# C_2006195EN.01002001.xml

| 18.8.2006 | EN | Official Journal of the European Union | C 195/20 |
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18.8.2006

EN

Official Journal of the European Union

C 195/20

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Opinion of the European Economic and Social Committee on the Revised proposal for a Regulation of the European Parliament and of the Council on public passenger transport services by rail and by road

(COM(2005) 319 final — 2000/0212 (COD))

(2006/C 195/06)

On 30 September 2005 the Council decided to consult the European Economic and Social Committee, under Articles 71 and 89 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 May 2006. The rapporteur was Mr Buffetaut and the co-rapporteur was Mr Ott.

At its 427th plenary session, held on 17 and 18 May 2006 (meeting of 18 May), the European Economic and Social Committee adopted the following opinion by 63 votes to one with 12 abstentions.

1.   Conclusions and recommendations

| 1.1 | The European Economic and Social Committee feels that the proposal for a regulation on public passenger transport services by rail and road submitted by the Commission is an improvement on previous versions in terms of the option for direct award of contracts. |
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1.1

The European Economic and Social Committee feels that the proposal for a regulation on public passenger transport services by rail and road submitted by the Commission is an improvement on previous versions in terms of the option for direct award of contracts.

| 1.2 | However, in order to achieve the objective of legal security desired by organising authorities and operators, certain points still need to be clarified:






  — | specific implementation of the geographical limitation on public transport activity and specific clauses on non-distortion of competition in the event of direct award to a local government-controlled operator; |
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1.2

However, in order to achieve the objective of legal security desired by organising authorities and operators, certain points still need to be clarified:

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specific implementation of the geographical limitation on public transport activity and specific clauses on non-distortion of competition in the event of direct award to a local government-controlled operator;

| — | derogation from the general principles for the direct award of rail transport contracts, which seems legally unjustified and which should at least be better managed; |
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derogation from the general principles for the direct award of rail transport contracts, which seems legally unjustified and which should at least be better managed;

| — | a return to the spirit of the proposal for a regulation of February 2002 (1) with regard to the quality of service and compliance with social legislation, without calling the subsidiarity principle into question; |
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a return to the spirit of the proposal for a regulation of February 2002 (1) with regard to the quality of service and compliance with social legislation, without calling the subsidiarity principle into question;

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| — | clarification of the reciprocity system during the transitional period; |
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clarification of the reciprocity system during the transitional period;

| — | possibility of extending the duration of contracts, on an exceptional basis, beyond the limits originally set when the investment burden or amortisation periods warrant this; |
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possibility of extending the duration of contracts, on an exceptional basis, beyond the limits originally set when the investment burden or amortisation periods warrant this;

| — | clearer definition of regional and long-distance transport; |
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clearer definition of regional and long-distance transport;

| — | application of the regulation to all public transport contracts involving public service obligations or granting exclusive rights; |
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application of the regulation to all public transport contracts involving public service obligations or granting exclusive rights;

| — | confirmation of the precedence of the regulation over public procurement law when the operator assumes a risk. |
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confirmation of the precedence of the regulation over public procurement law when the operator assumes a risk.

| 1.3 | In that context the Committee expressly endorses the obligation to draw up contracts and the balance struck between the competitive tendering and direct award options as conducive to the necessary transparency and improved quality of services within a competitive system. |
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1.3

In that context the Committee expressly endorses the obligation to draw up contracts and the balance struck between the competitive tendering and direct award options as conducive to the necessary transparency and improved quality of services within a competitive system.

| 1.4 | The Committee would like to see the provisions of the regulation apply to all public service transport contracts. |
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1.4

The Committee would like to see the provisions of the regulation apply to all public service transport contracts.

| 1.5 | In the context of the balance struck between competitive tendering and direct award to an internal operator the Committee declares itself in favour of restricting activity to a particular area to prevent distortions of competition and safeguard freedom of choice for local authorities and fair conditions for controlled competition. |
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1.5

In the context of the balance struck between competitive tendering and direct award to an internal operator the Committee declares itself in favour of restricting activity to a particular area to prevent distortions of competition and safeguard freedom of choice for local authorities and fair conditions for controlled competition.

