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Is the Payment to Prestigious MICHELIN Guide "Prohibited" State Aid?

Is the Payment to Prestigious MICHELIN Guide "Prohibited" State Aid?

Czech Republic
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The Ministry for Regional Development of the Czech Republic will soon decide whether to pay for the Czech Republic to become part of the prestigious MICHELIN Guide. The MICHELIN Guide is asking for CZK 10 million for this "service" for the next three years.

Such a payment coming from public funds to one particular entity undoubtedly confers a so-called selective advantage and could therefore be regarded as state aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union.

In case of this payment, we could think of a specific category of so-called operating state aid. In this way, undertakings cover their production costs. But even such state aid is almost always incompatible with the EU internal market and, therefore, prohibited. The exception might be the reimbursement of operating costs in case of support for renewable energy sources or support for environmental projects, which is hard to imagine in the case of MICHELIN Guide.

One of the few ways to legalise public support is to apply the de minimis rule, which provides that state aid of up to EUR 200,000 paid over three consecutive fiscal years to a single undertaking will not be considered "dangerous" and will therefore be "authorised".

To sum up, it would be highly problematic to assess such a payment as legally compatible with the European market and the legal rules on state aid. Given that this sum has been recently paid by Hungary, Slovenia and Estonia, the evolving practice will be of considerable interest.

Another scenario might arise if the gastronomic guide were to compete for an objectively set amount in a public tender, which would have to meet relatively strict criteria.

By Vladena Svobodova, Senior Associate, JSK, PONTES

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