Effect on intra-Community trade

In most cases, the effect on intra-Community trade requirement poses little difficulty as any significant quantity of aid granted to particular undertakings or to the production of certain goods will strengthen the beneficiary’s competitive position compared to its competitors throughout the Community and thereby the aid will have the potential to affect intra-Community trade. In the past, the Commission has considered that where there is a problem of overcapacity even a small amount of State aid may be sufficient to produce harmful effects on competition within the Community and, hence, affect intra-Community trade. In Italy v Commission,31 the Court held that trade was clearly affected where the lowering of social security charges reduced labour costs and strengthened the competitive position of the Italian undertakings, as shown by an increase in exports from Italy. For activities of a local nature, such as the provision of local services, there may be no affect on intraCommunity trade. It should be stressed that measures which do not affect intraCommunity trade do not constitute aid nor require notification. As part of the Commission’s current package of initiatives to modernise State aid enforcement the Commission has published a draft communication regarding State aid that has a limited effect on trade (LET) and which will continue to require notification but be subject to simplified and expedited procedures.32