Mason Hayes Solicitors

Competition Law of the EU – Ralph Kellas

To what extent do the changes introduced by the Lisbon Treaty resolve the problems associated with the application of competition law the financing and functioning of SGEIs?

I. Introduction

SGEIs are complicated entities. They are at once ‘economic and social, private and public’,[1] and thus encapsulate many of the basic tensions that play out in EU law. Due to the state intervention that SGEIs presuppose, they have had an oppositional relationship with the competition rules and with the Union’s agenda of economic integration. Yet this supposed opposition is not so simple considering that SGEIs are the subject of Treaty provisions. Article 16 EC accorded SGEIs the status of ‘shared value’.[2] Moreover, the Commission in its 2001 Communication identified SGEIs as ‘a key element of the European model of Society’.[3] This signals a shift in EU policy towards a more ‘social Europe’, which various provisions of the Lisbon Treaty (at least textually) now confirm. The competition rules still apply, however, and as such it is not clear how competition law is to be reconfigured along side these new social objectives. In order to understand, then, how the Lisbon Treaty might resolve the problems associated with the application of competition law to the functioning and financing of SGEIs, those problems first have to be understood. But the problems are numerous, and this essay cannot deal with them all. Thus, the scope of this essay is defined by two main problems that characterise pre-Lisbon Article 16 EC.

Article 16 EC designated SGEIs a ‘shared value’ of the Union, according to which ‘the Union and Member States, each within their respective powers and within the scope of the … Treaties, shall take care that such services operate on the basis of principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions.’ There are several important properties to recognise here. First, SGEIs have been elevated to the status of a ‘value’ in EU law. Second, this ‘value’ is a shared one, whose indeterminacy is compounded by the fact that it is not clear in what shares these ‘respective powers’ are allocated. Third, as Ross argues, while Article 16 suggests a Union responsibility for the functioning of SGEIs,[4] because such responsibility is ‘without prejudice to Articles 77 [now 93], 90 [now 106] and 92 [now 107],’ it is essentially a ‘microcosm’ of the balancing act that the EU courts continually perform of market and non-market interests.[5]

Article 16 thus throws up two basic problems: The distribution of competences between Member States and the Union, which is discussed in section II, and the question of how the Court is to balance market and non-market values, which is discussed in section III. The following demonstrates that these problems are reflected in the case law, confirming the ‘microcosm’ description of Article 16. However, investigating the second problem reveals that its source is in fact the first problem. It is on this basis that the essay turns to the Lisbon Treaty in Section IV. Protocol (No 26)[6] and Article 36[7] of the Charter are identified as potential answers to this problem (subject to the Court’s interpretation). Articles 14 TFEU and 36 of the Charter are then discussed in the context of Article 3(3) TEU,[8] which enables consideration of their purposive value to the overarching post-Lisbon EU agenda.

II. ‘Respective powers’

The first problem arises in the Court’s administration of Article 86(2) EC – now Article 106(2). The first stage in this process is the issue of whether there exists an SGEI. But the question arises of what is the concept of SGEI? The ensuing question is in what jurisdiction – domestic or Union – should one look to find out? This is not straightforward, considering that, according to Article 16 EC, both the Union and Member States have shared powers in respect of the principles and conditions on which SGEIs operate. It is further complicated by the fact that, historically, the concept of SGEI has derived from Member States’ public service traditions, reflecting their constitutional idiosyncrasies.[9] On this view it would appear that there is no single concept of SGEI, and therefore defining an SGEI is a matter contained within prerogative of each Member State in view of its particular national situation. However, in determining Art 106, the Court of Justice has necessarily exercised some, albeit circumspect, appraisal of SGEIs.

From the case law it is difficult to distil any principles that offer a coherent explanation of the EU’s relationship with SGEIs. In the Court of Justice’s interpretation of Art 106(2), it has reiterated that ‘Member States have a wide discretion to define what they regard as SGEIs’ (emphasis added).[10] The implication here that Member States are unconstrained by EU law in the formulation of SGEIs is misleading. While the Court of Justice shows deference towards Member States, Art 106(2) itself states that ‘undertakings entrusted with [SGEIs] … shall be subject to the rules contained in the Treaty…’ But do the rules of the Treaty specifically constrain the defining of SGEIs? In Porto di Genova, the Court of Justice interpreted the national court as ‘asking whether Art [106(2)] … must be interpreted as meaning that a dock-work undertaking … must be regarded as being entrusted with the operation of [SGEI]…’ (emphasis added).[11] Moreover, in RTT the Court dealt with an ‘[SGEI] within the meaning of Art [106(2)] of the Treaty’ (emphasis added).[12] This indicates that SGEIs have a communautaire element.

