State Aid

Last verified on Tuesday 30th July 2019

State Aid: Spain

Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Uría Menéndez

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?

Spain

Under Royal Decree 1755/1987 of 23 December on the procedure for notifying the European Commission of projects aimed at establishing, granting or modifying internal aid by public administrations or public entities, any public authority that intends to grant aid must submit a copy of the project to the Secretariat of the Inter-Ministerial Commission for Economic Affairs related to the European Union at least three months in advance of its planned implementation.

Notification to the European Commission of state aid measures is centralised through the Ministry of Foreign Affairs and Cooperation. In particular, the General Directorate for Coordination of Common Policies and EU General Affairs. The Subdirectorate General for Legal and Institutional Affairs is in charge of advising on the compatibility of state aid measures with EU rules and representing Spain in the notification process before the European Commission. In addition, specialised units at the regional level also advise local and regional administrations on this matter.

Further, the rights under EU state aid rules pertaining to natural or legal persons adversely affected by state aid measures may be judicially enforced through complaints submitted to the European Commission.

The Spanish Markets and Competition Commission (CNMC) is responsible for supervising and monitoring of state aid measures in Spain granted by any public authorities. The CNMC is responsible for applying the rules under the Spanish Competition Act 15/2007 of 3 July (Spanish Competition Act) on state aid. In particular, the Spanish Competition Act instructs the CNMC to draft an annual report on public aid granted in Spain. In addition, the CNMC may, at its own initiative or at the request of any public authorities, assess the conditions for the granting of aid and its potential effects on competition; it is entitled to issue reports regarding individual state aid frameworks and submit specific recommendations to public authorities in order to ensure the maintenance of effective competition in the market. Nevertheless, it does not enjoy any investigatory or enforcement powers.

For the sake of completeness, we note that Law 9/2017 of 8 November on Public Sector Contracts (Law on Public Sector Contracts) establishes an indirect control of state aid in public tendering procedures. In particular, in the context of public tenders, an offer that is abnormally low must be rejected if this is due to the existence of state aid, unless the company making the offer can prove that such state aid is compatible with EU rules. In addition, if the contracting authority rejects an offer for this reason in a tender procedure subject to harmonised regulation, it must inform the European Commission.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

According to the Spanish Competition Act, the CNMC may analyse the criteria used to grant public aid in relation to its possible effect on competition in the markets. This involves, inter alia, addressing proposals to public administrations to foster competition and challenging administrative regulations and decisions that may hamper effective competition in the market. In addition, the CNMC regularly publishes comments on proposed administrative regulations.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

There is no specific mechanism in Spain for monitoring compliance with EU state aid rules; however, for specific types of state aid measures, certain provisions of Law 38/2003 of 17 November on general subsidies will apply (General Subsidies Law). Indeed, the monitoring of compliance with the General Subsidies Law is vested in the General Intervention Board at the national level. Equivalent entities exist at regional and local levels. Infringements of the General Subsidies Law can be sanctioned with severe fines, bans on participating in public tenders and disqualification for other subsidies; they may even constitute a criminal offence. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

There is no national authority in Spain responsible for dealing with complaints by competitors or interested parties in relation to potentially unlawful and/or incompatible state aid measures. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

We are not aware of the CNMC (or any other Spanish public authority) having regularly participated in exchanges of information with state aid authorities of other member states. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Members of the Spanish Government Legal Service are in charge of representing Spain before EU courts. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

The National Database on Subsidies (BDNS) is a central national registry of all subsidies and state aid granted by any Spanish public authority, whether national, regional or local, to natural or legal persons. The BDNS includes information on all subsidies granted by Spanish public authorities since January 2016. The BDNS is published on the website of the Treasury Ministry (http://www.infosubvenciones.es/bdnstrans/es/index) and provides information on the authority granting the aid, its amount, purpose and beneficiaries.

Local and regional authorities have also created their own registries regarding aid measures at regional and local levels.

