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Approval of state aid to EDF Energy for Hinkley Point C nuclear power station is upheld by EU General Court

On 12 July 2018, the European General Court dismissed an action by Austria that challenged the European Commission’s decision to approve state aid of £16bn to be granted by the UK  to EDF Energy plc for Hinkley Point C nuclear power station which is situated close to Maitland Walker’s Taunton and Minehead offices in Bridgwater, Somerset.

The Commission’s initial investigation into the state aid had been in depth and had resulted in the UK authorities’ agreeing to modify the terms of the proposed state financing to ensure that the state aid was proportionate and resulted in minimal distortions of competition.

The General Court dismissed all of the arguments raised by Austria in their challenge to the Commission's decision which included claims that the Commission had erred in properly characterising the aid measures and in finding that the aid measures were proportionate and necessary.

The General Court held that the state aid rules are applicable to measures relating to the area of nuclear energy and that the UK was entitled to define the development of nuclear energy as being a “public interest” objective, even though it is not an objective that is shared by all European member states. The General Court reiterated that member states have the right to choose their preferred mix of energy sources under the provisions of the Treaty on the Functioning of the European Union.

The General Court ruled that the Commission did not err in assessing the market definition in their assessment or in concluding that the aid measures were proportionate and necessary. Furthermore, Austria had not been able to show that the Commission had erred in weighing up the positive and negative effects of the aid measures or that the Commission had failed to take into account relevant information. The case is Case T?356/15 - Republic of Austria v European Commission (ECLI:EU:T:2018:439), judgment of 12 July 2018.

This decision of the General Court is a welcome reinforcement of the autonomy of EU member states to determine their energy mix and to maintain nuclear energy as a source in that mix if preferred even though some member states do not use nuclear energy. Austria has a long history of opposing nuclear power and is also currently challenging in the higher European court (the European Court of Justice (“ECJ”)) a decision by the Commission to approve the expansion of a Hungarian nuclear power plant. It remains to be seen whether Austria will seek to appeal this decision of the General Court to the ECJ.

Maitland Walker regularly advises public and private bodies on issues of state aids and public procurement in addition to its strong offering in competition law. Julian Maitland-Walker is ranked as a Band 1 lawyer for competition law in the 2018 Chambers UK Guide and is praised for his “deep knowledge of the law”. Clients for whom we have offered state aid advice include local authorities, universities and research institutes. Sheree-Ann Virgin, Senior Associate Solicitor and David Hollier, Associate Solicitor both assist Julian in issues of state aid.

To discuss any state aid or competition law issues with our EU & Competition Law department please contact Julian Maitland-Walker.