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‘Naked Economic Nationalism’ · Case T-111/21 Croatia Airlines - COVID-19 · Annotation by Marijana Liszt journal article

Annotation of the Judgment of the General Court of 9 November 2022 in Case T-111/21 Croatia Airlines - COVID-19

Marijana Liszt

European State Aid Law Quarterly, Volume 22 (2023), Issue 2, Page 199 - 204

This case note concerns one of many European Commission decisions approving State aid as damage compensation to airlines due to extraordinary occurrences (COVID-19 outbreak), on the basis of Article 107(2)(b) TFEU, considered to be an ‘automatic exemption’, meaning that the discretionary powers of the Commission are confined to verifying the fulfilment of the required conditions. This Commission decision has been challenged by the tireless Ryanair DAC, which has been challenging many State aid measures granted to airlines by the Member states simultaneously, on the basis of Article 107(2)(b) TFEU as well as other applicable grounds (Article 107(3)(b); the COVID-19 Temporary Framework). This judgment has been chosen as it refers to Croatia Airlines, the Croatian national air carrier, presenting the first ever General Court decision referring to State aid granted to a Croatian undertaking by the Republic of Croatia. The case raises several peculiar legal questions concerning the notions of discrimination and the difference in treatment. It is also worth mentioning the Court’s argument regarding Croatia Airlines’ essential role in Croatia’s air transport connectivity.

Covid State Aid Policy for Aviation Backfired · Joined cases T-34/21 and T-87/21 Ryanair and Condor v Commission (Lufthansa; COVID-19) · Annotation by Tania Pantazi journal article

Annotation of the Judgment of the General Court of 10 May 2023 in Joined cases T-34/21 and T-87/21 Ryanair and Condor v Commission (Lufthansa; COVID-19)

Tania Pantazi

European State Aid Law Quarterly, Volume 22 (2023), Issue 4, Page 414 - 419

State aid to European airlines during the Covid-19 crisis has been the object of several judgments of the General Court since 2021. This case marks a turn in previous case law, as it annuls the approval of the Commission for multiple reasons of substance relating to misapplication of the Covid State Aid Temporary Framework. The measure at issue was a recapitalisation scheme for one of Europe’s largest airline groups, Deutsche Lufthansa. The decision may affect other pending cases on measures for European airlines.

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

Is State Aid Law a Self-Contained Regime Within EU Law? journal article

Marcus Klamert, Franz A.M. Koppensteiner

European State Aid Law Quarterly, Volume 22 (2023), Issue 3, Page 234 - 241

This article discusses two seemingly contradictory strands of case law by the EU Courts: one finding that a State aid procedure may never lead to a result in contradiction to other rules and principles of EU law; the other holding that only such violations of other EU law should be considered by the European Commission that are intricately linked to the State aid measure itself. This article examines how this case law relates to general EU law principles such as consistency and loyalty and a synthesis is proposed based on the recent Grand Chamber judgment in Braesch. This article submits that State aid law is not a self-contained regime within EU law allowing the European Commission to ignore the requirements of other EU law. Keywords: modalities of State aid; self-contained regime; consistency; loyalty; legal certainty; power plant

EU State Aid Control in a Dynamic Global Environment: journal article

Time to Rethink the Interested Party Concept?

Antonis Metaxas

European State Aid Law Quarterly, Volume 21 (2022), Issue 1, Page 43 - 53

EU State aid rules, as a normative framework for ensuring and preserving undistorted competition in an equitable Common Market, traditionally constitute fundamental provisions of the EU legal order. Within this framework, the constructive cooperation of the Member State concerned with the European Commission is important when assessing the compatibility of an aid measure with the internal market. Notwithstanding the bilateral character of the control procedure, the participation of interested parties enables the Commission to get a better insight regarding the contested aid measure in order to conclude whether the latter is aligned with the Union’s interests and policies. In a dynamic global environment, these interests and prevailing priorities are constantly redefined (climate change is a prominent example). To the extent that this broader, dynamic scope of EU State aid control is accepted, the question arises if State aid measures adopted by a Member State for supporting a given activity shall be assessed not only on the grounds provided for by the Member State concerned, the recipient of the aid or its direct competitors. In this context, the author claims that aspects of procedural efficiency must be held in balance with the reality of normative interdependence and the necessity of compatibility among EU policies. Procedurally, the question now arises if and to which extent the interested party concept must be broadened so that, for example, organisations of the civil society obtain a ‘locus standi’ in EU State aid control administrative procedures as well as in respective judicial proceedings before EU Courts. Keywords: interested party; State aid control procedure; NGO; Aarhus Convention; Aarhus Regulation

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.

