Chapter 11

The empire strikes back: Corporate
responses to remunicipalisation
By Olivier Petitjean

Over the last years, there has been a significant trend towards the remunicipalisation of public services in many sectors, which challenges thedominant narrative of a seemingly irresistible tide of privatisation sincethe 1980s and 1990s. Remunicipalisation involves taking back a public
service from a private entity. In some cases, this private operator is asmall, local company. In many cases, though, cities are dealing with large,
powerful transnational corporations, such as Suez and Veolia in the water
and waste sectors. In most cases, then, remunicipalisation takes place inthe context of a blatant imbalance of power in knowledge and resources
between a local public authority and a global corporation. It is all themore significant that we have witnessed so many remunicipalisations inspite of such unfavourable conditions.
Corporate representatives tend to deny that they have the upper hand andportray themselves as subjected to the rules and conditions imposed bypoliticians and public officials. Formally, from a purely legal perspective,
the relationships between public authorities and corporations are on an
equal footing: in theory, cities can freely negotiate the terms of theircontractual arrangements with private operators, and they are equally
free to end these contractual arrangements if they prove unsatisfactory.
Reality is often very remote from this ‘theoretical’ model. Corporations
have far more resources than local authorities, and far more allies; there
are many ways in which they can make their interests prevail and limit
the political options of elected political representatives.

165

The empire strikes back: Corporate responses to remunicipalisation

FRANCE OF CASES 156
TOTAL NUMBER

Remunicipalisation 155
Municipalisation 1

Transport

Waste

21

3

Energy

Water

2

109

Local government

21

Highlights

Food and catering 4
Sports 1
Parking 3• Around 70% of all cases took place in the water sector, which has seen awave of remunicipalisation since 2000, including large cities such as Paris,
Rennes, Grenoble, Nice and Montpellier.
• Paris is a significant model for remunicipalisation, with the introductionof groundbreaking democratic accountability mechanisms, an emphasison access to water for all, including homeless people and migrants, andadaptation to climate change - while keeping prices lower than they were
before remunicipalisation.
• Access to organic, local food in school restaurants and childcare is anothersector where progressive cities and local authorities are reinventing public
services, with the creation of municipal farms and innovative procurement
policies.
• Several cities like Paris and Rennes have introduced innovative partnerships
with the farming sector to protect water catchments, encourage a shift toorganic production and create new markets for them through procurement
and public labels.

This article is an overview of some ways in which corporations respond to
remunicipalisation, before and after it takes place. Its aim is to illustrate
the different levers of power and influence that corporations are able touse to prevent or hinder remunicipalisation. Also, it aims to provide somestrategic learnings for city officials and civil society groups confronted
with the uphill battle for remunicipalisation. It relies heavily on theexperience of the French water sector, where there has been an intense(and partly successful) political battle to break the stranglehold imposedby private corporations over the last 20 years.

166

The empire strikes back: Corporate responses to remunicipalisation‘First, they ignore you...’A few years ago, an international publication by the private water sector
referred indirectly to remunicipalisation as ‘the R word’.1 It was probably
a sign that the first, standard response of corporations to the threat ofremunicipalisation – trying to pretend it does not exist – was starting
to unravel. They were not ready to acknowledge that the return of waterto public management was a viable, potentially attractive alternative tothe domination of corporate giants, yet they could not ignore it anymore
either.
At first in France, corporations tried to act as if water remunicipalisation
was not happening. Then, they tried to depict the early examplesof remunicipalisation as marginal initiatives, motivated by purely
ideological reasons. Both arguments, of course, have been disproved.
First off, remunicipalisation is real: we have counted at least 110 casesin the water and sanitation sector in France since 2000. What is more,
it has been demonstrated that such a change also made sense from atechnical and economic point of view.2 Even conservative mayors, who
can hardly be accused of ideological bias, have done it.3 Still today, thedefault response of private sector representatives to remunicipalisation
will be to dismiss it.
What is true, however, is that remunicipalisation is unlikely to ever makeheadlines in the national media. First, it is essentially a local development
and often the very politicians who push remunicipalisation in their city
do not wish to make it a politicised or public issue. What is more, thesedevelopments contradict some commonly held beliefs about the public
sector and the unavoidability of corporate dominance that are deeply
ingrained in mainstream media. This is why the work of publicising
remunicipalisation is so important.

