Private Enforcement of EU State Aid Law

1. Lecturer: Niki Papadonikolaki, Attorney at Law, D.E.A. Private Enforcement of EU State Aid Law

2. Overview Private Enforcement of the E.U. State Aid Law and Control of State Aids • Private actions much more developed in detecting anticompetitive practices than in the state aid field • Although article 88(3) can be invoked directly by undertakings in national courts. It is a unique provision under state aid law • In 2005 the Commission launched and published a study-action plan reviewing the enforcement of EU State aid rules at national level • Actual Practice: Majority of cases are “ shield” cases • Limited number of “sword” cases

3. I. The implementation of private enforcement through the ECJ Cases • GENERAL PRINCIPLES Commission - National Courts: Complementary roles 1) National Procedural Autonomy -Lorenz, Case C-120/73, [1973] ECR 1471 -Opinion of A.G. Ruiz-Jarabo Colomer in Pearle and Others, Case C-345/02 2) Direct Effect of Art.88 (3) EC -Lorenz, Case C-120/73, [1973] ECR 1471 3) Role of the Commission -France v.Commission, Case C-301/87 [1990]

4. I. The implementation of private enforcement through the ECJ Cases 4) Role of National Courts -FNCEPA and Syndicat national des negociants and transformateurs de saumon, Case C-354/90, [1991] ECR I-5505 “………the validity of financial support granted in disregard of that provision and possible interim measures…….” “….the role of NC implies that they have to take into account the breach of the state requirement having regard to article 88(3).” “….The Commission does not regularize invalid measures ex post facto…” “…….the NC do not have to stay proceedings…..” -SFEI, Case C-39/94, [1996] ”…………….their duty to safeguard the rights of individuals….” -Italie c.Commission Case C-400/99, [2001]

5. I. The implementation of private enforcement through the ECJ Cases • REMEDIES IN NATIONAL COURTS The NC have to implement the Commission’s negative decisions which require: a) The Member State not to put in effect a state aid project or b) to abolish a state existing aid scheme or c) to recover the aid granted in breach of the requirement of the last sentence of art. 88 (3) 1) Recovery -SFEI Case C-39/94 [1996] ECR I-3547 2) Repayment of Levies -VAN CALSTER and CLEEREN, joined Cases C-261/01 and C-262/01, [2003] ECR I-12249 -STREEKGEWEST, Case C-174/02, [2005] ECR I-85 3) Interim Relief -SFEI Case C-39/94 [1996] ECR I-3547

6. I. The implementation of private enforcement through the ECJ Cases • REMEDIES IN NATIONAL COURTS (Cont.ed) 4) Action for Damages a.Against the State -HJ, BANKS, Case C-390/98 [2001] b. Against the aid recipient -SFEI Case C-39/94 [1996] ECR I-3547

7. II. The implementation of Private enforcement through the NC decisions • NC are competent for: • action by member state to obtain recovery (or action by beneficiary against recovery) • or for action by competitor aginst member state (or against beneficiary) for damages, recovery , injuctive measures • or for action before NC by a company against member state for the annulment of a discriminatory imposition of financial burden

8. II. The implementation of Private enforcement through the NC decisions A) NC may be seized about litigation between undertakings on the basis of unfair competition law -”French Commercial Supreme Court , 1999, Etablishementrs J.Richard Ducros v.Societe” B) NC may be seized by the undertakings claiming damages for a decision to grant a state aid contrary to the requirement of the last sentence of art.88 (3) -” French Administrative Supreme Court 31 May, 2000, Societe Pantochin” C) NC may be seized for tax litigation in which claimants are persons subjected to tax asking for its reimbursement or discharge -”French Administrative Supreme Court Conseil d’Etat, 21th December 2006, Societe Auchan

9. II. The implementation of Private enforcement through the NC decisions • Conclusion: • The principle that member states are obliged to make good loss or damage caused to individuals by breaches of Community law for which the states can be held responsible is inherent in the system of the Treaty. [BRACHERIE DU PECHEUR and FACTORTAME Cases C-46/93 and C48/93]

10. ISSUES FOR DISCUSSION • What kind of procedure: civil? administrative? Fiscal? • Defences raised by beneficiary based on national law principles (“absolute impossibility” defence- too often used) • Is competitor aware of the aid? And is he willing to sue? Standing? • Procedure can take many yaers/expensive • NC can only decide illegallity, not compatibility/ reluctant to decide while case still before Commission • Private parties seek enforcement in a defensive /re-active manner in most cases • In some Member States, locus standi of a competitor is an issue. Can the competitor sure the beneficiary directly? • Important development : transactions by which aid is granted contrary to article 88 (3) are null and void. • Difficulties when recovery must take place at local/regional level. • No availability or use of provisional measures to recover aid.

11. CONCLUSION • Clarify where possible in recovery decision: body that must seek reimbursement, quantify exact amount, precisely identify the beneficiary • Force MS to inform the Commission within certain period about method, timing of most effective recovery procedure • Prevent NC from staying proceedings pending appeal before ECJ • Give Commission in Procedural Regulation amicus curiae role in all?