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 power to recover aid was first entrusted to the Commission by the Court of Justice which asserted that the Commission was competent to decide the abolition or modification of an aid incompatible with the internal market, and its repayment . Now, the Commission, pursuant to Regulation No 2015/1589 , has the obligation to order the recovery of unlawful or incompatible aid. Thus, according to Article 16, where it takes a negative decision, the Commission decides that the Member State concerned must take all necessary measures to recover the aid from the beneficiary, unless the recovery would be contrary to a general principle of EU law. The recovery decision is subject to a limitation period of ten years , beginning on the day on which the unlawful aid is awarded to the beneficiary either as individual aid or as aid under an aid scheme, and may be interrupted by any action taken by the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid .

Recovery is meant to restore the situation as it existed on the market prior to the granting of the aid in question . This is not a sanction , but the logical consequence of the incompatibility or unlawfulness of the State measure . Re-establishing the status quo ante merely enables account to be taken, at the stage of recovery of the aid by the national authorities, of the treatment which would have prevailed if the operations at issue had been carried out without that measure . The mere abrogation of the measure at issue with effect ex nunc is in itself insufficient and contrary to the concept of recovery .

The recovery constitutes a proportionate measure, even if it is implemented long after the aid was granted and is likely to cause to the recipient a much more serious harm than that resulting from the distortion of competition and effect on intra-EU trade .  In cases where the competitive advantage benefits a third party in relation to the direct recipients of the measure, its withdrawal is justified only if it is necessary to restore the competitive situation which would have prevailed in the absence of State aid: by ordering the Member State concerned to refrain from any payment under the guarantee when it had also ordered the recovery of the identified advantage by means of the entry of a debt in the liabilities of the undertakings benefiting from the aid in question, the Commission imposed a disproportionate obligation and exceeded the powers conferred on it by Article 108 (2) TFEU .  

Irrespective of the form of the aid granted  - tax exemption , offer to buy at guaranteed price , loan, security or guarantee of a loan  -, the recovery includes, in addition to the amount of the aid, interest calculated on the basis of an appropriate rate fixed by the Commission and payable from the date on which the unlawful aid was at the disposal of the beneficiary until the date of its recovery (Regulation No 2015/1589, Article 16). The repayment of aid, increased by default interest, has a sufficient character. It is not necessary to require the repayment of funds also granted by the State, but whose incompatibility has not been found . Th e Commission which must, according to its obligation to conduct a diligent and impartial examination of the case for the purposes of Article 108 TFEU, assess, as accurately as the circumstances of the case will allow, the advantage actually enjoyed by the undertaking, can, in order to evaluate the amount of the aid to be recovered, take into account the  interest rate that would have been charged by a private investor having granted loans and guarantees similar to those of the present case, the date on which they were granted, and the creditworthiness of the recipient of the aid on that date .

The aid must be recovered from the actual beneficiary , which needs not be the undertaking having received the funds but can be that which retains the competitive advantage when repayment is requested. It may be the subsidiary of the beneficiary undertaking which has effectively benefited from the aid , the third party in favor of which the sum constituting the aid was borrowed , the transferee undertaking  or the undertaking ensuring the economic continuity of the undertaking in liquidation . The economic continuity between the undertakings party to a transfer of assets is assessed in the light of the subject matter of the transfer i.e. assets and liabilities, maintenance of the workforce, bundled assets, the transfer price, the identity of the shareholders or owners of the acquiring undertaking and the original undertaking, the moment the transfer takes place (after the commencement of the investigation, opening of the procedure or the final decision) and also the economic logic of the operation. Moreover, the question of the transfer of the aid is assessed differently, depending on whether it forms part of a sale of shares or of a sale of all or part of the assets . However, the Commission is under no obligation to order, even in part, the recovery of aid from any indirect beneficiary in addition to the direct beneficiary, in particular where the latter is a clearly identifiable undertaking fulfilling all the conditions laid down in Article 107(1) TFEU . In addition, the Commission may specify, in its decision ordering recovery, that the Member State in question must ensure that the beneficiaries repay the amounts of aid which they actually received, without being able to transfer the burden of recovering these amounts to another party to the contract .

