Glossary of competition terms

This Glossary is based on definitions from DG COMP’s Glossary of terms used in EU competition policy (© European Union, 2002) and the OECD’s Glossary of industrial organisation economics and competition law (© OECD, 1993). Each term is enriched with references of national case laws from the e-Competitions Bulletin and Concurrences Review.

State action defense

In the EU, the TFEU prevails over all Member States rules. Therefore, EU competition law should normally prevail over national regulations. Although the competition provisions of the TFEU are addressed to private and public undertakings, the Court of Justice decided that, according to the loyalty clause of the Treaty on the European Union (TEU), Member States may not adopt regulation that would deprive EU competition rules of their effectiveness, save the exceptions provided in the TFEU especially regarding the provision of services of general economic interest. On that basis, the Court of Justice has not allowed any industry to claim a complete exemption from EU competition law on the basis of a national regulation.

However, the Treaty provides that competition rules do not apply, hence national law may apply, when it is necessary for the provision of a service of general economic interest (SGEI). This provision is construed narrowly by the Court of Justice and requires three conditions to be met:

  • Undertaking is ‘entrusted’ by the state, with legislation or a contract, to carry out a service as SGEI. Although Member States have large discretion to determine what a SGEI is, some EU criteria are emerging: the service should be universal, compulsory and provided for general, and not private, interest.
  • The restriction of competition is necessary to ensure that the service can be provided under economically acceptable conditions;
  • The restriction of competition is not contrary to the interest of the Union. This provision has not yet received a detailed scrutiny by the Court of Justice, but it requires more than the proof that the state measures do not affect the trade between Member States.

If a Member State does not fulfil its obligations under EU law and adopts a regulation compelling undertakings to adopt anti-competitive behaviours that cannot be justified for the provision of a SGEI, the Court of Justice may allow a regulated conduct defence [based on the State action doctrine]. This will, however, only be the case in the situation where the regulated firm has no autonomy and if the national law has not yet been declared contrary to EU law by a national authority or by the European Commission.

© OECD

Glossary