| 1.6 | In the event of direct award to an internal operator, the Committee would like to see a clearly defined and controlled margin of flexibility retained, where, in the interests of the unity of the networks and the integration of transport services, services need to be extended to neighbouring and/or adjacent areas administered by a different authority from that which awarded the public service transport contract. |
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1.6

In the event of direct award to an internal operator, the Committee would like to see a clearly defined and controlled margin of flexibility retained, where, in the interests of the unity of the networks and the integration of transport services, services need to be extended to neighbouring and/or adjacent areas administered by a different authority from that which awarded the public service transport contract.

| 1.7 | The Committee feels that derogations for minor contracts and in order to ensure the continuity of services are warranted. |
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1.7

The Committee feels that derogations for minor contracts and in order to ensure the continuity of services are warranted.

| 1.8 | The Committee questions the option of direct award of public service rail transport contracts both to traditional and new operators, without laying down any precise rules ensuring fair competition of the kind applied to internal operators, thus giving rise to legal uncertainty and distortions of competition. |
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1.8

The Committee questions the option of direct award of public service rail transport contracts both to traditional and new operators, without laying down any precise rules ensuring fair competition of the kind applied to internal operators, thus giving rise to legal uncertainty and distortions of competition.

| 1.9 | The Committee considers that the principles of transparency, equal treatment and quality and efficiency of public rail transport can be better guaranteed only if the same rules are applied as to local road transport. |
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1.9

The Committee considers that the principles of transparency, equal treatment and quality and efficiency of public rail transport can be better guaranteed only if the same rules are applied as to local road transport.

| 1.10 | The Committee calls for a return to the spirit of the 2002 proposal for a regulation with regard to service quality and compliance with the social legislation in force in the Member States. |
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1.10

The Committee calls for a return to the spirit of the 2002 proposal for a regulation with regard to service quality and compliance with the social legislation in force in the Member States.

| 1.11 | This apart, the EESC would welcome speedy adoption of the regulation, which is necessary to ensure legal certainty within the sector. |
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1.11

This apart, the EESC would welcome speedy adoption of the regulation, which is necessary to ensure legal certainty within the sector.

2.   Introduction

| 2.1 | The European Commission has published a new proposal for a regulation on public service obligations with regard to public road and rail passenger transport services. The document in question is the third version. |
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2.1

The European Commission has published a new proposal for a regulation on public service obligations with regard to public road and rail passenger transport services. The document in question is the third version.

| 2.2 | The EESC welcomes the Commission's work, which enables discussions — previously blocked at institutional level — to be re-launched. |
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2.2

The EESC welcomes the Commission's work, which enables discussions — previously blocked at institutional level — to be re-launched.

| 2.3 | The proposed text is intended to reconcile the varying positions voiced in previous discussions in the light of recent developments in case law, particularly the Altmark Trans judgment, and to address concerns about compliance with the principles of subsidiarity and of administrative freedom for public authorities. |
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2.3

The proposed text is intended to reconcile the varying positions voiced in previous discussions in the light of recent developments in case law, particularly the Altmark Trans judgment, and to address concerns about compliance with the principles of subsidiarity and of administrative freedom for public authorities.

| 2.4 | It is very different from and simpler than the previous version. However, in order not to prolong the legislative procedure, the Parliament decided to treat it as a revised version of the same text and to examine it at second reading. The proposal is therefore now before the Council of Ministers, which has just begun its examination and has decided to study its correlation with the third rail package, particularly with regard to the opening-up of international traffic and the possibility of cabotage (2). |
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2.4

It is very different from and simpler than the previous version. However, in order not to prolong the legislative procedure, the Parliament decided to treat it as a revised version of the same text and to examine it at second reading. The proposal is therefore now before the Council of Ministers, which has just begun its examination and has decided to study its correlation with the third rail package, particularly with regard to the opening-up of international traffic and the possibility of cabotage (2).

