State aid

Question 1

Characteristics of state aid

Answer 1

• no prohibition or nullity but incompatibility
• exemptions possible
• duty to notify new aid
• no fines under public enforcement + no true private enforcement yet
• no parallel application of EU-nat’l law

Question 2

Field of application of Art. 107 TFEU

Answer 2

if …

• behaviour: granting aid
• parties: by MS or through MS resources (not EU); favouring certain undertakings
• object or effect: (threat of) distorting of competition … by favouring certain undertakings
• EU dimension: trade between MS is affected

… then
- incompatible with the internal market

unless …
- ‘otherwise provided in the Treaties’ = Art 106(2), 107(2)-(3)

Question 3

Definition of “aid”

Answer 3

• (financial) transfer
• any form whatsoever
• artificial advantage compared to market (not being able to obtain advantages on the market; / market investor criterion)
• public-private ownership of grantor or beneficiary

Question 4

(threatens to) distort competition

Answer 4

must be ‘appreciable’ > de minimis (Regulation): max €200.000 per undertaking over 3 years

Question 5

Undertakings - treatment of state-owned and private companies

Answer 5

They are treated alike.

Question 6

“Certain” undertakings

Answer 6

-> Selectivity

Question 7

Affection of trade between MS

Answer 7

very broad interpretation, but not unlimited

-> even applies to undertakings selling exclusively on domestic market (limiting chances of foreign competitors)

Question 8

Services of general economic interest (SGEI)

Answer 8

Outcome in the overall public good would not be supplied by the market
-> not subject to competition rules, if compensation for actual SGEI -> Altmark Criteria

Question 9

Altmark Criteria

Answer 9

1. cleary defined public service obligations
2. calculation parameters have been established transparently and objectively beforehand
3. cost coverage and a reasonable profit only
4. [if no public procurement] benchmarking with cost analysis of typical undertaking

Question 10

Per se (automatic) exemptions

Answer 10

Art. 107 (2) TFEU:

• aid having a social character
• natural disasters or exceptional circumstances
• German reunification efforts

Question 11

Facultative exemptions

Answer 11

Art. 107 (3) TFEU:

• areas where standard of living is abnormally low
• important project of common European interest
• remedy serious disturbance in economy
• certain economic activities or of certain economic areas
• culture and heritage conservation

Question 12

General Block Exemption Regulation

Answer 12

EC Regulation No 651/2014

-> block exemption -> aid but no notification

Question 13

Procedure of State Aid

Answer 13

• incompatibility (substance) vs illegality (procedure)
• existing aid (generous) vs new aid (strict)
• two-phase procedure
• informal vs formal procedure
• EU knows only MS, not undertakings

Question 14

Procedure in regards to existing aid

Answer 14

Art. 108 (1) TFEU:
– aid declared compatible by EC
– aid properly exempted
– aid properly notified but no EC action (Lorenz)

• > constant review by EC
• > no retroactive recovery -> generous regime

Question 15

Procedure in regards to new aid

Answer 15

Art. 108 (3) TFEU:

• notification and suspension
• > incompatibility -> Art 108 (2) prodecure

-> retro-active recovery possible = strict regime