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2019 ALJ 1 (2019)

handle is hein.journals/aljl2019 and id is 1 raw text is: ISSN: 2409-6911
AUSTRIAN LAW                                                (CC-BY) 4.0 license
wJO   URNAL                                              ustrian-law-journaI.at
DOI:1 0.25364/01.6:2019.1.1
Article 106 (2) TFEU in Case Law
Internalization and Customized Balancing of Welfare and Market
Interests
Martina Melcher,* Graz
Abstract: The EU law on public services is characterized by the need to reconcile competing
EU and Member States interests as well as to accommodate both market and welfare
interests. This paper explores how the Court of/ustice of the EU (CJEU) and the Commission
conduct this multi-level balancing of interests in the context of Article 106 (2) TFEU. To
provide a full picture, this balancing is assessed by looking into both the requirements for
the derogation and its scope of application. In essence, it is suggested that the EU has
internalized the aforementioned struggle ofinterests. On the one hand, the EU, represented
by the CJEU and the Commission, has assumed an increasingly dominant role by gradually
limiting the autonomy and margin of discretion of the Member States regarding the
provision, commission and financing ofpublic services. On the other hand, itis argued that
Article 106 (2) TFEU allows only a 'customized and limited derogation' from market and
competition rules and has to be construed in consideration of the general compatibility test'
which identifies economic activities in the first place. As a whole, Article 106 (2) TFEU
constitutes a working system that reconciles potentially conflicting interests in favour of
functioning public services. However, it is crucial that its premises and limits are respected.
Keywords: services ofgeneral interest - SGI; services ofgeneral economic interest - SGEI
public services; welfare; (concept of an) undertaking State aid; competition law; public
service obligation; principle of proportionality
1. Introduction
Public services or services of general interest (SGI), as they are called in the European Union (EU)
law, lie at the heart of a welfare state. Contrary to standard market services', they are not provided
based on an individual (economic) interest, but are classified as being of public or general interest,
hence important to everyone. If such services qualify as economic activities2 (i.e. services of general
* MMag. Dr. Martina Me/cher, M.Jur (Oxon) is an assistant professor at the Department of Civil Law, Foreign Private
Law and Private International Law at the University of Graz. The author wishes to thank Brigitta Lurger and an
anonymous reviewer for their careful reading of the manuscript and their valuable comments and suggestions.
1 Similarly, Ulla Neergaard, Services of General Economic Interest: The Nature of the Beast; in THE CHANGING LEGAL
FRAMEWORK FOR SERVICES OF GENERAL INTEREST IN EUROPE 17, 20 (Markus Krajewski, Ulla Neergaard and Johan Van de
Gronden eds., 2009).
2 See chapter l.A. below.

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