State Aid

02 December 2020
Capabilities and Services

Economic analysis plays an increasingly important role in European State aid law and practice. For many years, the market economy investor principle (MEIP) has been the guiding principle in identifying and quantifying State aid. In 2014, the European Commission (EC) established the balancing test as the basis for determining State aid as part of its State aid modernisation (SAM) initiative. By establishing the MEIP as the guiding principle, the EC placed economic reasoning and analysis at the heart of all horizontal State aid guidelines, be it for regional aid, rescue and restructuring aid, R&D&I aid, risk finance aid, or aid for environmental protection and energy. Applicants must also weigh positive and potential distortive effects of aid for some sector-specific types of aid. Economic analysis is therefore central in identifying and quantifying the effects of State aid, for assessing its likely impact on welfare, and in justifying beneficial aid before the EC. NERA has substantial expertise in advising private, public, and government initiatives in State aid matters.