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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16. November 2021  |   State Aid Uncovered by Phedon Nicolaides

Selectivity and Tax Measures
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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
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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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26. October 2021  |   State Aid Uncovered by Phedon Nicolaides

Legitimate Expectations and the “Right” to State Aid
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Legitimate expectations can only be created by EU institutions giving unambiguous and unconditional assurances. No undertaking enjoys a right to State aid. Member States may reduce the amount of State aid they grant. Introduction As the process of transition to green economy accelerates, Member States have been reducing the subsidies they promised to grant to the early investors in the […]
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19. October 2021  |   State Aid Uncovered by Phedon Nicolaides

Is Anyone who is Affected by State Aid an “Interested Party” that can Challenge a Commission Decision?
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A non-competitor cannot normally claim to be “interested party”. The Commission does not have to prove to the normal legal standard the existence of state aid when it opens the formal investigation procedure. Introduction This week’s article reviews two recent judgments: one on the status of “interest party” and another on the obligations of the Commission when it opens the […]
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12. October 2021  |   State Aid Uncovered by Phedon Nicolaides

Security of Supply May Justify a Deviation from Public Procurement Rules
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Security of supply justifies a deviation from the normal procurement procedures as long as the same security cannot be achieved through a competitive selection of suppliers. Introduction Point 19 of the 2012 SGEI Framework requires that the assignment of a public mission to an undertaking must comply with the applicable public procurement rules. It does not impose an obligation for […]
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5. October 2021  |   State Aid Uncovered by Phedon Nicolaides

What the Commission Must Find Out in the Preliminary Examination of State Aid: The Lessons from Tempus Energy on what is Sufficient Information
State Aid Blogs - to use
The Commission must open the formal investigation procedure when it has serious doubts based on the information available to it. Introduction Once I asked an administrator of an institute where I used to work why I was not informed about certain benefits that were available to staff. “Because you did not ask”, he answered. How could I ask about something […]
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28. September 2021  |   State Aid Uncovered by Phedon Nicolaides

A Faulty Sale Procedure Can Lead to Presumption of State Aid and Annulment of a State Aid Decision
State Aid Blogs - stateaid39
A sale of public assets cannot be presumed to be free of State aid when bidders are not treated equally. Introduction When the state sells a company it owns, there is a presumption that no State aid benefits either the buyer or the company that is sold if the sale is open transparent, non-discriminatory, unconditional and the chosen buyer is […]
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21. September 2021  |   State Aid Uncovered by Phedon Nicolaides

Market Economy Operator Test: Timisoara Airport & Wizz Air
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Public funding of activities that fall within the remit of the state does not constitute state aid. Although the presence of a credible ex ante business plan based on realistic assumptions is a strong indicator that the MEOT is satisfied, its absence does not necessarily prove that the MEOT is failed. Introduction Following a complaint by Carpatair, the European Commission […]
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14. September 2021  |   State Aid Uncovered by Phedon Nicolaides

Pricing of Guarantees
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A market guarantee premium must cover all costs assumed by the guarantor including the cost of possible default, cost of capital and the cost of administering the guarantee. Introduction Financial instruments are much in vogue. The Pan-European Guarantee Fund and to a smaller extent the Recovery and Resilience Fund are implemented through financial instruments that seek to leverage private participation. […]
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20. July 2021  |   State Aid Uncovered by Phedon Nicolaides

The Italian Health System Is not Economic in Nature
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Certain elements of competition that raise efficiency do not undermine the social solidarity foundations of a health care system. Introduction A question that has been addressed by the Court of Justice but not in sufficient detail is whether the providers of non-economic health services can compete with each other. The answer is conditionally affirmative. Competition that does not undermine the […]
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13. July 2021  |   State Aid Uncovered by Phedon Nicolaides

Existing Aid, New Aid and Retroactive Application of a Block Exemption Regulation
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Changes to approved aid measures result in new aid. Only purely formal or administrative changes do not turn existing aid into new. Prolongation of an existing aid measure is not purely formal or administrative. Introduction Any change to an approved aid measure that affects its compatibility with the internal market turns it into a new aid that has to be […]
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6. July 2021  |   State Aid Uncovered by Phedon Nicolaides

Disentangling the Impact of Covid-19 from other Business Problems
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State aid may only compensate for the direct damage caused by covid-19. Introduction Aid that compensates for damage caused by natural disasters or exceptional occurrences is declared by Article 107(2)(b) TFEU to be compatible with the internal market. That is why Article 1(4)(c) of the GBER does not exclude, as is normally the practice, undertakings in difficulty from schemes that […]
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29. June 2021  |   State Aid Uncovered by Phedon Nicolaides

Amazon and the Difficulty of Finding a Comparable Tax Payer
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To apply the Arm’s Length Principle to transactions between two related companies, the Commission must identify the less complex company of the two and compare it to a similar independent company. Methodological errors in the application of the Arm’s Length Principle by national authorities does not necessarily prove the existence of advantage. Introduction On 12 May 2021 the Commission suffered […]
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22. June 2021  |   State Aid Uncovered by Phedon Nicolaides

Is State Aid for Locally Established Undertakings Compatible with the Internal Market?
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Limitation of State aid to companies which have a durable link with the local economy can be compatible with the internal market. Introduction By prohibiting barriers to free movement and establishment in the internal market, the EU seeks to make the choice of location of a company largely irrelevant. All companies should be treated the same regardless of where they […]
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15. June 2021  |   State Aid Uncovered by Phedon Nicolaides

State Aid to Group of Companies
In assessing the compatibility of State aid with the internal market, the Commission must also consider previous awards to a legally distinct but related company. In assessing the need for rescue/restructuring aid, the Commission must also consider whether the recipient is a member of a group that can provide internal funding. Introduction Paragraph 11 of the Commission’s Notice on the […]
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8. June 2021  |   State Aid Uncovered by Phedon Nicolaides

Economic Continuity and Recovery of Indirect State Aid
Special insolvency procedures can confer a selective advantage that constitutes State aid. A recovery order can be extended to the new owner of a company that had received incompatible State aid. Introduction Recipients of State aid that is found to be incompatible with the internal market have to pay it back with interest. This liability for repayment also extend to […]
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1. June 2021  |   State Aid Uncovered by Phedon Nicolaides

The Impossibility of Proving the Absolute Impossibility to Recover Incompatible State Aid
It is not sufficient to claim that is it absolutely impossible to recover incompatible State aid. It must be shown that alternative methods have been actually tried without success. Introduction It is rather impossible for Member States to prove that it is absolutely impossible to recover State aid that has been found by the Commission, and confirmed by EU courts, […]
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25. May 2021  |   State Aid Uncovered by Phedon Nicolaides

Compensation for Universal Service Provision
As long as the compensation does not exceed the net extra costs of the universal service activities, it may be used to offset other costs. Introduction The rules on State aid for services of general economic interest [SGEI] are very generous because they allow both investment and operating aid. Yet, it is not easy to comply with those rules because […]
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18. May 2021  |   State Aid Uncovered by Phedon Nicolaides

State Aid and Essential National Interest
State aid that is necessary for protecting essential national interests can be compatible with the internal market. Introduction State aid should support outcomes that the market by itself cannot achieve. This implies that State aid that is restricted to only one or a few undertakings is unlikely to be capable of delivering the desired outcome. Yet, sometimes there may be […]
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