Services Of General Economic Interest Research Articles

A Fair Price for Energy? Ownership versus Market Opening in the EU15

In the past two decades privatisation and liberalisation of network industries providing services of general economic interest (SGEI), have been particularly significant in the European Union. Wide variations around a common policy trend can, however, be observed across countries and sectors. We focus on electricity and gas sectors because energy sectors have usually been profit makers, not affected by direct government transfers, in contrast to other SGEI. We study the effects of privatisation and other reforms on consumer prices using both subjective data on consumers’ perception of utility prices and data on average prices paid.

The Notion of Services of General Economic Interest Revisited

The paper examines the concept of services of general economic interest in the light of delimitation of vertical competences and responsibilities between the Community institutions and the Member States. The concept of services of general economic interest is also analysed in terms of the related concepts of universal service, public service obligations, (public) undertaking and economic activity. Furthermore, limitations on the provision of services of general economic interest arising from the EC Treaty rules and exemptions from these general rules provided for in Article 86(2) are reviewed.

The Legality of the 'Golden Share' under EC Law

Privatisation is still an ongoing process for most of the Member States of the European Union. The beginning of the privatization initiatives started from the United Kingdom during the Margaret Thatcher’s time. Liberalization process was seen as a way to achieve a high level of competitiveness of the market. Thirty years later the privatization is still an issue of high importance. The transfer of the state assets to the private sector needs to be ensured and secured through the retention of a certain state control especially over the formerly state owned enterprises which provide services of general economic interest. According to the EC Treaty when the European Internal Market is concerned the fundamental principle of free movement of capital should be respected. Among the possible restrictions of this principle is considered to be the use of the so called golden share, special right that is used by the government in order to keep a certain level of control in the management of the privatized companies. During the last ten years it is very much arguable to what extend could be proved that the use of the golden share” device is legal and in line with the EC Treaty, the provisions of the secondary EC legislation and the existing ECJ case law . The aim of this article is to give a brief overview of what the reasons for the application of the golden share as a legal tool are, to define what their legal nature is, to identify how and when this legal mechanism could be used and accepted as permissible and when it is considered to be a restriction on the free movement of capital principle. The article is also analyzing the decisive approach and the proportionality test used by the ECJ.

Risk Equalisation in Health Insurance and the New Standard for Public Service Compensation in the Context of State Aid and Services of General Economic Interest Under EU Law

In its BUPA Case of February 2008 the Court of First Instance set a new standard for assessing whether public service compensation constitutes a state aid and/or is covered by the exception for services of general economic interest. At issue was risk equalisation between providers of private health insurance in Ireland. The alternative standard adopted in BUPA is less rigid than that in Altmark and therefore in principle to be welcomed also because it seems more suited to services provided in competition and therefore to new ways of providing public services. This means it contains elements of a new approach toward national attempts at reshaping the welfare state in EU law terms. However too much discretion was given to the national authorities and the Court of First Instance did not sufficiently address the conditions of competition in the relevant Irish markets in this case, making it on these counts a false start.

Providing Legal Clarity and Securing Policy Space for Public Services through a Legal Framework for Services of General Economic Interest: Squaring the Circle?

The body of European law which affects public services (services of general economic interest) is constantly growing, and thereby increasingly reducing the political autonomy of Member States and their regional and local subunits to finance and organize public services. This causes uncertainty among public authorities and service providers alike. A legal framework for services of general economic interest could reconcile EC law with public services and provide for greater legal clarity. However, such a framework raises a number of fundamental legal questions concerning its legal basis and its relationship with other sources of EC law. This contribution argues that a legal framework for services of general economic interest could clarify key terms of EC law affecting public services, and could be based on the current EC Treaty. A legal framework could not however, alter the overall framework of primary law with its emphasis on competition in a free market.

Services of General Economic Interest: The Post–Altmark Scenario

More than four years after the Altmark judgment, a number of questions concerning the treatment of services of general economic interest within the European Union still remain without an answer. In this article, the author discusses the developments since the Altmark decision.

Public Financing of Urban Transport: The Application of EC State Aid Rules

This article provides an overview of the relevant legislation concerning the granting of State aid to transport and considers how Articles 87 and 73 of the EC Treaty apply. It outlines in detail the main provisions of Regulations Nos 1191/69 and 1107/70 which lay down the main rules on State aid for urban transport and analyses how they have been interpreted and applied in the Commission’s decisions and Courts’ jurisprudence. Consideration is given to the concept of services of general economic interest and how public service obligations may be compensated by the State. The link between transport services and infrastructure and how the acquisition or replacement of rolling stock is treated under various State aid rules is also examined, as well as the relationship between structural funds and State aid and the concept of “internal operator”, which plays a predominant role in the context of RegulationNo. 1370/2007. The article outlines the main provisions of the new regulation and concludes by introducing the steps to be followed by Member States that wish to provide public support via the discharge of public service obligations to transport operators.

