Tentamen European Law
Probleem 1 – State aid
Art 107 (1) TFEU: elements prohibiting
1. Any aid granted by a member state or through state resources in any form whatsoever
Aid: Positive or negative dimension: a financial advantage or the measure must relieve some undertakings from charges which are
normally included in the budget of an undertaking (such as tax measures, benefits) (Adria-Wien)
If positive: how to assess whether there is an advantage? --> Market Economy Operator Test:
1. does the state act outside of its public capacity and if so: would a prudent independent operator acting under normal market
conditions have acted at the moment when the aid was granted in the same manner as the state did?
For the negative dimension: the taxing situation (which a private investor/purchaser cant do) the test does not apply. To see if there is an
advantage in the taxing situation one company is paying less than another one.
Granted by a member state and through State resources: The ‘or’ in art 107 (1) must be read as an ‘and’. Only aid if it is payed by the
State and through state resources. (Stardust)
The Member State:
o Measures adopted by local, regional and central government
o Measures by public or private bodies designated or established (ingesteld of aangewezen) by the state. However if it
is totally private it is out of the scope (private decision making etc).
State resources: Directly or indirectly (PreussenElektra) (the state can give directions for example to a bank). According to the Court of
Justice's judgment in Stardust Marine, a benefit granted by such a body, which is often a public undertaking, must be imputable to the
state. However, the mere fact that a public undertaking is under state control is not sufficient for benefit granted by that undertaking to
be imputed to the state. Only in cases where the government was involved, in one way of another, in the adoption of the measure
concerned can a benefit be imputed to the state and potentially classified as state aid.
2. That distorts or threatens to distort competition
Main requirement is the existence of a competitive link between the undertaking receiving the advantage and the disadvantaged
undertakings. To determine the competitive link you have to define the relevant market: product market and geographical market.
- A relevant product market comprises all those products and/or services which are regarded as interchangeable or
substitutable by the consumer by reason of the products' characteristics, their prices and their intended use; Two perspectives
are employed to determine which products compete with one another: a consumer perspective and a producer perspective. In
order to define the relevant product market from a consumer perspective, it is important to examine the extent to which
consumers regard certain products as being interchangeable with the product in respect of which the restriction or distortion
of competition is suspected. ). This so-called demand-side substitution can be identified using the characteristics of the
product, but a more formalized way to do so is by asking what would happen if a hypothetical monopolist for the product
under investigation would raise the price for that product with approximately 10%. Would that be profitable, or would
consumer switch to other products?
- A relevant geographic market comprises the area in which the firms concerned are involved in the supply of products or
services and in which the conditions of competition are sufficiently homogeneous.
3. By favouring certain undertakings or the production of certain goods
Selectivity: this is easy to establish in case of subsidies. However, difficult in case of tax measures (Adria-Wien stappen)
(1) Identifying the common or normal tax system applicable in the Member State concerned
(2) Prima-facie selectivity: Favouring certain undertakings or the production of certain goods in comparison with other undertakings
which are in a legal and factual situation that is comparable in the light of the objective pursued by the measure in question
(3) Justification (rechtvaardiging) ‘in the light of the nature or overall structure of the tax system’
• by objectives that are inherent to the general tax system: een groter bedrijf betaald nou eenmaal meer dan een klein bedrijf
• by legitimate objectives without a link to the general tax system (such as ‘protection of environment’, refused by CJEU, Case
C-143/99, Adria-Wien)
Gibraltar tax: the entire tax system is classified as selective.
4. In so far as it affects trade between member states
Trade between Member States is already affected when the state aid in question strengthens the position of an undertaking as
compared to any other undertakings competing in the EU internal market.
− Not in case of ‘de minimis’ subsidies: Not more 200.000 Euro over a 3-year period (Commission Regulation (EU) No 1407/2013).
Services of general economic interest (SGIE)
− Article 106(2) TFEU: Compensation is no state aid if the recipient undertaking must actually have public service obligations (= service of
general economic interest) to discharge. The compensation cannot exceed what is necessary to cover all or part of the costs incurred in
the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit.
− Examples: public transportation services.
Exceptions
- Article 107(2) TFEU: State aid falling under Article 107(2) TFEU is ‘per se’ exempted
, - Article 107(3) TFEU: The exemption under Article 107(3) TFEU lies within the discretion of the European Commission.
Unlawful aid is aid that is put into effect without notification. The Commission may, on its own initiative, examine whether such aid is
compatible with the internal market. In other words, unlawful aid is not prohibited by definition. In cases where unlawful aid is found to
be incompatible with the internal market, the Commission can require its recovery from the beneficiary (kan de Commissie
terugvordering van de begunstigde eisen.).
