EU competition law, and State aid rules in particular, only apply to undertakings engaged in an “economic activity”. In this respect, any activity consisting in offering goods or services on a given market is an economic activity. However, pursuant to EU case-law, certain activities are considered non-economic if they aim to pursue social objectives based on the principle of solidarity.
In 2007-2014, the European Commission investigated alleged State aid measures to Slovak State-owned health insurers, following a complaint filed by one of their competitors, Dôvera. On 15 October 2014, the Commission adopted a final decision, concluding that the activity of providing compulsory health insurance in Slovakia cannot be considered as an “economic activity” because of its solidarity-based nature.
Dôvera challenged the Commission’s decision before the General Court. In its judgment of 5 February 2018 (which we discussed here), the General Court annulled the Commission’s decision and considered that compulsory health insurance should be considered as an economic activity for the purpose of applying State aid rules. Importantly, the General Court stated that “the fact that the offer of goods or services is made without seeking to make a profit does not prevent the entity which carries out those operations on the market from being regarded as an undertaking, provided that the offer exists in competition with that of other operators that are seeking to make a profit. It follows that it is not the mere fact of being in a position of competition on a given market which determines the economic nature of an activity, but rather the presence on that market of operators seeking to make a profit. That is the situation in the present case, since it is common ground between the parties that the other operators on the market in question are seeking to make a profit, so that [the State-owned insurance companies], ‘by contagion’, would have to be considered to be undertakings”.
The Commission appealed the General Court’s decision. In its judgment of 11 June 2020 (C-262/18 and C-271/18), the Grand Chamber of the Court of Justice overruled the General Court, including on the qualification of the State-owned insurance companies as undertakings “by contagion”.
More particularly, the Court of Justice ruled that the General Court’s considerations resulted from an erroneous interpretation of two previous judgments (rendered in cases Cassa di Risparmio and MOTOE). The Court of Justice underlined that “it is apparent from those two judgments that, where an operator’s activity consists in the offer of services of an economic nature - that is to say, in the case that gave rise to the first of those judgments, services linked to financial, commercial, real estate and asset operations, and, in the case that gave rise to the second of those judgments, services linked to the organisation of sporting competitions based on sponsorship, advertising and insurance contracts for the commercial exploitation of those competitions - in a market environment of competition with other operators which are seeking to make a profit, the fact that that offer of services is made by the not-for-profit operator does not call into question the classification of the activity concerned as an economic activity”.
As a result, “it cannot be inferred from that case-law that a body involved in the management of a scheme which has a social objective and applies the principle of solidarity under State supervision could be classified as an undertaking on the ground, emphasised by the General Court [...], that other bodies operating in the context of the same scheme are actually seeking to make a profit”.
Please contact Pierre de Bandt, Jeroen Dewispelaere for further information about this case and/or for general legal advice relating to State aid.