Considerations for state aid recipients in France

Considerations for aid recipients

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 such legal right or uniform procedure for state aid to be granted; this mainly depends on the nature of the aid (eg, fiscal, budgetary or banking aid, job creation aid, agricultural aid). The dispenser of aid may have limited, conditional or discretionary powers to grant aid. When the state aid granting authority has limited powers - given that precise and detailed conditions for the allocation of aid have been defined - it has to grant the aid to those recipients that meet the said conditions. It frequently occurs in fiscal matters, for example. Outside such context, public authorities have discretionary powers to grant state aid, and candidate recipients have no right to claim them.

What are the main criteria the national authorities will consider before making an award?

The French authorities take a wide range of considerations into account when assessing the opportunity to grant aid to a candidate recipient. Major criteria may be innovation, job creation or saving, support for regional development and SMEs, rescue and restructuring of companies, particularly when it relates to strategic sectors (eg, Areva in the energy sector), agriculture and environmental protection.

What are the main strategic considerations and best practices for successful applications for aid?

There is a wide range of possible intervention in a company’s life cycle that may involve state aid. Strategic considerations such as growth potential, job creation and innovation are taken into account when requesting aid for the creation of a company or its development. A set of tools is available to public authorities to assess the relevance of a project, and a reference database for aid applicants has been made available under the direction of the DGE (www.aides-entreprises.fr).

How may unsuccessful applicants challenge national authorities’ refusal to grant aid?

The decision of a state entity to refuse the allocation of aid is usually an administrative decision and is therefore subject to judicial review, usually on grounds of ultra vires or more rarely by way of a full remedy action (eg, in those few cases where the unlawful refusal to grant aid, the provision of erroneous information or misleading representations led to the denial of the aid or to the diminution of the amounts granted).

Prior to bringing an action before the judge, claimants must lodge a pre-litigation request before the decision maker or its supervisor. An action for annulment of the decision may then be lodged before the administrative courts of first instance, then on appeal before the administrative court of appeal and ultimately before the Council of State, which is the administrative supreme court in France.

To what extent is the aid recipient involved in the EU investigation and notification process?

In practice, the public authority (either national, regional or local) proceeds to a first analysis of the nature and compatibility of the measure with state aid rules. This should in theory be supplemented by the lead ministry, followed by the SGAE. The SGAE centralises such matters so as to enable a uniform and sound approach to state measures from a state aid law perspective. In case of doubt as to the compatibility of the contemplated measure, the SGAE recommends a notification to the European Commission.

The role played by the candidate recipient within the context of the notification process is restricted by EU case law. Indeed, as a general rule, within the context of state aid review procedure, interested parties other than the member state concerned do not have the right to consult the documents in the European Commission’s administrative file. There is a general presumption that, in principle, disclosure of documents in the administrative file undermines protection of the objectives of investigation activities. Thus, the European Commission may, pursuant to the third indent of article 4(2) of EU Regulation No. 1049/2001 of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, refuse access to all documents relating to the state aid review procedure. Interested parties may nevertheless demonstrate that a given document disclosure is not covered by that presumption, or that there is a higher public interest justifying the disclosure of the document concerned by virtue of article 4(2) of Regulation No. 1049/2001 (Case C-139/07P European Commission v Technische Glaswerke Ilmenau GmbH; Cases T-494/08 to T-500/08 and T-509/08 Ryanair v Commission).

The French state has also recently formulated a restrictive approach in its comments to the European Commission’s 2016-2017 Consultation on the Code of Best Practice on the conduct of State aid control proceedings (see http://ec.europa.eu/competition/consultations/2016_cbp/index_en.html). The French authorities indeed explained that they only involve companies or their counsel when it proves necessary for a full understanding of the case by the European Commission or for the proper conduct of the proceedings. Since proposed state aid is, subject to compatibility, granted at the member state’s discretion, the French authorities argued that the involvement of companies cannot be formulated as a prerequisite or an obligation under the Code of Best Practice.