Volume 38 (2015)

Volume 38 (2015) / Issue 2

Frank Maier-Rigaud, Christopher Milde, 'The Rescue and Restructuring Aid Guidelines of the European Commission: An Economic Point of View' (2015) 38 World Competition, Issue 2, pp. 189–213

Abstract

In the context of its ambitious State Aid Modernization work, the European Commission presented new guidelines on Rescue and Restructuring (R&R) aid in 2014. In this article, the consequences for generic R&R aid and in particular the balancing test for State aid proposed by the guidelines are discussed. Given the severe and pervasive harm of R&R aid explicitly recognized by the guidelines, granting R&R aid can only be justified under the proposed balancing test if the R&R aid contributes strongly to an objective of common interest. This objective of common interest may either be addressing a market failure or increasing social or economic cohesion. As is argued here, R&R aid can, by definition, not address or alleviate a market failure. Regarding social and economic cohesion, while R&R aid may plausibly prevent the increase of unemployment in a particular region or prevent the interruption of a service of general economic interest, it is rather doubtful that R&R aid is an appropriate policy instrument in these circumstances. In summary, in all but possibly two special cases R&R aid would fail the balancing test. To the extent that the economic principles set out in the new guidelines are taken seriously, the guidelines for R&R aid may therefore ultimately mean nothing less than the abolition of R&R aid in practice.

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ISSN: 1011-4548
ID: WOCO2015015