Introduction
New State aid schemes have to be notified to the Commission for prior authorisation. Changes to already authorised schemes that do not alter their nature or significantly increase their amounts do not need to be notified as they are considered to be existing aid.
Article 4(1) of Regulation 794/2004 explains that “an alteration to existing aid shall mean any change, other than modifications of a purely formal or administrative nature which cannot affect the evaluation of the compatibility of the aid measure with the [internal] market. However an increase in the original budget of an existing aid scheme by up to 20 % shall not be considered an alteration to existing aid”.
On 21 May 2025, in case, T-72/22, Interneto žiniasklaidos asociacija and others v Commission, the General Court found that the Commission committed a simple but sufficiently serious error concerning an alteration to existing that led the Court to annul the Commission decision in question.[1]
The General Court also clarified that for alterations to existing aid to result in new aid they must be “substantial”. Substantial alterations affect the “constituent” elements of the aid measure. The constituent elements are those that determine the compatibility of the aid with the internal market and are to be found in the relevant Commission block exemption regulations and guidelines.
In this respect, it is worth noting that the Commission applies what may be called a two-step test to determine whether an alteration results in new aid [in addition it checks when necessary whether the measure was adopted before the country’s accession to the EU]. First, it establishes whether the alteration is to an aspect of the aid that is “non-severable” from the measure. If the answer is yes, then it proceeds to the second step where it examines whether the alteration is substantial in the sense that it changes the substance of the measure. Broadly, the substance of a measure is give by the objective of the aid, the nature of the advantage, the eligible beneficiaries, the scope of the aided activities, and the source of the financing of the aid. In practice, the Commission examines all the relevant criteria of the compatibility of the aid. [See, for example, SA.62830 concerning State aid to Finnish public broadcaster YLE to support online learning services.]
Background
The applicants, Interneto žiniasklaidos asociacija [IZA] and two other broadcasters, sought the annulment of a letter from the Commission services [reference COMP.C.4/KK/ASz/ao D(2021)7942463] on measure SA.57787 concerning State aid granted by Lithuania to the public service broadcaster LRT. LRT used to be to partly funded by the state. It also generated revenue from advertising and the sale of programming. However, in 2015 and 2020, the arrangements for its state funding were amended. LRT was no longer allowed to ran advertisements so that the shortfall in commercial revenue was covered by an increase in the state’s contribution.
IZA and the other applicants were active in the television and radio broadcasting sector. In June 2020, they submitted a complaint to the Commission, alleging that LRT received new aid that had not be notified to the Commission. In April 2021, the Commission replied by expressing the preliminary view that the LRT funding scheme constituted existing aid as it was implemented before Lithuania’s accession to the EU in 2004.
The applicants disagreed with the Commission and asked it to open the formal investigation procedure. In November 2021, the Commission sent the contested letter to the applicants. In that letter, it stated, first, that the LRT funding scheme constituted existing aid. Second, it concluded that the 2015 and 2020 amendments could not be regarded as substantial alterations to existing aid. Consequently, the 2015 and 2020 amendments did not result in new aid. Third, the Commission’s view was that LRT’s funding was prima facie compatible with the rules on broadcasting and Article 106(2) TFEU.
Was the contested letter a challengeable act?
The first issue that had to be tackled by the General Court was whether the letter of the Commission was a challengeable act.
The General Court explained at the outset that “(24) In accordance with the first paragraph of Article 263 TFEU, acts against which an action may be brought are acts intended to produce legal effects vis-à-vis third parties.”
Next, the General Court noted that “(25) under the second subparagraph of Article 12(1) of Regulation 2015/1589, the Commission must examine without undue delay any complaint submitted by an interested party regarding allegedly unlawful aid. When it receives such a complaint, the Commission must initiate the preliminary examination stage provided for in Article 108(3) TFEU.”
The General Court observed that “(27) when the Commission receives a complaint about allegedly unlawful aid, by classifying the measure as existing aid, it subjects it to the procedure laid down in Article 108(1) TFEU and thus implicitly refuses to initiate the procedure laid down in Article 108(2) TFEU in respect of that aid which the complainant considers to be unlawful aid, that is to say new aid put into effect without the requisite authorisation”.
“(28) The adoption by the Commission of such a position, based on the information supplied by the interested parties, constitutes a decision”. “(29) The fact that the act is not referred to as a ‘decision’ is also irrelevant, in principle.”
Then the General Court held that “(33) a decision, by which the Commission classifies the measure at issue as existing aid and thus implicitly refuses to initiate the formal investigation procedure laid down in Article 108(2) TFEU, constitutes a decision under Article 4 of Regulation 2015/1589 and, consequently, an act open to challenge for the purposes of Article 263 TFEU”.
Standing to bring proceedings
The next issue that was examined by the General Court was whether the applicants had legal standing under Article 263 TFEU.
