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Policy and track record
Outline your jurisdiction’s state aid policy and track record of compliance and enforcement. What is the general attitude towards subsidies in your system?
State aid is not a prominent feature of Swedish economic life, and as a result state aid cases have not featured extensively since Sweden’s EU accession in 1995. The stated aim of Swedish aid policy is that support granted shall be well targeted and effective, and provide a clear added value on a socio-economic level. In the past, state aid cases have related to issues such as local authorities’ sale of real estate, aid schemes in the context of the financial crisis and support for transport and infrastructure given the large size of the country. Other areas of aid have included environmental protection and the promotion of sustainable regional growth, including the expansion of broadband infrastructure across Sweden. Recent aid measures approved by the European Commission (the Commission) include the extension of tax exemptions or tax credits for sustainable biofuels, aid for regional airports and workforce integration.
Which national authorities monitor compliance with state aid rules and have primary responsibility for dealing with the European Commission on state aid matters?
No specific public authority has been given the task to supervise compliance with the European state aid rules in Sweden. Management of aid is handled by the granting authority, which is in turn under the supervision of the courts.
The government, through the Unit for Competition, State Aid and Framework Conditions at the Ministry of Enterprise and Innovation, has exclusive competence to submit aid notifications to the Commission. The Ministry of Enterprise and Innovation is also responsible for declaring the application of a block exemption to the Commission, and for all other contacts with the Commission in state aid matters.
In order for the Ministry of Enterprise and Innovation to carry out its tasks, public authorities are obliged to report to it any aid that may come under the Commission’s scrutiny.
As of 1 January 2018, the National Agency for Public Procurement is tasked with providing legal advice on state aid matters to local authorities and regions.
Which bodies are primarily in charge of granting aid and receiving aid applications?
There are no specific bodies responsible for granting aid. Various public authorities may grant support that constitutes aid and receive applications. Specific authorities may be responsible for granting aid under particular schemes (for example, aid under the scheme for R&D and innovation is granted through public body Vinnova).
General procedural and substantive framework
Describe the general procedural and substantive framework.
Any state aid measure granted by a public authority must have a basis in Swedish public law. There is no single legislative act that provides a legal basis for the granting of state aid; rather, such legal basis must be found in public law rules relating to the subject matter of the aid itself.
Identify and describe the main national legislation implementing European state aid rules.
Sweden has not implemented the European state aid rules through any specific piece of legislation. Rather, application of the substantive Treaty rules on state aid derives from their direct applicability. Procedural issues relating to recovery and repayment of illegal aid, as well as compliance with reporting obligations at both EU and Swedish levels, are provided for in the Act (2013:388) on the application of the European Union state aid rules (SAA) and its implementing regulation.
What are the most significant national schemes in place governing the application and the granting of aid, that have been approved by the Commission or that qualify for block exemptions?
Among the most significant schemes approved in recent times are:
- aid for R&D and innovation;
- aid for regional investments;
- aid to regionally promote small and medium-sized enterprises; and
- aid for local climate investments.
A variety of regional aid measures have been granted, in particular for transport and infrastructure in areas of Sweden with low population density. More recent significant approvals by the Commission concern the Swedish tax exemption on certain sustainable biofuels and environmental compensation to rail freight transport. Another significant recent case concerned sheltered employment in Sweden, regarding Sweden’s Samhall scheme for the integration of people with disabilities via labour market insertion, which the Commission approved with a proposal of appropriate measures.
General Block Exemption Regulation
Are there any specific rules in place on the implementation of the General Block Exemption Regulation (GBER)?
Sweden has not implemented the GBER through any specific legislation. That said, provisions regarding the creation of a state aid registry are found in the SAA and its implementing regulation, and in the instructions of the public body tasked with creating and operating that registry, the Swedish Agency for Growth Policy Analysis.
Public undertakings, public holdings in company capital and public-private partnerships
Public ownership and Services of General Economic Interest (SGEI)
Public undertakings, public holdings in company capital and public-private partnerships
Do state aid implications concerning public undertakings, public holdings in company capital and public-private partnerships play a significant role in your country?
State aid to public undertakings plays a comparatively minor role in Sweden. From time to time issues are raised concerning support given by local authorities, notably alleged sale of land below market value or the grant of loan guarantees to wholly owned companies. Sweden has implemented the EU Transparency Directive through the Act (2005:590) on transparency of certain financial relations (the Transparency Act), which contains provisions in order to ensure the Commission’s insight into the financial relationship between the public sector and public undertakings. The Swedish Competition Authority supervises that the public authorities act in compliance with the Transparency Act and may, when necessary, collect information requested by the Commission. The Competition Authority can make public undertakings’ compliance with the Transparency Act subject to a periodic penalty payment. The Transparency Act applies to all public undertakings over which the public has a direct or indirect dominant influence, as a result of ownership, financial cooperation or the rules applicable to the undertaking, and whose turnover exceeds a threshold of €40 million. Public undertakings covered by the Transparency Act have to instruct their accountant to conduct a review regarding the undertaking’s compliance with the obligations in the Act.
