Short Reads

General Court rules that an implicit and unlimited guarantee does not necessarily constitute State aid

General Court rules that an implicit and unlimited guarantee does not necessarily constitute State aid

General Court rules that an implicit and unlimited guarantee does not necessarily constitute State aid

01.07.2016 EU law

On 26 May 2016, the General Court ("GC") annulled a decision of the European Commission concerning an implicit and unlimited guarantee granted by the French government to the French Petroleum Institute ("FPI"). The French government and the FPI alleged that the FPI did not benefit from the guarantee and therefore the guarantee did not qualify as State aid.

 

The FPI was governed by private law until it was re-established under public law status in 2006. The Commission held that the grant of that status had the effect of conferring an unlimited public guarantee on FPI's activities, as it was no longer subject to insolvency proceedings.

The Commission alleged that the FPI benefitted from this guarantee in its relationships with  suppliers and customers, qualifying the guarantee as an advantage. Furthermore, the Commission deemed this a selective advantage since the FPI's competitors, which are established under private law, are subject to insolvency proceedings. The Commission took a similar view with regard to an unlimited implied guarantee in the La Poste case.

The FPI and the French State appealed the decision, arguing that the guarantee did not qualify as State aid. The GC allowed the appeal. While it shared the Commission's view that the public undertaking status of the FPI implies an unlimited guarantee, the GC ruled that the Commission should have shown the actual effects produced by the guarantee. According to the GC,  the Commission did not prove that the FPI actually benefitted or was likely to benefit from the guarantee. In particular, the Commission did not demonstrate that the FPI’s suppliers treated or were likely to  treat it more favourably, for instance by offering lower prices or not requiring a guarantee themselves.

As a result the GC annulled the decision of the Commission. The parties may appeal to the Court of Justice against this judgment on points of law only.

This article was published in the Competition Law Newsletter of July 2016. Other articles in this newsletter:

1. Court of Justice dismisses appeals in the Calcium Carbide Cartel
2. General Court confirms that the financial position of shareholders and the possibility to increase credit facilities are relevant when assessing an inability to pay request
3. General Court confirms illegality of non-compete clause in telecoms transaction
4. District Court of Rotterdam rejects the applicability of arbitration clauses in antitrust damages litigation
5. Update on changes in antitrust damages claims legislation in the Netherlands
6. New maximum fines for competition law infringements in the Netherlands as of 1 July 2016

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