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 disturbance mentioned in Article 107(3)(b) TFEU must affect the economy of a Member State, not merely that of one of its regions or areas . Thus, the unification, which has had negative effects on the German economy, alone is not sufficient to apply the exemption provided for in Article 107(3)(b) TFEU . However, it is not necessary for the aid measure based on Article 107(3)(b) to be capable,  …

Aid to remedy a serious disturbance in the economy of a Member State

The disturbance mentioned in Article 107(3)(b) TFEU must affect the economy of a Member State, not merely that of one of its regions or areas . Thus, the unification, which has had negative effects on the German economy, alone is not sufficient to apply the exemption provided for in Article 107(3)(b) TFEU . However, it is not necessary for the aid measure based on Article 107(3)(b) to be capable, in itself, of remedying a serious disturbance in the economy of the Member State in question . Given that Member States are not obliged to remedy serious disturbances of their economy in their entirety , undertakings cannot complain that the amount of aid granted is insufficient to remedy them effectively . Indeed, the objective pursued by Article 107(3)(b) TFEU does not preclude a Member State from choosing, for objective reasons, to grant only one undertaking the benefit of a measure adopted under this provision , without this being dictated by a desire to favor one undertaking over its competitors. Provided they meet the conditions laid down in the text, measures taken on this basis are presumed to be adopted in the EU's interest, without the Commission having to weigh up the beneficial effects of the aid against its negative effects on trading conditions and the maintenance of competition . Furthermore, the differences in treatment of undertakings provided for in Article 107(3), subject to meeting the requirements laid down by the derogations set out, characterize special provisions within the meaning of the first paragraph of Article 18 TFEU, which exclude the application of the principle of discrimination on grounds of nationality .

Article 107(3)(b) TFEU has experienced a new life with the financial crisis of Fall 2008 by enabling the Commission to mitigate its requirements regarding State aid control in order to boost the economy without having to apply the enhanced rules applicable to aid for undertakings in difficulty. It has adopted a series of provisions intended to set guidance on the treatment of State measures in the financial sector in particular to safeguard impaired assets and to recapitalize the financial institutions in difficulty . Although the Commission's adoption of rules of conduct limits it in the exercise of its discretion, those communications do not, however, have binding effect on the Member States which remain at liberty to notify the Commission of aid measures which they consider compatible, without meeting the conditions set out in its guidelines and which the Commission may authorize in exceptional circumstances . It has also set a temporary framework for State aid measures to support access to finance in the current economic crisis for a limited duration . According to the Commission, certain categories of State aid are justified, for a limited period, to remedy those difficulties and may be declared compatible with the internal market on the basis of Article 107(3)(b) TFEU. Even if it exceeds the de minimis threshold, that aid may be declared compatible where the subsidy is limited to EUR 500,000 per undertaking, the aid is granted in the form of a scheme to undertakings which were not in difficulty on 1 July 2008 , and that measure is not export aid or aid favoring domestic products. Member States will have to show that the State aid measures notified under this framework are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State and that all the conditions are fully respected .

Those provisions, which constitute a temporary framework aimed at remedying the exceptional difficulties facing undertakings, and more particularly SMEs , to obtain funding sources, concern both undertakings in difficulty and those who, as a result of the financial crisis, are likely to face temporary deficits or credit availability issues. The initial provisions  remain applicable despite exemptions laid down. However, a Member State may not claim that Article 107(3)(b) TFEU ought to be applied directly to the facts of the case, notwithstanding the existence of the rules of conduct set out in the Temporary Community Framework (TCF) and the amended TCF, if it did not argue, in support of that claim, that there were specific exceptional circumstances in the primary agricultural sector concerned . The schemes containing those measures must thus be notified, and individual aid measures may then be granted without notification. In addition to an increase in the de minimis threshold, other aid measures may be declared compatible within that framework, such as, inter alia, aid in the form of guarantees , subsidies , or aid for green products .

