On 29 April 2015 the European Commission concluded in relation to seven measures granting public support to purely local operations that they do not involve state aid within the meaning of EU rules. In a press release the European Commission explained that the seven decisions provide both supporting authorities and stakeholders with additional guidance to determine which measures need not be approved by the Commission under EU state aid rules.
The criteria for state aid are set out in Article 107 paragraph 1 Treaty on the Functioning of the European Union (TFEU). There is question of state aid if a ‘measure’:
- originates from the State or is funded from State resources;
- provides one or more specific undertakings;
- provides a benefit;
- distorts the competition;
- adversely affects trade between the Member States (interstate effect).
According to established case law, classification as state aid requires that all five requirements set out in Article 107 paragraph 1 of the TFEU are met. In the seven cases referred to here, the European Commission has concluded that the local initiatives will not have a significant adverse effect on trade between the Member States. This means that the local initiatives concerned do not involve state aid within the meaning of Article 107 paragraph 1 TFEU.
The decision-making practice of the European Commission
The seven decisions relate to a number of clinics, an urban project company, a fishing port and marina, a national outdoor training centre and golf clubs.
Incidentally, they fit into a whole series of decisions in which the European Commission came to the conclusion that the relevant local initiatives did not affect trade between the Member States:
- support for a swimming pool
- support for the restoration of a sea pier
- support for the restoration of historic buildings
- support for the restoration of a historic shipyard
- support for a museum
- support for the construction of a municipal theatre
- support for small marinas
- support for a ski lift
Effect on trade between the Member States
In the first paragraph of the press release, the European Commission speaks of a ‘significant’ effect on trade between the Member States. Given the different language versions of the press release, this seems to refer to a ‘substantial’ effect. It must be assumed that the term ‘substantial’ has no independent meaning. After all, in the press release the European Commission states that a local initiative ‘should have no – or at most marginal – foreseeable effects on cross-border investments in the sector or the establishment of firms within the EU’s Single Market’.
Case law shows that trade between the Member States is affected if the aid:
- makes exports from the Netherlands to other Member States easier for the benefiting undertaking(s), or
- makes export to the Netherlands for undertakings from other Member States more difficult.
Furthermore, the effect on trade between the Member States need only be plausible. Although there is no lower limit, trade between the Member States need not be affected appreciably and the European Commission need not prove the (potential) effect on trade between the Member States, it must be inferred from the press release that if the effect is marginal, there is no effect on trade between the Member States within the meaning of Article 107 paragraph 1 TFEU. The question is then: where is the limit?
It is noted in the press release that, once any confidentiality issues have been resolved, the non-confidential versions of the decisions will be made available in the State Aid Register on the website of DG Competition. So we must have some patience before we can examine the exact assessment framework. But the press release does lift a corner of the veil. To illustrate that a local initiative may not adversely affect trade between the Member States, the European Commission refers to the situation where the beneficiary delivers the goods or performs services within a limited area within a Member State and will probably not attract customers from other Member States. This is reminiscent of the assessment framework used by the EFTA Surveillance Authority in its decision regarding a recreational water park in the Norwegian municipality of Bømlo. The Council of State has used a similar assessment framework in the Ridderstee Holiday case.
The European Commission seems to take the position that a measure only has interstate effect if trade between the Member States is in any case more than marginally affected. This means that the approach of the European Commission may be slightly more flexible than has always been assumed on the basis of the case law of the Court of Justice. In the light of the modernisation of the EU state aid policy (SAM), however, the approach is clearly in line with the efforts of the European Commission to focus on cases with a significant impact on the internal market. In this connection, Joaquin Almunia, at the time the European Commissioner for Competition, already announced in a speech held on 10 February 2012 that the European Commission advocates a simplified handling of cases with little effect on trade between the Member States. How this will be implemented remains to be seen.
By Eric Janssen