March 01
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16th January 2020
Competition & State Aid

State Aid: Commission’s decision on Hungary’s food chain inspection fee and tax on tobacco sales unlawful – AG Kokott

In her second Opinion today in the case C-456/18 P, Advocate General Kokott proposes that the Court of Justice quash the judgments of the General Court (Joined Cases T-554/15 and T-555/15), in which the GC upheld the European Commission’s decisions to order the suspension of the application of two progressive taxes introduced by the Hungarian legislation in 2014 in the field of tobbacco and food chains inspections.

In 2015, the European Commission found that these fiscal measures, which are based on progressive turnover rate structures, may be in breach of EU State aid rules because they grant a selective advantage to companies with low turnover over their competitors.

The Commission’s decision to open a formal investigation procedure was simultaneously followed by a suspension order addressed to the Hungarian authorities. The Commission considered that the continued application of the contested Hungarian measures could have a substantial impact on market competition, and therefore it adopted suspension orders, within the meaning of Article 11(1) of Regulation No 659/1999.

 

In her Opinion, Advocate General Kokott considers that the European Commission breached its duty to state reasons, for not justifying the grounds underlying its decision to issue the suspension orders. As a result, the AG proposes that the Court annul the judgment of the General Court and the European Commission’s challenged Decision.

 

The full text of the Opinion (French) is available here.

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