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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14. March 2023  |   State Aid Uncovered by Phedon Nicolaides

State Aid for the Resolution of a Polish bank
State Aid Blogs - State Aid Uncovered SM posts 1
Introduction Whenever a bank seeks State aid, it must be considered as “failing or likely to fail”. A failing bank must be liquidated or resolved. Resolution means that the critical functions of the bank are preserved while the rest are wound down. Critical functions are those that impact significantly the real economy such as deposits, loans to SMEs or payments. […]
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7. March 2023  |   State Aid Uncovered by Phedon Nicolaides

Tax Advantages and Competitive Bidding
State Aid Blogs - State Aid Uncovered SM posts 9
Introduction Award of contracts or sale of state assets through competitive bidding procedures or tenders are presumed to result in a market prices and to confer no advantage to the winner in the meaning of Article 107(1) TFEU. However, on 25 January 2023, the General Court ruled, in case T-666/21, Società Navigazione Siciliana v European Commission, that certain tax advantages […]
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28. February 2023  |   State Aid Uncovered by Phedon Nicolaides

Discretion of Public Authorities and Selectivity
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Introduction On 2 February 2023, the Court of justice, in case C649/20 P, Spain and Others v European Commission, clarified the extent to which public authorities can implement general measures without in practice favouring any undertaking. The exercise of administrative discretion can turn a general measure into selective. The Court made a distinction between what may be called “related” or […]
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21. February 2023  |   State Aid Uncovered by Phedon Nicolaides

The Selectivity and Profitability of Agreements between Airports and Airlines
State Aid Blogs - State Aid Uncovered SM posts 27
Introduction Selectivity is a tricky issue. Even a measure that appears not to favour or exclude any undertaking may in practice prove to be selective if its effects favour certain undertakings over others that are in a comparable situation. In order to determine whether they are comparable it necessary to examine the objective of the measure. This is what the […]
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8. February 2023  |   State Aid Uncovered by Phedon Nicolaides

State Aid May Have an Incentive Effect Even After the Start of Work: But Would it Favour Inefficient Operators?
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Introduction Perhaps the most important aspect of the compatibility of State aid with the internal market is the presence of incentive effect. That is, the aid is capable of changing the behaviour of the recipient. If it does not, then public money is wasted because it has no effect on what happens on the market anyway. In principle, in order […]
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30. January 2023  |   State Aid Uncovered by Phedon Nicolaides

Cumulation of State Aid Granted by Different Member States
State Aid Blogs - State Aid Uncovered SM posts 6
Introduction The EU Green Deal and the Climate, Environmental Protection and Energy Aid Guidelines [CEEAG] allow Member States to grant more aid, in diversity and amounts, to incentivise companies to invest in greener technologies and energy. However, when multiple Member States grant aid for the same purpose, there is a risk of overcompensation of undertakings that operate across Member States. […]
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24. January 2023  |   State Aid Uncovered by Phedon Nicolaides

State Resources Include all the Resources that Can be Directed by the State for its own Purposes
State Aid Blogs - State Aid Uncovered SM posts 40
Introduction On 12 January 2023, the Court of Justice delivered its judgment in joined cases C-702/20, DOBELES HES and C-17/21, Sabiedrisko pakalpojumu regulēšanas komisija.[1] A Latvian court requested the Court of Justice to provide a preliminary ruling on the interpretation of Article 107(1) TFEU, Article 108(3) TFEU, Regulation 1407/2013 on de minimis aid and of the procedural Regulation 2015/1589. The […]
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17. January 2023  |   State Aid Uncovered by Phedon Nicolaides

The Private Acquirer Test: An Illuminating and also Puzzling Judgment
State Aid Blogs - State Aid Uncovered SM posts 22
A public authority may act as a market operator and acquire services through a private third party without conferring an advantage to the provider of those services. Introduction When a public authority buys a service and pays the market price it does not confer an advantage to the seller in the meaning of Article 107(1) TFEU. Even if it pursues […]
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10. January 2023  |   State Aid Uncovered by Phedon Nicolaides

The Value of Land
State Aid Blogs - State Aid Uncovered SM posts 19
Different valuation methods do not confer a selective advantage if they generate similar results. Introduction Land or immovable property has no intrinsic value. Its value depends on how the land or property is used. In turn, how it is used is determined by several factors such as its location, and the applicable zoning rules. A plot of land in an […]
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3. January 2023  |   State Aid Uncovered by Phedon Nicolaides

The Link between State Aid and Environmental Provisions of EU Law
State Aid Blogs - State Aid Uncovered SM posts 17
Introduction It is an established principle in the case law that the Commission may not authorise State aid that infringes other provisions of EU law, both primary and secondary. Now consider the following case. A Member State notifies to the Commission regional investment aid to support the construction of a mega factory. The factory will produce its own energy and […]
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24. May 2022  |   State Aid Uncovered by Phedon Nicolaides

