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. November 2019  |   State Aid Uncovered by Phedon Nicolaides

How to Assess a Shareholder Loan
State Aid Blogs - StateAidHub blogpost49 shareholder loan MEOP
A shareholder loan cannot be simply compared to a bank loan because the shareholder also benefits from improvements in the future profitability of the borrower. Introduction When a public authority grants a loan to a company, the methodology in the 2008 Commission communication on reference and discount rates can be used to determine whether the loan contains State aid. However, […]
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19. November 2019  |   State Aid Uncovered by Phedon Nicolaides

Compensation to a Toll Road Operator
State Aid Blogs - StateAidHub blogpost48 toll road motorways Poland obligations StateAid
Contractual obligation to provide compensation that does not exceed the loss of income is not State aid. Introduction When is a company entitled to compensation by the state? The easy answer is “when the state is liable for damage”. However, it may be possible for a company to claim compensation from the state when the state has assumed contractual obligations. […]
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14. November 2019  |   State Aid Uncovered by Phedon Nicolaides

Risk Finance
State Aid Blogs - StateAidHub blogpost47 Finance lexxion GBER SMEs
Risk finance measures for the support for large enterprises or SMEs which operate for longer than seven years fall outside the GBER and must be notified individually to the Commission. Introduction Since the State aid modernisation and the new rules that were introduced in 2014, only a handful of risk finance measures [7-8?] have been notified to the European Commission […]
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5. November 2019  |   State Aid Uncovered by Phedon Nicolaides

Economic Continuity in Recovery of Incompatible State aid
Lab test
The new owner of a company that received incompatible State aid may be liable to pay it back. Introduction   Companies rarely escape from the obligation to repay incompatible State aid. Over the past decade or so, very few companies have successfully argued that they legitimately expected that the aid they received was compatible with the internal market. When a […]
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30. October 2019  |   State Aid Uncovered by Phedon Nicolaides

The Operator of an Economic Infrastructure is an Undertaking
State Aid Blogs - m 1
The assignment of public service tasks to an infrastructure operator is not sufficient to prevent the application of State aid rules. Introduction The characterisation of an entity as an undertaking is activity based, not status based. If it carries out activities for which there is a market, it becomes an undertaking, regardless of providing services which are in the general […]
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22. October 2019  |   State Aid Uncovered by Phedon Nicolaides

Production of Green Electricity
State Aid Blogs - StateAidHub blogpost44 greenelectricity
Member States may reduce the amount of State aid they grant and companies may not claim they have a right to State aid. Introduction Close to 60% of all aid granted to industry and services in the EU goes to support environmental protection, energy efficiency and the generation of electricity from renewable sources of energy. However, as technology improves, the […]
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16. October 2019  |   State Aid Uncovered by Phedon Nicolaides

Attempting to Minimise Past State aid Is of No Interest to a Private Investor
State Aid Blogs - StateAidHub blogpost43 privateinvestor
A public authority acting as a private investor ignores past State aid. Introduction It is now a settled principle that when a public authority intends or pretends to act as a private investor it must not take into account any past aid it has granted to the company in which it wants to invest. On 19 September 2019, the General Court […]
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8. October 2019  |   State Aid Uncovered by Phedon Nicolaides

Public Service Obligations, Duration of Entrustment and Reasonable Profit
State Aid Blogs - StateAidHub blogpost41 LNGterminal
The duration of entrustment should not exceed the economic life of the investment and the rate of return should reflect the commercial risk of that investment. Introduction Is a 55-year entrustment through a direct award compatible with EU rules? And is a profit rate that exceeds the risk-free rate of return reasonable? These are some of the questions that the […]
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1. October 2019  |   State Aid Uncovered by Phedon Nicolaides

Enforcement of State Aid Rules by National Courts
State Aid Blogs - m 2
Private enforcement has increased, but damages for illegal granting of State aid have been successfully claimed in just one case. Introduction   According to the annual competition report that was published in July, Member States use the GBER to implement 96% of their new aid measures.[1] This impressive outcome should be seen in conjunction with the recent rulings of the Court […]
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24. September 2019  |   State Aid Uncovered by Phedon Nicolaides

“Invest-NL”: A New Promotional Bank
State Aid Blogs - StateAidHub blogpost39 promotionalbank
A state-owned promotional or development bank can pursue public policy objectives and also invest on terms which are acceptable to private investors. Introduction During the past decade or so several Member States have established “promotional” or “development” banks for the purpose of investing where the market does not. Private investors may be reluctant to commit their money for a variety […]
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30. April 2019  |   State Aid Uncovered by Phedon Nicolaides

The Commission Must Explain its Decision
State Aid Blogs - StateAid Blogpost17 2019 Lexxion UPS DeutschePost Eu Commission State Aid
A Commission decision that affects the legal position of an undertaking is actionable before EU courts. The opening of the formal investigation procedure must lead the Member State concerned to suspend the aid measure and may result in a recovery ruling by a national court. The Commission must be consistent in its reasoning. If it cannot use certain information at […]
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23. April 2019  |   State Aid Uncovered by Phedon Nicolaides

