Competition and Cohesion – Coherence or Conflict? European Union Regional State Aid Reform Post-2006

Abstract: In 2005, the European Commission adopted competition policy Guidelines regulating national regional aid. Mirroring European Union Cohesion policy reforms, initially the Commission took a 'hard line' outlawing national regional aid, except in areas designated by the Commission, in order to improve cohesion, competition, and the efficiency of aid spending. This was successfully resisted by the Member States in favour of a more flexible regime. This paper argues that the Commission's approach to regional aid reform was flawed and raises wider questions about the relationship between national and European Union regional policies and the way in which the European Union promotes cohesion, competition and competitiveness.