The assumption underlying the EU Competition Rules is that competition is good, intrinsically as it reflects economic liberty and/or because it produces desirable outcomes. Distortions to competition are accordingly to be regulated. As interventions by the State may create distortions, the State aid rules regulate the assistance that governments may provide to undertakings. But the task of the State aid rules is not to prevent or eliminate all distortions of the market by governments but to draw a line between those interventions that are legitimate and those that are not. Where that line should be drawn is a contested issue and has particular relevance today in the context of tax administration.

Drawing on administrative law, I argue in an article which is forthcoming in the Law Quarterly Review that the line should be drawn in a manner which accommodates ‘wrong’ decisions by public authorities. This has particular relevance today in the context of tax administration. EU Member State tax authorities are alleged to have given unduly favourable tax rulings to multinationals, such as Apple, Amazon and Fiat, in departure from the underlying tax rules and that this constituted State aid. The article argues that these cases should not be decided on the basis that a misapplication of the relevant tax rules alone, national or otherwise, should not be sufficient to give rise to State aid concerns. Rather what should be asked is whether the tax authorities acted contrary to administrative law when they administered the relevant tax rules. As applied in the context of the ongoing cases, this could still well mean that the tax authorities acted unlawfully. But critically, this proposition avoids putting the Commission in a situation such that it becomes a supranational tax authority.

The Law Quarterly Review operates a strict policy on accessing pre-published versions of articles so it cannot be posted on SSRN. If you wish to obtain a copy, please send me an email (stephen.daly@kcl.ac.uk).