The decision of the Federal Administrative Court (BVerwG) dated July 7, 2020 (Case No. 8 B 59.19) addresses the issue of challenging state aid granted after the expiration of the approval period set by the European Commission.
Dispute Over Expired German GAK Program
The case involved a specific funding program under the Joint Task for the Improvement of Agricultural Structures and Coastal Protection (Gemeinschaftsaufgabe zur Verbesserung der Agrarstruktur und des Küstenschüztes, GAK Program), which was in effect from 2010 to 2012. The associated state aid had been approved by the European Commission until December 31, 2013.
In the legal dispute, a defendant municipality granted a subsidy to an undertaking for the expansion of broadband coverage within the municipal area, based on the GAK Program. A provisional award decision was made on December 16, 2013, but the final award was not communicated until April 30, 2014.
Prohibition of Implementation When Exceeding the Commission’s Decision
The plaintiff sought judicial protection, primarily relying on Article 108(3) sentence 3 of the Treaty on the Functioning of the European Union (TFEU). According to this EU law implementation prohibition, state aid may not be implemented if and to the extent that it does not fall within the scope of a notification issued by the Commission. In other words, aid measures must strictly adhere to the Commission’s specifications; otherwise, they are unlawful.
The plaintiff ultimately succeeded before the Federal Administrative Court. A grant is only covered by the original approval of the Commission if it is awarded within the approval period.
This decision underscores the importance of adhering to approval deadlines for state aid. It is directed at both funding providers and recipients, as well as their competitors. The former should ensure that approval notices are issued within the deadlines set by the European Commission. Otherwise, the legality of the aid is not guaranteed, and the aid must be reversed.