167

The empire strikes back: Corporate responses to remunicipalisation

Hostile environment
Corporations have more financial and technical resources, they have moreexperience in a variety of contexts, and they are used to dealing with many
local authorities. In contrast, when a public service has been privatised
for a very long time (or has always been private: think of water services
in Nice or Barcelona), municipal expertise in the water sector needs to berebuilt from scratch. In the case of the Paris water remunicipalisation,
the city decided to take the time necessary, years before the end of theprivate contract, to regain this expertise.
Given the profound imbalance of power between local authorities (often
small and scattered) and corporations, the former obviously needassistance. National public administrations, sectoral bodies, academics
and consultancy firms should all be there to help local authorities deal
with corporate providers and make the best decision possible according
to their policy objectives, by providing adequate advice and expertise. In
reality, the opposite often happens.
In France, Veolia, Suez and the private industry have managed toinfluence or exert control on the whole water sector, including nationallevel officials, so that the ‘advice’ received by local authorities is skewed
in their favour. This is true of both the technical advice specific to thewater sector, and of the legal advice about what local authorities canor cannot do in terms of EU law, for instance. Many of the specialised
consultancy firms hired by local authorities to advise them on theiroptions for water services are biased, often because they have a historicalconnection with private corporations or have an indirect economic
interest in the matter (and sometimes, to be fair, they are reluctant tosupport remunicipalisation because of their experience with poorly run
public services). Sectoral bodies and trade associations are funded byprivate companies and staffed by seconded personnel from Suez andVeolia. Public administrations often take a narrow view of the issues

168

The empire strikes back: Corporate responses to remunicipalisation

at hand and favour the private sector for two reasons: fiscal austerity(private management makes it look as if government is spending less)and supporting national ‘champions’ such as Suez and Veolia to continue
to be global leaders in the water market.
The only force that could counter-balance an environment so hostile toremunicipalisation is collaboration among public services. This can bedone through public-public partnerships4 or through the creation of
networks such as France Eau Publique or Aqua Publica Europea at theEuropean level, which allow for mutual support and operational synergies(at the national level) such as joint procurement, sharing of technicaldevelopments, and so on.

Privateers buying hearts and minds
In the battle for remunicipalisation, winning the ‘hearts and minds’ of
the different stakeholders and of the general public is crucial. This meanselected politicians, public administration staff, water sector workers, civicorganisations, consultants, and of course citizens: there are many players
who can push for or against remunicipalisation. Private companies havelong understood how important it is to cultivate good relationships withdecision-makers and all of those who could influence their business. And
they have the financial capacity to dedicate significant resources to this.
In France, Veolia organises every year a lavish dinner for French mayors
during their official annual conference. But this is only the tip of the iceberg in terms of the lobbying targeted at local officials. For years, both
Veolia and Suez were involved in the financing of French political parties,
through commissions on water contracts.5 This kind of blatant abuse has
become very rare, but as an illustration, until recently Veolia was still asponsor of the annual festival of the Communist newspaper L’Humanité,
and bought expensive ads on its pages. The reason is simple: Communist mayors from the suburbs of Paris had (and still have) deciding votes

