Skip to main content
SpringerLink
Log in
Book cover

Social Services of General Interest in the EU pp 245–262Cite as

Public Distortions of Competition: The Importance of Article 106 TFEU and the State Action Doctrine

  • Chapter
  • First Online:

Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

This chapter examines the potential distortions of competition that may arise when governments seek to promote SSGIs. This is becoming an important issue as many social services are being transferred to competitive market structures. A central research question is the extent to which governments can contribute to the optimal functioning of SSGIs. The chapter focuses upon Article 106 TFEU and the State Action Doctrine (SAD), but also discusses the application of the free movement rules.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   139.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD   179.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    See speech by Commission Vice-President J. Almunia, ‘Only government funding of this latter category of public services (services that are economic in nature) is subject to EU competition law and, more specifically, to the control of State aid,’ Press Release, ‘SGEI reform and the application of competition rules to the financial sector: themes for dialogue with the European Parliament,’ SPEECH/11/197. Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/197&format=HTML&aged=0&language=EN&guiLanguage=en (last accessed on 11 October 2011). See also Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Reform of the EU State Aid Rules on Services of General Economic Interest, COM(2011) 146 final, 23 March 2011, p. 3.

  2. 2.

    Article 16 EC. See Ross 2000, p. 22.

  3. 3.

    Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on Services in the Internal Market, OJ 2006 L 376/36-68.

  4. 4.

    See e.g. COM(2011) 146 final; Commission, Commission Staff Working Paper, The Application of EU State Aid Rules on Services of General Economic Interest since 2005 and the Outcome of the Public Consultation, SEC(2011) 397, 23 March 2011.

  5. 5.

    The CJEU in CJEU, Case C-376/98 Germany v. European Parliament and Council (The Tobacco Advertising Directive) [2000] ECR I-8419, held in paras 106, 107 that:

    ‘In examining the lawfulness of a directive adopted on the basis of Article 100a of the Treaty, the Court is required to verify whether the distortion of competition which the measure purports to eliminate is appreciable (Titanium Dioxide, cited above, para 23) [CJEU, Case C-300/89 Commission v. Council [1991] ECR I-2867].

    In the absence of such a requirement, the powers of the Community legislature would be practically unlimited. National laws often differ regarding the conditions under which the activities they regulate may be carried on, and this impacts directly or indirectly on the conditions of competition for the undertakings concerned. It follows that to interpret Articles 100a, 57(2) and 66 of the Treaty as meaning that the Community legislature may rely on those articles with a view to eliminating the smallest distortions of competition would be incompatible with the principle, already referred to in para 83 of this judgment, that the powers of the Community are those specifically conferred on it’.

    In the sequel to this judgment, CJEU, Case C-380/03 Germany v. Parliament and Council [2006] ECR I-11573 the CJEU accepted a subsequent version of the directive that left out the criticised elements.

  6. 6.

    CJEU, Case C-157/94 Commission v. Netherlands [1997] ECR I-5699; CJEU, Case C-158/94 Commission v. Italy [1997] ECR I-5789; CJEU, Case C-159/94 Commission v. France [1997] ECR I-5815; CJEU, Case C-160/94 Commission v. Spain [1997] ECR I-5865.

  7. 7.

    CJEU, Case C-437/09 AG2R [decided on 3 March 2011, nyr].

  8. 8.

    Ibid. para 35.

  9. 9.

    Commission, Commission of 16 January 1991, 91/50/EEC, Relating to a Proceeding under Article 85 of the EEC Treaty (now Article 101 TFEU) (Ijsselcentrale and others), OJ 1991 L 28/32.

  10. 10.

    Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009, Concerning Common Rules for the Internal Market in Electricity and Repealing Directive 2003/54/EC, OJ 2009 L 211/55.

  11. 11.

    Directive 2009/73/EC of the European Parliament and of the Council 13 July 2009 Concerning Common Rules for the Internal Market in Natural Gas and Repealing Directive 2003/55/EC, OJ 2009 L 211/94.

  12. 12.

    See also Chap. 11 in this volume, by Heide-Jørgensen.

  13. 13.

    CJEU, Case C-41/90 Höfner and Elser [1991] ECR I-1979.

  14. 14.

    CJEU, Joined Cases C-159/91 and C-160/91 Poucet and Pistre [1993] ECR I-637.

  15. 15.

    CJEU, Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK Bundesverband [2004] ECR I-2493.

  16. 16.

    Opinion of AG Jacobs of 22 May 2003 in CJEU, Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK Bundesverband [2004] ECR I-2493, paras 25–28.

  17. 17.

    CJEU, Case C-503/99 Commission v. Belgium [2002] ECR I-4809.

