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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17. July 2018  |   State Aid Uncovered by Phedon Nicolaides

Danish Water Tax Exemption
State Aid Blogs - SAH Blogpost28 Water Tax Denmark
A selective tax reduction does not constitute State aid if it does not confer an advantage that is proportionately larger than the magnitude of the tax reduction. A complete exemption of insignificant amounts of the taxable volume can be justified on the grounds of reducing administrative burden.     Introduction   Member States enjoy wide discretion to levy taxes on […]
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10. July 2018  |   State Aid Uncovered by Phedon Nicolaides

The 2017 Annual Competition Report
State Aid Blogs - Blog27 Annual Report
Introduction   On 18 June 2018, the European Commission published its Annual Report on Competition Policy for 2017.[1] As usually, the Annual Report is accompanied by a Staff Working Paper that has almost four times as many pages as the Annual Report and provides more details on developments in all areas of competition policy, including State aid.The pre-eminent role of the […]
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3. July 2018  |   State Aid Uncovered by Phedon Nicolaides

Revision of the GBER
State Aid Blogs - SAH Blog26 GBERd
Block exemption of new financial instruments.   Introduction   The Commission has recently published a proposal for amendment of Council Regulation 2015/1588[1] which authorises the Commission to adopt block exemption regulations. The purpose of the Commission’s proposal is to expand Article 1 of Regulation 2015/1588. This Article lists the categories of aid that may be declared compatible with the internal market.The […]
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25. June 2018  |   State Aid Uncovered by Phedon Nicolaides

Remedying the Damage of a Natural Disaster through Incentives for New Investments
State Aid Blogs - m 3 1
Damage from natural disasters can be remedied in the short-term through direct compensation or in the longer-term through investment subsidies to support new productive capacity.   Introduction   This article reviews a rather straightforward case which, however, is also quite unusual. It concerns a measure to remedy the effect of recent earthquakes in Italy. What makes it unusual is that […]
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19. June 2018  |   State Aid Uncovered by Phedon Nicolaides

Sector-Specific Tax Exemptions
State Aid Blogs - SAH Blogpost 24 Seaports
A measure that covers a whole sector can be selective. Distortions caused by the policies of other Member States cannot justify the granting of State aid. The purpose of State aid is not to ensure equal conditions of competition across Member States.   Introduction On 31 May 2018, the General Court ruled in case T-160/16, Groningen Seaports v European Commission.[1] Groningen […]
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12. June 2018  |   State Aid Uncovered by Phedon Nicolaides

State Aid for the Deployment of Broadband Networks
State Aid Blogs - SAZ Blogpost 23 Broadband
Most State aid for the development of broadband networks is approved by the Commission. But the aid must be limited only to areas where market-based investments are unlikely to be made without aid.   Introduction   This article reviews a recent Commission decision authorising State aid for broadband development in the Netherlands which is one of the most networked countries […]
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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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14. November 2017  |   State Aid Uncovered by Phedon Nicolaides

Existing v New Aid
State Aid Blogs - m 4 1
Any alteration of an existing aid measure can affect the substance of the measure itself. A deviation from the conditions of authorisation may turn existing aid into new aid. Alteration or deviation from the conditions of authorisation that affect the compatibility of an existing aid measure, can result in the granting of new aid. A Member State that alters an […]
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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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