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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?
It is a generally accepted idea that the central government and most regional authorities are well aware of the state aid rules, and also consult the European Commission on the possibilities of state aid in important matters. However, it is also felt that the central government should make more use of the possibilities to grant lawful state aid. It appears that the state aid rules are less well known to certain local authorities.
Europa Decentraal, a non-profit organisation that was jointly established in 2002 by the Dutch Ministry of the Interior and Kingdom Relations, the Association of Netherlands Municipalities, the Interprovincial Consultative Committee and the Dutch Water Authorities, provides the Dutch municipalities, provinces, water boards and ministries with information and advice on the correct application of EU law and policy. On behalf of the Dutch Ministry of the Interior and Kingdom Relations, it also coordinates the notification of exempted aid measures to the European Commission via the State Aid Notification Interactive, and the reporting of state aid to the European Commission via the State Aid Reporting Interactive.
The amount of (non-crisis) aid in the Netherlands is below the average in the European Union, and generally amounts to approximately 0.3 per cent of GDP. Total state aid (excluding railways) amounted to approximately €2.3 billion in 2016. Subsidies are the most important aid instrument.
Public enforcement in respect of illegal state aid in the Netherlands is carried out by the European Commission on the basis of EU legislation, and may also be carried out by the central government on the basis of the Act on Compliance with European Legislation by Public Entities (Wet NErpe), which entered into force on 13 June 2012.
The number of formal procedures initiated by the Commission in respect of state aid measures by the Netherlands is limited. Since 2000, 49 formal procedures were initiated, of which there were only three in 2012, one in 2013, two in 2014, none in 2015 or 2016 and one in 2017. In 2017, 11 decisions were taken by the Commission with respect to the Netherlands. In eight cases, the Commission decided not to raise objections; in two cases the Commission decided that the measure did not constitute aid (one after the measure was formally notified and one after a complaint); in one case the Commission has decided to open the formal investigation procedure (Ikea).
The central government has not yet used its powers under the Wet NErpe to instruct a public entity to comply with state aid rules.
Private enforcement in respect of illegal state aid is dealt with by both administrative and civil courts. This includes:
- action for damages brought by a competitor against the beneficiary of the aid or the authority that granted the aid for losses as a result of the unlawful grant of the aid;
- request for an injunction made by a competitor threatened with injury by such aid against the authority that granted the unlawful aid (for example, an order prohibiting the grant of any further aid and the recovery of support given);
- action by a competitor against the authority that granted unlawful aid for annulment of the act implementing the aid;
- action against the authority that granted aid for annulment of the decision to collect a levy imposed on an undertaking where the levy is used to finance unlawful aid; and
- action by the authority that granted aid against the recipient to recover aid granted contrary to article 108(3) of the Treaty on the Functioning of the European Union (TFEU) or that, on the basis of a Commission decision, is not compatible with the common market.
In the past three years, over 100 cases have been brought before the various courts where applicants have claimed that unlawful state aid measures were involved. The unlawful state aid argument has been put forward particularly in procurement cases and cases concerning municipal real estate development. In most cases, the court decided the unlawful state aid argument was invalid.
The Dutch Competition Act contains an explicit obligation for administrative authorities not to give preferential treatment to their own undertakings over their competitors, for example, by offering favourable conditions on loans.
Which national authorities monitor compliance with state aid rules and have primary responsibility for dealing with the European Commission on state aid matters?
On the basis of the distribution of competences under national law, the central government, regional and local authorities, independent administrative bodies and bodies governed by public law each have the responsibility to comply with the state aid rules and have primary responsibility for dealing with the European Commission on state aid matters. The Coordination Point State Aid of the Ministry of the Interior and Kingdom Relations offers advice and coordinates state aid notifications, with the support of non-profit organisation Europa Decentraal (see question 1).
Under Wet NErpe, which entered into force on 13 June 2012, the competent minister - generally the Minister of the Interior and Kingdom Relations - may instruct a public entity to comply with European legislation, including state aid rules, and may impose (periodic payment) penalties if the public entity does not follow such instruction. Beneficiaries can initiate appeal proceedings against a decision of the Minister of Interior and Kingdom Relations at the Administrative Jurisdiction Division of the Council of State.
