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

Under the guidelines , any restructuring aid should be authorized only if the advantages of the undertaking's survival offset the distortions of competition it causes  and if the measures favor the entry of new competitors, the expansion of existing small competitors or cross-border activity. The communication lays down conditions for approval which must be fulfilled cumulatively . An aid must induce an undertaking to carry out the necessary recovery measures. Even if the aid is notified after the costs relating to the development work had been incurred, it does not lose its incentive nature where the precise form and nature of the communications and acts emanating from the competent national authorities, together with the urgency due to the recipient's financial situation, make it possible to deduce from it a conduct determined by the assurance that it would be granted .

According to the “one time, last time” principle, a restructuring aid can be granted only once. Repeated aid is evidence of its inefficiency and aggravates the distortion of competition . Thus, the Member State dispensing the aid must specify whether the recipient undertaking has already benefited from such an aid in the past. The guidelines impose that ten years have elapsed since the restructuring period came to an end or implementation of the plan was halted (whichever is the latest) to authorize the granting of a new aid .

A restructuring aid for an undertaking in difficulty must be granted to an extent that is not contrary to the common interest of the Union. State measures must be necessary and proportionate . Compensatory, appropriate  and sufficient measures must be taken in order to offset as far as possible the unfavorable consequences of aid for competitors . They take the form of structural  and behavioral   measures. The  sale of a viable production division, which will enable the potential competitors of an undertaking receiving a restructuring aid to acquire an organized part of its production capacities  or small capacity reductions where stricter conditions would compromise the long-term viability of the undertaking , or measures proposed as part of a merger between the purchaser and the privatized undertaking, which is the recipient of the aid , constitute compensatory measures. The proportionate character of measures depends on the size and volume of the undertaking in the market concerned. Therefore, they are not necessary where the recipient's market share in the European Union is below 1%  or in the absence of structural excess of production capacity in the market concerned .

According to the guidelines, “the amount and intensity of the aid must be limited to the strict minimum of the restructuring costs necessary to enable restructuring to be undertaken in the light of the existing financial resources of the undertaking, its shareholders or the business group to which it belongs” . In application of that principle, the Commission may prohibit the beneficiary bank from acquiring control of more than 5% of any undertaking whatsoever, without limiting the ban to competing businesses alone .

 The recipient undertaking must contribute to the financing of the plan and bear an appropriate part thereof . This is the case where more than a third of the restructuring costs are borne by its own resources  or its contribution is up to 43.4% given, inter alia, the number of jobs concerned, the scale of the cuts in capacity, the need to preserve the viability of the activity and the absence of future aid . By contrast, a restructuring aid scheme is not compatible where the contribution of recipients to their restructuring is not sufficient , in particular where the private buyer is contributing only 12% of the funds . Likewise, loans or short-term deferrals of payment which are not related to the financing of the restructuring costs , or a depreciation which does not provide resources available and depends on future operations which are the result of the aid provided  cannot be regarded as the recipient's contribution from its own resources or through outside investments.

An aid gives rise to the implementation of a restructuring plan, where duration must be as short as possible  to allow the recipient undertaking to return to long-term viability within a reasonable time-scale . The restructuring plan submitted to the Commission by a Member State must be particularly detailed and rigorous , and contain precise and reliable information . When a Member State puts forward commitments, it is responsible for ensuring that those commitments are consistent with its national law and for determining, if need be, whether it is appropriate to initiate, in accordance with its constitutional procedures, a process for amending that law . The plan must be realistic as to the undertaking's future operating conditions . This is not the case where internal measures on which this restoration is supposed to be based principally are not sufficiently certain  or where it relies on unrealistic forecasts and the success of the operation, which depends on the amount of resources committed and the rapidity with which funds are available, is jeopardized by the purchasers' lack of financial means . The disproportion between the profits expected from the recovery programme intended to enable the recipient undertaking to honor current orders and the extent of the existing debts, makes it possible to find that a return to profitability is impossible .

The Commission may further impose any conditions and obligations it considers necessary, such as the obligation for the State to take measures - for example, to open up the market -, to impose certain obligations on the recipient undertaking, or to refrain from granting aid pursuing other objectives during the restructuring plan .

