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ALJ 2019 Article 106 (2) TFEU in Case Law 9
In sum, despite the allegedly wide discretion of the Member States to identify, provide, commission
and organize such services, it is the EU and its institutions that ultimately determine what
constitutes an SGEI and what does not, also outside harmonized sectors. The EU determines which
of the activities that are generally subject to competition may qualify for a derogation based on
Article 106 (2) TFEU. This is not alarming in itself, but it illustrates a shift in the balancing of interests
and control of SGEI in favour of the EU that should not be overlooked.
III. A Customized and Limited Derogation for SGEI
While SGEI as economic activities enter the scope of application of EU competition law through the
front door, Article 106 (2) TFEU provides a back door out. To be specific, Article 106 (2) TFEU allows
a derogation from competition rules (and other provisions of EU primary and secondary41 law) for
entities entrusted with the operation of SGEI, if the application of these rules would ‘obstruct the
performance […] of the particular tasks assigned to them’ and the development of trade is not
‘affected to such an extent as would be contrary to the interests of the Union’.42
In the following sections, this derogation is examined more closely. After explaining the
understanding of this rule as a ‘balancing test’ (see III.A infra), its application in the presence and
absence of secondary and soft law is contrasted (see III.B infra). It is argued that Article 106 (2)
TFEU only allows a customized and limited derogation that is increasingly shaped by secondary
and soft law and complements the general ‘compatibility test’ performed to identify an economic
activity (see II.A.3 supra).
A. From a Narrowly Conceived Exception to a Balancing of Interests
Formerly neglected, Article 106 (2) TFEU gained much importance as a derogation provision in the
context of the liberalization and privatization of public undertakings in the utility markets in the
1980s and 1990s. Today it is the only primary law provision on SGEI that is directly relied on by the
CJEU on a regular basis. Prior to 1993, the CJEU used this provision to strengthen competition and
applied Article 106 (2) TFEU in a very restrictive manner, in so far as it required the fulfilment of the
particular public service task to be incompatible with competition rules.43 In the case Corbeau
however, it abandoned this approach. It no longer gives priority to undistorted competition over
SGEI by limiting the chances of a derogation as much as possible,44 but stipulates that a derogation
Similarly, as regards an existing ‘market failure’ as a precondition for an SGEI: WOLF SAUTER, PUBLIC SERVICES IN EU LAW
153 (2014).
41 The General Court appears to approve of such an interpretation in Case T-128/98 Aéroports de Paris v
Commission, ECLI:EU:T:2000:290, para 228. Likewise, Alexis Komorowski, Der allgemeine
Daseinsvorsorgevorbehalt des Art. 106 Abs. 2 AEUV, EuR 310, 324 (2015).
42 Many details regarding the impact of various financing models for SGEI on competition are provided by a recent
study (2016) prepared by Ecorys for the Commission, available at
http://ec.europa.eu/competition/publications/reports/kd021641enn.pdf (last visited Feb. 15, 2019).
43 See for example Case C-41/90 Höfner, ECLI:EU:C:1991:161, para 24; Case 155/73 Sacchi, ECLI:EU:C:1974:40, para
15; Case C-260/89 ERT, ECLI:EU:C:1991:254, para 33; Case 41/83 Italy v Commission, ECLI:EU:C:1985:120, para 33
(emphasis added). For further case law, see BUENDIA SIERRA, supra note 35, at 305 – 316.
44 Equally Tony Prosser, Competition Law and Public Services: From Single Market to Citizenship Rights?, 11 EPL 543,
551 (2005).
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book Austrian Law Journal, Volume 1/2019"
Austrian Law Journal
Volume 1/2019
- Title
- Austrian Law Journal
- Volume
- 1/2019
- Author
- Karl-Franzens-Universität Graz
- Editor
- Brigitta Lurger
- Elisabeth Staudegger
- Stefan Storr
- Location
- Graz
- Date
- 2019
- Language
- German
- License
- CC BY 4.0
- Size
- 19.1 x 27.5 cm
- Pages
- 126
- Keywords
- Recht, Gesetz, Rechtswissenschaft, Jurisprudenz
- Categories
- Zeitschriften Austrian Law Journal