Likewise, in deciding whether state funding for an SGEI amounts to a state aid contrary to Article 107(1), the same indeterminacy as to the concept of, and the respective competences in relation to, SGEI exists. The Altmark judgment[13] laid down the test for state aid based on the ‘compensation approach’,[14] the first criterion of which is that ‘the recipient undertaking must have clearly defined public service obligations to discharge.’[15] Although this is a separate test from that of Art 106(2), the scope of the Altmark criteria ‘to a large extent overlaps with that of the scope of Article [106(2)].’[16] It follows that ‘public service obligations’ are constitutive of SGEI. However, this does not reveal what EU law constraint there is on Member States’ organisation of SGEIs. Besides the requirement of a public service – whatever that means – the Court has chosen not to specify objective conditions of public service obligations.[17] Renzulli reads this reticence as a signal from the Court that such clarification is a matter for the legislature.[18]

Nevertheless, that the Court appears to exercise some, albeit vague, control of SGEIs alludes to a communautaire meaning.[19] Indeed, the function of Art 106(2) is not to keep SGEIs away from the competition rules, but ‘to reconcile Member States’ interest in using certain undertakings … as an instrument of economic or fiscal policy with the Community’s interest in ensuring compliance with the rules on competition…’(emphasis added).[20] This can be read either as indicating the distribution of social and economic policies between Member States and the Union respectively, or that the Court is following ‘a delicate balance … between market and non-market considerations.’[21]

In any case, the question remains what degree and kind of competence the Union enjoys in the application of Art 106(2). The Court of Justice has, in a sporadic and case-specific manner, begun to delimit the concept of SGEI.[22] In RTT,[23] this was couched in the negative. The Court simply stated that the service in question did not qualify as an SGEI, because such an activity ‘should be open to any undertaking.’[24] For similarly obscure reasons, the Court held in Porto di Genova that compared with ‘other economic activities’ dock work did not demonstrate the ‘special characteristics’ of SGEIs.[25]

More substantively, the Court has recognised ‘universal service’ as an element of SGEI.[26] It was on this basis that the Court in Corbeau dissociated special or premium services from the SGEI in question.[27] But even then the Court did not lay down what constitutes ‘universal service’, which has subsequently been obfuscated by conflicting statements of the Commission and the CFI. Whereas the Commission has considered that SGEI denotes ‘complete territorial coverage’,[28] the CFI in BUPA held that, while universal coverage defines ‘the classical type of SGEI’, it ‘does not preclude the existence of other, equally lawful, types of SGEIs…’ which do not offer a universal service.[29]

Moreover, the CFI’s promotion of Member State discretion in defining ‘what they regard as’[30] SGEIs, and its ‘light touch’[31] application of Article 106(2) and the Altmark test, confirm the leniency of the standard of review.[32] But, the CFI also stipulated that such discretion is ‘not unlimited’.[33] Member States have to prove that the service in question meets the minimum criteria of an official entrustment, and the universal and compulsory nature of the mission. The latter is satisfied if the entrusted operator is obliged to ‘provide that service to any user requesting it.’[34] Although this could be seen as adding to the inconsistency, it is notable that the BUPA minimum criteria are context-neutral: They identify the elements that are ‘common to every mission of [SGEI]…’[35]

Thus, only the CFI has offered positive, objective criteria. According to the Court of Justice’s jurisprudence, on the other hand, the communautaire meaning of SGEI appears more latent.

III. Balancing EU values

Art 106(2) stipulates that undertakings entrusted with an SGEI are subject to the Treaty rules ‘in so far as the application of such rules does not obstruct the performance … of the particular tasks assigned to them.’ Thus, the word ‘obstruct’ is the hinge that determines the extent to which the competition rules apply or disapply. Cruz explains that this word can imply either that measures may attract an exception from the Treaty rules, reflecting the boundary between EU and Member State competences, or, as is his view, that competition as a value may be superseded by some non-competition value embodied in a ‘special regime applying to [SGEIs]’.[36] However, if Cruz is correct that the latter implication prevails, he still fails to distinguish two components of Art 106(2): a value judgment and a pragmatic judgment.[37] Considering Habermas’s discourse theory, the following argues that the ‘obstruct’ test involves pragmatic judgment, which is dependent on a prior value judgment.[38] Thus, the value judgment cannot consist in the ‘obstruct’ test itself, but implicitly in the Court’s preceding recognition and acceptance of the SGEI.

