Commission Publishes Guidance On The Notion Of State Aid
On 19 May 2016, the European Commission published its Notice on the notion of State aid as referred to in Article 107(1) TFEU (’Notice’).
This guidance can be used to determine whether public spending falls within or outside the scope of EU State aid control. It is also intended to facilitate public investment in the EU, by helping member states and companies to design public funding in ways that do not distort competition. The Commission hopes to mobilize at least €315 billion over three years in private and public investment across the EU.
The Notice gives general guidance on the constituent elements of the notion of State aid by systematically summarising the case law of the EU Courts and the Commission’s decisional practice (see for instance the judgments in T-251/11 Austria v Commission és a C-518/13 Eventech. In addition, it provides clarifications on a number of points particularly important for public investment. Its key clarifications are the following:
- – Public investment for the construction or upgrade of infrastructure does not constitute State aid (will not need to be checked under state aid rules) if it does not directly compete with other infrastructure of the same kind. This is typically the case for roads, railway infrastructure, inland waterways and water supply and waste water networks. In contrast, if one project is financed with public money while competing projects have to operate without public support, this can be deemed to give the subsidized project a selective economic advantage over its rivals, and will therefore be subject to prior Commission scrutiny.
- – Even if infrastructure is built with the help of state aid, there is no aid to its operator and users if they pay a market price. When infrastructure is built with public financing that involves state aid in line with EU rules, public authorities must make sure that such aid is not passed on to the operator or users.
- – Funding provided to local infrastructures or services that are unlikely to attract customers from other Member States, and which only has a marginal effect on cross-border investment, does not fall under state aid rules.
- – Public funding of certain cultural activities that are provided for free or a minimal fee does not be covered by the rules.
- – If public authorities buy goods or services through tenders, which respect EU rules on public procurement, this is in principle sufficient to ensure the transaction is free of state aid.
Petra Agnes Kanyuk
Law Student, University of Debrecen, Faculty of Law
State aid: Commission clarifies scope of EU State aid rules to facilitate public investment. Brussels, 19 May 2016. http://europa.eu/rapid/press-release_IP-16-1782_en.htm (2016-06-22)