Commercial Divisions of Public Entities and the Limits of EU Competition Law

Abstract

Competitive behaviour by public entities is generally approached in the literature as concerning the traditional State-owned enterprises pursuing public interest objectives. However, increasingly we see examples of commercial divisions of public entities aiming to generate revenue per-se. Because these commercial divisions can enjoy competitive advantages over their private sector competitors, their behaviour may distort competition. This phenomenon has become prevalent throughout the EU, and Member States tend to approach its anticompetitive effects through various competition law(-related) frameworks. This article points out, however, that a competition law framework may be ill-suited to address anticompetitive effects of commercial divisions of public entities. With an ill-functioning and diverging legal framework across the EU, anticompetitive effects of commercial divisions of public entities lead to an uneven playing field between public and private firms with adverse effects on the internal market.