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Competition Policy in the EUFifty Years on from the Treaty of Rome$
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Xavier Vives

Print publication date: 2009

Print ISBN-13: 9780199566358

Published to Oxford Scholarship Online: September 2009

DOI: 10.1093/acprof:oso/9780199566358.001.0001

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State Aids: Economic Analysis and Practice in the European Union

State Aids: Economic Analysis and Practice in the European Union

(p.176) 7 State Aids: Economic Analysis and Practice in the European Union
Competition Policy in the EU

David Spector

Oxford University Press

Economic theory provides many different rationales for a supranational state aid control. It can be justified by paternalistic motives — helping national governments overcome their inability to resist special interests or make long-term commitments as well as by non-paternalistic ones — internalizing various types of cross-country externalities. This multiplicity of economic approaches leads to several possible policy prescriptions. Depending on which theory of harm is relevant, the meaning of ‘distortion of competition’ and ‘affectation of trade between member states’ may be as fluctuating as the case law. According to recent court rulings, an aid measure neither distorting competition nor distorting trade should be deemed legal irrespective of its economic soundness. But the Commission seems to be promoting a different view, making the economic efficiency of an aid scheme a decisive assessment criterion. How this discrepancy will be resolved is not yet clear.

Keywords:   state aid, externalities, distortion of competition, theory of harm, case law

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