Brussels, 18/02/2004 (Agence Europe) - As we anticipated (see yesterday's EUROPE, p.11), on Wednesday the European Commission adopted a communication on the revision of the regulatory framework applicable to the compensation granted by Member States to companies providing services of general interest. The objective is to guarantee them greater legal security. However, although the Commission has stuck to its draft decision to drop the advance-notification obligation for businesses active mainly at local level and receiving a relatively small amount of funding, it has given up on the presentation of a proposed directive modifying the financial relations between the Member States and public service companies benefiting from "large scale" public funding. In this back-pedalling, the effect of the resolution adopted by the European Parliament (EP) on 14 January can be seen, which questions the risks of unilateral decision-making by the Commission (see EUROPE of 14 January p.11 and of 15 January, p.13). Taking the Parliament's wishes into account, therefore, the Commission has decided to launch consultations on a new framework with clear criteria and simplified procedures on the compensatory payments which will remain subject to the principle of prior notification. Philippe Herzog (GUE/NGL, France), EP rapporteur on this dossier, immediately welcomed this "interim victory". He also expressed his view that the text of the draft decision for the notification exemption for "small" businesses providing services of general interest is "a good one".
The first measure proposed on Wednesday, which centres on the small-scale public funding of businesses providing services of general interest, recommends exempting this funding from the prior notification obligation, as long as it does not exceed an annual ceiling of public funds, and its beneficiaries' sales do not exceed a given threshold. The funding of public services supplied by hospitals and council housing would also be exempt from notification, independent of the amounts involved. Furthermore, this exemption would also cover compensation for maritime transport to islands covered by sectorial regulations, as long as the annual traffic does not exceed 100,000 passengers. Given the similarity of the situation in the Member States, the Commission believes it must now consult them to determine the exact ceilings to be applied for the exemption from the obligation to notify.
Instead of the legislative proposal on the framework for large-scale funding which is subject to the obligation of prior notification, the Commission has decided to put a working document to consultation by its services, the substance of which goes along the lines of the case law relating to the "Altmark" ruling. In this document, it states the view that compensation for the provision of services of general interest is not State aid, and is therefore not subject to the prior notification obligation and the Commission's approval, if four conditions apply: -the beneficiary must be entrusted with a clearly-defined public service mission; -the compensation must not exceed the costs incurred in the discharge of the public service minus the revenues earned providing the service (compensation may, however, include a reasonable profit); -the beneficiary is chosen in a public tender, or compensation does not exceed the costs of a well-run undertaking that is adequately equipped with the means to provide the public service. The Commission underlines that compensation paid in the framework of public service provision is not a notifiable form of State aid if the beneficiary is selected as part of an open and transparent tender procedure. Nor does this compensation include State aid if the State can prove that the beneficiary of the public compensation does not receive more that the extra net cost after deduction of revenue that the provision of the service at an affordable price would be incurred by any well-run company with adequate staff levels.