The CNMC publishes an annual report on state aid measures (https://www.cnmc.es/ambitos-de-actuacion/promocion-de-la-competencia/ayudas-publicas); its website also includes information on state aid measures that have been published in official journals. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

National substantive and procedural rules

8. Describe any recent developments in substantive or procedural rules under domestic law relating to state aid.

Spain

The main recent developments in Spanish case law on state aid relate to the procedure for recovering illegal aid. In recent cases, the Spanish Supreme Court has declared that Spanish law does not require a specific procedure for recovering illegal state aid measures; beneficiaries of alleged illegal state aid enjoy the same rights as any other party to administrative proceedings including, among others, the right to be heard. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

There are only a very limited number of specific national provisions regarding the application or enforcement of EU state aid rules. In particular, the General Subsidies Law and its implementing regulations establish an obligation at the national level to inform the European Commission of any state aid measures, the standstill obligation, and other ex post control mechanisms. In addition, as has been explained in the reply to question 1, the Law on Public Sector Contracts establishes an indirect control of state aid in public tendering procedures.

The recovery of most incompatible state aid measures will follow the general rules of Spanish administrative proceedings. In contrast, the Spanish General Taxation Law (Title VII) sets out a specific procedure for recovering state aid measures in the field of tax. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

10. Are there national rules or guidelines relating to the implementation of EU state aid rules, in particular EU guidelines?

Spain

As a general rule, Spanish authorities apply EU state aid rules without requiring any measures implementing them into Spanish law. Nevertheless, there are various national laws that implement EU guidelines. In particular, the EU Guidelines on regional state aid were implemented in Spain by means of the Regional Incentives Act (Law 50/1985 of 27 December) and its implementing regulations as well as by several Royal Decrees approving the regional-aid maps.

Furthermore, on 27 July 2016, the CNMC published a Methodological Paper for the Assessment of State Aid (https://www.cnmc.es/file/107238/download) that summarises the EU state aid measures. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

There are no specific national rules or guidelines regarding the application for, and the granting of, any kind of state aid measures in Spain. Therefore, each measure of state support is governed by specific rules and guidelines depending on the form of the measure. The specific public authority issuing the state aid under a framework generally publishes guidance on the basis for the framework, eligible beneficiaries, details on its scope and purpose, eligible costs, the amount of aid and the procedure on how to apply for support.

The General Subsidies Law sets the eligibility requirements and the procedures to be followed to receive state support. The CNMC is also entitled to publish ad hoc reports regarding specific state aid measures. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

The notion of “service of general economic interest” (SGEI) is not explicitly defined under Spanish law. Article 128.2 of the Spanish Constitution states that “essential resources or services may be restricted by law to the public sector, especially in the case of monopolies; the intervention of companies can potentially be demanded if so required by the general interest”.

Spanish regulations have imposed “public service obligations” on undertakings active in specific sectors (eg, telecommunications, energy supply, postal services, aviation, maritime and train transport) in order to ensure the provision of services that are considered essential but that might not be provided in the absence of such obligations. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Since 2008, the CNMC (and its predecessor, the CNC) has published an annual report regarding public aid granted in Spain providing information on the type of aid granted by Spanish authorities, the CNMC’s activities regarding state aid, recent proceedings initiated by the European Commission against Spain and judgments handed down by European courts regarding state aid measures implemented in Spain. The last annual report was published on 5 July 2018 (https://www.cnmc.es/ambitos-de-actuacion/promocion-de-la-competencia/ayudas-publicas).

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

In Spain, no courts have exclusive subject-matter jurisdiction to hear state aid cases; jurisdiction of the courts follows the general rules and will depend on the type of action and the mechanism used to grant the aid.

In most cases, administrative courts will have jurisdiction over state aid cases. In particular, they will have jurisdiction to hear disputes initiated by a competitor or another public authority against the authority that granted the aid related to either the lawfulness of the aid or the execution of the recovery order issued by the European Commission. Actions initiated by a competitor against the authority that granted the aid seeking damages will also be heard before administrative courts. It is also important to take into consideration that Spanish courts may also apply EU state aid rules ex officio without the claiming party having invoked them.

However, when a competitor seeks compensation from the beneficiary as a result of damages resulting from the granting of aid or if the aid is granted via a contract between the beneficiary and an administrative body under the provisions of private law, civil courts will have jurisdiction to hear the case.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

There are no particular rules on this issue in the field of state aid; therefore, the general rules on appeals to a higher court apply and at least one appeal to a higher court will be allowed. The grounds for an appeal can either be a factual error or the incorrect application of Spanish or EU law.