After the financial crisis, the Covid-19 pandemic gave rise to a new State aid framework.  Adopted on 20 March 2020 and amended six times, the temporary framework has been extended until 30 June 2022 to ensure recovery in the Union. It allows Member States to provide targeted and proportionate aid to undertakings in difficulty as a result of the pandemic, in particular by contributing to part of the uncovered fixed costs of undertakings hit by the crisis. It is intended to support the economy in the context of the Covid-19 escalation, but not to impose cost-cutting or restructuring on the beneficiary at the time the aid is granted . Since the purpose of aid granted under the framework is to ensure the operational continuity of viable undertakings during the pandemic, the commitments entered into under the framework must guarantee that, after the aid has been granted, the beneficiary will not become more powerful on the market than it was before, and that effective competition will be preserved . However, it would be contrary to the objective of State aid granted under the temporary framework to require, from the outset or immediately, a restructuring plan for undertakings which have in no way contributed to the difficulties caused by the Covid-19  pandemic. The aid falls under Article 107(3)(b) and as such must be intended to remedy a serious disturbance in the economy caused by the Covid-19 pandemic. While financing measures are subject to prior notification and authorization, the processing of these measures has been accelerated and the scope of compatibility has been extended. In France, this has primarily concerned the arts sector or, more broadly, those affected by the measures prohibiting public gatherings. At the start of the pandemic, certain sectors, such as aviation, came to a complete standstill and the vast majority of Member States granted aid to their national companies to ensure their survival. This aid gave rise to numerous complaints from a low-cost carrier that claimed that the eligibility criteria of the aid schemes were discriminatory. The European court nevertheless concluded that the eligibility criterion relating to the systemic or strategic importance of the aid recipients for the national economy and the fact that their registered offices and main centers of activity were required to be located on the territory of the Member State in question demonstrated that the aid scheme was intended to support undertakings that were genuinely and durably anchored in the national economy, in order to remedy the serious disturbance to that economy. Furthermore, according to the General Court, by ensuring that those undertakings have sufficient external financing to enable them to re-establish their capital structure at a time when the functioning of the credit and capital markets is seriously disrupted by the pandemic, the Member State providing the aid has satisfied the requirements under Article 107(3)(b) TFEU .  It also considered that granting aid only to a national airline does not go beyond what is necessary to achieve the objective pursued since allocating the aid to all the airlines operating in the Member State concerned, on the basis of their market share, would have the effect of reducing the amount of aid granted to the national airline, so that its liquidity requirements would not be met, which could have serious repercussions on the Member State in question, given the importance of that airline for its economy . The General Court , approved by the Court , also specified that the fact that the eligibility criterion based on the undertaking's turnover adopted by the aid scheme results in a difference between undertakings depending on whether all or only part of their activities have been affected by Covid does not in itself make it unlawful, provided that this criterion is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned.

Case C-301/96 Germany v Commission [2003] ECR I-9919, LawLex200500004594JBJ.

Commission Decision No 96/666/EC of 26 June 1996, Volkswagen Group, LawLex200500004767JBJ; Case T-132/96 Freistaat Sachsen and others v Commission [1999] ECR II-3663, LawLex200500005160JBJ; Case C-57/00 P Freistaat Sachsen and others v Commission [2003] ECR I-9975, LawLex200500004603JBJ; Case C-301/96 Germany v Commission [2003] ECR I-9919, LawLex200500004594JBJ.

Commission Communication No C-83/01 of 7 April 2009, OJ C/83 of 7 April 2009, 1, replaced from 1 Jan. 2011 by Commission Communication No 2011/C 6/05 of 11 January 2011. 

The aid may be granted to undertakings that were not in difficulty at that date but entered in difficulty thereafter as a result of the financial and economic crisis.

Case C-667/13 Estado português, Judgment of 5 March 2015, LawLex201500000271JBJ, the temporal limitation of aid granted in the form of a State guarantee and the obligation to notify any subsequent extension of that guarantee, as well as the obligation resting on the beneficiary of that guarantee to submit a restructuring plan are not mere formal requirements, but rather necessary conditions for that aid to be declared compatible with the internal market and means of ensuring that the emergency aid granted to an undertaking in difficulty does not go beyond what is necessary to achieve the common-interest objective concerned, which consists, in the present case, in preventing a serious disturbance in the national economy.

For SMEs, the 2009 guidelines applicable until 31 December 2010, were temporarily adpated: e.g., the maximum permitted tranches of finance are increased to EUR 2.5 million from EUR 1.5 million per target SME over each period of twelve months (Commission Communication No 2009/C 83/01, pt 4.6.2, a). This provision was no longer present in the 2011 communication, as the Commission had chosen to progressively bring to an end the temporary measures in order to take account of economic recovery.

See Commission Communication No 2009/C 83/01, Article 3 which lists all EU provisions likely to be applied under crisis circumstances: Regulation No 1998/2006 on de minimis aid, Guidelines on State aid for environmental protection or research and development and innovation, Notice No 2008/C 155/02 on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees, Guidelines on national regional aid for 2007-2013, etc.

Case C-431/14 P Hellenic Republic v Commission, Judgment of 8 March 2016, LawLex201600000503JBJ.

Commission Communication No 2011/C 6/05, pt 2.3.

Commission Communication No 2011/C 6/05, pt 2.4.

Commission Communication No 2011/C 6/05, pt 2.5.

T-34/21 Ryanair DAC and Condor Flugdienst GmbH, Judgment of 10 May 2021, LawLex202300006524JBJ.