Which bodies are primarily in charge of granting aid and receiving aid applications?
There are no specific bodies primarily in charge of granting aid and receiving aid applications. On the basis of the distribution of competences under national law, aid may be granted by the central government, regional and local authorities, independent administrative bodies and bodies governed by public law. These authorities and bodies may appoint a separate executive body for the implementation of aid schemes and measures.
General procedural and substantive framework
Describe the general procedural and substantive framework.
The General Administrative Law Act contains general rules for orders (sometimes also referred to as ‘decisions’) of administrative authorities and sets out the general framework for legal protection against such decisions. It includes provisions concerning the preparation and notification of orders and the duty to state reasons for them. For example, orders must be prepared with due care, powers may not be used for purposes other than those for which they were conferred by the legislature, and the interests concerned must be weighed in a proportionate manner.
Division 4.2 of the General Administrative Law Act contains specific rules in respect of the granting of subsidies. This division deals with the subsidy grant, the obligations of the subsidy recipient, the determination of the definitive subsidy amount, the withdrawal and amendment of a subsidy and payment and recovery.
The Civil Code and the Code of Civil Procedure apply to state aid measures set out in legal acts under private law. Aid granted in the context of, for example, a sales agreement or a loan agreement will normally be governed by private law.
Identify and describe the main national legislation implementing European state aid rules.
There is no specific national legislation implementing European state aid rules, apart from a recently adopted Act for the recovery of state aid. This Act, which entered into force on 1 July 2018, contains the general rules for the recovery of state aid and solves certain difficulties under national law in respect of the recovery of state aid (such as the legal basis for recovery of illegal aid, recovery of interest and limitation periods).
Recovery of illegal aid is handled by the administrative organ that granted the aid, in accordance with the aforementioned Act for the recovery of state aid. In the past, in a number of cases, the principle of effectiveness and the primacy of EU law have been applied to set aside provisions of national law that would prevent the recovery of illegal aid.
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?
The approved and block-exempted schemes are issued on a national or regional level. For the most part, these schemes relate to environmental protection, the agricultural sector, SMEs and regional aid. For instance, the three northern provinces (Groningen, Friesland and North-Holland) operate the Subsidieverordening Waddenfonds 2012, a specific programme that allows for subsidies in respect of the conservation and development of the Wadden Sea area. In the province of North Brabant, a subsidy scheme for urgency areas is in place that provides subsidies to farmers who close down their businesses in this environmentally deprived area (SA41334). On a national level, the schemes could be sector-specific, such as fisheries (SA33344) and public broadcasting (E 5/2005 (ex NN 170b/2003)). In 2014, the Commission issued the regional aid map 2014-2020 for the Netherlands in Decision SA39108. During the period 2016-2020, compensation will be granted to freight rail transport during construction works on the Betuweroute (SA42476).
General Block Exemption Regulation
Are there any specific rules in place on the implementation of the General Block Exemption Regulation (GBER)?
On the basis of the distribution of competences under national law, the central government, regional and local authorities, independent administrative bodies and bodies governed by public law each have the responsibility to implement the rules laid down in the GBER. No specific legislation is in force apart from the general obligations for the authorities to act in a transparent manner, as laid down in the General Administrative Law Act and the Dutch Competition Law. The website of Europa Decentraal provides guidance on the implementation of the GBER.
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 implications concerning public undertakings, public holdings in company capital and public-private partnerships generally do not play a significant role in the Netherlands. A 2013 report on the participation policy of the national government explicitly indicates that adherence to state aid rules is part of the assessment criteria.
In general, the state holds ownership in undertakings that are considered of vital importance to the national economy. The list of state-owned companies is, however, limited. As a result of the financial crisis, certain banks and insurance companies of national importance were nationalised and received state aid, within an approved state aid scheme of the European Commission.
Are there any specific national rules on SGEI? Is the concept of SGEI well developed in your jurisdiction?
There are no specific national rules on SGEI. A past study suggests that many regional and local authorities are not very familiar with the concept of SGEI, and do not often rely on the Altmark principles or the Almunia package in order to ensure compliance with state aid rules.
