Economics is increasingly being used to inform the regulatory, governmental, and judicial decisions that shape the legal boundaries of the free market. Economic and financial analysis is at the heart of modern state aid policy.
Oxera has a long-standing reputation for providing critical economic insight into state aid matters to governments, lawyers, regulators, and large corporations. We have market-leading experience in front of the European Commission and courts and enjoy excellent working relationships with the European Commission, including with the Chief Economist’s team.
‘'We use economics to answer the big questions.'’
In this Q&A, Oxera economic experts discuss the success stories and key issues our clients face in state aid
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The skills we apply to state aid

State aid covers any form of advantageous government treatment (whether implicit or explicit), ranging from direct subsidies to tax exemptions.

Financial Analysis
Corporate finance skills are essential to state aid analysis, particularly in relation to tests of the market economy operator principle and over-compensation tests for companies providing services of general economic interest (SGEI).

Client projects

  • Expert advice to a top Spanish football club on an appeal of a Commission state aid Decision.
  • Advising EDF in a European Commission investigation into alleged tax advantage in France.
  • Advising airports on a range of state aid matters, including MEOP assessments of loan arrangements and the notification of investment aid.

Competition Economics
Competition economics is used to assess market failures and identify distortions in trade and competition due to state aid. Where aid has a substantial distortive effect, competition economics is used to assess how to mitigate this effect, including the design of effective competition remedies in order to ensure that the goal of ‘good aid’ is still achieved.

Client projects

  • Ex post evaluation of a tax measure for a French authority.
  • Advising EDF in the European Commission investigation into state aid for new nuclear investment at Hinkley Point, leading to clearance by the Commission as compatible with state aid rules.

Regulatory Economics
Regulatory economics is used to assess whether the measure is best designed to deliver its stated objectives. For example, we test whether the European Commission’s requirements for ‘good aid’ are met—i.e. that the aid is well-designed, targeted at identified market failures, and least distortive.

Client projects

  • Advised an energy company on the appropriate design of a claw-back mechanism to ensure that the company’s profitability did not exceed a ‘reasonable’ level, and therefore that state funding received by the company could be compatible with state aid rules.

Oxera State Aid


Fight or flight

Client: Ryanair
Result: State aid clearance achieved at several European airports

Client: Ryanair

Result: State aid clearance achieved at several European airports

Ryanair is one of the brands that has turned the airline industry on its head. Offering low-cost flights reduces margins to unprecedented lows, requiring a shift not only in the business model, but in airport locations.

Over the last four years, the European Commission has been conducting state aid investigations in relation to agreements signed between Ryanair and at least 25 European airports, covering agreements made as far back as the late 1990s.

Under current state aid rules, a negative result for Ryanair would have cost more than a substantial price in repayment of funds, as well as damages from competitors and the airports themselves.

In the course of these investigations, Oxera has prepared several reports that have been submitted to the European Commission. In these reports, we demonstrate that, based on sound economic and financial analysis, Ryanair’s arrangements at these airports are in line with the market economy operator principle. We also participated in several working sessions with the Commission during these investigations.

To date, Oxera has helped Ryanair to obtain clearance for 98% of its value at risk (on the basis of traffic volume implicated by the Commission’s investigations). In particular, we have helped Ryanair achieve state aid clearance at Aarhus Airport (Denmark), Alghero Airport (Italy), Charleroi Airport (Belgium), Hahn Airport (Germany), Marseille Airport (France), Niederrhein Airport (Germany) and Västeräs Airport (Sweden).

Find out more from our experts in this area: