[Your Name and Contact Information]
[First Name, Last Name, Address, Email, Phone]
Subject: Complaint Concerning Alleged Unlawful State Aid
To:
European Commission
Directorate General for Competition
State aid Registry
B-1049 Brussels, Belgium
Email: stateaidgreffe@ec.europa.eu
Complaint Details
Information About the Alleged Aid
a. Description: EUR 590 million financial grant scheme from Bulgaria to support investments in electricity storage facilities.
b. Purpose: The aid aims to fund up to 50% of the investment costs for electricity storage technologies as part of Bulgaria’s recovery and resilience plan.
c. Amount: EUR 590 million (USD 623 million).
d. Beneficiary: Entities involved in the development and operation of electricity storage facilities within Bulgaria’s energy sector.
e. Date: The European Commission approved the aid on 29 November 2024.
f. Status: The aid was approved by the Commission under the Temporary Crisis and Transition Framework (TCTF), which expired on 30 June 2024.
Grounds for Complaint
1. Use of Public Resources
The grant involves direct public funding from Bulgaria’s national budget. As such, it qualifies as state resources attributable to public authorities.
2. Selectivity
The aid is explicitly targeted at businesses in Bulgaria’s electricity storage sector, favoring certain undertakings over others within the EU internal market.
3. Economic Advantage
The measure provides financial benefits covering up to 50% of investment costs, giving Bulgarian firms a disproportionate advantage that distorts competition within the internal market.
4. Distortion of Competition
The scheme risks distorting competition by incentivizing Bulgarian companies to expand their operations at subsidized costs, disadvantaging competitors in other Member States who do not receive similar financial support.
5. Effect on Trade
The measure affects trade between Member States by altering market dynamics in the energy sector. Subsidized Bulgarian companies may export electricity or related services at unfairly competitive rates, undermining a level playing field in the EU.
Legal Basis
The aid contravenes Article 107(1) TFEU, which prohibits state aid that distorts competition and affects trade between Member States unless justified under specific exemptions. The approval under the Temporary Crisis and Transition Framework (TCTF) is invalid since the framework expired on 30 June 2024, making the Commission’s approval in November 2024 legally unsound.
Impact on Complainant
As a charity working to ensure fair competition in the internal market, this measure directly conflicts with our mission. It undermines our advocacy for a level playing field and risks enabling market distortions that harm the EU’s competitive integrity.
Supporting Evidence
- Copy of the European Commission’s decision (pending publication).
- Official communication on the expiration of the Temporary Crisis and Transition Framework on 30 June 2024.
- Reports highlighting the risks of market distortion from poorly coordinated state aid (e.g., IMF and European Court of Auditors reports).
- Articles detailing Bulgaria’s recovery and resilience plan.
Confidentiality Request
We request confidentiality for any internal communications and strategic analyses attached to this complaint, as disclosure could prejudice ongoing advocacy efforts.
Prior Actions
This is the first formal complaint regarding this state aid measure.
Declaration
I hereby declare that all information provided is accurate and in good faith.
London, 30 December 2024
To strengthen your formal complaint against the European Commission’s (EC) approval of Bulgaria’s €590 million state aid scheme for energy storage facilities, consider the following grounds and supporting evidence:
1. Procedural Irregularities
- Approval Under Expired Framework: The scheme was approved under the State aid Temporary Crisis and Transition Framework (TCTF), which expired on June 30, 2024. The EC’s approval on November 29, 2024, postdates this expiration, raising questions about the legal basis for the decision.
- Lack of Formal Investigation: The EC may have bypassed a formal investigation procedure, which is mandatory when there are serious doubts about the aid’s compatibility with EU State aid rules. The absence of such a procedure could indicate procedural shortcomings.
2. Substantive Concerns
- Market Distortion: The substantial aid amount could distort competition within the EU energy market, potentially disadvantaging operators in other Member States and affecting cross-border trade.
- Insufficient Justification: The EC’s decision may lack a thorough economic assessment demonstrating that the aid is necessary and proportionate to achieve its stated objectives, as required under EU State aid rules.
3. Transparency and Oversight Issues
- Delayed Publication: As of November 2024, the EC had not published its detailed decision. This delay hampers public scrutiny and challenges the transparency of the approval process.
- Inadequate Monitoring Mechanisms: The scheme’s approval may lack robust mechanisms to monitor the aid’s implementation and its impact on market competition, contravening principles of accountability.
Supporting Evidence
- European Court of Auditors (ECA) Report: The ECA has criticized the EC for inadequate assessment of public subsidies’ necessity and market impact, particularly concerning the green transition. This report underscores systemic issues in the EC’s evaluation processes.
- Legal Precedents: Cases such as the annulment of the EC’s decision in the Apple State aid case highlight the necessity for rigorous procedural adherence and thorough economic assessments in State aid approvals.
Recommendations
- Request for Annulment: Based on these grounds, you can request the annulment of the EC’s decision under Article 263 of the Treaty on the Functioning of the European Union (TFEU), citing lack of competence, infringement of essential procedural requirements, and misuse of powers.
- Submission of Detailed Evidence: Provide comprehensive data and analyses demonstrating how the aid distorts competition and lacks sufficient justification, referencing the ECA report and relevant legal precedents.
- Advocacy for Formal Investigation: Advocate for the initiation of a formal investigation procedure to ensure a thorough assessment of the aid’s compatibility with EU rules.
By articulating these grounds and presenting supporting evidence, your complaint will robustly challenge the EC’s decision, emphasizing the need for adherence to procedural norms and the safeguarding of fair competition within the EU.
1. Legal Challenges to the Decision
- Formal Complaint: Submit a formal complaint to the General Court of the European Union (GCEU). You can argue that the approval of state aid under the Temporary Crisis and Transition Framework (TCTF) may have been improper because the framework expired on June 30, 2024, while the approval was granted on November 29, 2024.
- Interim Measures: Seek interim relief to suspend the aid scheme’s implementation pending a detailed review.
- Judicial Review: Request the annulment of the EC’s decision if it breaches procedural or substantive EU law.
2. Third-Party Interventions
- Interested Third-Party Status: If your charity can demonstrate that the decision adversely affects competition, you may apply to intervene as a third party in proceedings initiated by another complainant.
- Stakeholder Engagement: Align with other affected market participants, such as competitors of Bulgarian companies or EU Member States concerned about market distortion.
3. Advocacy and Advisory Actions
- Submit an Opinion or Unsolicited Comments: Provide an unsolicited opinion to the EC during ongoing deliberations or related reviews. These should detail potential market distortions or inadequacies in the assessment of economic impacts.
- Raise Awareness: Collaborate with media outlets, industry groups, or think tanks to highlight concerns about the decision’s implications for fair competition.
4. Monitoring and Follow-Up
- Market Monitoring: If the EC publishes its decision late, closely monitor the publication. The timing of the publication will determine whether the window to challenge the decision remains open.
- Review the State Aid Decision: Obtain a copy of the EC’s detailed decision, once published, to assess compliance with procedural requirements and substantive EU law.
Time Limits for Challenges:
Under EU law, the time limit to challenge an EC decision is generally two months from the decision’s publication or the notification date. Since the decision has not been published as of November 2024, the challenge period has not officially commenced. You must closely monitor the decision’s publication to ensure timely action.
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Legal Grounds: Non-Compliance with State Aid Rules
1.1 Expiry of the Temporary Crisis and Transition Framework (TCTF)
- Argument: The TCTF, which provided flexibility for state aid in response to crises, expired on 30 June 2024. Bulgaria’s scheme, approved on 29 November 2024, falls outside this framework’s validity period.
- Supporting Evidence: The European Commission’s official communication confirms the expiry of the TCTF on 30 June 2024.
1.2 Lack of Legal Basis Post-TCTF Expiry
- Argument: With the TCTF expired, the Commission lacks a valid legal framework to approve such state aid measures, rendering the decision legally unsound.