“(36) An action for the annulment of such a decision [i.e. a refusal to open the formal investigation procedure] brought by a person who is concerned within the meaning of Article 108(2) TFEU is to be declared to be admissible where that person seeks, by instituting proceedings, to safeguard the procedural rights available to him or her under that provision”.
“(38) By contrast, if the applicant calls into question the merits of a decision appraising the aid taken on the basis of Article 108(3) TFEU or after the formal investigation procedure, the mere fact that it may be regarded as ‘concerned’ within the meaning of Article 108(2) TFEU cannot suffice to render the action admissible. The applicant must therefore demonstrate that it has a particular status, for the purposes of the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17). That applies in particular where the applicant’s position on the market concerned is substantially affected by the aid to which the decision in question relates”.
“(40) According to Article 1(h) of Regulation 2015/1589, an interested party is ‘any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing undertakings and trade associations.’ In other words, there is an indeterminate group of persons to whom notice must be given. That provision does not, however, rule out the possibility that an undertaking which is not a direct competitor of the beneficiary of the aid can be categorised as an ‘interested party’, provided that that undertaking demonstrates that its interests could be adversely affected by the grant of the aid. Thus, it is necessary for that undertaking to establish, to the requisite legal standard, that the aid is likely to have a specific effect on its situation”.
“(41) If an applicant is recognised as having the specific status of ‘interested party’, within the meaning of Article 1(h) of Regulation 2015/1589, in connection with the specific subject matter of the action, that status is sufficient to distinguish it individually, for the purposes of the fourth paragraph of Article 263 TFEU, where that action seeks to safeguard the applicant’s procedural rights under Article 108(2) TFEU”.
“(42) In the present case, the applicants are the authors of the complaints which led to the adoption of the contested letter. They actively participated in the preliminary examination procedure. Moreover, as they submit, while the first applicant is a trade association defending the interests of undertakings competing with the beneficiary of the alleged aid, the second and third ones are two undertakings competing with that beneficiary and their interests could be affected by the grant of the alleged aid.”
“(43) Therefore, it must be held that the applicants have established that they have the status of interested parties for the purposes of Article 108(2) TFEU and of Article 1(h) of Regulation 2015/1589, […] Accordingly, the applicants are entitled to challenge the contested letter in so far as, by their action, they seek to safeguard their procedural rights.”
“(45) In order to have its action for annulment upheld, the applicant may invoke any plea capable of showing that the assessment of the information and evidence which the Commission had at its disposal during the preliminary examination procedure for the measure notified should have raised doubts as to the compatibility of that measure with the internal market.”
The tasks of the Commission and the scope of judicial review
“(57) The formal investigation procedure under Article 108(2) TFEU is essential whenever the Commission has serious difficulties in determining whether aid is compatible with the internal market. Thus, the Commission may confine itself to the preliminary examination under Article 108(3) TFEU when taking a decision in favour of aid only if it is able to satisfy itself, after an initial examination, that that aid is compatible with the internal market. If, by contrast, the initial examination leads the Commission to the opposite conclusion or even if it does not enable it to resolve all the difficulties involved in determining whether the aid is compatible with the internal market, the Commission is under a duty to carry out all the requisite consultations and for that purpose to initiate the procedure under Article 108(2) TFEU”.
“(58) The same applies where the Commission, following the examination of a complaint and after the preliminary examination stage, concludes that the measure at issue constitutes existing aid.”
Meaning of “serious difficulties”
Next, the General Court explained the meaning of serious difficulties. “(59) As the concept of ‘serious difficulties’ is objective in nature, proof of the existence of such difficulties, which must be looked for both in the circumstances in which the decision not to raise objections was adopted and in its content, must be furnished by the applicant seeking the annulment of that decision, by reference to a consistent body of evidence”.
“(60) In particular, if the examination carried out by the Commission during the preliminary examination procedure is insufficient or incomplete, this constitutes an indication of the existence of serious difficulties in the assessment of the measure at issue, which should have triggered the Commission’s obligation to initiate the formal investigation procedure”.
“(61) In addition, the lawfulness of a decision […] falls to be assessed by the EU Courts, in the light not only of the information available to the Commission at the time when the decision was adopted, but also of the information which ‘could have been available’ to the Commission, which includes information which seemed relevant and which could have been obtained, upon request by the Commission, during the administrative procedure”.
“(63) It follows that the review by the Court of the legality of a decision not to initiate the formal investigation procedure on account of the absence of serious difficulties will go beyond simple consideration of whether or not there has been a manifest error of assessment. A decision adopted by the Commission without initiating the formal investigation procedure may be annulled, because of the failure to initiate the inter partes and detailed examination required under Article 108(2) TFEU, even if it is not established that the Commission’s assessments as to substance were wrong in law or in fact.”
The meaning of existing aid
First, the General Court recalled that “(71) existing aid must therefore be regarded as lawful so long as the Commission has not found that it is incompatible with the internal market”.
“(74) Under Article 1(c) of Regulation 2015/1589, alterations to existing aid are to be considered as ‘new aid’ subject to the notification requirement of Article 108(3) TFEU”.
