Traditionally public HEIs have not been regarded as undertakings. Instead they were seen as state institutions administering a scheme funded by general taxation to provide education and research in the public interest.[1] The students were not deemed to be consumers, they did not pay fees (or at least not significant ones) and research was not conducted for a customer but was, as the Research Framework phrases it, ‘independent R&D for more knowledge and better understanding’.[2] However recent developments suggest that not necessarily all activities of HEIs fall under these definitions of non-economic teaching and research activities any longer.[3]

Universities would be conducting an economic activity if they provided research or education (or additional activities, such as offering accommodation or selling certain products) on a market. The mere aim of increasing student numbers as such is not significant to show that there is an economic activity occurring. Instead a service would have to be provided on a market in the interest of the consumer by a potentially profit-oriented entity.[4] Whilst the absence of profit could be an indicator that a given entity does not operate on a market, it is insufficient in itself. Similarly, cross-subsidy of possible profits into other charitable parts of its activities would not hinder the classification as an undertaking generally. Thus non-profit and not-for-profit entities can be included in the definition if the services they provide could theoretically be conducted in a market setting. Likewise, as has been seen above, the public character of an entity does not hinder the categorisation as an undertaking. Instead, the classification solely depends on the activities’ (potentially) economic character. Whether or not that is the case has to be evaluated on a case by case basis.[5]

  • [1] As regards education see Commission Communication on the application of the EuropeanUnion State aid rules to compensation granted for the provision of services of general economicinterest OJ [2012] C 8/02 para 26 seq and Commission Decision 2006/225/EC on the aid schemeimplemented by Italy for the reform of the training institutions OJ [2006] L 81/13 para 41 seq.In both these, the Commission explicitly imported the reasoning from internal market law in thefield of education into competition and state aid law. In internal market law the Court had established in C-263/86 Humbel (Judgment of 27 September 1988, EU:C:1988:451) and C-109/92Wirth (Judgment of 7 December 1993, EU:C:1993:916) that public education is generally nota service in the meaning of the Treaty (see further Chap. 2, Sect. 2.3.2 above). Similarly, in twocases of notified state aid concerning the Czech Republic (State aid NN54/2006-Czech RepublicPrerov Logistics College) and Hungary (State aid NN343/2008-Hungary College of NyiregyhazaPartium Knowledge Centre) the Commission found the activities of colleges to be of a noneconomic nature. As regards research see the Communication on state aid and SGEIs mentionedearlier in this note in para 29 as well as Commission Communication ‘Framework for Stateaid for research and development and innovation’ OJ [2014] C 198/01 (hereinafter ResearchFramework) para 19 where the principle that research in the public interest in public HEIs is usually not an economic activity is established.
  • [2] Research Framework para 19(a).
  • [3] For more on recent developments in the HEIs sector see Chap. 1 (Sect. 1.3.3). On the classification of HEIs, see also Steyger 2002, p. 275 seq, 277 seq; Swennen 2008/2009, pp. 265, 268,279; Gideon 2012, p. 173 seq.
  • [4] In the field of the free movement provisions, the emphasis is more on the aspect of remuneration while in competition law the existence of a market and the potential profit-making abilityare the key factors (see similar Odudu 2011, p. 235). However, the changing definition in thefield of the free movement provisions (Chap. 2, Sect. 2.3.2 above) and the fact that remuneration was found there can be an indicator that a market is developing, that there is the potential tomake a profit and that the service is thus of an economic nature. For example, in C-153/02 Neri(Judgment of 13 November 2003, EU:C:2003:614) the Court in para 39 explicitly stated that the‘organisation for remuneration of university courses is an economic activity’.
  • [5] See also Steyger 2002, p. 277 seq; Swennen 2008/2009, p. 265 seq, 268 seq, 275, 279 seq;Gideon 2012, p. 173 seq, Gideon 2015a, p. 1053 seq; Gideon 2015b 29, p. 59 seq, Gideon andSanchez-Graells 2016, p. 30 seq. For an analysis of the question as to whether an entity is anundertaking in the field of health care (as a similar field of public service provisions), see Prosser2010; p. 335, Odudu 2011.
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