b'To avoid conferring a benefit, the authority must ensure that it does not indirectly subsidise the undertaking, and treats it on arms length in the same way as any other third party contractor. In assessing this criterion, the Commission has recognised the market economy investor principle (MEIP) which provides that, if the state is acting in the same way as a private investor would in similar circumstances, no unlawful benefit is conferred. In other words, would an arms length commercial investor, without the policy drivers and political pressures of a local authority, have entered into the same arrangements purely for commercial purposes? MEIP can be applied to a number of potential measures for the provision of assistance by the authority to a company. Typical examples of direct and indirect subsidisation are: a local authority loan on terms more favourable than generally available commercial rates; grant funding; the provision of guarantees or indemnities; and other assistance, eg premises, ICT equipment, vehicles, etc which are provided free of charge, at a subsidised rate or cross-subsidised in some other way. If a State aid issue arises, the assistance proposed must be approved in advance by the Commission through: approval by formal notification; the assistance being compatible with an existing approved notified scheme; or the assistance being compatible with one of the State Aid block exemptions issued by the Commission, or it must come within the de minimis exemption which currently allows for aid of up to 200,000 over a three-year period. Bear in mind that this is all aid received, not just from one public body, on one specific project and must be assessed on a rolling basis. The consequences of unlawful State aid are potentially extremely serious, including damages payable by the authority to any third parties who can show they have suffered a loss as a result of the aid, and recovery of the aid (plus interest) from the recipient. The company will probably need to take its own legal advice in relation to the competition law issues which may arise from such arrangements. The result of the EU referendum is likely to significantly alter the law on State aid. Until the UK leaves the EU and the results of the various negotiations are known, it is difficult to predict what form of State aid law will exist in the UK going forward.There is a more in-depth chapter on State aid issues in Rob Hanns Local Authority Companies and Partnerships written by contributing law firm Browne Jacobson.63'