The hard side of soft power – the Portuguese Competition Authority recommendation to the Government on stranded costs in the electricity sector
Member States provide for varying degrees of State aid for industries operating within their territory to help achieve a wide variety of policy objectives, such as to reduce regional disparities within a country, to promote research and development and innovation activities, or to promote a high level of environmental protection.2 This may be considered, with certain limits, to be generally beneficial to the economy by providing a stronger productive base.3 However, sometimes benefits are less obvious and can impair the development of the internal market by distorting competition.4
At the High Level Forum of Member States, which took place in December 2014, Margrethe Vestager, European Commissioner for Competition, mentioned in her speech that “too much state aid is still badly designed and hinders growth. By preventing inefficient companies from leaving the market or awarding tax breaks to multinationals, it disadvantages the young, innovative companies that could revolutionise our economy. By providing conditions that the private sector cannot match, it crowds ← 215 | 216 →out private investment. By benefiting domestic companies over rivals in other Member States, it fragments the single market, the cornerstone of our prosperity.”5 Commissioner Vestager then challenged the “Member States as well as the Commission, to work together in partnership to make every euro of taxpayers’ money count”6 in order “to promote good aid, while stamping out bad aid and ensure transparency of where the money go.”7
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