October 25
2020
Dolores Utrilla
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22nd September 2020
Competition & State Aid Consumer, Health & Environment

Court of Justice’s ruling in Hinkley Point C case: how to apply State aid rules to aid for the construction of nuclear power stations

The Court of Justice has just given its judgment in Austria v Commission (C-594/18 P), an appeal against the General Court’s ruling in Austria v Commission (T-356/15) in which it was called on to clarify, for the first time, whether the construction of a nuclear power station may benefit from State aid approved by the Commission pursuant to Article 107(3)(c) TFEU.

The case stems from Commission Decision 2015/658, which approved  an aid scheme planned by the United Kingdom for the nuclear power station ‘Hinkley Point C’ (Somerset, UK) with the aim of creating new nuclear energy generating capacity which would be operational for 60 years from 2023. The Commission approved the planned measures as State aid compatible with the internal market pursuant to Article 107(3)(c) TFEU. Under that provision, aid to facilitate the development of certain economic activities or of certain economic areas may be considered to be compatible with the internal market provided that it does not adversely affect trading conditions to an extent contrary to the common interest.

Austria then brought an action for annulment against that decision before the General Court. On 12 July 2018, the General Court dismissed the action, holding that Member States may invoke the promotion of nuclear energy as a legitimate objective for the purposes of Article 107(3)(c) TFEU and that, in light of that objective, the measures notified by the UK were appropriate, necessary and proportionate.

In his Opinion on the case, delivered on 7 May 2020, Advocate General Hogan suggested that the Court of Justice reject the appeal and also make clear that Article 107(3)(c) TFEU does not condition the compatibility of State aid upon its serving a ‘public’ or ‘common’ interest objective. The Opinion contained crucial reflections on the interpretation of Article 107(3)(c), as explained in this Analysis by Fernando Pastor-Merchante.

Today, the Court of Justice dismissed the appeal and confirmed that the construction of a nuclear power station may benefit from State aid approved by the Commission pursuant to Article 107(3)(c) TFEU, and – in line with the interpretation of Advocate General Hogan – that this provision does not require planned aid to pursue an objective of common interest. Accordingly, the Court rejected as unfounded Austria’s claims that the construction of a new nuclear power station does not constitute an objective of common interest.

Also in line with the Advocate General’s Opinion, the Court of Justice confirmed that, in the absence of specific State aid rules in the Euratom Treaty, the State aid rules of the TFEU are applicable in the nuclear energy sector. Today’s ruling also made clear that, contrary to what the General Court held, the Euratom Treaty does not preclude the application in that sector of the rules of EU law on the environment. Therefore, State aid for an economic activity falling within the nuclear energy sector that is shown upon examination to contravene environmental rules cannot be declared compatible with the internal market.

The judgment is available here.

An Analysis on this case by Malgorzata Cyndecka will be published soon on EU Law Live.

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