European competition law and the non-profit sector

Although there has been a debate in the USA for more than two decades about competition policy and non-profit organisations, the debate has not yet had the same prominence in Europe. Only in the last few years, even in the USA, has anti-trust policy toward the sector been examined. The paper examines the position for two groups of competition issues in European Community law: first, the problem of the lawfulness of grant aid, given the rules against state subsidies distorting competition; and second, the application of the rules for competition in the single market including EC anti-trust law. Particular legal problems are identified for non-profits which use geographical catchment area agreements with similar organisations. Finally, the paper examines a range of policy issues which arise on consideration of Community law, including the idea of community development as a locally autarchic objective, the terms of competition for grants and contracts, and the possible implications of the future application of European competition law to non-profits in the Community.This paper is part of a series of studies on non-profit organisations and competition policy; others include 6, 1991; 1992a,b. Many people, all of whom know much more about the law and the economics of this subject than I do, have helped me with this paper. I am particularly grateful to Richard Steinberg, Tymen van den Ploeg, Richard Whish, Martin Knapp, Jeremy Kendall and Stephen Lloyd who read and commented on earlier drafts. Richard Whish urged me to greater caution on the meaning of undertaking and interstate trade effects, pointed out the relevance of the subsidiarity provisions in Maastricht, put me straight on the merger regulations, and saved me from a number of legal errors. I am grateful to Jeremy Kendall for pointing out the BUPA case to me, and to Tymen van den Ploeg for directing me to theDaily Mail case and explaining its significance to me with greater patience than I deserved. I have also benefited from advice from Lindsay Driscoll, Nigel Tarling, Bridget Phelps, Anita Randon and Janet Morrison. I am grateful also to all the people who attended an NCVO seminar on 27 April 1992 at which a late draft of the paper was given for their comment. None of them is responsible for my errors. Although I am employed by the National Council for Voluntary Organisations, London, the paper represents my own views and not those of the Council.