State Aid Control Research Articles

Economics of State aid Control: Where Law and Economics Meet

Economics of State aid Control: Where Law and Economics Meet

The Transformation of State Aid Control in Serbia and EU Conditionality

The Transformation of State Aid Control in Serbia and EU Conditionality

Policy Considerations on the Interplay Between State Aid Control and Competition Law

Under the broad topic of the interplay between state aid and competition law, this article addresses the following related lines of discussion: (i) the goals and some of the political rationales of state aid control; (ii) a brief illustration of some of the harm caused by state aid, including a distinction between its anticompetitive and distortive effects; (iii) a description of the Portuguese legal and institutional framework on domestic state aid, including the underlying rationale for this institutional design; (iv) an assessment of the policy concerns that a scenario whereby the AdC would hold full-fledged enforcement powers against state aid might raise, and, finally (v) the competition advocacy role played by the AdC in relation to state-induced competition distortions, such as state aid or subsidies. The article concludes by putting into context the references included in recent EU policy statements on the importance of “fair competition” or “equitable markets” and recalls the need to avoid that similar standards contaminate antitrust enforcement or merger control, given the risks that “mixed” policy objectives in those domains might entail. It signals, in any event, the virtues of this new found rhetoric: the fact that it helps to engage the common citizen on the importance of competition. Such popular, less technocratic approach can be instrumental in bringing competition enforcement “down to earth”.

El control de ayudas públicas en la Unión Europea sobre los clubes del fútbol español

El control de ayudas públicas en la Unión Europea sobre los clubes del fútbol español

Precautionary Recapitalisations: Time for a Review

The first part of the paper considers the effects of pre-empting a resolution procedure for a troubled financial institution by a precautionary recapitalization as specified in Article 32 (4) (d) of the Bank Recovery and Resolution Directive (BRRD). Benefits are seen for the maintenance of systemically important operations of an institution with legally independent subsidiaries in multiple jurisdictions and possibly for the maintenance of lending in situations where an entire banking system is involved. Other systemic concerns, such as the maintenance of lending when only part of a banking system is affected, the avoidance of damage to money markets, and potential systemic effects from bailing in creditors, can be addressed in a resolution procedure under the rules of the BRRD and do not require the instrument of a precautionary recapitalization. The second part of the paper provides a critical assessment of Article 32 (4) (d) of the BRRD and finds some weaknesses that contribute to raising taxpayers’ costs or to reducing the effectiveness of the operation. The availability of precautionary recapitalization outside of resolution contributes to undue and costly delays in acknowledging and addressing problems. The conditions specified in the Directive are problematic, sometimes too tough, sometimes too lenient, most importantly because the objectives of State aid control differ from the objectives of the BRRD. The paper concludes with suggestions for reform.

State Aid Control in South-East Europe: Waiting for a Wake-up Call

The South-East European (SEE) countries, having signed Stabilisation and Association Agreements with the European Union, are required to establish an operationally independent state aid monitoring authority, to harmonise their legislative framework with that of the EU, and to demonstrate a credible enforcement record. This paper analyses whether these requirements for EU accession have been achieved so far. The authors conducted a comparative cross-country analysis and tried to identify common problems and enforcement trends. As the paper elucidates, the SEE countries have largely met the EU requirements by harmonising their national state aid acts and corresponding by-laws with EU law. However, these rules are applied in a different socio-economic context and by national authorities of dubious independence from the government, which results in a modest enforcement record. As may be derived from the pre-accession experience of the countries of Central and Eastern Europe, the effectiveness of state aid control mechanisms is conditioned by the credibility of the country’s EU perspective. And the South-East European countries have only just started their European journey.

West German Borderland Aid and European State Aid Control

Abstract This article focuses on one of the most persistent regional aid programmes in West German history, the so-called “zonal borderland aid” (Zonenrandförderung). The programme supported regions along the 1,393-kilometer long inter-German border that divided West and East Germany during the Cold War. The article seeks to explain the increasingly fraught relationship between borderland aid and European state aid control in the 1970s and 1980s. The intervention of the Directorate for Competition (DG IV) against borderland aid begs an explanation since the Treaty of Rome (1957) had granted a specific exemption for aid to these regions from the competition policies of the Common Market. The article makes the general case that regional state aid is a key component of structural policy alongside sectoral aid. It argues that interest politics prevented a sober needs assessment of the West German border regions, turning Zonenrandförderung into funding by habit, not by need. This left the European Commission as the only institution that could mount a credible challenge to an ossified sense of entitlement in the affected regions.

The collapse of the French Shipyard of Dunkirk and EEC state-aid control (1977–86)

Since 1958 the European Commission has been in charge of monitoring a progressive reduction of national aid to shipbuilding. However, a large gap existed between theory and practice, especially during the severe crisis that hit Western European shipbuilding from the late 1970s onwards. This article gauges the real influence of state-aid control on companies’ restructuring by examining both the Commission’s papers and the archives of the French shipyard of Dunkirk, which was the second French shipbuilding company in the early 1980s before collapsing in 1986. It argues that the closure of the yard was due to a progressive assertion of European Economic Community (EEC) state-aid control, but also to the company’s internal weakness as well as changes in the French state’s industrial policy.