169

The empire strikes back: Corporate responses to remunicipalisation

when it came to awarding the contracts to water service provider SEDIF
and SIAAP in the sanitation sector, both strategic for Veolia.
Even when political leaders opt for remunicipalisation, private companies
can turn to other stakeholders to mount opposition. It can be the oppositiongroups in the city council; or sometimes private companies turn to national
governments that actively seek to thwart remunicipalisation efforts by
local authorities, as seen in Spain when the national government joineda lawsuit initiated by the private sector against the city of Valladolid. Or
sometimes they have allied with the workers from the private service
providers and their unions, particularly in the water and energy sectors
where wages and conditions were historically better in the privatecompanies. This strategy was compounded by the fact that proponents ofremunicipalisation were sometimes undiplomatic in their public discourse
against private companies, omitting to differentiate between workers
who were just doing their job and company executives and shareholders
who focused on profit-making. In France, initially, some union leadersactively campaigned against water remunicipalisation. This is no longer
the case as workers and unions have come to see that their fears about
remunicipalisation were not justified all the while conditions within theprivate water companies were worsening.
In Barcelona, where the city council is seeking to take back its water
service from the hands of the private sector and is trying to organise acitizen referendum to this effect, the water company Agbar (now a subsidiary of Suez) has pushed this strategy very far. It has improved theconditions for its workers to turn them against remunicipalisation, it haslavished civil society organisations in Barcelona with generous subsidies
and sponsorships, and it has launched large-scale advertisement campaigns in the media... all on top of its traditional funding of local politicalparties.

170

The empire strikes back: Corporate responses to remunicipalisation

Legal straitjackets
Clearly, corporations have more resources and deeper pockets than local
authorities, but the average reader would logically think that at least‘there is the law’, and the law is the law. The relations between publicauthorities and private operators are governed by legal and contractualrules that should correct this profound imbalance of power. In theory,
cities have the right to defend their interests and end their contractual
relations with private companies if they have good reasons to do so. In
practice, however, things are not so simple. There are many layers oflegislation, national and international, and, unfortunately, some legal
provisions and mechanisms serve the interests of corporations. Even whena contract expires and a local authority exerts its seemingly very normal
right not to renew it and take the service back to public management,
there are still legal avenues for corporations to challenge the decision or,at least, claim large sums of money in compensation.
The most famous – or rather infamous – of these legal mechanisms areinvestor-state dispute settlements (ISDS). In a nutshell, these take placein private, opaque commercial tribunals which companies can resort towhen they consider that their investments and their profits have been
unfairly diminished by governments, and through which they can ask
for a hefty compensation. The key problem with this system is that thedefinition of ‘unfair’ is decided by a panel of private arbitrators, on thebasis of vague commercial law principles rather than on the substanceof the cases. As a result, most ISDS cases are resolved in favour ofcorporations, which is why it caused such a public outcry when it was
proposed that they be included in the Transatlantic Trade and Investment
Partnership. Some ISDS cases have been initiated against laws passed
to protect water sources from fracking or mining, against new taxes oragainst raising the minimum wage. There have been several high-profile
cases targeting remunicipalisation or renationalisation of public services,
particularly in Argentina.6 Every time a large-scale remunicipalisation

171

The empire strikes back: Corporate responses to remunicipalisation

is being considered by a local authority, you can be sure the threat of an
ISDS complaint is aired, explicitly or implicitly.
In a sense, however, ISDS is just the tip of the iceberg. Many national
or EU laws can also be used against remunicipalisation. Some countries
such as Spain have even passed laws that actually ban local authorities
from creating new local public companies. In the end, a simple fact
remains: cities can decide to privatise their water service at any time,
but once they have signed a contract with a private company they cannot
easily get out of it, and they remain bound by its terms. In addition,
any dispute on the implementation of the contract will be judged by acommercial court, under commercial law, in which corporate lawyers are
obviously very versed – local officials much less so. And any mistake inthe remunicipalisation process or in the terms of the contract can be paidvery dearly, in the form of financial compensation.
This legal straitjacket on remunicipalisation is not so much about the actual
trials and court cases – which remain very few – as it is about the constantthreat of legal action. This is something that local politicians usually wantto avoid at all costs, and it is often sufficient to hinder remunicipalisationor convince them to pay significant compensation to private providers.
Experience shows, however, that when city councils choose to go to court
and challenge the compensation claimed by corporations, they often
succeed in getting these compensation costs cancelled or at least reduced.
This is why, in the fight for remunicipalisation, legal expertise is perhaps
just as important as technical expertise.

