European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

State aid measures create unequal competition and are liable to result in dysfunctions of the market. However, it would be inconceivable to totally prohibit them in mixed economies as they represent a major instrument of industrial policy or town and country planning and, at the purely economic level, they may be a means of solving market failures.

Articles 107 to 109 TFEU establish a control on those State aid measures which create distortions of competition and affect trade between Member States. Article 107 lays down a general principle of incompatibility of aid with the internal market, and includes exemptions according to its purpose which allow aid to be held compatible. Article 108, supplemented by Regulation No 2015/1589 of 13 July 2015 , codifying and repealing Regulation No 659/1999 of 22 March 1999  sets out the applicable procedural rules.

As it is viewed nowadays, State aid monitoring does not fall within the framework of price theory. Despite the reference to restrictions of competition in the text, the very formalistic definition of prohibited aid focuses much more on the intrinsic characteristics of the State's conduct than on the anticompetitive effects of that conduct. The supervisory authorities will not assess whether the aid in question is likely to strengthen the market power of its beneficiary by giving it the possibility to adopt exclusionary behavior towards its competitors. In many ways, the control of State aid now seems to be either a manifestation of the unfair competition doctrine, or an instrument of economic policy in the hands of the Commission which can substitute its own assessment for that of the Member States in this area.

The monitoring of State measures has been reinforced since the setting-up of the single market  and is currently the subject-matter of a modernization policy by the Commission. The EU authority adopted an action plan for the period 2005-09, which was to reduce the amount of aid awarded on the one hand and, on the other, to encourage States to grant aid more aimed at creating lasting jobs and improving the competitiveness in industry in accordance with the objectives of the Lisbon Strategy for Growth and Jobs . The Commission has set out its plans for the reform of State aid control in the forthcoming years in its communication of 8 May 2012 . Finding that the economic and financial crisis has “put strains on Member States' budgets, requiring fiscal consolidation and better use of scarce resources”, the Commission considers that the potential for growth in Europe for 2020 is through more effective and efficient public spending and particularly stronger and better targeted State aid control. The objectives of modernization of State aid control are therefore threefold: (i) to foster sustainable, smart and inclusive growth in a competitive internal market; (ii) to focus Commission ex ante scrutiny on cases with the biggest impact on internal market whilst strengthening the Member States cooperation in State aid enforcement; (iii) to streamline  the rules and provide for faster decisions. The Commission has consequently adopted new guidelines on the rapid deployment of broadband networks , on regional State aid , environmental protection and energy  and a communication concerning the banking sector . The procedural regulation was also amended , and then codified  in order to take better account of the decision-making practices of the supervisory authorities, the enlargement of the Union and the economic and financial crisis. Regulation No 651/2014 of 17 June 2014  extended the scope of Block Exemption Regulation No 800/2008, which has now been repealed, by creating new categories of aid exempt from the notification requirement. Thus any aid scheme which fulfils the conditions set and any individual aid granted under that scheme is exempted. Further, in conformity with Article 1 of Regulation No 2015/1588 , the Commission has, by way of regulation, declared certain categories of horizontal State aid compatible with the internal market and the Commission has finally completed its reform initiated in 2012 and, on 19 May 2016, adopted a new communication on the notion of State aid .

OJ L 248 of 24 September 2015, p. 9–29.

by Regulaton No 2015/1589 of 13 July 2015.

Regulation No 2015/1588 of 13 July 2015 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to certain categories of horizontal State aid, OJEU of 24 September 2015, L 248, p. 1, [codifying Council Regulation No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid (OJEU L 142 of 14.5.1998, p. 1. amended by Council Regulation (EU) No 733/2013 of 22 July 2013, OJEU L 204 of 31.07.2013)], introducing new categories of aid not subject to the notification requirement, such as aid in favor of innovation, culture, making good the damage caused by certain adverse weather conditions; sports, aid to certain broadband infrastructures, residents of remote regions, for transport when this aid has a social character and aid in favor of certian aspects of agriculture, forestry and fishing. These categories of aid concern only those areas for which the Commission has considerable experience and which does not give rise to any significant distortion of competition. 

Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union, OJ C 262 of 19 July 2017, p. 1-54.

XXVIIIth report of the Commission on competition policy, 1998, sec. 99, 743, 81, at pt 182.

Total State aid granted by the Member States stood at EUR 67 billion in 2006: EUR 20 billion for Germany; EUR 10 billion for France; EUR 5.5 billion for Italy; EUR 5 billion for Spain; EUR 4 billion for the United Kingdom (See State Aid Scoreboard, COM(2007) 791, final, 3).

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, COM(2012) 209 final on EU State Aid Modernisation.

Communication from the Commission of 26 January 2013, EU Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks (2013/C 25/01).

Guidelines on regional State aid for 2014-2020 (2013/C 209/01).

Communication No 2014/C 200/01 Guidelines on State aid for environmental protection and energy 2014-2020, OJ 28 June 2014, p. 1.

Communication from the Commission of 30 July 2013 on the application, from 1 August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (2013/C 216/01).

Regulation No 734/2013 of 22 July 2013 amending Regulation No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, OJEU 30 July 2013, L 204, p. 15.

367. Context