Integration in small steps: The European commission and member‐state aid to industry

Member states of the European Union traditionally have used a variety of aids to industry to develop national champions, rescue major enterprises in financial trouble, and to make industry more competitive internationally. Yet making the single European market operational and sustaining cohesion across member states with different abilities to aid their industrial enterprises requires that the European Commission monitor state aid closely. Most accounts of this tension point to the weak record of the Commission in rejecting aid packages proposed by member states. This article argues that the rate of rejection of aids by the Commission is a highly misleading indicator of the Commission's influence in this policy area. In fact, the Commission has developed substantial capacities to regulate state aid relative to the constraints within which it operates.