In application of the principle of procedural autonomy, the recovery of aid is made in compliance with the national rules, either material rules or rules of procedure or form, including those relating to the burden of proof .In effect, it is not the role of the Commission to demand that the Member State recover unlawful aid . A national court may, in the absence of less onerous procedural measures, declare the cancellation of the guarantee of a loan granted to an undertaking which would not have obtained that financing without the State's guarantee, if it takes the view that cancellation may lead to or facilitate the restoration of the competitive situation which existed before . The principle of procedural autonomy is, however, limited by that of the effectiveness of EU law .

Case 70/72 Commission v Germany [1973] ECR 813, LawLex200400002772JBJ.

See also Commission Notice No 2007/C 272/05 of 15 November 2007, which includes the case-law principles governing recovery.

Case T-664-14 Kingdom of Belgium, Judgment of 7 December 2018, LawLex202000002094JBJ 

Case C-183/91 Commission v Greece [1993] ECR I-3131, LawLex200500004645JBJ; Case C-404/00 Commission v Spain [2003] ECR I-6695, LawLex200500004600JBJ.

Case C-183/91 Commission v Greece [1993] ECR I-3131, LawLex200500004645JBJ; Case C-404/97 Commission v Portugal [2000] ECR I-4897, LawLex200500004963JBJ; Case C-404/00 Commission v Spain [2003] ECR I-6695, LawLex200500004600JBJ: tax credits in this case; Case C-148/04 Unicredito Italiano [2005] ECR I-11137, LawLex200600001240JBJ.

Commission decision No 98/665/EC of 25 February 1998, Hibeg, LawLex200500004754JBJ: purchase of unsold shares; No 2005/173/EC of 12 May 2004, Aid implemented by Spain, LawLex200700001548JBJ; Case T-366/00 Scott v Commission [2003] ECR II-1763, LawLex200500004830JBJ: purchase of a land at preferential price.

Commission decision No 95/466/EC of 26 July 1995, Vlaamse Luchttansportmaatschappij (NV), LawLex200500005363JBJ; No 97/271/EC of 18 December 1996, Forges de Clabecq, LawLex200500004781JBJ; Case T-16/96 Cityflyer Express v Commission [1998] ECR II-757, LawLex200500005256JBJ; Case C-288/96 Germany v Commission [2000] ECR I-8237, LawLex200500004946JBJ; Commission decision No 2003/626/EC of 27 November 2002, Thuringia loan program for small and medium-sized enterprises, LawLex200500004658JBJ; No 2005/786/EC of 2 March 2005, State aid implemented by Germany for Chemische Werke Piesteritz, LawLex200600001234JBJ; No 2005/920/EC of 20 July 2005, Greußener Salamifabrik GmbH, LawLex200600001235JBJ; No 2006/947/EC of 7 December 2005, On the State Aid implemented by Belgium for ABX Logistics, LawLex200700000456JBJ.

Case C-350/93 Commission v Italy [1995] ECR I-699, LawLex200500005142JBJ.

Case T-500/12 Ryanair Ltd, Judgment of 5 February 2015, LawLex201500000136JBJ.

Case T-391/08 Ellinika Nafpigeia, Judgment of 15 March 2012, LawLex202000002075JBJ.

The status of actual beneficiary of the aid must be established by the Commission, which cannot rely on mere assumptions, Case T-196/02 MTU Friedrichshafen v Commission [2007] ECR II-2889, LawLex200700001485JBJ; The Commission asks the States to indicate the recipients of new individual aid in order to facilitate the recovery in case of negative decision, Commission Notice No 2007/C 272/05 of 27 November 2007, at pt 35.

