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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28. February 2023  |   State Aid Uncovered by Phedon Nicolaides

Discretion of Public Authorities and Selectivity
State Aid Blogs - State Aid Uncovered SM posts 30
Introduction On 2 February 2023, the Court of justice, in case C649/20 P, Spain and Others v European Commission, clarified the extent to which public authorities can implement general measures without in practice favouring any undertaking. The exercise of administrative discretion can turn a general measure into selective. The Court made a distinction between what may be called “related” or […]
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21. February 2023  |   State Aid Uncovered by Phedon Nicolaides

The Selectivity and Profitability of Agreements between Airports and Airlines
State Aid Blogs - State Aid Uncovered SM posts 27
Introduction Selectivity is a tricky issue. Even a measure that appears not to favour or exclude any undertaking may in practice prove to be selective if its effects favour certain undertakings over others that are in a comparable situation. In order to determine whether they are comparable it necessary to examine the objective of the measure. This is what the […]
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8. February 2023  |   State Aid Uncovered by Phedon Nicolaides

State Aid May Have an Incentive Effect Even After the Start of Work: But Would it Favour Inefficient Operators?
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Introduction Perhaps the most important aspect of the compatibility of State aid with the internal market is the presence of incentive effect. That is, the aid is capable of changing the behaviour of the recipient. If it does not, then public money is wasted because it has no effect on what happens on the market anyway. In principle, in order […]
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30. January 2023  |   State Aid Uncovered by Phedon Nicolaides

Cumulation of State Aid Granted by Different Member States
State Aid Blogs - State Aid Uncovered SM posts 6
Introduction The EU Green Deal and the Climate, Environmental Protection and Energy Aid Guidelines [CEEAG] allow Member States to grant more aid, in diversity and amounts, to incentivise companies to invest in greener technologies and energy. However, when multiple Member States grant aid for the same purpose, there is a risk of overcompensation of undertakings that operate across Member States. […]
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24. January 2023  |   State Aid Uncovered by Phedon Nicolaides

State Resources Include all the Resources that Can be Directed by the State for its own Purposes
State Aid Blogs - State Aid Uncovered SM posts 40
Introduction On 12 January 2023, the Court of Justice delivered its judgment in joined cases C-702/20, DOBELES HES and C-17/21, Sabiedrisko pakalpojumu regulēšanas komisija.[1] A Latvian court requested the Court of Justice to provide a preliminary ruling on the interpretation of Article 107(1) TFEU, Article 108(3) TFEU, Regulation 1407/2013 on de minimis aid and of the procedural Regulation 2015/1589. The […]
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17. January 2023  |   State Aid Uncovered by Phedon Nicolaides

The Private Acquirer Test: An Illuminating and also Puzzling Judgment
State Aid Blogs - State Aid Uncovered SM posts 22
A public authority may act as a market operator and acquire services through a private third party without conferring an advantage to the provider of those services. Introduction When a public authority buys a service and pays the market price it does not confer an advantage to the seller in the meaning of Article 107(1) TFEU. Even if it pursues […]
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10. January 2023  |   State Aid Uncovered by Phedon Nicolaides

The Value of Land
State Aid Blogs - State Aid Uncovered SM posts 19
Different valuation methods do not confer a selective advantage if they generate similar results. Introduction Land or immovable property has no intrinsic value. Its value depends on how the land or property is used. In turn, how it is used is determined by several factors such as its location, and the applicable zoning rules. A plot of land in an […]
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3. January 2023  |   State Aid Uncovered by Phedon Nicolaides

The Link between State Aid and Environmental Provisions of EU Law
State Aid Blogs - State Aid Uncovered SM posts 17
Introduction It is an established principle in the case law that the Commission may not authorise State aid that infringes other provisions of EU law, both primary and secondary. Now consider the following case. A Member State notifies to the Commission regional investment aid to support the construction of a mega factory. The factory will produce its own energy and […]
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20. December 2022  |   by Phedon Nicolaides

Compensation for Damage
State Aid Blogs - State Aid Uncovered SM posts 2
Introduction On 9 November 2022, the General Court followed its previous judgments in cases concerning compensation for damage caused by the covid-19 pandemic to rule, in case T-111/21, Ryanair v European Commission, that Member States were free to choose to whom to grant State aid.[1] Ryanair had sought the annulment of Commission decision SA.55373 concerning damage compensation to Croatia Airlines […]
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13. December 2022  |   State Aid Uncovered by Phedon Nicolaides

State Guarantees for Undertakings in Difficulty
State Aid Blogs - State Aid Uncovered SM posts 12
In order to detect State aid in a state guarantee, it is necessary to carry out a search to identify the market rate, if it exists. There is no general presumption that an undertaking in difficulty cannot obtain a guarantee from the market. It is necessary to consider the risk of default. The calculation of the amount of aid must […]
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6. December 2022  |   State Aid Uncovered by Phedon Nicolaides

Compliance with State Aid Guidelines
State Aid Blogs - State Aid Uncovered SM posts 10
For aid to be declared compatible with the internal market, all of the formal and substantive provisions of the relevant guidelines must be satisfied. State aid is granted the moment the right to a selective advantage is conferred, even if the actual benefit materialises at a future point in time. Introduction On 26 October 2022, the General Court reiterated, in […]
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15. November 2022  |   State Aid Uncovered by Phedon Nicolaides

No Effect on Trade
State Aid Blogs - State Aid Uncovered SM posts 6
A public measure of purely local character and which does not induce cross-border movement of investors or clients is unlikely to affect trade between Member States. Introduction It is rare to find a judgment that confirms that a particular public measure is not liable to affect trade between Member States. The General Court did so in its judgment of 19 […]
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8. November 2022  |   State Aid Uncovered by Phedon Nicolaides

Natural Disasters and State Aid
State Aid Blogs - State Aid Uncovered SM posts 4
Compensation for damage suffered by undertakings as a result of a natural disaster constitutes State aid. The compensation is compatible with the internal market only if, first, there is a causal relationship between the natural disaster and the damage and, second, the amount of compensation does not exceed the amount of the damage. Introduction Financial assistance in the form of […]
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1. November 2022  |   State Aid Uncovered by Phedon Nicolaides

Research Organisations, their Primary Objectives and their Shareholders
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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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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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