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. February 2020  |   State Aid Uncovered by Phedon Nicolaides

An Important (and so far, Unique) Project of Common European Interest
State Aid Blogs - StateAidHub blogpost6 microplastics IPCEI
State aid for important R&D projects of common European interest can cover different costs than the RDI Framework and at different rates of intensity. Introduction Several Member States have demanded a more active industrial policy to counteract perceived unfair foreign competition. The Commission’s response has partly been that current rules do allow cross-border cooperation for the development of innovative products. […]
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4. February 2020  |   State Aid Uncovered by Phedon Nicolaides

How to Compensate for the Extra Cost of Public Service Obligations: Step-by-Step Guidance on a Complex Calculation
State Aid Blogs - StateAidHub blogpost5 SGEI
The “net avoided cost methodology” takes into account only incremental costs. Introduction The two most difficult issues in the design of State aid measures to support services of general economic interest [SGEI] are the proper definition of the public service obligation [PSO] and the identification of the “counterfactual” on the basis of which the public service compensation [PSC] is calculated. […]
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28. January 2020  |   State Aid Uncovered by Phedon Nicolaides

State Aid Rules in the UK after Brexit: Alignment or Divergence?
State Aid Blogs - StateAidHub blogpost4 Brexit
The current rules will apply at least until 31 December 2020. Introduction On Saturday, 1 February 2020, the United Kingdom will no longer be a Member of the European Union. Will it then have to abide by EU State aid rules? According to the Agreement on the Withdrawal of the UK from the EU, the whole of the UK will […]
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23. January 2020  |   State Aid Uncovered by Phedon Nicolaides

Public Subsidies to Households Can Be State aid
State Aid Blogs - m 44
Support for individual borrowers can be indirect State aid to banks.   Introduction The fact that a public measure has social objectives and aims to help poor households or disadvantaged persons instead of undertakings does not necessarily remove it from the reach of State aid rules. During the past decade, in response to the economic crisis, a number of Member […]
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14. January 2020  |   State Aid Uncovered by Phedon Nicolaides

Exclusive Rights and Legal Monopolies
StateAidHub_LegalMonopolies
State aid rules can apply to sectors which are legal monopolies. Introduction The fact that a company enjoys exclusive rights and operates in a sector covered by a legal monopoly does not necessarily insulate it from State aid rules. This has been confirmed by the Court of Justice in its judgment of 19 December 2019, in case C-385/18, Arriva Italia […]
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7. January 2020  |   State Aid Uncovered by Phedon Nicolaides

Bail-in Is the Responsibility of Member States
State Aid Blogs - StateAidHub blogpost1 Bail In 2
Commission approval of State aid to bail-out a bank does not give rise to right for compensation for creditors who are bailed-in. Introduction Investors in banks who lost their money have sought compensation both at EU and national level. So far, claims for damages at EU level have been unsuccessful. In some instances, the cases before EU and national courts […]
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27. December 2019  |   State Aid Uncovered by Lexxion Publisher

5 Most Read Articles on StateAidUncovered in 2019
State Aid Blogs - 5 most read articles 2019
Groundbreaking judgments like “Eesti Pagar”, applications of the private investor principle in air transport or questions of interpretation of the GBER besides many more, have moved and shaped this year’s judgments on State aid. Also Brexit and its meaning for State aid control in the UK has still been on everyone’s mind. See which articles by Prof. Phedon Nicolaides were […]
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23. December 2019  |   State Aid Uncovered by Phedon Nicolaides

A Preferential Electricity Tariff Is Selective, Confers an Advantage and Distorts Competition
State Aid Blogs - StateAidUncovered blogpost53 Alouminion
A judicial decision on interim measures is a selective measure. The private investor test does not apply to judicial decisions on interim measures. Introduction On 11 December 2019, in case C‑332/18 P, Mytilinaios Anonymos Etairia — Omilos Epicheiriseon v European Commission, the Court of Justice probably wrote the last chapter in a long-running case concerning privileges that had been granted […]
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17. December 2019  |   State Aid Uncovered by Phedon Nicolaides

Can a Tax (rather than a Tax Exemption) Confer a Selective Advantage?
State Aid Blogs - StateAidHub blogpost52 Stateaid Lexxion TAX Water Spain European Commission
A tax that is levied at one level of government and does not apply to products and activities at a different level of government need not be selective. Introduction A tax exemption normally confers a selective advantage, unless it is justified by the logic of the tax. Counterintuitively, a tax itself can be selectively advantageous if its scope is too […]
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10. December 2019  |   State Aid Uncovered by Phedon Nicolaides

