European Commission In A “Reflection Mode” Following CJEU Loss In The Engie State Aid Case

On December 5, 2023, the CJEU overturned the judgment of the General Court, which upheld the Commission decision of June 20, 2018 finding that Luxembourg had granted unlawful State aid of €120 million to Engie.

Article 107 TFEU prohibits State aid, which concerns aid measures that grant a “selective advantage” to certain undertakings over others, and thus distort competition.  A selective advantage requires three determinations: (i) the relevant benchmark within the investigated Member State’s national law (the “reference framework”); (ii) a derogation from that benchmark (the “advantage”); and, (iii) a lack of justification for that derogation.  In essence, the broader the reference framework, the easier it is for the Commission to find that a given Member State has granted a selective advantage.  The judgment clarifies that in determining the reference framework, the Commission must follow the interpretation of the national law provided by the investigated Member State unless that interpretation is clearly incoherent with the prevailing interpretation under the national legal system based on the relevant legal provisions, case law, and decisional practice.

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