Bulletin n° 14 - décembre 2015


The French notion of Intérêt Général (general public interest), in the European Union area – the example of public investment

Thomas Maitrot (élève avocat de l'HEDAC / ISIT)


France developed the notion of Intérêt général (general public interest). The notion is broad, but can be summarized as being the action of the State in the economic area when a general public interest is at stake.That is to say that the State will examine a lot of criteria, including the economic benefit, but also other criteria which are not related to the economy. Nowadays, the notion is in danger. It shall, with the European law, change or disappear.

General public interest seems to be forgotten by the French State to be compliant with the European law and the economic rules. The prohibition of State aids, initially incompatible with the European law, shows that it is really hard for a State to help its economy[1]. For this reason, when the French State is a shareholder, it is likely to resort to public investment. But European law also regulates the public investment area. Indeed, the Court of Justice of the European Communities has defined and limited public investment in 1986. Even if article 345 of the Treaty on the Functioning of the European Union (TFEU) does not prejudge of their ownership system, Member States must behave in the same way than private investors, with a profitability objective.

Is French general public interest compatible with the economic rationale? For the Conseil d'Etat, State intervention is allowed only when it pursues an objective of general public interest.

There are rules on State intervention in French and European law. The creation of the French Public Investment Bank (BPI) in 2013 gives us the opportunity to wonder about public investment. In 2009, when the Fonds stratégique d’investissement (FSI – which is now a subsidiary of BPI) was created, a minority public investment doctrine was set up. Therefore, a series of issues must be clarified, firstly about the definition of public investment. A State has to act as a private investor. The Court of Justice of the European Union has often developed this notion since 1986. When a State acts like a private investor, its action cannot be considered as a State aid under article 107 TFEU.

Can this notion of private investor be compatible with general public interest? The precedents of the Conseil d'Etat highlight that general public interest is a way of obtaining the stability of the economy. Can the obligation to act like a private investor, according to European law, help France to maintain the stability of the economy, according to national law? How can the public investment respect European and French law?

In fact, despite the prohibition of State aids, public intervention on the market still takes place through the notion of public investor. But can the State freely invest to ensure the economic order? To answer to those questions, we need to study public investment and the notion of private investor (I), before examining the same notion regarding general public interest (II).

Public investment: a way to public intervention with many definitions

To study and to find a definition of public investment, one has to examine the prohibition of State aid (A), then to develop the criteria of private investor (B).

The prohibition of State aid, a brake for State intervention
Article 107§1 TFEU prohibits State aids. The interventionist government started in France after World War II with projects such as Airbus or TGV. In the seventies, a regulatory state disappeared, illustrated for instance with a decree of 1986 about freedom of pricing[2]; however, the interventionism is really present in the French culture. However, the decree of 1986 shows the beginning of the disengagement of the State. This change in France is logical and coherent in view of European law. Member states have to intervene less in the economy in order to avoid competition between economic operators.

OnMarch 21st 1990, in Commission v. Belgium case, the Court of Justice gave four conditions for a qualification of State aid. The measure has to be a state intervention or has to be realized by means of a state resource to give an advantage to the beneficiary, to affect trade between Member States, and to distort competition[3]. We can see a negative definition of public investment; public investment is not a State aid.

An action like the action of the private investor
We have seen the negative criteria of public investment. We must now study the objective criteria. On July 10th, 1986, in the Bathroom Ceramic case[4]the Court of Justice gave a part of the answer concerning the private investor criteria. Since 1986, the Court has often developed its theory. We can quote, for example a case of 1991, Italy vs Commission. The Court stated that “It should be pointed out in this connection that, according to settled case-law, investment by the public authorities in the capital of undertakings, in whatever form, may constitute State aid where the conditions set out in Article 92 are fulfilled.” But a State intervention can also not constitute a State aid, when the conditions of the treaty are not fulfilled.

A Commission communication of 1984 reiterated the principle: “There is not a state aid if the operation is realized in circumstances which would be acceptable for a private investor who acts in the normal condition of the market.” After this communication, the bathroom ceramic case brought to light the private investor criteria. The Court has to look if “an appropriate way of establishing whether such a measure is a state aid is to apply the criterion, which was mentioned in the commission’s decision and, moreover, was not contested by the Belgian government, of determining to what extent the undertaking would be able to obtain the sums in question on the private capital markets. In the case of an undertaking whose capital is almost entirely held by the public authorities, the test is, in particular, whether in similar circumstances a private shareholder, having regard to the foreseeability of obtaining a return and leaving aside all social, regional-policy and sectorial considerations, would have subscribed the capital in question”. It is important to note that even if a regional policy or a social policy does not take place in the economic analysis, the State, which is in a position of a shareholder and not in a position of public authority, can intervene by a fiscal measure. The Court will analyse if a Member State, in the same (or almost the same) situation than private investor, indulges a similar behaviour. It is a global appreciation; the Court will examine the nature and the object of the measure, if it can distort the competition[5].

