State Aid Law Blog

State Aid Uncovered Blog

In Lexxion’s State Aid Uncovered blog, Prof. Phedon Nicolaides publishes weekly critical analyses of recent State aid judgments and decisions. Each post presents the key points of a court judgment or EU Commission decision, places it in the context of similar case law or practice, assesses the underlying reasoning and highlights any inconsistencies or contradictions.

Guest contributions from other State aid experts will also be published on the blog at irregular intervals to complement the content of the blog posts.

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1. November 2022  |   State Aid Uncovered by Phedon Nicolaides

Research Organisations, their Primary Objectives and their Shareholders
State Aid Blogs - State Aid Uncovered SM posts 38
A research organisation is not required to reinvest any revenue it may generate into its non-economic activities. The fact that the shareholders of a research entity are profit seeking has no decisive impact on its classification as a research organisation. Introduction As governments push universities to engage in more collaborative research with industry, the question increasingly arises where to draw […]
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18. October 2022  |   by Phedon Nicolaides

Public Authorities Acting as Private Investors
State Aid Blogs - State Aid Uncovered SM posts 5
It is a well-established principle in the case law that when a public authority acts as a private investor, it must disregard all public policy objectives and its obligations as an arm of the state. Many judgments of EU courts and Commission decisions have examined in detail the various elements that underpin the reasoning of a private investor such as […]
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11. October 2022  |   by Phedon Nicolaides

Selectivity of Regional Schemes
State Aid Blogs - State Aid Uncovered SM posts 4
Introduction Article 107(3)(a) areas and the outermost regions of the EU [defined in Article 349 TFEU] are more favourably treated under State aid rules. But they still have to comply with the terms of Commission authorising decisions. In case regional State aid is found to be incompatible with the internal market, their regional handicaps cannot justify any leniency in the […]
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4. October 2022  |   by Phedon Nicolaides

Recovery of Incompatible Aid and the Application of General Provisions for the Avoidance of Double Taxation
State Aid Blogs - State Aid Uncovered SM posts 2
The amount of incompatible State aid that has to be recovered can be reduced by any credit the aid recipient could have legally obtained from the application of general provisions of national law. Introduction The recovery of incompatible State aid has to be carried out immediately and effectively. The Commission gives guidance to the Member State concerned how to calculate […]
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27. September 2022  |   State Aid Uncovered by Phedon Nicolaides

Compliance with Public Service Obligations Does Not Necessarily Entitle the Providers of Public Services to Compensation
State Aid Blogs - State Aid Uncovered SM posts 32
In the field of bus or rail transportation, Member States may impose either public service obligations through a contract or regulate prices through general rules. Providers of transport services are entitled to compensation only if they are financially worse off as a result of compliance with public service obligations. Introduction It is now a well-established principle in the case law […]
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20. September 2022  |   State Aid Uncovered by Phedon Nicolaides

An Innovative Scheme to Support Individual Borrowers
State Aid Blogs - State Aid Uncovered SM posts 31
Individuals and households are not undertakings. However, any public funding of individuals or households may constitute indirect aid to undertakings. Such aid may be exempted on the basis of Article 107(2)(a) TFEU. Introduction Article 107(1) TFEU applies to indirect State aid as well as to direct aid. Since all State aid has both primary effects [i.e. the benefits that go […]
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13. September 2022  |   State Aid Uncovered by Phedon Nicolaides

State Aid for External Transport Costs
State Aid Blogs - State Aid Uncovered SM posts 1
State aid may be granted to reduce the difference in “external” costs caused by different modes of transport. Introduction Member States have used money from the Recovery and Resilience Fund [RRF] to support the development of less polluting and more energy efficient activities and technologies. A case in point is Spain’s scheme that incentivises the transfer of freight traffic from […]
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6. September 2022  |   State Aid Uncovered by Phedon Nicolaides

Special Economic Zones
State Aid Blogs - State Aid Uncovered SM posts 29
Member States must check that the State aid claimed by undertakings established in special economic zones concern activities that are actually carried out within those zones. Introduction Several Member States have special economic zones in which companies enjoy preferential tax treatment. These zones can be divided into two categories: those that can be found mostly in the new Member States […]
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23. August 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation for the Net Cost of Public Service Obligations (Part II)
State Aid Blogs - State Aid Uncovered SM posts 19
Public service obligations must be imposed through an act of entrustment that defines clearly the terms of the service and the duration of the obligation. The “reasonable profit” in the public service compensation should reflect the risk borne by the provider. Introduction In 2009, the Commission received several complaints concerning State aid that Italy had granted to the various shipping […]
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16. August 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation for the Net Cost of Public Service Obligations (Part I)
State Aid Blogs - State Aid Uncovered SM posts 19
Public service obligations must be imposed through an act of entrustment that defines clearly the terms of the service and the duration of the obligation. The “reasonable profit” in the public service compensation should reflect the risk borne by the provider. Introduction In 2009, the Commission received several complaints concerning State aid that Italy had granted to the various shipping […]
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5. July 2022  |   State Aid Uncovered by Phedon Nicolaides

