Common Transport Policy and State Aid law

Casebook : X-XIX

Łukasz StępkowskiChair of Int’l and European Law

Sectoral aid• Apart from general Treaty and secondary law framework on State aid rules,

there are specific aid regimes for different sectors of economy• Those aid regimes apply as lex specialis to aid measures• Such aid regimes include (ex C. Quigley, EU State Aid Law and Policy,

Oxford 2015) :• Agriculture, forestry and fisheries,• Broadcasting, media and telecommunications,• Coal and steel,• Energy,• Security,• Shipbuilding,• Sport,• Transport.

Common European Transport Policy• Matters relating to transport are an area of shared competence (viz. 4(2)(b) TFEU) of the

Union and its Member States• Treaty rules on Common Transport Policy are found under Arts 90-100 TFEU• Treaty rules on CTP apply only to transport by rail, road and inland waterway (100(1) TFEU),

and as such, maritime transport and air transport activities are subject to „normal” 107 et seq. TFEU

• Of note is Article 93 TFEU, which reads :„Aids shall be compatible with the Treaties if they meet the needs of coordination of

transport or if they represent reimbursement for the discharge of certain obligations inherent in the concept of a public service”.• An additional lex specialis on compatibility of aid with the internal market• Does not set down an exemption from the standstill obligation of 108(3) TFEU – transport

aid, compatible on the basis of 93 TFEU, still has to be notified (unless a specific exception applies)

Common European Transport Policy - continued• A provision related to the concept of State aid is found under Article 96 TFEU• 96(1) TFEU : The imposition by a Member State, in respect of transport operations carried out within

the Union, of rates and conditions involving any element of support or protection in the interest of one or more particular undertakings or industries shall be prohibited, unless authorised by the Commission.

• 2. The Commission shall, acting on its own initiative or on application by a Member State, examine the rates and conditions referred to in paragraph 1, taking account in particular of the requirements of an appropriate regional economic policy, the needs of underdeveloped areas and the problems of areas seriously affected by political circumstances on the one hand, and of the effects of such rates and conditions on competition between the different modes of transport on the other. After consulting each Member State concerned, the Commission shall take the necessary decisions.

• 3. The prohibition provided for in paragraph 1 shall not apply to tariffs fixed to meet competition.• Stricter approach to rates and conditions of transport (no „compatibility” clauses)• Paragraph 3 relates to tariffs imposed by the industry itself and not the States (Geiger,

Khan, Kotzur (eds), EU Treaties – Commentary, Muenchen 2015, p. 481, infra 2)

Transport, GBER and de minimis aid• The new GBER (i.e. Regulation 651/2014) applies only sparingly to

transport, covering social aid for transport for residents of remote regions (section 9)

• The de minimis Regulation 1407/2013 adopts a restrictive stance on road freight transport. Article 3(2) of that Regulation provides that the total amount of de minimis aid granted per Member State to a single undertaking performing road freight transport for hire or reward shall not exceed EUR 100 000 over any period of three fiscal years, and that this de minimis aid shall not be used for the acquisition of road freight transport vehicles.

SGEIs and transport• The Commission and Member States may apply 106(2) TFEU in the context of

transport, but must do so under increased restrictions, with some modes of transport excluded

• Decision 2012/21/EU does not apply to transport by land (cf. para. 22 of the preamble to and Article 1(2)(a) and 1(5) of that Decision); it does however apply to air and maritime transport (cf. para. 23 therein, Art. 2(4)), provided that other substantive rules are complied with (i.e., inter alia, Regulations nos 1008/2008 and 3577/92)

• Instead of the Decision on SGEIs, passenger transport by rail and road is covered by Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1448634375516&uri=CELEX:32007R1370

• Regulation no 1370/2007 is supported by Regulation 1192/69, but compensation under that regulation is effected pursuant to EU rules, and hence not State aid

Regulation no 1370/2007• Scope by object : • national and international operation of public passenger transport services by rail and other

track-based modes and by road, except for services which are operated mainly for their historical interest or their tourist value.

