State aid Procedures

Notified aid

EU State aid control requires prior notification of all new aid measures to the Commission. Member States must wait for the Commission's decision before they can put the measure into effect. There are a few exceptions to mandatory notification, for example:

• aid covered by a Block Exemption (giving automatic approval for a range of aid measures defined by the Commission, upon empowerment by the Council),
• de minimis aid not exceeding €300,000 per undertaking over any period of 3 fiscal years or
• aid granted under an aid scheme already authorised by the Commission.

Preliminary investigation

Each notification triggers a preliminary investigation by the Commission. From the time it has received a completed notification, the Commission has two months to decide whether:

• there is no aid within the meaning of the EU rules, and the measure may be implemented; or
• the aid is compatible with EU rules, because its positive effects outweigh distortions of competition, and may be implemented; or
• serious doubts remain as to the compatibility of the notified measure with EU State aid rules, prompting the Commission to open an in-depth investigation.

Simplified notification

Sometimes, the compatibility assessment of a measure can be rather straightforward. This is the case when a measure is an amendment to a previously approved scheme and it only touches upon the budget, the duration (up to six years) or its award criteria, by tightening them.  In all these instances, Member States can notify the measure via a simplified form and the Commission shall use its best endeavors to take a decision within one month.

Assessment of Existing aid

Existing aid is any aid that fulfills any of these conditions: (i) it existed prior to the entry into force of the TFEU in the respective Member State, (ii) it has been authorised by the Commission (or by the Council), (iii) it is deemed to have been authorised because the Commission has not taken a decision within the time prescribed to assess notified aid; (iv) it has not been subject to any action by the Commission, or by a Member State, acting at the request of the Commission, for ten years;  (v) at the time it was put into effect it did not constitute aid, and subsequently became an aid due to the evolution of the internal market.

To secure the abolition or adaptation of existing aid that is incompatible with the internal market or to review aid schemes which were authorized in the past but which may no longer be compatible with the internal market under the conditions currently prevailing, the Commission must inform the Member State concerned, who can then submit comments within one month. The Commission then examines these comments and - if necessary - proposes appropriate measures to bring the existing aid in line with EU State aid rules. If the Member State does not accept these measures, the Commission may then initiate the formal investigation procedure.

Unlawful aid

Unlawful aid is aid granted without prior Commission authorisation. The Commission promptly examines all information it receives concerning alleged unlawful aid provided it derives from a formal complainant. If there are doubts as to the compatibility of the measure, the Commission carries out an in-depth investigation. The Commission may use injunctions to obtain information from Member States, suspend the further granting of aid or impose provisional recovery obligation on the Member State.  In case of a final negative decision, recovery of the aid already paid out, with interest, will take place.

Formal investigation procedure

The Commission is obliged to open a formal investigation under Article 108(2) TFEU where it has serious doubts about the aid's compatibility with EU State aid rules.

The decision to initiate this procedure is sent to the relevant Member State. It summarises the factual and legal bases for the investigation and includes the Commission's preliminary assessment, outlining any doubts as to the measure's compatibility with EU state aid rules. The decision is published in the EU's Official Journal, and Member States and interested parties have normally one month to submit comments. The Member State concerned is invited to comment on observations submitted by interested parties.

Misuse of aid

The Commission can also open a formal investigation procedure where it finds that authorised aid is being misused.

Complaints

Interested parties may submit complaints to inform the Commission of any alleged unlawful aid or misuse of aid. Interested parties are any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing undertakings and trade associations. Complainants are to fill out the complaint form and provide all the requested information, including demonstrate that they are interested parties, together with a non-confidential version of the complaint.

Adopting a final decision

The Commission adopts a final decision at the end of the formal investigation. There is no legal deadline to complete an in-depth investigation and its actual length depends on many factors, including the complexity of the case, the quality of the information provided and the level of cooperation from the Member State concerned.

If the measure constitutes aid, the formal investigation will have three possible outcomes:

• Positive decision: the measure is declared compatible with the internal market.
• Conditional decision: the measure is found compatible, subject to the conditions stated in the decision.
• Negative decision: The measure is incompatible and cannot be implemented. The Commission in principle orders the Member State to recover aid that has already been paid out. Where the decision is on existing aid, the Commission cannot order the recovery of aid already given, but will prevent the Member State from granting future aid.

If the Member State does not comply with a conditional decision or with a negative decision, the Commission may refer it to the European Court of Justice (ECJ), without initiating an infringement procedure under Article 258 TFEU.

The case can also be closed following the withdrawal of the notification by the Member State.

Recovery of aid

If the Commission has taken a negative decision in the context of aid that has already been paid out, the Commission requires the Member State to recover the aid with interest from the beneficiary (unless such recovery would be contrary to a general principle of EU law). In this case, the Commission opens a 'recovery case' to enforce the implementation of its decision.

The aim of recovery is to remove the undue advantage granted to a company (or companies) and to restore the market to its state before the aid was granted. There is a limitation period of ten years for recovery.

Related link:  Recovery of unlawful aid

Judicial review

All decisions and procedural conduct of the Commission are subject to review by the General Court and ultimately by the ECJ.

Enforcement of State aid rules by national courts

The implementation of the system of State aid control is a matter for both the Commission and the national courts, their respective roles being complementary but separate. While the Commission has exclusive competence for assessing the compatibility of aid measures with the internal market, it is for the national courts to safeguard the rights of individuals faced with a possible breach by Member States of the duty to obtain authorization by the Commission before putting a State aid measure into effect. The Notice on the enforcement of State aid rules by national courts clarifies their role.