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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9. July 2019  |   State Aid Uncovered by Phedon Nicolaides

1) The European Commission Does not Have to Identify Individual Beneficiaries in its Recovery Decisions 2) Revision of the GBER [InvestEU, Seal of Excellence, ETC]
State Aid Blogs - StateAidHub blogpost27 GBER
This week’s article deals with two issues: possible defence against repayment of incompatible State aid and the forthcoming revision of the GBER. Introduction In 2008, the Commission ordered France to recover incompatible aid that had been granted by means of several public measures to support farmers [see Commission decision 2009/402]. What made that decision interesting was that part of the […]
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2. July 2019  |   State Aid Uncovered by Phedon Nicolaides

Application of the MEOP to Energy Infrastructure
State Aid Blogs - StateAidHub blogpost26 energy infrastructure
A public authority that acts as a private operator may charge what the market can bear. Introduction In January 2019, Germany notified to the Commission, for reasons of legal certainty, investment of the municipality of Hamburg in a district heating network. The Commission, in decision SA.52390, found that the investment in Hamburg District Heating Network conformed with the Market Economy […]
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25. June 2019  |   State Aid Uncovered by Phedon Nicolaides

How to Value Land in Complex Land Swaps
State Aid Blogs - StateAidHub blogpost25 LandSwap RealdMadrid
A private investor assesses all components of a complex transaction and takes into account not just profit, but also the legal implications of the prospective transaction and possible future liability.   Introduction   When a public authority sells land, it should either auction it through a competitive and unconditional process or have it valued beforehand by an independent expert.Sometimes, public […]
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18. June 2019  |   State Aid Uncovered by Phedon Nicolaides

Is it OK to Tax Company Size?*
State Aid Blogs -
Progressive tax rates that are consistent with the objective of the tax system are not necessarily selective. Introduction Member States are free to design their corporate tax systems as long as they do not grant State aid or infringe fundamental internal market freedoms. A question that arises in discussions on what Member States may or may not do when designing […]
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11. June 2019  |   State Aid Uncovered by Phedon Nicolaides

I) Unlimited State Guarantees II) Effect on Trade
State Aid Blogs - StateAidHub blogpost23
A competitor who wants to challenge a Commission decision authorising State aid without a formal investigation must, first, show that it is seriously harmed by the aid. Introduction This week’s article reviews two judgments: one on unlimited state guarantees granted by France [case T-135/17, Scor v European Commission][1] and another on aid that was found not to affect trade between Member […]
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4. June 2019  |   State Aid Uncovered by Phedon Nicolaides

Not Every Compensation Is a Compensation in the Meaning of Altmark
State Aid Blogs - StateAidHub blogpost22 electricity Altmark SGEI
Regulation and licensing do not constitute obligations for the provision of an SGEI. Compensation for changes in public policy is not compensation that complies with the Altmark conditions. Introduction The calculation of the compensation for the net extra costs of public service obligations [PSO] is a difficult task. On 15 May 2019, in case C-706/17, Achema et al v Lithuania […]
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28. May 2019  |   State Aid Uncovered by Phedon Nicolaides

What Happens when Internal Market Rules and State Aid Rules Clash?
State Aid Blogs - StateAidHub blogpost21 Tax Refund
A tax refund may not be granted, if it constitutes non-notified State aid.   Introduction   It is a well-established principle that restrictions on internal market rights or freedoms may not be attached to a State aid measure. Indeed, current State aid rules [e.g. GBER, guidelines] explicitly exclude from their scope any aid measure which is inseparably linked to a […]
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21. May 2019  |   State Aid Uncovered by Phedon Nicolaides

There Is No Threshold below which Economic Activities Can Be Considered to be Non-economic
State Aid Blogs - StateaidHub blogpost20 Lexxion Port Economic Activities
Non-economic activities have to be accounted separately from economic activities. The exercise of public tasks assigned by the state cannot protect an undertaking from State aid rules. State aid distorts competition even when it aims to remedy distortions. Introduction Ports, like other transport infrastructures, may operate under public obligations some of which may be of economic and some of non-economic […]
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16. May 2019  |   State Aid Uncovered by Phedon Nicolaides

Competitors’ Rights
State Aid Blogs - StateaidHub blogpost19 Lexxion Lufthansa Airport StateAid Ryanair Frankfurt Competition EU Commission
A competitor must show that it is substantially affected by State aid approved by the Commission in order to challenge the Commission’s decision. Merely being affected by the aid is not enough. To show that aid has a substantial impact, it is first necessary to define the relevant market. This is different from the “distortion of competition” in the meaning […]
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7. May 2019  |   State Aid Uncovered by Phedon Nicolaides

Land Development: The Case of Jaguar Land Rover Slovakia
State Aid Blogs - StateAidHub blogpost18 Landrover Jaguar Nitra Stateaid Infrastrsucture Transport Lexxion
Public funding of infrastructure which is not constructed for the specific needs of a company is not State aid.   Introduction An article carried by the Financial Times on 1 May 2019 revealed that Jaguar Land Rover [JLR] decided to make again the iconic Land Rover Defender. The production of this legendary off-roader ended about 10 years ago because it […]
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4. December 2018  |   State Aid Uncovered by Phedon Nicolaides

