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State Aid and the MEIT - Can the State really be seen as a private investor?

Bruzelius, Erik LU (2016) JURM02 20161
Department of Law
Abstract
State Aid is prohibited according to European Union legislation since it has possible distortive effects on competition. Nevertheless, Member States intervene in the economy and play an important role in the full functioning and development of the economy and society. The European Commission investigates potential State Aid measures by comparing the behaviour of the State with the behaviour of a hypothetical private investor by applying the so-called Market Economy Investor Test. According to the Commission it is crucial that there is a profit opportunity as a part of the investment or measure in that without profit opportunity, said investment or measure would not be transacted by a private investor. This is unfortunate since States often... (More)
State Aid is prohibited according to European Union legislation since it has possible distortive effects on competition. Nevertheless, Member States intervene in the economy and play an important role in the full functioning and development of the economy and society. The European Commission investigates potential State Aid measures by comparing the behaviour of the State with the behaviour of a hypothetical private investor by applying the so-called Market Economy Investor Test. According to the Commission it is crucial that there is a profit opportunity as a part of the investment or measure in that without profit opportunity, said investment or measure would not be transacted by a private investor. This is unfortunate since States often do not have profit interests in mind when they are conducting business; rather, a State might simply want to increase the society’s living standard, protect jobs or the environment, or promote other well-founded societal goals. Therefore, the current system might have a negative effect in the sense that States within the European Union shy away from entering into business since they know that they will fail the test solely on the ground that they cannot show speculative returns of the prospective investment. Accordingly, voices have risen for a new test by the Commission where aspects other than profitability would be taken into account – such as socioeconomic goals. Therefore, it has been suggested that the test benchmark should be changed from a “private investor” to a “reasonable investor”. However, this proposal is more easily contemplated than implemented because of the limited legislative powers of the Courts in State Aid cases. This thesis will show that the current system does not work flawlessly since the Commission and the Courts do not know what factors can and should be of importance within the assessment and that a change to a “Reasonable Investor Test” might increase legal certainty in this area of law. At the very least, a shift to a Reasonable Investor Test might make it easier for States and other State undertakings to safely plan their activities. (Less)
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author
Bruzelius, Erik LU
supervisor
organization
course
JURM02 20161
year
type
H2 - Master's Degree (Two Years)
subject
keywords
State Aid, The Market Economy Investor Test, MEIT, Competition Law, European Business Law
language
English
id
8881207
date added to LUP
2016-06-16 15:15:38
date last changed
2016-06-16 15:15:38
@misc{8881207,
  abstract     = {State Aid is prohibited according to European Union legislation since it has possible distortive effects on competition. Nevertheless, Member States intervene in the economy and play an important role in the full functioning and development of the economy and society. The European Commission investigates potential State Aid measures by comparing the behaviour of the State with the behaviour of a hypothetical private investor by applying the so-called Market Economy Investor Test. According to the Commission it is crucial that there is a profit opportunity as a part of the investment or measure in that without profit opportunity, said investment or measure would not be transacted by a private investor. This is unfortunate since States often do not have profit interests in mind when they are conducting business; rather, a State might simply want to increase the society’s living standard, protect jobs or the environment, or promote other well-founded societal goals. Therefore, the current system might have a negative effect in the sense that States within the European Union shy away from entering into business since they know that they will fail the test solely on the ground that they cannot show speculative returns of the prospective investment. Accordingly, voices have risen for a new test by the Commission where aspects other than profitability would be taken into account – such as socioeconomic goals. Therefore, it has been suggested that the test benchmark should be changed from a “private investor” to a “reasonable investor”. However, this proposal is more easily contemplated than implemented because of the limited legislative powers of the Courts in State Aid cases. This thesis will show that the current system does not work flawlessly since the Commission and the Courts do not know what factors can and should be of importance within the assessment and that a change to a “Reasonable Investor Test” might increase legal certainty in this area of law. At the very least, a shift to a Reasonable Investor Test might make it easier for States and other State undertakings to safely plan their activities.},
  author       = {Bruzelius, Erik},
  keyword      = {State Aid,The Market Economy Investor Test,MEIT,Competition Law,European Business Law},
  language     = {eng},
  note         = {Student Paper},
  title        = {State Aid and the MEIT - Can the State really be seen as a private investor?},
  year         = {2016},
}