State Aid

Last verified on Thursday 5th November 2020

State Aid: France

Jacques Derenne and Ciara Barbu O'Connor

Sheppard Mullin

National state aid control - competent authorities

1. Which national authority or body is responsible for the oversight of state aid in your country, in particular the identification of new aid measures and their notification to the European Commission, the monitoring of existing aid measures for compliance with EU state aid rules and decisions, the submission of annual reports on existing aid schemes to the European Commission and cooperation more generally with the European Commission on state aid matters?

France

All relations with the European Union must go through the Permanent Representation of France to the European Union (RP). However, in France, the General Secretariat for European Affairs (SGAE), a department attached to the Prime Minister’s office, centralises all issues in relations with the European institutions. It ensures the unity and the consistency of any French positions submitted within the European Union (inter alia). One of its 18 operational sectors is “competition and state aid”. All state issues and aid notifications are coordinated by the SGAE.

The RP is a source of information and advice on the matter. Participating in all the multilateral meetings and bilateral contacts with the European Commission (Commission) on these subjects, it has at its disposal a comprehensive and up-to-date view of the Commission’s practice.

The Legal Affairs Directorate of the Ministries responsible for the Economy and Finance Department monitors legal issues in this area. It can be consulted in the case of doubt about the compatibility of help or queries on procedures to be followed.

The Treasury (or “Bercy”, the Ministry of the Economy and Finance) is generally involved in all state aid matters, in particular through the financial impact it has on the state budget. The Interministerial Committee for Industrial Restructuring (CIRI), a department of that Ministry, is also often involved in state aid matters relating to rescue or restructuring aid. This organism aims to assist the undertakings in difficulty and at developing remedies allowing them to ensure their restructuring and, if appropriate, their long-term viability. These measures may give rise to a variety of state aid measures.

The Agence des Participations de l’État (APE, the state’s shareholdings agency) is also naturally involved in state aid measures concerning undertakings in which the French state holds a shareholding or is likely to hold a stake following state aid recapitalisation measures.

In France, unlike in some other member states, there is no “centralised state aid person” who would represent the state unified aid policy, in cases or in policy issues with the Commission. As indicated above, this depends on the centre of gravity of the matter in question.

The French Council of State (Conseil d'Etat) also plays an important role for the compliance and the implementation of EU law by the executive, legislative and judiciary powers.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

2. Does any authority monitor the national legislative process to identify potential aid measures? Does this independent authority have sufficient powers to prevent the legislature or government from adopting aid measures that do not comply with EU state aid rules?

France

There is no specific national authority, as compared to the structured national ex ante control in Cyprus, tasked with ensuring that state aid rules (both procedural under article 108(3) of the Treaty on the Functioning of the European Union (TFEU) and substantive under article 107(2) and (3) or 106(2) TFEU) are strictly complied with in each state intervention.

The granting of unlawful aid can be prevented before the administrative courts through actions for annulment or by raising a plea of illegality of the act on which the aid measure is based or, before commercial (civil) courts, by challenging the behaviour of the alleged beneficiary operating on the market with an alleged unlawful aid (see below).

From a legislative standpoint, there is no specific process whereby the members of the parliament would be prevented from violating EU state aid rules, on their own motion or when examining legislative proposals from the government.

However, the role of the Council of State (it should be mentioned that, in addition to its litigation powers as the supreme administrative court, the Council of State is also a special adviser to the government for its legislative and regulatory action (the “administrative section”)).

In this advisory role, the Council of State is seised of bills before they are passed by the Council of Ministers. It also has jurisdiction over draft ordinances, as well as the most important draft decrees referred to as decrees in the Council of State. The government may refer a matter to the Council of State for an opinion on any other regulatory text or on a particular legal issue. Since the 2008 constitutional reform, the President of the National Assembly or the Senate may also refer any bill submitted to either of the two parliamentary assemblies to the Council of State for an opinion before the text is examined in committee. It also plays an important role as a filter in the procedure of the priority constitutionality issue.

Through this specific advisory competence, the Council of State has the means to play an important role in preventing the French state violating EU state aid rules through a kind of “national” ex ante state aid control, though not constituting a binding advisory role (in most of the cases). The Council of State includes an advisory department specialising in all EU law matters (Délégation au droit européen), which in particular monitors since 2014 all EU state aid cases to the attention of all French administrative judges.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

3. What are the competences of the national authority responsible for state aid control, and what is the legal basis for these powers in domestic law? Does this authority have the power to grant interim measures in addition to any interim relief that may be available in the national courts?

France

In France, there is no specific national authority responsible for state aid control. The main authority responsible for enforcing negative Commission decisions is the Ministry of Economy and Finance but other ministries may also be responsible in some cases depending on the sector and the matter. As mentioned above, all these issues are coordinated by the SGAE.

If the state aid is granted by local authorities or other public bodies (ie, social security institutions), the Ministry of Economy and Finance will usually liaise with the local authorities in order for them to request the recovery of state aid.

The RP in Brussels usually communicates with the Commission.

In the case of unlawful and incompatible aid established by a negative Commission decision, the state will first inform the beneficiary of the obligation to reimburse the aid. The recovery procedure will be initiated by the state or at the local level. The recovery will be ordered by an executory act, adopted by the Judicial Officer of the Treasury.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

4. Aside from the role played by the European Commission and national courts in enforcing EU state aid rules, does the national authority responsible for state aid control accept complaints made by competitors, other interested parties, or other third parties regarding potentially unlawful and incompatible aid measures?

France

In France, there are no administrative authorities that accept aid complaints made by competitors or third parties. The national, both administrative and civil, courts are the only appropriate forum.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

5. Does the national authority responsible for state aid regularly cooperate or exchange information with the state aid authorities in other member states? If so, are there formal structures to facilitate this cooperation and information exchange, or does this occur on a purely ad hoc basis? In the context of the covid-19 outbreak, has the national authority responsible for state aid regularly cooperated or exchanged information with the state aid authorities of other member states?

France

The Ministry of Economy and Finance usually cooperates and exchanges information with the local authorities or other public bodies (ie, social security institutions) with the coordination by the SGAE.

There is no formal structure such as the European Competition Network to cooperate with other member states on state aid matters.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

6. Which body represents your country in state aid proceedings before the EU courts?

France

France's representation before the EU courts is handled by the Legal Affairs Directorate of the Ministry of Europe and Foreign Affairs (Sub-Directorate for European Union Law and International Economic Law – “Quai d’Orsay”, this is the team of specialised agents for EU litigation matters). This directorate liaises with the SGAE and the ministries concerned, in particular the Ministry of Economy and Finance. As such, it is the responsibility of this directorate to draft the briefs and written observations of the French government for the EU courts and to plead before them.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

7. Is there a national register or other central source of data on national aid measures? Are the various state aid reports, complaints, decisions, etc, published?

France

All schemes and information concerning aid are available at: https://www.europe-en-france.gouv.fr/fr/aides-d-État.

A vade-mecum on state aid matters has been published and is regularly updated under the aegis of the SGAE.

From time to time, reports are drafted and published by the National Assembly (for instance: "rapport d’information déposé par la commission des affaires européennes sur la politique européenne de concurrence" of July 2014 (“information report submitted by the committee of European affaires on the European competition policy”). http://www.assemblee-nationale.fr/14/europe/rap-info/i2105.asp

In addition, in application of EU reporting obligations (in particular Regulation No. 2015/1589), France has set up an internal reporting system from local authorities to central ministries under the supervision of the SGAE to provide the Commission (SARI, State aid Reporting Interactive) with the annual report on all aid granted during a given year in France.

This report is separate from the State Aid Transparency Public Search on DG Competition’s website to give access to state aid individual award data provided by member states in compliance with the European transparency requirements for state aid (for aid above €500,000).

See: https://webgate.ec.europa.eu/competition/transparency/public?lang=en.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

National substantive and procedural rules

8. Describe any recent developments in substantive or procedural rules under domestic law relating to state aid. Describe also any developments in substantive or procedural rules under domestic law relating to state aid that occurred in the aftermath of the covid-19 outbreak.

France

There are no specific French law relating to state aid, apart from administrative circulars.

The latest applicable administrative circular on state aid matters is the “Prime Minister's Circular of 5 February 2019 on the application of European competition rules on public aid to economic activities”. It provides administrations with the information and methodology they need to understand the regulations on state aid. It also defines the principles that form the basis of French policy in this area.

There are no major changes compared to the circular of 26 April 2017, which had the same purpose and which the circular of 5 February 2019 repeals.

See: https://www.legifrance.gouv.fr/download/pdf/circ?id=44368

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

9. Is there a specific legislative or administrative scheme under national law relating to the application or enforcement of EU state aid rules?

France

There are no specific French laws relating to state aid, apart from the administrative circular on state aid mentioned above.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

10. Are there national rules or guidelines relating to the implementation of EU state aid rules, in particular EU guidelines? Check in particular any specific implementation related to covid-19 issues such as implementation of positive decisions of the European Commission with respect to your country.

France

See question 8 and the circular of the Prime Minister of 2019.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

11. Are there national rules or guidelines relating to the process of applying for, and the granting of, state support?

France

As explained under question 8, there are no specific French laws relating to state aid. The circular of the Prime Minister of 2019, referred to above, is the main text providing guidance on the process of granting state aid at national level.

Concerning the authorities that are competent to grant aid, a distinction must be drawn between the types of aid concerned. Under French law, a fundamental distinction is made depending on whether the aid is governed by public or civil law.

Fiscal aid includes all kinds of tax relief, tax exemption or tax cuts that are not precluded by law (General Taxation Code, CGI) and that are granted in accordance with a general economic policy. Article 34 of the French Constitution states that fiscal aid must be provided for by a legislative act. Therefore, a parliamentary act is necessary to approve the grant of fiscal aid by a public authority. However, the law can provide that a ministerial decree will specify the conditions of the application of such fiscal aid. The grant of fiscal aid is governed by the CGI, which sets out the procedural conditions. However, the application rules and the final decision to grant the aid are provided for under administrative law.

Budgetary aid includes grants, loans, capital contributions and guarantees from the state that are financed through the state budget. Pursuant to article 34 of the French Constitution, the granting of budgetary aid should be provided for by a parliamentary law (autorisation budgétaire). A regulation of 2 January 1959 states that the general content of the budget must be drawn up by statute, with the credits divided into sections and provided for by ministerial decree.

When budgetary aid is directly granted by the state in the form of subsidies, it must be shown in the “Expenditure” section of the general budget. This also applies to aid granted by public bodies that are legally separate from the state, but which are financed by its budget.

However, aid financed by special funds (eg, “le Fonds de développement économique et social”, “le Fonds forestier national” and “le Soutien financier de l’industrie cinématographique”, etc) does not need to be provided for by statute.

The types of aid granted directly from the state budget or by public bodies are governed by administrative law as well. The decision to grant budgetary aid is usually an administrative decision, although it can also be granted by an administrative contract. Where loans are granted directly by the state or by public bodies, they will be governed by administrative law and budgetary law. Where the aid is granted by a private body, however, private law must be applied.

Banking aid that is granted by private funds does not need to be provided in statute and is generally governed by private law. However, when the aid is granted by a private body controlled by the state (“Caisse des dépôts et consignations”, “Oséo”, etc), the decision to grant the aid is an administrative one, while the contract between the private body and the beneficiary will be concluded under private law. The state usually exercises its power over the private bodies that grant banking aid by giving instructions in the form of a ministerial decree or a letter of instruction. Nevertheless, when the aid is granted directly by a private body that is only marginally under the control of the state, only private law (banking law) will apply.

