Institute of Governmental Studies

Scholars and politicians have always fiercely debated on the role of government in the economy. This has shaped the legal frameworks governing the relationship between markets and governments. A key element of these legal frameworks is the antitrust legislation and the focus of this paper is the most remarkable difference between US and EU: State Aid. It is virtually non existent in the former while explicit policy in the latter. While in Europe it became an important issue in the light of the building of a single European market, it has not been a key issue for US antitrust basically because of historical reasons. More specifically, this discussion paper analyzes the impact on regulation of network industries played by the European Court of Justice (ECJ) with its Altmark decision (July 24th 2003), which defined the conditions so that a compensation for public services is not considered state aid. The analysis address specifically on the fourth condition which applies whenever the undertaking is not chosen in a public procurement: compensation needs to be determined by benchmarking the operations of the public service provider against market determined standards. In the last part of this paper we briefly present a case study on the postal sector, where risks for State Aid legislation infringement are likely to arise if universal service cost burdens are to be compensated through public subsidies. We also present a possible way forward that needs to researched to address this issue.