This presentation by Jose Luis Buendía, Partner, Garrigues, was made during the discussion “The promotion of competitive neutrality by competition authorities” held at the 20th meeting of the OECD Global Forum on Competition on 8 December 2021. More papers and presentations on the topic can be found out at oe.cd/pcnca.

1. Promoting Competitive Neutrality:
Heracles’ most difficult labour?
Dr José Luis Buendía Sierra
20th Global Forum on Competition, OECD, 8 December 2021

2. Introduction
 Market distortions are caused:
• Not only by anticompetitive behaviors of undertakings
• But often also by State measures
 Keeping competition in the markets is like
guarding a house with two doors
 The solution, however, is not obvious:
• The State may have legitimate reasons to distort
competition
• Controlling such behavior would require primacy over
governments and parliaments
 Genuine enforcement is only likely at a
supranational setting (like the EU)
 Advocacy is often the only realistic alternative
at national level.
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3. A Multi-Level System: Neutrality Enforced
 The European Union and its supra-national - not just
international – character
 The role of the European Commission (DG COMP) as a
competition authority
• Articles 101 and 102 TFEU: application of antitrust and merger control
rules to (both private and public) undertakings
• Article 106(1): Control of Exclusive and Special Rights
• Article 106(2): Services of General Economic Interest (SGEI)
• Articles 107 and 108: Control of State aid
• Public Procurement Directives
 Big powers coupled with delicate responsibilities
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4. EU State Aid Control & National Authorities
 Articles 107 and 108 TFEU: State aid is a very wide notion
 Traditional EU State aid control: highly centralized regarding both
enforcement and authorization – recovery decisions
 More and more decentralization… but only for negative
enforcement
• National courts
• National administrations and NCAs
 If national enforcement does not work, then …
• Preliminary reference before the CJEU
• Obligation for the Commission to act
 Commission monopoly regarding positive declarations of
compatibility
 Very powerful instrument
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5. Article 106 TFEU: Neutrality’s Sleeping Beauty
 Article 106(1) is the forgotten twin brother of Article 107 TFEU
• It imposes competitive neutrality on the EU Member States
• It prohibits State measures like exclusive rights distorting competition in favor of public or
privileged undertakings
• Except if justified by Article 106(2) as a SGEI
 Article 106(3) gives quasi-legislative powers to the European Commission
• Transparency Directive, Telecommunications or SGEIs
• Politically controversial
 The wide scope of Article 106(1) was confirmed by the CJEU in
C-553/12 P Greek Lignite
• The Commission is not actively enforcing this, probably because complainants cannot
force it to act
• The good news is that national courts can apply it and may raise preliminary questions
before the CJEU
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6. One Level Systems: The Challenge Of Enforcing Neutrality
 National competition authorities…
• are not supranational institutions;
• cannot directly enforce neutrality against the legislator; and
• at most, can only declare as inapplicable a national rule in the context of a
specific case (C-198/01 CIF)
 Icarus’ frustration and desire to fly …
 Can NCAs impose fines on public authorities responsible for
facilitating antitrust infringements?
• The Spanish Supreme Court thinks so (Sherry Wines)
• Redundant with certain EU provisions?
 NCAs may however have enforcement powers
• Over administrative, regional and/or local authorities
 Either compulsory decisions or actions before the national courts
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7. One Level Systems: To Neutrality By Advocacy
 Otherwise, NCAs can issue
• Before new measures are adopted or afterwards recommendations, opinions and/or reports
• They can point out the existence of infringements and increase public awareness
• This may generate incentives for private stakeholders to challenge the measures and/or attract the
attention of those with the power to enforce (like the European Commission)
• Publication may be a very strong instrument in the medium to long term
 Report on the Ancillary Copyright Proposal by the Spanish Competition Authority
 Formigal Ski School Decision by the Competition Tribunal of Aragon (TDCA)
• Competition distortion caused by a public concession
• Sherry Wines case law discussed but found not applicable
• However, reference to Article 106 TFEU
• And recommendation to the local authority http://www.tdca.es/wp-content/uploads/2020/06/Acuerdo-Expediente-
n%C2%BA-04-2019.pdf
 “Nothing is so stupid as to vanquish; the real glory is to convince” (Victor Hugo)
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8. Conclusions
 Promoting competitive neutrality is
never an easy task for a competition
authority
 If it has enforcement powers - normally
only in multi-level environments - it
faces serious political resistance
 If it lacks such powers… it is a serious
source of frustration
 The art of persuasion is the only
alternative (like the prophets of the
Bible)
 The last and perhaps most difficult
labor of Heracles?
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