Opinion of the Committee of the Regions on the "Communication from the European Commission: Services of General Interest in Europe"

(2002/C 19/04)

THE COMMITTEE OF THE REGIONS,

having regard to the communication from the European Commission: Services of General Interest in Europe (COM(2000) 580 final);

having regard to the decision of its Bureau on 12 December 2000, in accordance with Article 265(5) of the Treaty establishing the European Community, to draw up an opinion on this matter and to instruct Commission 6 for Employment, Economic Policy, Single Market, Industry and SMEs to undertake the preparatory work;

having regard to the communication from the European Commission: Services of General Interest in Europe (COM(1996) 443 fin);

having regard to the resolution of the European Parliament of 17 December 1997 (R4-0357/1997) on the said communication;

having regard to the opinion of the Economic and Social Committee of 22 September 1997 (CES 0605/1997);

having regard to the opinion of the Committee of the Regions of 16 January 1997 (CdR 148/96 final)(1);

having regard to the Lisbon European Council;

having regard to the Charter of Fundamental Rights;

having regard to the Nice European Council;

having regard to the conclusions of the Stockholm summit;

having regard to the draft opinion (CdR 470/2000 rev. 2) adopted by a majority by Commission 6 on 2 July 2001 (rapporteur: Mr Joseph (F/PSE); mayor of Bastidonne, vice-president of the Provence-Alpes-Côte d'Azur region);

whereas services of general interest have a key role to play for society as a whole;

whereas modern, global society can only be viable if it is based on a European model of social organisation that balances its three supporting pillars: a democratic political system with fundamental freedoms and human rights, a market economy and social cohesion;

whereas the concept of service of general interest exists in all countries, even in different forms and is underpinned by shared values on which European integration is based;

whereas the Europe that is being built, looking ahead to the IGC in 2004, must become a true Europe of citizens,

adopted the following opinion at its 40th plenary session on 19 and 20 September 2001 (meeting of 20 September).

The Committee of the Regions

welcomes the European Commission's communication on Services of General Interest in Europe which sets out to clarify the respective roles of the various levels of public authority and the competition and internal market measures that apply to services of general interest (SGIs) and its intention to develop a European framework for the proper functioning of services of general interest in which national, local and regional authorities, together with the Community, have their role to play in accordance with Article 16 of the EC Treaty;

welcomes the respect for the principle of subsidiarity with regard to the freedom that the Member States have to define what constitutes a service of general interest and decide how it should be used as specified in the Commission communication;

considers, however, that the European Commission's contribution falls short of the legitimate expectations of the various actors concerned, both in terms of the role and mission of SGIs and the proposals set out in the European Commission's communication;

notes, moreover, that the European Commission's communication contributes to a clearer understanding of the true importance of SGIs in the European Union, but that it has no legal value in the hierarchy of Community law and can only be considered as a position paper, which does not bind the European Commission in its decisions;

has the following remarks and recommendations to make on the European Commission's communication.

1. The mission of Services of General Interest in the European Union

1.1. The Committee of the Regions (CoR) notes with interest that in its definition of the mission of SGIs the European Commission recognises their specific nature and social and economic role, in particular by referring to a broad concept of the needs of users who must be covered by SGIs. In this respect, the Committee welcomes the explicit reference to the specific needs of certain population groups (e.g. the disabled or those on low incomes) and the obligation to provide complete territorial coverage of essential services, not always governed by profitability criteria, including remote or inaccessible areas, whose economic development will be boosted and whose social and territorial cohesion will be improved.

1.2. The Committee therefore considers that SGIs are part of the European social model and that they contribute to the essential values of solidarity and cohesion. In this respect, they also play an important role in achieving the primary goals of the European Union.

1.3. The Committee notes that the European Commission's definition of SGIs is not very clear and that it maintains confusion as to the nature of their general-interest function and the legal scope of their mission in Community law.

1.4. The Committee also draws attention to the definition of SGEIs as envisaged in Article 16 of the Treaty which is also too vague: "SGEIs operate on the basis of principles and conditions which enable them to fulfil their missions." Although this wording recognises the specific nature of the missions of SGEIs, it is open to interpretation given the lack of a general framework to define the criteria for assessing their missions and the conditions of their application. However, the Committee feels that the substance of Article 16 should be heeded when the Commission frames regulations for the individual supply areas.

1.5. The Committee recommends that joint values and principles be laid down in the Treaty to guide the application of SGIs in the European Union in order to provide a reference framework on this issue at Community level.

2. The role of SGIs in the economic, social and territorial cohesion of the European Union

2.1. The Committee supports the European Commission's explicit reference to the leading role played by SGIs in strengthening economic, social and territorial cohesion and believes that the requirements of economic, social and territorial cohesion should be given priority in making provisions for services of general interest and regulations to govern them. Furthermore, the Committee insists on the fundamental role played by local and regional authorities in defining and developing SGIs.

