Could you recognise state aid if you came across it?

What is state aid? Article 107 of the Treaty on the Functioning of the European Union prohibits:

  • a grant of state aid where
    • the aid is granted by a member state or through state resources
    • the aid distorts or threatens to distort competition
    • the aid affects trade between member states

This has been construed very widely by the European courts to include many different forms of financial assistance or economic advantage granted by the state (for example a loan at a low interest rate, a debt write-off, a guarantee). State aid and public procurement regularly need to be considered together.

Who might need advice? All public and private sector parties distributing or receiving public money need to understand the state aid rules. Failure to follow the rules can result in projects being unravelled up to 10 years after the grant.