European Watchdog Warns of Poor Oversight at European Commission

brussels - The European Court of Auditors has raised concerns about inadequate supervision of relaxed state aid rules, which could undermine the internal market.

For the first time, there will be no separate European Commissioner for Competition. Just as the European Court of Auditors warns of inadequate oversight of relaxed state aid rules. "This could undermine the internal market," said the financial watchdog.

The European Commissioner for Competition is one of the oldest existing roles within the executive EU power. But as of December, the role of referee of the internal market will more or less disappear.

Spanish politician Teresa Ribera will become vice president 'for a clean, fair, and competitive transition.' She will be ultimately responsible for green policies and will also handle competition issues.

The European Court of Auditors does not comment on this change. However, the watchdog looks back on the recent developments. To keep companies afloat during the COVID-19 crisis and the consequences of the war in Ukraine, Brussels has relaxed European state aid rules.

Since then, the support spending of member states has nearly tripled from around €120 billion per year before the crisis to over €320 billion in the years of the pandemic, the Court of Auditors writes. Countries have continued with support subsidies, for example, to help companies during the energy crisis - which is related to the war in Ukraine.

According to the Court of Auditors, state aid is increasingly being used to support green goals of industrial policy. However, this is not without risks. "The EU currently has a complex set of state aid rules that are not always consistent or sufficiently supported by economic analysis," warns the Court of Auditors. "This could also undermine the effective functioning of the EU's internal market, as richer countries can simply spend more than others, thus disrupting a level playing field."

In addition, the Court of Auditors states that member states do not provide complete and reliable data on the aid granted, making it more difficult for the Commission to accurately map the assistance.

Brussels also supposedly lacks a 'structured approach' to detecting state aid that is not properly notified by member states. The report also examines COVID-19 aid procedures in the Netherlands and compares them to Germany. Our neighboring Germans provided loans at low interest rates to businesses, while The Hague distributed subsidies. Moreover, the support amount was based on turnover losses and fixed costs (including depreciation of fixed assets). Entrepreneurs did not have to prove that the problems were caused by the pandemic.

The Court of Auditors notes that the Dutch approach can help maintain a company's investment level, but there is no direct link between depreciation and liquidity needs.

The European Commission allowed this and, according to the Court of Auditors, did not ensure that the support was aimed at companies hardest hit by the crisis and that the support sometimes went beyond preventing bankruptcy.