State Aid

Working with the EU: How Discourses Shape the Application of EU State aid Rules; Bernard Steunenberg; Pieter Zwaan; Journal of common market studies, 2024-01, Vol.62 (1), p. 242-261

Abstract: State aid rules are an important part of the European Union’s (EU) competition policy that aims to ensure a fair competition in the common market. These rules directly affect national andsub-national governments of member states, which are sometimes confronted with different and opposing claims about what to do. The question is how implementing civil servants interpret and resolve these claims in practice. In this article, discourse analysis is applied to identify how civil servants apply and interpret state aid rules based on empirical research in the Netherlands. The main finding is that, even within the existing regulatory framework of one member state, the application of state aid rules is understood differently based on the discourses we identified. We describe the content, dissemination amongst civil servants and the relationship of these dis-courses with compliance. The article shows that discourses matter and help to understand how state aid rules are applied.

Reconciling Environmental VAT Differentiations With EU EU State Aid Law; Stefanie Geringer; EC Tax Review, 2024, Vol.33 (1), p. 8-18

Abstract: Differentiations in value added tax (VAT) rates and VAT exemptions are used to pursue environmental policy goals, among other things. This article analyses the compatibility of such environmental VAT measures with European Union (EU) state aid law. It is found that the criteria for the granting of a fiscal advantage to (certain) undertakings and the liability to (threaten to) distort competition and affect intra-Union trade are typically fulfilled in these situations. Conversely, the qualification of the relevant advantage as ‘state’ aid (as opposed to Union aid) essentially depends on the (voluntary or mandatory) character of the advantage according to the EU VAT Directive. In any case, one could argue that aligning the VAT legal framework with the European Green Deal is now an additional objective of EU VAT law. Such a reading would speak against the selectivity of these environmental measures pursuant to the Court of Justice of the European Union’s (CJEU’s) established three-stage assessment. Value added tax (VAT), rate reductions, rate differentiation, exemptions, state aid, Union aid, selectivity, distortion of competition, environmental policy, European Green Deal.

Pravni položaj državnih potpora u insolvencijskim postupcima; Lidija Šimunović; Zbornik Pravnog fakulteta Sveučilišta u Rijeci (1991), 2024, Vol.45 (1), p. 209-227

Abstract: Odredbom čl. 11. st. 7. Stečajnog zakona (u daljnjem tekstu: SZ) propisano je da se na postupke i mjere u kojima odlučuju vjerovnici, a kojima se odstupa od skupnoga namirenja vjerovnika unovčenjem dužnikove imovine i podjelom prikupljenih sredstava vjerovnicima na odgovarajući način primjenjuju propisi kojima se uređuje područje državnih potpora. Drugim riječima, predmetna odredba propisuje da se u svim insolvencijskim postupcima koji imaju za cilj nastavak poslovanja dužnika (npr. predstečajni postupak ili stečajni postupak s provođenjem stečajnog plana) i u kojima je država vjerovnik, uz pravila SZa, na odgovarajući način primjenjuju i pravila državnih potpora. Iako to nije SZ-om izrijekom propisano, podrednim tumačenjem izvodi se zaključak da se i u insolvencijskim postupcima čijim zaključenjem dužnik prestaje postojati (npr. stečaj s likvidacijom) i u kojima je država vjerovnik, primjenjuju pravila državnih potpora na odgovarajući način. Takvo uređenje otvara brojne teorijske i praktične dvojbe o kojima se u domaćem pravu nije sustavno raspravljalo. U radu se polazi od analize specifičnosti državnih potpora u insolvencijskim postupcima, analizira se test privatnog vjerovnika i test gospodarskoga kontinuiteta. Potom se prelazi na problematiku pravilnog prijavljivanja, ispitivanja, namirenja i apsolutne nemogućnosti namirenja tražbine s naslova povrata nespojive državne potpore u insolvencijskim postupcima. U zaključnom se dijelu rada daju smjernice de lege lata i de lege ferenda za odgovarajuću primjenu pravila državnih potpora u insolvencijskim postupcima. 

