Further thoughts on data and policy indicators a-propos two recent papers on procurement regulation & competition: comments re (Tas: 2019a&b)

The EUI Robert Schuman Centre for Advanced Studies’ working papers series has two interesting recent additions on the economic analysis of procurement regulation and its effects on competition, efficiency and value for money. Both papers are by BKO Tas.

The first paper: ‘Bunching Below Thresholds to Manipulate Public Procurement’ explores the effects of a contracting authority’s ‘bunching strategy’ to seek to exercise more discretion by artificially estimating the value of future contracts just below the thresholds that would trigger compliance with EU procurement rules. This paper is relevant to the broader discussion on the usefulness and adequacy of current EU (and WTO GPA) value thresholds (see eg the work of Telles, here and here), as well as on the regulatory decisions that EU Member States face on whether to extend the EU rules to ‘below-threshold’ contracts.

The second paper: ‘Effect of Public Procurement Regulation on Competition and Cost-Effectiveness’ uses the World Bank’s ‘Benchmarking Public Procurement’ quality scores to empirically test the positive effects of improved regulation quality on competition and value for money, measured as increases in the number of bidders and the probability that procurement price is lower than estimated cost. This paper is relevant in the context of recent discussions about the usefulness or not of procurement benchmarks, and regarding the increasing concern about reduced number of bids in EU-regulated public tenders.

In this blog post, I reflect on the methodology and insights of both papers, paying particular attention to the fact that both papers build on datasets and/or indexes (TED, the WB benchmark) that I find rather imperfect and unsuitable for this type of analysis (regarding TED, in the context of the Single Market Scoreboard for Public Procurement (SMPP) that builds upon it, see here; regarding the WB benchmark, see here). Therefore, not all criticisms below are to the papers themselves, but rather to the distortions that skewed, incomplete or misleading data and indicators can have on more refined analysis that builds upon them.

Bunching Below Thresholds to Manipulate Procurement (Tas: 2019a)

It is well-known that the EU procurement rules are based on a series of jurisdictional triggers and that one of them concerns value thresholds—currently regulated in Arts 4 & 5 of Directive 2014/24/EU. Contracts with an estimated value above those thresholds are subjected to the entire EU procurement regulation, whereas contracts of a lower value are solely subjected to principles-based requirements where they are of ‘cross-border interest’. Given the obvious temptation/interest in keeping procurement shielded from EU requirements, the EU Directives have included an anti-circumvention rule aimed at preventing Member States from artificially splitting contracts in order to keep their award below the relevant jurisdictional thresholds (Art 5(3) Dir 2014/24). This rule has been interpreted expansively by the Court of Justice of the European Union (see eg here).

‘Bunching Below Thresholds to Manipulate Public Procurement’ examines the effects of a practice that would likely infringe the anti-circumvention rule, as it assesses a strategy of ‘bunching estimated costs just below thresholds’ ‘to exercise more discretion in public procurement’. The paper develops a methodology to identify contracting authorities ‘that have higher probabilities of bunching estimated values below EU thresholds’ (ie manipulative authorities) and finds that ‘[m]anipulative authorities have significantly lower probabilities of employing competitive procurement procedure. The bunching manipulation scheme significantly diminishes cost-effectiveness of public procurement. On average, prices of below threshold contracts are 18-28% higher when the authority has an elevated probability of bunching.’ These are quite striking (but perhaps not surprising) results.

The paper employs a regression discontinuity approach to determine the likelihood of bunching. In order to do that, the paper relies on the TED database. The paper is certainly difficult to read and hardly intelligible for a lawyer, but there are some issues that raise important questions. One concerns the authors’ (mis)understanding of how the WTO GPA and the EU procurement rules operate, in particular when the paper states that ‘Contracts covered by the WTO GPA are subject to additional scrutiny by international organizations and authorities (sic). Accordingly, contracts covered by the WTO GPA are less likely to be manipulated by EU authorities’ (p. 12).  This is simply an acritical transplant of considerations made by the authors of a paper that examined procurement in the Czech Republic, where the relevant threshold between EU covered and non-EU covered procurement would make sense. Here, the distinction between WTO GPA and EU-covered procurement simply makes no sense, given that WTO GPA and EU thresholds are coordinated. This alone raises some issues concerning the tests designed by the author to check the robustness of the hypothesis that bunching leads to inefficiency in procurement expenditure.