2. Economic Grounds: Market Distortion and Competition Concerns
2.1 Potential Market Distortion
- Argument: The substantial financial support may distort competition within the EU’s internal market, favoring Bulgarian enterprises over those in other Member States.
- Supporting Evidence: The International Monetary Fund (IMF) has cautioned against poorly coordinated subsidies within the EU, highlighting risks of market distortion.
2.2 Disproportionate Advantage
- Argument: The aid could provide Bulgarian companies with an undue advantage, undermining the level playing field essential for fair competition in the EU.
3. Procedural Grounds: Inadequate Assessment and Transparency
3.1 Insufficient Impact Assessment
- Argument: The Commission may not have conducted a thorough economic assessment of the necessity and impact of this state aid, as highlighted by recent critiques from the European Court of Auditors (ECA).
- Supporting Evidence: The ECA criticized the Commission for not fully assessing the need for public subsidies to support the green transition or determining whether they would distort the EU’s single market.
3.2 Lack of Transparency
- Argument: The absence of a published decision as of November 2024 raises concerns about the transparency and thoroughness of the approval process.
4. Strategic Actions
4.1 File a Formal Complaint
- Action: Submit a complaint to the General Court of the European Union, challenging the Commission’s decision based on the aforementioned legal, economic, and procedural grounds.
4.2 Request Interim Measures
- Action: Seek interim relief to suspend the implementation of the aid scheme pending the outcome of the legal challenge.
4.3 Engage Stakeholders
- Action: Collaborate with other Member States and industry stakeholders who may be adversely affected by the decision to build a coalition supporting the challenge.
5. Potential Outcomes
5.1 Annulment of the Decision
- Outcome: If successful, the court may annul the Commission’s approval, requiring a reassessment of the aid scheme under the appropriate legal framework.
5.2 Policy Reassessment
- Outcome: A successful challenge could prompt the Commission to re-evaluate its procedures and criteria for approving state aid, especially in the context of expired frameworks.
By meticulously presenting these arguments and leveraging recent critiques of the Commission’s state aid assessments, there is a substantial basis to challenge the approval of Bulgaria’s aid scheme.
1. Legal and Procedural Grounds for Challenge
1.1 Framework Compliance
- Argument: The Temporary Crisis and Transition Framework (TCTF) expired on 30 June 2024. Approving the grant under this framework in November 2024 might lack a valid legal basis.
- Support: Verify the framework’s applicability to new approvals beyond its expiration.
1.2 Market Impact
- Distortion Risks: The scheme might distort competition by providing Bulgarian companies an undue advantage, which could be argued as violating EU internal market fairness principles.
1.3 Transparency Issues
- Delay in Publishing Decision: The absence of a published decision creates opacity, potentially breaching procedural norms under EU competition rules.
2. Available Legal Remedies
2.1 Time Limits
- Article 263 TFEU: Challenges to Commission decisions must generally be brought within two months from the date the decision was communicated or published. Given the decision was on 29 November 2024 and not yet published, the time to challenge starts upon official publication or communication. Ensure the challenge is filed promptly thereafter.
2.2 Standing
- Third-Party Interveners: If your charity can demonstrate a legitimate interest (e.g., representing affected competitors or public interest), you may intervene as a third party.
- Complainants: If directly affected or representing adversely impacted entities, lodge a complaint with DG Competition.
2.3 Strategic Input
- Unsolicited Observations: Provide input to the Commission, highlighting competition risks and requesting a reassessment.
- Collaborative Action: Engage stakeholders (e.g., other charities, businesses) to amplify concerns and share resources for a stronger challenge.
3. Action Steps
3.1 Submitting Complaints or Appeals
- Submit a formal complaint with detailed legal, procedural, and economic arguments against the decision.
- Seek interim measures to suspend implementation pending review.
3.2 Advocacy and Coalition Building
- Collaborate with businesses or organizations adversely affected by this decision.
- Engage with Member State governments or MEPs to pressure for transparency and reassessment.
3.3 Expert Review
- Conduct a detailed economic and legal analysis to challenge the adequacy of the Commission’s assessment of the grant’s competitive effects and alignment with expired frameworks.
