AG opinion in Hinkley Point C state aid challenge

Thanks to Tim Johnston, Brick Court Chambers for sending in this comment on the AG opinion in Case C-594/18 P

On 7 May 2020 Advocate General Hogan handed down his Opinion in Case C-594/18 P, Austria’s challenge to the European Commission’s Decision that the UK Government could lawfully grant State aid to support the construction of Hinkley Point C nuclear power station.

The outcome of this case is hotly anticipated and the Opinion does not disappoint. Two major themes emerge from the reasoning.

First, the Advocate General opens by describing the case as the “legal side of a dispute between Member States that are in favour of nuclear power and those that are not” (§1). The “fundamental question” that the Court has to resolve is whether lawful State aid could ever be granted for the construction of a nuclear power plant. Austria’s case, in essence, is that such projects are “either expressly or implicitly precluded” by the Treaties (including the Euratom Treaty itself) (§3).

The Opinion resolves that dispute decisively in favour of the freedom of Member States to pursue their own energy policies. The environmental benefits and disbenefits of nuclear power may be hotly contested and different Member States may take different views (§41). In a clear articulation of judicial self-restraint, Advocate General Hogan states that the Court “quite obviously has neither the competence nor, just as importantly, the democratic legitimacy to rule on such issues” (§42).

This logic runs through the opinion. When assessing the proportionality of the measure, the Advocate General concludes that the relevant market – for the purposes of that assessment – is the market in nuclear energy generation, not the market in electricity generation in general. That is consistent with his approach that the starting point must be the freedom of Member States, as set out in Article 194 TFEU, to choose their own energy mix (see by way of example §109).

For that reason (and relying on the content of the Euratom Treaty), the Advocate General rejects Austria’s submission that nuclear power is “per se inconsistent with the environmental objectives of the TFEU” (§40). Member States are entitled, at least in principle, to grant State aid to support the construction of nuclear power plants.

Second, but equally importantly, the Opinion marks a significant departure in the field of State aid law concerning Article 107(3)(c). One of the key questions raised by the appeal is whether the construction of nuclear power stations can satisfy the requirement that a measure should pursue an “objective in the common interest.” The General Court held that this requirement was satisfied if the measure in question furthered a “public interest” (see the discussion at §51). Austria disagreed.

In answering this question, the Advocate General proposes a significant overhaul of the underlying case law itself. He notes that the Commission has no competence to legislate in this area, and that its guidelines and frameworks are not binding as to the construction of Article 107(3)(c) (§52). He goes on to note that the General Court has held, on various occasions, that in order to be fall within Article 107(3)(c), a measure must fulfil an objective in the common interest (§55). However, in his view, no such requirement is set out on the face of the Treaty and the existing case law in this field is wrong. Aid granted under Article 107(3)(c) must only meet the requirements set out in the Treaty itself (§57).

This is a significant departure from the existing case law and practice in this field. In Advocate General Hogan’s view, the General Court went awry in Mediaset v Commission (T‑177/07, EU:T:2010:233) when it imposed that additional requirement. That judgment, and the subsequent cases are “not correct in law” (§58).

It remains to be seen whether the Grand Chamber will follow the Advocate General’s analysis on this point. If it does, it will mark a significant departure from the existing case law in this field.


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