Detailed rules on the application of Article 108 on the functioning of the European Union EC Treaty
With a view to providing a procedural regulation on the application of Article 108 (ex-Article 88) of the TFEU and in order to increase the transparency and legal certainty of state aid, the Council has adopted this Regulation on the implementation of state aid.
Save as otherwise provided in regulations made pursuant to Article 109 (ex-Article 89) of the Treaty or to other relevant provisions thereof, any plans to grant new aid must be notified to the Commission in sufficient time by the Member State concerned, which is required to provide all necessary information in order to enable the Commission to take a decision. Where the Commission considers that information provided by the Member State is incomplete, it may request all necessary additional information.
Any notifiable aid must not be put into effect before the Commission has taken or is deemed to have taken a decision authorising it (standstill clause). It must be notified on a notification form as set out in Annex I, Part I to Regulation (EC) No 794/2004. From 1 January 2006 notifications will be transmitted electronically, unless otherwise agreed between the Commission and the notifying Member State.
Where, after a preliminary examination, the Commission finds that the notified measure raises doubts as to its compatibility with the common market, it will decide to initiate formal investigation proceedings pursuant to Article 108, Paragraph 2 (ex-Article 88, Paragraph 2) of the Treaty. The decision will summarise the relevant issues of fact and law, include a preliminary assessment by the Commission of the proposed measure and set out the doubts as to its compatibility with the common market. The Member State concerned and interested parties may submit comments within a period of less than one month, which may be extended by the Commission.
The formal investigation proceedings will be closed by means of a decision. The Commission may find that:
- the notified measure does not constitute aid;
- the doubts as to the compatibility of the notified measure with the common market have been removed and the aid is compatible with the common market (positive decision). The Commission may attach to a positive decision conditions subject to which aid may be considered compatible and lay down obligations to enable compliance with the decision to be monitored (conditional decision);
- the notified measure is incompatible with the common market and may not be put into effect (negative decision).
If the Member State fails to comply with a conditional or negative decision, the Commission may refer the matter to the Court of Justice direct.
The Member State concerned may withdraw the notification before the Commission has taken a final decision. It may also amend an aid that has already been notified and approved. The amendments, notified using the form given in Annex II to Regulation (EC) No 794/2004, should not influence the assessment of the aid measure's compatibility with the common market. The increase resulting from an amendment may not exceed 20% of the initial budget of an existing aid scheme.
The Commission may revoke a decision where it was based on incorrect information.
Where the Commission has in its possession information from whatever source regarding alleged unlawful aid, it must examine that information without delay. It may request information from the Member State concerned.
The Commission may, after giving the Member State concerned the opportunity to submit its comments, adopt a decision requiring the Member State to suspend any unlawful aid (suspension injunction).
In the same way, the Commission may adopt a decision requiring the Member State provisionally to recover any unlawful aid until it has taken a decision on the compatibility of the aid with the common market (recovery injunction) if the following criteria are fulfilled:
- according to an established practice, there are no doubts about the aid character of the measure concerned, and
- there is an urgency to act, and
- there is a serious risk of substantial and irreparable damage to a competitor.
The Commission may authorise the Member State to couple the refunding of the aid paid illegally with the payment of rescue aid to the firm concerned.
If the Member State fails to comply with any of the above-mentioned injunctions, the Commission is entitled to refer the matter to the Court of Justice and apply for a declaration that the failure to comply constitutes an infringement of the Treaty.
Where negative decisions are taken in cases of unlawful aid, the Commission will decide that the Member State concerned must take all necessary measures to recover the aid from the recipient (recovery decision). The Commission would not require recovery of the aid if this were contrary to a general principle of Community law. The powers of the Commission to recover aid will be subject to a limitation period of ten years.
The Commission may obtain all necessary information from the Member State concerned for the review, in cooperation with the Member State, of existing aid schemes pursuant to Article 108, Paragraph 1 (ex-Article 88, Paragraph 1) of the Treaty. Where it concludes that an existing aid scheme is not or is no longer compatible with the common market, it will issue a recommendation proposing appropriate measures to the Member State concerned. The recommendation may propose:
- substantive amendment of the aid scheme, or
- introduction of procedural requirements, or
- abolition of the aid scheme.
Any interested party may submit comments following a Commission decision to initiate the formal investigation procedure and may inform the Commission of any alleged unlawful aid and any alleged misuse of aid.
Where the Commission has serious doubts as to whether decisions not to raise objections, positive decisions or conditional decisions are being complied with, the Member State concerned must allow the Commission to undertake on-site monitoring visits. The officials authorised by the Commission to check compliance will be empowered:
- to enter any premises and land of the undertaking concerned;
- to ask for oral explanations on the spot;
- to examine books and other business records and take copies.
Officials authorised by the Member State in whose territory the monitoring visit is to be made may be present at the monitoring visit.
Member States must send the Commission annual reports on all existing aid schemes with regard to which no specific reporting obligations have been imposed by a Commission decision. Member States must transmit annual reports to the Commission electronically at the latest by 30 June of the current year.
The Commission will be assisted by an Advisory Committee on State Aid, composed of the representatives of the Member States and chaired by the representative of the Commission. The Committee must, among other things, be consulted before the Commission adopts any implementing provision concerning the form, content and other details of notifications, or annual reports.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Regulation (EC) No 659/1999||
OJ L 83 of 27.3.1999
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Regulation (EC) No 794/2004||
OJ L 140 of 30.4.2004
This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.
- For details on how to contact the European Commission regarding state aid, see the DG Competition webpage.