Lecture 7
Relevance:
Political this is where law meets politics as this is where we want to realize our ‘European model of society’
We don’t want absolute competition but workable competition
We are willing to set competition aside for more noble goals, that is what we are doing here
When we defined competition law we said that the law promoting competition will also limit unfettered
competition
It is controversial but also very dynamic
Much uncertainty and discussion in the heads of MS, EU institutions and academics = work in progress
Reason: interaction/conflict
• Between legal and socio-economic values +
• Between various areas of the law
• Between different levels of regulation and enforcement
Essentials:
Link with the internal market (free movement of goods, of persons, of capitals) in principle its interaction
with EU law is easy: it deals with Member States behaviours and Competition deals with the undertakings
behaviour. However, it is not a clear cut distinction: more and more often we are applying internal market
rules to individuals and we are applying the rules written for undertakings to Member States behaviour.
o Competition law does not only protect consumers or competitors but also the internal market
o Internal market = prohibition for Member States to discriminate or restrict free movement of
goods persons, services, capital
o Competition law = prohibition for undertakings to enter into cartels, abuse dominant position, ...
o But now: convergence → internal market and competition law work together – examples:
Fixed book price :half of the Member States have a system of fixed book prices: what can
we do about it? It depends how the fixed book price is organized. Sellers and editors can
enter into agreement to fix the price then it would be a matter for 101 TFEU. But then
we have system where fixed book price is organized by an act of parliament and we can
say it hinder the free movement of books then we are in internal market law. So
depending how the system is organized we will apply the internal market law or
competition law,
Becu: Antwerp dock workers have a monopoly in the port of Antwerp to unload your
ship you have to rely on certified dock workers. Now there is a company. Some people
said that this monopoly was contrary to competition law. Court check if EU competition
apply to the case; dock workers are employees of a company and the monopoly is
granted to the employee and not the company so they are untouchable because they
are not undertakings! You could made a case based on internal market law: it would be a
breach of free movement of services. )
I. Public undertakings, privatisation
1. Terminology, principle of neutrality
1. Terminology
Public undertakings: it is a state-owned undertaking/enterprise majority of shares!
Privatisation (privatising public asset: state ownership becomes private ownership) from the moment the
State only has 49% of the shares
Liberalisation (the process of creating more competition)
Demonopolisation (extreme form of liberalisation: I bring competition where there was none)
, Deregulation (I reduced the volume of state regulation, it does not go hand in hand with privatization
more flexibility less rules)
Corporatisation (State create a separate entity to perform a task, is it a separate entity? A task of the
central government is set apart in separate legal entity but this entity will still be controlled by the state as
a shareholder)
Contracting out (State not longer to perform a task itself but it will be performed by a private entity which
the state no controls as a shareholder but which you will control under contract law).
These do not necessarily go hand in hand: If you privatize you should not be flexible but control but making rules to
make sure that the practice is still controlled
2. Starting point: neutrality
Art. 345 TFEU: “The Treaties shall in no way prejudice the rules in Member States governing the system of property
ownership.”
Limited scope + neutrality towards decision, not towards implementation of decision
More and more this article became a fiction: The Court ruled that property ownership has nothing to do
with IP, then the Court said that the process from going to State-owned to private-owned, the process is
still under the control of EU law (both Internal market and competition law).
Has neutrality become a fi cti on?
Is EU law really neutral?
Budgetary norms: Maastricht norms and also the ESM related norms under which if we have to obey to
budgetary
Discipline the easiest way is to sell of state assets =EU law oblige the State to respect the budgetary norms
and the less hurtful way is to simply sell the State assets.
Economic adjustment programmes in EMU (ESM): in some of these programs the Court advice the State to
sell State assets.
Private funding of infrastructure: the EU promotes that! The result of that is that structure that used to be
State owned become privatised.
Privatisation as condition for State aid: this goes really far. Sometimes the Court said you can give a State
aid but you have to privatise this sector.
Liberalisation pre-emptive privatisation’.
Technical regulation (e.g. environment):
= all these factors together means that it is not as neutral we think it is. If we are not neutral, then we cannot use
neutrality as an excuse for not having rules on privatisation, or on transfer from civil servant status to private
employees status. There are no such rules on the EU!
Now finally the Court has said in Essent case that even the decision to privatise is no longer for the member States
to make without control of EU law.
cf ECJ 22.12.2013 C-105/12-C-107/12 Nl v Essent: Dutch prohibition on the privatisation of the networks that
should remain on public hands. Court said in the judgement, if these assets always have to be public then it means
it is less attractive for people to invest in that company. If you make less attractive to invest, it means that you are
in breach of free movement of capital (Internal market law). Is your decision justified? The Netherlands said yes we
have good grounds for that decision (ex: security of supply); But the decision itself is not today only for Member
States.
Art. 345 TFEU is no longer a reality. It is still there in the books but in reality it has became a fiction.
