3.7.3 Imposed by the Commission or proposed by the Member State?

Restructuring measures can take the form of either commitments or conditions. Substantively, there is no difference between commitments and conditions; but there is an important procedural difference between them. In section 2.5, it was explained that a State aid procedure has two phases: a preliminary investigation procedure and a formal investigation procedure. At the end of the preliminary investigation procedure, the Commission can accept commitments by the Member State and adopt a decision not to raise objections.1 If, however, there are serious doubts as to the compatibility of the notified aid measure with the common market, then the Commission can initiate the formal investigation procedure. At the end of the formal investigation procedure, the Commission can adopt a conditional decision, thereby imposing conditions on the bank concerned.2

Most decisions concerning State aid to banks are ‘commitment decisions’.3 The advantages of commitment decisions over conditional decisions are obvious: the formal investigation procedure is avoided, which saves time. Furthermore, the avoidance of the formal investigation procedure means that extra administrative efforts are avoided. In addition, the opening of the formal investigation procedure is seen as a ‘clash’ between the Commission and the Member State concerned – which they might wish to avoid.4

The key difference between a conditional decision and a commitment decision is that in a conditional decision, the Commission imposes restructuring measures, while a commitment decision is based on the restructuring measures proposed by the Member State concerned.

Formally speaking, the Member State proposes commitments. However, in reality, the commitments result from negotiations between the Commission and the Member State (and the beneficiary bank). When proposing restructuring measures, the Member State anticipates the commitments that the Commission would require.5 If the commitments are deemed insufficient by the Commission, the Commission would not adopt a decision not to raise objections. In the end, all State aid measures have to be authorised by the Commission before they can be implemented. The Commission thus has the decisive say in the negotiations about the restructuring measures. Therefore, the Commission is in a position to require certain commitments from the Member State. It has been remarked that commitment decisions can sometimes be better characterised as a Commission’s unilateral decision rather than a truly ‘negotiated’ solution.6 In some cases, the Commission even explicitly indicated that it expected certain commitments. This can be illustrated by the following recital from the Opening Decision on HSH Nordbank:

If the commitments proposed by the Member State are not accepted by the Commission, the Member State is effectively forced to propose more far-reaching restructuring measures. Otherwise, the Commission will not adopt a commitment decision. In such a case, the Commission will impose restructuring measures by adopting a conditional decision. This is also illustrated by the case of HSH Nordbank:

What is the position of the beneficiary bank vis-à-vis the Member State? The beneficiary bank has some say in the negotiations about the restructuring plan. In that regard, the Court has held that “in principle, there is nothing to prevent the content of all the measures provided for by the restructuring plan from being the subject-matter of negotiations between the Commission and the Member State concerned, in which the beneficiary of the aid may, where appropriate, participate”.9 Laprévote argues that it is likely that most cost reduction measures result from the banks’ own decisions.10 Nicolaides & Rusu argue that compensatory measures included in restructuring plans are defined first by the beneficiary banks themselves and then proposed by the corresponding Member States.11 However, while the beneficiary bank might have some say on the restructuring measures, the Commission has the decisive say. In the end, the beneficiary bank is subject to the restructuring plan and the restructuring measures that are included in it.