Page - 5 - in Austrian Law Journal, Volume 1/2019

ALJ 2019 Article 106 (2) TFEU in Case Law 5 due to their non-economic nature, while others, namely SGEI, generally fall into the scope of competition law, but may then be exempted according to Article 106 (2) TFEU. 2. Categories of Non-economic Activities Most importantly, an activity which falls within the exercise of public or sovereign powers is not of an economic nature with regard to the EU competition rules.11 Generally, such activities ‘intrinsically form part of official authority and are performed by the State’.12 Sometimes however, also private entities are vested with public power and consequently do not qualify as undertakings with respect to such activities.13 For example, the ECJ found that, as a whole, Eurocontrol’s activities ‘are connected with the exercise of powers relating to the control and supervision of air space which are typically those of a public authority’.14 Regarding social security systems (e.g. insurance against accidents at work and occupational diseases, pension schemes), the CJEU argues that an activity is non-economic if it fulfils an exclusively social function. Besides the pursuance of a social objective15, which is not sufficient by itself, such a function is characterized by a high degree of solidarity (as opposed to the principle of capitalization) and a substantial extent of State control and supervision.16 As the CJEU correctly assumes, redistributive structures which are based on the allocation of benefits or the provision of services that do not reflect the contributions made to the system due to cross-subsidization may hinder the performance of such activities in a competitive market.17 On their own however, such structures – even if they contain more than just some individual elements of solidarity – are not sufficient for the qualification of an activity as non-economic. In addition, the scope of the State’s control over how the entity operates and the activity functions has to be assessed (e.g. degree of liberty to determine the amount of contributions and benefits, margin of negotiation; selection of the entity in question based on financial and economic consideration).18 Hence, if solidarity as a predominant principle makes it necessary for these activities to be managed in a certain way that is incompatible with competition and contrary to how an undertaking would normally act on a market (i.e. independent market-related decision-making), they do not qualify as economic activities. A similar, albeit (still) primarily solidarity based test without explicit reference to State 11 Case C-364/92 SAT Fluggesellschaft v Eurocontrol, ECLI:EU:C:1994:7; Case C-343/95 Calì & Figli v Servizi Ecologici Porto di Genova, ECLI:EU:C:1997:160. 12 Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of SGEI (2011 SGEI Communication), OJ 2012 C 8/4, para 16. 13 Each activity must be qualified separately, see Case C-49/07 MOTOE, ECLI:EU:C:2008:376, para 25. 14 Case C-364/92 SAT Fluggesellschaft v Eurocontrol, ECLI:EU:C:1994:7, para 30. 15 For example, the provision of a compulsory social protection or the continuation of performance despite non- payment of contributions or the absence of a profit-making interest. 16 Joined Cases C-159/91 and C-160/91 Poucet und Pistre, ECLI:EU:C:1993:63; Case C-244/94 FFSA v Ministère de l’Agriculture, ECLI:EU:C:1995:392; Case C-67/96 Albany, ECLI:EU:C:1999:430; Joined Cases C-115 to 117/97 Brentjens, ECLI:EU:C:1999:434; Case C-218/00 Cisal, ECLI:EU:C:2002:36; Case C-437/09 AG2R, ECLI:EU:C:2011:112. For further details and references to case law, see Commission Notice on the notion of State aid, OJ 2016 C 262/1, 6. 17 Joined Cases C-159/91 and C-160/91 Poucet und Pistre, ECLI:EU:C:1993:63, paras 10 and 11; Case C-218/00 Cisal, ECLI:EU:C:2002:36, para 39; Case C-350/07 Kattner Stahlbau, ECLI:EU:2009:127, paras 44 – 59; Case C-437/09 AG2R, ECLI:EU:C:2011:112, para 51. 18 Joined Cases C-159/91 and C-160/91 Poucet und Pistre, ECLI:EU:C:1993:63, para 15; Case C-218/00 Cisal, ECLI:EU:C:2002:36, para 43.