European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

The concept of State aid covers all measures or failure to adopt measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking  due to the legal requirements or those imposed by international conventions applicable to an economic activity . The mere finding of methodological requirements for the determination of transfer pricing, endorsed by an  …

Indirect advantage

The concept of State aid covers all measures or failure to adopt measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking  due to the legal requirements or those imposed by international conventions applicable to an economic activity . The mere finding of methodological requirements for the determination of transfer pricing, endorsed by an advance pricing arrangement, is not sufficient to establish a reduction of  the fiscal burden granted to an integrated company . On the other hand, a measure cannot be classified as State aid if it is limited to ensuring that the recipient's budget is not burdened by a charge which under normal circumstances would not have existed . Thus aid does not necessarily have to be in the form of an allocation of resources. It may take the form of an indirect advantage which favors the competitive position of the undertakings concerned . Are therefore classified as indirect advantages:

- concession of charges  or tax exemptions , if the loss of tax resources amounts to a financial burden for the public authority ; in tax matters, the examination of advantage overlaps with the  examination of selectivity insofar as, in order for those two  conditions to be satisfied, it must be shown that the contested tax  measure leads to a reduction in the amount of tax which would normally  have been payable by the beneficiary of the measure under the ordinary  tax regime which would, therefore, have been applicable to other  taxpayers in the same situation ; the assessment of the selective nature of the tax measure requires the identification of the common tax system or reference system of the Member State concerned, which constitutes the starting point for the comparative examination carried out in the context of the selectivity assessment , with the result that a mistake in identifying those factors will vitiate the entire analysis of the condition relating to selectivity ; the determination of the reference framework for tax measures obliges the Commission to accept the interpretation of the relevant national provisions given by the Member State concerned, unless the authority establishes that another interpretation prevails in the case law or administrative practice of that Member State ;

- the provision of particular goods or services  on preferential terms  compared to the conditions of the private market ; the mere fact that, due to its particular characteristics, State-owned property can be made available only to a limited number of users or even only a single user, does not by itself rule out the possibility that that may be held to be a selective advantage deriving from State resources, including when that limitation has its origins in considerations of safety ;

- conditions of transaction that are not normal , in particular when the public authorities are selling land and buildings ; the Commission Communication of 10 July 1997  setting out the rules applicable in that field indicates that, “A sale of land and buildings following a sufficiently well-publicized, open and unconditional bidding procedure, comparable to an auction, accepting the best or only bid is by definition at market value and consequently does not contain State aid”; the procedure which applies for sales of land and buildings by public authorities also governs the sales of shares in real estate companies ;

-  the grant of interest subsidies or preferential interest rates , or a guarantee ; according to the General Court , it cannot be excluded that a State guarantee itself confers advantages which may involve an additional burden for the State, even if in the hypothesis where a borrower takes out a loan guaranteed by the public authorities of a Member State, the latter would  obtain an advantage due to the fact that the financial cost it bears is lower than what it would have incurred obtaining the same funding and the same guarantee at the market price; thus, in exceptional circumstances characterized by the impossibility for the borrower to repay by its own means the whole of the loan covered by the State guarantee, the amount of the aid is equivalent to the total amount of the guaranteed loan; it is at the moment the guarantee is given, not the moment at which the guarantee is invoked or the moment at which payments are made that a determination must be made of whether or not the guarantee constitutes State aid.

The economic advantage from which an operator benefits may also result from the passive behavior of a Member State which, unconcerned with recovering the amount of its claims, refrains from applying enforcement procedures  or grants payment facilities . In this case, there is an advantage only where the facilities granted appear manifestly more significant than those that a private creditor would have granted in the same situation .

Commission Decision No 98/476/EC of 21 January 1998, Tax concessions under § 52 (8) of the German Income, LawLex200500004752JBJ, on a tax concession which encourages investors to acquire holdings in undertakings located in the new German Länder and West Berlin; No 2004/339/EC of 15 October 2003, Measures implemented by Italy for RAI SpA, LawLex200500004541JBJ, on a tax exemption on the revaluation of an undertaking's assets.

