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Services of General Economic Interest as a Constitutional Concept of EU Law pp 171–206Cite as

Meaning of the EU Concept of SGEI Emerging from the CJEU Case Law

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

Abstract

Based on the results of Chaps. 3 and 4, this chapter proposes a legal understanding of the EU concept of SGEI, trying to identify what the meaning of “economic” is in SGEI and what the core elements of the concept in EU law can be in the present Treaty frame. An essential submission in that chapter is that the notion of “entrustment to an undertaking”, repeatedly included as a central element in the Commission’s tentative definitions of the notion of SGEI, is not part of the core elements of the EU concept of SGEI, whereas the notion of obligation/task is. Another important argument is that the “E” in SGEI refers to the fact that the public service regulation is of economic interest, in the sense that it can affect the economic conditions for the exercise of an activity which can be economic at an EU level, i.e. is economic in some Member State(s), but not necessarily in the Member State imposing that regulation.

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Notes

  1. 1.

    SGEIs have been defined for the purpose of Directive on Services 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services on the internal market (hereinafter “the Services Directive”).

  2. 2.

    Rather to the contrary, as proposing a clear understanding of the meaning of the EU concept of SGEI may be compared to walking on a minefield.

  3. 3.

    Tuori’s critical positivist theory, based on a vision of law as a “multi-layered normative phenomenon”—the surface of individual statutes, decisions and scholarly interventions (the “will”) being underpinned by sub-surface cultural elements of law such as general legal concepts and principles, legal theories or doctrines, and patterns of argumentation (the “reason”). Tuori professes that legal science is dual by nature, being a combination of legal practice and scientific practice. As a scientific practice legal science looks both at law as legal practices (which it is a part of) and as a legal normative order (which it considers from an observer’s perspective). See Tuori 2002.

  4. 4.

    Weiler 2013, p. 249. At page 238 of this paper, Weiler asks rhetorically: “The ECJ never crossed the line between law and politics? Transparent, non-cryptic, soundly reasoned decisions?”

  5. 5.

    Syszczak has shown how the Commission’s agenda for the modernization of social services of general interest and the Member States in the Council seeking justifications and exemptions for these services in secondary law on state aid, procurement and free movement have led to the deployment of soft law and safe havens. She found that the casuistic development of this soft law and these safe has produced an inconsistent terminology and inconsistent approaches to social services of general interest. See Szyszczak 2013.

  6. 6.

    Neergaard 2008, p. 104–106.

  7. 7.

    For a more detailed account of this discussion, see Buendia Sierra 1999, p. 279–283.

  8. 8.

    Commission, “Services of general interest in Europe” COM (2000) 580 final, point 22.

  9. 9.

    Case T-106/95 FFSA [1997] ECR II-229, para 99; Case T-17/02 Fred Olsen [2005] ECR II-2031, para 216; Case T-289/03 BUPA [2008] ECR II-81, paras 166–169; Case T-442/03 SIC para 195; Case T-309/04 TV2 [2008] ECR II-2935, paras 113 et seq.

  10. 10.

    Regarding the “grand words” and their meaning, see Neergaard 2008, p. 105, referring to Freedland 1998.

  11. 11.

    Commission, “Services of general interest in Europe” (Communication) 2001/C 17/04, point 14.

  12. 12.

    See Case T-289/03 BUPA [2008] ECR II-81, para 10.

  13. 13.

    Some authors call it “clarification”, see Sauter and Schepel 2007, p. 154.

  14. 14.

    Commission, “Services of general interest” (Green Paper) COM (2003)270 final, p. 7.

  15. 15.

    Commission, “Services of General Interest” (White Paper) COM (2004) 374 final, p. 22.

  16. 16.

    See Case C-280/00 Altmark [2003] ECR I-7747 and Case C-480/06 Commission v Germany [2009] ECR I-4747 and Case 202/88 France v Commission [1991] ECR I-1223.

  17. 17.

    2010 SGEI Guide, p. 15–16, emphasis added.

  18. 18.

    2013 SGEI Guide, p. 21.

  19. 19.

    In the 2010 SGEI Guide, the Commission specified that SGEIs are economic services subject to public service obligations imposed by national, regional or local authorities, depending on the allocation of powers under national law, and did not name PSOs imposed by the EU, although the Green Paper on SGI presented SGEI as covering in particular “certain services provided by the big network industries such as transport, postal services, energy and communications”. It was unsaid why the Community—without being replaced by the Union—was left out as one of the governance levels establishing specific public service obligations. In the 2013 SGEI Guide, it seems that PSOs are meant as a “public intervention”, where it is unsaid which institutions are meant to intervene and impose obligations.

  20. 20.

