Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Recent (and key) State aid judments: on SGEIs and tax selectivity

with 2 comments

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This is today’s second post on interesting highlights that we had not yet covered. In this one I will very briefly deal State aid cases decided at the end of 2015.

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In my previous post I referred to a case in which the Commision got an arguably unnecessary blow.  A stream of cases where the Commission got away with something surprising is that related to the digital switchover in Spain decided on November 26th (disclosure: we represent several companies and public entities in those cases). For a comment in the State Aid Hub, see here.

The whole case boils down to the Commission and the General Court agreeing that ensuring that the TV signal reaches the 2,5% of Spanish citizens living in “remote and less urbanized areas” (to quote the decision’s title) otherwise not covered by the market (the market failure uncontested) is not a Service of General Economic Interest. So much for Protocol 26, for the Commission’s lip service to SGEIs, and also for Member State’s ability to choose how to provide a SGEI (which is now conditioned to “technologic neutrality”).  The case is also interesting when compared to others in which the Commission acknowledges, for instance, that ensuring broadband access in Paris is a SGEI…

It is noteworthy that in its Press Release the Court did not refer to the areas/population affected by the measures (I insist, the 2,5% of population living in remote and less urbanized areas).

There is much more to be said about these cases, but I will comment again on these cases once we have won the 4 ECJ appeals lodged a few days ago 😉

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We nonetheless fared better in another State aid case related to the so-called “tax lease” (disclosure, in that saga of cases we are also representing the applicants/investors in 22 pending cases before the General Court against the same decision). The Judgment of the General Court of December 17th in the pilot case concerning the appeal by the Kingdom of Spain confirms the theory of selectivity with which we previously won the “Spanish financial goodwill cases” and pursuant to which investors should not have been identified as the beneficiaries of the alleged aid (for our comment on that one, see here).

The Judgment does a very good job explaining why that theory not only is perfectly sensible, but also that it was always there regardless of the Santander/Autogrill Judgments (read, in particular paras. 143 to 180). In the Court’s view, the decision’s error regarding selectivity also contaminates its conclusions regarding the distortion of competition and the effect on inter-state trade.

The Commission is likely to appeal, if only because of the spill-over effects this could have in its recent tax-ruling investigations. So, again, we’ll be able to say more once the ECJ Judgments are out. By the way, the many cases pending before the General Court raise a number of other most interesting issues (e.g. can a State aid decision declare private contracts void?), so keep an eye open for those too.

[Sponsored Ad: we will be lecturing on State aid litigation next week in a 3 day State aid seminar taking place in Madrid; see here: IEB State aid Seminar 2016

P.S. By the way, the last three cases to which I have referred were all adopted under Commissioner Almunia (in the case of the financial goodwill, only the third decision, issued just days before the annulment; the previous two were adopted under Kroes), all targeted Spain, two of them were annulled and the other –although endorsed by the General Court- is, without exaggeration, the worst I have ever seen in my experience. The fact that these decisions adopted under his mandate were all unfounded clearly shows that the criticism according to which Almunia would have favored Spanish companies is also unfounded.

Written by Alfonso Lamadrid

24 February 2016 at 12:39 pm

Posted in Uncategorized

2 Responses

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  1. The Spanish “tax lease” surely throws up some interesting questions. It would be good to hear what the GC has to say about the point of voiding private contracts but are you sure this will ever get decided after the ruling in the pilot case? Another one is what the effects of the ruling are. Spain seems to take the view that the old tax lease “is lawful and does not constitute State aid” (see http://www.lamoncloa.gob.es/lang/en/gobierno/news/Paginas/2015/20151217-taxlease.aspx). Not so sure this is true. The ruling seems to be very focused on the absence of a selective advantage for the investors rather than making general conclusions on the system as a whole. In any event, since the final decision which was annulled was preceded by a decision to initiate the formal investigation procedure, doesn’t the annulment mean that the formal investigation is now re-opened?

    Kai Struckmann

    24 February 2016 at 2:12 pm

  2. check the dates of the decisions and mandates again. you got it wrong.

    bismarck

    25 February 2016 at 5:43 pm


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