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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24. May 2016  |   State Aid Uncovered by Phedon Nicolaides

Tax Exemptions Authorised by the Council of the EU
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State aid is an objective concept. When the Commission assesses a measure it has to examine its effects and cannot be bound by a decision of the Council. A beneficiary of State aid cannot entertain legitimate expectations simply because the Commission does not appear to object to the aid.   Introduction On 22 April 2016, the General Court rendered its judgment […]
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18. May 2016  |   State Aid Uncovered by Phedon Nicolaides

PART II: Regional Development and i) Market Economy Operator Test ii) Services of General Economic Interest
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A market economy operator undertakes activities whose incremental revenue exceeds their incremental costs. A market economy operator ignores costs which are unaffected by those activities. A service of general economic interest has special characteristics that set it apart from other services with positive impact on the economy. Having a positive impact is not enough.   Part II: Public tasks and […]
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10. May 2016  |   State Aid Uncovered by Phedon Nicolaides

PART I: Regional Development and i) Market Economy Operator Test, ii) Services of General Economic Interest
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A market economy operator undertakes activities whose incremental revenue exceeds their incremental costs. A market economy operator ignores costs which are unaffected by those activities. A service of general economic interest has special characteristics that set it apart from other services with positive impact on the economy. Having a positive impact is not enough.   Introduction National and regional authorities […]
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3. May 2016  |   State Aid Uncovered by Phedon Nicolaides

Calculation of State Aid in Guarantees
State Aid Blogs - 21.11.State resources State control
State guarantees can be used to support loans for working capital. The amount of State aid in guarantees can be calculated to remain below the de minimis threshold of EUR 200,000.   Introduction With financial instruments being very much in vogue, there is much interest in the use of guarantees and loans as a means of granting State aid. Therefore, […]
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2. May 2016  |   Guest State Aid Blog by Lexxion Publisher

Court’s Diary – May 2016
gavel
Find below the court’s diary for all State aid cases this month. Would you like to write a comment on one of them? Please don’t hesitate and get in touch with us ([email protected]), we are happy to publish your comment on the blog.   Tuesday 10/05/2016 Judgment in Case T-47/15 – Germany v Commission (General Court – Third Chamber)   […]
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18. April 2016  |   State Aid Uncovered by Phedon Nicolaides

Who is Aided when a Bank is Resolved?
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Bank resolution may involve State aid. However, the depositors do not normally benefit from State aid, nor do the buyers of the viable assets, if they pay a market price. Any aid normally goes to the remaining, non-performing, assets that are eventually liquidated.   Introduction The new bank resolution regime that came into force on 1 January 2016 aims to […]
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12. April 2016  |   State Aid Uncovered by Phedon Nicolaides

The Private Creditor Test: All Options Must be Taken into Account
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A private investor always takes into account all available information before it makes any investment. Similarly, a private creditor takes into account all available options for recovering the largest possible amount of the money that is due. Such options may include different legal procedures. In assessing alternative options, a private creditor considers not only the amount that may be recovered, […]
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5. April 2016  |   State Aid Uncovered by Phedon Nicolaides

Local Infrastructure
State Aid Blogs - StateAidHub blogpost47 Finance lexxion GBER SMEs
Public funding of local infrastructure is not State aid when the responsibility for the infrastructure falls within the remit of public authorities, it is not commercially exploited, it is open to all users, it is not intended to support the needs of any particular undertaking and any benefits to any undertaking are incidental.   Introduction Even since the adoption of […]
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4. April 2016  |   Guest State Aid Blog by Lexxion Publisher

Court’s Diary – April 2016
gavel
Find below the court’s diary for all State aid cases this month. Would you like to write a comment on one of them? Please don’t hesitate and get in touch with us ([email protected]), we are happy to publish your comment on the blog.   Thursday 14/04/2016 Judgment in Case C-100/15 P – Netherlands Maritime Technology Association v Commission (Court of […]
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30. March 2016  |   State Aid Uncovered by Phedon Nicolaides

The Treatment of Advisory and Information Services under State Aid Rules: The Case of the German Milk Levy
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Public funding of advisory and information activities may constitute State aid. Public funding of industry associations may constitute State aid.   Introduction An article that was published on this blog in January (view the article HERE) dealt with the issue of compulsory tests. If tests which are intended to safeguard public health are paid for by the state, is there any […]
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30. September 2014  |   State Aid Uncovered by Phedon Nicolaides

