Abstract
This chapter analyses the legal meaning of the notion of “economic activity” and the relevance of this notion for the applicability of EU free movement, competition and procurement rules. It shows that the CJEU makes a distinction between an activity which at an EU level can be economic, and therefore constitutes services, goods or capital in the meaning of the Treaties, and an activity which in a specific case (under a national regulation or in a specific transaction) is economic. It finds that a legal and unitary interpretation of the notion of “economic activity” for the purpose of EU rules on competition, free movement, and procurement emerges from the Court’s case law. It also finds that in a case by case approach, the Court determines that an activity is economic on the basis of two criteria of agreement and remuneration, both easily fulfilled. The Court’s approach implies that an activity does not have to be economic in a Member State for this Member State’s regulation of this activity to be subject to EU market rules. Once the CJEU has established that public services, including social services, can be economic at a Union level, the Court finds that the Member States’ regulatory and administrative measures affecting these services are covered by EU market rules. The chapter concludes that the Court’s approach explains the development of its case law on public services, with a relatively lenient approach in the application of EU market rules. It also concludes that these judicial developments made it legally and politically necessary to transform the Treaties, and constitute a major cause of the emergence of SGEI as a constitutional public service concept in the post-Lisbon Treaties.
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Notes
- 1.
Hatzopoulos holds the view that the concept is unitary and has the same content under both internal market and competition law. See Hatzopoulos 2011, pp. 4–6.
- 2.
See Wehlander 2015, pp. 37–187.
- 3.
Case C-157/99, Smits and. Peerbooms [2001] ECR I-05473, paras 44–45.
- 4.
This was first laid down in Duphar, see Case C-238/82 Duphar [1984] ECR I-00523, para 16.
- 5.
Case C-41/90 Höfner and Elser [1991] ECR I-1979, para 21. The challenging element in the ruling in Höfner was arguably the irrelevance of the form of the activity’s financing, as the Court, in Commission v Italy, had established not only the irrelevance of the legal form for determining the existence of a public undertaking, but also, long before the ruling in Cases C-180/98 to C-184/98 Pavlov and Others [2000] ECR I-6451, that the State may act either by exercising public powers or by carrying on economic activities of an industrial or commercial nature by offering goods and services on the market (see Case C-118/85, Commission v Italy [1987] ECR 2599, paras 10 and 7).
- 6.
Case C-437/09 AG2R [2011] ECR I-973, para 45, where the Court refers to the same statement in several earlier cases.
- 7.
See Cases C-180/98 to C-184/98 Pavlov and Others [2000] ECR I-6451, para 75.
- 8.
See in particular Odudu 2009, p. 226.
- 9.
Case C-519/04 P Meca-Medina [2006] ECR I-6991.
- 10.
Opinion of AG Poiares Maduro in Case C-205/03 P FENIN v. Commission ECR [2006] I-6295, para 51.
- 11.
For the sake of simplicity, the free movement of workers and of EU-citizens has been left outside the scope of the study conducted in this chapter.
- 12.
Although to a lesser extent, this is true even in cases relating to the freedom of establishment.
- 13.
See in-depth study in Wehlander 2015, pp. 57–105.
- 14.
Case C-355/00 Freskot [2003] ECR I-05263, paras 52–59. As to the freedom of establishment, it is explicitly characterized by the Court as a right to pursue an “economic activity”, see for instance Case C-221/89 Factortame II [1991] ECR I-3905, para 20, and regarding service activities, the Court defines an economic activity for the purpose of the freedom of establishment as services “provided for remuneration”, see Case C-268/99 Jany [2001] ECR I-8615, para 48. However, by contrast with by AG Bot, the Court is obviously careful to justify the applicability of the Treaty provision to national rules restricting social services, by invoking their character of “service in the meaning of the Treaties” and not by characterizing them as an “economic activity”. Examples of this approach can be found in Joined Cases C-171/07 and C-172/07 Apothekerkammer des Saarlandes [2009] ECR I-4171, para 18. In this paragraph, the Court refers to Case C-372/04 Watts [2006] ECR I-4325, paras 92 and 146 and to Case C-169/07 Hartlauer [2009] ECR I-1721, para 29, see Wehlander 2015, pp. 71–78.
