Transcript Document

EU STATE AID LAW
AND THE CREDIT CRISIS
CONOR QUIGLEY QC
IIEA, DUBLIN
3 FEBRUARY 2010
State Aid: Article 107(1) TFEU
 State aid within Article 107(1) TFEU
 Aid entails a financial advantage from
State resources
 Selective advantage favouring certain
undertakings
 Distortion of competition
 Effect on trade between Member
States
State Aid: Article 107(3) TFEU
 Exemptions: Article 107(3)(c) TFEU
 Permissible aid
 Regional aid
 Aid for SMEs
 R&D&I aid
 Environmental aid
 Training/employment aid
 Rescue & restructuring aid
 Article 108(2) TFEU: Council
approval in exceptional
circumstances
Supervisory Procedures
 Supervisory regime
 Block exemption
 Individual exemption
 Duty to notify: Article 108(3) TFEU
 Procedural Regulation 659/1999/EC
 Preliminary assessment: Article 4
 No aid
 Aid compatible with common market
 Doubts as to compatibility
 Formal assessment: Article 7
 No aid
 Aid compatible
 Conditional decision
 Negative decision
Initial reaction to the credit
crisis
 Rescue and restructuring guidelines
 Bank in difficulty
 Rescue aid
 6 months
 Loan/guarantee for liquidity purposes
 Restructuring aid
 Restructuring plan for long-term viability
 Avoidance of undue distortions of
competition
 Divestment of assets, capacity reduction
Credit crisis measures
 Systemic banking crisis: Article
87(3)(b) EC / Article 107(3)(b) TFEU
 Commission communications
 Rescue operations
 Recapitalisation
 Treatment of impaired assets
 Temporary framework
 Restructuring measures
Issues in State aid and the
credit crisis
 Definitions
 Market operator test: NAMA
 Sale of bank assets: LloydsTSB
 Bonus taxes: Bank payroll tax
State Aid definition
 Intervention by the State resulting in an advantage
for an undertaking by mitigating the charges which
are normally included in its budget: Case 30/59,
Steenkolenmijnen v High Authority [1961] ECR 1,
p. 19.
 Recipient receives an economic advantage which
it would not have obtained under normal market
conditions: Case C-39/94, SFEI v La Poste [1996]
ECR I-3547, para 60
 Departure from a benchmark set of rules, or from a
normal burden, which confers an advantage: Case
C-66/02, Italy v Commission [2005] ECR I-10901,
per Advocate General Stix-Hackl at para 48.
State Aid and the Market
Operator Test – principles (1)
 Would a private operator, in
possession of the same information
as the public authority, conduct the
same commercial transaction on the
same terms: Case C-457/00,
Belgium v Commission [2003] ECR
I-6931, para 47.
State Aid and the Market
Operator Test – principles (2)
 All the relevant features of the measures
and their context must be examined,
including those relating to the situation of
the authority responsible for granting the
measures: Case T-196/04, Ryanair Ltd v
Commission [2008] ECR II-nyr, para 59.
 always necessary to assess properly any
commercial reasons underlying the
transaction in question, especially where
there is a change from previous
commercial arrangements involving the
same parties, see, for example, Case T98/00, Linde v Commission [2002] ECR II3961.
State Aid and the Market
Operator Test – principles (3)
 Comparison between the conduct of
public and private investors must be made
by reference to the attitude which a private
investor would have had at the time of the
transaction in question, having regard to
the available information and foreseeable
developments at that time: Cases
T-228/99 & T-233/99, Westdeutsche
Landesbank Girozentrale v Commission
[2003] ECR II-435, paras 244-246; Case
T-20/03, Kahla/Thüringen Porzellan
GmbH v Commission [2008] ECR II-nyr,
para 238.
Restructuring: sale of assets
 Restructuring guidelines
 Long term viability
 Compensatory measures to avoid
distortions of competition
 Significant own contribution
 Ensuring competitive banking sector
State aid and Taxation
 Selectivity: Where measure constitutes an
advantage for certain undertakings in
comparison with others which are in a
comparable legal and factual situation:
Cases C-182/03 & C-217/03, Belgium and
Forum 187 v Commission [2006] ECR I5479, para 119
 Reference framework must be
determined: Case C-88/03, Portugal v
Commission [2006] ECR I-7115, para 56
 Differentiation may be justified by the
nature of the general system: Case C143/99, Adria-Wien Pipeline [20-01] ECR
I-8365, para 42