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

To be compatible with the internal market within the meaning of Article 107(3) TFEU, a State aid must not only comply with one of the objectives set out in the Treaty, but it must also be necessary for the attainment of such an objective . As the compatibility of State aid with the internal market constitutes an exemption from a prohibition principle, Article 107(3) TFEU is strictly interpreted :  …

Necessity/Proportionality

To be compatible with the internal market within the meaning of Article 107(3) TFEU, a State aid must not only comply with one of the objectives set out in the Treaty, but it must also be necessary for the attainment of such an objective . As the compatibility of State aid with the internal market constitutes an exemption from a prohibition principle, Article 107(3) TFEU is strictly interpreted : only an aid which is indispensable in relation to those objectives is compatible . An aid which worsens a situation of excess capacity at Union level in the sector in which the recipient undertaking operates does not comply with the provisions of Article 107 TFEU . Although when examining whether State aid for an economic activity does not adversely affect trading conditions to an extent contrary to the common interest, the Commission must take into account the negative effects of the State aid on competition and trade between Member States, it is not, on the other hand, required to consider any other negative effects such as the negative impacts on the environment of a nuclear power plant .

The necessary character of an aid will depend on its incentive nature . This is the case for an aid to restructuring which induces in a decisive way the beneficiary to carry out the restructuring plan submitted  or an aid granted to an air carrier when a route is started up, and such route would not have been opened without public support, the aid making it possible to develop a profitable activity in the long term . By contrast, a State aid requested at the starting-up of a project in a country involving risks for investments, has no incentive character where competing undertakings could install a production unit there without requesting any aid . According to the General Court, the finding that the request for aid is prior to the start of enforcement of the investment project is a simple, relevant and appropriate criterion that allows the Commission to presume the existence of an incentive effect .

An aid is proportionate where it is transparent, non-discriminatory, limited in time and only covers the costs of the launching phase of the project in order for the undertaking to become viable and not to be maintained artificially in activity . Therefore, a start-up aid for the development of an airport must benefit only to airlines carrying out the development objective sought in terms of volume of passengers and must only offset the additional start-up costs . Regional operating aid is granted only for activities carried out in the region concerned . Subsidies granted for the construction and operation of a pipeline constitute a compatible aid, insofar as facilities are accessible on non-discriminatory terms for all competitors, and where such subsidies allow the completion of the project in question, and without them, the return on the investments would be too low, and they remain limited to a level that allows not more than a normal internal rate of return .

To be proportionate, the aid must be justified by sufficient consideration. It follows that operating aid does not fall in principle within the scope of application of Article 107(3) TFEU. In effect, contrary to investment aid, operating aid is not connected with the completion of a precise and legitimate project, such as the restructuring of an undertaking viable on the long term, but is aimed at releasing an undertaking from the costs it would have normally borne in the course of its usual management . By its very nature, operating aid affects trading conditions to an extent contrary to the common interest  and is assumed to be incompatible with the internal market .

The following are regarded as operating aid incompatible with the internal market: aid for advertising campaigns, market surveys and purchase of the equipment to be leased for the exclusively commercial development of the recipient undertaking , increased reduction in the payment of social security contributions without any social or economic compensatory contribution , measures which reduce the normal operating charges of an undertaking , or aid for relieving the debt burden of its recipients . A retroactive investment aid granted in the form of a direct subsidy may also characterize an operating aid where the potential recipient, by making investments without waiting for the end of the control procedure, acted at its own risks . Likewise, aid to subsidize the sale price and the storage or destruction of a part of the harvest and which is granted on the basis of prices and quantities produced, constitutes operating aid incompatible with the internal market when it is aimed at relieving an undertaking of the costs which it would normally have had to bear in the context of its current management or its normal activities .

However, the presumed incompatibility of an operating aid is not irrefragable. Such a measure may exceptionally fulfill the conditions of compatibility of Article 107(3) TFEU where it is justified on the grounds of its contribution to one of the objectives sought and where its amount is in proportion to the disadvantages which it is intended to mitigate .

See Case 730/79 Philip Morris v Commission [1980] ECR 2671, LawLex200500004057JBJ, ECLR, 1981, 208-212, obs. FLYNN; Case T-187/99 Agrana Zucker und Stärke v Commission [2001] ECR II-1587, LawLex200500005167JBJ; Case T-126/99 Graphischer Maschinenbau v Commission [2002] ECR II-2427, LawLex200500004878JBJ.

Commission Decision No 92/483 of 24 June 1992, concerning aid provided by the Brussels Regional Authorities (Belgium) in favor of the activities of Siemens SA in the data-processing and telecommunications sectors, LawLex200500005354JBJ:"In particular, [the exceptions] may be invoked only when the Commission is satisfied that, without the aid, market forces alone would be insufficient to guide the recipient towards patterns of behaviour that would serve one of the objectives of the said exceptions. Applying the exceptions to cases which do not contribute to such objectives or where aid is not necessary for those purposes would amount to conferring advantages on the industries or firms of certain Member States, whose financial position would be artificially strengthened, and to affecting trade between Member States and distorting competition without any justification based on the common interest referred to in Article [107](3)".

Commission Decision No 2004/393/EC of 12 February 2004, Ryanair, LawLex200500005658JBJ; No 2005/170/EC of 16 June 2004, Aid for the construction of a propylene pipeline, LawLex200700001547JBJ; No 2008/354/EC of 11 December 2007, Tax credit introduced by France for the creation of video games, LawLex200900000059JBJ.

