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2.1.1 public undertakings
As a concept to prevent Member States from escaping from the effectiveness of The Treaty, the concept of public undertaking therefore should be defined at the Community level. So the Commission gave a definition of public undertaking in Article 2 of Commission Directive (the “Transparency Directive”),which is generally considered to be a correct interpretation of this concept as regards the Treaty . The definition is as follows:
For the purpose of this Directive:
- “public undertakings” means:
Any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it.
A dominant influence on the part of the public authorities shall be presumed when these authorities, directly or indirectly in relation to an undertaking:
(a) hold the major of part of the undertaking’s subscribed capital; or
(b) control the majority of the votes attaching to shares issued by the undertaking; or
(c) can appoint more than half of the members of the undertaking’s administrative, managerial or supervisory body.
In virtue of such concept above this concept of public undertakings defines public undertakings from the angle of discretionary control of public authorities. And it more emphasizes the internal relationship between them. “Therefore, for the Commission a public undertaking is an undertaking controlled by a Member State.”Furthermore according to the concept of undertaking in Hofner , an undertaking within the meaning of the Community competition rules is an entity which carries out an economic activity. Herein as regards the concept of public undertakings we presumed they must have economic characteristics and otherwise such public undertakings should fall out of the scope of the Treaty. Consequently we can say that public authorities aim to carry out economic activities through the means of public undertakings therein. According to the doctrine in Hofner, an undertaking controlled by a Member State to carry out an economic activity should be categorized as undertakings contained in EC competition law.
2.1.2 Privileged Undertakings
Under such method, we can go into the concept of privileged undertakings. Firstly undertakings with exclusive rights are such undertakings with
the rights that are granted by a Member State to one undertaking through any legislative, regulatory or administrative instrument, reserving it the right to provide a telecommunication service or undertake an activity within a given geographical area.
This concept still indicates the economic nature of undertakings with exclusive rights, though it more emphasizes on the function of public authorities in the process of establishing of these undertakings. Anyway we can not deny the economic characteristics of undertakings with exclusive rights. Hereby the concept of undertakings with exclusive rights none the less falls the scope of undertakings within competition law.
As regards the concept of undertaking with special rights, the commission defined its concept of special rights as follows:
Special rights with regard to telecommunication services are rights ‘that are granted by a Member State to a limited number of undertakings through any legislative, regulatory or administrative instrument which within a given geographic area,
- limits to two or more undertakings authorized to provide a service or undertake any activity, otherwise than according to objective, proportional and non-discriminatory criteria, or
- designates, otherwise than according to such criteria, several competing undertakings as being authorized to provide a service or undertake an activity, or
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