In its Judgment of 10 May 2016 in Germany v Commission, T-47/15, EU:T:2016:281, the General Court (GC) has revisited once more the tricky issue whether publicly-mandated payments between private economic operators can constitute State aid. The GC has followed the functional approach of the Court of Justice (ECJ) in Vent De Colère and Others (C-262/12, EU:C:2013:851, see here), continuing a line of case law that distinguishes PreussenElektra (C-379/98, EU:C:2001:160, see here), and further minimising the 'outlier' decision in Doux Élevages and Coopérative agricole UKL-AREE (C-677/11, EU:C:2013:348, see here).
In the case at hand, the relevant German scheme of financial support for the production of renewable energy created both mandatory purchase obligations of energy from renewable sources ('EEG energy') at above-market prices (the 'support scheme'), and reductions in such surcharges for certain types of electric-intensive undertakings in the manufacturing sector (or 'EUIs') (the 'compensation scheme'). Thus, the EEG energy financial scheme included both measures in support of producers and of 'heavy-users' of electricity. Importantly, all these financial measures were managed by intermediaries in the energy markets. The Commission had found this scheme in breach of EU State aid rules, unless stringent conditions applied.
One of Germany's main submissions against the application of State aid rules by the Commission (mainly, Art 107 TFEU) to prohibit was that the EEG energy support and compensation schemes was that 'according to the case-law, payments between individuals which are ordered by the State without being imputable to the budget of the State or of another public body and in respect of which the State does not relinquish any resources, in whatever form (such as taxes, duties, charges and so on), retain their private-law nature' (para 73).
This submission triggers an analysis of whether such payments qualify as State resources, which mainly hinges on whether the State has control over those funds. Seeking to rely on PreussenElektra and Doux Élevages, the arguments submitted by Germany focused on the fact that the aid was administered 'at arms length' by the energy intermediaries. On the contrary, seeking to rely on a functional approach to the assessment of 'public control' of the private funds that derived from the EEG energy financial scheme, the Commission's arguments were closer to the position of the ECJ in Vent De Colère.
In order to assess these issues, the GC reiterated consolidated case law of the ECJ and stressed that 'Article 107(1) TFEU covers all the financial means by which the public authorities may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector. Therefore, even if the sums corresponding to the measure in question are not permanently held by the Treasury, the fact that they constantly remain under public control, and therefore available to the competent national authorities, is sufficient for them to be categorised as State resources' (para 83).
In the assessment of the EEG energy support and compensation schemes, the GC engaged in a reasoning that, fundamentally, relied on two main issues: 1) the fact that German law imposed on specific energy intermediaries (in the case, on transmission system operators, or TSOs) obligations oriented towards the administration of the EEG energy financial schemes that 'can be assimilated, from the point of view of their effects, to a State concession' (para 93); and 2) the fact that the funds raised through the EEG energy financial schemes are ring-fenced by law or, in other words, 'the funds are not paid into the TSOs’ general budget or freely available to them, but are subject to separate accounting and allocated exclusively to the financing of the support and compensation schemes, to the exclusion of any other purpose' (ibid).
As a result of these two circumstances, the GC concludes that 'the funds generated by the EEG surcharge and administered collectively by the TSOs remain under the dominant influence of the public authorities in that the legislative and regulatory provisions governing them enable the TSOs, taken together, to be assimilated to an entity executing a State concession' (para 94, emphasis added). Or, even more clearly, that 'the fact that the State does not have actual access to the resources generated by the EEG surcharge, in the sense that they indeed do not pass through the State budget, does not affect ... the State’s dominant influence over the use of those resources and its ability to decide in advance, through the adoption of the EEG 2012, which objectives are to be pursued and how those resources in their entirety are to be used' (para 118).
The second key element in the analysis, in my view, is that the GC gives significant relevance to the fact that the payments ultimately required from consumers derived necessarily from the existence of the German law enacting the . In other words, the GC relied heavily on the fact that the surcharges amounted to '20% to 25% of the total amount of an average final consumer’s bill. Having regard to the extent of that burden, its passing on to final consumers must therefore be regarded as a consequence foreseen and organised by the German legislature. It is thus indeed on account of the EEG 2012 that final electricity consumers are, de facto, required to pay that price supplement or additional charge. It is a charge that is unilaterally imposed by the State in the context of its policy to support producers of EEG electricity and can be assimilated, from the point of view of its effects, to a levy on electricity consumption in Germany. Indeed, that charge is imposed by a public authority, for purposes in the general interest, namely protection of the climate and the environment by ensuring the sustainable development of energy supply and developing technologies for producing EEG electricity, and in accordance with the objective criterion of the quantity of electricity delivered by suppliers to their final customers' (para 95, emphasis added).
In my view, the GC is right on both points, and both the functional analysis of the control the State exercises over ring-fenced mandatory charges and the stress given to the (para)fiscal nature of the charge are good justifications for the enforcement of State aid rules against this type of State intervention--thus closing the gap created by cases such as Doux Élevages.
However, the case also leaves a strange aftertaste due to the references to a 'State concession'. Given the increasing body of EU economic law applicable to concessions (notably, Dir 2014/23, which does not seem to have much to do with what the GC assessed in Commission v Germany), it would probably have been preferable for the GC to keep a stricter use of language.
In that regard, if the GC actually wanted to stress that the intermediaries administering the EEG energy financial scheme were exercising (quasi) delegated public powers or (quasi) delegated State prerogatives (which was the language used in Doux Élevages, para 32), then it better ought to say so in those terms. Otherwise, there is a risk of generating additional confusion in an area of EU economic law that, honestly, is getting ever more complex.