When regional or local authorities rely on the Altmark principles or the Almunia package, this is usually done by way of an administrative order or contract.
The Ministry of the Interior and Kingdom Relations published a guidance paper on SGEI in July 2014, describing the current rules laid down in the 2012 SGEI package of the European Commission. Several provinces and larger cities have their own guidance paper, decree or (standard) order in respect of SGEI (for example, The Hague issued the Haagse Kaderverordening Subsidies).
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?
There is no legal right for businesses to obtain state aid. The granting of aid is completely within the authorities’ discretion. However, on the basis of the General Administrative Law Act, orders of administrative authorities must respect certain general principles, including the principle of equal treatment.
Main award criteria
What are the main criteria the national authorities will consider before making an award?
Over the past few years, most (non-crisis) aid was granted for environmental protection (including energy saving). This totalled an amount of more than €1 billion in 2016. Other important amounts were granted to the agricultural sector and for research and development. Other types of aid, including employment aid and rescue and restructuring aid, are not awarded very often. In 2015, the amount of state aid (excluding railways) granted by the Dutch authorities amounted to approximately €2.3 billion.
Strategic considerations and best practice
What are the main strategic considerations and best practices for successful applications for aid?
The central government offers general advice in respect of aid. The authorities and bodies granting aid can provide more specific advice. The main strategic considerations and best practices for successful applications of aid include a thorough analysis of the rules or regulations that allow for aid, including their scope, and a timely application. It is advisable to collect as much relevant information as possible and, to the extent possible, discuss a request for aid beforehand with the granting authority or body. It is also advisable to start preparing a request for aid at an early stage and not start a project before a decision with respect to the request has been taken.
Challenging refusal to grant aid
How may unsuccessful applicants challenge national authorities’ refusal to grant aid?
Under the General Administrative Law Act, interested parties must normally follow a preliminary administrative procedure (usually an objection procedure) before challenging an administrative order before the court. This preliminary administrative procedure allows the administrative authority to reconsider its order. It follows that an unsuccessful applicant will normally first challenge a refusal to grant aid before the relevant administrative authority itself, and will subsequently challenge the refusal before an administrative court.
Involvement in EU investigation and notification process
To what extent is the aid recipient involved in the EU investigation and notification process?
The extent to which the aid recipient is involved in the EU investigation and notification process depends on the authority involved and the issues involved. The notification will be drafted by the authority involved, but the aid recipient may be asked to provide input.
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?
There is no specific national body to which competitors may address complaints about state aid. However, under the Wet NErpe, the competent minister may instruct a public entity to comply with European legislation, including state aid rules, and may impose (periodic payment) penalties if the public entity does not follow such instruction. A competitor may therefore address complaints about (proposed) state aid to the competent minister and ask the minister to take action.
Perhaps more common and more appropriate, a competitor that qualifies as an interested party may challenge an administrative order of the granting body in the preliminary administrative procedure before this body, and subsequently before the court.
It is not possible to file a complaint about state aid to the Netherlands Authority for Consumers and Markets (ACM), which applies the competition rules (cartel prohibition, prohibition of abuse of a dominant position and merger control) in the Netherlands. However, the ACM may impose an order, sanctioned with periodic penalty payments, upon an administrative authority that gives preferential treatment to its own undertakings over its competitors - for example, by offering favourable conditions on loans, provided that this does not constitute state aid within the meaning of article 107(1) TFEU.
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?
An administrative order has to be published pursuant to the provisions of the General Administrative Law Act. According to these provisions, an administrative order that is addressed to one or more interested parties must be notified by being sent or issued to them, including the applicant. There is no obligation to publish such an order in a government gazette. Orders that are not addressed to one or more interested parties must be notified by means of a notice of the order, or the substance thereof, placed in an official government publication, news-paper or free local paper, or in any other suitable way.
The transparency provisions in the GBER have been implemented by means of a national state aid website, which can be reached via the website of the Directorate-General of Competition.
Give details of any legislation that gives competitors access to documents on state aid granted to beneficiaries.
