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.
The long awaited Subsidy Control Bill has been published by the UK Government with bold promises that it will “create a new system for subsidies that can enable key domestic priorities, such as levelling up economic growth across the UK and driving our green industrial revolution“. In this article we identify the main changes immediately emerging from the draft legislation, […]
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 […]
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 […]
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 […]
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 […]
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 […]
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, […]
As long as the compensation does not exceed the net extra costs of the universal service activities, it may be used to offset other costs. Introduction The rules on State aid for services of general economic interest [SGEI] are very generous because they allow both investment and operating aid. Yet, it is not easy to comply with those rules because […]
State aid that is necessary for protecting essential national interests can be compatible with the internal market. Introduction State aid should support outcomes that the market by itself cannot achieve. This implies that State aid that is restricted to only one or a few undertakings is unlikely to be capable of delivering the desired outcome. Yet, sometimes there may be […]
A tax that is levied on both imported and domestic products but its revenue finances only domestic products infringes fundamental provisions of the EU Treaty. Introduction Member States finance the generation of electricity from renewable energy sources [RES] with revenue they raise through levies or charges on consumers of electricity. On 14 April 2021, the General Court in judgment in […]
I am grateful to Peter Staviczky for comments on an earlier draft. A company that is owned by more than 25% by public bodies is not considered to be an SME, regardless of whether those public bodies actually exercise direct or indirect control. A public university can be a public body. Temporary Framework Update: Number of approved and published covid-19 […]
On Friday, 30 November 2020, the European Commission published a Staff Working Document [SWD(2020) 257 final] presenting and assessing the results of the evaluation of the main State aid rules of the EU. The SWD explains the aims of the State Aid Modernisation [SAM] that was launched in 2012 and summarises the findings of the Fitness Check of the GBER, […]
I am grateful to Peter Staviczky for comments on an earlier version. The possible negative impact of State aid on the environmental is taken into account when the aid measure violates directly the relevant EU law. The Commission protects the interests of other Member States by ensuring that the negative effects of State aid are kept to the minimum possible. […]
Fiscal benefits to employees do not constitute State aid as long as they do not confer a direct or indirect advantage to their employers. Update on Temporary Framework: Number of approved and published Covid-19 measures, as of 16 October 2020: 302* Legal basis: Article 107(2)(b): 32; Article 107(3)(b): 255; Article 107(3)(c): 23 Average number of measures per Member State: 11 […]
Negotiated transactions are not necessarily market conform. Update on Temporary Framework: Number of approved and published covid-19 measures, as of 9 October 2020: 295* Legal basis: Article 107(2)(b): 32; Article 107(3)(b): 248; Article 107(3)(c): 23 – Average number of measures per Member State: 10.5 – Median number of measures per Member State: 12 – Mode number of measures per Member […]
I am grateful to Péter Staviczky for comments on an earlier draft of this article. I am solely responsible for its contents. The European Commission retains its sole right to assess the compatibility of aid granted on the basis of the GBER. Criteria defined in national law need not be taken into account by the Commission. The SME status has […]
A rational airport operator considers only incremental revenue and costs and ignores any cost not caused by an agreement with an airline. State aid developments: New Guidelines in State aid in EU ETS The Commission published on Friday, 25 September, in Official Journal C 317, p.5, the new Guidelines on State aid measures in the context of the system for […]
Operators selected through competitive, transparent, non-discriminatory and unconditional procedures receive no State aid. When only a single bid is submitted, the market conformity of the outcome must be verified with comparative analysis. Activities are purely local when they are not likely to attract customers or operators from abroad. Update on Temporary Framework: Number of approved and published covid-19 measures, as […]
Non-economic tasks and economic activities which are inseparable from those non-economic tasks are together, as a bundle, non-economic in nature. Public compensation for the extra costs of services of general economic interest [SGEI] may not cross-subsidise activities that fall outside the scope of the SGEI. Update on Temporary Framework: Number of approved and published covid-19 measures, as of 11 September […]
A snapshot of Covid-19 State aid Number of Covid-19 approved measures1, 2 [EU27 + UK, 4 September 2020] 19-15 13-11 9-7 6-4 BE CZ DK IT PL DE FR HU LV NL BG EL FI IE LT LU MT RO SE SK UK AT CY EE ES HR PT SI Source: DG Competition, author’s own calculations 1: Data exclude amendments […]
