CONDITIONAL REGULATORY INDEPENDENCE: THE DETERMINANTS OF THE EU COMMISSION DECISIONS ON STATE AID (1999-2009)

To what extent does European Commission regulate state aid policy independently of member states’ preferences? Formally, the European Commission regulates state aid independently of national pressures. In real facts, since the supranational rules restricts the opportunities to support selective undertakings, member states have to gain from constraining the Commission’s authority in order to play a leading role in the domestic economy. The present analysis investigates to what extent and under which circumstances member states are able to affect the Commission decisions on state aid. According to the European rules on state aid policy, I present a straightforward game that highlights how member states strategically interact with the Commission. Hence, I derive six testable hypotheses on the impact of member states through threats of non-compliance and the most influent commissioners on state aid policy, such as the commissioners on competition and regional policy. Employing data on 3249 decisions on state aid that the Commission has taken from the 22nd of March 1999, when the current regulation on state aid came in force, until 31/12/2009, I find that decision-making has been affected by member states. On the whole, they seem to take advantages both from the weaknesses of state aid control and the nomination of the commissioner on regional policy. Member states’ influence varies among policy objectives: the Commission is affected especially when it evaluates measures concerning regional development. On the contrary, when the decision-making concern horizontal measures, the Commission seems to be affected only by the threats of non-compliance In addition to the mechanisms executed by member states, supranational decisions may be affected also by other factors, such as the Commission’s policy preferences, the procedural constraints provided for by formal rules, the degree of selectivity of the aid, the level of workload and the changes in the economic cycle.