EU big boys dominate subsidies league table

Almost two-thirds of unlawful state aid across the EU27 is granted by the five biggest member states, according to a European Commission report due out next week (27 June).

France, Germany, Italy, Spain and the UK accounted for 73% of the 605 decisions on unlawful aid made by the Commission over the period 2000-06, the report says.

The five countries breached EU law by failing to notify EU antitrust regulators of handouts. But much of the aid awarded in France, Germany, Italy and Spain would have been deemed illegal even if it had been reported by governments.

Spain is marked out for special attention for illegal aid granted to companies in the industry and services sector. Over half of the unreported aid breached common market rules.

Neelie Kroes, the commissioner in charge of antitrust issues, will indicate her dissatisfaction with member states shirking their duty to recover the money.

The report notes that member states have made progress in tackling the backlog of recovery cases, particularly during the period 2004-06, but nearly a third of total handouts amounting to billions of euros have yet to be clawed back.

Special mention is made in the report of the 1994 Deggendorf ruling from the European Court of Justice, which granted the Commission powers to freeze state aid decisions for companies that have not reimbursed unlawful aid.

Jacques Derenne, a partner at the Brussels office of law firm Lovells, said he believed that Kroes would be prepared to use the power granted by the ruling in a more systematic manner, even if her actions lead to bankruptcies.

Derenne worked on a report on enforcement of state aid law for the Commission last year. He said that next week’s scoreboard would set the tone for a forthcoming announcement by Kroes clarifying the rules of the game.

The so-called recovery notice, which is set to be unveiled after the summer break, was discussed at a meeting of officials from the Commission and member state representatives yesterday (20 June).

Almost two-thirds of unlawful state aid across the EU27 is granted by the five biggest member states, according to a European Commission report due out next week (27 June).