Case C-457/00 Belgium v Commission [2003] ECR I-6931, LawLex200500004602JBJ; Case C-277/00 Germany v Commission [2004] ECR I-3925, LawLex200600000038JBJ; Case T-111/01 Saxonia Edelmetalle v Commission [2005] ECR II-1579, LawLex200700000253JBJ; Case T-324/00 CDA Datenträger Albrechts v Commission [2005] ECR II-4309, LawLex200700001462JBJ; Commission decision No 2008/344/EC of 23 October 2007, Technologie Buczek Group, LawLex200900000057JBJ.

Regulation No 2015/1589, Art. 17; Case T-369/00 Département du Loiret v Commission [2003] ECR II-1789, LawLex200500005196JBJ.

Case C-457/00 Belgium v Commission [2003] ECR I-6931, LawLex200500004602JBJ.

Commission decision No 2000/567/EC of 4 November 2000, System Microelectronic Innovation GmbH, LawLex200500004717JBJ; No 2005/173/EC of 12 May 2004, Aid implemented by Spain, LawLex200700001548JBJ; Case C-277/00 Germany v Commission [2004] ECR I-3925, LawLex200600000038JBJ; Case C-480/09 P AceaElectrabel Produzione SpA, Judgment of16 December 2010, LawLex201000001459JBJ: which considers that a transferee who, in the branch of activity transferred in the course of a restructuring, holds joint second-rank controlling shareholdings with the power to block decisions on the most important matters, and a majority shareholding in the undertaking marketing its products, forms an economic unit with it.

Case C-328/99 Italy and SIM 2 Multimedia v Commission [2003] ECR I-4035, LawLex200500004597JBJ; Case. C-127/16 P

Case C-127/16 P SNCF Mobilités, European Commission, Judgment of 7 March 2018, LawLex201800000424JBJ.

Case T-666/21 Società Navigazione Siciliana SCpA, Judgment of 25 January 2023, not yet available in English.

Case T-1/14 Aluminios Cortizo (SAU) and Cortizo Cartera (SL), Judgment of 26 June 2024, not available in English.

Case 215/82 Deutsche Milchkontor GmbH [1983] ECR 2633, LawLex200900001652JBJ.

Cases C-102/21 and 103/21 Autonome Provinz Bozen, Judgment of 7 April 2022, LawLex202200002140JBJ.

Case C-275/10 mPAY24 v OHIM - Ultra (MPAY24) [2011], LawLex201200000626JBJ.

Case T-29/14 Telefónica Gestión Integral de Edificios y Servicios and Banco Santander (SA), Judgment of 21 February 2024, : the Member State to which a decision requiring it to recover unlawful aid is addressed is required to take all appropriate measures to ensure that the decision is implemented, in order to achieve effective recovery of the sums due for the purpose of eliminating the distortion of competition caused by the competitive advantage conferred by the unlawful aid.

See inter alia Case C-276/03 P Scott v Commission [2005] ECR I-8437, LawLex200600001232JBJ.

Case C-705/20 Fossil (Gibraltar) Ltd, Judgment of 15 September 2002, LawLex202200007277JBJ.

Case C-75/97 Belgium v Commission [1999] ECR I-3671, LawLex200500005080JBJ. This is not a measure with penal character, Case T-366/00 Scott v Commission [2003] ECR II-1763, LawLex200500004830JBJ. Also see Commission Notice 2019/C 247/01 on the recovery of unlawful and incompatible State aid, OJ of 23 July 2019, pt 26.

Case C-183/91 Commission v Greece [1993] ECR I-3131, LawLex200500004645JBJ.

Case C-148/04 Unicredito Italiano [2005] ECR I-11137, LawLex200600001240JBJ.

Case T-487/11 Banco Privado Português, Judgment of 12 December 2014, LawLex201900000950JBJ.

Case T-55/99 CETM v Commission [2000] ECR II-3207, LawLex200500005208JBJ.

443. Obligation to repay aid