State aid & National enforcement

Foreword State aid & Private enforcement: An overview of EU and national case law

Article 107(1) of the Treaty on the Functioning of the European Union [TFEU] declares State aid granted by Member States to be incompatible with the internal market. This principle of incompatibility is not absolute. Under certain conditions, State aid may be exempted from the prohibition of Article 107(1) TFEU. Article 108(3) TFEU requires Member States to inform the European Commission in advance of their plans to grant State aid and the Commission assesses their compatibility with the internal market by examining whether they conform with the conditions for exemption. The Commission is the principal enforcer of the State aid provisions of the Treaty. The supervision carried out by the Commission is supplemented by national courts which also play an important role in the enforcement of State aid rules. They are empowered to apply the prohibition of Article 107(1) TFEU and to take all appropriate action to remedy infringement of Article 108(3) TFEU. Competitors of recipients of State aid that has not been notified to and approved by the Commission can resort to national courts to seek enforcement of the notification obligation imposed by Article 108(3) TFEU on Member States. This “private enforcement” not only supports the “public enforcement” of State aid rules by the Commission, but it also strengthens it by broadening the remedies afforded to competitors of recipients of unlawful aid. For the purposes of this article, “private enforcement” means the initiation of proceedings before national courts for the purpose of seeking compliance with State aid rules. In practice, such proceedings are initiated by competitors of aid recipients. They petition national courts in three separate situations: i) when State aid is granted without prior notification to the European Commission; ii) when State aid that has been found by the Commission to be incompatible with the internal market is not fully recovered as ordered by the Commission; and iii) when they seek compensation for damages caused by unlawful aid.

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Maastricht University

State Aid

The EU Court of Justice sets aside two judgments of the General Court which dismissed the appeals of two airlines against a Commission decision concerning State aid granted by Italy to Sardinian airports (Volotea / EasyJet)
European Court of Justice (Luxembourg)
The Court of Justice sets aside the two judgments of the General Court which dismissed the actions of Volotea and easyJet against the decision of the Commission concerning State aid granted by Italy to Sardinian airports* That decision is also annulled, to the extent that it concerns Volotea (...)

The EU General Court issues a decision which confirms that the date on which State aid is deemed to be granted is not necessarily the date on which the actual benefit materialises (Tirrenia di navigazione)
Maastricht University
The Date on which State Aid is Deemed to be Granted Is not necessarily the Date on which the Actual Benefit Materialises* State aid is deemed to be granted even if the benefit cannot be quantified in advance and even if state resources are transferred at a future point in time. Introduction (...)

The EU Court of Justice orders Greece to pay a lump sum of €5.5B and a penalty payment of €4.37B for failure to recover wrongful State aid granted to a mining company (Larco)
General Court of the European Union (Luxembourg)
Greece is ordered to make a lump sum payment of €5 500 000 and periodic penalty payments of over €4 000 000 for every six months’ delay for failure to recover State aid granted to Larco* The Court first declared that Greece had failed to fulfil its obligations in a judgment delivered in 2017 (...)

The Spanish Supreme Court reconsiders its position on the proportionality criteria in relation to private hire vehicle licenses in light of Articles 49, 102 and 107 of TFEU (Prestige / Limousine)
Judicial Ethics Commission (Madrid)
The Spanish Supreme Court has declared admissible an appeal in cassation against a judgment by the Madrid High Court of Justice concerning the conformity of its case-law on the criterion that limits private hire vehicle licences to one for every 30 taxi licences or fewer, in the light of (...)

The Spanish High Court voids an agreement between the national government and a local authority to expand the terrestrial television network in rural areas on the grounds that it breached EU State aid rules (La Manche)
Judicial Ethics Commission (Madrid)
The Spanish National High Court declares that the agreement between the State and the Autonomous Community of Castile-La Mancha for the access to digital terrestrial television is void on the ground that it infringed the rules of EU law on State aid in the terms decided by the European (...)

