2. Offering, pricing and competition and the specific Ordinance on Fees

In the accounts, it is important to separate fees charged for services or assignments from activities linked to the organisation’s own research or research collaborations. In practice, this is done through separate accounting. In the legislation, the terms “non-economic activity” and “economic activity”, or “fee-based activity” are used. It is up to each organisation to interpret and implement this categorisation, and they often use their own terminology. The main features of this categorisation lies in the fact that one category refers to activities financed by grants or direct government funding, and the second refers to activities operating in a commercial market.

A non-economic activity is an activity which does not involve offering products or services in a market and which is generally financed by grants or other forms of support and is generally operated on a non-profit basis. An economic activity means the sale of products and services to external users that can be found in both the business sector and the public sector. It is difficult to provide a general definition of when an activity should be categorised as one or the other. Each organisation needs to make this assessment based on its own circumstances in consultation with its finance officers and legal counsels.

Put simply, state aid is financing from public funds that gives one or more undertakings an advantage over their other competitors³⁰. In Sweden’s competition law, ‘undertaking’ is defined as a natural or legal person engaged in activities of an economic or commercial nature. To the extent that such activities involve the exercise of public authority, they do not fall within the scope of this definition³¹. In principle, state aid is prohibited with a few exceptions (for example de minimis aid³², and aid provided for in the General Block Exemption Regulation³³). Always remember that state aid can happen in two directions – aid to the host organisation, and/or indirect aid to external users. The latter case is dealt with in the next section.

The EU’s state aid rules are found mainly in Articles 107–109 of the Treaty on the Functioning of the European Union (TEU)³⁴. The implementation of the state aid rules in Sweden is regulated, inter alia, in the Act on the Application of the European Union State Aid Rules (2013:388)³⁵.

In principle, all types of organisations may be affected by the state aid rules, depending on the activities they pursue. The categorisation into economic activities (for example, contract research, see Section 3.2) and non-economic activities (for example, individual research or research collaboration at a research organisation, see Section 3.3) is a key measure for ensuring compliance with the rules.

The European Commission has stated that where a research infrastructure is used almost exclusively for a non-economic activity, its funding may fall outside state aid rules in its entirety, provided that the economic use remains purely ancillary³⁶.

A research infrastructure’s activity may be deemed non-economic if the capacity allocated each year to such an economic activity does not exceed 20 per cent of the relevant entity’s overall annual capacity³⁷. This state aid rule does not specify the level at which the calculation to determine whether an economic activity is purely ancillary or not should be made. Nor what the relevant entity is, or whether the assessment is to be made on individual parts or the whole organisation. For most HEIs, it is rare for this limit to be exceeded, in part because accounting is done at the overall organisational level based on the HEI’s organisation number. At this level, the proportion of economic activity is generally low. But also in part because it is rare that any individual research infrastructure at an HEI has higher than 20 per cent economic activity.

In addition to your own organisation being prohibited from receiving state aid, you must also ensure that the external user does not receive indirect state aid as a result of using the research infrastructure. Exemptions exist, for example, when state aid is approved under a block exemption.

In the rules pertaining to indirect state aid, the Commission distinguishes between two cases: Research on behalf of undertakings and Collaboration with undertakings. In the case of research on behalf of undertakings, the Commission writes that it does not normally count as state aid to the undertaking – as long as the research organisation or research infrastructure receives payment of an adequate remuneration for its services³⁸. This is especially true if the service is provided at a market price. Alternatively, in cases where there is no market price and the service is then provided at a price that:

• reflects the full costs of the service and generally includes a margin established by reference to those commonly applied by undertakings active in the sector of the service concerned; or
• is the result of arm’s length negotiations where the research organisation negotiates in order to obtain the maximum economic benefit at the moment when the contract is concluded and covers at least the marginal costs of the service.

As regards collaboration with undertakings, the Commission writes that activities can under certain conditions be considered to be effective collaboration. Where collaboration projects are carried out jointly by undertakings and research organisations, the Commission considers that no indirect state aid is awarded to the participating undertakings if one of the following conditions is fulfilled³⁹:

• The participating undertakings bear the full cost of the project.
• The results of the collaboration which do not give rise to IPR may be widely disseminated. Any IPR resulting from the activities of research organisations or research infrastructures are fully allocated to those entities. See also section 3.5 about the teachers’ exemption.
• Any IPR resulting from the project, as well as related access rights, are allocated to the different collaboration partners in a manner which adequately reflects their work packages, contributions and respective interests.
• The research organisation or research infrastructure receives compensation equivalent to the market price for the IPR which result from their activities and are assigned to the participating undertakings. The total value of any contribution – both financial and non-financial – of the participating undertakings to the costs of the research organisations or research infrastructures’ activities that resulted in the IPR concerned, may be deducted from that compensation.
  

Sweden’s competition law prohibits anti-competitive cooperation between undertakings and the abuse of a dominant position in the market by an undertaking⁴⁰. In addition, there are rules on anti-competitive sales activities by public entities.

Certain conduct by the State, a municipality or a region engaged in a sales activity may be prohibited through an injunction, if such conduct⁴¹:

• distorts or is likely to distort the conditions for effective competition in the market, or
• impedes or is likely to impede the occurrence or the development of such competition.
  