The restructuring plan must be fully implemented by the recipient undertaking , which must also perform the obligations laid down in the Commission approval decision. Any failure to implement the plan or to fulfill the other obligations is regarded as a misuse of the aid  and opens an action in accordance with the second subparagraph of Article 108(2) TFEU . The end of the restructuring period determined by the Commission shall take place when, after the period of payment of aid, the undertaking has a sufficient level of capital . Where the restructuring covers several years and involves substantial amounts, the Commission may require payment to be split into installments, each installment being subject either to prior confirmation of the satisfactory implementation of the plan, or prior approval by the Commission after verification that the plan is being satisfactorily implemented .

To guarantee the satisfactory implementation of the restructuring plan, the Commission may require the communication of regular detailed reports. During implementation, the Member State may ask the Commission to agree to changes to the plan . If the revised plan is not submitted to the Commission, the latter can impose on the Member State, based on Article 108(2) TFEU, to abolish or alter the aid within a period of time it determines.

Commission Communication No 2014/C 249/01, at pt 76 et seq.

This is the case where the firm's disappearance would result in a monopoly or tight oligopoly situation: Commission Decision No 2004/166/EC of 9 July 2003, Société Nationale Maritime Corse-Méditerranée, LawLex200500004530JBJ.

Behavioral measures must ensure that aid is used only to finance the restoration of long-term viability and is not abused to prolong serious and persistent market structure distortions or to shield the beneficiary from healthy competition (pts 83 et seq.). 

Commission Decision No 2008/145/EC of 12 September 2007, State aid C 54-2006 (ex N 276/2006), LawLex200800000285JBJ.

Case T-110/97 Kneissl Dachstein v Commission [1999] ECR II-2881, LawLex200500005237JBJ; Case T-198/01 Technische Glaswerke Illmenau v Commission [2002] ECR II-2153, LawLex200500008218JBJ.

Commission Decision No 2010/137/EC of 28 August 2009, Austria Austrian Airlines, LawLex201000000651JBJ, commitment relating to capacity reductions and cap on growth after 2010.

Commission Decision No 2008/91/EC of 10 July 2007, State aid C 19/06 (ex NN 29/06), LawLex200800000279JBJ.

Commission Decision No 1999/690/EC of 3 February 1999, Aid which Germany is planning to introduce for Graphischer Maschinenbau GmbH, LawLex200500004735JBJ.

Commission Communication No 2014/C 249/01 of 31 July 2014, at pt 61.

Case T-319/11 ABN Amro Group NV, Judgment of 8 April 2014, LawLex201400001833JBJ.

The recipient of a restructuring aid must in particular apply all its resources generated by assets considered to be non-essential in carrying on its activities for the purposes of its restructuring: Case T-349/03 Corsica Ferries France v Commission [2005] ECR II-2197, LawLex200800000234JBJ. According to the Guidelines, a contribution to the restructuring costs from the undertaking's own resources is appropriate where it amounts to at least 25% in the case of small enterprises, 40% for medium-sized enterprises and 50% for large firms. A lower contribution will be justified by exceptional circumstances and in cases of particular hardship: at pt 44.

Commission Decision No 97/81/EC of 30 July 1996, Aid granted by the Austrian Government to Head Tyrolia Mares, LawLex200500004783JBJ.

Case T-171/02 Regione autonoma della Sardegna v Commission [2005] ECR II-2123, LawLex200600001241JBJ.

Commission Decision No 2006/947/EC of 7 December 2005, On the State Aid implemented by Belgium for ABX Logistics, LawLex200700000456JBJ.

The aid can reach 75%, even 100%, of the total amount of the restructuring: Commission Decision No 1999/378/EC of 4 November 1998, Aid granted by France to Nouvelle Filature Lainière de Roubaix, LawLex200500004744JBJ.

Commission Decision No 1999/378/EC of 4 November 1998, Aid granted by France to Nouvelle Filature Lainière de Roubaix, LawLex200500004744JBJ.