Political control versus technical control
Another key learning from French experiences with water remunicipalisation is that taking back control of the services involves much more thanjust deciding not to renew a contract. You might be in charge in principle,
but many key aspects of the service were put in place by private opera-

172

The empire strikes back: Corporate responses to remunicipalisation

tors. And many times, even when all the material pipes and the plants
have been returned to public management, the private companies stillown (or claim to own) all the immaterial aspects of the service, such asdata on equipment and customers, information systems, patented technologies used in water plants, possibly water meters, and the like. They
can decide either to make remunicipalisation more difficult by retainingsome of these assets, or by charging local authorities for their continued
use by the remunicipalised operator. This obviously leaves remunicipalised operators in a position of fragility, at least until they can build theirown tools and take back control of the immaterial aspects of the service
as well.

Price wars
Price is often a key reason for politicians and citizens to want to do awaywith private management of public services. Behind many stories of
remunicipalisation, there is a background of unjustified price hikes andthe siphoning of cash from the public service for private benefits. Take
away the unnecessary financial transfers to a parent company and its
shareholders, and you can lower the price almost instantly. This is justwhat the city of Paris did when it remunicipalised its water service: theprice of water was cut by 8 per cent on account of the many million euros
that were being ‘saved’ because there was no private shareholder involved
any more. More recently, in Montpellier, the price of water dropped by
10 per cent upon its return to public management, while maintaining
the same level of investments. This book includes many other examples
where a return to public management has resulted in significant savings
while maintaining or improving the quality of the service and theconditions for workers.
At the same time, price can also be a factor that corporations can use asleverage in their fight against remunicipalisation. In France, Veolia andSuez have responded to the threat of water remunicipalisation by offering

173

The empire strikes back: Corporate responses to remunicipalisation

dramatic cuts in the price of water when negotiating new contracts withlocal authorities. Since 2000, many large French cities (Paris, Grenoble,
Nice, Montpellier, Rennes) have opted to remunicipalise water. Other
large cities (Lyon, Marseille, Bordeaux, Toulouse) that have decided torenew their contracts with Suez or Veolia justify their decision by thesesubstantial price cuts. Local authorities and private companies havereported an estimated 25 per cent price cut in Toulouse or Lyon, anda 20 per cent reduction in Marseille, although consumer organisations
have disputed the figures. On the one hand, this can be seen as a positive
development, as it is a corrective to some of the most blatant abusesof the past. On the other hand, lowering the price of water in suchproportions while still trying to make a profit obliges private companies
to cut on maintenance, investments and workers’ conditions. It results
in a ‘low-cost’ public service, which will prove unsustainable in thelong term for local authorities, and very probably for the corporations
themselves. Responsible public operators cannot and should not engage
in a ‘dumping’ strategy to keep prices low at all cost. This is a reminderthat although price is important and often decisive, it is not the only
criterion. Democratic control and the long-term sustainability of theservice are equally important.

Co-opting remunicipalisation
First, they ignore you, then they laugh at you, then they fight you...
and then they pretend you are on the same side. A sign of the successof remunicipalisation is seeing private companies using the samelanguage as their opponents. Some private providers, such as Veolia
for the hotly contested SEDIF contract (Paris suburbs), have revamped
their entire communications strategy and now advertise themselves asa ‘public service’ just like their public rival Eau de Paris (city of Paris).
Other private operators now seek to imitate the governance innovationsof remunicipalised operators, such as creating seats for civil society
or citizen representatives on the board of directors. Needless to say,

