Court: Countries cannot override EU on aid
The European Union’s highest court ruled today that EU governments cannot override the bloc’s executive office in deciding whether state subsidies are illegal.
The Luxembourg-based European Court of Justice ruled it was illegal for EU governments to allow Portugal to bail out struggling pig farmers.
Governments in the 25-nation bloc “cannot authorise an aid measure which the Commission has declared incompatible with the common market,” the court said.
EU spokesman Gregor Kreuzhuber said the decision “reconfirms the division of power” between the various EU institutions.
If the court “had ruled otherwise, it would have been the beginning of the end for the proper regulating of state aids,” he said.
The case stems from Portuguese aid to pig farmers in the 1990s. The Commission determined that the bailouts broke European law, but EU governments subsequently ruled otherwise, citing the financial plight of the farmers.
The Commission then sued, complaining that the governments’ move undercut its authority under EU law.
Portugal must now recover the money it gave to its farmers.
The issue is controversial. Many EU governments feel they should have the right to intervene when important companies are threatened with imminent collapse. Millions of jobs are on the line, and governments often have large stakes in the affected companies.
But regulators fear such actions undermine the single European market.
Britain angered the Commission in September 2002 when it increased a £700m (€1.04bn) plus loan to British Energy. Last year, France went ahead with a multi-billion euro bailout of engineering flagship Alstom.