    Case C-480/06 Commission v Germany [2009] ECR I-04747.

  21. 21.

    Articles 16 and 17(1) of the Services Directive.

  22. 22.

    Neergaard 2008, p. 74–75.

  23. 23.

    See Recital 8 of the Services Directive.

  24. 24.

    See Section 2 Chapter IV respectively Chapter V of the Directive on Services 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services on the internal market.

  25. 25.

    See Recital 70 of the Services Directive, emphasis added.

  26. 26.

    See Article 17(1).

  27. 27.

    Case T-289/03 BUPA and Others v Commission [2008] ECR II-81, p. 175–176. Interestingly the General Court presents the view of the Commission without clearly expressing its support to this view. The word “recognizes” seems to indicate that the Commission’s appreciation in that part is viewed by the Court as in principle binding.

  28. 28.

    Snell 2008, p. 191.

  29. 29.

    Neergaard 2008, p. 35.

  30. 30.

    Ibid., p. 49.

  31. 31.

    Buendia Sierra 2008, p. 192. In spite of negligible differences, this is the same definition he submitted 1999, see Buendia Sierra 1999, p. 277.

  32. 32.

    See Commission Decision of 2 July 2009 on nature conservation areas (Germany) in case NN8/2009—C(2009) 5080 final, and Commission Decision of 13 July 2011 on subsidy scheme for acquisition of land for nature conservation (Netherlands) in case SA.31243 (ex N308/2010)—C(2011)4945 fina.

  33. 33.

    Report of the commission of inquiry on the Internal market “EU, Sverige och den inre marknaden—En översyn av horisontella bestämmelser inom varu- och tjänsteområdet” SOU 2009:71, p. 151.

  34. 34.

    See Commission’s Decision of 13 July 2011 on subsidy scheme for acquisition of land for nature conservation (Netherlands) in case SA.31243 (N 308/2010)—C (2011)4945 final, point 13.

  35. 35.

    2010 SGEI Guide, SEC (2010)1545 (final), point 2.2.

  36. 36.

    Sauter 2008, p. 184.

  37. 37.

    This analysis of SGEIs as a multi-level responsibility appears to be reflected by the expression “projects of general economic interest” used by Buendia Sierra 1999, p. 176.

  38. 38.

    Article 3(3) of Directive 2003/54/EC provides that “Member States shall ensure that all household customers, and, where Member States deem it appropriate, small enterprises, (namely enterprises with fewer than 50 occupied persons and an annual turnover or balance sheet not exceeding EUR 10 million), enjoy universal service, that is the right to be supplied with electricity of a specified quality within their territory at reasonable, easily and clearly comparable and transparent prices.”

  39. 39.

    That the Electricity Directive creates an SGEI is expressed in recital 26 of the Electricity Directive: “The respect of the public service requirements is a fundamental requirement of this Directive, and it is important that common minimum standards, respected by all Member States, are specified in this Directive, which take into account the objectives of common protection, security of supply, environmental protection and equivalent levels of competition in all Member States.” The recital clarifies further that the SGEI thus defined must be “refined” at national level: “It is important that the public service requirements can be interpreted on a national basis, taking into account national circumstances and subject to the respect of Community law.”

  40. 40.

    See Case C-480/06 Commission v Germany, cited above.

  41. 41.

    Szyszczak considered that a legislative framework on SGEI from the Commission would allow for the definition and clarification of the concepts of SGI and SGEIs. She believed that the legal base for the Internal market (Article 114 TFEU) could be used for measures relating to SGEIs. See Szyszczak 2009, p. 301.

  42. 42.

    Case C-160/08 Commission v Germany [2010] ECR I-03713.

  43. 43.

    Case C-49/07 MOTOE [2008] ECR I-4863, paras 46–47.

  44. 44.

    Buendia Sierra 2008, p. 207. In Port de Mertert Advocate General Dutheillet de Lamothe held that running a river port could constitute a service of general economic interest entrusted to an undertaking, when two conditions are fulfilled: first that the port should be for the public and, unless in exceptional cases, not a port reserved for the needs of one or more undertakings; second that the traffic using the port should be involved in a general economic activity. Thus, AG Dutheillet rather evoked a “general economic activity” than a “general economic interest”. See Opinion of Advocate General Dutheillet de Lamothe in Case 10/71 Port of Mertert [1971] ECR 739.

  45. 45.

    See Opinion of AG Léger in Case C-438/02 Krister Hanner [2005] ECR I-04551, para 150, where AG Léger uses exactly the formulation used in Case C-179/90 Merci Convenzionali [1991] ECR I-05889, para 27 and Case C-266/96 Corsica Ferries [1998] ECR I-03949, para 45.

