Opinion of the Economic and Social Committee on 'Services of General Interest in Europe (Commission communication)` (97/C 287/18)

On 20 November 1996 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the 'Communication from the Commission on Services of general interest in Europe`.

At its meeting of 28 November 1996, the Economic and Social Committee decided, in accordance with Rule 19(1) of its Rules of Procedure, to set up a subcommittee to prepare its work on the subject.

The subcommittee adopted its Draft Opinion on 18 April 1997. The rapporteur was Mr van Dijk.

At its 346th plenary session of 28 and 29 May 1997 (meeting of 29 May) the Economic and Social Committee adopted the following opinion by 44 votes in favour, 26 votes against and 18 abstentions.

1. Introduction

1.1. In September 1996 the European Commission published a communication drawing attention to services of general interest.

1.2. In this communication the Commission provides a definition of services of general interest and universal service and makes a distinction between these two concepts.

1.3. Services of general interest are all services which the public authorities class as being of general interest.

1.4. The concept of 'universal service` is stated by the Commission to refer to a set of requirements which should be satisfied throughout the European Union by the bodies providing certain services of general interest. Central to those requirements is the objective of guaranteed access to essential services at affordable prices. The concept has been evolved outwith the Treaty through extensive discussions on a sector-by-sector basis amongst the European institutions and is being implemented through various sector-specific pieces of European legislation.

2. General comments

2.1. Concept of 'universal service`

2.1.1. The Committee wonders whether this distinction is relevant. It would seem to distinguish between, on the one hand, postal and telecommunications services, and on the other, radio/television, energy and transport. Furthermore, the Committee wonders to what extent this is an essential distinction. The Committee feels that the term 'universal service` is not self-explanatory and fails to make clear both the concept and its pan-European Union criterion. It can be confused with 'services of general interest` or 'public service`. In its recent Opinion on 'Public service obligations in the internal energy market` () the Committee called on the Commission to clarify and define such terms.

2.1.2. The Committee takes note of the response by the Commission in providing required definitions and clarification in this communication. It acknowledges the distinction made by the Commission between the literal use of the term 'services of general interest`, on the one hand, and the evolving concept of 'universal service` on the other hand.

2.1.3. Opinions have already been given by the Committee on sector-specific proposals for Community-level development of universal service in relation to telecommunications, postal services, electricity, broadcasting and the information society. However, it has repeatedly stressed that implementation of this concept must assist in strengthening economic and social cohesion, in terms of geographical cover, within the European Union and in particular encourage citizen participation, which presupposes that the funding of this universal service is guaranteed.

2.1.4. The description of 'universal service` provided in the Commission communication, is accepted as being appropriate in the wide context of the communication and it is so used within this Opinion. However, the implementation of this concept needs to be developed in a more comprehensive way, as called for by the Committee in previous Opinions.

2.2. Services of general interest

2.2.1. In its communication, the Commission reserves the term 'services of general interest` solely for telecommunications and postal services, transport, electricity, radio and television. The Committee wonders whether other services might not also be regarded as of general interest.

2.2.2. The Committee can imagine that other services, too, are regarded as of general interest. Health care and education for example.

2.2.3. The Commission communication leaves it up to the public authorities to decide which services are deemed to be of general interest. The Committee wonders whether this is not too narrow an approach. Nor is it clear which public authorities are meant: national or European?

2.2.4. Point 26 of the communication makes it clear that the European institutions have 'respected the different national definitions of the general interest, which are based on each country's special social and cultural characteristics and their choice of society` ().

2.2.5. At the same time, the Commission states that 'the Member States are free to define additional general interest duties "provided that the means used comply with Community law"` ().

2.2.6. The Committee considers that a framework must be laid down at Community level whereby the Member States can determine which services are regarded as of general interest. Accordingly, it would be up to the Member States to decide which services are covered by the term. The Committee assumes that interested groups, such as the social partners and consumer organizations, will be consulted on this. The Committee considers that this would be a good way to consolidate the subsidiarity principle, in accordance with Article 3b of the EC Treaty.

2.3. Objective and strategy

2.3.1. The Committee is in agreement with the Commission's statement that services of general interest contribute to economic and social cohesion and to economic performance and thus have a role to play in meeting the overall aims of the European Union.

2.3.2. Under its proposed strategy to promote services of general interest, the Commission plans the continuation of a sector-by-sector approach for both the opening up of markets and the introduction of universal service obligations. The Committee supports both the strategy and the planned approach subject to the comments made in previous paragraphs of section 2.

3. Should services of general interests be mentioned in the Treaty?

3.1. At the end of its communication, the Commission raises the question of whether the Treaty should contain a reference to services of general interest. It suggests inserting the following in Article 3:

'- a contribution to the promotion of services of general interest`.

3.2. Before going into the wording of such a text, the Committee questions whether there should be such a reference in the Treaty.

3.3. The Treaties strive for more far-reaching competition. According to the Treaty, every decision that can adversely affect competition in the common market is incompatible with that market. In particular this means fixing prices, controlling production, markets, technical development or investment, and sharing markets or sources of supply ().

