For the application of competition law it is important to know the definition of an undertaking:
Every entity engaged in an economic activity, regardless of the legal status of the entity and
the way in which it is financed. (Höfner & Elser)
Therefore, also a public agency (Höfner & Elser) and a non-profit-making organization (FFSA) can
be an undertaking. The mere fact that something is a non-profit-making body does not deprive the
activity which it carries on of its economic character. In AG2R (r.o. 42) is stated that any activity
consisting in offering goods and services on a given market is an economic activity. Bodies that are
entrusted with the management of certain compulsory social security schemes based on the principle
of solidarity are excluded from being an undertaking (FFSA). So therefore, bodies entrusted with the
management of statutory health insurance and old-age insurance schemes that pursue an exclusively
social objective and do not engage in economic activity can be excluded (AKO).
Required for such bodies is (r.o. 47 AOK/44 e.v. AG2R):
- That they base their activity on the principle of (national) solidarity;
o In this case the sickness funds where joined together in a type of community founded
on the basis of solidarity which enables an equalisation of costs and risks between them.
Therefore the sickness funds where not in competition which each other/private
institutions (AOK).
o In another case there is a uniform sum for contribution that does not take into
consideration factors such as age, state or health (AG2R).
o In other words: an important characteristic is the not systematically proportionate
contribution to the risk insured. The absence of any direct link between the
contributions paid and the benefits granted entails solidarity between better paid
workers and those who, given their low earnings, would deprive of proper social cover
if such link existed. (Kattner Stahlbau)
o Important is of the insurance schemes are compulsory (Kattner Stahlbau and see more
FFSA)
- Are entirely non-profit-making;
- They are subject to supervision by the state which instituted it.
o Although an undertaking satisfies to the above criteria, is instituted by the state and is
under some sort of state control it is possible there is too much negotiation room for
the body itself to fall under the exclusion. As this could lead to financial and economic
considerations and therefore economic activity (AG2R r.o. 64 & 65). Keep in mind that
the sole room to determine the amount of contribution is not enough to say that there
is not enough state supervision (AOK & Kattner Stahlbau).
Another exemption is when there is an exclusive task for the government (a state prerogative). In
Diego Cali it is stated that there is a difference between a situation where the state acts in the exercise
of official authority and that where it carries on economic activities by offering goods or services on
the market. When there is a task that is solely of public interest, it forms part of the essential functions
of the state. Such tasks (e.g. protection of the environment) is not of an economic interest and therefore
the competition rules do not apply.
However: even when a company has an exclusive right for a certain period of time that company can
be in competition with other companies to renewal the contract after this period for yet again an
exclusive right. If so, then it is a undertaking because there is economic activity. Therefore the
competition rules do apply? (Sjöverg) → not sure about this, could you explain this more in the lecture?
When there is an undertaking, this undertaking is subject to competition rules as the prohibition to abuse
of domination are applicable (art. 102 TFEU).
Every entity engaged in an economic activity, regardless of the legal status of the entity and
the way in which it is financed. (Höfner & Elser)
Therefore, also a public agency (Höfner & Elser) and a non-profit-making organization (FFSA) can
be an undertaking. The mere fact that something is a non-profit-making body does not deprive the
activity which it carries on of its economic character. In AG2R (r.o. 42) is stated that any activity
consisting in offering goods and services on a given market is an economic activity. Bodies that are
entrusted with the management of certain compulsory social security schemes based on the principle
of solidarity are excluded from being an undertaking (FFSA). So therefore, bodies entrusted with the
management of statutory health insurance and old-age insurance schemes that pursue an exclusively
social objective and do not engage in economic activity can be excluded (AKO).
Required for such bodies is (r.o. 47 AOK/44 e.v. AG2R):
- That they base their activity on the principle of (national) solidarity;
o In this case the sickness funds where joined together in a type of community founded
on the basis of solidarity which enables an equalisation of costs and risks between them.
Therefore the sickness funds where not in competition which each other/private
institutions (AOK).
o In another case there is a uniform sum for contribution that does not take into
consideration factors such as age, state or health (AG2R).
o In other words: an important characteristic is the not systematically proportionate
contribution to the risk insured. The absence of any direct link between the
contributions paid and the benefits granted entails solidarity between better paid
workers and those who, given their low earnings, would deprive of proper social cover
if such link existed. (Kattner Stahlbau)
o Important is of the insurance schemes are compulsory (Kattner Stahlbau and see more
FFSA)
- Are entirely non-profit-making;
- They are subject to supervision by the state which instituted it.
o Although an undertaking satisfies to the above criteria, is instituted by the state and is
under some sort of state control it is possible there is too much negotiation room for
the body itself to fall under the exclusion. As this could lead to financial and economic
considerations and therefore economic activity (AG2R r.o. 64 & 65). Keep in mind that
the sole room to determine the amount of contribution is not enough to say that there
is not enough state supervision (AOK & Kattner Stahlbau).
Another exemption is when there is an exclusive task for the government (a state prerogative). In
Diego Cali it is stated that there is a difference between a situation where the state acts in the exercise
of official authority and that where it carries on economic activities by offering goods or services on
the market. When there is a task that is solely of public interest, it forms part of the essential functions
of the state. Such tasks (e.g. protection of the environment) is not of an economic interest and therefore
the competition rules do not apply.
However: even when a company has an exclusive right for a certain period of time that company can
be in competition with other companies to renewal the contract after this period for yet again an
exclusive right. If so, then it is a undertaking because there is economic activity. Therefore the
competition rules do apply? (Sjöverg) → not sure about this, could you explain this more in the lecture?
When there is an undertaking, this undertaking is subject to competition rules as the prohibition to abuse
of domination are applicable (art. 102 TFEU).
