SCHEME: THE STATE AND THE COMMON MARKET
PUBLIC COMPANIES:
Involvement of the State? competition articles designed to apply to undertakings. competition articles designed to apply to undertakings.
Member State can have “undertakings” as well.
ARTICLE 106 TFEU:
(is designed to prevent the state from enacting or maintaining in force measures relating to public
undertakings, which derogate from other obligations under the Treaty)
Arts. 101-102TFEU make NO exception for public undertakings -> they fall within their scope!
ARTICLE 106 – SUBSECTION (1):
Covers 2 types of undertakings:
PUBLIC UNDERTAKINGS: THOSE TO WHICH MS HAVE GRANTED SPECIAL
OR EXCLUSIVE RIGHTS:
Transparency Directive -> ‘Public undertaking’ The grant of exclusive power is not illegal per se
means any undertaking over which the public under Art. 106(1), but it will be if the state places
authorities may exercise directly or indirectly a an undertaking is such dominant position that the
dominant influence. Such influence is to be very exercise of these exclusive rights could not
presumed when authorities hold major part of avoid being abusive Bodson
the PU’s capital, control majority of votes or can
appoint more than half of the members of its
administrative, managerial or supervisory board.
Sacchi -> these situations of state influence are
sufficient to characterize it as PU.
This is the case even if the U is privatized -> Sacchi
OBLIGATION FLOWING FROM ARTICLE 106(1) TFEU:
It requires MS neither to enact nor maintain in force any measure that is contrary to the Treaty
A breach of Article 106(1) -> means that some other Treaty Article has been breached (such as Arts. 18 or
101 to 109)
Bodson -> any state rule that compels an undertaking to breach Art. 102 is illegal under Art. 106(1). The
grant of exclusive power is not illegal per se under Art. 106(1), but it will be if the state places an
undertaking is such dominant position that the very exercise of these exclusive rights could not avoid
being abusive
Merci convenzionali Porto di Genova SpA -> the measure will be in breach when the exclusive rights
could not avoid being abusive, or where such rights are liable to create a situation in which the
undertaking is induced to commit an abuse.
The term induced -> because the holder of exclusive right possesses market power it is enabled to price
in an abusive manner, therefore it is induced to do so
THE CURRENT APPROACH OF THE COURT:
!!!The grant of exclusive rights will normally be held prima facie to infringe Art. 106(1), but it will then be
considered whether there is some objective justification applicable (under f.e. Art. 106(2))!!! Traco,
Ambulanz Glockner
, ARTICLE 106 – SUBSECTION 2:
Exemption for “services of general economic interest” competition articles designed to apply to undertakings. in so far as the application of [the Treaty] rules
does not obstruct the performance in law or in fact, of the particular tasks assigned to them.” See also
art. 14 TFEU.
The application of Art. 106(2) is divided in 3 steps:
1. DETERMINE THE TYPE OF 2. DETERMINE WHETHER THE 3. IT MUST NOT AFFECT THE
UNDERTAKING EXCEPTION APPLIES: DEVELOPMENT OF TRADE
- It must be of the kind - Commission v Netherland -> - Even if the exception
mentioned above (PU or it is sufficient if the applies, it must be
exclusive competence) application of the Treaty established whether the
- Not relevant whether it is rules obstructed the development of trade is not
public or private, BUT the performance, in law or in affected to such an extent
service must have been fact, of the undertaking’s as would be contrary to the
assigned to it by a public special obligations. interests of the EU
authority GVL - See Merci, British Telecom,
- BUPA -> ‘service of general Corbeau, Albany pg 412
economic interest’ = MS
have discretion as to what
they consider to fall therein.
BUT discretion cannot be
used arbitrarily so as to
remove a particular sector
from the ordinary
competition rules
- A crucial element of a SGEI
is the compulsory nature of
the service (the undertaking
must provide it for anyone)!
