State Aid - Sgei

Front 1

SGEI - Result

Back 1

Result: State aid, but compatible with 106 TFEU
Mind relation to Decision 2005/842/EC: if a measure falls under the SGEI decision it is exempted from the obligation to notify.
Mind relation to Altmark: if a measure fulfils the Altmark criteria it does not constitute State aid for lack of advantage.

Front 2

SGEI – Act of entrustment

Back 2

Act of entrustment must specify
- Nature and duration
- Undertakings and territory
- Special rights
- Parameters to calculate compensation
- Arrangements to repay overcompensation

Front 3

SGEI – Necessity

Back 3

- “applicaton of EC Treaty rules must not obstruct performance of particular task” (i.e. 87 must not hinder SGEI).
- A compensation is necessary if the undertaking would not perform the particular task in the absence of the compensation.
- The necessity condition has largely been absorbed by the check of absence of overcompensation.

Front 4

SGEI – Proportionality

Back 4

- “undertakings entrusted are subject to EC Treaty rules (87) in so far as….”
- Idea: Costs of SGEI must be compensated.
- Compensation must be proportional, i.e. no less restrictive measures.
- Assessment largely reduced to check of absence of overcompensation.
- - FFSA (tax concession to La Poste) started this.
- - SGEI Framework (para.8) confirmed it.
- - BUBA relativised it.

Front 5

SGEI – Proportionality (BUPA)

Back 5

- British United Provident Association vs. Commission: BUPA attacks Commissions approval of risk equalisation scheme to balance instability of Irish market for health insurance products.
- BUPA reintroduces necessity and proportionality test beyond check of absence of overcompensation.
- Court: Commission checks
- - whether system is founded on manifestly erroneous economic and factual premises (market failure)
- - whether system is manifestly inappropriate for achieving objectives pursued (necessity/ proportionality)

Front 6

State aid - SGEI

1. What is an SGEI?

Back 6

A SGEI is an economic activity
- which the public authorities
classify as being of general interest
- and subjects to specific public service obligations (because they consider that they are of general interest) and
- that market forces may not provide these services in a satisfactory manner.

Hint 6

Member States have a wide margin of discretion.
Commission only to ensure that this discretion is without a manifest error of assessment.

Front 7

State aid - SGEI

3. Under which conditions is a measure compatible State aid under Art. 106 (2) TFEU?

Back 7

State aid
1. to an undertaking (unproblematic)
2. properly entrusted (official act)
3. with an SGEI (wide discretion)
4. which was necessary (not without aid)
5. and proportional (no overcompensation)
6. and in the Community interest (not checked)

Front 8

State aid - SGEI

2. What are the relevant legal documents to be considered?

Back 8

1. Art. 106 (2) TFEU.

2. SGEI Framework specifying compatibility assessment of Art. 106 (2) TFEU.

3. SGEI Decision block-exempting certain services from obligation to notify.