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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22. February 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation for Damage and De Minimis Aid
State Aid Blogs - Social Media posts 4
Compensation for damage caused by protected animals is State aid. Member States may categorise compensatory payments as de minimis aid and refuse to make payments in excess of the de minimis threshold. Introduction Advantage in the meaning of Article 107(1) TFEU is any benefit granted by the state that is not available under normal market conditions. Normal market conditions are […]
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15. February 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation and State Aid
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An event that causes damage for which the state is liable is distinct from the act that confers the right for compensation. Introduction The concept of State aid covers all resources that are controlled by the state, regardless of the reason why such resources may be transferred to or put at the disposal of an undertaking. On 25 January 2022, […]
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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
State Aid Blogs - Social Media posts 6
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
State Aid Blogs - Social Media posts 2
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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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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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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