Illegal state aid in Spain
Thursday 28 June 2012
Two contracts, signed in December 2006, by Bizkaia regional authority (Spain) with Habidite Tecnologies Pais Vasco SA were unlawful, according to the European Commission. The investigation, launched by the Commission in 2009, found that the contracts - one to set up a construction module factory in Alonsotegi and the other on the delivery of 1,500 modular homes - contained state aid. State aid funding is classified as such when no private player would have accepted the contracts under the bidding terms. Such aid is compatible with EU regional assistance guidelines, when investments are made in disadvantaged areas. However, the infraction in the Bizkaia case consisted in the fact that the Commission was not duly notified before the contracts were granted. State aid definitions and provisions are aimed at financing public projects, whose positive effects outweigh the potential distortions created in the internal market by the subsidy.