Brussels, 06/06/2002 (Agence Europe) - In coming weeks, the European Commission will be adopting its "method" for assessing services of general interest. The communication, requested by the Barcelona Summit in the context of debates on liberalising network industries, will be presented to the Seville Summit.
The document from the services under Commissioners Bolkestein and Solbes specifies three issues which are to be assessed: 1) the impact that liberalisation would have on real competition; 2) the impact of these changes on market performance; and 3) the way that users perceive such changes. The analysis will first of all concern electricity, gas, air transport, rail, postal services and telecommunications, but "coverage may be extended or possibly reduced", states the document, citing the example of "local public transport and radiobroadcasting". A first annual report should be forwarded to the Council and Parliament in autumn 2003 and the relevance of the assessment method would be reviewed in 2006.
We recall that the conclusions of the Barcelona Summit stressed that "the integration of the European networks and the opening of public service markets should be done giving full importance to the quality of such services". They mainly insisted on ensuring access to services of general interest "both for citizens and for territorial and social cohesion purposes". Immediately after this, the Heads of State called on the Commission to present: 1) a methodology for assessment of services of general interest; 2) guidelines on State aid to services of general interest and, "where necessary", an exemption rule; and 3) a framework directive specifying the principles relating to services of general economic interest, under Article 16 of the Amsterdam Treaty (indicating that the Community and the Member States must ensure "services of general economic interest" work correctly in respect of competition rules).
This week, the Commission adopted a report to the attention of the Seville Summit, on the state of preparation of the guidelines for the State aid relating to services of general interest, called for with great insistence by France and Germany. The report explains in substance that it is urgent to wait as "case law evolves". The Commission does not wish to give its opinion before the Court of Justice has given its rulings on the Altmark Trans (local transport) and Gemo (slaughter waste elimination) cases, which should specify the case law on legal qualification of compensation paid by the States for the rendering of public services. If it follows its advocate general, the Court may overthrow the last ruling on the question (Ferring affair), whereby compensation for services of general interest are not considered State aid.
The draft communication on methodology shows a determination to reach political balance between the expectations of Portugal, France and Belgium in particular, especially on the impact that services of general interest would have on social and territorial cohesion, and the expectations of Germany in particular on economic competitiveness. Its aim is to "give a rigorous and regular assessment of performance that can serve as a guide for political decisions, mainly in the context of future liberalisation, and which make it possible to determine whether the results of the market are compatible with the social and economic aims of the EU".
Information will come from surveys carried out by experts among consumers (a call for offers is to be launched at the end of the year) and existing data. "No new mechanism or report will be imposed on Member States", say the authors of the document. New indicators should, however, be developed for qualitative analyses, they recognise. In addition, the method should be flexible for keeping up with the evolution of services of general interest and cover not only economic aspects but also environmental and social aspects. In response to the concerns of Member States that do not necessarily wish for the Commission to interfere in their internal affairs, the draft Communication specifies that the method will be founded on the principle of subsidiarity and will focus on the impact that services of general interest will have on the working of the internal market. The Parliament and fora such as the Committee of the Regions or the Economic and Social Committee should be involved in the assessment, the draft communication specifies. Assessment criteria would be:
Competitive framework: 1) supply: percentage of demand legally opened to competition, date of full legal liberalisation, identification of the incumbent, number of competitors in the segment, percentage of the population having a choice between more than x suppliers in the segment, market share of the incumbent in the segment, concentration ratios, and internalisation of companies; 2) legislative
structure and framework: degree of vertical integration of the incumbent and other competitors, identity and powers of regulators and regulatory restrictions; 3) market access: access charges to the network for domestic and for foreign competitors, structure and transparency of the tarification mechanism, time and cost to obtain access to the network, percentage of the supply carried out by third Party Access, imports as a percentage of domestic capacity, publicity of the available spare capacity, and percentage of capacity booked by the incumbent; 4) demand: growth of the sector in terms of quantities, percentage of consumers having switched suppliers at least once on the liberalised segment in the last three years, and price elasticity of demand.
Market performance: 1) economic and employment performance: contribution of the sector to domestic GDP, contribution of the segment to employment, evolution of employment in the incumbent, evolution of employment in the sector, productivity of the sector as measured by output per person employed, productivity of the incumbent as measured by output per person employed, R&D effort, and environmental dimensions of the market outcomes of services of general interest; 2) Price: evolution of prices in domestic currency in real and in nominal terms, relative price level in euro compared to the EU average, and affordability (ration between prices and average salaries); 3) quality of services: reliability (duration of interruption, percentage of population affected by delays and interruptions, duration of repairs), access (time of access, number of post offices, seats in trains or planes per inhabitant, geographical access), security (number of accidents per distance and/or capital); 4) universal service obligations: network density and evolution (new or abandoned air transport routes), percentage of population not having access to the service.
Consumers' perception of services offered: There is overall satisfaction with regard to services and also price and quality, but contractual or information problems between consumers and service providers, indicators of conflict resolution, and reported difficulties to switch service providers.
The above criteria should on the whole meet the expectations of Member States mainly among those insisting that the social dimension should be taken into account. Some, however, might regret that the analysis only covers services of general interest under privatisation and not sectors such as water, or private services that have general interest such as crossborder banking services, says one observer.