Anti-competitive Regulation of Markets by Member States

It was not only entities providing public services that came under the scrutiny of EU competition law, however, but also public market regulation. Firstly, according to the case law, a general obligation regarding anti-competitive state regulation arises from Article 4(3) TEU which contains the ‘principle of sincere cooperation’ in achieving the aims of the Treaties. The effet utile of competition law would be undermined, according to the Court, if the Member States were allowed to keep in force legislation which allows or even requires undertakings to engage in anticompetitive conduct.[1] There seems to be no public interest exemption from this principle.[2] However, state legislation based on a recommendation by a committee of experts from industry will not be regarded as a decision by an association of undertakings if the experts come to their decision independently from any interested undertakings and if governmental review of the composition of the committee and the decision is possible.[3] Such safeguards based on procedure can be used as a defence to show that national law is in the public interest rather than national governments giving into industrial lobbying.[4] The Court has applied Article 4(3) TEU in conjunction with Article 101(1) TFEU only in cases where an actual infringement of competition law by undertakings took place. Review purely of governmental regulation of the market without such an infringement does not seem possible under this provision.[5]

Secondly, Article 106(1) TFEU has led to the opening of markets because it prohibits national measures regarding ‘public undertakings and undertakings to which Member States grant special or exclusive rights’ to infringe the TFEU. In contrast to Article 4(3) TEU, which is not limited in its substantive scope, Article 106(1) TFEU is thus applicable only to such undertakings.[6] It does not, however, prohibit the existence of these,[7] but only those measures[8] regarding such undertakings which infringe the Treaty. Article 106(1) TFEU has been used to review legislation without an actual infringement by an undertaking having occurred.[9] Whilst Article 4(3) TEU has mostly been employed in cartel cases, the abuse of a dominant position has predominantly been dealt with under Article 106(1) TFEU.[10] In this respect it seems that any legislation containing the threat of putting an undertaking into a position where it is abusing, cannot help but or is likely to abuse its dominance, infringes Article 106(1) TFEU in conjunction with Article 102 TFEU.[11]

Article 4(3) TEU and Article 106(1) TFEU may thus render inapplicable such national measures which infringe competition law (or other Treaty provisions). Yet, these provisions have so far been used somewhat more sparingly. Buendia Sierra has in particular criticised a certain reluctance on the side of the Commission to utilise Article 106(1) TFEU to its full potential to review state action[12] and others have discussed that the Court has used these provisions more as a threat to encourage the ‘voluntary’ opening of markets.[13] In this respect, it has also been remarked that the Court seems less strict in its assessment the more ‘public’ or ‘social’ the service and that it sometimes does not seem to go through the effort of demonstrating an infringement with regards to public services at all, but goes straight to examining the exemption under Article 106(2) TFEU.[14]

  • [1] 13/77 INNO v ATAB (Judgment of 16 November 1977, EU:C:1977:185) para 30 seq.
  • [2] Chalmers et al. 2014, Chapter 25 (online resource), p. 6 suggest that this might change in thefuture after the Court considered ‘ancillary constraints’ in C-309/99 Wouters (Judgment of 19February 2002, EU:C:2002:98) as part of Article 101 TFEU. The Court also followed this line ofreasoning in C-519/04 P Meca-Medina (Judgment of 18 July 2006, EU:C:2006:492). Both cases,however, concerned very specific circumstances and it has to be seen how far this line of reasoning can actually be utilised beyond such cases.
  • [3] C-185/91 Reiff (Judgment of 17 November 1993, EU:C:1993:886) para 14 seq, case C-35/99Arduino (Judgment of 19 February 2002, EU:C:2002:97) paras 34-37.
  • [4] Chalmers et al. 2014, Chapter 25 (online resource), p. 5 seq; Sauter 2015, p. 127 seq.
  • [5] C-2/91 Meng (Judgment of 17 November 1993, EU:C:1993:885) para 14 seq. As there wasno actual collusion between undertakings in this case, the Court did not find an infringement ofArticle 4(3) TEU in conjunction with Article 101 TFEU.
  • [6] On the definition of ‘public undertakings and undertakings to which Member States grant special or exclusive rights’ see Whish 2015, p. 235 seq.
  • [7] 155/73 Sacchi (Judgment of 30 April 1974, EU:C:1974:40) para 14.
  • [8] On the definition of ‘measures’ see Whish 2015, p. 238, who concludes that a wide approach,similar to the approach concerning the definition of the term in respect to the free movement provisions, is envisaged here.
  • [9] 18/88 RTT (Judgment of 13 December 1991, EU:C:1991:474) para 23 seq. In T-169/08 GreekLignite (Judgment of 20 September 2012, EU:T:2012:448) the General Court initially annulleda Commission decision where there was no infringement by an undertaking. However, this wasquashed on appeal (C-553/12 P Greek Lignite (Judgment of 17 July 2014, EU:C:2014:2083)).Thus it is still possible to act against anticompetitive market regulation by Member States evenwithout an actual infringement by an undertaking. On the case see also Szyszczak 2015, p. 684seq who argues that the language the Court uses in the appeal case may even present a modernisation and expansion in that it ‘provides greater scope to examine the potential effects on competition by the creation and exercise of monopoly/quasi monopoly rights by the State’ (quote on p. 686).
  • [10] See, for example, C-49/07 MOTOE (Judgment of 1 July 2008, EU:C:2008:376) para 50.
  • [11] On Article 106(1) TFEU see Sauter and Schepel 2009, p. 93 seq, 96; Neergaard 2011, p. 182;Chalmers et al. 2014, Chapter 25 (online resource), p. 8 seq; Whish 2015, p. 234 seq.
  • [12] Buendia Sierra 2016.
  • [13] Chalmers et al. 2014, Chapter 25 (online resource), p. 2, 14.
  • [14] See Neergaard 2011, p. 183 seq, Chalmers et al. 2014, Chapter 25 (online resource), p. 14 seqwith further references, Whish 2015, p. 241 seq.
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