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Economics

Study Notes

State Aid

Level:
A Level
Board:
AQA, Edexcel, OCR, IB

The argument for monitoring state aid given to private and state businesses by member Government is that by giving certain firms or products favoured treatment to the detriment of other firms or products, state aid disrupts normal competitive forces.

  • Under current European state aid rules, a company can be rescued once
  • Any restructuring aid offered by a national government must be approved as being part of a feasible and coherent plan to restore the firm's long-term viability
  • Government aid designed to boost research and development, regional economic development and the promotion of small businesses is normally permitted
  • In July 2014, the EU competition authorities ordered Ryanair to pay back €10m in illegal state aid on the grounds that state aid gave them an unfair advantage that distorted competition on several routes

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