Economic Effects and EU State Aid Control: Recalibrating the Impact Standards for the Identification of Aid in Article 107(1) TFEU

Abstract Despite the frequent refrain that the identification of State aid depends on the effects of a measure and not is objectives, causes, or aims, the conditions for the application of the prohibition on aid that directly relate to the effects of an intervention play a relatively minor role in the analysis. These impact standards, which require that a measure causes a distortion of competition and affects trade between Member States, are easily satisfied. This article proposes changes to the application of these impact standards in Article 107(1) TFEU. It argues that the criteria relating to the distortion of competition and the effect on trade between Member States should be interpreted as distinct, higher thresholds imposing more substantial evidential burden on the Commission. This proposal draws on the existing logic of the case law and the State aid control regime to contain the notion of aid within principled and coherent limits.