Services of General Economic Interest in EU Competition Law

Striking a Balance Between Non-economic Values and Market Competition

verfasst von: Lei Zhu

Verlag: T.M.C. Asser Press

Buchreihe : Legal Issues of Services of General Interest

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book provides a comprehensive examination of the interaction between Services of General Economic Interest (SGEI) and EU competition law, covering in particular Article 106 of the Treaty on the Functioning of the European Union (TFEU) and state aid rules. It also takes the telecommunications, postal service and transport sectors as case studies, taking into account the technological, economic and political backgrounds to these sectors.

The area of SGEI has undergone fundamental developments over the past three decades and the most recent changes in the Lisbon Treaty, recognizing SGEI as a shared value and granting explicit competence to the EU, mark its constitutional significance. The key issue is how to balance economic values underlying competitive markets and non-economic public service values such as universal access to essential services. The essence of the question is the relationship between the market and the state. This controversial issue is addressed through a critical analysis of a number of landmark EU Court judgments and Commission decisions over the decades.

Offering a clear appreciation of the evolution of the EU regulatory framework on SGEI that lays out the limits and boundaries within which the Member States define, organize and fund SGEI, the book is particularly aimed at academics with a research interest in the interaction between public services and EU competition law, but as it also demonstrates clearly how the application of EU competition law has transformed the public utilities sectors, it will be of interest to law makers, legal professionals and policy makers as well.

Dr. Lei Zhu is a Research Associate at the Institute of International Law at Wuhan University in Wuhan, China. He studied at the Institute for Competition & Procurement Studies of the Bangor University Law School in Wales, United Kingdom, where he obtained his PhD in law in 2015.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

This introductory chapter places service of general economic interest (SGEI) in its broader legal context. It first traces the historical development of SGEI by outlining its increasing importance in EU law. After remaining dormant for 30 years, it began to occupy a pivotal position from the late 1980s as it provides derogation from the application of Article 106(1), justifying the “controlled liberalisation” process in sectors such as electronic communications, postal services, transport, broadcasting and energy. Its significance rose further after the Treaty of Lisbon, which endorsed SGEI as a fundamental right and grants new legislative competence to the EU. It then summarises four main themes in the academic debate concersening SGEI. It introduces the aim of this book, which is to investigate whether the right balance has been struck in the current EU regime on SGEI, and outlines the plan of this book.

Lei Zhu

Chapter 2. SGI: An EU Expression of State Functions

Abstract

This chapter probes into the different terms associated with service of general economic interest (SGEI), including service of general interest (SGI) and non-economic service of general interest (NSGI). It argues that SGI corresponds to the notion of state functions in the national context, i.e. what functions the state undertakes. It lies at the heart of national sovereignty, which explains the controversial nature of the issue. This chapter focuses, secondly, on the distinction between economic and non-economic service of SGI. This is a prerequisite for competition law to apply. It takes a closer look at the case law and finds that the Court has not adopted the potentiality test as a criterion for the demarcation, as argued by some scholars. Instead, the Court has followed the functional approach by looking at whether the exercise of public power is involved. By identifying certain activities as non-economic, NSGIs are excluded from the scope of EU competition law. This essentially isolates them from the market liberation effect and the economic logic of EU competition rules, which will safeguard the non-economic values of NSGI provision.

Lei Zhu

Chapter 3. The Grant of Exclusive Rights Under Article 106

Abstract

The provision of services of general economic interest (SGEIs) was often organised under a monopolistic structure through the grant of exclusive right by the Member States. Such a measure is inherently anti-competitive because it eliminates market competition, which would naturally cause the EU concern. Exclusive right is covered by Article 106, which will be the focus of this chapter. Article 106 has been at the heart of this debate, and it has a ‘notorious’ reputation as being very difficult to interpret and apply. When the Treaty of Rome was adopted in 1957, State monopolies were widespread across the Member States in sectors such as electronic communications, postal services, public transport and broadcasting. This reality was largely taken for granted and remained outside the reach of EU competition law until the late 1980s. There was a fundamental change in the case law of the Court in early 1990s, which transformed the landscape of SGEI. The grant of exclusive rights is increasingly regulated and limited by EU competition law unless it is necessary for the provision of SGEIs under economically acceptable conditions.

