The Court of Justice has been recently presented with some cases where a State aid measure was argued to have (not) infringed EU internal market law and should thus (not) have been authorised by the European Commission. These cases raise the common issue of the Commission’s duty to assess proposed State aid measures for compliance with other rules of EU internal market law, and the effects of the relevant approval decisions.
One such case was NFŠ (C-28/23, EU:C:2024:893), where the Court was asked to confirm that consideration of compliance with the EU procurement rules as part of the analysis of the legal structure of the State aid measure should be binding on national courts, where the Commission included a paragraph on such compliance that, at the very least implicitly, indicated that the Commission had been satisfied that there was no breach.
As I criticised (see here, including the relevant disclaimer), despite the AG Opinion stressing that, having been presented with the relevant information on the approach to complying with the applicable procurement rules, ‘the Commission could not have failed to examine whether the form in which the public aid granted … was structured masked the existence of a public contract which should have been put out to tender’ (and thus breached the applicable procurement rules), the ECJ fudged its answer. The ECJ simply stated that implicit assessments of compatibility with EU internal market rules (in that case the procurement rules) could not be binding on national courts.
(Un)surprisingly, it seems that this was not a one-off situation, or the end of the issue.
In the more recent Judgment of 23 January 2025 in Neos v Ryanair (C‑490/23 P, EU:C:2025:32), the ECJ was confronted with arguments on whether the European Commission was obliged to explicitly assess (and provide reasons for its views on) the compatibility of a State aid measure with Art 56 TFEU.
It is worth reproducing the relevant paragraphs in full:
56 … as is clear from the case-law …, the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the FEU Treaty. Accordingly, State aid which, as such or by reason of some modalities thereof, contravenes provisions or general principles of EU law cannot be declared compatible with the internal market.
57 In the present case, it must be found, first, that while the decision at issue … includes a detailed examination of the compatibility of the minimum remuneration requirement solely in the light of Article 8 of the Rome I Regulation, that nevertheless does not show, as Neos has correctly observed, that that is the only provision of EU law which the Commission considered as relevant for that examination. Indeed, in … the decision at issue, the Commission concluded that the minimum remuneration requirement was prima facie compliant with the Rome I Regulation and that it did not ‘constitute a breach of other provisions of Union law’.
58 Second, … the Commission’s obligation to state reasons does not in any event mean that it must in every case justify the absence of an explicit examination of the compatibility of an aid measure in the light of certain provisions or certain principles of EU law other than the State aid rules and, therefore, give its view on their relevance for the purpose of such an examination.
59 Indeed, given the extremely large number of provisions and principles of EU law that may be infringed by the grant of aid, the Commission cannot be required, without undermining the effectiveness of the procedure under Article 108 TFEU, or even the possibility to take a decision in favour of aid after the preliminary examination phase referred to in Article 108(3) TFEU, and thus without initiation of the formal investigation procedure, to provide specific reasoning concerning each one of them, and, in the present case, as far as concerns Article 56 TFEU.
60 In that respect, it should be held, having regard to the necessity to take account of the context for the purpose of assessing the obligation to state reasons … that a decision declaring an aid measure to be compatible with the internal market in the framework of a procedure under Article 108 TFEU means, in particular if it is apparent, as in the present case, from the Commission’s statement of reasons that it has assessed the aid measure concerned in the light of those provisions or principles, that the latter institution has taken the view that those provisions and principles were either not relevant with respect to that measure or, in any event, had not been infringed.
61 It follows from the foregoing that the General Court also erred in law in finding … that the Commission had infringed its obligation to state reasons in that it had not explained why the only relevant provision, other than Articles 107 and 108 TFEU, in the light of which it had to examine the compatibility of the minimum remuneration requirement, was Article 8 of the Rome I Regulation and not, in particular, Article 56 TFEU.
Prof Nicolaides has already astutely criticised this approach by the ECJ, stressing that
The statements of the CJEU in paragraphs 58 to 60 did not cite any case law. Indeed it seems that it was the first time that the CJEU dealt with the extent of the examination by the Commission of other provisions of EU law. The CJEU missed an opportunity to provide more detailed guidance on what the Commission ought to examine, given the absoluteness of the principle that State aid may not be declared compatible with the internal market if it infringes other provisions of EU law.
It would be unreasonable to expect the Commission to scan the whole of EU law whenever it assesses the compatibility of State aid. But that is certainly not necessary. In this sense, the CJEU performed a logical trick by setting up an irrelevant benchmark to justify why the Commission was not obliged to carry out an exhaustive examination of EU law. The CJEU could have laid down general criteria or could have identified the aspects and modalities that may be considered to be indissoluble from an aid measure, without laying down airtight rules.
I would add that this creates a very strange approach to the effects of implicit assessments by the European Commission of compatibility of State aid measures with the EU internal market rules. On the one hand, implicit assessments suffice for the Commission to discharge its duties to ensure that ‘the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the FEU Treaty’ (Neos v Ryanair, para 56) while, at the same time, ‘assessments which might implicitly follow from a decision of that institution relating to State aid cannot, in principle, be binding on the national courts in a dispute … which is unrelated to the compatibility of that aid with the internal market’ (NFŠ, para 59).
Quite how this can be squared with legal certainty and doctrines on the protection of legitimate expectations is hard for me to see, especially as it is hard for me to understand what the Court means (in different judgments) by compatibility with the internal market (which seems to sometimes be a broad and sometimes a very narrow concept).
More to follow?