Another issue concerns the way in which the author equates open procedures to a ‘first price auction mechanism’ (which they are not exactly) and dismisses other procedures (notably, the restricted procedure) as incapable of ensuring value for money or, more likely, as representative of a higher degree of discretion for the contracting authority—which is a highly questionable assumption.

More importantly, I am not sure that the author understood what is in the TED database and, crucially, what is not there (see section 2 of Tas (2019a) for methodology and data description). Albeit not very clearly, the author presents TED as a comprehensive database of procurement notices—ie, as if 100% of procurement expenditure by Member States was recorded there. However, in the specific context of bunching below thresholds, the TED database is very likely to be incomplete.

Contracting authorities tendering contracts below EU thresholds are under no obligation to publish a contract notice (Art 49 Dir 2014/24). They could publish voluntarily, in particular in the form of a voluntary ex ante transparency (VEAT) notice, but that would make no sense from the perspective of a contracting authority that seeks to avoid compliance with EU rules by bunching (ie manipulating) the estimated contract value, as that would expose it to potential litigation. Most authorities that are bunching their procurement needs (or, in simple terms) avoiding compliance with the EU rules will not be reflected in the TED database at all, or will not be identified by the methodology used by Tas (2019a), as they will not have filed any notices for contracts below thresholds.

How is it possible that TED includes notices regarding contracts below the EU thresholds, then? Well, this is anybody’s guess, but mine is that a large proportion of those notices will be linked to either countries with a tradition of full transparency (over-reporting), to contracts where there are any doubts about the potential cross-border interest (sometimes assessed over-cautiously), or will be notices with mistakes, where the estimated value of the contract is erroneously indicated as below thresholds.

Even if my guess was incorrect and all notices for contracts with a value below thresholds were accurate and justified by the existence of a potential cross-border interest, the database cannot be considered complete. One of the issues raised (imperfectly) by the Single Market Scoreboard (indicator [3] publication rate) is the relatively low level of procurement that is advertised in TED compared to the (putative/presumptive) total volume of procurement expenditure by the Member States. Without information on the conditions of the vast majority of contract awards (below thresholds, unreported, etc), any analysis of potential losses of competitiveness / efficiency in public expenditure (due to bunching or otherwise) is bound to be misleading.

Moreover, Tas (2019a) is premised on the hypothesis that procurement below EU thresholds allows for significantly more discretion than procurement above those thresholds. However, this hypothesis fails to recognise the variety of transposition strategies at Member State level. While some countries have opted for less stringent below EU threshold regimes, others have extended the EU rules to the entirety of their procurement (or, perhaps, to contracts up to and including much lower values than the EU thresholds, to the exception of some class of ‘micropurchases’). This would require the introduction of a control that could refine Tas’ analysis and distinguish those cases of bunching that do lead to more discretion and those that do not (at least formally)—which could perhaps distinguish between price effects derived from national-only transparency from those of more legally-dubious maneuvering.

In my view, regardless of the methodology and the math underpinning the paper (which I am in no position to assess in detail), once these data issues are taken into account, the story the paper tries to tell breaks down and there are important shortcomings in its empirical strategy that, in my view, raise significant issues around the strength of its findings—assessed not against the information in TED, but against the (largely unknown, unrecorded) reality of procurement in the EU.

I have no doubt that there is bunching in practice, and that the intuition that it raises procurement costs must be right, but I have serious doubts about the possibility to reliably identify bunching or estimate its effects on the basis of the information in TED, as most culprits will not be included and the effects of below threshold (national) competition only will mostly not be accounted for.

(Good) Regulation, Competition & Cost-Effectiveness (Tas: 2019b)

It is also a very intuitive hypothesis that better regulation should lead to better procurement outcomes and, consequently, that more open and robust procurement rules should lead to more efficiency in the expenditure of public funds. As mentioned above, Tas (2019b) explores this hypothesis and seeks to empirically test it using the TED database and the World Bank’s Benchmarking Public Procurement (in its 2017 iteration, see here). I will not repeat my misgivings about the use of the TED database as a reliable source of information. In this second part, I will solely comment on the use of the WB’s benchmark.

