CYIL vol. 15 (2024)

CYIL 15 ȍ2024Ȏ STATE AID BY CZECHIA TO DUKOVANY II not possibly obtain under normal market conditions. 7 Consequently, applying the MEIP to Dukovany II , it is clear that a reasonable private investor would undoubtedly not have acted in the same way as the Czech State. Furthermore, given that electricity from Dukovany II’ s nuclear power plant would compete with other sources of electricity, inside and outside Czechia, the selective economic advantage to Elektrárna Dukovany II would be capable of distorting or threatening to distort competition and affecting trade between EU Member States. 8 To conclude, on the first limb of the test applied to Dukovany II , there is state aid. 6. The second limb of the test: if there is state aid, is it compatible with the TFEU? When it has been established that there is state aid according to the first limb of the test, the European Commission proceeds to assess whether the aid is compatible with Article 107 TFEU, 9 especially Article 107(3)(c) TFEU (‘ aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest ’). The second limb of the test is two-fold and contains a positive condition and a negative condition. 10 The positive condition is that state aid is compatible with the TFEU if the aid is necessary and proportionate, taking into account the objectives of the Euratom Treaty and market failure. The negative condition is that state aid is compatible with the TFEU if the aid does not unduly distort competition and trade between member states. The European Commission first evaluates the positive condition, with a special focus on whether the envisaged state aid is necessary and proportionate. 9 Article 107 TFEU reads as follows: “(1) Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. (2) The following shall be compatible with the internal market: (a) aid having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned; (b) aid to make good the damage caused by natural disasters or exceptional occurrences; (c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division. Five years after the entry into force of the Treaty of Lisbon, the Council, acting on a proposal from the Commission, may adopt a decision repealing this point. (3) The following may be considered to be compatible with the internal market: (a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment, and of the regions referred to in Article 349, in view of their structural, economic and social situation; (b) aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State; (c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest; (d) aid to promote culture and heritage conservation where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest; (e) such other categories of aid as may be specified by decision of the Council on a proposal from the Commission.” . 10 AMEYE E., ‘State Aid in the Nuclear Sector: What is the Legal Test?’ (2024) 45 European Competition Law Review 281. 7 Idem, recitals (152) and (153). Idem, recitals (154) to (155). 8

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