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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18. October 2022  |   by Phedon Nicolaides

Public Authorities Acting as Private Investors
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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
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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
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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
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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
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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)
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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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9. August 2022  |   State Aid Uncovered by Phedon Nicolaides

Legal Standing of Competitors
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A Commission decision authorising or prohibiting a state aid measure that can be implemented without any intermediate rules is a “regulatory act” that can be challenged by “directly concerned” undertakings. Introduction Any natural or legal person who is the addressee of an act of an EU institution can challenge that act before EU courts. This is a right that is […]
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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
State Aid Blogs - State Aid Uncovered SM posts
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
State Aid Blogs - Social Media posts 4
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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15. February 2022  |   State Aid Uncovered by Phedon Nicolaides

Compensation and State Aid
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An event that causes damage for which the state is liable is distinct from the act that confers the right for compensation. Introduction The concept of State aid covers all resources that are controlled by the state, regardless of the reason why such resources may be transferred to or put at the disposal of an undertaking. On 25 January 2022, […]
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8. February 2022  |   State Aid Uncovered by Phedon Nicolaides

The Mysterious “Substantial” Competitive Effect
State Aid Blogs - Social Media posts 3
State aid has a “substantial” effect on competitors when it has a direct and negative impact on their market positions that goes beyond the typical influence of aid on competitive relationships. Introduction State aid always harms competition and competitors. A public measure that has no effect on competition is not State aid. Therefore, it is not enough for a company […]
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1. February 2022  |   State Aid Uncovered by Phedon Nicolaides

I. The Commission Need not Always Open the Formal Investigation Procedure before Correcting a Faulty Decision II. Fines for Failure to Recover Incompatible Aid
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The formal investigation procedure need not be re-opened when the fault lies in the legal assessment of the measure in question. Incompatible State aid has to be recovered quickly and effectively, even from insolvent undertakings. Introduction This article examines two recent judgments concerning Greece. The first judgment explains when the Commission does not have to re-open the formal investigation procedure […]
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25. January 2022  |   State Aid Uncovered by Phedon Nicolaides

Duplication of Infrastructure Does not Promote Regional Development
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A private investor is not interested in regional development. A private investor recoups its investment in infrastructure from revenue from the operation of that infrastructure. Duplication of infrastructure does not contribute to regional development. Introduction In 2015 the European Commission caused a buzz in the State aid community when it decided that investment aid granted to a small Polish airport […]
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18. January 2022  |   State Aid Uncovered by Phedon Nicolaides

A Non-Selective Financial Tax with a Narrow Scope
State Aid Blogs - Social Media posts 3
The scope of a tax must be objectively defined in order for those excluded from the tax not to benefit from a selective advantage. Introduction Taxes are burdens, so they fall outside the scope of Article 107(1) TFEU which prohibits selective benefits funded with state resources. Normally, Article 107(1) applies to benefits from tax exemptions or tax derogations which result […]
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11. January 2022  |   State Aid Uncovered by Phedon Nicolaides

Private Creditor and the Ability of the Debtor to Repay
State Aid Blogs - Social Media posts 1
There are no rules as to the promptness with which a private creditor must act in order to enforce its claims. However, a hypothetical private creditor need not demand that a debtor be declared insolvent as soon as it fails, without taking any account of its longer-term potential. Introduction When the state accepts to restructure debt owed to it or […]
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4. January 2022  |   State Aid Uncovered by Phedon Nicolaides

Public Funding of an Energy Infrastructure Project
State Aid Blogs - Social Media posts 2
State aid up to 100% of the funding gap of a project can be compatible with the internal market. Introduction The European Commission approved investment aid for a Liquefied Natural Gas [LNG] terminal in Alexandroupolis in northern Greece [case SA.55526]. The project involves the following: A Floating Storage Regasification Unit [FSRU] for the storage and regasification of LNG. The construction […]
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