Phedon Nicolaides

European State Aid Law Quarterly, Volume 22 (2023), Issue 2, Page 132 - 149

A fundamental criterion of the compatibility of State aid with the internal market is the presence of incentive effect. State aid must be able to change the behaviour of the recipient undertakings. The purpose of this article is threefold. First, it reviews recent case law and Commission decisions on the presence or absence of incentive effect. Second, it argues that this simple, yet fundamental criterion of compatibility suffers from a serious weakness. Third, it proposes an alternative method for establishing the existence of an incentive effect. Even when the aid is granted before the start of work, it does not necessarily follow that it induces the recipient to do something extra. A savvy company that knows how State aid rules work can adjust its investment plans in such a way as to qualify for aid, even when it does not really need it. Therefore, the new approach proposed in this article goes beyond the current test of the existence of incentive effect, asking not just whether a specific investment or project would not be carried out without the aid, but also whether the project is ‘discretionary’, in the sense that it is not indispensable for the continued operation of the recipient company. Keywords: incentive effect; necessity of State aid; indispensable expenditure; discretionary expenditure

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

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

Birgit Haslinger, Julia Schiestl

European State Aid Law Quarterly, Volume 22 (2023), Issue 3, Page 343 - 347

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.

Alice Pisapia

European State Aid Law Quarterly, Volume 21 (2022), Issue 2, Page 188 - 193

The 2020 judgment of the Court of Justice of the European Union – C-160/19 P Comune di Milano v Commission – illustrates under which conditions the injection of capital in a company owned and controlled by the State can be considered a measure imputable to the State. The City of Milan (Comune di Milano) tried, until last instance, to defend the injection of public capital in the company SEA Handling SpA which was managing ground services at Milan-Linate and Milan-Malpensa airports. However, the appeal against the judgment of the General Court was supporting the Commission’s interpretation about the qualification of the measure as a State aid unlawfully provided and, in any case, incompatible with the European internal market. The present case note analyses two relevant juridical concepts: the private operator principle as applied by the Court with the private investor test, and the intensity of the judicial review to be applied by the Court during the appeal of a Commission decision in case of complex economic assessments. Finally, given the apical role of the Commission in State aid, the Court cannot replace the assessment carried out by the Commission; it can only revise it if the misapplication of the private investor principle was vitiated by a manifest error.

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

Galina Petkova

European State Aid Law Quarterly, Volume 21 (2022), Issue 1, Page 106 - 106

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

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.