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The Court of Justice Allows Member States to Compensate the Undertaking of their Choice: a Critique journal article

Phedon Nicolaides

European State Aid Law Quarterly, Volume 22 (2023), Issue 4, Page 371 - 380

State aid that compensates for damage caused by natural disasters or exceptional occurrences can run into many millions. It has the potential to cause a serious distortion to competition in the internal EU market. Yet, Article 107(2)(b) declares that aid compatible with the internal market without any prior assessment of its positive and negative effects by the Commission. This immediately raises the question - why is that aid considered by the TFEU to be compatible with the internal market? A corollary question is whether compensatory aid can be granted only to some of the undertakings harmed by a natural disaster or exceptional occurrence. The Court of Justice has recently answered the latter question by ruling that compensatory aid for a limited number of beneficiaries is not excluded by Article 107(2)(b). This paper argues that the latter question cannot be answered without deriving a plausible answer to the former question. Given the structure and overall objective of Article 107, a plausible answer is that compensatory aid tends to restore rather than distort competition. Therefore, compensatory aid that is granted to a limited number of beneficiaries is likely to be discriminatory beyond the extent that is inherent in any State aid measure and to cause excessive distortion of competition. Keywords: Article 107(2)(b) TFEU, compensation for damage, selectivity, discrimination.

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.

State Aid Junkies, Viruses and the Aviation Industry: journal article

Ryanair’s Litigation against Approved Aid Measures for Airlines During the Pandemic

Christopher McMahon

European State Aid Law Quarterly, Volume 20 (2021), Issue 2, Page 249 - 257

During the pandemic, many Member States have engaged in more interventionist policies to sustain their economies through tough public health restrictions. This has manifested itself in the provision of large quantities of State aid to elements of the aviation industry by Member States, facilitated by the relatively permissive policies of the European Commission. The Irish low-cost airline Ryanair has been a notable and outspoken critic of these measures, describing them as ‘state aid crack cocaine’ and their beneficiaries as ‘state aid junkies’ and has launched an aggressive programme of litigation to annul the decisions approving the aid. This article reviews the first nine of the judgments of the General Court that this litigation has produced to date, three of which have led to the annulment of the Commission’s approval of the aid. This article will go on to assess the impact of these decisions and examine the contribution they make towards understanding the State aid response of the EU and its Member States to the pandemic. It will be suggested that the General Court has generally taken a tolerant attitude towards pandemic-related aid for aviation, upholding the approval of individual aid and allowing Member States to confine the aid to recipients with a close connection to their own economies. Keywords: COVID-19; Temporary Framework; aviation; non-discrimination.

Fund Transfers to Authorities Owning a Company as State Aid? - Equal Fund-Distribution in the Case of ‘Double Roles’ · Case T-583/18 GVN · Annotation by Benjamin Linke journal article

Annotation on the Judgment of the General Court (Fifth Chamber) of 5 October 2020 in Case T-583/18 GVN

Benjamin Linke

European State Aid Law Quarterly, Volume 20 (2021), Issue 1, Page 114 - 119

It is well enough understood that public authorities exercising official power are no undertakings and therefore cannot be recipients of State aid. What happens, however, if an authority receives funds for distribution in a sector (here: the transport sector) and at the same time owns or controls a company in given sector? Does the ‘dual role’ already lead to a classification as transfer of funds to a State aid relevant undertaking? The General Court had to decide on this question in connection with compensation means in local public transport that were transferred by the state to lower administrative authorities for distribution to transport companies. The local authorities were criticised of (allegedly) making the funds available to their own companies rather than private operators.

State Aid and COVID-19: journal article

With a Particular Focus on the Air Transport Sector

Petar Petrov

European State Aid Law Quarterly, Volume 20 (2021), Issue 4, Page 461 - 478

The outbreak of COVID-19 has devastating effects on national economies and on various business sectors. To prevent even harder consequences, Member States have adopted various support packages in order to support the hardest-hit businesses, including air carriers and airports. In order to support Member States’ initiatives, the European Commission has adopted temporary applicable State aid rules deemed more appropriate to these extraordinary circumstances. Without surprise, the rather fast authorisation of a number of State aid support schemes has open the door to litigation, giving the EU courts the occasion to rule on a number of matters. Given the importance of air carriers for both Member States’ economies and connectivity, the current paper focuses on the impact of COVID-19 on air carriers and on the recent State aid developments in this field. Keywords: support schemes; COVID-19; Temporary Framework; airlines; aviation; non-discrimination; balance of interests

European Commission v World Duty Free Group, formerly Autogrill España SA, Banco Santander SA, Santusa Holding SL  ∙ Joined Cases C-20/15P and C-21/15 P ∙ Annotation by Adrien Giraud and Sylvain Petit journal article

Annotation on the Judgment of the Court of Justice of the European Union (Grand Chamber) of 21 December 2016 in Joined Cases C-20/15P and C-21/15P Commission v. World Duty Free Group

Adrien Giraud, Sylvain Petit

European State Aid Law Quarterly, Volume 16 (2017), Issue 2, Page 310 - 315

On 21 December 2016, in the Spanish fiscal aid cases, the Grand Chamber of the Court of Justice of the European Union struck down the General Court’s attempt of November 2014 to introduce an innovative interpretation of the notion of selectivity. Whereas the General Court had required the identification of a category of undertakings when a fiscal measure is potentially accessible to all undertakings, the Court of Justice adopted a rather conservative approach and merely restated its settled case-law. This case note analyses the law as restated by the Court and addresses some of the criticisms that have recently surfaced. Keywords: Fiscal Aid; Notion of Selectivity; Category of Undertaking; Discrimination; Burden of Proof.

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