What would the Commission do? A case of existing State aid. José Manuel Barroso

What would the Commission do? A case of existing State aid.

When dealing with State aid matters, national judges and the European Commission have 'essential, but distinct, roles'. This distinction seems to be blurring, as recent Dutch case law shows.

It is tempting to describe the procedural rules surrounding European State aid law as essentially very simple. Barring some exceptions, a State aid measure in the sense of Article 107 TFEU must be notified to the European Commission. The Commission can (I realize I’m cutting some corners here) either announce that the aid is incompatible with the internal market and prohibit it, or approve the aid because it is compatible with the internal market.

This is all quite manageable, one might reason. The real difficulty, after all, lies in determining whether a measure must be characterized as State aid in the first place. Well, not so much. Yes, the question whether State aid is at play remains undoubtedly a difficult issue that has led to much litigation at the EU and national levels and will likely continue to do so. But over the last few years, Dutch judges have also had to deal with complaints about aid being granted in breach of Commission approval decisions.

The most recent example in the Netherlands is a contentious one. The case concerned aid granted to housing corporations so that they could improve the living conditions in certain districts that were faced with particularly poor standards of living. This aid had allegedly been granted in violation of a Commission approval decision. To discuss this high-profile case now would probably be too elaborate (but be on the lookout for an upcoming case note in the Dutch journal AB).

The point is: when dealing with cases in which aid is said to have been granted in a way that is not covered by the relevant approval decision, national judges find themselves on a slippery slope. Does the Commission’s decision determine rigidly how the approved aid must be granted, down to the last letter and footnote? Or is it also legitimate to grant aid in a way that, while it may not exactly correspond to the approval decision, from a practical point of view seems to approximate it quite well? Although it is possible to ask the Commission questions, who would want to burden it with questions about the exact meaning of its nth paragraph, read in combination with paragraph xyz? So Dutch judges recently have found themselves considering what exactly the Commission meant to approve in its decision.

Strange and novel? By no means. It is an inherent part of European law to interpret Commission decisions, and to ask (preliminary) questions where the issue is particularly difficult. But what makes these recent cases so interesting is that the judge is balancing another fine line. National judges are famously entitled to determine whether a measure constitutes State aid, but may not determine if it is compatible with the internal market. This is the task of the Commission, who may exclusively approve aid measures. So, when determining what the Commission meant to approve, judges are potentially in danger of saying something about the compatibility of the aid measure. No easy task.


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