The appeal of a recovery order does not entail an automatic suspension of the obligation to recover the aid. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

To the best of our knowledge, as a general rule, national courts do not confuse the concept of unlawful aid with incompatible aid.

The fact that the Supreme Court distinguishes between both concepts can be seen, for instance, in its judgment of 14 June 2017, number 1049/2017, which states that “the unlawfulness of state aid resulting from failure to comply with the obligation to notify prior to execution is not affected by the fact that the European Commission considers that such a measure is compatible with the common market.”

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

To the best of our knowledge, as a general rule, national courts do not confuse the concept of new aid with existing aid.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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.

Spain

In general, Spanish courts are reluctant to refer questions regarding the interpretation of EU state aid law until they are obliged to do so under article 267 TFEU.

There is a limited number of referrals regarding the interpretation of state aid rules. By way of example, the Supreme Court has referred some questions in, among others, cases C-275/13 Elcogás, C-222/07 Uteca and C-71/04 Xunta de Galicia. Other high courts have also referred questions such as the High Court of the Basque Country in cases C-428/06 to C-434/06 Unión General de Trabajadores de la Rioja and the High Court of the Community of Valencia in case C-387/92 Banco Exterior de España. There have also been referrals from lower courts, although this is less common. For example, the Administrative Court of Ferrol referred a question in case C-522/13 Ministerio de Defensa and Navantia regarding a tax exemption in respect of State-owned land made available to a private company whose capital was wholly publicly owned.

In 2018, the Supreme Court requested a preliminary ruling from the Court of Justice regarding a tax that levies the use of inland waters for the production of electrical energy (case C-105/18 Unesa). The Supreme Court had doubts as to whether this tax constitutes state aid and, in particular, whether it discriminates some hydroelectric production companies in favour of hydroelectric plants located in certain territories and electricity producers from other sources. The case is still pending before the European Court of Justice. On 8 May 2019, the Advocate General issued its opinion and the case is now awaiting the ruling of the European Court of Justice.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

We are not aware of national courts generally using the possibilities offered by the Procedural Regulation regarding the amicus curiae; nor are we aware of the European Commission generally submitting written observations to national courts and requesting authorisation to appear in court hearings on state aid matters.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

The majority of state aid judgments that have been delivered during the last year refer to the Regional environmental tax measures imposed on department stores. The origin of this case was the referral for a preliminary ruling of the Spanish Supreme Court regarding whether certain exemptions to regional environmental taxes constituted state aid. Following the rulings of the European Court of Justice (cases C-233/16 Anged/Cataluña, C-234 and 235/16 Anged/Asturias, and C-236 and 237/16 Anged/Aragón) and the subsequent judgement of the Spanish Supreme Court, lower Spanish Courts have adopted judgements withdrawing the appeal against the liquidation executed by the Spanish tax authorities that were submitted by companies that claimed the nullity of the regional tax on the grounds it constituted illegal state aid.

A number of state aid cases recently before Spanish courts related to appeals against measures adopted by the Spanish authorities in order to recover illegal aid. The lack of specific proceedings for the recovery of illegal aid has resulted in problems regarding the conciliation between the respect of the rights of defence of the beneficiaries and the obligation of Spain to immediately execute the recovery decision. The Supreme Court has declared that the beneficiaries’ rights of defence in recovery proceedings should receive the same protection as in other national proceedings involving actions of the same nature as recovery proceedings. In particular, the fact that the proceedings for recovering illegal aid did not allow for the intervention of the beneficiary led to the annulment of the act of the Spanish authorities implementing the recovery order. See, for example, the judgment of the Supreme Court of 25 January 2017 in Ros Casares and from 25 May 2017 Habidite Technologies.

