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The Application of the Market Economy Operator Principle in the Aviation Sector journal article

Nicole Robins, Laura Puglisi

European State Aid Law Quarterly, Volume 20 (2021), Issue 1, Page 74 - 86

Economic and financial analysis plays an increasing role in State aid assessments. It is often used to assess whether one of the criteria for State aid to exist is met − namely, whether the State’s intervention confers an economic advantage − as well as specific aspects of whether any aid is compatible with the relevant State aid rules. To determine whether a public measure confers an economic advantage on the beneficiary, the market economy operator principle (MEOP) test is often applied. The rationale behind the test is to assess whether the State is acting in the manner of a private investor. In the aviation sector, the MEOP is applied at various levels, ranging from funding provided by the State to airport owners or operators, to the relationship between publicly owned airports (or those that have received State aid) and airlines. This article provides an overview of the different levels at which the MEOP test is applied in the aviation sector, and its underlying economic and financial principles. Throughout the article, examples are provided to demonstrate how the MEOP test has been applied in practice. Keywords: market economy operator principle; MEOP; market economy investor principle; MEIP; benchmarking; pari passu; profitability analysis

An Illustration of a Textbook Case or Rather of the Principle That the Devil Is in the Detail? · Cases T-607/17 Volotea, T-716/17 Germanwings and T-8/18 easyJet · Annotation by Marianne Clayton, Maria Segura and Lara Manuel journal article

Annotation on the Judgments of the General Court of the European Union (First Chamber) of 13 May 2020 in Cases T-607/17 Volotea v Commission, T-716/17 Germanwings v Commission and T-8/18 easyJet v Commission

Marianne Clayton, Maria Segura, Lara Manuel

European State Aid Law Quarterly, Volume 19 (2020), Issue 3, Page 372 - 377

On 13 May 2020, the General Court of the EU rendered three judgments on the actions brought by Volotea, easyJet and Germanwings seeking the annulment of Commission Decision SA.33983. In this Decision, the Commission had inter alia concluded that the aid scheme ‘Compensation to Sardinian airports for public service obligations’ entailed the grant of incompatible aid to several airlines that had concluded commercial agreements with airport operators for the development of the island as a tourist destination. The General Court analysed in these judgments each of the criteria of the notion of State aid on its own merits and provided particularly worth-noting reasoning on concepts such as imputability, indirect advantage, the application of the MEOP or the definition of aid scheme.

‘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.

The MEOP in the Larko Case · Case T-423/14 Larko Geniki · Annotation by Małgorzata Cyndecka journal article

Annotation on the Judgment of the General Court (Sixth Chamber) of 1 February 2018 in Case T-423/14 Larko Geniki Metalleftiki kai Metallourgiki AE v European Commission.

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.

Previous State aid and Subsequent Financial Assistance journal article

The FIH Judgment and the Future of the MEOP

Jan Bonhage

European State Aid Law Quarterly, Volume 18 (2019), Issue 1, Page 29 - 36

Taking into account previous State aid in the MEOP assessment requires an in-depth analysis of the specifics of the individual case. The mere fact that economic interests derive from previous State aid does not rule out their relevance in the assessment of the economic rationality of further financial measures. State aid aims at a comprehensive analysis of all relevant factors at the time of the funding decision. Both the purpose of the MEOP and previous European case law support such comprehensive substantive approach in the MEOP State aid assessment of subsequent financial measures. In light of the rationale of the MEOP and previous decisions, the CJEU’s rather formal approach in the FIH case is not convincing. The comprehensive substantive approach of ING Groep, also concerning the relevance of previous State aid in the assessment of subsequent public measures, more adequately reflects all aspects that a private investor would take into account in a comparable situation. Keywords: FIH; ING Groep; Land Burgenland; MEOP; previous State aid; subsequent financial measures; substantive approach; comprehensive assessment; formal approach; public authority.

The Development of the Burden of Proof in MEOP Cases journal article

Which Side of the Court and Whose Ball?

Anne Louise Bengt Jespersen

European State Aid Law Quarterly, Volume 18 (2019), Issue 4, Page 458 - 469

The Market Economy Operator Principle (MEOP) is an essential tool in State aid law when determining whether a specific State measure confers an economic advantage within the meaning of Article 107(1) TFEU. Despite the many clarifications in the jurisprudence over the years, the applicability of the MEOP to specific economic transactions and the assessment of the economic rationality of a State measure continue to be subject to debate before the Commission and the EU Courts. Since the ruling of the Court of Justice in EDF, a recurring question in this debate has been the apportioning of the burden of proof in cases where the MEOP is invoked by the Member State and/or the alleged aid beneficiary. In more recent cases, the EU Courts have further developed the principles concerning the apportioning of the burden of proof as well as the standard of proof required on the part of the Commission and the Member States, respectively. This article analyses the approach of the Commission and the EU Courts with respect to the burden of proof in MEOP Cases prior to and after EDF, in SACE, Larko and Frucona Košice. Furthermore, the article reflects on the latest developments in the EU Courts’ Case law and points to a potential ambiguity therein. Keywords: MEOP; Burden of proof; Requirement of evidence ex ante; Allocation of burden of proof.

The MEOP in the FIH Case ∙ C‑579/16 P Commission v FIH ∙ Annotation by  Małgorzata Cyndecka journal article

Annotation on the Judgment of the Court of Justice (Grand Chamber) of 6 March 2018, in Case C‑579/16 P European Commission v FIH Holding and FIH Erhvervsbank (FIH).

Małgorzata Agnieszka Cyndecka

European State Aid Law Quarterly, Volume 17 (2018), Issue 4, Page 546 - 552

In the awaited FIH judgment, the CJEU once again reviewed the question of costs or risks that may be taken into account under the application of the MEOP. It is now clear that the origins of such costs or risks are crucial. What may make sense in terms of economics, which is one of the two components of the MEOP, is not necessarily in line with State aid law. In fact, if based solely on number crunching, the application of the MEOP may frustrate the aim of State aid control that is safeguarding a ‘level playing field’ for all market participants.

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.

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