Conditional regulatory independence: the determinants of the European Commission's decisions on state aid

To what extent does European Commission regulate state aid policy independently of member states’ preferences? The present analysis investigates to what extent and under which circumstances member states are able to affect the Commission decisions on state aid. According to the European rules on state aid policy, I present a straightforward game that highlights how member states strategically interact with the Commission. Hence, I derive four testable hypotheses on the impact of member states through threats of non-compliance and the appointment of the most influent commissioners on state aid policy. Employing data on the 3249 decisions on state aid that the Commission has taken from the 22nd of March 1999, when the current regulation on state aid came in force, until 31/12/2009, I find that supranational decisions have been influenced by member states. On the whole, they seem to take advantages both from the weaknesses of state aid control and the appointment of the commissioner on regional policy.