EU State Aid Policy, Economic Approach, Bailouts, and Merger Policy: Two Comments

STRUCTURE AND EFFECTS IN EUROPEAN COMPETITION LAW, Basedow, Jürgen, and Wolfgang Wurmnest, eds., Kluwer Law International

13 Pages Posted: 6 Feb 2010

See all articles by Wolfgang Kerber

Wolfgang Kerber

University of Marburg - School of Business & Economics

Date Written: February 4, 2010

Abstract

The first comment argues that the current economic approach to EU state aid policy tends to become a general control of the effectiveness of all subsidies in the Member States. This goes far beyond the initial intention of the EU competition rules of Art. 87 to 89 EC Treaty. An economic approach that also takes into account the economic theory of federalism would lead to a sophisticated two-level system of state aid control in which (1) the EU state aid control is limited to state aid with spillover effects on other Member States and (2) national agencies for controlling subsidies focus on subsidies with their primary effects within the Member States. The second comment suggests the possibility of using EU merger policy to prevent firms from becoming ‘too big to fail’. This would reduce the danger of bailouts that can lead to significant distortions of competition. The possibility of a bailout test in merger policy is discussed.

Keywords: State aid policy, merger policy, bailout, competition law

JEL Classification: K21, L4

Suggested Citation

Kerber, Wolfgang, EU State Aid Policy, Economic Approach, Bailouts, and Merger Policy: Two Comments (February 4, 2010). STRUCTURE AND EFFECTS IN EUROPEAN COMPETITION LAW, Basedow, Jürgen, and Wolfgang Wurmnest, eds., Kluwer Law International. Available at SSRN: https://ssrn.com/abstract=1547790

Wolfgang Kerber (Contact Author)

University of Marburg - School of Business & Economics ( email )

Am Plan 2
Marburg, D-35037
Germany
+49 6421 2823921 (Phone)

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