Undertakings
The treaty does not define undertaking; it has been the task for the EU courts to clarify its meaning
See case T-99/04 AC-Treuhand v Commission 2008 para 144)
o it should be pointed out that the terms ‘agreement’ and ‘undertaking’, within the meaning
of Article 81(1) EC, constitute legal concepts which have not been delimited, the full
implications of which fall ultimately to be determined by the Community judicature, and the
application of which by the administration is subject to full judicial review.
This is a very important concept, since only agreements and concerted practices between
undertakings are caught by article 101; similarly article 102 applies only to abuses committed by
dominant undertakings.
The competition law question is whether the distortion of competition is the responsibility of an
undertaking; if it is the behavior in question may infringe article 100 and one and article 102 subject
to the availability of various defenses.
1. Apply the Hofner quote/ definition
2. Cross check if there is any reason to the activity is not economic?
a. If the issue relates to a state body – SELEX principles: is it acting as an undertaking in
that specific case?
Undertaking and Association of Undertaking
Basic Definition:
CJ in Hofner and Elser v Macrotron GmbH 1991 para 21:
o The concept of an undertaking encompasses every entity engaged in an economic
activity regardless of their legal status of the entity and the way in which it is financed.
Pavlov (2000)
o Any activity consisting in offering goods or services on a given market is an economic
activity
Wouters v Algemene Raad van de Nederlandsche Orde van Advocaten
o Rules in the Treaty do not apply to activity which by its very nature, its aim and rules,
does not belong to the sphere of economic activity which is connected with the exercise
of the powers of a public authority.
Need to Adopt a Functional Approach:
The same legal entity maybe acting as an undertaking when it carries on one activity but not
when it is coming off on another.
And functional approach is needed when determine whether an entity, when engaged in the
particular activity, is doing so as an undertaking or the purpose of competition rules
o MOTOE (2008)
The classification as an activity formed within the exercise of public powers or as an
economic activity must be carried out separately for each activity exercised by a
given entity
, Undertakings
Example: local authorities may (a) have powers to adopt bylaw specifying where cars can
cannot be parked and (b) on land which it operates commercially as a car park.
o when performing the first function the authority authority would, in the language
of Wouter be exercising as a public authority and therefore not an undertaking. the
behavior in the second example would be an economic activity and therefore would fall
into an undertaking.
SELEX Sistemi
o The General Court had to decide whether Eurocentral, an entity created by the member
states of the EU for the purpose of establishing navigational safety in the airspace of
Europe, was acting as an undertaking. the court concluded that some of its activities - for
example setting technical standards, procuring prototypes and managing intellectual
property rights - were not economic.
o However, it also concluded that some other activities - for example the provision of
technical assistance to national administrations - could be separated from the exercise
of its public powers and be characterised as economic.
o Court of justice disagreed and held that the General Court had erred in
concluding that the latter activities were economic.
‘Engaged in an Economic Activity’
Offering goods or services on a given market is an economic activity
o It is not the mere possibility that private operators could carry on the activity that is
decisive, but the fact that the activities carried on under market conditions (AG Opinion
in FENIN v Commission 2005)
o Spanish Courtier Services
The Commission held that the Spanish post office, insofar as far as it was providing
services on the market, was acting as an undertaking
o Hofner and Elser
CJ reach the same conclusions include the German federal employment office
o Ambulanz Glockner
Non-profit making medical aid organisations, such as the German motocross calmer
providing ambulance services for remuneration were acting as undertakings.
o A legal entity that acts as a ‘facilitator’ to a cartel come be undertaking, even though it
does not itself produce the goods or services that are cartelised (AC Truend v
Commission 2015)
o The mere holding of shares in an undertaking does not, in itself, mean that the owner of
the shares is itself an undertaking engaged in economic activity; however the position
will be different where the shareholder actually exercises control by involving itself in
the management of the undertaking (Cassa di Risparmio di frenze 2006)
o Pegler v Commission 2011 General court held that a ‘dormant’ company with no assets,
employees or turnover did not offer goods or services on a market and therefore was
not acting as an undertaking.
No need for a profit-motive or economic purpose’
o The fact that an organization lacks a profit motive (Van Landewyck v Commission
1980) or does not have an economic purpose (Italy v Sacchi 1974) does not, in
itself, mean that an activity is not economic.
