State Aid

On 1 January 2016, the Antimonopoly Office of the Slovak Republic as an independent body took over the competencies in the field of state aid from the Ministry of Finance of the Slovak Republic. New State Aid – Act No 358/2015 Coll. on State Aid strengthened the position of the aid coordinator and thus significantly widened the scope of its tasks and competences. On the basis of the new State Aid Act, a central register has been established in order to enable the Slovak Republic to fulfill the EC transparency requirements.

The control over regulations under which state aid is provided seeks to minimize the unjustifiable advantages that some participants in the market or industry may have in competition at the expense of others. The goal of such control is to maintain, or restore, healthy market conditions and effective competition. Preferential treatment of selected companies is not conducive to long-term prosperity and economic growth, because firms that are not beneficiaries of state aid may get into difficulties and will have to withdraw from the market. Therefore, as a general rule, state aid is not permitted, and may be granted only under extraordinary circumstances.

Article 107(1) of the Treaty on the Functioning of the European Union defines state aid as ‘any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods […], in so far as it affects trade between Member States’. This clarifies the different constituent elements of the state aid.

To be State aid, a measure needs to have these features:

there has been an intervention by the state or through state resources which can take a variety of forms (e.g. grants, interest and tax reliefs, guarantees, government holdings of all or part of a company, or providing goods and services on preferential terms, etc.);

the intervention gives the recipient an advantage on a selective basis, for example to specific companies or industry sectors, or to companies located in specific regions

– competition has been or may be distorted;

– the intervention is likely to affect trade between member states.

State aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities.

Despite the general prohibition of state aid, in some circumstances government intervention is necessary for a well-functioning and equitable economy. Therefore, the Treaty on the Functioning of the European Union leaves room for a number of policy objectives for which state aid can be considered compatible. The legislation stipulates these exemptions. The respective regulations 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 European Commission adopts new legislation in close cooperation with the member states.

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.

EU state aid control requires prior notification of all new aid measures to the European Commission. Member states must wait for the European Commission’s decision before they can put the measure into effect. There are a few exceptions to mandatory notification. These include mainly:

aid covered by block exemption regulations (giving automatic approval for a range of aid measures defined by the European Commission),

de minimis aid not exceeding 200 000 eur per undertaking over any period of 3 fiscal years (100 000 eur in the road transport sector) or

aid granted under an aid scheme already authorized by the European Commission.