Introduction
There are many cases where recipients of public subsidies perform non-economic activities and, therefore, those subsidies do not constitute state aid in the meaning of Article 107(1) TFEU. By contrast, there are only a handful of cases where activities that are normally economic in nature become non-economic because they are inextricably linked to a function reserved for the state or the exercise of state powers.
A typical example is the printing of money or passports. The printing itself is something that can be done by an undertaking. But the issuing of money or passports is a function reserved exclusively for the state. Therefore, when the state decides to print itself money or passports it does not become an undertaking.
A more complicated situation is when the state assigns to an entity that is not a public authority a task that falls within its state functions. The Commission, in decision 2025/1963, had to assess such a situation with respect to measure SA.39639 implemented by Italy in favour of consortium Cineca.1
In October 2014, the Commission received a complaint from BeSmart, a private IT services company in Italy, alleging that Cineca, a non-profit publicly owned consortium, benefitted from state aid for providing of IT services to the Ministry of Education, other public authorities and public and private universities. Cineca was also engaged in the provision of High Performing Computing [HPC] services. BeSmart also alleged that Cineca maintained no account separation between its various activities.
In May 2021, the Commission opened the formal investigation procedure which was concluded in November 2024. The Commission received comments from several interested parties including Cineca. Decision 2025/1963 which concluded the investigation was published in the Official Journal on 15 October 2025.
Cineca is a non-profit inter-university consortium established at the initiative of the Ministry of Education in 1967 to manage a computing centre. Its original mission was to build a supercomputer to be used for research purposes. Subsequently, Cineca expanded its range of activities and admitted various Italian public and private universities, and certain public research bodies.
Cineca’s services to the Ministry consist of the following: Management of the national archive of tenured teaching staff and researchers employed by Italian universities; management of calls for funding of research projects; management of certain data of students; human resource management functions (e.g. payroll) for university staff; websites of students and researchers; management of registration to access tests and pre-registration for university faculties or for open competitions for schoolteachers; management of the budget of universities and allocation of annual funds. For those services, Cineca received in the relevant period annual public financing in the range of EUR 10-20 million. The precise amount was decided each year.
Cineca’s IT services to universities consist of the following: An integrated university software system named U-GOV which applies to the management of the main functional areas of universities. The U-GOV suite is made-up of various software modules, such as course and student management (i.e. course administration, student enrolment, student administration, exam administration, etc.); human resource management; finance and accounting; document management (i.e. document archiving, digital management, etc.).
Cineca has been providing services to more than 80 public universities and more than 25 private universities. The corresponding income for Cineca from 2015 to 2018 was about EUR 173 million of which about EUR 159 million was from public universities and about EUR 14 million from private universities.
In addition Cineca operates the largest HPC centre in Italy and one of the major HPC centres in the EU. HPC services target primarily public organisations to advance in basic and applied research at both national and international level.
Economic activity?
The Commission paid particular attention to whether the services provided by Cineca were economic in nature. First, it examined the IT services provided to Italian universities. For this purpose, it recalled that “(230) Article 107(1) of the Treaty does not apply where the State acts by exercising public power or where the activity in question forms part of the essential functions of the State or is connected with those functions by its nature, its aim, and the rules to which it is subject. This notion is further described in the cited case law, including the existence of an “intrinsic link”, an “inextricable link”, a “close link”, an “inseparable link”, a “necessary link” or a “direct connection“ between the supported activity and a State function.”
The notion of “intrinsic link” concerns the “(232) legal obligations in support of a public task which applied to the State as well as to the beneficiaries of the State support; the commonality of the objectives (common purpose) pursued, and the finding that the service in question is essential to the State’s ability to carry out the State task (the “necessity”, “indispensability”, “inseparable nature” argument). The intrinsic link must exist with respect to the totality of the functionalities (or modules) offered in the service, or with respect to each functionality. Were some of the functionalities of the package, in isolation, not be linked to the exercise of a State task, it would be non-economic if without this functionality, the rest of the system would be largely useless, or would not be operational. Under these circumstances, the functionalities must be considered as being linked to each other and form different facets of the same activity. Once the links between the various functionalities are established, it can be examined whether the service with these functionalities is connected to the exercise of public power. The findings in the cases cited were not affected by the presence of competitors on the market and relied among other things, on the circumstance that the beneficiary was able to offer the most comprehensive range of products among competitors.”
“(233) The task, therefore, is to establish whether there is an intrinsic link between the provision of IT services to Italian universities and the State’s task in the tertiary education field. Pursuant to the cited case law, Cineca’s provision of IT services to Italian universities would not be of an economic nature if it were found to be intrinsically linked to an essential function of the Italian State in the field of public tertiary education.”
“(242) The Commission first examines whether it is justified to examine the intrinsic link with respect to the totality of the functionalities (or modules) offered in the service (see recital 232). In other words, the question is whether it is possible to conclude that the functionalities are linked to each other and form different facets of the same activity, in a way that the system, as a whole, would not be operational without each individual functionality. The Commission finds that out of the eight functionalities listed in recital (181)*, the following five functionalities have a clear and unique link to university education: 1) Management of the enrolment process and the issuing of qualifications; 2) Management of the design of training offers connected to accreditation; 3) Management of postgraduate activities (activation of research doctorate courses and specialised courses; 4) Management of admission process for academic staff; 5) Collection of scientific output of academic staff. The functionalities of 1) Accounting management of the administration and research projects, 2) Legal and economic management of careers of academic and administrative staff (payment of wages; contributions, etc), and 3) Document management and registration of administrative acts to ensure compliance with regulatory provisions are functionalities with a more general role. However, some have specific education specific features such as the management of academic staff and the accounting management of research projects. Finally, even if the functionality of document management may have limited education specific features, the function “document management” is one without which the system could not function, and hence the universities could not fulfil their legal tasks of providing tertiary education.”
