State Aid Policy
State aid policy is clearly the most original of the EU’s competition policies. In restricting the capacity of governments to support their national firms, the policy sounds the death-knell of purely national industrial strategies by granting the Commission the task of ensuring that subsidies granted within the EU are compatible with single market objectives. This chapter provides an introduction to the Commission’s state aid regime, placing it firmly in a single market context. The argument that the Single European Market (SEM) is jeopardised by unchecked state aid is almost a truism, although this is not to neglect the many other impediments to a barrier-free Europe. But should all physical, regulatory and fiscal barriers to European trade be removed, national subsidies would remain as one of the few protectionist (and market-fragmenting) instruments at the disposal of national and sub-national authorities. The single market rationale for the policy is further strengthened by the prospect of monetary union.
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