State Aid Modernisation Research Articles

The transformation of EU State aid law … and its discontents

This article analyses the main goals of the 2012 State Aid Modernization (SAM) reform in light of the recent case law of the Court of Justice of the European Union in the State aid field.The article concludes that the Court has adopted a principled approach towards the State aid discipline, including the definition of aid – notably in fiscal cases –, the assessment of compatibility, and the exceptions from the obligation to notify new aid. This approach constitutes a reminder that, despite recent policy initiatives, the main features of the original Treaty system of State aid control have not changed. The case law studied also shows that the SAM initiative has brought, alongside many positive effects, a number of less satisfactory consequences. Finally, the case law examined is liable to limit the effects of the first two SAM objectives while, in parallel, reinforcing the third. State Aid Modernization, assessment of compatibility, exemptions, SAM objectives

The impact of state aid on economic growth: fresh evidence from a panel of 27 EU countries

ABSTRACT In this study, we examine how State aid policy in the European Union (EU) affects the level of economic growth. By applying several panel data econometric techniques, to a sample of 27 EU countries over the period 2007–2019, we investigate how state support and government interventions affect the level of economic growth in the EU member states. Based on the empirical findings, we document a positive impact of state aid programmes on fostering economic growth leaving significant room for the implementation of a new pan-European industrial policy. Lastly, we provide policy implications to government officials and policymakers on the effectiveness of the State Aid Modernization programme and the future of State aid control in the aftermath of the pandemic crisis.

The role of block exemptions and state aid modernization in enforcing state aid rules in the European Union

The article covers the role and effects of introducing block exemptions in state aid in the EU and the prerequisites for reforming state aid that was launched on a big scale in 2012, known as State Aid Modernization. Herein presented are key substantive uses of block exemptions as well as reform constituents and business processes employed by the European Commission to ensure that state aid regulatory framework is up-to-date and feasible. The article explores the trends prevalent in enforcing state aid rules given the increase of decentralization trends and overviews the implications of the implementation of regulatory acts upon which the state aid modernization was based.

РЕГУЛЮВАННЯ КАРТЕЛЬНОЇ УГОДИ В ЄС: ОСТАННІ ЗМІНИ ТА ЇХ НАСЛІДКИ

Competition is a one of the most important and fundamental mechanisms of the economy, which is considered to be an essential factor for economic growth and prosperity. This article reviews the importance of competition law, which is one of the most crucial and essential part of law that has to be implemented properly to support and ensure smooth functioning of the economy in the state. This article points out the most important and significant steps taken by the European Commission towards the fight against cartel agreements in the past few years, for example, when the European Commission introduced and made recent developments by implementing specific laws, rules and programs during the last few years, which could be used as a tool to fight against cartel agreements, foster economy and support free and undistorted competition on the market. At the same time, this article discusses and clearly highlights that collaboration between the relevant bodies, as well as between the international organizations increases efficiency of competition level and fosters economic growth. The European Union has updated the relevant guidelines, and fruitful cooperation between the relevant Member States certainly facilitates the process of identifying anti-competition agreements in the marketplace. The article reviews implementation of effective Directives, legal acts or guidelines, such as Directive ECN+ empowering competition authorities to counter any anti-competitive practices, introduction of state aid modernization effective package that plays a crucial role in empowering the EU Member States to execute strategies for better economy, as well as other international developments against cartels to show that these developments are aimed at governing and protecting free and undistorted market competition. These instruments are very efficient and significant for competition and its further development.

