law Blog

State Aid Uncovered Blog

In Lexxion’s State Aid Uncovered blog, Prof. Phedon Nicolaides publishes weekly critical analyses of recent State aid judgments and decisions. Each post presents the key points of a court judgment or EU Commission decision, places it in the context of similar case law or practice, assesses the underlying reasoning and highlights any inconsistencies or contradictions.

Guest contributions from other State aid experts will also be published on the blog at irregular intervals to complement the content of the blog posts.

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8. February 2022  |   State Aid Uncovered by Phedon Nicolaides

The Mysterious “Substantial” Competitive Effect
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State aid has a “substantial” effect on competitors when it has a direct and negative impact on their market positions that goes beyond the typical influence of aid on competitive relationships. Introduction State aid always harms competition and competitors. A public measure that has no effect on competition is not State aid. Therefore, it is not enough for a company […]
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1. February 2022  |   State Aid Uncovered by Phedon Nicolaides

I. The Commission Need not Always Open the Formal Investigation Procedure before Correcting a Faulty Decision II. Fines for Failure to Recover Incompatible Aid
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The formal investigation procedure need not be re-opened when the fault lies in the legal assessment of the measure in question. Incompatible State aid has to be recovered quickly and effectively, even from insolvent undertakings. Introduction This article examines two recent judgments concerning Greece. The first judgment explains when the Commission does not have to re-open the formal investigation procedure […]
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25. January 2022  |   State Aid Uncovered by Phedon Nicolaides

Duplication of Infrastructure Does not Promote Regional Development
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A private investor is not interested in regional development. A private investor recoups its investment in infrastructure from revenue from the operation of that infrastructure. Duplication of infrastructure does not contribute to regional development. Introduction In 2015 the European Commission caused a buzz in the State aid community when it decided that investment aid granted to a small Polish airport […]
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18. January 2022  |   State Aid Uncovered by Phedon Nicolaides

A Non-Selective Financial Tax with a Narrow Scope
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The scope of a tax must be objectively defined in order for those excluded from the tax not to benefit from a selective advantage. Introduction Taxes are burdens, so they fall outside the scope of Article 107(1) TFEU which prohibits selective benefits funded with state resources. Normally, Article 107(1) applies to benefits from tax exemptions or tax derogations which result […]
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11. January 2022  |   State Aid Uncovered by Phedon Nicolaides

Private Creditor and the Ability of the Debtor to Repay
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There are no rules as to the promptness with which a private creditor must act in order to enforce its claims. However, a hypothetical private creditor need not demand that a debtor be declared insolvent as soon as it fails, without taking any account of its longer-term potential. Introduction When the state accepts to restructure debt owed to it or […]
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4. January 2022  |   State Aid Uncovered by Phedon Nicolaides

Public Funding of an Energy Infrastructure Project
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State aid up to 100% of the funding gap of a project can be compatible with the internal market. Introduction The European Commission approved investment aid for a Liquefied Natural Gas [LNG] terminal in Alexandroupolis in northern Greece [case SA.55526]. The project involves the following: A Floating Storage Regasification Unit [FSRU] for the storage and regasification of LNG. The construction […]
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28. December 2021  |   State Aid Uncovered by Phedon Nicolaides

Illegal Aid Cannot be Regularised a Posteriori
A Commission decision finding non-notified aid to be compatible with the internal market cannot remedy the illegality that existed before the Commission decision. Introduction In November 2021, the General Court rejected an appeal by the recipient of illegal aid who had asked the Commission to declare the aid compatible with the internal market even though the Member State concerned had […]
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21. December 2021  |   State Aid Uncovered by Phedon Nicolaides

How to Determine Selectivity
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A measure is selective when it excludes undertakings that are equally capable of contributing to the achievement of its objectives. Introduction Since no two undertakings are exactly the same, how can it be determined whether they are in a comparable situation? Differences in their features such as size or the type of technology they use do not necessarily mean that […]
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14. December 2021  |   State Aid Uncovered by Phedon Nicolaides

First Case of a “Private Debtor” Test?
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A public authority acting as a “private debtor” tries to minimise the amount that it has to pay. Introduction In assessing whether commercial transactions between public authorities and undertakings are free of State aid, the European Commission and EU courts apply the market economy investor principle [MEIP]. In essence, this principle tests whether a public investor behaves like a private […]
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7. December 2021  |   State Aid Uncovered by Phedon Nicolaides

