Access to European Commission Guidance

The Treaty on the Functioning of the European Union (TFEU) grants unique powers to the European Commission in the field of State aid. In no other policy field does the TFEU require Member States to inform the Commission of plans to implement a measure and confer to the Commission the right to assess those measures without obtaining the prior consent of the Council or EU courts. Even under Article 258, where the TFEU empowers the Commission to initiate action against Member States that infringe EU law, the TFEU still obliges the Commission to “bring the matter before the Court of Justice”.

The TFEU establishes this system of prior control of State aid because public subsidies can distort competition in the internal EU market. The integrity of this system depends on the Commission being able to distinguish between subsidies that remedy market failure and subsidies that worsen market failure. However, the effectiveness of prior control is conditional on compliance by Member States. And, compliance by Member States, in turn, depends on the rules being clear and comprehensible.

But, there is a weakness in this system of State aid control. If Member States make a mistake, intentionally or unintentionally, the cost is borne by the recipients of the aid. Member States are obliged to recover any aid that has been granted illegally. Illegally granted aid either falls outside the scope of a block exemption regulation or is not notified to and approved by the Commission. Even if a Member State repeatedly commits the mistake of granting illegal aid, they face no penalty under EU law as long as they recover it with interest. Of course, they waste administrative resources in granting and recovering aid and may be exposed to legal action under national law, but it appears that undertakings rarely succeed in obtaining compensation for damage suffered as a consequence of faulty administrative decisions.

This is because the Court of Justice has held in many judgments that undertakings may not entertain legitimate expectations that the aid is granted legally to them if the procedure under Article 108(3) has not been followed.1

Since the vast majority of State aid measures are based on block exemption regulations,2 one may reasonably assume that aid recipients do not face the same risk when aid is granted under such a regulation. That would be the wrong assumption. The Court of Justice is very clear that:3

Perhaps more importantly, the Court of Justice has also clarified that national aid-granting authorities “are in the same position, in this respect, as the potential beneficiaries of aid and are required to ensure that their decisions are compliant with that regulation.”4

It follows that not only must the rules be understood correctly by the recipients of State aid, they cannot rely on assurances given to them by the authorities that grant the aid. Those authorities also have to interpret correctly block exemption regulations. Therefore, a prudent and diligent economic operator must form its own view as to the legality of the aid it receives.

And, here is another weakness in the State aid system that undermines its effectiveness. Aid recipients have no access to the interpretation and guidance provided by the Commission to national authorities. The Commission refuses to allow undertakings access to the answers sent electronically to questions from Member States. One can understand why the right to submit questions is only open to Member States. Very reasonably, the Commission does not want to be inundated with questions, possibly from persons with limited knowledge of State aid. However, granting reading rights should result in no additional administrative burden.

The view of the Commission, as expressed informally by officials of DG Competition, appears to be that undertakings can always ask questions of national authorities and if national authorities do not know the answer, they can ask the Commission. This view is disingenuous. It makes undertakings dependent on national authorities that may have their own interpretation and interests. It also weakens compliance with State aid rules because it prevents undertakings from challenging the interpretation of national authorities. And, it creates an uneven playing field in the EU for the simple reason that the attitude of national authorities towards aid applicants varies across the EU. Such variation in national practices may not be the concern of the Commission, but ultimately, it makes it much more difficult for undertakings to act prudently and diligently when they receive State aid, as required by EU case law.

The powers assigned to the Commission directly by the TFEU are balanced against the obligations that apply to all EU institutions - such as respect for the principles of proportionality [Article 5 TEU] and explanation of the reasons on which a legal act is based [Article 296 TFEU]. The duty to explain should not be limited to formal decisions. It should also extend to the rules that apply to both grantors and recipients of State aid.

State aid rules have become longer and more complex. For example, the consolidated version of the recently revised General Block Exemption Regulation [Regulation 651/2014, as revised by Regulation 2023/1315] is now 187 pages long. Articles 2 & 3 that define the scope of the GBER and lay down the various definitions respectively, run to 43 pages. The current Guidelines on Climate, Environmental Protection and Energy Aid are 89 pages, the longest ever.

The conclusion is simple. As the rules become more complex and numerous, the Commission, as the “regulator” of the State aid system, is under an implicit (if not explicit) obligation to provide guidance to all parties who must comply with State aid rules. As aptly expressed in an OCED study on regulatory governance: “information needs to be intelligible, clear and user-friendly for citizens, to whom all public institutions are ultimately accountable.”5

Phedon Nicolaides*