Tutorial 7 - Competition Law: State Aid
City Council was wondering whether the arrangement should be notified. Article 107 will be
used to check whether it is State Aid over here.
Four conditions (107)
- aid, it can literally be any benefit that you can calculate in money, even if it is not
literally money, that you would not be able to obtain in the market like that. In our
case everything they save on the price of the land is the aid.
- granted by MS, yes as there is an indirect transfer from a regional body (city council
of Maastricht is an emanation of the state as it is a public body that has state power).
If the state somehow has control over the body that is giving aid, it is also state aid.
- distort of competition, other breweries do not get this cheap price, so you could say
this condition is fulfilled. Look at deminimis again in this point! This one is really laid
down in the commission regulation, so this one is binding and the deminimis of article
101 is not binding. They will have money to spend on other stuff, but other breweries
are not able to do this. With tax refunds you quickly get back to 101.
- may affect trade between MS, which it does, as it is almost automatic. All of the
benefits will pay out for the company, somehow they will be better off than other
ones, they will be able to offer the beer cheaper in their own country but also in
Belgium, Germany. So by giving them the aid you actually automatically affect trade
and distort competition. If you lend it to all of the breweries, you still might distort
competition but perhaps this can fall under one of the exceptions.
Next, we check the types that are deemed to be compatible (par 2) and there is types that
might be compatible, depending on the discretion of the Commission (par 3).
Types that are deemed compatible automtically:
- Aid with social character to individual consumers
- damages caused by natural disasters (very limited)
- German exception
See article 107 (3) for the facultative exceptions. These are up to the discretion of
Commission. You could argue aid for cultural heritage, if it was the last dutch beer brewery
but again you have to say that its in the interest in the Union, so maybe if dutch beer is very
specific or worlwide known.
None of the exceptions are really applicable, so you could check the block exemtion. None
of them really fits. Very technical to go into the block exemption regulation.
Then, best thing to do is to notify the commission under article 108 (2) TFEU. Paragraph 3 is
applicable to our case, first check whether 1 or 3 is applicable. Our case is new state aid as
the company wants to move to Belgium, no aid has been given before. If there is new state
aid, the commission has to be informed and it could be that commission invokes 108 (2). MS
has to wait the measures before there is a final decision out of the article. Before going to
the notary to sell the piece of light they need to wait for green or red light from the
commission.
City Council was wondering whether the arrangement should be notified. Article 107 will be
used to check whether it is State Aid over here.
Four conditions (107)
- aid, it can literally be any benefit that you can calculate in money, even if it is not
literally money, that you would not be able to obtain in the market like that. In our
case everything they save on the price of the land is the aid.
- granted by MS, yes as there is an indirect transfer from a regional body (city council
of Maastricht is an emanation of the state as it is a public body that has state power).
If the state somehow has control over the body that is giving aid, it is also state aid.
- distort of competition, other breweries do not get this cheap price, so you could say
this condition is fulfilled. Look at deminimis again in this point! This one is really laid
down in the commission regulation, so this one is binding and the deminimis of article
101 is not binding. They will have money to spend on other stuff, but other breweries
are not able to do this. With tax refunds you quickly get back to 101.
- may affect trade between MS, which it does, as it is almost automatic. All of the
benefits will pay out for the company, somehow they will be better off than other
ones, they will be able to offer the beer cheaper in their own country but also in
Belgium, Germany. So by giving them the aid you actually automatically affect trade
and distort competition. If you lend it to all of the breweries, you still might distort
competition but perhaps this can fall under one of the exceptions.
Next, we check the types that are deemed to be compatible (par 2) and there is types that
might be compatible, depending on the discretion of the Commission (par 3).
Types that are deemed compatible automtically:
- Aid with social character to individual consumers
- damages caused by natural disasters (very limited)
- German exception
See article 107 (3) for the facultative exceptions. These are up to the discretion of
Commission. You could argue aid for cultural heritage, if it was the last dutch beer brewery
but again you have to say that its in the interest in the Union, so maybe if dutch beer is very
specific or worlwide known.
None of the exceptions are really applicable, so you could check the block exemtion. None
of them really fits. Very technical to go into the block exemption regulation.
Then, best thing to do is to notify the commission under article 108 (2) TFEU. Paragraph 3 is
applicable to our case, first check whether 1 or 3 is applicable. Our case is new state aid as
the company wants to move to Belgium, no aid has been given before. If there is new state
aid, the commission has to be informed and it could be that commission invokes 108 (2). MS
has to wait the measures before there is a final decision out of the article. Before going to
the notary to sell the piece of light they need to wait for green or red light from the
commission.
