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The 'Incentive Effect' and 'Start of Works' – Court of Justice Creates Confusion journal article

Ulrich Soltész

European State Aid Law Quarterly, Volume 23 (2024), Issue 1, Page 35 - 39

The "incentive effect" is a rather technical issue under the State aid rules which is of huge practical importance. In a nutshell, this principle states that aid cannot be granted if the recipient had already started with the project before the application for aid was submitted. As this can lead to the complete refusal of funding, and because the recent case law - in particular the Eesti Pagar judgment (C-349/17) - is extremely harsh in defining the “start of works”, the “incentive effect” requirement has the potential to cause sleepless nights for aid recipients. Unfortunately, the most recent judgment in Est Wind Power (C-11/22) has not helped matters, but instead added to the confusion. Keywords: Incentive Effect; Aid Application; Start of Works; Early Project Start; Investment Aid


Inextricably Linked? The Limits of a State Aid Inquiry · Case T-101/18 Republic of Austria v European Commission (Paks II) · Annotation by Tamás Kende and Gábor Puskás journal article

Annotation on the Judgment of the General Court of 30 November 2023 in Case T-101/18 Republic of Austria v European Commission (Paks II)

Tamás Kende, Gábor Puskás

European State Aid Law Quarterly, Volume 22 (2023), Issue 2, Page 205 - 211

Article 107(3)(c) TFEU requires a delicate balancing of the positive effects of the aid aiming the development of certain economic activities and the negative effects thereof. The Paks II judgment provides clarifications as to the limits of this balancing process and the European Commission’s obligations to take into account primary and secondary EU laws other than those related to State aid, as well as fundamental goals of the EU Treaties like the protection of environment. The Paks II judgment also confirms that State aid rules are also applicable concerning activities falling under the EURATOM Treaty and clarifies the relationship between State aid and public procurement and an infringement procedure and a State aid procedure. The Paks II judgment also shows that Member States have a hard time with challenging the Commission’s State aid decisions if they rely on an alleged err in law or they attack the Commission’s discretionary powers and the proper application thereof.


The Analogous Application of State Aid Law to Asymmetric Taxes journal article

Can the Imposition of a Special Charge Be State Aid Within the Meaning of Article 107(1) TFEU?

Lars Mörmel

European State Aid Law Quarterly, Volume 22 (2023), Issue 3, Page 267 - 275

Narrow-scoped special charges imposed by Member States on certain undertakings can have an effect that is as distorting on competition as tax exemptions. However, the wording of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU) does not allow for a direct application of State aid rules in these cases; neither is it possible to treat special charges as a form of far-reaching tax exemption for unaffected undertakings. Despite its practical significance, the Court of Justice of the European Union (CJEU) has failed so far to address the issue appropriately. This article critically examines the relevant case-law and calls for a methodological re-orientation. In the absence of other legal instruments to deal with the problem and in light of the potential for Member States to circumvent State aid rules through special charges, Article 107(1) TFEU should, in extension of its literal scope of application, be applied to special charges by way of analogy. This would lead to more legal clarity and certainty for both lawmakers and affected undertakings. Keywords: special charges; asymmetrical taxes; negative State aid; analogous application


News from Micula: The Court of Justice Clarifies the Temporal Application of EU State Aid Rules and Confirms the Relevance of Achmea · Case C-638/19 P European Commission v European Food SA and Others (Micula) · Annotation by Vasiliki Dolka journal article

Annotation of the Judgment of the Court of Justice (Grand Chamber) of 25 January 2022 in Case C-638/19 P European Commission v European Food SA and Others ('Micula')

Vasiliki Dolka

European State Aid Law Quarterly, Volume 21 (2022), Issue 1, Page 87 - 92

On 25 January 2022, the Court of Justice (CJ) overturned the judgment of the General Court (GC) that had annulled a 2015 European Commission (Commission) State aid decision declaring the payment of compensation granted by an arbitral award for violation of the 2003 Romania-Sweden Bilateral Investment Treaty, as unlawful and incompatible State aid. The GC annulled the Commission Decision for lack of competence ratione temporis to assess the measure as it considered the aid to have been granted before Romania’s accession to the EU. To the contrary, the CJ considers that the critical date at which the right to receive the aid is conferred to the beneficiary coincides with the granting of the right to compensation. On this ground, the CJ reinstates the Commission’s competence to review the aid. It also confirms the relevance of the Achmea ruling, by concluding that any consent that may have been given by an EU Member State to participate in international investment arbitration proceedings before its accession to the EU lacks any legal force post accession. The CJ has remanded the case back to the GC to decide on the merits.




‘Reversed’, ‘Excessive’ or Misconstrued? The Controversy About the Burden of Proof in MEOP Cases journal article

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.


Once an Aid Recipient, Always an Aid Recipient? The Post-Crisis State Interventions in the Banking Sector and Beyond journal article

Małgorzata Agnieszka Cyndecka

European State Aid Law Quarterly, Volume 17 (2018), Issue 2, Page 192 - 203

One of the questions raised by the unprecedented state interventions in favour of banks that were hit by the financial crisis is whether the mere fact of having benefitted from aid in the past qualifies any future state measures granted to the same undertaking as aid. Given the number and importance of beneficiaries that received ‘crisis aid’ under article 107(3)(b) TFEU, this question merits a prompt answer. In terms of State aid law, it amounts to establishing the applicability of the Market Economy Operator Principle, MEOP. While the General Court (GC) ruled on consecutive state measures under Article 107(1) TFEU in the BP Chemicals case of 1998, recent case law has raised much controversy. This article attempts to clarify the implications of disregarding or misapplying BP Chemicals and the consequences of such practice to the MEOP while the CJEU is about to give its ruling in FIH, a highly debatable case on consecutive state measures in the banking sector. Keywords: Applicability and Application of the MEOP; Banking Sector; Consecutive State Interventions; BP Chemicals Formula; FIH Case.


The Applicability and Application of the Market Economy Investor Principle: Lessons Learnt from the Financial Crisis journal article

Małgorzata Agnieszka Cyndecka

European State Aid Law Quarterly, Volume 16 (2017), Issue 4, Page 512 - 526

One of the consequences of the financial crisis is a development and refinement of the Market Economy Investor Principle (MEIP). The MEIP is a well-established yardstick for determining whether a given State intervention confers an economic advantage upon a recipient undertaking, which it would not have obtained under normal market conditions. Although most State interventions in favour of financial institutions have aimed to remedy the systemic crisis, and thus amounted to aid, the MEIP has remained a vital instrument in applying Articles 107(1) TFEU and 61(1) EEA. As the relevant case law and decisional practice of the Commission and EFTA Surveillance Authority (ESA) demonstrate, the use of the MEIP under exceptional market conditions has raised some interesting issues. Those concern both its applicability and application. In particular, while ESA apparently excluded the applicability of the MEIP due to absence of ‘normal market conditions’, the Commission denied applying it to an amendment to repayment terms of aid. As regards the application of the MEIP, the ‘business-hostile’ conditions must be duly taken into account when assessing whether the State entered a given transaction on market terms. Keywords: MEIP; Application; Applicability; Financial Crisis.

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