By Gian Marco Galletti
In his Opinion issued in case C-329/15 ENEA SA w Poznaniu v Prezes Urzędu Regulacji Energetyki on 22 March 2017, AG Saugmandsgaard ØE held that the quota-based system designed by Poland in order to support the production of energy from cogeneration (‘Combined Heat and Power electricity’ or ‘CHP electricity’) should be sheltered from the application of State aid rules as it does not fulfil all the conditions enshrined in Article 107(1) TFEU (‘Article 107(1)’). In particular, the missing piece of the ‘aid jigsaw’ is, according to AG Saugmandsgaard ØE, that the national measure in question does not entail the use of ‘State resources’.
The interpretation of the State resources criterion is a classic battleground between the effectiveness of EU rules and the protection of national regulatory autonomy. On the one hand, a broad reading of the State resources criterion is justified by the fact that Member States may feel tempted to assume a ‘private form’ to evade the application of State aid rules; on the other hand, a narrow reading averts the risk of enabling the Commission to conduct ‘an inquiry on the basis of the Treaty alone into the entire social and economic life of Member States’, as famously summarized by AG Jacobs in Viscido. The EU case law has, after some fluctuations, opted for a broad approach leaving only limited room for a finding of no State resources and therefore no aid (PreussenElektra). This was particularly evident when the Court was called to examine energy production-supporting measures taken by the Member States: the Netherlands (Essent Netwerk), Austria (Austria v Commission), France (Association Vent de Colère) and Germany (Germany v Commission) all unsuccessfully attempted to persuade the European judges that their feed-in tariff schemes did not engage public resources.
From a policy perspective, if this Opinion were to be upheld by the Court this would be the first (post-PreussenElektra) happy ending for the Member States in their struggle to design State aid-compliant legal mechanisms for funding the switch towards environmentally friendlier energy mixes and production processes.
From a strictly legal perspective, the reasoning of the AG in the present case deserves special attention in that it appears to point to a narrower, and arguably more accurate, interpretation of both layers of the State resources criterion. Continue reading
By Dimitrios Kyriazis
Oddly enough, state aid has recently been making headlines. In June, the Commission decided to open three in-depth investigations into tax rulings issued by Ireland, Luxembourg and the Netherlands in relation to Apple, Fiat and Starbucks respectively. In October, the Commission announced that it will also be examining whether the tax treatment of Amazon by Luxembourg is in line with EU state aid rules. These decisions are the spearhead of a recent clampdown on sweetheart tax deals between Member States and big multinationals that Commissioner Almunia says will ensure that they pay “their fair share of taxes”.
By Paul Adriaanse
On 3 April 2014 the CJEU confirmed the General Court’s judgment of 2 March 2012 in the State aid dispute between the European Commission and the Kingdom of the Netherlands, ING Groep NV and the Dutch Central Bank (De Nederlandsche Bank NV). All six grounds of appeal brought by the Commission in this case were dismissed by the Court. Most notable are the Court’s considerations on the applicability of the private investor test. The Court confirmed that the Commission cannot evade its obligation to assess the economic rationality of a given measure in the light of the private investor test solely on the basis that the measure is connected to a measure which itself already constitutes State aid. Centrally, the decision raises the question as to why the Court sticks to the private investor test in the particular circumstances of the given case. Is the private investor test to be applied by default? Or are there good reasons for the applicability of this test, no matter what?
The financing and construction of transport infrastructure has often been considered in the past to fall outside the ambit of State aid rules, on the basis that it constituted a public interest task and not an economic activity. The Commission’s 1994 Aviation guidelines for example reflected this view by stating that “the construction or enlargement of infrastructures projects (such as airports, motorways, bridges, etc.) represents a general measure of economic policy which cannot be controlled by the Commission under the Treaty rules on State aid”.
