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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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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20. December 2022  |   by Phedon Nicolaides

Compensation for Damage
State Aid Blogs - State Aid Uncovered SM posts 2
Introduction On 9 November 2022, the General Court followed its previous judgments in cases concerning compensation for damage caused by the covid-19 pandemic to rule, in case T-111/21, Ryanair v European Commission, that Member States were free to choose to whom to grant State aid.[1] Ryanair had sought the annulment of Commission decision SA.55373 concerning damage compensation to Croatia Airlines […]
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13. December 2022  |   State Aid Uncovered by Phedon Nicolaides

State Guarantees for Undertakings in Difficulty
State Aid Blogs - State Aid Uncovered SM posts 12
In order to detect State aid in a state guarantee, it is necessary to carry out a search to identify the market rate, if it exists. There is no general presumption that an undertaking in difficulty cannot obtain a guarantee from the market. It is necessary to consider the risk of default. The calculation of the amount of aid must […]
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6. December 2022  |   State Aid Uncovered by Phedon Nicolaides

Compliance with State Aid Guidelines
State Aid Blogs - State Aid Uncovered SM posts 10
For aid to be declared compatible with the internal market, all of the formal and substantive provisions of the relevant guidelines must be satisfied. State aid is granted the moment the right to a selective advantage is conferred, even if the actual benefit materialises at a future point in time. Introduction On 26 October 2022, the General Court reiterated, in […]
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29. November 2022  |   by Phedon Nicolaides

What Costs Must be Included in Compensation for Public Service Obligations?
State Aid Blogs - State Aid Uncovered SM posts
Introduction The two most difficult issues in imposing a public service obligation on a providers of a service of general economic interest is, first, the correct definition of the obligation and, second, the correct calculation of the amount of compensation that covers only the net extra cost of the service. The correct definition must take into account what the market […]
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15. November 2022  |   State Aid Uncovered by Phedon Nicolaides

No Effect on Trade
State Aid Blogs - State Aid Uncovered SM posts 6
A public measure of purely local character and which does not induce cross-border movement of investors or clients is unlikely to affect trade between Member States. Introduction It is rare to find a judgment that confirms that a particular public measure is not liable to affect trade between Member States. The General Court did so in its judgment of 19 […]
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8. November 2022  |   State Aid Uncovered by Phedon Nicolaides

Natural Disasters and State Aid
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Compensation for damage suffered by undertakings as a result of a natural disaster constitutes State aid. The compensation is compatible with the internal market only if, first, there is a causal relationship between the natural disaster and the damage and, second, the amount of compensation does not exceed the amount of the damage. Introduction Financial assistance in the form of […]
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24. May 2022  |   State Aid Uncovered by Phedon Nicolaides

Another Case of Rescue Aid to an Airline
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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
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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
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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
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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
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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!
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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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