Fiat v European Commission: Fiat and Luxembourg’s Great Fiscal Autonomy Victory Comes at a Great Cost to the Commission

Abstract

The Court of Justice of the EU (CJEU) handed the European Commission a significant defeat in its objective to stop multinational enterprises from benefitting from illegal state aid, mainly through unilateral transfer pricing agreements. The CJEU corrected the Commission’s analysis and asserted that conferring a selective advantage from a state policy was only possible by comparing inconsistencies with the Member State’s legislation rather than a harsher EU-wide OECD arm’s length principle. This article will analyse the issues caused by the case’s outcome, such as parity and uncertainty in the Commission’s analysis for future cases. Additionally, the article will analyse the mostly unsuccessful use of the state aid provision by the Commission in its other cases and how the amendment of EU laws is needed to turn the tide in the Commission’s favour.