In its judgment of 24 June 2014 (Diputación Foral de Vizcaya) on the recovery of illegal aid granted by the Diputación Foral de Vizcaya to a maritime transport company, the Supreme Court extended the liability of the obligation to repay amounts considered as state aid to the parent company of the entity that had been declared the beneficiary of the aid. In that case, the Diputación Foral de Vizcaya had acquired various tickets from the maritime transport company to be used within a specified period. The European Commission declared that the acquisition of those tickets constituted state aid and ordered the recovery of the amounts paid. The execution of the recovery order involved the termination of the sale and purchase agreement of the tickets. The commercial court declared that, as a result of the termination, the Diputación Foral de Vizcaya was obliged to return the unused tickets to the beneficiary and, if that was not possible, to pay the price of the tickets. As the Diputación Foral de Vizcaya was not able to return the tickets, it was obliged to pay their price. After such payment was made, the beneficiary decided to cancel the service of the line to which they related. The Supreme Court declared that, in order to comply with Spain’s obligation to recover the illegal aid, the beneficiary’s parent company was liable for the infringement of the contractual obligations assumed by the beneficiary. The judgment made reference to the concept of a “single economic unit” under competition law as well as to the liability of a parent company for infringements committed by its wholly owned subsidiaries.

On 1 March 2019, the Supreme Court issued an order admitting an appeal on whether the recovery proceedings must be suspended following a judgment of the European Court of Justice that annuls the decision of the European Commission declaring the existence of unlawful state aid due to formal defects and, therefore, allowing the European Commission to reinitiate the state aid proceedings. The judgment on this matter is still pending.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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.

Spain

Under Spanish law, government measures can be challenged directly in administrative courts on the grounds of the existence of unlawful state aid. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Any legal or natural person having a legitimate interest has standing to judicially challenge a government measure on the grounds of the existence of unlawful state aid (eg, competitors of the beneficiary of the allegedly unlawful aid or unsuccessful bidders). Associations of undertakings and trade unions affected by the measure or that are entitled by law to defend collective interests will also have legal standing. Other public authorities meeting certain requirements would also be entitled to challenge the legality of measures adopted by other public authorities. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

Owing to the primacy of EU law, Spanish law does not prevent national authorities from claiming the unlawfulness of aid they granted in domestic court proceedings (see, eg, judgment of the Supreme Court of 2 March 2015 in the Elcogás case) in the absence of a European Commission decision.

Furthermore, court proceedings initiated by a public authority claiming the unlawfulness of a state aid granted by another public authority are common in Spain (see, eg, judgment of the Supreme Court of 7 February 2006).

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

EU limitation periods prevail in national proceedings regarding the illegality of state aid measures. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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)?

Spain

National court proceedings can be initiated in parallel with an investigation by the European Commission. Indeed, if the European Commission has opened in-depth proceedings, Spanish courts may adopt measures to prevent the execution of the state aid measure or to ensure that the beneficiary is not in a position to profit from the aid. Such measures could include, for example, instructing the beneficiary to deposit the amount of the aid in a blocked account until the European Commission adopts a final decision (see our response to question 26). 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

The court may decide to stay proceedings if the European Commission has opened an in-depth investigation regarding the state aid measure at stake. However, in that case, the court should adopt interim measures to protect the rights of the claimant under article 108.3 TFUE such as ordering the beneficiary to deposit the funds obtained from the application of the state aid measure in a blocked bank account (see judgment of the Supreme Court of 17 July 2014 in the Astra Ibérica case). 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

The European Commission’s preliminary conclusion in its opening decision that a measure constitutes state aid will not create a presumption before national courts regarding the existence of state aid (see judgment of the National Court of 11 April 2000 in the case of Asociación Profesional de Empresas Navieras de Líneas Regulares); however, it will have an impact on the adoption of interim measures by the court aimed at ensuring compliance with article 108.3 TFEU (see the Astra Ibérica case in question 26).

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

The Deustche Lufthansa case seems to have had no effect on Spanish courts to date. As has been mentioned in the reply to question 19, we are not aware of national courts generally using the possibilities offered by the Procedural Regulation regarding the amicus curiae in state aid matters. As to requests for preliminary rulings, even if Spanish courts are reluctant, there are indeed some cases (see reply to question 18).

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

In proceedings before administrative courts, an administrative act or regulation benefits from a presumption of legality and the claimant must establish its illegality. Therefore, the burden of proof falls primarily on the claimant. This general principle should also apply to state aid cases.

In a damages action before civil courts, the burden of proof lies with the claimant, who must prove and quantify the corresponding damages and establish the cause of the damages.

If the European Commission has already adopted a decision declaring the aid illegal, the court has no margin to depart from that conclusion.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

As a general rule, in Spain, any competitor and any natural or legal person who holds a legitimate right or interest has standing to bring a claim in a national court challenging a measure that unlawfully implements state aid.