Practical problems, such as the potential bankruptcy of the recipient undertaking, do not constitute grounds for abandoning the recovery
of unlawful aid. Only when such recovery is absolutely impossible, it is acceptable under Union law to leave things as they are with the
unlawful aid in place. Failure on the part of the member state to implement the recovery order will constitute an infringement with EU
law that can result in the imposition of a fine and a periodic penalty payment (boete en dwangsom).
n EU State aid law is important because of article 108 (3) TFEU (the standstill clause).
The last sentence is the most important: if a member state (could also be a public undertaking) has a plan to grant or alter aid, it has to
inform the Commission. (notification application) If they don’t approve, they can’t pay the aid out.
Art 108 (3) has direct effect (its written clear and precise) and can be applied by national Courts. A company (competitor) can go to court
and start a procedure to check if the State aid is legal.
- The procedure is in Regulation 2015/1589
- Standstill obligation: Member States cannot implement aid measures until the Commission authorizes them (art 3 of the
Regulation) (provision had direct effect, can be enforced by national Courts and provision includes an obligation to recover
unlawful aid: ‘recovery of unlawful aid is the logical consequence of the finding that it is unlawful.
- After notification: art 108 (3) TFEU: the Commission investigates whether (1) the notified measure meets the state aid criteria
in art 107 (1) TFEU and (2), if so, whether the measure could be exempted under article 107 (2) or (3) and approved (or not,
then: abolishing or altering (afschaffen of veranderen) the notified measure)
- Before and during the investigation: unlawful aid.
Probleem 2 – Cartels
Art 101 (1) TFEU – prohibition of anti-competitive collusions: ‘cartels’.
(1) the actors involved must be qualified as ‘undertakings’,
Höfner en Elser: The legal personality of the entity and the way in which it is financed are not relevant for the definition of undertaking.
Secondly, the undertaking must be engaged in economic activity. According to the CJEU, an activity can be considered “economic” if
there is (1) the offering of goods or services on the market and (2) the activity could at least in principle be carried on by a private
undertaking in order to make profits.
Two exceptions to the concept of economic activity:
- The public powers exception was discussed in the SAT v. Eurocontrol case. The CJEU decided that Eurocontrol’s activities
regarding control and supervision of Europe’s air space did not constitute an economic activity on the grounds that the control
and supervision of air space was connected with the exercise of powers which are typically those of a public authority.
• The exception for solidarity based-activities. The case law in this area relates mostly to social insurance and pension funds. This
sector is often subject to government intervention in order to ensure a certain level of solidarity. An example of this is to be
seen in the Poucet and Pistre case: the CJEU concluded that sickness funds and the organizations involved in the management
of the public social security system fulfil an exclusively social function based on the principle of national solidarity and is
entirely non-profit-making. The benefits paid (de betaalde uitkeringen) are statutory benefits (wettelijke uitkeringen) that bear
no relation to the amount of the contributions. Accordingly, that activity is not an economic activity and the organizations to
which it is entrusted are not undertakings.
In a number of cases, CJEU has distinguished three criteria to distinguish whether social insurance schemes are to be
considered an economic activity:
– Does the body in question pursue a profit-making or social objective?
– What is its level of solidarity?
– What is the level of government supervision?
(2) their conduct must be captured by one of the three forms mentioned in this paragraph,
An agreement: If there is a concurrence of wills (‘wilsovereenstemming’) among the parties, there might be an agreement. Its form is
unimportant; agreements might be formal contracts (regardless of their validity), gentleman’s agreements or even oral understandings.
What kind of agreements are ‘caught’ by Article 101(1)?
Horizontal agreements are agreements between undertakings that are competing with each other at the same level of the commercial
chain. Vertical agreements, are agreements between undertakings at different levels of the commercial chain (manufacturer and
distribution). There is also the distinction between inter-brand and intra-brand competition. Inter-brand competition is competition
between producers of different brands. Intra-brand competition is the competition between distributors of the same brand. This
distinction is of importance when it comes to vertical restrictions since intra-brand competition is restricted by the production of a
product vis-à-vis its distributors (beperkt door de productie van een product ten opzichte van zijn distributeurs (zoals geografische
beperkingen, die inhouden dat een bepaalde distributeur het recht heeft om exclusief een product te verkopen in deze regio).
The Court confirmed in the Consten and Grundig case that vertical agreements were covered by the provision as well.
, An agreement may be hidden as an ‘apparently unilateral behaviour’ (kennelijk eenzijdig gedrag). An example of this is a situation where
party A acts as if it took a decision for anti-competitive conduct on its own and imposed it on party B, but in reality, party B has given its
consent to the action. The Bayer-case is an example where this is discussed. In Bayer, the Court defined the test to decide when an
‘apparently unilateral behaviour’ is actually an agreement that falls under Article 101(1) TFEU. According to the Court, there needs to be
‘an acquiescence (een instemming) by the other partners, express or implied, in the attitude adopted by the manufacturer.’ This tacit
compliance can for instance be shown through actual compliance with the apparently unilateral measure (dat kan blijken uit de naleving
van de uniliteral measure).