2.2. The Committee wishes to stress, on this issue, that the principle of economic and social cohesion under Article 2 of the Treaty takes precedence over competition policy and that the introduction of indirect management arrangements in SGIs must be geared to achieving higher levels of prosperity for citizens. Fulfilling the mission of SGIs must, therefore, be entirely subject to Community policy and that the mission itself should be clearly defined in Article 3 of the Treaty, with the two aims of general interest and competition serving the same purpose, i.e. citizens' satisfaction and the right to universal service.

2.3. The Committee supports the right to universal service guaranteed over time and therefore wonders why the European Commission's communication describes universal service as a transitional system "during the process of passing from monopoly provision to openly competitive markets".

2.4. The Committee therefore intends to strengthen the reference to the following guiding principles taken from the European Commission's communication for the establishment of SGIs:

- the right of public authorities to consider that certain services are in the general interest when market forces may not result in a satisfactory provision, and that they take the form of general interest obligations;

- the guarantee of universal access, which is the obligation to provide a given service throughout the territory of a country at an affordable price and to a similar standard;

- complete territorial coverage of essential services in remote or inaccessible areas and in "problem" inner-city areas;

- the need to view essential natural elements and rare resources (such as air, water) as "common property" which can be managed by public authorities, agencies or companies.

2.5. The Committee also wishes to point out the importance of applying the principle of "equity" in financing services of general interest for outlying, upland and sparsely populated regions in order to promote not only economic and social cohesion, but also sustainable development (regional and local) and job creation. This implies reviewing arrangements for financing SGIs, in particular, truly allowing for financial solidarity compensation to be made insofar as this would comply with the actual achievement of general-interest missions. In this respect the Committee does not share the European Commission's opinion of the central issue of State aid, notably "de minimis" aid which might be applied to SGIs. Although the European Commission recognises the need to fund extra costs arising from public services of general interest, it has limited State aid to these. The Commission's communication precludes methods of financing based particularly on compensation. The Commission should specify that this limitation to extra costs should not prevent individual Member States, in the light of their situations and needs, from framing different compensation systems aimed at creating equivalent conditions throughout their territory for the provision of services in the general interest.

2.6. The Committee wishes to point out that the concept of territorial cohesion, which is as fundamental to economic and social cohesion as it is to fulfilling the missions of SGIs, is recognised in Article 16 of the Treaty on SGEIs but not in the Treaty's basic principles, and considers that this reference should be included in the Treaty article on economic and social cohesion.

2.7. The Committee considers, given forthcoming EU enlargement, that SGIs should play an essential role for territorial cohesion and the implementation of the acquis communautaire in these countries, whose levels of development are considerably lower than the current Community average.

3. The application of the principle of subsidiarity in establishing and providing general interest services

3.1. The Committee shares the European Commission's explicit reference to the principle of subsidiarity which must guide the choice of what constitutes an SGI and how it is to be provided, and mentions that "action at appropriate level, Community, national, regional or local level needs to be taken to establish criteria for services of general interest".

3.2. The Committee shares the European Commission's view in considering that responsibility for deciding whether a service is to be regarded as a service of general interest and how it should be operated are issues that are first and foremost decided locally or regionally and that this should be done in such a way as to respect the Constitutions of the Member States.

3.3. The Committee believes, given that local and regional levels are closest to the citizens concerned, that they are best placed to judge what services of general interest should be implemented, how they are to be managed and their quality, taking into consideration the type of population involved.

4. The application of competition principles to the mission of SGIs

4.1. The Committee considers that the clarifications given by the European Commission on the relationship between services of general interest and the single market are not entirely satisfactory, largely because it does not give equal consideration to EU competition policy and SGIs.

4.2. The Committee notes, in this respect, the three principles underlying the application of Article 86 of the Treaty on competition and wishes to include the following in respect of their application to SGEIs:

- Neutrality as regards the public or private ownership of companies implies that there is not necessarily a correlation between the privatisation of public companies for the sake of competition policy and fulfilling the mission of SGIs, as the latter can be achieved by both private and public companies; in addition the indirect management of SGIs must be governed by the principles of effectiveness, efficiency and proximity to citizens.

- Member States' freedom to define means that Member States are primarily responsible for defining what they regard as services of general economic interest on the basis of the specific features of the activities, the only limitation being a check to make sure that there has been no apparent error. This principle should apply from local or regional level by virtue of the principle of subsidiarity and considering the socio-economic specificity of the regions concerned.

- Proportionality which results from Article 86(2) implies that consideration be given to the means required to fulfil the general-interest mission and that these can, contrary to the European Commission's opinion, create trade distortions arising from factors such as remoteness (both geographical and terrain-related), social exclusion and sustainable development, etc. so that everyone has proper access to essential services.

4.3. In order to provide more legal and planning certainty for municipalities and regions when providing services of general interest, the Committee feels that it is absolutely essential for so-called secondary legislation (directives, regulations, communications) to lay down the guidelines followed by the Commission as to the scope and application of European competition law in particular. In this context the Committee welcomes the efforts of the Commission to clarify its practice, especially as regards the law on aid, by providing lists of examples and data bases. However, the Committee thinks it would be desirable to have some general, abstract regulations, whose content went beyond being simply a collection of individual case decisions.

