Abstract
Sweden has a long tradition of being a welfare state with local authorities both having the responsibility for the provision of public services and being the ones delivering the services. This has changed the last decades and today public services performed by private entrepreneurs. These entrepreneurs are usually chosen within the public procurement regime, but they can also—especially when it comes to different kinds of social services—be the deliverers of public services within the free choice system. This article focuses on the unique Swedish free choice system and public funding of independent schools in relation the EU competition rules.
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Notes
- 1.
Lindvall and Rothstein 2006, p. 54.
- 2.
Modéer 2008, p. 289.
- 3.
Ibid. p. 292.
- 4.
See Lindvall and Rothstein 2006, pp. 47–63.
- 5.
Overall, municipalities and county councils employ more than one million people, corresponding roughly to 25 % of the total employment in Sweden. Information avaialbe at: www.skl.se
- 6.
See the Local Government Act. Available at: http://www.regeringen.se/content/1/c6/03/91/65/16f96742.pdf
- 7.
- 8.
See 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, and Commission, Communication from the Commission to the European Parliament, the Council the European Economic and Social Committee and the Committee of the Regions, Accompanying the Communication on ‘A Single Market for 21 st Century Europe’, Services of General Interest, Including Social Services of General Interest: A New European Commitment, COM(2007) 725, 20 November 2007.
- 9.
See Kolam 2010, pp. 391–399.
- 10.
Available at: http://www.sweden.gov.se/sb/d/1474.
- 11.
Available at: http://www.sweden.gov.se/sb/d/1454.
- 12.
Available at: http://www.sweden.gov.se/sb/d/8270.
- 13.
See inter alia the Social Services Act [Socialtjänstlagen (2001:453)].
- 14.
About the use of public and administrative contracts in Sweden, see Madell 1998.
- 15.
See Madell 2009, pp. 423–450.
- 16.
- 17.
- 18.
Modéer 2008, p. 298.
- 19.
See Madell 2009, pp. 423–450.
- 20.
See Lindvall and Rothstein 2006, pp. 47–63.
- 21.
- 22.
The role of the voluntary organisations (charitable, church organisations etc.) is very small in Sweden.
- 23.
- 24.
A new provision of the Social Services Act, in force since 1 January 2011, stipulates the ‘dignity of life within elderly care’ to be provided by social services, to guarantee an appropriate response according to the needs and requirements of every individual and by taking into consideration the various cultural, ethical and other particular conditions associated with the person’s identity.
- 25.
See Madell 2009, pp. 423–450.
- 26.
The Swedish system for providing health care is described in Madell 2009, p. 423–450.
- 27.
See Madell 2009, pp. 423–450.
- 28.
Björklund et al. 2005, p. 9.
- 29.
Pater and Waslander 2009, p. 4. The authors underline that in the wake of marketsation of education in the 1990s, many countries have crafted new policy arrangements combining public and private control over compulsory education. What makes the Swedish educational system ‘rather unique’ is according to them the combination of public funding with the possibility of for–profit firms governing schools, present only in very few countries. Politicians in the United Kingdom have expressed interest for the system..
- 30.
See Chap. 1 Sect. 1 of the Education Act [Skollagen (2010:800)], the last of which came into force 1 July 2011. Some parts will apply on education starting from the school year 2012–2013.
- 31.
This private operator may be a natural or legal person.
- 32.
See Chap. 1 Sect. 3 combined with Chap. 2 Sect. 7 2nd para of the Education Act. Most of them are operated by municipalities and are therefore named ‘municipal schools’ in this article.
- 33.
This possibility was introduced in the new Education Act; see Chap. 2 Sect. 6.
- 34.
See Chap. 23 of the Education Act, which also includes provisions on municipal cooperation in this field.
- 35.
See Chap. 1 Sect. 2 of the Swedish Instrument of Government [Regeringsformen].
- 36.
See Chap. 2 Sect. 18 of the Swedish Instrument of Government.
- 37.
See Chap. 7 Sect. 3 of the Education Act.
- 38.
See Chap. 9 Sect. 8, Chap. 10 Sect. 10 and Chap. 15 Sect. 17 of the Education Act..
- 39.
See Chap. 16 Sect. 42 of the Education Act.
- 40.
See Chap. 16 Sect. 42 of the Education Act.
- 41.
See Chap. 15 Sect.s 30 and 32 of the Education Act.
- 42.
See Chap. 9 Sect. 15, Chap. 10 Sect. 30 and Chap. 11 Sect. 29 of the Education Act.
