University of Zagreb Law Faculty Doctoral Study in European Law Scientific Research Seminar: The Role of the Court Practice in the Evolution of EU Law   Mentor: Prof. dr. Tamara Ćapeta „The Breakthrough Points in the EU Court Judgements related to State Aid and their Impact on the Evolution of State Aid Law” Davor Vuletić

State aid, Article 107 (1) 1. Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.

State aid Article 108 (1) 1. The Commission shall, in cooperation with Member States, keep under constant review all systems of aid existing in those States. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the internal market.

State aid Article 109 The Council, on a proposal from the Commission and after consulting the European Parliament, may make any appropriate regulations for the application of Articles 107 and 108 and may in particular determine the conditions in which Article 108(3) shall apply and the categories of aid exempted from this procedure.

Evolution of State aid law through the assessment of twelve key judgements. judgements influence state aid policy and law indirectly in the long term period, depending on what the political institutions make of them through the state aid reforms as a consequence of the continuous ECJ activity and reasoning established by the case law.

Structure Introduction The political dynamics in state aid policy and law Theoretical background in between the Treaties and the Court practice Breakthrough Points in the EU Court Judgements on state aid issues The impact of the case-law on the evolution of state aid law Conclusion

Breakthrough Points 24 Court decisions were considered 12 most significant rulings identified searching for the ‘techniques of judicial protection’: filling the gaps, using the general principles of law, and prevailing higher law

Selection criteria that they are final Court decisions dealing with the state aid regulations in the Treaties; that they have “horizontal effect” on the entire state aid law, and not just on some of its segments as tax issues, services of general interest, sectoral or individual aids; that they have established a long-term constant in the ECJ practice and for the application of the state aid law on various states of facts in the area of state aid; or that they have impacted further evolution of state aid law and policy or the creation of new regulations in this area.

Case Breakthrough points Initiator before the Court Lost the Case Won the Case Benefited from ECJ decision Impact on SA Law Influence on SA policy French export C 6/69 & C 11/69 Purpose of SA Commission/ France merged cases France Commission Direct Indirect Kohlgesetz C 70/72 Possibility for illegal SA repayment Germany Lorenz C 120/73 Direct effect of prohibition before EC clearance National court - Direct until 1999 Italian textile C 173/73 SA judged by their effects on trade Italy Steinike C 78/76 State resources and Legal nature Neutral Philip Morris C 730/79 Likelihood to affect trade Art.173 EEC Intermills C 323/82 No SA law for Competition cases Meura C 234/84 MEIP test Belgium France vs. C 325/91 Legal base for EC soft law obligatory Member States FNE C 241/94 General measure can be selective Preussen Electra C 379/98 No illegal SA without budgetary burden British Aggregate C 407/06 Legal drafting technique irrelevant British Aggregate Association CFI /

State aid reforms The State Aid Action Plan (SAAP) 2005 – 2009 called for “less and better targeted state aid” State Aid Modernisation (SAM) launched in may 2012 to streamline the various state aid rules and focus Commission action on the most distortionary types of aid General Block Exemptions (GBER) 2014 State aid control becoming more and more a State aid policy Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union

The impact on state aid law -Judicial politics or the policy? If the Courts decision is negative, meaning prohibiting certain actions or giving the reasoning that changes the current understanding of legality of state aid measures, than the impact on state aid law is direct and immediate. If the Court decisions provide the opportunity to Commission to act in future or reconfirms existing Commission tests than the impact on state aid law is indirect.

The influence on state aid policy The influence of Court’s judgements is indirect in all the cases where other institutions have to act to change state aid policy or where there are interactions with other community policies Direct influence of the Court’s decisions on state aid policy is identified when decisions are related to rules used for state aid control process thus prohibiting current or intended Commission’s practice or providing opportunity for future Commission’s practice.