The UK Government publishes its long-awaited Subsidy Control Bill
Herbert Smith Freehills (London)
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Herbert Smith Freehills (London)
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Herbert Smith Freehills (Brussels)
On 30 June 2021, the UK Government published its much-awaited Subsidy Control Bill. In this update, we explore the key aspects of the proposed UK subsidy control regime. We conclude with five key takeaways. Overview of the UK regime The Subsidy Control Bill establishes a UK subsidy control (...)

The UK Competition Authority introduces a new Subsidy Advice Unit which will provide non-binding advice to authorities on State subsidies and replace the former notification requirement
Gleiss Lutz (Brussels)
This article has been nominated for the 2022 Antitrust Writing Awards. Click here to learn more about the Antitrust Writing Awards. For many Britainophiles in the EU, the noise of the Brexiteers and their shouting about “world-beating Britain” during the last five years of the departure process (...)

The Polish Supreme Administrative Court issues a decision on the applicability of regional investment aid for the purposes of tax exemption and the maximum amount of aid that may be granted in an administrative decision
Warsaw School of Economics
Background & facts of the case The case related to the Polish flagship programme of regional investment aid customarily referred to as Special Economic Zones (SEZ), which essentially provides an exemption from corporate income tax (CIT) in an amount proportionate to investment costs (...)

The German Federal Court of Justice declares that the legal situation prior to the grant of unlawful State aid is decisive when considering whether recovery orders are binding
Gleiss Lutz (Brussels)
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Jones Day (Brussels)
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Gleiss Lutz (Brussels)
The Federal Court of Justice (Bundesgerichtshof) clarified that the legal situation prior to the grant of the unlawful State aid is decisive for its recovery, in particular the scope and method of the recovery. The Federal Court of Justice also held that an alleged violation of the (...)

The UK Government publishes a consultation paper outlining proposals for a new subsidy control regime
Ashurst (London)
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Ashurst (London)
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Ashurst (London)
On 3 February 2021, the Department for Business, Energy & Industry Strategy ("BEIS") published a consultation paper outlining proposals for a new subsidy control regime in the UK ("Consultation Paper"). The need for a new subsidy control regime has been prompted primarily by: the State (...)

The Spanish High Court of Justice for Aragon rejects an appeal over a tax exemption for a regional tax on large retailers because the appellant does not satisfy the exemption (Aki Bricolaje Espana)
Judicial Ethics Commission (Madrid)
Aragón High Court of Justice dismisses the appeal against the assessment of the regional tax on large retail establishments in Aragon on the ground that what constituted State aid was the exemption for certain establishments but not in the case of the now appellant undertaking. Background & (...)

The Italian Supreme Court annuls a ruling by the Piedmont Regional Tax Court which voided a decision requiring two companies to return illegal State aid (A.O. / A.A.)
BonelliErede (Brussels)
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Luiss Guido Carli University (Rome)
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BonelliErede (Brussels)
On 20 November 2020, the Supreme Court delivered Decision No. 26477 in a case concerning penalties imposed by the ITA on A.O. and A.A. for failure to comply with the implementing provisions of a Commission recovery order. Background & facts of the case By Decision 2005/315/EC of 20 (...)

The Italian Supreme Court decides, following a preliminary reference to the EU Court of Justice, that aid which predated EU market liberalisation can constitute new State aid (Fallimento Traghetti del Mediterraneo)
BonelliErede (Brussels)
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Luiss Guido Carli University (Rome)
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BonelliErede (Brussels)
On 16 October 2020, the Supreme Court delivered Decision No. 22631 in a case concerning alleged aid granted by the Italian Government to a company operating in the maritime cabotage sector. Background & facts of the case In 1981, Fallimento Traghetti del Mediterraneo S.p.A. (“TDM”) brought (...)

The Portuguese Supreme Administrative Court issues a decision which finds that notwithstanding a government decree excluding firms operating in agriculture, an agribusiness may reap the benefits of a corporate tax-relief scheme (Tax Benefits)
Morais Leitão, Galvão Teles, Soares da Silva (Lisbon)
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Morais Leitão, Galvão Teles, Soares da Silva (Lisbon)
Background and facts of the case The appellant undertaking brought a claim before the Supreme Administrative Court (“SAC”) against the sentence rendered by the Leiria Administrative and Tax Court, which dismissed the judicial claim brought against the payment of additional Corporate Income Tax (...)

