Obligations on Member States under the EU competition rules

Question 1

Duty of Sincere Cooperation

Answer 1

Positive
- Member states must work to ensure fulfilment of obligations arising out of the Treaties

Negative
- Refrain from measures which could jeopardize the attainment of the objectives.

Have to assess when a MS can be held liable for the conduct of undertakings

UP –> MS are free to pass legislation, even if its contrary to art. 101 and 102, only in very specific cases do art. 4(3) apply.

The test
- Require or favour agreements that infringe art. 101
- Reinforce agreements that infringe art. 101
- Delegate legislative power to a private company
- All elements of art. 101 must be fulfilled + the member state doing one of the three things above

Question 2

Article 106 – Compliance with the
Treaties

Answer 2

Art. 106(1)
- Adressed to the MS

• Obligation on MS not to enact nor maintain measures contrary to the Treaties
• Applies only in conjunction with another Art.
• Public undertakings (owned by the state) or private undertakings given special or exclusive rights (affecting other undertakings from exercising economic activity)
• MS must adopt a “measure” that affects the conduct of the public undertaking or undertakings given special or exclusive rights –> Usually creation of monopolies
• Inability to meet demand by the “special undertaking” – Can constitute an abuse (akin to refusal to supply), legal monopoly prevents competitor from satisfying demand
• Conflict of interest – Creating of a situation, where conflict of interest would be a sufficiently likely, e.g. favour of own products/content or ability to impose unreasonable demands
• Ancillary activity – The ability to use monopoly rights in neighbouring markets, e.g. ambulance services

Art. 106(2)
- Limited exception for undertakings providing services of general interest from the application of the competition rules

• Undertakings can claim that art. 101/102 does not apply, if this would prevent the undertaking from perfoming the task assigned by the MS –> not other technically or economic means

Art. 106(3)
- Provides the Commission with the competence to ensure compliance with art. 106
- Commission can adopt decisions + directive that eliminates the existing violations (MS has to alter legislation m.m.)