- 15.
Case C-263/86 Humbel [1988] ECR 5365, para 17.
- 16.
Case C-263/86 Humbel, para 18.
- 17.
Case C-263/86 Humbel, para 20.
- 18.
Case C-355/00 Freskot [2003] ECR I-05263, paras 56–59 and 78–79. The contribution was essentially a charge imposed by law equally to all operators and levied by the tax authority.
- 19.
Case C-281/06 Jundt [2007] ECR I-12231, para 33.
- 20.
Case C-157/99 Smits and Peerbooms [2001] ECR I-5473, para 55.
- 21.
Case C-157/99 Smits and Peerbooms [2001] ECR I-5473, para 58. The Court’s statement signals also that “consideration for the service in question” may cover the total volume of service provided under a period rather than per service unit, and can be agreed upon between the provider and the financer of the service, rather than “as normally on a market” between the provider and the recipient.
- 22.
This radical statement was made 25 years ago by Judge Koen Lenaerts, see Lenaerts 1990, Constitutionalism and the many faces of federalism, 38 American Journal of Comparative Law 205 (1990) at 220.
- 23.
Opinion of AG Stix-Hackl in C-76/05 Schwarz [2007] ECR I-6849, paras 39–40: the creation of a way out' of closed systems of national solidarity, accompanying the possibility of exercising the fundamental freedoms laid down in the EC Treaty/…/ is in itself detrimental at least to the idea of national solidarity, because the spreading of risk is restricted”.
- 24.
Lenaerts 2012, p. 1249.
- 25.
Joined Cases C-267 and C-268/91 Keck and Mithouard [1993] ECR I-6097.
- 26.
Case C-519/04 P Meca-Medina [2006] ECR I-6991.
- 27.
Another thing is of course that non-economic EU rights, such as the right to move and reside freely within the EU in accordance with Article 20(2) TFEU, may not unjustified be restricted by the national legislators.
- 28.
See Lenaerts 2012, p. 1251.
- 29.
Case C-70/95 Sodemare [1997] ECR I-3495, where the Court found that the Italian regulation imposing a not-for-profit condition to admit operators in the public-funded welfare system for old peoples’ homes in Italy was compatible with the right of establishment of a profit-making company established in Luxemburg which had set up for-profit old peoples’ homes in Italy.
- 30.
Case C-113/13 San Lorenzo [decided on 11 December 2014, nyr], para 50.
- 31.
Ibid, paras 59–60. The Court emphasized that this freedom is subject to several conditions, in particular that the associations do not pursue objectives other than the good of the community and budgetary efficiency, do not make any profit as a result of their services, apart from the reimbursement of the variable, fixed and on-going expenditure necessary to provide them, and do not procure any profit for their members, see paras 61–63.
- 32.
According to Semmelmann, the CJEU’s interpretation of the Treaty competition rules pursues the same overarching goal as its interpretation of EU free movement rules, “namely to abolish obstacles to cross-border trade”. See Semmelmann 2010, p. 521.
- 33.
Case C-118/85 Commission v Italy [1987] ECR 2599, para 7.
- 34.
Ibid.
- 35.
Case C-41/90 Höfner [1991] ECR I-1979.
- 36.
See Cases C-180/98 to C-184/98 Pavlov and Others [2000] ECR I-6451, para 75.
- 37.
In Case C-364/92 Eurocontrol [1994] ECR I-43 and Case C-343/95 Diego Cali [1997] ECR I-1547, the Court concluded that the activities at issue constituted the exercise of public powers, and came to the opposite conclusion regarding the provision of airline facilities against fees freely set by the airport management company in Case C-82/01 P Aéroports de Paris [2002] ECR I-09297. For a more in-depth analysis, see Wehlander 2015, pp. 121–128.
- 38.
