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-Public / private doctrine. He alleged that according to the definitions of exclusive rights and special rights, it seems that the Commission appears to have preferred the criteria based on form since it considers ‘power’ within Article 86(1) to be ‘granted by a Member State to an undertaking … through any legal, regulatory or administrative instrument’.And in its Hofner judgment, the Court seemed to imply that any activities that may conceivably be exercised by a private undertaking should be considered as an economic activity. Both of them suggests that those monopolies which the State awards to an undertaking by means of private law will not be State measure within Article 86(1), but subject to Article 81 or 82.
However in virtue of the judgment in Hofner, I think that the Court said that ‘employment procurement has not always been, and is not necessarily, carried out by public entities. That finding applies in particular to executive recruitment.’Then can we immediately make a simple conclusion of a public / private doctrine indicated in these judgments? In addition, the difference in form existing between public and private law are due to different legal traditions of the Member States. And there are no generally accepted concepts of public law and private law at Community level now. Probably considering such drawback Dr. Buendia Sierra admitted that taking an approach base on such doctrine of form would create the problem of treating differently situations which, to all intends and purpose, are the same.
As regards the two formative doctrines, the former one needs other doctrines as circumstantial evidences, and the reasoning of latter one itself would produces much disputes. So such doctrines can not even satisfy Dr. Sierra himself. Upon that he can not but make a further examine of the substantive methods implied by the practices of the Community.
‘When determining what is the law applicable to an exclusive right granted by a public authority by a public authority to an undertaking, the Court of Justice does not base its reasoning so much on the public or private law form of the grant in question, but rather on its function.’Thus the author provided the function criteria as his substantial criteria. For differentiate the function of administrative power granted by State measure to public or privileged undertakings the author developed a distinction between organization of a market and participation in a market. For explaining the two new concepts, he took an example that ‘consider a local council which is the proprietor of commercial premises and which to rent them to an undertaking with object of obtaining income destined to swell its confers … The council is only interested in punctual payment of the rent. Such a contract would be purely commercial.’This activity of local council is participation in a market, which should be subject to Article 81 or 82.
Otherwise, if the activity of a public authority concerns not so much rent pursuing as other goals, for example public interest, such activity should be categorized as organization of a market and therefore be referred to Article 86(1). For example, in telecommunications sector the principal objective of the local council will be to guarantee that its citizens receive a reasonable service at a fair price, and for that reason they will impose on the concessionary contractual obligations which bind undertakings in this regard. Herein ‘commercial behaviors alone can not be used to completely explain the activities of public undertakings or privileged undertakings because of state discretionary power involved.
I should admit that such distinction contributes us to understanding different activities, subject to Article 86(1) or competition law, of public or privileged undertakings. However it is somewhat difficult to explain State measure with relation to natural monopoly sector by this criteria, organization or participation of a market. As regard to the situation where a public authority confers essential facilities to an undertaking, in the one hand it is necessary for the public authority to do that because of the necessity, whether theoretical or practical, of operation of natural monopolies; on the other hand from an economic point of view in fact such granting activity probably prevent other competitors from entering the market because of impossible replication of essential facilities. In such situation is this activity categorized as organization of a market or participation in a market, assuming that there are no obligations conferred on those undertakings conferred on essential facilities? Fortunately, the assumption in the foregoing sentence hardly does exist. In another way, sectors of natural monopoly are always conferred on public service obligations. Therefore it seems that such doubt is much ado about nothing. Hope so!
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