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Social Services of General Interest and the State Aid Rules

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Book cover Social Services of General Interest in the EU

Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

The present chapter examines the impact of the State aid rules on the organisation and provision of SSGIs. The topic is approached as a test to the thesis according to which the Union, its institutions and its law tend to favour economic objectives over social policy aims, thus producing a social deficit. The chapter addresses two main questions: do the State aid rules endanger the provision of SSGIs? Should issues concerning social services be dealt with at Union level or at national level, and which institutions are better equipped to deal with them? To explore these questions, the chapter examines the following issues: the applicable texts and the institutions in charge of interpreting and applying them; the notion of economic activity; the per se exception concerning aid of a social nature granted to individual consumers and the social dimensions of other exceptions; and the Altmark case law, the Altmark package and its reform.

The opinions expressed in this paper are purely personal and do not necessarily reflect those of the European Commission or of its Legal Service. Thanks are due to Julian Currall, Leo Flynn, Paula Ploscar and Adinda Sinnaeve for comments on a first draft of this chapter.

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Notes

  1. 1.

    Scharpf 2010.

  2. 2.

    Ibid. p. 14.

  3. 3.

    Ibid. p. 222.

  4. 4.

    Ibid.

  5. 5.

    Ibid. pp. 336–341. CJEU, Case C-341/05 Laval [2007] ECR I-11767; CJEU, Case C-438/05 Viking [2007] ECR I-10779.

  6. 6.

    Ibid. pp. 224 and 242.

  7. 7.

    CJEU, Case C-280/00 Altmark [2003] ECR I-7747.

  8. 8.

    Scharpf 2010, p. 320.

  9. 9.

    Ibid. p. 322.

  10. 10.

    Ibid. p. 242.

  11. 11.

    Ibid. p. 322.

  12. 12.

    Ibid. p. 666.

  13. 13.

    Ibid. p. 200.

  14. 14.

    Driguez and Rodrigues 2008, pp. 192, 194 and 196–197. For a similar opinion, see the Rapport d’Information of the French Assemblée Nationale of 1 April 2009 on Social Services of General Interest, Report No. 1574, pp. 9–10.

  15. 15.

    Baquero Cruz 2007.

  16. 16.

    Baquero Cruz 2005.

  17. 17.

    Council Regulation No. 659/1999 of 22 March 1999, Laying Down Detailed Rules for the Application of Article 107 TFEU, OJ 1999 L 83/1.

  18. 18.

    See the Commission, Commission Notice on the Enforcement of State Aid Law by National Courts of 9 April 2009, OJ 2009 C 85/1.

  19. 19.

    In law there are limits to the setting of enforcement priorities, as the Commission is bound by Article 10 of the Procedural Regulation (Regulation No. 659/1999) to examine without delay ‘information from whatever source [usually complaints from competitors] regarding alleged unlawful aid’. The setting of priorities is a policy issue that may be reflected in block exemptions, individual and general Decisions (like the Altmark Decision, cited in n. 7) and soft law instruments.

  20. 20.

    CJEU, Case C-41/90 Höfner [1991] ECR I-1979.; CJEU, Case C-218/00 Cisal [2002] ECR I-691, para 22.

  21. 21.

    Commission, Commission Staff Working Paper, The Application of EU State Aid Rules, on Services of General Economic Interest since 2005 and the Outcome of the Public Consultation, SEC(2011) 397, 23 March 2011, p. 34.

  22. 22.

    This is the test developed in CJEU, Case C-36/92 Eurocontrol [1994] ECR I-43, para 30. See, also, CJEU, Case C-343/95 Diego Calì & Figli [1997] ECR I-1547, para 23. For a more detailed discussion, see Baquero Cruz 2005, pp. 179–185.

  23. 23.

    CJEU, Case C-41/90 Höfner [1991] ECR I-1979.

  24. 24.

    CJEU, Case C-67/96 Albany [1999] ECR I-5751, para 86.

  25. 25.

    CJEU, Case C-350/07 Kattner Stahlbau [2009] ECR I-1513, para 43.

  26. 26.

    For example, Dony 2004, p. 307.

  27. 27.

    See Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committe and the Committe of the Regions, Accompanying the Communication on ‘A Single Market for 21st Century Europe’, Services of General Interest, Including Social Services of General Interest: A New European Commitment, COM(2007) 725 final, 20 November 2007, p. 4; Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Commitee and the Council of the Regions on the Reform of the EU State Aid Rules on Service of General Economic Interest, COM(2011) 146 final, 23 March 2011, p. 3.

  28. 28.

    See van Raepenbusch 2006, p. 101.

  29. 29.