The plaintiff can request the adoption of all measures necessary to guarantee that the future judgment is effective. These measures can be requested before the measure has been implemented (ie, to prevent the aid being granted) or after the measure has been awarded (in such case the court may, among other actions, order that the funds granted be held in escrow). 

In order to determine whether interim relief must be granted, the court will assess all interests at stake. The adoption of interim measures will be rejected if they would be expected to seriously affect the general interest.

Note that Spanish courts have recognised the importance of interim measures in the context of unlawful aid and appear highly inclined to apply the principles under the Commission’s Notice on the enforcement of state aid law by national courts. In particular, the courts have recognised that if there is an ongoing Commission investigation and the national court prefers to await the outcome of the Commission’s compatibility assessment before adopting a final recovery order, the court should adopt appropriate measures, eg, placement of the funds in an escrow (see the Astra Ibérica case in our response to question 26).

For the sake of completeness, note that the Supreme Court’s orders (autos judiciales) of 5 December 2017 and 22 February 2019 admitted an appeal on whether it is possible to extend interim measures adopted in relation to an illegal state aid measure (eg, a framework agreement) to acts that implemented such measure, and which had not been individually challenged. The first order was ultimately confirmed by the judgment of the Supreme Court of 11 October 2018.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Consequences of violation of state aid rules

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

Spain

Under Spanish law, a non-notified measure that contains state aid is null and void. In principle, this means that, if a court finds that a measure is unlawful, the court must order the recovery of the aid along with the corresponding interest. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

No, there are no domestic law provisions that would significantly hinder a national court from ordering the recovery of non-notified state aid.

Nevertheless, the effective application of rules on unlawful state aid depends greatly on the discretion of courts, owing to the absence of specific legislation in this area, the effective application of rules on unlawful state aid depends greatly on the discretion of courts. To date, in several cases courts have been diligent and have not hindered the recovery of non-notified state aid. It must, nevertheless, be noted that Spanish courts are sensitive of the rights of the parties in proceedings (eg, right to be heard), which may render the recovery of the aid more difficult or less swift.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Enforcement by the European Commission

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?

Spain

No precedents have been identified regarding the need to declare a guarantee invalid if it secures a loan constituting aid granted in breach of article 108.3 TFEU.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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.

Spain

In Spain, a competitor and an affected third party can claim compensation from the authority granting the state aid for damages caused by the award of unlawful aid. That claim could be based on either EU law (cases C-6/90 and C-9/90 Francovich and C-46/93 and C-48/93 Brasserie du Pêcheur) or Spanish law (the rules concerning state liability).

As regards state liability, Spanish law recognises a right to be compensated by public authorities for any wrongful damage suffered, provided that the damage results from the normal or abnormal functioning of public services (except in cases of force majeure or if the individual is legally obliged to bear the damages).

Actions for damages can be exercised independently or simultaneously with the actions requesting that a measure implementing state aid be declared null and void. However, independent actions for damages following a European Commission decision declaring the existence of unlawful state aid, can only be exercised if said decision is final. In a judgment of the Supreme Court (judgment of 8 February 2019), the action seeking damages was rejected, among other grounds, because the decision of the European Commission declaring the existence of unlawful state aid had been appealed by other companies before the European General Court. However, it must be noted that the referred judgment is a very rare case in which the action claiming compensation for damages was not brought by a competitor of the beneficiary but by the beneficiary itself (the Real Madrid Spanish football club) on the basis that the recovery process showed that it payed more under the tax regime applicable to it (that according to the European Commission constituted state aid) than what it would have paid under the normal tax regime applied to the majority of football clubs.

