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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5. June 2018  |   State Aid Uncovered by Phedon Nicolaides

The Extent of the Discretion of Member States to Define Services of General Economic Interest (SGEI)
State Aid Blogs - SAH Blogpost 22 SGEI
A service is classified as an SGEI not only when it is important for citizens but also when the market does not adequately supply it and one or more undertakings are compelled to provide it to specified consumers, in specified areas and on specified terms.   Introduction   The Treaty on the Functioning of the EU and the case law […]
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29. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Exemptions from Product-Specific Taxes
State Aid Blogs - SAH Blogpost 21 Product Tax
Tax exemptions do not constitute State aid when they aim to induce change in the behaviour of consumers, when they distinguish between harmful products and non-harmful products and for reasons of administrative simplicity.   Introduction   In the past two weeks, an article was published in two parts criticising the judgments of the Court of Justice in three cases of […]
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22. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Exemption from Taxes that Protect the Environment May not be Selective – Part II
State Aid Blogs - victor xok gFjGZ2qRZOo unsplash
Member States have discretion to impose taxes that penalise environmentally harmful activities. Exemption of undertakings whose activities do not harm the environment does not constitute State aid whenever the exempted undertakings are not in a comparable situation.   Application of Article 107(1) to the Asturias tax   In this case, exempted establishments were those with sales area less than 4000m2 or […]
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15. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Exemption from Taxes that Protect the Environment May not be Selective – Part I
State Aid Blogs - 14.05.18 Part1 Blog19 Spain Regional Tax
Member States have discretion to impose taxes that penalise environmentally harmful activities. Exemption of undertakings whose activities do not harm the environment does not constitute State aid whenever the exempted undertakings are not in a comparable situation.   Application of Article 107(1) to the Asturias tax   In this case, exempted establishments were those with sales area less than 4000m2 or […]
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8. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Dealing with Problematic Banks
State Aid Blogs - StateAidHub blogpost14 StateAid Lexxion Money Eu Commission Bank Financial
The sale of a bank through a fair, open, competitive and transparent procedure that maximises the value of the assets and liabilities is free of State aid.   Introduction This week’s article returns to the theme of State aid to banks and examines a case of “precautionary” recapitalisation and a case of sale of a bank, that was linked to […]
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2. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Compensation for Public Service Obligations
State Aid Blogs - 02.05.2018 SA POL UK SGEI
Compensation for public service obligations may be fixed at less than the net extra costs of the provider of the public service to induce it to become more efficient.   Introduction   Every three years the UK determines the compensation it provides to the Post Office Limited (POL) for the extra costs of the public services it provides. Commission decision […]
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24. April 2018  |   State Aid Uncovered by Phedon Nicolaides

Liquidity Support to Banks
State Aid Blogs - 24.04.2018 StateAid Banks MPS
Banks that receive State aid are considered to be failing banks, except when the aid is granted to solvent banks for the purpose of precautionary recapitalisation or temporary liquidity.   Introduction   During the past decade, large amounts of public funds have been committed to shore up failing or illiquid banks. Under current banking rules, the mere fact that a […]
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17. April 2018  |   State Aid Uncovered by Phedon Nicolaides

Complaints about Billboards and Welfare Services
State Aid Blogs - 17.04.2018 State aid Billboard
A regulatory measure may affect competition but it does not constitute State aid. Administrative changes to existing aid measures do not result in new State aid.   Introduction This article reviews two Commission decisions: one concerning a Czech regulatory measure and another concerning existing aid to German social organisations. Both decisions dealt with complaints about alleged illegal State aid.   […]
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10. April 2018  |   State Aid Uncovered by Phedon Nicolaides

What Makes a Public Health Care System Non-economic?
State Aid Blogs - 10.04.18 HealthCare StateAid Economic
Health services are not economic in nature when they are funded by the state through taxation, they are provided for free or at a nominal fee which is the same for all patients and they are available to all citizens on a universal basis and on the same terms.   Introduction   After the judgment of the General Court of […]
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3. April 2018  |   State Aid Uncovered by Phedon Nicolaides

Advantage through Contracts
State Aid Blogs - ah life rd2jRzEum9g unsplash
A price below the regulated normal price confers an advantage. Competition is distorted even when the aid recipient does not expand its operations.   Introduction An undertaking can obtain an advantage without receiving an outright grant. The advantage may be hidden in a contract for the supply of an essential input at reduced prices. This is the issue tackled by […]
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7. November 2017  |   State Aid Uncovered by Phedon Nicolaides

