Structural disadvantage argument in State aid case law

When implementing public policies, Member States’ market interventions can sometimes cause structural disadvantages to affected undertakings. Typically, Member States then seek to offset these disadvantages. In this context, the article investigates the case law on Article 107(1) TFEU to determine whether the structural disadvantage argument can be effectively invoked in State aid proceedings, meaning that the offsetting of such disadvantage is considered as an aid-free public measure. To clarify the research framework the article discusses the concept of economic advantage. It then provides insights into the development of case law, revealing different approaches of the European Court of Justice (ECJ) and General Court (GC) and their gradual alignment. This is followed by a discussion of the Orange judgments, illustrating how the courts currently interpret Article 107(1) TFEU regarding structural disadvantages. The article then proposes a new approach, namely the net effect approach, to identify aid-free interventions when dealing with public measures that neutralize structural disadvantages. Ultimately, the article summarizes key findings that demonstrate the utility of the net effect approach and its compatibility with State aid ‘ecosystem’ and, more generally, with the fundamental principles of EU law.