The European School of Thought has been established in State aid legislation. Consequently, the economical examination of State aid in Article 106 and 107 TFEU were modified.
A company which receives government support obtains an advantage over its competitors. As a result, State aid is prohibited unless it is justified by reasons of general economic development. To ensure that this prohibition is respected the European Commission oversees the compliance of State aid within the EU rules.
As a first step, it must be determined whether a company receives State aid.
- Is it an intervention by the State or through State resources? It can take a variety of forms like grants, interest and tax reliefs, guarantees, government holdings of all or part of a company, or the provision of goods and services on preferential terms, etc.
- Does the intervention confer an advantage to the recipient on a selective basis? Do only specific companies or sectors of the industry, or do companies located in specific regions benefit from this method?
- Is the competition distorted?
- Is intervention likely to affect trade between Member States?
General measures are not regarded as State aid because they are not selective and apply to all companies regardless of their size, location, or sector. Examples include general taxation measures or employment legislation.
Today, the State aid provisions are fully coherent with the economic principles developed in EU competition law.