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| 2.5 | The Commission considers that the current legislative framework, which dates from 1969, is outdated and that the efficiency and quality of modes of transport must be improved in order to maintain or increase their market share. It would like to regulate competition, including for regions and towns, in order to ensure transparency in the way in which public service contracts are awarded and executed (3). In its 2001 opinion on the previous proposal for a regulation the EESC welcomed ‘the Commission's intention of introducing a market regime for public passenger transport based on controlled rather than full competition’ (4). |
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2.5

The Commission considers that the current legislative framework, which dates from 1969, is outdated and that the efficiency and quality of modes of transport must be improved in order to maintain or increase their market share. It would like to regulate competition, including for regions and towns, in order to ensure transparency in the way in which public service contracts are awarded and executed (3). In its 2001 opinion on the previous proposal for a regulation the EESC welcomed ‘the Commission's intention of introducing a market regime for public passenger transport based on controlled rather than full competition’ (4).

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| 2.6 | It also noted with satisfaction that ‘henceforth equality of opportunity and competition between all types of enterprise, irrespective of their legal form, will be achieved through legal and accounting transparency’ (5). |
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2.6

It also noted with satisfaction that ‘henceforth equality of opportunity and competition between all types of enterprise, irrespective of their legal form, will be achieved through legal and accounting transparency’ (5).

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| 2.7 | At the present moment, given that the proposal for a regulation is to be discussed by the European Parliament at a second reading, the EESC can only reiterate its desire for transparency, equal opportunities and controlled competition in public road and rail passenger transport management procedures, in compliance with the neutrality principle of Article 295 of the Treaty. |
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2.7

At the present moment, given that the proposal for a regulation is to be discussed by the European Parliament at a second reading, the EESC can only reiterate its desire for transparency, equal opportunities and controlled competition in public road and rail passenger transport management procedures, in compliance with the neutrality principle of Article 295 of the Treaty.

| 2.8 | In that connection the recent case law of the European Court of Justice, especially the Altmark Trans and Stadt Halle judgments, has helped to clarify the issue. In exercising its right of initiative, the Commission is not bound by the doctrine of case law, the legal system of the European Union being mainly based on written law rather than the decisions of the courts. In practice, the proposal for a regulation incorporates the principles of the three main criteria identified in the Altmark Trans judgment (Article 4). Aspects of the fourth criterion can be found in point 7 of the annex. |
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2.8

In that connection the recent case law of the European Court of Justice, especially the Altmark Trans and Stadt Halle judgments, has helped to clarify the issue. In exercising its right of initiative, the Commission is not bound by the doctrine of case law, the legal system of the European Union being mainly based on written law rather than the decisions of the courts. In practice, the proposal for a regulation incorporates the principles of the three main criteria identified in the Altmark Trans judgment (Article 4). Aspects of the fourth criterion can be found in point 7 of the annex.

| 2.9 | It should be pointed out that the Altmark Trans judgment defined the criteria ensuring that compensation of public service obligations is not legally classified as state aid. The proposal for a regulation is broader in scope and covers points not dealt with in the case law, such as the questions of the compatibility with competition rules of compensation legally classified as state aid and the grant of exclusive rights. In 1969 there was no transport market; the question of exclusive rights did not, therefore, arise. |
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2.9

It should be pointed out that the Altmark Trans judgment defined the criteria ensuring that compensation of public service obligations is not legally classified as state aid. The proposal for a regulation is broader in scope and covers points not dealt with in the case law, such as the questions of the compatibility with competition rules of compensation legally classified as state aid and the grant of exclusive rights. In 1969 there was no transport market; the question of exclusive rights did not, therefore, arise.

