Institutional design of state aid authorities in south east Europe: The unfit legal transplant and its ramifications

Abstract

All countries in South East Europe introduced a national system of state aid control. The paper first analyses the legal requirements for introducing national state aid rules, stemming from the Stabilization and Association Agreements these countries concluded with the European Union, but also from the Central European Free Trade Agreement and the Energy Community Treaty. The analysis of the institutional design of the national state aid authorities reveals that the SEE countries largely chose to establish an authority with close links to the Government—either as a unit within the ministry of finance or ministry of economy, or as a collegial body formed by the representatives of different ministries, but only formally separated from the Government. Only the FYR Macedonia has chosen to design its state aid authority in a different manner, by entrusting the existing competition authority with the task of state aid control. Both types of institutional design are “inspired” by the models of state aid authorities that existed in the Central and East European countries in the pre-accession period. Regardless of the type of institutional design that a country opted for, the enforcement record of these authorities remains unsatisfactory. The paper concludes with an analysis of the reasons for the inefficiency of state aid control in SEE countries, which do not seem to directly result from the choice of the institutional model of the monitoring authority, since there is no substantive separation of the state aid authority from the Government structures that provide state aid.