Abstract
This chapter introduces the third part of the project being the task of controlling state aid and the importance of the two-pillar system in the EEA to ensure state aid control. It is clear that the substantive primary law provisions in the chapter on competition and state aid law have remained largely untouched by the process of treaty revisions. However, the position in the EU’s constitutional framework of competition and state aid law and policy have shifted significantly as a result of the revision processes in the amending treaties.
This chapter introduces the subsequent analysis explaining the division into two chapters. It explains how the first part (Chap. 12) concerns legal tools to protect state welfare services from EU/EEA competition and state aid law. However, the second part (Chap. 13) demonstrates how securing guarantees for public services at the EU level in the constitutional texts the Member States have also outlined and legitimized an increased application of EU law to public services. This is then demonstrated through the state aid scrutiny by the Commission applied to largely non-economic services and the paralleling of this practice by the Authority in the EEA. In the EU legal order the increased policymaker role of the Commission has been officially sanctioned through various primary law amendments, the most recent being Article 108(4) TFEU on the right to adopt block exemption regulation. No parallel legal recognition of the Authority exist in the EEA Agreement.
The chapter discusses public services in the EU legal order in light of various models for welfare integration, the changed constitutional framework for public services in the EU legal order including Article 14 TFEU, Article 36 in the Charter of Fundamental Rights and Protocol 26 TFEU as well as the more complex evolution of EU law compared to the analysis in Part I and Part II.
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Notes
- 1.
The power of the Authority is characterised as symmetrical with the Commission powers in the EU pillar, see Karlsson (2014), p. 470.
- 2.
An analysis of the constitutional implications of state aid law can be found in de Cecco (2013), see also de Cecco (2012). On the need for a legal framework in the EU for the provision of SGEI, see Krajewski (2008), pp. 377–398, for a general and updated state aid analysis, see Hancher et al. (2016).
- 3.
- 4.
See also Damjanovic (2013), p. 1691 stating that the Commission has gradually shifted the Member States’ welfare regimes from the category of non-economic to economic SGI.
- 5.
The role of the Commission to have exclusive responsibility for initiating proposals for EU legislation is not shared by the EFTA Surveillance Authority given that there is no independent legislative process in the EFTA pillar. The role of guardianship of the Treaties/EEA Agreement, i.a. through the opening of infringements proceedings against Member States/EFTA States and the role of a competition authority in the areas of state aid, antitrust and mergers are both paralleled in the EEA.
- 6.
The EFTA Surveillance Authority issue parallel Communications applicable to EFTA States.
- 7.
The first Communication relevant for public services was issued in 1996 and pioneered the concept of services of general interest (SGI). Article 4(2) TFEU add SGI to the activities of the Union (previous Article 3 EC).
- 8.
The reasons for exempting state aid for public service broadcasting is set out in current Protocol 29 TFEU on the system of public broadcasting which was first added to primary law by the Amsterdam Treaty.
- 9.
Social housing and education is examined more briefly in Sect. 11.5.
- 10.
- 11.
This divide also applies for the free movement of services provisions. A service is economic if it is normally provided for remuneration, although it is not necessarily the recipient that pays for the service, see Part I.
- 12.
See Commission Communication, Services of General Interest, including social services of general interest: a new European commitment, COM (2007) 725 final 1 and 3.
- 13.
Services of General Interest, including social services of general interest: a new European commitment, COM (2007) 725 final 4 and 5, see also the division in Protocol 26 TFEU.
- 14.
COM 2007(725), p. 5, see also Commission’s Communication on Social services of general interest, COM(2006) 177.
- 15.
An academic analysis of the developments in EU law for public services in general and for social services specifically can be found in Szyszczak et al. (2011).
- 16.
Neergaard (2008), p. 95.
- 17.
The term was first mentioned in the Commission Report to the Laeken European Council, COM(2001) 598, and continuous to be used in soft law measures, see for a comprehensive academic study of the concept in EU law in Neergaard et al. (2013).
- 18.
Cruz (2013), p. 296.
- 19.
Baquero Cruz refers to Fritz Scharpf as a foremost advocate of this thesis, Cruz (2013), p. 288.
- 20.
Except to some extent at the end of the paper where doubts are expressed as to the Member States being the right level to find the optimal regulatory mechanism for social policies based on the understanding that in the national, regional or local context, social policies are captured by the entrenched position of various groups, see Cruz (2013), pp. 312–313.
- 21.
As noted by Damjanovic, the state aid rules have a potentially broader scope of application than the competition rules given that they also apply to state advantages principally granted for the provision of non-economic activities if the entity also provides economic activities and these two operating areas are not properly separated so that there is a threat of cross-subsidisation. An example of where this issue is relevant is public hospitals, Damjanovic (2013), p. 1698.