    As was the case in CJEU, Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK Bundesverband [2004] ECR I-2493, para 53. Despite the fact that there was some measure of competition among German sickness funds when they set their contribution rates, the Court concluded that their activities were not economic, because that element of competition was just a limited incentive for the funds to be more efficient, but at the end of the day they are ‘joined together in a type of community founded on the basis of solidarity (‘Solidargemeinschaft’) which enables an equalisation of costs and risks between them’.

  30. 30.

    CJEU, Joined Cases 40–48, 50, 54–56, 111, 113 and 114/73 Suiker Unie [1975] ECR 1663, para 24: ‘whatever criticisms may be made of a system, which is designed to consolidate a partitioning of national markets by means of national quotas, the effects of which will be examined later, the fact remains that if it leaves in practice a residual field of competition, that field comes within the provisions of the rules of competition.’ [emphasis added].

  31. 31.

    See, for example, the Commission, Commission Staff Working Document, Guide to the Application of the European Union Rules on State Aid, Public Procurement and the Internal Market to Services of General Economic Interest, and in Particular to Social Services of General Interest, SEC(2010) 1545, 7 December 2010, pp. 22–23; the Guide gives examples based on Court judgments and on Commission decisions.

  32. 32.

    See CJEU, Case C-342/96 Spain v. Commission [1999] ECR I-2459, para 23: ‘… the social character of State aid is not sufficient to exclude it outright from being categorised as aid for the purposes of Article [107 TFEU]…’ See, also, CJEU, Case 173/73 Italy v. Commission [1974] ECR 709, paras 27 and 28; CJEU, Case C-241/94 France v. Commission [1996] ECR I-4551, para 21.

  33. 33.

    Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA Agreement to State Aids in the Aviation Sector of 10 December 1994, OJ 1994 C 350/5,11.

  34. 34.

    See, for example, Commission, Decision of 11 December 2007, C(2007) 5979 final, N 471/2007, Portugal, Social Aid to individual Air Passengers Resident in Madeira; Commission, Commission Decision of 23 April 2007, C(2007) 1872, N13/2007, France, Social Aid to Individual Passengers for Corsica; Commission, Commission Decision of 10 April 2009, C(2009) 3047, N 179/2009, United Kingdom, UK Homeowners Morgage Support Scheme; Commission, Commission Decisions of 13 July and 24 November 2009, C(2009) 5658 final and C(2009) 9243 final, N 358/2009 and N 603/2009, Hungary, Support Scheme for Housing Loans. The Commission Decisions on State aid which are not published in the OJ can be found at: http://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=3.

  35. 35.

    See, for example, Commission, Commission Decision of 26 January 2011, on State Aid, C(2011) 267, C 50/2007, France, Sickness Insurance Policies (contrats solidaires et responsables) and Supplementary Group Insurance Policies Providing Cover for Death, Incapacity and Invalidity, OJ 2011 L 143/16 (the scheme was not approved under Article 107(2)(a) TFEU because it was not certain that the tax exemption and deduction scheme would be passed on to final individual consumers and because the tax deduction could involve discrimination); Commission, Commission Decision of 24 January 2007, on State Aid, C(2007) 170, C 52/2005, Implemented by the Italian Republic for the Subsidised Purchase of Digital Decoders, OJ 2007 L 147/1, paras 125–128; the aid did not have a social character because it benefited the whole of the Italian population.

  36. 36.

    Commission, Commission Decision of 14 February 2008, on State Aid, C(2008) 685, N 27/2008, United Kingdom, Aid of a Social Character Air Services in the Highlands and Islands of Scotland (prolongation of N 169/2006), OJ 2008 C 80/5.

  37. 37.

    Ibid. para 11.

  38. 38.

    Ibid. para 17 [emphasis added].

  39. 39.

    Ibid. para 35.

  40. 40.

    Ibid. conclusion.

  41. 41.

    Ibid. para 33.

  42. 42.

    Ibid. para 36.

  43. 43.

    Ibid. paras 5, 6 and 8.

  44. 44.

    Commission Regulation No. 800/2008 of 6 August 2008, Declaring Certain Categories of Aid Compatible with the Common Market in Application of Articles 87 and 88 of the Treaty (General Block Exemption Regulation), OJ 2008 L 214/3-47. On this topic, see Bacon 2009, pp. 197–208; Heidenhain 2010, pp. 439–444.

  45. 45.

    Commission, Commission Decision of 7 March 2007, on State Aid, C (2007) 652 final, N 798/06, Sweden, Measures to Promote Certain House Building.

  46. 46.

    Ibid. para 6.

  47. 47.

    Ibid. para 18.

  48. 48.

    Ibid. para 19.

  49. 49.

    Ibid. para 20.

  50. 50.

    Ibid. para 21.

  51. 51.