  18. 18.

    CJEU, Case C-567/07 Sint Servatius [2009] ECR I-9021.

  19. 19.

    The Servatius judgment provides yet another example. In para 29 of this judgment, the CJEU accepted that ‘national rules may restrict the free movement of capital in the interest of objectives directed at resisting pressure on land or at maintaining, as a town and country planning measure, a permanent population in rural areas.’ Ibid.

  20. 20.

    At first sight it may seem that Article 3(1)(g) is now replaced by Article 3(1) TFEU. However, this article assigns exclusive powers to the Union. Thus, it only allocates competences and no longer establishes a general principle. The latter is contained in Protocol 27 to the Lisbon Treaty, which has the same status in the Union law as the two Treaties. On this Protocol see Barents 2009, p. 123; Lane 2009, p. 167.

  21. 21.

    CJEU, Case C-437/09 AG2R [decided on 3 March 2011, nyr], para 37.

  22. 22.

    For the purpose of this contribution I use the term ‘Article 106 undertakings’ as a shorthand.

  23. 23.

    CJEU, Case C-437/09 AG2R [decided on 3 March 2011, nyr], paras 24, 25.

  24. 24.

    Ibid. para 66.

  25. 25.

    Although in AG2R the undertaking was the product of a collective agreement and not a governmental action, there is no doubt that the discretion applies to SGEIs that are created by governments.

  26. 26.

    CJEU, Case C-157/94 Commission v. Netherlands [1997] ECR 1-5699; CJEU, Case C-158/94 Commission v. Italy [1997] ECR I-5789; CJEU, Case C-159/94 Commission v. France [1997] ECR I-5815; CJEU, Case C-160/94 Commission v. Spain [1997] ECR I-5851; CJEU, Case 189/95 Franzén [1997] ECR I-5909.

  27. 27.

    CJEU, Joined Cases C-88, 93 and 94/01 P Chronopost SA and others v. Commission [2003] ECR I-6993. In para 34 the Court held: ‘La Poste is entrusted with a service of general economic interest within the meaning of Article 90(2) of the EC Treaty (now Article 86(2) EC) (see Case C-320/91 Corbeau [1993] ECR I-2533, para 15). Such a service essentially consists in the obligation to collect, carry and deliver mail for the benefit of all users throughout the territory of the Member State concerned, at uniform tariffs and on similar conditions as to quality.’ In para 41 the CJEU, held that: ‘In the light of all the foregoing considerations, the Court of First Instance erred in law in interpreting Article 92(1) of the Treaty as meaning that the Commission was not entitled to determine whether there was aid to SFMI-Chronopost by reference to the costs borne by La Poste but that it should have checked whether the payment received by La Poste ‘was comparable to that demanded by a private holding company or a private group of undertakings not operating in a reserved sector, pursuing a structural policy—whether general or sectorial—and guided by long-term prospects.’

  28. 28.

    CJEU, Case C-280/00 Altmark [2003] ECR I-7747.

  29. 29.

    Commission, Commission Decision of 28 November 2005, C(2005) 2673 on the Application of Article 86(2) of the EC Treaty to State Aid in the From of Public Service Compensation Granted to Certain Undertakings entrusted with the Operation of Services of General Economic Interest, OJ 2005 L 312/67.

  30. 30.

    Community Framework for State Aid in the Form of Public Service Compensation, OJ 2005 C 297/4. [Eds: The Framework and Decision were revised after this chapter was completed and are discussed in Chap. 13 by Szyszczak].

  31. 31.

    See Slot 1998, pp. 1183–1203.

  32. 32.

    An example could be the public water supply.

  33. 33.

    This could be the case when there is no clear governmental action bestowing such a task on the undertaking. Another situation could be where the services provided by the undertaking cannot be considered exclusive or special rights. See e.g. CJEU, Case C-35/96 Commission v. Italy (CNSD) [1998] ECR I-3831.

  34. 34.

    CJEU, Case 13/77 GB-Inno-BM v. ATAB [1977] ECR 2115.

  35. 35.

    Ibid. paras 31 and 33.

  36. 36.

    CJEU, Case 267/86 Van Eyke v. Aspa NV [1988] ECR 4769, para 16.

  37. 37.

    Wainwright and Bouquet 2003, p. 544.

  38. 38.

    CJEU, Case C-2/91 Meng [1993] ECR I-5791.

  39. 39.

    CJEU, Case C-245/91 Ohra [1993] ECR I-5851.

  40. 40.

