The Market Economy Investor Test in EU State Aid Law: Applicability and Application

International Competition Law Series Volume 66

The Market Economy Investor Test in EU State Aid Law unravels the notion of the Market Economy Investor Principle (MEIP). For more than thirty years, EU and EFTA courts have been using a test for applying the MEIP to determine whether a state intervention amounts to a granting of an economic advantage to a recipient undertaking. If the state wishes to act as a commercial operator, it must comply with the MEIP. Unsurprisingly, the test remains a difficult and controversial legal instrument, and its very existence and credibility have been questioned.

This book analyses the applicability of MEIP in order to clarify doubts and misinterpretations. Such an understanding is crucial because of the negative consequences of the test’s misapplication, and also because the ongoing process of opening markets for more competition blurs the distinction between the public and private sectors.

The author's article depicting her doctoral thesis, on which the book is based, won the European State Aid Law Quarterly PhD award for 2016.  

What’s in this book:

• The analysis (of the applicability of MEIP) addresses such questions as the following:
• What characterizes a ‘prudent’ investor?
• When is it justified to consider a given public investor ‘rational’ or ‘reasonable’?
• How should the ‘economic’ or ‘commercial soundness’ of state interventions be understood?
• What rate of return is required under the MEIP and how is it calculated?
• When should the profitability analysis be undertaken and why?

The author examines both the theory behind the principle and its practical application, with detailed attention to case law and the Commission’s guidelines explaining the test’s mechanism. The different subtypes of the MEIP are enumerated and scrutinized in-depth, and the various critiques of the test are considered. The work concludes with proposals for change.

How this will help you:

Practitioners, policymakers, and academics will appreciate the clarification offered of the MEIP: the character of an economic advantage under the MEIP and in aid scenarios; how to determine whether the MEIP is applicable to a given state measure; and how to apply the test according to its various subtypes and to atypical or complex interventions. In addition, the book identifies potential and existing pitfalls in using the MEIP and suggests how to avoid them. The book’s systematic analysis goes a long way to ensuring a credible and reliable assessment of the applicability of state aid under Article 107(1) TFEU.