State Aid Law

Final destination: liquidation or privatization

Privatization could be the final chapter in the legal dispute over state contributions to the Animal Rendering Association of Rheinland-Pfalz. The Association must be liquidated because of its inability to repay subsidies – the European Commission was not satisfied with a municipal bailout solution but instead demanded a request for tender. The case is considered a precedent setter and has caused cities and local authorities to question under what conditions public contracting bodies are to be considered “companies”, especially in light of the issues raised by the current insolvencies among public utilities.

The 2014 exemption for those below a certain threshold, on the other hand, represented an all-clear signal. Firms active in this area often approach the issues from the perspective of administrative or public procurement law. Examples include CBH Rechtsanwälte and Heuking Kühn Lüer Wojtek. A significant decision by the European Court of Justice (ECJ) was, however, achieved by Latham & Watkins on behalf of the city of Lübeck; it gave the city back its freedom to negotiate on the nature of its airport fees.

The current court case between the state of Nordrhein-Westfalen and the Klausner wood empire poses a thorny question about how state aid violations may render a contract null and void. The ECJ is to decide whether a valid German decision may be overruled by European law. The law firms involved in this dispute are Beiten Burkhardt and Graf von Westphalen.

EC leverages state aid law in the dispute over the reallocation charge

The European Commission’s activities with regard to taxes and the turnaround in energy policy also made headlines: the EC and member states must wrestle with some politically charged questions regarding economic responsibilities. The dispute over the reallocation charge under the Renewable Energy Act (REA) is only one example. The application of state aid law can lead to greater repayment risks that until recently were viewed as unlikely. In some large firms such as Freshfields Bruckhaus Deringer and Jones Day, the tax and state aid practices have become more aligned as a result.


State aid law includes many aspects of European law; therefore ?antitrust and public-law experts, as well as lawyers in Brussels, are typically active in this practice area. As state aid questions often arise in the financing, construction and operation of infrastructure facilities, further information can be found in the chapters on ?energy law and ?public procurement.