Definition Of State Aid Research Articles

Substantive and Procedural Parallels and Overlaps Between Art. 107, 108 TFEU and the (Draft) Regulation

Similarities between the European Commission’s proposal for a regulation on foreign subsidies distorting the internal market and State aid law have been widely noted, not least because of their similar goals. This article analyzes overlaps and parallels between both substantive and procedural rules in the European Commission’s proposal and State aid law. In particular, the article focuses on the extent to which precedents regarding the definition of State aid may also inform the application of the proposal and its definition of foreign subsidies.

CREATION OF THE STATE AID MONITORING AND CONTROL SYSTEM IN UKRAINE AS A RESULT OF THE SIGNING OF THE ASSOCIATION AGREEMENT BETWEEN UKRAINE AND THE EU

The purpose of the article is to research the process of reforming the legislation of Ukraine in the fi eld of monitoring and control of state aid to business entities in connection with the signing of the Association Agreement and to develop proposals for necessary amendments to the Ukrainian legislation in order to align it with the EU acquis.The statistical analysis shows the ineffi ciency of functioning of the state aid system to business entities in Ukraine. According to Association Agreement between Ukraine and the EU, Ukraine has undertaken the obligation to establish a system of state aid monitoring and control. Thus, Ukrainian legislation in this fi eld has developed signifi cantly.The adoption of the Law of Ukraine «On State Aid to Business Entities» has become a signifi cant event. Due to the rapid process of reforming the legislative framework, there is a need for a more detailed research and legal analysis of the State Aid Institute, which proves the relevance of the topic.However, some legislative changes need to be made in the fi eld of monitoring and control of state aid to business entities in order to eliminate signifi cant inconsistencies with EU acquis.The comparative-legal, formal-legal method, the method of generalization and interpretation are used.The practical value of the article is to develop proposals for legislative changes due to the inconsistency of the legal provisions of the Law of Ukraine «On State Aid to Business Entities» and the provisions of the Association Agreement between Ukraine and the EU. In order to avoid contradictions, there is a need to supplement the concept of state aid. The current defi nition of state aid creates grounds for expanding the application of the rules on state aid monitoring and control. It is proposed to supplement the concept with the characteristic «impact on trade between Ukraine and EU Member States».Suggestions to change the approach to identifying services of general economic interest have also been made. In particular, we propose to implement the universal Altmark criteria and to establish them at the level of the Law.

The Social Dimension of EU State Aid Law and Policy

AbstractTraditionally, EU state aid law has been attached to the goals of maintaining free competition and preventing the distortionary effects of Member States’ economic intervention, while social considerations have been considered immaterial to state aid control. However, in more recent years, EU state aid law has acquired a clearer ‘social dimension’, indirectly streamlining national subsidies towards social goals. The entry into force of the Treaty of Lisbon, and particularly of Articles 3(3) TEU and 9 TFEU, has had an impact on the way in which social goals have been taken into account in the application of the state aid provisions. In the last decade, the European Commission has sought out a more appropriate balance between the main objective of preserving competition in the internal market on the one hand, and social objectives, also enshrined nowadays in the Treaties, on the other. This ‘social dimension’ is still underdeveloped, but emerges to varying degrees when looking respectively at the definition of state aid under Article 107(1) TFEU, at the scope of the derogations under Articles 107(2) and 107(3) TFEU and at the secondary legislation adopted for their implementation.

STATEAID AS EFFECTIVE MECHANISM OF STATE REGULATION AND SUPPORT OF SMALL AND MEDIUM ENTREPRENEURSHIP

In the article there is analysed the main approaches to the definition of state aid, including made by EU regulatory documents such as, for example, the Treaty Establishing the European Community and the Treaty on the Functioning of the European Union. Also there is considered the role and importance of the state aid in ensuring the effective functioning of mechanism ofstate regulation and support of small and medium enterprises. Thereisstudied the experience of state support in the form of state aid to a number of European countries and legislative regulation of state aid in Ukraine.

Definition and Characteristics of State Aid

The paper deals with the definition of state aid and the determination of general characteristics of this institute particularly in terms of the decision-making practice of the Court of Justice and the Commission. Especially, this paper analyses the characteristics of state aid, i.e., “measure granted by a State or through State resources”, “economic advantage to particular undertaking (business) or sector (industry)”, “distortion of competition” and “effect on trade between the EU Member States”. Furthermore it also refers to a system of exceptions where it is possible to provide state aid.

