State aid control as a coordinating instrument for EU industrial policy in the internal market : conference paper

The European Union's industrial policy has gained renewed significance in response to geopolitical shifts, intensifying global competition, and the twin digital and green transitions. This paper analyses the coinciding role that EU State aid law plays as a coordinating instrument for EU industrial policy in the internal market. In recent years, the EU's approach to State aid has undergone a significant transformation, moving from a strict prohibition model towards a more flexible compatibility regime. By leveraging instruments in the renewed State aid toolbox, such as the General Block Exemption Regulation, Important Projects of Common European Interest, and temporary crisis frameworks, the Commission now facilitates targeted State aid to support industrial goals, particularly in green technologies, innovation, and strategic autonomy. The paper critically assesses this development and analyses its advantages and disadvantages. While this shift overall enables swifter resource mobilisation, it also raises concerns over competitive neutrality and the potential for deepening economic divergence between Member States. Ultimately, balancing ambitious industrial objectives with market fairness remains a core challenge for the EU's evolving governance architecture. At the same time, the paper shows that further stand-alone industrial policy is needed.