Legal Remedies Available to Competitors of Recipients of Unlawful State Aid under Estonian Law

Author:Mari Kelve-Liivsoo, Artur Knjazev, Tea Kookmaa

Article 108 (3) of the TFEU (imposing the ‘standstill obligation’) stipulates that Member States are obliged to notify the European Commission of pending state aid and wait for its approval. Breach of the standstill obligation requires effective remedies in order to protect the rights of individuals, which is a task for the national courts. National procedural autonomy is restricted only by the... (see full summary)

Mari Kelve-Liivsoo Artur Knjazev Tea Kookmaa
Bachelor’s student Master’s student Master’s student
University of Tartu University of Tartu University of Tartu
Legal Remedies Available
to Competitors of Recipients
of Unlawful State Aid under
Estonian Law
1. Introduction
This article addresses the issue of breaching the standstill obligation under Article 108 (3) of the Treaty on
the Functioning of the European Union (hereinafter ‘TFEU’)*1 and the legal remedies possible under Esto-
nian legislation that are available to persons whose rights have been infringed by way of unlawful state aid.
The paper focuses mainly on the competitors of the recipient of unlawful state aid.
State aid and its potential recovery is highly topical in Estonia. In April 2014, the European Commission
decided to initiate formal investigative procedure in the case of Estonian Air.*2 The company had bene ted
from several public interventions over the space of 10 years while only a single capital injection is allowed
as restructuring aid.*3 Another example is the Estonian Electricity Market Act, which allows support for
producers of energy from renewable sources.*4 This state aid scheme was approved by the European Com-
mission but actually launched before the approval.*5
Pursuant to Article 107 (1) of the TFEU, aid granted by a Member State to undertakings and ful ll-
ing the criteria listed in that article*6 (i.e., state aid) is generally not permissible. State aid may be given
or altered only upon prior approval of the European Commission (also ‘the Commission’).*7 The Member
State concerned shall not put its planned measures into effect until the Commission has reached a nal
decision on the compatibility of these measures with the internal market. This is referred to as the standstill
obligation.*8 Said obligation is breached where the Member State fails to notify the Commission of state aid
or does notify the Commission but fails to wait for a positive decision. The standstill obligation is intended
to guarantee that state aid does not take effect before the Commission has had a reasonable period within
1 Treaty on the Functioning of the European Union. – OJ C 326, 26.10.2012.
2 European Commission SA.36868. Publication in OJ on 9.5.2014. JOCE C/141/2014.
3 Ibid., para. 80.
4 Estonian Electricity Market Act (‘EMA’ in later notes), §59.
5 European Commission. State Aid SA.36023 (2014/NN) – Estonia, Section 4 (‘Conclusion’) and para. 55.
6 State aid is aid that 1) is granted by a Member State 2) through state resources, 3) confers an advantage on the recipient, 4)
is selective in nature, 5) distorts competition, and 6) has potential to affect cross-border trade.
7 Article 108 (3) of the TFEU.
8 Ibid.

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