Article 82 And Public Health Bodies Considered

In deciding whether or not to impugn national public health

bodies for abusive anti-competitive practices under article 82 of

the EC Treaty, national and supranational courts are required to

balance the need for effective competition in the internal market

against a requirement to respect member state sovereignty in areas

falling outside the full competence of the Community. Article 14(2)

of the EC Treaty commits the Community to the establishment of an

internal market which "shall comprise an area without internal

frontiers in which the free movement of goods, persons, services

and capital is ensured" in accordance with the requirements of

the treaty, including its competition provisions.

Bearing in mind the respective competences of the member states

and the Community under the EC Treaty, it is necessary to revisit

the EU's case law to examine the extent to which supranational

judicial enforcement of article 82 is constrained in those markets

where public health bodies participate. To do so requires, first,

to explore whether or not public health bodies enjoying dominant

positions in domestic markets fall outside the scope of article 82;

and, secondly, to consider whether or not article 152(5) of the EC

Treaty entitles member states, through their public health bodies,

to engage with impunity in abusive conduct injurious to competition

in violation of the requirements of articles 10, 3(g) and the

competition provisions of the EC Treaty.

Article 82 and public health bodies

Community case law reflects that article 82 is an instrument of

ex post competition management which is designed to control abusive

exploitation by one or more undertakings of a position considered

dominant in a relevant market of the European Union. Inherent in

the effective application of the Community's competition rules

is an appreciation that economic operators can undermine the goals

of the internal market through anti-competitive behaviour as

readily as state measures impugned by articles 25, 28 or 49 of the

EC Treaty.

Articles 81 and 82, as a general statement, complement the free

movement provisions of the EC Treaty, insofar as their proper

enforcement against private and public entities ensures the

viability of an internal market characterised by the abolition, as

between the 27 member states, of all obstacles to intra-Community

trade.

The requirements of article 82 are clear, precise and

unconditional. They are capable of engendering in private

individuals legal rights upon which they may rely before the

national courts. Reliance upon article 82 by private citizens and

competition enforcement agencies against dominant undertakings

enables the punishment before the courts of anti-competitive

behaviour by private or public bodies. Prima facie, any undertaking

that enjoys a position of dominance in a relevant market and

through its conduct towards competitors, customers or consumers

abuses that position, behaves in violation of the requirements of

article 82.

The precise application of the Community's competition rules

to dominant public health bodies is determined by a constantly

evolving teleological judicial interpretation of article 82 which

has regard to all provisions of the EC Treaty. Among these

provisions is article 152(5) which provides that Community action

in the field of public health must fully respect the

responsibilities of the member states for the organisation and

delivery of health services and medical care. It is undisputed that

public health bodies hold a position of special responsibility in

national health markets. In many cases, they enjoy a position of

dominance in domestic health markets through the intervention of

state legislators and governments. All dominant undertakings are

subject to special responsibilities. Indeed, the Court of Justice

has held in Nederlandsche Banden-Industrie Michelin v

Commission [Case 322/81] that "a finding that an

undertaking has a dominant position is not in itself a

recrimination but simply means that, irrespective of the reasons

for which it has such a dominant position, the undertaking

concerned has a special responsibility not to allow its conduct to

impair genuine undistorted competition on the common

market".

Interpretation of "undertaking"

Central to the potential application of article 82 to the market

conduct of public health bodies is the judicial interpretation of

the term "undertaking". The EC Treaty, while making

reference to the term in several places, does not define the

concept. Historically, the supranational courts have sought to

impose a broad definition of the notion of undertaking, thereby

enabling the Community to maximise its competence over all markets

falling within the parameters of the EC Treaty. Advocate General

Roemer proffered a useful early definition of the term in Italy

v Council [Case 32/65] stating that "apart from legal

form or the purpose of gain, undertakings are natural or legal

persons which take part actively and independently in business and

are not, therefore, engaged in a purely private activity".

In cases involving private economic operators, the Court of

Justice has not been reluctant to interpret the term expansively,

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