16 Jan 2023

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Preliminary rulings addressing many questions relating inter alia to the notion of state resources, effect on trade and the intervention of national courts

On 12 January 2023, the Court adopted its Judgment on joined cases C‑702/20 and C‑17/21 following two requests for a preliminary ruling from the Supreme Court of Latvia. The ECJ was asked inter alia to interpret Article 107(1) and Article 108(3) TFEU, the de minimis Regulation and the Procedural Regulation in a case where two undertakings operating hydroelectric power plants applied to the regulatory authority for damages as compensation for the losses sustained as a result of the blocking of a tariff. Until 7 June 2005, the applicable law provided that under certain conditions electricity producers were entitled to sell their surplus electricity production to the approved electricity distribution undertaking at a price corresponding to twice the average electricity sale price. The average electricity price was determined by the appointed regulatory authority. As from 8 June 2005, the Law was amended but companies that had benefited from this provision would continue to be subject to that regime. The regulatory authority however referred to the average selling price in force at that time and did not update it, the tariff being blocked.

The Court first held that national legislation which obliges the approved electricity distribution undertaking to purchase electricity generated from renewable energy sources at a price higher than the market price and which provides that the resulting additional costs are financed by a compulsory surcharge borne by end users or which provides that the funds used to finance those additional costs constantly remain under public control constitutes an intervention through state resources. The Court stressed that classification as state aid is not subject to the condition that the market concerned has first been fully liberalised as an advantage granted to certain undertakings is liable to affect trade and to distort competition even before the full liberalisation of that market.

The Court also recalled that state aid is fundamentally different in its legal nature from damages in compensation which national authorities may be ordered to pay to individuals and that such damages do not constitute state aid within the meaning of EU Law.

The Court also clarified that where a national legislation has established state aid, the payment of a sum claimed before the courts in accordance with that legislation also constitutes state aid. Moreover, legal proceedings seeking full entitlement to that right must be regarded as requests for payment of the portion of that state aid not received and not as requests for the grant by the court seized of a separate state aid.

The Court added that the establishment of state aid cannot result from a judicial decision and falls outside the scope of a court’s powers and obligations.

As regards to the de minimis Regulation, the de minimis nature of an aid must be assessed in the light of the total amount of the sums already received and the sums still claimed by the applicants during the reference period.

Finally, the Court observed that a national court may grant a request seeking the payment of a sum corresponding to new aid which has not been notified to the Commission, provided that that aid is first duly notified by the national authorities concerned to that institution and that the latter gives, or is deemed to have given, its consent in that regard.

For further information : Court’s press release