The paper relies on four of the WB’s benchmark indicators (one further constructed by Djankov et al (2017)): the ‘bid preparation score, bid and contract management score, payment of suppliers score and PP overall index’. The paper includes a useful table with these values (see Tas (2019b: Table 4)), which allows the author to rank the countries according to the quality of their procurement regulation. The findings of Tas (2019b) are thus entirely dependent on the quality of the WB’s benchmark and its ability to capture (and distinguish) good procurement regulation.

In order to test the extent to which the WB’s benchmark is a good input for this sort of analysis, I have compared it to the indicator that results from the European Commission’s Single Market Scoreboard for Public Procurement (SMSPP, in its 2018 iteration). The comparison is rather striking …

Source: own elaboration.

Clearly, both sets of indicators are based on different methodologies and measure relatively different things. However, they are both intended to express relevant regulators’ views on what constitutes ‘good procurement regulation’. In my view, both of them fail to do so for reasons already given (see here and here).

The implications for work such as Tas (2019b) is that the reliability of the findings—regardless of the math underpinning them—is as weak as the indicators they are based on. Likely, plugging the same methods to the SMSPP instead of the WB’s index would yield very different results—perhaps, that countries with very low quality of procurement regulation (as per the SMSPP index) achieve better economic results, which would not be a popular story with policy-makers…  and the results with either index would also be different if the algorithms were not fed by TED, but by a more comprehensive and reliable database.

So, the most that can be said is that attempts to empirically show effects of good (or poor) procurement regulation remain doomed to fail or , in perhaps less harsh terms, doomed to tell a story based on a very skewed, narrow and anecdotal understanding of procurement and an incomplete recording of procurement activity. Believe those stories at your own peril…

CJEU implicitly rejects GC's views on subjective assessment of two-part State aid measures under Art 107(1) TFEU (C-15/14)

In its Judgment in Commission v MOL, C-15/14, EU:C:2015:362, the CJEU upheld the previous Judgment of the GC where the selectivity of two-part State aid measures was assessed with very generous deference towards the State's exercise of regulatory powers (which I criticised here). 

 

The CJEU assessed the criticism by the Commission of the GC's position (T-499/10, paras 64 and 65) that the presence of a selective advantage cannot be deduced from the mere fact that the operator is left better off than other operators when the Member State concerned justifiably confined itself to exercising its regulatory power following a change on the market. 

 

Remarkably, the Commission took issue with the fact that the General Court linked "the assessment of the selective nature of the ... agreement, and therefore the measure at issue, to whether or not the Member State concerned had the intention, at the time of concluding that agreement, of protecting one or more operators from the application of a new fee regime" (C-15/14, para 85, emphasis added). As the CJEU stresses

According to the Commission, the General Court thus disregarded the settled case-law of the Court of Justice to the effect that Article 107(1) TFEU defines State interventions on the basis of their effects, and independently of the techniques used by the Member States to implement their interventions (see, inter alia, judgments in Belgium v Commission, C‑56/93, EU:C:1996:64, paragraph 79; Belgium v Commission, C‑75/97, EU:C:1999:311, paragraph 25; British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 89; and Commission v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 91, 92 and 98) (C-15/14, para 86).

I had also criticised the GC for the inclusion of the element of "intention" in its previous Judgment. However, I also expressed doubts as to the CJEU's willingness to side by the GC. In my view back then,

If Article 107(1) TFEU is meant to avoid distortions of competition in the internal market, when confronted with sequential, two-part or complex aid measures, the fact that they all formed part of a 'master plan' from the outset or are the 'random or supervening' result of discrete interventions should be irrelevant. Otherwise, the burden of proving 'distortive intent' from the outset may simply make it impossible to pursue these cases. However, it may well be that the remarks made by the GC in para 67 of MOL v Commission will remain a 'mere' obiter dictum and that the assessment of two-part or complex measures will remain much more objective in the future.

Consequently, I was hoping that the CJEU would quash this part of the Judgment in T-499/10. However, the CJEU rejected the argument of the Commission and determined that the GC's argumentation in paras 64 to 67 and 82 of the Judgment in T-499/10 was not vitiated by any error of law. I disagree with the CJEU's arguments to support the GC's position, which deserve close scrutiny (below). However, given that the CJEU has managed to uphold the GC's reasoning and at the same time stress that two-part or complex State aid measures must be assessed without any reference to the "intention" of the Member State, I agree with the outcome of the case.