The state can also grant aid by the way of a capital contribution, governed by company law.

However, when the beneficiary of this kind of aid is a public undertaking, the capital contribution is called a capital endowment and public law should apply.

 

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

12. How is the concept of "service of general economic interest" (SGEI) defined on the national level? Did the definition recently lead to disputes, and, if so, how was the dispute adjudicated?

France

French law does not recognise the concept of ‘service of general economic interest’, but only that of ‘public service’. The national legislator defines some activities as activities of general interest, or of public or national interest, but there is no general legal definition of general interest, nor a legal definition of public service. Therefore, the notion of SGEI refers to the notions of public service obligation and public service compensation, as developed by the EU case law.

Under EU law, a specific regime was introduced in November 2005, revised in December 2011 and has been directly applicable since 2012. This regime provides that if one of the four Altmark criteria (C-280/00, 24 July 2003, Altmark Trans GmbH a.o., EU:C:2003:415) is not met, the financial compensation for the public service is covered by a specific “State aid in the form of public service compensation” scheme.

Furthermore, the organising public authority has broad powers to manage the SGEI. In particular, the authority may decide to carry out the SGEI by its own departments or by a separate entity over which it exercises control similar to that exercised over its own departments; or may entrust the execution of the SGEI to one or more external companies. This can be done in several ways:

  • by purchasing the provision of SGEI in return for a price (public contracts);
  • by transferring the operating risk of the SGEI (public service delegation); and
  • by entrusting the mission of SGEI by a unilateral act, according to national and European public procurement law.

 

The authority may also decide to subsidise an activity having a public service nature, in view of the general interest attached to it.

In a judgment of 2007, the Council of State recalled the different management methods available to public authorities responsible for a public service (Council of State, 6 April 2007, No. 284736). It also clarified the relations between a public authority and a private entity carrying out on its own initiative an activity that, because of the general interest attached to it and its importance, encourages the latter to exercise a right of supervision over its organisation and, where appropriate, to grant it funding. Without creating a public service, a public authority may decide to fund a legal entity under private law for it to carry out a specifically determined mission having a "public service character" or of general interest as long as there are no rules or principles preventing it from doing so.

The SGAE also published a guide on SGIE issues: "Guide relatif à la gestion des services d’intérêt économique général" (SGEI): Guide relatif à la gestion des services d’intérêt économique général.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

13. Do any studies on national enforcement of EU state aid rules exist? If so, describe the main subjects and results of these studies.

France

Although there are no studies carried out by the French state with regard to national enforcement of state aid rules to the best of our knowledge, the Ministry of Economy and Finance has published a Vade-Mecum on state aid, which covers state aid both at EU level and nationally in detail. See question 7.

Furthermore, the 2019 Study on the enforcement of state aid rules and decisions by national courts, commissioned by the Commission provides updated data on national enforcement in France.

This 2019 Study follows up several previous studies:

The 2019 Study analysed state aid enforcement by national courts across the EU, including the main trends with regard to the enforcement of EU state aid rules by national courts. It provided best practices in state aid enforcement by national courts across the EU and analyses the use of cooperation tools by the Commission and national courts in relation to state aid cases:

This Study showed that there have been 32 “public” (cases initiated by a public authority) enforcement cases in France since 2007 and 104 “private” (cases initiated by a private party) enforcement cases. Most cases are heard by the administrative courts either at first instance or at last resort, with only a few cases being heard by civil jurisdictions. The Study also shows that the plaintiffs in national cases are usually the beneficiary or competitors of the aid recipient. Furthermore, the remedies ordered vary between the claim being rejected, the case being sent back to the lower court for reassessment, recovery order for the unlawful or incompatible aid, avoiding aid recovery due to impossibility of recovery, indirect challenge against the Commission decision through a preliminary ruling to the Court of Justice of the European Union (CJEU), liquidation of the aid beneficiary, quantification of the aid to be recovered, and requests of aid recovery suspension.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

Role of national courts

14. Do all national courts have jurisdiction to apply state aid rules? Or do certain dedicated courts have specific jurisdiction for state aid cases?

France

Both administrative and civil courts have jurisdiction to apply state aid rules.

In actions brought before the administrative courts, the competent courts are the administrative courts, the administrative courts of appeal and the Council of State. The Council of State is competent at first and last resort for actions concerning the validity of decrees or for actions concerning decisions that fall within the scope of its exclusive competence. It is also competent to hear actions concerning administrative decisions applicable throughout the French territory. Actions before the Council of State are generally dealt with within two or three years.

Actions may be brought before the civil courts (including the commercial courts and labour courts) regarding litigation between private parties, including claims against a state-owned company and its subsidiaries, governed by private law (this raises cross-subsidy issues). Moreover, the civil courts have exclusive jurisdiction in specific areas, eg, indirect taxes (see French Court of Cassation – civil Supreme Court, 4 July 2006, Galerie de Lisieux v caisse Organic de recouvrement, No. V-03-12.565). In this instance, the competent courts are the courts of first instance, the courts of appeal and the Supreme Court (Court of Cassation).

The commercial courts have jurisdiction over litigation between professionals acting in the course of their business and over any litigation between businesses. Therefore, commercial courts are often the relevant courts in which to bring actions for damages against a competitor receiving alleged unlawful aid (see French Court of Cassation, 15 June 1999, Etablissements J. Richard Ducros v Société Métallique Finsider Sud, No. B 97-15.684). Where the applicant is not an undertaking, an action can also be brought before the civil courts. Judgments of the commercial courts can be appealed to the commercial division of the courts of appeal and can be further appealed on a point of law only to the Court of Cassation. Depending on whether there is an appeal on a point of law, a case can take between five to six years (around six months before a commercial court, two years before a court of appeal and two years before the Court of Cassation).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

15. Can the judgment of a national court on a state aid matter be appealed? If so, what grounds of appeal are available, and which court can hear the appeals? Does an appeal of a recovery order entail an automatic suspension of the obligation to recover unlawful aid (not notified) pending the outcome of the appeal?

France

Yes, the judgment of a national court can generally be appealed. See question 14 above.

Before the administrative court a judgment can be appealed to the administrative court of appeal (and then appealed on points of law to the Council of State as the supreme administrative court).

Before the civil court a judgment can be appealed to the courts of appeal. The grounds of appeal can be based on the finding of aid, the amount to be recovered, the identification of beneficiaries, the qualification of unlawful aid, etc.

In the Scott I case, the CJEU ruled that a French national court should set aside national administrative law providing for the suspensive effect to an appeal of a national recovery order. The CJEU held, inter alia, that a procedure that provided for the suspensory effect of actions brought against demands for payment issued for the recovery of unlawfully received aid does not fulfil the conditions laid down in the EU State aid procedure Regulation and that, accordingly, the rule providing for such suspensory effect should therefore not have been applied (C‑232/05, 5 October 2006, Commission v France, EU:C:2006:65).

In another Scott case, the CJEU ruled that article 14 of Regulation No. 659/1999 (now article 16 of Regulation No. 205/1589) is to be interpreted as not precluding, in circumstances in which amounts corresponding to the aid in question have already been recovered, annulment by the national court of orders issued to recover the unlawful state aid on grounds of there being a procedural defect, where it is possible to rectify that procedural defect under national law. That provision does, however, preclude those amounts being paid once again, even provisionally, to the beneficiary of that aid (C-210/09, 20 May 2010, Scott SA and Kimberly Clark SAS v Ville d'Orléans, EU:C:2010:294).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

16. Do national courts sometimes confuse the concept of unlawful aid with incompatible aid?

France

To the best of our knowledge, the French national courts do not confuse the concepts of unlawful aid and incompatible aid especially since the SFEI case (C-39/94, 11 July 1996, Syndicat français de l'Express international (SFEI) and others v La Poste and others, EU:C:1996:285).

 

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

17. Do national courts sometimes confuse the concept of new aid with existing aid?

France

The French courts do not appear to confuse the concepts of new aid and existing aid.

There have in fact been recent references from French courts to the CJEU on this distinction, which shows that the French courts are well aware of the issue and refer questions when there is a need for further interpretation of EU law.

In particular, in 2018, the French Council of State referred a question for preliminary ruling that raised the issue of new and existing aid. The referring French court asked whether the significant increase in revenue from the taxes earmarked for the scheme, in relation to the forecast that had been notified to the Commission, required a new notification according to article 108(3) TFEU and whether an increase in the initial budget of an existing aid scheme in excess of 20 per cent constituted a change to that scheme, as laid down in the implementing Regulation 794/2004 (the predecessor to the current Regulation 2015/2282) (see C-510/16, 20 September 2018, Carrefour Hypermarchés SAS and Others v Ministre des Finances et des Comptes publics, EU:C:2018:751).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

18. Do national courts traditionally refer questions regarding the interpretation of EU state aid rules to the Court of Justice? Provide any notable examples of preliminary references made on state aid questions.

France

Pursuant to article 267 TFEU, national courts can refer preliminary questions to the CJEU on any aspect of EU law. France has a moderate tradition of referring questions for preliminary ruling to the CJEU with 10 being referred on state aid issues in a period of 10 years until 2018. A possible explanation is that these countries have a tradition of direct state intervention in the economy. By way of example, the French Council of State referred questions to the CJEU on the qualification of a financing mechanism put in place by French legislation that sought to help undertakings that produce wind-generated electricity by offsetting the additional costs arising from the obligation to purchase the electricity generated by wind turbines. The CJEU held that such an intervention used state resources (C-262/12, 19 December 2013, Association Vent De Colère! Fédération nationale and Others v Ministre de l’Écologie, du Développement durable, des Transports et du Logement and Ministre de l’Économie, des Finances et de l’Industrie, EU:C:2013:851).

More recently, the CJEU considered the French regulatory framework establishing an obligation to purchase the electricity generated by plants that use solar radiation energy at a price higher than the market price, such obligation being financed by all final consumers of electricity, qualified as an intervention by the state or through state resources. The CJEU also took the opportunity to recall that national courts are to take all necessary measures to remedy the breach of the suspension obligation pursuant to article 108(3) TFEU (C-515/16, 15 March 2017, Enedis, SA v Axa Corporate Solutions SA and Ombrière Le Bosc SAS, EU:C:2017:217).

