Toespraak Kroes: 'rechtbanken spelen belangrijke rol in bestrijding illegale staatssteun' (en)

SPEECH/09/ 481

Neelie Kroes i

European Commissioner for Competition Policy

Private Enforcement of State Aid rules

State aid conference

Brussels, 19 th October 2009

Ladies and Gentlemen,

Thank you for the invitation to speak today. I would also like to thank Professor Slot for his introduction – we need academia to 'spread the gospel', and I am very happy to see how many 'faithful' – judges, private practitioners, and academics – have followed the call today.

We have come together to discuss the private enforcement of state aid rules. From the Commission's point of view, this is an absolutely crucial issue. The credibility of state aid control depends on effective enforcement. The state aid rules are only worth as much as Member States actually respect them.

If anything, the current crisis has highlighted even more how important an effective control of state aid actually is.

With five solid years of reform behind us, the Commission has made state aid control more effective. But in this large EU of 27 Member States, we can also use a helping hand closer to where the aid is granted. This involves competitors ready to complain, lawyers ready to bring cases, courts ready to take up the challenge and enforce state aid discipline "at home" – and I will mention other important actors later on.

But somehow, courts have a special place in all this: they could in fact be our strongest allies! This is because the Treaty rules and the ECJ case law have given them very important powers – but of course also duties - in the state aid field. Courts are in charge of protecting competitors affected by illegal aid. And because they are "close to home", they can sometimes do this better and faster than we could.

Let me give you an example. The Commission's powers to act against illegal aid on an interim basis are limited. In fact, they are so limited that we rarely get to use them. National courts, based on their national rules, are often much more powerful and can step in before aid has even been actually paid. This added speed of intervention can sometimes be more important than the cost of litigation, of which we are of course all very aware.

So, private enforcement is a useful way to make rights real: competitors taking action "back home" – and courts enforcing their rights.

Where do we stand in private enforcement?

Although strong private enforcement could have enormous benefits, companies have traditionally been reluctant to "go local".

You will remember that, in 2006, we published a study about the role of national courts across the EU-15. This found that, while the number of state aid cases was increasing, many of these cases could not really be called genuine private enforcement. Companies quite often went to court not to fight unlawful aid, but to benefit from it in the same way as their competitors. Actions aimed at the recovery of illegal aid, on the contrary, were few and far between - and there were almost no successful damages actions. A good example is court actions about illegal tax exemptions: competitors almost never say to a national court "abolish the tax exemption". Instead they say "I want it too". The result of this would of course be more aid and not less.

We have now asked the authors of the study to give us an update on the situation, since 2006 and for the whole EU. The material in this update is very good indeed.

Others will discuss the finer details today, but my first impression is that the results are quite encouraging. Many national courts are doing an excellent job in state aids. More and more of them are ready to prevent illegal aid before it is paid or annul granting acts already adopted.

Let me give you a good example from a court in Scandinavia, who was confronted with a sale of land below market price. The court first c hecked that the sale contained state aid, saw that it had nevertheless not been notified to the Commission and therefore promptly annulled the decision to sell. That is exactly how the system should work - and there are many examples like this from other Member States. Overall, we seem to be heading into the right direction.

But there are some worrying aspects too. I am especially concerned that some judges still do not acknowledge that national courts have a role in making state aid control more effective.

The new Notice: Guidance and Cooperation

So, definitely, there's more work to do. If we want to strengthen private enforcement across the EU, it is absolutely vital to make all national judges fully aware of their powers – and of their duties under Community law. The same awareness is of course needed amongst possible claimants and their advisers. Where there is no claimant, even the best informed judge is not going to help us.

But we are also aware that the jurisprudence on the role of national judges is sometimes complicated, and it may not always be easy to find the relevant judgments. This is why, already in the State Aid Action Plan, I wanted more practical and user friendly guidance in this area. I am delighted that this guidance – the Enforcement Notice, as we call it - has now been adopted by the Commission. You can of course access it as usual on our website.

The purpose of the Notice is not to re-invent the wheel or to create new burdens for national judges: we simply want to ensure they are fully informed about all the aspects concerning the application of state aid rules before national courts.

To give just two examples:

• 1. 