Access to information and documents of an administrative body can be obtained by means of a request under the Government Information Act. The administrative body is obliged to comply with the request unless certain specific circumstances apply - for example, if the requested information contains confidential business data. If a request under the Government Information Act is denied, the decision of the administrative body may be challenged before the administrative body itself (objection procedure), and subsequently before the court (appeal procedure).
What other publicly available sources can help competitors obtain information about possible illegal or incompatible aid?
Competitors may be able to obtain information about illegal or incompatible aid from publicly available annual reports and from the financial statements that public limited companies, private limited companies, cooperative associations and mutual benefit associations are obliged to register with the Dutch Chamber of Commerce. However, it may prove very difficult to derive from these annual reports and financial statements that illegal or incompatible aid was granted.
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?
There are few possibilities to counter illegal or incompatible aid, apart from complaints to the national authorities and petitions to national and EU courts. Competitors may address third parties and point out the illegality of a proposed aid measure. This includes, in particular, addressing a financial institution that intends to grant a loan on the basis of an illegal state guarantee. Past experience indicates that these types of alternative strategies are not applied very often.
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?
Actions against aid measures that are granted through administrative acts should first be brought before an administrative court. If an action before the administrative court is no longer possible, the civil court has jurisdiction. Civil courts have exclusive jurisdiction in cases where aid measures are granted through non-administrative acts or where aid measures are laid down in policy rules or in generally binding provisions.
Standing before the administrative court is only possible if the applicant qualifies as an interested party. The applicant must have a direct and individual interest in order to qualify as an interested party. A competitor of the aid recipient will be considered an interested party if it can prove that its competitive position has been or will be affected by the state aid measures.
In principle, everyone has standing before the civil court. The only requirement is that the claimant have sufficient interest. A party that may not qualify as an interested party in an administrative procedure may, therefore, still have standing to bring an action before the civil court.
What are the available grounds for bringing a private enforcement action?
In administrative proceedings, article 108(3) TFEU is an independent standard for assessment, and, if this article is put forward as a ground for enforcement, the state aid measure must be reviewed fully. Additional grounds for private enforcement actions in administrative proceedings can be formed by the general principles of proper administration.
European legislation does not form a ground for civil private enforcement actions on its own. The grounds for a civil private enforcement action need to be based on Dutch national legislation, which can form the context for Community legislation. Several options are available:
- wrongful act (article 6:162 of the Dutch Civil Code (DCC);
- nullity of the state aid measure (article 3:40 of the DCC);
- undue payment (if the third party has paid a levy that is used for financing the illegal state aid measure) (article 6:203 of the DCC); or
- unjustified enrichment (article 6:212 of the DCC).
If the administrative body granted the state aid measure by means of a non-administrative act, general principles of proper administration and the principles of reasonableness and fairness may also form a ground for bringing a private enforcement action in civil proceedings.
Defence of an action
Who defends an action challenging the legality of state aid? How may defendants defeat a challenge?
In administrative proceedings, the action challenging the legality of state aid is defended by the administrative body that has granted the aid. The beneficiary must be granted the opportunity to take part in the proceedings.
In civil proceedings, the action challenging the legality of state aid is defended by the relevant government body with legal personality (eg, the municipality), of which the administrative body (eg, the Municipal Executive, consisting of the mayor and aldermen) is part.
Defendants may defeat a challenge by arguing that the claimant has provided insufficient evidence that a certain measure constitutes aid, or by providing sufficient evidence that a certain measure does not constitute aid.
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?
The state aid rules are regularly and increasingly referred to in national court proceedings. The success rate for private actions is still rather limited, especially because it appears difficult to demonstrate that a state measure constitutes an advantage and does not meet the market economy operator test.
The cost risk involved if a challenge is unsuccessful is very limited. Each party initially bears its own costs. In ordinary civil cases, the losing party must bear the legal costs as fixed by the court, which are substantially lower than the actual legal costs.
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?
Both administrative and civil courts may request a preliminary ruling from the European Court of Justice (ECJ) if this is deemed necessary.
According to the General Administrative Law Act, the administrative court is obliged to supplement the facts on its own initiative. This also includes referring a question on state aid to the Commission. This is not a common practice in the Netherlands.