Case T-538/11 Belgium v Commission, Judgment of 25 March 2015, LawLex201700001319JBJ: The cost of the controls relating to the production or marketing of products, imposed by the compulsory BSE screening tests, constitutes a charge usually assumed by the budget of an undertaking.

Case C-555/22 P Royaume-Uni de Grande-Bretagne et d’Irlande du Nord and ITV plc, Judgment of 19 September 2024, LawLex202500006733JBJ.

Case  C-451/21 P Grand-Duchy of Luxembourg, Judgment of 5 December 2023, ; Case C-457/21 P Commission v  Grand-Duchy of Luxembourg, Judgment of 14 December 2023, : outside areas where tax law is subject to harmonization, the Member State concerned determines, through the exercise of its own powers in the field of direct taxation and with due regard for its fiscal autonomy, the constituent characteristics of the tax, which define, in principle, the reference framework or the normal tax regime, on the basis of which the condition relating to selectivity should be analyzed.

Commission Decision No 98/365/EC of 1st October 1997, Alleged State aid granted by France to SFMI-Chronopost, LawLex200400002559JBJ: access, by a subsidiary active in a competitive sector, to the customers of its parent company, which is an undertaking active in a reserved market, and to goodwill, does not constitute a State aid where there is no cash advantage; Case T-475/04 Bouygues and Bouygues Télécom v Commission [2007] ECR II-2097, LawLex200800000237JBJ: the earlier award of UMTS licenses to two operators at the same price as that paid by the new applicant does not give rise to an anticompetitive temporal advantage where problems associated with the technology in question and an unfavorable economic climate for its development have prevented them from exploiting the previous award.

Case C-56/93 Belgium v Commission [1996] ECR I-723, LawLex200500005307JBJ: the fixing of a preferential tariff for the price of gas granted to certain undertakings does not constitute a State measure where, in the context of the market in question, that tariff is objectively justified by economic reasons such as the need to withstand competition from imports from non-member countries and to retain important existing customers; Commission Decision No 2002/142/EC of 18 July 2001, Valmont Nederland BV, LawLex200500005323JBJ: the construction of a public car park of which an undertaking is the main user but regularly shares its use with undertakings in its vicinity, constitutes a State aid for half the costs of constructing, the other half amounting to normal business costs; Case C-83/01 P Chronopost v Ufex and others [2003] ECR I-6993, LawLex200500004606JBJ: the provision by La Poste to its subsidiary of logistical and commercial assistance linked to its network does not constitute State aid where the price charged covers all the additional, variable costs incurred in providing that assistance, an appropriate contribution to the fixed costs arising from use of the network and an adequate return on the capital investment insofar as it is used for the subsidiary's competitive activity and where there is nothing to suggest that those elements have been underestimated in an arbitrary fashion; Case C-126/01 GEMO [2003] ECR I-13769, LawLex200500009581JBJ: a public carcass disposal service that is free of charge, appears to be an economic advantage liable to distort competition as it relieves its beneficiaries of a financial burden.

Case T-127/99 Diputación Foral de Álava and others v Commission [2002] ECR II-1275, LawLex200500004880JBJ: postponement of payment of the price of sale of a plot of land occupied for nine months free of charge does not constitute a State aid where interference in the possession or ownership authorizes such a suspension under the applicable national civil legislation.

Case T-108/16 Naviera Armas SA, Judgment of 15 March 2018, LawLex201900000439JBJ.

Commission Decision No 2000/480/EC of 8 July 1999, Aid granted by France to the Crédit Agricole group, LawLex200400002591JBJ: the granting of the mandatory deposits by notaries, public officers subject to public authorities, to a specific banking establishment, on virtually-free terms of collection and free terms of keeping, mobilizes State resources within the meaning of Article 107(1) TFEU; See also: preferential rights that cannot be classified as State aid: Case C-237/04 Enirisorse [2006] ECR I-2843, LawLex200600001230JBJ: a national law which merely regulates the exceptional withdrawal right granted to members of a company by precluding their right to reimbursement does not constitute a State aid where such a right remains when the conditions of withdrawal laid down by general law are fulfilled; Case T-613/97 Ufex and others v Commission [2000] ECR II-4055, LawLex200500005209JBJ: the possibility for an undertaking to advertize on a public radio station does not constitute a State aid even though the granting of air time infringed the regulations governing that station, where that access does not result in any transfer of State resources.