Indirect v Secondary Effects of State Aid
State Aid Blogs - 07.11.sardinia airport State aid
The prohibition of State aid in Article 107(1) of the Treaty applies both to the direct and indirect beneficiaries of aid. The direct and indirect beneficiaries are those who are intentionally targeted by the aid. Secondary effects are benefits which are inherent in an aid measure and which are not targeted at specific undertakings.   Introduction Public funding for the […]
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1. November 2017  |   State Aid Uncovered by Phedon Nicolaides

Activities Linked to State Prerogatives
State Aid Blogs - 01.11.17 State aid
Economic activities which cannot be separated from the exercise of public powers cease to be economic in nature.   Introduction The dividing line between economic and non-economic activities is in a permanent state of flux. Although it is now clear that some activities fall within the powers and prerogatives of the state, while many others are carried out by the […]
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24. October 2017  |   State Aid Uncovered by Phedon Nicolaides

Private Creditor Test
State Aid Blogs - SAH Blog26 GBERd
The Commission must apply the private creditor test even if a Member State does not request it or believes that it is not relevant.   Introduction Private investors always have two options: to invest or not to invest. They choose the option that generates the largest amount of profit or revenue. Similarly, private creditors also have two options: call in […]
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17. October 2017  |   State Aid Uncovered by Phedon Nicolaides

State Resources and Imputability
State Aid Blogs - 17.10. imputability stateaid
When the state acts in its capacity as legislator it is not presumed to direct the resources of undertakings it owns and over which it can exercise dominant influence as a shareholder. Introduction On 13 September 2017, the Court of Justice replied to a request from a national court to advise it on the concept of state resources [case C‑329/15, […]
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10. October 2017  |   State Aid Uncovered by Phedon Nicolaides

Pitfalls in the Use of De Minimis Aid
State Aid Blogs - 05.12.Imputability of Aid State aidz
Calculating de minimis aid according to the average amount of aid received by undertakings is wrong. Introduction It appears that all Member States grant de minimis aid, even though some tend to grant it more easily than others. De minimis aid can be used to subsidise any costs, including those which are not eligible under other State aid rules. The […]
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4. October 2017  |   State Aid Uncovered by Phedon Nicolaides

The Necessity and Proportionality of Regional Aid
State Aid Blogs - m 5 1
The Commission must open the formal investigation procedure when it has serious doubts about the compatibility of State aid. The aid that is necessary to induce a company to locate its investment in an assisted region is the amount that covers the difference in costs between the assisted region and the best alternative location. This amount is also proportional.   […]
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26. September 2017  |   State Aid Uncovered by Phedon Nicolaides

Odysseus and the Sirens: A Rational Market Operator Can Agree to be Bound by the Ruling of an Arbitration Tribunal
State Aid Blogs - m 6 1
A rational market operator can agree to arbitration if there is no reasonable prospect of a better outcome. However, a rational operator would ensure that the terms according to which an arbitration decision can be taken would be defined in advance and would not be prejudicial to the operator.   Introduction Is it rational for a market operator to agree […]
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19. September 2017  |   State Aid Uncovered by Phedon Nicolaides

Calculating the Amount of State Aid in a 100% Public Guarantee
State Aid Blogs - CCH tate aid infratructure
The proxy rates in the Commission Notice on Guarantees cannot be used in cases of state guarantees that cover 100% of the underlying loans.   Introduction Last week’s article reviewed the terms of the operation of regional airports in Greece. (View it here). This week’s article continues with the theme of management of public infrastructure and examines Commission decision SA.42545 on […]
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12. September 2017  |   State Aid Uncovered by Phedon Nicolaides

Concession Agreements Free of State Aid
State Aid Blogs - concessions State aid airports
Awards of concession contracts should follow a procedure which is open, transparent, non-discriminatory and unconditional. Prices may be regulated to prevent excessive prices and profits. But, the concession fee may be adjusted to enable the concessionaire to earn a sufficient return.   Introduction This article examines the link between State aid and concession agreements. In decision SA.44259, the Commission considered […]
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5. September 2017  |   State Aid Uncovered by Phedon Nicolaides

Sale, Liquidation and Other Options for Private Investors
State Aid Blogs - m 33
A private investor chooses the less costly option between selling a company at a loss and liquidating it. In addition to avoiding losses, a private investor also cares for its image, quantifies its value and factors it in the sale or liquidation option.   Introduction On 6 July 2017, the General Court ruled in two closely related cases: T-74/14, France […]
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