Which Role for State Aid and Merger Control During and After the Covid Crisis

In response to the severe economic crisis triggered by Covid-19, state aid and a relaxation of competition rules, including merger control, have been proposed as policyoptions. We argue that there is a clear role for state aid in sectors experiencing a temporary shock, whereas state aid in sectors affected by a permanent long-term shock is more problematic. We also argue that merger control should not be relaxed and that in particular any merger proposal invoking the failing firm defence requires close scrutiny.