European HEIs and EU Law
As shown in Chaps. 1 and 2, European HEIs were first established in the Middle Ages as centres of learning and teaching which were later nationalised and, in the Humboldtian era, succumbed to a strong research mission. In recent decades HEIs have, again, undergone changes due to the introduction of mass higher education, increasing commodificaton and a stronger focus on internationalisation. The latter two trends have not gone unnoticed by policy makers at the EU level who originally had not concerned themselves with HEIs as the European project had started as an economic integration endeavour and the economic value of HEIs had not been initially apparent. At the same time, potentially due to the important value of HEIs in national culture and them being maintained by public funding, the Member States seemed reluctant to provide far reaching competences to the EU level and only equipped them with a supplementary competence in education and a shared competence in research, the latter only having been extended recently with the Treaty of Lisbon 2007 and containing a caveat in Article 4(3) TFEU. These limited consequences did not lead to, and in the case of education, indeed, explicitly prohibited, harmonisation. As this, nevertheless, appeared to have been desired (to a certain extent), the Member States in cooperation with European third countries agreed on the Bologna Process for the harmonisation of higher education systems. As regards research, despite the extended competences since the Lisbon Treaty 2007, the main EU instruments remain funding and the Open Method of Coordination (OMC). Here, research and the role of HEIs for the ‘knowledge based economy’ have become increasingly important in the framework of the Lisbon/Europe 2020 Strategy with which the Framework Programmes have now been streamlined in Horizon 2020. The soft law mechanisms (the Bologna Process and the OMC) have attracted a variety of criticisms including the legal and democratic concerns of the Bologna Process pointed out by Garben.
At the same time, HEIs need to comply with other seemingly unrelated directly applicable provisions of EU law such as those on Union citizenship, the fundamental freedoms, competition and state aid. As in other more social policy areas, the retaining of competences at national levels with the simultaneous requirement of abiding by EU (economic) law may thus lead to spill-over, as neo-functionalism explains, of these provisions and influence national policy concepts on HEIs. This assumption seems to have already been proven true by the citizenship cases of Austria and Belgium, discussed in Chap. 2 (Sect. 184.108.40.206), where the large net influx of foreign students created pressures on the free and open access policies of those Member States. The possibility of HEIs coming within the ambit of the more economic free movement provisions or competition and state aid law increases with ongoing commodification and might in turn require even further commodification. In the cases Schwarz, Jundt and Neri, for example, the fundamental freedoms have already been applied to educational activities and required changes in national tax policy in the former two and a change in diploma recognition policy in the latter case.
As explained in Chap. 3 (Sects. 3.2.1 and 3.2.4), for the competition and state aid law provisions to be applicable to HEIs the latter would need to conduct an economic activity. The Commission recognised in Decision 2006/225/EC and in a Communication on state aid and services of general economic interest (SGEIs) that ‘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’. In the Research Framework the Commission provides guidance as to when research amounts to an economic activity. Accordingly, in particular, ‘independent R&D for more knowledge and better understanding’ is a non-economic activity, while, in particular, ‘renting out equipment or laboratories to undertakings, supplying services to undertakings and performing contract research’ are activities of an economic nature no matter as what they are labelled by the Member States. Therefore, HEIs in systems with a higher degree of commodification are more likely to conduct an economic activity and fall under the competition rules.
