SGEI

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SGEIs

Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (2012/C 8/02) 11.1.2012

Undertakings: “8. Based on Article 107(1) of the Treaty, the State aid rules generally only apply where the recipient is an ‘undertaking’. 9. The Court of Justice has consistently defined undertakings as entities engaged in an economic activity, regardless of their legal status and the way in which they are financed.” So it applies to trading non-profits.

No definitive list of SGEIs: “14. Since the distinction between economic and non-economic services depends on political and economic specificities in a given Member State, it is not possible to draw up an exhaustive list of activities that a priori would never be economic. Such a list would not provide genuine legal certainty and would thus be of little use.”

Security: “16. Article 107 of the Treaty does not apply where the State acts ‘by exercising public power’ or where authorities emanating from the State act ‘in their capacity as public authorities.” So in general police, army, air, shipping and pollution control and prisons are exempt.

Social services: 18. Whether social security is ‘economic’ or ‘solidarity-based’ is judged on a ‘bundle’ of factors:

  • solidarity-based schemes are compulsory, pursuing an exclusively social purpose, non-profit, non-contributions-based, non-earnings-related, state supervised?
  • by contrast ‘economic’ schemes are optional, capitalise contributions, are profit-making, and provide benefits that are supplementary to a basic scheme

Health: 22. NHS units providing free universal coverage are not undertakings, including ancillary services. 24. However public hospitals providing cover paid for by the patient or their insurance is economic.

Education: 27. Fees that cover a fraction of the true costs of the service do not make it economic (28. but predominantly fee-based education is). Includes kindergartens, universities and vocational training.

Research: 29. Universities and research organisations activities of education, research, dissemination of results, and even [30.] technology transfer through licensing and spin-off creation are non-economic if the revenues are retained.

Industry levies: 34. these are state aid.

Evolving concept: “45. The concept of service of general economic interest is an evolving notion that depends, among other things, on the needs of citizens, technological and market developments and social and political preferences in the Member State concerned.”

Broadband: 49. Where the market is already providing (e.g.) broadband “with sufficient coverage” then setting up a parallel infrastructure is not an SGEI. “In contrast, where investors are not in a position to provide adequate broadband coverage, SGEI compensation may be granted.”

In the interest of society as a whole: 50. “Services to be classified as SGEIs must be addressed to citizens or be in the interest of society as a whole.”