There are regular references to the CJEU from French national courts, some of them are benchmark cases in EU state aid, such as:

  • C-354/90, 21 November 1991, Fédération Nationale du Commerce Extérieur des Produits Alimentaires and Syndicat National des Négociants et Transformateurs de Saumon v French Republic (last sentence of article [108](3) of the Treaty – Prohibition of giving effect to proposed measures), EU:C:1991:440;
  • C-39/94, 11 July 1996, Syndicat français de l'Express international (SFEI) and others v La Poste and others (Jurisdiction of national courts when the matter is also pending before the Commission – Definition of State aid – Consequences of infringement of the last sentence of article [108](3)), EU:C:1996:285;
  • C-254/97, 8 July 1999, Société Baxter, B. Braun Médical SA, Société Fresenius France and Laboratoires Bristol-Myers-Squibb SA v Premier Ministre, Ministère du Travail et des Affaires sociales, Ministère de l'Economie et des Finances and Ministère de l'Agriculture, de la Pêche et de l'Alimentation (Internal taxation – Tax deduction – Expenditure on research – Proprietary medicinal products), EU:C:1999:368;
  • C-53/00, 22 November 2001, Ferring SA v Agence centrale des organismes de sécurité sociale (ACOSS) (notion of aid and SGEI, Tax benefit granted to certain undertakings – Wholesale distributors), EU:C:2001:627;
  • Case C-126/01, 20 November 2003, Ministère de l'Économie, des Finances et de l'Industrie v GEMO SA (notion of aid, System of financing a public carcass disposal service by a meat purchase tax) EU:C:2003:622;
  • C-266/04 to C-270/04, C-276/04 and C-321/04 to C-325/04, 27 October 2005, Nazairdis SAS, now Distribution Casino France SAS and Others v Caisse nationale de l'organisation autonome d'assurance vieillesse des travailleurs non salariés des professions industrielles et commerciales (Organic) (Concept of aid – Tax assessed on the basis of sales area – Hypothecation of the tax revenue), EU:C:2005:657;
  • Case C-526/04, 7 September 2006, Laboratoires Boiron SA v Union de recouvrement des cotisations de sécurité sociale et d'allocations familiales (Urssaf) de Lyon (notion of aid, tax on direct sales of medicines – Compensation for discharging public service obligations imposed on wholesale distributors – Burden of proof in relation to overcompensation – Prohibition on making reimbursement of a charge practically impossible or excessively difficult), EU:C:2006:528;
  • C-199/06, 12 February 2008, Centre d’exportation du livre français (CELF) and Ministre de la Culture et de la Communication v Société internationale de diffusion et d’édition (SIDE), CELF I (article 108(3) – National courts – Recovery of unlawfully implemented aid – Aid declared compatible with the common market), EU:C:2008:79;
  • C-1/09, 11 March 2010, Centre d'exportation du livre français (CELF) and Ministre de la Culture et de la Communication v Société internationale de diffusion et d'édition (SIDE), CELF II (article 108(3) – Unlawful aid declared compatible with the common market – Annulment of the Commission decision – National courts – Application for recovery of unlawfully implemented aid – Proceedings stayed pending the adoption of a new Commission decision – Exceptional circumstances liable to limit the obligation to repay), EU:C:2010:136;
  • C-210/09, 20 May 2010, Scott SA and Kimberly Clark SAS v Ville d'Orléans (article 14(3) of Regulation 659/1999 – Recovery of aid – Principle of effectiveness – Assessments vitiated by a procedural defect – Annulment), EU:C:2010:294;
  • C‑677/11, 30 May 2013, Doux Élevage SNC and Coopérative agricole UKL-ARREE v Ministère de l’Agriculture, de l’Alimentation, de la Pêche, de la Ruralité et de l’Aménagement du territoire and Comité interprofessionnel de la dinde française (CIDEF) (notion of aid, concept of ‘State resources’ and of ‘imputability to the State’ – Administrative measure making those contributions compulsory for all traders in the agricultural industry affected), EU:C:2013:348;
  • C-510/16, 20 September 2018, Carrefour Hypermarchés SAS and Others v Ministre des Finances et des Comptes publics (notion of existing aid and alteration to existing aid), EU:C:2018:751;
  • C-212/19, 17 September 2020, Ministre de l'Agriculture et de l'Alimentation v Compagnie des pêches de Saint-Malo (notion of aid – wreck of the oil tanker Erika – Aid scheme for aquaculture and fisheries undertakings – Reduction in social security contributions – Employees’ contributions – Advantage – Question of who is liable for repayment), EU:C:2020:726; and
  • C-556/19, 21 October 2020, Société Eco TLC v Ministre de la Transition écologique et solidaire (Concept of “State resources” – Increased responsibility of producers – Eco-body approved by the public authorities to collect financial contributions from those who place on the market certain products to be able to fulfil, on their behalf, their legal obligation to treat waste from those products – Financial support paid by that eco-body to contractually bound sorting operators), EU:C:2020:844.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

19. Do national courts use the possibilities offered by article 29 of Regulation 2015/1589 (Procedural Regulation) providing for the amicus curiae conditions in state aid matters? Has the European Commission submitted written observations to national courts and asked authorisation to appear in court hearings?

France

The amicus curiae procedure allows someone who is not a party to the litigation to intervene in a case where they believe that the court’s decision may affect their interests. Under article 29 of Regulation 2015/1589, national courts may ask the Commission to transmit information in its possession to them or ask for its opinion on questions concerning the application of state aid rules.

According to the Commission’s database, no opinion was requested by a French court but two amicus curiae observations have been submitted to French courts concerning state aid matters: https://ec.europa.eu/competition/court/amicus_curiae.html.

  • in the SNCM case, to the Administrative Court of Appeal of Marseille, concerning the obligations for national authorities from a Commission decision, the definition of a SGEI and the tender procedure for selection to SGEI provider (amicus curiae observations by the Commission of 5 August 2004, leading to a judgment of the Administrative Court of Appeal of Marseille of 6 April 2016); and
  • in an airport case, to the Administrative Court of Appeal of Bordeaux in an interim measures case (Référé provision) concerning the obligation for the national judge to set aside a French law that impedes effective recovery (automatic suspensive effect of the law; observations of 25 November 2015 leading to a judgment of the Administrative Court of Appeal of Bordeaux of 10 December 2015).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

20. Describe recent developments regarding state aid cases before national courts.

France

The main recent cases in France are the following:

  • In 2019, the French government adopted an aid scheme for employment in the entertainment industry covered by the Regulation exempting de minimis aid (Gouvernement français, décret No. 2019-1011 du 1er octobre 2019 relatif au Fonds national pour l’emploi pérenne dans le spectacle (FONPEPS), JORF No. 0229 of 2 October 2019).
  • In 2018, the French Council of State held that the state cannot be held liable for having implemented an existing aid for the period that precedes the Commission’s decision confirming the incompatibility of the aid measure. Therefore, it concluded that an undertaking that had suffered damage as a result of the aid measure could not receive compensation (CE, 25 October 2018, Ryanair, No. 408789, FR:CECHR:2018:408789.20181025).
  • In 2019, the Commercial Chamber of the of the Court of Cassation established that the mechanism obliging the dominant French electricity producer to buy back photovoltaic electricity at a price that is higher than the market price, implemented by the decree of 12 January 2010 but not notified to the Commission, should be considered as unlawful state aid (Cass. com., 18 September 2019, No. de pourvoi 18-12.596, Sole et Sole 3 c/ EDF; Cass. com., 18 September 2019, No. de pourvoi 18-12.657, Sole et Sole 3 c/ EDF et AXA; Cass. com., 18 September 2019, No. de pourvoi 18-12.601, Sole et Sole 2 c/ EDF; Cass. com., 18 September 2019, No. de pourvoi 18-12.597, Sole et Sole 2 c/ EDF; Cass. com., 18 September 2019, No. de pourvoi 18-16.521, Magelis c/ ERDF; Cass. com., 18 September 2019, No. de pourvoi 18-22.226, 18-22.229, 18-22.230, 18-22.235, 18-22.236, 18-22.237, 18-22.238, 18-22.239, 18-22.240, 18-22.247, 18-22.250, 18-22.255, 18-22.257, 18-22.260, 18-22.281, 18-22.282, 18-22.284, 18-22.285, 18-22.286, EDF).
  • In two other recent judgments (18 September 2019), the Commercial Chamber of the Court of Cassation decided a case involving unlawful state aid. In particular, it stated that the loss of the chance to benefit from a tariff resulting from unlawful state aid could not be compensated (Cass. com., 18 September 2019, EDF c/ Corsica Sole 2, No. 18-12.601; Cass. com., 18 sept 2019, EDF c/ Corsica Sole 3, No. 18-12.657; Ccl. A.G. M. Debacq, 2 July 2019, EDF c/ Corsica Sole 2, No. 18-12.601; Ccl. A.G. M. Debacq, 2 July 2019, EDF c/ Corsica Sole 3, No. 18-12.657).
  • In March 2020, the French Council of State decided on a case concerning a Commission’s decision that had become final and binding on national authorities and courts. Indeed, the Commission decided on the compatibility of the aid measure implemented by France in the field of bus transport and the Court of First Instance of the EU had dismissed the actions that had been brought against that decision. The Council of State set aside the judgment of the Administrative Court of Appeal, which annulled the decisions of the state to refuse to recover the aid not notified to the Commission and failed to indicate the provisional nature of those refunds, “whereas the recovery of the aid can be ordered only as a safeguard measure pending the Commission’s decision on the compatibility of the aid scheme with the internal market”. In particular, the Council of State held that the state decisions were unlawful, but the extent that the interest had not been recovered (CE, 18 March 2020, Autocars R. Suzanne et Syndicat autonome des transporteurs de voyageurs, No. 396651).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

21. Under national procedural rules, can a government measure be challenged directly in court on the grounds of illegal state aid, or do applicants first have to go through a preliminary administrative review procedure? If so, describe the steps involved in this procedure.

France

With regard to the general powers of the French courts concerning the direct effect of article 108(3) TFEU, both the administrative and civil courts are competent to hear claims against unlawful aid. While most actions are brought before the administrative courts because state aid measures are usually granted through acts governed by public law, French administrative law distinguishes between two main types of actions. Depending on the object of the dispute, the claimant can either contest the legality of a decision of the Administration or bring an action for damages for the harm caused by the decision of the Administration, whereby the Administration’s decision or act can also, incidentally, be declared illegal.

For both types of actions, it is mandatory that the claimant submit a preliminary request to the Administration before bringing an action in the competent administrative court. This requirement, which may take the form of an administrative action or a recours hiérarchique, obviously lengthens the procedure in the event that the Administration refuses to act, in which case the claimant would be required to challenge the decision of the Administration in court. The objective of this is to hold the Administration liable and obtain the annulment of an administrative decision. The action is subject to strict deadlines. The claimant must show that it has an interest in challenging the decision (ie, the challenged act must produce legal effects). Various interests have been held to justify the bringing of an action by the claimant, including a purely financial interest. The conditions for admissibility are less strict than those of the second action. See also question 34.

Before the administrative courts, the claimant can bring  an action for annulment of a state decision or state measure involving state aid (for example, tax regulations – see, for example, Administrative appeal court of Paris, 5 November 2007 and 1 October 2007, Boucherie du marché – SAS Vitry Distribution and Société SAS P et A – SA Boucherie Bordet, No. 07PA00256 – No. 06PA04277 and No. 07PA00118 – No. 06PA03997 – and tenders – see Administrative appeal court of Bordeaux, 15.7.2008, Société Merceron TP, No. 07BX00373) or an action engaging the liability of the state to obtain damages (in principle, the state can only be sued before administrative courts).

The objective of this second type action is to protect the rights of the natural or legal person subject to the Administration in the context of state liability or contracts with the state. The claimant must demonstrate that it has a personal interest in the action. This requirement is not difficult to meet when the claimant requests damages from the state.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

22. Under national procedural rules, who has legal standing to challenge a government measure in court on the grounds of illegal state aid?

France

Here too a distinction should be drawn between the two types of actions possible before the administrative courts.

