In the first case, an independent Greek motor sport organiser challenged the decision of ELPA to refuse consent for an event it wanted to organise. ELPA is a not for profit organisation that is exclusively empowered by the Greek state to provide final consent to motor sport events. ELPA also organises and markets motor sport events itself. In the second case, the European Commission raised concerns about the level of exclusive exploration and extraction rights granted by the Greek state to the publicly owned power corporation (the PPC).
The cases highlight two questions: (1) when is an entity an 'undertaking' caught by the Article 81/82 competition rules and (2) when will state granted exclusivity breach Article 86?
What is an undertaking?
Articles 81 and 82 apply to 'undertakings', or those entities engaged in 'economic activity'.
- Economic activity – In the ELPA case, the Advocate General has confirmed that 'economic activity' means offering goods or services in any given market. The existence of a market for the good or services concerned is therefore key, although other established cases confirm that the existence of a monopoly will not preclude the existence of a market. In the ELPA case the Advocate General has also highlighted the fact that one entity can be engaged in both economic and not economic activities. Whether it is classified as an 'undertaking' and bound by the competition rules may therefore change depending on the particular activity it is engaging in. This is a distinction that can raise some practical difficulties for those entities operating on the public/private border.
- Legal form and funding irrelevant – The ELPA case also re-establishes the fact that the legal form of an entity is not relevant to its classification as an undertaking (e.g. whether or not it is profit seeking or incorporated). Nor is the method by which it is financed (publicly financed entities will still be 'undertakings' where they engage in economic activity).
The Advocate General therefore concluded that ELPA was an 'undertaking' so far as it organised and marketed motor sport events. Its separate consenting activities were not economic ones but, as is elaborated below, nevertheless attracted the application of Article 86.
When does state granted exclusivity breach Article 86?
Article 86 applies in the case of public 'undertakings' or other undertakings that are granted special or exclusive rights (e.g. ELPA) and provides that 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 Articles 12 and 81 to 89."
These two cases together confirm that a state measure that provides an unequal advantage and so protects a dominant position (e.g. by granting a near monopoly on exploration or extraction of a key raw material as in the PPC case) or creates a situation whereby a dominant undertaking could abuse its position (e.g. by giving an undertaking the ability to refuse its competitor access to a market as in the ELPA case) will breach Article 86. Interestingly, whether or not the abuse actually takes place is not relevant for Article 86. Any objective justification of ELPA's refusal to consent may therefore be relevant to its breach of Article 82 but will have no bearing on the state's breach of Article 86.
In the ELPA case, the ECJ will now make its finding and the domestic Greek court will then have to assess the market definition and cross border dimensions of the case before deciding for or against the independent organiser. The European Commission have sent the PPC case back to the Greek government in order that it may identify and implement measures to end the breaches of Article 86. The European Commission has however indicated that at least 40% of the lignite resources must be available to competitors.