Purchases or sales are not open to criticism where they are carried out at a price valued on the basis of a number of neutral opinions given by a sworn, publicly appointed expert: Commission Decision No 2000/796/EC of 21 June 2000, Aid granted by Germany to CDA Compact Disc Albrechts GmbH, LawLex200700000307JBJ. However, purchasing on market conditions is not sufficient for the commercial transaction to be normal where the State has no actual need for the goods or services in question: Case T-116/01 P & O European Ferries (Vizcaya) v Commission [2003] ECR II-2957, LawLex200400003305JBJ; Case T-79/21 Ryanair DAC, Judgment of 14 June 2023, , A contract for the purchase of marketing services from an airline by an association promoting regional tourist and economic flows constitutes an advantage for the airline insofar as it has increased its load factor and the association does not derive any benefit for the effective promotion of the city concerned and its surroundings.

Commission Decision No 2001/120/EC of 13 June 2000, Measure taken by Germany in respect of Kali und Salz GmbH, LawLex200500004718JBJ: the price paid for a public shareholding, which can constitute a State aid if there is no bidding procedure, is compatible with the common market where the negotiations did not exclude any potential investors, and took place according to market principles; No 2005/664/EC of 14 December 2004, Acquisition of land belonging to Aircraft Services Lemwerder, LawLex200600001239JBJ: the acquisition by a municipality from an undertaking of plots of bare land, the municipality ensuring itself that development, does not constitute a State aid where the municipality did not buy the land for at a price above the market price or in the seller's interest, but acted in accordance with its integrated planning and on the basis of wider political considerations; Commission Decision No 2008/366/EC of 30 January 2008, Konsum Jämtland ekonomisk förening, LawLex200900000060JBJ: the sale of a municipal land to an undertaking without public tender, although a competing undertaking submitted a credible and binding bid of a higher amount, results in a loss of State resources corresponding to the difference between that bid and the actual sale price; Case C-325/22 TS and HI, Judgment of 19 October 2023, : the sale of land by a public authority may involve elements of State aid, in particular where it is not carried out at market value, i.e. at the price that a private investor, acting under normal conditions of competition, would have been able to charge.

Commission Communication No 97/C 209/03, OJ C 209, 10.07.1997.

Case Cases T-760/15 and T-636/16 Netherlands (Starbucks), Judgment of 24 September 2019, LawLex201900001131JBJ, non-compliance with the methodological requirements is not sufficient to establish that there is a a reduction of the tax burden and thus State aid, as the Commission must also demonstrate that the methodological errors that it identified in the advance pricing arrangement (APA) between the Dutch tax authorities and the undertaking at issue do not allow a reliable approximation of an arm's length outcome to be reached and that they led to a reduction in the taxable profit compared with the tax burden resulting from the application of normal taxation rules under national law on an undertaking placed in a comparable factual situation to an undertaking and carrying out its activities under market conditions.  

Commission Decision No 2006/900/EC of 20 October 2005, Componenta Oyj, LawLex200700000566JBJ: where the shares in a real estate company are sold to a town on the basis of the value of the land, that value must be set by an independent asset valuer according to the same procedure as that provided for in the Communication on State aid elements in sales of land and buildings by public authorities.

Commission Decision No 91/1/EEC of 20 December 1989, Concerning aid in Spain to Magefesa, LawLex200400002459JBJ: aid in the form of grants reducing the effective rate of interest on loans already contracted, granted by regional authorities to a producer experiencing serious financial difficulties, constitute advantages for the undertaking within the meaning of Article 107(1) TFEU.

