Treaty on the functioning of the European Union - state aid and sporting legacy facilities within the European Union.

• Author: Lawrence, Steve

State subsidy of private companies is incompatible with the common market

The debacle over the legacy use of the London Olympic Stadium has highlighted the difficulties which arise in respect of legacy use of large scale publicly funded sports facilities following major international sports events.

An issue arises for bidders and organisers because, beyond the life of the events themselves, the facilities created will have a continuing function. That continuing function will, in some cases, involve use by private undertakings in the context of their day-to-day operations in direct competition with other European undertakings.

In particular, difficulties are now arising in respect of sporting events organised by the IOC and FIFA within the European Union and especially in respect of the continuing use of stadia for football. Professional football clubs are private undertakings.

In essence any legacy framework must be constructed in such a way as to ensure that illegal state aid does not accrue to private businesses in competition with other such businesses within the EU.

The Treaty on the Functioning of the European Union is clear on the issue of state aid:

Under Article 107 it states: 'Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.' Exceptions

There are exceptions and clear guidance is given particularly to do with infrastructure as follows:

'Under certain conditions, support for infrastructure might not constitute State aid within the meaning of Article 107 (1) TFEU. General measures which do not favour certain undertakings or productions, but benefit the economy as a whole, are not considered State aid. For the constructions of multifunctional stadiums etc. it would have to be inter alia assessed whether the site is open to all users on non discriminatory conditions. Sports infrastructures dedicated to or benefitting certain undertakings would not constitute a general measure. There might not be an advantage in the meaning of Article 107 (1) TFEU if the user of the infrastructure pays the market price for its use.' Powers of redress

There is no mechanism for the imposition of punitive fines in cases where illegal state aid does arise, instead...