Daseinsvorsorge im Wandel der Staatsformen

The article deals with the concept of “Daseinsvorsorge“ (“public provision for existence“) as the expression of a public task, and it asks whether this term is still necessary and useful. The original idea (Forsthoff 1938) is: Individuals in the modern society are dependent on services which they cannot achieve by own means so that governments are called upon to perform such tasks. Today, among other things, the concept of such public services serves as a source of political strategies and of legal arguments which both aim at protecting public undertakings against requirements of European Community Law. The European Commission has accepted “Daseinsvorsorge” as a translation of “services of general economic interest” (cf. Treaty Establishing the EC, art. 16 and 86). The responsibility of the state and municipalities (at least subsidiarily, as a legal guarantee) constitutes an important element of the theory of the social state and also a constitutional principle derived from art. 20 sect. 1 of the German Basic Law, but was expressed in essence already by Lorenz von Stein in the middle of the 19^th century.

Sharing costs between a Service of General Economic Interest and Competitive Activities: The Example of the Postal Retail Network

The European Commission has produced precise rules governing the computation of the cost of services of general economic interest (SGEI). The Commission has adopted a fully distributed cost approach where the SGEI can bear a "reasonable" share of the common cost. We highlight a possible inconsistency issue between this state aid case law and the antitrust case law based on an incremental cost approach. We also show the difficulty introduced by the identification of the common costs, relying on the example of the network of a postal operator providing commercial services and fulfilling an accessibility obligation.

La prise en considération de critères « extraconcurrentiels » dans le droit communautaire de la concurrence

Cet article explore les relations entre la politique de concurrence et les autres politiques communautaires. Il examine la manière dont le droit communautaire primaire (les traités) et secondaire (le règlement concentration) résout les conflits susceptibles de survenir entre les objectifs de la politique de concurrence et les autres politiques. La thèse principale de ce travail d’exégèse est que les règles communautaires n’excluent pas le rôle actif de considérations extraconcurrentielles dans l’application et la concrétisation de la politique de concurrence, mais que ce rôle est néanmoins limité. Manifestation du libéralisme économique modéré de la « Constitution économique européenne », la libre concurrence est en droit communautaire le principe et la prise en compte de critères extraconcurrentiels l’exception.

Services of General Economic Interest (SGEI) and Universal Service Obligations (USO) as an EU Law Framework for Curative Health Care

Services of general economic interest (SGEI) are a legal category in the EC Treaty that is designed to enable proportionate restrictions on the Treaty's market freedoms (including competition) in so far as necessary to attain legitimate public policy objectives defined (in the first instance) at national level. In principle this concerns those cases where market failures cannot be effectively remedied with market-based solutions. This paper aims to set out the history of the SGEI concept and its legal basis in order to examine the question whether it might provide a useful regime for those hospital services that cannot at present be subjected to full market-based provision - while solidarity based state provision is not an option, or is no longer desirable. The answer to this question is that there is indeed scope for applying SGEI. Especially since the Altmark Trans judgment of the European Court of Justice national governments may be expected to become increasingly proactive in designating SGEI in order to obtain state aid immunity. Universal service obligations (USO) that guarantee universal access are one of the most important examples of the way SGEI are operationalised, for which this paper proposes a structured test. Finally, as regards the proportionality test applied to SGEI this paper suggests that in the absence of Community level standards for SGEI this means testing whether intervention is manifestly disproportionate, whereas in cases where pre-emption by Community legislation has taken place, the least restrictive means test applies.

'State' and 'Market' in the Competition and Free Movement Case Law of the EU Courts

The Treaty rules on free movement and competition are predicated on a distinction between state measures and measures of private undertakings that can be problematic in practice, as this distinction is often not clear cut. The first part of this paper examines the manner in which the European Courts of Justice attribute measures either to the public or the private sphere in their free movement and competition case law. The second part looks at those areas of EU law that deal with the interface of the public and the private sphere such as effet utile, public undertakings, special and exclusive rights and services of general economic interest, as well as state aids, public authority and public interest exceptions. The examination of the case law of the Court starts out from two competing theoretical frameworks, i.e. the Ordoliberal school of law and economics, and the service public approach to public services. It is found not to be determined or explained by either of these. Instead, the variables of proportionality and preemption, and Community law doctrines such as functionalism, teleology and subsidiarity play an overriding role. The November Revolution of 1993 (broadly, before and after the Keck judgment and similar case law in other areas) is found to have given rise to a complex realignment of rules, where horizontal broadening of the scope of EU law is often accompanied by a vertical withdrawal deferring to the Member States.