    CJEU, Case C-280/00 Altmark [2003] ECR I-7747. The Altmark approach was built on the Ferring judgment (CJEU, Case C-53/00 Ferring [2001] ECR I-9067), refining it, and was confirmed in CJEU, Joined Cases C-34/01 to C-38/01 Enirisorse [2003] ECR I-14243. In CJEU, Case C-126/01 GEMO [2003] ECR I-13769, the Court took a different approach, but it was a chamber judgment and it seems to have remained an isolated and doubtful precedent.

  52. 52.

    See Sinnaeve 2003; Acierno and Baquero Cruz 2004; Szyszczak 2004; Heidenhain 2010, pp. 511–533 (chapter by Max Klasse); Szyszczak 2011, pp. 293–326.

  53. 53.

    This position departed from the previous position of the GC, according to which any public service compensation granted to an undertaking constituted State aid which should be notified to the Commission and could be justified within the framework of Article 106(2) TFEU. See GC, Case T-106/95 FFSA v. Commission [1997] ECR II-229; GC, Case T-46/97 SIC [2000] ECR II-2125.

  54. 54.

    CJEU, Case C-53/00 Ferring [2001] ECR I-9067.

  55. 55.

    Ibid. para 33.

  56. 56.

    Sinnaeve 2003, pp. 355–359.

  57. 57.

    This view has been emphasised in GC, Case T-354/05 TF1 v. Commission [2009] ECR II-471, para 135.

  58. 58.

    Commission, Commission Decision of 28 November 2005, C(2005) 2673, on the Application of Article 86(2) of the EC Treaty to State Aid in the Form of Public Service Compensation Granted to Certain Undertakings Entrusted with the Operation of Services of General Economic Interest, OJ 2005 L 312/67.

  59. 59.

    Community Framework for State Aid in the Form of Public Service Compensation, OJ 2005 C 297/4.

  60. 60.

    Commission Directive 2005/81/EC of 28 November 2005, Amending Directive 80/723/EEC on the Transparency of Financial Relations Between Member States and Public Undertakings As Well As on Financial Transparency within Certain Undertakings, OJ 2005 L 312/47.

  61. 61.

    SEC(2010) 1545, cited in n. 31.

  62. 62.

    See judgment of the General Court, GC, Joined Cases T-568/08 and T-573/08 M6 and TF1 v. Commission [decided on 1 July 2010, nyr], paras 140–141.

  63. 63.

    In CJEU, Case C-451/10 P TF1 v. Commission, OJ C 2010 328/15, an appeal against the judgment of the General Court mentioned in the previous footnote, TF1 claims that the GC erred in law ‘by stating that the application of Article 106(2) [TFEU] did not require an assessment of the efficient functioning of public service’. The court rejected the appeal by reasoned order of 9 June 2011, without addressing this tissue.

  64. 64.

    This is the test that the Court generally applies in the framework of Article 106(2) TFEU. See Baquero Cruz 2005, pp. 195–197. See also CJEU, Case C-67/96 Albany [1999] ECR I-5751, para 103.

  65. 65.

    See also, for example, Commission, Commission Decision of 7 December 2005, on State Aid, C(2005) 4668 final, N 395/2005, Ireland, Loan Guarantee for Social Infrastructure Schemes Funded by the Housing Agency.

  66. 66.

    Commission, Commission Decision of 15 December 2009, on State Aid, C(2009) 9963 final, N 642/2009, The Netherlands, Existing and Special Project Aid for Housing Corporations. The Decision has been attacked in three pending cases before the General Court: GC, Cases T-201/10 IVBN v. Commission; T-202/10 Stichting Woonlinie and Others v. Commission; T-206/10 Vesteda Groep v. Commission, OJ 2010 C 179/59-50, 53.

  67. 67.

    Ibid. paras 14 and 89.

  68. 68.

    Ibid. para 57.

  69. 69.

    Decision of 26 January 2011, cited in n. 35.

  70. 70.

    Ibid. para 144. See, also, paras 189–192.

  71. 71.

    The revised package includes the following legal texts: Communication from the Commission on the application of the EU State aid rules to compensation granted for the provision of SGEIs, OJ 2012 C 8/4-14; Commission Decision of 20 December on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of SGEIs, OJ 2012 L 7/3-10; Communication from the Commission, EU framework for State aid in the form of public service compensation (2011), OJ 2012 C 8/15-22; Commission Regulation on the application of Articles 107 and 108 TFEU to de minimis aid granted to undertakings providing SGEIs, OJ 2012 L 114/8.

  72. 72.

    Commission Communication of 23 March 2011, cited in footnote 28. The Communication is based on the recommendations concerning social services included in the report of M. Monti to President Barroso of 9 May 2010 on A New Strategy for the Single Market: At the Service of Europe’s Economy and Society, pp. 73-75.

  73. 73.

