If you suspect your continental competitors are getting illegal help from their governments "the direct and cheap thing to do is blow the whistle and write to the Commission to see what they can do about it," advises James Flynn, a solicitor with Linklaters and Paines who specialises in state aids cases. But first, Flynn says, collect as much information as possible to back up your case, such as newspaper cuttings, contract information and transactions which indicate below-cost pricing.
The big problem will be the difficulty of establishing a causal link between your competitor's subsidy and the problems that you face," he says, "but the Commission can find out what you cannot."
Complaints should be filed with DG4, the competition directorate, at the European Commission, rue de la Loi, 200 Brussels. A copy could also be sent to Karel van Miert, the new commissioner in charge of competition (address as above). Cases involving the transport sector should be sent to DG7, the transport directorate at the same address. A copy of all correspondence should be sent to the UK Department of Trade and Industry, 1-19 Victoria Street, London SW1.
Once a complaint is filed and Brussels decides to act, the Commission may require the state to suspend the aid scheme and to confirm that it has done so within 15 days. Then the suspect state is required to supply full information on the state aid involved. If the government does not reply, or this is considered unsatisfactory, the Commission can decide, on the basis of the information in its possession, that the aid is incompatible with the common market. Such a decision may require that aid already paid be recovered, including interest from the date on which the aid was paid.
It is also important to know whether an aid under review is an existing aid, legally in force, or a new aid, Flynn says. "While the Treaty of Rome allows the Commission, at any time, to reconsider existing aid schemes and to order them to be abolished or amended in the light of changing circumstances, it cannot order existing aids to be suspended until its review is complete.
Although EC member states are required to notify the Commission of aid programmes and cannot begin them until they are approved, the rule is frequently flouted. However, in a precedent-setting decision taken in 1990 involving Boussac, a French textile and paper producer, the European Court of Justice ruled out action by the Commission to order the recovery of aid purely as a result of not following the official procedure.
Flynn believes the Boussac ruling has seriously weakened the system: "A significant problem over the years has been that member states frequently implement aid plans either without any notification at all, or without waiting for the official green light from the Commission. Such aid is called 'illegal'; it may or may not, on examination, be found to be incompatible with the common market."
In the Boussac case, some of the state aid was eventually found to be incompatible and had to be repaid.
(Eds-Any questions or substantial alterations should be checked with Flynn whose number of 606-7080.).