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Chillin’ State Aid Workshop: materials and comments

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If you follow us, you will know that Chillin’ organised its first State aid event on 14 June. We thoroughly enjoyed the day, and the encouraging feedback we received suggests that it would be a good idea to repeat the trick.

Whether you were able to make it or not, we are sure many of you are interested in the materials used at the workshop.

Selectivity

My presentation (see here) opened the first discussion, devoted to selectivity issues. I had the privilege to share this panel with José Luis Buendía Sierra, Jacques Derenne, Penelope Papandropoulos and Christina Siaterli.

As an academic, this area of the law has become genuinely fascinating, and this was a dream occasion for me to raise (finally!) some questions that have been at the heart of my discussions with students over the years (I was, in fact, glad to see some of them in the audience).

I structured the discussions around three main points:

The co-existence of two approaches to selectivity

One of the most intriguing issues in this area has to do with the co-existence of two different approaches to selectivity. There is a form-based approach that revolves around the famous ‘three-step test’ and there is an effects-based approach in which the only question that matters is whether, in effect, undertakings in a comparable factual and legal situation are treated in the same way (the Gibraltar approach).

We discussed how panellists saw the co-existence of these two approaches – one of the panellists labelled it the Marxist (as in Groucho) approach to selectivity (‘this is my approach to selectivity, but if you do not like it to I have another one’).

My own take? The co-existence of these two approaches (with all the legal and policy implications that follow) is alive and well, as evidenced by the GC judgment in the Polish Retail Tax case.

Undertakings in a ‘comparable factual and legal situation’

This has emerged as a central question in many recent cases. Whether or not a measure amounts to a selective advantage (and thus whether it qualifies as State aid) depends on the equal treatment of ‘undertakings in a comparable factual and legal situation’.

Alas, how to identify, in practice, the undertakings that are in a comparable factual and legal situation? The question is tricky, and the case law still developing.

It is clearly not about defining the relevant market in an antitrust sense. What is it then? Can the exercise be conducted in a meaningful and predictable way? It is reasonable to argue that large and small undertakings in case like Polish Retail Tax are not in a comparable situation; but it is equally reasonable to argue that they are.

What will the future bring? Some panellists were more optimistic than others about the situation, which will in any event remain a central one.

What if it is all about the objectives?

I finished the panel with a question on which a PhD student of mine has been working hard for a while already: what if the finding that a measure is selective depends in reality on the underlying objective of the measure?

What if, in other words, it all depends on whether the objective is deemed commendable or not? This interpretation would allow us to reconcile seemingly contradictory judgments such as World Duty Free and Gibraltar.

This suggestion raises an immediate follow-up question: would two formally identical measures, one pursuing a commendable objective and one pursuing a questionable one, be treated in the same way?

This fundamental debate could hardly be more topical. As I was giving the final touches to this post the General Court announced the annulment of the Commission decision in the Hungarian advertisement tax case, and there is growing talk about the so-called digital taxes (to which one of the panellists referred). Interesting times ahead!

Procedural and institutional issues

Alfonso chaired the second panel, which featured Natura Gràcia (see here for her presentation), Massimo Merola, María Jesús Segura Catalán (presentation here) and Andreas von Bonin (presentation here).

This second panel touched upon eternal questions on procedure that have not lost a bit of their topicality. We were lucky that the knowledgeable audience allowed for meaningful discussions.

One of these eternal questions relates to the status of third parties in State aid proceedings.

A second question concerns the powers and obligations of national courts. Is a national court required to order recovery pending a Commission decision, even when there is a reasonable prospect that the aid will be deemed compatible? Some argued it is, some took the view that the Treaty allows for more flexibility.

Finally, the issue of judicial review has raised eyebrows in recent times. There is a perceived rise in the rate of annulments before the General Court. Does this perception reflect reality (sorry, I am an academic and have to ask this)? Assuming it does, what may be driving it? María Segura gave some valuable insights in this sense.

State aid beyond the EU

We did not want to turn the last panel into one focused on Brexit issues alone. In my introduction (see here) I tried to emphasise the trade-offs at stake when a State aid system between two trading partners is designed.

In particular, I showed how, a purely national system (e.g. the CMA controlling aid granted by UK public authorities) comes at the price of an asymmetric relationship with supranational authorities – some of the wording used in the Withdrawal Agreement is reminiscent of the relationship between the European Commission and national competition and/or regulatory authorities in the telecoms sector.

My introduction was followed by a presentation by Vincent Verouden who addressed the rationale for State aid control between trading partners (see here, and note that he also addresses some of the features of the future EU/UK relationship); Nicole Robins (see here), who addressed, why and how frictions between the EU and the UK might arise and – faithful to the objective of the panel – Christian Jordal addressed some features of a symmetric system (that are enshrined in the EEA Agreement, as shown here).

Our keynote speaker: Viktor Kreuschitz

We were privileged to have Viktor Kreuschitz, judge at the General Court and renowned State aid specialist, who provided a wonderful overview of some recent developments that were not covered in the previous panels. I frantically took notes on issues that ranged from the notion of State resources to the status of the GBER. And learnt a lot!

Written by Pablo Ibanez Colomo

27 June 2019 at 10:24 am

Posted in Uncategorized

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