The immensity of the economic challenges posed by unification inevitably raised difficult questions of state aid, industrial policy, and the relationship between state and market. These questions led immediately to pitched domestic conflicts and, after 1992, to a widening gap between German rhetoric and German action on competition matters in Brussels. The effect was schizophrenic; Bonn's formal position on state aid remained true to its pre-unification heritage, but German behavior betrayed a new interventionist logic at work.

Pre-unification competition policy

Based on Articles 84–94 of the Treaty of Rome, the Community's competition regime confers considerable operational autonomy on the Commission to “investigate, codify, exempt, and fine” on questions relating to cartels, monopolies, and state aid to industry; it has evolved into a veritable “economic constitution, guaranteeing the maintenance of a liberal market order.” Competition matters often have been sharply contested in the Council, pitting more interventionist members like France and Italy against supporters of liberal orthodoxy, principally Germany and the UK.

On the question of state aid, West Germany was an enthusiastic supporter of a stringent application of the rules derived from Articles 92–94 of the Rome Treaty, which prohibit state subsidies that distort intra-Community trade. In practice, officials regarded state aid as a necessary evil, distinguishing between assistance to cushion the social upheaval caused by the structural decline of an industry and aid intended merely to prop up inefficient producers.