Economic activity and undertakings © Łukasz Stępkowski

Competition law and its subjects Competition law regulates the conduct of market players within the scope of their business activities By virtue of that, competition law must necessarily possess specific legal concepts that allow it to remain effective Those concepts are the concept of an economic activity and that of an undertaking Economic activity is any activity consisting in offering goods and services on a given market (C-205/03 P FENIN, EU:C:2006:453, para. 25) An undertaking is any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed (C-41/90 Höfner and Elser, EU:C:1991:161, para. 21)

Economic activity Domestic legal systems may sometimes require that in order to qualify as an economic activity a given behaviour has to be organised, often repeated and undertaken for profit For instance, Polish business law requires that economic activity has to be often repeated in order to be deemed genuine However, economic activity for the purposes of EU competition law does not refer to any national concepts of economic activities The concept of an undertaking is an autonomous legal concept under EU law and is not dependent on the issue whether a given conduct is or is not an economic activity according to some national law Consequently, the sole system of reference for assessing whether something is or is not an economic activity should be EU law only There may be instances where something is not an economic activity under national law and at the same time is an economic activity according to EU competition law

an Undertaking Similarly to the concept of an economic activity, the concept of an undertaking is not dependent on some national law The concept at issue does not refer to any iteration of an ’undertaking’ that would have been found under national law For instance, it does not refer to an ’undertaking (przedsiębiorstwo)’ specified in the Polish Civil Code, nor does it refer to the concept of an ’entrepreneur (przedsiębiorca)’ found thereunder And undertaking is also not dependent on a specific legal form (i.e. a company, a partnership, a natural person acting as a sole trader, etc) Similarly to an economic activity, the concept of an undertaking is an autonomous concept of EU competition law which should be the sole reference point therefor

Economic activity Given that it has to be ’any activity consisting in offering goods and services on a given market’, the area of business involved is, save where there are specific provisions under secondary law, not limited to a particular sector As such, in principle any sector wherein goods or services are offered on a market is subject to EU antitrust law Nor does it have to be that a particular set of goods or a particular service are to be offered However, the jurisprudence of the Court supplies certain examples where an activity is not to be deemed ‚economic’ the rules on competition laid down in the FEU Treaty do not apply to activity which, by its nature, its aim and the rules to which it is subject does not belong to the sphere of economic activity, or which is connected with the exercise of the powers of a public authority (T‑90/11 ONP EU:T:2014:1049, 36)

Economic activity (or absence thereof) Activities which fall within the exercise of public powers are not of an economic nature justifying the application of the Treaty rules of competition However, the fact that it is the State itself which acts is not sufficient to justify the non- application of antitrust law Where only a part of some activities are carried out by way of an exercise of public powers and others are commercial, an entity is engaged in an economic activity where the commercial part is severable from the entirety of activities If the allegedly ‚commercial’ part may not be separated from the whole of them, all of the activities at issue are considered to be carried out within the scope of public powers (C- 138/11 Compass-Datenbank EU:C:2012:449, 36-38)

Exercise of public powers Examples The army or the police Air navigation safety and control Maritime traffic control and safety Anti-pollution surveillance The organisation, financing and enforcement of prison sentences The collection of data for public purposes imposed by law Dredging Youth training centres managed by professional football clubs K. Van de Casteele, the Notion of undertaking, EU Competition Law vol. iv, 2016, p. 206

Economic activity (or the absence thereof)-cont. An indication of economic activity is acting in return for remuneration and exclusively on the basis of actual market demand Assumption of the financial risks involved in the exercise of a given activity is also an indication of economic activity (C-327/12 SOA EU:C:2013:827, 29) there is no need to dissociate the activity of purchasing goods from the subsequent use to which they are put in order to determine the nature of that purchasing activity, and that the nature of the purchasing activity must be determined according to whether or not the subsequent use of the purchased goods amounts to an economic activity (FENIN, 26)

Economic activity (or the absence thereof)-cont. The national social security system may have a bearing on the issue whether a given activity is an economic activity Organisations that are involved in the management of the public social security system fulfil an exclusively social function, where such activity is based on the principle of national solidarity and is entirely non-profit-making and the benefits paid are statutory benefits bearing no relation to the amount of the contributions that activity must, by its nature, its aim and the rules to which it is subject, be inseparably connected with the national pensions system (C-185/14 EasyPay, EU:C:2015:716, 38-40)  However, the social aim of an insurance scheme is not in itself sufficient to preclude the activity in question from being classified as an economic activity (C-437/09 AG2R, EU:C:2011:112, 45)

