Social Services of General Interest (SSGI)

Eilmansberger/Herzig
However, the Court of Justice has not followed the argument of its Advocate
General. 10 It refers to its settled case-law, under which medical activities fall within the scope
of Art 50 EC, there being no need to distinguish in that regard between care provided in a
hospital environment and care provided outside such an environment. 11 The specific nature of
certain services could not result in such services being excluded from the elementary freedom
to provide services. Moreover, certain medical services, such as those provided across
borders, are indeed paid by the patients directly.
This leads one to infer that a social security system operating with benefits in kind is
not, per se, excluded from being an economic activity. This signifies that a service that is not
directly paid by the beneficiary may also be considered an economic activity.
So if neither the legal status, nor the not-for-profit nature, nor the lack of direct
exchange of services, can exclude an entity from being an undertaking, what criteria need to
be used to define the personal scope of application?
Under prevailing jurisprudence the only criterion would be that of whether the activity
of the entity in question is of an economic or non-economic nature. Hence the internal market
and competition rules need to be applied whenever industrial, craft or commercial activities
are carried out with the aim of offering goods or services on any given market. 12
1.1.2. Sovereign activities (imperium)
The concept of undertaking thus excludes activities resulting from the exercise of
sovereign powers, i.e. activities that are reserved to the State and are thus of a non-economic
nature. Incontestably, this would include the core area of sovereign powers, such as protecting
domestic and external security, justice administration and maintaining external relations. 13
However, also powers such as those relating to the control and supervision of air space, or the
control and supervision of maritime ports to combat pollution, are typically those of a public
authority according to case-law. 14 But this core area is interpreted in very restricted terms in
practical application and jurisprudence. Hence, as a rule, social services may not be regarded
as imperium. There might be exceptions, such as when social services are tightly linked to
traditionally public services so that they must be included into the core body of sovereign
powers. Examples could be psychiatric treatment in the execution of sentences or, maybe,
probation services monitored by criminal courts.
Since distinction depends on the nature of the activity rather than on the legal status
under which it is performed, these activities are deemed to be of a non-economic nature even
10
judgment in Case C-157/99, Smits and Peerbooms, ECR 2001, I-5473, par. 47 ff.
11
judgments in Joined Cases 286/82 and 26/83, Luisi and Carbone, ECR 1984, 377, par. 16; Case C-159/90,
Society for the Protection of Unborn Children Ireland, ECR 1991, I-4685, par. 18, concerning distribution
of information on clinics carrying out voluntary terminations of pregnancy; and Case C-158/96, Kohll, ECR
1998, I-1931, par. 29 and par. 51.
12
Case C-222/04, Cassa di Risparmio di Firenze, ECR 2006, I-289, par. 108; Case C-35/96, Commission v
Italy, ECR 1998, I-3851, par. 36; Joined Cases C-180/98 – C-184/98, Pavel Pavlov and Others, ECR 2000,
I-6451, par. 75.
13
See also Communication from the Commission on services of general interest, OJ 2001 C17/4, par. 28; and
Herzig Wettbewerbs-, beihilfen- und vergaberechtliche Fragen von Non-Profit-Organisationen, in
Studiengesellschaft für Wirtschaft und Recht, Das Recht der Non-Profit-Organisationen (2006) 97, 100.
14
Case C-364/92, Eurocontrol, ECR 1994, I-43; par. 31; Case C-343/95, Diego Calì & Figli, ECR 1997, I-
1547, par. 22.
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