Competition and cohesion - coherence or conflict? EU regional state aid reform post-2006

In 2005 the European Commission adopted competition policy guidelines regulating national regional aid. Mirroring EU Cohesion policy reforms, initially the Commission took a 'hard line' outlawing national regional aid, except in areas designated by the Commission, in order to improve cohesion, competition and the efficiency of aid spending. This was successfully resisted by the Member States in favour of a more flexible regime. This paper argues that Commission's approach to regional aid reform was flawed and raises wider questions about the relationship between national and EU regional policies and the way in which the EU promotes cohesion, competition and competitiveness.