 

According to the CJEU,

92 ... the General Court stated, in paragraph 67 of the judgment under appeal, that [under] the case-law of the Court of Justice, ... for the purposes of Article 107(1) TFEU, a single aid measure may consist of combined elements on condition that, having regard to their chronology, their purpose and the circumstances of the undertaking at the time of their intervention, they are so closely linked to each other that they are inseparable from one another (judgment in Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others, C‑399/10 P and C‑401/10 P, EU:C:2013:175, paragraphs 103 and 104 and the case-law cited).

93 In that context, the General Court emphasised, in paragraph 67 of the judgment under appeal, that a combination of elements such as that relied upon by the Commission in the decision at issue may be categorised as State aid when the State acts in such a way as to protect one or more operators already present on the market, by concluding with them an agreement granting them fee rates guaranteed for the entire duration of that agreement, while having the intention at that time of subsequently exercising its regulatory power, by increasing the fee rate so that other market operators are placed at a disadvantage, be they operators already present on the market on the date on which that agreement was concluded or new operators.

94 It was in the light of those considerations that the General Court, in paragraph 68 of the judgment under appeal, decided that it was necessary to examine whether, in those proceedings, the Commission was entitled to consider that the contested measure was selective.

95 It follows from the foregoing that, as MOL contends, paragraphs 64 to 67 of the judgment under appeal do not, as such, concern the examination of the selectivity of the 2005 agreement, but are preliminary explanations aimed at introducing the relevant framework in relation to which the General Court examined whether the Commission was correct in finding that the measure at issue was selective (sic).

96 As the Advocate General stated in points 107 and 114 of his Opinion, by those preliminary explanations, the General Court in fact sought to deal with the issue of the links existing between the 2005 agreement and the 2008 amendment, which the Commission had not specifically addressed in the decision at issue, and more particularly, to underline the fact that, given that there is no chronological and/or functional link between those two elements, they cannot be interpreted as constituting a single aid measure.

97 By those preliminary explanations, the General Court merely applied the case-law laid down by the Court of Justice in the judgment in Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others (C‑399/10 P and C‑401/10 P, EU:C:2013:175), to which the General Court also expressly referred in paragraph 67 of the judgment under appeal, and according to which, since State interventions take various forms and have to be assessed in relation to their effects, it cannot be excluded that several consecutive measures of State intervention must, for the purposes of Article 107(1) TFEU, be regarded as a single intervention. That could be the case, in particular when consecutive interventions, having regard to their chronology, their purpose and the circumstances of the undertaking at the time of those interventions, are so closely related to each other that they are inseparable from one another (C-15/14, paras 92 to 97, emphasis added).

I find the reasoning of the CJEU very poor. By artificially breaking up paragraph 67 of the GC's Judgment in paras 92 and 93 of its own Judgment, the CJEU attempts to limit the requirement of the element of "intention" to some mysterious "preliminary explanations" excluded from the selectivity assessment, and this is very unsatisfactory and unconvincing.

In my view, the CJEU should have plain and simply said that the GC would have been wrong to include an element of "intention" in the test applicable to two-part or complex State aid measures, which assessment needs to be carried out in view of objective factors such as 'their chronology, their purpose and the circumstances of the undertaking at the time of their intervention, [or whether] they are so closely linked to each other that they are inseparable from one another' as per Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others.

Allowing the GC to save face by limiting its erroneous interpretation of that case law in para 67 of T-499/10, or failing to stress the fact that it was an unfortunate expression made obiter dictum (if they wanted to remain deferential) pays lip service to legal certainty. In my view, the CJEU could have decided otherwise because the element of "intention" is actually not assessed at any point of the GC's Judgment and the CJEU was ready to accept the selectivity analysis carried out by the GC. Consequently, there was no need for the strange and convoluted analysis in paras 92 to 97 of the Judgment in C-15/14. 

Be it as it may, the silver lining is in the fact that the CJEU has clearly rejected that the test it progressively laid down for the analysis of two-part or complex State aid measures encompasses any subjective element of "intention" on the part of the granting Member State. Consequently, the analysis of the selectivity of measures closely connected will continue to have to be carried out on the basis of purely objective factors, such as 'their chronology, their purpose and the circumstances of the undertaking at the time of their intervention, [or whether] they are so closely linked to each other that they are inseparable from one another. All is well that ends well.

