EU law prohibits the provision of aid by a member state to an undertaking unless that aid has been authorised in advance by the Commission. The basis of this is that national governments should only intervene in the operation of markets in very exceptional circumstances.
Cash payments and subsidies are the most obvious forms of aid but also other forms of favourable treatment, from planning waivers to "soft" investment terms, to the grant of guarantees and other less direct forms of assistance may also be prohibited.
Where an undertaking has received illegal aid, there is the real risk that the aid will require to be repaid, whilst for competing businesses, they will have suffered a detriment as a result of the illegal aid and will be entitled to be compensated.
With the substantial public sector in Scotland, many decisions and actions by a public authority will have potential State Aid issues.
Through our Competition Group and our Public Sector and Government Group we have the experience and the expertise to assist clients in both the private and the public sector in dealing with State Aid arguments.
We have successfully taken a case to the EU Commission and secured a decision against the UK in relation to an investment in a business on non-commercial terms. We continue to advise in many sectors in which private and public sector operations are in competition to ensure as level a playing field as possible.