The Jurisdictional Side of Selectivity
Lady Justice
A measure determined independently by similar public entities is not selective even if it varies across those entities. A measure is selective when the entity that has adopted it, applies it differently to undertakings which are within its jurisdiction and in a comparable situation. A public entity may differentiate its measures provided the differentiation can be objectively justified. Introduction   […]
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23. September 2014  |   State Aid Uncovered by Phedon Nicolaides

Restructuring Aid Approved on Condition that the Beneficiary Is Sold to Highest Bidder
corporate building
The Commission has wide discretion in assessing the compatibility of State aid with the internal market. Each case is assessed on its own merits and, therefore, the Commission is not bound by precedents or decisions on previous cases. Sale of shares held by public authorities may be required if divestment is necessary for long-term viability of aid beneficiary. Introduction   […]
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16. September 2014  |   State Aid Uncovered by Phedon Nicolaides

Simultaneity of Investments by Public and Private Investors is a Necessary but not Sufficient Condition for Public Investments to be Free of State Aid
coins
If a public authority guarantees a loan to a company that is in financial difficulty and charges a low premium, the whole loan, not just the difference between the market rate of premium and the rate actually charged, will be considered to be State aid. Simultaneous capital injection by public and private investors is not enough to eliminate State aid […]
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9. September 2014  |   State Aid Uncovered by Phedon Nicolaides

Not Surprisingly, Another Member State Fails to Prove Compliance with the Altmark Criteria
slaughterhouse
Maintaining capacity that is necessary for the provision of normal services cannot be classified as a service of general economic interest. State aid may not be granted towards the costs of cleaning up pollution caused by the aid recipient itself. State aid to a legal monopoly may still affect trade if there is competition for the monopoly rights or if […]
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2. September 2014  |   State Aid Uncovered by Phedon Nicolaides

Compensatory Payments Can be State Aid
Tractor on a field
Article 107(1) also applies to payments that offset the damage caused by natural disasters. It is irrelevant that the compensation is partial or that competitors did not suffer similar damage. A measure can be State aid even if it is partially or wholly funded by private resources. It is sufficient that the resources come under state control. A measure is […]
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26. August 2014  |   State Aid Uncovered by Phedon Nicolaides

Levying Taxes to Fund Public Broadcasters
broadcast tower
Taxes may not be examined by the Commission in the context of Article 107 even if they finance State aid measures. By contrast, the Commission may examine a tax in the context of its assessment of the compatibility of aid with the internal market when the tax is inseparable from an aid measure. A tax is inseparable from an aid […]
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19. August 2014  |   State Aid Uncovered by Phedon Nicolaides

A Textbook Case of i) How to Sell Public Assets without Passing on Incompatible State Aid to the Buyer, and ii) How to Work together with the Commission
handshake
An undertaking that has received incompatible State aid must pay it back or, if it cannot, it must be liquidated. Before a recipient of possibly incompatible State aid is liquidated, its assets can be sold off to the highest bidder. The buyer of previously subsidised assets does not benefit from State aid if i) it pays a market price and […]
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12. August 2014  |   State Aid Uncovered by Phedon Nicolaides

Management of Port Infrastructure through a very long Concession Contract: Is the Funding Gap Method Meaningful?
port
Competitive selection of the operator of an infrastructural facility normally eliminates State aid. However, modifications to the contract after the operator is selected may confer an advantage that constitutes State aid. Public funding that is calculated on the basis of the “funding gap” method ensures that the aid is necessary and proportional. Introduction   Several recent articles in the blog […]
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4. August 2014  |   State Aid Uncovered by Phedon Nicolaides

The Profitability of an Investment Must be Determined Ex Ante
invest graph
Internal transfer of capital which is not used to fund new economic activities is not State aid. Injection of fresh capital to satisfy solvency and liquidity requirements still has to comply with State aid rules. A private investor always has the option of not injecting new capital and may opt instead to close down the business. A private investor always […]
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29. July 2014  |   State Aid Uncovered by Phedon Nicolaides

Benchmarks of Profitability for Private Investors
movie production
A public authority that injects capital in an undertaking [or provides any other kind of finance] must ensure that the funding can achieve the rate of return that can, in principle, satisfy a private investor. The rate that can satisfy a private investor and ensure that the funding is free of State aid is the rate that covers the cost of […]
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