Factsheet: State aid Procedures

Competition: State aid procedures Article 107 of the Treaty on the Functioning of the Preliminary investigation European Union (TFEU) ensures that aid granted by a Each notification triggers a preliminary investigation Member State or through State resources does not by the Commission. The Commission may request distort competition and trade within the EU by information from the notifying Member State, if the favouring certain companies or the production of notification is incomplete. If the Member State fails to certain goods. reply to an information request in the prescribed To prevent that companies doing business in the period of time, the notification is deemed to be Internal Market receive selective advantages that withdrawn. From the time it has received a distort competition, the TFEU contains a general completed notification, the Commission has two prohibition of State aid. months to decide that: However, in some circumstances, government  there is no aid within the meaning of the EU intervention is necessary for a well-functioning rules, and the measure may be implemented; or economy to offset market failure. The TFEU leaves  the aid is compatible with EU rules, because room for a number of policy objectives which can be its positive effects outweigh distortions of supported through State aid and are considered competition, and may be implemented; or compatible with the internal Market. The Commission  serious doubts remain as to the compatibility of is responsible for enforcing the EU State aid rules1. the notified measure with EU State aid rules, prompting the Commission to open an in-depth Notified aid investigation. In this instance, the measure may not be implemented until the investigation is EU State aid control requires prior notification of all concluded. (See formal investigation procedure). new aid measures to the Commission. Member States must wait for the Commission's decision before they can put the measure into effect. There are a few Simplified procedure exceptions to mandatory notification, for example: This procedure is intended to expedite more straightforward cases. For certain categories of aid  aid covered by a Block Exemption (giving and if all the conditions are met, the Commission automatic approval for a range of aid must adopt a short-form approval decision within 20 measures defined by the Commission), working days from the date of notification.  de minimis aid not exceeding €200,000 per undertaking over any period of 3 fiscal years Misuse of aid (€100,000 in the road transport sector) or  aid granted under an aid scheme already The Commission can also open a formal investigation authorised by the Commission. procedure where it finds that authorised aid is being misused. Existing aid To secure the abolition or adaptation of old pre- accession aid that is incompatible with the internal 1 Primarily the Directorate-General (DG) for Competition. DG market or to review aid schemes which were Agriculture and Rural Development and DG Maritime Affairs authorized in the past but which may no longer be and Fisheries deal with the agricultural and fisheries sectors compatible with the internal market under the respectively. conditions currently prevailing, the Commission must inform the Member State concerned, who can submit There are mainly three possible outcomes: comments within one month. The Commission then examines these comments and - if necessary -  Positive decision: where the measure is no aid proposes appropriate measures to bring the existing or the aid is compatible with the internal market. aid in line with EU State aid rules. If the Member  Conditional decision: the measure is found State does not accept these measures, the compatible, but its implementation is subject to Commission must then initiate the formal the conditions stated in the decision. investigation procedure.  Negative decision: The measure is incompatible and cannot be implemented. The Commission in Unlawful aid principle orders the Member State to recover aid that has already been paid out from the Unlawful aid is aid granted without prior beneficiaries (see "Recovery"). Where the decision Commission authorisation. The Commission must is on existing aid, the Commission cannot order examine all information it receives concerning alleged the recovery of aid already given, but will prevent unlawful aid immediately. If indeed there is unlawful the Member State from granting future aid. aid, as for cases of notified aid, the Commission first opens a preliminary investigation and, if doubts as to The case can also be closed following the withdrawal the compatibility of the measure persist, subsequently of the notification by the Member State. carries out an in-depth investigation. The Commission may use injunctions to obtain information from Recovery of aid Member States, suspend the further granting of aid or impose provisional recovery obligation on the Member If the Commission has taken a negative decision in State. the context of aid that has already been paid out, the Commission requires the Member State to recover the In case of a final negative decision, recovery of the aid with interest from the beneficiary (unless such aid already paid out, with interests, will take place recovery would be contrary to a general principle of (see "Recovery"). EU law). In this case, the Commission opens a 'recovery case' to enforce the implementation of its Formal investigation procedure decision. If the Member State does not comply with The Commission is obliged to open a formal the decision in due time, the Commission may refer it investigation under Article 108(2) TFEU where it has to the European Court of Justice (ECJ), without serious doubts about the aid's compatibility with EU initiating an infringement procedure under Article 258 State aid rules, or where it faces procedural TFEU. difficulties in obtaining the necessary information. The aim of recovery is to remove the undue The decision to initiate this procedure is sent to the advantage granted to a company (or companies) and relevant Member State. It summarises the factual and to restore the market to its state before the legal bases for the investigation and includes the aforementioned aid was granted. There is a limitation Commission's preliminary assessment, outlining any period of ten years for recovery. doubts as to the measure's compatibility with EU state aid rules. The decision is published in the EU's Official Judicial review Journal, and Member States and interested third All decisions and procedural conduct of the parties have one month from the date of publication Commission are subject to review by the General to submit comments. The Member State concerned is Court and ultimately by the ECJ. in turn invited to comment on observations submitted by interested parties. July 2013. This factsheet provides basic information on competition Adopting a final decision procedures and is not a substitute for the applicable legislation. More information on State aid control: The Commission adopts a final decision at the end of http://ec.europa.eu/competition/state_aid/overview/index_en.html the formal investigation. There is no legal deadline This and other factsheets are available at: http://ec.europa.eu/competition/publications to complete an in-depth investigation and its actual length depends on many factors, including the © European Union, 2013 complexity of the case, the quality of the information Reuse is authorised, provided the source is acknowledged. provided and the level of cooperation from the Member State concerned.