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Complaints About State Aid

If a UK company believes that a competitor is receiving illegal aid then they should complain directly to the Commission on the Complaints Form. The Commission is obliged under the Procedural Regulation to act on any evidence of potential illegal aid and will therefore take complaints seriously.

Member State or interested party complaints

Any Member State or interested party can challenge a Commission decision in the European Court of Justice. (Article 230 of the EC Treaty).

Member States have an automatic right to bring such cases to the Court, or to intervene in a case before the Court.

Other interested parties, such as companies contesting a Commission decision to approve aid for a competitor, need to show they have a legitimate interest or locus standi.

The Court has precedent as to when a third party can intervene and any company wishing to challenge a Commission decision could do so directly or if they wish could seek their own legal advice as soon as possible.

To challenge a decision successfully means proving that the Commission infringed an essential procedural requirement or misused its powers in the way it reached a decision. It is not enough merely to disagree with a decision. One has to show that had the Commission followed its own obligation and procedures properly - including properly considering the relevant facts - it could not have reached the decision it did.

A challenge to a decision has to be made within two months of Member States or interested parties being notified of the decision. Anyone wishing to challenge a decision can do so by contacting the Commission directly.

Commission or another Member State complaint against a Member State

The Commission or another Member State may also bring a claim to the European Court of Justice that a Member State has failed to fulfil its obligations or to comply properly with a Commission decision.

Article 88(2) allows the Commission or a Member State to refer directly to the ECJ if at the end of the Commission’s investigation, its decision is not being complied with.

Complaints referred by national courts

The European Court of Justice also considers cases referred to it by national courts under Article 234. Member States may submit written observations and may appear at the hearing even if they did not submit written observations.

Article 88(2) allows the Commission or a Member State  to refer directly to the ECJ if at the end of the Commission’s investigation, its decision is not being complied with.

The Commission and the Court have the power to fine Member States for not complying with decisions.

Commission complaints about UK aid

The Commission may also receive a complaint, or itself raise a concern about a proposed UK State Aid payment or scheme that it may have heard about through the media. The Commission would then ask the UK for a detailed explanation within a set time. The Commission would be legally within its powers to open an Article 88(2) formal investigation procedure, backed by an injunction to halt any current aid payments, if it was not satisfied with the UK response.

State Aid Branch can advise on the best way to handle Commission complaints.

It is important to fully satisfy the Commission’s enquiries, so that it can put a convincing case to the complainant that no further action need be taken. The complainant may otherwise pursue the matter in the national courts.

Consequences and penalties

The Commission monitors and controls State Aid in the EU by requiring Member States to notify the Commission in advance of proposed State Aid. This gives the Commission the opportunity to approve or refuse to approve the proposed State Aid.

The Procedure Regulation (659/99) defines unlawful aid as unnotified aid.

Under the present procedural rules, the Commission is under the obligation to order the recovery from the beneficiaries of any unlawful aid that is found to be incompatible with the Common Market. This includes repayment with interest to the public authorities.

Application of law

The obligation under Article 88(3) of the Treaty to notify proposed State Aid or changes to existing approved State Aid is directly enforceable in Member States’ courts.

Only the European Court of Justice has competence to review the legality of the Commission’s decisions and actions in controlling State Aid.

National courts uphold the rights of persons in the event of a breach by national authorities of the ban on putting State Aid into effect without Commission approval. The courts must take steps on the question of the validity of decisions and recovery of unlawful aid.

The Commission and the Court have the power to fine Member States for not complying with decisions.