GC rules on two-part State aid measures and selectivity under Art 107(1) TFEU (T-499/10)

In its Judgment of 12 November 2013 in case T-499/10 MOL v Commission, the General Court has found that an authorisation agreement that froze the mining fees payable for the explotaition of hydrocarbon reserves and that exempted the beneficiary from complying with a posterior law that increased the applicable mining fees does not constitute State aid incompatible with the internal market. In my view, the Judgment is interesting for the guidance it provides regarding the analysis of two-part or complex State aid measures.

 

In the case, MOL and the Hungarian State entered into an authorisation agreement in 2005 whereby the mining rights assigned to MOL were extended and the mining fees payable in return were determined on a non-revisable basis for the period 2005-2020. Later, a 2008 law reform significantly increased the mining fees that would have been payable for the exploitation of those same fields. However, in view of the 2005 agreement, MOL was exempted from topping up the mining fees it was liable to pay. Competitiors and potential new entrants were subject to the revised (higher) fees.

 

The Commission took the view that, given the way the 2005 agreement and the provisions of the 2008 amendment had been designed, they should be regarded as part of the same measure and it concluded that their combined effect conferred an unfair advantage to MOL.

 

According to the Commission, even if the 2005 agreement was concluded in accordance with the Mining Act then in force and even if it was up to the Member State to set the mining fees, the effects produced were not necessarily compatible with the State aid rules of the Treaty, although, taken in isolation, neither the 2005 agreement nor the 2008 amendment was contrary to these rules.

 

It is important to stress that MOL was the only operator in the hydrocarbons sector to have obtained an extension of its mining rights, since other extension agreements concerned undertakings extracting solid minerals, for which mining fees were not amended.  The Commission considered that the measure fulfilled the criteria enshrined in Article 107(1) TFEU and should be considered as State aid, and that there was nothing to indicate that it could be compatible with the internal market.

 

The Hungarian authorities challenged the Commission's position arguing that the measure did not constitute State aid, since the 2005 agreement conferred MOL no advantage and was not selective, as the company received no preferential treatment resulting from that agreement. Hungary further stressed that undertakings making large investments in mining projects require long‑term certainty in respect of the applicable mining fees and charges and that, consequently, mining fees subject to agreement should be fixed and stable for the entire duration of the respective agreement.

  

 

The GC has reviewed the Commission's decision and, mainly on the basis of the 'selectivity' requirement under Article 107(1) TFEU, has found that:

46 [...] although the Commission considered that the contested measure had, in those two constituent elements, favoured the applicant, it drew attention to the fact that the extension agreement was, by itself, selective, on account of the manner in which it had been negotiated and concluded [...]. In stating that the 2005 agreement and the 2008 amendment had resulted in the applicant’s benefiting from lower mining fees than those of the other operators until 2020, the Commission drew attention to the selective nature of the 2005 agreement vis-à-vis the applicant only [...], since the benefit of such mining fees stems solely from the agreement, which sets the rate of the increased mining fee for each of the fifteen years of duration of the agreement, and which provides that the rates thus set will be determined solely in accordance with its provisions and that those rates will stay unchanged [...]. Moreover, by concluding that the applicant was subject to a specific regime shielding it from any increase in mining fees [...], the Commission necessarily took the view that the criterion of selectivity of the contested measure had been met, on the ground that, in the light of its characteristics mentioned above, the 2005 agreement was selective. [...]

54 With respect to the selective nature of the aid measure, it must also be observed that Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects (Case C‑409/00 Spain v Commission [2003] ECR I‑1487, paragraph 46). It follows that the application of that provision only requires it to be determined whether under a particular statutory scheme a State measure is such as to favour ‘certain undertakings or the production of certain goods’ over others which are in a legal and factual situation that is comparable in the light of the objective pursued by the measure in question (see Spain v Commission, paragraph 47 and the case-law cited). If so, the aid measure satisfies the condition of selectivity which defines State aid as laid down by that provision. [...]

62 As a preliminary point, it should be recalled that the contested measure consists of two elements, namely the 2005 agreement, which sets mining fee rates for all the applicant’s fields, whether in production or the subject of extension, for each of the fifteen years of duration thereof, and the 2008 amendment, which increases mining fee rates for all hydrocarbon fields under authorisation, but does not contain any provisions relating to fields that have already been the subject of an extension agreement.