Commission Decision No 96/563/EC of 29 May 1996, Jako Jadekost GmbH & Co. KG, LawLex200500005367JBJ: a security intended to secure an operating loan characterizes a State aid where it corresponds to the entire amount of the loan covered, although no financial institution would agree to lend money to it without that guarantee from the beneficiary, owing to its severe financial circumstances; No 1999/484/EC of 3 February 1999, State aid in favor of Hijos de Andrés Molina, LawLex200400002621JBJ: there is State aid where the guarantee which would not have been obtained on the market given the beneficiary's financial difficulties, enables it to continue trading, perhaps forcing competitors to go out of business, even if it is never called on; No 2001/102/EC of 19 July 2000, Aid granted by Austria to Lenzing Lyocell GmbH & Co KG, LawLex200500005430JBJ: the State guarantee for a loan granted by a consortium of commercial and public banks does not constitute a State aid where the interest rate corresponds to commercial rates; No 2008/137/EC of 7 March 2007, State aid in favor of Cyprus Airways Public Ltd, LawLex200800000283JBJ: according to the Commission Notice on State aid in the form of guarantees (Commission Notice No 2008/C 155/02, OJ 20.06.2008, Article 3(2)), the classification as State aid can be retained for a loan guarantee granted to an undertaking which could not obtain it at market conditions given its parlous economic situation, or which does not pay any premium in consideration.

Case T-423/14 Larko Geniki Metalleftiki kai Metallourgiki AE, Judgment of 1 February 2018, not available in English: the Commission may validly describe an undertaking as being in difficulty where it reports negative equity, resulting in a considerable reduction of its corporate capital, a reduction of its turnover by almost half compared to the previous year, and considerable losses, and it may consider that the State guarantee  granted constitutes a State aid insofar as that guarantee, granted in consideration of the payment of a premium of 1%, does not reflect the  default risk for guaranteed loans and therefore, the behavior of a private investor.

Commission Decision No 96/614/EC of 29 May 1996, Measures granted by Italy in favour of Breda Fucine Meridionali SpA, LawLex200500004765JBJ: alleged grant of aid to a public undertaking through public holding companies does not correspond to the normal behavior of a private investor where that undertaking would have already been wound up after losses which wiped out its share capital, its debts being so large as to rule out any prospect of profitability even in the long term; No 2004/167/EC of 17 September 2003, Aid implemented by Germany for Space Park Development GmbH & Co., KG, LawLex200500004531JBJ: the prolongation of a loan under the same conditions for an open-ended period of time, namely without any schedule of reimbursement, does not correspond to the normal behavior of a private bank in a market economy.

Commission Decision No 91/144/EEC of 2 May 1990, Halkis Cement Company, LawLex200500004568JBJ: abnormal leniency, even lack of action, of public services or bodies in collecting their claims from an undertaking constitutes a State aid; Case C-200/97 Ecotrade v Altiforni e Ferriere di Servola [1998] ECR I-7907, LawLex200500005081JBJ: the special administration system relating to insolvency constitutes a State aid where it makes it possible to benefit from advantages outside ordinary law, such as extending the prohibition and suspension of all individual actions for enforcement to tax debts, release from the obligation to pay fines and pecuniary penalties in the case of failure to pay social security contributions, and application of a preferential rate where all or part of the undertaking is transferred, and the implementation of which depends on national industrial policy considerations; Case C-480/98 Spain v Commission [2000] ECR I-8717, LawLex200500004969JBJ: where, as a result of the application of legislation on court-supervised recovery schemes and insolvency the loss of tax and social security revenue for a State does not justify in itself the treating of that legislation as aid, undertakings declared insolvent at the demand only of private creditors, and which were able to continue trading without complying with their tax and social security obligations for several years and free of any conditions, have benefited from an unlawful particular advantage; Case C-276/02 Spain v Commission [2004] ECR I-8091, LawLex200500004502JBJ: an advantage resulting from the systematic non-payment of social security contributions and taxes, without the competent authorities adopting forced collection procedures, constitutes a State aid.

Case C-256/97 DM Transport [1999] ECR I-3913, LawLex200500005071JBJ: facilities, granted for the payment of social security contributions by a public body responsible for collecting them, to an undertaking experiencing financial difficulties confers on it a commercial advantage despite the obligation to pay interest or penalties for late payment.

