E.U. State Aid Developments in 2003: More Complexity, Less Certainty Symposium on European Competition Law

Oswell, Dennis, Vahida, Esfandiar | January 1, 2004

There was a time when observers had the impression that European companies could think of no better gift from the government than a subsidy of some sort. Scrutiny of such governmental largess at the E.U. level was perceived as lax and any consequences for violating the E.U. competition rules against such handouts were seen as remote and timid. Times have changed. As the European Commission (the “Commission”) stiffens its resolve to police and punish unlawful State intervention in the marketplace, governmental subsidies to favored undertakings, broadly referred to in the European Union as “State aid,” are fast becoming gifts that companies sometimes wish they had not received. The characterization of State aid granted in a straightforward manner as unlawful, e.g., through the grant of a loan at an artificially low rate, is relatively unproblematic, but the Commission is more and more often scrutinizing suspected State aid in unobvious and novel situations. In doing so, the Commission has been using the tests applied in straightforward cases and has adapted them to the situations under review (to use a French expression –c’est dans les vieilles marmites qu’on fait la meilleure soupe)