Services of general economic interest

Institution Definition

Services of an economic nature, the provision of which can be considered to be in the general interest. For example: basic, publicly accessible supply of energy, telecommunication, postal services, transport, water and waste disposal services. The Member States are primarily responsible for defining what they regard as services of general economic interest on the basis of the specific features of the activities concerned. However, their definitions are subject to the Commission’s control for manifest errors where Member States specifically entrust undertakings within the meaning of Article 86(2) of the EC Treaty with services of general economic interest. The precise definition of the particular task assigned to the entrusted undertaking is an important element for assessing whether and to what extent it is justified for the State to grant exclusive rights or funds to that undertaking in order to ensure the fulfilment of the task. European Commission

See also Article 14 TFEU and Protocol No 26 annexed to the TFEU

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

Case Comments

Australian Competition Authority The Australian Competition Authority accepts a court-enforceable commitment to approve the merger of the two largest providers of cash-in-transit services (Armaguard / Prosegur)

ACCC authorises Armaguard and Prosegur’s merger, subject to undertaking* The ACCC has granted authorisation to the proposed merger of Linfox Armaguard Pty Ltd (Armaguard) and Prosegur Australia Holdings Limited and has accepted a court-enforceable undertaking, which is a condition of the (...)

Peter L’Ecluse, Catherine Longeval, Michael Clancy, Koen T’Syen The Belgian Competition Authority seeks a ’hold separate’ measure to delay the full integration of a merger between two telecoms, one of which is failing, until after the Authority completes its abuse of dominance investigation (Edpnet / Proximus)

Last month, the Belgian Competition Authority ( BCA ) decided to open abuse of dominance proceedings against telecommunications operator Proximus on account of that party’s acquisition of struggling Edpnet (see, Life Sciences News and Insights, 23 March 2023). On 20 April 2023, the BCA’s chief (...)

Francis Donnat, Christophe de Saint-Pern Visibility of services of general interest : The Audiovisual and Digital Communication Regulatory Authority launches a public consultation on measures to ensure appropriate visibility of services of general interest

The Regulatory Authority for Audiovisual and Digital Communication [hereinafter "ARCOM"] has opened a public consultation, from March 15 to April 21, 2023, on its draft deliberation on the measures to be implemented by operators of user interfaces to ensure appropriate visibility of (...)

Peter Camesasca, Carole Maczkovics, Laura van Kruijsdijk The Belgian Government takes action to screen foreign direct investment on its territory following the adoption of the FDI screening mechanism legislation

Belgium introduced an FDI screening mechanism anticipated to enter into force on July 1, 2023, adding yet another jurisdiction in the EU which has adopted national measures to implement the EU’s FDI Regulation (EU) 2019/452. The new Belgian regime may place additional compliance obligations on (...)

Alain Ronzano Tax advantage: The General Court of the European Union confirms that the quasi-exemption from registration fees represents a tax advantage which is not indissolubly linked to an SGEI and does not constitute a necessary compensation for the achievement of the latter (Navigazione Siciliana)

On January 25, 2023, the Court of First Instance of the European Union delivered its judgment in case T-666/21 (Società Navigazione Siciliana SCpA v. European Commission). It dismissed the action brought by Società Navigazione Siciliana SCpA, the applicant, seeking partial annulment of the (...)

Bruno Stromsky Maritime transport: The General Court of the European Union confirms a Commission decision ordering the recovery of aid granted to a maritime transport service from its direct beneficiary (Navigazione Siciliana)

This judgment is one of a series of cases concerning the "Tirrenia" decisions taken by the Commission, which have given rise to several judgments of the Court of First Instance fairly recently (see the judgment of 18 May 2002, Tirrenia di navigazione SpA v Commission, T-593/20 and T-601/20, (...)