The Optimal Assessment Rule for EU State Aid Procedure

This article fills the gap in the State aid literature by discussing the optimal rule for State aid assessment, which shall increase the reliability and accuracy of State aid enforcement by the European Commission. Moreover, it contributes to decision theory more broadly, by putting emphasis on the error in application of law, which hampers an effective distinction between desirable and undesirable measures. The argument developed in this article is that the informational asymmetries, which the Commission faces when assessing measures, may be overcome to a different extent at each procedural stage. Hence, and due to the interrelation between complexity of rules and the probability of error in their application, State aid assessment requires two assessment rules, one for the preliminary examination and one for the formal investigation. However, it seems that such optimal assessment rules have not been identified, and no concern about accuracy in application of complex rules is reflected in the literature or in the legal framework. Consequently, the Commission shall structure and make known the rules which guide its assessment, especially in the preliminary examination. This would benefit the quality and transparency of the decision-making and might be particularly valuable in the context of the on-going revision of State aid guidelines. EU State aid law, Article 107 TFEU, Decisional Errors, Decision Theory, State Aid Procedure, Compatibility Assessment, Notion of Aid, State Aid Modernisation, Revision of State Aid Guidelines, Optimal Assessment Rule

Az állami támogatási soft law hatása a kedvezményezettekre


 
 
 
 Az Európai Unió tagállamai által nyújtott támogatások legfontosabb ellenőre az Európai Bizottság, az Európai Unió működéséről szóló Szerződés (EUMSz) 107. és 108. cikkei alapján gyakorlatilag kizárólagos hatáskörrel rendelkezik a támogatások belső piaccal való összeegyeztethetőségének elbírálására. Értékelési gyakorlata során a Bizottság saját döntési gyakorlatát alapul véve – annak megszilárdulását követően – iránymutatásokat, keretszabályokat (a továbbiakban: soft law) fogad el, amelyek jogforrásnak nem minősülő dokumentumként meghatározzák, hogy a jövőben a Bizottság mely támogatásokat, illetve milyen feltételeket teljesítő támogatásokat tekint a belső piaccal összeegyeztethetőnek.
 
 
 

Legal Status and Legal Effects of the Commission’s State Aid Guidelines:

Looking at the practical case of the Guidelines on State aid for environmental protection and energy (EEAG) (2014-2020) and implementation of them, this article intends to re-open the debate on the legal status of soft law instruments in EU State aid policy. It analyses the recent case law of the Court of Justice of the European Union and the manner the latter distinguishes between the legal force and the legal effects of the State aid guidelines, not only on the Commission, but also on third parties like Member States. The article puts in perspective the careful approach of the Court in not recognising the possible indirect effects of the guidelines on Member States or individuals with the procedural and structural changes in the adoption of the guidelines. With the implementation of the State Aid Modernisation, a circular process in three steps has been established between the adoption of the General Block Exemption Regulation (GBER), the new State aid guidelines and the proposals for new secondary legislation. In this process, the guidelines assume the function of a bridge, building on the binding principles enshrined in the GBER and preparing the revision of sectoral EU directives and regulations. With the upcoming revision of the GBER and the EEAG which is now scheduled for adoption in 2021, the same dynamic will most probably apply. The revision of the GBER and the EEAG will need to reflect the content of the newly adopted Clean Energy Package for All Europeans, but will also play a crucial role in preparing the grounds for amending relevant secondary legislation in line with the Commission’s European Green Deal Strategy. Keywords: EEAG 2014-2020, renewable energy, support schemes, GBER, legal force, legal effects

The 2019 ‘Fitness Check’ of State Aid Modernisation Reform of 2012—An Opportunity to Redefine and Reintroduce Sustainability into the EU/EEA State Aid Rules? The Example of the Transport Sector

This article intends to launch a discussion on the possibilities of introducing more sustainability into the rules on granting State aid. State aid law constitutes a crucial part of the internal market regulation. In principle, granting public support to companies is prohibited in the European Union (EU) as such state intervention distorts competition. In some cases, however, aid may be allowed if it pursues a legitimate public policy objective such as research, regional development, transport or environmental protection. In 2017, the EU Member States spent EUR 116.2 billion, i.e., 0.76% of GDP, on State aid at the EU level. While aid to the environment and energy saving promotes sustainability, the question is whether other types of aid also do so. This article provides a brief explanation of the rationale behind State aid control, explains how ‘good aid’ may be approved by the European Commission or EFTA Surveillance Authority (ESA) before it is granted by the Member States and proposes taking a closer look at the current guidelines for granting aid in the transport sector. This sector has a serious impact on the environment and human well-being, while it is heavily subsidised by the state.

