State aid means action by a (national, regional or local) public authority, using public resources, to favour certain undertakings or the production of certain goods. A business that benefits from such aid thus enjoys an advantage over its competitors. Control of state aids thus reflects the need to maintain free and fair competition within the European Union.
Aid which is granted selectively by Member States or through state resources and which may affect trade between Member States or distort competition is therefore prohibited (Article 107 of the Treaty on the Functioning of the European Union - TFEU). State aid may nonetheless be permitted if justified by objectives of general interest: aid to promote the development of disadvantaged areas or for services of general economic interest, small and medium-sized enterprises, research and development, environmental protection, training, employment and culture.
The European Commission has the task of keeping under review state aid granted by the Member States, whether planned or already operational, in order to ensure that it does not distort competition.
The Commission and the Court of Justice have placed a very broad interpretation on the concept of "aid" as regards the body granting it (the state itself, a regional or local authority, a body over which the state exercises a dominant influence, directly or indirectly, a private company or a publicly owned company operating under private law, etc.), its form (direct or indirect aid, such as relief of a firm's financial burdens) and its purpose.