2.3.1 Criterion 1: The aid must be granted by the state or through state resources

Unsurprisingly, an aid measure can only be categorised as “State aid” when it is granted by the State. However, the notion “Member State” does not only include the central government, but also the regional and local governments.1 In that regard, it has been argued in the literature that the term “government aid” would actually better capture the essence of this criterion than the term “State aid”.2

The phrase “granted by the state or through state resources” may be confusing. It can be understood as one criterion, but it can also be interpreted as two alter native criteria. According to the latter interpretation, only one of the two criteria has to be met. If, for instance, it is established that a Member State grantsaid, then it does not have to be proven that State resources are involved. In the past, the case-law of the Court was not always clear on this matter, but in 1993, the Court decided in case C-189/91 that the terms “granted by the state” and “through state resources” are no alternatives.3 Thus, for a measure to satisfy the criterion “granted by the state or through state resources”, it must be, first, granted directly or indirectly through State resources, and second, be imputable to the State. This means that two cumulative requirements have to be met.4

For a measure to be capable of being categorised as State aid, it should be granted, directly or indirectly, through State resources. This criterion is not fulfilled when the measures have no budgetary effect for the State. This means that regulatory measures which have no impact on the budget of the State arenot caught by Article 107 TFEU. For instance, when a State relaxes the anti- pollution regulation, this may confer an advantage to certain undertakings. However, since the relaxation of the anti-pollution regulation has no impact on the budget of the State, no state resources are involved, so this regulatory measure does not fall under the scope of Article 107 TFEU.5

The case-law from the Court has clarified the notion of “State resources”. The Court has held that a measure can be capable of being regarded as State aid within the meaning of Article 107 TFEU, even if there is no transfer of state resources.6 For instance, a tax exemption does not involve a transfer of state resources, but it nonetheless has a budgetary impact and is therefore capable of being regarded as State aid.

If the aid is directly granted by the State, then it is obvious that the criterion “granted by the state or through state resources” is met. However, some situa- tions are less clear-cut. For instance, if aid is granted through an intermediate body.

There is an entire body of case-law about the question whether aid is imput able to the State. The imputability to the State of an aid measure taken by a public undertaking may be inferred from a set of indicators arising from the circumstances of the case and the context in which that measure was taken.7

The Court has held that no distinction is to be drawn between cases where the aid is granted directly by the State and those where it is granted by public or private bodies which the State establishes or designates with a view to admin istering the aid. EU law cannot permit the rules on State aid to be circum vented merely through the creation of autonomous institutions charged with allocating aid.8

Even if the State is in a position to control a public undertaking and to exercise a dominant influence over its operations, actual exercise of that control in a particular case cannot be automatically presumed. A public undertaking may act with more or less independence, according to the degree of autonomy left to it by the State. Therefore, the mere fact that a public undertaking is under State control is not sufficient for measures taken by that undertaking to be imputed to the State. The public authorities must be regarded as having been involved, in one way or another, in the adoption of those measures.9

If the body cannot take the measure without taking account of the requirements of the public authorities, then it can be concluded that the measure is the result of the actions of the State.10 As a result, it is capable of being categorised as State aid.