State aid & Private 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 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 General Court 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
Dentons (Warsaw)
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 clarifies 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 appeal over tax exemption for a regional tax on large retailers on the grounds that 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.)
Bonelli Erede (Brussels)
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Luiss Guido Carli University (Rome)
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Bonelli Erede (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)
Bonelli Erede (Brussels)
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Luiss Guido Carli University (Rome)
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Bonelli Erede (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 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 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 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, Richter & Hampton (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 French Supreme Administrative Court issues a ruling that in the absence of special text specifying a longer prescription period for the repayment of aid granted, only four-year limitation period provided for in Article 3 of Regulation 2988/95 is applicable (Société Maison Ginestet)
Baker McKenzie (Paris)
A dispute concerning the repayment of European aid intended to support the promotion of wines allowed the Conseil d’Etat (Council of State) to settle two questions concerning, on the one hand, the rules of prescription applicable in the event of litigation relating to the payment of European (...)

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 (...)

The Austrian Supreme Administrative Court makes the entry into force of a national law introducing a State aid scheme contingent on approval by the EU Commission (Dilly’s Wellnesshotel)
University of Vienna (Vienna)
Background & Facts of the case As a preliminary to the discussion of the case, it is useful to highlight the historical development of the material scope of the law at issue in the proceedings before the public courts, the Energieabgabenvergütungsgesetz (Law on the rebate of energy taxes; (...)

The Polish Regional Administrative Court in Warsaw issues a decision on the statute of limitation in State aid recovery cases in the absence of the Commission’s recovery order
Dentons (Warsaw)
Background & facts of the case In the facts of the case a company received in 2008 state aid towards the cost of employment of the handicapped, which was conditional, among others, on timely payment by the beneficiary company of social security contributions. Polish authorities discovered (...)

The Austrian Federal Administrative Court dismisses the claim by a telecoms operator that reforming the rights to use of radio frequencies, but excluding pre-existing rights from this reform, constitutes illegal State aid because there is no demonstrable negative effect on the State flowing from the reform
University of Vienna (Vienna)
Background & Facts of the case In order to enable a more efficient use of the Austrian mobile communications network, the Telekom-Control Commission (“the authority”) ordered, by decision of 28 July 2014, a so-called “refarming” of rights of use for radio frequencies in the 900 and 1800 MHz (...)

The Italian Council of State rules that the EU Commission’s decision to declare a provision of State aid legal cannot have a retroactive effect (Impresa Renato Murgia)
Bonelli Erede (Brussels)
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Luiss Guido Carli University (Rome)
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Bonelli Erede (Brussels)
On 15 July 2019, the Council of State delivered Decision No. 4962 in which it rejected the appeal brought by the Autonomous Region of Sardinia against a decision of the Regional Administrative Court of Sardinia (“TAR Sardinia”), which had upheld the annulment action brought by Re. Mu. S.r.l. (...)

The Dutch Court of Appeals for Amsterdam rules the total annulment of a public loan guarantee would not breach the legal principles of fairness and reasonableness when trying to restore the competitive landscape (Commerz)
Freshfields Bruckhaus Deringer (Amsterdam)
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Freshfields Bruckhaus Deringer (Amsterdam)
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Freshfields Bruckhaus Deringer (Amsterdam)
For the facts of the case, please refer to the case summary of the judgment from the Supreme Court of the Netherlands, 27 May 2016 (Commerz v Rotterdam Port Authority) ECLI:NL:HR:2016:994. Taking into account the preceding judgments of the Supreme Court of the Netherlands and the Court of (...)

The Polish Supreme Administrative Court issues a judgement on the power of a national court to order recovery of unlawful aid also in the absence of the Commission’s prior negative decision
Dentons (Warsaw)
Background & facts of the case The case formed part of a vast group of disputes arising from a refusal by Polish authorities to apply to beneficiaries exemptions from real estate tax that had been granted by Poland prior to Polish accession to the EU without any notification of that aid (...)

The EU Court of Justice preliminarily determines that a Lithuanian aid scheme for the provision of public interest services in the electricity sector breaches State aid rules (Achema / Orlen Lietuva / Lifosa / VKEKK)
DG ENERGY (Luxembourg)
The judgment of the Court of 15 May 2019 in case C-706/17, delivered upon a request for a preliminary ruling from the Supreme Administrative Court of Lithuania (“Achema”), replicates the analysis which was previously established in Association Vent de Colère!. The judgment in Achema thus follows (...)

The French State Council concludes that three taxes assigned to an undertaking in the audiovisual and multimedia sector cannot be regarded as an integral part of an aid scheme on the basis that they represent a growing share of revenue which is not considered as having directly influenced the amount of aid granted (National Center for Cinema & Moving Image)
Baker McKenzie (Paris)
The junction between the financing of cinema and audiovisual media and State aid law is at the origin of a case which, initially supposed to revolve around the notion of "alteration to existing aid", has come, after a contentious detour, to clarify what constitutes a tax measure hypothecated to (...)

The Italian Supreme Court orders the recovery of aid given to Sardinian hotels and dismisses arguments that the local government’s reassurances should provide the undertakings with protection due to legitimate expectations (Eurosarda Gestioni Turistiche)
Bonelli Erede (Brussels)
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Luiss Guido Carli University (Rome)
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Bonelli Erede (Brussels)
On 26 February 2019, the Supreme Court delivered Decision No. 5594 in a case concerning the reimbursement of aid unlawfully received by Eurosarda Gestioni Turistiche S.r.l. from the Sardinian regional government. Background & facts of the case In Decision 2008/854, the Commission declares (...)