Note that exercising these actions may face certain challenges, since establishing the quantum of the damage and proving the causal link between the measure and the damage may be difficult. In this regard, one case concerning claims for damages has been identified. Indeed, the National Court’s judgment of 21 May 2002 in Fletamentos de Baleares, the Court dismissed a company’s claim for damages despite acknowledging that its competitor (Transmediterránea, SA) had been granted unlawful state aid. The Court held that the plaintiff had failed to prove the existence of damages, since – unlike the plaintiff – its competitor carried out activities of public interest (and, therefore, their activities were not comparable) and the funds provided by the authorities only compensated the unfavourable conditions resulting from those activities. As such, the Court concluded that the competitor was not favoured in comparison to the plaintiff and that, therefore, the latter did not suffer damages.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

A third party (other than an affected third party) could theoretically claim compensation from the member state for damages caused by a failure to respect the standstill obligation, subject to the condition that the criteria established in EU or Spanish law are met (see our response to question 34). However, no such cases have been identified.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Theoretically, a competitor could bring a damages action against the aid beneficiary; however, we have not identified any cases in which a third party brought such a claim.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

Spanish courts are reluctant to award damages against the state for having unlawfully granted aid. The Supreme Court has in the past declared that granting damages to a beneficiary for such reason would be tantamount to granting again the aid that has been declared illegal, thereby, circumventing state aid rules. See, for instance, the Supreme Court judgment of 18 January 2012 and the judgment of the High Court of the Basque Country of 26 June 2017, which quotes the former.

In addition, a judgment of the Supreme Court of 5 September 2018 established that the repayment of state aid could not be seen as a damage but as a mechanism to return to the situation in which the other companies that were not granted any aid found themselves. Therefore, it was considered that the requirement of a wrongful damage needed to grant compensation for damages under Spanish law was not met in this case.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

As mentioned in question 31, if a national court declares an aid unlawful, the measure will be considered null and void.

If a measure has been unlawfully implemented and is declared incompatible, the measure will also lead to the recovery of the aid along with any accrued interest. If the unlawful aid is subsequently declared compatible, the judge must recover the accrued interest but will have the option of recovering the aid or not.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Recovery of state aid

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?

Spain

A government regulation or contract containing an aid measure that has been declared unlawful will be considered null and void. The Supreme Court has previously declared regulations null and void (see judgment of the Supreme Court of 7 February 2006). The declaration of compatibility would not regularise the unlawfulness of the measure. As to the subsequent regulations or contracts linked to the aid measure, this question is currently being analysed by the Supreme Court (see question 30).

As regards measures (regulations or contracts) that have been lawfully implemented but are nevertheless declared incompatible with the internal market, the public authorities can declare them null and void. In addition, if administrative acts, the public authorities can request that a court annul them (for instance, if the authority that granted the aid did not want to declare it null and void and it was another authority that had filed the request with the court).

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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.

Spain

Only one in-depth investigation has been opened by the European Commission against Spain over the past 12 months (case SA.49579).

In this case, on 1 July 2019, the European Commission initiated an in-depth investigation to assess whether Spain’s plan to grant €20.7 million of public support to Peugeot for investing in process improvements in its existing car plant in Vigo (located in the autonomous region of Galice) is in line with EU rules on regional state aid.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

On 10 July 2018, the European Commission adopted a decision declaring that Correos, the publicly-owned Spanish postal operator, was overcompensated for the delivery of its universal postal service obligation and also benefited from incompatible tax exemptions. In this decision, the European Commission also declared that certain measures constituted existing aid and therefore, did not need to be recovered. After the decision, the European Commission initiated a cooperation procedure with Spain to agree on modifications to these measures in the future that is still ongoing.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Yes, the European Commission initiated case SA.47912 following its sector inquiry on capacity mechanisms. On 27 November 2017, the European Commission opened an in-depth investigation to assess whether Spain’s environmental incentive for coal power plants was in line with state aid rules. This investigation related to the scheme introduced by the Spanish authorities in 2007 that was aimed at supporting the installation of new sulphur oxide filters in existing coal power plants. These filters were supposed to reduce sulphur oxide emissions from those plants below certain limits. Since 2007, 14 coal power plants have benefitted from the scheme and received in total more than €440 million in public support, and payments were expected to continue until 2020. The European Commission was concerned that this scheme, that had not been notified as state aid, merely imposes on its beneficiaries the implementation of already mandatory environmental EU standards. If so, the scheme would not actually have any environmental incentive effect and the financial support may breach a long-standing principle of state aid rules, namely that member states may not grant state aid to companies to meet mandatory environmental EU standards. The European Commission considers that this would go against the “polluter pays” principle and give the relevant coal power plants an unfair competitive advantage over other forms of power generation and over coal power plants in other EU countries subject to the same EU legislation.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

According to publicly available information, Spain was subject to an injunction by the European Commission suspending aid following an investigation that was initiated in connection with tax aid granted to Ramondín (case C 22/1999).

