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Accurately assessing competitive market conditions plays an increasingly significant role in the evaluation of state aid cases. Clients have retained Brattle in connection with several state aid proceedings initiated by the European Commission. Our role in these proceedings has been to conduct detailed empirical analysis, develop economic and financial models, and apply the Market Economy Investor Principle (MEIP) test.


Below is a list of representative engagements for our State Aid practice.

EC state aid investigation
Brattle provided economic analysis in support of Alro, an aluminium producer, in connection with an EC state aid investigation of the price of electricity in a long-term power purchase agreement (PPA) with Hidroelectrica, a state owned electricity generator in Romania. Our analysis entailed detailed financial and electricity market modelling to determine but-for market prices and profitability, absent the PPA. Following an in-depth investigation, the European Commission concluded that the electricity supply contract did not constitute State Aid. In its decision, the Commission referred to the “ample and comprehensive studies prepared by the Brattle Group in support of their arguments according to which the agreement with Hidroelectrica did not involve any state aid.”
Evaluation of the distortion of competition induced by state aids
For the HM Treasury in the United Kingdom, Brattle economists developed a methodology to identify sensitive sectors where the distortion of competition induced by state aids is likely to be particularly serious. We provided a framework in which an economic analysis of state aid can be performed, traced out the effect that various types of aid can have on competition, and presented background information on EU state aid policy. Brattle’s assessment also outlined an approach for identifying sectors suffering from structural problems in terms of market failures, which arise in the exit decisions of firms in declining industries. We also analyzed the factors that determine the magnitude of the distortions of competition induced by state aid in the context of a formal model.
European Commission investigations of possible state aid in the electricity sector
Members of The Brattle Group advised large energy companies in several EU countries in connection with investigations by the European Commission of whether artificially low regulated tariffs or negotiated prices could constitute illegal state aids. We undertook detailed economic and financial analyses, including modelling the domestic electricity market and preparing a financial valuation model. Our economic analyses and written testimonies underpin the client’s legal case.
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