Minimisation of the expected cost of error in EU state aid enforcement

Abstract

This thesis examines substantive and procedural EU State Aid Law from the angle of accuracy in assessment of State measures by the Commission under the notification procedure and, to a lesser extent, by national authorities under the General Block Exemption Regulation. It adopts an economic analysis approach, within the framework of which it identifies the components of the expected cost of error (the probability of error multiplied by its cost) and makes suggestions on how to bring that expected cost down without significantly increasing enforcement costs. In order to lower, ex ante, the expected cost of error in Commission’s assessment, it seems essential to separate the criteria of compatibility assessment applied under the preliminary examination on the one hand, and the formal investigation procedure on the other hand. It is necessary in order to overcome the informational asymmetries, exacerbated by the procedural design of the preliminary examination. This proposition becomes particularly salient because the least costly type of error, on the side of which it could be preferable to err, may not be reliably identified in State aid law. In order to lower, ex post, the expected cost of error, a well-functioning error correction mechanism is necessary. In that respect, the action for annulment, especially the one that allows to attack decisions not to open a formal investigation procedure, presents an interesting potential. While softer rules for locus standi in State aid are still needed, the recent developments in the Court’s case-law look promising for competitors. Finally, the extension of the GBER allows to free Commission’s resources to more accurately assess the remaining measures, but it must be guaranteed that national authorities correctly qualify measures under the exemptions. The significant efforts to simplify the GBER and to educate national enforcers are assessed positively.