“(75) However, it should be recalled that not every alteration of existing aid is necessarily new aid. It is apparent from Article 4(1) of Commission Regulation (EC) No 794/2004 […] implementing Regulation 2015/1589 […] that, ‘for the purposes of Article 1(c) of Regulation [2015/1589], an alteration to existing aid shall mean any change, other than modifications of a purely formal or administrative nature which cannot affect the evaluation of the compatibility of the aid measure with the [internal] market. However an increase in the original budget of an existing aid scheme by up to 20% shall not be considered an alteration to existing aid.’” “(76) Thus, in order to qualify as new aid, an alteration of existing aid must be substantial”.
Since neither Regulation 2015/1589, nor Regulation 794/2004 refer to substantial alterations, the General Court defined what alteration can be considered substantial. “(77) In order to assess whether alterations to existing aid are substantial, it is necessary to examine whether those alterations affected the constituent elements of the original funding scheme”.
“(78) The constituent elements of the original funding scheme include, inter alia, the nature of the advantage, the class of beneficiaries, the activities of the beneficiaries, the objective of the financial support, the public service task assigned to the beneficiaries and the source and amount of that support”.
“(79) These elements are also referred to in paragraph 31 of the Broadcasting Communication”.
The statements in paragraphs 78 & 79 are very useful. They indicate that the constituent elements of a scheme, whose alteration would result in new aid, are those which affect or determine the compatibility of the scheme with the internal market. They can be found either in the relevant block exemption regulations or guidelines.
Then the General Court noted that “(89) LRT’s dual-funding scheme, consisting of State compensation and revenue from advertising activities, was replaced, as a result of the 2015 amendments, by a single-funding scheme, advertising now being prohibited and LRT being funded mainly by State compensation and by certain limited revenue from commercial activities.”
“(90) However, the Commission does not appear to have considered, in the contested letter, the consequences, on LRT’s sources of funding, of eliminating advertising revenue.”
“(91) The Commission did not consider whether the elimination of advertising as a source of funding for LRT was likely to reduce the net benefit from commercial revenue by the same amount, through automatic and proportionate increase of the net cost of the public service activity and therefore the public contribution paid to LRT. In addition, it failed to examine whether removing revenue from commercial advertising could have the consequence that LRT would henceforth be funded, exclusively or almost exclusively, from public funds, and whether that increase in public funding would not constitute an alteration of one of the constituent elements of the original LRT funding scheme and would therefore be classified as new aid.”
“(92) Furthermore, in the contested letter, the Commission did not carry out a sufficiently comprehensive examination making it possible to identify precisely the characteristics of the LRT funding scheme prior to 10 December 1994 and determine whether the amount of that funding, as a constituent element of the original LRT funding scheme, had been substantially altered after the introduction of the 2015 and 2020 amendments.”
“(93) In particular, as regards the 2015 amendments, […], the Commission stated that, […], LRT’s total actual budget had increased from EUR 22 234 000 in 2014 to EUR 25 067 000 in 2015. According to the Commission, that ‘seems to indicate that the overall budget of LRT, for which the State assures the financing, did not change drastically following the change in 2015’.”
In other words, the increase in LRT’s budget was only 13%. However, what matters is not the change in the budget of the aid recipient but the change in the aid budget or amount.
“(95) The documents before the Court show that, when the contested letter was adopted, the Commission had at its disposal figures provided by the applicants which should have led it to enquire whether the amount of State compensation paid to LRT had been substantially altered after the 2015 amendments. It is apparent […], that the compensation actually paid by the State to LRT […] increased from EUR 15 158 000 in 2014 to EUR 22 726 000 in 2015, representing a 49.9% increase, whereas the increases in previous years were less significant. As regards the share corresponding to commercial revenue (third column of that table), it went from EUR 7 076 000 in 2014 to EUR 2 341 000 in 2015. However, no answer appears to have been given to those issues in the contested letter.”
The General Court point out to similar increases in the State aid budget following the 2020 amendments.
“(97) It is apparent […] that, following the 2020 amendments, the ‘safe haven’ of EUR 29 900 000, […], was increased to approximately EUR 41 000 000, which, […], represents a 37.12% increase. However, this does not appear to have been addressed in the contested letter.”
“(99) In those circumstances, the applicants are right to claim that the Commission carried out an insufficient and incomplete examination of the classification of the 2015 and 2020 amendments as existing aid during the preliminary examination procedure, which constitutes an indication of the existence of serious difficulties in the assessment of the measure at issue”.
Therefore, the General Court annulled the Commission letter.
Conclusions
Two important lessons can be drawn from this case. First, the relevant budget is not that of the aid recipient but that of the aid scheme. Second, the alterations that turn an existing aid measure into a new measure are those that affect its compatibility with the internal market and can be found in the relevant Commission regulations and guidelines.
[1] The full text of the judgment can be accessed at:
