EU rules on State aid
The framework for the EU rules on State aid is defined in Articles 107–109 of the EC Treaty.
The definition of State aid is based on the interpretation of Article 107(1). The rules on State aid concern measures with which the public sector grants aid or other benefits to undertakings. The form of the aid is not significant. The general form of aid is direct aid to the recipient, but e.g. a rent lower than the market price of a real estate is considered aid. Undertakings are defined as entities engaged in economic activities regardless of their judicial form.
The characteristics of an aid measure are laid down under Article 107(1). First of all, the case should involve channelling public resources (incl. municipalities and EU funding) to undertakings. In addition, the measure must distort, or risk to distort, competition by favouring the aid recipient. Another requirement of the aid is that it also affects trade between the Member States. The precondition for applying the State aid rules is that all these characteristics are fulfilled.
State aid is basically prohibited under Article 107(1). However, paragraphs 2 and 3 of Article 107 define the exemptions under which aid measures can be authorised. Member States cannot themselves assess the eligibility for aid, but a prior notification procedure is applied. Aid under Article 107 must, as a rule, be submitted to the Commission for approval before its implementation (Article 108(3). Aid granted without prior notification is illegal. In this case the undertaking can be ordered to pay the aid back.
Detailed information on the EU State aid policy, as well as on aid schemes of and aid granted by Member States is available on the website of the Commission’s Competition DG.
In matters of EU State aid, the tasks of Working life and Markets Department of the Ministry of Employment and the Economy are
- national regulation required by the procedural rules on EU State aid,
- to consult and coordinate national authorities on State aid matters,
- participation in development of the regulation at the EU institutions, and other international cooperation e.g. in WTO,
- to coordinate State aid complaints and
- notification of State aid to the European Commission, and other tasks related to aid surveillance (eg. annual reporting to the European Commission).
However, the Ministry of Employment and the Economy does not coordinate the aid falling within the administrative domain of the Ministry of Agriculture and Forestry.