Many who have written on Article 106(2) overlook this prior question, which has added to the confusion. They consider that the SGEI case law exhibits two variants of the test of proportionality, which are distinguishable by their intensity of review.[39] One variant is strict: In order to disapply the competition rules, the measure in question must be the least restrictive means available. The other is more lenient: The measure in question must be necessary to the attainment of the objective. However, debate about the merits of each test puts the cart before the horse, so to speak, because one cannot know what variant of test is pragmatically consistent, unless the value of SGEI relative to competition is first determined.

Little evidence can be found, in any case, to verify that the strict test is a concrete precedent in SGEI law.[40] Rather, the requirement of necessity appears to have gained currency. In Corbeau, having recognised the universal nature of the service, the Court premised the existence of an SGEI.[41] This constituted the point of departure for the Court’s determination of the necessity test, which ‘presupposes that it will be possible to offset less profitable sectors against the profitable sectors…’[42] Thus, it was the SGEI itself that justified the restriction on competition. Rather than assessing what would be the least detrimental measure to the market, the Court was concerned with ‘the extent to which a restriction on competition is necessary in order to allow the [undertaking] to perform its task.’[43] The object of the necessity test was therefore not the protection of the market, but the realization of the SGEI. The restraint on competition was instrumental to that end. Likewise, in Almelo, the Court implicitly accepted the SGEI by virtue of the universality of electricity supply,[44] on which basis it held that restrictions ‘must be allowed in so far as they are necessary.’[45] In Albany, having recognised the ‘essential social function’ of the SGEI,[46] the Court held that the exclusive rights were justified on the ground that their removal ‘might make it impossible … to perform the task of general economic interest’ (emphasis added).[47]

The necessity test is therefore a pragmatic judgment for reaching a particular end, which is informed by a prior value judgment. Once the court has recognized an SGEI, the non-market value supersedes the market value, and satisfying that value requires that the SGEI is able to operate. The fact that competition is not restricted without necessity demonstrates that the two values are not antagonistic, but, as Cruz rightly posits, reconciled.[48] This, moreover, explains why the burden on Member States does not require them to ‘prove, positively, that no other conceivable measure, which by definition would be hypothetical, could enable those tasks to be performed under the same conditions.’[49]

These cases indicate that Art 106(2) does not function to mediate between EU and Member State values, and accordingly between EU and Member State competences, but between values that equally belong to the EU. They substantiate de Cecco’s suggestion that the two sets of corresponding interests are ‘on an axiological par.’[50] The case law is therefore consistent with Ross’s reading of Article 16, because if the Court finds that there is an SGEI, an EU obligation arises to enable that SGEI. Consequently, the necessity test can be seen as a mechanism ‘recruited to assist’ this EU objective.[51] However, if the value judgment is the recognition of the SGEI, this reverts the discussion to the question of what qualifies as an SGEI under EU law. The trouble is, as established in the analysis above, the Court’s offerings in this regard have been only case-restricted indications.[52] The fundamental uncertainty is thus the question of what the objective and general criteria of SGEIs are, such that the Union’s competence is delineated and dovetails with that of Member States.

IV. The Lisbon Treaty

The new provisions introduced by Lisbon relevant to this question include Protocol (No 26), Article 36 of the Charter and, in a more general sense, Article 3 TEU. Their effects on the problems discussed will be addressed in turn. First, however, it is necessary to briefly mention Article 14 TFEU.[53]

Although the augmentation of ex Article 16 EC in what is now Article 14 TFEU gives new legislative competence to the Parliament and Council to enact regulations, the Commission has expressed that it plans to continue its soft law approach.[54] This rules out a meaningful discussion on the merits of legislation. Instead, the potential for change lies with the Court.

Protocol (No 26) on Services of General Interest serves as an interpretative guide for Article 14 TFEU. Of course, its potential to demystify Article 14 depends on the treatment it receives from the Court. Nevertheless, the Commission, for one, believes that ‘the Protocol brings the necessary clarity and certainty to EU rules.’[55] Article 1 comprises three indents that form ‘shared values of the Union in respect of [SGEIs] within the meaning of Article 14 [TFEU]…’. It is argued that the content of these indents offer a resolution of the ‘respective powers’ of the Union and Member States in relation to the ‘principles and conditions’ under Article 14. The first indent iterates the wide discretion of Member States in ‘providing, commissioning and organising [SGEIs] as closely as possible to the needs of users.’ It does not specify powers, but this is necessarily so. Considering that SGEIs operate best with minimal EU interference, it could be read as an appeal to subsidiarity in Article 5 TEU.[56]

The second indent refers to the value of ‘diversity between various [SGEIs] and the differences in needs and preferences of users that may result from different geographical, social and cultural situations.’ This denotes the dynamic and reflexive nature of SGEIs in responding to the variability of national contexts.[57] Accordingly, it can be inferred that the second indent affirms the power of Member States in respect of the context-dependent ‘principles and conditions’ of SGEIs – that which cannot be specified at EU level.

