Social Services of General Interest (SSGI)

Eilmansberger/Herzig
can see, has only once delivered an opinion on this issue. This was in the Sodemare case. It
concerned a Lombardy Regional Law under which the running of nursing establishments was
reserved to non-profit providers. Profit-making undertakings were thus excluded. Advocate
General Fennelly saw this to be an inadmissible discrimination against foreign providers. In
his opinion, most charitable endeavour in the sector of care for the elderly followed the
principle of `charity begins at home' and took place at national, regional or local level. This
was certainly the case in Lombardy, as all of the private contracting homes were run by
bodies based in the Region. Thus, one was permitted to presume that non-Italian companies
would be unwilling to assume a non-profit-making legal form in order to operate in
Lombardy. 82 The ECJ did not uphold this opinion, and rightly so. It held that the fact that
profit-making undertakings could not automatically participate in the implementation of a
legal system of social welfare was not liable to place profit-making companies from other
Member States in a less favourable factual or legal situation than profit-making companies
from the Member State in which they are established. It also held that, as Community law
stood at present, a Member State might, in the exercise of the powers it retained to organise
its social security system, consider that attainment of the objectives pursued by a social
welfare system of this kind necessarily implied that the admission of private operators to that
system as providers of social welfare services was to be made subject to the condition that
they were non-profit-making. 83 The exact dogmatic interpretation of this formulation remains
open. But one may presume that the Court of Justice would deem such restrictions justified on
social grounds. 84 The reasons given for this decision are, however, very curt and leave little
room for transferring the stated principles to other situations. This again leads to much legal
uncertainty which might be addressed by a clarifying act of secondary law.
1.3. Impact of the Services Directive
1.3.1. On the relationship between Directive and primary law
Largely incorporating and codifying the corresponding principles of case-law,
Directive 2006/123/EC (Services Directive, SD) 85 requires the Member States to examine
their entire legal systems for any of the specific restrictions mentioned in the Directive. For
this purpose distinction is made between rules on permanent establishment of the service
provider in the host State (freedom of establishment for providers) and rules on the temporary
take-up of an activity (freedom of provision of services). The freedom to provide services
chapter shall not apply to services of general economic interest (Art 17(1)). Since social
services, for the most part, fall within this category they will only be subject to SD provisions
on the freedom of establishment. These require Member States to conduct an extensive
horizontal screening of national legal systems for compliance with SD provisions and
stipulate comprehensive obligations of information and reporting to the European
Commission. This concerns rules at both the federal and the laender level. Facts that need to
be reported are those concerning requirements, bans, conditions or restrictions included in the
legal or administrative rules, in administrative case-law rulings or rules of professional
associations. The SD’s added value in relation to existing case-law, except for Art 14, mainly
consists not so much in any substantive exacerbation of the existing acquis but rather in
aspects of procedural law: before that any obstacles to the provision of services could only be
addressed by the Commission on a case-by-case basis through a usually lengthy ex-post EC
infringement procedure, or by affected providers before national courts and through
procedures for a preliminary ruling. The Services Directive now permits an ex ante
82 AG Fennelly, Conclusions, Case C-70/95, Sodemare, ECR 1997, I-3395, par. 35.
83 Case C-70/95 Sodemare, ECR 1997, I-3395, par. 32 f.
84 for monograph see Eicker, Grenzüberschreitende gemeinnützige Tätigkeit (2004).
22