The Governmnet withdrew from EUR 1.6 million aid to the IT company

Zoran Sretić and Miomir Stojković successfully advised the client in the process initiated before the Commission for State Aid Control („Commission“) in 2016 challenging the unlawful and incompatible state aid hence forcing the Government to pull back from the direct grant of over EUR 1.6 M granted to a local subsidiary of a  global information technology company at the beginning of 2017.

The Commission does not have a practice to publicly announce initiation of ex-ante control procedure triggered by an aid notification, which makes challenging such measures more difficult for competitors while assessment of the aid is still pending. The Commission, had been rubber stamping regularly such measures in closed procedures limiting the opportunity for competitors to intervene and challenge the measure. Therefore, the client required swift reaction in a highly complex legal area with limited information available.

This case had both special and general importance. For the client the key was to eliminate unlawful financial market advantage transferred to his competitor through the state budget. In addition, a state aid aid scheme applicable to the case was amended by the Government soon thereafter. Namely, an explicit exemption of investment aid in the software development industry from the scope of the state aid scheme was introduced not to disort the competition in the future in a soaring IT market which has an unmatched demand for an expert workforce. In general, however, withdrawing of the Government from the unlawful measure, so far unprecedented in the state aid legal area in Serbia, reflected the potential of using state aid rules to intercept incompatible state aid measures.

Arguments in our winning case, a first of this kind ever faced by the State aid grantors and the Commission, were firmly based in EU rules and practice, which prohibit the nontransparent selective transfer of financial advantage to undertakings through public resources.