63 In that regard, it should be noted at the outset that the Commission was right to state [...] that the 2005 agreement is not contrary to the State aid rules. Since the fees stipulated by the 2005 agreement, which were applicable to both fields already in production and fields concerned by extension of authorisation, were higher than the statutory fees applicable at the time of its conclusion, that agreement did not involve any State aid element for the purposes of Article 107 TFEU.

64 Next, the Court considers that, where a Member State concludes with an economic operator an agreement which does not involve any State aid element for the purposes of Article 107 TFEU, the fact that, subsequently, conditions external to such an agreement change in such a way that the operator in question is in an advantageous position vis‑à‑vis other operators that have not concluded a similar agreement is not a sufficient basis on which to conclude that, together, the agreement and the subsequent modification of the conditions external to that agreement can be regarded as constituting State aid.

65 In the absence of such a principle, any agreement that an economic operator might conclude with a State which does not involve any State aid element for the purposes of Article 107 TFEU would always be open to challenge, where the situation on the market on which the operator party to the agreement is active evolves in such a way that an advantage is conferred on it [...] or where the State exercises its regulatory power in an objectively justified manner following a market evolution whilst observing the rights and obligations resulting from such an agreement.

66 However, a combination of elements such as that observed by the Commission in the contested decision may be categorised as State aid where the terms of the agreement concluded were proposed selectively by the State to one or more operators rather than on the basis of objective criteria laid down by a text of general application that are applicable to any operator. In that regard, it must be pointed out that the fact that only one operator has concluded an agreement of that type is not sufficient to establish the selective nature of the agreement, since that may result inter alia from an absence of interest by any other operator.

67 Moreover, it should be recalled that, for the purposes of Article 107(1) TFEU, a single aid measure may consist of combined elements on condition that, having regard to their chronology, their purpose and the circumstances of the undertaking at the time of their intervention, they are so closely linked to each other that they are inseparable from one another (see, to that effect, Joined Cases C‑399/10 P and C‑401/10 P Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others [2013] ECR I‑0000, paragraphs 103 and 104). In that context, a combination of elements such as that relied upon by the Commission in the contested decision may be categorised as State aid where the State acts in such a way as to protect one or more operators already present on the market, by concluding with them an agreement granting them fee rates guaranteed for the entire duration thereof, whilst having the intention at that time of subsequently exercising its regulatory power, by increasing the fee rate so that other market operators are placed at a disadvantage, be they operators already present on the market on the date on which the agreement was concluded or new operators.

68 It is in the light of those considerations that it is necessary to examine whether, in the present case, the Commission was entitled to consider that the contested measure was selective, on the ground that, in so far as the 2005 agreement sets the rate of the increased mining fee for each of the fifteen years of its duration and provides that the rates thus set would remain unchanged, it was selective (T-499/10 at paras 46-68, emphasis added).

On the basis of the very specific circumstances of the case, the GC finds that the 2005 agreement was not selective that its combination with the 2008 amendment does not alter this finding and, consequently, annuls the Commission's incompatibility Decision.

 

Beyond the specific circumstances of the case, I think that the analytical framework sketched by the GC includes some useful guidance [such as the stress on the close chronological requirement, or the selectivity element (implicitly) required in all the components of a two-stage or complex State aid measure] but also some troubling hints at a less than objective assessment.

 

In that respect, regardless of the emphasis put on the standard legal position that 'Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects' (para 54), the GC goes on to stress that 'a combination of elements such as that relied upon by the Commission in the contested decision may be categorised as State aid where the State acts in such a way as to protect one or more operators already present on the market, by concluding with them an agreement granting them fee rates guaranteed for the entire duration thereof, whilst having the intention at that time of subsequently exercising its regulatory power, by increasing the fee rate so that other market operators are placed at a disadvantage' (para 67). Therefore, the GC does build in an element of (reverse) causality or, probably more accurately, of volition or intention that seems extraneous to the State aid control system.

 

If Article 107(1) TFEU is meant to avoid distortions of competition in the internal market, when confronted with sequential, two-part or complex aid measures, the fact that they all formed part of a 'master plan' from the outset or are the 'random or supervening' result of discrete interventions should be irrelevant. Otherwise, the burden of proving 'distortive intent' from the outset may simply make it impossible to pursue these cases. However, it may well be that the remarks made by the GC in para 67 of MOL v Commission will remain a 'mere' obiter dictum and that the assessment of two-part or complex measures will remain much more objective in the future (as indeed, is the case with the rest of the Judgment).