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Keyword: Article 107(3)(b)

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The Evolving Interpretation of Article 107(3)(b) TFEU journal article

Phedon Nicolaides

European State Aid Law Quarterly, Volume 21 (2022), Issue 1, Page 31 - 42

This article reviews the evolving case law on Article 107(3)(b) TFEU. It is now established that State aid must be appropriate, necessary and proportional. However, this article finds that it is still not clear in the case law how they are to be applied in conjunction with each other. Several judgments of the General Court delivered in 2021 also indicate that the principle of proportionality can refer to both the amount of aid as well as to the scope of the aid measure. The 2021 judgments of the General Court represent a departure from previous case law in so far as they dispense with any assessment of the impact of State aid on trade and competition. Since aid on the basis of Article 107(3)(b) aims to remedy a serious economic disturbance, it is also presumed to be in the interest of all Member States. Pending cases before the Court of Justice may still reverse this new interpretation of the application of Article 107(3)(b). Keywords: Article 107(3)(b); appropriateness; necessity; proportionality; common European interest

The Limits of ‘Proportionate’ Discrimination journal article

Phedon Nicolaides

European State Aid Law Quarterly, Volume 20 (2021), Issue 3, Page 384 - 396

Challenges by Ryanair to Commission decisions that authorised Covid-19 related State aid have brought to the fore the important issue of discrimination in both individual aid measures and aid schemes. All State aid is to a certain extent discriminatory because it selectively favours certain undertakings over others which are in comparable situations. The question is how much discrimination is allowed under Article 107(2) and (3) TFEU, especially when Member States limit the number of eligible undertakings. The General Court has ruled that Member States are not obliged to grant State aid to any or all companies. They may limit the circle of beneficiaries. However, Member States may only grant aid that is appropriate for the objective it aims to achieve, necessary and proportionate for that purpose. This article argues that limiting the aid according to the extent of the links of the beneficiaries to the local economy appears to be a good proxy for the effectiveness of the aid, but it may also be disproportionately discriminatory because such links do not necessarily ensure that the beneficiaries actually contribute more to the local economy than non-beneficiaries or that they actually need the aid more than non-beneficiaries. Appropriately designed aid measures can reduce the degree of discrimination, by applying consistently and systematically objectively justified criteria, without compromising the effectiveness of the aid or forcing Member States to grant more aid than they can afford. The recent Court cases have exposed the hitherto unidentified conflict between the discretion of Member States to grant State aid only to a single or a few undertakings and the need to avoid disproportionate discrimination. Keywords: Article 107(2)(b); Article 107(3)(b); discrimination; proportionality; establishment; links with local economy.

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