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Archive for May 19th, 2020

State Aid Asymmetries and the Covid-19 Outbreak- An Update and an Offer

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covid

At the end of March, my colleague José Luis Buendía and I wrote a post on this blog (also here and here) pointing to the risk of massive distortions to the internal market caused by the asymmetric national responses to the Covid-19 outbreak. We put out there a proposal to mitigate these distortions that we think would be legally feasible.

This was not a prominent debate at the time. After all, there appeared to be more pressing issues, and pointing to this one was uncomfortable, and even politically incorrect. Things, however, have changed, and this debate is gaining prominence (see below for a list of recent pieces touching on it). President Von der Leyen and Commissioner Vestager have now also warned about the dangers of what’s happening. The consequences of what we decide to do on this subject might be felt for generations.

What was politically incorrect only two months ago has now become almost the consensus. To put it mildly, almost everybody recognizes now that may be witnessing the greatest competitive distortion of our lifetime. Having a correct diagnosis does not cure the illness but is at least a first step in the right direction. It is certainly much better than denying the existence of the problem.

We put a possible solution on the table that we think is legally feasible, but you might have other ideas about variants or alternative models that could also do the trick. We are confident that if the community of competition lawyers and economists puts its creative juices to work we might be able to contribute to the solution. After all, we can get really creative when it comes to market definitions and theories of harm…

If any of the readers of this blog has other ideas or suggestions on how to prevent, mitigate or correct these competitive distortions, we are happy to offer you a space in this platform.

For more on this see, for example:

-. Von der Leyen warns state aid ‘unlevelling the playing field’ in Europe (The Guardian, 13 May)

-. Vestager: Discrepancy in state aid distorts single market, hampers recovery (Euractiv.com and Reuters, 18 May)

-. EU Members clash over State aid as richer countries inject more cash (Financial Times, 1 May)

-L. Hornkohl and J. van‘t Klooster, With Exclusive Competence Comes Great Responsibility: How the Commission’s Covid-19 State Aid rules Increase Regional Inequalities within the EU, VerfBlog (29 April)

-M. Motta and M. Petz, EU state aid policies in the time of COVID-19 (18 April);

Macron: “We are at a moment of truth” (Financial Times, 17 April)

– JL. Buendía, Editor’s Note: Editor’s Note – State Aid in Time of Cholera (European State aid Law Quarterly, Vol 19, Issue 1 (1 April)

Written by Alfonso Lamadrid

19 May 2020 at 7:45 pm

Posted in Uncategorized