On the private investor criteria: Case C-276/02 Spain v Commission [2004] ECR I-8091, LawLex200500004502JBJ; Case T-36/99 Lenzing v Commission [2004] ECR II-3597, LawLex200500005221JBJ: the conduct of a public body responsible for collecting social security contributions, which grants a rescheduling of debt to an undertaking in difficulty and does not initiate forced collection procedures so as not to cause its liquidation, cannot be likened to a private creditor trying to maximize its prospects of recovering the debt, where that body alone enjoys a right of abstention, preferential debts and certain guarantees, such as securities and mortgage.

Case T-135/12 France v Commission, Judgment of 26 February 2015, not available in English.

Commission Decision No 2001/371/EC of 21 December 2000, Exemption from mineral levies, LawLex200500004724JBJ.

Reduction of social charges: Case 173/73 Italy v Commission [1974] ECR 709, LawLex200400003458JBJ; , Case C-212/19 Ministre de l'Agriculture et de l'Alimentation v Compagnie des pêcheS de Saint-Malo, Judgment of 17 September 2020, LawLex202000002408JBJ, which excludes from being classified as aid the measures in favor of fish farmers and fishermen which consist of a reduction in salary contributions when the reduction concerns only the employees who are the only direct beneficiaries, the companies being obliged to increase the net salary of their employees in proportion to the exemptions from contributions; public funding of the reduction in working hours, under a collective agreement which excludes any salary increase to be borne by the undertaking: Case C-5/01 Belgium v Commission [2002] ECR I-11991, LawLex200500004860JBJ; public carcass disposal service free of charge: Case C-126/01 GEMO [2003] ECR I-13769, LawLex200500009581JBJ; public subsidy granted to final consumers for the purchase or rental of digital decoders: Commission Decision No 2007/374/EC of 24 January 2007, State aid implemented by the Italian Republic for the subsidized purchase of digital decoders, LawLex200700001563JBJ; public guarantee of an undertaking's pension liabilities: Commission Decision No 2009/703/EC of 11 February 2009, State aid implemented by the United Kingdom of Great Britain and Northern Ireland - Crown guarantee to BT, LawLex200900003159JBJ.

Reimbursement of a parafiscal charge or the use to which the revenue from it is put: Case C-149/91 Sanders Adour and Guyomarc'h Orthez v Directeur des services fiscaux des Pyrénées-Atlantiques [1992] ECR I-3899, LawLex200500005297JBJ; A special depreciation facility allowing the undertakings to defer payment of tax: Commission Decision No 96/369/EC of 13 March 1996, Fiscal aid given to German Airlines, LawLex200500005364JBJ; irregular provisions from an undertaking which enables it to benefit from a substantial tax concession which was not owed: No 2002/C 280/04/EC of 16 October 2002, on EDF status of industrial and commercial public body; Tax law which allows doctors to change from taxable to exempted status for VAT purposes without any reduction of the input tax already deducted: Case C-172/03 Heiser [2005] ECR I-1627, LawLex200500005299JBJ; Deferral of liability to tax: Case C-66/02 Italy v Commission [2005] ECR 10901, LawLex200700001460JBJ; Tax incentives intended to induce individuals to invest in a selected group of target undertakings: Commission Decision No 2010/13/EC of 30 September 2009, Aid scheme No C2-09 which Germany intends to grant to modernise the general conditions for capital investments, LawLex201000000488JBJ.

Case C-200/97 Ecotrade v Altiforni e Ferriere di Servola [1998] ECR I-7907, LawLex200500005081JBJ: the possible loss of tax revenue as a result of the application of a statutory system laying down a framework for relations between insolvent undertakings and their creditors, which absolutely prohibits individual actions for enforcement, holds the suspension of interest on all debts by the undertaking, and the correlated reduction in creditors' profits, is not considered as a State aid insofar as it does not constitute a financial burden resulting from the granting of a particular advantage to the undertakings in question.

Case T-508/19 Mead Johnson Nutrition (Asia Pacific) Pte Ltd and others, Judgment of 6 April 2022, LawLex202200002141JBJ.

Case C-465/20 P Commission c. Irlande, Judgment of 10 September 2024, LawLex202400006328JBJ.

European Competition Law

380. Indirect advantage

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Les décisions de justice citées dans ce paragraphe :

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380. Indirect advantage

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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