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Keyword: Subsidy

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How Much Could the US Inflation Reduction Act Cost Europe? journal article

Eszter Hargita, Filip Puzder, Péter Staviczky

European State Aid Law Quarterly, Volume 22 (2023), Issue 3, Page 242 - 266

The Inflation Reduction Act (IRA) was introduced in the US in August 2022, aiming to promote investments into clean energy production. The IRA provides huge amount of aid, which can have a draining effect of green investments vital for the green transition of the European economy. In response, the Commission adopted Temporary Crisis and Transition Framework (TCTF) in March 2023. As well as explaining the historical context and content of these subsidy-rules, this article makes an attempt to compare the subsidies available under the IRA and the TCTF, considering the maximum aid amount available under the regional aid guidelines. Keywords: Inflation Reduction Act; IRA; subsidy competition; incentive effect; operating aid; battery manufacturing; tax credit

Proportionality of the Sectoral Application of the Covid-19 Temporary Framework journal article open-access

Sofie Holtan Lakså

European State Aid Law Quarterly, Volume 22 (2023), Issue 4, Page 356 - 370

This article is adapted from the author’s College of Europe Master’s Thesis which was awarded the Lexxion Publisher prize for the Best Thesis on EU State aid. One of the measures put in place to mitigate the effect of the Covid-19 pandemic on the European economy was the Covid-19 Temporary Framework. Adopted on 19 March 2020, it granted Member States flexibility under the State aid regime to support their national economies from their own pockets. While the relaxed rules were deemed necessary, the Framework was introduced with a known caveat: it is well-established that the granting of State aid distorts competition on the internal market. It is for the same reason that certain criteria have to be met for the Commission to approve the granting of aid, amongst them the principle of proportionality. This article argues that a large share of the aid approved under the Temporary Framework was in fact not proportionate to the shock caused by the Covid-19 pandemic, and should therefore not have been approved by the European Commission. The results demonstrate that the aids granted under the Temporary Framework cannot be considered proportionate in nature: of the 19 sectors analysed, the aid was found not to be disproportionate to the shock caused by the pandemic in only one sector. Keywords: Temporary Framework; proportionality; subsidy race; COVID-19

The UK’s Subsidy Control Regime journal article

Subsidy Advice Unit Referrals – Tips and Best Practice

David du Parc Braham, Maria Marsden

European State Aid Law Quarterly, Volume 22 (2023), Issue 4, Page 381 - 388

Well into the first year of the UK’s new subsidy control regime, we look at the role played by the Subsidy Advice Unit (SAU), with practical tips and best practices for public authorities and their advisors contemplating referrals to the SAU. As well as stressing the importance of early engagement with the SAU, including pre-referral discussions, we set out how to navigate the referral process, including the criteria for when to refer, preparing for referral and what happens during a referral. Tips and best practices for drafting the assessment of compliance cover the common issues we have seen so far in relation to market failure, impact on competition and the balancing test. These suggestions compliment rather than replace existing statutory and SAU guidance. Keywords: subsidy control | UK | SAU | public authority

The Design of Enforcement Institutions: journal article

Lessons from the UK’s New State Aid Control Regime

Phedon Nicolaides

European State Aid Law Quarterly, Volume 20 (2021), Issue 3, Page 370 - 383

Now that the UK is no longer a member of the European Union it has to substitute the EU system of State aid control with its own system for the control of subsidies. Brexiters have argued that this presents a unique opportunity to the UK to design a system that is less cumbersome and more effective than that of the EU. This article examines how the draft Subsidy Control Bill intends to address the three problems of the design of institutions responsible for the control of State aid or subsidies; ie the problems of discovery, assessment and enforcement. If finds that, by comparison to the EU system, the proposed UK system seems to grant more leeway to public authorities and to impose fewer formal requirements but also to require assessment of most subsidies by the Competition and Markets Authority (CMA). At the same time, the greater leeway creates more uncertainty about the conformity of subsidies with the various principles laid down in the Subsidy Control Bill. The Bill also leaves several issues unclear, especially with regard to the status of subsidies which are not referred to the CMA or subsidies which are granted contrary to CMA recommendations. The powers of the CMA are certainly more limited than those of the Commission. Keywords: EU-UK Trade and Cooperation Agreement; UK Subsidy Control Bill; State aid regime; Competition and Markets Authority; Competition Appeal Tribunal.

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