ABSTRACT
The rules on State aid form a crucial part of the relationship between State involvement in, or regulation of, national markets and Community competition law. The Treaty has specific provisions in Arts 87-89 regulating State aid which is granted by Member States. The basic rationale behind these rules is that the level competitive playing field for undertakings throughout the Community may be jeopardised by any grant of aid to undertakings by public authorities of Member States. The premise is that the competition rules would be futile if Member States could favour their own home-based companies by subsidising those companies’ ability to compete or by using subsidies to attract investment. State aid can therefore be viewed as ‘beggar my neighbour’ subsidies which can distort competition and, in particular, harm the fabric of the Community by allowing richer Member States to use their economic well-being to give unfair support to national undertakings.