The third indent is the most significant in view of filling the legal hole of the Union’s competence. It enumerates several criteria that are distinctive on account of their context-neutrality. They are: ‘a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights.’ These criteria could form the principles and conditions of SGEI provision in respect of which the Union has competence. It follows that these criteria could form a firm basis for review by the Commission and the courts. Further, this also reveals the resemblance of universal access and universal user rights with the obligation under BUPA to ‘provide that service to any user requesting it.’[58] BUPA appears to be a progressive decision in this light.

It is notable that no specific mention is made about the ‘financial and economic conditions’ of SGEI performance. The implication is that such conditions are within Member States’ discretion for the ‘providing, commissioning and organising’ of SGEIs.[59] However, if the Protocol is understood as a delineation of competences, it could be seen as implicit affirmation of the ‘compensation approach’ manifested in Altmark. Indeed, it would be counterintuitive if state funding were presumptively illegal under this shared framework. Moreover, the Protocol criteria could arguably inform the determination of the first criterion of the Altmark test in respect of public service obligations.

Fiedziuk deprecates Article 1 of the Protocol, arguing that it merely ‘confirms the pre-Lisbon trend in the approach to SGEI’ and therefore does not add anything new.[60] In support of this, she refers to criteria devised by the Commission.[61] But, while these criteria are similar to the third indent of the Protocol,[62] the Court has so far not observed them, as this essay has shown. They cannot therefore be deemed representative of the ‘pre-Lisbon trend’. Despite the fact that Treaty codification of the Commission’s soft law is the ultimate elevation, Fiedziuk seems not to recognise that, with the Court’s endorsement, the criteria in the third indent would serve to delineate the Union’s competence for the first time.

Accompanying the introduction of the Lisbon Treaty, the Charter of Fundamental Rights has had an upgrade, such that it is now of equal legal value to that of the Treaty. Article 36 of the Charter does not confer a right, but states that ‘The Union recognises and respects access to [SGEIs] … in order to promote the social and territorial cohesion of the Union.’ The question is thus what potential effect this has on the application of competition law to SGEIs. Fiedziuk’s verdict on Article 36 is also bleak. Her previous mistaken premise that there exists in the law some unproblematic allocation of competences underpins this argument as well. She argues that an ‘EU-originating definition of the scope and nature of the obligation’ in respect of SGEIs cannot be deduced.[63] Plainly, an EU principle of access would not interfere with Member States’ discretion – neither the discretion prior to the Protocol nor as indicated by the Protocol. Article 36, moreover, requires a purposive reading. If, under Article 14 TFEU, SGEIs have a role in promoting social and territorial cohesion, and article 36 recognises and respects access to SGEIs in order to promote social and territorial cohesion, it follows that access must be an integral aspect of SGEIs for the purposes of EU objectives. Article 3(3) TEU confirms the purposive nature of both Articles 14 TFEU and 36 of the Charter, since it identifies social and territorial cohesion as an objective of the EU. Article 36 of the Charter can therefore be considered supplementary to Article 14 TFEU, because, in effect, it provides that access to SGEIs is necessary for the fulfillment of their role in promoting social and territorial cohesion. Article 36 therefore gives meaning to the joint obligation under Article 14 TFEU.

What was arguably inchoate in the acquis prior to Lisbon – Article 16 EC’s and the case law’s allusion to non-market values of the EU – is now constitutionally embodied in Article 3(3) TEU.[64] This states that the sustainable development of Europe shall be based on ‘a highly competitive social market economy’. The underlying theory explains why SGEIs, and access to SGEIs, have become part of the EU’s free market ideal. Social justice is connected with free markets by the idea of equality of opportunity.[65] Abandoning the classical welfare model, the Commission posits that ‘whereas society cannot guarantee equal outcomes for its citizens, it must become much more resolute in fostering equal opportunities…’[66] Accordingly, the ‘general interest’ content of SGEIs no longer denotes the state’s role as provider, but rather as facilitator of opportunities and access for individuals themselves to take advantage of market.[67] SGEIs thus understood do not pose a fundamental risk to the market;[68] the EU retains a market-driven agenda. Rather, they are supposed to be in a ‘mutually supportive’ relationship with the market.[69] It is in the light of this ideal that the teleological significance of Articles 36 of the Charter and 14 TFEU becomes clear.[70]

