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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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
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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
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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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9. March 2022  |   State Aid Uncovered by Phedon Nicolaides

The Concept of “Undertaking in Difficulty” and Evidential Requirements
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The “subscribed share capital” of a company includes the capital that is already paid and any future amount that shareholders have irrevocably committed to pay. Introduction Undertakings in difficulty may not receive any kind of aid except aid to compensate for damage caused by a natural disaster or exceptional occurrence and, under strict conditions, rescue and/or restructuring aid. In most […]
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1. March 2022  |   State Aid Uncovered by Phedon Nicolaides

Security of Energy Supply
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Guaranteed supply of electricity at fixed prices to a state-owned network operator involves a transfer of state resources to the supplier. Guaranteed supply of electricity at fixed prices confers an advantage to the supplier. Introduction Member States are allowed to take measures to ensure the security of energy supplies. There is a variety of such measures: imposition of obligations on […]
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22. February 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation for Damage and De Minimis Aid
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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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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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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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