Judgment By Formula: Regulatory Form and the Differentiation of Fiscal Measures and Non-Fiscal Measures in EU State Aid Law; Christopher McMahon; European State Aid Law Quarterly, 2024, Vol.23 (1), p. 4-14

Abstract: The State aid rules apply to a wide range of interventions on the internal market that take a variety of different forms. This poses challenges for the case law on the identification of aid within the meaning of Article 107(1) TFEU as it seeks to adapt the standards it applies to different circumstances while avoiding formalism. Criticisms in the academic literature of the application of the prohibition on aid to fiscal measures are frequently premised on the assumption that the rules should apply in a different way to such measures on account of their relationship with the sovereignty of Member States in the field of taxation. The manner in which the law on the application of the State aid rules to fiscal measures remains unsettled. This article examines a substantial doctrinal obstacle to any form of differentiation in the standards used to identify fiscal and non-fiscal measures in the form of two related maxims which recur throughout the case law. The first holds that aid is defined in relation to its effects. The second is that regulatory technique is irrelevant to the classification of a measure as aid. This article will chart the development of these established formulae in the case law and explain their relationship to one another, arguing that they represent a significant, but not absolute impediment to the articulation of distinct standards to identify aid in the form of fiscal measures. 

The Impact of State Aid on Economic Growth: Fresh Evidence from a Panel of 27 EU Countries; Nikoletta Poulou; Michael L. Polemis;  Aikaterina Oikonomou; European Competition Journal, 2023-09, Vol.19 (3), p. 359-379

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 Analogous Application of State Aid Law to Asymmetric Taxes: Can the Imposition of a Special Charge Be State Aid Within the Meaning of Article 107(1) TFEU?; Lars Mörmel; European State Aid Law Quarterly, 2023-11, Vol.22 (3), p. 267-275

Abstract: Narrow-scoped special charges imposed by Member States on certain undertakings can have an effect that is as distorting on competition as tax exemptions. However, the wording of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU) does not allow for a direct application of State aid rules in these cases; neither is it possible to treat special charges as a form of far-reaching tax exemption for unaffected undertakings. Despite its practical significance, the Court of Justice of the European Union (CJEU) has failed so far to address the issue appropriately. This article critically examines the relevant case-law and calls for a methodological re-orientation. In the absence of other legal instruments to deal with the problem and in light of the potential for Member States to circumvent State aid rules through special charges, Article 107(1) TFEU should, in extension of its literal scope of application, be applied to special charges by way of analogy. This would lead to more legal clarity and certainty for both lawmakers and affected undertakings.

State Aid, Protectionism and Public Procurement: An Uneasy New World Order; Christopher Yukins; European State Aid Law Quarterly; 2023-07, Vol.22 (2), p. 181-187

Abstract: New measures in the European Union and the United States have raised concerns about protectionism that could break the international supply chains opened by longstanding trade agreements in both civilian and defence markets. While concerns about the United States’ protectionism under the Inflation Reduction Act (IRA) might be resolved, at least in part, by deferring to those trade agreements, new rules proposed under different Biden administration legislation – the Infrastructure Investment and Jobs Act (IIJA) – have raised similar concerns that supply chains supporting US infrastructure from abroad could be choked off (both legally and practically). In the European Union, the new Foreign Subsidies Regulation (FSR) may apply EU ‘State aid’ rules to foreign vendors competing for major procurements in the European Union (both civilian and defence), an extraterritorial application of EU rules regarding government subsidies which may raise impassable barriers to trade – undoing, again, the economy and efficiencies of a transnational network of secure suppliers.