Some commentators have hastened to point out that the Union lacks the means to implement the social market economy.[71] But this is precisely why SGEIs constitute a shared value of the Union, which are managed, correspondingly, by shared competences.[72] In this way Member States and the Union are integrated into the same overarching ‘strategy’ of the social market economy. It is for this reason that the correlation between the division of economic and social competences with a division of Union and Member State competences is now an anachronism. In other words, SGEIs represent the fusion of social and economic policies governed by an overarching economic rationale.[73]

V. Conclusion

This essay had to begin by investigating what causes the problems in the application of competition law to SGEIs. With the exception of the BUPA judgment, the Court’s jurisprudence in relation to SGEIs essentially suffers from a near-emptiness of consistent, context-neutral criteria in respect of SGEIs. Moreover, the uncertainty surrounding the kind of proportionality test applicable under Article 106(2) was found to be attributable to commentators’ failing to look beyond the mechanical operation of the test itself. The case law clearly demonstrates the necessity test, which constitutes evidence that non-market values have superseded the market value. Thus, while the case law – but for its opaqueness – is consistent with the interpretation of Article 14 TFEU as an obligation, this returned the discussion to the question of what the respective shares of competence are.

The extent to which the Lisbon Treaty resolves the problems discussed depends on the Court’s forging the connections between the relevant Treaty provisions. Nevertheless, Protocol (No 26) indicates an allocation of competences and, more importantly, sets out positive criteria, which could form the basis of judicial review of SGEIs. The objective, context-neutral nature of such criteria potentially enables a dovetailing of Union and Member State competences. The absence of provisions on financial and economic conditions can be seen as affirmation of the Altmark test.

Though not a right,[74] Article 36 of the Charter determines that access to SGEIs is indispensable to SGEIs fulfilling their role of promoting social and territorial cohesion. This corroborates that SGEIs are an instrumental part of the EU’s socio-economic aspirations. The social market economy appears to embody the same balancing of market and non-market interests. However, it could be argued that this balancing now consists in the dialectic between the competition and SGEI rules. Weight is given to this claim by the Lisbon Treaty’s omission of competition as an end.[75] If the Court can be sure of the substantive EU content of SGEI now that the Protocol is in force, a new phase of overt balancing of these values might ensue.

Bibliography

Cases

o  C-66/86 Ahmed Saeed [1989] ECR 803

o  C-67/96 Albany [1999] ECR I-5751

o  C-393/92 Almelo [1994] ECR I-1477

o  C-280/00 Altmark Trans [2003] ECR I-7747

o  T-289/03 BUPA v Commission [2008] ECR II-81

o  C-202/88 Commission v France [1991] ECR I-1223

o  C-157/94 Commission v Netherlands [1997] ECR I-5699

o  C-320/91 Corbeau [1993] ECR I-2533

o  C-343/95 Diego Calì & Figli Srl v Servizi ecologici porto di Genova SpA [1997] ECR I-1547

o  C-203/9 Dusseldorp [1998] ECR I-4075

o  C-34/01 Enirisorse [2003] ECR I-14243

o  C-126/01GEMO [2003] ECR I-13769

o  C-331/88 FEDESA [1990] ECR I-4023

o  T-106/95 FFSA and others v Commission [1997] ECR II-229

o  T-17/02 Fred Olsen [2005] ECR II-2031

o  C-179/90 Merci Convenzionali Porto di Genova [1991] ECR I-5889

o  C-451/03 Servizi Ausiliari [2006] ECR I-2941

o  T-442/03 SIC v Commission [2008] ECR II-1161

Policy Documents

o  European Commission, ‘Green paper on services of general interest’ COM(2003) 270

o  European Commission ‘Opportunities, access and solidarity: towards a new social vision for 21st century Europe’ COM(2007) 726

o  European Commission ‘Services of general interest in Europe’ [2001] OJ C17/4

o  European Commission ‘Services of general interest, including social services of general interest: a new European commitment’ COM (2007) 725

o  European Commission, ‘White Paper on services of general interest’ COM (2004) 374 final

Articles and other papers

o  Azoulai, L. (2008) ‘The Court of Justice and the social market economy’ 45 C.M.L. Rev. 1335-1356

o  de Cecco, F. (2010) ‘A Re-evaluation of the Boundaries of State Aid in EU Law’ DPhil Thesis, University of Sussex

o  Gromnicka, E. (2005) ‘Services of General Economic Interest and State Aids Regime: Proceduralisation of Political Choices?’ 11(3) E.P.L. 429-61

o  Fiedziuk, N. (2011) ‘Services of General Economic Interest and the Treaty of Lisbon: opening the doors to a whole new approach or maintaining the status quo?’ 36(2) E.L. Rev. 226-242

o  Joerges, C. & Rödl, F. (2004) ‘“Social Market Economy” as Europe’s social model’ EUI Working Paper No. 2004/8

