Brussels, 23/03/2011 (Agence Europe) - On Wednesday 23 March, the European Commission published a communication on the revision of European Union state aid rules on services of general economic interest (SGEI) with the aim of improving legal security and simplifying existing rules and their application using a more diversified and proportionate approach to the various forms of public service. The communication is based on a detailed report on application of the current rules industry-by-industry and is intended to open a debate with interested parties ahead of publication of new draft legislation in July for new rules that will come into force in November (when the current rules run out).
Services of general economic interest covered by the state aid rules vary widely, ranging from transport, postal services, energy, water, sewage to waste management. The state had a public service obligation across the country for such services, including remote areas and areas where such services are not profitable. To compensate for the higher costs of the public duty obligation for public and private suppliers, countries often grant subsidies in line with criteria laid down by the Commission in 2005 (following the 2003 Altmark ruling at the European Court of Justice that recognised the legitimacy of such public subsidies, which are not the same as state aid (state aid is often illegal under competition law), see EUROPE 8511).
The full post-Altmark package (the Monti-Kroes package) lays down criteria to be met by subsidies that do not have to be notified to the Commission and explains which subsidies need to be notified and how they are examined, and how to register complaints (for competitors feeling that the subsidies have put them at a disadvantage).
In the reform of the existing rules, the Commission plans to make good a number of shortcomings where the rules do not cover the scale of the costs encountered by suppliers of SGEI over and above those of a well-managed company, which tends to hinder the proper functioning of the markets and can cause lower quality services and waste public spending. The Commission wants to explain the difference between services of economic and non-economic interest, and the differences between services of general economic interest (SGEI) and services of general interest (SGI) and the restrictions on SGEI imposed on the member states. The Commission aims to simplify the rules for small-scale social services or services provided at local level, which have little impact on trade, and grant greater importance to efficiency and competition for large-scale services.
The Commission's announcement has generated a wealth of reaction, including from the European Parliament's public services intergroup chaired by Françoise Castex, (S&D, France), who said she was pleased that the Commission wants to carry out this reform, which the intergroup has been calling for. She explained that funding is essential to ensure the very existence of local public services and although the Commission includes in its report some of the reforms suggested by the intergroup, they need to be included in the draft legislation to be unveiled in November. This satisfaction was echoed by the deputy-chair of the intergroup, Sophie Auconie (EPP, France), who said that the current state aid rules did not take enough account of the diversity and special nature of services for which public funding is granted. She added that EU rules should ensure transparency and balance in the granting of public funding but must not be so rigid and complex as to restrict vital services for fellow citizens. In this connection, Auconie called for people to have an open mind about type of funding and demand high quality and accessibility for public services. Speaking on behalf of the Greens, Pascal Canfin (France) said the European Commission has pledged to take a pragmatic, efficient approach to reform of the Monti-Kroes rules from the starting point of the problems encountered by various players on the ground (SGEI providers and local authorities) in order to come up with the right solutions for them.
Laurent Wauquiez, French European Affairs Minister, also reacted to the report, stressing the key role of public services which were, he said, at the heart of the European economic and social model, and the need to ensure quality. When it comes to funding such services, he said the Commission's rules should focus on cases where there is a genuine danger of damaging competition at EU level and rules should be simplified for social services at local level and small local authorities. (F.G./transl.fl)