3.36 State Aid is the giving of financial advantage by the state to certain undertakings over others, which has the potential to distort trade between EU member states and the potential to distort competition. It can give rise to complex deliberations about what is or is not acceptable practice by public authorities. The European Commission has considerable powers to monitor, control and ultimately prohibit the forms and levels of aid provided to commercial undertakings by EU Member States or through State resources.34
3.37 In the context of JVs the risks of problems arising could be mitigated by ensuring parity in terms between the public and private sectors and the use of a competitive procurement to find the JV partner. State Aid considerations do not apply only when a JV is set up - they apply to any of the various ways in which financial advantage might be given by the state so this could include exit arrangements or transactions during the life of the JV.
3.38 State Aid rules need not be a large hurdle to overcome, especially if the JV is set up with the rules in mind from an early stage in the project. An analysis of the State Aid position should therefore be undertaken at an early stage.
3.39 The application of the rules can be complex and if there are any doubts related to specific projects these should be addressed at an early stage to the State Aid Branch at BIS35 or legal advice sought. Further information on State Aid can also be found in Annex C.
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34 This includes public funds administered by the Member State through central, regional, local authorities or other public or private bodies designated or controlled by the State.
35 BIS State Aid Branch, email: bis.enquiries@bis.gsi.gov.uk or telephone 020 7215 5000 .