With regard to the first, which aims to hold the Administration liable and obtain the annulment of an administrative decision, the claimant must show that it has an interest in challenging the decision (ie, the challenged act must produce legal effects). Various interests have been held to justify the bringing of an action by the claimant, including a purely financial interest.

With regard to the second, whose objective is to protect the rights of the natural or legal person subject to the Administration in the context of state liability or contracts with the state, the claimant must demonstrate that it has a personal interest in the action. This requirement is not difficult to meet when the claimant requests damages from the state.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

23. Can a national authority argue in domestic court proceedings that a particular measure contains unlawful state aid, or are there any procedural bars to doing so?

France

To the best of our knowledge, in France, there has not been a case (similar to Eesti Pagar: C-349/17, 5 March 2019, EU:C:2019:172) where the question was whether the public authority concerned should ex officio set aside an unlawful aid without the intervention of a judge. However, this would be the logical consequence of the principle of primacy of EU law over national law, as enshrined in the Simmenthal case (whose principles extend to the administration) (see 106/77, 9 March 1978, Amministrazione delle Finanze dello Stato v Simmenthal SpA (Discarding by the national court a law contrary to Community law), EU:C:1978:49).

While the assessment of the compatibility of the aid measures falls within the exclusive competence of the Commission, the national courts have to safeguard the subjective rights of those affected by a breach of the obligation of prior notification of state aid to the Commission provided for in article 108(3) TFEU. In particular, the Council of State established that in case of non-notification of the aid, the national court should safeguard the rights of litigants, until the Commission adopts its final decision.

Furthermore, recently the Council of State held that, pending the Commission’s decision on the compatibility of the aid measure, recovery by undertakings that have benefited from aid granted on the basis of an aid measure, not notified to the Commission, can only be ordered provisionally (CE, 18 March 2020, Région Ile-de-France, No. 396651).

Finally, the Court of Appeal, ruled in favour of the beneficiary of state aid that argued that the recovery order had to be annulled, since he could not comment on the aid amount and calculation method used in the recovery order before it was adopted. Indeed, according to the Court, the State administration violated the beneficiary’s right of defence (Nantes administrative court of appeal, 31 August 2010, No. 07NT00572).  

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

24. What are the limitation periods under national procedural rules for a party seeking to invoke unlawfulness under state aid rules in domestic court proceedings?

France

In a recent judgment, the CJEU clarified that the 10-year limitation period provided for in the Procedural Regulation only applies to the Commission insofar as it concerns recovery of unlawful aid (C-387/17, 23 January 2019, Traghetti, EU:C:2019:51). This does not preclude national courts from allowing damages even after 10 years. Furthermore, national limitation period can be shorter so long as they are still effective.

The question of limitation periods relating to claims against the state has proved somewhat problematic under French law. However, procedural specificities should not constitute an obstacle to the immediate recovery of unlawful aid. It is, in principle, for the national court to rule out any measure, including legislative, likely to hinder the effectiveness of a recovery decision.

The overall limitation period for invoking unlawfulness is shorter than the ten-year limitation period laid down for the recovery powers of the Commission in article 17 of Procedural Regulation No. 2015/1589. However, national rules appear contrary to the need for effectiveness as internal procedures do not allow for a recovery beyond four to five years. It is up to the national courts to draw all the necessary conclusions from the Simmenthal case-law and to set aside the national law limitation periods that are obstacles to the recovery of unlawful aid.

The Administrative Court of Appeal of Bordeaux perfectly assimilated this requirement by ruling out the five-year limitation period (Bordeaux administrative court of appeal, 5 February 2013, No. 12BX000231).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

25. Does any provision of national law prevent an individual with standing from bringing state aid proceedings in the domestic courts concurrently with an investigation by the European Commission (eg, if the individual has complained to the European Commission in parallel, or the European Commission has started an investigation on its own initiative)?

France

The French courts adopt all necessary measures in view of drawing the appropriate conclusions from an infringement of article 108(3) TFEU in application of the Deutsche Lufthansa (C-284/12, 21 November 2013, Deutsche Lufthansa, EU:C:2013:755) and SFEI (C-39/94, 11 July 1996, SFEI v La Poste a.o., EU:C:1996:285) case law. There is no provision of national law that prohibits an individual from bringing state aid proceedings while there is an ongoing Commission investigation. Instead, bringing such a claim enables the claimant to obtain interim relief (see, for example, Council of State, 28 July 2009, Sociétés Air France, Régional et Britair, No. 329819).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

26. Under which circumstances will a national court stay proceedings as to the existence of state aid pending a European Commission investigation?

France

The national court must first determine whether the measure constitutes state aid. In case of doubt, the court may question the Commission or ask the CJEU for a preliminary ruling.

However, once the Commission has decided to initiate the formal investigation procedure in considering that the state measure in question constitutes aid (see question 27), the national court is bound by that (provisional) Commission decision and may no longer freely decide on this question of existence of aid. If the national court disagrees with the Commission, it can only refer the matter to the CJEU by virtue of a reference for a preliminary ruling.

Similarly, if the decision of the Commission is that the measure does not constitute aid, the national court is also bound by that decision.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

27. What are the consequences for national courts if the European Commission has already come to the preliminary conclusion in its opening decision that the measure constitutes incompatible state aid?

France

As soon as the Commission has decided to open the formal investigation procedure, the national court is obliged to adopt all the necessary measures with a view to drawing the consequences of a possible violation of article 108(3) TFEU. See question 25 with regard to what those consequences could be.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

28. How do national courts react to the Deutsche Lufthansa case? By referring matters to the European Commission (for amicus curiae support) or to the Court of Justice of the European Union (CJEU) for a preliminary ruling under article 267 TFEU?

France

The French courts apply the Deutsche Lufthansa case law (see question 24). Moreover, the French courts are relatively active in referring requests for preliminary rulings. In a recent case concerning a Commission decision that had become final and binding on national authorities and national courts, the Council of State followed the approach in the Deutsche Lufthansa case (Council of State, 18 March 2020, Autocars R. Suzanne et Syndicat autonome des transporteurs de voyageurs, No. 396651). In particular, the Council of State ruled that the decision of the state to refuse the recovery of illegal aid was unlawful, to the extent that the interest had not been recovered.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

29. What is the burden of proof in state aid cases before national courts?

France

As a general rule, the claimant has to bear the burden of proof in both administrative and civil matters.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

30. In light of the EU law obligation on national courts to protect the rights of individuals affected by the unlawful implementation of state aid, what are the requirements under national law for a plaintiff seeking interim measures in the courts, in particular to prevent the grant of aid? In what form and under what circumstances can interim relief be granted?

France

Competing undertakings can request the suspension of a decision granting unlawful state aid (référé-suspension). In theory, this type of action could be based on the principle of supremacy of EU law but that principle has never been invoked in state aid cases (C-39/94, 11 July 1996, SFEI v La Poste a.o., EU:C:1996:285).

The “référé-suspension” was introduced into French law in 2000 (Law No. 2000-597 of 30 June 2000, Official Journal of 1 July 2000, in force on 1 January 2001; L.521-1 of the Code of Administrative justice). The judge can order suspension of a contested decision in the context of an action for annulment. Suspension can only be requested when the administrative decision granting the aid has not yet been fully implemented (see various cases where all actions were, however, dismissed: Council of State, 11 November 2004, Syndicat national de l’industrie des viandes a.o.; Council of State, 28 September 2001, AFORM a.o.; Council of State, 28 July 1999, SA Bouygues a.o.: Council of State, 14 March 2010, Air France e.a., No. 336405).

The conditions that must be satisfied for this type of interim measure to be granted are (i) urgency; (ii) the establishment of a prima facie case; and (iii) harm to the claimant, if the contested measure comes into effect. Under French law, the interpretation of these criteria is generally less strict than under EU law. For example, urgency may be established on the basis of purely financial consequences resulting from the implementation of the contested measure. The Council of State requires that the implementation of the administrative act must affect, in a sufficiently serious and immediate manner, a public interest, the legal situation of the claimants or the interest the latter wants to defend (Council of State, 30 July 2003, Commune de Paulhac).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

31. What remedies are available to a national court if it determines that a non-notified measure contained state aid?

France

Unless there are exceptional circumstances where, for example, a recovery order proves inappropriate (see, for example, C-275/10, 8 December 2011, Residex, EU:C:2011:814), the French courts apply the CELF case law (C-199/06, 12 February 2008, CELF, EU:C:2008:79), thereby ordering the recovery of “unlawful” interest only instead of full recovery if the state aid in question is deemed compatible by the Commission (see, for example, Council of State, Case No. 274923 of 19 December 2008, CELF). Full recovery is required if the aid is deemed both unlawful and incompatible. There is also the possibility for the beneficiary and competitors to seek damages from the state.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

32. In light of the EU law requirement that national courts must, in principle, order the full recovery of unlawful state aid from a beneficiary, are there any domestic law provisions that may hinder a national court from ordering the recovery of non-notified state aid? Do national courts set aside such domestic law provisions as required by the Court of Justice’s case law?

France

Member states concerned shall take all the measures available under their respective legal systems, including interim measures, without prejudice to EU law. The Scott judgment below illustrates the full force of this principle (C-232/05, 5 October 2006, Commission v France, EU:C:2006:651). Indeed, it follows from the first Scott case, which stems from aid granted by the French state, the national measures chosen to execute a Commission decision must lead to an immediate and effective execution. The Court held that a national provision that provided for an automatic suspensory effect of actions brought against recovery orders failed to have regard to the objectives pursued by the EU rules on state aid, in particular the immediate restoration of the previously existing situation on the market. Any delay in the recovery process would go against the effectiveness of recovery itself as the natural consequence flowing from unlawful aid.

The Scott saga continued when the Administrative Court of Appeal in Nantes was seised of the question of the regularity of the revenue documents issued for the recovery of the unlawful aid on the grounds that they did not indicate the surname and first name of the signatory (C-210/09, 20 May 2010, Scott SA and Kimberly Clark SAS v Ville d'Orléans, EU:C:2010:294). Being divided between its obligation to annul the revenue vouchers for that reason and its obligation to ensure the immediate and effective recovery of the unlawful aid, the Administrative Court of Appeal referred the matter to the CJEU for a preliminary ruling. While the Court acknowledged that “the annulment of a revenue order is not open to criticism as such” (since it results only from the full exercise of the principle of effective judicial protection), it cannot but find that such annulment could, in principle, lead to repayment of the unlawful aid to the beneficiary. Where the sums corresponding to the aid in question have already been recovered, the national court is not precluded from annulling, on the ground of a formal defect, revenue cheques issued to recover unlawful state aid, where the possibility of rectifying that formal defect is guaranteed by national law. However, the national courts are precluded from paying back the sums, even provisionally, to the beneficiary of that aid. See also question 49.

The administrative court may be seised by a competitor to enjoin the state to use its power of substitution for a local authority that has failed in its obligation to recover. It would be sufficient here for the claimant to establish the absence of recovery and to ask the national court to enjoin the representative of the state to give formal notice to the community in question to recover the aid, to extend the one-month period from which substitution is possible. Although it appears that no such action has been brought, it would have a good chance of succeeding given that article L.1511-1-1 of the CGCT does not leave the state representative any room for manoeuvre in the exercise of the substitution. Substitution appears to be a duty to guarantee the effectiveness of a Commission recovery decision.  

