3.3.5 Distorts or threatens to distort competition and affect trade between Member States

A measure granted by a Member State is considered to distort competition when it is liable to improve the competitive position of the recipient compared to other undertakings with which it competes. A distortion of competition is generally found to exist when a Member State grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition. Public support is liable to distort competition even if it does not help the recipient undertaking to expand and gain market share. It is enough that the aid allows it to maintain a stronger competitive position than it would have had if the aid had not been provided.1

As regards the conditions relating to the effect on trade between Member States and the distortion of competition capable of being caused by the aid, it should be noted that, for the purpose of categorising a national measure as State aid, it is not necessary to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, it being necessary only to examine whether that aid is liable to affect trade and distort competition.2

Public support can be considered capable of having an effect on trade between Member States even if the recipient is not directly involved in cross-border trade.3 However, an effect on trade between Member States cannot be merely hypothetical or presumed. It must be established why the measure is liable to have an effect on trade between Member States, based on the foreseeable effects of the measure.4