Why Grant a Loan to an Undertaking in Difficulty?
State Aid Blogs - State Aid Uncovered SM posts 14
When a market operator invests in an undertaking in difficulty it also considers the possibility of restructuring, sale or closure. Introduction The answer to the question posed in the title of this article is “because the loan enables the undertaking to become viable again and repay the loan with interest”. It is now well established in the case law that […]
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28. June 2022  |   State Aid Uncovered by Phedon Nicolaides

Individual Aid to Counter the Effects of Serious Economic Disturbance Is Legally Possible, but Is it Appropriate?
State Aid Blogs - State Aid Uncovered SM posts 13
Individual aid need not be capable itself to remedy serious economic disturbance in the economy of a Member State. It is sufficient that it contributes to that effect. Introduction On 22 June 2022, in case T‑657/20, Ryanair v European Commission, the General Court confirmed once more that Member States have a right to grant State aid to the undertakings of […]
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21. June 2022  |   State Aid Uncovered by Phedon Nicolaides

The Date on which State Aid is Deemed to be Granted Is not necessarily the Date on which the Actual Benefit Materialises
State Aid Blogs - State Aid Uncovered SM posts 12
State aid is deemed to be granted even if the benefit cannot be quantified in advance and even if state resources are transferred at a future point in time. Introduction The precise date on which State aid is granted can be important such as, for example, when calculating the present value of aid granted in tranches at different points in […]
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14. June 2022  |   State Aid Uncovered by Phedon Nicolaides

Territoriality and the Tax Treatment of Intra-group Transactions
State Aid Blogs - State Aid Uncovered SM posts 11
A special tax rule can constitute the reference or normal system of taxation if it is “severable” from other tax rules and has its own legal logic. Introduction The application of State aid rules to the tax treatment of transactions between companies that belong to the same multinational group is contentious. During the past three years or so, the Commission […]
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7. June 2022  |   State Aid Uncovered by Phedon Nicolaides

A Rare Commission Decision on SGEI Interpreting Decision 2012/21
State Aid Blogs - State Aid Uncovered SM posts 10
A non-profit provider of free services which are in competition with similar services on the market is an undertaking. Introduction The decentralisation of State aid policy of the past decade has made it easier for the Member States to achieve their public policy objectives. By using blog exemption regulations and decisions, they can grant State aid faster, without having to […]
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31. May 2022  |   State Aid Uncovered by Phedon Nicolaides

State Aid and Anti-Competitive Practices
State Aid Blogs - State Aid Uncovered SM posts 9
State aid to undertakings that engage in anti-competitive practices is incompatible with the internal market. Introduction For State aid to be compatible with the internal market, it may not infringe any other provision of the Treaty or secondary legislation. Occasionally, the Commission finds State aid measures to be incompatible with the internal market because they contain clauses that exclude foreign […]
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24. May 2022  |   State Aid Uncovered by Phedon Nicolaides

Another Case of Rescue Aid to an Airline
State Aid Blogs - State Aid Uncovered SM posts 6
An undertaking does not have to be nationally “important” in order to qualify for rescue aid. Introduction The pandemic has been hard on airlines. For some of them, however, the pandemic simply exacerbated their already existing problems. On 18 May 2022, in case T‑577/20, Ryanair v European Commission, the General Court had to examine the case of State aid to […]
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10. May 2022  |   State Aid Uncovered by Phedon Nicolaides

Risk Finance
State Aid Blogs - State Aid Uncovered SM posts 5
Risk finance aid in the form of tax relief based on the GBER must be limited to private investors. Introduction Decisions of the European Commission authorising aid for risk finance are very rare. This is the consequence of the success of the Commission to get Member States to use almost exclusively the General Block Exemption Regulation [GBER] for the design […]
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3. May 2022  |   State Aid Uncovered by Phedon Nicolaides

The Standard of Proof in State Aid Complaints and the “Informational Disadvantage” of Complainants
State Aid Blogs - State Aid Uncovered SM posts 4
The Commission must use its investigative powers to seek clarification from Member States in order for it to establish whether a measure constitutes State aid, or is compatible aid, or is existing aid. Introduction Complaints are an important source of information to the Commission. The possibility afforded to undertakings to lodge such complaints with the Commission is intended to dissuade […]
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26. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Member States Must Recover of their Own Initiative Illegally Granted Aid
State Aid Blogs - State Aid Uncovered SM posts 3
Aid granted illegal must be recovered by the granting authority without any need for a prior Commission decision ordering recovery. The amount of recovered aid may be limited to that which is in excess of what is allowed by the GBER. Introduction It is a well-established principle in the case law that a “prudent market operator” is responsible to check […]
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