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

Sensitive sectors which are particularly vulnerable, with structural overcapacity, or even declining, are subject to specific rules so as to coordinate and direct public interventions. In the form of directives or regulations, provisions follow a common frame: after reminding the essential characteristics of EU regulation on State aid, and the specificities of the sector in view of, inter alia, a  …

Definition and conditions of granting

Sensitive sectors which are particularly vulnerable, with structural overcapacity, or even declining, are subject to specific rules so as to coordinate and direct public interventions. In the form of directives or regulations, provisions follow a common frame: after reminding the essential characteristics of EU regulation on State aid, and the specificities of the sector in view of, inter alia, a possible common policy, they set out various eligible types of aid and the conditions for granting them. Having a limited duration of application, those provisions are extended, replaced or repealed by the EU authorities depending on the development of the sector.

Special rules have therefore been provided for aid in favor of the agriculture , fisheries , steel, shipbuilding , textile and clothing, synthetic fibers, motor vehicle, transports  and coal industries, which are expressly excluded from the scope of application of the general exemption regulation 651/2014 (Article 1). Due to their common characteristics and in order to limit the propagation of sectoral aid, the Commission has adopted a general document called “Multisectoral framework on regional aid for large investment projects” . In force since 1 January 2004, the current framework applies to the synthetic fibers, motor vehicle and steel industries but provides for a trial period before the integration of other sectors appearing in a list having not come into force yet. However, the various sectors retain certain specificities. No investment project may benefit from a State aid in the synthetic fibers sector while in the motor vehicle industry, aid is eligible but subject to a ceiling (30% of regional aid ceiling for projects with eligible expenditure exceeding EUR 50 million or which benefit from an amount of aid exceeding EUR 5 million). Lastly, in the steel industry, investment aid has been prohibited since 24 July 2002.

For sectors excluded from the scope of application of the multisectoral framework (shipbuilding, agriculture, fisheries, transports, the coal industry), the Member States' room for manoeuvre varies depending on the nature of the aid and the sector in question . Thus, shipbuilding aid cannot avoid application of Article 107 TFEU and fall under Article 346, which allows Member States to derogate from the provisions of the Treaty for the protection of the essential interests of their security, even though the civil activity of the shipyard is merely the necessary corollary to the activity of military production. On the other hand, tax exemptions or State aid for professional training and investment aid, cannot be examined under Articles 108, 109 and 112 TFEU where they fall within a specific matter, such as the common agricultural policy the objectives of which take precedence over those of the Treaty on competition pursuant to Article 42 TFEU . The agricultural sector is governed by Regulation No 702/2014 of 25 June 2014  and the Guidelines for State aid in the agriculture and forestry between 2014 and 2020 , which set out a common agricultural market and provide for measures of financial support specific to that sector . The existence of a common organization of markets prohibits the unilateral granting of operating State aid . Regarding agricultural products, any aid in favor of national production is liable to affect trade between Member States . State aid in the agricultural sector must be linked to setting-up costs , or allow a reduction in overcapacity of the sector . This is not the case for an aid which tends to offset losses of income suffered by farmers when switching from traditional farming to organic farming methods . A de minimis aid in the agriculture sector must not relate to activities linked to exports or the use of domestic over imported products, nor be linked to the price or quantity of products placed on the market .

In a sector suffering from serious structure overcapacity, such as textile, the aim of aid must be to provide the beneficiary in the short term with a level of competitiveness sufficient to ensure success on the international market. A direct link between aid and operations benefiting therefrom must further be established in order to assess the actual influence of an aid. The rescue of ailing companies cannot constitute an objective compatible with the internal market in the textile industry, particularly affected by excess production capacity and fall in prices . By contrast, aid to adapt structures allowing the elimination of excess capacity , aid for modernization and conversion investments or aid promoting collective actions from public, scientific or professional organizations in terms of promotion of research or improvement of short-term forecasts, may be held compatible.

The Commission has also adopted guidelines on State aid for environmental protection and energy for the period 2014-2020, the validity of which has been extended , which apply to all aid falling under Article 107(3)(c) TFEU, including in sectors governed by specific EU rules. Aid for environmental protection and the achievement of energy objectives is compatible with this text if it makes a greater contribution to the EU's environmental or energy objectives without adversely affecting trading conditions to an extent contrary to the common interest.  The guidelines set out a list of eligible sectors in Annex 3, such as the development and processing of nuclear materials. The question arose as to whether aid measures in favor of an economic activity in the nuclear sector could be declared compatible under Article 107(3)(c) even though they would undermine the European Union's environmental rules. The Court of Justice held that aid cannot be declared compatible if it contravenes the precautionary principle, the polluter pays principle, and the principle of sustainability but validated aid in favor of a power plant that had the objective of developing an activity within the meaning of Article 107(3)(c), in particular by replacing ageing generating capacity that was scheduled for closure for closure and by using more advanced technology than the one used .