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

33. Would the national court necessarily declare a guarantee invalid if it secures a loan constituting aid and was granted in breach of article 108(3) TFEU? Does it make a difference if the only aid beneficiary is the borrower and not the lender?

France

A guarantee may also benefit the lender when a guaranteed loan is used to reimburse another loan, which is not guaranteed. This is, however, an assumption that is rarely made, and difficult to demonstrate. Moreover, the mere fact that the stabilisation of a company in difficulty benefits all of its creditors is an important element to be recognised as a consequence of the aid, and does not, in itself, constitute aid in favour of these creditors.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

34. How can a competitor of the beneficiary or other affected third parties claim compensation from the authority granting the state aid for damages caused by the aid? Explain the steps involved in bringing such an action for damages. Explain the steps involved in bringing such an action for damages and how national courts have applied the criteria of the relevant EU case law.

France

In an action engaging state liability, the claimant must request that the Administration adopt a decision permitting the award of damages from the state, prior to bringing an action before the administrative courts (rule of the “prior decision”). In principle, the Administration has two months to react to this request before the claimant can turn to the administrative courts to engage the liability of the granting authority. When the Administration fails to adopt a decision, the claimant has five years from the date of notification of the Administration’s refusal (if there is one) to file an action before the administrative courts. The action before the administrative courts actually consists of a request to annul the administrative decision refusing to award damages or compensation.

It must be borne in mind that the conditions for awarding damages in cases of state liability are very strict under French law. Moreover, the court will not automatically award damages, even if it finds that the state is liable.

Damages can be awarded only if (i) the rule breached intended to confer rights on individuals; and (ii) there is a direct causal link between the damage sustained and the breach of the relevant rule. The main liability regime is liability for fault, although, in specific areas, liability of the state can be triggered without proof of fault by the Administration. Administrative courts have shown a certain reluctance to engage the liability of the legislator for infringement of a provision of EU law. It has been held that the illegality enabling state liability to be engaged should be found at the level of the administrative act implementing the law, even if it was adopted in violation of EU law. The proof of the existence of fault is hard to demonstrate, as the courts have recognised a certain margin of appreciation for the legislator.

The liability of the state under EU law was relied on, for the first time, in a state aid case brought by a beneficiary of unlawful aid before the Administrative Court of Grenoble in 2003 (Administrative Court of Grenoble, 15 October 2003, Société Stéphane Kélian). The claimant argued that the liability of the state for breach of EU law, namely article 108(3) TFEU, could be raised without proof of fault on the part of the state, and that it concerned all “emanations” of the state, including the legislator. It was alleged that liability arose both under principles of French liability law and those principles of EU law derived from the CJEU’s Francovich case law. The action was dismissed for reasons relating to the conditions of causation. The liability of the state can also be based on EU law, according to the conditions laid down

in the Francovich–Brasserie du Pêcheur cases (C-6/90 and C-9/90, 19 November 1991, Andrea Francovich and Danila Bonifaci and others v Italian Republic, EU:C:1991:428 and C-46/93 and C-48/93, 5 March 1996, Brasserie du Pêcheur SA, EU:C:1996:79).

Competitors of the beneficiary of unlawful state aid, as well as the beneficiary itself, can request damages from the state before the administrative courts, regardless of the final decision of the Commission (see the Saumon case, (i) C-354/90 and (ii) Council of State, 2 June 1993).

See also question 38.  

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

35. How can a third party claim compensation from the member state for damage caused by failure to respect the standstill obligation?

France

To the best of our knowledge, a competitor of the beneficiary of state aid can claim compensation for the damage suffered as a consequence of the state breaching its obligation to notify the aid (Administrative Court of Appeal of  Paris, 23 January 2006, Groupe Salmon Arc-en-ciel, No. 04PA01092 (Borotra case); Administrative Court of Appeal of Paris, 4th Chamber, 17PA00397, 9 October 2018).

In general, in France the courts frequently use a procedure called "astreinte", namely the threat of financial penalties against the state when they order the recovery of unlawful aid.

See also question 27.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

36. Under national law, can a third party bring damages actions against the beneficiary?

France

The SFEI ruling was issued following a reference from the Paris Commercial Court. This principle is well enshrined in the French civil or commercial system (see also the Ducros case mentioned below).

The existence of an action for liability and damages against the beneficiary can be seen as an incentive in national law for private parties to be more cautious when they received state aid. However, these “horizontal” litigations are still rare.

Actions engaging the liability of the beneficiary of unlawful aid have to be brought before the civil courts. The court first determines whether the beneficiary benefited from the unlawful state aid and whether he knew or could have known that the aid received was unlawful (ie, granted in violation of article 108(3) TFEU), and second, evaluates the amount of damages to be granted to its competitors.

In several cases, the Court of Cassation has confirmed the principle of extra-contractual liability of the beneficiary of the aid. Since the CJEU has ruled that the principle of liability of the beneficiary cannot be derived from EU law alone, it will have to be based upon unfair competition pursuant to article 1382 of the French Civil Code (civil liability) as well. The claimant has to demonstrate the existence of fault, damage and a causal link between the fault and the damage. Where the Commission has already adopted a negative decision, there is a presumption that a fault has been committed.

Claims of unfair competition are often invoked in the context of public procurement cases. The beneficiary of unlawful aid can be sued for damages for unfair competition by unsuccessful bidders, arguing that the selected bidder was able to make the best offer because of aid previously granted. Civil liability of the beneficiary for accepting illegal state aid has been claimed (C-39/94, 11 July 1996, SFEI v La Poste a.o., EU:C:1996:285; Court of Cassation, 15 June 1999, Etablissements J. Richard Ducros v Société Métallique Finsider Sud, N°B 97-15.684) but the French civil Court, rejecting the appeal on other grounds, did not explicitly recognise this principle.

Furthermore, the rules on unfair competition can also be invoked against a public body (local authority) participating in a public tender procedure. Under state aid rules, public bodies are not per se forbidden to participate in such procedures, as long as, the financing of the activity is sufficiently transparent in the state budget. The activity of the public body must be subject to fiscal and accountancy obligations that are similar to those imposed upon private undertakings.

The claimant will have to show, based on the accounts of the public body, that the costs of the services provided were underestimated (for an unsuccessful action in that sense, see France, Administrative Court of Appeal of Bordeaux, 15 July 2008 Société Merceron TP No. 07BX00373). In addition, contractual liability (article 1116 of the French Civil Code) could also be invoked by third parties against the beneficiary, on the condition that they are bound by contractual links. Unjust enrichment cannot be invoked in state aid cases, as it can only be claimed in situations where there is no legal basis for the enrichment (absence of an administrative act or absence of a contract). Unjust enrichment is only a subsidiary means of action, to be used when no other means is available to the claimant.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

37. Under national law, how can a beneficiary bring damages actions against the member state as per the SFEI case law of the Court of Justice for having unlawfully granted aid? How do national courts avoid the risk of circumvention of EU state aid rules?

France

Damages actions against the member state remain limited, in fact there has only been one case, to our knowledge, in which competitors have actually been awarded monetary compensation (and this case is under appeal on the exact quantum of damages). It is often said that the main obstacle to damages actions brought by private parties, based on a violation of state aid law is the lack of a clear legal basis under national law. However, the Francovich EU case law on the liability principles enshrined in EU law directly could amply suffice for state aid cases.

The state’s responsibility can be best invoked under Union law by virtue of the Francovich case on state liability (in the present context, the breach of the obligation to notify is a material infringement and the conditions of that case law appear to be easily fulfilled), or it can be invoked under national law depending on the national rules regarding state liability.

In Corsica Ferries, the French Administrative Court of Bastia, awarded damages based on the Commission’s decision on the unlawfulness and incompatibility of the aid (TA Bastia, 23 Feb 2017, Corsica Ferries, No. 1500375 and No. 1501123). However, the national court also based its decision on another French case, that of the Administrative Court of Marseille of 6 April 2016, which had annulled the local authority’s decision to award the public service delegation and the contract relating thereto on the grounds that the financial compensation provided for in the latter constituted unlawful state aid. And it was in reference to that judgment, and not the Commission’s decision, that the Administrative Court found that the unlawfulness was such as to engage the responsibility of the state. While this is grounds for a damages claim since the Commission had already established the unlawfulness of the aid, such a claim may only be introduced at the end of the Commission’s investigation, which may take two or more years. This only goes further in showing the necessity for harmonisation with regard to state aid damages, as is the case in antitrust, as it would clarify the rules on private enforcement of state aid and ensure harmonious application across the member states.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

Consequences of violation of state aid rules

38. What are the consequences of a violation of EU state aid rules for the validity and enforceability of the aid measure under national law? Are the consequences the same for unlawful aid that was not notified to the European Commission as for aid that the European Commission has ultimately determined as incompatible with the internal market?

France

Where a member state has granted unlawful aid to an economic operator, it is, in principle, incumbent on the member state to recover the aid to restore the economic situation as it existed prior to the payment of the aid. EU case-law considers that such recovery cannot be regarded as a penalty; it is merely the logical and proportionate consequence, having regard to the objective of effective competition established by the Treaty, of the infringement found.

Failure to notify the aid measure to the Commission automatically renders the aid unlawful. Aid that is unlawful because it has not been notified but has been declared compatible by the Commission is not subject to recovery. However, the national court may require the aid beneficiary to reimburse the equivalent of the interest that it should have paid on the banking market between the payment of the aid and the declaration of compatibility by the Commission.

The recovery of incompatible unlawful aid is an obligation instituted by the Commission to encourage member states to comply with the obligation, laid down in article 108(3) TFEU, to notify the Commission of planned aid.

Before doing so, the national court must first determine whether the measure constitutes state aid. In case of doubt, the court may ask the Commission or refer a question to the Court for a preliminary ruling.

However, once the Commission has decided to open the formal investigation procedure, the national judge is in a way divested of this competence and is obliged to adopt all the necessary measures to draw the consequences of a possible violation of the law.

Regulation No. 734/2013 added a new article 29 to the Rules of Procedure concerning the cooperation with national courts. It is foreseen that the courts of the member states may request the Commission to provide them with information in its possession or with an opinion on questions relating to the application of state aid rules.

The Commission, acting on its own initiative, may submit written observations to the courts of the member states responsible for the application of the state aid rules. With the permission of the court concerned, it may also submit oral observations. Before formally submitting its observations, the Commission must inform the member state concerned of its intention to do so.

For the sole purpose of drawing up its observations, the Commission may request the competent court or tribunal of the member state to forward any documents available to the court or tribunal that are necessary for the Commission's assessment of the case.

Where the national court is satisfied that a measure constitutes prima facie unlawful aid, it is for the national court to assess the need to order interim measures, pending its judgment on the merits, for example, where it has requested clarification from the Commission. In this case, if the aid has been paid out, the Commission considers that the most appropriate solution is to order that the aid and interest be deposited in a blocked account, until the national court has ruled on the merits of the case. If the aid has not been paid, the court may suspend its payment by interim order. The Council of State has thus been led to use its powers in this way urgently, to suspend the payment of aid measures that should have been notified to the Commission.

Where unlawful aid is about to be paid, the national court must, after finding that the granting measure is invalid on the ground of infringement of article 108(3) TFEU, prevent the payment of the aid.

