EU: National courts are now bound by Commission decisions on State aid opening proceedings

22 November 2013

Yesterday's State aid judgment of the Court of Justice has important practical consequences for beneficiaries of aid and their competitors. The latter will be able to benefit from easier ways to block the payment of aid, making the life of recipients of non-notified State aid more difficult.

When investigating a State aid case, the Commission must open the formal investigation procedure (often referred to as "Phase II") if it has doubts on the legality of the aid. At the end of that procedure, the Commission takes a final decision on the State aid.

According to the Court, when the Commission opens proceedings, national courts must take all necessary measures to stop the implementation of the aid until the Commission's final decision which regularly takes one year and a half to complete. If necessary, the court must order the suspension and recovery of any payments.

Until yesterday's judgment, courts were not bound by Commission decisions opening proceedings and had to make their own assessment.

This judgment is surprising as previously, it was understood that such preliminary decisions did not produce legal effects on parties and so, they could not be challenged by parties. In view of the legal effects of opening decisions recognised by yesterday's judgment, we question whether parties should now be able to challenge such decisions.

What does it mean?

It is easier for complainants to obtain relief before national courts as soon as the Commission opens proceedings. Consequently, they have more incentives to make representations to the Commission so that it opens proceedings.

More than ever before, beneficiaries are advised to actively verify whether the State aid they receive has been notified to, and approved by, the Commission. Absent such notification, the risk that they will to be ordered to repay the aid has increased.

The judgment of the CJEU in Deutsche Lufthansa (Case C-284/12) is available here.

Authors

Jose rivas

José Rivas

Partner
Belgium

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