Regulation No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products; OJ L 358, 16.12.2006; Commission Communication No 2006/C 319/01 of 27 December 2006, guidelines for State aid in the agriculture and forestry sector 2007-2013, OJ C 319, 27.12.2006.

Commission Communication No 2008/C 84/06 of 3 April 2008, Guidelines for the examination of State aid to fisheries and aquaculture; Regulation No 875/2007 of 24 July 2007, OJ L 193, 25.07.2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the fisheries sector and amending Regulation No 1860/2004 of 6 October 2004, OJ L 325, 28.10.2004.

Commission Decision No 89/228 of 30 November 1988, Decree-Law No 370-87, LawLex200500005333JBJ; Case C-86/89 Italy v Commission [1990] ECR I-3891, LawLex200500004641JBJ; Case C-114/00 Spain v Commission [2002] ECR I-7657, LawLex200500004840JBJ, Commission Decision No 2001/52 of 20 September 2000, Aid implemented by France in the wine-growing secto, LawLex200500004725JBJ: State aid which promotes an increased production of wine in an area, in breach of the common organization of the market in wine, is incompatible with the common market within the meaning of Article 107(3) TFEU; No 2004/342 of 16 December 2003, Agricultural Sector, LawLex200500004581JBJ.

Case C-346/03 Atzeni and others [2006] ECR I-1875, LawLex200700000271JBJ.

Commission Decision No 2007/57/EC of 7 June 2006, Aid granted by Germany for the acquisition of shares in winegrowers' cooperatives, LawLex200700000282JBJ.

Case C-456/00 France v Commission [2002] ECR I-11949, LawLex200500004856JBJ.

Commission Decision No 2004/341 of 10 December 2003, Agricultural Sector, LawLex200500004580JBJ.

Commission Decision No 2000/237/EC of 22 December 1998, Aid scheme implemented by Spain in favour of horticultural products, LawLex200400002585JBJ; No 2006/570/EC of 14 December 2004, German aid scheme for Bavarian machinery rings, LawLex200700001574JBJ.

Commission Decision No 85/471/EEC of 10 July 1985, Aid granted by the Federal German Government to a producer of polyamide and polypropylene yarn, LawLex200400002432JBJ; No 87/585/EEC of 15 July 1987, Aid granted by the French Government to a producer of textiles, clothing and paper products, LawLex200400002444JBJ.

Commission Decision No 92/317/EEC of 25 March 1992, Aid in favour of Hilaturas y Tejidos Andaluces SA, LawLex200500004682JBJ; No 2005/467/EC of 19 May 2004, Sioen Fibres SA, LawLex200700001550JBJ.

Case C-594/18 P Austria v Commission and others, Judgment of 22 September 2020, LawLex202000002427JBJ, on the United Kingdom's aid measure for the Hinkley Point C nuclear power plant.

Regulation No 3094/95 of 22 December 1995 on aid to shipbuilding, OJ L 332 of 30 December 1995, amended on many occasions; Commission Communication No 2003/C 317/06 of 30 December 2003, Framework on State aid to shipbuilding (extended until 31 December 2011).

Regulation No 1370/2007 of 23 October 2007 on public passenger transport services by rail and by road, OJ L 315, 3.12.2007.

Commission Communication No 2002/C 70/04 of 19 March 2002, Multisectoral framework on regional aid for large investment projects, OJ C 070, 19.03.2002, which supersedes Commission Communication No 98/C 107/05 of 7 April 1999.

Case C-246/12 P Ellinika Nafpigeia v Commission, Judgment of 28 February 2013, not available in English.

Case T-82/96 ARAP and others v Commission [1999] ECR II-1889, LawLex200500005199JBJ.

Regulation No 702/2014 of 25 December 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 TFEU, OJEU L 13 of 1 July 2014. See also Regulation No 1408/2013 of 18 December 2013 on the application of Articles 107 and 108 TFEU to de minimis aid in the agriculture sector. 

Commission 2014-2020 No 2014/C 204/01 of 1 July 2014, Guidelines for State aid in the agriculture and forestry sector 2007 to 2013, OJ C 319, 27.12.2006.

Case C-114/00 Spain v Commission [2002] ECR I-7657, LawLex200500004840JBJ.

European Competition Law

409. Definition and conditions of granting

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409. Definition and conditions of granting

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