Page - (000003) - in Austrian Law Journal, Volume 1/2019

ISSN: 2409-6911 (CC-BY) 4.0 license www.austrian-law-journal.at DOI:10.25364/01.6:2019.1.1 Article 106 (2) TFEU in Case Law Internalization and Customized Balancing of Welfare and Market Interests Martina Melcher,* Graz Abstract: The EU law on public services is characterized by the need to reconcile competing EU and Member States interests as well as to accommodate both market and welfare interests. This paper explores how the Court of Justice of the EU (CJEU) and the Commission conduct this multi-level balancing of interests in the context of Article 106 (2) TFEU. To provide a full picture, this balancing is assessed by looking into both the requirements for the derogation and its scope of application. In essence, it is suggested that the EU has internalized the aforementioned struggle of interests. On the one hand, the EU, represented by the CJEU and the Commission, has assumed an increasingly dominant role by gradually limiting the autonomy and margin of discretion of the Member States regarding the provision, commission and financing of public services. On the other hand, it is argued that Article 106 (2) TFEU allows only a ‘customized and limited derogation’ from market and competition rules and has to be construed in consideration of the ‘general compatibility test’ which identifies economic activities in the first place. As a whole, Article 106 (2) TFEU constitutes a working system that reconciles potentially conflicting interests in favour of functioning public services. However, it is crucial that its premises and limits are respected. Keywords: services of general interest – SGI; services of general economic interest – SGEI; public services; welfare; (concept of an) undertaking; State aid; competition law; public service obligation; principle of proportionality I. Introduction Public services or services of general interest (SGI), as they are called in the European Union (EU) law, lie at the heart of a welfare state. Contrary to standard market services1, they are not provided based on an individual (economic) interest, but are classified as being of public or general interest, hence important to everyone. If such services qualify as economic activities2 (i.e. services of general * MMag. Dr. Martina Melcher, M.Jur (Oxon) is an assistant professor at the Department of Civil Law, Foreign Private Law and Private International Law at the University of Graz. The author wishes to thank Brigitta Lurger and an anonymous reviewer for their careful reading of the manuscript and their valuable comments and suggestions. 1 Similarly, Ulla Neergaard, Services of General Economic Interest: The Nature of the Beast, in THE CHANGING LEGAL FRAMEWORK FOR SERVICES OF GENERAL INTEREST IN EUROPE 17, 20 (Markus Krajewski, Ulla Neergaard and Johan Van de Gronden eds., 2009). 2 See chapter II.A. below.