Commission Decision No 2005/786/EC of 2 March 2005, State aid implemented by Germany for Chemische Werke Piesteritz, LawLex200600001234JBJ.

A period of three to four years is not a manifestly excessive period for a return to long-term viability: Case T-123/97 Salomon v Commission [1999] ECR II-2925, LawLex200500005236JBJ. A period of ten years to restore the viability of an undertaking in difficulty which has received a State restructuring aid is excessive: Commission Decision No 2002/229/EC of 13 November 2001, Aid scheme which the Sardinia Region (Italy) is planning to implement for the restructuring of holdings in difficulty in the protected crops sector, LawLex200700000281JBJ.

The return to viability is established where the restructuring and liquidation go along measures to improve productivity, such as reduction in staffing level, the replacement of obsolete equipment or subcontracting: Case T-149/95 Ducros v Commission [1997] ECR II-2031, LawLex200500005156JBJ. The condition of a minimum return on capital that the restructuring plan must guarantee relates not to a fair return for the entity dispensing the aid but to the restoration of the recipient's competitiveness: Case T-110/97 Kneissl Dachstein v Commission [1999] ECR II-2881, LawLex200500005237JBJ.

Commission Decision No 98/204/EC of 30 July 1997, Aid granted by France to the GAN group, LawLex200400002558JBJ.

Case T-73/98 Prayon-Rupel v Commission [2001] ECR II-867, LawLex200500005178JBJ, Case C-17/99 France v Commission [2001] ECR I-2481, LawLex200500004866JBJ; Case T-35/99 Arduino [2002] ECR I-1529, LawLex200500005047JBJ: the disproportion between the profits expected from the recovery programme enabling the recipient undertaking to honor current orders and the extent of the existing debts, makes it possible to find that a return to profitability is impossible; Commission Decision No 2004/166/EC of 9 July 2003, Société Nationale Maritime Corse-Méditerranée, LawLex200500004530JBJ; No 2005/786/EC of 2 March 2005, State aid implemented by Germany for Chemische Werke Piesteritz, LawLex200600001234JBJ.

Joined Cases C-352-14 and C-353-14 Juan Miguel Iglesias Gutiérrez and Elisabet Rion Bea v Bankia SA and Others, Judgment of 15 October 2015, LawLex201500001271JBJ: national legislation under which the compensation payable to an employee whose dismissal is held to be unfair is set at an amount higher than the legal minimum can be applied to proceedings relating to a collective redundancy that falls within the scope of the Commission decision authorizing aid for the restructuring of the company in question even if the Member State had committed to ensuring that in the framework of the restructuring, the severance payments were close to the legal minimum.

Case T-126/99 Graphischer Maschinenbau v Commission [2002] ECR II-2427, LawLex200500004878JBJ.

Commission Decision No 2004/166/EC of 9 July 2003, Société Nationale Maritime Corse-Méditerranée, LawLex200500004530JBJ, for a plan based on a market survey enabling the preparation of scenarios reflecting best-case, worst-case and intermediate assumptions and the firm's strength and weaknesses; which retains the realistic character of the plan where the improvement in the recipient's viability derives from internal measures making it possible to contemplate long-term operation with its own resources.

Commission Decision No 97/242/EC of 18 September 1996, Hilaturas y Tejidos Andaluces SA, LawLex200500004780JBJ.

Case T-35/99 Arduino [2002] ECR I-1529, LawLex200500005047JBJ.

Commission Communication No 2014/C 249/01, at pt 46.

Unless it finds an equivalent, indeed better, measure to mobilize its own funds by reducing the duration of customer credit: Commission Decision No 2006/367/EC of 20 October 2004, State aid partly implemented by France for the 'Sernam' company, LawLex200700001576JBJ.

A decision approving restructuring aid is abusively applied where the Member State does not fulfill the minimum conditions of approval such as the setting-up of a management information system or where it allows the recipient to prolong its activities artificially, in particular by tolerating without imposing penalties that it does not publish its audited accounts in time: Commission Decision No 2003/372/EC of 11 December 2002, Aid granted by Greece to Olympic Airways, LawLex200500005707JBJ.

