Demystifying the Balancing of the Positive and Negative Effects of State Aid

A recent judgment has confirmed that the European Commission’s consideration of the positive and negative effects of State aid, in the context of its assessment of the compatibility of aid with the internal market, may be “succinct”. The meaning of “succinct” consideration is un-clear. Also unclear is how the Commission performs the broader “balancing” of the diverse and often non-comparable effects of State aid. Therefore, this paper proposes that, for the sake of clarity and transparency, the Commission adopts a conceptually simpler approach which in fact corresponds to its current practice. It should state explicitly that compatible State aid must satisfy certain positive criteria without having any manifest negative effects. Such an approach would also be consonant with the case law of the European Court of Justice.