• Member States may apply this Regulation to public passenger transport by inland waterways and, without prejudice to Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage), national sea waters

• Regulation does not apply to public works concessions under EU public procurement rules• Purpose : conditions under which competent authorities, when imposing or

contracting for public service obligations, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations

• Compensation awarded primarily through public service contracts (Art. 5(1) of that Regulation)

Regulation no 1370/2007 - continued• Aid measures falling under Regulation no 1370/2007 are deemed to be

compatible with the Treaty and exempt from notification under 108(3) TFEU (art. 9(1) thereunder)

• However, the Regulation in question adds in 9(2) that aid under 93 TFEU not falling under Regulation no 1370/2007 shall be restricted to the research and development stage and may not cover the commercial exploitation of such transport systems and technologies…which does not necessarily appear to be in line with the Treaty (read: the Regulation is at odds with a higher-ranking norm of EU law (93 TFEU) that does not allow any restriction under it)

• So far, no preliminary rulings and/or actions for annullment

Maritime transport and State aid• Functions on the basis of a Commission Communication, that is

Community guidelines on State aid to maritime transport (2004)• http://eur-lex.europa.eu/legal-content/EN/TXT/?

qid=1448632778009&uri=CELEX:52004XC0117%2801%29• Any aid to undertakings active in the field of maritime transport• Maritime transport equates transport of goods and persons by sea, and,

where specified, towage and dredging• No application to shipbuilding (different sector, excluded under 2.1

therein)• Covers inter alia fiscal measures, crew relief, investment aid, training aid,

regional aid, restructuring

Air transport and State aid

• Also has its own Communication, i.e. Guidelines on State aid to airports and airlines (2014)• http://eur-lex.europa.eu/legal-content/EN/TXT/?

qid=1448637338446&uri=CELEX:52014XC0404%2801%29 • Commission may approve aid to airports and airlines under Article 107(3)(c) TFEU• Compatibility criteria outlined in sections 5.1 and 5.2 of the Communication• Commission introduced an extra criterion in that any infringement of any other EU

rule by a measure (not necessarily under State aid law) will exclude it from compatibility (81)

• Additionally, the Comission will take into account any proceedings under Arts 101 or 102 TFEU (82)

• Temporal derogation in regard to compatibility (for 10 years) as to operating aid (112)

Case X• An undertaking is active in the field of primary production of a certain

agricultural product, that is coffee• That undertaking applies for the grant of de minimis aid• May this aid be granted ? Why/why not?

Case XI

• Enterprise A is an enterprise that does not frustrate the SME criteria• Enterprise B, which is a large enterprise that undertakes a regular venture

capital investment activity to invest equity capital in unquoted businesses, pays for 30% of share capital of A

• Assess the nature of the connection between A and B under relevant rules • Is A still a SME?

Case XII• Undertaking A receives assistance from Member State B by way of a direct

grant of money in a clandestine manner• Undertaking B, which is a direct competitor of A, incurs market loss and

pecuniary loss (damnum emergens and loss of future profits)• What can Undertaking B do to remedy the situation ?

Case XIII• Member State A designs a new type of a main battle tank and grants

financial assistance to a publicly-owned tank factory• May this be considered State aid?• May this be compatible with the Treaty?

Case XIV

• Member State A grants compensation pursuant to a SGEI to an undertaking

• That compensation measure expressly refers to the Altmark criteria from case-law, but does not mention Decision 2012/21/EU

• Is this compatible with the Treaty ?• Is this exempt from the notification requirement?

Case XV

• Undertaking A received aid without notification that had not fallen within GBER or any other exemption

• The Commission ordered the aid in question repaid by way of a decision• The decision is in force and unchallenged• The Commission did not specify the amount of aid to be repaid to the

Member State concerned• Undertaking A resists repayment before national courts• May a national court challenge the validity of the Commission decision?• May national courts decide that the amount of aid to be repaid amounts

to zero in these circumstances (i.e. no specification of an aid amount to be repaid)?

Case XVI

• The Commision decided that an aid measure is incompatible with the Treaty

• A Member State copy-pastes the contents of that measure into a new measure and applies to the Council under 108 TFEU to exceptionally approve that aid

• Council approves aid• Is this legal?

Case XVII

• The year is 2020• A Member State grants operating aid to an airline• Is this legal?

Case XVIII

• Undertaking A received 200.000 EUR in de minimis aid four years ago, 100.000 EUR half a year ago and applies for 50.000 EUR of that aid today.

• May this undertaking receive that aid?• What if this undertaking would be primarily active in a road transport

sector?

Case XIX

• Enterprise A is a SME• Enterprise A employs its 251st employee for the first time• Is A still a SME?