Education as a Competence of EU Law : The Economic Nature of Swedish For-Profit Independent Schools

Sammanfattning

Ever since the CJEU’s seminal decision in Humbel, delimiting non-economic education systems such as public schooling, from the ambit of internal market law has proved a difficult task for the courts. Although the TFEU expressly shields member states’ legislative power to organize and administer central welfare services from the legislative competence of the European Union, strictly economic activities such as privately funded education, is still subject to the free movement provisions of the internal market. This tension between national control over welfare systems and the interest of free movement, is in many ways inherent to treaty and continues to spark debate in the legal field. Thus, the question of when a service of general interest (SGI) is economic in nature and falls within the ambit of EU law still illudes scholars and legislators alike. However, as this thesis finds, the Swedish education system, wherein publicly funded yet privately administered for-profit companies operate, provides an illustrative and compelling challenge to the CJEU’s case law. Moreover, the existence of for-profit independent schools remains a highly controversial political issue and limitations on profiteering in the education sector is to be expected in the near future. This in turn raises the question of whether limitations, or even the complete disallowing of independent schools’ profits stands in accordance with EU law. This thesis then, analyses a long line of case law stemming from the 1980’s up until today and proposes an updated view of the Humbel-criteria. It finds that the services provided by for-profit independent schools are in fact non-economic in nature and therefore fall within the sole legislative competence of member states. The reason being that national legislators enjoy a wide margin of discretion when deciding how to achieve sound management in the welfare sector. It concludes that elements of competition and profits do not affect the non-economic nature of a publicly funded service so long as the principal aim of the public welfare system in question is to fulfil the state’s duty towards its citizens. Finally, this paper discusses the principle of proportionality and the possibility of member states to disallow for-profits providers in the welfare sector. It also provides an answer to a fundamental problem of EU law, which in this paper is called “the Pandoras box of EU law”, finding that member states always maintain the right to re-regulate an industry which they were not obliged to liberalize in the first place. The findings in this paper are however, not strictly limited to the field of education. The proposed understanding of non-economic services of general interest (SGI) are also illustrative of the economic character of other welfare sectors such as healthcare and social security. Thus, it goes further than to answer the pressing political question of Swedish for-profit independent schools, by providing general guidance on how the CJEU balances the inherently national interests of modern welfare states on the one hand, and the fundamental aim of free and functioning trade on the other.