Retroactive Application of the GBER
State Aid Blogs - m
When an aid scheme is adjusted by limiting the eligible beneficiaries, it becomes “new” aid and must be notified to the Commission. The GBER can be applied retroactively to aid that was granted before it came into force.   Introduction In July 2016, Dilly’s Wellnesshotel wrote legal history for being the first undertaking to contest the application of the General […]
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19. February 2019  |   State Aid Uncovered by Phedon Nicolaides

Support for Non-Performing Loans in Cyprus
State Aid Blogs - StateAidHub blogpost47 Finance lexxion GBER SMEs
Public assistance to households to pay for their mortgages is not State aid. Public assistance to enterprises to pay for their loans may be qualified as de minimis aid. Public assistance to households and de minimis aid to enterprises to pay for their loans are indirect aid to banks, which, however, falls outside the directive on bank recovery and resolution […]
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14. February 2019  |   State Aid Uncovered by Phedon Nicolaides

What Does a Private Investor Take into Account before Investing?
State Aid Blogs - StateAidHub blogpost6 2019 Lexxion investment Stateaid commission EU telecom
A private investor may invest in a troubled company that is restructuring is order to increase its future profitability.   Introduction   The answer to the question posed above is short and simple: everything relevant. A private investor does not ignore anything that can affect the profitability of the prospective investment.This implies that the other side of the coin is […]
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12. February 2019  |   State Aid Uncovered by Phedon Nicolaides

Pari Passu Is not Static
State Aid Blogs - StateAidHub blogpost4 2019 lexxion pari passu chemistry Investment
When comparing the behaviour of public and private creditors, it is necessary to ensure that their situations and interests do not diverge over time.   Introduction   When an undertaking owes money to a public authority the latter must use all available legal means to recover the money, including the liquidation of the undertaking and the sale of its assets. […]
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29. January 2019  |   State Aid Uncovered by Phedon Nicolaides

Services of General Economic Interest: Proper Definition and Avoidance of Overcompensation
State Aid Blogs - StateAidHub Blogpost4 2019 Lexxion Stateaid SGEI Social Housing
Member States need to demonstrate that public service obligations imposed on undertakings are necessary and proportional to the need for public service. A change in the funding of public services does not constitute new aid if it does not alter its objectives, the beneficiaries or the amount of aid by more than 20%.   Introduction It is a well-established principle […]
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22. January 2019  |   State Aid Uncovered by Phedon Nicolaides

The Private Investor Principle in Air Transport – Part II
State Aid Blogs - StateAidHub Blogpost3 2019 lexxion Commission Airport Investment StateAid
Public funds managed by private airport operators can be classified as state resources. Prices charged by airport operators can be used as a benchmark for market prices only if their activities and size are comparable and their costs are not subsidised by State aid. Before a private investor enters into any commercial arrangement, it takes into account all relevant information, […]
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16. January 2019  |   State Aid Uncovered by Phedon Nicolaides

The Private Investor Principle in Air Transport – Part I
State Aid Blogs - StateAidHub blogpost2 2019 lexxion stateaid airports
Public funds managed by private airport operators can be classified as state resources. Prices charged by airport operators can be used as a benchmark for market prices only if their activities and size are comparable and their costs are not subsidised by State aid. Before a private investor enters into any commercial arrangement, it takes into account all relevant information, […]
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8. January 2019  |   State Aid Uncovered by Phedon Nicolaides

Justification of a Tax Exemption
State Aid Blogs - StateAidHub blogpost23
Prevention of excessive taxation may justify tax exemption. Prevention of abuse may justify limits to the tax exemption.   Introduction   A tax exemption may not constitute state aid if it is justified by reasons which are linked to the nature or general scheme of the tax system. This is what the Court of Justice said on 19 December 2018, […]
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21. December 2018  |   State Aid Uncovered by Phedon Nicolaides

Infrastructure Projects, State Guarantees and Distortion of Competition
State Aid Blogs - SAH blogpost51 52 stateaid infrastructure guarantees
State guarantees must be limited in duration and amount and the conditions for their mobilization must be defined in advance. Public funding to an operator in a closed sector does not affect trade and, therefore, does not constitute State aid.   Introduction Large infrastructure projects are complex, encounter many unforeseen problems and often fall behind schedule for years. Consider, for […]
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18. December 2018  |   State Aid Uncovered by Phedon Nicolaides

The Date and Scope of Public Service Compensation
State Aid Blogs - SAH blog50 beneficiaries stateaid public transportation
Aid is deemed to be granted on the date the beneficiary undertaking acquires the legal right to it, regardless of whether it is actually paid on that date. It is not enough for a public authority to define the service that it wants an operator to provide and the price that it should charge. It must also define where and […]
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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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