- 43.
See the preparatory works to the Education Act [Skollagen (2010:800)], Government Bill 2009/10:165, p. 203, the author’s own translation.
- 44.
See Chap. 2 Sect. 8 of the Education Act.
- 45.
See notably Chap. 9 Sect. 17, Chap. 10 Sect. 25 and 35, Chap. 11 Sect. 25 and 34, Chap. 16 Sect. 42–48, Chap. 18 Sect. 8–9 of the Education Act.
- 46.
See Chap. 1 Sect. 9 of the Education Act.
- 47.
See the preparatory works to the Education Act, Government Bill 2009/10:165, p. 206.
- 48.
See Chap. 10 Sect. 8 of the Education Act..
- 49.
See Chap. 10 Sect. 24 and Chap. 16 Sect. 42 of the Education Act.
- 50.
See Chap. 2 Sect. 4 of the Education Decree [Skolförordningen (2011:185)].
- 51.
See the preparatory works to the new Education Act, Government Bill 2009/10:165, p. 206. An earlier Government Official Report (SOU 2002:121) expressed already the view that municipal and independent schools to the largest possible should be submitted to the same regulation. A proposal to replace the name ‘independent school’ by the name ‘private school’ was therefore put forward, as it was deemed that schools covered by the same regulation as municipal schools could not be considered as ‘independent’, see p. 197 et seq. The name proposed was, however, not introduced in Swedish law. A major objection was that the name ‘private school’ rather indicated a private funding, which is not at all the case with independent schools.
- 52.
See in particular Chap. 14 of the Education Decree.
- 53.
The local authorities may levy tax for the management of their affairs; see Chap. 14 Sect. 4 of the Swedish Instrument of Government [Regeringsformen]..
- 54.
The general State subvention is part of a financial redistribution system designed to equalise the financial base of local authorities, whichever their surface, population and geographic situation.
- 55.
Chap. 9 Sect. 9 and Chap. 10 Sect. 11 of the Education Act.
- 56.
NAE, Facts and Figs. 2010, Facts and Figures About Pre-School Activities, School-Age Childcare, Schools and Adult Education in Sweden, NAE Report No. 349, 2010, pp. 20, 36.
- 57.
Planning becomes a problematic exercise in a dynamic market with free choice for users. Demographic aspects, like the decrease of the number of pupils, can necessitate consolidation but also cooperation between municipal schools to secure quality and continuity. This is not easy to reconcile with a market logic of undistorted competition.
- 58.
PISA, Report for 2009, 7 December 2010. In 2009, the gap between the best and worst Swedish students was larger than the OECD average, and while there was still less difference between good and bad schools than in many OECD countries, the gap in Sweden was in 2009 twice as wide as in 2000.
- 59.
Some statistics can be found on the website of NAE, available at: www.skolverket.se
- 60.
See Chap. 2 Sect. 8 of the Local Government Act [Kommunallagen (1990:900)].
- 61.
See the judgment of the Administrative Court of Appeal of Stockholm [Kammarrätten i Stockholm] No. 584-08, decided after appeal from a decision of the Administrative Court in Stockholm County No. 10633-07.
- 62.
See the judgment of the Administrative Court of Stockholm County [Länsrätten] No. 13429-08.
- 63.
In yet, another spin-off case regarding the sale of two schools to companies created by staff of these schools, goodwill was found correctly evaluated (see the judgment of the Administrative Court of Appeal of Stockholm, No. 3801-09 and 3802-09). However, payment conditions were considered as more generous than market conditions, thus constituting aid contrary to the Swedish municipal competence rules. In its conclusions, the Administrative Court of Appeal underlines that the very fact that individual aid to particular undertakings contrary to Chap. 2 Sect. 8 of the Swedish Local Government Act had been established, suggested that the municipality also had contravened Union law’s State aid rules. Regarding, however, the question as to whether the municipality should have notified its sale plans to the Commission, the Administrative Court of Appeal considered that ‘in the absence of more detailed analysis or argumentation in the case it could not be considered as proved that all the criteria required were fulfiled for the existence of a state aid having to be notified.’, p. 4. In the frame of such legal actions—so-called legality review—it is normally for the member of the municipality contesting a municipality’s decision to prove its illegality.
- 64.