Where a court finds that a measure constituting state aid has not been notified or has been put into effect before obtaining the Commission's approval, it must, in principle, order the full recovery of the aid, together with interest. The Council of State has also ruled that when, “ruling on a case, [it] has annulled a regulatory act instituting aid in breach of the obligation of prior notification to the Commission, it is incumbent on the State to take all necessary measures to ensure recovery from the beneficiaries of the aid, as the case may be, of the aid paid on the basis of this illegal scheme or of the interest calculated on the period of illegality”.

The breach of the obligation to notify the aid constitutes a fault likely to engage the responsibility of the state by a competitor of the beneficiary undertaking that has suffered damage, as well as by the beneficiary of the aid itself (Administrative Court of Appeal of Paris, 23 January 2006, Groupe Salmon Arc-en-ciel, No. 04 PA01092 (Borotra case)). The CJEU has, in fact, recognised the right of undertakings to which unlawful aid has been paid to bring an action for state liability in accordance with national procedural rules (C-199/06, 12 February 2008, CELF, EU:C:2008:79, paragraph 53).

However, the administrative court recognises the duty of diligence of companies receiving aid. In the Borotra case, the company could not have been unaware that a formal investigation procedure had been initiated by the Commission, and the court exonerated the state from one-quarter of its liability. In any event, neither the amount of aid to be repaid nor the corresponding default interest constitute compensable damages. Only the consequences of recovery, such as the financial costs arising from the loan taken out to repay the aid, are compensable.

National legal risks are not theoretical: recourse is increasingly being taken by companies competing with aid beneficiaries. These legal risks are all the more important since the mere infringement of procedural rules leads to the illegality of the measure and the application of sanctions prejudicial to the state, as for the beneficiary company.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

39. What are the consequences of a violation of EU state aid rules for the validity of a government regulation or contract containing the aid measure, and for subsequent regulations or contracts linked to the aid measure? Are the consequences the same for unlawful aid that was not notified to the European Commission as for aid that the Commission has ultimately determined to be incompatible with the internal market?

France

Regarding contracts with the state, the decision to enter into the contract can be challenged by way of an ultra vires action. The annulment of such a decision can result in the contract being declared null and void. Decisions relating to the execution of the contract can only be challenged by third parties (by bringing an ultra vires action). The parties to the contract must file an action for damages. The Ryanair case provides an example of a contract involving state aid concluded between the state (Chamber of Commerce) and an airline (Council of State, 27 February 2006, Companies Ryanair Limited v Chambre de Commerce et d’Industrie du Bas-Rhin, No. 264406 and 264545). The Council of State held that the refusal to notify an aid measure constitutes a contestable act (Administrative Supreme Court/Council of State, 7 November 2008, No. 282920, Comité national des interprofessions à appellations d’origine et autres). However, the decision to notify a measure is not contestable, as the Council of State has held that the relevance of such decision is intrinsically linked to the assessment of the compatibility of the aid measure, which is an exclusive competence of the Commission.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

Enforcement by the European Commission

40. Describe any major state aid investigations opened by the Commission against your country over the past 12 months. State whether these investigations were specific to your country or part of a broader investigation into several member states.

France

There have been few formal investigations initiated by the Commission against France in the past 12 months:

  • French aid granted to Béziers airport and Ryanair (SA.47970);
  • a question of SGEI through a measure destined for maritime service to Corsica (SA.49207); and
  • the mechanism for regulating natural gas storage in France (SA49414).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

41. Has the European Commission suggested appropriate measures concerning existing aid measures in your country over the past 12 months?

France

To the best of our knowledge, there have been no such cases in the past 12 months. But emblematic decisions are the following:

  • Decision E50/2001 of 30 April 2003, Garantie accordée par CDC à sa filiale CDC Ixis;
  • Decision SA.12111 of 2 June 2004, Dispositions fiscales applicables aux mutuelles et institiutions de prévoyance en France;
  • Decision E10/2005 of 20 April 2005, redevance radiodiffusion – France;
  • Decision C24/2005 of 22 November 2006, EPIC status of Laboratoire national d'essais;
  • Decision C56/2007 of 26 January 2010, Garantie d'État illimitée – La Poste (F); and
  • Decision SA.28298 of 27 July 2017, Ports taxation in France.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

42. Has the European Commission ever opened specific investigations against your country following a sector inquiry?

France

There has only been one sector inquiry that resulted in investigations against France being opened by the Commission, that is the sector inquiry to secure electricity supplies. In the aftermath of the sector inquiry, the Commission opened an investigation in 2016 concerning the countrywide capacity mechanism (SA.39621), in 2017 concerning the tender for additional capacity in Brittany (SA.40454), and in 2018 concerning the specific demand response tender (SA.48490).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

43. Has your country ever been subject to an injunction by the European Commission to suspend or provisionally recover aid under article 13 of Regulation 2015/1589?

France

To the best of our knowledge, the French state has never been subject to a suspension injunction or a recovery injunction by the Commission.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

44. Has your country ever been subject to an infringement procedure under article 108(2) TFEU and article 260 TFEU?

France

The French state has been subject to numerous procedures pursuant to article 108(2) TFEU for non-compliance with a Commission decision in which the Commission ordered the recovery of unlawful and incompatible aid (actions for failure to fulfil obligations):

  • C-63/14, 9 July 2015 (Obligation of recovery — Absolutely impossible — Compensation for a service additional to the basic service) EU:C:2015:458;
  • C-37/14, 12 February 2015 (‘Contingency plans’ — Fruit and vegetable sector – Recovery — Failure to act) EU:C:2015:90;
  • C-179/10, 28 September 2011, EU:C:2011:617;
  • C-549/09, 20 October 2011 (Aid granted to fish farmers and fishermen – Recovery - Non-compliance – Absolute impossibility of compliance) EU:C:2011:672;
  • C-214/07, 13 November 2008 (Aid scheme – Recovery – Absolute impossibility of giving effect to a decision) EU:C:2008:619;
  • C-441/06, 18 October 2007 (Recovery – Duty of cooperation) EU:C:2007:616;
  • C-232/05, 5 October 2006 (Aid granted to Scott Paper SA/Kimberly-Clark – Recovery – Non-execution owing to the application of a national procedure – National procedural autonomy – Limits - "National procedure allowing immediate and effective execution' for the purposes of article 14(3) of Regulation (EC) No. 659/1999 – National procedure providing that actions brought against demands for payment issued by national authorities have suspensory effect) EU:C:2006:651;
  • C-337/04, 27 June 2005, EU:C:2005:407;
  • C-504/03, 4 April 2005, EU:C:2005:197;
  • C-261/99, 22 March 2001 (Recovery – No absolute impossibility of implementation) EU:C:2001:179;
  • C-99/84;
  • C-93/84, 13 March 1985 (Aid to fishing undertakings) EU:C:1985:114;
  • C-18/84, 7 May 1985 (Tax advantages for newspaper publishers) EU:C:1985:175;           
  • C-291/83;
  • C-290/83, 30 January 1985 (Aid to farmers financed by the operating surplus of a national agricultural credit fund) EU:C:1985:37;
  • C-171/83 R, 20 September 1983 (Interim measures) EU:C:1983:23;
  • C-52/83, 15 November 1983 (Compliance by a State with a Commission decision), EU:C:1983:328; and
  • C-6/69, 10 December 1969.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

45. Has the European Commission ever undertaken on-site state aid monitoring visits based on article 27 Regulation 2015/1589 (previously article 22 of Regulation 659/1999)? How were the visits carried out? What measures were taken to assist the officials and experts carrying out the visit?

France

To the best of our knowledge, the Commission has never untaken on-site state aid monitoring visits in France based on article 27, Regulation 2015/1589.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

Recovery of state aid

Recovery of state aid

46. Which national authority orders the recovery of state aid following a European Commission decision, a judgment of the Court of Justice, or a national court judgment?

France

When the Commission issues a negative decision, it orders the recovery of the unlawful aid.

In France, the authority responsible for enforcing negative Commission decisions is usually the Ministry of Finance. Other ministries, such as the Ministry of Agriculture, may also be responsible in some cases depending on the type of aid.

Recovery orders issued by the Commission are addressed to the ministerial department concerned, which centralises and coordinates all the information necessary to comply with the recovery obligation (amount granted, identity of the beneficiaries). In cases where the aid is granted by local bodies (“collectivités locales”, such as regions or other state’s departments) or other public bodies (such as the social security institutions), the Ministry of Finance must liaise with the local authorities to issue claims or acts requesting the recovery of the aid. The local authorities may be prefects, regional social security units or others, depending on which local authority granted the aid.

When the aid is granted by a local public authority, it takes on the responsibility of recovering the aid pursuant article L.1511-1-1 of the General Code for Local Authorities. If the aid is not recovered, the local authority receives an injunction to recover the aid. If recovery has not been carried out within one month of notification of the injunction, the local state representative with the necessary competent authority must act immediately to recover the aid by any means possible.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

47. What procedural or administrative actions are contemplated in the national law for the recovery of unlawful or incompatible state aid?

France

In principle, when an aid is declared unlawful following a negative Commission decision, the Administration will first inform the beneficiary of the obligation to repay the aid. When an aid is declared unlawful following the judgment of a national court, the granting authorities are enjoined to recover the aid from the beneficiary. Judgments of appeal courts are referred to the court before which the litigation was initiated. Specific departments of the Supreme Court are in charge of implementing the judgments. The recovery procedure will then be initiated by the Administration, in the same way as the state would proceed to obtain reimbursement of a debt owed to the state (ie, at central or local level).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

48. What actions are available to the national recovering authority seeking to force an unwilling beneficiary to refund the unlawful and incompatible state aid?

France

If the undertaking concerned does not repay the aid, the state can turn to a third party that holds the undertaking’s funds to recover the aid directly by seizing the funds deposited in a bank account. Once insolvency proceedings have been opened, the state must register its claim with the creditors’ representative (see below for more details on insolvency proceedings).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

49. Can an individual with standing bring an action in the national courts for the purpose of: challenging the validity of the national recovery order implementing the European Commission’s recovery decision; or suspending the national recovery order pending a final decision either on the validity of the national recovery order itself, or on the validity of the European Commission’s recovery decision?

France

The executory act can be challenged before the administrative courts in the context of an opposition procedure (pursuant to the normal procedure), ie, an ultra vires action or an action for annulment. Such an action can be initiated on the grounds of the existence of an unlawful aid (payability of the amount to be recovered). The recovery act adopted by the local authority can also be challenged by the addressee within two months of receipt. In principle, the introduction of an action to challenge the recovery act will automatically suspend the recovery procedure under French law.

However, in the Scott case (C-232/05, 5 October 2006, Commission v France, EU:C:2006:651), the CJEU declared this procedural rule to be contrary to EU law, especially in relation to the principle of an effective and immediate recovery. In this case, the Commission adopted a decision stating that the preferential land price and the rate of the water treatment levy granted to Scott by France were incompatible with the Internal Market. According to article 2 of this decision, France had to take “all measures” to recover the unlawful aid from the beneficiary. Since recovery of state aid is governed by national procedure, the General Council of Loiret and the City of Orléans issued a recovery act for the aid. In 2001, Kimberly-Clark brought actions challenging those two recovery orders before the Administrative Court of Orléans. Such actions have automatic suspensory effect in French law. As a consequence, the aid in question had not been recovered four years after the adoption of the Commission decision. The Commission brought an action against France under article 108(2) TFEU for the non-execution of its decision by France. The Commission stressed that the automatic suspensory effect of actions brought against demands for payment issued to recover aid granted does not fulfil the obligation of “immediate and effective” execution of the Commission’s decision provided by article 14(3) of Council Regulation (EC) No. 659/99. The Court followed the Commission by ruling that this automatic suspensory effect is contrary to article 14(3) of the Council Regulation (EC) No. 659/99 because it prevents the recovery order from taking effect, in terms of reimbursement of state aid, before the competent national court has given its decision.

