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Tutorial 7 - Case Studies
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Tutorial 7Altmark Test: Apply in State aid casesSecond line of defense – First condition: granting aid if the Altmark
conditions are met THERE IS NO AID no need to notify
Article 106 (1) TFEU
Especially important in State aid and in 102 abuse of dominance cases.It allow us to “punish” the State too, and
not only the undertaking.We must assess the breach of competition law following the specific steps of the
branch we are applying it in conjunction with -> if there is a breach according to that branch, then the State is
in breach tooApplicable to:
Public undertakings
Private undertakings granted by the States with special or exclusive rights
Article 106 (2)TFEU- Applied in the 3rd line of defense in any branch. After checking the specific exemptions
of the branch We apply the specific steps of that branch to the case.If we find that there is indeed a breach,
then there might be an exception under article 106(2)
1. Does the undertaking perform a SGEI?This is decided by the State, the EC and ECJ only control
manifest errors.There must be an entrustment by the State with the performance of a public service
2. Is the breach of competition rules necessary for the performance, in law or in fact, of the particular
tasks assigned to them?If it is necessary, then, it is excepted unless...
3. Is trade affected to such an extent that it is contrary to the EU interests?
7.1 Case study: Nature parks
Q. List the legal issues. Assess Y’s chances in court.
1. Checking whether EU competition law applies to the case
Ratione personae: Is it an undertaking? “Any entity engaged in an economic activity, regardless of its legal
status and the way in which it is financed” (Höfner and Elser)
Entity? Independent and bears its financial risks. X is independent and bears its financial risks. So is
Y.
Economic activity? Any activity consisting in offering goods and services on a given market is an
economic activity (Pavlov and Others). It cannot be occasional.
o It depends on the nature of the activity, if it just deals with the maintained of the park
without any option of making profit then it would be a cultural activity that it is not economic
in nature
o it also possible to argue that X and Y engage in economic activity, that is management of
public parks. Maintenance of the parks might be considered purely exercising powers of the
State, but since it is a private undertaking is unlikely. They are probably engaged in some kind
of economic activity such as asking for an entrance fee or a café.
Ratione materiae: the sector falls under the scope of EU competition rules
Ratione loci: Is the behavior implemented in the Member States or has effect in Member States? The
behavior is implemented in the Netherlands and in Germany. Does it/may it affect trade between states? Yes,
it can have a foreclosure effect on undertakings from other MS willing to enter the Dutch market.
Is there appreciable effect on trade between Member States? MS it is indeed affected, since it makes
impossible to foreign undertakings, for example German, to enter the market. Very broad interpretation in
State Aid cases. Altmark par. 81: “there is no threshold or percentage below which it may be considered that
trade between Member States is not affected. The relatively small amount of aid or the relatively small size of
the undertaking which receives it does not as such exclude the possibility that trade between Member States
might be affected”.
, 2. Checking whether one or more of the five branches apply to the
case (not mutually exclusive)
You could argue we are dealing with a public undertaking, but then would we have to combine it with article
101/102. Here it could possibly be a monopoly but there is no indication of an abuse so therefore this is
unlikely.
1. Granting an aid: an economic transfer that artificially puts the undertaking in an advantage
Is there an advantage? There is a financial transfer, the compensation for the public service of
maintenance Undertaking X is granted with exclusive rights to perform the maintenance of the parks,
and it is paid by the State for it. This also allows undertaking X to conduct exclusively or, in a clear
advantage, other related economic activities, such as collecting entrance fees, managing food or café
within the park...
Is this advantage provided artificially by an economic transfer? Is this advantage artificial? Market
investor test:20 % margin is probably too high. A private investor in normal conditions of the market
would not pay so much
Then, by now is aid
However, since we have a public service, we must apply Altmark here and check if it is indeed aid. (EC
Communication 1st Altmark package)
Do we have a public service? Professor’s definition: “A SGEI is service that society deems to be so important
that everyone should have access to it at a reasonable price and a reasonable quality even if you can make no
profit“This definition is not so helpful here. However, normally the MS define what a public service is. The court
and the EC will only check manifest errors, marginal review. In the case, nothing leads us to think that we
should not trust the NL when defining it as a public service.
Apply the 4 Altmark conditions
Undertaking entrusted with public service obligations We assume there is a government act entrusting
the undertaking with clear obligations: which parks to maintain, in which conditions...
The parameters on the basis of which the compensation is calculated have been established
beforehand in an objective and transparent manner We assume the second one is fulfilled too
Proportionality of the compensation: Compensation does not exceed what is necessary to cover all or
part of the costs incurred [...] taking into account the relevant receipts and a reasonable profitThis is
probably not fulfilled. We think there is over compensation
If there is no public procurement, the level of compensation must be determined on the basis of an
analysis of the costs which a typical undertaking well run and adequately provided with means [...]
would have incurred.No info about the fourth We do not have sufficient information to assess the
fulfilment of all the conditions.
Nevertheless, since the conditions are cumulative, failing to meet the third condition entails that Altmark is
not applicable and, then, the measure is still aid.
2. By the State or through state resources
Imputability – No problem. The aid is directly granted by the State
Impact on State resources- No problem here, the money comes directly from State resources.
3. Selectivity The measure is clearly selective, it is only granted to one undertaking.Therefore, there is a
different treatment with regards to other undertakings that might be in a legal and factual situation
comparable.
4. Distortion of competition
It is liable to distort competition exclusivity, competitors cannot enter the market
We check the De minimis (Article 3.2) Which threshold do we apply? The service has been defined
by the MS as a public service (it is a park- common interest) and the control of the EC and court is
limited to manifest errors so, most probably, instead applying 200.000 which is the normal state aid de
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