Competing for the Island Lifeline: European Law, State Aid and Regional Public Services

Bennett P. (2006) Competing for the island lifeline: European law, state aid and regional public services, Regional Studies 40, 953–966. Ensuring the freedom to provide services in Europe often means that state subsidies for loss-making, but essential, services are subject to competitive tendering. For the past three decades ‘lifeline’ ferry services to the islands of Western Scotland have been operated by the state-owned company Caledonian MacBrayne. State-owned companies are not exempt from European Union state aid and procurement rules, however, and the Scottish Executive is about to issue an invitation to tender for these services. This paper examines the aims of European Union rules on state aid, procurement and ‘services of general economic interest’, and their application to ferry services in the spatial periphery of Europe. The advantages and disadvantages of competitive tendering are then considered, focusing on the consequences for efficiency, labour, quality and investment, and the likelihood o...

Public–private efficiency in the delivery of services of general economic interest: The case of urban transport

This paper studies urban transport, a public service with extensive initiatives towards deregulation and privatisation throughout the European Union and in other developed and developing countries. The relative merits of deregulation, public or private provision and the implications of different policies for the performance of public services have become important issues. A crucial question is what type of operating and regulatory environment is best suited to stimulate efficiency in public service delivery. This paper analyses specifically the effect of privatisation and deregulation on the technical efficiency of bus services in 73 cities, in order to compare performance in cities with bus services provided by public operators, private operators, both types simultaneously or in which the service is deregulated. The behaviour of the different types of operators analysed in this paper shows that competition – total or partial – is effective in controlling costs.

Towards a European Legal Order for Services of General Economic Interest

Towards a European Legal Order for Services of General Economic Interest

Services of General Economic Interest in the State Aids Regime: Proceduralisation of Political Choices?

This article is an attempt at the systemization of the recent developments in the Community State Aid policy with regard to services of general economic interest. The analysis of the relationship between article 87 and 86(2) of the Treaty is illustrated by the case law of the European Court of Justice. Particular attention is paid to the practical impact of the Altmark judgment and its theoretical implications. Critical evaluation of the conditions for financing of service of general economic interest is taken up in detail. The conclusion offers a view of the present and prospective Community impact on the development of services of general economic interest, demonstrating that its consequences are further reaching than previously considered.

Zur Konvergenz der nationalen Raumordnungspolitiken Frankreichs und Deutschlands im Post-EUREK-Prozess

The concepts of the French aménagement du territoire and of German spatial planning have approached each other in the post-EUREK-process that began after 1999. After the withdrawal of the EU-Commission from the EUREK-process that was organised intergovernmentally until then the evolved organisational and procedural structures of CEMAT and the structures that were newly created by the Commission are existing side by side. The pursuit of European spatial planning interests by the member states is strengthened by the principle of subsidiarity that is included in the European treaties. With the re-organisation of the objective- and competence system of the EU, particularly through the introduction of the aspect of “territorial cohesion” that is associated with article 16 EGV (services of general economic interest), the debate on the European Constitutional Treaty raises different questions regarding the future organisation of a European spatial development policy. At any rate the existing insecurity concerning the competence of the EU in spatial planning is not removed by the constitutional treaty. Political interests that go in the same direction can be followed more effectively within the states and on the European level through the approach of spatial planning policy.

A New Social Contract Law for Public Services? – Consequences from Regulation of Services of General Economic Interest in the EC