Central government (the state) as a legal person includes public-sector HEIs. Thus, the rules apply to public-sector HEIs as well as to other legal persons including research institutes if the state, a municipality or a region directly or indirectly has a decisive influence over this legal person⁴².

Conduct that may be prohibited includes the following examples⁴³:

• setting prices that are too low, that is, predatory pricing.
• discriminating, that is, treating different undertakings in different ways without acceptable reasons
• denying undertakings access to strategic utility, such as certain research infrastructures
• mixing the exercise of public authority with business activity.
  

The term ‘market’ in competition law – The supervisory authority in Sweden, the Swedish Competition Authority, examines and determines what the relevant market is in the individual cases that are submitted to the Authority for its assessment.

The Commission provides guidance on how to apply the term ‘relevant market’ in the enforcement of competition law⁴⁴. The relevant market, within which the Commission assesses the dynamics of competition, usually has both a product dimension and a geographic dimension.

• The relevant product market comprises all those products regarded as interchangeable or substitutable to the product(s) of the undertaking(s) involved, based on the products’ characteristics, their prices and their intended use, taking into consideration the conditions of competition and the structure of supply and demand on the market.
• The relevant geographic market comprises the geographic area in which the undertaking(s) involved supply or demand relevant products, in which the conditions of competition are sufficiently homogeneous for the effects of the conduct or concentration under investigation to be able to be assessed, and which can be distinguished from other geographic areas, in particular because conditions of competition are appreciably different in those areas.
  

The rules that a research infrastructure should apply in pricing vary between assignments. Each assignment needs to be assessed separately. In the practical work involved in pricing, it is suggested that the research infrastructures themselves should be responsible for grouping assignments into one of the following three categories:

Category 1: Applies to activities that entail a technical service or product, or contract research offered in a market.

Category 2: Activities and assignments financed by direct government funding or grants, such as publicly funded research projects or the direct government core funding.

Category 3: Anything that cannot unambiguously be included in Categories 1 or 2.

Proposed working method for pricing in each of the three categories:

A government agency, such as a public-sector HEI, may charge fees for products and services that it provides if compatible with an act, ordinance or a separate decision by the Government. The Ordinance on Fees for Research Infrastructure (2022:1378)⁵¹ gives public-sector HEIs a specific authorisation to charge fees for granting external users access to research infrastructure. When applying the Ordinance, the definition of research infrastructure adopted by the EU applies⁵².

This Ordinance, which entered into force on 1 October 2022, provides public-sector HEIs with better conditions for making research infrastructures accessible to other parties, and enables their wider use, which is expected to contribute additional benefits to society.

Prior to this Ordinance coming into force, fees for access to research infrastructure were charged under the general authorisation in Section 4 of the Fees Ordinance⁵³. To be able to charge fees for products and services under the general authorisation, they must be of small size or a temporary nature. The general authorisation also limits what fees may be charged for⁵⁴. The new Ordinance on Fees for Research Infrastructures gives HEIs a specific authorisation to charge fees for providing research infrastructure at a rate up to full cost recovery. The fee may include the total costs incurred in the provision of a research infrastructure, including staff, skills and peripheral equipment. However, this does not apply to such research data that must be made available free of charge under the Public Sector Data Accessibility Act⁵⁵. The specific authorisation does not entail any obligation to charge fees, but simply provides an option and entitlement to do so.

This separate ordinance takes precedence over the general authorisation in Section 4 of the Fees Ordinance (1992:191). When an HEI intends to make a research infrastructure available and the requirements are met, fees should thus be charged with reference to the new Ordinance.

The legal basis for charging fees under the Ordinance on Fees for Research Infrastructures – Being able to charge fees for research infrastructure is predicated on the following:

1. the research infrastructure is wholly or partly under the control of the HEI;
2. the HEI has established and documented criteria for access to the research infrastructure; and
3. the research infrastructure is supplied within the framework of the HEI’s tasks.

Putting this into practice – Because HEIs in Sweden have different structures and orders of delegation, how the Fees Ordinance is implemented may be somewhat different from HEI to HEI. However, in general:

• The HEI needs to establish whether Requirements 1 and 3 above are met.
• The HEI is responsible for establishing criteria for access to the research infrastructure – Requirement 2. The purpose of the criteria is to clarify for different categories of external user which research infrastructures are available, how external users can access them, and to ensure that the pricing is transparent.

Appropriate criteria to include and describe are:

1. Which research infrastructure is available to external users.
2. What is required to get access to the research infrastructure.
3. The amount of the fees or the principles for determining the amount of the fees for external use.
4. Principles for prioritising external use in the event of limited access.
5. How an external user should proceed to get access to research infrastructure.

The size of the fees and the right to utilise the fees income – the Ordinance on Fees for Research Infrastructures also includes specific authorisations concerning the size of the fees that may be charged and the right to utilise the fees income. HEIs may decide on the size of the fees up to full cost recovery. Where necessary in order to avoid distorting competition in the market, the amount of the fees should be market-based. In addition, the HEIs may utilise the fees income up to full cost recovery. Income from fees that exceeds full cost recovery must be reported under an income heading.