    Commission Staff Working Paper cited in n. 21.

  74. 74.

    Communication cited in n. 27, pp. 6-7.

  75. 75.

    GC, Case T-289/03 BUPA v. Commission [2008] ECR II-81. For a description and critique of this judgment, see the annotation by Sauter 2009.

  76. 76.

    That has been the main role of the notion of SSGIs so far. See, for an example, the Commission, Communication from the Commission, Implementing the Community Lisbon Programme: Social Services of General Interest in the European Union, COM(2006) 177 final, 26 April 2006, which makes clear at the outset that, ‘… under Community law, social services do not constitute a legally distinct category of service within services of general interest, although they have a special role as pillars of the European society and economy…’ p. 4.

  77. 77.

    But see the EP, Resolution of 14 March 2007 on Social Services of General Interest in the European Union, OJ 2007 C 301/140-143 E, emphasising the need for a clearer legal framework that takes into account the specificity of social services, and the opinions mentioned in n. 14.

  78. 78.

    As described in COM(2006) 177 final, p. 7. See also COM(2007) 725 final, p. 5: ‘The question of how to distinguish between economic and non-economic services has often been raised. The answer cannot be given a priori and requires a case-by-case analysis’.

  79. 79.

    See Commission, Commission Staff Working Document, Second Biennial Report on Social Services of General Interest, SEC(2010) 1284 final, 22 October 2010, pp. 15–27. According to the report, the share in employment of the activities linked to the provision of health and social services has grown, in average across the Union, from 8.7 % in 2000 to 9.6 % in 2007 (p. 16), and this sector is ‘one of the main contributions to employment creation from 2000’ (p. 18). In terms of expenditure, ‘the resources devoted to health and social services, amounted in 2005 to around 9 % of the GDP of the EU-25’ (p. 22).

  80. 80.

    Ibid. p. 37: the crisis ‘has caused both the need and the demand for services to rise and, at the same time, significantly constrained the financing basis in public budgets’. Hence the increasing need to fulfil ‘the growing demand for services in a cost-effective way’.

  81. 81.

    Communication 2011, cited in n. 27, p. 6. [See Chap. 13 by Szyszczak for an update on the Almunia revision of the Monti-Kroes package of measures; Eds].

  82. 82.

    See Sinnaeve 2011, pp. 213 and 217.

  83. 83.

    On this issue see Drijber and Stergiou 2009 and SEC(2010) 1545, pp. 59–73.

  84. 84.

    Article 18 of Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004, Coordinating the Procurement Procedures of Entities Operating in the Water, Energy, Transport and Postal Services Sectors, OJ 2004 L 134/1; Article 17 of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the Coordination of Procedures for the Award of Public Works Contracts, Public Supply Contracts and Public Service Contracts OJ 2004 L 134/114.

  85. 85.

    See Articles 20 and 21 of Directive 2004/18/EC. See, also, SEC(2010) 1545, p. 14.

  86. 86.

    CJEU, Case C-324/98 Telaustria [2000] ECR I-10745, paras 58–62.

  87. 87.

    The legislator has already done so in the field of public passenger transport services by rail and by road, imposing public procurement rules on public service concessions in that field. See Regulation No. 1370/2007 of the European Parliament and of the Council of 23 October 2007 on Public Passenger Transport Services by Rail and by Road and Repealing Council Regulations No. 1191/69 and 1107/70, OJ 2007 L 315/1-13. On the first experiences with this Regulation, see Rusche and Schmidt 2011.

  88. 88.

    In this sense, van Raepenbusch 2006, pp. 143 and 161.

  89. 89.

    On the possible added value of this legal basis, see Fiedziuk 2011.

  90. 90.

    This is what purports to do the ‘Voluntary European Quality Framework for Social Services’ drafted by the SPC, SPC/2010/10/8 final.

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  1. Legal Service of the European Commission, B-1049, Brussels, Belgium

    Julio Baquero Cruz

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  1. , Faculty of Law, University of Copenhagen, Studiestræde 6, Copenhagen K, 1455, Denmark

    Ulla Neergaard

  2. , School of Law, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Erika Szyszczak

  3. , Faculty of Law, Radboud University, Comeniuslaan 4, Nijmegen, 6525 HP, Netherlands

    Johan Willem van de Gronden

  4. , Fachbereich Rechtswissenschaft, Universität Erlangen-Nürnberg, Schillerstraße 1, Erlangen, 91054, Germany

    Markus Krajewski

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Baquero Cruz, J. (2013). Social Services of General Interest and the State Aid Rules. In: Neergaard, U., Szyszczak, E., van de Gronden, J., Krajewski, M. (eds) Social Services of General Interest in the EU. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague, The Netherlands. https://doi.org/10.1007/978-90-6704-876-7_12

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