Breaking down the CJEU’s decision in Apple: An unsatisfactory outcome

Abstract

This is a brief commentary on the CJEU decision of 10 September 2024 that set aside the previous judgement of the General Court on the 'Apple case', ordering Apple to pay back Ireland the non-insignificant amount of 13 billion Euros plus interest in unlawful State aid. The commentary concentrates exclusively on the Commission’s first line of reasoning, which is where the appeal is grounded and is divided into three parts: i) the GC’s misinterpretation (or misreading) of the Commission allocation of profits to ASI and AOE’s branches in Ireland; ii) the GC’s consideration of the functions by Apple Inc for profit allocation, and iii) the infringement of the separate entity approach, the ALS, and consequently, Article 107 TFEU. The commentary concludes that the CJEU's decision is unsatisfactory from a strict legal perspective, which can be noticed in at least four aspects of it. First, it implicitly confirms the alleged new prerogative of the Commission to use the ALS (embodied in the AOA) as an allocation benchmark to check Member States’ correct profit allocations. Second, it portrays transfer pricing as a sort of exact science, granting the Commission the task to control the ‘correct allocation’ of profits, including methodological errors. Third, it leaves big question marks regarding the burden of proof in state aid law cases. Fourth, and more importantly, it demonstrates how legal rules can always be twisted to serve the political interests of any specific sector, in this case disguising anti-avoidance concerns behind anti-subsidy rules.

Keywords: State aid, Apple case