A blogpost should be just a little provocative. So let’s provoke: the idea that breaches of State aid law can be solved by national courts is nice, but wrong. Enforcement by national judges, rather than the European Commission, is costly and cumbersome, and it doesn’t work.
In theory, it makes a lot of sense. The European Commission must be notified of State aid before it is granted (barring certain exceptions). If the Commission is not notified, the aid is considered illegal. In cases of illegal State aid, the Commission can and must order the recovery of the aid granted, but only if it is also incompatible with the internal market.
This, of course, presents the Commission with quite a problem. Before it can order the recovery of the aid, it must determine whether the aid, if it had been notified, would have been allowed. Luckily for the Commission, national judges can order the recovery of aid based solely on the decision that it constitutes State aid that should have, but has not been, notified.
It truly seems like a good solution: competitors of aid recipients can simply turn to their national courts to claim protection against the consequences of non-notified aid. The courts can order the recovery of the aid, suspend its payment, and even award damages to the disadvantaged competitor. He may address the Commission, but it’s really not necessary.
In practice, this doesn’t work out as expected. National courts do get involved – in the past year, in the Netherlands, 51 judgments have been published in which the words ‘State aid’ appear. However, there are hardly any cases where a complaint actually leads to the decision that illegal State aid has been granted. Where it does, it is rarer still for even part of the aid to be recovered. I have yet to see a case in the Netherlands where payments are suspended or where damages are granted.
This might mean that the cases that make it to court generally do not involve State aid. That would be good news, although it does suggest that competitors either do not fully understand the State aid rules or that they invoke them on the off-chance that the courts will take their side.
The real problem, I would say, lies elsewhere. Before the Dutch courts, it is generally the applicant who must prove that a measure qualifies as State aid. This is nearly impossible. Cases have been rejected where a competitor argued that other market operators offer their services at lower prices than the alleged aid recipients, but failed to make sufficiently detailed economic comparisons between the services actually conducted. Unlike the Commission, Dutch courts cannot independently assess whether an advantage has been granted. This fits squarely in the principle of national procedural autonomy, but it makes private enforcement through national courts that much less effective.
Are there counterarguments? Of course, but let me instead direct your attention to an excellent article in the Common Market Law Review (2012, pp. 1675-1702), where Tobias Lock questions the assumption “that the remedy of Member State liability is a useful and welcome additional tool to enhance Member State compliance with their obligations under EU law”. Private enforcement may just be overrated.