HOW SELECTIVE IS SELECTIVITY? A FEW THOUGHTS ON REGIONAL SELECTIVITY

Abstract

Article 87 (1) EC prohibits any state aid in whatsoever form, unless the Commission considers it to be compatible with the common market. This prohibition significantly reduces in many cases the freedom of Member States to conduct their policies in defining the political and economic environment in which undertakings operate. Article 88 (3) EC, which provides for the notification procedure and prohibits the implementation of aid measures before the Commission's approval, also significantly reduces the Member State's playground. Rarely, however, can it be argued that the state aid control could potentially have drastic consequences for the national constitution order. Although the questions of what constitutes state resources and to which extent trade between Member States can be affected are controversial, this article focuses on only one aspect of the definition of state aid, namely selectivity, the application of which may have the most far-reaching consequences for many Member States' constitutional orders. It has to be stressed, though, that this short article does not aim to deal comprehensively with every difficult issue connected with the application of the selectivity test, but is limited to some of its aspects which may have bearing on Member States' decisions concerning the distribution of powers and especially the power of taxation.