State aid procedural rules

KEY POINTS

• As a general rule, state aid is prohibited under EU law as it may give an unfair advantage to one company or group of companies over another, thus distorting competition in the EU. Under certain circumstances, however, state aid is permitted to support particular economic sectors in difficulty, for example. This regulation sets out the relevant procedural rules for the application of EU state aid.
• Procedure regarding notified aid: EU countries must notify the European Commission of any plans to grant new aid. In such cases, the procedures include the obligation by the Commission to inform the EU country concerned without delay of the receipt of the notification and to decide within 2 months whether the aid is lawful or whether a further investigation procedure into the aid is needed.
• Regarding any such investigation procedure, the Commission may request from any EU country, company or group of companies all the market information it needs in order to make a decision on whether the aid is lawful under EU rules. It may impose fines on any company that provides false or misleading information. The Commission must try to reach a decision within 18 months from the opening of the investigation procedure.
• Procedure regarding unlawful aid: the Commission may, on its own initiative, examine any information it receives regarding any alleged unlawful aid. In such cases the procedures include the right of the Commission to obtain all the necessary information for making a decision. It may also issue injunctions requiring an EU country to provide relevant information (information injunction) or to suspend any unlawful aid until the Commission has taken a decision on the compatibility of the aid with the internal market (suspension injunction).
• Limitation periods: the power of the Commission to recover aid is limited to 10 years from the day the unlawful aid is awarded to the relevant company or group of companies.
• Investigations into sectors of the economy: the Commission may conduct an investigation where it suspects that state aid given to a particular sector of the economy distorts competition. It may request information of EU countries and relevant companies. In so doing, it must state the reasons for its inquiry and publish a report of its findings.