Latham Secures Victory in Lithuanian LNG State Aid Case

Latham has obtained a victory for AB Achema and Achema Gas Trade, by obtaining a judgment by the European General Court that partially annuls a decision of the European Commission (EC) adopted in 2018 to approve Lithuanian State aid granted in 2016 to the incumbent LNG supplier, Litgas, for the provision of services of general economic interest (SGEI) linked to the operation of an LNG terminal in Lithuania.

The part of the decision that was annulled concerned an amendment made in 2016 by Lithuanian authorities to prior aid approved by the EC in 2013 (the 2016 amendments). Under the 2016 amendments, Lithuania entrusted Litgas with an SGEI, which entailed an obligation to supply a mandatory quantity of LNG to keep the LNG terminal at sea port of Klaipėda operational. Lithuania also introduced a new component of the LNG financing method (LNG supplement) in favour of Litgas to compensate for the SGEI, which was mainly financed by the applicants. The EC found that the 2016 amendments were compatible with the internal market without opening a formal in-depth investigation. The General Court held that the approval of the 2016 amendments without opening a formal investigation infringed AB Achema’s and Achema Gas Trade’s procedural rights and that the EC’s review of the relevant aspects of the case was incomplete, insufficient, and inconsistent. 

This judgment, and an earlier judgment secured by Latham in Lithuanian aid in the electricity sector, strengthen the procedural rights of private parties in State aid control procedures. The judgment further serves as a reminder for the EC to observe the indicative time frames applicable to the pre-notification phase and the examination of complaints concerning State aid. It also confirms that an extensive number of exchanges between the EC and a Member State and the content of those exchanges may, in conjunction with an incomplete and inconsistent assessment, be indicative of serious difficulties, resulting in the EC’s obligation to open a formal investigation procedure. 

Latham represented AB Achema and Achema Gas Trade in their challenge of the EC’s decision before the General Court, with a Brussels-based team led by partners John Wileur and Javier Ruiz Calzado with associate Natália Solárová.