The Finnish Consumer and Competition Authority ("FCCA") has recently published a policy brief on detecting and assessing competitive effects arising from state grants to the voluntary sector in accordance with the Finnish Act on Discretionary Government Transfers ("Act"). State grants should not be confused with state aid. Publicly funded state grants are used for supporting vital functions of civil society. Nearly four billion euros are distributed in over 300 state grant applications annually.
According to the Act such goods and services whose market-based supply and demand fail to meet the ideal level in society are eligible for support by the state. Pursuant to the Act, a state grant must not cause any significant competition or market effects. According to FCCA, consolidating the assessment of competitive effects requires that the application and granting processes are unified.
State grants can distort competition especially in situations where a private operator offers a same or similar service to one in receipt of public support. A carelessly granted subsidy (whose competitive effects were not anticipated), or misuse of a state grant either intentionally or unknowingly, may lead to negative competitive effects. The FCCA states that the features of supported activities shall be recognised when assessing competitive effects. Currently the ambiguity of terminology and insufficient knowledge base impede the assessment of competitive effects.
In the future state grants will be applied through a unified website (haeavustuksia.fi) that brings together all state grant applications. This aims also to allow anyone to view the grants applied for, the amounts granted and paid out, and the purpose of the grants.
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