The Market Economy Investor Test in EU State Aid Law. Applicability and Application. Malgorzata Wolters Kluwer

Transcription

1 The Market Economy Investor Test in EU State Aid Law Applicability and Application Malgorzata Wolters Kluwer

2 Preface List of Abbreviations xvii xix PART I Introduction, Objectives, Delimitations and Methodology 1 CHAPTER 1 Introduction Subject of This Book Objectives Delimitations On the Relation between the EU and EEA Law Legal Sources and Their Use Note on Citation and Nomenclature On the Use of the Term the 'MEIP': 'The Devil Is Known by Many Names' Structure 11 PART II Introductory Remarks on the Notion of the MEIP 13 CHAPTER 2 The Dual Capacity of State and the MEIP Introduction The Notion of Aid Origins and Endorsement of the MEIP Introduction Written Question to the Commission of Commission Decision on State Aid to the Steel Industry of Transparency Directive of vii

3 2.3.5 The Council and the Parliament's Endorsement of the MEIP in The Equity Holdings Communication of The Court's Endorsement of the MEIP in Commission Communication on Public Undertakings of Non-binding Sector-and Aid Instrument-Specific Commission Guidelines Compliance with the MEIP and Granting Aid: What Economic Advantage and in Whose Favour? Conclusions 27 PART III The Applicability of MEIP 29 CHARTER 3 Introduction Preliminary Remarks The Structure of Examination 33 CHARTER 4 AG Lenz's View on the Applicability of the MEIP Introduction AG Lenz in Meura and Boch II 35 CHARTER 5 Hytasa: Making a Distinction between the Two Capacities of the State Introduction The 'Hytasa Formula' The Structure of Analysing the Application of Hytasa Hytasa at the Stage of Applying the MEIP A Choice between Privatisation, Liquidation and Restructuring of a Public Undertaking Aid in Favour of the Restructured/Recapitalised and/or Privatised Undertaking Introduction The Scope of Liabilities of a Public Shareholder The Costs of Aid That Was Granted in the Past and Subsequent Applications of the MEIP Introduction The Gröditzer Stahlwerke Approach Gröditzer Stahlwerke and Unlimited State Guarantees in Favour of Public Credit Institutions Criticism of the Gröditzer Stahlwerke Approach to Unlimited State Guarantees 50 viii

4 Are Unlimited State Guarantees Comparable to the Structures of Liability in the Private Sector? Are Political Statements Comparable to Unlimited State Guarantees? Conclusions Do Costs of Social Nature Always Fall within the Public Authority Dimension? The 'General Rule' on the 'Public Authority Character' of Social Costs Are There Exemptions from the 'General Rule' on Social Costs? How to Distinguish between Two Types of Social Costs under the MEIP? Conclusions Aid in Favour of the Purchaser Introduction FortMalakoff Privatisation of Bank Burgenland Conclusions Applying Hytasa for the Purpose of Determining the Applicability of the MEIP Introduction 'No Market Economy Investor Would Have Found Itself in the Situation of the Public Shareholder' Linde Koninklijke Scheide Groep and Hellenic Shipyards Does the Fact of Having Benefitted from Aid in the Past Exclude the Applicability of the MEIP to Measures That Were Granted at Some Later Point in Time? Does the MEIP Apply to an Amendment to Repayment terms of Compatible Aid? Do ING and BB Contradict Each Other? Conclusions 81 CHAPTER 6 The Relation between the Fulfilment of Obligations, Which the State Assumed as a Public Authority, and the Exercise of Public Powers Introduction Ryanair and EDF: Factual Background and the Commission's Position on the Applicability of the MEIP AG Leger on the Applicability of the MEIP in Altmark 86 ix

5 6.4 The Judida] Review in Ryanair and EDF The Position of the CFI in Ryanair The Position of the GC in EDF The Position of the ECJ in EDF Has the GC Distorted and Misinterpreted the Facts of EDF? Has the Commission in EDF Mixed the Applicability of the MEIP with Its Application? The (Mis-)Interpretation of Article 107(1) TFEU Conclusions 103 CHARTER 7 The Applicability of the MEIP Post-EDF Introduction Has the Court Departed from Pre-existing Case Law? The Concept of an Undertaking in Determining the Applicability of the MEIP Introduction AceaElectrabel: Two Different Concepts of an Undertaking? The Relevance of SAT Fluggesellschaft Has EDF Established the Applicability of the MEIP to All Tax Measures? The Applicability of the MEIP to Tax Scheines Difference in Cost of Capital The Applicability of the MEIP and State Resources The MEIP as a 'General Standard' Was the Sole Ownership of EDF a Sine Qua Non Condition for Considering the MEIP Applicable? Has EDF Shed Light on the Applicability of the MEIP? The Post-EDF Approach to the (Non-)applicability of the MEIP to Unlimited State Guarantees 134 CHARTER 8 The Applicability of the MEIP to Measures That Were Adopted in Relation to the 2008 Financial Crisis Introduction 'Measures That Were Adopted in Relation to the 2008 Financial Crisis' How Does ESA Approach the Applicability of the MEIP in the 'Financial Crisis Decisions'? Does the Commission's Practice Support the Non-applicability of the MEIP because of the 2008 Financial Crisis? What is the Commission's Approach to the MEIP in the 2008 Financial Crisis Cases? Conclusions 142 x

