The Notion of State aid

(1)

The Notion of State aid

(2)

The Notion of State aid

• Found under Art. 107(1) TFEU

• A branch of EU Competition law

• An area of EU exclusive competence

• An autonomous concept of the law of the Union, not mandated by national law

• National law may not alter the concept at issue

• Secondary law may not alter the requirements of Art.

107(1) TFEU (although it may interpret and qualify it)

• Primacy and effectiveness apply

(3)

The Notion of State aid

• The aim of Article 107(1) TFEU, according to the Court of Justice, is to prevent trade between Member States from being affected by benefits granted by public

authorities which, in various forms, distort or threaten to distort competition by favouring certain undertakings or the production of certain products

• Judgment of the Court of 15 June 2006, joined cases C- 393/04 and C-41/05 Air Liquide Industries Belgium SA v Ville de Seraing (C-393/04) and Province de Liège (C-

41/05), ECLI:EU:C:2006:403, para. 27

(4)

The Notion of State aid

• The concept is described as „objective”, in the sense

that there is no discretion on part of the Commission or Member States as to whether there would be aid on

occassion of all requirements having been fulfilled

• In addition, the concept is understood as to its effects, i.e. it is irrelevant for the existence of aid whether a

Member State or the beneficiary of aid had a particular interest in granting or receiving aid, and it is also

irrelevant for what additional purpose does the Commission initiate proceedings, provided that requirements for aid are (alleged as) met

(5)

The Notion of State aid

• However, the foregoing is not to say that there is no element of assessment, as it is for the Commission to conduct a diligent and impartial examination of the

contested measures, so that it has at its disposal, when adopting the final decision establishing the existence and, as the case may be, the incompatibility or

unlawfulness of the aid, the most complete and reliable information possible for that purpose

• Judgment of the Court of 3 April 2014, case C-559/12 P French Republic v European Commission,

ECLI:EU:C:2014:217, para. 63

(6)

The Notion of State aid

• There is no hierarchy as to the various forms of State

aid (C. Quigley, EU state aid and policy, Oxford 2015, p.

14), and therefore, for instance, a guarantee with an element of aid is not „worse” or „better” than a direct subsidy of the same amount of aid

(7)

The Notion of State aid

• While the notion of State aid is „wide” (note the proviso that the form is immaterial), there is no „parallel” notion to that of State aid; for that, a measure that is similar to a State aid measure would not be subject to State aid

rules where not all requirements would be fulfilled

(8)

The Notion of State aid

• A State aid measure may be a single measure (e.g. a loan, a capital injection, a write-off, a direct cash grant, a tax relief), but there is nothing stopping the

Commission from considering measures that

incorporate multiple or consecutive interventions (esp.

in an aid programme)

• Judgment of the Court (Grand Chamber) of 19 March 2013, joined cases C-399/10 P and C-401/10 P

Bouygues SA and Bouygues Télécom SA v European Commission and Others (EU:C:2013:175, para. 103)

(9)

The Notion of State aid

• State aid is considered to be granted when a legally binding act conferring the right to aid appears

• Issuing a beneficiary with a decision that is enforceable, entering into a contract, amending articles of

association

• The actual payment of the amount of aid is not conclusive as to the above

• Some aid measures may sometimes not involve (unpaid guarantee) or never involve (tax deduction, abstention from enforcement of an overdue loan) a payment

(10)

The Notion of State aid

• State aid may be granted directly or indirectly, by way of passing on to a third party

• Where the entirety of State aid is passed on, the third party becomes the sole beneficiary

• This is exemplified where a parent company receives aid, but transfers the aid amount to a subsidiary

• However, indirect grant of aid is for the Commission to prove, which may be difficult

(11)

The Notion of State aid

• State aid is capable of being granted where the State acts as a market

participant or an influence on the market, and not in exercise of public powers

• Areas of ‚public powers’

• the army or the police

• air navigation safety and control

• Maritime traffic control and safety

• Anti-pollution and surveillance

• the organisation, financing and enforcement of prison sentences

• the development and revitalization of public land by public authorities

• the collection of data to be used for public purposes on the basis of a statutory obligation imposed on the undertakings concerned to disclose such data

• Restrictive interpretation