The control of state aid in the European Union: a major competition issue

SUMMARY OF:

Council Regulation (EC) No 659/1999 - detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (state aid)

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:

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:

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

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