COMPETITION • EUROPEAN LAW • STATE AID
The general principle of prohibition laid down in Article 107(1) TFEU includes exceptions which will make it possible to find that certain State aid are compatible with the internal market.
Article 107(2) defines three categories of aid which are compatible ipso jure:
– aid having a social character i.e. granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned;
– aid to make good the damages caused by natural disasters or exceptional occurrences: compatibility is subject to the condition that the causal event is exceptionally serious and that the amount of aid paid is directly related to the damage caused; according to Regulation No 651/2014, damage caused by earthquakes, avalanches, landslides, floods, tornadoes, hurricanes, volcanic eruptions and wildfires of natural origin are events that may constitute a natural disaster;
– aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, granted to compensate for the economic disadvantages caused by the division. The rule regarding this category of aid is interpreted narrowly and excludes differences in development between the original and the new Länder which may be explained by causes other than the division of Germany, such as the establishment of different politico-economic systems on either side of the frontier.
The Commission may have to supervise such aid but this is limited to verifying that it meets the legal definition. The conditions are in effect interpreted narrowly and the Commission must authorize the aid where the conditions of granting are met.