State aid (compatibility)


Institution Definition

Despite the general prohibition of State aid, in some circumstances government interventions is necessary for a well-functioning and equitable economy. Therefore, the Treaty leaves room for a number of policy objectives for which State aid can be considered compatible. The legislation stipulates these exemptions. The laws are regularly reviewed to improve their efficiency and to respond to the European Councils’ calls for less but better targeted State aid to boost the European economy. The Commission adopts new legislation is adopted in close cooperation with the Member States. How is State aid verified? The European Commission has strong investigative and decision-making powers. At the heart of these powers lies the notification procedure which -except in certain instances- the Member States have to follow. (...) State aid sector inquiries can be launched in situations where State aid measures may distort competition in several Member States, or where existing aid measures are no longer compatible with the regulatory framework. Aid measures can only be implemented after approval by the Commission. Moreover, the Commission has the power to recover incompatible State aid. (...) the Commission invites interested parties to submit comments through the Official Journal of the European Union when it has doubts about the compatibility of a proposed aid measure and opens a formal investigation procedure. © European Commission

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