Article 108(3) TFEU and the standstill obligation

There is one State aid rule that can trigger years of legal risk if ignored: the standstill obligation under Article 108(3) TFEU. In simple terms, where a measure constitutes new aid that requires notification, it must not be implemented before the Commission gives the green light. This is not a technical detail. It is a directly effective rule, meaning private parties can rely on it before national courts to freeze, unwind, or neutralise unlawful implementation.

Standstill is not a “let’s notify and carry on” approach. It is a genuine prohibition: no payment, no implementation, no advantage until the procedure is closed. If the advantage is granted anyway, the system contains tools to restore the situation, even where the Commission may later find the aid compatible.

Why is it so strict? Because once an undertaking receives the advantage, the competitive landscape can already be distorted. The rule is preventive by design. That is also why EU law assigns an enforcement role to national courts, requiring them to secure the effectiveness of Article 108(3).

A crucial distinction follows. Aid may later be deemed compatible on substance, but if implemented without respecting Article 108(3), it is procedurally unlawful. That unlawfulness is enough to trigger remedies and litigation.

National courts can adopt interim measures where fast relief is needed. A particularly practical remedy supported in the enforcement guidance is to place the aid amount (and illegality interest) on a blocked account, so the funds do not remain at the beneficiary’s disposal while the substance is assessed.

Importantly, standstill is not satisfied merely by ordering interest while the money remains available to the undertaking. The idea is straightforward: without the unlawful aid, the undertaking would not necessarily have had equivalent funds at its disposal on the same terms.

Finally, even where the Commission ultimately adopts a positive compatibility decision, EU case law and commentary indicate that the procedural breach does not simply vanish. Depending on the timing and circumstances, the beneficiary may still be liable for illegality interest for the period of unlawful availability.

General information, not legal advice.