Case T-657/20 Ryanair  v Commission, Judgment of 22 June 2022, LawLex202200004107JBJ, which states that it is sufficient for the aid to contribute to remedying the serious disturbance caused to the economy of the Member State; Case T-769/20 Ryanair DAC, Judgment of 18 October 2023, LawLex202400004766JBJ.

Case T-34/21 Ryanair DAC and Condor Flugdienst GmbH, Judgment of 10 May 2021, LawLex202300006524JBJ, which states that the concept of significant market power within the meaning of the temporary framework for State aid measures to support the economy in the context of the COVID-19 surge is to be considered equivalent to that of a dominant position under competition law, so that the Commission must take into account all relevant factors relating both to barriers to entry and expansion and to the market shares held by the beneficiary and its competitors on the market concerned.

Case T-737/20 Ryanair DAC, Judgment of 18 October 2023, 

Case T-628/20  Ryanair DAC Judgment of 19 May 2021, LawLex202100004887JBJ.

Case T-388/20 Ryanair DAC, Judgment of 14 April 2021, LawLex202300006524JBJ; upheld in Case C-353/21 P Ryanair DAC, Judgment of 30 May 2024, LawLex202400004776JBJ; Case T-657/20, Judgment of 22 June 2022, LawLex202200004107JBJ.

Case T-306/21 Falke KGaA, December 21 December 2022, LawLex202500006913JBJ : the Commission may, without disregarding the limits of the broad discretion it is granted for the application of Article 107(3)(b) TFEU, consider it appropriate to ensure the viability of undertakings a substantial part of whose business has been affected by the Covil-19 pandemic, rather than any business affected by this pandemic, irrespective of the undertaking's overall situation. See also Case T-260/21 E. Breuninger GmbH & Co, Judgment of 21 December 2022, LawLex202500006912JBJ.

Case C-124/23 P E. Breuninger GmbH & Co., Judgment of 4 October 2024, not available in English

Case T-260/21 E. Breuninger GmbH & Co, Judgment of 21 December 2022, LawLex202500006912JBJ.

 Case T-513/21 Bastion Holding BV, Judgment of 10 May 2023, LawLex202300006527JBJ.

Case C-588/22 P,  Judgment of 7 November 2024, LawLex202500000899JBJ, which recalls that when the measure concerned is envisaged as individual aid, the identification of the economic advantage makes it possible, in principle, to presume its selectivity, since by its nature, individual aid establishes a difference in treatment, or even discrimination, between the undertaking benefiting from this aid and all other undertakings which are, with regard to the objective pursued by this aid, in a comparable situation.

Case T-657/20 Ryanair DAC, Judgment of 22 June 2022, LawLex202200004107JBJ; Case T-513/21 Bastion Holding BV, Judgment of 10 May 2023, LawLex202300006527JBJ; Case T-769/20 Ryanair DAC v Commission and Estonia, Judgment of 18 October 2023, LawLex202400004766JBJ; Case C-353/21 P Ryanair DAC v Commission, Spain, France and Finland, Judgment of 30 May 2024, LawLex202400004776JBJ.

Case C-209/21 P Ryanair DAC, Judgment of 23 November 2023, LawLex202300013860JBJ.

Commission Communication of 13 October 2008 on the application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis; OJ C 270, 25.10.2008, 8; Commission Communication No 2009/C 10/03 of 15 January 2009 on the recapitalization of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition; Commission Communication No 2009/C 72/01 of 26 March 2009 on the treatment of impaired assets in the Community banking sector; OJ C 072, 26.03.2009, 1; OJ C 10, 15.01.2009, 2; Commission Communication No 2009/C 195/04 of 23 July 2009 on the return to viability and the assessment of restructuring measures in the financial sector in the current crisis under the State aid rules ("Communication on restructuring measures"), OJEU C 195 of 19 August 2009, 9; Commission Communication No 2010/C 329/07 of 1 December 2010 Communication from the Commission on the application, from 1 January 2011, of State aid rules to support measures in favor of banks in the context of the financial crisis, OJEU C 329 of 7 December 2010, 7; Commission Communication No 2011/C 356/02 of 1 December  2011  on the application, from 1 January 2012, of State aid rules to support measures in favor of banks in the context of the financial crisis, OJEU C 356 of 6 December 2011, 7; Commission Communication No 2013/C 216/01 of 30 July 2013, on the application, from 1 August 2013, of State aid rules to support measures in favor of banks in the context of the financial crisis, OJEU C 216 of 30 July 2013, 1. 

Case C-526/14 Tadej Kotnik and others, Judgment of 19 July 2016, LawLex201900000520JBJ.

European Competition Law

419. Aid to remedy a serious disturbance in the economy of a Member State

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419. Aid to remedy a serious disturbance in the economy of a Member State

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