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.
[...] pdf Case 120/73 Gebrüder Lorenz GmbH v Federal Republic of Germany et Land de Rhénanie-Palatinat  ECR 1471, at para Notice on Cooperation between National Courts and the Commission in the State Aid Field (OJ C p.8, article 3. “Study on the Enforcement of State aid Law at National Level”, March 2006, Jones Day, Lovells, Allen & Overy, available at http://ec.europa.eu/comm/competition/state_aid/studies_reports/studies_repor ts.html. Struys, Michel, and Abbott, Henry,” The Role of National Courts in State Aid Litigation”, European Law Review 2003, 172-189, p.176. [...]
[...] Abbamonte, Giuseppe, “Competitors' Rights to Challenge Illegally Granted Aid and the Problem of Conflicting Decisions in the Field of Competition E.C.L.R 87-93. Betws Anthracite Ltd v DSK Anthrazit Ibbenburen GmbH (2004) 1 All ER 1237 at para 75, cited in Ward, Tim and Smith, Kassie, Competition Litigation in the UK, p.319. Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci v Italy  ECR I-5357. Case C-39/94 Syndicat Francais de l'Express International and others v La Poste and others  ECR I-3547, at para 74. [...]
[...] Study on the enforcement of state aid law at national level (March 2006, produced by external consultants for DG Competition) Report on the application of EC state aid law by the Member State Courts (1999, produced by external consultants for DG Competition) 2005 Report on Competition Policy, DG Competition 2004 Report on Competition Policy, DG Competition XXXIIIrd Report on Competition Policy, DG Competition 2000/1999 Report on Competition Policy, DG Competition Articles Abbamonte Giuseppe “Competitors' Rights to Challenge Illegally Granted Aid and the Problem of Conflicting Decisions in the Field of Competition (European Competition Law Review 1997, 87-93) Bacon, Kelyn, Concept of State Aid: the Developing Jurisprudence in the European and UK Courts” (European Competition Law Review 2003, 54-61) Evans, Andrew Policy and Equality in the European Union: The Example of State Aid Control” (European Law Review 1998, 434-451) Hakenberg, Waltraud and Erlbacher, Friedrich “State Aid Law in the European Courts in 2001 and 2002” (European Competition Law Review 2003, 431- 448) Nicolaides, Phedon, “Compensation for Public Service Obligations: the Floodgates of State (European Competition Law Review 2003, 24(11), 561- 573) Nourry, Alex, New Procedural Regulation on the Application of the EC State Aid Rules” (International Company and Commercial Law Review 1999, 145-147) Rapp, Julia, “State Aid in the Accession Countries Sorting Through the Confusion” (European Competition Law Review 2005, 410-415 Rodger, Barry J., “State Aid A Fully Level Playing Field” (European Competition Law Review 1999, 251-255) Rydelski, Michel Sanchez, “State Aid or Not State Aid? [...]
[...] It will argue that these shortcomings qualify the effectiveness of the provisions of the EC Treaty concerning State aids in preventing distortions to the operation of the single market, and will analyse some of the solutions put forward by the Commission, such as decentralisation of State aid control and private State aid litigation before national courts. The effectiveness of the EC Treaty provisions concerning State aids: the development of a comprehensive corpus of rules completing Articles 87 to 89 EC The necessity of State aid control: a balance between the potential distortions and benefits of State aid to the operation of the single market The effective operation of the single market has been one of the principal objectives of Community action and policies. In that respect, the European Commission has repeatedly emphasised that competition policy is an “essential instrument in achieving the internal market”. As stated by the current European Commissioner for competition Neelie Kroes, the essential purpose of State aid control is to “guarantee that companies can compete on a level playing field” regardless of the Member state in which they are established. [...]
[...] The ECJ held that in order to determine whether these facilities constituted State aid, it was necessary to consider whether those payment facilities were manifestly more generous than those which would have been granted by a private creditor in a similar situation, which was seeking to recover the sums owed to it: Case C-256/97 Déménagements-Manutention Transport  ECR I-3913, cited in Bacon, Kelyn, Concept of State Aid: the Developing Jurisprudence in the European and UK courts”, European Common Law Review 54-61, p.58. [...]
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