Lei Zhu

Chapter 4. Application of State Aid Rules to SGEI Funding

Abstract

The provision of service of general economic interest (SGEI) is often not commercially viable under normal market conditions and requires financial support from the State. This chapter examines the interplay between EU state aid rules and SGEI. Two issues are of particular significance—the issue of definition and the issue of compatibility. This chapter studies the case law of the Court, in particular the landmark Altmark ruling, and the Commission practice. It argues that by applying state aid law to SGEI funding, the EU regulates how SGEIs are funded by the Member States. The focus of EU state aid law has been on ensuring SGEI funding is competition neutral.

Lei Zhu

Chapter 5. Universal Service Obligation in Telecommunications

Abstract

The chapter studies service of general economic interest (SGEI) in the telecommunications sector, which has been translated as universal service obligations (USO). The ideal of universal service was deeply rooted in the organisation of the sector under the traditional public service model. The EU liberalisation process transformed this sector from state monopolies to competitive markets. It was in this process that USO provision began to be regulated at the EU level. It finds that SGEI was largely a by-product of the liberalisation process. It was defined very narrowly during the market liberalisation process, limited to physical access to telephony network. It remained largely unchanged until now. It is submitted that USO as defined by EU law has become obsolete and meaningless, as is shown by the steady decline in the subscription rate to fixed telephone. Instead, the focus of EU law has been on ensuring that USO funding is competition neutral.

Lei Zhu

Chapter 6. Services of General Economic Interest in the Postal Sector

Abstract

This chapter deals with services of general economic interest (SGEIs) in the postal sector. It first traces the history of universal postal service and finds that, although it was often taken for granted, the modern version of universal service obligation (USO) emerged only after World War II. This chapter then investigates how USO is treated during and after the market liberalisation process in the postal sector. This study suggests that universal postal services differ significantly from their counterpart in the telecommunications sector. From the very beginning, universal service occupied a much more prominent position, and liberalisation was much delayed and prolonged. The EU managed to establish a minimum level of harmonisation regarding the definition of SGEI, and the Member States enjoy much freedom in regard to the scope of USO. While a significant amount of funding is still required for USO funding in the postal sector, the Commission has been using the state aid rules to ensure such funding does not lead to over-compensation.

Lei Zhu

Chapter 7. Service of General Economic Interest in Transport

Abstract

Service of general economic interest (SGEI) in the transport sector has been developed under the notion of public service obligation (PSO) within the framework of Common Transport Policy. This chapter explores the treatment of SGEIs in the transport sector. It begins with PSO in air transport, where the pursuit of regional economic development has been recognised as a valid SGEI objective and the public tendering procedure must be used. The second part of this chapter discusses PSO in inland transport, where Member States still enjoy much freedom and have been granted derogation from the public tendering procedure. It further studies PSO in the maritime transport sector, where transport links to islands have been regarded as valid SGEIs by the EU. The analysis shows that the concern of the EU is to ensure state intervention is competition neutral.

Lei Zhu

Chapter 8. Conclusions

Abstract

This chapter summarises the major findings of the research. It draws conclusions on this research and proposes answers to the research question formulated in Chap. 1 of the book. It also compares and contrasts diverse solutions for service of general economic interest (SGEI) provision developed across different sectors and highlights the features of the European Union regime on SGEI. It ends with some insights and reflections on the implications of this research.

Lei Zhu

Backmatter

Titel: Services of General Economic Interest in EU Competition Law
verfasst von: Lei Zhu
Verlag: T.M.C. Asser Press
Electronic ISBN: 978-94-6265-387-0
Print ISBN: 978-94-6265-386-3
DOI: https://doi.org/10.1007/978-94-6265-387-0