Following the CJEU’s judgment, in January 2007, the Administrative Court of Orléans dismissed the actions brought before it by the beneficiaries, Scott and Kimberly Clark, which reimbursed the amount of the aid unlawfully received. On 8 March 2007, Scott and Kimberly Clark appealed against that judgment before the Administrative Court of Appeal of Nantes, alleging an infringement of the formal requirements laid down in a provision of the national law. However, in December 2008, Scott and Kimberly Clark reimbursed the interest on the aid they had unlawfully received. The Administrative Court of Appeal of Nantes doubts as to the compatibility of the annulment of the assessments on grounds of procedural defect with article 14(3) of Regulation (EC) No. 659/1999 and referred a new question to the Court for a preliminary ruling.

In a judgment of 20 May 2010, the CJEU, however, confirmed its strict approach concerning the use of national procedures to justify any derogation to the recovery obligation and held that:

Article 14(3) of Council Regulation (EC) No 659/1999 was to be interpreted as not precluding, in circumstances in which amounts corresponding to the aid in question have already been recovered, annulment by the national court of recovery orders on grounds of there being a procedural defect, where it is possible to rectify that procedural defect under national law. That provision does, however, preclude those amounts being paid once again, even provisionally, to the beneficiary of that aid. (C-210/09, 20 May 2010, Scott SA and Kimberly Clark SAS v Ville d'Orléans, EU:C:2010:294)

The procedure for the recovery of unlawful state aid can be initiated by the state issuing an act for recovery, which can then be subject to specific performance. This act can only be contested by the addressee, by way of an opposition action in the form of an ultra vires action (see the Boussac case, Administrative Court of Paris, 16 February 1994). In the absence of such an act, see Commercial Court of Paris, 21 January 2003, SA Sojerca v Jaunet. This action has suspensory effect.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

50. Can third parties with standing obtain a mandatory order from the court that forces the relevant national authority to recover funds from a beneficiary of incompatible state aid where the former has failed to implement a recovery decision by the European Commission?

France

Where aid has not been notified, competitors are entitled to have their rights protected before national courts. In recognising the direct effect of the last sentence of article 108(3) TFEU, the Court has given the national courts the role of guarantor of the effectiveness of the notification obligation contained therein.

The Saumon judgment (C-354/90, 21 November 1991, Saumon v France, EU:C:1991:440) in response to a preliminary question referred by the French Council of State, clarifies the role of the national courts.

Many disputes concern direct action by competitors of aid recipients against the member state to obtain the suspension or recovery of aid. One example is the dispute between the Société internationale de diffusion et d'édition (SIDE) and the Centre d'exportation du livre français (CELF) (C-199/06, 12 February 2008, CELF, EU:C:2008:79). Otherwise, direct actions against competitors are very rare (cf. however the UFEX (ex-SFEI) - Chronopost case (C-341/06 P et 342/06 P, 1 July 2008, Chronopost SA and La Poste v Union française de l’express (UFEX), EU:C:2008:375)). A finding that aid has been granted in breach of article 108(3) TFEU must, in principle, lead to its recovery.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

51. What defences by beneficiaries against recovery have been accepted by national authorities or courts?

France

The problem in the application of national procedural rules arises particularly in French law because the opposition to a recovery enforcement order (contesting the validity of the title by the aid recipient before the administrative judge) has, by law, a suspensive character. However, the CJEU has ruled that the French rule providing for the suspensive effect of appeals against enforcement orders should not be applied in recovery proceedings, since it did not allow effective and immediate recovery (C-232/05, 5 October 2006, Commission v France, EU:C:2006:651). See also question 15.

If the beneficiaries of unlawful aid challenge the finding before the General Court and the CJEU, the enforcement of the recovery order can be prevented for the duration of the procedure before the national court. If a recovery order has already been adopted it can also be challenged by the beneficiaries before the administrative court (see, for example, C-210/09, 20 May 2010, Scott SA and Kimberly Clark SAS v Ville d'Orléans, EU:C:2010:294 in questions 15, 32 and 49).

With regard to the protection of legitimate expectations, the French Council of State recently issued a ruling whereby it made it clear that neither the state nor the beneficiary could rely on their legitimate expectations to avoid their obligations to take all necessary measures to implement the Commission’s finding of unlawful aid (Council of State, No. 409693, 20 December 2017, Association Vent de Colère).

The French courts have also confirmed the impossibility of recovery for time-barred claims (Court of Cassation, 19.2.2013, No. 12-14527).

 

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

52. What is the situation under national law if recovery was ordered by a national court owing to the violation of the standstill obligation but the aid is later declared compatible with the internal market by the European Commission?

France

The CELF judgments are both preliminary references stemming from French courts. Since the reversal of case law by the CELF judgment in 2008, the national court is no longer required to order the reimbursement of aid that has not been the subject of prior notification, but which has been recognised as compatible by the Commission. The CJEU considers that “exceptional circumstances may arise in which it would be inappropriate to order repayment of the aid”. The national court is therefore not required to order the recovery of aid implemented in failure to comply with article 108(3) TFEU, when the Commission has adopted a final decision establishing the compatibility of the aid with the internal market. Although the aid was paid in breach of a procedural rule laid down by the Treaty, its recovery is not required, the decision of the Commission having declared it compatible. However, the aid remains illegal.

The CJEU requires, however, that the interest that the aid beneficiary would have had to pay if it had had to borrow the sum in question on the capital market be repaid, pending a declaration of compatibility by the Commission. During this period, the undertaking concerned benefited from unlawful aid. The undue advantage thus consists, on the one hand, in the non-payment of the interest that he or she would have paid on the relevant amount of compatible aid if he had had to borrow that amount on the market pending the Commission’s decision and, on the other hand, in the improvement of his competitive position vis-à-vis other market operators during the period of illegality. The national court is therefore obliged to order the aid recipient to pay interest for the period of illegality.

The CJEU states that the national court, therefore, has the choice of whether or not to order repayment, without prejudice, however, to the member state’s right to put the aid declared compatible into effect again at a later date.

However, where proceedings are brought before a national court in parallel with an examination procedure conducted by the Commission, the national court is not relieved of its obligation to safeguard the rights of individuals under article 108(3) TFEU. In another judgment in the CELF case, the Court clarified that the national court could not, in this case, stay the proceedings until the Commission had ruled on the compatibility of the aid with the internal market, even where the Commission had already adopted a first decision of compatibility that had been annulled by the CJEU.

The Court clarified that this obligation to rule only requires the court to actually adopt safeguard measures if the conditions justifying those measures are met: there is no doubt that the aid is classified as state aid, the aid is about to be or has been put into effect, and there are no exceptional circumstances that make recovery inappropriate.

When deciding on such a request, the national judge may order the aid to be repaid with interest, or the funds to be paid into a blocked account, as suggested by the Commission in its above-mentioned 2009 Communication. Nevertheless, a simple order to pay interest on sums that would remain in the company’s accounts would not allow the obligations laid down in article 108(3) TFEU to be fully complied with.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

53. How do national courts apply the CELF I case law (Case C-199/06)?

France

The French courts apply CELF I (which is a “French” case).

While, in principle, the national court is required to order the recovery of any unlawful aid, it is not bound by this obligation where the Commission has adopted a final decision finding the aid to be compatible with the internal market within the meaning of article 107 TFEU.

In such a case, under European law, the national court is only required to order the beneficiary of the aid to pay interest in respect of the period of illegality (during which the unlawful aid benefited the recipient in an anticipatory manner, in breach of article 108(3) TFEU).

Under national law, on the other hand, the national court may, where appropriate, also order recovery unlawful aid, but the member state may put a stop to the latter to be executed at a later date on the basis of the decision of the Commission; it may also grant damages in the case of damage caused by 

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

54. How do national courts handle cases where the European Commission has not yet decided on compatibility?

France

Where the national court is satisfied that a measure constitutes prima facie unlawful aid, it is for the national court to assess the need to order interim measures, pending its judgment on the merits, for example, where it has requested clarification from the Commission.

Although the administrative judge is the main actor in the field of interim measures in the field of state aid, the judicial judge may use the various summary proceedings available to him to act in this matter. While the scope of the measures is extensive and the conditions flexible, the civil judge has been rarely seized and has never pronounced interim measures because of the illegality of an aid. The administrative court that has been seised slightly more often in summary proceedings has not shown much more willingness to grant interim measures. Overall, the latter remains reluctant to grant interim measures as a consequence of the granting of unlawful aid.

Despite their broad scope in private law, interim measures have a limited scope in the field of state aid. They are not likely to have any influence on the decision granting aid. Therefore, they cannot stop the granting of aid, as only the administrative court has this competence. The interest of an interim injunction in civil law may be for the competing third party to require the beneficiary to stop receiving the aid, or even to return it if it has already been received. Either the plaintiff manages to prove the urgency and the absence of serious dispute or the existence of a dispute, or in the absence of such conditions, he demonstrates imminent damage or a manifestly unlawful disturbance.

The Air Lib case seems to be the only case in which a judge has truly ruled on the merits of a summary judgment. It was brought before the Créteil Commercial Court on 12 February 2003 (Trib. com. Créteil, 12 February 2003, Corsair c/ Airlib, No. 2003R00009). The Corsair company was taking action against the Air Lib company, which was benefiting from significant support measures from the public authorities to maintain an activity on the verge of bankruptcy. These measures enabled Air Lib to offer flights at abnormally low prices. The applicant company demanded the reimbursement of the illegal aid. The President of the Commercial Court declared himself incompetent to assess the consequences of a possible illegality of the aid granted to Air Lib on the grounds that his decision risked contradicting a decision of the Commission, which was in the process of conducting an investigation to assess the nature of the financial aid granted. However, the judge did not rule out taking interim measures following the Commission’s decision. This decision is in contradiction with the CJEU’s case-law since, according to the latter, where the Commission before which the case is brought has not yet ruled on the compatibility of the aid with the internal market, a national court is required neither to declare itself incompetent nor to stay the proceedings until the Commission has taken a position. The judge hearing the application for interim relief was therefore not faced with a lack of jurisdiction in principle; he could have ruled.

On several occasions, the courts have shown a reluctance to suspend the execution of an administrative decision on the grounds that it may contain unlawful aid. The reason for this is the failure to meet the conditions for summary proceedings linked to a strict interpretation by the administrative court. Regardless of whether the aid is invoked by the applicants to demonstrate a serious doubt or a situation of urgency, the court generally tends to reject the argument based on state aid law. In a number of decisions, state aid rules were invoked by the claimants to characterise the presence of a serious doubt, but was not upheld due to lack of admissibility of the claim or lack of urgency.