Swedish Agency for Public Management [Statskontoret], Pricing in the Transfer of Public-Sector Activities to Municipal Staff (‘hiving-off’): Municipal and EC/EU Legal Aspects, Report 2008:10, Commissioned by the Swedish Ministry of Finance to Examine the Controversial Conditions of Municipal Spin-Offs. In the Swedish full text, the question of the applicability of EU state aid rules is raised p. 46 and 47, but the sale of schools at issue is examined exclusively from the angle of a building being possibly sold by a municipality under market price to municipal employees.
- 65.
Case C-293/83, Gravier v. City of Liège, [1985] ECR p. 593, paras. 19–25 and 30–31. The rule examined provided for differential fees for courses in strip cartoon art, considered by the Court as vocational training.
- 66.
Ibidem, paras. 7 and 16.
- 67.
Case C-263/86, Belgian State v. René Humbel and Marie-Thérèse Edel, [1988] ECR p. 5365, para. 23, concerning enrolment fees for courses deemed to constitute vocational training but not a service for the purpose of free movement rules.
- 68.
Case C-209/03, The Queen (on the application of Dany Bidar) v. London Borough of Ealing, Secretary of State for Education and Skills, [2005] ECR I-2119, para. 48.
- 69.
Case C-184/99, Grzelczyk v. Centre public d’aide sociale d’Ottignies-Louvain-la-Neuve, [2001] ECR I-6193. Mr. Grzelczyk had covered the costs of his first three years of study in the host Member State by taking on various minor jobs and had applied for benefits only for the particularly demanding fourth year. The Court interpreted the words “not unreasonable” as meaning that a certain degree of solidarity must exist between nationals of a Member State and nationals of other Member States, particularly if the economic difficulties encountered by a beneficiary of the right of residence are temporary. Interestingly the Court took support of the sixth recital of Directive 93/96 that is more nuanced than to the wording of its Article 4, see para. 44.
- 70.
Ibidem, para. 9.
- 71.
Case C-147/86, Commission v. Hellenic Republic, [1988] ECR p. 1637, para. 10.
- 72.
Hatzopoulos 2006, p. 2.
- 73.
Opinion of AG Geelhoed in case C-372/04, Yvonne Watt v. Bedford Primary Care Trust and Secretary of State for Health, para. 60.
- 74.
See Case C-157/99, Smits and Peerbooms, paras. 56–58 compared to paras.70–71.
- 75.
Case C-109/92, Wirth v. Landeshaupstadt Hannover, [1993] ECR I-06447, para. 16.
- 76.
Ibidem, para. 12. See also C-109/92, Wirth v. Landeshauptstadt Hannover, para. 16.
- 77.
AG Darmon had underlined this lack of information, and meant that it was for the national court to decide the case on the basis of the Humbel criteria, see opinion of AG Darmon in case C109/92, Wirth v. Landeshaupstadt Hannover, para. 16.
- 78.
Ibidem, para. 17.
- 79.
This explains the assertion that ‘at the present stage of the Treaty assistance to students for maintenance and for training in principle fall outside the scope of the Treaty’, see para. 25, an assertion later modified by the Grzelczyk ruling.
- 80.
Case C-76/05, Herbert Schwarz and Marga Gootjes-Schwarz v. Finanzamt Bergisch Gladbach, [2007] ECR I-6849, para. 35. The Court of Justice ruled that the question of whether the private school in Scotland was providing a service in the meaning of Article 49 EC (now Article 56 TFEU) was for the national court to answer on the basis of more detailed facts. It was only if the answer to that question was negative that an examination in the light of Article 18 EC (now Article 18 TFEU) proved necessary, see paras. 47 and 83–99.
- 81.
See C-76/05, above footnote 53, paras. 38–41.
- 82.
Ibidem, paras. 45–46.
- 83.
Ibidem, paras. 54–55.
- 84.
Ibidem, para. 71.
- 85.
Case C-318/05, Commission v. Germany, [2007] ECR I-6957, para. 121. In Commission v. Germany the Court also found the tax rule incompatible with Articles 39 and 43 EC (now Articles 45 and 49 TFEU).
- 86.
Case C-281/06, Hans-Dieter Jundt and Hedwig Jundt v. Finanzamt Offenburg, [2007] ECR I-12231, para. 31.
- 87.
Ibidem, para. 32.
- 88.
These spin-offs lead to a partial privatsation. The local authority closes down its own school and sells the schools assets and building to a private part on the condition that the latter gets from the State administration an authorisation to run an independent school in this location. The new established free school is run in a mixed economic model by a private body and with public funds.
- 89.
European Commission CP248/08.
- 90.