The Spanish Supreme Court grants an appeal allowing a real estate tax break to the nationalised shipyards company (Navantia)
Judicial Ethics Commission (Madrid)
The Spanish Supreme Court, after the Ferrol Administrative Court had raised the question for a preliminary ruling to the Court of Justice, upheld the cassation filed by Navantia against the judgement delivered by the Galicia High Court of Justice, and recognized the exemption from Real Estate (...)

The EU General Court rules that the Spanish tax system applicable to certain finance lease agreements entered into by shipyards constitutes an aid scheme and that the unlawful State aid granted under that system must be recovered from the beneficiaries (Spain / Lico Leasing / Pequeños y Medianos Astilleros Sociedad de Reconversión)
General Court of the European Union (Luxembourg)
The Spanish tax system applicable to certain finance lease agreements entered into by shipyards constitutes an aid scheme* The unlawful State aid granted under that system must be recovered from the beneficiaries In 2006, the European Commission received a number of complaints concerning the (...)

The EU General Court dismisses the actions for annulment in the "Spanish tax lease saga" (Spain / Lico Leasing / Pequeños y Medianos Astilleros Sociedad de Reconversión)
Van Bael & Bellis (Brussels)
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Hogan Lovells (Brussels)
On 23 September 2020, the General Court delivered another judgment in the “Spanish tax lease saga”, concerning certain aid measures granted through tax provisions applicable to agreements put in place for the financing and acquisition of vessels in Spain. This judgment follows the annulment and (...)

The EU General Court finds a Spanish ship finance scheme to be illegal State aid (Spain / Lico Leasing / Pequeños y Medianos Astilleros Sociedad de Reconversión)
Zepos & Yannopoulos (Athens)
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Zepos & Yannopoulos (Athens)
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Zepos & Yannopoulos (Athens)
By its renvoi judgement of 23 September 2020, the General Court upheld the 2013 European Commission decision which found that the Spanish tax lease scheme (“the STL system”) allowing shipping companies to benefit from rebates of up to 30% on the price of vessels built by Spanish shipyards (...)

The Portuguese Supreme Administrative Court considers the distinction between "establishment" and "undertaking" in the context of EU State aid rules (Miranda do Douro)
Morais Leitão, Galvão Teles, Soares da Silva (Lisbon)
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Morais Leitão, Galvão Teles, Soares da Silva (Lisbon)
Background & facts of the case The municipality of Miranda do Douro brought a claim before the Supreme Administrative Court (“SAC”) against the ruling rendered by the Northern Central Administrative Court, which considered that the conditions for the exemption of property transfer taxation (...)

The Portuguese Southern Central Administrative Court rejects a claim by a food distributor on the grounds that they do not have locus standi to challenge a levy funding an animal carcass collection system under EU State aid rules (“Food Safety Plus” Tax)
Morais Leitão, Galvão Teles, Soares da Silva (Lisbon)
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Morais Leitão, Galvão Teles, Soares da Silva (Lisbon)
Background & facts of the case The Appellant, a company in the sector of retail distribution of food products that owns and manages several brands and shops, brought a claim before the Southern Central Administrative Court (“SCAC”) against the sentence rendered by the Lisbon Administrative (...)

State aid & Private enforcement: An overview of EU and national case law
Sheppard Mullin (Brussels)
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Macfarlanes (Brussels)
I. Introduction State aid private enforcement continues to develop rapidly with landmark cases that are some of the most important in competition law. This special issue will look at this type of competition law private enforcement which, given the recorded cases, is as developed, if not more (...)

The EU Court of Justice clarifies the conditions in which a legal person liable to pay a tax can plead its incompatibility with the EU State aid rules before a national court (Vodafone)
Van Bael & Bellis (Brussels)
On 3 March 2020, the Grand Chamber of the Court of Justice (the “ECJ”) delivered another judgment in the field of taxation and State aid (Vodafone Magyarország Mobil Távközlési Zrt., C-75/18). While this judgment does not substantially develop the case law in this field, it contains useful (...)

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