Part VI Global Approach of State Aid Law—WTO Law and EU Trade Defence Instruments, 2 Anti-subsidy Law and Practice of the European Union

This concluding chapter explores EU's anti-subsidy instruments, which are designed to address subsidization by other WTO members. After a hesitant start, the EU since 1995 has progressively used the AS instrument to act against subsidization by third-country governments. While initially focusing on relatively clear-cut export subsidies, over time the EU has more and more also countervailed domestic subsidy programmes. This is clearest in the AS cases initiated against China during the past five years, where the majority of the countervailed programmes have consisted of domestic subsidies. In this context, it is important to note that the findings of specificity reached by the EU in cases concerning China are largely based on the use of facts available, resulting from the imposition of very high burdens of proof on the Chinese government that domestic subsidies in fact are not specific.

Part III Rules for the Compatibility of State Aid, 1 General Theory on Compatibility of State Aid

This chapter presents a general theory on the compatibility of State aid, considering the relation between general and sectoral regulation and State aid control. State aid control is one of the most important powers of the Commission. The origins of the prohibition of subsidies can be found in Chapter IV, Section C of the Havana Charter for an International Trade Organization of 1947. Due to the lack of ratification by the US Congress, that Charter was abandoned in 1950 and never entered into force. However, the Treaty on European Coal and Steel Community (ECSC) drew a lot of inspiration from the Havana Charter, and established, amongst others, a general prohibition on subsidies or State assistance (Article 4 ECSC). The Spaak report proposed to extend that prohibition to all sectors of the economy. At the same time, it foresaw the possibility to exceptionally authorize State aid, and proposed to confer the power of authorization to the Commission.

Part III Rules for the Compatibility of State Aid, 5 Aid Exempted from Notification to the Commission: The General Block Exemption Regulation (GBER)

This chapter explores the General Block Exemption Regulation (GBER). Article 108(4) TFEU allows the Commission to issue a regulation exempting Member States from the notification obligation as regards certain categories of aid, provided certain conditions are respected. The Council determines these categories in advance by means of a Regulation adopted on the basis of Article 109 TFEU. In 2008 the Commission adopted the GBER and repealed the previous regulations. In the GBER, the Commission exempted from the notification obligation seven categories of aid, by laying down general and specific compatibility conditions for aid regarding regional development, SMEs, risk capital, research and development, environmental aid, disadvantaged and disabled workers, and training.

Part IV Procedures before the Commission, 3 Recovery of Unlawful Aid and the Role of National Courts

This chapter examines the recovery of unlawful and incompatible State aids, which is one of the cornerstones of free and undistorted competition in the European Union. The repayment of an aid declared unlawful and incompatible with the common market is of utmost importance, as it eliminates the distortion of competition caused by the competitive advantage afforded by the contested aid. In other words, by repaying an unlawful aid, the recipient forfeits the advantage it had enjoyed over its competitors on the market and therefore the previously existing situation is restored; it is common ground in this respect that this objective is attained once the aid in question—increased, where appropriate, by default interests—has been repaid by the recipient.

Part V Judicial Review before the Court of Justice of the European Union, 2 Direct Actions and Judicial Review before the Union Courts

This chapter addresses access to justice in the context of centralized enforcement of EU State aid law and judicial review before the Union courts. The subject matter of litigation is State aid measures adopted in particular by the European Commission as the main supervisory body in this field pursuant to Article 108 TFEU. The term ‘access to justice’ is meant to comprise both the various conditions of standing for bringing direct actions against such measures before the General Court (GC), which essentially comprise actions for annulment (Article 263 TFEU), actions for failure to act (Article 265 TFEU), and actions for damages (Article 268 in combination with Article 340(2) TFEU). The chapter also looks at the nature and the types of acts that are possibly subject to judicial review before the GC.

Part VI Global Approach of State Aid Law—WTO Law and EU Trade Defence Instruments, 1 WTO Subsidy Laws: The International Regulation of State Aid

This chapter focuses on the concepts of subsidy control under World Trade Organization (WTO), prohibiting certain types of subsidies that might have a harmful effect on economic activity in other WTO members. A major innovation of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) was the classification of subsidies into three categories, often referred to as ‘red light’, ‘yellow light’, and ‘green light’. ‘Red light’ subsidies are prohibited per se, with no need to actually prove any adverse effect. The ‘yellow light’ or ‘actionable subsidies’ are not prohibited, but may be challenged only if they cause ‘adverse effects’. Under the ‘green light’ category, certain selected types of subsidies were non-actionable even if they were specific and caused one of the harms listed in Articles 5 and 6 of the SCM Agreement.

Part I Rationales for State Aid Rules, 4 The Legal Framework to Subsidies and State Aid Review

This chapter assesses the legal framework of the multi-level system of State aid and subsidies control not only on the level of the EU but also on the international level—the World Trade Organization (WTO)—and the national level by EU Member States. The control of subsidies and State aids as a multi-level phenomenon has been a laboratory of design solutions for procedural law provisions, enforcement techniques, and the development of general principles of law. It is one of the fields of law which has been most influential for the development of modern public law as a multi-level legal system with several constitutionalized levels. Not only by the sheer force of numbers and issues raised, State aid and subsidies cases have had a great influence on the development of procedural rights such as defence rights. It also added to the clarification of notions of discretion, the protection of legitimate interests, and principles of equality.

Part V Judicial Review before the Court of Justice of the European Union, 3 Decentralized Judicial Review and Enforcement of EU State Aid Rules

This chapter assesses the enforcement of EU State aid rules. The Commission is not the only authority involved in the monitoring of State aid. As regards the supervision of Member States' compliance with their obligations under Articles 107 and 108 TFEU, the national courts also have an important role to play. The implementation of that system of control is a matter for both the Commission and the national courts, their respective roles being complementary but separate. Whilst assessment of the compatibility of aid measures with the common market falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union, it is for national courts to ensure the safeguarding, until the final decision of the Commission, of the rights of individuals faced with a possible breach by State authorities of the prohibition laid down by Article 108(3) TFEU.

Part I Rationales for State Aid Rules, 3 Evolution of State Aid Rules: Conceptions, Challenges, and Outcomes

This chapter looks at the evolution of the legal framework for State aid during the past six decades of economic integration and addresses State aid rules in the context of balancing national policy objectives with the necessity to review aids at a supranational level. A dual trend emerges from the evolution of State aid rules over the last sixty years. On the one hand, the Court of Justice has played a key role in establishing new principles and designing rules governing State aid. In parallel, the Commission also acts as a rule-maker, by introducing relevant soft law and regulatory texts. In this context, the adoption of the Procedural Regulation in 1999 can be regarded as a turning point in the codification and development of State aid rules. The development of State aid is, however, not completed, as reflected in the last reforms of the State Aid Action Plan and the State Aid Modernization initiative.

Part I Rationales for State Aid Rules, 2 Evolution of Aid in the EU: Classifying Different Types of Countries, and the Financial and Economic Crisis

This chapter examines the evolution of (non-crisis) aid in the EU-27 since 1992, which serves as a basis to assess the similarities and differences between the practices of granting aid in EU Member States. Aggregate data for the EU-27 as a whole suggests that Member States have given a smaller percentage of their GDP as aid over time, which might be regarded as reflective of the view that they are accepting the need for its reduction and its control in the single European market. While declining in the first half of the 1990s, aid levels peaked in 1997, only to be reduced by 1999. This can be explained based on the new regulations that were pursued during the time period, which resulted in broader definitions by the Commission and tighter control.