The concept of undertaking strikes back – the activity of religious orders and congregations

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by Ana Filipa Afonseca, member of CEDU

The Court of Justice, final interpreter of the Treaties, has dealt with a broad spectrum of concepts of undertaking, making certain decisions somewhat perplexing to lawyers unsuspicious of the particularity of the concept of undertaking in the context of competition rules. These decisions are still the living proof that competition is at the heart of legal (and political) modeling process of European integration.

On the other hand, regarding the field of state aids, in the Congregación de Escuelas Pisa’s ruling, Case C-74/16, 27th June 2017, the Court of Justice had the important and difficult task of deciding whether the activities carried out by Spanish religious establishments were of economic nature. With this assumption, the Congregación de Escuelas Pías had received an illegal fiscal exemption and this measure is a forbidden state aid in the terms of the Article 107(1).

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Competition harms created by administrative legislation: a new approach to an ancient problem

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by, María Pilar Canedo Arrillaga, Professor at the University of Deusto and Jean Monnet Chair

Competition law has a general aim of protecting markets against those actors that, for different reasons, break the rules of the game and obtain an extra-benefit harming competitors, consumers and society in general.

The traditional approach to competition law is to focus attention on undertakings – generally the most powerful because of different reasons – that find in the absolute freedom of laissez faire, the best opportunity to maximize their particular benefits not taking into consideration the general interest. Articles 101 and 102 of the Treaty of the Functioning of the EU have been the most relevant tool to fight these practices both by the European Commission and the national or subnational authorities.

In the former 20 years attention has been given by different international Organizations (OEDC, UNCTAD) to the role played by the State in the harms generated in the markets. Article 107, TFUE (dealing with State Aid) was since the beginning of the European Market one of the concerns of the EU institutions but a new approach is needed in this field.

The many different levels of administration (central Governments, regions, provinces, mayors) have the power to create legislation that reduces competition by creating entry barriers in markets or by generating discrimination between economic actors.

Those administrations have an incredible economic power when they enter into public procurement procedures in order to guarantee services and products to de citizens. If those administrations don’t impose the principles of efficiency in their procedures, the services received by the population will be more expensive and will have lower quality.

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Modernisation and supermodernisation of the state aid law – silent deepening of European integration?

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by Ana Filipa Afonseca, student of the Master´s degree in EU Law of UMinho

In general, the Member States have always had a bad understanding about the importance of the prohibition of the state aid, pursuant Article 107, TFEU, in fact, in 1966 and in 1987, the Member States rejected the proposal of the Commission to assume a legal definition of aid.

Truly, in the past – not so distant – Member States escaped the application of the prohibition of the state aid in a simple way: they didn’t notify the European Commission about the aid that they had conceded to their companies.

The importance of the state aid prohibition started to become clear to the Member States when they noticed this article plays an important role on improving the growth of the internal market. And the main reason this prohibition was learned by the Member States was due to its control for a non-differentiated growth of the Member States and distortion of competition. Besides that, it ended an obscure and dubious policy practice of the destination of public funds to the eyes of the citizens… until, shall we say, the beginning of the crisis in 2008.
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The concept of (economic) sovereignty: the Apple/Ireland case

by Ana Filipa Afonseca, student of the Master´s degree in EU Law of UMinho

If we know the economic policy behind the article 107.º and 108.º of TFEU we will know better ourselves as European Union. Here, the sovereinty have a modern aproach because it deals with a new reallity, witch is the heart of EU: the idea of a single, free and fair market throught the Member States. That necessarilly increases a deep discussion about the institutional and Member State’s power to take attractive measures to grow up their own economy throught tax benefits, such as the case in analysis.

But, in fact, the Member States are now new states because they are regulated by common politics emerged by a supra national organ, which did not exist: the EU itself. When we say “new States” we are not calling for a conceptual reform in the international law as the elements of the 1st article of Montevideo’s Convention remain. It must be noted that the requirement of an effective Government does not take into account the way/fashion in which state policy is implemented but, symbolically, it is important to point out that there is a new set of rules that inevitably transform the path of State economic policy in the Member States of the EU.

In this way, if every competition rule in the TFEU as well as the economic freedoms ones are important to the new economic formula, the prohibition of State aid under Article 107 and 108 has an added symbolic force: it is addressed directly to the Member States, imposing a stand still position before their peers.

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Between the competition law and a competition culture: the case of Apple/Ireland

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by Ana Filipa Afonseca, student of the Master´s degree in EU Law of UMinho

The importance of Apple’s case emerged when the journalist of the Irish Times asked the European Commission representative, Margrethe Vestager, in the press conference about the illegality of the aid provided by Ireland to Apple Sales International, if the Union wouldn’t be afraid of losing the investment of external companies with such sanctions. The answer given, without lyricism, made clear that the lesson wasn’t well-examined, after all, she simply answered “this is not a penalty, this is unpaid taxes”. The state aid prohibition read in the 107º TFEU conforms one of the most important competition laws, given that this mechanism contradicts the previous protectionist rules, inherent to the state individualism, in which the national independence was established through favouring State domestic economy to the detriment of other economies. Therefore, this response was surgical: urges the time for the Member States to finally consider the internal market as a single market, defined by the fair competition and this will be the main catch for future investment. Above all, the competition law demands an important shift of thought by the Member States – today we are not one.

The case Apple/Ireland raises several questions. Primarily, it takes into account the mould of the State aid, due to the fact that this is not a direct measure of tax exemption, fiscal guarantee, preferential  tax interest , favourable deals in the land acquisition, special rates, as in most cases, the Irish measure translates in a broad sense, in a advantage (expression used in the Case Italy versus European Commission 2nd of July of 1974, Process 173/73) that benefits the economic operator. The illegal aid converts into splitting of profit between Apple Sales International and Apple Operations Europe which the result implies that the Irish branch office would be subjected to the normal taxation of Irish companies, however, the head office where most of the profit was allocated, was not subjected to any kind of taxation and this was possible under the Irish tax law, which until 2013 allowed for so called ‘Stateless Companies’.

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Summary of Costa/ENEL – 6/64

by José Ricardo Sousa, student of the Master's degree in EU Law of UMinho

Keywords: primacy; competition rules; non-discrimination; nationalisation; state aid.

Court: CJEU | DateJuly 15th 1964 | Case: 6/64 | Applicants: Faminio Costa vs Ente Nazionale Energica Elettrica

Summary: The Italian Republic nationalized the production and distribution of electric energy. In the middle of the proceedings, Mr Costa, shareholder of an energy company affected by the sector nationalization requested the application of article 177 of EEC Treaty to obtain the interpretation of articles 102, 93, 53 and 37 of the same treaty. To Mr Costa, this nationalization infringed the articles mentioned above. The Giudice Consiliatore decided to send a question to CJEU:

“Having regard to Article 177 of the Treaty of25 March 1957 establishing the EEC, incorporated into Italian law by Law No 1203 of 14 October 1957, and having regard to the allegation that Law No 1643 of6 December 1962 and the presidential decrees issued in execution of that Law (No 1670 of 15 December 1962, No 36 of 4 February 1963, No 138 of25 February 1963 and No 219 of 14 March 1963) infringe Articles 102, 93, 53 and 37 of the aforementioned Treaty, the Court hereby stays the proceedings and orders that a certified copy of the file be transmitted to the Court of Justice of the European Economic Community in Luxembourg.’”

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