3.   General comments

| 3.1 | The Committee welcomes the Commission's initiative but would like to raise a number of legal questions which merit discussion, and stresses how important it is that the new regulation should genuinely guarantee the legal security that the whole sector needs so badly in order to ensure rapid adoption and implementation. |
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3.1

The Committee welcomes the Commission's initiative but would like to raise a number of legal questions which merit discussion, and stresses how important it is that the new regulation should genuinely guarantee the legal security that the whole sector needs so badly in order to ensure rapid adoption and implementation.

| 3.2 | The Committee welcomes the Commission's efforts to achieve a new balance in local transport which respects the local authorities' administrative freedom and is satisfactory for all stakeholders. |
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3.2

The Committee welcomes the Commission's efforts to achieve a new balance in local transport which respects the local authorities' administrative freedom and is satisfactory for all stakeholders.

| 3.3 | It welcomes the fact that the local authorities are free either to put their transport services out to competitive tender, to provide the services themselves or via an internal operator, providing that precise criteria are met in order to prevent any distortion of competition. |
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3.3

It welcomes the fact that the local authorities are free either to put their transport services out to competitive tender, to provide the services themselves or via an internal operator, providing that precise criteria are met in order to prevent any distortion of competition.

| 3.4 | The Committee reaffirms its support for the principle of controlled competition, rather than full competition, which has been incorporated in the new proposal for a regulation (Articles 3 and 5(3)). This principle seems to offer the best basis for reconciling public service needs with the need for a secure, harmonised framework of rules for the award of contracts. It reconciles public-service-related and commercial needs in the sector (irrespective of the legal status of the enterprises concerned). |
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3.4

The Committee reaffirms its support for the principle of controlled competition, rather than full competition, which has been incorporated in the new proposal for a regulation (Articles 3 and 5(3)). This principle seems to offer the best basis for reconciling public service needs with the need for a secure, harmonised framework of rules for the award of contracts. It reconciles public-service-related and commercial needs in the sector (irrespective of the legal status of the enterprises concerned).

| 3.5 | The Committee considers that a competitive system offering the general use of contracts and freedom to choose between competitive tender or direct award is the best guarantee of improved public transport quality and efficiency. What will happen is that the organising authorities will need to establish clearly and in advance public service obligations, the areas concerned, the rules determining compensation and the arrangements for sharing costs and revenues, as well as arranging sufficient prior publicity. |
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3.5

The Committee considers that a competitive system offering the general use of contracts and freedom to choose between competitive tender or direct award is the best guarantee of improved public transport quality and efficiency. What will happen is that the organising authorities will need to establish clearly and in advance public service obligations, the areas concerned, the rules determining compensation and the arrangements for sharing costs and revenues, as well as arranging sufficient prior publicity.

| 3.6 | At the same time, operators will have a clear understanding of the conditions which they operate under. |
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3.6

At the same time, operators will have a clear understanding of the conditions which they operate under.

| 3.7 | In addition, the proposal envisages that ‘each competent authority shall publish once a year a detailed report on the public service obligations for which it is responsible, the selected operators and the compensation payments and exclusive rights granted to the said operators by way of reimbursement’ (Art. 7). This will enable members of the public to find out about the exact conditions under which public transport services operate, thus putting them in a position to question the quality and cost of the services provided to them. However, it must be ensured that the report does not unduly increase the administrative burden on local authorities and thus, by extension, on operators. Too much bureaucracy is not conducive to full information. |
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3.7

In addition, the proposal envisages that ‘each competent authority shall publish once a year a detailed report on the public service obligations for which it is responsible, the selected operators and the compensation payments and exclusive rights granted to the said operators by way of reimbursement’ (Art. 7). This will enable members of the public to find out about the exact conditions under which public transport services operate, thus putting them in a position to question the quality and cost of the services provided to them. However, it must be ensured that the report does not unduly increase the administrative burden on local authorities and thus, by extension, on operators. Too much bureaucracy is not conducive to full information.

4.   Specific comments

4.1   The regulation and public procurement law

| 4.1.1 | The question of legal precedence arises, as there are two systems of law which can be applied to the sector. |
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4.1.1

The question of legal precedence arises, as there are two systems of law which can be applied to the sector.

| 4.1.2 | At the first reading, in 2001, the European Parliament adopted an amendment requiring the future regulation to take precedence over public procurement law in order to create a clear and coherent legal framework. The solution proposed by the Commission is for the applicable law to be determined by the choice of the organising public authority.






  — | if there is a public service obligation and the operator takes on part of the risk, the regulation applies; |
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4.1.2

At the first reading, in 2001, the European Parliament adopted an amendment requiring the future regulation to take precedence over public procurement law in order to create a clear and coherent legal framework. The solution proposed by the Commission is for the applicable law to be determined by the choice of the organising public authority.

