Local Government Review — May 2014: state aid latest developments

All public bodies that are in a position to give resources to help businesses need to know about state aid. State aid is when a local or national authority selectively grants public resources to an entity that is engaged in economic activity and provides that entity with an economic advantage.

The Treaty on the Functioning of the European Union states that state aid, in whatever form, which could distort competition and affect trade by favouring certain undertakings or the production of certain goods, is illegal. There are, however, exceptions to this rule. In certain circumstances, the commission may formally approve aid measures within certain limits.

The reason why both public authorities and the recipients of aid need to be concerned is that the European Commission has powers to recover unlawful state aid. The consequences of giving such aid include…

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