A civil court may also refer a question on state aid to the Commission, and stay proceedings upon request of one of the parties involved. It is unclear whether the civil court may also refer a question on state aid to the Commission without a party’s request to do so. This follows from the fact that the civil court has a passive role in proceedings, and therefore may only judge on the basis of the specific facts and circumstances that have been submitted by the parties. In February 2015, the Court of Appeal of Den Bosch addressed the European Commission in order to obtain information about a complaint filed with the Commission in a case of alleged state aid to a waste management company that was owned by several municipalities. To date there have not been any interventions by the European Commission as an amicus curiae in state aid proceedings.
Burden of proof
Which party bears the burden of proof? How easy is it to discharge?
In administrative proceedings, the administrative court may adopt an active role concerning the collection of evidence. In practice, the claiming party bears the burden of proof and must demonstrate the existence of (illegal) aid. It may be difficult to show that illegal aid has been granted, especially if it is not clear whether a certain measure constitutes an advantage.
In civil proceedings, the claimant bears the burden of proof. Once again, it may be difficult to demonstrate that illegal aid is involved. Some alleviation of the burden of proof can be obtained if the principles of reasonableness and fairness should give reason to do so. Courts have interpreted the burden of proof in multiple different ways in the past and at times have shifted the burden of proof.
A discovery procedure does not exist under Dutch law.
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?
Yes, a competitor can bring state aid proceedings to a national court when the Commission is already investigating the case. In July 2015, the Court of Noord Nederland decided that when the Commission is already investigating the case this does not prevent a national court from protecting the rights of a claimant before a national court. The Court also mentioned that it is the obligation of national courts to take measures that can prevent or remedy the unlawful implementation of state aid measures in the period until the Commission has rendered its decision.
What is the role of economic evidence in the decision-making process?
In both administrative and civil proceedings, all evidence is allowed, unless otherwise determined by law. Economic evidence is therefore generally accepted and, where appropriate, relied on by national judges.
What is the usual time frame for court proceedings at first instance and on appeal?
In 2016, approximately 65 per cent of civil cases were decided at first instance within a period of one year, and approximately 89 per cent within a period of two years. On appeal, approximately 46 per cent of cases were decided within a period of one year and approximately 81 per cent within a period of two years.
In 2013, both at first instance and on appeal, almost 80 to 85 per cent of administrative law cases were decided within a period of one year.
What are the conditions and procedures for grant of interim relief against unlawfully granted aid?
Interim relief against unlawfully granted aid can be granted by the administrative court and the civil court, depending on the legal basis of the aid involved.
In interim injunction proceedings before the administrative court, interim relief will be granted if the claimant is an interested party and it is the court’s preliminary assessment that the administrative order is illegal. If the court has doubt whether the order is illegal, interim relief may be granted on the basis of a balancing of interests. Interim injunctions proceedings require urgency and a pending objection or appeal procedure.
In interim injunction proceedings before the civil court, interim relief is only granted if the plaintiff has an urgent interest that outweighs the interests of other parties involved. There must be a matter of urgency and the court must take account of the probable outcome of the main proceedings. The interim injunction has a provisional character and ceases to exist at the moment a final decision concerning the dispute has been taken. It is not necessary that a principal claim is pending before the civil court, but the civil court is obliged to abstain from ruling if administrative proceedings are possible.
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?
In its judgment in relation to the Residex case, which followed the judgment of the ECJ of 8 December 2011, the Supreme Court in the Netherlands made it clear that the legal consequences, if a national court establishes the presence of illegal aid, depend on what is necessary to restore the competitive situation that existed before the illegal aid was granted. In case of (illegal) state guarantees, this may lead to the nullity of the guarantees if this contributes to restoring the competitive situation prior to the aid.
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?
In administrative proceedings, the administrative court is allowed to order compensation for damages. Compensation is granted if there is unlawful state aid and if there is a causal relationship between the aid and the damage suffered.
To claim damages in a civil court procedure, liability based on a wrongful act must be established. In order to accept government liability, four criteria must be satisfied. The administrative body must have acted unlawfully; the breached measure must have been intended to protect the applicant; there must be a causal relationship between the breach and the damages suffered; and the wrongful act must be attributable to the counterparty.
