The control of state aid in the European Union: a major competition issue
SUMMARY OF:
SUMMARY
The Treaty on the Functioning of the European Union (TFEU) prohibits state aid unless it is justified by reasons of general economic development. The European Commission is in charge of ensuring that state aid complies with European Union rules.
To prevent businesses in the EU’s internal market from benefiting from selective advantages that distort competition, state aid is, as a general rule, prohibited. In certain cases, however, state intervention is necessary to compensate for market failure. The Commission ensures that these rules are respected and that exemptions are applied equally across the EU. The procedures are laid down in Council Regulation (EC) No 659/1999 and in its amending acts and implementing measures.
Different aid schemes examined by the Commission
As a general rule, EU countries must notify the Commission of new aid measures before implementing them. In a notification, EU countries must provide all the necessary informationin order to enable the Commission to take a decision.
The Commission must also examine information it receives about alleged unlawful aid, i.e. aid granted without prior authorisation. If the allegation is well founded, it opens a preliminary investigation, as for cases of notified aid.
The Commission also reviews existing aid schemes to ensure they are still compatible with the internal market.
Preliminary examination
Each notification triggers a preliminary investigation. From the time it receives a completed notification, the Commission has 2 months to decide whether:
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there is no aid within the meaning of the EU rules; or
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the aid is compatible with EU rules because its positive effects outweigh distortions of competition; or
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serious doubts remain as to the compatibility of the measure with state aid rules.
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In the first two cases the measure can be implemented immediately, but in the third the Commission opens an in-depth investigation procedure.
Formal investigation procedure
The decision to initiate this procedure is sent to the relevant EU country. It contains the factual and legal bases for the investigation, including the Commission’s preliminary assessment. EU countries and interested third parties have 1 month to submit comments. The EU country concerned is also invited to comment on observations submitted by interested parties.
Final decision
The Commission adopts a final decision at the end of the formal investigation. There are three possible outcomes:
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a positive decision (i.e. the measure is not aid or the aid is compatible with the internal market);
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a conditional decision (the measure is compatible, but its implementation is subject to conditions);
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a negative decision (the measure is incompatible and cannot be implemented).
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The case can also be closed if the EU country withdraws the notification.
Recovery of aid
If the Commission takes a negative decision about aid that has already been paid out, it normally requires the EU country to recover the aid (plus interest) from the beneficiary. If the EU country does not comply with the decision in due time, the Commission may refer it to the Court of Justice of the European Union.
The limitation period for recovery is 10 years.
ACT
Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union
REFERENCES
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Act |
Entry into force |
Deadline for transposition in the Member States |
Official Journal |
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Regulation (EC) No 659/1999 |
16.4.1999 |
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Amending act(s) |
Entry into force |
Deadline for transposition in the Member States |
Official Journal |
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Regulation (EU) No 734/2013 |
20.8.2013 |
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Successive amendments and corrections to Regulation (EC) No 659/1999 have been incorporated into the basic text. This consolidated version is for reference only.
RELATED ACTS
Implementing acts
Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 140, 30.4.2004, pp. 1-134)
Commission Regulation (EU) No 372/2014 of 9 April 2014 amending Regulation (EC) No 794/2004 as regards the calculation of certain time limits, the handling of complaints and the identification and protection of confidential information (OJ L 109, 12.4.2014, pp. 14-22)
Commission notice
Notice from the Commission on a simplified procedure for treatment of certain types of state aid (OJ C 136, 16.6.2009, pp. 3-12)
last update 21.09.2015