State aid and the market economy operator principle

Produced in partnership with CMS
Practice notes

State aid and the market economy operator principle

Produced in partnership with CMS

Practice notes
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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

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Jurisdiction(s):
United Kingdom
Key definition:
State aid definition
What does State aid mean?

Assistance provided by an EU Member State, or one of its public authorities, using public resources which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods.

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