State Aid

The control over legal rules for the award of state aid seeks to minimize the unjustifiable advantages that some participants in the market or industry may have in competition at the expense of others. The goal of such control is to maintain, or restore, healthy market conditions and effective competition. Preferential treatment of selected companies is not conducive to long-term prosperity and economic growth, because firms that are not beneficiaries of state aid may get into insurmountable difficulties and will have to withdraw from the market. Therefore, as a general rule, state aid is not permitted, and may be granted only under extraordinary circumstances. The Office had been issuing rulings on the conformity of state aid awarded by the Czech Republic with the European Community law for a total of four years, until May 1, 2004. With the admission of this country to the European Union, that jurisdiction passed onto the European Commission. The Office continues to function as a monitoring, coordinating and consulting body that advises governmental agencies on the handling of individual cases. An example how the decision of an antimonopoly institution may generate money for the Government is the illegal state aid in the case of the OKD privatization. The Czech government decided to sell its share in this company to KARBON INVEST for 2.25 billion Czech crowns. However, in 2004, the Office blocked the transaction, which it viewed to be an illegal state aid. As it turned out, the market value of the share was actually higher by almost two billion Czech crowns.

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