The following Competition practice note Produced in partnership with CMS provides comprehensive and up to date legal information covering:
Economic transactions carried out by Member States do not confer an advantage in favour of an undertaking, and therefore do not constitute State aid under EU law, if they are carried out in line with normal market conditions.
The European Commission, confirmed by the Court of Justice, has set up the ‘market economy operator principle’ (MEOP) to identify the presence of State aid in cases of public investments in the form of capital injections: to determine whether a public investment constitutes State aid, it is necessary to assess whether, in similar circumstances, a private investor of a comparable size operating in normal market economy conditions would have made the same investment.
This principle has later been applied to different economic transactions (capital injections, loans, guarantees, sale and purchase of assets, goods and services, etc).
When applying the MEOP, only the benefits and obligations linked to the role of the State as an economic operator, and not those linked to its role as a public authority are to be taken into account. The MEOP is in principle not applicable if the State acts as a public authority rather than as an economic operator. In this regard, a State intervention cannot be driven by public policy reasons such as regional development or tourism. The MEOP should be applied leaving aside all considerations which exclusively relate to a Member State's
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