What is State Aid Law?

The State Aid rules are European Competition and Public Law legal provisions which apply to all forms of state funded support provided within the European Union. The rules are designed to prevent public funding undermining the common market by giving one or more businesses a competitive advantage.

The State Aid legislation can be found in Articles 107(1) to 109 of the Treaty of the Functioning of the European Union.

State Aid is public funded support which meets each of the four criteria listed in Article 107(1) of the Treaty. The four criteria are:

1. Is the measure funded by the State or through the State’s resources?
2. Does the measure favour certain undertakings?
3. Could the measure potentially distort competition within the beneficiary’s market?
4. Could the measure affect trade in more than one European Union state?

Where State Aid is present, support will only be lawful where it is provided:

• under an exemption approved by the European Commission; or
• the European Commission approves the support through the notification process.

The application of the State Aid law test is informed by European Commission decisions, State Aid case law and officical guidance documents.