Concerned practice: This concept was designed as a safety net to catch all forms of collusive behaviour falling short of an agreement. It
can be seen as coordination between undertakings which is not consensually agreed. This must be apparent (moet blijken uit) from the
behaviour of the participants.
The definition of what constitutes a concerted practice has been given in the Suiker Unie case (discussed in the online video lecture), and
further elaborated in the case ICI v Commission on the dyestuffs (‘kleurstoffen’) industry.
è A concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes
apparent from the behaviour of the participants. Although parallel behaviour may not by itself be identified with a concerted
practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not
correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the
undertakings, and the volume of the said market.’
Decisions of associations of undertakings: An association of undertakings usually consists of undertakings of the same general type and
makes itself responsible for representing and defending their common interests vis-à-vis (tegenover) other economic operators,
government bodies and the public in general. Bijv. Nederlandse Orde van Advocaten, UEFA.
(3) their conduct must be collusive in a sense that it is anti-competitive by object or effect, and
- Hard-core/Restriction by object refers to the objective content (‘inhoud’) of the collusion without any need of a detailed analysis of the
effects on the market. So, it does not matter whether the collusion actually has a restrictive effect on competition; it is prohibited by
definition because of its content. include price-fixing clauses, output-limiting clauses, market-sharing clauses, and clauses that grant
absolute territorial protection to a distributor (i.e. that nobody else in the market can sell the products of the producer without the
distributor’s consent). It’s a sufficient degree of harm
- Collusions that restrict the competition by their effect do not have the restriction of competition as their object, but the collusion can
have that effect in practice. In order to assess this, the actual competitive situation is compared legally and economically to a
hypothetical one in which the alleged collusive conduct did not take place.
Thus, in case of restrictions by effect, Article 101(1) TFEU is not applicable where the impact of the collusion on competition is not
appreciable (‘noticeable’). This is called the "de minimis rule": if there is or can be no noticeable effect on competition, the prohibition
of Article 101(1) TFEU does not apply. In other words, minor market imperfections will thus be tolerated. The appreciability of the effect
on competition is measured through reference to the parties’ market shares.
If the de minimis rule applies, there will be no prevention, restriction or distortion to an appreciable extent, in other words, no effect
that a conduct falls under the prohibition of Article 101(1) TFEU.
The criteria for the de minimis rule to apply are set out in paragraph 8 of the Notice. According to paragraph 8, in case of horizontal
agreements (8a: agreements between competitors), the aggregate (joint) market share held by the parties to the agreement must not
exceed 10%. In case of vertical agreements (8b: agreements between non-competitors), the market share held by each of the parties (or
aggregate) must not exceed 15%. In cases where it is difficult to classify an agreement as either a horizontal or a vertical agreement, a
10% market share threshold is applied (paragraph 9 of the Notice). In case of a network of agreements, the market share threshold must
not exceed 5% for horizontal and vertical agreements (paragraph 10 of the Notice). An example of a network of agreements was to be
seen in the Delimitis-case.
(4) the collusive conduct must affect the trade between Member States in appreciable manner.
In the Société Technique Minière (STM) case, the Court added that the collusion should affect the ‘pattern of trade’ between Member
States. Later, the CJEU let go of the broad definition given in Consten and Grundig (a collusion that can indirectly or potentially constitute
a threat to trade -> almost all collusions could fulfil this definition), and opted for a thorough analysis of the effects of the collusion by
using the ‘Commission Guidelines on the Effect on Trade Concept Contained in Articles [101 and 102] of the Treaty’, also known as the
‘NAAT Guideline’.
Collusions will not fall under the prohibition of Article 101(1) TFEU if two cumulative conditions are met (paragraph 52 of the NAAT
Guideline). First, the aggregate market share of the parties on any relevant market within the Union affected by the agreement must not
exceed 5%. Secondly, the aggregate Union turnover (omzet) of the undertakings concerned in the products covered by the agreement
(van de betrokken ondernemingen in de onder de overeenkomst vallende producten) must not exceed 40 million euro.
In assessing all of this, the CJEU takes account of whether the agreement forms part of a broader network of agreements. This contextual
view of agreements was developed in the Delimitis case. . It was therefore necessary to analyse the effects of all of the beer supply
agreements in the network to conclude whether there was an effect that had an inter-state dimension.
If the four conditions of Article 101 paragraph 1 TFEU are met, then, in principle, there is a prohibited cartel. Yet, there are exceptions
and exemptions, 101 (3) TFEU.
Four exceptions