Another Case of Rescue Aid to an Airline
State Aid Blogs - State Aid Uncovered SM posts 6
An undertaking does not have to be nationally “important” in order to qualify for rescue aid. Introduction The pandemic has been hard on airlines. For some of them, however, the pandemic simply exacerbated their already existing problems. On 18 May 2022, in case T‑577/20, Ryanair v European Commission, the General Court had to examine the case of State aid to […]
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10. May 2022  |   State Aid Uncovered by Phedon Nicolaides

Risk Finance
State Aid Blogs - State Aid Uncovered SM posts 5
Risk finance aid in the form of tax relief based on the GBER must be limited to private investors. Introduction Decisions of the European Commission authorising aid for risk finance are very rare. This is the consequence of the success of the Commission to get Member States to use almost exclusively the General Block Exemption Regulation [GBER] for the design […]
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3. May 2022  |   State Aid Uncovered by Phedon Nicolaides

The Standard of Proof in State Aid Complaints and the “Informational Disadvantage” of Complainants
State Aid Blogs - State Aid Uncovered SM posts 4
The Commission must use its investigative powers to seek clarification from Member States in order for it to establish whether a measure constitutes State aid, or is compatible aid, or is existing aid. Introduction Complaints are an important source of information to the Commission. The possibility afforded to undertakings to lodge such complaints with the Commission is intended to dissuade […]
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26. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Member States Must Recover of their Own Initiative Illegally Granted Aid
State Aid Blogs - State Aid Uncovered SM posts 3
Aid granted illegal must be recovered by the granting authority without any need for a prior Commission decision ordering recovery. The amount of recovered aid may be limited to that which is in excess of what is allowed by the GBER. Introduction It is a well-established principle in the case law that a “prudent market operator” is responsible to check […]
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19. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Injection of Capital in a Postal Operator
State Aid Blogs - State Aid Uncovered SM posts 2
The resources of a public undertaking necessarily count as “state resources”, regardless of the degree of autonomy of the public undertaking. However, not every decision of a public undertaking can necessarily be “imputed” to the state. A prudent investor may take into account authorised State aid. A prudent investor may tolerate short-term losses if it can realise sufficient profits in […]
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12. April 2022  |   State Aid Uncovered by Phedon Nicolaides

A First Commission Decision on Natural Gas Storage
State Aid Blogs - State Aid Uncovered SM posts 1
Compensation that guarantees a normal or fair rate of return eliminates risk that is inherent in market transactions and therefore confers an advantage in the meaning of Article 107(1) TFEU. Introduction On 23 March 2022, the European Commission announced plans to mitigate the spike in energy prices caused by the war in Ukraine. Chief among those plans were proposals for […]
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5. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Intra-State Transfers and the Discretion of Public Authorities
State Aid Blogs - State Aid Uncovered SM posts
Resources transferred from one public authority to another for the purpose of being used to subsidise undertakings do not fall within the scope of Article 107(1) TFEU if the recipient authority has discretion in their disbursement. Introduction A public authority that carries out economic activities becomes an undertaking that is subject to the prohibition of Article 107(1) TFEU. When the […]
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25. March 2022  |   State Aid Uncovered by Phedon Nicolaides

A New Temporary Crisis Framework
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Introduction A new Temporary Framework which is called “Temporary Crisis Framework” [TCF] to distinguish it from the currently applicable Temporary Framework on covid-19 related State aid was adopted on 23 March 2022, almost two years to the date of the publication of the rules on covid-19 related State aid.[1] The purpose of the TCF is to enable Member States to […]
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22. March 2022  |   State Aid Uncovered by Phedon Nicolaides

I. Vouchers for SMEs II. Funding of Aid with Revenue from Levies Imposed on the Aid Beneficiaries
State Aid Blogs - State Aid Uncovered SM posts 4
State aid rules apply both to direct and indirect beneficiaries of aid. Introduction This week’s article reviews a Commission decision and a judgment of the Court of Justice. The Commission decision concerns Italian vouchers for SMEs to pay for the use of fast broadband services. The judgment deals with a German measure supporting milk quality tests. In both cases an […]
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15. March 2022  |   State Aid Uncovered by Phedon Nicolaides

Another Altmark Compliant Case!
State Aid Blogs - State Aid Uncovered SM posts 2
Any non-SGEI obligation attached to a public service contract may not raise the cost of the service above the level of the “least cost to the community”. Introduction It is very rare for measures of compensation for public service obligations to be found by the European Commission to be compliant with the Altmark conditions. Nonetheless, in the past two years […]
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