This chapter provides an overview of the EU State aid litigation in a quasi-federal system. Accordingly, a cursory look at the basic parameters of this hybrid system is helpful, in which judicial powers are shared between various actors and where effective judicial protection in line with Article 47 of the Charter of Fundamental Rights of the Union needs to be granted via the interplay of supranational and national judicial remedies. Generally, in EU competition law, this system is referred to as one of centralized and decentralized review and enforcement. Its essential characteristics are first and foremost designed to be mutually reinforcing and complementary in nature, but they also give rise to numerous issues of conflict of laws—both procedural and substantive—as well as issues of conflict of jurisdiction and competence between the supranational and the national legal orders.

This chapter examines the evolution of (non-crisis) aid in the EU-27 since 1992, which serves as a basis to assess the similarities and differences between the practices of granting aid in EU Member States. Aggregate data for the EU-27 as a whole suggests that Member States have given a smaller percentage of their GDP as aid over time, which might be regarded as reflective of the view that they are accepting the need for its reduction and its control in the single European market. While declining in the first half of the 1990s, aid levels peaked in 1997, only to be reduced by 1999. This can be explained based on the new regulations that were pursued during the time period, which resulted in broader definitions by the Commission and tighter control.

This chapter focuses on the notion of undertaking. The concept of undertaking is based on that of economic activity. Essentially this regards an activity that is subject to market-based competition, or that is at least potentially capable of being provided in competition. There is no single set of criteria to determine this. Instead, a range of different criteria has emerged to determine whether economic activity is involved in particular sectors such as the exercise of public authority of the provision of social security, education, or healthcare. Often a number of such factors have to be weighed. Increasingly there are different activities such as building and exploiting airport facilities, which are economically linked, regarded jointly as economic activities which come within the field of State aid rules.

This chapter discusses the distortion of competition and the effect on inter-Member State trade conditions. Article 107(1) TFEU provides that State aid is prohibited if two complementary conditions are fulfilled, namely if the State measure in issue distorts or threatens to distort competition and affects trade between Member States. The common trend within the EU Courts' case law is that no actual assessment of these criteria is required. In order to establish that competition is distorted and trade between Member States affected, it is not necessary to define the market or to carry out a thorough investigation as regards the impact that the contested measure might have upon the economic operators involved. All that matters is whether an advantage is granted to a market operator, at the detriment of another which will, as a matter of fact, encroach upon the good functioning of competition and trade between Member States.

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