This reasoning was, however, invalidated by the General Court in its Aéroports de Paris judgment of 12 December 2000 (T-128/98, confirmed on appeal by the Court in case C-82/01 P), which clarified that the operation of an airport constitutes an economic activity, although the case concerned Article 102 TFEU and rules on predatory pricing. Since then, the Commission has thus followed the Court’s approach, but has recognised that due to the legitimate expectation that may have been created, the financing of infrastructure granted before the date of the judgment in Aéroports de Paris should not lead to the recovery of the possible State aid involved.
In its Judgment of 20 September 2012 in case T‑154/10 French Republic vs. European Commission, the General Court of the EU (GC) has established a new test of “bankruptcy-proofness” as an advantage contrary to Article 107(1) TFEU that may generate a significant shake up in the control of State aid granted (implicitly) to establishments of an industrial and commercial character (EICC, or EPIC in their French acronym)–ie legal entities governed by public law which have distinct legal personality from the State, financial independence and certain special powers, including the performance of one or more public service tasks.
In a nutshell, the controversy concerned the Commission’s position that there is (illegal) State aid where the legal form and status of EICCs shield them from general rules on bankruptcy and winding up under the relevant national legislation (in the case, French law). Indeed, in the view of the Commission as summarised by the GC,
[the EICC concerned (La Poste)] was not subject to the ordinary law rules governing the administration and winding-up of firms in difficulty and that, according to point 1.2, second paragraph, fourth indent of the 2008 Notice [on the application of Articles 87 [EC] and 88 [EC] to State aid in the form of guarantees (OJ 2008 C 155, p. 10)], there is aid in the form of a guarantee where more favourable credit terms are obtained by undertakings whose legal status rules out bankruptcy or other insolvency procedures (T-154/10, at para. 23, emphasis added).
On the 5th of June 2012, the Court of Justice of the EU (hereafter ‘CJEU’) delivered an important judgment in the field of European State aid law on the very notion of State aid and the application of the private investor test to situations where a priori a private investor could not adopt the same behaviour as the State. To put things in context, it will be recalled that the private investor test is normally used in order to determine whether a public company has been granted an advantage within the meaning of Article 107 TFUE, by comparing the behaviour of the State with that of a private investor operating in normal market conditions. It was settled case-law (see notably the case-law quoted by the Court at point 79 of its judgment) however that, when the State acts as a public authority (by using its fiscal prerogatives for example), this test cannot be applied as there is no private investor to which the State can be compared to.
For the first time with this EDF judgment, the CJEU attempts to set criteria in order to distinguish between the State acting as shareholder and the State exercising public power.
Parts of the territory of some EU-Member States are situated overseas. Does EU-Competition law apply there? Some recent French precedents answer this question. According to Art. 52 TEU the EU-treaties apply to the 27 Member States mentioned therefore. EU-law applies, in principle, to the whole territory of those Member States including the overseas parts of their territory. In Art. 355 TFEU, the territorial scope of the EU-treaties is further specified. There are more or less three ‘categories’ or ‘degrees’ of territorial scope with regard to the overseas (for a more extensive and general description see Kochenov’s article).
- First, the Outermost Regions, where EU-law applies, with the possibility for temporary exceptions to the acquis of the EU; although the term ‘temporary’ is perhaps not the right word, since the derogations are constantly extended. The Outermost Regions consist of the French départements d’outre-mer, the Spanish Canary Islands and the Portuguese Azores and Madeira.
- Secondly, the Overseas Countries and Territories (OCT) , where EU-law applies, with the possibility for more permanent exceptions to the acquis of the Union. On the OCTs a special regime of EU-law is applicable: the association regime (of Part IV of the TFEU). The OCTs are listed in Annex II to the TFEU and consist of Danish Greenland, the French territoires and collectivités d’outre-mer, the Caribbean part of the Netherlands and most of 12 British Overseas Territories.
- And thirdly, custom made regimes for specific parts of some Member States, such as the Channel Islands and Åland Islands. In addition some custom made regimes can be found in the accessions treaties, such as Gibraltar and the Spanish territories Ceuta and Mellila, which are situated on the African continent.