European Commission issues a new Best Practices Code for State aid control

State aid and the obligation to notify the Commission

Member States can in principle only implement State aid after approval from the Commission. Therefore, Member States must notify the Commission of intended measures if they contain State aid. A state measure is deemed to include State aid when state resources are used to give an undertaking or a certain group of undertakings preferential economic treatment with a result that the competition is or may be distorted and that this measure is likely to affect the trade between Member States. After the notification, the Commission will examine whether a measure is compatible with the internal market. If that is the case, it will approve the measure.

The Commission has issued several decisions which exempt certain categories of State aid from the obligation to notify State aid in advance. The General Block Exemption Regulation for instance provides for such an exemption [See our June 2017 Newsletter]. If State aid is not notified and falls outside the ambit of issued exemptions to the notification obligation, competitors and other interested parties can file a complaint to the Commission.

The Best Practices Code

The new Best Practices Code for State aid control clarifies how the Commission will be in contact with Member States authorities and provides guidance before State aid measures are formally notified. It describes, for instance, how the pre-notifications contacts between the Member States authorities and the Commission should take place. This new code also explains that it is possible for Member States to ask the Commission services to deal with priority cases within a certain timeframe. In that regard the Commission will ask Member States twice a year which cases they deem of high priority. The Commission will then propose a so called Mutually Agreed Planning on the basis of this information.

A notified measure can also be subject to a streamlined procedure. This means that the Commission will, within 25 days from the date of notification, try to adopt a so-called short-form decision finding that the notified measure does not constitute State aid or a decision not to raise objections. This procedure is applicable if the notified measure is comparable to measures approved in at least three other Commission decisions. The Member States can ask during the pre-notification stage to apply the streamlined procedure.

If the Commission is of the opinion that a measure constitutes State aid which is not compatible with the internal market it will generally launch a formal investigation. The decision to open this investigation will be published to enable interested parties to submit comments. Comments must be submitted within a month after the publication of the decision. The Commission will aim to make a decision on the measure within 18 months from the start of the investigation process.

Lastly, the Commission states that interested parties wanting to submit a formal complaint to the Commission should fill out the complaint form. The Commission will make a decision or send a letter with its preliminary views within 12 months after the registration of the complaint.

This article was published in the Competition Law Newsletter of August 2018. Other articles in this newsletter:

1. European Court of Justice dismissed Orange Polska’s appeal in abuse of dominance case
2. General Court underlines importance of Commission's duty to state reasons
3. General Court dismisses appeals by investor against power cable cartel fine
4. Google receives a second record fine of EUR 34 billion for imposing restrictions on Android device makers
5. District Court in the Netherlands rules on limitation periods in CRT case
6. Court of Appeal in the Netherlands decides to appoint independent economic experts in TenneT v ABB
7. Belgian Court of Cassation annuls decision prohibiting pharmacists from using Google Adwords