State aid control in the modernisation era: Moving towards a differentiated administrative integration?

AbstractDespite contentions that state aid control is an instance of direct execution, the State Aid Modernisation (SAM) package has largely dispersed responsibility for giving effect to the common legal framework across national administrations. In this setup, the effectiveness of state aid law is confronted with asymmetric capacities, diffuse application of complex rules and difficulty in keeping dispersed powers under control. This article combines selected evidence on the operation of state aid control with a multidisciplinary analysis of the functioning of integration mechanisms in the European administrative space. The aim is to examine the potential effects of SAM. It contends that, while the reform has strengthened the Commission's dominance, the instruments of administrative integration might fail to secure adequate capacities and implementation performances at national level, due to constitutional constraints and opposing forces. This effect, it is argued, could be divisive, and risks undermining the integrity of the internal market.

A Critical Analysis of Rescue and Restructuring Aid

Rescuing and restructuring aid (R&R aid) is one of the most controversially debated categories of State aid and perceived very critically by the Commission. In the course of the State aid modernisation programme in 2014, the Commission has tightened the requirements to grant such aid by introducing a non-exhaustive list of balancing criteria. This counterfactual analysis increasingly shifts the focus to the economic effects of R&R aid and the incentives it creates. The modernised R&R aid therefore primarily aims at promoting a more reliable assessment of all the effects of an intervention whilst enhancing the predictability of decisions. Despite the efforts the Commission has put into improving R&R rules, this article asserts that due to R&R aid’s pervasive and distortive nature, it can hardly ever be justified and should consequently be replaced with other, less distortive market instruments, such as harmonised insolvency proceedings. Considering the fact that the EU consists of 28 countries with various national interests, the currently very restrictive practice of R&R aid could, however, be seen as a temporary compromise solution between Member States and the Commission. Keywords: Rescue and Restructuring Aid; State aid Modernisation; Justifiability of Rescue and Restructuring Aid

State Aid Evaluation

The Commission requirement concerning the evaluation of State aid schemes is one of the pillars of the State Aid Modernisation (SAM) reform of 2014. The aim of the evaluations conducted under State aid rules is to provide evidence on both the direct impact of the aid on its beneficiaries and on its indirect impacts, positive and negative, as well as on the proportionality and appropriateness of the aid measure. This article provides an account of the state of play in the evaluation of State aid schemes. To this end, we analyse the legal framework of the evaluation requirements as outlined under the General Block Exemption Regulation and under different State aid guidelines, and synthesise the characteristics of the current 45 evaluation plans, and of the Commission decisions approving them. Finally we discuss the lessons learnt from the first final evaluation reports submitted and reflect on challenges ahead. Keywords: State aid Modernisation; State aid control; Evaluation plan.

State Aid in the Ports Sector: a Blessing or a Curse?

The European Commission sees the ports sector as a driving force for economic growth and regional development in Europe. It has recently developed various policy initiatives in this sector and taken measures whereby State aid control forms the key element. The Commission has opted for an approach based on two interlinked pillars. First, the Commission intends to create a (more) level playing field among European Union Member States, by using State aid rules to curb tax benefits for (public) companies in the ports sector. Second, further to the State Aid Modernisation Programme, the Commission is, to an increasing extent, pursuing an active European economic policy in the ports sector by means of exemptions from the prohibition of State aid. As a result, certain aid measures targeting market failures and objectives of a common European interest are permissible. In this article we will provide an analysis of recent developments and place them in their legal and policy-related context. We will specifically discuss the impact of these developments on seaports in the Netherlands.

