What is State Aid Law?
State Aid Law is a central EU legal area under Articles 107-109 TFEU that controls state subsidies. It ensures that public funds do not unlawfully distort competition in the internal market.
What Constitutes State Aid?
State aid exists when four criteria are cumulatively met:
- State resources: The measure is financed from public funds
- Selective advantage: A specific company or sector is favored
- Competition distortion: The measure distorts or threatens to distort competition
- Effect on trade: Trade between EU Member States is affected
Connection to Procurement Law
- Procurement as safe harbour: Proper competitive procurement demonstrates no excessive prices were paid
- Service concessions: State aid rules must be observed when transferring public service obligations
- SGEI: Services of general economic interest are subject to special rules (Altmark criteria)
- De minimis: Small aids below certain limits are exempt from notification
Consequences of Violations
The EU Commission can order recovery of unlawful aid plus interest. Contracts may be void, and competitors can bring claims before national courts.
Exemptions
Not all state aid is prohibited. The General Block Exemption Regulation (GBER) automatically exempts certain categories, de minimis aid below €300,000 over three years is exempt, and SGEI compensation has its own framework.