Competition Policy in Subsidies and State Aid

Abstract:     
This document (of 193 pages) comprises the proceedings of an OECD roundtable on subsidies, state aid and competition policy, held at the OECD in February 2001.

Government assistance to firms can have a substantial impact on competition. Competition policy naturally extends, therefore, to policies designed to control subsidies. But what exactly is a subsidy? Government interventions of all kinds (including interventions through payments, taxes, regulation, deregulation or the provision of public goods) can affect competition between firms. Which of these interventions should count as subsidies? Short of a full cost-benefit analysis is it possible to identify and control harmful subsidies? Different methods for controlling subsidies focus on different ways of slicing this problem. The European Union controls on state aid focus on financial transfers to selected firms in a country. Other approaches are possible. Some countries, following the lead of the EC, are expanding their competition law to include controls on subsidies of various forms.

This document consists of a background paper by the Secretariat, submissions from 8 OECD countries and a summary of the oral discussion.

Number of Pages in PDF File: 193

Keywords: Subsidies, state aid, competition policy

JEL Classification: H20, L40

working papers series