Compliance with rules of negative integration: European state aid control in the new member states

Abstract

Starting from existing accounts on candidate country and member state compliance, the compliance record of the Central and Eastern European countries in the field of state aid policy is puzzling. Despite allegedly low compliance costs in areas of negative integration and despite the European Union's powerful instrument of conditionality, the candidate countries' state aid policies have been in striking contrast to European rules before accession. After accession they quickly brought their policies in line with European requirements. This compliance record is a result of the institutional structure of European state aid control, conceding extraordinary enforcement powers to the Commission, rather than of low compliance costs in this field. By shifting the burden of proof to potential state aid grantors and channelling enterprises' state aid demand, Commission control produces strong incentives to comply with European state aid rules.