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 →
In its judgment of 17 December 2015, Spain a.o./Commission, the General Court once again annulled a Commission decision dealing with a fiscal State aid scheme on the grounds that the Commission did not sufficiently establish that the scheme in question conferred a selective advantage to its beneficiaries.
Strikingly, the General Court’s judgment was very much inspired by two of its previous judgments – albeit in another composition – in the cases Autogrill España and Banco Santander. In those cases, the General Court found that for the condition of selectivity to be satisfied, a category of undertakings which are exclusively favoured by the measure at issue must be identified in all cases and found that “the mere finding that a derogation from the common or ‘normal’ tax regime has been provided for cannot give rise to selectivity” . This is especially the case when the measure at issue does not exclude, a priori, any category of undertakings from taking advantage of it. 
Without entering into the merits of these two judgments, against which the Commission has brought separate appeals, the General Court’s judgment in the Spanish Tax Lease (STL) case deserves special attention, for it contains also interesting developments on the links between the separate notions of advantage and selectivity, and the need for the Commission and for the EU courts to pay special attention to the identification of the correct beneficiary when dealing with State aid schemes involving multiple layers of actors. Continue reading →
In this post I will analyse a particular aspect of State aid law: the temporal scope of secondary instruments applied to assess the aid’s compatibility. The case at hand deals in particular with Regulation (EEC) 1191/69, which originally came into force on 1 July 1969, and Regulation (EC) 1370/2007, which repealed the former instrument and came into force on 3 December 2009.
The dispute began in February 2010, when the Commission issued a decision addressed to the Kingdom of Denmark, declaring that the public transport service contracts granted to Danske Statsbaner SV (DSB) constituted (non-notified) State aid under Article 107(1) TFEU, but that such aid was compatible with the internal market on the basis of Regulation (EC) 1370/2007.
Mr. Andersen, a competitor of DSB on the route between Compenhagen and Ystad, challenged the decision in front of the General Court (GC), and the Commission subsequently appealed against the latter’s decision in front of the EU Court of Justice (CJEU).
Situated between the market and the state, the notion, concept and characteristics of public services are often multifaceted and difficult to grasp. The EU layer of public service regulation further adds to this complexity as it interacts in many different ways with the national legal frameworks in this field: EU law may structure national legal norms, coordinate the provision of services between the Member States, bring about minimal or maximal standards (e.g. pertaining to quality, ubiquity or affordability of the services provided), comprise detailed regulation or even set prices for the provision of public services as in the case of mobile roaming tariffs. At the same time the law on public services is under the influence of a whole range of EU law provisions and regimes: namely the rules on free movement, competition law and state aid, general and sector-specific primary law provisions, horizontal rules of secondary law, as well as a large body of sector-specific secondary EU law, which has increased substantially over the past few years. With his book Public Services in EU Law Wolf Sauter undertakes a challenging attempt to elucidate the complexity of EU law in the field of public services. Continue reading →
Most state aid cases seem relatively straightforward, with the most notable exception being tax cases which had their fair share of attention recently. When I read a summary of the Eventech case (C-518/13), at first glance it seemed to fall in the straightforward category. However, as one may recall from tax state aid cases, often the most difficult aspects of these cases are the criteria of selectivity and the involvement of state resources. And it just so happens that these criteria are the main issues at stake before the CJEU in Eventech, which makes it a judgment worthy of some further discussion.
Anyone who has ever been to London knows the distinctive Black Cabs which are probably as much a British symbol as their well-known bigger sisters, the red double-deckers. What you may not know (at least I didn’t) is that there are also other kinds of taxis in London called minicabs.
Sometimes a book wins you over, and José Luís Da Cruz Vilaça’s EU Law and Integration: Twenty Years of Judicial Application of EU Law (Oxford/Portland, Hart 2014), is such a book.
I must admit that I had some reservations at first over the concept of the book, which is in essence an overview of the legal career – both as a legal scholar and a judge – of José Luís Da Cruz Vilaça, on the basis of a series of articles on different topics written over the course of two decades. Books like this only stand out if they can avoid three traps. Continue reading →
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”.
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.