State aid (notification)

 

Author Definition

 

Definition

Notification is the process by which Member States submit state aid measures to the European Commission for assessment before they implement them. Notification is required of all new aid measures, except if they comply with “block exemption” regulations. The Commission assesses the compatibility of the proposed aid with the internal market. The notification process ends either with authorisation, in case the aid is compatible, or prohibition, in case it is incompatible.

 

Commentary

Article 108(3) TFEU requires Member States to inform the Commission of “any plans to grant or alter aid”. The purpose of this requirement is to enable the Commission to assess the compatibility of a proposed aid measure with the internal market. Individual awards within the context of already approved aid schemes , measures that existed before the accession of a Member State to the European Union or measures that became state aid as a result of the evolution of the internal market are exempt from notification.

Exempt from notification are individual awards within the context of already approved aid schemes, measures that existed before the accession of a Member State to the European Union or measures that became state aid as a result of the evolution of the internal market.

Council Regulation 2015/1589 – the so-called procedural regulation – lays down in much more detail than Article 108 TFEU the procedure by which Member States notify aid measures to the Commission and how the Commission may treat notified or non-notified measures.

If the Commission does not have any doubts about the compatibility of the aid, it authorises the measure. If, by contrast, it has “serious doubts” about its compatibility or it encounters “serious difficulties” in assessing the compatibility, it must open the “formal investigation procedure”.

The decision to open the formal investigation is published in the Official Journal of the EU and any “interested party” may submit comments. An interested party is any undertaking that can be affected by the proposed aid. The formal investigation can end either with a positive decision authorising the implementation of the aid or a negative decision prohibiting the implementation of the aid. In some cases the investigation may also end with a “no aid” decision, if the Commission concludes that the measure in question does not satisfy all of the criteria of Article 107(1) TFEU.

The notification procedure is a bilateral procedure between the Commission and Member States. Potential beneficiaries and their competitors do not have access to file. Nevertheless, they may challenge a Commission decision before the General Court of the EU.

The Commission is required by Regulation 2015/1589 to complete its assessment of a notified measure within two months. However, if it asks the Member State concerned for clarification or additional information, the two-month period starts afresh.

To assist Member States to notify measures that the Commission may declare compatible with the internal market, the Commission encourages Member States to have “pre-notification” contact. A pre-notification meeting is an informal meeting in which Member States may indicate to the Commission their plans and receive from the Commission non-binding advice on how their envisaged aid measures may need to be adjusted so that when they are formally notified they can be quickly approved.

An aid measure that is implemented without prior notification to the Commission or does not fall within the scope of a block exemption regulation is automatically “illegal” or “unlawful”. National courts are obliged to suspend illegal aid measures.

If the Commission becomes aware of an illegally implemented measure and assesses its compatibility with the internal market, it is not bound by the two-month deadline to conclude that assessment. However, it is required by the case law to conclude within “reasonable time”, although EU courts have not defined any precise deadline. The length of reasonable time depends on the complexity of the case.

If the Commission finds that aid granted illegally is incompatible with the internal market, it must order the recovery of the full amount of the aid plus interest from the moment it was granted. Within the period defined by the Commission, the Member State concerned must inform the Commission of the measures that it intends to take to secure the complete recovery of the aid. There is no EU law laying down specific provisions on the recovery of incompatible aid. For this reason, recovery is effected on the basis of national law. The Court of Justice has held that Member States are required to take all necessary steps for the immediate and effective recovery of the aid.

 

Case references

T-648/19, Nike Netherlands & Converse Netherlands v European Commission, EU:T:2021:428.

C-349/17, Eesti Pagar, EU:C:2019:172.

T-308/00 RENV, Salzgitter v European Commission, EU:T:2013:30.

C-194/09 P, Alcoa Trasformazioni v European Commission, EU:C:2011:497.

C-501/00, Spain v European Commission, EU:C:2004:438.

 

Bibliography

Council Regulation of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, OJ L 248, 24 September 2015, pp. 9-29.

Leigh Hancher, Tom Ottervanger, Piet Jan Slot, EU State Aids, Sweet & Maxwell, 2021.

Anna Nowak-Salles, The Optimal Assessment Rule for EU State Aid Procedure, World Competition, 2020, vol. 43(1), pp. 87-106.

This article is being reviewed by the Editors of the Dictionary.

Author

Quotation

Phedon Nicolaides, State aid (notification), Global Dictionary of Competition Law, Concurrences, Art. N° 88913

Visites 1889

Publisher Concurrences

Date 1 January 1900

Number of pages 500

 

Institution Definition

EU State aid control requires prior notification of all new aid measures to the Commission. Member States must wait for the Commission’s decision before they can put the measure into effect. There are a few exceptions to mandatory notification, for example: aid covered by a Block Exemption (giving automatic approval for a range of aid measures defined by the Commission), de minimis aid not exceeding €200,000 per undertaking over any period of 3 fiscal years (€100,000 in the road transport sector) or aid granted under an aid scheme already authorised by the Commission. European Commission

 
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