Spain was also subject to a suspension injunction by the European Commission in 2013 in case SA.35550. This case concerned a tax measure relating to the amortisation of financial goodwill for foreign shareholding acquisitions.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Yes, Spain has been subject to infringement procedures under article 108.2 TFEU.

On several occasions, the European Court of Justice has held that Spain failed to fulfil the recovery obligations imposed by the European Commission decisions concerning state aid. See, for example, cases C-485/03 through C-490/03 (concerning specific tax measures implemented in the Basque region – provinces of Álava, Guipúzcoa and Vizcaya), C-177/06 (relating to tax frameworks applied in the provinces of Álava and Guipúzcoa) and C-499/99 (concerning loan guarantees, loans at non-market conditions, non-refundable subsidies and interest subsidies granted to the Magefesa Group).

Note that Spain’s failure to implement the rulings cited above caused the European Commission to initiate infringement proceedings. The European Court of Justice ultimately declared the failure to recover the aid (cases C-485/03 to C-490/03 and C-499/99) and imposed penalties on Spain to ensure recovery (see cases C-184/11 and C-610/10). The penalties included both daily penalty payments or lump sum payments.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

We are not aware of any on-site state aid monitoring visits based on article 22 of Council Regulation (EC) 659/1999 (Procedural Regulation) undertaken by the European Commission.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Main areas 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?

Spain

As a general rule, the authority responsible for ordering the recovery of state aid is that which granted the aid.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Under Spanish law, there exist distinct administrative procedure for recovering subsidies, on the one hand, and tax state aid, on the other. No specific procedure exists for other measures.

With regard to subsidies, measures for which a decision ordering the recovery following articles 107, 108 and 109 TFEU has been issued are de facto revoked and must be recovered. The beneficiary of the measure is first given the opportunity to voluntarily return the aid. If the aid is not returned, the authority is then entitled to proceed with the forced recovery by applying the measures referred to in our response to question 42.

Spanish legislation also regulates how to proceed to recover state aid in connection with tax. The procedure includes a number of rules that ensure that the recovery of the measure is not unduly delayed.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Other

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

Spain

Spanish authorities can proceed to a forced recovery if the beneficiary of state aid does not voluntarily return it. In this regard, the authority may enforce guarantees against the latter or seize its assets (which may subsequently be sold or assigned to the authority toward satisfaction of the debt). The authority can apply these measures autonomously without the intervention of a judge.

Although the above is established expressly for subsidies, it nevertheless applies mutatis mutandis to other types of state aid measures.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

As a general rule, an individual with standing cannot bring an action before national courts for the purpose of challenging the validity of the national recovery order implementing the European Commission’s recovery decision (assuming the validity of the latter is not challenged).

As exceptions, it can be argued that the rules of the procedure established under national law to recover the aid have been breached or that the European Commission’s decision has not been correctly interpreted and applied. None of these exceptions would challenge the validity of the European Commission’s decision, and would instead be limited to the manner in which recovery was carried out.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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?

Spain

Yes, if an authority has failed to implement a recovery decision by the European Commission, third parties with standing are entitled to request that the court issue a mandatory order forcing the relevant national authority to recover funds from a beneficiary of illegal state aid.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

Beneficiaries frequently put forward defences based on legitimate expectations to argue that state aid should not be recovered. However, Spanish courts have rejected those claims considering, in a manner consistent with the European Court of Justice, that aid beneficiaries may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the established procedure (given that a diligent economic agent should generally be capable of determining whether that procedure has been followed). See, for example, judgment of the Supreme Court of 9 February 2012 in Gas Natural.

It is also common that beneficiaries rely on legal certainty; however, for reasons similar to those concerning legitimate expectations, courts usually reject this defence (see, eg, judgment of the Supreme Court of 23 September 2009 in Unión Fenosa).