Consequences
Relevance:
Political this is where law meets politics as this is where we want to realize our ‘European model of society’
We don’t want absolute competition but workable competition
We are willing to set competition aside for more noble goals, that is what we are doing here
When we defined competition law we said that the law promoting competition will also limit unfettered
competition
It is controversial but also very dynamic
Much uncertainty and discussion in the heads of MS, EU institutions and academics = work in progress
Reason: interaction/conflict
• Between legal and socio-economic values +
• Between various areas of the law
• Between different levels of regulation and enforcement
Essentials:
Link with the internal market (free movement of goods, of persons, of capitals) in principle its interaction
with EU law is easy: it deals with Member States behaviours and Competition deals with the undertakings
behaviour. However, it is not a clear cut distinction: more and more often we are applying internal market
rules to individuals and we are applying the rules written for undertakings to Member States behaviour.
o Competition law does not only protect consumers or competitors but also the internal market
o Internal market = prohibition for Member States to discriminate or restrict free movement of
goods persons, services, capital
o Competition law = prohibition for undertakings to enter into cartels, abuse dominant position, ...
o But now: convergence → internal market and competition law work together – examples:
Fixed book price :half of the Member States have a system of fixed book prices: what can
we do about it? It depends how the fixed book price is organized. Sellers and editors can
enter into agreement to fix the price then it would be a matter for 101 TFEU. But then
we have system where fixed book price is organized by an act of parliament and we can
say it hinder the free movement of books then we are in internal market law. So
depending how the system is organized we will apply the internal market law or
competition law,
Becu: Antwerp dock workers have a monopoly in the port of Antwerp to unload your
ship you have to rely on certified dock workers. Now there is a company. Some people
said that this monopoly was contrary to competition law. Court check if EU competition
apply to the case; dock workers are employees of a company and the monopoly is
granted to the employee and not the company so they are untouchable because they
are not undertakings! You could made a case based on internal market law: it would be a
breach of free movement of services. )
I. Public undertakings, privatisation
1. Terminology, principle of neutrality
1. Terminology
Public undertakings: it is a state-owned undertaking/enterprise majority of shares!
Privatisation (privatising public asset: state ownership becomes private ownership) from the moment the
State only has 49% of the shares
Liberalisation (the process of creating more competition)
Demonopolisation (extreme form of liberalisation: I bring competition where there was none)
, Deregulation (I reduced the volume of state regulation, it does not go hand in hand with privatization
more flexibility less rules)
Corporatisation (State create a separate entity to perform a task, is it a separate entity? A task of the
central government is set apart in separate legal entity but this entity will still be controlled by the state as
a shareholder)
Contracting out (State not longer to perform a task itself but it will be performed by a private entity which
the state no controls as a shareholder but which you will control under contract law).
These do not necessarily go hand in hand: If you privatize you should not be flexible but control but making rules to
make sure that the practice is still controlled
2. Starting point: neutrality
Art. 345 TFEU: “The Treaties shall in no way prejudice the rules in Member States governing the system of property
ownership.”
Limited scope + neutrality towards decision, not towards implementation of decision
More and more this article became a fiction: The Court ruled that property ownership has nothing to do
with IP, then the Court said that the process from going to State-owned to private-owned, the process is
still under the control of EU law (both Internal market and competition law).
Has neutrality become a fi cti on?
Is EU law really neutral?
Budgetary norms: Maastricht norms and also the ESM related norms under which if we have to obey to
budgetary
Discipline the easiest way is to sell of state assets =EU law oblige the State to respect the budgetary norms
and the less hurtful way is to simply sell the State assets.
Economic adjustment programmes in EMU (ESM): in some of these programs the Court advice the State to
sell State assets.
Private funding of infrastructure: the EU promotes that! The result of that is that structure that used to be
State owned become privatised.
Privatisation as condition for State aid: this goes really far. Sometimes the Court said you can give a State
aid but you have to privatise this sector.
Liberalisation pre-emptive privatisation’.
Technical regulation (e.g. environment):
= all these factors together means that it is not as neutral we think it is. If we are not neutral, then we cannot use
neutrality as an excuse for not having rules on privatisation, or on transfer from civil servant status to private
employees status. There are no such rules on the EU!
Now finally the Court has said in Essent case that even the decision to privatise is no longer for the member States
to make without control of EU law.
cf ECJ 22.12.2013 C-105/12-C-107/12 Nl v Essent: Dutch prohibition on the privatisation of the networks that
should remain on public hands. Court said in the judgement, if these assets always have to be public then it means
it is less attractive for people to invest in that company. If you make less attractive to invest, it means that you are
in breach of free movement of capital (Internal market law). Is your decision justified? The Netherlands said yes we
have good grounds for that decision (ex: security of supply); But the decision itself is not today only for Member
States.
Art. 345 TFEU is no longer a reality. It is still there in the books but in reality it has became a fiction.
Consequences
