What is State aid?

The phrase "State Aid" is used every day in business. But the phrase has a technical meaning in European Union law. So what does the concept mean in EU law?

In essence, State aid is:

• an intervention by an EU Member State or using EU Member State resources.  By contrast, assistance by a non-EU Member State (e.g. the United States, China or Japan) would be covered by the EU's "dumping" rules but not the EU's "State aid" rules.  The EU State aid rules relate to interventions by only EU Member States
• which confers an advantage or benefit
• on some (but not all) businesses or competitors (i.e. there is "selectivity") By contrast, a general measure applying to every business does not amount to State aid.  Selectivity could arise where the advantage or benefit is granted to some businesses or regions
• the intervention is likely to affect trade between EU Member States

There is no closed list of what amounts to a State aid but examples include:

• grants
• guarantees by an EU Member State which a "market economy operator" would not have provided on those terms
• interest relief
• reduced tax rates
• tax reliefs
• unduly favourable terms (e.g. a higher price for goods, land or services than a "market economy operator" would pay)

If the EU Member State acts in the same way that a "market economy operator" (i.e., a private business operator) would do then the Member State is not likely to be giving State aid.

The concept of State aid has evolved over time and therefore businesses which believe that either they or competitors are receiving State aid then specialist legal advice should be sought.

For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 12 August 2020