applicability of competition law principles on public sector ...

was applied to Poucet 20 which was a French local social security <strong>of</strong>fice administering sickness
and maternity insurance schemes. Similarly in FENIN 21 the European courts held that the
commission had been correct to find that 26 Spanish public authorities that managed the national
health service were not ‘undertaking’.
EC <strong>competition</strong> <strong>law</strong> applies just as well to state-owned companies as to private companies.
Article 106 <strong>of</strong> the Treaty on the Functioning <strong>of</strong> the European Union 2008 reminds the Member
States that the <strong>competition</strong> rules apply also to state-owned companies and that national <strong>law</strong>s
depriving the <strong>competition</strong> rules <strong>of</strong> their effectiveness would be in violation <strong>of</strong> the Treaty. 22
Article 106(1) in combination with Article 101 and 102 obliges the Member States to refrain
from imposing anticompetitive behaviour on their public or privileged undertakings. The
Deutsche Post 23 case is a landmark case for applying anti-trust <strong>law</strong> to public monopolies. This
case is the first time that the Commission applied the test for predatory pricing to a traditional
public service such as postal service. As has been elaborated earlier the term ‘Undertaking’
under Article 101 includes Government Bodies. Furthermore, Article 106(1), which is addressed
to the Member States, lays down the following broad principle:
"In the case <strong>of</strong> public undertakings and undertakings to which Member States grant
special or exclusive rights, Member States shall neither enact nor maintain in force any measure
contrary to the rules contained in this Treaty, in particular to those rules provided for in Article
12 and Articles 101 to 110".
Article 106(2) provides for a narrow exception to the rule that <strong>competition</strong> <strong>law</strong> is applied to all
types <strong>of</strong> undertakings.
"Undertakings entrusted with the operation <strong>of</strong> services <strong>of</strong> general economic interest <strong>of</strong>
having the character <strong>of</strong> a revenue-producing monopoly shall be subject to the rules contained in
this Treaty, in particular to the rules on <strong>competition</strong>, in so far as the application <strong>of</strong> such rules
does not obstruct the performance, in <strong>law</strong> or in fact, <strong>of</strong> the particular tasks assigned to them. The
development <strong>of</strong> trade must not be affected to such an extent as would be contrary to the interests
<strong>of</strong> the Community"
20 Poucet v. Assurances generals de France, [1993] ECR I-637.
21 Federacion Espanola de Empresas de Tecnologia Sanitatria (‘FENIN’) v. Commission, [2006] ECR I-6295
(para.25).
22 Article 106, Treaty on the Functioning <strong>of</strong> the European Union 2008.
23 Commission Decision 2008/354/EC
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