The majority owner of the corporate company ThEducation is per June 2011 the corporate company Bure. Bure's business concept is ‘to acquire, develop and divest operational companies so that the shareholders in Bure shall receive a good return on invested capital through access to a portfolio of professionally managed companies’, see http://www.bure.se/extra/pod/?lang=en.
- 91.
The Swedish group Baggium is part of the Nordic company FSN, which acquired Baggium AB in January 2010. FSN presents itself as ‘a leading Nordic private equity investment company focused on the middle-market segment’. Originally established in 2000, FSN Capital seeks to make control investments in Nordic companies with significant potential to become international leaders. Baggium has more than 40 schools in Sweden.
- 92.
Affärsvärlden 2007-11-14: it is this education activity that makes them attractive as investment objects. Available at: http://80.76.151.54/aktier/analyser/analys/index.xml?stock_analysis_id=10834&skiprows=0
- 93.
See Academia’s business vision, ‘We will be the leading education company on the deregulated education market. Through well-defined brands we will drive the pedagogic development and create a company with the highest quality on the market. We will take active part in the transformation and development of the education industry… AcadeMedia is an education company that develops people. We use methods that result in measurably higher quality and more satisfied customers than our competitors’. Available at: http://www.academedia.se/Start/OmAcadeMedia/InEnglish.aspx.
- 94.
See Piernas Lopez 2010, p. 177, referring to the Meca-Medina case, in which the Court held that, whereas the rules concerning questions of purely sporting interest fall outside the scope of the Treaty provisions on free movement, this did not imply that the addressees of such rules or people engaged in the activity governed by such rules were excluded from competition rules, see CJEU Case C-519/04 Meca-Medina and Majcen [2006] ECR I-6991, paras 26–27.
- 95.
CJEU, Case C-118/85 Commission v. Italy [1987] ECR 2599, paras 3 and 7; GC, Case T-319/99 FENIN [2003] ECR II-357, para 37; CJEU, Case C-30/87 Bodson v. Pompes Funèbres des Régions Libérées SA [1988] ECR 2470, para 18.
- 96.
Odudu 2009, pp. 230–232.
- 97.
Waslander et al. 2010, see point 261. Referring to other studies and to their own observations the authors conclude inter alia ‘there is strong evidence that education markets are essentially local in nature. That is, parents do not choose just any school but a school within travelling distance, and schools do not compete with any school but with schools nearby. This implies that characteristics of the local situation are important’.
- 98.
See 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 final, 7 December 2010, p. 23.
- 99.
Commission Decision of 30 November 2006, C(2006) 5528, NN 54/2006, Czech Republic, Prerov Logistics College, OJ 2006 C 291, paras 15–18. Available at: http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/.
- 100.
EFTA Surveillance Authority Decision No. 39/07/COL of 27 February 2007 on Public Financing of Municipal Day-Care Institutions in Norway, p. 11.
- 101.
Ibid. page 9.
- 102.
EFTA Surveillance Authority Decision 291/03/COL of 18 December 2003, Regarding the Establishment of Private Day-Care Facilities on Public Sites with Subsidized Real Estate Household Fees in Oslo (Norway)..
- 103.
Opinion of AG Jääskinen of 14 April 2011 in CJEU, Case C-271/09 Poland v. Commission [decided on 21 December 2011, nyr], paras 68, 70 and 71.
- 104.
By ‘general rules’ we mean here procurement rules which are not particularly designed for free-choice systems
- 105.
When this is written,
- 106.
Wehlander 2011, 65–71.
- 107.
Letter to the Head of Section for Market and Competition Division at the Swedish Ministry of Enterprise, Energy and Communications, registered under reference COMP/H-2/BC – (2012)33624, dated 29.03.2012.
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Addendum (per June 2012)
Addendum (per June 2012)
Before this chapter went to press, the Swedish government received in March 2012 a letter from DG Competition at the European Commission, meant to respond a “wave of enquiries” in the Swedish Parliament about the Swedish authorities’ privatization practices including the complaints sent to the CommissionFootnote 107. The Commission informs about its decision to close the spin-off cases administratively, without a formal decision being taken, as “absence of effect on internal market and trade between Member States would a priori indicate that the measures described in the complaints would not constitute aid in the meaning of Article 107(1) TFEU”. The Commission reserves itself the discretion to review the matters if new evidence arises. It seems that the Commission—implicitly and very discreetly—shares our view that independent schools in Sweden constitute undertakings for the purpose of state aid rules.
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Wehlander, C., Madell, T. (2013). SSGIs in Sweden: With a Special Emphasis on Education. 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_18
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