State actions to recover incompatible aid
What is the relevant legislation for the recovery of incompatible aid and who enforces it?
There is no specific national legislation for the recovery of incompatible aid and who enforces it. A legislative proposal for the recovery of state aid was introduced in April 2008, but has not yet been adopted by Parliament. On 13 November 2014, the Minister of Economic Affairs stated that the existing proposal will be replaced by a new, less complex proposal.
It follows from case law of the administrative courts that article 4(49)(1)(b) of the General Administrative Law Act can be applied to subsidies that constitute illegal state aid. According to this provision, ‘an administrative authority may withdraw a decision determining the definitive subsidy amount or amend it to the detriment of the recipient if the definitive subsidy amount was determined incorrectly and the subsidy recipient knew this or should have known this’.
Furthermore, for most ministries, specific Subsidy Framework Acts explicitly provide that a subsidy can be refused, lowered or withdrawn where the subsidy is contrary to a treaty obligation of the Dutch state, and that interest may be charged in case of unduly paid amounts.
Legal basis for recovery
What is the legal basis for recovery? Are there any grounds for recovery that are purely based on national law?
Under Dutch administrative and civil law, recovery can often be based on the concept of ‘undue payment’ or ‘unjust enrichment’. In addition, the General Administrative Act and a number of Subsidy Framework Acts provide for special provisions on recovery in the case of subsidies. Also, the General Tax Act contains certain provisions for a situation where too little tax was imposed, and authorises the tax inspector to impose additional tax if a ‘new fact’ occurs.
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?
An infringement procedure was initiated by the Commission in Case C-382/99. This case concerned aid granted by the Minister of Finance to service stations located near the border with Germany. Since the Commission was not satisfied by the answers that were given by the Dutch government, it decided to start the infringement procedure. The ECJ agreed with the Commission on all points.
Another infringement procedure against the Netherlands was initiated in Case C-401/07. The Commission held that the Dutch state did not recover the unlawful aid fast enough and for that reason started the infringement procedure. In response, the Dutch state pledged that it would amend the rules by which it would ensure that the recovery of unlawful aid would take place more quickly. As a result, the Commission decided to withdraw the case.
Implementation of recovery
How is recovery implemented?
In the report of the Interdepartmental Commission for European Law ‘Recovery of State Aid’ (The Hague 2002), it was established that the Netherlands does not have a comprehensive set of legal tools to recover state aid. There were recovery problems in administrative law, private law and tax law. This has led to a specific Act for the recovery of state aid that entered into force on 1 July 2018. As of 1 July 2018, recovery of state aid after a decision by the Commission is possible on the basis of the Act for the recovery of state aid. The administrative body that has granted the aid has to render a unilateral decision for the recovery of the aid. The recovery includes the interest. The purpose of the recovery is to restore the situation to what it was before the illegal aid was granted. Therefore, the recovery also concerns interest.
Article 108(3) TFEU
Can a public body rely on article 108(3) TFEU?
Yes, this is possible. If a public body has granted state aid to an undertaking, but subsequently finds out (or takes the position) that the aid is unlawful, it can rely on article 108(3) TFEU, which is directly applicable. In recent case law, there are several examples where a public body argued that unlawful aid had been granted and invoked the nullity of a contract. Case law shows, however, that unlawful state aid does not necessarily lead to the nullity of the contract and that it may be sufficient that the amount of the aid under the contract is recovered (with the contract staying in place).
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?
Beneficiaries of aid can challenge a unilateral administrative decision to recover aid before the competent administrative court (the Court for Trade and Industry or the competent tax court). There is no appeal possible against judgments of the Court for Trade and Industry.
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?
Pursuant to the General Administrative Law Act, in general it is possible to obtain interim relief against a recovery order. However, in view of the principle of effectiveness and the primacy of EU law, interim relief against a recovery order will normally not be granted if it is clear that the aid was illegal. Aid recipients will normally not receive damages for recovery of incompatible aid as this would undermine the state aid rules. Only in very particular circumstances will aid recipients receive damages (for example, on the basis of legitimate expectations).