The General Court of the European Union has rejected Austria’s action challenging the European Commission’s decision of March 2017 validating Hungarian State aid for the company Paks II for the construction for operation of two reactors at the Hungarian Paks nuclear power station site, in a judgment delivered on Wednesday 30 November (judgment T-101/18).
This aid is in large part financed by a loan in the form of a €10 billion revolving credit facility granted by Russia to Hungary under an intergovernmental agreement which also provided for the construction of the reactors to be awarded to the Russian company JSC NIAEP without competition.
Among other things, Austria argues that the direct award of the contract to the Russian company constitutes a breach of EU public procurement rules. In its view, since the award of this contract was linked to the contested State aid, the Commission should have examined the aid under the directives on public procurement. The Austrian authorities also rely on a European case law from September 2020 which validated British aid to the Hinkley Point power plant (Case C-594/18 P, see EUROPE 12565/27).
According to the General Court, the decision to award the contract for the construction of the two new reactors, which took place prior to the aid measure in question, does not constitute an integral part of the purpose of that aid. The carrying out of a public procurement procedure and the possible use of another company for the construction of the reactors would not alter the purpose of the aid, i.e. the provision of two new reactors free of charge for the purpose of their operation, nor would it alter the beneficiary of the aid, it says. Furthermore, Austria has not demonstrated that a tender procedure may have had an influence on the amount of aid. However, according to the European Court, such a circumstance would not have had any consequence on the advantage that the contested aid constituted for its beneficiary, namely the free provision of the two new reactors.
Secondly, the General Court considers that renewable energy producers did not suffer from disproportionate distortions of competition in the liberalised electricity market, as Member States remain free to determine the composition of their energy mix.
See the General Court’s judgment: https://aeur.eu/f/4dt (Original version in French by Mathieu Bion)