SGEI and EU Treaties Lida Balta Unit A

SGEI and EU Treaties Lida Balta Unit A 3 – State aid policy and scrutiny Presentation in EP Public Services Intergroup Wednesday 24 March 2010 The views expressed by the authors in this presentation do not constitute the official position of the Commission European Commission Directorate General for Competition, Directorate A, Unit A 3 11

The notion of SGEI in the Treaty Ø There is no definition as such in the Treaty of the Functioning of the EU ØArticle 14 TFEU ØArticle 106(2) TFEU ØArticle 93 TFEU ØProtocol n° 26 (Treaty of Lisbon) European Commission Directorate General for Competition, Directorate A, Unit A 3 2

Definitions - 1 Ø Services of general interest (SGI): ü Market or other services that public authorities classify as being of general interest and therefore subject to specific public service obligations (PSO). ü Can be Services of general economic interest (SGEI) but also Services of general non economic interest (SGn. EI) (cf. Protocol n° 26) Ø Services of general economic interest (SGEI): Services of an economic nature considered to be of general interest and subject to PSO => within the ambit of competition law European Commission Directorate General for Competition, Directorate A, Unit A 3 3

Definitions - 2 Ø Public service obligations (PSO): specific obligations that are imposed by public authorities on the service provider in order to ensure that certain general interest objectives are met. Ø Universal service (Union concept): the minimum set of services of specified quality to which all users and consumers have access, in the light of specific national conditions, at an affordable price. European Commission Directorate General for Competition, Directorate A, Unit A 3 4

Wide margin of discretion of Member States Ø Member States have a wide margin of discretion in defining what they consider as an SGEI Ø Protocol n° 26 confirms this principle, already existing in case law and Commission practice Ø The Commission can only check for: – breaches of EU law in harmonised sectors or – manifest error in non harmonised sectors European Commission Directorate General for Competition, Directorate A, Unit A 3 5

Control of breach of EU law Ø In harmonised sectors: üFor instance: EU legislation on e-communications, energy, postal services üIf objectives of general interest defined in EU law => MS can not go against üIf EU law refers to specific services (cf. universal service)=> MS margin of discretion to go beyond European Commission Directorate General for Competition, Directorate A, Unit A 3 6

Control of manifest error Ø In non harmonised sectors: ü Control by the Commission and EU courts ü Commission’s control on manifest error: § avoidance of errors going against Treaty rules § not interference in MS competences § test: if the general interest at stake exhibits special characteristics as compared with the general interest of other economic activities European Commission Directorate General for Competition, Directorate A, Unit A 3 7

Limited examples of manifest error Ø Dock work, consisting in loading, unloading, transhipment, storage and general movement of goods within ports; not SGEI (Merci Convenzionali Porto di Genova C-179/90, GT-Link C-242/95, Enirisorse C-34 -38/01) Ø Advertising, e-commerce, teleshopping, the use of premium rate numbers in prize games, sponsoring or merchandising ; do not meet the “democratic, social and cultural needs of each society” in the sense of the Amsterdam Protocol; not an SGEI (cf. 2009 Broadcasting Communication) European Commission Directorate General for Competition, Directorate A, Unit A 3 8

Consequence of manifest error Ø The financing of services not constituting SGEI not impeded Ø Assessment on a different legal basis; Article 107. 3 TFEU and not Article 106. 2 Ø Financing provided under the conditions of the relevant Commission Framework or Guidelines, defined according to the objective and not the SGEI Framework European Commission Directorate General for Competition, Directorate A, Unit A 3 9

Notion of economic activity Ø Why is it important? ü Competition rules apply only to economic activities ü Non economic activities; not within the ambit of competition rules Ø Who defines it? ü Not the Commission’s or MS’ competence; depends on characteristics of the activity at stake and its regulation ü Not a static but a dynamic notion; evolves with the development of the internal market, its regulation, economy etc. European Commission Directorate General for Competition, Directorate A, Unit A 3 10

Definition of an activity as economic Ø Any activity consisting in offering goods and/or services on a given market; Ø Even a potential market; Ø Independently of: üThe legal status of the entity; üIts social character; üIts’ non-profit making character European Commission Directorate General for Competition, Directorate A, Unit A 3 11

Examples of economic activities Ø Public employment procurement exercised by public agencies (Höffner & Elser C-41/90); Ø Emergency and patient transport services (Glöckner C 475/99); Ø Medical services (Smits C-157/99); Ø Optional insurance schemes operating according to the principle of capitalisation (FFSA C-244/94, Albany C 97/96); Ø Management of transport infrastructure (Aéroports de Paris C-82/01 P) European Commission Directorate General for Competition, Directorate A, Unit A 3 12

Examples of non economic activities ØOf a purely social nature: üManagement of compulsory insurance schemes functioning under the solidarity principle (Poucet & Pistre C-159/91, AOK Bundesverband C-354/01 & C 355/01) üThe provision of public education financed as a general rule by the public budget and carrying out a State task in the social, cultural and educational fields towards the population (Humbel 263/86) European Commission Directorate General for Competition, Directorate A, Unit A 3 13

Examples of non economic activities Ø Linked to the exercise of State prerogatives: ü Activities related to the army or the police; ü Maintenance and improvement of navigation safety (Eurocontrol C -364/92); ü Anti-pollution surveillance in maritime areas (Cali & Figli C 343/95); ü Standardisation activities and related research and development activities ( Selex T-155/04) ü Organisation and enforcement of correctional measures (Com. Decision in LT case N 140/2006) European Commission Directorate General for Competition, Directorate A, Unit A 3 14

Conclusion Ø The notion of “general interest” ü is within the competence of MS ü limited only in case of manifest error or breach of EU law; Ø The notion of “economic” : ü is factual; depends on the circumstances of the case ü the case law has established some criteria European Commission Directorate General for Competition, Directorate A, Unit A 3 15

Further information Ø For further information check out Frequently asked questions on the application of State aid rules to SGEI: http: //ec. europa. eu/competition/state_aid/legislat ion/faq_sieg_en. pdf Ø Ask questions on the Interactive Information Service: http: //ec. europa. eu/services_general_interest/ind ex_en. htm European Commission Directorate General for Competition, Directorate A, Unit A 3 16

Thank you for your attention European Commission Directorate General for Competition, Directorate A, Unit A 3 17