stateaid

State aid refers to any measure by which a government or public authority confers an economic advantage on a select entity through state resources. Such advantages can take the form of direct grants, loans on favorable terms, guarantees, equity stakes, tax concessions, or the provision of goods or services below market value, and may cover support to firms, sectors, or specific projects. State aid is typically evaluated against the principle that public intervention should not unduly distort competition or affect trade within the jurisdiction.

In the European Union, state aid is governed by Article 107 of the Treaty on the Functioning of the European Union. The EU treats most forms of selective support as state aid and subjects them to notification and approval by the European Commission. Aid can be declared compatible with the internal market if it serves a legitimate objective and is proportionate and efficient, or it can be exempted under de minimis thresholds or sector-specific block exemptions. When aid is found incompatible, it may be required to be repaid.

Typical categories include regional development subsidies, environmental or research incentives, rescue or restructuring aid for distressed firms, and preferential loans or tax incentives. The framework also includes rules on transparency, impact assessment, and state aid control. Critics argue that state aid can distort competition, encourage inefficiency, or undermine budgetary neutrality, while proponents view it as a tool to address market failures, promote public policy objectives, and catalyze investment.

Outside the EU, many countries use similar concepts under different names, with varying degrees of oversight. The governance of state aid continues to evolve with policy goals such as supporting innovation, sustainable growth, and regional cohesion.