The Council of State rejected the summary proceedings suspension lodged by the association "Vent de colère! » (CE, ord., 3 October 2006, Association Vent de colère! – Fédération Nationale, No. 297722). The association requested the suspension of an order of the Minister of the Economy, Finance and Industry setting the conditions for the purchase of electricity produced by installations using wind energy. It argued that this measure, which had not been notified, constituted state aid. However, the appeal was dismissed for lack of urgency; the satisfaction of the condition of a serious endowment on legality was therefore not examined by the administrative judge. In the present case, the Council ruled that the mere mention of the additional cost of electricity was not sufficient to demonstrate a sufficiently serious and immediate infringement.

The companies Air France and Brit Air asked the administrative judge to suspend the execution of the decision by which the Chamber of Commerce and Industry of Marseille had instituted an incentive scheme for the creation of new routes (CE, ord., 19 March 2010, Société Air France, Société Brit Air, No. 336405). The applicants argued that this decision constituted state aid that had not been notified to the Commission. While this plea was used to establish the presence of serious doubt, it also served to demonstrate the urgency of the situation. Failure to notify would constitute an infringement of a public interest and the execution of the contested decisions would cause the applicants serious and immediate damage in view of the difficulties in the economic sector. The judge refused to consider the condition of urgency satisfied. He, therefore, rejected the applicants’ bold argument that the lack of notification was prejudicial to a public interest. It considered that the absence of notification “does not, on its own and independently of the prejudice directly caused to the interests of the applicant companies, characterise the existence of a situation of urgency justifying an interim injunction to suspend the execution of the contested decisions”. The risk of annulment of an administrative act is not sufficient to characterise the urgency. A few months later, the same companies again requested the suspension of the decision to set up an incentive scheme for the creation of new lines 2000. As the pleas in law invoked were identical, the Council of State relied largely and expressly on its order of 19 March 2010. It rejected once more the invocation of the public interest, which is attached to compliance with EU law, as reflecting, in itself, the existence of an emergency. Although it implicitly recognised that compliance with the obligation to notify represents a public interest, that interest is not sufficient, invoked alone, to satisfy the requirement of urgency. Moreover, the measure at issue does not significantly alter the conditions of competition causing serious and immediate damage. The illegality of state aid is therefore not sufficient to justify the urgency requirement.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

55. Are the recovery interests paid by a beneficiary tax deductible under national tax rules?

France

To the best of our knowledge, this question has not been raised yet in France. In principle, the response should be negative since this would create another unlawful aid in the aid recovery process.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

56. Is aid that was granted in the form of a fiscal measure always recovered through a new tax assessment, or do the national authorities use the freedom of choice under EU law to recover through the easiest available and most efficient method, even if not fiscal?

France

To the best of our knowledge, this question has not been raised yet in France. In principle, the courts use the freedom of choice.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

Main areas of state aid

57. Which sectors have received the highest amounts of aid in the past five years? Provide an update relating to covid-19 state aid, in particular by distinguishing guarantee schemes – referring to any statistics on the activation rates – from grants or recapitalisations, or other measures more related to R&D or the health sector.

France

With regard to covid-19 state aid see questions 58 to 62.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

58. Provide information on the amounts of state aid paid out under approved state aid schemes and individually approved state aid for the past five years.

France

There are some 222 aid schemes in France and five individual aid. All schemes and information concerning aid are available at: https://www.europe-en-france.gouv.fr/fr/aides-d-État.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

Covid-19 state aid measures

59. Provide information on the legal basis (article 107(2)(b), (3)(b) or (3)(c) TFEU?) chosen for aid measures and the type of aid granted during the covid-19 outbreak.

France

France has adopted measures under both article 107(2)(b) and 107(3)(b) TFEU in response to the covid-19 crisis. For the updated list of measures, see the consolidated list published by the Commission:

In March 2020, the Commission adopted the so-called “Temporary Framework” (communication from the Commission for state aid measures to support the economy in the current covid-19 outbreak, adopted on 19 March 2020 and amended on 3 April 2020, 8 May 2020, 29 June 2020 and 13 October 2020 – consolidated version – as at 13 October 2020:

https://ec.europa.eu/competition/state_aid/what_is_new/TF_consolidated_version_amended_3_april_8_may_29_june_and_13_oct_2020_en.pdf).

Some of the French measures are described below.

As a whole, the French measures are distributed as follows (classified by the dates of the Commission’s decisions approving the measures):

  • one measure under a 107(2)(b) TFEU (compensation of damages); and
    • 31 March: French scheme deferring payment by airlines of certain taxes to mitigate economic impact of the coronavirus outbreak;
  • three measures under article 107(3)(c) TFEU (outside the specific rules of the “Temporary Framework” but in line with its main principles):
    • 12 April: a €10 billion guarantee scheme to support domestic credit insurance market in coronavirus outbreak;
    • 11 May: a guarantee scheme for exporting small and medium-sized companies affected by coronavirus outbreak; and
    • 17 July: a reinsurance scheme to support the credit-insurance;
  • thirteen measures (aid schemes and some individual measures) under the Temporary Framework
    • 21 March: Three French measures mobilising €300 billion of liquidity support for companies;
    • 30 March: €1.2 billion French “Fonds de solidarité” scheme for small enterprises in temporary financial difficulties due to coronavirus outbreak;
    • 20 April: €7 billion French “umbrella” scheme to support the economy in the coronavirus outbreak;
    • 24 April: French guarantee scheme for exporting companies affected by the coronavirus outbreak;
    • 29 April: €5 billion loan guarantee by France to the Renault group to mitigate the economic impact of coronavirus outbreak;
    • 4 May: French plans to provide €7 billion in urgent liquidity support to Air France;
    • 26 May: French guarantee of a €71 million loan to automotive spare parts NOVARES;
    • 5 June: €5 billion French “umbrella” scheme to support research, development, testing infrastructures and production of coronavirus relevant products;
    • 29 June: French scheme of €207 million of wage subsidies to support the economy;
    • 30 June: €30 billion French subordinated loan scheme to support companies affected by the coronavirus outbreak; and
    • 28 July: Second amendment to the French scheme to support the recovery of the economy: crise liée au coronavirus.

The measure adopted under article 107(2)(b) TFEU is a scheme deferring payment by airlines of certain taxes to mitigate the economic impact of coronavirus outbreak (SA.56765). The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the member states to compensate for the damages linked to the outbreak are justified. The Commission found that the French aid scheme will compensate damages that are directly linked to the coronavirus outbreak. In this respect, the scheme will contribute to address the economic damage caused by the coronavirus in France. It also found that the measure is proportionate as the foreseen compensation does not exceed what is necessary to make good the damage. The Commission, therefore, concluded that the scheme is in line with EU state aid rules, in particular article 107(2)(b) TFEU as it will contribute to mitigate the negative consequences of coronavirus for the airline sector in France, without unduly distorting competition in the Internal Market.

Under article 107(3)(b) TFEU, France adopted a €10 billion guarantee scheme to support the domestic credit insurance market in the context of the coronavirus outbreak (SA.56903). The Commission found that the scheme notified by France was compatible with the principles set out in the TFEU and is well targeted to remedy a serious disturbance to the French economy. In particular, (i) the guaranteed insurance products are offered only to compensate for the lack of sufficient private offer, (ii) the guarantee will only be provided until the end of this year, (iii) the guaranteed insurance products can be offered by all credit insurers in France, (iv) the guarantee mechanism ensures risk sharing among its users, and (v) guarantee fee premiums provide sufficient remuneration for the French state.

The Commission, therefore, concluded that the measure necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with article 107(3)(b) TFEU and the general principles set out in the Temporary Framework.

Under article 107(3)(b) TFEU, France has also adopted a guarantee scheme for small and medium-sized companies with export activities that are affected by the coronavirus outbreak (SA.57219). The Commission found that the scheme notified by France is compatible with the principles set out in the EU Treaty and is well targeted to remedy a serious disturbance to the French economy. In particular, (i) it covers guarantees with a limited maturity and size; (ii) the guarantees will only be provided until the end of this year; (iii) it limits the risk taken by the state to a maximum of 90 per cent; (iv) the guarantees can be offered to all exporting companies in France; (v) the guarantee mechanism ensures risk sharing among its users; and (vi) the guarantee fee premiums provide sufficient remuneration for the French state. The Commission, therefore, concluded that the measure will contribute to managing the economic impact of the coronavirus in France. It is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with article 107(3)(b) TFEU and the general principles set out in the Temporary Framework.

The main schemes approved (SA.56709 on 21 March 2020) were undoubtedly the three measures mobilising €300 billion of liquidity support for companies (in fact it seems that, as at November 2020, less than 50 per cent of this budgeted support has been used by companies). These consists in (i) two guarantee schemes via Bpifrance of state guarantees on commercial loans and credit lines for companies <5,000 employees and (ii) a guarantee scheme for banks on portfolios of new loans for all types of businesses – aim to enable banks to quickly provide liquidity to a company in need. The main features of the schemes are the following (in line with the Temporary Framework):

  • the risk taken by the state is limited to a maximum of 90 per cent;
  • the guarantee premiums are equal to a base rate (IBOR one year or equivalent, as published by the Commission) applicable on 1 January 2020, plus a line of credit that takes into account the nature of the beneficiary company and the maturity of the underlying instrument;
  • the risk premiums are progressive by maturity bracket of the underlying instrument (step-up), so as to encourage a faster repayment of aid granted;
  • the maximum duration of the guarantee does not exceed six years; and
  • the guarantee covers investment and working capital credits, as well as confirmed lines of credit that finance the operating cycle of the beneficiary companies.

The Commission considered that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of France. The measures introduce assurances regarding possible indirect aid to credit or other financial institutions. These assurances request at least a maintenance of the total outstanding amounts per beneficiary, ensure that these institutions pass on, as far as possible, the benefits of the notified measures to the beneficiary undertakings.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

60. Provide information on any state aid measures granted by your country to undertakings in difficulty (within the EU definition) during the covid-19 outbreak but which were excluded from the Covid-19 Temporary Framework because they were in difficulty before 31 December 2019.

France

To the best of our knowledge, no measures that were excluded under the Temporary Framework have been granted by France to undertakings in difficulty because they were in difficulty prior to 31 December 2019.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

61. Provide information on any recapitalisation measures introduced under the Covid-19 Temporary Framework.

France

To date no recapitalisation measures have been adopted under the Temporary Framework but plans for individual aid measures and recapitalisation aid schemes are being examined by the French authorities (as at in November 2020).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

62. Provide information on any aid measures that did not require notification, such as no aid measures or de minimis aid, in the context of the covid-19 outbreak.

France

France has adopted several aid measures that did not require notification. Measures have been adopted to counter the devastating impact in favour of local shops, craftsmen and the self-employed, the book industry, building and public works sector, the ecological transition at the heart of the automobile support plan, technology companies, aeronautical sector and tourism.

To the best of our knowledge, there have been no de minimis aid measures adopted in the context of covid-19.

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

63. Provide information on any possible litigation before your national courts with respect to potential unlawful state aid granted within the covid-19 outbreak.

France

While competition litigation for compensation has thus increased more than significantly in recent years, it seems that companies are not yet fully aware of their right to be compensated for the damage caused to them by infringements of EU state aid law. The covid-19 pandemic and its hitherto unprecedented amount of state aid should undoubtedly reverse this trend. However, there have not been any such challenges to date before the national courts.

Ryanair has challenged the Commission’s decision approving the French scheme allowing airlines with an operating licence in France to defer certain taxes to the General Court (T-259/20, pending).

Answer contributed by Jacques Derenne and Ciara Barbu O'Connor

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