Brussels, 24/07/2003 (Agence Europe) - On Wednesday, the EU Court of Justice gave a ruling that has been eagerly awaited in the Altmark Trans affair concerning public service financing. It considers that financial intervention in favour of public services is not State aid under Community law. The Court does not therefore accept the arguments of Advocate General Philippe Léger who, on two occasions, had issued conclusions stating that such financing was indeed State aid and that the projects should therefore be notified before being implemented. We recall that, at the end of 2001, the public bus transport service, Altmark from Magdeburg in Germany, and NVGA, a competitive company that challenged the public subsidies granted to Altmark according to the arguments that this was State aid, presented their arguments to the Court during a first hearing. Given the importance of the problem, the Court had decided on 14 January to resort to exceptional procedure and to organise a second hearing to call on all Member States as well as the Council and European Commission to give their points of view.
In its ruling, the Court recalls that, for a state intervention to be classified as State aid in the sense of the EC Treaty, it must be considered as an advantage granted to the beneficiary company, an advantage that the latter would not have acquired under normal market conditions. In the present case, it considers there is no advantage in the sense that State intervention is compensation for costs incurred by the beneficiary companies under public service obligations. Nonetheless, compensation must meet four criteria in order to avoid being considered State aid: 1) the recipient undertaking must actually have public service obligations to discharge and those obligations must be clearly defined; 2) the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner; 3) the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit; 4) where the undertaking is not chosen in a public procurement procedure, the level of compensation must be determined by a comparison with an analysis of the costs which a typical transport undertaking would incur (taking into account the receipts and a reasonable profit from discharging the obligations). Only if these four conditions are met, the Court concludes that an undertaking has not enjoyed a real financial "advantage" which would have the effect of putting it in a more favourable competitive position than the undertaking competing with it, so that it is not therefore State aid within the meaning of the EC Treaty.
The ruling in question thus clarifies the Court of Justice doctrine regarding services of general interest and will allow the Commission to work on the bases of its guidelines in this connection. During a debate before the EP, competition Commissioner Mario Monti pointed out that he would take inspiration from the conclusions of the Court's ruling before drafting a framework regulation proposal in autumn 2003.
The Commission considers that the Court's ruling is a major precedent. Tilman Lueder, Mr Monti's spokesperson, considers that the Court of Justice has given a precise framework in this connection and that things are clearer as regards State aid. He added that this will make it possible to establish a good framework for avoiding competition distortion as far as compensation is concerned, and that they are confident the Member states will assume their responsibilities as they should.
The CEEP (European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest) considers the ruling is satisfactory and confirms the Ferring ruling of November 2002 (Ed.: which already concluded that compensation for a public service mission is not State aid). The ruling is "important because it notes that compensation for a public service operation is not State aid if it fulfils the four criteria defined by the Court, criteria that we find appropriate", Inge Reichert, CEEP Director, explains. It is the opinion of CEEP that the fourth criterion is particularly important as it recognises that selection of enterprises for public service missions may be done outside European public procurement procedure. "It is important for the small municipalities, which would otherwise be faced with unwieldy procedures", it states. One of the consequences of the ruling is that, once the four criteria are met, the municipalities should not necessarily have to notify each intervention, as the Commission seems to be advocating. The CEEP also hopes that the ruling will also influence the position of the Commission's competition services, which recommend a tough line in the context of reflection launched by the Commission's Green Paper on services of general interest.