Commission Decision No 2005/351/EC of 20 October 2004, Intermediación Aérea SL, LawLex200700001546JBJ.

Case T-713/22, Judgment of 6 November 2024, LawLex202500000900JBJ, which states that regional operating aid for the outermost regions is designed to offset the additional costs borne by undertakings in these regions as a result of the handicaps from which they suffer, with only the activities affected by the handicaps, Only those activities affected by the handicaps, and therefore the additional costs specific to these regions, are eligible for such aid, so that activities carried out outside these regions, which are not affected by these additional costs, can be similarly excluded, even if they are carried out by companies established in these regions.

Commission Decision No 2005/170/EC of 16 June 2004, Aid for the construction of a propylene pipeline, LawLex200700001547JBJ.

Commission Decision No 2000/480/EC of 8 July 1999, Aid granted by France to the Crédit Agricole group, LawLex200400002591JBJ.

Case C-86/89 Italy v Commission [1990] ECR I-3891, LawLex200500004641JBJ.

Case T-459/93 Siemens v Commission [1995] ECR II-1675, LawLex200500005063JBJ, Case C-288/96 Germany v Commission [2000] ECR I-8237, LawLex200500004946JBJ.

Case T-459/93 Siemens v Commission [1995] ECR II-1675, LawLex200500005063JBJ.

Commission Decision No 97/239/EC of 4 December 1996, Maribel bis/ter, LawLex200500004770JBJ.

See for renovation investments: Case 259/85 France v Commission [1987] ECR 4393, LawLex200500005406JBJ; Case 62/87 Exécutif régional wallon v Commission [1988] ECR 1573, LawLex200500005401JBJ; for a bank guarantee intended for the financing of general expenses: Commission Decision of 8 July 1999, No 2000/480/EC of 8 July 1999, Aid granted by France to the Crédit Agricole group, LawLex200400002591JBJ; Case C-288/96 Germany v Commission [2000] ECR I-8237, LawLex200500004946JBJ, for an aid for the replacement of old vehicles: Case C-372/97 Italy v Commission [2004] ECR I-3679, LawLex200500004506JBJ.

Commission Decision No 79/743/EEC of 27 July 1979, Proposed Netherlands Government assistance to increase the production capacity of a cigarette manufacturer, LawLex200500005284JBJ.

Case T-190/00 Regione Siciliana v Commission [2003] ECR II-5015, LawLex200500004872JBJ.

Case T-187/99 Agrana Zucker und Stärke v Commission [2001] ECR II-1587, LawLex200500005167JBJ.

Case T-243/09 Fedecom v Commission, Judgment of 27 September 2012, LawLex202000001898JBJ; Case T-314/15 Greece v Commission :  tax exemptions from taxation and non-quantified taxes in favor of an undertaking that it would normally have had to bear as current expenditure incurred in the course of its economic activity, which distort the conditions of competition, cannot be regarded as investment aid, but constitute operating aid, not covered by Article 107(3) TFEU.

See for a regional aid to maintain jobs: Case C-310/99 Italy v Commission [2002] ECR I-2289, LawLex200500004848JBJ, for a regional aid: Commission Decision No 1999/718/EC of 24 February 1999, Daewoo Electronics, LawLex200500004736JBJ; for an operating aid for environmental protection: No 2001/521/EC of 13 December 2000, Aid scheme implemented by the Kingdom of the Netherlands for six manure-processing companies, LawLex200500004726JBJ; Case C-278/95 P Siemens v Commission [1997] ECR I-2507, LawLex200500005095JBJ. Guidelines on regional State aid for 2014-2020: regional aid constituting operating aid is not in principle compatible with the internal market, unless it is awarded to tackle specific or permanent handicaps faced by undertakings in disadvantaged regions  falling within the scope of Article 107(3)(a) of the Treaty, or to compensate for additional costs to pursue an economic activity in an outermost regions or to prevent or reduce depopulation in very sparsely populated areas.

Commission Decision No 95/438/EC of 14 March 1995, Piezas y Rodajes SA, LawLex200400002506JBJ.

C-594-18 P Austria v Commission and others, Judgment of 22 September 2020, LawLex202000002427JBJ, relating to Hinkley point C power plant.

Case T-167/14 Judgment of 11 October 2016, not available in English, holding that a State aid scheme which is based on a news content/volume of advertising ratio and aims to achieve production and dissemination of high-quality editorial content promoting democratic debate, fully contributes to the realization of that objective because it encourages its beneficiaries to reduce advertising space and therefore, to produce more editorial content and to ensure the quality of the news published.

Case T-126/99 Graphischer Maschinenbau v Commission [2002] ECR II-2427, LawLex200500004878JBJ: for an aid notified after the costs relating to development works were incurred.

Commission Decision No 2004/393/EC of 12 February 2004, Ryanair, LawLex200500005658JBJ.

Commission Decision No 2007/414/EC of 21 February 2007, Cordex, Companhia Industrial Têxtil SA, LawLex200700001564JBJ.

Case T-394/08 Regione autonoma della Sardegna and others v Commission, LawLex201400000165JBJ.

European Competition Law

404. Necessity/Proportionality

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404. Necessity/Proportionality

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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