In this respect, it is interesting to note the Commission Decision finding that the electronic procurement platform (TenderNed) supplied in-house by the Dutch Ministry of Economic Affairs, Agriculture and Innovation must be een as the exercise of public powers. Therefore, and Although a market exists in the Netherlands for the supply of electronic procurement platforms, the Commission concluded that the supply of this platform is a non-economic activity. The Commission reasoning is challenging, as it argues in particular that supplying such a platform is not an “inherent economic activity, but rather a service of general interest, which can be commercially exploited only so long as the State fails to offer the service itself” and thus can be an economic activity as conducted by private operators, see Commission’s Decision of 18 December 2014 on The Netherlands E-procurement platform TenderNed SA.34646 (2014/NN) (ex 2012/CP), point 68. Unsurprisingly, this Decision has been contested and brought to the General Court, see Case T-138/15 Aanbestedingskalender a.o. v Commission. The Commission’s approach regarding TenderNed does not seem to fit well with its own reasoning in its Decision 2012/485/EU of 25 April 2012 on the aid to the Zweckverband Tierkorperbeseitigung in Rheinland-Pfalz, im Saarland, im Rheingau-Taunus-Kreis und im Landkreis Limburg-Weilburg (ZT) SA.25051 (C 19/10), supported by the General Court, see Case T-309/12 ZT EU:T:2014:676. On these decisions, see Szyszczak 2015, p. 684.
- 39.
In particular AG Jacobs characterized an activity that could at least in principle be carried on by a private undertaking in order to make profits as “economic in character”, which is a somewhat confusing term for an activity only fulfilling the “comparative test”, see Opinion of AG Jacobs in Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK [2004] ECR I-2493, para 28.
- 40.
As seen above, such a “duty of consistency” has also emerged in San Lorenzo regarding not-for-profit conditions in public service systems restricting the freedom of establishment, see Case C-113/13 San Lorenzo [decided on 11 December 2014, nyr].
- 41.
Case C-205/03 P FENIN [2006] ECR I-6295, para 26, confirmed in Case C-113/07 P SELEX [2009] ECR I-2207, paras 102 and 114.
- 42.
See Case C-35/96 Commission v Italy [1998] ECR 1-3851, para 37; Joined Cases C-180/98 to C-184/98 Pavlov [2000] ECR I-5481, para 76; Case C-309/99 Wouters [2002] ECR I-1577, para 48.
- 43.
Case C-82/01 P Aéroports de Paris [2002] ECR I-9297, para 78. In that case the issue was rather that a distinction had to be made between the non-economic and economic activities conducted by the airport management company.
- 44.
By “positive criterion” is meant here a criterion which specifically can be found in an economic activity, by contrast with an approach finding that an economic activity can be found even in the absence of certain criteria.
- 45.
Opinion of AG Poiares Maduro in Case C-205/03 P FENIN [2006] ECR I-6295, paras 47 and 52.
- 46.
Case T-137/10 CBI, Judgement of 7 November 2012, para 91, refereing to Commission decision of 28 October 2009 Financement des hôpitaux publics du réseau IRIS de la Région Bruxelles-Capitale (Belgique), NN 54/2009—C (2009) 8120 final.
- 47.
Hatzopoulos 2011, p. 2: “some authors strive to demonstrate that certain Treaty rules also apply in the absence of an economic activity”. In a similarly pragmatic manner, van de Gronden states that “[i]f a public authority externalises the provision of SSGI, the Directive for the award of public works contracts, public supply contracts and public service contracts comes into play, see van de Gronden 2013b, pp. 150–151.
- 48.
These are the terms used by Hordjik and Meulenbelt to criticise the CJEU’s approach, see Hordijk and Meulenbelt 2005, p. 126.
- 49.
See for instance Case C-324/98 Telaustria AG [2000] ECR I-10793, paras 60–62; Case C-458/03 Parking Brixen [2005] ECR I-8585, para 50 and Case C-410/04 ANAV [2006] ECR I-3303, para 22.
- 50.