  46. 46.

    Buendia Sierra 1999, p. 216 and 278.

  47. 47.

    Case 155/73 Sacchi [1974] ECR 409, para 14. This statement was referred to in several other cases, for instance Case C-320/91 Corbeau, para 9, Case C-260/89 ERT [1991] ECR I-2925, paras 10–12 and 20, Joined Cases T-309/04, T-317/04, T-329/04 and T-336/04, TV 2 [2007] ECR II-00491, para 103.

  48. 48.

    This involves that the control of manifest error does not only concern the Member States’ definition of SGEI missions, but also their implementation of these missions, in particular because the costs related to the missions can call for the assessment of complex economic facts.

  49. 49.

    Case T-137/10 CBI, [decided on 7 November 2012, nyr], para 88.

  50. 50.

    Case T-442/03 SIC v Commission [2008] ECR II-1161, para 153.

  51. 51.

    See Article 3(2) of 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 [2009] OJ 211/55.

  52. 52.

    Joined Cases C-34/01 to C-38/01 Enirisorse [2003] ECR I-14243 para 34.

  53. 53.

    See Case C-480/06 Commission v Germany [2009] ECR I-4747 and Case 202/88 France v Commission [1991] ECR I-1223, para 12.

  54. 54.

    159/94 Commission v France [1997] ECR I-5815, para 89.

  55. 55.

    Case T-289/03 BUPA [2008] ECR II-81, para 166, see also Case T-17/02 Fred Olsen [2005] ECR II-2031, para 216 and the case law cited under that paragraph. The definition of such services by a Member State can be questioned by the Commission only in the event of manifest error.

  56. 56.

    Ibid., para 172.

  57. 57.

    Commission, “Communication on the application of State aid rules to public service broadcasting” 2009/C 257/01, para 49.

  58. 58.

    179/90 Merci convenzionali [1991] ECR I-5889, para 27.

  59. 59.

    Case C-266/96 Corsica Ferries [1998] ECR I-3949, para 45; see also Case C-242/95 GT-Link [1997] ECR I-4449, paras 52–53, emphasis added.

  60. 60.

    Case C-480/06 Commission v Germany [2009] ECR I-4747.

  61. 61.

    See Case C-159/94 Commission v France [1997] ECR I-05815. Under para 71 the Court underlined that “[i]t should nevertheless be borne in mind that it is clear from the case law of the Court (see Almelo/…/ para 49) that such obligations or constraints may be taken into consideration for the purpose of considering to what extent derogations from the Treaty rules which it is sought to justify are necessary in order to enable the undertaking in question to perform the tasks of general interest entrusted to it.” Reference to case C-393/92 Almelo [1994] ECR I-1477.

  62. 62.

    Case C-480/06 Commission v Germany [2009] ECR I-4747 para 37, referring to Council Directive 75/442/EEC of 15 July 1975 on waste [1975] OJ L194/39.

  63. 63.

    This task was pursuant to Article 5(2) of Council Directive 91/156/EEC of 18 March 1991, amending Directive 75/442 [1991] OJ L 78/32. A similar task is now provided by Article 16(1) and (3) of Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives, among which Directive 91/156/EEC (as consolidated by Directive 2006/12/EC on waste) [2008] OJ L312/3.

  64. 64.

    Thus, by referring to the EU principle of proximity for the treatment of municipal waste, imposing on public authorities to plan this treatment in a manner that ensures that municipal waste is treated as close as possible from the place where it has been produced, the Court did clarify, although quite shortly, what the general economic task consisted in, contrary to Steinicke’s view. See Steinicke 2011, p. 270.

  65. 65.

    Case C-480/06 Commission v Germany [2009] ECR I-4747, para 44.

  66. 66.

    As already mentioned the Court has at several occasions used the term “public service” as a synonym for SGEI.

  67. 67.

    Case C-160/08 Commission v Germany [2010] ECR I-03713, paras 125–126.

  68. 68.

    Case T-289/03 BUPA [2008] ECR II-81, para 178.

  69. 69.

    Ibid., paras 12 and 166, referring to para 22 of the Communication on SGEIs and to the case law of the Court of First Instance (now general Court).

  70. 70.

    See Cases C-170/90 Merci Convenzionali [1991] ECR I-5889 para 27, C-38/01 Enirisorse [2003] ECR I-14243, at I-14247 paras 33–34 and T-289/03 BUPA [2008] ECR II-81, para 172.

  71. 71.

    Case 127/73 BRT II [1974] ECR 318, paras 22–23.

  72. 72.

    Case 172/80 Züchner [1981] ECR 2021, para 7.

  73. 73.

