9 Colum. J. Eur. L. 429 (2003)
Cesare Rizza. The Author is an associate of Cleary, Gottlieb, Steen & Hamilton, resident in the Rome office, and a former référendaire at the Court of Justice of the EC.
The interplay between the Treaty rules on State aid and Article 86(2) EC lies at the heart of the stimulating debate which has been developing following the judgments delivered by the EC courts of law in the FFSA and “CELF” cases. This debate involves the regulated industries in which incumbent operators are granted financial advantages by public authorities in order to compensate for the cost of public service constraints imposed upon them. The Court of First Instance (“CFI”), as did at least implicitly the Court of Justice (the “ECJ”), initially endorsed the principle that an aid measure that is merely intended to offset the extra costs of public service tasks assumed by the beneficiary undertaking may nonetheless be classified as aid within the meaning of Article 87 EC. Its function as public service offset may be taken into account when considering whether the measure in question is “shielded” from application of the EC Treaty competition rules pursuant to Article 86(2) EC. A.G. Jacobs dubbed this the “State aid approach” in his recent opinion in the pending GEMO Case. This principle, however, was called into question by the recent Ferring ruling. In that case, the ECJ (Sixth Chamber) held that aid exists only if and to the extent that the economic advantage that State funding of a SGEI provides to the beneficiary undertaking(s) exceeds appropriate remuneration for the cost of providing the service in question. This is termed the “compensation approach” in A.G. Jacobs’s language. It may seem ironic that the ECJ’s redefinition of the boundaries of Articles 87 and 86(2) EC, which creates a deplorable legal uncertainty, comes precisely at a time when the Commission, reacting to the concerns expressed by the European Council in 2000 and in 2001, has committed itself to exploring ways of increasing legal certainty in the sphere of services of general interest.
It is extremely important to note at the outset of this analysis that the debate between the “State aid approach” and the “compensation approach” is not merely theoretical but has material practical consequences. If, on the basis of the “compensation approach,” a given financing measure does not constitute State aid, the measure falls outside the scope of the State aid rules and need not be reported to the Commission. Moreover, a national court can decide that a State measure intended to offset the cost of public service obligations involves no State aid without having to wait for the Commission to assess the compatibility of the measure.” Under the “State aid approach” the same measure would constitute State aid which must be notified in advance to the Commission, the derogation in Article 86(2) EC being subject to the same procedural process as the exemptions in Article 87(2) and (3) EC of the EC Treaty.
