Researching State Aid

Students researching in a library Print publication


First published in University Business in the February 2014 edition.

Walker Morris, recently advised the University of Huddersfield on State Aid issues relating to an application for research funding. The article below looks at dealing with State Aid when applying for research grants.

Unless excepted, exempt or previously approved, the giving of any form of State Aid is illegal. State Aid is the provision of an economic advantage from public resources to a selected undertaking (or group of undertakings) operating in a commercial market which has the potential to distort competition and affect trade between member states.

The best way to avoid falling foul of the State Aid rules is ensuring that any grant given does not comply with the four limb test set out in Article 107 of the Treaty on the Functioning of the European Union. A university, when applying for grants for research purposes, may not have control as to whether the test is met, unless it can redesign its proposals to avoid State Aid.

Universities can usually rely on the exemption at Section 7 of the General Block Exemption Regulation 2008, ‘Aid for research and development and innovation’, where grants are for research purposes. Under this exemption, State Aid can be granted for fundamental research, industrial research and/or experimental development, provided the university complies with the parameters of the exemption. State Aid can only be used for eligible costs – personnel, instruments and equipment, building and land, contractual research, technical knowledge, overheads and operating costs. To rely on the exemption, it is crucial to know the total cost, the extent covered by State Aid, and the split between the categories of research to ensure relevant thresholds are met, and to demonstrate the incentive effect – a material increase in the size, scope, total amount spent and/or speed of completion.