Challenge to UK State aid for Hinkley Point C nuclear power station finally rejected by Grand Chamber of EU Court of Justice

22/09/20

By decision of 8 October 2014, the European Commission approved aid which the UK was planning to implement in favour of unit C of the nuclear power station at Hinkley Point, Somerset, for the purpose of creating new capacity for the generation of nuclear energy.

The Republic of Austria, supported by the Grand Duchy of Luxembourg, brought an application before the General Court of the EU to annul the Commission’s decision. The United Kingdom intervened in support of the Commission’s defence.

The General Court handed down judgment on 12 July 2018 dismissing Austria’s application - here.

Austria, still supported by Luxembourg, appealed to the Court of Justice of the European Union. The appeal was heard by a Grand Chamber on 28 January 2020, the last occasion on which the UK appeared before the Court as an EU Member State.

The Court, following the opinion of Advocate General Hogan in May 2020 (here) rejected Austria’s appeal.

The Court decided that State aid in the nuclear sector fell within the scope of the Treaty on the Functioning of the European Union (TFEU), rather than the Euratom Treaty.

The Court held that aid measures for construction of a nuclear power station could be exempted under Article 107(3)(c) TFEU if two conditions were met. These are that the aid, first, must be intended to facilitate the development of certain economic activities or of certain economic areas and, second, must not adversely affect trading conditions to an extent contrary to the common interest. The Court rejected Austria’s contention that there was a further condition that the aid must itself pursue an objective of common interest.

The Court emphasised that under Article 194(2) TFEU a Member State is free to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply, and thus may include nuclear energy as part of its energy mix.

Of more general significance to EU State aid law is the Court’s confirmation that, when checking that the measures at issue were compatible with the internal market, neither the Commission nor the General Court was required to characterise them formally as ‘investment aid’, which may satisfy the conditions for application of Article 107(3)(c) TFEU, or ‘operating aid’, the authorisation of which under that provision is in principle precluded.

The Court’s press release is here.

The Court’s judgment is here.