State Control: The Case of EEG 2012
State Aid Blogs - 5 most read articles 2019
There is crucial difference between control by the state over resources and attribution to the state of the aid granting decision.   Introduction According to the latest edition of the State aid Scoreboard, in 2017 Member States granted a total of EUR 105 billion of State aid to manufacturing and services. Of that amount, 58% or EUR 61 billion supported […]
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16. April 2019  |   State Aid Uncovered by Phedon Nicolaides

Spanish Football Clubs Score against the Commission: a) Linked Advantages and Disadvantages Must be Assessed Together b) In Determining the Existence of an Advantage, the Commission Must Explain both what it Takes into Account and what it Ignores
State Aid Blogs - StateAidHub blogpost15 Soccer loans Lexxion Spain EU Commission
State measures which are linked and produce both positive and negative effects, must be considered together to determine whether they confer a net advantage to undertakings. Counter-guarantees must be taken into account to determine the existence of advantage even if they are provisional.   Introduction Member States have in a number of cases tried to defend tax reductions or tax […]
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9. April 2019  |   State Aid Uncovered by Phedon Nicolaides

The Boundary between State and Private Resources
State Aid Blogs - StateAidHub blogpost14 StateAid Lexxion Money Eu Commission Bank Financial
Discretion in the form of intervention can remove it from the control of the state.   Introduction Suppose a thug puts a gun to your head and demands your wallet. Because you have sentimental photos in your wallet, you offer instead the keys to your car. You would rather lose the car than the wallet. Can the thug claim in […]
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3. April 2019  |   State Aid Uncovered by Phedon Nicolaides

The Incentive Effect of Public Funding of Infrastructure in Tranches
State Aid Blogs - StateAidHub blogpost13 StateAid motorway greece E65 EU Comission lexxion
Public funding of functionally and commercially severable parts of an infrastructure project may have incentive effect even after construction is completed on some of the parts. A subsidy for the operation of a toll motorway may not constitute State aid.   Introduction State aid granted to a project that has already started lacks incentive effects and, therefore, cannot be found […]
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26. March 2019  |   State Aid Uncovered by Phedon Nicolaides

National Authorities Must Recover Aid they Grant Mistakenly
State Aid Blogs - StateAidHub blogpost12 StateAid food bread eu small
Assurances from granting authorities cannot guarantee the legality of State aid. Aid recipients must verify that the aid is granted correctly.   Introduction The Commission must stop its misguided policy of not making public the answers it provides to Member States on questions of interpretation of the General Block Exemption Regulation [GBER]. This is one of the consequences of a […]
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19. March 2019  |   State Aid Uncovered by Phedon Nicolaides

Many Tax Rulings Do Not Make a Single Aid Scheme
State Aid Blogs - StateaidHub blogpost11 Lexxion 2019 Tax Commission EU judgement
The autonomy that Member States enjoy in the field of direct taxation must be exercised in compliance with EU State aid law. A State aid measure is considered to be a “scheme” when (a) no further implementing acts are necessary, (b) the granting authority has no discretion in how the measure is applied and (c) the measure defines the eligible […]
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13. March 2019  |   State Aid Uncovered by Phedon Nicolaides

How Can Incompatible State Aid Be Passed-on from one Company to another to Avoid Recovery?
State Aid Blogs - StateaidHub blogpost10 2019 commission judgement nvestment state aid lexxion
Introduction State aid that is incompatible with the internal market has to be paid back, unless the repayment would be contrary to a general principle of EU law. Last November the Court of Justice ruled in case C‑622/16 P, Scuola Elementare Maria Montessori v European Commission that “(79) the principle that ‘no one is obliged to do the impossible’ is among the […]
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5. March 2019  |   State Aid Uncovered by Phedon Nicolaides

How Much May a Non-Economic Entity Charge without Becoming an Undertaking?
State Aid Blogs - StateaidHub blogpost9 2019 lexxion education stateaid financing commission 2
The price should not cover more than 50% of the costs. Introduction An entity that does not make profit can still be an undertaking. However, an entity that charges a fee for its services is not necessarily an undertaking. The EU Court of Justice has never defined how low such a fee must be in order for that entity to […]
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27. February 2019  |   State Aid Uncovered by Phedon Nicolaides

EU Rules do not Impose a Time Limit on the Power of National Courts to Deal with Non-notified Aid
State Aid Blogs - StateAidHub blogpost8 Maritim Ferry Port StateAid Lexxion
State aid may affect trade even when the market concerned is not liberalised. This can happen when the aid recipient also has operations outside that market, which it can cross-subsidise. Claims for damages caused by illegal aid must be accorded the same treatment under national law as any other claim resulting from faulty decisions of the state.   Introduction A […]
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