New Developments in State Aid Policy

Mario MONTI

1. Introduction

I would like to begin my remarks by thanking you for the invitation to speak to you today about new developments in State aid policy. Unlike antitrust and merger reform, there is no single major instrument of State aid reform. So it is not surprising that State aid reform has received less attention. Nevertheless this should not disguise the fact that very real changes are taking place.

2. General Approach to State Aid Control

When I was appointed as competition Commissioner, I underlined my determination to ensure a strict control of State aid. This objective has received support at the highest political level. At the Stockholm European Council, Member States committed themselves to continue their efforts to reduce the general level of State aid expressed as a percentage of the gross domestic product (GDP) by 2003, and to the need to redirect aid towards horizontal objectives of common interest, including cohesion objectives. At Barcelona, the Heads of Government reiterated this commitment. “Less and better targeted State aid”, they said, “is a key part of effective competition”.

The recent editions of the State aid scoreboard clearly demonstrate that so far Member States are on track towards meeting these commitments, although we need to remain vigilant. There is a clear decline in aid levels up to the end of 2001, especially outside the sensitive sectors of agriculture, fisheries and transport, where aid levels have fallen by about 25% between 1997 and 2001. Moreover there has been a significant increase in the proportion of aid devoted to horizontal objectives, such as R&D aid, aid for SMEs, the environment, employment and training, and a corresponding reduction in the amount of more distortive individual aid, although here the exact picture varies quite considerably between the Member States.