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It is with great pleasure that I welcome today's seminar, which aspires to be the first of a series of topics that the Legal Service Academy is launching, aiming at training in areas where legal science meets economics.
First of all, I would like to thank the Commissioner of State Aid Control for her immediate response to our request to organise today's seminar and all the officials of your Office who, through their presentations, I am sure, will contribute to the success of today's seminar.
The subject of today's seminar, although, at first sight, it may be perceived that it concerns a limited number of lawyers of my Office, nevertheless, it is a fact that State aid issues arise in several cases, which are handled by the Lawyers of the Republic [AND THIS IS PROVED BY THE NUMBER OF PARTICIPANTS TODAY]. In particular, these issues can arise either through the control of any bill undergoing legislative control, or through the legislative control of contracts in which the State participates, or through the handling of cases both in the Administrative Court and in the Provincial Courts by filing actions to claim compensation for the granting of illegal State aid, just to mention a few illustrative examples. Therefore, the aim of today's training is to provide an additional knowledge base for the handling of important cases that ultimately affect the economic life of the country.
EU legislation in the field of State aid is part of the European Union's general policy of ensuring and maintaining conditions of healthy competition and is based on primary law and the relevant articles of the TFEU. This illustrates the importance the Union attaches to the control of Member States in their interventions in the economy. Primary law, as supplemented by a wealth of secondary legislation, lays down the terms and conditions for the granting of State aid to undertakings, and together they have been the subject of interpretation in a number of decisions of the Courts of the Union.
The concept of State aid is an objective and legal concept defined directly by the Treaty. According to Article 107 TFEU, "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 internal market, save as otherwise provided in the Treaties." This is clearly a very broad definition.
Despite the general prohibition of state aid, in some cases government intervention is necessary for an orderly and fair economy. Therefore, the Treaty leaves room for certain policy objectives (for example, addressing serious economic disturbances) for which State aid may be considered compatible.
These exceptions are contained in the State aid legislation and stem from the notion that State aid often has a countervailing effect, either by facilitating the mitigation of the effects of any malfunctioning of free market mechanisms or by providing targeted support to undertakings in areas such as research and development or by addressing exceptional needs (and I cite for example the framework that allowed State intervention to address serious economic disturbances caused by the
The State aid control system provided for in the Treaty is based on the exclusive competence of the European Commission to assess the compatibility of State aid measures with the internal market. Prior notification by Member States of all planned aid measures is compulsory, except in cases covered by a regulation or a block exemption decision. The Member State concerned may not put the measure into effect until the Commission has adopted a decision approving the aid measure.
It is clear that the early diagnosis of the character of a measure as a State aid measure and its treatment in accordance with the framework set by the European Union safeguards the interests of the Republic of Cyprus and avoids infringement proceedings against the Republic, but also further complications, if one considers that, in the event of a decision by the European Commission that an aid measure is not compatible with the common market, the Commission will not be able to take action against the Republic of Cyprus.
