The European Union has ruled that a Madrid government policy designed to increase competition in the Spanish fuels market does not constitute state aid and is therefore not illegal.

The policy in question dates back to 2000 and was drafted to aid wider involvement in the Spanish petrol retailing sector. However, two service station associations in Spain argued that the Madrid policy effectively created a double standard which allowed hypermarkets to enter the fuel market free from the regulatory restrictions imposed on conventional market players. Suggestions were also made that the policy amounted to direct state aid.

Responding to the challenge, the European Commission earlier ruled that the Spanish government policy was legitimate and did not break EU rules. Now the EU Court of First Instance has upheld that initial ruling, PetrolWorld has reported.

The fresh ruling may be appealed in the EU’s top court, the European Court of Justice, within two months.