State aid is falling down, falling down: An analysis of the case law on the notion of aid

The article looks at the definition of State aid, in the light of recent case law of the EU Courts. There are claims that this case law shows serious shortcomings, is too complex, and reveals a rift between the General Court and the ECJ. In particular the interpretation of the substantive elements forming the notion of aid such 'granted by the state or through state resources' and 'selectivity' is far from clear. The question arises whether State aid control is then possible at all, given the underlying political objectives. Despite some shortcomings the Courts are somehow still managing to maintain a formal approach, in order to meet predictability requirements and legal certainty and at the same allowing a certain degree of flexibility. The case law reaffirms that the interpretation of the notion of aid still aims to preserve free movement and fair competition between States, and to ensure that Member States comply with EU law in terms of transparent economic governance. The efforts by the Courts and the European Institutions, in particular the Commission, in developing consensual rules on policy may still be the best we have so far.

On the Right Track Towards a Competition Neutral Compensation

Probably the most harmful way to distort trade is by grant of State aid. The legal definition of State aid is stipulated in Article 107(1) TFEU. A State aid measure is a financial support granted by the State to certain undertakings. This support implies an advantage for the beneficiary and has a distortive impact on the internal market. All financial measures that satisfy the cumulative conditions in the Article 107(1) TFEU are illegal, unless notified by the government to the Commission and approved by it. The rule imposing the obligation of notification is known as the stand-still clause.During the period of implementation of a public service contract, the public authorities may grant financial benefits to the track-based operator in order to guarantee high quality passenger transport. These benefits can either constitute State aid or can be treated as representing a remuneration paid by the State to the track-based operators entrusted with public service obligations. In this context, a correct definition of the financial measure is absolutely essential in order to insure that no undue distortion of competition will incur as a result of an unnecessary or disproportional large reward. The contracts should be awarded by tender only where there is no interest from the free competition sector.

The ‘Elusive Frontier’: Regulation under EC State Aid Law

The more one gets involved with the definition of State aid under Article 87(1) EC the more there is a realization of how elusive this is. Each and every element of this concept still raises fundamental questions and is still subject to debate. There is one area, however, which is the real frontier of EC State aid law, and indeed of any system aiming to control public subsidies: regulation. This paper attempts to sketch some of the aspects raised by the legal status of regulation under EC State aid control. It does not propose to offer definitive answers. The fact itself that after more than fifty years since the entry into force of the Treaty of Rome we are asking this question is probably a sign that there are no final answers. From another perspective, the issue ultimately depends on policy and not legal choices, which is partly beyond our remit. What we aim to achieve with this paper is two-fold. On the one hand, to analyze the issue at an operative micro-level, by assessing it against the various traditional elements of the notion of State aid under Article 87(1) EC. At the same time, to insert the issue of the control of regulation within its broader systemic and institutional context. This turns on asking what other EC law provisions, particularly internal market rules, could apply to the same measure and what institutional, and even constitutional, implications the application of State aid, rather than internal market rules, might have. It can be anticipated that these considerations do play a crucial role in the definition of EC State aid under Article 87(1) EC and on whether regulation should be covered or not.

HOW SELECTIVE IS SELECTIVITY? A FEW THOUGHTS ON REGIONAL SELECTIVITY

Article 87 (1) EC prohibits any state aid in whatsoever form, unless the Commission considers it to be compatible with the common market. This prohibition significantly reduces in many cases the freedom of Member States to conduct their policies in defining the political and economic environment in which undertakings operate. Article 88 (3) EC, which provides for the notification procedure and prohibits the implementation of aid measures before the Commission's approval, also significantly reduces the Member State's playground. Rarely, however, can it be argued that the state aid control could potentially have drastic consequences for the national constitution order. Although the questions of what constitutes state resources and to which extent trade between Member States can be affected are controversial, this article focuses on only one aspect of the definition of state aid, namely selectivity, the application of which may have the most far-reaching consequences for many Member States' constitutional orders. It has to be stressed, though, that this short article does not aim to deal comprehensively with every difficult issue connected with the application of the selectivity test, but is limited to some of its aspects which may have bearing on Member States' decisions concerning the distribution of powers and especially the power of taxation.