    CJEU, Case C-185/91 Reiff [1993] ECR I-5801 Reich 1994, pp. 459–492. There was an extensive discussion in the CJEU on the desirability of a broad norm (outlawing all state legislation with an anti-competitive effect) versus a more limited norm (action prescribing, encouraging or reinforcing anti-competitive agreements) as is evidenced in the rapport d’audience of the Meng case (CJEU, Case C-2/91 Meng [1993] ECR I-5791). The discussion was reopened after a first round with the Opinion of AG Tesauro of 14 July 1993 in CJEU, Case C-2/91 Meng [1993] ECR I-5751, followed by a second round with seven questions to the governments and a second opinion.

  41. 41.

    Wainwright and Bouquet 2003.

  42. 42.

    CJEU, Case C-180/98 Pavlov v. Stichting Pensioenfonds [2000] ECR I-6451.

  43. 43.

    Ibid. para 98.

  44. 44.

    CJEU, Joined Cases C-359/95P and 379/95P Commission and France v. Ladbroke [1997] ECR I-6265.

  45. 45.

    CJEU, Case C-35/96 Commission v. Italy (CNSD) [1998] ECR I-3851.

  46. 46.

    CJEU, Joined Cases 11, 40–48, 50, 54–56, 111, 113 and 114/73 Suiker Unie and others v. Commission [1975] ECR 1663.

  47. 47.

    This clearly demonstrated in the Opinion of AG Jacobs of 22 May 2003 in CJEU, Joined Cases C-264, 306, 354 and 355/01, AOK Bundesverband [2004] ECR I-2493. Unlike the CJEU in its judgment, the AG found that the healthcare funds are undertakings thus finding that they are subject to the competition rules. However, subsequently he considered that the undertakings can be exempted under Article 106(2).

References

  • Barents R (2009) Constitutional horse trading: some comments on the protocol on the internal market and competition. In: Bulterman M, Hancher L, McDonnell A, Sevenster H (eds) Liber Amicorum Piet Jan Slot. Wolters Kluwer, Alphen aan den Rijn, p 123

    Google Scholar 

  • Lane R (2009) EC competition law post-Lisbon: a matter of protocol. In: Bulterman M, Hancher L, McDonnell A, Sevenster H (eds) Liber Amicorum Piet Jan Slot. Wolters Kluwer, Alphen aan den Rijn, p 167

    Google Scholar 

  • Reich N (1994) The ‘November Revolution’. CMLRev 31:459

    Google Scholar 

  • Ross M (2000) Article 16 EC and services of general interest: from derogation to obligation. ELRev 25:22

    Google Scholar 

  • Slot PJ (1998) Cases C-157/94 Commission v. Netherlands; C-158/94 Commission v. Italy; C-159/94 Commission v. France; C-160/94 Commission v. Spain; C-189/95, Harry Franzén [1997] ECR 1-5699; I5789; I–I-5815, I5851.I-5909. CMLRev 35:1183–1203

    Google Scholar 

  • Wainwright R, Bouquet A (2003) State intervention and action in EC competition law. In: Hawk B (ed) Annual proceedings of the Fordham corporate law institute: International Antitrust Law and Policy, vol 551. Juris Publishing, Inc., 2004, New York, pp 539–551

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculteit Rechtsgeleerdheid, Europees Recht, Leiden University, Leiden, The Netherlands, Beulingstraat 2,1017BA, Amsterdam, The Netherlands

    Piet Jan Slot

Authors
  1. Piet Jan Slot
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Piet Jan Slot .

Editor information

Editors and Affiliations

  1. , Faculty of Law, University of Copenhagen, Studiestræde 6, Copenhagen K, 1455, Denmark

    Ulla Neergaard

  2. , School of Law, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Erika Szyszczak

  3. , Faculty of Law, Radboud University, Comeniuslaan 4, Nijmegen, 6525 HP, Netherlands

    Johan Willem van de Gronden

  4. , Fachbereich Rechtswissenschaft, Universität Erlangen-Nürnberg, Schillerstraße 1, Erlangen, 91054, Germany

    Markus Krajewski

Rights and permissions

Reprints and permissions

Copyright information

© 2013 T.M.C. ASSER PRESS, The Hague, The Netherlands, and the editors

About this chapter

Cite this chapter

Slot, P.J. (2013). Public Distortions of Competition: The Importance of Article 106 TFEU and the State Action Doctrine. In: Neergaard, U., Szyszczak, E., van de Gronden, J., Krajewski, M. (eds) Social Services of General Interest in the EU. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague, The Netherlands. https://doi.org/10.1007/978-90-6704-876-7_10

Download citation

Publish with us

Policies and ethics

Societies and partnerships

Search

Navigation