Page - 18 - in Austrian Law Journal, Volume 1/2019

ALJ 2019 Martina Melcher 18 Furthermore, the close connection between the non-applicability of competition (and market) rules due to the lack of an economic activity and the ‘customized derogation’ that may be granted to SGEI is also an important aspect to keep in mind. The system only works in a way that is beneficial to functioning SGEI if the respective functions of its two main components (i.e. ‘general compatibility test’ and ‘customized derogation’) are respected and clearly differentiated. Although the criteria to exclude non-economic activities from the scope of competition law altogether (i.e. ‘general compatibility test’) and to grant an exemption pursuant to Article 106 (2) TFEU (i.e. ‘customized derogation’) are based on the same assumption (namely that such services may not be provided satisfactorily under normal market conditions), they cannot be congruent, because otherwise one and the same activity would be included into the scope of competition law and then exempted by Article 106 (2) TFEU for the very same reason. Accordingly, SGI, which should not be subject to competition and the general market rules in the first place, must not be ‘saved’ by way of exemption pursuant to Article 106 (2) TFEU. However, the very broad meaning given to the concept of an undertaking risks to allow just that. The CJEU must therefore be careful to distinguish between non-economic activities that are generally incompatible with a competitive market and economic activities that are generally compatible with a competitive market but require a limited and customized derogation. Given the alleged success of the market model for utilities and the dwindling public budgets, this distinction might gain even more importance in the future. The categorization of activities in fields such as health care, education93 and research will show whether the CJEU is willing to respect the limits of competition law (and thus its own competence) or misuses the balancing test of Article 106 (2) TFEU to grant a ‘customized derogation’ for activities that are – as neSGI – generally incompatible with competition (and market) rules. Further research that compares and contrasts the criteria of the ‘general compatibility test’ and the prerequisites for a ‘customized derogation’ is much needed in this regard. 93 Although the Commission also refers to education and research activities when elaborating on the notion of undertaking and economic activity (see 2011 SGEI Communication, para 26), the cited case law (i.e. Case C-318/05, Commission v Germany, ECLI:EU:C:2007:495, para 71) deals only with the infringement of free movement and should thus not be applied one to one in the context of competition law. Cf Case C-74/16 Congregación de Escuelas Pías Provincia Betania, ECLI:EU:C:2017:496 (education in the context of competition rules without reference to an SGEI however).