The private investor criteria will be revealed by a body of evidences: especially by the criteria of profitability[6], the behaviour of the others shareholders and the characteristics of the market[7]. The FSI, created in 2009, published its strategic orientations that are in coherence with the precedents of the Court of Justice of the European Union. Sébastien Bernard explains that the FSI targeted four categories of companies: the small and medium-sized companies creating growth, medium-sized companies capable for creating value in applied technologies area and potential world leader in the field, medium-sized companies in a significant period of change, and large and medium-sized companies which play an significant role in their sector whose capital stabilization allows for the completion of industrial projects[8].

President Sarkozy announced the creation of the FSI in November 2008[9]as an answer to the economic crisis. The aim of the FSI is to invest in existing companies. In the strategic orientations of the FSI[10], we discover that the FSI shall act as a private investor. The intervention of the FSI is only for cost- efficient projects and in a long run perspective. Moreover the FSI participates just in a minority shareholding with others private investors. In the investment doctrine of the FSI, it is made clear that the purpose of the FSI is to invest in a privileged way in strategic companies for economy, that is to say, companies which have skills, technologies and which create jobs.This paragraph shows the willingness of coexistence between the European law and the general public interest. According to this criterion, the public authority is different than the State, operator in a market. Therefore how can national public funds be used on a market, in the general public interest while it shall act as a private investor? The BPI shares the same investment doctrine.[11]

Conciliation with aims of general public interest

Some issues are raised by the investment as a private investor, a separation between functions of public authority and State operator on market. What is the place of general public interest when the State has to conduct itself as a private investor? Does the general public interest reside only in strategic companies with a big potential? We will study in a first time the definition of public investment on the light of general public interest (A). Then we will examine the criteria of the conciliation between private investment and general public interest (B).

Public investment and general public interest
French tradition has always connected the state, the economy, and general public interest. According to Sophie Nicinski we can distinguish four phases. With Colbert, minister of Louis XIV, we can note the first phase, colbertism and a kind of interventionism of the State in the economy. The goal is to have an exportation policy based on high quality materials. With French Revolution, it was the triumph of economic liberalism, as we can see with the décret d’Allarde in 1791[12]or the loi Le Chapelier[13]in 1791. The State has a role of a gendarme. It protects the liberalism. The Welfare state under the Third Republic is not incompatible with that vision, which organizes economic activities, like the public transports or industrial and commercial public services. Moreover, for the Conseil d'Etat, public initiative is closely circumscribed[14]. Sophie Nicinski develops a third phase, an interventionist government, which began during inter war period, but which would be effective after World War II, inspired of Keynes theories. This policy is linked with important projects such as Airbus, TGV or Concorde. With interventionism, an extensive public sector is developed. But the State tries more to guide the economy than to administrate or manage it.

In the second half of the seventies, with the rediscovery of Hayek theories, which imply that State’s decisions disturb the economic life, we can see the last phase, the regulatory State. Alternation of political parties in 1986 caused the disengagement of the State, symbolized by the decree of 1986 about the freedom of pricing[15]. This was shown by a supervised liberalism. This change of direction has to be analysed in view of European law. The European construction is built in opposition to the interventionist doctrines of the States. Article 120 TFEU provides that economic policies of the States must permit the realization of the Union goals. According to article 3 TFEU, the (pas the) competition rules are exclusive competences of the European Union. The interpretations of economic freedoms given by the Court of Justice lead to a liberal constraint on the Member States policies.

For those reasons, in the 1990s, we have witnessed to open up the network industries to competition.European law, with a large conception of the notions of economic activities and companies is in opposition with the French tradition and the area of public initiative. Article 107 TFEU prohibits State aids. Monopolies have to be adapted, with the removal of exclusive rights, according to article 37 TFEU. The opening of networks to competition sets up regulatory authorities. The European pattern imposes that the State defines an economic interest purpose, and acts in a proportionate manner to realize this goal. Moreover there is also an apparition of a public law of competition, which, according to Sophie Nicinski, is a way to adjust the state support and to define its intervention condition[16].

