Edited by Christopher Bovis
Public procurement, as well as State aid, constitutes instruments, which are traditionally used by Member States to define or direct their economic policies. Article 3 of the Treaty of the European Union stresses the need for the European Union (EU) to establish an internal market. In order for the internal market to function, Articles 3 and 4 of the Treaty of the Functioning of the European Union (TFEU) provides the EU and the Member States with competence to establish the necessary rules. The public procurement rules aim to prevent the foreclosure of the internal market. If left unregulated, Member States are likely to favour national undertakings. Hence, the award of public contracts by public authorities in the Member States is subject to the principles of equal treatment, non-discrimination, transparency and proportionality. The public procurement rules open the market for public contracts to competition and ensure compliance with basic EU law principles. The State aid rules on the other hand aim to prevent trade between Member States from being affected by advantages granted by public authorities. The purpose of State aid regulation is therefore to avoid distortions of the competition on the market by States granting subsidies and other financial advantages to undertakings. Such State measures can distort intra-EU competition both by excluding foreign competitors, as well as by attracting foreign competitors to a particular market or region. State aid can also have the effect of creating subsidy races between Member States.
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