For instance, Sánchez Graells 2011, p. 195.
- 51.
This argument was made by AG Stix-Hackl in her Opinion to Case C-247/02 Sintesi [2004] ECR I-9215, para 33.
- 52.
See Article 1(2) (a) Directive 2004/18/EC.
- 53.
See for instance Wehlander 2015, pp. 167–178.
- 54.
Case C-399/98, La Scala [2001] ECR I-5409, para 73.
- 55.
Case C-159/11 Lecce, [decided by the Grand Chamber on 19 December 2012, nyr], para 29. This approach is quite in line with the Court’s interpretation of the notion of “remuneration” for the purpose of the fundamental freedoms.
- 56.
Case C-305/08 CoNISMa [2009] ECR I-12129.
- 57.
Ibid., see paras 28 to 30 read in combination.
- 58.
Case C-159/11 Lecce, [decided by the Grand Chamber on 19 December 2012, nyr], para 27. This implies perhaps that the benefit of an advertising obligation is not only for operators whose activity was economic before they tendered.
- 59.
See Arrowsmith et al. 2011, p. 37.
- 60.
Case C-107/98 Teckal [1999] ECR I-8121, para 50.
- 61.
Case C-458/03 Parking Brixen [2005] ECR I-8585, para 61, emphasis added.
- 62.
Case C-507/03 Commission v Ireland (“An Post”) [2007] ECR I-9777, para 29.
- 63.
Case C-480/06 Commission v Germany [2009] ECR I-04747.
- 64.
Case C-169/07 Hartlauer [2009] ECR I-1721.
- 65.
Azoulai 2011, pp. 192–219.
- 66.
Case C-279/93, Schumacker [1995] ECR I-225, para 21.
- 67.
Azoulai 2011, p. 211.
- 68.
In his classic essay on the transformation of the European Community between 1957 and 1991, Weiler argued that under a period of political stagnation, from 1973 to the mid-1980s, when the Treaty itself did not precisely define the material limits of Community jurisdiction, the Court’s case law constituted evidence of a substantial change in the distribution of competences without resort to Treaty amendments. In his view, this had taken place through jurisdictional mutations in the concept of enumeration, which Weiler divided in four categories of mutation in the Court’s case law, which he called extension, absorption, incorporation and expansion. He illustrated “absorption” by the Casagrande ruling. In that case, and on the basis of Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community [1968] OJ L 257/2, Casagrande had requested annulment of a German law entitling children satisfying a means test to a monthly educational grant, but which excluded from entitlement non-Germans except stateless people and residents under a right of asylum. In a two-phase reasoning the Court stated that: “Although educational and training policy is not as such included in the spheres which the treaty has entrusted to the Community institutions, it does not follow that the exercise of powers transferred to the Community is in some way limited if it is of such a nature as to affect the measures taken in the execution of a policy such as that of education and training; Chapters 1 and 2 of Title III of Part Two of the Treaty in particular contain several provisions the application of which could affect this policy.” Weiler held that in this reasoning, it was not the Community policy that encroached on national education policy, but instead the national educational policy that was impinging on Community free-movement policy and thus had to give way. See Weiler 1991, p. 2440, with reference to Case 9/74 Casagrande [1974] 773.
- 69.
Commission, “Completing the Internal Market: White Paper from the Commission to the European Council (Milan, 28–29 June 1985)” COM (85) 310, point 87.
- 70.
Gerber 1994, p. 137.
- 71.
In Azoulai’s words, the question arises “how to safeguard the “essential functions” of Member States without undermining the “core” of EU integration? This indefinite oscillatory motion will repeat in the case law.” Azoulai relates this “oscillatory motion” to the political and social context of distrust towards further integration and federalization of Europe, See Azoulai 2011, p. 206, footnotes omitted.
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Wehlander, C. (2016). “Economic Activity”: Criteria and Relevance in the Fields of EU Internal Market Law, Competition Law and Procurement Law. In: Services of General Economic Interest as a Constitutional Concept of EU Law. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-117-3_2
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