Emerging Trends at the National and EU Level
Edited by Pier L. Parcu, Giorgio Monti and Marco Botta
Chapter 3: State aid control: recent developments and some remaining challenges
Article 107 TFEU, instead of providing a definition of State aid, identifies five elements to an incompatible aid: (i) the use of State resources; (ii) the measure must confer an advantage to certain firms; (iii) the advantage must be selective; (iv) the measure must distort competition; and (v) the measure must affect trade between Member States. These five elements are not equally important. The case law developed so far has underlined the importance of ‘the use of State’s resources’ and of ‘selectivity’. The other criteria, while certainly considered, are of minor importance. One of this chapter’s suggestions is that the analysis of the distortions of competition originated by an aid should become much more relevant and be a constitutive part of the assessment of what is incompatible aid. Furthermore, the Commission has now made clear that subsidies are meant to overcome market failures. However, for any identified market failure, there are many different ways to overcome it: intervention via either regulation, a tax or a subsidy is an issue that is not part of the assessment of compatibility. In State aid control, the counterfactual is clearly the absence of the aid. A second suggestion of this chapter is that at the domestic level, granting a subsidy should be the subject of a careful competition assessment analysis so as to identify the optimal policy. Domestic competition authorities should be put in charge of this assessment and, by expanding the scope of State aid control, they could also evaluate under a domestic provision State aid that now falls under the de minimis threshold. Finally, the Treaty provisions on regional aid were initially meant to overcome regional disparities within Member States. After the enlargement, it is no longer regional disparities that are addressed, but differences between Member States. New Member States benefit both from regional aid and from cost and exchange rate advantages vis à vis the other Member States. In order to improve the analysis of compatibility of regional aid, the Commission should carefully assess these additional elements of ‘competitiveness’ in its individual decisions, instead of expanding the scope of the General Block Exemption Regulation.
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