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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12. December 2018  |   State Aid Uncovered by Phedon Nicolaides

The Challenge of Identifying the Reference Tax System: The Spanish Goodwill Case, Again
State Aid Blogs - SAH blog49 Lexxion tax
To determine whether an aid measure is selective, the treatment of the beneficiaries has to be compared to those undertakings which are in a comparable position.   Introduction   On 15 November 2018, the General Court ruled in case T-239/11, Sigma Alimentos Exterior v European Commission.1 Sigma Alimentos Exterior (SAE), a Spanish company, appealed against Commission decision 2011/282 which found that […]
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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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8. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Dealing with Problematic Banks
State Aid Blogs - StateAidHub blogpost14 StateAid Lexxion Money Eu Commission Bank Financial
The sale of a bank through a fair, open, competitive and transparent procedure that maximises the value of the assets and liabilities is free of State aid.   Introduction This week’s article returns to the theme of State aid to banks and examines a case of “precautionary” recapitalisation and a case of sale of a bank, that was linked to […]
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2. May 2018  |   State Aid Uncovered by Phedon Nicolaides

Compensation for Public Service Obligations
State Aid Blogs - 02.05.2018 SA POL UK SGEI
Compensation for public service obligations may be fixed at less than the net extra costs of the provider of the public service to induce it to become more efficient.   Introduction   Every three years the UK determines the compensation it provides to the Post Office Limited (POL) for the extra costs of the public services it provides. Commission decision […]
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24. April 2018  |   State Aid Uncovered by Phedon Nicolaides

Liquidity Support to Banks
State Aid Blogs - 24.04.2018 StateAid Banks MPS
Banks that receive State aid are considered to be failing banks, except when the aid is granted to solvent banks for the purpose of precautionary recapitalisation or temporary liquidity.   Introduction   During the past decade, large amounts of public funds have been committed to shore up failing or illiquid banks. Under current banking rules, the mere fact that a […]
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17. April 2018  |   State Aid Uncovered by Phedon Nicolaides

Complaints about Billboards and Welfare Services
State Aid Blogs - 17.04.2018 State aid Billboard
A regulatory measure may affect competition but it does not constitute State aid. Administrative changes to existing aid measures do not result in new State aid.   Introduction This article reviews two Commission decisions: one concerning a Czech regulatory measure and another concerning existing aid to German social organisations. Both decisions dealt with complaints about alleged illegal State aid.   […]
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10. April 2018  |   State Aid Uncovered by Phedon Nicolaides

What Makes a Public Health Care System Non-economic?
State Aid Blogs - 10.04.18 HealthCare StateAid Economic
Health services are not economic in nature when they are funded by the state through taxation, they are provided for free or at a nominal fee which is the same for all patients and they are available to all citizens on a universal basis and on the same terms.   Introduction   After the judgment of the General Court of […]
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3. April 2018  |   State Aid Uncovered by Phedon Nicolaides

Advantage through Contracts
State Aid Blogs - ah life rd2jRzEum9g unsplash
A price below the regulated normal price confers an advantage. Competition is distorted even when the aid recipient does not expand its operations.   Introduction An undertaking can obtain an advantage without receiving an outright grant. The advantage may be hidden in a contract for the supply of an essential input at reduced prices. This is the issue tackled by […]
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27. March 2018  |   State Aid Uncovered by Phedon Nicolaides

Correct Pricing for the Use of Publicly Funded Infrastructure
State Aid Blogs - m 6
Publicly funded infrastructure must be made available to users at prices that correspond to its market value.   Introduction   When publicly-funded infrastructure is placed at the disposal of an undertaking, that undertaking must pay a market price, otherwise it derives an advantage in the meaning of Article 107(1) TFEU. But what is the market price? Is it the price […]
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20. March 2018  |   State Aid Uncovered by Phedon Nicolaides

Private Creditor v Private Investor
State Aid Blogs - m 4
A private investor never agrees to an unprofitable transaction while a private creditor may agree to a loss in order to avoid a bigger loss from non-recovery of debt owed to it. A public authority acting as a private operator must disregard any losses it may incur from State aid it granted in the past.   Introduction   A question […]
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13. March 2018  |   State Aid Uncovered by Phedon Nicolaides

What Is and What Is not Export Aid
State Aid Blogs - 13.03. Trade StateAid deminimis
The prohibition of export aid prevents distortions in the internal market. Therefore, it cannot be considered as restricting intra-EU trade. Aid is classified as export aid only if it has a direct impact on exports. The incidental and indirect effect on exports of investment aid is not sufficient to categorise it as export aid.   Introduction On 28 February 2018, […]
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6. March 2018  |   State Aid Uncovered by Phedon Nicolaides

State Aid for R&D
State Aid Blogs - m 5
A large amount of State aid can still be compatible with the internal market if it meets all of the requirements of the RDI Framework.   Introduction   Since the coming into force of the GBER, only very few cases of R&D have been notified to the Commission. This means that it is not so obvious how the State aid […]
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