o  Karayigit, M. (2009) ‘The Notion of Services of General Economic Interest Revisited’ 15(4) European Public Law 575-595

o  Krajewski, M. (2008) ‘Providing Legal Clarity and Securing Policy Space for Public Services though a Legal Framework for Services of General Economic Interest: Squaring the Circle?’ 14(3), E.L.P. 377

o  Renzulli, A. (2008) ‘Services of General Economic Interest: The Post-Altmark Scenario’ 14(3) European Public Law, 399

o  Ross, M. (2009) ‘A healthy approach to services of general economic interest? The BUPA judgment of the Court of First Instance’ 34(1) E.L. Rev. 127-40

o  Ross, M. (2000) ‘Article 16 and Services of General Economic Interest: from derogation to obligation?’ 25(1) E.L.Rev. 22-38

o  Sauter, W. (2008) ‘Services of general economic interest and universal service in EU law’, E.L.Rev. 167-193

o  Semmelmann, S. (2010) “The European Union’s Economic Constitution under the Lisbon Treaty: Soul-searching among lawyers shifts the focus to procedure” 35(4) E.L.Rev. 516-541

Chapters in Books

o  Barnard, C. (2010) ‘Solidarity and the Commission’s ‘Renewed Social Agenda’’ in Ross, M. & Borgmann-Prebil, Y. Promoting Solidarity in the European Union, Oxford, OUP, 73-105

o  Buendía Sierra, J.L. (2006) Article 86 – Exclusive Rights and other anti-competitive State measures’ in Faull, J. & Nickpay, A. The EC Law of Competition (2nd Ed.) Oxford, OUP, 593-695

o  Cruz, J. B. (2005) ‘Beyond Competition: Services of General Economic Interest and European Community Law’ in de Burca, G. EU Law and the Welfare State, 169-212

o  Ross, M. (2009) ‘The Value of Solidarity in European Public Services Law’ in Krajewski, M., Neergaard, U. & van de Gronden, J. (eds) The Changing Legal Framework for Services of General Interest in Europe: Between Competition and Solidarity, TMC Asser Press, 81-99

o  Schweitzer, H. (2011) ‘ Services of General Economic Interest: European Law’s Impact on the Role of Markets and of Member States’ in Cremona, M. Market Integration and Public Services in the European Union, Oxford: OUP, 11-62

Books

o  Habermas, J. (1996) ‘Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy’ Cambridge, Polity

o  Sunstein, C. R. (1999) ‘Free Markets and Social Justice’ Oxford: OUP

o  Trimidas, T. (2003) ‘The General Principles of EC Law’ Oxford, OUP


[1] Cruz, J. B. (2005) ‘Beyond Competition: Services of General Economic Interest and European Community Law’ in de Burca, G. EU Law and the Welfare State, 169-212, p.

[2] Consolidated Version of the Treaty Establishing the European Community, Office for Official Publications of the European Communities.

[3] European Commission, ‘Services on general interest in Europe’ (2001/C 17/04)

[4] Ross, M. (2000) ‘Article 16 and Services of General Economic Interest: from derogation to obligation?’ 25(1) E.L.Rev. 22-38

[5] ibid. pp. 33-34

[6] EU (2010) Consolidated Treaties, Belgium, Publications Office of the EU, p 308

[7] OJ 2000 C 364/17

[8] OJ 2008 C 115/17

[9] Schweitzer, H. (2011) ‘ Services of General Economic Interest: European Law’s Impact on the Role of Markets and of Member States’ in Cremona, M. Market Integration and Public Services in the European Union, Oxford: OUP, 11-62, pp. 13-16

[10] T-442/03 SIC v Commission [2008] ECR II-1161, [195] and T-17/02 Fred Olsen [2005] ECR II-2031 [216], referring to T-106/95 FFSA and others v Commission [1997] ECR II-229, [99].

[11] C-179/90 Merci Convenzionali Porto di Genova [1991] ECR I-5889, [25]

[12] C-18/88 RTT [1991] ECR I-5941 [16]

[13] C-280/00 Altmark Trans [2003] ECR I-7747

[14] As distinguished from the ‘State Aid Approach’. AG Jacobs takes stock of these two strands of case law in his Opinion in C-126/01GEMO [2003] ECR I-13769 [91]-[106]

[15] Op. Cit. C-280/00 Altmark [89]

[16] T-289/03 BUPA v Commission [2008] ECR II-81 [160]

[17] Altmark has subsequently been endorsed, but not clarified: C-34/01 Enirisorse [2003] ECR I-14243; C-451/03 Servizi Ausiliari [2006] ECR I-2941

