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State Aid Assessment of Complex Settlement Agreements:

The European Commission’s Opening Decision in the German Lignite Phase-Out Case

Christian Koenig, Carlos Deniz Cesarano


Keywords: Germany, lignite phase-out, compensation measures, settlement agreement

The European Green Deal envisages a clean and decarbonised energy sector with net-zero greenhouse gas emissions by 2050. These ambitious objectives entrust the Member States with enormous tasks in connection with the transformation process, which must always be designed in a proportionate manner. For this purpose, compensation measures are regularly part of decarbonisation strategies. In the context of the German lignite phase-out, new legal challenges arise due to State aid law. In particular, the present case poses the question of how elements of settlement agreements are to be assessed under State aid law. This field currently seems to be almost unexplored, as the Commission’s notice on the notion of State aid only refers to settlement agreements in connection with tax law. However, settlement agreements contain some important elements that should be properly taken into account by the Commission in its State aid assessment. The fact that settlement agreements serve to avoid legal and factual uncertainties, especially in the context of highly complex decarbonisation strategies, must play a decisive role in an all-embracing economic analysis.

Christian Koenig is the Director of the Center for European Integration Studies and Professor of Law at the University of Bonn; Carlos Deniz Cesarano is a Research fellow and PhD Candidate at the Center for European Integration Studies at the University of Bonn. The piece is based on a legal opinion.


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