Will COVID-19 kill Europe’s state aid discipline?

Will COVID-19 kill Europe’s state aid discipline?

My colleague Carlo Stagnaro and I reviewed Thomas Philippon’s The Great Reversal for Law & Liberty.

Philippon’s book is ingenious and thought-provoking. The main thesis is that the EU became, as it were, more pro-competitive than the US. One of the pieces of evidence Philippon produces is the European discipline on state aid. National government subsidies to businesses are disciplined by Brussels and that helped in fostering a more competitive environment European-wide.

Yet is that going to last? Carlo and I are skeptical. COVID-19 is jeopardizing the genuine pro-market elements in European competition policy.

It is not a surprise—and perhaps it may warrant a new chapter in the next edition of The Great Reversal—that member states seized the opportunity of the coronavirus crisis to call for a de facto suspension of the state aid discipline. While the new, more permissive framework is deemed to be “temporary,” only time will tell how long “temporary” measures will last.

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