3.4. In accordance with the Treaty, the Commission considers the abuse of a dominant position within the common market or in a substantial part of it as incompatible with the common market ().

3.5. In addition, state aid may not be open-ended except in the following circumstances:

- aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;

- aid to promote the execution of an important project of common European interest;

- aid to facilitate the development of certain economic activities or of certain economic areas;

- aid to promote culture and heritage conservation ().

3.6. Undertakings operating services of general interest are subject to the Treaty's rules, in particular the rules on competition, insofar as this does not obstruct the performance of their particular tasks. The development of trade must not be affected ().

3.7. Over recent years the EU has adopted various initiatives to implement full competition in different sectors, such as postal and telecommunications services. The Commission regards both these sectors as services of general interest.

3.7.1. Without legislation there is a fear that, under certain circumstances, it may no longer be possible to provide some services on the terms mentioned in point 1.4. All companies must operate in a common market and abide by the free competition rules. This means that companies which previously occupied a monopoly position must now face competition.

3.7.2. The Committee thinks that competition can result in more effective and more efficient service provision, but can also bring with it certain problems. Sharper competition will place a question-mark over less profitable parts of businesses.

3.7.2.1. The result could be that these parts are disposed of or services to certain regions or groups are reduced. Thus some 'less profitable` train routes are under threat, with no or much less frequent public transport being offered in replacement. The rapid growth of commercial television, for instance, could jeopardize public broadcasting, especially if its revenue drops. Pay-TV is then only a small step away.

3.8. Within the Committee, it is recognized that such a development can be averted if the competent authorities adopt the necessary regulations. The question is at what level should this take place: national or EU?

3.8.1. Advocates of the national level point to Article 90(2) of the EC Treaty which, they claim, offers sufficient guarantees for measures to be taken at national level to satisfactorily protect access to services of general interest. They also think that the protection of services of general interest must take place at the lowest possible level. Services of general interest can best be protected by national measures.

3.8.2. Advocates of European-level measures believe that it is measures deriving from the EC Treaty that threaten services of general interest: hence new European measures are needed to counter the threat from existing European measures.

3.9. The Committee endorses the latter argument and therefore calls for a reference in the Treaty.

4. Reference in EC Treaty

4.1. Without prejudice to the use of Articles 77 and 90, the Committee believes that reference should be made to 'services of general interest` in the new Treaty in so far as the objective is to protect or improve standards of service. In this context, the Committee is aware of a presidency proposal which is based on these principles.

Brussels, 29 May 1997.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 56, 24. 2. 1997, p. 83.

() Point 26 of the Commission communication on services of general interest in Europe.

() Point 30 of the Commission communication on services of general interest in Europe.

() EC Treaty, Article 85.

() EC Treaty, Article 86.

() See Articles 92-94 of EC Treaty.

() EC Treaty, Article 90.

APPENDIX to the opinion of the Economic and Social Committee

(In accordance with Rule 47 of the Rules of Procedure)

The following proposal for an amendment, tabled by Mr Little, was defeated in the course of the debate:

Delete points 3.8. to 3.9. and whole of section 4 and replace by the following:

'3.7.3. However, the free competition rules can be waived, under Article 90(2) of the Treaty, for undertakings entrusted with the operation of services of general economic interest where the application of those rules would obstruct the performance of the particular tasks assigned to them.

3.7.4. Whilst certain of the fears expressed in point 3.7.2.1 are undoubtedly of substance, the bulk of those fears can be taken care of by proper and effective action taken by the regulatory bodies set up by Member States to protect the users of such services of general interest. The Committee endorses the Commission's suggestion that increased European-level coordination of regulatory activities may be required given the degree of European integration in some services.

3.8. The Commission's analysis shows that the current provisions of the Treaty and the sector-by-sector approach so far adopted have proved to be perfectly appropriate to meet universal service needs while protecting the competition regulations.

3.8.1. No evidence has been produced to show that the Commission is unable to influence Member States regarding the principle of undertaking its general interest services function. On the contrary, the Commission acknowledges that, where the concept and criteria of a European universal service has been introduced, there have been positive effects for the development of such services. Decisions on detailed aspects, such as the location of facilities and the frequency of services are made and, inevitably, will continue to be made at Member State level.

3.9. The Commission's proposal for an amendment to the Treaty would cut across the present delicate balance between achieving a competitive market in services of general interest and the wider requirements of providing such services.

3.9.1. The Commission acknowledges that its proposal would not create a new legal basis and that services of general interest continue to be primarily an area for action by the Member States. The Committee considers that the proposed addition to Article 3 could lead to conflict with Articles 3(b) and 90.

3.10. In the view of the Committee, the Commission proposal to amend Article 3 should be withdrawn. It considers that it is not justified by the analysis in the Communication, is unnecessary, would not enhance or protect the interest of the public in general services and would conflict with the existing provisions of the Treaty. Thus, in the Committee's view, no change in the Treaty is required for the stated future objectives to be achieved.`

Reason

Self-explanatory. The case for the conclusion stated in point 3.10 is set out in points 3.7.3 to 3.9.1.

Result of the vote

For: 32, against: 43, abstentions: 18.