State aid — from tax relief to loans and guarantees — acts directly on market competition, and that is precisely why the Law on Competition subjects its grant to special control. The architecture of this page follows the statute itself: prohibition first, then exceptions, the agreement procedure, and the right to challenge granted aid.
The Rule: What Is Prohibited
Article 12 sets the general rule: prohibited is state aid in any form, to an economic agent or to a particular kind of activity, which impedes competition or creates a threat of its impediment. The concept of aid is broad: exemption from, reduction of or deferral of tax, write-off of debt, restructuring, loans on favourable terms, transfer of assets, monetary assistance, guarantees of profit and other benefits.
Article 3 defines the players: an economic agent is a person who, regardless of residency, carries out entrepreneurial activity, while the grantor of state aid is an organ of the state, of an autonomous republic or of a municipality — and also a non-commercial legal entity, a public-law legal entity, an enterprise in which the state’s participating share exceeds 50 per cent, or an intermediary economic agent acting in the state’s name.
The Exceptions: What Needs No Agreement
The statute names the exceptions precisely. Permitted without an agreement with the agency are: social assistance granted to an individual consumer, provided it does not discriminate against the producer of the relevant goods or services; the elimination of the consequences of a natural disaster or force majeure; environmental measures; the exercise of a right or performance of an obligation provided by a legislative act or an international agreement; individual state aid of minimal significance; and a major state project where the government has so decided.
With the agency’s agreement, aid that does not significantly restrict competition may be permitted where granted for the economic development of particular regions or for promoting culture and cultural heritage. The threshold of minimal significance is determined by government decree.
The Procedure: Application and Conclusion
Under Article 13 the agreement procedure is regulated by government decree. The granting authority submits to the agency an application containing information on the purpose, form and amount of the aid and on the recipient, together with a substantiation that the aid to be granted does not substantially restrict competition. The agency examines compliance and issues a conclusion no later than 30 working days; given the volume and complexity of the case the period may extend to 3 months, and failure to issue a conclusion within the set period counts as consent. A request for additional information suspends the period. The conclusion is submitted to the granting authority and to the government.
A negative conclusion does not end the matter: it passes to the government, which takes the relevant decision itself.
De Minimis Reporting and the Register
Article 14 builds the transparency layer: the granting authority of minimally significant aid must annually, by 1 February of the year following the reporting year, provide the agency with information on the amount, timing and recipients of aid granted. The agency ensures entry of this data into the register of de minimis aid; where in maintaining the register it finds that an amount exceeds the established ceiling, it prepares a conclusion addressed both to the granting authority and to its superior body.
Challenge and the Agency
Article 15 is the injured party’s instrument: where granted aid significantly restricts competition on the relevant market or the granting procedure violates the law, a person directly damaged may challenge the granted state aid in court. Article 16 defines the agency itself — the body implementing competition policy, accountable to parliament and the prime minister, independent in its decision-making, whose acts are binding. The agency is financed from the state budget and, no later than 1 May of each year, submits an annual report to parliament, the prime minister and the public.
Frequently Asked Questions
Below are the questions granting authorities and recipient businesses ask most often, answered from the norms of the Law on Competition.
Which aid needs no agreement?
Social aid to individual consumers, force majeure relief, environmental measures, obligations under law or international agreement, de minimis amounts, and major government-decided projects.
Who may be the granting authority?
An organ of the state, of an autonomous republic or of a municipality, a non-commercial legal entity, a public-law legal entity, an enterprise with a state share exceeding 50 per cent, or an intermediary agent acting in the state’s name.
How quickly does the agency conclude?
Within 30 working days, extendable to 3 months for complex cases; silence within the period counts as consent.
Can granted aid be challenged?
Yes — by a person directly damaged, in court, where the aid significantly restricts competition or the granting procedure was violated.
What happens on a negative conclusion?
The matter passes to the government, which takes the final decision on the issue itself.
How We Help on Legal.ge
The lawyers of Legal.ge assist both sides of state aid law: for granting authorities we prepare applications and the substantiation of non-restriction of competition; for recipient and competitor businesses we assess the lawfulness of aid and challenge it in court. Contact us — and your aid scheme will be built in full compliance with competition law.