Małgorzata Cyndecka

European State Aid Law Quarterly, Volume 18 (2019), Issue 2, Page 157 - 168

Following the landmark judgments in Ryanair of 2008, EDF of 2012 or ING of 2014, it is no longer disputed that one distinguishes between the applicability of the Market Economy Operator Principle (MEOP) and its application. Yet, one of the most relevant consequences of making that distinction - the allocation of the burden of proof - still raises controversy. When the GC annulled the Commission’s decision in EDF due to an insufficient and flawed assessment of the applicability of the MEOP, the Commission, EFTA Surveillance Authority (ESA) and AG Mazák argued that the GC erred in law by reversing the burden of proof. The same argument was raised by the Commission in Buczek Automotive of 2013. In Frucona Košice II of 2017, the Commission claimed that the GC created a new requirement imposing on the Commission an ‘excessive burden of having to seek all “imaginable” evidence and information’ when it verifies compliance with the MEOP. In all those cases, the CJEU disagreed with the Commission. In 2018, however, the EU Courts handed down judgments concerning the MEOP where the Commission’s line of argument was more successful. Most importantly, EDF, Larko and Duferco seem to have provided more clarity with respect to discharging the burden of proof when establishing the applicability of the MEOP and its application and, in particular, the Commission’s obligations in this regard. Given the importance of apportioning the burden of proof and the difficulties with that issue resulting from the distinction between the applicability and application, more clarifications from the EU Courts are very much welcome. Keywords: Applicability and application of the MEOP; Burden of proof; Scope of Commission’s obligations.

Małgorzata Cyndecka

European State Aid Law Quarterly, Volume 18 (2019), Issue 2, Page 119 - 120

Małgorzata Cyndecka

European State Aid Law Quarterly, Volume 18 (2019), Issue 2, Page 180 - 185

When the State grants an economic advantage to an undertaking, it may avoid triggering Article 107(1) TFEU by complying with the Market Economy Operator Principle (MEOP). Yet, if the State invokes the MEOP in the course of the administrative procedure, it must establish unequivocally and on the basis of objective and verifiable evidence that it acted as a rational, profit-oriented, prudent and well-informed private market operator would have acted in similar circumstances under normal market conditions. If the State provides such information, the Commission is required to carry out an overall assessment, taking into account all relevant evidence in the case enabling it to determine whether the beneficiary would manifestly not have obtained comparable facilities from a private operator. While granting an economic advantage to an undertaking in financial difficulties does not necessarily amount to aid, the State must prove that it properly took into account the additional risk involved in a given measure when it decided to implement it. Ignoring such signs of a firm being in difficulty as increasing losses, diminishing turnover or mounting debt is not in line with the behaviour of a prudent private shareholder and it questions the economic rationality of the State’s conduct. This may entitle the Commission to qualify a given measure as aid. Keywords: MEOP; burden of proof; prudent shareholder; firm in difficulties; State guarantees.

Małgorzata Cyndecka, Timothy Wyndham

European State Aid Law Quarterly, Volume 17 (2018), Issue 3, Page 375 - 386

The economic implications of indirect taxation have long been understood. Reducing indirect taxes results in lower prices. This straightforward and intuitive result has been an undisputed input into State aid policy, allowing robust legal analyses of tax exemptions. However, recent advances in the economic theory of two-sided markets yield new predictions for the impact of one type of indirect tax, the value added tax (VAT), on electronic newspapers. The surprising new theoretical prediction is that reader prices increase following VAT reductions. The prediction is driven by low marginal costs and the fact that advertisers would pay more for an ad seen by more readers. We bring this insight into the State aid literature and assess the implications for State aid policy. In particular, we raise questions over the legal assessment of a Norwegian State aid scheme, where a VAT exemption for print newspapers was extended to digital newspapers. If prices go up instead of down the policy will not have the intended effect and, under the given argumentation, the aid should not be viewed as compatible with the functioning of the internal market. The economic and legal arguments we present are important for the wider European debate on whether to reduce VAT on electronic newspapers. Keywords: VAT; Electronic newspapers; Two-sided markets