*[a) Management of the enrolment process, student careers, and the issuing of qualifications; b) Management of the design of training offers connected to accreditation; c) Management of post-graduate activities (activation of research doctorate courses and specialised courses); d) Management of admission process for academic staff; e) Accounting management of the administration and research projects; f) Legal and economic management of careers of academic and administrative staff (payment of wages; contributions, etc.); g) Collection of scientific output of academic staff; h) Document management and registration of administrative acts to ensure compliance with regulatory provisions.]
Next, the Commission verified, in paragraphs 244-257 of the decision, the existence of a legal obligation of the Italian state to support university education. This obligation emanates from the Italian constitution. The state has been discharging its constitutional responsibility through public universities which are mandated to carry out the state’s educational policy. The provision of IT services by Cineca to universities is a component of educational policy. These services are “intrinsically linked” to the constitutional obligation of the state.
In this connection, the Commission examined the purpose of the IT services provided by Cineca and found a “commonality of purpose” with the state function. It concluded that the nature of the IT services was “essential/inseparable” for/from the state’s ability to carry out its educational task through public universities.
The Commission also responded to an argument of the complainant that the IT services were economic in nature because they could be carried out by a private undertaking with a view towards making a profit. According to the Commission, the case law indicated that “(271) it is irrelevant whether the service could be provided by a private undertaking.” [Here the Commission cites case C-262/18 P, Dovera, on the Slovak health insurance system]. It added “that in the present case, no comparable product range for university administration software was offered by any private undertaking”.
“(276) The Commission would like to point out that the most relevant precedents, (notably the TenderNed case and the HIS case) clearly prove that the existence of competitors does not turn an activity automatically into an economic activity. This question must be decided in the context in which the activity takes place. The HIS case representing an identical situation to the one in the present case, found that an activity can qualify as non-economic if it makes the achievement of the public task objective of the State more efficient. As Italy points out, there are competitors to Cineca in the market of IT services to universities, but none of these competitors has the same level of completeness and integration for managing the essential institutional functions of the universities.”
The complainant also argued that Cineca was continually expanding the range of its services to non-university clients. In response, the Commission stated that “(281) no legal rule prevents an entity from simultaneously performing an economic and a non-economic activity. As cross-subsidisation of economic activities however may occur in situations where an entity is engaged both in an economic, as well as a non-economic activity, that entity is obliged to separate the financing, costs, and revenues of the economic activity from those of the non-economic activity (account separation). The … conclusion that Cineca’s source code is Cineca’s property and has an economic value is not irreconcilable with the notion that the related activity is inseparable from carrying out a State task.”
The Commission concluded that “(291) the provision of IT services to Italian State universities do not constitute an economic activity, as the activity in question forms part of the essential functions of the State or is connected with those functions ‘by its nature, its aim and the rules to which it is subject’”.
The Commission also added that “(292) the profit seeking character of the non-State Italian universities makes it likely that the educational activity carried out by those private organisations is an economic activity and not a public task. As explained in the NOA, “public education services must be distinguished from services financed predominantly by parents or pupils or commercial revenues. For example, higher education financed entirely by students clearly fall within the latter category. In certain Member States public entities can also offer educational services which, due to their nature, financing structure and the existence of competing private organisations, are to be regarded as economic”. Therefore, the activity of providing IT services to these universities is not intrinsically linked to the provision of the State’s task in the field of tertiary education.”
Therefore, the Commission had to examine whether the other criteria of Article 107(1) TFEU were satisfied with respect to services provided to private universities. For this purpose, it considered whether the actions of Cineca could be imputed to a decision of the Italian state.
Imputation
The Commission was unsure whether the decision of Cineca to provide services to public universities could be imputed to the state. However, with respect to private universities, it found that “(302) services financed predominantly by parents or pupils, or commercial revenues do not act in accordance with a public mandate. However, public authorities designate some members of the governing bodies of the private universities. On the other hand, these members do not constitute a majority of the governing bodies of these universities and have no veto power in decision making. In addition, there is no specific information available to the Commission on the basis of which imputability with respect to individual transactions could be examined.” “(303) On this basis, the Commission considers that private universities’ purchase of IT services from Cineca are not imputable to the Italian State.”
No advantage
The complainant argued that Cineca provided IT services at prices above market rates. Even though the information available to the Commission showed that the overall revenue of Cineca was below market level for several years in the relevant period, the Commission rejected this part of the complaint for the following reason.
“(328) An actionable allegation of economic advantage in the form of paying prices above market level must necessarily be transaction specific. In this context, the allegation would need to refer to a specific purchase by a specific university of a specific product or a range of products from Cineca which in turn, would need to be compared to a “market price” for the same product(s), in the same volume and at the same time.”
Conclusion
As the Commission rejected all the remaining arguments of the complainant, its overall conclusion was that Cineca did not receive state aid, partly because its activities were not economic in nature, as they were inherently linked to a state function, partly because its services to private universities could not be imputed to the state and partly because it obtained no abnormal advantage.
(1) The full text of the Commission decision can be accessed at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202501963
