State Aid Law

What is ”state aid” under EU law?

State resources must not be allocated from governments of member states of the European Union which purport to distort competition between undertakings, unless there is an exemption that is provided only by the ruling of the correct authority. This shall be deemed unlawful.

The Treaty on the Functioning of the European Union (Art. 107, para. 1) reads:

"Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market."

Thus, almost all State aid is awarded under block exemptions. Specifically, under the General Block Exemption Regulation

Five cumulative criteria shall be present for a “State aid” to exist:

1. "the use of state resources"

2. "the measure must confer an advantage to a certain undertaking"

3. "the advantage must be selective"

4. "the measure must distort competition"

5. "affect trade between member states".

If interested in reading more on this topic, please read an article which I have published, entitled "An analysis of the definition of ‘economic activity’ under EU Competition Law.

When is the state not engaged in an economic activity?"

(click here)