As regards EU competition and state aid law, there has so far only been a single case regarding HEIs which has not received full scrutiny due to the limited standing of the competitor who had brought the case before the General Court. The analysis here (Chap. 3 Sect. 3.3) thus had to be conducted mainly from a theoretical legal doctrinal perspective. This analysis resulted in the conclusion that, whilst the application of the competition rules might occasionally aid ‘consumers’ (students) or HEIs themselves, there are situations where they might have a detrimental effect on (social) national or HEI policies. The scholarship scheme which was challenged as price fixing in an US American case discussed in Chap. 3 (Sect. 220.127.116.11) might be such an example, even though a compromise was found in the end and the case settled. It might also be conceivable that competition law will require national bodies distributing study places to be opened to institutions from other Member States of which the systems might not be capable. As regards research HEIs must, in particular, be careful to demand market prices, full costs plus profit or to negotiate at arm-length the maximum economic benefit in areas of economic activity to avoid state aid or predatory pricing accusations. Furthermore, public funders might have to commission research, if it had to be regarded as economic in nature, according to the Altmark case law or the relevant rules in the Research Framework which both, at a minimum, seem to require non-discrimination and prices reflecting market values.
While arguably certain case law might indicate some leniency of the EU institutions towards areas of primary responsibility of the Member States, it is the national competition authorities who are now investigating most competition law cases and the national cases on educational institutions discussed in Chap. 3 (Sects. 3.3.2-3.3.4) seem to indicate that they are not reluctant to open proceedings. If HEIs would have to pay fines for the infringement of competition law, the question would also arise how or by whom these would be paid. On the other hand, strict compliance with the competition rules might commercialise the activities of HEIs even further. For example, if HEIs cannot fix tuitions fees at a low level, less well-off students might not be able to get into certain universities and if HEIs have to compete on a full cost level, those located in parts of the country with higher salary levels or those owning antique buildings would have a competitive disadvantage which they could not rationalise in a way private companies could whilst at the same time retaining their heritage and traditions. There are, of course, still exemption possibilities for infringements of competition law under Article 101(3), 107(2) and (3) and under Article 106(2) TFEU as well as the relevant secondary legislation. These might, however, not capture every situation and, in any case, it might make the conduct of HEIs increasingly complicated from a legal/administrative perspective.
-  See also Ulnicane 2016, p. 229 seq.
-  Garben 2010.
-  C-147/03 Commission vs Austria (Judgment of 7 July 2005, EU:C:2005:427), C-65/03Commission vs Belgium (Judgment of 1 July 2004, EU:C:2004:402).
-  However, in C-73/08 Bressol (Judgment of 13 April 2010, EU:C:2010:181) the Court acceptedseemingly unrelated concerns about the health care system as a justification, while keeping itsgeneral approach towards free movement (i.e. equal treatment with regards to access and the possibility of differentiation as regards maintenance) intact. This was possible as in this case the freemoving students were mainly studying medical subjects which, assuming they would return totheir home states, could lead to a shortage of medical professionals. See further on citizenshipand HEI policies Chap. 2 Sect. 2.3.1 and on Bressol Sect. 18.104.22.168 above.
-  Cases C-76/05 Schwarz (Judgment of 11 September 2007, EU:C:2007:492), C-281/06Jundt (Judgment of 18 December 2007, EU:C:2007:816) and C-153/02 Neri (Judgment of 13November 2003, EU:C:2003:614).
-  C-41/90 Hofner (Judgment of 23 April 1991, EU:C:1991:161) para 21.
-  Decision 2006/225/EC on the aid scheme implemented by Italy for the reform of the traininginstitutions OJ  L 81/13.
-  Commission Communication on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest OJ  C 8/02.
-  Ibid para 28.
-  Commission Communication ‘Framework for State aid for research and development andinnovation’ OJ  C 198/01.
-  United States v. Brown Univ., No. 91-CV-3274.
-  C-280/00 Altmark (Judgment of 24 July 2003, EU:C:2003:415).
-  T-289/03 BUPA (Judgment of 12 February 2008, EU:T:2008:29), C-113/13 Spezzino(Judgment of 11 December 2014, EU:C:2014:2440), but potentially also cases like C-523/12Dirextra (Judgment of 12 December 2013, EU:C:2013:831) in the area of free movement law.
-  Similar Hatzopolous 2009, p. 236 seq; Sauter 2015, p. 142 seq; Gideon and Sanchez Graells2016, p. 42 seq, 53.