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if there is a public service obligation and the operator takes on part of the risk, the regulation applies;

| — | if there is a straightforward tender, the public procurement directive applies to the procedure for putting contracts out to tender. |
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if there is a straightforward tender, the public procurement directive applies to the procedure for putting contracts out to tender.

| 4.1.3 | On this point, the EESC believes that the provisions of the regulation should apply to all public service transport contracts, in line with the principles of transparency and equal treatment. This would be by far the simplest and clearest solution and would not call into question the freedom of the competent authorities to conclude contracts. |
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4.1.3

On this point, the EESC believes that the provisions of the regulation should apply to all public service transport contracts, in line with the principles of transparency and equal treatment. This would be by far the simplest and clearest solution and would not call into question the freedom of the competent authorities to conclude contracts.

4.2   Direct award option

| 4.2.1 | Unlike the two previous versions, the proposal for the first time allows a public transport contract to be awarded to an internal operator directly without competitive tender (Article 5(2)). This innovation responds to the wish expressed in the previous debates that the local authorities' organisational freedom be preserved. |
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4.2.1

Unlike the two previous versions, the proposal for the first time allows a public transport contract to be awarded to an internal operator directly without competitive tender (Article 5(2)). This innovation responds to the wish expressed in the previous debates that the local authorities' organisational freedom be preserved.

| 4.2.2 | There are a number of conditions for this:






  — | The services must be local. |
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4.2.2

There are a number of conditions for this:

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The services must be local.

| — | The internal operator must not take part in competitive tenders organised outside the territory of the competent authority and must perform all its activity within the territory of the competent authority. This is in the spirit of the wish for competitive reciprocity expressed by the Parliament at the first reading (Amendment 61), in compliance with the principles of the Treaty. This is a logical and fair solution, as it would be unacceptable for a local-authority controlled operator enjoying protection from competition within its own territory to have the option of competing against other operators in territories open to competition. |
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The internal operator must not take part in competitive tenders organised outside the territory of the competent authority and must perform all its activity within the territory of the competent authority. This is in the spirit of the wish for competitive reciprocity expressed by the Parliament at the first reading (Amendment 61), in compliance with the principles of the Treaty. This is a logical and fair solution, as it would be unacceptable for a local-authority controlled operator enjoying protection from competition within its own territory to have the option of competing against other operators in territories open to competition.

| — | Contracts may be awarded directly only to internal operators over which the competent authority exercises the kind of complete control it has over its own departments. However, the Commission has not taken complete account of the case law of the Court of Justice of the European Communities (Teckal judgment of 18.11.1999, Stadt Halle judgment of 11.1.2005 and Parking Brixen judgment of 13.10.2006). |
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—

Contracts may be awarded directly only to internal operators over which the competent authority exercises the kind of complete control it has over its own departments. However, the Commission has not taken complete account of the case law of the Court of Justice of the European Communities (Teckal judgment of 18.11.1999, Stadt Halle judgment of 11.1.2005 and Parking Brixen judgment of 13.10.2006).

| 4.2.3 | At the first reading, the European Parliament came out clearly in favour of maintaining the option of direct award to a local operator controlled by the competent local authority alongside the competitive tender option. The discussions in the Council of Ministers have tended in the same direction, with most representatives of the Member States being in favour of the competent authorities retaining the freedom to provide local services themselves, using in-house enterprises, or to outsource them by competitive tender. |
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4.2.3

At the first reading, the European Parliament came out clearly in favour of maintaining the option of direct award to a local operator controlled by the competent local authority alongside the competitive tender option. The discussions in the Council of Ministers have tended in the same direction, with most representatives of the Member States being in favour of the competent authorities retaining the freedom to provide local services themselves, using in-house enterprises, or to outsource them by competitive tender.

| 4.2.4 | The Commission has attempted to take account of this consensus and has therefore sought to strike a balance between controlled competition and the direct award option; the EESC endorses this approach as it preserves the administrative freedom of the organising public authorities while taking account of the principles set out by the ECJ. |
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4.2.4

