State Aid Decisions Research Articles

EU Competition Law Developments in the Aviation Sector: January to July 2014

The first half of 2014 has seen quite a substantial increase in competition law activity in the State aid sector in relation to aviation matters with the release of the European Commission's ('Commissions') new state aid rules for airports and airlines, the adoption of a communication prescribing transparency rules and a number of State aid decisions issued by the Commission.

Housing and positive European integration: permissible state aid for improving the urban environment

Housing is not one of the European Union (EU’s) formal competences, but European integration does affect member states’ housing policies to a significant extent. Without the establishment of EU-level competence, housing cannot become a field of positive integration and the Europeanisation of housing policies will continue to occur through negative integration, i.e. removing housing policy barriers to the establishment of the single European market. This paper analyses a state aid case relating to housing development in the city of Apeldoorn, the Netherlands. The case would suggest that the Commission concludes, on the one hand, that policies which use state funds to provide land for housing distort competition and yet, on the other hand, it views the improvement of the urban environment and quality of life in the neighbourhood as a well-defined EU objective that may make such aid permissible. This case is examined in the context of other state aid decisions on the Joint European Support for Sustainable Investment in City Areas programme and on services of general economic interests, as well as a comparable case in which state aid was not allowed. It concludes that an EU competence has developed on the urban environment and quality of life and that, as such, positive integration on housing issues exists.

The Belgian Governement's Tender for the Press Distribution SGEI Issues for Discussion

Over the last few years, the European Commission adopted a number of important State aid decisions in the postal sector. One of these decisions concerned the compensation granted by the Belgian Government to bpost for the delivery of services of general economic interest (“SGEIs”) over 2013-2015. Among these SGEIs figure the early delivery of newspapers and the distribution of periodicals at reduced prices (the “Press Distribution SGEI”), which the Belgian Government considers as “particularly important to ensure a wide distribution of the written press throughout Belgium in order to enhance the level of information and diversity of opinion, and to foster public participation in the political debate.” As regards the Press Distribution SGEI, the Belgian authorities committed to organize a competitive, transparent and non-discriminatory tendering procedure with a view to award a service concession at national level by end of 2014 to the selected operator that will take over the provision of press distribution SGEI as of 1 January 2016. This paper addresses some of the key questions faced by the Belgian Governement with respect to the organisation of the tender for Press Distribution SGEI. Given the limited experience in tendering SGEIs in Europe, this is a challenging exercise, which the Commission will look at with a keen interest given its insistence that compensation for the provision of SGEIs be attributed through a tendering procedure. While the Altmark judgment of the Court of Justice of the European Union (“CJEU”) suggested that tendering a SGEI may be one of the ways in which the compensation paid for the provision of this service could escape the State aid qualification, the Commission’s so-called “SGEI Package” makes it clear that the tendering of SGEIs is compulsory if the contracting authority wants to ensure that the compensation is not qualified as State aid. Against this background, this paper is divided in five sections. Section II briefly analyses the Altmark decision and the Commission’s SGEI package with a specific focus on the 2012 Communication of the Commission on the application of the European Union (“EU”) State aid rules to compensation granted for the provision of services of general economic interest (the “Communication”), which elaborates on the so-called Altmark conditions. Section III discusses some of the challenges suggested by international experience with respect to the organisation of tenders. As will be seen, tendering may be affected by the irrational behaviour of some tenderers (the so-called “winner’s curse”), as well as strategic behaviour (“moral hazard”) with the risk that the service is not provided at the right level of quality or is even discontinued. Section IV analyses these challenges in the context of the Belgian tender for the Press Distribution SGEI and suggests ways in which they can be addressed. Finally, Section V briefly concludes.

EU Competition Law Developments in the Aviation Sector from 4 July to 31 December 2013

The second half of 2013 has seen continued activity in the aviation sector, particularly on the part of the European Commission ('Commission') which issued five new merger decisions. At the start of 2013 we saw the Commission prohibiting Ryanair's second takeover bid for Aer Lingus. Some no doubt wondered if the Commission would also prohibit Aegean Airlines' second takeover bid for Olympic which had previously been prohibited in January 2011.Also of note was the UK's Competition Commission ('CC') issuing its Final Report into Ryanair's minority shareholding in Aer Lingus This article considers the UK consultation relating appeals of licence conditions imposed on operators of dominant areas at dominant UK airports, reviews the ongoing and closed investigations, reviews relevant judgments of the European Courts (the General Court and the Court of Justice), as well as those cases awaiting judgment and concludes with a review of some relevant State aid decisions. Somewhat surprisingly there do not appear to have been any aviation mergers notified to regulators in the EU over the last six months.

EU Competition Law Developments in the Aviation Sector from 01 January 2013 to 3 July 2013

The first half of 2013 has seen quite a substantial increase in competition law activity in the aviation sector. This is partly the result of quite a bit of merger activity (six cases with two phase II investigations ongoing) but there has also been considerable activity on the State aid front with the European Commission (the 'Commission') opening five new State aid investigations and announcing a consultation on proposals for new State aid guidelines for aid to airports, start-up routes and airlines. This article first summarizes the Commission's proposals for new State aid guidelines, reviews the ongoing and closed investigations, considers the mergers that have been notified to the Commission or other regulators, reviews relevant judgments of the European Courts (the General Court and the Court of Justice),1 as well as those judgments that are still pending and concludes with a review of some relevant State Aid decisions.