ARTICLES – ENERGY AND STATE AID CONTROL ∙ Balancing Environmental Protection, Competitiveness and Competition: A Critical Assessment of the GBER and the EEAG

ARTICLES – ENERGY AND STATE AID CONTROL ∙ Balancing Environmental Protection, Competitiveness and Competition: A Critical Assessment of the GBER and the EEAG

ARTICLES – ENERGY AND STATE AID CONTROL ∙ When Sisyphus Gave Up: Capacity Markets and State Aid in the EU

ARTICLES – ENERGY AND STATE AID CONTROL ∙ When Sisyphus Gave Up: Capacity Markets and State Aid in the EU

DEI v European Commision ∙ C-590/14 P ∙ Annotation by Mihalis Kekelekis

The notion of existing aid has a huge importance in State aid control. Procedural rules for existing aid differ from those regarding new aid. The consequence of granting new or existing aid is also different: from recovery to a proposal to adopt appropriate measures and modify the scheme. As other notions in the State aid field, despite its importance, the notion of existing aid is still evolving by the case-law of the EU courts. This should be an objective concept but as this judgment reveals, it may also be influenced by a subjective analysis regarding State aid compatibility. This judgment also clarifies the role of national courts in the State aid field. National courts must not only serve as guarantors of the direct effect of Article 108(3) TFEU but also as potential aid granting authorities. Keywords: Existing Aid; New Aid; Recovery; Duration; Alteration of an Existing Aid; National Courts; Notification.

FOREWORD ∙ Environmental and Energy Taxation and State Aid Control: Does the Current Framework Make Sense or Should It Be Adjusted?

FOREWORD ∙ Environmental and Energy Taxation and State Aid Control: Does the Current Framework Make Sense or Should It Be Adjusted?

ARTICLES – ENERGY AND STATE AID CONTROL ∙ Energy Tax Incentives in the United States: A Comparative Perspective on State Aid

As the State aid rules illustrate, law that is designed to protect trade can limit the extent to which governments may use tax incentives to achieve energy and environmental goals. Yet these legal limitations can vary significantly around the world, affecting the role that tax incentives may play in different countries. This article briefly explores how federal constitutional law in the United States shapes the use of energy-related tax expenditures at the federal and State level with a particular eye toward features that are relevant to a comparison with the European Union’s taxation powers and its State aid rules. Keywords: US Commerce Clause; US Constitutional Law; Energy Taxation; Energy Tax Expenditures.

ARTICLES – ENERGY AND STATE AID CONTROL ∙ The Inadequacy of EU State Aid Law and WTO Law on Subsidies to Regulate Energy Tax Reliefs

ARTICLES – ENERGY AND STATE AID CONTROL ∙ The Inadequacy of EU State Aid Law and WTO Law on Subsidies to Regulate Energy Tax Reliefs

ARTICLES – ENERGY AND STATE AID CONTROL ∙ The Concept of ‘Environmental Tax’ in a State Aid Context When a Fiscal Energy Measure Is Concerned

ARTICLES – ENERGY AND STATE AID CONTROL ∙ The Concept of ‘Environmental Tax’ in a State Aid Context When a Fiscal Energy Measure Is Concerned

Book Review: EU State Aid Control – Law and Economics Edited by Philipp Werner and Vincent Verouden

Book Review: EU State Aid Control – Law and Economics Edited by Philipp Werner and Vincent Verouden

Financing of Berlin Brandenburg Airport ∙ SA.41342 ∙ Annotation by Antigoni Lykotrafiti

This annotation focuses on the latest (out of three) European Commission decisions on the financing of the new Berlin airport by its public shareholders. The decision is important because it deals with a case having a great impact on the Single Market. Moreover, it constitutes the first example of application of the private investor test in airport financing cases after the publication of the Commission Notice on the notion of State aid – the jewel in the crown of the State Aid Modernisation initiative. The commentary points to the link between politics, law and economics in high-profile State aid cases, questioning the effectiveness of EU State aid control. Keywords: Market Economy Investor Principle; Airport Infrastructure; Airport Operator; Traffic Forecast; Severability; Predictability.

Without EU State Aid Control No EU-UK Free Trade Deal?

Without EU State Aid Control No EU-UK Free Trade Deal?

Two Policies at Odds with Each Other? European Structural and Investment Funds and State Aid Control

How do the European Structural and Investment Funds (ESI Funds) interact with the EU state aids rules?The paper sets out by providing the background on the objectives and the inter-governmental and administrative structures that underpin the ‘ESI Funds’. It, then, proceeds to present the inconsistencies that arise between EU Cohesion policy, the driving force behind the ‘ESI Funds’, and competition policy because of the conceptual differences and the, often, distinct objectives the two policy areas pursue. Upon providing the theoretical background on the relationship between competition policy and cohesion policy, the paper continues by presenting the new legal framework of the ESI Funds and the relevant to state aids provisions, with a view to assessing the new Common Provisions Regulation with regard to the State Aid Modernisation initiative. It then reviews in which cases ESI Funds may qualify as state aids and the repercussions this classification might bring about. Finally, it provides an overview of the WTO rulings with regard to Union funds, in particular those subsidizing the Common Agricultural Policy (CAP).

Stateless Income, State Aid and the (Which?) Arm’s Length Principle

The arm’s length principle has a new function. When used by the European Union (EU) Commission for State aid control purposes, it is aimed at protecting a level playing field for all economic operators in the internal market, i.e. at protecting free competition, rather than at tax base protection or prevention of double taxation. In that function, it is part of competition law, rather than of tax law. It may, therefore, deviate from the traditional Organisation for Economic Co-operation and Development (OECD) understanding of that principle. The case law on which the Commission relies, is not very explicit, and it remains to be seen whether the EU Courts will endorse the Commission’s approach, but from a competition law perspective, that approach makes sense. Both from the Belgian excess profits scheme case and the Apple case, it transpires that the Commission is of the opinion that a company cannot have stateless income. A branch State cannot suffice by saying ‘not in my yard’ if that implies that real income is allocated into a tax void, disappearing for tax purposes into a physically non-existent head office. Whether or not the EU Courts, if they accept the Commission’s approach, will also accept recovery ten years back with interest, will most likely depend on the question of whether, even if the Commission’s approach may be novel, the companies and the Member States involved should anyway have known better.