Sunday, 13 December 2009

State aid in EU Lisbon Treaty: Procedures and legislation

The blog post State aid in EU Lisbon Treaty: Prohibition and derogations presented the substantive Lisbon Treaty provision on state aid: a wide-ranging prohibition, but with obligatory and discretionary exemptions.

This post offers a reminder of Articles 108 and 109 of the Treaty on the Functioning of the European Union (TFEU), the treaty provisions on state aid procedures and legislation (OJEU 9.5.2008 C 115).

State aid procedures

Review and recovery of state aid, notification by member states and group exemptions from notification requirements are provided for in the procedural Article 108 TFEU:

Article 108 TFEU
(ex Article 88 TEC)

1. The Commission shall, in cooperation with Member States, keep under constant review all systems of aid existing in those States. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the internal market.

2. If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the internal market having regard to Article 107, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.

If the State concerned does not comply with this decision within the prescribed time, the Commission or any other interested State may, in derogation from the provisions of Articles 258 and 259, refer the matter to the Court of Justice of the European Union direct.

On application by a Member State, the Council may, acting unanimously, decide that aid which that State is granting or intends to grant shall be considered to be compatible with the internal market, in derogation from the provisions of Article 107 or from the regulations provided for in Article 109, if such a decision is justified by exceptional circumstances. If, as regards the aid in question, the Commission has already initiated the procedure provided for in the first subparagraph of this paragraph, the fact that the State concerned has made its application to the Council shall have the effect of suspending that procedure until the Council has made its attitude known.

If, however, the Council has not made its attitude known within three months of the said application being made, the Commission shall give its decision on the case.

3. The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the internal market having regard to Article 107, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this
procedure has resulted in a final decision.

4. The Commission may adopt regulations relating to the categories of State aid that the Council has, pursuant to Article 109, determined may be exempted from the procedure provided for by paragraph 3 of this Article.

State aid legislation

Article 109 TFEU is the legal base for EU legislation on state aid:

Article 109
(ex Article 89 TEC)

The Council, on a proposal from the Commission and after consulting the European Parliament, may make any appropriate regulations for the application of Articles 107 and 108 and may in particular determine the conditions in which Article 108(3) shall apply and the categories of aid exempted from this procedure.

Protocols and Declaration

In the context of state aid, the following Protocols and Declarations are relevant: Protocol (No 27) on the internal market and competition, Protocol (No 29) on the system of public broadcasting in the Member States, and Declaration (29) on Article 107(2)(c) of the Treaty on the Functioning of the European Union.


After these two introductory blog posts on the state aid provisions in the Lisbon Treaty, we turn to the latest State Aid Scoreboard from the European Commission in a coming post.

Ralf Grahn

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