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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26. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Member States Must Recover of their Own Initiative Illegally Granted Aid
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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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19. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Injection of Capital in a Postal Operator
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The resources of a public undertaking necessarily count as “state resources”, regardless of the degree of autonomy of the public undertaking. However, not every decision of a public undertaking can necessarily be “imputed” to the state. A prudent investor may take into account authorised State aid. A prudent investor may tolerate short-term losses if it can realise sufficient profits in […]
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12. April 2022  |   State Aid Uncovered by Phedon Nicolaides

A First Commission Decision on Natural Gas Storage
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Compensation that guarantees a normal or fair rate of return eliminates risk that is inherent in market transactions and therefore confers an advantage in the meaning of Article 107(1) TFEU. Introduction On 23 March 2022, the European Commission announced plans to mitigate the spike in energy prices caused by the war in Ukraine. Chief among those plans were proposals for […]
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5. April 2022  |   State Aid Uncovered by Phedon Nicolaides

Intra-State Transfers and the Discretion of Public Authorities
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Resources transferred from one public authority to another for the purpose of being used to subsidise undertakings do not fall within the scope of Article 107(1) TFEU if the recipient authority has discretion in their disbursement. Introduction A public authority that carries out economic activities becomes an undertaking that is subject to the prohibition of Article 107(1) TFEU. When the […]
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25. March 2022  |   State Aid Uncovered by Phedon Nicolaides

A New Temporary Crisis Framework
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Introduction A new Temporary Framework which is called “Temporary Crisis Framework” [TCF] to distinguish it from the currently applicable Temporary Framework on covid-19 related State aid was adopted on 23 March 2022, almost two years to the date of the publication of the rules on covid-19 related State aid.[1] The purpose of the TCF is to enable Member States to […]
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22. March 2022  |   State Aid Uncovered by Phedon Nicolaides

I. Vouchers for SMEs II. Funding of Aid with Revenue from Levies Imposed on the Aid Beneficiaries
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State aid rules apply both to direct and indirect beneficiaries of aid. Introduction This week’s article reviews a Commission decision and a judgment of the Court of Justice. The Commission decision concerns Italian vouchers for SMEs to pay for the use of fast broadband services. The judgment deals with a German measure supporting milk quality tests. In both cases an […]
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15. March 2022  |   State Aid Uncovered by Phedon Nicolaides

Another Altmark Compliant Case!
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Any non-SGEI obligation attached to a public service contract may not raise the cost of the service above the level of the “least cost to the community”. Introduction It is very rare for measures of compensation for public service obligations to be found by the European Commission to be compliant with the Altmark conditions. Nonetheless, in the past two years […]
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9. March 2022  |   State Aid Uncovered by Phedon Nicolaides

The Concept of “Undertaking in Difficulty” and Evidential Requirements
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The “subscribed share capital” of a company includes the capital that is already paid and any future amount that shareholders have irrevocably committed to pay. Introduction Undertakings in difficulty may not receive any kind of aid except aid to compensate for damage caused by a natural disaster or exceptional occurrence and, under strict conditions, rescue and/or restructuring aid. In most […]
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1. March 2022  |   State Aid Uncovered by Phedon Nicolaides

Security of Energy Supply
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Guaranteed supply of electricity at fixed prices to a state-owned network operator involves a transfer of state resources to the supplier. Guaranteed supply of electricity at fixed prices confers an advantage to the supplier. Introduction Member States are allowed to take measures to ensure the security of energy supplies. There is a variety of such measures: imposition of obligations on […]
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22. February 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation for Damage and De Minimis Aid
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Compensation for damage caused by protected animals is State aid. Member States may categorise compensatory payments as de minimis aid and refuse to make payments in excess of the de minimis threshold. Introduction Advantage in the meaning of Article 107(1) TFEU is any benefit granted by the state that is not available under normal market conditions. Normal market conditions are […]
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28. December 2021  |   State Aid Uncovered by Phedon Nicolaides

