On July 24, 2003 the ECJ delivered a judgment in the Altmark case $ ^{19} $ with regard to the application of the State Aids rules to public services obligations (a notion within the broader category of services of general economic interest). The Court ruled on a long-disputed issue: whether subsidies representing compensation for public service obligations constitute state aid under the meaning of Article 87 (1) of the EC Treaty. The ECJ pointed out that, according to settled case-law (see supra), for a state measure to be classifiable as state aid within the meaning of the EC Treaty, it must be capable of being regarded as an “advantage” conferred on the recipient undertaking which that undertaking would not have obtained under normal market conditions.

The Court held that there is no such “advantage” where a state financial measure must be regarded as compensation for the services provided by the recipient undertakings in order to discharge public service obligations. However, for such compensation to escape classification as state aid in a particular case, four conditions must be satisfied. $ ^{20} $ First, the recipient undertaking must actually have public service obligations to discharge and those obligations must be clearly defined. Second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner. Third, the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit. Fourth, where the undertaking is not chosen in a public procurement procedure, the level of compensation must be determined by a comparison with an analysis of the costs which a typical transport undertaking would incur (taking into account the receipts and a reasonable profit from discharging the obligations).

Only if those four conditions are satisfied may it be considered that an undertaking has not enjoyed a real financial “advantage” that would have the effect of putting it in a more favorable competitive position than the undertakings competing with it, so that it is not therefore state aid within the meaning of the EC Treaty.

In the more recent GEMO case, $ ^{21} $ Advocate General (“AG”) Jacobs proposed to make the distinction between measures directly linked to the service of general economic interest and those indirectly linked. The latter only would be considered as aid and thus would be subject to notification. This analysis was then subsequently adopted in Enirisorse. $ ^{22} $ In the Enirisorse case, the ECR responded to the following issue: Does allocation to a public undertaking of a fund to the State by operators who do not receive services for that undertaking constitute special or exclusive rights given to the public undertaking under Article 87? It is clear that public undertakings are within the scope of Article 87. But services in the general economic interest should not be used as a shield for all state aid. It is necessary to ask what are the special characteristics that distinguish it from other economic activities, but even then the transfer of funds must be shown to be connected to that specific characteristic. It is important to note that the three cases Altmark, GEMO and Enirisorse were all pending before the ECJ at the same time. Altmark was the first to be decided. By that time, the advocate general in all three cases had rendered their opinion. The AG in Altmark considered that PSO compensations should be viewed as State aid while AG Jacobs in GEMO and the AG in Enirisorse considered at least certain compensation mechanisms to fall outside of the