What is State Aid?

The objective of state aid control is, as laid down in the founding Treaties of the European Union, to ensure that government interventions do not distort competition and trade inside the EU. In this respect, state aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities.

Article 107(1) of the Treaty on the Functioning of the European Union states the following:

“Save as otherwise provided in the Treaties, 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 internal market.”

The EU state aid rules are founded on the interpretation of this Article as well as the case law of the European Courts of Justice.

Four cumulative criteria comprise the definition of state aid: the involvement of state resources, the selectivity of the measure, the impact on competition and the impact on trade.