From defence spending to green subsidies, governments are relying on state aid more than ever. Yet while the cases reaching Luxembourg continue to evolve, the underlying principles of EU state aid control remain remarkably stable, European General Court judge Tihamér Tóth says in an interview with EU Perspectives.
What types of cases do you usually decide in relation to state aid?
At the General Court of the European Union, we review Commission decisions, which typically either authorise member states to grant aid to companies or prohibit them from doing so. These are cases we call direct actions, where typically a competitor or a member state is the applicant, and the Commission is the defendant. Our task is to decide whether the Commission has done its job properly.
The Court of Justice of the European Union (CJEU), which is the second-instance court in Luxembourg, deals with three types of cases in which state aid law may be relevant.
First, it reviews judgments of the General Court on appeal.
Second, it responds to questions referred by national courts. This is what we call the preliminary ruling procedure. It is quite a different type of procedure and generally leads to shorter, more accessible judgments. It is essentially about interpretation: how national courts should interpret concepts such as the notion of state aid or the definition of a small and medium-sized enterprise. After the Court delivers its preliminary ruling, it is for the national court to decide the case itself.
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The third type of procedure in which the Court of Justice can be involved is the infringement procedure, where the Commission sues a member state, for example, for failing to recover aid that has been found unlawful and incompatible with the internal market. These are follow-up proceedings stemming from a Commission decision establishing that a member state granted unlawful aid to a company and must recover it.
Member states typically have between four and twelve months, depending on the circumstances, to recover the aid and report back to the Commission. If the Commission concludes that the aid has not been properly recovered from the beneficiaries, it can bring proceedings before the Court of Justice.
Why does the Commission do that? Because once the Court confirms that the Commission was right and that the member state failed to recover the aid properly, the Commission can, in a separate procedure, ask the Court to impose financial penalties on the member state. One could therefore view this as a fourth type of procedure in which the Court becomes involved. So there are several different ways in which the European courts deal with state aid issues.
State aid law has developed significantly in recent years. You mentioned the preliminary ruling procedure. In your experience, how much clarity do member states currently have regarding what they can do under EU state aid rules?
State aid law forms part of competition law. It is a highly complex area. On the one hand, the most important rules are contained in the Treaties. These are general provisions, and interpreting them can be challenging precisely because of their broad nature. Applying concepts such as “state resources” or “undertaking” to the specific circumstances of a case is not always straightforward.
On the other hand, there is a substantial body of secondary legislation, including the General Block Exemption Regulation, as well as extensive soft-law instruments such as guidelines and notices. These documents run to hundreds, if not thousands, of pages and are highly technical. Their purpose is to provide greater legal certainty for member states and companies. However, one may legitimately ask whether becoming increasingly detailed and technical always helps to achieve that objective.
Overall, this remains a complex legal area. Both member states and companies generally require expert legal advice if they wish to proceed with confidence.
In the past, the courts played a crucial role in interpreting EU law, shaping the very nature of the project from its beginnings. Many of those interpretations remain applicable today. How important is judicial interpretation in shaping state aid policy now?
It remains important, but as you rightly point out, the fundamental cornerstones were established decades ago. I believe it is a positive development that these elements of our case law have remained stable. Courts are naturally cautious about changing settled jurisprudence abruptly.
In today’s world, technological developments, AI and economic change are moving much faster than they did 20 or 30 years ago. As a result, legal procedures that have remained largely unchanged for decades can appear slow.
What we mainly do today is fine-tuning. Of course, there are always new cases, new legislation and new crises. There is always something new under the sun. However, these developments generally do not affect the fundamental principles of state aid control. That, at least, is my view.
In areas such as defence, speed is often essential. Can we strike the right balance between deciding cases quickly while still upholding the law?
This is a very important question. It is also an area where not only the European courts but courts around the world face challenges. In today’s world, technological developments, artificial intelligence and economic change are moving much faster than they did twenty or thirty years ago. As a result, legal procedures that have remained largely unchanged for decades can appear slow.
This is a difficult issue because shortening procedures would inevitably require sacrificing certain procedural safeguards. Litigants might appreciate faster decisions, but they might be less satisfied if they felt their procedural rights had been curtailed.
In Luxembourg, we are doing our utmost to decide cases as quickly as possible. An additional challenge is that we are a multilingual institution. Although most of our internal work is conducted in French, which helps ensure consistency, the process still involves extensive translation.
Furthermore, in major cases the Commission often adopts lengthy decisions containing complex factual assessments and detailed calculations. If courts are expected to conduct a thorough review of those decisions, that process inevitably takes time.
