State Aid Enforcement After Apple
This is the text of Ruth Mason's Tillinghast Lecture, delivered at NYU School of Law in October 2025. The lecture frames the EU's anti-subsidy rules (state-aid) as involving balancing act when subsidies are delivered as tax savings: the EU protects free movement and a level playing field, yet Member States retain primary tax-design powers (rates, bases, allocation methods). Procedurally, the Commission must prove a selective advantage and often does so by constructing a “reference system” and identifying a derogation—an approach that mirrors tax-expenditure analysis. But recent cases have pushed this method into controversial territory because those cases concerned what tax-expenditure analysis labels "structural rules." Structural rules are the deep architecture of the tax system such as tax rates, taxable units, and methods of allocating income for which there are no ready reference bases. The Commission's search for new methods that can handle structural tax rules has led to ambiguity, accusations of political motives, baseline fights, and recoveries that rely on debatable premises. Mason's solution described in more detail in a forthcoming bookend lists alternative methodologies that can separate true distortions (tariff equivalents or subsidies for interstate over in-state commerce) from mere mismatches or policy differences between states. Getting the method right is not a mere academic problem: it enhances predictability for business, preserves the Commission’s legitimacy, and better serves the single market’s neutrality goals.