Illegal Aid Cannot be Regularised a Posteriori
A Commission decision finding non-notified aid to be compatible with the internal market cannot remedy the illegality that existed before the Commission decision. Introduction In November 2021, the General Court rejected an appeal by the recipient of illegal aid who had asked the Commission to declare the aid compatible with the internal market even though the Member State concerned had […]
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21. December 2021  |   State Aid Uncovered by Phedon Nicolaides

How to Determine Selectivity
State Aid Blogs - Social Media posts
A measure is selective when it excludes undertakings that are equally capable of contributing to the achievement of its objectives. Introduction Since no two undertakings are exactly the same, how can it be determined whether they are in a comparable situation? Differences in their features such as size or the type of technology they use do not necessarily mean that […]
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14. December 2021  |   State Aid Uncovered by Phedon Nicolaides

First Case of a “Private Debtor” Test?
State Aid Blogs - Blog 51 KV
A public authority acting as a “private debtor” tries to minimise the amount that it has to pay. Introduction In assessing whether commercial transactions between public authorities and undertakings are free of State aid, the European Commission and EU courts apply the market economy investor principle [MEIP]. In essence, this principle tests whether a public investor behaves like a private […]
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7. December 2021  |   State Aid Uncovered by Phedon Nicolaides

An Unusual Case of a “Self Notification” of State Aid by an Aid Beneficiary
State Aid Blogs - Blog 50 KV
Aid beneficiaries may not “notify” State aid to the Commission. Only Member States may notify aid. Beneficiaries of non-notified aid may ask national courts to penalise the granting authorities. Introduction What should an undertaking do when it finds out that a public measure from which it has been benefitting contains State aid that has not been notified to the European […]
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30. November 2021  |   State Aid Uncovered by Phedon Nicolaides

When Does an Amendment of an Existing Aid Make it a New Aid?
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Existing aid becomes new aid if any amendment affects the assessment of its compatibility with the internal market. Introduction Member States often amend and adjust State aid measures after they are approved by the Commission. Such changes must be carried carefully because they can turn an existing aid into new aid and all new aid has to be notified to […]
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30. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Public Funding of an Undertaking in a Closed Sector
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Public funding of undertakings in sectors closed to competition does not constitute State aid. A sector is closed to competition when competition on and for the market is precluded by law. Introduction Determining when State aid does not affected cross-border trade is both difficult and tricky. But there is one exception; when the sector is closed to competition. A sector […]
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23. November 2021  |   State Aid Uncovered by Phedon Nicolaides

6th Revision of the Temporary Framework for Covid-19 State Aid
State Aid Blogs - Blog 47 KV
Introduction On Thursday, 18 November 2021, the European Commission adopted a sixth amendment to the Temporary Framework [TF] for State aid measures to combat covid-19. The document laying down the new amendments can be accessed here: https://ec.europa.eu/competition-policy/document/download/a822acec-f0c6-4c8c-ab49-fc2dd34188ec_en The TF was scheduled to expire on 31 December 2021. The new amendment extends its validity to 30 June 2022. It also changes […]
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16. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Selectivity and Tax Measures
State Aid Blogs - Blog KV 46
The reference system for determining the selectivity of a tax measure must have its own logic and be autonomous and its identification depends on the content, structure and specific effects of the applicable rules. A measure that does not exclude any particular undertaking can be selective if it treats differently undertakings which are in similar situations. Introduction On 6 October […]
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9. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Compensatory Payments and State Resources
State Aid Blogs - blog 45 KV
Funds used in compensation mechanisms mandated by the state become state resources Introduction The Court of Justice has stressed repeatedly that any resource over which the state can exercise control becomes a state resource, regardless of whether it is managed by a public authority or a private entity. Member States, however, keep inventing novel and complicated arrangements in which mandated […]
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2. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Market Economy Operator
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Comparing prices charged by different airports is not a suitable method for detecting the existence of selective advantages. Introduction Airports enter into complex agreements with airlines. When airports are in public ownership or operate under a mandate by the state, their agreements with airlines may contain State aid. It is, however, very difficult to detect State aid in these agreements […]
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