[18] Renzulli, A. (2008) ‘Services of General Economic Interest: The Post-Altmark Scenario’ 14(3) European Public Law, 399, p. 404

[19] AG Van Gerven regards SGEIs as having ‘special Community significance’: Op. Cit. C-179/90 Merci Convenzionali Porto di Genova, [27]

[20] C-202/88 Commission v France [1991] ECR I-1223 [12]

[21] Op. Cit. Cruz, J. B. (2005) ‘Beyond Competition: Services of General Economic Interest and European Community Law’ 195

[22] Incidentally, there is some convergence on the positive meaning of SGEI among Advocates General Van Gerven, Cosmas and Darmon, who have all stated that SGEIs are ‘activities of direct benefit to the public’: Respectively. Op. Cit. Case C-179/90 Porto di Genova [27]; C-393/92 Almelo [1994] ECR I-1477 [137]; C-343/95 Diego Calì & Figli Srl v Servizi ecologici porto di Genova SpA [1997] ECR I-1547 [96]

[23] Op. Cit. Case C-18/88 RTT

[24] ibid. [22]

[25] Op. Cit. C-179/90 Porto di Genova [27]

[26] C-320/91 Corbeau [1993] ECR I-2533 [15], which has been defined in Directive 2002/22/EC 7 March 2002 ‘Universal Services Directive’ Art 3(1)

[27] ibid. Corbeau [19]

[28] European Commission, ‘White Paper on services of general interest’ COM (2004) 374 final, p. 8

[29] Op. Cit. T-289/03 BUPA v Commission [186]

[30] ibid. [166]

[31] Ross, M. (2009) ‘A healthy approach to services of general economic interest? The BUPA judgment of the Court of First Instance’ 34(1) E.L. Rev. 127-40, pp. 137-39

[32] Cf. Gromnicka, who argues that Altmark has brought about more rigorous judicial review: Gromnicka, E. (2005) ‘Services of General Economic Interest and State Aids Regime: Proceduralisation of Political Choices?’ 11(3) E.P.L. 429-61

[33] Op. Cit. T-289/03 BUPA v Commission [168]

[34] ibid. [190]

[35] Karayigit, M. (2009) ‘The Notion of Services of General Economic Interest Revisited’ 15(4) European Public Law 575-595, p. 587

[36] Op. Cit. Cruz, J. B. (2005) ‘Beyond Competition: Services of General Economic Interest and European Community Law’ p. 175; de Cecco, F. (2010) ‘A Re-evaluation of the Boundaries of State Aid in EU Law’ DPhil Thesis, University of Sussex, p. 123

[37] Semmelmann notes that proportionality cannot be seen as reduced to a ‘merely technical exercise’: Semmelmann, S. (2010) “The European Union’s Economic Constitution under the Lisbon Treaty: Soul-searching among lawyers shifts the focus to procedure” 35(4) E.L.Rev. 516-541, p. 535

[38] Habermas, J. (1996) ‘Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy’ Cambridge, Polity, pp. 159-161

[39] Distinguished in C-331/88 FEDESA [1990] ECR I-4023 [13]; see also Sauter, W. (2008) ‘Services of general economic interest and universal service in EU law’, E.L.Rev. 167-193; Buendía Sierra, J.L. (2006) Article 86 – Exclusive Rights and other anti-competitive State measures’ in Faull, J. & Nickpay, A. The EC Law of Competition (2nd Ed.) Oxford, OUP, 593-695

[40] Ahmed Saeed laid down that Art 106 allows the limitation of the competition rules to the extent that it is ‘indispensable for the performance of the task of general interest’ (C-66/86 Ahmed Saeed [1989] ECR 803 [58]). However, without elaboration, it is not conclusive that a proportionality test characterised by indispensability is more discriminating than that of necessity. To argue that doubt still remains as to which test prevails, Schweitzer (Op. Cit. Schweitzer, H. (2011) ‘ Services of General Economic Interest: European Law’s Impact on the Role of Markets and of Member States’) relies on a passage in Dusseldorp, which states that it is incumbent on the Member State to show that the ‘objective cannot be achieved equally well by other means’ (C-203/9 Dusseldorp [1998] ECR I-4075 [67]) However, the paragraph immediately following states that Article 106(2) ‘precludes rules … without any objective justification and without being necessary for the performance of the task of general interest…’ ([68]), and so the necessity test prevails after all.

