State aid to banks (IVOR nr. 109) 2018/2.3.2:2.3.2 Criterion 2: The recipient of aid: “undertaking”

State aid to banks (IVOR nr. 109) 2018/2.3.2

2.3.2 Criterion 2: The recipient of aid: “undertaking”

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

The recipient of the aid must be an undertaking. Article 107 TFEU covers both private and public undertakings.1 The notion of “undertaking” under Article 107 TFEU is the same as under Article 101 TFEU. It should be noted that the term “undertaking” is not defined in the Treaty. However, as with many other concepts in the Treaty, the Court has interpreted the concept of undertaking. In C-41/90, the Court has given the following definition: undertakings are natural or legal persons engaging in economic activities.2

This definition raises another question: what is an “economic activity”? Also this concept is interpreted in the case-law: an economic activity is any activity consisting in offering goods and services on a given market.3 In that regard, it should be noted that some activities belong to the exclusive competence of the State, such as issuing passports. The State has reserved these activities for itself. They relate to the exercise of state prerogatives. As a result, there is no market for such activities, and they therefore cannot be regarded as economic activities.

The decisive issue is thus whether the entity is engaging in an economic activity. The size of the entity, its legal status or the way in which it is financed are not relevant when determining if an entity can be classified as undertaking. Also a profit motive is not required, so also non-profit organisations are capable of being categorised as undertaking.4

The Court has given a broad interpretation of the notion of “undertaking”. Consequently, several organisations which at first sight might not appear to be undertakings, fall under the scope of the State aid rules. Hospitals, museums, theatres and professional football clubs are examples of organisations that have been categorised as undertakings. It is important to note that an entity is only an undertaking with respect to its economic activities.5 If an entity engages in both economic activities and other activities, then it is only an undertaking with respect to its economic activities. As a result, the State aid rules only apply to those activities. This may be the case for museums and theatres who engage in both purely cultural activities and more commercial activities.6

Deze functie is alleen te gebruiken als je bent ingelogd.