The scope of Article 86(2) EC Treaty between the poles of adequate provision of public services and undistorted competition (Tienda española)

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The provision of Article 86(2) EC Treaty allows, under certain conditions, a deviation from the rules of the EC Treaty insofar as the application of these rules would obstruct the operation of services of general economic interest which have been entrusted to certain undertakings by the state. Thus, Article 86(2) is designed to strike a balance between the objectives of the Community in respect of market integration and national public service objectives.

This paper addresses a critical analysis of the scope of Article 86(2) and its role between the poles of adequate provision of public services and undistorted competition as set out by the case law of the European courts and legislation. In a first step, the several requirements of the provision are examined. In the course of this, particular attention is paid to the definition of the term ‘services of general economic interest’ as well as to the meaning of ‘obstruction to the performance of the service’. Then, Article 86(2) is shown in its special role in the financing of services of general economic interest.