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About state aid

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On 1 January 2016, the Antimonopoly Office of the Slovak Republic as an independent administration body took over the competences in the field of state aid from the Ministry of Finance of the Slovak Republic. New State Aid Act – the 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 new State Aid Act, a central register has been established in order to enable the Slovak Republic to fulfill the EC's 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 detriment of others. The goal of such control is to maintain, or restore, healthy market conditions and effective competition. The preferential treatment of selected enterprises is not conducive to long-term prosperity and economic growth, because enterprises 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.

The 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 different constituent elements of state aid.

As a state aid can be considered a measure for the benefit of enterprises that meet the following features:

  • there has been the intervention by a state or from state resources which can take a variety of forms (e. g. grants, interest and tax reliefs, guarantees, the government holdings of all or part of an enterprise, or the provision of goods and services on preferential terms, etc.);
  • the intervention gives a recipient an advantage on a selective basis, for example it is granted to specific enterprises or industry sectors, or to enterprises located in specific regions,
  • competition has been or may be distorted,
  • the intervention is likely to affect a trade between Member States.

State aid is defined as an advantage in any form of 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 a space 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 a notification procedure, which – except for certain instances – the Member States have to follow.

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

  • aid covered by block exemption regulations (giving an automatic approval for a range of aid measures defined by the European Commission),
  • de minimis aid not exceeding EUR 200 000 per an undertaking over any period of 3 fiscal years (EUR 100 000 in road transport sector) or
  • aid granted under an aid scheme already authorized by the European Commission.