The legal framework for services of general interest has changed. Energy, water, telecommunications services, postal services, and railways services, are increasingly provided by private providers that operate on a more or less liberalised market. In contrast, the introduction of consumer rights in this field has only begun. At the same time, a new social contract law is emerging at EC level that guarantees access for everyone to services of general interest of high quality at affordable prices. The article analyses the contract law implications of the plans of the EC Commission for general principles and conditions for the provision of services of general interest and discusses recent sectoral EC legislation. It also explores to what extent EC law confers individual rights on consumers. Le cadre légal des services d’intérêt général a changé. l’énergie, l’eau, les télécommunications, les services postaux et les transports ferroviaires sont de plus fournis par des opérateurs privés qui interviennent dans un marché plus ou moins libéralisé. En contraste, l’introduction de droits des consommateurs dans ce champ commence tout juste. Dans le même temps, un nouveau droit des contrats social émerge au niveau de l’Union européenne qui garantit l’accès de chacun à des services d’intérêt général de qualite et abordables. L’article analyse les implications sur le droit des contrats des plans de la commission européene relatifs aux principes généraux et conditions de fourniture des services d’intérêt général et discute la récente législation sectorielle européenne. Il examine également dans quelle mesure le droit européen des contrats confère des droits individuels aux consommateurs. Die rechtlichen Rahmenbedingungen für Dienstleistungen von allgemeinem Interesse haben sich geändert. Energie, Wasser, Telekommunikationsdienstleistungen sowie die Dienstleistungen von Post und Eisenbahn werden zunehmend von privaten Dienstleistern erbracht, die auf einem mehr oder weniger liberalisierten Markt operieren. Die Einführung von Verbraucherrechten in diesen Bereichen hat dagegen erst begonnen. Gleichzeitig entsteht in der EG ein neues sozialen Vertragsrecht, das jedem Zugang zu Dienstleistungen von allgemeinem Interesse von hoher Qualität zu erschwinglichen Preisen garantiert. Der Aufsatz analysiert die vertragsrechtlichen Implikationen der Pläne der Kommission der EG für allgemeine Prinzipien und Bedingungen für die Erbringung von Dienstleistungen von allgemeinem Interesse und erörtert jüngere sektorale Rechtsakte der EG in diesem Bereichen. Darüber hinaus untersucht er, inwieweit dem Verbraucher subjektive Rechte zuerkannt werden.

Financing Services of General Economic Interest

Services of general economic interest' play an important role in the lives of the citizens of Europe. Increasingly such services have come under attack from the use of the competition and internal market law provisions of the EC Treaty, revealing that the European Union lacks a clear strategy to promote the role of such services in the new economy. Article 86(2) EC is one provision which allows for the mediation between traditional State duties towards citizens and the demands of competitive markets. Additionally, Article 16 EC recognises that such services have a role to play in the future constitutional shape of Europe and this is enhanced by the recognition of access to services of general economic interest as one of the fundamental rights of the EU in Article 36 of the Charter of Fundamental Rights of the Union.2 While of constitutional importance, neither provision provides a legal base to develop the role of public services in Europe. The White Paper on services of general interest claims that such services also the subject of intense debate within the Convention on the future of Europe3 but the issue of competence in the area of services of general economic interest was not seen as a priority by the Convention on the Future of Europe. The Working Group on Social Europe could not agree on whether Article 16 EC should be amended to provide a legal base for EU level legislation on services of general economic interest4 and the resulting amendment to Article 16 in the draft Treaty establishing a Constitution for Europe, Article 111-6, emphasised that services of general interest were subject to European law but did not provide the legal means for the enactment of such laws, opening up the possibility that the EU could be in breach of its fundamental duty to respect the role of such services in competitive markets in Europe. The EC Commission has used a soft law discourse to promote a more clearly defined working relationship between the aims of services of general economic interest and the operation of the internal market in order to secure a clearer under-

Services of General Economic Interest, State Aid, and Public Procurement

Services of general economic interest (SGEI) are of great importance in all the Member States of the European Union. Their significance has been established in Articles 16 and 86 of the EC Treaty. The Altmark judgement of the European Court of Justice (ECJ) of July 2003 marked a new stage in the issue of compensation for SGEI. The ECJ held that compensation does not constitute State aid if the following conditions are met: the recipient undertaking must actually have public service obligations to discharge and the obligations must be clearly defined; the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner; the compensation does not exceed what is necessary to cover the costs incurred in the discharge of public service obligations; where the undertaking which is to discharge public service obligations is not chosen pursuant to a public procurement procedure, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations. These four conditions leave much room for interpretation by the Member States. With regard to the last condition it seems that the ECJ promotes the use of a public procurement procedure when discharging an undertaking with SGEI. It nevertheless leaves the option to use a calculation of the costs which a typical undertaking would have incurred in discharging the public service obligations. The problem here is that the ECJ does not explain what kind of undertaking should be regarded as a “typical one” and which parameters should be used in the analysis of the costs. Making use of a public procurement procedure will give the Member States more certainty that the compensation they have granted will not be regarded as State aid. By promoting the use of public procurement procedures when discharging an undertaking with the provision of SGEI, the ECJ limits the freedom of the Member States to organise their SGEI. On the other hand, the Altmark judgement gives more freedom to the Member States to define their SGEI. In the Enirisorse case and the Danske Busvognmaend case the Altmark conditions were applied.