Are there any specific national rules on SGEI? Is the concept of SGEI well developed in your jurisdiction?
There are no specific Swedish rules concerning aid for SGEI. Where aid has been granted for services of an SGEI character, this has been done by the relevant authority on the basis of its own competence (cf recently the Commission’s decision approving aid to Kalmar airport, which was granted by the local authorities and notified to the Commission under the SGEI Framework). For a recent example, the aforementioned Samhall case concerned the Swedish entity charged with integration into the labour market of persons with disabilities. Faced with a complaint and a resulting Commission investigation, Sweden argued that the measure did not constitute aid, since it fulfilled the Altmark criteria and, failing that, that the requirements of the Commission’s 2012 SGEI Decision were met. In its decision, the Commission found that the Altmark criteria were not fulfilled; moreover, it considered that the SGEI Decision was not fully complied with either, but it proposed appropriate measures, making the scheme compatible with that Decision.
Considerations for aid recipients
Legal right to state aid
Is there a legal right for businesses to obtain state aid or is the granting of aid completely within the authorities’ discretion?
In principle, there is no legal right for businesses to obtain state aid; aid may be granted at the relevant public authority’s discretion subject to other administrative law requirements. This said, if aid is granted under a programme to which access is determined by conditions, applicants will need to be treated equally, subject to budget constraints.
Main award criteria
What are the main criteria the national authorities will consider before making an award?
There are no general criteria that a public authority will consider before granting aid; this will be dependent on the purpose pursued by and the conditions for the relevant aid measure.
Strategic considerations and best practice
What are the main strategic considerations and best practices for successful applications for aid?
Potential applicants should keep themselves informed of state aid schemes relevant to them, including information on the political purpose of the scheme, the deadline for applications, the conditions that applicants need to fulfil and award criteria. Should an application for aid be unsuccessful, it may be possible to appeal that decision.
Challenging refusal to grant aid
How may unsuccessful applicants challenge national authorities’ refusal to grant aid?
A public authority’s decision not to grant aid may be appealed to the administrative courts.
Involvement in EU investigation and notification process
To what extent is the aid recipient involved in the EU investigation and notification process?
The process with regard to the Commission is entirely the responsibility of the Ministry of Enterprise and Innovation; the Ministry handles all formal steps in the procedure and all contacts with the Commission. Other parties may be called upon to provide information: the SAA sets out an obligation for a body that proposes to grant aid to inform the government of its intention and provide information regarding such aid. Likewise, any party that may possess information required for a state aid matter before the Commission is under an obligation to provide such information on request. In certain cases, the aid recipient may need to be involved further, depending on the nature of the case.
Regardless of formal procedure, it should be noted that generous rules of access to documents of the Swedish administration may enable third parties to obtain documents, such as correspondence, relating to a particular case.
Strategic considerations for competitors
Complaints about state aid
To which national bodies should competitors address complaints about state aid? Do these bodies have enforcement powers, and do they cooperate with authorities in other member states?
As noted, there is no body with overall responsibility for state aid. A complainant may therefore directly address its submissions to the body granting the aid or, where possible, an authority having oversight of that body. A party may also, depending on the nature of the case, raise irregularities from a state aid perspective with the Ministry of Enterprise and Innovation.
Dealing with illegal or incompatible aid
How can competitors find out about possible illegal or incompatible aid from official sources? What publicity is given to the granting of aid?
There are a number of sources available to find out about aid. As regards aid schemes implemented by legislation, the legislative process is transparent and proposals for legislation and their preparatory works are public and easily available, often online.
As regards ad hoc measures, it is notable that a very broad principle allows public access to documents held by the Swedish administration; in general, documents are available to third parties upon simple request to the relevant public authority, unless there are particular reasons for confidentiality. It may thus be possible for a prospective complainant - having learned of the existence of aid through the press or otherwise - to obtain relevant documentation. From this perspective, it is useful that the SAA provides for the body granting aid to keep a register of aids granted.
Information may also be obtainable from the central registry of state aid operated by the Swedish Agency for Growth Policy Analysis (see above).
Give details of any legislation that gives competitors access to documents on state aid granted to beneficiaries.