EU Competition Law Developments in the Aviation Sector from 29 July 2012 to 31 December 2012

The second part of 2012 has seen a moderate increase in competition law activity in the aviation sector, coupled with the European Commission's (the 'Commission') announcing a package of proposals to increase the competitiveness of the European Union's (EU) aviation industry. A summary of the Commission's decision in the freight forwarding cartel investigation has finally been published, however the non-confidential version is still awaited. Since July, there have been a number of mergers announced, including Aegean/Olympic and IAG/Vueling. This article first summarizes the Commission's package of proposals, reviews the ongoing and closed investigations, considers the mergers that have been notified to the Commission or other regulators (as opposed to potential mergers that have been announced in the media), reviews relevant judgments of the European Courts (the General Court and the Court of Justice), as well as those judgments that are still pending and concludes with a review of some relevant State Aid decisions.

The Application of EU Competition Rules in the Transport Sector

The major legislative development in 2012 was the adoption of the recast of the first railways legislative package by the Council and European Parliament. Air transport was the focus of antitrust enforcement in 2012 with major cartel investigations, important State aid decisions and an interesting judgment on the notion of undertaking applied to airport management. The major merger decisions in 2012 were the clearance of the purchase of BMI by IAG and the opening of phase II procedures in the UPS / TNT and Air Ryan / Air Lingus cases.

The New Political Economy of EU State Aid Policy

Despite its importance and singularity, the EU’s state aid policy has attracted less scholarly attention than other elements of EU competition policy. Introducing the themes addressed by the special issue, this article briefly reviews the development of EU policy and highlights why the control of state aid matters. The Commission’s response to the current economic crisis notably in banking and the car industry is a key concern, but the interests of the special issue go far beyond. They include: the role of the European Commission in the development of EU policy, the politics of state aid, and a clash between models of capitalism. The special issue also examines the impact of EU policy. It investigates how EU state aid decisions affect not only industrial policy at the national level (and therefore at the EU level), but the welfare state and territorial relations within federal member states, the external implications of EU action and the strategies pursued by the Commission to limit any potential disadvantage to European firms, and the conflict between the EU’s expanding legal order and national.

On the Rules of Standing to Challenge State Aid Decisions Adopted at the End of the Preliminary Phase

On the Rules of Standing to Challenge State Aid Decisions Adopted at the End of the Preliminary Phase

2010 and 2011 EU Competition Law and Sector-Specific Regulatory Jurisprudence and Case Law Developments with a Nexus to Poland

This third overview of EU competition and sector-specific regulatory jurisprudential and case law developments with a nexus to Poland covers the years 2010 and 2011. This period of time is worth noting for several reasons. First, EU courts delivered a significant number of judgments in 'Polish' cases including an increased number of preliminary rulings. Second, 2010-2011 developments were dominated by judgments and decisions concerning telecoms. Finally, the Commission adopted only a handful of Polish State aid decisions following a formal investigation procedure under Article 108(2) TFEU. The main developments in telecoms relate to the Court of Justice’s preliminary reference judgment in Tele 2 Polska focusing on the interpretation of Regulation 1/2003 and the PTC v UKE ruling that dealt with number portability charges. Relevant is also the antitrust prohibition decision issued by the Commission against Telekomunikacja Polska S.A. for its refusal to grant access to its wholesale broadband services.In other fields, the Court of Justice delivered three State aid judgments (including two appeals against pre-2010 judgments of the General Court) and two judgments in infringement proceedings (regarding pre EU Accession marketing authorisations for medicines and the reutilisation of data from the public sector). The General Court ruled on appeal in the butadiene rubber cartel case (e.g. in Trade-Stomil v Commission). Finally, the Commission dealt with a merger case with a truly Polish specificity (Kraft Foods/Cadbury), approved subject to divestiture of the E. Wedel brand.

Determinants of the European Commission’s State Aid Decisions

We study whether the European Commission’s State aid decisions are in line with the goals of the State Aid Action Plan (2005–2009). Next, we explore the determinants of these decisions using data for 2007 on 600 cases. We find by means of logit and probit regressions that authorization is more likely when notification took place recently. Furthermore, ad hoc aid measures have a higher risk to end up in a negative decision, whereas schemes are more positively evaluated. Being in the objective category of firms or sectors in difficulties can reduce the probability of a positive outcome. Our results indicate that most of the Commission decisions are, on average, in line with the Action Plan.

State Aid to Banks in the Financial Crisis: The Past and the Future

This Economist's Note considers the use of state aid policy in Europe to control the flow of public funds to the banking sector during the financial crisis, and the potential implications of so doing. During the financial crisis, state aid decisions have had to prioritise saving financial institutions over distortions to competition. But post-crisis, saving institutions is not the same as saving the financial system. The more stable the financial system becomes, the easier it is for state aid control to take a tough approach to aided banks. Looking forward, as aid is unwound there is a policy choice to be made whether to prioritise competition in the single market (by coordinating withdrawal of aid) or to prioritise competition within national markets (by removing state support as and when local conditions permit)