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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30. November 2021  |   State Aid Uncovered by Phedon Nicolaides

When Does an Amendment of an Existing Aid Make it a New Aid?
State Aid Blogs - Blog KV 49
Existing aid becomes new aid if any amendment affects the assessment of its compatibility with the internal market. Introduction Member States often amend and adjust State aid measures after they are approved by the Commission. Such changes must be carried carefully because they can turn an existing aid into new aid and all new aid has to be notified to […]
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30. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Public Funding of an Undertaking in a Closed Sector
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Public funding of undertakings in sectors closed to competition does not constitute State aid. A sector is closed to competition when competition on and for the market is precluded by law. Introduction Determining when State aid does not affected cross-border trade is both difficult and tricky. But there is one exception; when the sector is closed to competition. A sector […]
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23. November 2021  |   State Aid Uncovered by Phedon Nicolaides

6th Revision of the Temporary Framework for Covid-19 State Aid
State Aid Blogs - Blog 47 KV
Introduction On Thursday, 18 November 2021, the European Commission adopted a sixth amendment to the Temporary Framework [TF] for State aid measures to combat covid-19. The document laying down the new amendments can be accessed here: https://ec.europa.eu/competition-policy/document/download/a822acec-f0c6-4c8c-ab49-fc2dd34188ec_en The TF was scheduled to expire on 31 December 2021. The new amendment extends its validity to 30 June 2022. It also changes […]
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16. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Selectivity and Tax Measures
State Aid Blogs - Blog KV 46
The reference system for determining the selectivity of a tax measure must have its own logic and be autonomous and its identification depends on the content, structure and specific effects of the applicable rules. A measure that does not exclude any particular undertaking can be selective if it treats differently undertakings which are in similar situations. Introduction On 6 October […]
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9. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Compensatory Payments and State Resources
State Aid Blogs - blog 45 KV
Funds used in compensation mechanisms mandated by the state become state resources Introduction The Court of Justice has stressed repeatedly that any resource over which the state can exercise control becomes a state resource, regardless of whether it is managed by a public authority or a private entity. Member States, however, keep inventing novel and complicated arrangements in which mandated […]
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2. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Market Economy Operator
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Comparing prices charged by different airports is not a suitable method for detecting the existence of selective advantages. Introduction Airports enter into complex agreements with airlines. When airports are in public ownership or operate under a mandate by the state, their agreements with airlines may contain State aid. It is, however, very difficult to detect State aid in these agreements […]
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26. October 2021  |   State Aid Uncovered by Phedon Nicolaides

Legitimate Expectations and the “Right” to State Aid
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Legitimate expectations can only be created by EU institutions giving unambiguous and unconditional assurances. No undertaking enjoys a right to State aid. Member States may reduce the amount of State aid they grant. Introduction As the process of transition to green economy accelerates, Member States have been reducing the subsidies they promised to grant to the early investors in the […]
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19. October 2021  |   State Aid Uncovered by Phedon Nicolaides

Is Anyone who is Affected by State Aid an “Interested Party” that can Challenge a Commission Decision?
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A non-competitor cannot normally claim to be “interested party”. The Commission does not have to prove to the normal legal standard the existence of state aid when it opens the formal investigation procedure. Introduction This week’s article reviews two recent judgments: one on the status of “interest party” and another on the obligations of the Commission when it opens the […]
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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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3. August 2021  |   State Aid Uncovered by Phedon Nicolaides

Methods for Determining Property Value
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Member States may use different methods for determining the value of property as long as they produce similar results. Introduction The base for property taxation is normally the value of the property, not size or location. The difficulty in determining the value of property is that land or buildings have no intrinsic value. It all depends on the purpose for […]
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27. July 2021  |   State Aid Uncovered by Phedon Nicolaides

A Rare Commission Decision on an SGEI Measure that Could Have Been Exempted from Notification
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A public service obligation must be imposed by an act of entrustment that describes in detail the terms of the obligation, identifies the undertaking that offers the service and lays down procedures for preventing over-compensation. Introduction The purpose of Commission Decision 2012/21 on services of general economic interest [SGEI] is, like the GBER, to exempt certain aid measures from prior […]
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20. July 2021  |   State Aid Uncovered by Phedon Nicolaides

The Italian Health System Is not Economic in Nature
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Certain elements of competition that raise efficiency do not undermine the social solidarity foundations of a health care system. Introduction A question that has been addressed by the Court of Justice but not in sufficient detail is whether the providers of non-economic health services can compete with each other. The answer is conditionally affirmative. Competition that does not undermine the […]
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13. July 2021  |   State Aid Uncovered by Phedon Nicolaides

Existing Aid, New Aid and Retroactive Application of a Block Exemption Regulation
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Changes to approved aid measures result in new aid. Only purely formal or administrative changes do not turn existing aid into new. Prolongation of an existing aid measure is not purely formal or administrative. Introduction Any change to an approved aid measure that affects its compatibility with the internal market turns it into a new aid that has to be […]
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6. July 2021  |   State Aid Uncovered by Phedon Nicolaides

Disentangling the Impact of Covid-19 from other Business Problems
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State aid may only compensate for the direct damage caused by covid-19. Introduction Aid that compensates for damage caused by natural disasters or exceptional occurrences is declared by Article 107(2)(b) TFEU to be compatible with the internal market. That is why Article 1(4)(c) of the GBER does not exclude, as is normally the practice, undertakings in difficulty from schemes that […]
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29. June 2021  |   State Aid Uncovered by Phedon Nicolaides

Amazon and the Difficulty of Finding a Comparable Tax Payer
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To apply the Arm’s Length Principle to transactions between two related companies, the Commission must identify the less complex company of the two and compare it to a similar independent company. Methodological errors in the application of the Arm’s Length Principle by national authorities does not necessarily prove the existence of advantage. Introduction On 12 May 2021 the Commission suffered […]
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22. June 2021  |   State Aid Uncovered by Phedon Nicolaides

Is State Aid for Locally Established Undertakings Compatible with the Internal Market?
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Limitation of State aid to companies which have a durable link with the local economy can be compatible with the internal market. Introduction By prohibiting barriers to free movement and establishment in the internal market, the EU seeks to make the choice of location of a company largely irrelevant. All companies should be treated the same regardless of where they […]
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15. June 2021  |   State Aid Uncovered by Phedon Nicolaides

State Aid to Group of Companies
In assessing the compatibility of State aid with the internal market, the Commission must also consider previous awards to a legally distinct but related company. In assessing the need for rescue/restructuring aid, the Commission must also consider whether the recipient is a member of a group that can provide internal funding. Introduction Paragraph 11 of the Commission’s Notice on the […]
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8. June 2021  |   State Aid Uncovered by Phedon Nicolaides

Economic Continuity and Recovery of Indirect State Aid
Special insolvency procedures can confer a selective advantage that constitutes State aid. A recovery order can be extended to the new owner of a company that had received incompatible State aid. Introduction Recipients of State aid that is found to be incompatible with the internal market have to pay it back with interest. This liability for repayment also extend to […]
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1. June 2021  |   State Aid Uncovered by Phedon Nicolaides

The Impossibility of Proving the Absolute Impossibility to Recover Incompatible State Aid
It is not sufficient to claim that is it absolutely impossible to recover incompatible State aid. It must be shown that alternative methods have been actually tried without success. Introduction It is rather impossible for Member States to prove that it is absolutely impossible to recover State aid that has been found by the Commission, and confirmed by EU courts, […]
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