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Is there a need for a Rule of Reason in European State aid law? Or how to Arrive at a Coherent Concept of Material Selectivity?

The ban on State aid as laid down by Article 107 (1) TFEU requires any advantage to be selective, meaning that it must be granted to only certain undertakings or to the production of certain goods. The jurisprudence of the European courts on this notion has been anything but coherent and straightforward in recent times. In 2001 the European Court of Justice accepted in its famous Adria-Wien ruling a so-called objectives-based approach, meaning that a Member State is justified to pursue different policies, such as environmental, social, or other objectives, without necessarily rendering a given measure materially selective. The General Court in two judgments handed down some years later built on this precedent and enlarged (to a considerable) extent the freedom enjoyed by Member States to pursue such objectives without falling under the State aid prohibition. In a more recent ruling the Court of Justice set aside one of those decisions, basing its conclusions on the premiss that the ban on State aid is purely effects-based. The analysis provided in this article takes this trias of rulings from the Luxemburg courts as the starting point to perform two main tasks. First, it looks into whether the objectives-based approach initiated by Adria-Wien can still be regarded as “good law”. Second, it then aims to present its own solution for exiting the current status of legal uncertainty and in this has, hopefully, struck an equitable balance between the goal of State aid to prevent distortions of competition and a sensible degree of freedom to be enjoyed by Member States to pursue (legitimate) goals of policy without any need to justify them in terms of State aid control.