This paper aims to explore the influence of EU State Aid law on national policy choices after the State Aid Modernisation (SAM) was closed in 2015. The notion of state aid is interpreted broadly by the European Court of Justice,therefore Member States discretion in formulating public policy is deeply effected by this. This paper addresses derogations under the prohibition of Article 107(1) TFEU, as well as the straitjacket effect of secondary legislation on national measures.
The SAM provided an opportunity for the European Commission to clarify and extend secondary law and to exempt around 90% of state aid measures. On the other hand, it brings uncertainty into the application of state aid law as Member States are required to interpret and to apply the new rules at their own risk. While the application of EU antitrust rules was decentralised in 2004 and provides for a Network between Member State’s competition authorities and the European Commission, the application of state aid provisions is highly centralised. Hence, in this new “decentralised” system, the risk of incompatible aid increases significantly and, as a consequence, this paper argues that cooperation between the Commission and Member States should become more effective and ex post Commission control should be strenghtened.
A further development is that moving from soft law to hard law enables the Commission to prioritise cases to be dealt with. By focusing on the more important cases, the Commission is in a position to deal with measures having a high potential to distort competition in the internal market. So the question to be answered is whether or not the straitjacket effect of SAM on national public policies will be counterbalanced by the positive effects of more efficient state aid investigations, ex ante and ex post at the level of the Commission.
