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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9. October 2018  |   State Aid Uncovered by Phedon Nicolaides

Ex ante Assessment of Future Profitability is Absolutely Necessary
State Aid Blogs - m 1 1
A private investor assesses the prospects of future profitability before it invests. The burden of proof lies with the Member State that claims it has acted as a private investor.   Introduction The market economy investor principle is based on a simple premise: before you commit your money you need to check how much you are likely to get back. […]
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2. October 2018  |   State Aid Uncovered by Phedon Nicolaides

The Compatibility of State Aid with the Internal Market: Lessons from “Hinkley Point C” – Part III
The objective of common interest that should be supported by State aid does not have to be an objective agreed by all Member States.   Environmental protection Austria argued that the Commission had ignored the potential negative effects of the aid on the environment such as the storing of nuclear waste. The reply of the Court was that “(516) in […]
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25. September 2018  |   State Aid Uncovered by Phedon Nicolaides

The Compatibility of State Aid with the Internal Market: Lessons from “Hinkley Point C” – Part II
State Aid Blogs - SAH blogpost37 Hinkley Point C UK 2017
The objective of common interest that should be supported by state aid does not have to be an objective agreed by all Member States.   Existence of market failure and need for aid Austria and Luxembourg claimed that the intervention by the UK was not necessary and that there was no evidence that the liberalised market for the generation and […]
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18. September 2018  |   State Aid Uncovered by Phedon Nicolaides

The Compatibility of State Aid with the Internal Market: Lessons from “Hinkley Point C” – Part I
State Aid Blogs - SAH blogpost37 Hinkley Point C UK 2017
The objective of common interest that should be supported by state aid does not have to be an objective agreed by all Member States.   Introduction On 12 July 2018, the General Court ruled in a complex case brought by Austria and Luxembourg against Commission decision 2015/658 which had authorised State aid for Hinkley Point C, a new nuclear power […]
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11. September 2018  |   State Aid Uncovered by Phedon Nicolaides

Selectivity Can Exist at Different Levels: The Case of the Spanish Tax Lease System
transport ship
A tax measure may be selective in relation to both intermediate and final beneficiaries.  An undertaking may enjoy a selective advantage even if it passes all tax benefits to other parties.   Introduction A measure that is not selective at one level may be selective at another level and a measure that is selective at one level can also be […]
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4. September 2018  |   State Aid Uncovered by Phedon Nicolaides

Public Procurement and State Aid
State Aid Blogs - SAH blogpost35 Nuclearpower
State aid does not have to be awarded on the basis of a competitive procedure, unless the relevant rules require it. Secondary legislation may allow Member States to make direct awards without a prior competitive procedure. Public procurement rules do not apply to awards between contracting authorities.   Introduction   Public procurement and State aid rules have the same basic […]
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28. August 2018  |   State Aid Uncovered by Phedon Nicolaides

Public Service Compensation
State Aid Blogs - SAH blogpost34 PublicCompensation SGEI
Compensation for the provision of public services may not exceed the avoidable cost minus any forgone revenue from not having to provide those services. The VAT exemption for postal services is not State aid because it is laid down in the EU VAT directive and therefore cannot be attributed to Member States.   Introduction This article reviews Commission decision on […]
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21. August 2018  |   State Aid Uncovered by Phedon Nicolaides

The European Commission’s Code of Best Practices on State Aid Procedures
State Aid Blogs - SAH blogpost33 SA Code
Closer cooperation between Commission services and Member States.   Introduction   The European Commission, DG Competition, published on 16 July 2018 on its website and then on 19 July 2018 in the Official Journal of the EU a Code of Best Practices for the Conduct of State Aid Control Procedures.[1]The purpose of the Code is to provide guidance to Member […]
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13. August 2018  |   State Aid Uncovered by Phedon Nicolaides

State Aid Control in the UK after its Exit from the European Union
State Aid Blogs - SAH blogpost32 State Aid and Brexit
After its withdrawal from the EU, the UK is likely to maintain a State aid regime that is similar to that of the EU.   Introduction   In seven months’ time, on 29 March 2019, the UK will leave the EU. But its withdrawal from the EU will not bring to an end compliance with EU rules. The UK is […]
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7. August 2018  |   State Aid Uncovered by Phedon Nicolaides

The Compatibility of State Aid Depends on the Rules which are Applicable at the Time the Aid is Granted
State Aid Blogs - SAH Blopost31 SA Italy Bustransfer
Failure to comply with just a single provision of an exemption regulation results in the non-applicability of the whole regulation and makes any implemented aid measure automatically illegal. The compatibility of aid measures adopted in the past but continuing having effects are assessed not on the basis of old rules but on the basis of the rules which are applicable […]
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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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29. August 2017  |   State Aid Uncovered by Phedon Nicolaides

Bank Recapitalisation that Conforms to the Market Economy Investor Principle
State Aid Blogs - m 7
A public authority acts like a private investor when it injects capital in a stricken bank if there is a realistic prospect of sufficient return that compensates it for the risk it bears.   Introduction Caixa Geral de Depósitos (CGD) is the largest bank in Portugal and is now fully owned by the State. In June 2012, Portugal notified to […]
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22. August 2017  |   State Aid Uncovered by Phedon Nicolaides

State Aid Is Not Compatible With the Internal Market when it Contravenes other EU Rules
State Aid Blogs - m 4 1
Relief from a penalty imposed by EU rules is State aid that is incompatible with the internal market.   Introduction EU rules contain a standard exclusion: State aid cannot be declared compatible with the internal market when it is non-severable [i.e. cannot be separated] from a violation of EU law. Yet, cases involving non-severable violations of EU law are rare. […]
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15. August 2017  |   State Aid Uncovered by Phedon Nicolaides

Exceptions to the Exceptional Nature of State Aid for Banks
State Aid Blogs - m 4
State aid for banks can be granted without triggering resolution in cases of precautionary recapitalisation and liquidation.   Introduction A primary objective of the European response to the financial crisis was to sever the link between troubled banks and indebted sovereign. The principle now is that if a bank needs money to meet the capital adequacy ratio required by banking […]
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8. August 2017  |   State Aid Uncovered by Phedon Nicolaides

Sale of State-Owned Bank
State Aid Blogs - 01.11.17 State aid
The sale of a public asset is free of State aid when it is open, transparent, non-discriminatory, unconditional and the award is made to the highest binding and credible offer.   Introduction The rules on State aid to financial institutions and banks have become very strict. Owners and creditors have to be bailed in [the so-called burden sharing] and the […]
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