An Unusual Case of a “Self Notification” of State Aid by an Aid Beneficiary
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Aid beneficiaries may not “notify” State aid to the Commission. Only Member States may notify aid. Beneficiaries of non-notified aid may ask national courts to penalise the granting authorities. Introduction What should an undertaking do when it finds out that a public measure from which it has been benefitting contains State aid that has not been notified to the European […]
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12. October 2021  |   State Aid Uncovered by Phedon Nicolaides

Security of Supply May Justify a Deviation from Public Procurement Rules
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Security of supply justifies a deviation from the normal procurement procedures as long as the same security cannot be achieved through a competitive selection of suppliers. Introduction Point 19 of the 2012 SGEI Framework requires that the assignment of a public mission to an undertaking must comply with the applicable public procurement rules. It does not impose an obligation for […]
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5. October 2021  |   State Aid Uncovered by Phedon Nicolaides

What the Commission Must Find Out in the Preliminary Examination of State Aid: The Lessons from Tempus Energy on what is Sufficient Information
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The Commission must open the formal investigation procedure when it has serious doubts based on the information available to it. Introduction Once I asked an administrator of an institute where I used to work why I was not informed about certain benefits that were available to staff. “Because you did not ask”, he answered. How could I ask about something […]
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28. September 2021  |   State Aid Uncovered by Phedon Nicolaides

A Faulty Sale Procedure Can Lead to Presumption of State Aid and Annulment of a State Aid Decision
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A sale of public assets cannot be presumed to be free of State aid when bidders are not treated equally. Introduction When the state sells a company it owns, there is a presumption that no State aid benefits either the buyer or the company that is sold if the sale is open transparent, non-discriminatory, unconditional and the chosen buyer is […]
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21. September 2021  |   State Aid Uncovered by Phedon Nicolaides

Market Economy Operator Test: Timisoara Airport & Wizz Air
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Public funding of activities that fall within the remit of the state does not constitute state aid. Although the presence of a credible ex ante business plan based on realistic assumptions is a strong indicator that the MEOT is satisfied, its absence does not necessarily prove that the MEOT is failed. Introduction Following a complaint by Carpatair, the European Commission […]
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14. September 2021  |   State Aid Uncovered by Phedon Nicolaides

Pricing of Guarantees
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A market guarantee premium must cover all costs assumed by the guarantor including the cost of possible default, cost of capital and the cost of administering the guarantee. Introduction Financial instruments are much in vogue. The Pan-European Guarantee Fund and to a smaller extent the Recovery and Resilience Fund are implemented through financial instruments that seek to leverage private participation. […]
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7. September 2021  |   State Aid Uncovered by Phedon Nicolaides

Assignment of Public Service Obligations
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The compensation for public service obligations may include reasonable profit and incentives for cost reduction. Introduction Member States have discretion to define services they consider to be in the general economic interest [SGEI]. However, they need to justify that definition. The Court of Justice has ruled on numerous occasions that an SGEI has “special characteristics” that set it apart from […]
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31. August 2021  |   State Aid Uncovered by Phedon Nicolaides

Public Funding of an Undertaking in a Closed Sector
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Public funding of undertaking in a closed sector [legal monopoly] does not distort competition and therefore does not constitute State aid. A legal monopoly has to conform with internal market rules. Introduction In July 2017, the Commission received a complaint by “C” [the complainant] alleging that Germany had granted State aid to two companies, RVV and Nordwasser, which supplied fresh […]
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24. August 2021  |   State Aid Uncovered by Phedon Nicolaides

It is Difficult to Challenge a Commission Decision Opening the Formal Investigation Procedure
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The assessment of the Commission in an “opening decision” is only provisional. The Commission is not required to prioritise its investigations or to extend them to anyone who may be in a similar situation. The right of non-discrimination is not violated when the Commission chooses to investigate some instead of all possible cases of State aid. An individual measure that […]
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17. August 2021  |   State Aid Uncovered by Phedon Nicolaides

The Problem of Multiple Awards of Aid to the Undertaking and to the Same Group
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Multiple awards of aid to the same undertaking are allowed as long as they cover different costs. Multiple awards of aid to the same group are allowed as long as aid does not leak from one undertaking in the group to another. Introduction In the first half of 2021, the General Court ruled in ten cases of appeal lodged by […]
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10. August 2021  |   State Aid Uncovered by Phedon Nicolaides

When Do Legal Exemptions Constitute State Aid?
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Exemption from a fine does not constitute State aid when it is based on transparent and pre-determined criteria. Infringement of EU law determines the compatibility of State aid, not the existence of State aid. Introduction An exemption from legal requirements that confers a selective advantage does not necessarily amount to State aid. In most cases, when beneficiaries are found not […]
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