Illiberal Versus Externally Fomented Growth Model Readjustment: Post-GFC State Aid in the EU’s Semi-Periphery;  Andrea Éltető; Gergő Medve-Bálint; Competition & Change, 2023-10, Vol.27 (5), p. 830-850

Abstract: Most foreign capital-led, export-oriented Eastern EU member states and the consumption-driven Southern European countries suffered a heavy blow during the Global Financial Crisis (GFC) in 2008–09. The GFC exposed the vulnerability of these economies to external shocks and raised the need for readjustment of their growth models through state intervention. While the rise of illiberal governments drove readjustment in the East, the main driver was externally fomented in the South. This article focuses on state aid, a particular instrument of industrial policy, which has been a main vehicle for growth model readjustment. We seek to explore whether the provision of state aid in the two European semi-peripheries contributes to long-term post-crisis recovery by promoting competitive investments in two Eastern (Hungary and Poland) and two Southern EU members (Portugal and Spain). Relying on the European Commission’s state aid database, we show that after 2013, in the consumption-driven South, governments aimed to strengthen supply through aid, while in the export-oriented East, they were more concerned about promoting exporting firms. The article thus reveals how state aid may preserve and reinforce existing growth models in the semi-periphery even if strategic aims and rhetoric target readjustment.

Subordinated Bonds and the Fulfilment of Their Obligations in the Event of State Aid; Jānis Kārkliņš; Pauls Zeņķis;  Latvijas Universitātes Žurnāls. Juridiskā zinātne, 2023-10, Vol.2023 (16), p. 130-147

Abstract: A bond is a  debt security, under which its issuer undertakes to repay to the bondholder the principal of the bond and the interest (the coupon) at a specified point in time, which is to be considered as the redemption of bonds. Bonds have several types: bonds issued by the public sector, bonds issued by capital companies, publicly available bonds, private bonds, convertible bonds, contingent convertible (CoCo) bonds, exchangeable bonds, exchange bonds, callable bonds, subordinated bonds, etc. In economic circulation, subordinated bonds are widespread securities. The subordinated obligation in the bond distinguishes the subordinated bond from other bonds. At the same time, the underlying relationship entails significant risks for the fulfilment of the obligations arising from the bond, which is outweighed by the higher profitability of such bonds. However, there are cases where the obligations arising from subordinated bonds are never met. Such cases may be based not only on the insolvency of the issuer of the subordinated bonds but also on the existence of State aid received by the issuer. In view of the recent financial difficulties of several banks, the likelihood of an issuer that has received State aid being able to meet its obligations under subordinated bonds becomes a particularly acute matter.

State aid through Arbitration Awards: EU Law as a Ground for Non-enforcement; Begoña Pérez Bernabeu; Intertax, 2023, Vol.51 (3), p. 219-231

Abstract: The relationship between international investment law (IIL) and EU law is not without problems as evidenced by the Achmea ruling. These tensions have become more evident in the Micula case in which the commission resorted to the state aid rules in order to attack arbitration awards arising from intra-EU Bilateral investment treaties (BITs) (deeming its enforcement as state aid). Despite its two rulings relating to the Micula saga, the Court of Justice of the European Union (CJEU) has not yet validated (or not) the application of state aid rules to the enforcement of intra-EU awards. Hopefully, the upcoming general court’s judgment shall rule on the merits of the Micula case thereby dispelling doubts. Nevertheless, it is foreseeable that further clarifying judgments will be required concerning the recognition and enforcement of intra-EU awards in non-EU jurisdictions. This article reviews the current situation to show that, while state aid rules could adequately prevent the enforcement of an intra-EU award within EU borders, they lack effectiveness for blocking enforcement beyond its borders.

The EU Trade Agenda-Rules on State Intervention in the Market; Nerina Boschiero; Stefano Silingardi; German Law Journal, 2023-02, Vol.24 (1), p. 151-178

Abstract: This Article critically analyzes the main legal and policy issues that are likely to determine the development of the EU’s trade policy concerning rules on State intervention in the market, specifically on subsidies and SOEs. The article assesses the aforementioned issue especially within the context of the new trade strategy entitled “An Open, Sustainable and Assertive Trade Policy” set out by the European Commission in February 2021, at the core of which stands the concept of strategic autonomy . The focus of our analysis is on key elements of the current EU competition and trade policies and normative initiatives, namely: the relaxation of the usual State Aid regime under Articles 107 and 108 TFEU to give Member States more flexibility in supporting their economies and strengthen EU industrial policy; the likelihood of EU proposals resulting in any substantial change to international trade law on subsidies and SOEs at the multilateral (WTO) level; a systemic horizontal investigation into the relevant trade rules promoted by the EU in its most recent practice of PTAs; and, finally, the EU pursuing stronger protection of its companies with its recently announced new regulation on foreign subsidies, on the basis of which the European Commission can investigate foreign subsidies and impose remedies. Even though, at first sight, it may seem that the current evolution of the EU trade policy on these issues seems inconsistent, the Article argues that the unilateral, bilateral, and multilateral approaches are indeed strictly intertwined, and they reveal a significant shift in the most recent EU trade policy objective in relation to the role of State in the market.