These four steps determine the specific tasks for the State in the economic life. Regulatory State is infrequent now, excepted in a goal of an economic operator State for helping a market. But since 1901 and the Casanova case, the Conseil d'Etat, to avoid municipal socialism, has circumscribed public initiative. To act, the State needs a General public interest and a shortage of public initiative. Since 1930 and The Chambre Syndicale du Commerce en Détail de Nevers case, to justify a State intervention, the circumstances on the market have to be special. General public interest is not the only condition to permit the State intervention. The State needs also a shortage of private initiative, which can be qualitative or quantitative[17]. But, in 2006, in the Ordre des Avocats au Barreau de Paris case, the Conseil d'Etat explained that general public interest was the major condition and that the shortage could be included in the general public interest. As a consequence the sole general public interest can now permit the intervention of the State on a market.

The principle is the same for public investment. State intervention on a market has to be guided by a purpose of general public interest. Therefore, even if, for European law, public investment has to be cost- efficient and if State intervention has been, since 1997 and the Millon et Marais case, subject to competition law, for French law, the action of the State is still guided by the general public interest.

What are the general public interest and the limits to State intervention?

Are there limits for the intervention of the government for general public interest?
Sébastien Bernard[18], in his article “L’actionnariat public et la crise”[19], speaks about the reborn of a shareholder State. This idea has seemed obsolete since 1986[20], but with the economic crisis in 2008, the concept is again developed. In 2007, the European Communities Justice Court disavowed the golden shares of the Member States[21]. It was a disavowal for public shareholding. But with the economic crisis in 2008, the public shareholding became almost fashion.

Sébastien Bernard distinguishes an Etat sauveteur, a lifesaver State, which, through the Société des Prises de Participations de l’Etat, has subscribed twenty billions in real assets to banks, and a State investor, which is more interesting for the development. But European competition law is always a limit when we speak about a State investor on the market.

Shareholder State, because of competition law, is going to give up on its derogating prerogatives from the ordinary law and is going to refuse to assume prerogative from ordinary law[22]. Since 1997 and the Millon et Marais case, competition law has fully applied to public bodies. The decree n°2011-130, on 31st January 2011 modifying the decree n°2004-963 on 9th September 2004 establishing a national remit service, the Agence des participations de l’Etat (APE)[23]is edifying. This agency has been created to identify the missions of a shareholder State. This new decree slightly changed the APE. The Agency is still taking charge of defending patrimonial interest of the State, but is also animating the policy of the Shareholder State, with economic, industrial and commercial perspectives.

The APE is well armed to lead une politique industrielle active, a modern industrial policy[24]The APE has in its missions the business administration of companies like EADS, Thalès and many companies in this strategic sector. However, even though Article 346 TFEU[25]gives a margin to the State in the defence of vital state interests of security, the measures of a Member State shall not distort the competition in internal market for products without military purposes. It is still possible to protect companies in sensitive sectors against hostile EPO, if companies are directly or indirectly related to national defense. In that area, the State can have an active industrial policy, without being contrary to European Union law.

For the Fonds Stratégique d'Investissement (FSI), there is a different problem. The FSI has direct participations in about twenty companies. But the FSI is also the owner of much participation in investment sector funds, created after the Etats généraux de l’industrie [Industry general states][26]. The FSI has incurred 200 million Euros in “le fonds de modernisation des équipements automobiles” [Modernization Fund for automotive equipment], in co-investing with Renault and PSA. The FSI wants to lead a strong industrial policy, but only if the companies “soient porteuses d’avenir malgré des difficultés temporaires” [are promising in spite of temporary difficulties] or “dispose de positions concurrentielles solides” [have solid competitive positions].[27]

If the FSI is acting like a private investor, it is because of the mistakes of the Agence de l’innovation industrielle (AII), created in 2005 in order to give a new industrial policy, with the emergence of champions nationaux, leading national companies, and which has disappeared two years later, with just few projects approved by European Commission, more for small companies than for the champions nationaux. So the FSI, acting like a private investor, tries to avoid this kind of mistakes.

The SPPE ensures the missions of the “Lifesaver State”. Its interventions, often State aids, have to be notified to the European Commission. But the goal of the Commission is to reduce the phenomenon, even if, with the crisis, State aids could be more frequent[28].

We have shown that general public interest is directly in conflict with competition law. In 2007, in the Tinez case, the Conseil d'Etat ruled that market stability is a general public interest. But how can this general public interest and a purpose of cost efficiency coexist? Is a private investor going to put money in a sector, which is facing difficulties? The conciliation between general public interest and a cost-efficiency project is a real question. How can the French State conciliate two imperatives, which seem to be opposite?

