Social Services of General Interest (SSGI)

Social Services of General Interest
when some of them are carried out by private State-commissioned organisations or other
outsourced entities. This is of significance in the area of regulatory law where regulators have
been established under a private legal status. But, as a rule, their regulatory activity will not
come under competition law because of their non-economic nature. By the same token,
independent entities which do not offer any goods and services on the market but focus on
controlling and organising public demand for social services cannot be qualified as
undertakings. This would include entities such as Fonds Soziales Wien whose activity of
’purchasing’ social services would have to be considered as being an activity of the City of
Vienna. Unless this activity is subject to competition law (see below), even the Fonds itself is
not deemed to be an undertaking.
Activities of a non-economic nature are also performed by municipalities or
associations of municipalities whenever they grant licences to private undertakings in the
social sector. 15 But they may be subject to public procurement rules. 16 Finally, the
combination of sovereign powers and entrepreneurial activity may be seen as violating
competition rules, for instance when a municipality, in exercising its sovereign powers,
distorts competition in favour of its own local undertaking. 17
1.1.3. Other non-economic activities
Basic social security schemes are probably the most important segments within the
social sector which, according to case-law, are excluded from competition law for failing to
be of economic nature. In the Poucet and Pistre case the Court of Justice denied for the first
time that they were undertakings. 18 It referred to three characteristics: first, the social
objective of managing public social security schemes; second, the principle of national
solidarity ensuring statutory services irrespective of the level of financial contributions based
on an equalisation system; third, the activities are not for profit. These criteria have been
further developed by the ECJ in later judgements in that the social objective and noncommercial
purpose are only one way of referring to the non-economic nature of a social
security system, but they cannot prevent them of their status as undertakings. The key
criterion is the principle of solidarity based on compulsory affiliation and, more specifically,
on the absence of any direct link between the contributions paid and the benefits granted.
According to case-law also the services of national education systems at schools and
universities cannot be classified as economic activities provided they are financed, essentially,
out of public funds. Whereas education provided by profit-oriented entities and financed,
essentially, out of private funds does classify as economic activity. 19
Aside from the distinction cases decided by Court rulings, it is often difficult to draw a
clear boundary line between economic and non-economic services. The European
Commission appears to be aware of this problem and avoids the compilation of any catalogue
of non-economic services, although the issue goes beyond competition law and has become
more acute in recent lawmaking projects. For instance the Commission‘s State aid monitoring
15
Case 30/87, Bodson, ECR 1988, 2479, par. 18; Case C-231/03, Coname, ECR 2005, I-7287, par. 12, not yet
published in ECR.
16
See details under I.4.
17
see Kokott in Conclusions, Case C-134/03, Viacom Outdoor, ECR 2005, I-1167, par. 81.
18
Case C-159/91 and C-160/91, Poucet and Pistre, ECR 1993, I-637.
19
Case C-109/92, Wirth, ECR 1993, I-6447, par. 14.
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