The EU Court of Justice clarifies the concept of "existing aid" in a private enforcement case and holds that unlawful aid cannot be retroactively legalised under a limitation period that has lapsed (Fallimento Traghetti del Mediterraneo)
Willkie Farr & Gallagher (Paris)
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Willkie Farr & Gallagher (Brussels)
On January 23, 2019, the European Court of Justice (hereinafter the “Court” or the “ECJ”) handed down a preliminary ruling on the notion of “existing aid”. The Court held, in particular, that the circumstance where a new aid that becomes existing aid by virtue of the 10 years limitation period has (...)

The Spanish Supreme Court, following a preliminary ruling by the EU Court of Justice, decides that a tax on large commercial establishments does not breach State aid rules because it is not sufficiently selective (IKEA)
Judicial Ethics Commission (Madrid)
The Supreme Court, after having raised the question for a preliminary ruling to the ECJ, dismisses the appeal against the Regulation of the Tax on Large Commercial Establishments of Asturias Background & facts of the case The tax on large commercial establishments in Asturias is not (...)

The Spanish High Court of Justice for Galicia, in agreement with the court of first instance, finds that a ship manufacturer was not exempt from a real estate tax notwithstanding the application of a European State aid scheme (Navantia)
Judicial Ethics Commission (Madrid)
Galicia High Court of Justice considers that the real estate tax exemption in favour of Navantia should not be granted despite the application of the European State aid scheme. This judgment was reversed in cassation by the Supreme Court. Background & facts of the case According to (...)

The Spanish High Court of Justice for Catalonia dismisses an appeal challenging the legality of a tax on large retailers on the grounds that some establishments are exempt and thus there is unlawful State aid (Alcampo)
Judicial Ethics Commission (Madrid)
Catalonia High Court of Justice dismisses the appeal against the assessment of the regional tax on large retail establishments on the ground that what constituted State aid is the exemption in favour of certain establishments but not in the case of the now appellant undertaking. Background (...)

The Portuguese Supreme Administrative Court determines that a levy to fund the national wine regulator does not constitute State aid on the grounds that all economic agents in the market are affected and that any effect is de minimis (Wine and Vine Institute)
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 This judgement arises from an appeal against the ruling issued by the Administrative and Tax Court of Viseu, which dismissed the action brought by the appellant against the decision of the Wine and Vine Institute (Instituto do Vinho da Vinha) ordering the (...)

The Spanish Supreme Court, following a preliminary ruling to the EU Court of Justice, dismisses an appeal against a tax on large commercial establishments because the selective criteria on which the tax is based does not breach EU State aid rules
Judicial Ethics Commission (Madrid)
The Supreme Court, after having raised the question for a preliminary ruling to the ECJ, dismisses the appeal against the Regulation of the Tax on Large Commercial Establishments of Aragón. Background & facts of the case The tax on large commercial establishments in Aragón is not contrary (...)

The Spanish Supreme Court, following a preliminary ruling by the EU Court of Justice, decides that a tax on large commercial establishments does not breach State aid rules
Judicial Ethics Commission (Madrid)
The Supreme Court, after having raised the question for a preliminary ruling to the Court of Justice, dismisses the appeal against the Regulation of the Tax on Large Commercial Establishments of Aragón Background & facts of the case The tax on large commercial establishments in Aragón is (...)

The Spanish Supreme Court upholds an appeal against a ruling which denied interim measures whilst the EU Commission investigated suspected illegal State aid (Astra Ibérica)
Judicial Ethics Commission (Madrid)
The Supreme Court upheld the cassation appeal against an order of the National Court that denied interim measures due to the obligations that derive for national judges from the initiation of a procedure by the European Commission concerning State aid. Background & facts of the case The (...)

The Spanish Supreme Court, following a preliminary ruling to the EU Court of Justice, dismisses an appeal against a tax on large commercial establishments on the grounds that taxes which discriminate on surface area or environmental considerations do not breach EU State aid rules
Judicial Ethics Commission (Madrid)
The Supreme Court, after having raised the question for a preliminary ruling to the ECJ, dismisses the appeal against the Regulation of the Tax on Large Commercial Establishments of Asturias Background & facts of the case The tax on large commercial establishments in Asturias is not (...)

The Austrian Higher Regional Court of Vienna remands a State aid case to back the lower court after ruling that where a recipient of a State-backed loan does not meet the criteria for that loan the aid may be illegal and the State may legitimately renege on its contractual obligations (Alpine)
University of Vienna (Vienna)
Background & Facts of the case In order to mitigate the effects of the financial and economic crisis of 2008, the Austrian legislator adopted the so-called Unternehmensliquidationsstärkungsgesetz (Law on strengthening the liquidity of companies, hereafter the “ULSG“). It authorised the (...)

The Spanish High Court of Justice for Valencia revokes a temporary suspension granted against a State aid recovery decision (Institut Valencià de Finances / Hércules de Alicante Club de Futbol)
Judicial Ethics Commission (Madrid)
Valencia High Court of Justice revokes the interim measure of suspension granted by a Court of First Instance against a regional recovery decision based on a decision of the European Commission appealed to the General Court and from which the interim suspension had also been requested. (...)

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