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

Sheree-Ann Virgin
23rd July 2018
On July 12, 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 ruled that the state aid regulations apply to nuclear energy-related measures and that the UK has the right to define the development of nuclear energy as a “public interest” objective even though not all European member states share this objective. 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 relevant information into account. The case is Case T?356/15, Republic of Austria v. European Commission (ECLI:EU:T:2018:439), judgement of July 12, 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 aid 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 and Competition Law departments, please contact Julian Maitland-Walker.

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