Commission Communication No 2014/C 249/01, at pt 126.

Commission Decision No 2004/166/EC of 9 July 2003, Société Nationale Maritime Corse-Méditerranée, LawLex200500004530JBJ.

Commission Communication No 2014/C 249/01, at pt 123.

Commission Communication No 2014/C 249/01 of 31 July 2014; see also Commission Decision No 98/490/EC of 20 May 1998, Crédit Lyonnais,  LawLex200500004753JBJ.

Commission Communication No 2014/C 249/01, at pts 124 et seq.

Commission Communication No 2014/C 249/01 of 31 July 2014, at pt 72, which provides for the possibility of repeating the aid where restructuring aid follows the granting of rescue aid as part of a single restructuring operation and this aid was not followed by a State supported restructuring (where the undertaking could reasonably be believed to be viable in the long term following the granting of rescue aid, or a new rescue or restructuring aid becomes necessary after at least five years due to unforeseeable circumstances for which the undertaking is not responsible). See, however, Commission Decision No 2009/973/EC of 13 July 2009, On the restructuring aid for Combus A/S, LawLex201000000491JBJ: successive capital injections in an undertaking characterize two different types of aid where there was one year and six months between the two measures and they served separated purposes.

The plan must provide commitments for reducing the undertaking's activities or the disposal of productive assets, as a compensatory justification for aid: Commission Decision No 92/317/EEC of 25 March 1992, Aid in favour of Hilaturas y Tejidos Andaluces SA, LawLex200500004682JBJ; the necessary and proportionate character of a restructuring aid is assessed having regard, inter alia, to the improvements already made by a loss-making undertaking to its financial standing, through increase in labor productivity, delay in orders and significant sale of assets: Commission Decision No 94/653/EC of 27 July 1994, Notified capital increase of Air France, LawLex200500004789JBJ; A restructuring aid remains proportionate where it does not bring the undertaking any excess liquidity which is unrelated to the process of restructuring and might help to finance aggressive commercial or investment operations not necessary to that restructuring, but is limited to finance the restoration of the undertaking's profitability: Commission Decision No 2002/224/EC of 19 September 2001, State aid in favor of Enichem SpA, LawLex200500005328JBJ; aid which finances the takeover of a company whose majority shareholder is also the sole manager of the recipient undertaking in difficulty is not necessary in view of its restructuring insofar as this double capacity makes a good cooperation between the undertakings likely in the absence of sale: Case T-17/03 Schmitz-Gotha Fahrzeugwerke v Commission [2006] ECR II-1139, LawLex200600001227JBJ.

The appropriate nature of measures is assessed having regard to the market structure and the competitive conditions: Commission Communication No 2014/C 249/01, at pt 76. See Commission Decision No 2002/229/EC of 13 November 2001, Aid scheme which the Sardinia Region (Italy) is planning to implement for the restructuring of holdings in difficulty in the protected crops sector, LawLex200700000281JBJ: absent any structural overcapacity situation, a restructuring aid scheme remains incompatible with the common market where the contemplated investments allow the recipient undertaking to develop its production capacity beyond what is necessary to guarantee a return to viability; No 2006/367/EC of 20 October 2004, State aid partly implemented by France for the 'Sernam' company, LawLex200700001576JBJ; No 2006/947/EC of 7 December 2005, On the State Aid implemented by Belgium for ABX Logistics, LawLex200700000456JBJ: situation of a saturated and growing market.

The restructuring aid which creates an exceptionally high level of distortion of competition requires compensating arrangements of equal proportion: Commission Decision No 98/490/EC of 20 May 1998, Crédit Lyonnais, LawLex200500004753JBJ. It will ensure in particular that CL makes compensating arrangements proportionate to the exceptional nature and size of the aid it has been granted

The communication defiines structural measures as divestments and reductions of activities: "Structural measures should therefore normally take the form of divestments on a going concern basis of viable stand-alone businesses that, if operated by a suitable purchaser, can compete effectively in the long term" (pts 78 et seq.). 

412. Conditions for validity