  National courts must order the recovery of illegal state aid. Their powers in this respect are different than those of the Commission. As most of you will know, we as the Commission cannot ask aid to be recovered simply because it wasn't notified to us. We always first have to check whether the aid is compatible with the common market. National courts on the contrary can! For them, illegality is all that counts, as they cannot examine the compatibility of the aid. But the flipside is that they cannot simply refuse to order recovery or wait for the outcome of a pending Commission investigation before doing so. This is one of the issues we touch on extensively in the new Notice.

• 2. 

  Damages actions: The lawyers amongst you will know how difficult it is to bring such claims. But at the same time, just like in antitrust, they are of course a vital element of effective private enforcement. The Notice therefore explains the relevant principles in detail – and I know that you'll hear more about that later today.

But what if such general guidance is not sufficient, because the national court needs concrete help on a pending case? One solution is of course to ask the European Court of Justice for a preliminary ruling – and the courts of last resort are even obliged to go down this route. But this is a lengthy process, and it may not give you all answers: where the national court is simply looking for factual information on a pending case, the Community Courts cannot provide that.

This is why the Commission has long offered national courts the possibility to contact us directly. But the practicalities of this cooperation weren't really sufficiently clear. Like Henry Kissinger, national courts did not know which number to call to hear "Europe's" view. And some may even have feared that a statement from the

Commission would impair their judicial independence. I want to lay that fear and confusion to rest today.

The Commission is ready and willing to be contacted – there are even specific email addresses and postal contacts listed in the Enforcement Notice. National courts can ask the Commission for information in its possession or for its opinion on a pending state aid issue. Such a system is working already in antitrust.

We consulted many judges before adopting the new Notice and had formal input from several high ranking courts across the EU. The overall feedback we received was very positive. Almost all judges agreed with the proposed cooperation mechanisms. To mention just one example, the Austrian Supreme Administrative Court explicitly welcomed the new cooperation tools and the contact point created by the Commission (I am particularly pleased that Judge Köhler is participating today). And with the first cooperation requests now coming in from national courts, I think we can look forward to further progress.

I hope that over time judges will find it natural to write or simply pick up the phone and talk to a Commission official about a certain issue. This is never binding, only helpful – the stuff of Mr Kissinger's dreams you might say.

What's next?

Our job to promote private enforcement of course does not stop here. We now want to use the new Notice, and advertise it to the legal community. Specific state aid training for national judges and a publication of materials on private enforcement are also in the pipeline. You will hear more today about various initiatives to make national court judgments more accessible. The Commission will make a first step in this direction. We will dedicate a part of our own Competition website to national courts and their State aid judgments.

At the same time, e-competitions is working on a comprehensive database of all relevant court judgments. I strongly welcome these initiatives. The more judges can benefit from experiences already made by their peers in other Member States, the more lawyers can learn how best to bring state aid cases, the more competitors find out about their rights – clearly, the better off we all are!

But we are also not putting all our hopes for better local control on national judges or the legal community. There are many other bodies at national level which have a vital interest in detecting illegal aid. The best examples are company auditors. Whenever auditors look at company data, in due-diligence for a takeover or as part of their normal annual audit, they must watch out for illegal aid. In fact, illegal aid is nothing other than a liability. Recovery can strike at any time! I therefore don't have to explain to the auditing community what overlooking illegal aid could mean for them. And the ECJ has always made it very clear that ignorance does not protect against recovery.

Auditors must therefore be made aware of the serious legal and financial risks which illegal aid may cause to their clients. It is important that auditors fully grasp the consequences of a recovery order to properly check the accounts put before them.

There are first encouraging signs that auditors are becoming more and more aware of these issues. But I hope that we will eventually manage to develop a similar degree of cooperation with them as we now have put in place with judges.

And what if it all does not work?

A final question we need to ask ourselves is what if this advocacy and information-sharing does not work? What if some of the worrying trends in national judgments I mentioned earlier get confirmed? In one Member State in particular, lower national courts even pretend that the state aid rules are not aimed at protecting individuals. What if the virus spreads?

We of course hope that these developments will be stopped in their tracks, and in the appropriate fora, without the Commission having to intervene. After all, lower courts can be overturned by higher ones; one of the courts concerned may request a preliminary ruling. If they do, no doubt the Court of Justice would set things right!

But if there was some systemic problem in some national judicial system, we would ourselves have to consider intervening to make sure that competitors get the necessary legal protection. It would not be possible to tolerate a justice gap in the long-term. We owe it to all consumers, companies and taxpayers to ensure them the benefit which stems from our state aid discipline.

Thank you!