Europäisches Beihilfenrecht Blog

State Aid Uncovered Blog

In Lexxions Blog „State Aid Uncovered” veröffentlicht Prof. Phedon Nicolaides wöchentlich kritische Analysen zu den neuesten Urteilen und Entscheidungen zu staatlichen Beihilfen. Jeder Beitrag stellt die wichtigsten Punkte eines Gerichtsurteils oder einer EU-Kommissionsentscheidung vor, ordnet sie in den Kontext ähnlicher Rechtsprechung oder Praxis ein, bewertet die zugrundeliegende Argumentation und zeigt etwaige Ungereimtheiten oder Widersprüche auf.

In loser Folge werden auf diesem Blog auch Gastbeiträge von anderen Experten für staatliche Beihilfen veröffentlicht, welche die Inhalte der Blogbeiträge ergänzen.

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Professor at Maastricht University; Professor at University of Nicosia, and Academic Director at Lexxion Training

How Can Incompatible State Aid Be Passed-on from one Company to another to Avoid Recovery?

Introduction State aid that is incompatible with the internal market has to be paid back, unless the repayment would be contrary to a general principle of EU law. Last November the Court of Justice ruled in case C‑622/16 P, Scuola Elementare Maria Montessori v European Commission that “(79) the principle that ‘no one is obliged to do the impossible’ is among the […]

How Much May a Non-Economic Entity Charge without Becoming an Undertaking?

The price should not cover more than 50% of the costs. Introduction An entity that does not make profit can still be an undertaking. However, an entity that charges a fee for its services is not necessarily an undertaking. The EU Court of Justice has never defined how low such a fee must be in order for that entity to […]

EU Rules do not Impose a Time Limit on the Power of National Courts to Deal with Non-notified Aid

State aid may affect trade even when the market concerned is not liberalised. This can happen when the aid recipient also has operations outside that market, which it can cross-subsidise. Claims for damages caused by illegal aid must be accorded the same treatment under national law as any other claim resulting from faulty decisions of the state.   Introduction A […]

Support for Non-Performing Loans in Cyprus

Public assistance to households to pay for their mortgages is not State aid. Public assistance to enterprises to pay for their loans may be qualified as de minimis aid. Public assistance to households and de minimis aid to enterprises to pay for their loans are indirect aid to banks, which, however, falls outside the directive on bank recovery and resolution […]

What Does a Private Investor Take into Account before Investing?

A private investor may invest in a troubled company that is restructuring is order to increase its future profitability.   Introduction   The answer to the question posed above is short and simple: everything relevant. A private investor does not ignore anything that can affect the profitability of the prospective investment.This implies that the other side of the coin is […]

Pari Passu Is not Static

When comparing the behaviour of public and private creditors, it is necessary to ensure that their situations and interests do not diverge over time.   Introduction   When an undertaking owes money to a public authority the latter must use all available legal means to recover the money, including the liquidation of the undertaking and the sale of its assets. […]

Services of General Economic Interest: Proper Definition and Avoidance of Overcompensation

Member States need to demonstrate that public service obligations imposed on undertakings are necessary and proportional to the need for public service. A change in the funding of public services does not constitute new aid if it does not alter its objectives, the beneficiaries or the amount of aid by more than 20%.   Introduction It is a well-established principle […]

The Private Investor Principle in Air Transport – Part II

Public funds managed by private airport operators can be classified as state resources. Prices charged by airport operators can be used as a benchmark for market prices only if their activities and size are comparable and their costs are not subsidised by State aid. Before a private investor enters into any commercial arrangement, it takes into account all relevant information, […]

The Private Investor Principle in Air Transport – Part I

Public funds managed by private airport operators can be classified as state resources. Prices charged by airport operators can be used as a benchmark for market prices only if their activities and size are comparable and their costs are not subsidised by State aid. Before a private investor enters into any commercial arrangement, it takes into account all relevant information, […]

Justification of a Tax Exemption

Prevention of excessive taxation may justify tax exemption. Prevention of abuse may justify limits to the tax exemption.   Introduction   A tax exemption may not constitute state aid if it is justified by reasons which are linked to the nature or general scheme of the tax system. This is what the Court of Justice said on 19 December 2018, […]

The Legal Basis of the (In)compatibility of Aid Must be Clear

The European Commission may withdraw a decision, but before it adopts a new decision it must give an opportunity to interested parties to submit their comments, especially, if it changes the legal basis of the assessment of the compatibility of the aid.   Introduction The most frequent reasons for which the Commission finds aid to be incompatible with the internal […]

i) Transfer of State Resources, ii) Non-recovery of Incompatible Aid, iii) Primacy of Agricultural Policy over Competition Policy

Private resources that come under the control of a public authority become state resources. The only defence for not recovering incompatible aid is absolute impossibility. Agricultural policy objectives take precedence over those of competition policy. Introduction This article reviews a case involving transfer of state resources and a case concerning failure to recovery of incompatible State aid. It also draws […]

Existing v New Aid

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 […]

Indirect v Secondary Effects of 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 […]

Activities Linked to State Prerogatives

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 […]

Private Creditor Test

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 […]

State Resources and Imputability

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, […]

Pitfalls in the Use of De Minimis Aid

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 […]

The Necessity and Proportionality of Regional Aid

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.   […]

Odysseus and the Sirens: A Rational Market Operator Can Agree to be Bound by the Ruling of an Arbitration Tribunal

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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