Failure to meet the demand as infringement of articles 106(1) and 102 TFEU

Abstract

Purpose – this paper aims to analyse application of Article 106(1) in conjunction with Article 102 of Treaty of the Functioning of the European Union (TFEU) with respect to situations, when undertakings having statutory monopoly rights fail to satisfy demand/needs of their customers. In particular, this research paper aims to determine what kind of causal link needs to be established between State actions and failure to meet the demand by the holder of statutory monopoly. Design/methodology/approach – theoretical methods (analytic and systematic) as well as case law analysis has been applied in the research. Finding – there are two legal tests supported by case practice. Commission takes the position that the State and holder of monopoly rights are jointly liable for failure to meet the demand. Hence infringement may be found in all cases, when there is clear demand on the market which remains unsatisfied. On its turn, European Court of Justice (ECJ) considers that infringement can be found only in such cases, when failure to meet the demand results from the State actions only. This paper suggests that joint liability test is more adequate for finding the infringement, and the most recent practice of EU courts seems to support this view. Research limitations/implications – findings presented in this paper are based on the analysis of case law of European Court of Justice and European Commission, which is admittedly rather scarce. Respectively, findings presented in this paper reflect status quo of the case law and doctrine, however some developments can be expected in the nearest future. Practical implications – selection of causal link theory, which should be applied in failure to meet the demand cases, has direct impact on the burden of proof falling on the claimant. Having determined to apply direct causal link test, practical possibilities to prove the infringement would be limited to very extreme cases of failure to meet the demand. On the contrary, application of joint liability test entitles to prove infringement rather easily – such infringement can be found in all cases when the customer has demand for some services and such demand is left unsatisfied by the holder of monopoly rights. Originality/Value – legal doctrine analyse the causal link in Article 106(1) and 102 TFEU cases, however the doctrine lack analysis of causal link problem specifically in failure to meet the demand cases, which are quite specific. The latter problem was addressed to some extent by Monti, Manaridou and Kersting. However their analysis touched upon only certain issues of causal link and does not take into account evolvements in the most recent case practice.