Assessment of competitive market conditions plays an increasingly significant role in the evaluation of state aid cases. The Brattle Group has advised in connection with several state aid proceedings initiated by the European Commission. Our role in these proceedings has been to conduct detailed empirical analysis, develop economic and financial models, and apply the Market Economy Investor Principle (MEIP) test.
For the HM Treasury in the United Kingdom, Brattle economists developed a methodology to identify sensitive sectors where the distortion of competition induced by state aids is likely to be particularly serious. We provided a framework in which an economic analysis of state aid can be performed, traced out the effect that various types of aid can have on competition, and presented background information on EU state aid policy. Brattle’s assessment also outlined an approach for identifying sectors suffering from structural problems in terms of market failures, which arise in the exit decisions of firms in declining industries. We also analyzed the factors that determine the magnitude of the distortions of competition induced by state aid in the context of a formal model.
We advised large energy companies in several EU countries in connection with European Commission investigations of whether artificially low regulated tariffs or negotiated prices could constitute illegal state aids. This entailed detailed economic and financial analysis, including modeling the domestic electricity market and preparing a financial valuation model. Our economic analysis and written testimonies underpin the client’s legal case.