State aid can be involved in many different situations. Some examples:
- the granting of operating subsidies or the alleviation of sufferance taxes by the municipality
- the sale of property by a regional development company
As State aid can distort the level playing field within the internal market, the European Union has a strict State aid regime. State aid is in principle prohibited unless it can be deemed compatible with the internal market. The European Commission monitors compliance with State aid rules. Therefore, in principle, any plan to grant State aid must be notified to the European Commission. It has exclusive competence to assess whether a concrete aid measure is compatible. As long as the European Commission has not decided on the compatibility, the planned aid may not be implemented. The Court of Justice of the European Union supervises enforcement by the European Commission.
Services of general economic interest
Services of general economic interest (SGEI) are economic services that serve a public interest. If these services are not provided or taken up by the market (under socially acceptable conditions), we speak of market failure. The State may then decide to entrust an undertaking with the provision of an SGEI and provide compensation in return. When the State finances the performance of this SGEI, it must take account of the State aid rules. Under conditions, this financing is permitted.
Foreign subsidies
Closely linked to the State aid rules are the European initiatives aimed at tackling foreign subsidies. While the State aid rules cover subsidies (in the broad sense of the word) from Member States, there are currently no similar rules for subsidies granted by non-EU authorities to companies operating in the internal market. As a result, efficient undertakings in the European market may be driven out of the market by less efficient state-owned, state-controlled or subsidised undertakings from outside the EU. On 17 June 2020, the European Commission published a White Paper on establishing a level playing field with regard to foreign subsidies. A legislative proposal is expected to follow in the second quarter of 2021.
Expertise
Our specialists can assess whether a measure qualifies as state aid and whether it should be notified to the European Commission. If it proves impossible to design a measure in such a way that it falls outside the scope of the state aid prohibition, it is often possible to make use of one of the exemptions from the notification obligation. Our specialists have extensive experience designing state aid-proof transactions between governments and businesses and think along with you in a practical manner. In many cases, this avoids a lengthy notification procedure and the initiative envisaged by the measure can proceed quickly. If notification is required anyway, we can supervise and support the notification. Our services also include assistance in Commission investigations into possible prohibited state aid and related disputes before the European and national courts. Our recent work includes
- advising on large-scale investment projects by municipalities and provinces
- advising municipalities and beneficiaries on COVID-19 aid
- advising on (real estate) transactions by public undertakings
- advising on the design of SGEIs
- filing complaints and litigating on behalf of undertakings whose competitors received unlawful state aid.
