The beginning of the end, or just another new chapter? Recent developments in EU competition policy control of regional state aid

State aid control is evolving rapidly against the background of a changing economic and geopolitical context. The so-called Lisbon agenda and subsequent Council conclusions have emphasised the objectives of ?less, but better? aid, which in turn have begun to influence Commission thinking on aid discipline. More fundamentally, enlargement of the Union to 25 members in May 2004 not only radically alters the economic landscape of the Community as a whole, but also presents formidable challenges for both the formulation and implementation of State aid control policy. At the same time, a number of State aid frameworks are due for renewal before 2007, providing the Commission with an opportunity for a comprehensive review of aid rules. This paper examines the new frameworks 'LASA' and 'LET' proposed by the Commission and their implications for regional aid. It then analyses the Commission's proposals for regional aid reform, charting the national responses to the initial consultation, the proposals put forward by DG Competition and the reactions of Member States. The paper concludes by highlighting some of the main issues and implications from the debate.

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