The Correlation between State Aids and Competitiveness

Author:Rodica Pripoaie
Pages:161-169
SUMMARY

This paper aims to establish the correlation between state aids received by companies and competitiveness, because an enterprise which receives a subsidy provided by a government has an advantage over other firms and competition may be distorted. State aid is an advantage conferred by national public authorities under certain conditions and for certain areas of activity. The E.U. rules for state... (see full summary)

 
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ISSN: 2067 9211 Performance and Risks in the European Economy
161
The Correlation between State Aids and Competitiveness
Rodica Pripoaie1
Abstract: This paper aims to establish the correlation between state aids received by companies and
competitiveness, because an enterprise which receives a subsidy provided by a government has an advantage
over other firms and competition may be distorted. State aid is an advantage conferred by national public
authorities under certain conditions and for certain areas of activity. The E.U. rules for state aids are ensuring
applied equally by European Commission, so state aids can be applied after approval by the Commission. But
in some circumstances government interventions are necessary f or an equitable economy. Measures of state
aids can be implemented only if were approved by the European Commission.
Keywords: state aid; correlation; competitors; European Commission
JEL Classification: D29; E22; E29; F23; F35
1. Introduction
State aids in the European Union represent a subsidy provided by a government, as Article 107 of
Treaty on the Functioning of the E.U. These state aids distort competition and they are classed by the
E.U. as illegal state aids. State aids in the E.U. were taken from Article 87(2) of the G.A.T.T. (General
Agreement on Tariffs and Trade) where they were defined as aid “granted by a Member State or
through state resources in any form аСatsoever”. The European Court of Justice consider these state
aids give an advantage over its competitors and competition has been or may be distorted.
State aid was defined into E.U. law by the Treaty of Rome as being any state intervention that distorts
competition law and after many years, in 2007 was improved in Treaty on the Functioning of the E. U.
But in some circumstances government interventions are necessary for an equitable economy.
Measures of state aids can be implemented only if approved by the European Commission.
2.1. The Control State Aids
The control state aids are necessary because the companies which receive a subsidy government have
an advantage over other companies. The Treaty of E.U. accepts state aids аСo’s justified by reasons of
economic development, so these state aids can be considered compatible. The E.U. rules for state aids
are ensuring applied equally by European Commission, so state aids can be applied after approval by
the Commission.
Also, the firms and persons may notify the Commission or may submit notifications to the Official
Journal of the European Union for open a formal investigation procedure.
1 AssocТate Professor, PСD, Dunărea de Jos UnТversТtв of GalatТ, RomanТa, Address: 47 Domnească Strada, 800008, Galati,
Romania, E-mail: rodica.pripoaie@ugal.ro.

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