Bankruptcy has also occasionally been argued by beneficiaries to prevent recovery. In its judgment of 7 July 2008, the Supreme Court held, in the context of the former insolvency law, that state aid had to be considered as a credit from the public authorities and should be treated similarly to tax credits (this treatment granted public authorities priority over other persons holding other types of credit). However, the Provincial Court of Alicante, in its judgment of 28 November 2017 in relation to state aid granted to Elche Club de Fútbol, declared that state aid credits cannot be classified within the current insolvency law and that they must be recovered immediately and with priority, without regard to the rules on preference established by that law.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

52. Provide information on any other special features of your country’s state aid regime not covered above.

Spain

Not applicable.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

53. 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?

Spain

Although no specific precedents have been identified, in the event a measure is declared unlawful by a national court but is subsequently declared compatible by the European Commission, the court will not necessarily need to order the recovery of the aid (even if it may be entitled to do so), but rather only of the interest accrued. 

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

We are not aware of any precedents in which Spanish courts have applied the CELF I case law.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

If there is an ongoing European Commission investigation, Spanish courts tend to await the outcome of the compatibility assessment before adopting a final decision. Note, however, that as explained in the reply to question 30, Spanish courts recognise the importance of interim measures (such as the placement of funds in an escrow) in the context of unlawful aid and appear inclined to apply the principles under the Commission’s Notice on the enforcement of state aid law by national courts.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

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

Spain

The Spanish General Taxation Law sets out that recovery interest is governed by EU legislation. However, there is no specific provision on the tax deductibility of such interest. As per late payment interest (which has similar features), some binding tax rulings of the Spanish Directorate General of Taxation support its deductibility for corporate income tax purposes (however, both the Economic-Administrative Central Court and the Supreme Court hold to the contrary).

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

57. 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?

Spain

The recovery of fiscal measures is carried out in accordance with the procedures established in the Spanish General Taxation Law, which generally involve a new tax assessment.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

58. Which sectors have received the highest amounts of aid in the past five years?

Spain

The information provided in this reply is based on the data provided in the 2018 state aid scoreboard published by the European Commission in 2019 (available at http://ec.europa.eu/competition/state_aid/scoreboard/index_en.html). The 2018 scoreboard includes aid expenditure made by member states before 31 December 2017 that falls under the scope of article 107.1 TFEU. The data does not include state aid to railways.

According to the information provided by the European Commission, in Spain, non-agricultural aid is the most relevant area. Between 2012 and 2017, non-agricultural aid amounted to 78–84 per cent of total expenditure, of which a significant portion was devoted to, among others, research and innovation, regional development (11–24 per cent and 6.5–34 per cent, respectively, though this is gradually decreasing) and sectoral development (19–35 per cent). Since 2014, an important amount has been devoted to social support to individual customers (16–23 per cent).

Aid aimed at agriculture and rural development amounted to 16-21 per cent and, in most years, a small portion was also granted to fisheries and aquaculture (0.1 per cent on average between 2012 and 2016).

Finally, expenditures on transport aid (excluding railways) between 2012 and 2016 amounted to 2.5–6 per cent of the total aid granted in Spain, most of which was allocated to maritime transport, with more limited amounts toward road, inland water and air transport.

Note that, as mentioned in our response to question 7, the CNMC also publishes an annual report on state aid in Spain. In its 2018 report (available at https://www.cnmc.es/ambitos-de-actuacion/promocion-de-la-competencia/ayudas-publicas), the CNMC indicates the total amount of state aid distinguishing between that granted to the financial sector and all others.

Aid to the financial sector grew significantly during the economic crisis (from 0.22 per cent of GDP in 2008 to 13.79 per cent in 2012), but has decreased significantly in recent years (0.38 per cent of GDP in 2016). On the other hand, aid to all other sectors varied between 0.26 per cent of GDP in 2016 and 0.53 per cent in 2009.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

59. 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.

Spain

The annual report published by the CNMC mentioned in our reply to the previous question includes the state aid measures notified by Spain as well as the exempt state aid measures communicated by Spain to the European Commission in 2015. Nevertheless, the report neither indicates the amounts of aid paid out nor distinguishes between frameworks and individual measures.

Information as regards notified measures and exempt measures communicated to the European Commission for previous years can be found in previous annual reports of the CNMC.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

60. Provide information on any other special features of your country’s state aid regime not covered above.

Spain

Not applicable.

Answer contributed by Edurne Navarro Varona, Ana Raquel Lapresta and Patricia Cano Gámiz

Get unlimited access to all Global Competition Review content