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

A restructuring consists in the completion of “a feasible, coherent and far-reaching plan to restore a firm's long-term viability” . It must not only settle the losses of the recipient undertaking but also tackle the reasons for those losses. In the General Court's view, the rescue and restructuring guidelines should not be interpreted as excluding from their scope certain types of measures, such  …

Definition

A restructuring consists in the completion of “a feasible, coherent and far-reaching plan to restore a firm's long-term viability” . It must not only settle the losses of the recipient undertaking but also tackle the reasons for those losses. In the General Court's view, the rescue and restructuring guidelines should not be interpreted as excluding from their scope certain types of measures, such as debt write-offs, even if they improve the beneficiary's capital position and give rise to the same moral hazard as a capital injection . The granting of restructuring aid may be justified where it does not promote a single undertaking but an economic activity and that its survival contributes to the maintenance of a competitive market structure .This is the case where the non-granting of aid is likely to result in the disappearance of the recipient undertaking and the creation of tighter oligopolies  or where the aid is granted to one of the three largest European air carriers . By contrast, investment aid intended to facilitate the acquisition of an existing undertaking, and not to create new production facilities or employment, and which has no EU sectoral justification, does not fulfill the conditions of compatibility with the internal market .

Restructuring aid can only benefit undertakings in difficulty defined as those which, without intervention by the State, will almost certainly be condemned to going out of business in the short or medium term. This is the case of an undertaking which has lost more than half of its share capital as a result of an increase in losses, financial debt and financial charges, the reduction in capital and turnover, the weakness of capital in relation to the company's size, financing requirement, net fixed assets, the weakness of its internal financing capacity and the banks' refusal to lend money to it because of its indebtedness, despite the provision of a security . The same is true of an undertaking whose reduction in charges would not be likely to exercise decisive influence on the overall assessment of its situation marked by a significant amount of loss and cash-flow problems . The fact that the situation of the undertaking in difficulty improved during the year in which the aid was granted cannot affect its classification . Similarly, it cannot be ruled out that a football club is an undertaking in difficulty within the meaning of the guidelines on State aid for rescuing and restructuring on the grounds that it is markedly easier for undertakings in the football sector to raise capital and obtain credit, irrespective of their financial situation, and that there is greater volatility in income and assets mainly due to their sporting performance, since the risk of fluctuations in income and the value of assets is a circumstance which undertakings active in markets other than professional football also regularly face . The comfort letter, which is of little economic value, provided by a parent company for its subsidiary is not relevant to the classification of the latter as a firm in difficulty, where the parent is actually in a situation of reduced financial and economic capacity which means that it is unable to cover the financial difficulties of its subsidiary . By contrast, indications are not sufficient where the indebtedness is calculated based on an average over a given period allowing the inclusion of undertakings in a positive situation the year before and where the control of indebtedness depends on voluntary statements by the potential recipients which do not keep accounts .

By requiring that aid benefits only existing undertakings, the guidelines exclude newly created undertakings  for the first three years following the start of operations in the relevant sector  or companies belonging to a group , except if the parent company's difficulties prevent it from supporting its subsidiary .

Commission Communication No 2014/C 249/01 of 31 July 2014, at pt 27. Public injections used to cover the losses arising from closures and the liquidation of companies of a group and writing-down of assets, as part of a restructuring plan liable to restore the long-term viability of the group, constitute a restructuring aid compatible with the common market: Commission Decision No 95/524/EC of 7 June 1995, Iritecna SpA, LawLex200400002509JBJ.

Case T-28/22 Ryanair DAC (Sté), Judgment of 8 May 2024, .

Case T-209/11 MB System v Commission, Judgment of 3 July 2013, .

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.

Case T-101/18 Austria v Commission, Judgment of 30 Novemer 2022, : holding that a company in the investment phase, which has not yet begun its energy production activity, is upstream of newly-created undertakings within the meaning of the guidelines on undertakings in difficulty, which consider as such undertakings during the first three years following their commencement of activity in the field concerned.

Commission Communication No 2014/C 249/01 of 31 July 2014, at pt 21; See also Commission Decision No 95/466/EC of 26 July 1995, Vlaamse Luchttansportmaatschappij (NV), LawLex200500005363JBJ; No 2005/940/EC of 1st October 2003, Jahnke Stahlbau GmbH Halle; No 2005/314/EC of 22 September 2004,Compagnie Marseille Réparation.

Commission Communication No 2014/C 249/01 of 31 July 2014, at pt 76 et seq. Case T-511/09 Niki Luftfahrt, Judgment of 13 May 2015, LawLex201700000992JBJ, where at the date of adoption of the challenged decision the recipient undertaking was not yet part of the group and could not be regarded as a company having been taken over by that group insofar as the payment of a subsidy by the State in question constituted an negative element intergrated into the price paid, it constituted an undertaking eligible for restructuring aid with the aim of ensuring its long-term viability.

Commission Decision No 2004/3955/EC of 2 March 2005; No 2008/145/EC of 12 September 2007, State aid C 54-2006 (ex N 276/2006), LawLex200800000285JBJ; Case T-209/11 MB System GmbH & Co. KG, Judgment of 3 July 2013, not available in English: a company forming part of a group is not in principle eligible for rescue and restructuring aid, unless it is shown that its difficulties are specific to it and do not result from an arbitrary allocation of costs within the group and are too severe to be resolved by the group itself.

Case T-110/97 Kneissl Dachstein v Commission [1999] ECR II-2881, LawLex200500005237JBJ.

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

Case T-371/94 British Airways and others and British Midland Airways v Commission [1998] ECR II-2405, LawLex200500005198JBJ, which holds that the aid promotes, not a particular undertaking, but the economic development of the sector concerned.

Commission Decision No 93/412/EEC of 6 April 1993, Hibeg, LawLex200500005358JBJ.

Case T-349/03 Corsica Ferries France v Commission [2005] ECR II-2197, LawLex200800000234JBJ.

Case T-102/07 Freistaat Sachsen and others v Commission.

Case T-267/08 Région Nord-Pas-de-Calais v Commission [2011] ECR II-1999.,LawLex201400000161JBJ.

Case T-766/16 Hércules Club de Fútbol SAD, Judgment of 20 March 2019, LawLex202000001899JBJ. 

European Competition Law

411. Definition

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411. Definition

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