Higher Education

As regards higher education activities, their classification as economic activities very much depends on the way a system is constructed and the likeliness increases with further commodification. The Commission, for example, stated in Decision 2006/225/EC that

[.] the concept of economic activity is an evolving concept linked in part to the political choices of each Member State. Member States may decide to transfer to undertakings certain tasks traditionally regarded as falling within the sovereign powers of States. Member States may also create the conditions necessary to ensure the existence of a market for a product or service that would otherwise not exist. The result of such state intervention is that the activities in question become economic and fall within the scope of the competition rules.[1]

Similarly, in its Communication on state aid and SGEIs, the Commission stated that ‘in certain Member States public institutions can also offer educational services which, due to their nature, financing structure and the existence of competing private organisations, are to be regarded as economic’.[2] Somewhat confusingly in para 31 of its Notice on the Notion of State Aid,[3] the Commission after reiterating this distinction,[4] continues that ‘education for more and better skilled human resources’ by ‘universities and research organisations’ would ‘in the light of the principles set out in [the previous paragraphs] [...] fall outside the scope of the State aid rules’. On the one hand, this may appear as if all ‘education for more and better skilled human resources’ by universities falls outside the state aid rules. On the other hand, this paragraph refers to the previous ones where the distinction made by the Court and the Commission in previous judgments and secondary law has been set out. One may thus conclude that only the non-economic activities educational activities are meant. Otherwise, that would be a new and significant exemption from the state aid rules which would seem somewhat at odds with previous developments, though it may have been purposely created when it became apparent that the previously made distinction in combination with ongoing commodification could lead to significant spill-over. In any case, this only concerns the scope of the state aid rules and does not affect the categorisation as economic and non-economic per se for which the principle still applies that the more market-like structures a system adopts, the more likely it becomes that the teaching activities will be regarded as economic in nature.

Changes in the way in which a Member State organises its HEI system (namely by integrating more market like structures) can thus lead to a more general classification of HEIs as undertakings. For example, in the UK students are paying around ?9000 a year in public universities and the very aim of the policy changes since Browne report[5] is to make them customers and to create a marketplace for higher education.[6] Taking this into consideration, it seems conceivable that HEIs of such systems will be regarded as undertakings for their educational activities.[7] Indeed, the former national competition authority of the UK, the Office of Fair Trading (OFT), has conducted a Call for Information on the English higher education sector to evaluate the competition situation after the reforms of the last few years. As it was phrased by Carmen Suarez from the OFT ‘clearly the Government reforms put an emphasis on choice and competition so there should be no surprise that the competition and consumer body looks at the sector’.[8]

Whilst the classification of teaching activities as economic in many other HEI settings might presently still not generally be given, there might, due to the relative concept of undertaking, nevertheless be individual teaching activities that do classify as economic in nature and the number of such activities may increase with further commodification. An indicator that an economic activity is being conducted could be seen in the fact that private for-profit providers are operating on a specific market. Public HEIs providing services on such a market could then be considered as undertakings for those activities. For example, a business school in a university could be seen as competing with private business schools even if the rest of the teaching activities of the public university are to be regarded as noneconomic, since in such cases there exists a profitable market for this particular


  • [1] See Decision 2006/225/EC para 50.
  • [2] Communication on state aid and SGEIs (n 80) para 28.
  • [3] Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty onthe Functioning of the European Union OJ [2016] C 262/1.
  • [4] Ibid para 30.
  • [5] Browne et al. 2010.
  • [6] These policy changes are supposed to be taken even further into the direction of a marketplace with the new Higher Education and Research Bill currently debated in the UK parliamentas outlined in the UK government’s Green and White Papers (see BIS 2015, 2016).
  • [7] See also Gideon and Sanchez-Graells 2016, p. 30 seq.
  • [8] Suarez 2014, p. 8 of the conference proceedings.
  • [9] See also Swennen 2008/2009, pp. 266, 268, 275 seq with examples of national cases, 279 seq.Steyger 2002, p. 278 seq also discusses in how far HEIs might be undertakings, but differs on thepoint that the concept of undertaking is relative. On p. 278 she states: ‘Under community law, theentity as a whole will be seen as such undertaking. Contrary to national law, there is no separation of the commercial activity from the government activity’.
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