    Case 7/82 GVL v Commission [1983] ECR 483, paras 31–32.

  74. 74.

    Case T-289/03 BUPA [2008] ECR II-81, para 178.

  75. 75.

    Ibid., para 178.

  76. 76.

    Ibid., para 179.

  77. 77.

    Ibid., para 182.

  78. 78.

    See van de Gronden 2013, p. 8.

  79. 79.

    Case T-442/03 SIC v Commission [2008] ECR II-1161, para 153. The GC referred to the Resolution of the Council and of the Member States of 25 January 1999 concerning broadcasting, OJ 1999 C 30, p. 1 (recital B and point 7 of the Resolution).

  80. 80.

    See Prosser 2005, p. 177–181. Davies and Szyszczak note that whereas a Member State has a wide competence to define a SGEI, this is no longer the case when a USO is found in liberalising legislation. The see an expanding role for the concept of USOs in the future development of the EU, see their charting of USOs’ development in Davies and Szyszczak 2011.

  81. 81.

    Commission, “Services of General Interest in Europe” (Communication) COM (96) 443 final, p. 2.

  82. 82.

    Article 3(3) of 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 [2009] OJ 211/55.

  83. 83.

    Ibid.

  84. 84.

    Sauter 2008, p. 14. Sauter explains that “imposing full national coverage for free at zero quality would obviously be pointless”.

  85. 85.

    Rott 2009, p. 226.

  86. 86.

    Article 3(2) the Electricity Directive.

  87. 87.

    See Article 3(1) of Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) [2002] OJ L108/51: “Member States shall ensure that the services set out in this Chapter are made available at the quality specified to all end-users in their territory, independently of geographical location, and, in the light of specific national conditions, at an affordable price”; Article 3(1) of Directive 97/67/EC: “Member States shall ensure that users enjoy the right to a universal service involving the permanent provision of a postal service of specified quality at all points in their territory at affordable prices for all users.”

  88. 88.

    Rott 2009, p. 215–232. To justify these measures, these Member States had to rely on public service obligations in accordance with Article 106(2) TFEU, allowing a strong state commitment on the market.

  89. 89.

    See Case C-242/10 Enel [2011] ECR I-13665.

  90. 90.

    Rott 2009, p. 232. On the issue of how far Article 36 of the EU Charter could protect an individual fundamental right, when a USO are defined a minima to be attractive to private providers, see Szyszczak 2014, p. 978.

  91. 91.

    This explanation gets support from Szyszczak’s understanding of the role which Article 36 of the EU Charter could have where a Member State creates regulation and policy for an SGEI, see Szyszczak 2014, p. 978.

  92. 92.

    Case C-280/00 Altmark [2003] ECR I-7747, para 89.

  93. 93.

    Van de Gronden 2009, p. 238–239. This author noted that prior to BUPA, the provision now in Article 106(2) TFEU had only been applied to cases where only one or a limited number of undertakings were entrusted with SGEI tasks.

  94. 94.

    Ibid., p. 237–239.

  95. 95.

    Ibid., p. 236. In ZT, the General Court holds that the notion of PSO in Altmark corresponds to the notion of SGEI in Article 106(2) TFEU, see Case T-309/12 TZ, EU:T:2014:676, para 132. Contrary to Szyszczak’s understanding, the Court did however not say that the notion of PSO in Altmark and the notion SGEI in the Treaties (i.e. not only in Article 106(2) TFEU but also in Article 14 TFEU) are synonyms, see Szyszczak 2015, p. 686.

  96. 96.

    Case T-289/03 BUPA [2008] ECR II-81, para 162.

  97. 97.

    Ibid., para 175. Remember that the obligations imposed on PMI insurers were open enrolment, community rating, lifetime cover and minimum benefits. The Court held that this “indissoluble link” implied that the Commission could not limit its state aid assessment to the obligations without also taking into account the services forming the subject-matter of those obligations and the provision of which was dependent on compliance with those obligations.

  98. 98.

    Ibid., para 176, emphasis added.

  99. 99.

    Case C-280/00 Altmark, [2003] ECR I-7747, para 95, emphasis added.

  100. 100.

    Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest, 2012/C 8/02, points 47, footnotes omitted.

  101. 101.

    This refers to van de Gronden’s understanding of SGEI missions, already evoked above, see van de Gronden 2009, p. 239.

  102. 102.

    Although it is difficult to say whether the Court makes a clear and consistent use of the terms PSO and PST in its case law, it appears that it has so far generally used the term public service obligation regarding undertakings and public service task regarding public authority.

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    Caroline Wehlander

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Wehlander, C. (2016). Meaning of the EU Concept of SGEI Emerging from the CJEU Case 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_5

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