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The Rationale of State Aid Control: A Return to Orthodoxy

Published online by Cambridge University Press:  27 October 2017

Abstract

The prevailing view on the rationale for State aid control is that it should be the same as, or very similar to, the rationale for competition control. It is certainly true that State aid distorts competition, as the economic definition presupposes. However, there is a subtle difference between the two, and we should return to orthodoxy in our analysis of these two concepts. The rational for State aid control is in fact to be found in the logic of the internal market principles. The tools to be used in analysing it are not identical to those used in the antitrust context. Rather, the free movement perspective should be adopted, and most problems in the arena of State aid can be better understood when approached from that perspective. It is also true that State aid procedures can be used to monitor compliance with free movement rules, and so the functional identity between the two sets of provisions is confirmed. State aid is a regulatory restriction on freedom of movement, and State aid control is an essential part of the functioning of the internal market, and so it makes sense to treat it in the same way as any other regulatory measure which has such an effect.

Type
Research Article
Copyright
Copyright © Centre for European Legal Studies, Faculty of Law, University of Cambridge 2010

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References

1 Case C-222/07 UTECA [2009] ECR I-1407.

2 With effect from 1 December 2009, Arts 87 and 88 of the EC Treaty have become Arts 107 and 108 respectively of the Treaty on the Functioning of the European Union (‘TFEU’). The Court of Justice of the European Communities has become the Court of Justice of the European Union, and the Court of First Instance has become the General Court.

3 In this context, the sometimes arduous distinction in the acquis of the Court between ‘Treaty’ derogations, applicable to distinctly applicable measures only, and case law exceptions, to be used to justify indistinctly applicable measures, is of course irrelevant. See in general Barnard, C, The Substantive Law of the EU, 2nd edn (Oxford, Oxford University Press, 2007)Google Scholar.

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6 Case 61/79 Amministrazione delle Finanze dello Stato v Denkavit italiana [1980] ECR 1205, para 31.

7 Case 730/79 Philip Morris [1980] ECR 2671, emphasis added.

8 European Commission Consultation Document, State Aid Action Plan: Less and better targeted State aid: a roadmap for State aid reform 2005–2009, COM(2005) 107 final, 7 June 2005.

9 Since the publication of the State Aid Action Plan, the Commission has already implemented a series of measures supposedly embracing the reform announced by it. See, for instance, Community Framework for State aid for research and development and innovation of 30 December 2006 ([2006] OJ C323/1) and Community Guidelines for State environmental protection aid of 1 April 2008 ([2008] OJ C82/1).

10 See, inter alia, Jenny, F, ‘The State Aid Action Plan: A Bold Move or a Timid Step in the Right Direction?2 (2006) Competition Policy International 2 Google Scholar; Nicolaides, P, ‘The Incentive Effect of State Aid: Its Meaning, Measurement, Pitfalls and Application’ (2009) 32 World Competition 579 Google Scholar; and Kaupa, C., ‘The more economic approach—a reform based on ideology?’ (2009) 8 European State Aid Law Quarterly 8, 311CrossRefGoogle Scholar.

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12 For the ‘official’ replies to the State Aid Action Plan, see <http://ec.europa.eu/competition/state_aid/reform/comments>, accessed 12 July 2010. See also Common principles for an economic assessment of the compatibility of State aid under Article 87.3 Staff Working Paper, 19 May 2009, available at <http://ec.europa.eu/competition/state_aid/reform/economic_assessment>, accessed 12 July 2010.

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20 Case 26/76 Metro I [1977] ECR 1875 and Case 250/92 Gottrup-Klim [1994] ECR I-5641.

21 V Di Bucci, ‘Comments on the Paper “Selectivity, Economic Advantage, Distortion of Competition and Effect on Trade”‘ in Derenne and Merola, above n 14, 157.

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26 Joined Cases C-463/04 and C-464/04 [2007] ECR I-10419.

27 Both have been promptly adopted by the Commission. See, respectively, Commission Regulation 1998/2006/EC of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid [2006] OJ L379, and Commission Regulation on General Block Exemptions of 6 August 2008, [2008]OJ L214/3.

28 Case 74/76 Iannelli v Meroni [1977] ECR 557, para 10.

29 Ibid, para 12.

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32 Case C-173/73 Italy v Commission [1974] ECR 409.

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34 Case C-173/73 Italy v Commission [1974] ECR 409 para 13.

35 Case C-8/74 Dassonville [1974] ECR 837.

36 See in general Weiler, JHH, ‘The Constitution of the Common Market Place’ in Craig, P and de Búrca, G, The Evolution of EU Law (Oxford, Oxford University Press, 1999) 349 Google Scholar.

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38 Case C-501/00 Spain v Commission [2004] ECR I-6717.

39 Case C-391/97 Gschwind [1999] ECR I-5451.

40 Case C-265/95 Commission v France [1997] ECR I-6959; Case C-157/99 Smits and Peerbooms [2001] ECR I-5473; Case C-438/05 Viking Line Abp [2007] I-10779.

41 Case C-172/03 Heiser v Finanzamt Innsbruck [2005] ECR I-1627.

42 Case C-222/04 Cassa di Risparmio di Firenze [2006] I-289.

43 See further de Cecco, F, ‘The many meanings of “competition” in EC state aid law’ (2006–2007) 9 CYELS 130 Google Scholar.

44 Case C-88/03 Portugal v Commission [2006] ECR I-7115; Case T-211/04 Gibraltar v Commission [2008] ECR II-3745; and Joined Cases C-428/06 to C-434/06 UGT-Rioja and Others [2008] ECR I-6747.

45 For an overview see Greaves, R, ‘Autonomous Regions, Taxation and EC State Aids Rules’ (2009) 34 EL Rev 779 Google Scholar.

46 Case C-212/06 Government of the French Community and Walloon Government [2008] ECR I-1683, para 58, with further references.

47 Case 249/81 Commission v Ireland (Buy Irish ) [1982] ECR 4005.

48 Case C-67/97 Ditlev Bluhme [1998] ECR I-8033.

49 Case C-376/98 Germany v European Parliament and Council [2000] ECR I-8419.

50 Case C-491/01 The Queen Secretary of State for Health, ex parte British American Tobacco (Investments) Ltd [2002] ECR I-11453; Joined Cases C-434/02 & 210/03 Arnold Andre and Swedish Match [2004] ECR I-11825, [2006] ECR I-4721; Case C-380/03 Germany v European Parliament [2006] ECR I-11573.

51 Case C-113/00 Spain v Commission [2002] ECR I-7601; Case C-114/00 Spain v Commission [2002] ECR I-7657. See in general Giolito, C, ‘La procedure de contrôle des aides d’Etat peut-elle être ultilisée pour contrôler la bonne application d’autres dispositions de droit communautaire?’ in Achieving the Objectives of State Aid Control: Time for Some Realism in EC State Aid Law: Liber Amicorum Francisco Santaolalla (The Hague, Kluwer Law International, 2008) 145 Google Scholar.

52 Case C-222/07 UTECA [2009] ECR I-1407.