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					                        SGEI and EU Treaties
                                                     Lida Balta
                                       Unit A3 – 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                                                                                       11
Directorate General for Competition, Directorate A, Unit A3
         The notion of SGEI in the Treaty
    There is no definition as such in the Treaty of
     the Functioning of the EU

           Article 14 TFEU
           Article 106(2) TFEU
           Article 93 TFEU
           Protocol n° 26 (Treaty of Lisbon)

European Commission                                           2
Directorate General for Competition, Directorate A, Unit A3
                                     Definitions - 1
     Services of general interest (SGI):
            Market or other services that public authorities classify as being of general
             interest and therefore subject to specific public service obligations (PSO).

            Can be Services of general economic interest (SGEI) but also Services of
             general non economic interest (SGnEI) (cf. Protocol n° 26)

     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                                                                           3
Directorate General for Competition, Directorate A, Unit A3
                                       Definitions - 2

     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.

     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                                                      4
Directorate General for Competition, Directorate A, Unit A3
     Wide margin of discretion of Member
                    States
     Member States have a wide margin of discretion in
      defining what they consider as an SGEI

     Protocol n° 26 confirms this principle, already
      existing in case law and Commission practice

     The Commission can only check for:
           – breaches of EU law in harmonised sectors or
           – manifest error in non harmonised sectors

European Commission                                           5
Directorate General for Competition, Directorate A, Unit A3
                Control of breach of EU law
    In harmonised sectors:
           For instance: EU legislation on e-communications,
            energy, postal services
           If objectives of general interest defined in EU law
            => MS can not go against
           If EU law refers to specific services (cf. universal
            service)=> MS margin of discretion to go beyond

European Commission                                                6
Directorate General for Competition, Directorate A, Unit A3
                    Control of manifest error
     In non harmonised sectors:

            Control by the Commission and EU courts

            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                                                                             7
Directorate General for Competition, Directorate A, Unit A3
         Limited examples of manifest error
     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)
     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                                                  8
Directorate General for Competition, Directorate A, Unit A3
           Consequence of manifest error
     The financing of services not constituting SGEI not
      impeded
     Assessment on a different legal basis; Article 107.3
      TFEU and not Article 106.2
     Financing provided under the conditions of the
      relevant Commission Framework or Guidelines,
      defined according to the objective and not the SGEI
      Framework
European Commission                                           9
Directorate General for Competition, Directorate A, Unit A3
                Notion of economic activity
     Why is it important?
            Competition rules apply only to economic activities
            Non economic activities; not within the ambit of
             competition rules
     Who defines it?
            Not the Commission’s or MS’ competence; depends on
             characteristics of the activity at stake and its regulation
            Not a static but a dynamic notion; evolves with the
             development of the internal market, its regulation,
             economy etc.

European Commission                                                        10
Directorate General for Competition, Directorate A, Unit A3
       Definition of an activity as economic
    Any activity consisting in offering goods
     and/or services on a given market;
    Even a potential market;
    Independently of:
           The legal status of the entity;
           Its social character;
           Its’ non-profit making character
European Commission                                           11
Directorate General for Competition, Directorate A, Unit A3
          Examples of economic activities
            Public employment procurement exercised by public
             agencies (Höffner & Elser C-41/90);
            Emergency and patient transport services (Glöckner C-
             475/99);
            Medical services (Smits C-157/99);
            Optional insurance schemes operating according to the
             principle of capitalisation (FFSA C-244/94, Albany C-
             97/96);
            Management of transport infrastructure (Aéroports de
             Paris C-82/01 P)

European Commission                                                  12
Directorate General for Competition, Directorate A, Unit A3
        Examples of non economic activities
           Of a purely social nature:
                 Management of compulsory insurance schemes
                  functioning under the solidarity principle (Poucet &
                  Pistre C-159/91, AOK Bundesverband C-354/01 & C-
                  355/01)
                 The 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                                                         13
Directorate General for Competition, Directorate A, Unit A3
       Examples of non economic activities
            Linked to the exercise of State prerogatives:
                  Activities related to the army or the police;
                  Maintenance and improvement of navigation safety (Eurocontrol
                   C-364/92);
                  Anti-pollution surveillance in maritime areas (Cali & Figli C-
                   343/95);
                  Standardisation activities and related research and development
                   activities ( Selex T-155/04)
                  Organisation and enforcement of correctional measures (Com.
                   Decision in LT case N 140/2006)


European Commission                                                                  14
Directorate General for Competition, Directorate A, Unit A3
                                           Conclusion
     The notion of “general interest”
        is within the competence of MS
        limited only in case of manifest error or breach of EU law;
     The notion of “economic” :
        is factual; depends on the circumstances of the case
        the case law has established some criteria




European Commission                                                    15
Directorate General for Competition, Directorate A, Unit A3
                            Further information
     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
     Ask questions on the Interactive Information
      Service:
      http://ec.europa.eu/services_general_interest/ind
      ex_en.htm

European Commission                                           16
Directorate General for Competition, Directorate A, Unit A3
                      Thank you for your attention




European Commission                                           17
Directorate General for Competition, Directorate A, Unit A3

				
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