We can define public investment as being an economic intervention from a State in the private economy, the public investor being in the same position than the private investor. An investment, even realized with State resources, has to obey, considering the peculiarities of a market, to a purpose of cost- efficiency. This latter has the same purpose than the one of a normal private investor. But the investment has to follow a general public interest purpose and is subject to competition law. Where is the line between the obligation to act like a “private investor” and to act in a general public goal?

Public investment has to be realized as a general public support to the economy, general public interest being the condition to the intervention of the State on the market. But with European law, the State margin is limited. The obligation to act like a private investor is an imperative. French government in its interventions combines now both notions, and tries to conciliate as well as possible. We are in an ideological battle, and for now, even if European obligations are above, the notion of investment for general public interest is still present.

1 - Conseil d’Etat. Rapport Public. Réflexions sur l’intérêt général, 1999.  [retour]

2 - Ordonnance n° 86-1283 du 1er décembre 1986.  [retour]

3 - NICINSKI S. Droit public des affaires, Paris : Montchrestien, 2e édition, 2010, 720 p.  [retour]

4 - Court of Justice of the European Communities. Judgment of the Court of 10 July 1986. Kingdom of Belgium v Commission of the European Communities. State aid - Subscription of capital of an undertaking - Right to a fair hearing. Case 40/85, July 10th, 1986.  [retour]

5 - General Court of the European Union. Judgment of the General Court (Sixth Chamber) of 13 February 2012. Budapesti Erőmű Zrt v European Commission. State aid - Wholesale electricity market - Favourable terms granted by a Hungarian public undertaking to certain power generators under power purchase agreements - Decision to initiate the procedure laid down in Article 88(2) EC - Decision declaring the aid incompatible with the common market and ordering its recovery - New aid - Private investor test. Joined cases T-80/06 and T-182/09.  [retour]

6 - CJEU, Air France, November 20, 1991.  [retour]

7 - CDF-Chimie Orkem, OJEC C 198, August 7, 1990.  [retour]

8 - BERNARD S. L’actionnariat public et la crise. Revue Française de droit administratif, 2010 : 4, p. 756.  [retour]

9 - Présidence de la République, Discours à Montrichard [Speech in Montrichard], November 20th, 2009.  [retour]

10 - Fonds Stratégique d’Investissement. Orientations stratégiques du FSI, http://www.fonds-fsi.fr/IMG/pdf/orientations_strategiques_du_fsi.pdf  [retour]

11 - Loi n°2012-1559 du 31 décembre 2012 relative à la création de la Banque publique d'investissement [Law on the creation of the Public Bank of Investment].  [retour]

12 - Freedom in the exercise of a profession.  [retour]

13 - Abolition of corporations.  [retour]

14 - Conseil d’État. Arrêt Casanova, Rec. P.333, S.1901, III, 29 mars 1901, p.73, note M. Hauriou.  [retour]

15 - Ordonnance n° 86-1283 du 1er décembre 1986.  [retour]

16 - NICINSKI N. Droit public des affaires,Paris : Montchrestien, 2ndedition , 2010, 720 p.  [retour]

17 - Ville de Nanterre, Arrêt, CE sect., November 20th, 1964.  [retour]

18 - Pr. Sébastien Bernard is Professeur agrégé de droit public, Dean of the Law faculty in Grenoble.  [retour]

19 - BERNARD S. L’actionnariat public et la crise. Revue Française de Droit Administratif, 2010, p. 756.  [retour]

20 - Privatizations started in France in 1986.  [retour]

21 - Court of Justice of the European Communities. Judgment of the Court (Grand Chamber) of 23 October 2007. Commission of the European Communities v Federal Republic of Germany. Failure of a Member State to fulfil obligations - Article 56 EC - Legislative provisions concerning the public limited company Volkswagen. Case C-112/05, October 23rd, 2007.  [retour]

22 - BERNARD S., op. cit.  [retour]

23 - LOMBARD M. Participations de l’Etat. Actualité Juridique Droit Administratif, 2011, p.1302.  [retour]

24 - LOMBARD M. op. cit.  [retour]

25 - “Any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes.”  [retour]

26 - Les états généraux de l’industrie [General Assembly of Industrie], October 2009 to February 2010.  [retour]

27 - LOMBARD M. op.cit.  [retour]

28 - E. g. European Commission. State aid: Commission prolongs crisis framework with stricter conditions, IP/10/1635, December 2nd, 2010.  [retour]


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