Economic activity (or the absence thereof) – cont. Employment relationship is not an economic activity, but being self-employed is (provided it is not ‚false self-employment’) As such, employees are not enganged in an economic activity even if they perform services for a remuneration Collective bargaining does not equate with economic activity, even where it may limit competition (C‑413/13 FNV EU:C:2014:2411, 22-40)

Economic activity (or the absence thereof) – cont. Certification schemes carried out for remuneration without standardisation are an economic activity (C-327/12 SOA, EU:C:2013:827, 32) Air traffic control by EUROCONTROL is not an economic activity, including its tasks in regard to Member State assistance (C-113/07 P SELEX EU:C:2009:191, para 79) Setting up of a supplementary occupational pension scheme for medical specialists may be done within the scope of an economic activity, and so is the professional activity of medical specialists (C-180/98 to C-184/98 Pavlov EU:C:2000:428

Economic activity – given market Services or goods have to be ‚offered’ on a ‚given market’ – which involves an analysis of domestic practice Given market may change over time, and an activity which was not an economic activity may become one (e.g. liberalisation of a sector of economy) Even where a market is regulated there is economic activity (Pavlov, 77)

Non-profit activities the fact that the offer of goods or services is made without profit motive does not prevent the entity which carries out those operations on the market from being considered an undertaking, since that offer exists in competition with that of other operators which do seek to make a profit non‑profit‑making associations which offer goods or services on a given market may find themselves in competition with one another. The success or economic survival of such associations depends ultimately on their being able to impose, on the relevant market, their services to the detriment of those offered by the other operators (C-49/07 MOTOE, EU:C:2008:376, 28,29)

an Undertaking The status of an undertaking is not dependent on a fact that a natural person must obtain a licence Specifically, natural persons who are advocates holding memberships in a national Bar are undertakings for the purposes of Articles 101 and 102 TFEU (C-309/99 Wouters, EU:C:2002:98, 48) Members of the Bar offer, for a fee, services in the form of legal assistance consisting in the drafting of opinions, contracts and other documents and representation of clients in legal proceedings. In addition, they bear the financial risks attaching to the performance of those activities since, if there should be an imbalance between expenditure and receipts, they must bear the deficit themselves. The complexity and technical nature of the services they provide and the fact that the practice of their profession is regulated cannot alter that conclusion

an Undertaking An undertaking may hold shares in another (e.g. in the case of a private company limited by shares) Where a member of a company does not involve oneself with management of the undertaking, such a member is not to be considered an undertaking solely by virtue of holding such shares (C-222/04 Ministero dell'Economia e delle Finanze v Cassa di Risparmio di Firenze SpA, 107-111) However, if such an entity did involve itself with management of an undertaking, it would be taking part in an economic activity and therefore itself be a part of an undertaking

Associations of undertakings Associations of undertakings are referred to under art. 101(1) TFEU a professional organisation with regulatory powers, such as the Bar of the Netherlands is an association of undertakings (Wouters, 60) The association itself might not be an undertaking, but it does not preclude it from being an association thereof (Wouters, 112) not every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 101(1) TFEU account must first of all be taken of the overall context in which a decision of the association of undertakings was taken or produces its effects account must be taken of its objectives, which in the present case consist in ensuring that the ultimate consumers of the services in question are provided with the necessary guarantees It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives (ONP, 37)

Economic activities (or the absence thereof) – cont. reasons of general interest, in particular the interest in the proper exercise of a profession, may justify the non-application of Article 101 TFEU to certain restrictions of competition when they are necessary (ONP, 38) Restrictive interpretation C-136/12 Consiglio nazionale dei geologii, 44 – adoption of codes of conduct as an association of undertakings: when it adopts a measure such as the Code of Conduct, a professional organisation such as the National Association of Geologists is neither fulfilling a social function based on the principle of solidarity, nor exercising powers which are typically those of a public authority. It acts as the regulatory body of a profession, the practice of which constitutes an economic activity

Decisions of associations of undertakings Where there is an association of undertakings, it is immaterial whether an association is regulated by public law or not (there is specifically no need of an administrative decision) in order to determine whether an agreement between undertakings or a decision by an association of undertakings has those characteristics, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms part When determining that context, it is also necessary to take into consideration the nature of the goods or services affected, as well as the actual conditions of the functioning and structure of the market or markets in question C-1/12 Ordem dos Técnicos Oficiais de Contas

Decisions – cont. Regulatory powers play a part as to the issue whether there is a decision of an association of undertakings when a Member State grants regulatory powers to a professional association, whilst defining the public-interest criteria and the essential principles with which its rules must comply and retaining its power to adopt decisions in the last resort, the rules adopted by the professional association remain State measures and are not covered by the Treaty rules applicable to undertakings Where the above is not true (e.g. where there is an own-initiative intervention by the association as to professional training) there is a decision (C-1/12, 54)

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