As noted above, Sweden operates a broad principle of public access to information, according to which the public is entitled to obtain documents from public authorities. This includes contracts entered into between the state and private undertakings. There are certain exceptions to this principle in the Public Access to Information and Secrecy Act, which contains provisions that would exempt certain official documents from being disclosed (eg, on the basis of commercial secrecy). When a request for access to a document is received, the public authority receiving the request and holding the document is subject to strict deadlines within which the document should be produced or a reasoned decision for the refusal to disclose it be taken. The latter decision can be challenged before the administrative courts.
What other publicly available sources can help competitors obtain information about possible illegal or incompatible aid?
The press may report on assistance granted to undertakings, in particular if the grant is large or politically controversial. Annual reports and other financial documents may also be useful for a potential complainant.
Other ways to counter illegal or incompatible aid
Apart from complaints to the national authorities and petitions to national and EU courts, how else may complainants counter illegal or incompatible aid?
Press and other media have from time to time raised the profile of the granting of aid. A concerned party can also complain to the Commission.
Private enforcement in national courts
Relevant courts and standing
Which courts will hear private complaints against the award of state aid? Who has standing to bring an action?
There is no Swedish legislation specifically regulating private enforcement in national courts; the introduction of such rules was considered at the time of the SAA but was ultimately deemed not necessary.
Three types of possible recourse need to be distinguished.
First, the legal act underlying the aid measure may be challenged. Such a challenge will typically be lodged before the administrative courts. Standing is regulated in administrative law and varies depending on the type of measure challenged. The Administrative Court of Appeal has explicitly confirmed that the competitor of an aid beneficiary has standing to challenge an aid decision by a public authority on the grounds that it breaches EU state aid rules.
Second, a private party may request a court to order that aid that has not been notified or upon which the Commission has yet to pronounce be suspended and that its implementation cease, pending the Commission’s decision as to the legality of the aid. The Supreme Court has stated that, in the absence of a designated court competent to hear such actions, such an action may be lodged before the competent civil courts.
Finally, a claim for damages as a result of illegal state aid may be lodged with the competent civil court by a party suffering injury from the grant of the aid.
Standing is determined on the basis of normal procedural rules and varies depending on, inter alia, the type of decision at issue.
What are the available grounds for bringing a private enforcement action?
The basic grounds for an action will be that aid has been granted in breach of articles 107(1) and 108(3) TFEU. This may in turn constitute a breach of, for example, Swedish administrative law, which may constitute the grounds for annulment. Hence, for instance, where aid has been granted by way of a decision by a municipality and is subsequently found illegal under state aid rules, the court will - on the basis of that illegality - annul the decision on the basis of Chapter 10 of the Municipalities Act (illegality of a decision adopted by the municipality).
It may also be noted that in addition to the state aid rules, Swedish administrative law prohibits local authorities from granting support to particular businesses without having particular reasons for such support. Therefore, if the challenged support is granted by a local authority, these rules may provide further grounds for annulment.
Defence of an action
Who defends an action challenging the legality of state aid? How may defendants defeat a challenge?
The actions described above will all be directed against the public authority that has granted the aid, which will thus be the defendant.
Compliance with EU law
Have the national courts been petitioned to enforce compliance with EU state aid rules or the standstill obligation under article 108(3) TFEU? Does an action by a competitor have suspensory effect? What is the national courts’ track record for enforcement?
There have been a limited number of enforcement actions before Swedish courts since the country joined the EU in 1995.
In a number of those cases, the administrative courts have made an in-depth review of the legality of state aid measures decided by municipalities and regional authorities. In a number of these, the measure has been deemed aid granted in breach of article 108(3) TFEU, and as a result the administrative measure challenged has been declared illegal as a matter of administrative law. In a recent case, an energy producer challenged a rate of taxation imposed on its hydroelectric activities that was higher than that applied to other forms of energy production. The administrative court held that the higher tax level constituted state aid, that it had been applied without notification to the Commission and thus was in breach of article 108(3) TFEU, and that therefore the tax applicable to the claimant should be the lower rate applied to other types of production. Interestingly, another recent judgment from an Administrative Court of Appeal drew the contrary conclusion in respect of a reduced rate of taxation for wind power.
Furthermore, third parties have in practice brought actions for damages against the state and public authorities on the grounds that illegal state aid had been granted. To date, no damages have to our knowledge been awarded as a result of such actions.
Referral by national courts to European Commission
Is there a mechanism under your jurisdiction’s rules of procedure that allows national courts to refer a question on state aid to the Commission and to stay proceedings?
A Swedish court is competent to refer a question to the Commission on the application of EU state aid law. In case of such a referral the court will most likely stay the proceedings awaiting the Commission’s response. The SAA expressly provides that the court may ex officio take into account written observations by the Commission pursuant to article 29 of the Procedural Regulation, even if the parties have not invoked them in the procedure.