6 CHAPTER 9 The Applicability of the MEIP to the Financing of Services of General Economic Interest Introduction The 'Efficiency Criterion': Its Relation to the MEIP and Limitations Chronopost I BUPA The 'Objective-Based' Approach Revised? Conclusions: The 'Efficiency Criterion' as a 'Special' Subtype of the MEIP 156 PART IV The Application of the MEIP 161 CHAPTER 10 Preliminary Remarks The Objective of Application What Private Investor? The Structure of Examination of the Application of the MEIP 166 CHAPTER 11 Economic and Non-economic Objectives Pursued by a Public Investor Introduction What Must a Public Investor Do under the MEIP? What Must a Public Investor Not Do under the MEIP? Conclusions 173 CHAPTER 12 From Whose Perspective Should One Verify the Profitability of a State Intervention? Introduction Helaba I What Can Be Learnt from Helaba 7? Why Should One Reject the 'Universal' Perspective of the Grantor? The Choice between the Recipient and the Grantor's Perspective in Helaba I The Consequences of the Two Perspectives under the MEIP Chronopost 1: 'Reference to the Objective and Verifiable Elements Which Are Available' Conclusions 181 CHAPTER 13 What Rate of Return Is Required under the MEIP and How to Calculate It? Introduction The Adequate Rate of Return in the Commission Communications 184 xi

7 13.3 The Profitability Assessment from the Economic Perspective The Criterion of 'the Average Rate of Return in the Sector Concerned' Introduction The 1999 WestLB Decision The CF1 Annuls the 1999 WestLB Decision Introduction Does the MEIP Apply to Profitable Undertakings? The Criterion of 'the Average Rate of Return in the Sector Concerned' The Two Perspectives from Which One Assesses the Profitability in WestLB The Infringement of the Obligation to State Reasons Conclusions 193 CHARTER 14 In Search of the 'Right' Benchmark of the MEIP in a Given Case Introduction The Public Investor and the Recipient Undertaking The Relation between the Grantor and the Recipient The Investment and the Situation or the Market in Which It Takes Place Conclusions 200 CHARTER 15 When Should the Profitability Analysis Be Undertaken and Why? Introduction The Case Law and the Commission Practice on the Relevant Time of Applying the MEIP Ex ante v. Expost Profitability Assessments under the MEIP: Questions and Doubts Questioning the Ex ante Approach? Option Agreements under the Private Vendor Test Introduction Asker Brygge: The EFTA Court Makes the Best of ESA's Decision Hammar. The Commission's View on Option Agreements Conclusions 215 CHARTER 16 The Test of Concomitance under the MEIP Introduction How to Meet the Test of Concomitance under the MEIP? The Proper Benchmark Real Economic Significance of Private Participation The 'Same' or 'Identical' Conditions Making the Investment Simultaneously The Participation of Employees 221 xii

8 16.3 Conclusions PART V The Application of the Different Subtypes of the MEIP CHAPTER 17 The MEIP and Its Subtypes 17.1 Introduction 17.2 The Private Creditor Test Introduction The Application of the Private Creditor Test 17.3 The Private Guarantor Test Introduction The Application of the Private Guarantor Test 17.4 The Private Reinsurer Test Introduction The Application of the Private Reinsurer Test 17.5 The Private Lender Test Introduction The Application of the Private Lender Test 17.6 The Private Borrower Test Introduction The Application of the Private Borrower Test 17.7 The Private Vendor Test Introduction Sale of Public Property through a Tender Procedure Sale Foliowing an Independent Expert Evaluation Relation between a Tender Procedure and an Independent Expert Evaluation The Absence of a Tender Procedure and an Ex ante Expert Evaluation The Price of Flexibility and Freedom in Applying the Private Vendor Test The Proposal of the Market Economy Tenderer Principle 17.8 The Private Purchaser Test Introduction The Application of the Private Purchaser Test 17.9 The Private Supplier Test Introduction The Application of the Private Supplier Test The Private Operator (Player) Test Introduction The Application of the Private Market Operator (Player) Test The Application of the MEIP to Gases of Cross-Subsidisation xiii

9 The Application of the MEIP to Corporate Tax Arrangements Conclusions 267 PART VI The Judicial Review 269 CHARTER 18 The Judicial Review of Cases concerning the MEIP Introduction Why Does the Extent of the Judicial Review in the MEIP Cases Raise Difficulties? A 'Complex Economic Appraisal' or a Review of Information of Economic Nature? Wide, But Not Unlimited Commission's Discretion and the Limited Judicial Review Conclusions 284 PART VII Criticism of the MEIP and Conclusions 285 CHARTER 19 Criticism of the MEIP Introduction Does the MEIP Contradict Article 345 TFEU? Does the MEIP Deprive the 'One Time, Last Time' Principle of Its Efficiency? Is the MEIP an Idealised, Hypothetical Model of a Non-existing Entrepreneur? Introduction Is Compliance with the MEIP a Paradox? Lack of the Required Funds State Investments That Are Atypical of the Private Market Other Reasons That May Explain the Absence of a Real Private Investor Private Investors Are Not Always Rational, Prudent and Profit-Oriented: Why Must the State Behave in This Way? Does the Commission Replace the Decision Made by a Public Investor? Conclusions Are Public and Private Investors Incomparable? Introduction Access to Unlimited Funds The Exercise of Public Powers 297 xiv

10 Are Entrepreneurial Skills and Motives of Public Officials Not Comparable to Those of Private Investors? Absence of 'Normal Market Conditions' Conclusions 299 CHAPTER 20 Conclusions 301 Bibliography 303 Table of cases 321 Table of Legislation 329 EEA law 341 Miscellaneous 343 Index 345 xv