State Aid is a complex issue which needs to be appropriately considered and managed. All projects containing any UK and EC government funding should be brought to the attention of R&IS for advice at the earliest opportunity, before submission, to enable any State Aid issues to be addressed to ensure the minimum impact on the project application process as well as on any resulting award.
The definition of State Aid stems from Article 87(1) of the EC Treaty which states: "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 shall, in so far as it affects trade between Member States, be incompatible with the common market".
This definition translates into 5 tests, all 5 of which must be met for State Aid to be present:
· the Aid is granted by a Member State or through state resources (e.g. lottery and European funds);
· the Aid confers an advantage on the recipient;
· the Aid favours certain commercial undertakings or the production of certain goods (i.e. selective in nature);
· the Aid distorts or has the potential to distort competition;
· the activity is tradable between Member States and the Aid has the potential to effect trade.
Where State Aid is present, there are a number of schemes (e.g. the R&D Block Exemption & De Minimus) under which such State Aid may be deemed to be allowable State Aid. The level of allowable State Aid is dependent on multiple factors including the scheme, the nature of the activity (e.g. is it research and what type of research), the status of the organisations involved and their status in the project. Advice may need to be sought externally and therefore R&IS should be contacted at the earliest opportunity prior to submission of a project to a funder.
Any State Aid that is not allowable is deemed illegal State Aid and the European Commission has the power to require repayment with interest from the State Aid beneficiary. State Aid beneficiaries can also take the granting authority to court for damages against illegal aid recovered. Therefore, the University not only has the possibility of being a recipient of illegal State Aid as a State Aid beneficiary, but also could be held accountable for passing on any illegal State Aid to our collaborators.