ARTICLE 106 – SUBSECTION 3:
Gives the Commission power to ensure the application of Article 106 through directives or decisions
addressed to MS
PUBLIC COMPANIES:
Involvement of the State? competition articles designed to apply to undertakings. competition articles designed to apply to undertakings.
Member State can have “undertakings” as well.
ARTICLE 106 TFEU:
(is designed to prevent the state from enacting or maintaining in force measures relating to public
undertakings, which derogate from other obligations under the Treaty)
Arts. 101-102TFEU make NO exception for public undertakings -> they fall within their scope!
ARTICLE 106 – SUBSECTION (1):
Covers 2 types of undertakings:
PUBLIC UNDERTAKINGS: THOSE TO WHICH MS HAVE GRANTED SPECIAL
OR EXCLUSIVE RIGHTS:
Transparency Directive -> ‘Public undertaking’ The grant of exclusive power is not illegal per se
means any undertaking over which the public under Art. 106(1), but it will be if the state places
authorities may exercise directly or indirectly a an undertaking is such dominant position that the
dominant influence. Such influence is to be very exercise of these exclusive rights could not
presumed when authorities hold major part of avoid being abusive Bodson
the PU’s capital, control majority of votes or can
appoint more than half of the members of its
administrative, managerial or supervisory board.
Sacchi -> these situations of state influence are
sufficient to characterize it as PU.
This is the case even if the U is privatized -> Sacchi
OBLIGATION FLOWING FROM ARTICLE 106(1) TFEU:
It requires MS neither to enact nor maintain in force any measure that is contrary to the Treaty
A breach of Article 106(1) -> means that some other Treaty Article has been breached (such as Arts. 18 or
101 to 109)
Bodson -> any state rule that compels an undertaking to breach Art. 102 is illegal under Art. 106(1). The
grant of exclusive power is not illegal per se under Art. 106(1), but it will be if the state places an
undertaking is such dominant position that the very exercise of these exclusive rights could not avoid
being abusive
Merci convenzionali Porto di Genova SpA -> the measure will be in breach when the exclusive rights
could not avoid being abusive, or where such rights are liable to create a situation in which the
undertaking is induced to commit an abuse.
The term induced -> because the holder of exclusive right possesses market power it is enabled to price
in an abusive manner, therefore it is induced to do so
THE CURRENT APPROACH OF THE COURT:
!!!The grant of exclusive rights will normally be held prima facie to infringe Art. 106(1), but it will then be
considered whether there is some objective justification applicable (under f.e. Art. 106(2))!!! Traco,
Ambulanz Glockner
, ARTICLE 106 – SUBSECTION 2:
Exemption for “services of general economic interest” competition articles designed to apply to undertakings. in so far as the application of [the Treaty] rules
does not obstruct the performance in law or in fact, of the particular tasks assigned to them.” See also
art. 14 TFEU.
The application of Art. 106(2) is divided in 3 steps:
1. DETERMINE THE TYPE OF 2. DETERMINE WHETHER THE 3. IT MUST NOT AFFECT THE
UNDERTAKING EXCEPTION APPLIES: DEVELOPMENT OF TRADE
- It must be of the kind - Commission v Netherland -> - Even if the exception
mentioned above (PU or it is sufficient if the applies, it must be
exclusive competence) application of the Treaty established whether the
- Not relevant whether it is rules obstructed the development of trade is not
public or private, BUT the performance, in law or in affected to such an extent
service must have been fact, of the undertaking’s as would be contrary to the
assigned to it by a public special obligations. interests of the EU
authority GVL - See Merci, British Telecom,
- BUPA -> ‘service of general Corbeau, Albany pg 412
economic interest’ = MS
have discretion as to what
they consider to fall therein.
BUT discretion cannot be
used arbitrarily so as to
remove a particular sector
from the ordinary
competition rules
- A crucial element of a SGEI
is the compulsory nature of
the service (the undertaking
must provide it for anyone)!
ARTICLE 106 – SUBSECTION 3:
Gives the Commission power to ensure the application of Article 106 through directives or decisions
addressed to MS