The Commission has attempted to take account of this consensus and has therefore sought to strike a balance between controlled competition and the direct award option; the EESC endorses this approach as it preserves the administrative freedom of the organising public authorities while taking account of the principles set out by the ECJ.

| 4.2.5 | It should be pointed out that the Commission has introduced a geographical demarcation criterion into the definition of internal operator in order to take account of the principle of competitive reciprocity advocated by the Parliament for local services provided under local government control, but in a form which complies with the Treaty. The application of this criterion raises two questions:






  — | Does this criterion refer to all transport services by internal operators as well as to those provided by sub-contractors? |
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4.2.5

It should be pointed out that the Commission has introduced a geographical demarcation criterion into the definition of internal operator in order to take account of the principle of competitive reciprocity advocated by the Parliament for local services provided under local government control, but in a form which complies with the Treaty. The application of this criterion raises two questions:

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Does this criterion refer to all transport services by internal operators as well as to those provided by sub-contractors?

| — | What happens when routes continue beyond the limits of the area for which the competent organising authority is responsible? Should routes be curtailed or should specific rules be applied in these cases? In this context the EESC considers that the territorial competence criterion should be relaxed. The services concerned could be of interest to areas for which different competent authorities are responsible, where this is necessary to ensure the unity of the network and the integration of transport services in areas which border on/are adjacent to that of the authority which awarded the public service transport contract. |
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—

What happens when routes continue beyond the limits of the area for which the competent organising authority is responsible? Should routes be curtailed or should specific rules be applied in these cases? In this context the EESC considers that the territorial competence criterion should be relaxed. The services concerned could be of interest to areas for which different competent authorities are responsible, where this is necessary to ensure the unity of the network and the integration of transport services in areas which border on/are adjacent to that of the authority which awarded the public service transport contract.

| 4.2.6 | Provision should be made for the possibility that, in order to ensure the unity of the network and the integration of transport services in areas which border on/are adjacent to that of the authority which awarded the public service contract, services operated by the organising authority itself or by an internal operator may also be of use to areas for which different competent authorities are responsible. In order to prevent this option being used to circumvent the principle of non-distortion of competition, it would be necessary to stipulate that services provided outside the area of territorial competence of the organising authority must not exceed a certain percentage of the value of the main contract. |
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4.2.6

Provision should be made for the possibility that, in order to ensure the unity of the network and the integration of transport services in areas which border on/are adjacent to that of the authority which awarded the public service contract, services operated by the organising authority itself or by an internal operator may also be of use to areas for which different competent authorities are responsible. In order to prevent this option being used to circumvent the principle of non-distortion of competition, it would be necessary to stipulate that services provided outside the area of territorial competence of the organising authority must not exceed a certain percentage of the value of the main contract.

| 4.2.7 | It should be made possible for the internal operators of several local authorities to cooperate, particularly in relation to research and development; otherwise they would become structurally less efficient than their potential competitors, which would not have the same limitations. |
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4.2.7

It should be made possible for the internal operators of several local authorities to cooperate, particularly in relation to research and development; otherwise they would become structurally less efficient than their potential competitors, which would not have the same limitations.

| 4.2.8 | It will be necessary to clarify these points in terms of both legal certainty and the practical organisation of services. The criteria established by the case law of the European Court of Justice (Stadt Halle case of 11.1.2005) for defining an internal operator leave some room for doubt, e.g. the phrase ‘factors such as’, which suggests that the list of criteria is not exhaustive. However, recent case law (Parking Brixen case of 13.10.2005) once again underlines that the criterion of control similar to that exercised over the authority's own departments is fundamental. |
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4.2.8

It will be necessary to clarify these points in terms of both legal certainty and the practical organisation of services. The criteria established by the case law of the European Court of Justice (Stadt Halle case of 11.1.2005) for defining an internal operator leave some room for doubt, e.g. the phrase ‘factors such as’, which suggests that the list of criteria is not exhaustive. However, recent case law (Parking Brixen case of 13.10.2005) once again underlines that the criterion of control similar to that exercised over the authority's own departments is fundamental.

| 4.2.9 | Finally, it is surprising that strictly defined conditions apply to the general case of direct award to an internal operator, whilst the specific exception to the principles of the regulation, concerning direct award to a rail operator, is not subject to any conditions; no reason for this is given in the explanatory memorandum. |
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4.2.9

Finally, it is surprising that strictly defined conditions apply to the general case of direct award to an internal operator, whilst the specific exception to the principles of the regulation, concerning direct award to a rail operator, is not subject to any conditions; no reason for this is given in the explanatory memorandum.

