Does a transfer of property-related assets from the public to the private sector constitute State Aid. This was the issue before the Grand Chamber of the ECJ in Case C-579/16 P, FIH Holding A/S v FIH Erhversbank A/S, Judgment on 6 March 2018. The Court reiterated:
(1) Classification of a measure as “State aid” for the purposes of Article 107(1) TFEU requires all of the conditions set out in that provision to be fulfilled;
(2) First, there must be an intervention by the State or through State resources;
(3) Second, the intervention must be liable to affect trade between Member States;
(4) Third, it must confer a selective advantage on the recipient;
(5) Fourth, it must distort or threaten to distort competition;
(6) As regards the third of those conditions, measures that, whatever their form, are likely directly or indirectly to favour certain undertakings, or fall to be regarded as an economic advantage that the recipient undertaking would not have obtained under normal market conditions, are regarded as State aid;
(7) Thus, having regard to the objective of Article 107(1) TFEU of ensuring undistorted competition, including between public and private undertakings, the definition of “aid”, within the meaning of that provision, cannot cover a measure granted to an undertaking through State resources where it could have obtained the same advantage in circumstances which correspond to normal market conditions;
(8) The assessment of the conditions under which such an advantage was granted is therefore made, in principle, by applying the private operator principle;
(9) In that regard, where a Member State confers, in its capacity as shareholder and not in its capacity as public authority, an economic advantage on an undertaking, the applicability of the private operator principle does not depend on the means used to place that undertaking at an advantage nor on the nature of the means used, which may fall within the State’s public powers;
(10) Moreover, the applicability of the private operator principle to an amendment to the conditions for the redemption of securities of an undertaking is not compromised because the acquisition of securities giving the State the status of an investor in that undertaking was financed by means of State aid in favour of that undertaking;
(11) When the private operator principle applies, the test to be employed in practice in a given case must be determined on the basis, inter alia, of the nature of the transaction envisaged by the Member State concerned;
(12) The tests that may be applied include those of the private investor and the private creditor.
(13) In order to assess whether the same measure would have been adopted in normal market conditions by a private operator in a situation as close as possible to that of the State, only the benefits and obligations linked to the situation of the State as a private operator, to the exclusion of those linked to its situation as a public authority, are to be taken into account;
(14) Thus, in the assessment of the economic rationality of a State measure, required by the private operator principle, the Court has found it necessary to disregard the costs incurred by the State as a result of redundancies, unemployment benefits and aid for the restructuring of the industrial infrastructure;
(15) In particular, as regards the latter situation, the Court has stated that, since, by granting aid, a Member State pursues, by definition, objectives other than that of making a profit from the resources made available to undertakings, it must be held that those resources are, in principle, granted by the State exercising its prerogatives as a public authority;
(16) It follows that the risks to which the State is exposed and which are the result of State aid that it has previously granted are linked to its actions as a public authority and are not among the factors that a private operator would, in normal market conditions, have taken into account in its economic calculations;
(17) This consideration applies, in particular, to the obligations arising for the State from loans and guarantees previously granted to an undertaking and constituting State aid: taking those obligations into account in the assessment of State measures adopted in favour of the same undertaking would be liable to prevent those measures from being classified as State aid even though they do not satisfy normal market conditions, on the sole ground that they prove economically more advantageous for the State than if they had not been adopted, and such a consequence would compromise the objective of ensuring undistorted competition;
(18) A private investor might accept an amendment to the repayment terms of the earlier capital injection in order, in particular, to increase the prospects of obtaining the repayment of that injection;
(19) However, that does not mean that when analysing the inherent economic rationality of a measure in order to determine whether a private investor would have behaved in the same way as the State concerned, risks arising for that Member State from the previous grant of State aid may be taken into account.