Leigh Hancher Energy & State aid: An overview of EU and national case law

State aid to the energy sector has grown steadily in volume and as consecutive issues of the Commission’s ‘State Aid Scoreboard’ have confirmed, it is after emergency or crisis aid granted on the basis of Article 107(3)(b), the second most important type of aid in terms of spending across the 27 Member States. The current set of ‘soft law’ guidelines for the assessment of the compatibility of state aids for climate, energy and environmental objectives – the CEEAG – is an extensive document covering many forms of support to combat climate chain and promote the energy transition. Nevertheless, the adoption of the new CEEAG has coincided with the outbreak of the war in the Ukraine and the onset of a major energy crisis in Europe and elsewhere. A large volume of aid is now being screened under the Temporary Crisis Framework (TCF), discussed below.

Alain Ronzano Competition policy: The European Commission unveils the results of the evaluation of the rules applicable to SGEI in the field of social and health services and for de minimis aid

On December 1, 2022, the European Commission published a staff working document summarizing the results of the evaluation launched in 2019 of the EU’s state aid rules for services of general economic interest (SGEI) in the area of services of general economic interest. summarizing the results (...)

Martin André Dittmer, Erik Kjaer-Hansen, Henrik Saugmandsgaard Øe State aid & Public procurement: An overview of EU and national case law

This special issue explores recent case law and elaborates on the interplay between public procurement and State aid. The two fields of law share the common aim to ensure that competition is undistorted on the internal market. As regards State aid rules, TFEU contains a prohibition that excludes Member States from granting any kind of aid to an undertaking, which might place other undertakings at an unjustified competitive disadvantage. The objective of public procurement rules is to ensure that the competition for public contracts remains free and open; when a contracting authority awards a certain contract, it does so on the basis of either the lowest price or the most advantageous economic offer and irrespective of the nationality of the tenderer. Without these rules Member States would not be constrained in funding beneficial companies; either by granting favourable contracts to companies or through unrestricted subsidy.

Phedon Nicolaides The EU Commission approves a Greek aid scheme whose objective is to support vulnerable and less prosperous households and micro or small enterprises struggling to repay mortgages and loans

An Innovative Scheme to Support Individual Borrowers* Individuals and households are not undertakings. However, any public funding of individuals or households may constitute indirect aid to undertakings. Such aid may be exempted on the basis of Article 107(2)(a) TFEU. Introduction (...)

Articles

Paul Nihoul, Peter Rodford EU Electronic Communications Law (ed.2)

This section selects books on themes related to competition laws and economics. This compilation does not attempt to be exhaustive but rather a survey of themes important in the area. The survey usually covers publication over the last three months after publication of the latest issue of (...)

Robert Ian McEwin Intellectual Property, Competition Law and Economics in Asia

This section selects books on themes related to competition laws and economics. This compilation does not attempt to be exhaustive but rather a survey of themes important in the area. The survey usually covers publication over the last three months after publication of the latest issue of (...)

Frédérique Berrod, Luc Besançon, Philippe Besset, François Blanchecotte, Gilles Bonnefond, Céline Devienne, Martial Dubonnet, Luis Godinho, Thomas Piquereau Competition enforcement in the health sector

This series of articles analyses the French competition policy in the health sector, including the notice issued by the French Competition Authority in April 2019 relating to the sectors of medicines distribution and medical biology. Each article deals with the topic from a different (...)

Stéphane Rodrigues L’ordre public économique, Aurore LAGET-ANNAMAYER (dir.)

This section selects books on themes related to competition laws and economics. This compilation does not attempt to be exhaustive but rather a survey of themes important in the area. The survey usually covers publication over the last three months after publication of the latest issue of (...)

Cheik Galokho Qualification as State aid and compensation for business costs

A measure can be classified as State aid only if it gives an advantage to an undertaking. The advantage will disappear when the measure is just a way to compensate some costs to which the undertaking has to face. But the distinction between costs that can be compensated without leading to the (...)

Events

Books

Chapters

Grands arrêts du droit de la concurrence - Régulations 4.2 Réseaux

407 2 Réseaux 2.1 Organisation générale Loi Nº 2010-1488 du 7 déc.2010 portant nouvelle organisation du marché de l'électricité, JORF n° 284 du 8 déc. 2010, p. 21467 Le Parlement adopte la loi portant nouvelle organisation du marché d e l'é l e c t r i c i t é Le 24 novembre 2010, l'Assemblée (...)
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