8. EU Competition Law (State Aid, Public Procurement)

Question 1

Art 107 - State Aid definition (conditions)

Answer 1

• State Resources
• Advantage
• Distortion of competition
• Likely to affect trade between member states
>>all four conditions have to be met!

Question 2

Art. 107 TFEU only inhibits subsidies by _____ , not by _______.

Answer 2

Art. 107 TFEU only inhibits subsidies by Member States, not by EU

Question 3

Private Investor Principle:

Answer 3

• Is applicable when a public authority acts as a private operator or investor
» compares the financial measure at issue to a commercial transaction
• It only applies to economic activities (i.e. any activities consisting in offering goods and services on a given market)

Question 4

The status of a public authority excludes the exercise of an economic activity

TRUE OR FALSE?

Answer 4

FALSE&raquo_space;

The status of a public authority does NOT exclude the exercise of an economic activity.
» they cannot, for that reason alone, be categorized as the exercise of public authority power or as regulatory activities

Question 5

Altmark Criteria Principle, explain the 4 criteria

Answer 5

• Concerns compensation for services of general economic interests (SGEI)

• 4 Altmark-Criteria: if met → compensation of SGEI can be exempted from Art. 107
1. Recipient undertaking must have clearly defined public
service obligations
2. Compensation has to be set in advance (objective &
transparent)
3. Compensation must not exceed what is necessary (including a reasonable profit)
4. Undertaking either chosen by public procurement
procedure or compensation must be determined with an
analysis of the costs

Question 6

State aid (Art. 107(1) TFEU) - Economic objections

Answer 6

• Subsidies distort competition
• Reduce efficiency
• Cost a lot of money
• Try to encourage a positive development but often miss the objective
• Free-rider effect resp. windfall gain
• Rewarding good behaviour would be open-ended

Question 7

Public Procurement Function

Answer 7

• Public procurement law sets rules for the acquisition of
goods and services by the government and equivalent
institutions
• Of high economic importance because public
procurement = 16 % of EU’s GDP
• Not only helps to reduce spending (procurement of high
quality and cost-efficient products)
» also prevents distortion of competition and corruption
• Puts a stop to the undue preference of local suppliers

Question 8

public procurement = __ % of EU’s GDP

Answer 8

public procurement = 16 % of EU’s GDP

Question 9

Public procurement is regulated …

Answer 9

only punctually (Art. 179(2) and 199(4) TFEU) and indirectly in the treaties

Question 10

Public procurement guidelines developed by the ECJ on the basis of the Fundamental Freedoms:

Answer 10

o Non-discrimination
o Transparency
o Fair competition

Question 11

Public procurement open procedure:

Answer 11

without a restriction on the number of tenderers, non-discriminatory publication of the call for bids in the Official Journal of the EU.

Question 12

Public procurement restricted procedure:

Answer 12

only those who are pre-selected (discretion, at least five) by the responsible authority will be invited to submit a tender, no entitlement to participation

Question 13

Public procurement award criteria:

Answer 13

• Public authorities have to select according to economic criteria, i.e. the lowest price or the most economically
advantageous bid has to be accepted
• However, they have the right to define quality standards
• As an exception, criteria not directly connected with the procurement may be used

Question 14

Distortion of public procurement law:

Answer 14

• integration of rewards for politically welcome business practices
• non-economical criterial distort the economical objective
• debated

Question 15

Are subsidies from the EU in conflict with Art. 107 TFEU?

a. No
b. Yes

Answer 15

a.

Question 16

Exemptions of Art. 107(1) TFEU are given in:

a. Art. 108(2) TFEU
b. Art. 108(1) TFEU
c. Art. 107(3) TFEU
d. Art. 107(2) TFEU

Answer 16

c. and d.

Question 17

Is aid given out by a MS to local businesses struggling with the economic effects of Covid-19 in conflict with Art. 107?

a. No, because Art. 107(2)
b. Yes, because Art. 107(1)
c. No, because Art. 107(3)

Answer 17

a.

Question 18

A public procurement procedure with pre-selected companies is:

a. An open procedure
b. A restricted procedure

Answer 18

b.

Question 19

The most important selection criteria for a public procurement procedure is:

a. Economic criteria (e.g.: lowest price)
b. Choosing a european company
c. Choosing a local company
d. Environmental Protection (e.g.: sustainability)

Answer 19

a.

Question 20

Private Investor Principle is also known as ….

Answer 20

Also known as the Market Economy Investor Principle