The Foreign Subsidies Regulation of the European Union: A New Instrument Levelling the Playing Field?; Karl Stas; Benjamin Geisel; Global Trade and Customs journal, 2023-10, Vol.18 (Issue 10), p. 360-371

Abstract: The European Union (‘EU’) has adopted a Foreign Subsidies Regulation (‘FSR’) to address potential distortions of competition in EU markets caused by subsidies granted to companies by non-EU governments. The FSR aims to level the playing field for all companies active within the EU and to close a regulatory gap left by existing frameworks (such as the EU’s State aid and merger control regimes or trade defense instruments). This article provides a comprehensive overview of the FSR and the accompanying Implementing Regulation and reflects upon their practical implications for companies engaging in economic activity in EU markets. Has a simple idea (i.e., extending the controls already applicable to government support by EU Member States also to support by non-EU governments) morphed into a bureaucratic monster burdening companies with needless red tape? Will the FSR achieve its goals effectively or will it put too much strain on the European Commission’s resources? Is the FSR about fair competition or is it simply protectionist?

New Challenges of EU State Aid Law: the Impact of the Pandemic on Competition between Member States; Krisztina Széles; Juridical Current. 2022, Vol. 25 Issue 1, p. 49-73

Abstract: The Covid-19 pandemic has generated an unprecedented economic and health crisis. Economic activity has decreased significantly in all Member States of the European Union. In order to avoid serious damage, the Commission has also relaxed the strict rules of state aid law. The State aid Temporary Framework was adopted on 19th March 2020 to mitigate negative economic effects of the pandemic situation. Although action by the Commission was needed, the wide and prolonged application of this measure is likely to distort competition in the internal market. The aim of this study is to explore the early effects of these preferential rules on the internal market and competition between Member States.

Getting State Aid Approved by the European Commission: Explaining the Duration of Preliminary Investigations in the State Aid Notification Procedure; Ruud van Druenen; P. J. Zwaan; E. Mastenbroek; Journal of Common Market Studies, 2022, Vol.60 (3), p. 545-561

Abstract: This article aims to explain the variation in duration of preliminary investigations in the state aid notification procedure. While this procedure is guided by objective standards, preliminary investigations result in an overwhelming majority of cases being approved in combination with a large
variation in duration. This study explores the explanatory power of political and managerial factors at the member state and state aid case level to account for this variation. Based on multilevel regression analysis of a newly created dataset, results show that both political and managerial factors
at the state aid case level affect the duration of preliminary investigations. No evidence was found for member state level factors having an effect.

Ausgleichszahlungen für Land- und Forstwirtschaft in Wasserschutzgebieten und das unionsrechtliche Beihilfeverbot; Michael Reinhard; Natur + Recht, 2022, Vol.44 (11), p. 737-744

Abstract: Die seit ihrer Einführung umstrittene Ausgleichsregelung für er- höhte Anforderungen an eine ordnungsgemäße Land- und Forst- wirtschaft in Wasserschutzgebieten droht durch ihren bewussten und gewollten Eingriff in den Wettbewerb zwangsläufig mit dem unionsrechtlichen Verbot staatlicher Beihilfen in Konflikt zu ge- raten. Der Beitrag untersucht die europarechtlichen Schranken der nach nationalem Verfassungsrecht nicht gebotenen Kompensati- onsansprüche und vertritt eine differenzierende Sichtweise, die sich an der Eigenart der einzelnen Schutzanordnungen und deren Auswirkungen auf den Handel zwischen den Mitgliedstaaten orientiert.

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