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Standing to bring applications for annulment before the European Courts: State aid cases

almunia 2In 2002, Spain set up a new tax relief scheme for the purchase of ships involving leasing and financing. This was the so-called Spanish Tax Lease System (‘SEAF’). The regime allowed the Associations of Economic Interest (‘AEIs’) to become beneficiaries of this tax relief. Those associations acted as intermediary between the shipyards in charge of building the ships and the ship owners that purchased them. In exchange for their investments the AEIs could reduce their taxable income.

On 17 July 2013, the European Commission declared the incompatibility of the SEAF with the European state aid rules (Articles 107 et seq. of the Treaty on the Functioning of the European Union, ‘TFEU’). The unlawfulness of this system was to be found in the anticompetitive advantage that the AEIs obtained and the resulting distortion of competition within the internal market.

The effect of this Decision was mainly that Spain had to recover the aid granted to the companies that invested on the AEIs.

This case is a mere example among the dozens of state aid cases that the Commission handles every year. The purpose of this post is to briefly comment on the standing to bring proceedings before the European Courts. In other words, who has the right to appeal Commission’s Decisions? In State aid cases, the addressee of the act is only the Member State to which the decision adopted by the Commission is notified. Assuming there was still time to appeal the Decision –the time limit is two months since its official publication, could the investors have applied for annulment?

Article 263 TFEU provides that any natural or legal person may institute proceedings against an act addressed to that person or which is of direct and individual concern to them.

Direct concern means that the challenged act must directly affect the applicant’s legal situation and must leave no discretion to its addressees entrusted with the implementation task. On the other hand, according to the European Courts case law, persons are considered to be individually concerned only if the decision affects them by reason of certain attributes specific to them or by reason of circumstances in which they are differentiated from all other persons.

In illegal state aid cases, the European Courts have required other two additional conditions in order to uphold the action: the company must  have been actual beneficiary of the illegal aid and the Commission must have requested the State to recover that aid from the company.

It can be concluded that these investing companies which were considered as beneficiaries of the SEAF and obliged to return the aids to the Spanish State, had the legal standing required to challenge the Commission’s Decision. The same goes for all those companies affected in the terms described above by a decision finding  state aid system illegal or incompatible with the EU law.

Source: europa.eu
Image: Almunia

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