Law 2101 Study Guide - Quiz Guide: European Union Competition Law
State Aid II: Substantive Aspects
- Aid qualifying under 107 par. 2 is legally entitled to be exempted
- Aid qualifying under 107 par. 3 has to be exempted by the commission
Automatic Justifications: Art. 107 par. 2
- 3 types of aid categories are declared to be automatically compatible with the internal market,
the commission has no discretion and the court interprets narrowly:
o Social aid: designed to exempt state aid measures helping consumers from poor
backgrounds. Two conditions need to be fulfilled:
▪ The aid must be given to individual consumers, not to individual undertakings
▪ The aid must be granted without discrimination related to the origin of the
products concerned → imposes an obligation on the member state not to pre-
select a national or a local undertaking that would exclusively be able to accept
the social vouchers
o Disaster aid: for damage caused by a national disaster or an exceptional occurrence
▪ Court insists on a very strict interpretation that only includes national calamities
or other extraordinary events.
▪ Court has insisted on a direct link between the aid and the damage incurred
o German aid: designed to compensate for the economic disadvantages resulting from the
division of Germany into 2 states between 1949-1990 → interpreted very restrictively
Discretionary Justifications: Art. 107 par. 3
- The list in art. 107 par. 3 may be broken down into five categories
o Regional aid: addressed in sub a&c and refers to aid that a member state transfers to
impoverished areas within its territory
o Project aid: sub b covers measures that assist a European project → a project that
benefits economic actors in more than one state.
o Crisis aid: sub b, traditionally interpreted very restrictively, use in order to rescue and
stabilize the European banking system is permitted.
o Art. 107 par. 3 sub c has the broadest discretionary justification:
▪ Allows for second form of regional aid
▪ Equally covers aid to facilitate the development of certain economic activities →
primary exception for most forms of horizontal aid such as research and
development aid and environmental aid
o Cultural aid: sub d, may cover state aid to the film industry, theatre or music companies.
Coverage of sport activities is controversial.
- The commission enjoys a wide discretion, the exercise of it involves assessments of an economic
aid and social nature which must be made within a union context.
- The court restricts itself to determining whether the commission has exceeded the scope of its
discretion by a distortion or manifest error of assessment of the facts or by misuse of powers or
abuse of process
- Commission may structure its discretion through the adoption of formal or informal regulatory
acts
- Art. 109: the commission may adopt block exemptions in a number of areas
Document Summary
3 has to be exempted by the commission. 3 types of aid categories are declared to be automatically compatible with the internal market, the commission has no discretion and the court interprets narrowly: social aid: designed to exempt state aid measures helping consumers from poor backgrounds. The commission enjoys a wide discretion, the exercise of it involves assessments of an economic aid and social nature which must be made within a union context. The court restricts itself to determining whether the commission has exceeded the scope of its discretion by a distortion or manifest error of assessment of the facts or by misuse of powers or abuse of process. Commission may structure its discretion through the adoption of formal or informal regulatory acts. 109: the commission may adopt block exemptions in a number of areas. 108: centralized enforcement mechanism and is best read from bottom to top: par.
