Chapter 12: The Relationship between State Aid and the Single Market
Andrea Biondi and Martin Farley* I. INTRODUCTION Since the adoption of the Treaty of Rome in 1957 the creation of the European single market has been fundamental to the European integration process. One of the principal methods by which the rules of the single market have sought to achieve European-wide integration has been through the imposition of limits on national economic policies so as to ensure the free-flow of trade. Central to this aim is the prohibition on Member States from seeking to influence or affect inter-State trade. This prohibition is embodied within the free movement provisions, which outlaw regulatory measures that create an obstacle to the free movement of goods, capital, workers, or services. In addition to the protection of these ‘four freedoms’, the Treaty of Rome, and now the Treaty on the Functioning of the European Union (TFEU), also included provisions prohibiting the introduction of discriminatory tax measures by Member States that could have an effect on inter-State trade, as well as rules governing the creation of State monopolies. Each set of these provisions, however, is a specific embodiment of a more fundamental, underlying principle: Member States must not favour certain (usually national) undertakings to the disadvantage of undertakings from other Member States. It is this basic premise that forms the basis on which the realisation of the single market is built, and a principle that is expressly embodied in Articles 107 and 108 TFEU, which govern the granting of financial aid by Member States to private undertakings....
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