What is State aid
Produced in partnership with CMS
What is State aid

The following Competition practice note Produced in partnership with CMS provides comprehensive and up to date legal information covering:

  • What is State aid
  • Overview of the EU State aid rules
  • Tests for what constitutes State aid
  • Economic advantage granted by a Member State or through State resources
  • Favouring certain undertakings or the production of certain goods (ie ‘selectivity’)
  • Distortion or threatens to distort competition
  • Affects trade between Member States
  • Some typical types of measures that will generally not be considered ‘aid’
  • The Market Economy Operator (MEO) principle
  • What happens if the four State aid tests are met?
  • More...

This Practice Note provides an overview of the EU State aid rules, and specifically what constitutes ‘aid’ for the purposes of Article 107(1) TFEU.

Overview of the EU State aid rules

Article 107(1) TFEU contains a general prohibition on the granting of State aid that distorts or threatens to distort competition within the EU by favouring certain undertakings or the production of certain goods. The prohibition on aid essentially seeks to ensure a level playing field for businesses within the EU, requiring any aid measures to be notified by the granting Member State governments and approved by the European Commission before being put into effect

Article 107(2) and (3) TFEU list certain types of aid measure that will generally be considered compatible with the EU internal market, and therefore approved by the European Commission. These include aid ‘having a social character, granted to individual consumers, provided it is granted without discrimination related to the origin of the products concerned’ (Article 107(2)(a)); and ‘aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment’ (Article 107(3)(a)).

The European Commission has wide powers pursuant to Articles 108 TFEU to investigate and to approve aid measures. These powers cover both notified aid and own-initiative investigations. Where the Commission concludes that any aid has been granted unlawfully and/or is not compatible

Popular documents