THE CHALLENGES OF QUALIFICATION
Michel Debroux (Partner, Reed Smith)
There is a great deal of news, as demonstrated in particular by the public consultation launched on 17 January by the European Commission on the draft communication on the very concept of State aid. The first issue at stake is simple: all non-notified state aid is illegal and can be suspended. State aid can only be implemented if it has been previously notified and accepted by the European Commission, or if it benefits from an exemption regulation. The distinction between unlawful aid and incompatible aid should be briefly recalled. A measure which meets all the criteria for being classified as State aid may be either unlawful or incompatible, or both. Aid that is not notified is ipso facto unlawful, even if it is subsequently declared compatible after being notified.
Therefore, potentially compatible aid may still be illegal as long as it has not been notified. A competitor may therefore challenge a non-notified measure before a national court, which may prohibit its payment and require its reimbursement. Even if the measure is subsequently approved by the Commission, the beneficiary will have to pay interest on arrears. Non-notification is thus a source of legal uncertainty and fragility. The other issue is the lack of transparency of the notifications. In the field of state aid, dialogue takes place between the Commission and the national authorities which notify or not notify measures. While there is a register of notified state aid, there is - and this is quite logical - no system for the automatic notification of measures that could potentially be classified as state aid. In addition to the legal uncertainty described above, there is also a lack of transparency. The beneficiary of a non-notified state aid cannot rely on the principle of legitimate expectation except in the extremely specific cases indicated by case law. These issues and uncertainties justify an effort to identify the measures - in particular tax measures - that may be classified as State aid. This is the aim of this seminar, which seeks to establish a dialogue between practitioners of competition law and tax law.
NOTION OF STATE AID