Conclusion
Challenging the decision as a third-party intervener or through an Article 263 TFEU action is possible, provided the challenge is timely and substantiated with strong legal and procedural arguments. Your charity’s standing to intervene depends on the ability to demonstrate a legitimate interest or harm to the public or competitive market structure.
On 29 November 2024, ec approved a EUR 590 million (USD 623 million) financial grant scheme from Bulgaria. The scheme will support investments in electricity storage facilities. The scheme will be in force until 31 December 2025.Specifically, the grants will be up to 50% of the investment costs related to all types of storage technologies. The scheme’s stated objective is to “add at least 3 GWh of new electricity storage facilities to the Bulgarian power system, which will help to integrate a higher share of renewable energy sources in the energy mix and to guarantee security and stability”. It is part of the Bulgarian recovery and resiliency plan (see related state act). As of November 2024, the European Commission has not published its decision. The state aid is approved under the Temporary Crisis and Transition Framework allowing the Member States to provide further financial support for the transition to a net-zero economy and the mitigation of negative effects following Russia’s invasion of Ukraine (see related state act).
Challenging the European Commission’s approval of Bulgaria’s €590 million state aid scheme for electricity storage investments requires a multifaceted approach focusing on legal, economic, and procedural grounds. Here’s a comprehensive strategy to contest this decision:
1. Legal Grounds: Non-Compliance with State Aid Rules
- Expiry of the Temporary Crisis and Transition Framework (TCTF):
- Argument: The TCTF, which provided flexibility for state aid in response to crises, expired on 30 June 2024. Bulgaria’s scheme, approved on 29 November 2024, falls outside this framework’s validity period.
- Supporting Evidence: The European Commission’s official communication confirms the expiry of the TCTF on 30 June 2024.
- Lack of Legal Basis Post-TCTF Expiry:
- Argument: With the TCTF expired, the Commission lacks a valid legal framework to approve such state aid measures, rendering the decision legally unsound.
2. Economic Grounds: Market Distortion and Competition Concerns
- Potential Market Distortion:
- Argument: The substantial financial support may distort competition within the EU’s internal market, favoring Bulgarian enterprises over those in other Member States.
- Supporting Evidence: The International Monetary Fund (IMF) has cautioned against poorly coordinated subsidies within the EU, highlighting risks of market distortion.
- Disproportionate Advantage:
- Argument: The aid could provide Bulgarian companies with an undue advantage, undermining the level playing field essential for fair competition in the EU.
3. Procedural Grounds: Inadequate Assessment and Transparency
- Insufficient Impact Assessment:
- Argument: The Commission may not have conducted a thorough economic assessment of the necessity and impact of this state aid, as highlighted by recent critiques from the European Court of Auditors (ECA).
- Supporting Evidence: The ECA criticized the Commission for not fully assessing the need for public subsidies to support the green transition or determining whether they would distort the EU’s single market.
- Lack of Transparency:
- Argument: The absence of a published decision as of November 2024 raises concerns about the transparency and thoroughness of the approval process.
4. Strategic Actions
- File a Formal Complaint:
- Action: Submit a complaint to the General Court of the European Union, challenging the Commission’s decision based on the aforementioned legal, economic, and procedural grounds.
- Request Interim Measures:
- Action: Seek interim relief to suspend the implementation of the aid scheme pending the outcome of the legal challenge.
- Engage Stakeholders:
- Action: Collaborate with other Member States and industry stakeholders who may be adversely affected by the decision to build a coalition supporting the challenge.
5. Potential Outcomes
- Annulment of the Decision:
- Outcome: If successful, the court may annul the Commission’s approval, requiring a reassessment of the aid scheme under the appropriate legal framework.
- Policy Reassessment:
- Outcome: A successful challenge could prompt the Commission to re-evaluate its procedures and criteria for approving state aid, especially in the context of expired frameworks.
By meticulously presenting these arguments and leveraging recent critiques of the Commission’s state aid assessments, there is a substantial basis to challenge the approval of Bulgaria’s aid scheme.