Common use of Advantage Clause in Contracts

Advantage. For a measure to constitute state aid within the meaning of Art. 61(1) it must 26 confer upon the undertaking an advantage that it would not have had under nor- mal market conditions. The financial situation of the undertaking after the mea- sure must be compared with the financial situation had the measure not been im- plemented.29 The concept of an advantage is an objective notion. It is the xxxxx- cial effects of the measure, which have to be assessed in order to determine whether it constitutes an advantage within the meaning of Art. 61(1).30 A classic example of an advantage is a grant of cash. The notion of an advan- 27 tage is however, much wider. In principle, any economic advantage flowing to the undertaking from state resources can constitute a form of state aid within the meaning of Art. 61(1). This includes tax exemptions and other tax breaks, loans and guarantees not provided on market terms or transactions such as the sale of publicly held property or other assets, or the purchase by public authorities of goods or services on more beneficial terms than what would be acceptable to a rational market economy operator. Transactions carried out on market terms do not fall under Art. 61(1). For in- 28 stance where public authorities sell an asset, the buyer is not considered an aid recipient by the mere fact that it is buying the asset from a public authority. If the public entity is acting as a market economy operator and, in particular, sells the asset at market price, no advantage is transferred to the buyer. This is re- ferred to as the market economy operator (MEO) principle.31 Thus when a 28 ESA has on numerous occasions considered whether different transactions carried out by the publicly owned Icelandic power company Landsvirkjun were imputable to the Icelandic State, see ESA Decisions No 391/11/COL and 392/11/COL, both of 13.12.2011 and ESA Decision 543/14/COL, 10.12.2014. ESA did not conclude on the question of imputability in any of these cases. 29 Case 173/73, 2.7.1974, Italy v Commission, at para. 17. 30 Case C-559/12 P, 3.4.2014, France v Commission, at para. 94. public authority acts as a private entity it is treated as a private entity. This is a result of the neutrality of EEA law as to public and private ownership. However, the MEO principle has a wider application in that it also applies in situations where public entities use their exclusively public competencies, such as afford- ing a tax break to a given undertaking.32 29 The comparator market operator must be a normal, rational market operator. This excludes charitable acts, and investments connected with a risk appreciably larger than normal in the relevant market.