Burden of proof
Which party bears the burden of proof? How easy is it to discharge?
Private enforcement follows the general rules of procedure before Swedish courts. This means that in general terms each party bears the burden of proof for its allegations. Thus, the party alleging the grant of illegal state aid has the burden of proof for the claim; the Supreme Administrative Court has found this allocation of the burden of proof to comply with the EU law requirements of equivalence and effectiveness.
A party’s ability to obtain evidence from the other party to the case or third parties varies considerably depending on whether the procedure takes place before the administrative or civil courts.
Deutsche Lufthansa scenario
Should a competitor bring state aid proceedings to a national court when the Commission is already investigating the case? Do the national courts fully comply with the Deutsche Lufthansa case law? What is the added value of such a ‘second track’, namely an additional court procedure next to the complaint at the Commission?
The question has yet to arise before the Swedish courts.
What is the role of economic evidence in the decision-making process?
The parties are free to invoke any evidence deemed necessary, including economic evidence, and the court is free to rely on all evidence put before it.
What is the usual time frame for court proceedings at first instance and on appeal?
The time frame of a case is highly dependent on the nature and complexity of the case; given the limited number of cases that have been tried, it is difficult to speculate on the ‘normal’ duration of these cases.
What are the conditions and procedures for grant of interim relief against unlawfully granted aid?
In the case of a challenge of the legal act underlying the aid, interim measures may be provided in accordance with article 28 of the Administrative Procedural Act or Chapter 15, article 3 of the Procedural Act.
As noted above, a particular procedure is available before the civil courts by which a party may request the suspension of the application of aid pending the Commission’s decision.
Legal consequence of illegal aid
What are the legal consequences if a national court establishes the presence of illegal aid? What happens in case of (illegal) state guarantees?
As noted above, a challenge against an aid measure takes the form of an administrative law action against the legality of the decision to award aid. If the decision is found in breach of state aid rules, it is illegal and as a result void.
What are the conditions for competitors to obtain damages for award of unlawful state aid or a breach of the standstill obligation in article 108(3) TFEU? Can competitors claim damages from the state or the beneficiary? How do national courts calculate damages?
The claiming party must prove that it has sustained a financial loss owing to unlawful state aid or a breach of the standstill obligation in article 108(3) TFEU. We are unaware of any cases where damages have been awarded on these grounds, or that have clearly delineated the circle of persons able to claim damages.
State actions to recover incompatible aid
What is the relevant legislation for the recovery of incompatible aid and who enforces it?
The SAA regulates the recovery of incompatible state aid. Pursuant to the SAA, it is for the state, public authority, municipality, state-owned enterprise or other relevant entity that granted the aid to recover it, with interest.
Legal basis for recovery
What is the legal basis for recovery? Are there any grounds for recovery that are purely based on national law?
The legal basis for recovery as far as state aid law is concerned is that the aid has been granted in breach of the TFEU state aid rules. Recovery takes place in civil court pursuant to normal procedural rules for such actions.
Commission-instigated infringement procedures
Has the Commission ever opened infringement procedures before the CJEU because of non-recovery of aid under article 108(2) TFEU?
No such procedure has been opened.
Implementation of recovery
How is recovery implemented?
If the beneficiary does not voluntarily repay the illegal aid, recovery is effected by means of court proceedings in the civil courts. Thus, the authority will bring an action of recovery against the beneficiary. Should the authority succeed in its action, the court will issue a judgment ordering repayment, which is immediately executable.
Article 108(3) TFEU
Can a public body rely on article 108(3) TFEU?
We are not aware of this issue having arisen to date; however, in principle, if a decision involving aid is found illegal and thus void, that finding will be applicable to all parties, including the public body having granted the aid.
Defence against recovery order
On which grounds can a beneficiary defend itself against a recovery order? How may beneficiaries of aid challenge recovery actions by the state?
No cases on recovery of aid have as yet come before the Swedish courts. In principle, the beneficiary may defend the aforementioned repayment action brought by the authority. If it is unsuccessful in doing so, the court judgment serves as a basis for recovery of the aid without further action being necessary. The SAA limits the grounds on which execution of that judgment can be postponed. The situation where a beneficiary has contested a recovery claim has to our knowledge not yet arisen.
Interim relief against recovery order
Is there a possibility to obtain interim relief against a recovery order? How may aid recipients receive damages for recovery of incompatible aid?
As noted above, recovery will be ordered by an interim order or final judgment of the competent court. There is thus no scope for an appeal of the recovery order, which can be immediately executed. While in ordinary cases Swedish law provides for the possibility of a stay in execution, the SAA specifically excludes this in the case of recovery of state aid. In practice, therefore, once recovery is ordered the beneficiary will need to comply.