[41] Op. Cit. Case C-320/91 Corbeau [15]

[42] ibid. [17]

[43] ibid. [16]

[44] Op. Cit. C-393/92 Almelo, [47-49]

[45] ibid. [49]

[46] C-67/96 Albany [1999] ECR I-5751 [105]

[47] ibid. [111]

[48] Op. Cit. Cruz, J. B. (2005) ‘Beyond Competition: Services of General Economic Interest and European Community Law’ p. 196

[49] C-157/94 Commission v Netherlands [1997] ECR I-5699 [58]

[50] Op. Cit. de Cecco, F. (2010) ‘A Re-evaluation of the Boundaries of State Aid in EU Law’, p. 123

[51] Trimidas, T. (2003) ‘The General Principles of EC Law’ Oxford, OUP, p. 124

[52] Indeed this is characteristic of the Court’s preference for technical reasoning over express value judgments: Op. Cit. Semmelmann, S. (2010) “The European Union’s Economic Constitution under the Lisbon Treaty: Soul-searching among lawyers shifts the focus to procedure” p. 539

[53] OJ 2008 C115/54

[54] European Commission ‘Services of general interest, including social services of general interest: a new European commitment’ COM (2007) 725

[55] ibid. p. 3; see also p. 9

[56] Krajewski, M. (2008) ‘Providing Legal Clarity and Securing Policy Space for Public Services though a Legal Framework for Services of General Economic Interest: Squaring the Circle?’ 14(3), E.L.P. 377, p. 384; The Commission also notes this issue: Op. Cit. European Commission ‘Services of general interest, including social services of general interest: a new European commitment’, p. 9

[57] Op. Cit. Karayigit, M. (2009) ‘The Notion of Services of General Economic Interest Revisited’, pp. 585-86

[58] Op. Cit. Case T-289/03 BUPA v Commission [190]

[59] ibid. [167]

[60] Fiedziuk, N. (2011) ‘Services of General Economic Interest and the Treaty of Lisbon: opening the doors to a whole new approach or maintaining the status quo?’ 36(2) E.L. Rev. 226-242, p. 233

[61] European Commission ‘Services of general interest in Europe’ [2001] OJ C17/4, para. 10

[62] The Green Paper would better serve her argument. It states criteria that assimilate more closely with those of the Protocol: ‘universal service, continuity, quality of service, affordability, as well as user and consumer protection’. European Commission, ‘Green paper on services of general interest’ COM(2003) 270, p. 4

[63] Op. Cit. Fiedziuk, N. (2011) ‘Services of General Economic Interest and the Treaty of Lisbon: opening the doors to a whole new approach or maintaining the status quo?’ p. 236

[64] And other powerful provisions such as Article 9 TFEU on the ‘guarantee of social protection [and] the fight against social exclusion…’

[65] Sunstein, C. R. (1999) ‘Free Markets and Social Justice’ Oxford: OUP, p. 3

[66] European Commission ‘Opportunities, access and solidarity: towards a new social vision for 21st century Europe’ COM(2007) 726, p. 6

[67] Barnard, C. (2010) ‘Solidarity and the Commission’s ‘Renewed Social Agenda’’ in Ross, M. & Borgmann-Prebil, Y. Promoting Solidarity in the European Union, Oxford, OUP, 73-105, pp. 86-87; ordoliberalism is also detectable here: Joerges, C. & Rödl, F. (2004) ‘“Social Market Economy” as Europe’s social model’ EUI Working Paper No. 2004/8, p. 14

[68] ibid. p. 15

[69] Op. Cit. COM(2007) 725, p. 6

[70] To similar effect: Op. Cit. Krajewski, M. (2008) ‘Providing Legal Clarity and Securing Policy Space for Public Services though a Legal Framework for Services of General Economic Interest: Squaring the Circle?’, p. 395

[71] Op. Cit. Semmelmann, S. (2010) “The European Union’s Economic Constitution under the Lisbon Treaty: Soul-searching among lawyers shifts the focus to procedure” Azoulai, L. (2008) ‘The Court of Justice and the social market economy’ 45 C.M.L. Rev. 1335-1356, p. 1337

[72] This bi-directionality can also be seen as a manifestation of solidarity: Ross, M. (2009) ‘The Value of Solidarity in European Public Services Law’ in Krajewski, M., Neergaard, U. & van de Gronden, J. (eds) The Changing Legal Framework for Services of General Interest in Europe: Between Competition and Solidarity, TMC Asser Press, 81-99, pp. 86 & 97

[73] Indeed the Commission says that SGEIs ‘contribute to the overall competitiveness of the European economy: Services on general economic interest in Europe (2001/C 1704)

[74] …yet: Azoulai, L. (2008) ‘The Court of Justice and the social market economy’, p. 1340

[75] Op. Cit. Semmelmann, S. (2010) ‘The European Union’s Economic Constitution under the Lisbon Treaty: Soul-searching among lawyers shifts the focus to procedure’. p. 523

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