Advocate General Kokott in TV2 case: No exceptions to payment of illegality interest

Advocate General Kokott’s opinion of 3 September 2020 in case C-445/19, Viasat vs TV2

Background

In a decision of in 2004, the European Commission found that TV2 had received illegal State aid from 1995 to 2002. In 2008, the Commission’s decision was set aside by the General Court, but by then TV2 had already received recapitalisation aid from the Danish State by way of a capital injection and a government loan enabling TV2 to repay the State aid.

In a new decision in 2011, the Commission held that although the recapitalisation aid amounted to State aid, it was still compatible with the State aid rules, because the aid was necessary and proportionate and was granted to a provider of services of general economic interest. The aid was therefore compatible with the internal market under Article 106(2) TFEU. 

The 2011 decision was referred to the General Court in four separate actions brought by the Commission, TV2 and Viasat. However, the Court essentially upheld the Commission’s decision.

The four actions were then referred to the European Court of Justice, which delivered its two judgments in 2017, both essentially upholding the Commission’s decision from 2011. 

Question about repayment

In its judgments, the European Court of Justice established that while the aid was compatible with the internal market, it had not been notified to and authorised by the Commission, making it illegal. However, the question whether TV2 had to pay so-called illegality interest (for the period in which the aid had been granted illegally) – and, if so, how much – had to be determined by the Danish courts.

This question is still pending before the Danish Eastern High Court. As a general rule, State aid which is paid before it has been authorised, and which turns out to be compatible with the State aid rules will not have to be repaid. However, the recipient will have to pay so-called “illegality interest” for the period in which the aid was received illegally. It is this situation that TV2 is now facing.

On 29 May 2019, the Eastern High Court made three requests to the European Court of Justice for preliminary rulings. They all concern the question whether the requirement for payment of illegality interest also applies in a situation like this, where the aid was granted to a public service broadcaster.

Opinion of Advocate General Kokott

In his opinion, Advocate General Kokott notes that TV2 must pay illegality interest for the period during which it received the aid illegally.

Kokott further notes that there are no exceptions to the requirement for payment of illegality interest notwithstanding that the aid has been granted for the purpose of providing services of general economic interest and has subsequently been held compatible with Article 106(2) TFEU. According to Kokott, the illegality interest must be paid in respect of all amounts that may be categorised as State aid. 

Kokott emphasises that the assessment of the compatibility of a State aid measure differs from the assessment of a breach of procedure and that, therefore, the outcome of the compatibility assessment does not influence the formal illegality assessment.

No final clarification yet

Kokott’s findings are not binding on the European Court of Justice. Hence, the case is now pending the Court’s preliminary ruling and the the Court’s decision whether to follow Kokott’s opinion or not.

It is still uncertain when the Court will make its preliminary ruling, but when it happens, the Danish Eastern High Court will – based on the ruling – have to rule on the question of illegality interest.

Read Kokott’s opinion.