Competition, State Aids and Subsidies

State aids and subsidies represent a significant amount of public funds and governments grant subsidies in a multiplicity of ways. However, a large heterogeneity exists among systems of control, both at the supranational and national levels. The actual impact of state aids and subsidies is difficult to assess. On the one hand, they may cause distortions and inefficiencies. On the other hand they are frequently rationalised as an instrument to tackle market failures and to produce positive externalities. To improve the assessment of state aids and subsidies measures, governments should adopt general screening ex ante and limiting criteria. Ex post assessment mechanisms should also be put in place in order to limit their negative impact. Furthermore, competition authorities should hold state-owned enterprises and government agencies to the same standards as private companies regarding the control of anticompetitive behaviour. Finally, advocacy by competition authorities to other parts of the Government should also contribute to keeping the granting of state aids in check.