EU rules on State aid
European Union law generally prohibits State aid to undertakings (Treaty on the Functioning of the European Union (TFEU), Article 107(1)). Public aid granted to an undertaking may give the company in question a selective financial advantage, which may distort competition and the functioning of the internal market.
However, public aid to undertakings may be compatible with the internal market if it promotes general economic development and the objectives of the TFEU. The European Commission has adopted detailed rules on the kinds of state aid that are allowed and the procedures to be followed when grating aid.
EU State aid rules apply if the aid measure fulfils all the criteria for State aid:
- public resources are channelled to public or private undertakings (‘undertaking’ refers to any entity engaged in economic activity, irrespective of its legal form)
- the advantage is selective, i.e. only conferred on certain undertakings
- the measure distorts or threatens to distort competition by favouring the beneficiary
- the measure affects trade between EU Member States
Ministry of Economic Affairs and Employment (MEAE) coordinates the implementation of the EU State aid rules in Finland, except for aid measures falling within the administrative branch of the Ministry of Agriculture and Forestry.
The MEAE is responsible for the following tasks:
- consulting the authorities granting aid and notifying the European Commission of all State aid measures
- coordinating State aid complaints between national authorities and the European Commission
- preparing the national regulation required by the EU State aid rules
- participating in the development of the regulation at the EU institutions and in other international cooperation
- reporting annual aid expenditure to the Commission in cooperation with the national authorities granting aid
Support for business activities is always applied for from the authority granting the aid, usually in connection with a national aid scheme. In Finland, authorities grating State aid include Tekes – the Finnish Funding Agency for Innovation, Finnvera, centres for economic development, transport and the environment, regional councils, municipalities and joint municipal authorities.
Further information: olli.hyvarinen(at)tem.fi, tanja.muller(at)tem.fi
The Association of Finnish Local and Regional Authorities provides legal guidance on EU State aid rules for municipalities and joint municipal authorities (senior legal counsels Pirkka-Petri Lebedeff and Katariina Huikko).