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 con- cerning the traditional State-owned enterprises pursuing public interest objectives. Howev- er, increasingly we see examples of commercial divisions of public entities aiming to gener- ate revenue per-se. Because these commercial divisions can enjoy competitive advantages over their private sector competitors, their behaviour may distort competition. This phenom- enon has become prevalent throughout the EU, and Member States tend to approach its an- ticompetitive effects through various competition law(-related) frameworks. This article points out, however, that a competition law framework may be ill-suited to address anticom- petitive effects of commercial divisions of public entities. With an ill-functioning and diverg- ing legal framework across the EU, anticompetitive effects of commercial divisions of pub- lic entities lead to an uneven playing field between public and private firms with adverse effects on the internal market.