EC competition policy: The poor relation of EC regional policy?

Abstract

Recent developments in the European Community have placed increasing emphasis on the need to promote economic and social cohesion. The most high profile response to this has been the reform of the Structural Funds. There is, however, a second, more long‐standing aspect to European Commission action on regional disparities. This involves the control of the regional policies of the Member States under the competition policy provisions of the Treaty. In contrast with Community structural policies, this dimension of cohesion policy involves no spending at the EC level and has attracted scant interest from academics. This article argues that, for most of the history of the Community, European competition policy has had more impact on regional policy in the Member States than has European regional policy; far from being a poor relation, EC competition policy is a major consideration for national policymakers seeking to support domestic industry or attract mobile investment to the problem regions; the penalties for failing to comply with the rules can be high and the political embarrassment acute. Looking forward, and taking account of ongoing developments in the Commission approach to controlling regional aids, the article concludes by reflecting on the capacity of present competition policy practices to adapt to regional policy needs in a further enlarged Europe.