174

The empire strikes back: Corporate responses to remunicipalisationthese initiatives are usually much more superficial, and never reachthe degree of accountability that has been introduced in Paris with theWater Observatory for instance.7 Their aim is to suggest that the politicaldebates of the past and the opposition between public and private
management are no longer relevant. It might be perceived as a sign that
remunicipalisation has won the ‘battle of ideas’. While this might be true
on a very general level, in practice there are still many highly problematic
contracts in place, and the water sector in France remains under thedomination of large corporations. More than ever, these corporations areseeking new, indirect forms of privatisation (such as the building andrunning of water plants) that keep them more sheltered from the publicgaze, or new contractual formulas that have the appearance of publicmanagement while keeping the private company in the driving seat.8

Conclusion
When all is said and done, local politicians and citizen groups pushingfor remunicipalisation and undertaking to rebuild a public water service
still face an uphill battle in France. The achievements of the last 20 years
are all the more remarkable. In spite of the creation of networks such as
France Eau Publique, the public service side remains scattered and focusedon local issues in comparison to large companies such as Suez and Veolia.
Many of the issues and problems that have triggered the recent wave of
remunicipalisation are still present in cities such as Marseille or Lyon.
The fight needs to continue in those places, as efforts are called for to
reinvent democratic, sustainable and inclusive public services able to faceissues such as pollution and the impacts of climate change. There is no
possible equilibrium in a context where the legal and political framework
is still veered towards the private sector and big companies such as Suezand Veolia are still seeking to extract unjustified profits from delivering
public services. If the remunicipalisation movement in France does notcontinue to push ahead, it might soon start losing ground.

175

The empire strikes back: Corporate responses to remunicipalisation

ABOUT THE AUTHOR

Olivier Petitjean is a journalist based in Paris. He
is the co-founder and chief editor of Observatoiredes multinationales (multinationales.org), an
investigative website and watchdog on French
corporations. He also writes for Basta!, a progressive
news website, on issues related to lobbying, corporate
power and the commons. He is the co-founder ofthe European Network of Corporate Observatories.
Previously he worked in various positions in the nonprofit sector and the publishing business.

Endnotes
1

See Elkins, I. (2015) Exorcising the “R” word. Global Water Intelligence Magazine 16(4), 23
April. Available at: https://www.globalwaterintel.com/global-water-intelligence-magazine/16/4/
opinion/exorcising-the-r-word2

See the Chapter 2 in this book, entitled ‘Paris celebrates a decade of public water success’.

3

See Petitjean, O. (2015) ‘Nice: Building a public water company after 150 years of private management’, in S. Kishimoto, E. Lobina and O. Petitjean (eds.) Eau publique, eau d’avenir: L’expérience mondiale de la remunicipalisation, pp. 88-95. Amsterdam: TNI, PSIRU, Observatoire desmultinationales, MSP, EPSU, FEP and APE. Available at: https://www.tni.org/en/publication/
our-public-water-future.

4

See Chapter 11 in this book on ‘Knowledge creation and sharing through public-public
partnership in the water sector’.

5

Lenglet, R. and Touly, J-L. (2006) L’eau des multinationales. Paris: Fayard.

6

See Kishimoto, S. (2015) ‘Trade agreements and investor protection: A global threat to public water’,in S. Kishimoto, E. Lobina and O. Petitjean (eds.) Our Public Water Future: The global experience with remunicipalisation, pp. 96-111. Amsterdam: TNI, PSIRU, Multinationals Observatory, EPSU and MSP. Available at: https://www.tni.org/en/publication/our-public-water-future.

7

See Petitjean, O. (2015) ‘Taking stock of remunicipalisation in Paris. A conversation with Anne Le
Strat’, in S. Kishimoto, E. Lobina and O. Petitjean (eds.) Our Public Water Future: The global
experience with remunicipalisation, pp. 66-74. Amsterdam: TNI, PSIRU, Multinationals
Observatory, EPSU and MSP. Available at: https://www.tni.org/en/publication/our-public-water-future

8

An example in France is the semi-public company structure (société d’économie mixte à
opérateur unique), which is advertised as an entirely publicly controlled company that is just‘operated’ by a private provider.

176