The Recovery of Incompatible Aid Cannot be Absolutely Impossible Unless it is first Attempted
State Aid Blogs - SAH blog48 Montessori Lexxion
Introduction In its ruling of 6 November 2018 in cases C‑622/16 P to C‑624/16 P, Scuola Elementare Maria Montessori v European Commission, the Court of Justice made it harder for Member States to escape from their recovery obligations.[1] Montessori appealed against the judgment of the General Court in case T‑220/13, Scuola Elementare Maria Montessori v European Commission. That judgment was reviewed here on […]
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27. November 2018  |   State Aid Uncovered by Phedon Nicolaides

Legal Standing of Investors in Failed Banks
State Aid Blogs - m 3
Investors that lodge claims before national courts for damages from resolution of banks have legal standing to request annulment of Commission decisions authorising State aid to those banks. Introduction It is now ten years since the start of the financial crisis. In these ten years, the Commission has adopted about 500 decisions dealing with State aid to banks and other […]
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20. November 2018  |   State Aid Uncovered by Phedon Nicolaides

State Aid Provisions in the Draft Agreement on the Withdrawal of the UK from the EU
State Aid Blogs - StateAid Blogpost Brexit EU Lexxion
The agreement on the withdrawal of the UK from the EU requires compliance with EU State aid rules.   Introduction   On 14 November 2018, EU and UK negotiators finalised the text of the Agreement on the withdrawal of the UK from the EU.[1] The Agreement has to be ratified by the UK and the other 27 Member States. Given immediate […]
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9. November 2018  |   State Aid Uncovered by Phedon Nicolaides

Using the Correct Methodology to Calculate Public Service Compensation
State Aid Blogs - stellrweb djb1whucfBY unsplash
Compensation for the extra costs of a public service obligation may include a reasonable profit that reflects the risk borne by the provider of the public service.   Introduction   The calculation of the amount of compensation for the extra costs of public service obligations can be difficult and tricky. In the absence of such calculation, aid to providers of […]
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6. November 2018  |   State Aid Uncovered by Phedon Nicolaides

Unconditional and Unlimited Guarantees and their (In)Compatibility with the Internal Market
State Aid Blogs -
Operating aid is not normally compatible with the internal market. Therefore, State aid provided through state guarantees should not cover operating costs. State aid embedded in guarantees must be quantifiable so that its necessity and proportionality can be assessed. The assessment of State aid must be made within an EU context taking into account its impact on trade.   Introduction […]
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30. October 2018  |   State Aid Uncovered by Phedon Nicolaides

Tax Inseparably Linked to State Aid
State Aid Blogs - Stateaid Blog43 Tax movie rent
Taxes which are inseparably linked with an aid measure are assessed together with the aid itself.  An increase of the budget of an aid scheme by more than 20% constitutes a change of existing aid that must be notified to the Commission for prior authorisation.   Introduction Taxpayers may not refuse to pay taxes on the grounds that the tax […]
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23. October 2018  |   State Aid Uncovered by Phedon Nicolaides

Public Service Obligations Must be Properly Defined and Selectivity Must be Proven [1]
State Aid Blogs - Stateaid blog42 Broadcasting
Neither the existence of market failure, nor national laws that designate a service to be in the general interest can replace an official act that assigns to one or more undertakings clearly defined public service obligations.   Introduction The proper definition of public service obligations (PSOs) is an issue that arises with surprising regularity. It is surprising because numerous court […]
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16. October 2018  |   State Aid Uncovered by Phedon Nicolaides

Unlimited State Guarantees
State Aid Blogs - m 2 1
Unlimited state guarantees create a presumption that the recipient of the guarantee obtains an advantage in the form of cheaper credit. Any advantage in the form of lower risk in transactions with suppliers or clients has to be proven.   Introduction State guarantees must be limited in time and amount and may cover only a specified event. Unlimited and general […]
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9. October 2018  |   State Aid Uncovered by Phedon Nicolaides

Ex ante Assessment of Future Profitability is Absolutely Necessary
State Aid Blogs - m 1 1
A private investor assesses the prospects of future profitability before it invests. The burden of proof lies with the Member State that claims it has acted as a private investor.   Introduction The market economy investor principle is based on a simple premise: before you commit your money you need to check how much you are likely to get back. […]
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2. October 2018  |   State Aid Uncovered by Phedon Nicolaides

The Compatibility of State Aid with the Internal Market: Lessons from “Hinkley Point C” – Part III
The objective of common interest that should be supported by State aid does not have to be an objective agreed by all Member States.   Environmental protection Austria argued that the Commission had ignored the potential negative effects of the aid on the environment such as the storing of nuclear waste. The reply of the Court was that “(516) in […]
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