EU State aid

State aid is essentially a publicly-funded gratuity to an entity for the purposes of activity for which there is a potential or actual market, and the aid is capable of affecting inter-State trade (see further, What is State aid).

The EU State aid rules (Articles 107 to 109 TFEU) give the European Commission (Commission) wide powers to investigate and order the recovery of illegally granted economic assistance which distorts the market in favour of the recipients of such assistance.

Economic assistance in any form whatsoever (ie an exemption from or reduction in the normal level of tax, loan or guarantee by the State), which is specific or selective in that it benefits certain undertakings or the production of certain goods, has routinely been considered to be State aid by the Commission and the EU Courts.

If a measure amounts to State aid and it is not notified to, or approved by, the Commission before it is put into effect, it will be unlawful. Some exemptions and exclusions apply and these are subject to detailed guidance from the Commission.

When does a measure amount to State aid?

State

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This week's edition of EU Law weekly highlights includes analyses on the decision of the Court of Justice clarifying several fundamental aspects of EU design law on fashion trends and originality, on the Commission’s proposal to ease EU AI Act compliance regime for manufacturers of medical devices, and predictions on the enforcement of the EU Digital Services Act in 2026. In addition the European Parliament, the Council of the EU and the Commission signed a Joint Declaration setting out the EU’s legislative priorities for 2026, the Commission renewed the UK adequacy decisions for EEA–UK personal data transfers, the Parliament adopted a legislative initiative report calling on the Commission to propose rules governing algorithmic management in EU workplaces, adopted an amendment to its Emissions Trading Scheme State aid Guidelines to address the increased carbon leakage risk, published a fitness check assessing the EU regulations on gas supply security and electricity risk preparedness, the Council has given final approval to the Common Agricultural Policy (CAP) simplification package, the Commission published a proposal for a regulation on compulsory licensing for crisis management and a proposal extending the Interim Regulation allowing certain online communication service providers to continue voluntarily detecting, reporting and removing child sexual abuse material on their services across the EU. Finally, the revisions to EU Deforestation Regulation, including postponement of application, was published in the Official Journal.

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