The treaty does not define undertaking; it has been the task for the EU courts to clarify its meaning
See case T-99/04 AC-Treuhand v Commission 2008 para 144)
o it should be pointed out that the terms ‘agreement’ and ‘undertaking’, within the meaning
of Article 81(1) EC, constitute legal concepts which have not been delimited, the full
implications of which fall ultimately to be determined by the Community judicature, and the
application of which by the administration is subject to full judicial review.
This is a very important concept, since only agreements and concerted practices between
undertakings are caught by article 101; similarly article 102 applies only to abuses committed by
dominant undertakings.
The competition law question is whether the distortion of competition is the responsibility of an
undertaking; if it is the behavior in question may infringe article 100 and one and article 102 subject
to the availability of various defenses.
1. Apply the Hofner quote/ definition
2. Cross check if there is any reason to the activity is not economic?
a. If the issue relates to a state body – SELEX principles: is it acting as an undertaking in
that specific case?
Undertaking and Association of Undertaking
Basic Definition:
CJ in Hofner and Elser v Macrotron GmbH 1991 para 21:
o The concept of an undertaking encompasses every entity engaged in an economic
activity regardless of their legal status of the entity and the way in which it is financed.
Pavlov (2000)
o Any activity consisting in offering goods or services on a given market is an economic
activity
Wouters v Algemene Raad van de Nederlandsche Orde van Advocaten
o Rules in the Treaty do not apply to activity which by its very nature, its aim and rules,
does not belong to the sphere of economic activity which is connected with the exercise
of the powers of a public authority.
Need to Adopt a Functional Approach:
The same legal entity maybe acting as an undertaking when it carries on one activity but not
when it is coming off on another.
And functional approach is needed when determine whether an entity, when engaged in the
particular activity, is doing so as an undertaking or the purpose of competition rules
o MOTOE (2008)
The classification as an activity formed within the exercise of public powers or as an
economic activity must be carried out separately for each activity exercised by a
given entity
, Undertakings
Example: local authorities may (a) have powers to adopt bylaw specifying where cars can
cannot be parked and (b) on land which it operates commercially as a car park.
o when performing the first function the authority authority would, in the language
of Wouter be exercising as a public authority and therefore not an undertaking. the
behavior in the second example would be an economic activity and therefore would fall
into an undertaking.
SELEX Sistemi
o The General Court had to decide whether Eurocentral, an entity created by the member
states of the EU for the purpose of establishing navigational safety in the airspace of
Europe, was acting as an undertaking. the court concluded that some of its activities - for
example setting technical standards, procuring prototypes and managing intellectual
property rights - were not economic.
o However, it also concluded that some other activities - for example the provision of
technical assistance to national administrations - could be separated from the exercise
of its public powers and be characterised as economic.
o Court of justice disagreed and held that the General Court had erred in
concluding that the latter activities were economic.
‘Engaged in an Economic Activity’
Offering goods or services on a given market is an economic activity
o It is not the mere possibility that private operators could carry on the activity that is
decisive, but the fact that the activities carried on under market conditions (AG Opinion
in FENIN v Commission 2005)
o Spanish Courtier Services
The Commission held that the Spanish post office, insofar as far as it was providing
services on the market, was acting as an undertaking
o Hofner and Elser
CJ reach the same conclusions include the German federal employment office
o Ambulanz Glockner
Non-profit making medical aid organisations, such as the German motocross calmer
providing ambulance services for remuneration were acting as undertakings.
o A legal entity that acts as a ‘facilitator’ to a cartel come be undertaking, even though it
does not itself produce the goods or services that are cartelised (AC Truend v
Commission 2015)
o The mere holding of shares in an undertaking does not, in itself, mean that the owner of
the shares is itself an undertaking engaged in economic activity; however the position
will be different where the shareholder actually exercises control by involving itself in
the management of the undertaking (Cassa di Risparmio di frenze 2006)
o Pegler v Commission 2011 General court held that a ‘dormant’ company with no assets,
employees or turnover did not offer goods or services on a market and therefore was
not acting as an undertaking.
No need for a profit-motive or economic purpose’
o The fact that an organization lacks a profit motive (Van Landewyck v Commission
1980) or does not have an economic purpose (Italy v Sacchi 1974) does not, in
itself, mean that an activity is not economic.
