Issue
The legal subject in issue is predicated on European Union competition law. The complainant in this case is FENNIN which is an association composed of undertakings that sell goods to the SNS management bodies. The allegation from the members of the association is that there was a blatant discrimination from the SNS management bodies because other supplies had been paid within a reasonable time while the member of that association of undertakings had not been paid. The main issue before the court was whether the DNS management bodies could be considered as undertakings according to the understanding of Article 82 EC. The other issue before the court was whether the SNS management bodies were in abuse of a dominant position pursuant to the Article 82.
Rule
An undertaking according to the community law of competition is defined as any entity which takes part in an economic activity without regard to the legal capacity of the organization and the mode it uses to acquire its financial resources to run the entity (C?355/01 AOK-Bundesverband and Others [2004] ECR I-2493, paragraph 46). According to the Court of justice, an undertaking is an activity where the goods and service are taken to the market, which is a pure manifestation of an commercial endeavor (Case C?35/96 Commission v Italy [1998] ECR I-3851, paragraph 36). It bears noting that public bodies are not exempted from the definition of an undertaking and the idea that one should not make profit in an undertaking is not a requirement under the European competition law. It is abundantly clear that the main factor that determines if an entity will be held to be an undertaking is if the there is if a commercial activity occurs. According to Article 82 an entity that is considered an undertaking is prohibited from abusing the dominant position they may be holding ion a certain market (European Commission, 2013). The idea inherent in this section is the prevention of one party from incongruously exploiting their economic power without regard to weaker organizations.
Application
In the court of first instance it was affirmed that that the test that should be applied in determining an undertaking is whether the reason that that the goods and services are being bought is to take goods into a market for an economic activity (Reckon, 2009). The court therefore upheld that mere buying of good with the mere objective or mandate to deliver the goods or services can not amount to an undertaking. However, if the goods are bought with the sole aim of engaging in a commercial activity thereafter then the entity falls within the meaning of an undertaking and al the rules of competition law will be applicable. It is imperative to note that the European Court of Justice found the deductions and the holdings of the court of first instance to have been rightly made. It affirmed that the mere purchase of commodities can not amount to an undertaking if then commodities are bought for a social purpose other than a commercial one. The court noted that the nature and purpose of the purchasing activity is vital in determining if the entity will deemed to be an undertaking. The allegation that SNS management bodies had taken advantage of its economic strength did not hold water because from the onset it was not undertaking according to law. It follows that for Article 82 to apply the entity must itself be an undertaking according to the competition law.
Conclusion
The court came to the conclusion that despite the fact that the SNS management bodies were being funded by a social security and State contributions, the underlying fact is that they were purchasing the goods to offer free medical services and not to engage in an economic activity. Therefore, it was conceded that they could not be construed to be undertakings within the definition of competition law. The court held that it is only the conduct of taking goods or services to a market that can be defined as an economic activity and not the mere buying of goods or services. Conversely, it has been argued that the decision in FENNIN is a narrow one and that it inly applies to fact if a case that absolutely similar to it (Sophie and Treacy, 2005). The nerve of the reasoning behind this assertion is that the case did not envisage other circumstances such as when a public organization offers goods and services to the market.
References
C?355/01 AOK-Bundesverband and Others [2004] ECR I-2493, paragraph 46
Case C?35/96 Commission v Italy [1998] ECR I-3851, paragraph 36
Case ECJ C-205/03, Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) (2006)
European Commission (2013) EU Competition Law: Rules Applicable to Antitrust Enforcement. Retrieved from https://ec.europa.eu/competition/antitrust/legislation/handbook_vol_1_en.pdf
Reckon. (2009). Fenin (CFI, ECJ) Retrieved from https://www.reckon.co.uk/open/Fenin
Sophie, L., and Pat, Treacy (2005) Applying competition law to state bodies. Retrieved from https://www.citationmachine.net/harvard/cite-a-book/search?utf8=%E2%9C%93&q=Competition+Law+Antitrust+law+and+policy+in+a+global+market+insight&commit=Search+Books
