Global Journal of Human Social Science, E: Economics, Volume 21 Issue 4

Gábor Potvorszki Abstract- The main aim of this article is to give an overview about the Competition Law of the European Union with special regard to the provisions on State Aid which basically determine the level playing field a Member State can grant subsidies for enterprises primarily for economic purposes. Besides the legal environment by giving a brief theoretical summary on the need for State intervention I gave some contributions about the empirics of State aid by analysing the State aid expenditure, economic growth and income level in the European Union between 2004 and 2019. I. T he V ery S pecific N ature of S tate A id within the M eaning of the E uropean U nion C ompetition L aw he Competition Law of the European Union (hereinafter EU) is a specific area limited to the Member States (hereinafter MSs) and applicable to market players acting in the internal market of the EU – irrespective from their origins – and therefore it can be considered a unique legislation system all over the world. The Competition Policy is a Common Policy meaning that national sovereignty of a MS is limited. To understand how the competition policy works, it dates back entirely to the Treaty of Rome (1957) as primary source of law, establishing the European Economic Community which had already laid down the fundamentals and main provisions of rules on competition within the economic integration in order to ensure fair market terms across the MSs and to prevent them not to turn into protectionism by protecting their markets which could basically have undermined to create a common and afterwards, single and internal market, at the same time. While the main task of Competition Law in the EU (see Figure 1.) is basically to create and maintain fair market conditions focusing on the prohibition of price agreements (e.g. cartels), the abuse of dominance of market power and unfair market behavior, respectively. State aid is a special area of Competition Law. It has the task to control when a State intervenes in the economy either directly (e.g. through cash grants) or indirectly (e.g. through the tax system or by regulations) and therefore the internal market is distorted or threatens with it and the trade between MSs is affected, too, irrespectively from the form of grants and the ownership issues. Source: Author’s Compilation based on DG Competition, European Commission. Figure 1: Typology of EU Competition Law T Volume XXI Issue IV Version I 17 ( E ) Global Journal of Human Social Science - Year 2021 © 2021 Global Journals Author: Ph.D., Assisstant Professor, State aid expert, Institute of World and Regional Economics, University of Miskolc, Hungary. e-mails: regpot@uni-miskolc.hu , potigabi@gmail.com State Aid in the European Union: Where Law and Economics Meet Keywords: European Union, Competition Law, State aid, economic growth, income level.