4.3   Competitive tender

| 4.3.1 | Apart from award to an internal operator, the proposal also provides for recourse to competitive tender. There are three derogations from the tendering obligation:






  — | for minor contracts, |
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4.3.1

Apart from award to an internal operator, the proposal also provides for recourse to competitive tender. There are three derogations from the tendering obligation:

—

for minor contracts,

| — | to ensure continuity of public services in the event of disruption of services or the immediate risk of such a situation, |
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—

to ensure continuity of public services in the event of disruption of services or the immediate risk of such a situation,

| — | for public service contracts concerning regional or long-distance transport by rail. |
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—

for public service contracts concerning regional or long-distance transport by rail.

| 4.3.2 | The EESC considers that the first two derogations are justified in principle, although the criteria used to define minor contracts are debatable. The third derogation on the other hand raises several questions. Partly because of the size of the sector concerned (turnover of about EUR 50 billion), partly because the award conditions are — in contrast to conditions for award to an internal operator — not particularly stringent, even though Article 7 contains useful provisions for publicity measures, and partly because rail transport is not a sector whose nature warrants its being permanently closed to competition, unless it is subject to provisions similar to those set out in Article 5(2) of the proposal for a regulation. |
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4.3.2

The EESC considers that the first two derogations are justified in principle, although the criteria used to define minor contracts are debatable. The third derogation on the other hand raises several questions. Partly because of the size of the sector concerned (turnover of about EUR 50 billion), partly because the award conditions are — in contrast to conditions for award to an internal operator — not particularly stringent, even though Article 7 contains useful provisions for publicity measures, and partly because rail transport is not a sector whose nature warrants its being permanently closed to competition, unless it is subject to provisions similar to those set out in Article 5(2) of the proposal for a regulation.

| 4.3.3 | It may be asserted that transparency, the principle of equal opportunities and the interests of users and operators would be better served by means of controlled tendering procedures, and that the approach adopted, probably as the result of a political compromise, rather unbalances the text in terms of its legal coherence. |
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4.3.3

It may be asserted that transparency, the principle of equal opportunities and the interests of users and operators would be better served by means of controlled tendering procedures, and that the approach adopted, probably as the result of a political compromise, rather unbalances the text in terms of its legal coherence.

4.4   Compensation for public service obligations

| 4.4.1 | Article 6 of the proposal for a regulation refers to Article 4, which is based in part on the criteria of the Altmark Trans judgment. Any compensation, however it is assigned, must conform with these provisions. In the case of directly awarded contracts, compensation must also comply with the rules set out in the annex, which state that, to calculate the amount of the compensation, the situation of direct service provision must be compared with that of a service provided under market conditions if the obligation had not been met. |
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4.4.1

Article 6 of the proposal for a regulation refers to Article 4, which is based in part on the criteria of the Altmark Trans judgment. Any compensation, however it is assigned, must conform with these provisions. In the case of directly awarded contracts, compensation must also comply with the rules set out in the annex, which state that, to calculate the amount of the compensation, the situation of direct service provision must be compared with that of a service provided under market conditions if the obligation had not been met.

| 4.4.2 | The text thus distinguishes between two situations:






  — | if there is competitive tender, the compensation of public service obligations reflects the spirit of the first three conditions set out it the Altmark Trans judgment; |
| --- | --- | --- |

4.4.2

The text thus distinguishes between two situations:

—

if there is competitive tender, the compensation of public service obligations reflects the spirit of the first three conditions set out it the Altmark Trans judgment;

| — | if a contract has been directly awarded without competitive tender, the public service obligation compensation will be based partly on the criteria established by the Altmark Trans judgment, but a comparative study of the economic management of the service outside the scope of public service obligations must also be carried out. |
| --- | --- |

—

if a contract has been directly awarded without competitive tender, the public service obligation compensation will be based partly on the criteria established by the Altmark Trans judgment, but a comparative study of the economic management of the service outside the scope of public service obligations must also be carried out.

| 4.4.3 | This systems gives rise to a certain legal complexity, requiring clearer definition in order to ensure transparency and good management for customers and taxpayers. |
| --- | --- |

4.4.3

This systems gives rise to a certain legal complexity, requiring clearer definition in order to ensure transparency and good management for customers and taxpayers.

4.5   Quality of services and social legislation

| 4.5.1 | The Commission stresses that the purpose of the proposal for a regulation is to regulate the question of public service obligations, and compensation for these, in the transport sector and not to deal with issues such as service quality, social legislation and consumer protection. Only Article 4(7) therefore deals with social rights in a flexible way. This is after all an area of national competence. |
| --- | --- |

4.5.1

The Commission stresses that the purpose of the proposal for a regulation is to regulate the question of public service obligations, and compensation for these, in the transport sector and not to deal with issues such as service quality, social legislation and consumer protection. Only Article 4(7) therefore deals with social rights in a flexible way. This is after all an area of national competence.

| 4.5.2 | However, the 2002 revised proposal was more precise in defining a suitable level of quality for public transport and passenger information, as well as social legislation (old Articles 4, 4a) and 4b)). |
| --- | --- |

4.5.2

However, the 2002 revised proposal was more precise in defining a suitable level of quality for public transport and passenger information, as well as social legislation (old Articles 4, 4a) and 4b)).

| 4.5.3 | The EESC deplores this excessively cautious new wording on quality, passenger information and the guarantees offered by national social legislation. It urges the Commission to amplify its proposal in the spirit of the 2002 proposal, while respecting the principles of subsidiarity and local authorities' administrative freedom. Without actually drawing up an exhaustive list of safety, quality and passenger information criteria, it would nonetheless be a good idea to indicate certain minimum requirements in these areas. |
| --- | --- |

4.5.3

The EESC deplores this excessively cautious new wording on quality, passenger information and the guarantees offered by national social legislation. It urges the Commission to amplify its proposal in the spirit of the 2002 proposal, while respecting the principles of subsidiarity and local authorities' administrative freedom. Without actually drawing up an exhaustive list of safety, quality and passenger information criteria, it would nonetheless be a good idea to indicate certain minimum requirements in these areas.

4.6   Transition between the current situation and the new legislation

| 4.6.1 | There is a certain amount of imprecision in Article 8(6), which regulates competitive tendering during the second half of the transitional period, but leaves the question wide open of what should happen during the first half of the period and in the case of direct award of contracts. |
| --- | --- |

4.6.1

There is a certain amount of imprecision in Article 8(6), which regulates competitive tendering during the second half of the transitional period, but leaves the question wide open of what should happen during the first half of the period and in the case of direct award of contracts.

Brussels, 18 May 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

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(1)  COM(2000) 7 final -2003/0212 (COD), as amended by COM(2002) 107 final.

1

(2)  It should be noted that the current proposal no longer covers inland waterway transport, which therefore continues to be governed by Article 73 of the Treaty.

2

(3)  COM(2005) 319 final, section 2.1.

3

(4)  OJ C 221, 7.8.2001 (point 2.2).

4

(5)  ibid, point 2.4.

5

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendment was defeated but received at least a quarter of the votes cast:

Point 4.6

Add a new paragraph to point 4.6:

Inland public transport markets in the EU have been opened up or liberalised to differing degrees, ranging from those that remain closed via those that allow controlled competition to those that have been fully liberalised. A transitional period is therefore needed, so that national markets can adapt to the Regulation and reach comparable levels, in order to prevent inequalities arising between Member States.

Reason

To be given orally.

Result of the voting:

For: 22

Against: 43

Abstentions: 3.

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