When State Aid Goes Wrong: journal article

Member State’s Liability Towards the Aid Beneficiary – A Belgian Case Study

Julie Leroy

European State Aid Law Quarterly, Volume 21 (2022), Issue 4, Page 384 - 396

A Member State which violates the standstill-obligation under Article 108(3) TFEU is not directly held responsible for his failure to comply with his obligations under EU law, as it is the aid beneficiary who will be obliged to repay the unlawful (and incompatible) State aid. This contribution evaluates if the aid beneficiary can nevertheless hold the Member State somehow responsible, through a damage claim based on the latter’s extra-contractual liability for the violation of EU law. The Belgian case study shows that such a claim can be successful, as the conditions of Articles 1382-1383 Old Civil Code might be fulfilled. However, the aid beneficiary is in a difficult position. One the one hand, this undertaking bears the ‘risk of proof’. On the other hand, a full compensation will be rare as, amongst others, the aid beneficiary’s own fault might lead to a liability apportionment. Finally, the obligation to repay the unlawful State aid (with interest) as such will never qualify as a damage that is eligible for a compensation, as this would undermine the effectiveness of EU law. Keywords: Article 108(3) TFEU; standstill-obligation; recovery of unlawful (and incompatible) State aid; liability of Member States; Belgium

The Design of Enforcement Institutions: journal article

Lessons from the UK’s New State Aid Control Regime

Phedon Nicolaides

European State Aid Law Quarterly, Volume 20 (2021), Issue 3, Page 370 - 383

Now that the UK is no longer a member of the European Union it has to substitute the EU system of State aid control with its own system for the control of subsidies. Brexiters have argued that this presents a unique opportunity to the UK to design a system that is less cumbersome and more effective than that of the EU. This article examines how the draft Subsidy Control Bill intends to address the three problems of the design of institutions responsible for the control of State aid or subsidies; ie the problems of discovery, assessment and enforcement. If finds that, by comparison to the EU system, the proposed UK system seems to grant more leeway to public authorities and to impose fewer formal requirements but also to require assessment of most subsidies by the Competition and Markets Authority (CMA). At the same time, the greater leeway creates more uncertainty about the conformity of subsidies with the various principles laid down in the Subsidy Control Bill. The Bill also leaves several issues unclear, especially with regard to the status of subsidies which are not referred to the CMA or subsidies which are granted contrary to CMA recommendations. The powers of the CMA are certainly more limited than those of the Commission. Keywords: EU-UK Trade and Cooperation Agreement; UK Subsidy Control Bill; State aid regime; Competition and Markets Authority; Competition Appeal Tribunal.

2ND ESTAL PHD AWARD NOMINATIONS ∙ Recovery of Unlawful Fiscal State Aid in Belgium journal article

Julie Leroy

European State Aid Law Quarterly, Volume 20 (2021), Issue 3, Page 325 - 336

This article, like my PhD thesis on which it is based, focuses on the recovery of unlawful fiscal State aid in Belgium. Currently, Belgium has no general legal framework for recovery procedures: neither for non-fiscal, nor for fiscal State aid. To the contrary, for the recovery of fiscal State aid, ad hoc-legislation was adopted in the past. On the one hand, the research evaluates if there is a need for a new legal framework for the recovery of unlawful fiscal State aid in Belgium, in the execution of a recovery decision from the European Commission. In order to make this evaluation, the existing ‘tax law route’ and ‘civil law route’ for fiscal recovery procedures are charted. Those routes are tested against ten evaluation criteria, which are deducted from EU law and national law. This evaluation clearly shows that there is a need for a new legal framework for the recovery of unlawful fiscal State aid in Belgium. Consequently, on the other hand, this research makes recommendations regarding the content and design of the new proposed framework. It is, amongst others, recommended to adopt general legislation that applies to all future fiscal recovery procedures in Belgium. Despite its focus on Belgium, several aspects of the research are also interesting for other EU Member States. Keywords: EStAL PhD Award; PhD research; recovery of unlawful (fiscal) State aid; Belgium; current framework; recommendations for new framework.