Ex Post State Aid Evaluation in Environmental Aid

The obligation to carry out an ex post evaluation of certain State aid measures was introduced in the European Union in 2014. This obligation represents an important element of the broader State Aid Modernisation initiative of DG Competition. In this article, we offer guidance, both from a legal and an economic perspective, on when an ex post evaluation is required, which methods are available and which methods are actually considered by Member States. More specifically, we propose a ‘traffic light system’, supporting a self-assessment of whether an ex post evaluation is required for a specific measure or not. Furthermore, we review the 24 evaluation plans which were approved by the European Commission by August 2018, with respect to the proposed approaches to the measurement of direct and indirect effects, appropriateness and proportionality. We find that the most common method considered by Member States in their evaluation plans is the econometric estimation of differences-in-differences. Keywords: State aid ex post evaluation; Environmental aid; Econometric estimation methods; Evaluation plans.

Key Developments in State Aid Law in 2016

This survey covers the main developments in European State aid law over the last 12 months. While the selection of cases is selective, the survey aims at providing an overview on both the Commission's policy and cases as well as on the judgements rendered by the Court of Justice of the European Union. The first part of this survey focuses on the main new legislation and guidance prepared by the European Commission in 2016 as part of its State aid modernisation programme. The release of the long awaited notice on the notion of aid is a welcome tool clarifying the boundaries of the notion of aid. ... The second part of this survey focuses on the European Commission's policy and decisional practice. This section concentrates on tax cases which have been particularly controversially debated topics of 2016. In an effort to clarify its decisional practice, the European Commission released an Internal working paper which combines traditional case law and the different method referenced by the OECD in relation to transfer pricing, thus refining the boundaries of the arm's length principle. The section concludes with a brief discussion of cases in the energy sector.

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.

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).

After State Aid modernisation - All quiet now?

After State Aid modernisation - All quiet now?

Key Developments in State Aid Law

With respect to legislation, there has been, in the last 12 months, no significant development on State aid, following the adoption of the State aid modernisation package in 2014. The EU case law has clarified the general conditions for the application of the Treaty provisions on State aid – in particular, the conditions of State intervention and State resources, the private investor principle and the requirement of selectivity. New developments are also worthwhile to note with respect to the compensation of public service obligations, the res judicata principle and the recovery of unlawful aid.

The Interplay Between Industrial Policy and State Aid: Natural Combination or Strange Bedfellows?

The system of European Union (EU) State aid control aims to strike a careful balance between European unity and national sovereignty. This entails that, while decisions to provide aid are in principle made by the Member States, the EU legal framework (as interpreted) generates a number of systemic obstacles that can preclude or limit the adoption and application of national industrial policy measures that entail monetary support, in particular, those that are based on the interpretation of industrial policy in a purely domestic sense, although some (types of) measures that are of particular interest from an industrial policy perspective fall outside the scope of application of Article 107(1) TFEU altogether. However, by inviting Member States to provide “good aid”, as opposed to “bad aid”, as exemplified by the recent State Aid Modernisation (SAM) programme, which, in turn, has been informed by the Europe 2020 Strategy, the EU increasingly aims to impact on the economic policy of its Member States. Combined with the creation of multiple supranational funding possibilities which aim to positively contribute to the objectives of said Europe 2020 Strategy, the proposition in this paper is that this enables the Commission to use State aid policy as a public governance instrument to advance positive European industrial policy in the absence of (full) harmonisation. Although this is arguably in line with what Article 173 TFEU on industry prescribes, the Commission’s interventionist use of its discretionary powers under Article 107(3) TFEU raises some doubts as to the assigned distribution between the Member States and the supranational level within the system of State aid control. Keywords: Industrial Policy; State aid; Balancing Public Interests; Discretion; Division of Competences.

Regional State Aid Control in Europe: A Legal and Economic Assessment

This paper provides a legal and economic analysis of the European rules for regional state aid according to Article 107 (1) and (3) TFEU. It summarizes the historical evolution and the trends of regional aid rules and describes the economic rationale behind them. The main principles are discussed with reference to recent academic research, leading cases and the State Aid Modernization initiative (“SAM”). The current rules for the assessment of compatibility as laid down in the general block exemption and the regional aid guidelines 2014 are critically reviewed in light of these principles.