Article 106 Public and Privileged Undertakings and Services of General Economic Interest

Article 106 TFEU is concerned with public undertakings and undertakings granted special or exclusive rights by the MS (privileged undertakings). It consists of three paragraphs. Article 106.1 TFEU specifies the application of the Treaty rules to public undertakings and to undertakings granted special or exclusive rights. Article 106.2 TFEU subjects the application of the Treaty rules to public undertakings and privileged undertakings to a limited exception for services of general economic interest and for revenue-producing monopolies. Its final paragraph, Article 106.3 TFEU, provides for expedited enforcement of the provision by the Commission by allowing the Commission to address decisions to the MS applying Article 106 TFEU, thus by-passing the standard enforcement mechanism procedure of Article 258 TFEU. In addition, Article 106.3 TFEU provides the Commission with specific and autonomous law-making powers to ensure the effective application of Article 106 TFEU, in this case by-passing the standard ordinary legislative procedure of Article 294 TFEU. 2 The full scope of Article 106 TFEU has undergone a gradual development. It was not until the 1990s that the provision came to the fore with four major cases1 and with the introduction of legislation in the area. Article 106 TFEU is a complex area of law, partly due to inconsistent and at times confusing case law, and it is an area of law that continues to be developed. Its gradual application and development can be explained on the basis of significant changes in economic and social policy, including the move from nationalisation to liberalisation and the dynamics of technological advances, as well as the trajectory of the internal market and its market integration goal. This trajectory has been marked by an initial focus on removing tariff barriers to trade in the form of customs duties and charges with equivalent effect and in the form of discriminatory and protectionist internal taxation, shifting to a focus on non-tariff barriers to trade in the form of quantitative restrictions and measures with equivalent effect and eventually progressing to a focus on the most intransigent barriers to market integration in the form of State intervention in the market directly through public undertakings or indirectly through the conferral of privilege on undertakings, and in the form of State aid.