- 22.
- 23.
Santa Maria (2015), p. 2.
- 24.
Protocol 3 to the SCA lays down in more detail the Authority’s powers and functions.
- 25.
For an informative analysis of the revised constitutional framework for public services in the EU legal order see Bauby (2011), pp. 19–35.
- 26.
This is particularly clear regarding the issuing of parallel Guidelines in the field of state aid by the EFTA Surveillance Authority, http://www.eftasurv.int/state-aid/legal-framework/state-aid-guidelines/.
- 27.
Napolitano (2005), pp. 565–581.
- 28.
The increased right to patient mobility is an example, see Chap. 3.
- 29.
The increased right to student financing in cross-border situations is an example, see Chap. 4.
- 30.
An example in the field of social housing is widely discussed for the so-called Dutch case, see Gruis and Elsinga (2014), pp. 463–469. Rights to welfare benefits in general as well the protection of cross-border patients’ rights health services provide other examples.
- 31.
This can be illustrated by the effect of the liberalisation of the broadcasting market on the provision of public broadcasting by many considered of essential value for democratic, social and cultural concerns, The Authority’s practice in the cultural area (film support) Decisions No. 32/02/COL and No. 169/02/COL approving aid schemes for film production and film-related activities, see also Decision No 430/08/COL on support schemes to audiovisual production.
- 32.
Cases in the healthcare sector serve as useful illustrations, see Chap. 3.
- 33.
- 34.
- 35.
And this process is ongoing, see the Report 9 May 2010, A New Strategy for the Single Market: At the Service of Europe’s Economy and Society, President of the Commission Mario Monti, see also the SGEI packages from 2005 and 2011.
- 36.
- 37.
See extensive references to the literature above.
- 38.
- 39.
Sauter (2014), p. 3 and chapter 4.
- 40.
Schweitzer (2011), p. 43.
- 41.
Like in the sectors of network industries and energy.
- 42.
Like in the sector of transport as demonstrated below i.a. in the case of Hurtigruten.
- 43.
- 44.
As pointed out by Sauter the term public service is fundamentally wider than SGEI because it refers to the service as a whole not just to that element of the service that is part of or required to ensure a public service obligation or USO that will constitute an SGEI, Sauter (2014), p. 10.
- 45.
A measure must satisfy the following five cumulative conditions for Article 107 (1)TFEU (Article 61(1)EEA) to apply: (i) aid must be granted through state resources, (ii) it must confer an economic advantage which is not received in the normal course of business, (iii) the advantage must favour undertakings, (iv) be selective by favouring certain undertakings or the production of certain goods, and (v) it must distort competition and affect trade between Member States (EEA states), see also Chap. 12 in footnote 3.
- 46.
Leading cases include Case C-41/90 Höfner and Elser [1991] ECR I-1979, Case C-320/91 Corbeau [1993] ECR I-2533, Case C-393/92, Almelo [1994] ECR I-1477 and Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089.
- 47.
For instance Case C-174/97 FFSA [1998] ECR I-1303, paragraph 173.
- 48.
Ross (2000), p. 24.
- 49.
See the in-depth analysis of this early approach in Prosser (2005).
- 50.
See i.a. Cases like Case 155/73 Giuseppe Sacchi [1974] ECR 40, paragraph 15, Case 18/88 RTT [1991] ECR I-05941 paragraph 22, T-260/94 Air Inter EU:T:1994:265, paragraph 138.
- 51.
Case 18/88 RTT [1991] ECR I-05941.
- 52.
T-260/94 Air Inter EU:T:1994:265, paragraph 138.
- 53.
Commission decision (EEC) 82/371 IV/29.995 Navewa-Anseau [1982] paragraph 66, see Prosser (2005).
- 54.
See Report 9 May 2010, A New Strategy for the Single Market: At the Service of Europe’s Economy and Society, President of the Commission Mario Monti.
- 55.
- 56.
Declaration 13 on Article 7d (now Article 14 TFEU) of the Treaty establishing the European Community, OJ 1997, C 340/133.
- 57.
Ross (2007), p. 1059.
- 58.
Ross (2007), p. 1057, see also H. Schweitzer [2007] Competition Law and Public Policy: Reconsidering an Uneasy Relationship. The Example of Art. 81, EUI Working Paper LAW No. 2007/30.
- 59.
Prosser (2005).
- 60.
Generally on promoting solidarity and public services, see Ross (2007), pp. 1057–1080.
