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The EU Economic Security Strategy: a Novel Approach or the Re-emergence of an Old Idea? journal article

Alexandros Lymperopoulos

European State Aid Law Quarterly, Volume 23 (2024), Issue 1, Page 40 - 55

The economic security strategy that the EU has recently introduced signals a turn in EU trade policy. Once a zealous advocate of free trade, the EU has now decided to adopt a ‘yes, but’ approach in its trade relations. This paper argues that the new strategy has been influenced to a degree by the trade suggestions of the 2019 Franco-German Manifesto for a European industrial policy. This paper also analyses the proposed tools of the new strategy and discusses their efficacy. It argues that economic security is distinct from, yet related to, industrial policy and explains why and how State aid law and merger control have a role to play in achieving economic security. The following analysis highlights that EU State aid law is aware of and responsive to international subsidies and seems aligned with economic security considerations. Regarding competition law, however, the European Commission has yet to understand the potential contribution of merger control in pursuing economic security and is hesitant to include it in the toolkit of the economic security strategy. That being said, aligning State aid and merger control with economic security is not without contradictions or risks. Keywords: Economic Security; EU Trade Policy; Competition Law; Franco-German Manifesto For A European Industrial Policy.

The Impact of the Cases Marinvest and Ighoga on the Notion of the Criterion “Effect on Trade Between Member States” journal article

Theresia de la Cruz Rothenfusser

European State Aid Law Quarterly, Volume 23 (2024), Issue 2, Page 125 - 135

This article analyses the impact of the General Court’s recent caselaw on the notion of “effect on trade between member states” under Article 107(1) TFEU. While the criterion was traditionally interpreted very broadly, the Commission changed its approach and developed criteria to restrict its application, essentially excluding cases where the effect on trade was not more than marginal. In Marinvest and Ighoga, the General Court endorses this new interpretation and provides further details for the application of the new criteria. This contribution evaluates the implications of the decisions for the interpretation of “interstate trade” on the one hand and its practical application by the Commission and Member States on the other hand. It concludes that the GC decisions contribute to a higher operability of the criteria and facilitates their application by the Member States, but ultimately cannot significantly advance legal certainty. This can only be achieved by a decision of the CJEU ruling on the admissibility of the Commission’s new interpretation and more consistent decisions going forward of both the Commission and the Courts adopting the new reading that allow the Member States more confidence in applying the criterion. Keywords: interstate trade; commission practice; Marinvest; Ighoga

Legal Basis of the Proposal for a Regulation on Foreign Subsidies Distorting the Internal Market journal article

Justyna Smela Wolski

European State Aid Law Quarterly, Volume 21 (2022), Issue 2, Page 153 - 172

This article explores the possible legal bases of the Proposal for a Regulation on Foreign Subsidies, which, at first glance, displays elements of competition, internal market, and common commercial policy. It is argued, in particular, that the Proposal does not fulfil the requirements regarding the use of Article 114 TFEU established in the Court’s case law despite its self-proclaimed goal of removing ‘distortions within the internal market’. Firstly, it is disputed that foreign subsidies can fall within the scope of a Member State’s competence. Secondly, even if the former reasoning were proved to be wrong, it is difficult to hold that the goal of the Regulation is to harmonize in order to prevent future obstacles to trade between Member States. In any case, should a general basis be needed due to the effects of the Regulation on the internal market, Article 352 TFEU would be a more plausible option, insofar as it applies to non-harmonisable areas and to the creation of new legal forms, such as foreign subsidies, which are at the crossroads of the notion of State aid of Article 107 TFEU and the notion of subsidy of the Anti-Subsidy Regulation. Nevertheless, it is concluded that the entirety of the Proposal could be based on Article 207 TFEU if a teleological and wide interpretation of the common commercial policy, such as that of Opinion 1/78, is followed. Notably, it is argued that the restoration of effective competition within the internal market is not a goal in itself, but rather a consequence of remediating undesirable trade-related behaviours of third countries. Finally, the role that the Regulation, if adopted, will play in Moldova and Ukraine is studied. Keywords: foreign subsidies; common commercial policy; trade; competition; internal market; legal basis

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.

The Squaring of the Circle: journal article

Subsidy Control Under the UK-EU Trade and Cooperation Agreement

Totis Kotsonis

European State Aid Law Quarterly, Volume 20 (2021), Issue 1, Page 15 - 29

The article provides an overview of the subsidy control commitments under the TCA and considers their implications for UK subsidy control regulation. Issues considered in this context include the extent to which TCA subsidy control differs from EU State aid rules and what additional flexibilities this might offer. Consideration is also given to the remedies available to interested parties with concerns about the grant of a subsidy, the inter-Party dispute resolution mechanisms, the availability of unilateral trade defence measures, as well as the question of the different levels of harm to trade or investment for which different TCA provisions provide. The article also highlights certain areas which require further attention, including the fact that the current UK subsidy control regime is not concerned with the potentially competition distortive effects of a subsidy on the UK internal market. Separately, the article considers the question of whether the absence of a prior notification requirement has an impact on the effectiveness of the UK subsidy control system. Keywords: subsidy control; UK; TCA; level playing field; trade; Brexit

Shedding Light into the ‘Black Box’ of State Aid: journal article

The Impact of Hinkley Point C on the Assessment of the Compatibility of State Aid

Phedon Nicolaides

European State Aid Law Quarterly, Volume 20 (2021), Issue 1, Page 4 - 14

The article argues that the judgment of the Court of Justice in case C-594/18 P Austria v Commission, which appeared to limit the criteria that the Commission uses to determine the compatibility of State aid, may have a positive impact on State aid control if it makes the assessment of the Commission more transparent. There is a need for greater transparency in the ‘weighing’ of the positive and negative effects of State aid and the ‘balancing’ of those effects. The weighing and balancing of the effects of State aid are not easy tasks. But it will be necessary for the Commission to be more explicit about the model it relies on to conclude that aid is compatible or not. Keywords: Article 107(3)(c) TFEU; compatibility with internal market; common interest; affectation of trade; distortion of competition; Hinkley Point C

Big on Big, Small on Small: A Never Ending Promise? journal article

A Critical Assessment of the Commission Decision Practice with Regard to the Effect on Trade Criterion

Sebastiaan Cnossen, Georges Dictus

European State Aid Law Quarterly, Volume 20 (2021), Issue 1, Page 30 - 40

More than five years ago, the European Commission provided further guidance on local support measures by establishing three criteria in order to exclude an effect on trade. As authors explain in this article, this approach fits well within the existing case law of the CJEU and has also been recently endorsed by the General Court. At the same time, authors critically assess the decision practice of the Commission which often lacks a solid assessment of the three criteria. This detracts from the Commission's self-proclaimed goal to be 'big on big, small on small' and further reduce the administrative burden for public authorities and companies. This articles therefore calls upon the Commission to provide more legal certainty on the effect on trade criterion by taking the assessment of this criterion more seriously and create more precedents that stakeholders can rely on. Keywords: effect on trade; local aid; cross-border; marginal effect; notion of aid