Leiden Law Blog

Pride and precedence

Posted on by Alke Metselaar in Public Law
Pride and precedence

Last Thursday, the European Court of Justice settled a matter that has long been an uncertain area of the application of EU State aid law by national judges. That area concerned the implications of parallel proceedings before the European Commission and the national courts. Specifically, it is possible that an alleged aid measure has been contested before a national court but is also the subject of an assessment by the European Commission. If, during the national proceedings, it appears that the Commission has qualified that measure as State aid but has not yet come to a final decision, the question arises whether the national court should take this (preliminary) qualification as a given or whether it should determine itself whether the measure constitutes State aid in breach of Article 108(3) TFEU. After all, as the Commission stresses, the Commission and national courts play essential but distinct roles, in which it is also the task of national courts to interpret the notion of State aid.

The preliminary question

In the case before the ECJ, the question of the German Oberlandesgericht Koblenz concerned just that issue. It had been asked to take certain measures regarding an alleged State aid. At the time of the proceedings, the Commission had taken the decision to initiate a formal investigation procedure under Article 108(2) TFEU, having reached the preliminary view that the measures in question constituted State aid. The Oberlandesgericht was in two minds as to how it should assess this decision and referred a preliminary question to the ECJ, asking whether the decision to initiate a formal investigation procedure has the result that a national court is bound by the Commission’s legal opinion in that decision as to whether a measure constitutes State aid.

Judgment

In its judgment, the ECJ answered that question affirmatively. It found that to rule otherwise would frustrate the effectiveness of Article 108(3) TFEU for three reasons. First, if the Commission were to confirm its preliminary view in its final decision, the national court would have failed to observe its obligation to suspend the implementation of any aid proposal until the adoption of the final Commission’s decision. Second, even if the Commission would in its final decision come to the conclusion that the measure does not constitute aid, the ECJ stressed, it must be recalled that the State aid control system has a preventive aim, meaning that the implementation of a measure should be deferred based already on the doubt raised in the decision to initiate the formal examination procedure as to the aid character of that measure. Finally, the Court called to mind the duty of sincere cooperation. Confirming in so many words the relevance of the Masterfoods-case law in State aid cases, the Court ruled that national courts must refrain from taking decisions which conflict with a decision of the Commission, even if it was provisional.

Comments

It’s probably just as well: State aid cases have proven difficult for national judges. The Dutch courts have only ever so rarely qualified a measure as State aid, which can be contributed in part to the complexity of the cases, the difficulty of making a convincing case and the far-reaching effect of qualifying a measure as State aid. Where the Commission has given a glimpse of its probable assessment of the aid measure at stake, experience shows that judges naturally tend to take that assessment into account, even if just indirectly. Should the judge seriously doubt the Commission’s assessment in its decision to initiate the formal investigation procedure, it can – as the ECJ states – still refer a preliminary question or even request further information from the Commission. 

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