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Some Remarks Concerning the Relationship between ESI Funds and State Aid Rules

Report of the Training on State Aid and ESI Funds, 9-10 May 2016

Gian Marco Galletti

It has been clearly proven that one of the major difficulties encountered by local authorities when implementing operational programmes is that of ensuring compliance with State aid rules. In this respect, this paper, building on the outcomes of the Training on State aid and European Structural and Investment (ESI) Funds, intends to provide some essential notions concerning the legal issues arising from the interaction between the main piece of legislation of ESI Funds, namely Regulation 1303/2013, and the concept of State aid, as laid down in Article 107(1) TFEU. In particular, the paper attempts to identify the circumstances where the notification of the EU co-financing through ESI Funds is not mandatory as the latter is not granted to an ‘undertaking’ or one of the constituents of the concept of aid (State resources, advantage, selectivity, effect on trade, distortion of competition) is not present. To that end, a number of relevant Commission decisions are referred to. Should the notification have to be made, the paper finally warns against a common mistake which may prevent the EU co-financing from being declared compatible with the internal market.

Gian Marco Galletti, PhD Candidate & EU Law Tutor, The Dickson Poon School of Law, King’s College London. The author is solely responsible for the views expressed and analyses provided.


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