A distinct State aid focus for the European Commission and EU Courts at the end of 2021

While the continued impact of EU competition law, on big tech in particular, dominates the headlines - and will probably do so into 2022, including the Digital Markets act - there has been a flurry of very recent State aid decisions by the European Commission (Commission) and activity before the EU Courts (both pandemic and non-pandemic related). State aid highlights include:

16 December 2021 – Advocate General’s Opinions in Case C-898/19 P Ireland v Commission and others
In a tax case, Advocate General Priit Pikamäe proposed that the Court of Justice allow the appeal brought by Ireland and annul the Commission’s decision declaring aid which Luxembourg granted to Fiat as being incompatible with the internal market. By its appeal, Ireland, supported by among others, Luxembourg, challenged the analysis carried out by the General Court to determine whether there was an economic advantage, in particular from the perspective of the rules applicable to State aid (first ground), the obligation to state reasons, the principle of legal certainty and respect for the division of competences between the European Union and the Member States. The AG recommended to the Court of Justice that (in light of the arms-length principle) the General Court erred in law in approving normal taxation as identified by the Commission for the purpose of examining the existence in an advantage within the meaning of EU State aid law. Read more here.

20 December 2021 - €900m German scheme to support investments in production of renewable hydrogen
The Commission approved a €900m German scheme to support investments in the production of renewable hydrogen in non-EU countries, which will be then imported and sold in the EU. The scheme, called ‘H2Global', supports the development of unexploited renewable resource potential outside the EU. It will contribute to the EU environmental objectives, in line with the EU Green Deal and was found not to unduly distort competition in the Single Market. Read more here.

21 December 2021 - New Guidelines on State aid for Climate, Environmental Protection and Energy
The Commission endorsed the New Guidelines on State aid for Climate, Environmental Protection and Energy (CEEAG). The CEEAG is to be formally adopted in January 2022 and will be applicable from then. The new rules involve an alignment with EU objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas including in relation to climate protection. The new rules create a framework to help Member States provide the support to reach the EU Green Deal objectives. Read more here.

21 December 2021 - €2.55bn restructuring aid by Portugal in favour of TAP Group and €107m compensation for damages suffered due to coronavirus pandemic 
The Commission approved: (i) €2.55bn of restructuring aid to enable TAP Air Portugal return to viability; and (ii) €107.1m aid to compensate TAP Air Portugal for damages suffered as a result of the coronavirus pandemic between 1 July 2020 and 30 December 2020. Read more here.

22 December 2021 - Revision of Guidelines on State aid for railway companies 
The Commission launched a public consultation inviting interested parties to comment on a proposed revision of the Commission's 2008 Guidelines on State aid for railway undertakings. Interested parties can respond to the consultation until 16 March 2022. Read more here.  

22 December 2021 - €57.4m restructuring aid to Croatian mechanical engineering company Ðuro Ðaković 
The Commission approved Croatia's plans to grant mechanical engineering company Ðuro Ðaković d.d. (‘Đuro Đaković) restructuring aid of €57.4m. The measure will enable the company to finance its restructuring plan and restore its long-term viability with the support of a private investor. The State guarantee allows the company to meet urgent liquidity needs and continue its activities, while limiting distortions to competition until approval of a restructuring plan. At the time, Croatia committed to submit a restructuring plan for Đuro Đaković within six months following the first disbursement of the guaranteed funds. Read more here.

22 December 2021 - €9.8m Belgian measure to recapitalise Brussels South Charleroi Airport in the context of the coronavirus outbreak 
The Commission approved Belgian plans to grant up to €19.2m for the recapitalisation of the Brussels South Charleroi Airport SA. The measure was approved under the Commission's State aid Temporary Framework to enable Member States to support the economy in the COVID-19 outbreak. Read more here.

22 December 2021 - €88m German support to compensate Deutsche Bahn for damages suffered by its subsidiary DB Cargo due to the coronavirus outbreak 
The Commission found an €88m German support measure in favour of Deutsche Bahn AG to be compatible with EU State aid rules. The measure, which will take the form of an equity injection, aims at compensating Deutsche Bahn for damages suffered by its subsidiary DB Cargo due to the coronavirus outbreak between 16 March and 17 May 2020. Read more here.

22 December 2021 - €71.4m measure by Portugal to further compensate TAP Air Portugal for damages suffered due to the coronavirus pandemic 
The Commission approved a €71.4m Portuguese aid measure to further support TAP Air Portugal in the context of the coronavirus pandemic. TAP Air Portugal is a Portuguese flag carrier and, as the largest airline based in Portugal and plays a key role in Portuguese tourism and the economy as well as being a significant employer. In 2019, it accounted for more than 50% of the arrivals and departures at the Lisbon International Airport. The damage compensation measure notified to the Commission amounted to €71.4m to compensate TAP Air Portugal for damage it suffered between 1 January and 30 June 2021 due to travel restrictions to limit the spread of the virus. TAP Air Portugal incurred significant operating losses and experienced a steep decline in traffic and profitability over this period. This follows previous support measures in favour of the airline that the Commission approved on 23 April 2021 and on 21 December 2021 (see above). The aid will take the form of either (i) a capital injection; or (ii) a loan that may be converted into capital. Read more here. 

With the continued effects of the pandemic, a focus on the EU Green Deal and continued consideration of tax State aid cases, 2022 promises to be lively.

For more information on this topic please contact Alan McCarthy, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 4 January 2022