As recognised by the EC Treaty, state aids are important and necessary policy instruments to achieve social and economic goals. However, depending on the way in which they are given, State aids can have a material impact on competition, leading to significant distortions to the common market. An unfairly given aid might for instance allow the recipient undertaking to increase its market share to a level at which it has enough power to behave independently of competitive pressures. The EC Treaty provisions concerning State aids seek to minimise these potential distortions of competition in Articles 87 to 89. As repeatedly emphasised by the European Commission, competition policy is 'essential for the completion of the single market'. State aid control therefore seeks to preserve the effective operation of the single market by promoting a 'level competitive playing field' between all undertakings in the European Union. This essay will explain the general prohibition of State aid and its exceptions in the EC Treaty. It will argue that the basic rules set out in the EC Treaty have allowed for the development of a comprehensive corpus of secondary legislation and case law, laying the foundations for a strict system of State aid control.
[...] See also Rydelski, Michael, “State Aid or Not State Aid? That Is The Question”, International Trade Law & Regulation 97-100, p.98 20: in Case 30/59 Steenkolenmijnen v High Authority [1961] the ECJ provided a definition of State aid that continues to be relevant : concept of aid is wider than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also interventions which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, without therefore, being subsidies in the strict meaning of the word, are similar in character and have the same effect”. [...]
[...] Hakenberg, Waltraud and Erlbacher, Friedrich, “State Aid Law in the European Courts in 2001 and E.C.L.R p.435; see Case 173/3 Italy v Commission [1974] ECR 709; Rodger, Barry and MacCulloch, Angus, Competition Law and Policy in the EC and UK, p.254. Case C-379/98 PreussenElektra AG v Schhleswag AG [2001] ECR I-2099, at para 58, cited in Ward, Tim and Smith, Kassie, Competition Litigation in the UK (London: Sweet & Maxwell, 2005), p.293. Case C-295/97 Industrie Aeronautiche e Meccaniche Rinaldo Piaggio SpA v International Factors Italia SpA (Ifitalia), Dornier Luftfahrt GmbH and Ministero della Difesa [1999] ECR I-3735, cited in Rodger, Barry and MacCulloch, Angus, Competition Law and Policy in the EC and UK, p.255. [...]
[...] The Commission frequently reviews its guidelines, thus allowing for a flexible adaptation to constantly evolving market conditions. For instance, the Commission has recently indicated its intention to publish guidelines on State aid and the environment by the end of 2007.[33] The Council has also used its powers under Articles and 89 in order to clarify the breadth of the general prohibition in Article 87: for example, the Council adopted in 2001 an important Regulation[34] declaring State aids to be compatible with the common market on de minimis grounds: an aid of €100,000 or less which is paid over a period of three years will not be considered as a State aid and will therefore not need to be notified by the Member State, which facilitates administrative procedures. [...]
[...] Case C-39/94 Syndicat Francais de l'Express International and others v La Poste and others [1996] ECR I-3547, at para 74. Joined Cases T-228/99 and T-233/99 WestLB v Commission [2003] ECR 435, para 290. Cited in Hancher, Leigh, Ottervanger, Tom and Slot, Piet Jan, EC State Aids (Third Edition) (London : Sweet & Maxwell, 2006). Third party competitors (or trade associations) must show direct and individual concern as stipulated by Article 230(4) EC: See Case 323/82 SA Intermills v Commission [1984] ECR 3809. [...]
[...] Evans, Andrew, Policy and Equality in the European Union: the Example of State Aid Control”, European Law Review 1998, 434-451, p.439. “State Aid Action Plan: Less and better targeted State aid: a roadmap for State aid reform 2005-2009”, point 10. Report on Competition Policy 2004, Volume available at http://ec.europa.eu/comm/competition/annual_reports/2004/en.pdf. See p. [ ] the gaps left by genuine market failures can be filled [by State aid] and more undertakings are enabled to become active competitors Report on Competition Policy 1999/2000, cited in Hakenberg, Waltraud and Erlbacher, Friedrich, “State Aid Law in the European Courts in 2001 and European Common Law Review 431-448, p.433. [...]
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