- 61.
Ross (2000), pp. 22–38.
- 62.
Case C-320/91 Corbeau [1993] ECR I-2523, Case C-393/92 Almelo [1994] ECR I-1477 and the clutch of cases involving the energy utilities in the Netherlands, Italy, France and Spain in 1997, Ross also demonstrates that there are exceptions and that no uniform picture emerges. The general tendency seems however well documented and in line with the objective of Article 14 TFEU.
- 63.
Ross (2000), p. 26.
- 64.
Opinion of Advocate General Jacob in Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089.
- 65.
Opinion of Advocate General Alber in Case C-340/99 TNT Traco [2001] ECR I-4109.
- 66.
Pursuant to Article 6 of the TEU the Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the EU of 7 December 2000 as adapted at Strasbourg on 12 December 2007, which shall have the same legal value as the Treaties—placed in the Title IV on Solidarity—thereof should be mentioned.
- 67.
Opinion of Advocate General Alber in Case C-340/99 TNT Traco [2001] ECR I-4109, paragraph 94.
- 68.
Protocol on Services of General Interest, OJ 2007, C 306/158 Note that Article 2 has the following wording; ‘The provisions of the Treaties do not affect in any way the competence of Member States to provide, commission and organise non-economic services of general interest.’ See also the Communication from the Commission on the Notion of State Aid (2016). The term non-economic service is far from a clear concept, see further in Sect. 12.2 below.
- 69.
The ‘Husbanken’ decision involved an assessment of whether the framework conditions for the Norwegian State Housing Bank (Husbanken) were in conformity with the EEA Agreement. Husbanken provided subsidised loans for housing purposes and was shielded against competition from banks and mortgage companies. The framework conditions enjoyed by Husbanken were regarded as going beyond what was acceptable under Article 59(2) of the EEA Agreement, see Case E-4/97. The Court required the Authority to conduct a proportionality test which involved an assessment of whether Husbanken’s cost to render the SGEI were not overcompensated, were limited to what was necessary for Husbanken to perform the specific service in question and would not affect trade to an extent contrary to the interests of the Contracting Parties. The decision by the EFTA Court prompts the question whether the state aid review was to be conducted in a manner where the Authority was entitled to prescribe the least distortive solution for the achievement of the Norwegian housing policy goals. In doing so, the rights of Norway to regulate its housing policy according to political goals would be limited. The Authority concluded, however, in its final decision that the Husbanken system did not appear inappropriate for the realisation of housing policy objectives; see Decision No. 121/00/COL, 28 June 2000. For other cases on social housing measures, see also the Icelandic saga of the Housing Financing Fund (HFF). The decision to close the investigation by the Authority on the grounds that the measure was compatible with the EEA Agreement under Article 59(2) in Decision No. COL 213/04 was challenged by competitors in commercial banks. The EFTA Court annulled the Authority’s Decision in Case E-9/04, The Bankers’ and Securities Dealers’ Association of Iceland. The aid was later considered as existing aid and appropriate measures were proposed, See Decisions No COL 406/08, COL 247/11 and COL 364/11. For an analysis of tensions between the provision of social housing in several Member States and EU market regulations see Gruis and Elsinga (2014), pp. 463–469.
- 70.
The Authority’s decision regarding safety training in high schools, 267/13/COL on 26 June 2013.
- 71.
The Authority’s decision on hospital pharmacies, 460/13/COL on 20 November 2013.
- 72.
Another potential area for a case study to illuminate these questions would be social housing. This has already been analysed for Iceland by Karlsson (2014), pp. 470–490.
- 73.
Significant for public service broadcasting is the extent of primary law regulation of this particular service, see the Amsterdam Protocol on the Systems of Public Broadcasting in the Member States, now Protocol 29 annexed to the TFEU, last sentence.
- 74.
Named after the Altmark decision, Case C-280/00 Altmark [2003] ECR I-7747.
- 75.
Some explanation of the use of terminology is required. In EU primary law, the concept of services of general economic interest (SGEI) is used to refer to the public services that fall under the exception in Article 106(2). Other important concepts are services of general interest (SGI), introduced in EU primary law for the first time with the Lisbon Treaty and also the concept of social services of general interest (SSGI). The concepts and their significance in the EEA context will be returned to.
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Fløistad, K. (2018). State Aid Law and Articles 14, 106 and 107 TFEU and Articles 59 and 61 EEA. In: The EEA Agreement in a Revised EU Framework for Welfare Services. Studies in European Economic Law and Regulation, vol 13. Springer, Cham. https://doi.org/10.1007/978-3-319-95043-3_11
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