5. The application of the "efficiency" principle in the provision and management of SGIs

5.1. The Committee considers it imperative for the mission of services of general interest to meet adequately the identified needs of users and to subscribe to the requirements of efficiency and quality for services offered to users.

5.2. The Committee advocates that all the relevant authorities within the EU focus on services of general interest in order to ensure better quality, more efficient management and the guarantee that users will be protected, and recommends framing common guidelines for:

- the quality of service provision;

- funding service activities;

- management and financial transparency;

- the evaluation of services and user review.

Given the legal uncertainty surrounding SGIs, and insofar as it is large public or private bodies which take on this type of service (SGIs and SGEIs), the Committee believes it is important for the protection of users to be effective, since they are unable to defend themselves against potential failure on the part of the large organisations concerned to meet quality and/or price obligations, as these organisations are in a much stronger position than consumers.

5.3. The Committee adheres to the basic principles set out in the Commission communication intended to guide the provision of SGIs, i.e.:

- clear definition of basic obligations to ensure good quality service provision;

- full transparency e.g. on financing services (tariffs, terms and conditions, choice and financing of providers);

- a guarantee of universal access for users;

- choice of service and, where appropriate, of supplier and effective competition between suppliers;

- independent review and control of service provision.

6. Boosting the idea of a public interest obligation

6.1. The Committee of the Regions points out that:

- Article 16 of the Treaty only applies to services of general economic interest and not to all SGIs, and that the European Commission's communication implicitly confirms this, as it only refers to services of general economic interest when the question of competition policy arises and thus adds to the confusion over the legal status of the mission of SGIs in Community law;

- SGIs are only included in the Community's legal panoply in the concepts of universal service, service of general economic interest and public service, which are embodied in Court of Justice judgements;

- the jurisprudence of the Court of Justice recognises that SGIs' general-interest missions do by nature vary, as they apply to individual cases. They cannot therefore provide legal certainty to providers of SGIs in their own right.

6.2. The Committee notes the legal uncertainty in the Treaty on the missions of services of general interest and considers that the European Commission's communication approaches services of general interest as an exception to a common legal system (free competition), which is contrary not only to the spirit but also the letter of Article 16, included as EC "principles", instead of taking positive steps to promote their role in developing social and territorial cohesion.

6.3. The Committee believes that the mission of services of general interest should be included in the fundamental objectives of the European Union on a par with the accomplishment of the single market, while respecting the principle of subsidiarity. In this manner, creating the single market and pursuing the general interest are complementary goals in the European endeavour and would enhance economic, social and territorial cohesion in the European Union. The regulation, arrangement and organisation of the tasks of services of general interest is the job, above all, of the regions and municipalities. In the Committee's view it is urgently necessary in this context to guarantee at European level, more clearly than hitherto, that public interest obligations will be respected whilst competition is being promoted. The guarantee of equal access, security of supply and continuity of service, quality of service as well as democratic control and public responsibility for providing the service are basic criteria for providing services in the general economic interest.

6.4. The Committee recommends legal recognition of SGIs in the Treaty and suggests inserting the mission of services of general interest in a suitable form in Article 3 of the Treaty, in order to back up the exercising of powers by the Member States in the area of services of general interest.

7. A common European framework of reference for the missions and operations of SGIs

7.1. The Committee notes with interest the guidelines put forward by the European Commission on the European approach and role of SGIs in Community policy, i.e.:

- the prime role of SGIs in supporting the competitiveness of the European economy, the quality of services provided and consumer protection;

- the prime role of SGIs in enhancing economic, social and territorial cohesion: SGI networks are an essential aspect of cohesion, especially in rural and deprived urban areas;

- respect for the principle of subsidiarity in Member States' freedom to decide what constitutes a service of general interest;

- reference to the promotion of social and territorial cohesion under Article 16 of the Treaty;

- the need to adopt a pro-active attitude with respect to SGIs and to encourage a European vision of SGIs in partnership with the national, regional and local levels.

7.2. The Committee considers that these principles meet some of its concerns about services of general interest, but they are very vague and fall short of its objectives. Furthermore, the European Commission's position is contradictory in that the communication gives priority to accelerating public sector liberalisation as the immediate response to these guidelines.

7.3. The Committee recommends, in addition to specific legal recognition for the mission of services of general interest in the Treaty, the drafting of a common framework of references which would guide SGIs within the EU.

7.4. The Committee notes with interest the reference in the European Commission's communication to other Community actions which have the same goals of consumer protection and economic, social and territorial cohesion as SGIs and which could help the latter to fulfil their mission and, in particular, to two initiatives directly connected with European spatial development policy:

- the adoption of a European Spatial Development Perspective setting out the policy options for the development of the European territory;

- the creation of a European Research Area including aspects on the "territorialisation" of research and electronic networks.

7.5. The CoR believes that these Community initiatives are important to a future approach to regional policy and the Structural Funds, in particular, in terms of the development of transnational and interregional co-operation underpinned by polycentrism and the constitution of trans-European networks of SGIs.

7.6. In order to complement its work and with a view to drawing up a new opinion in anticipation of the IGC in 2004, the Committee intends to undertake a study on the definition and development of SGIs in the different Member States.

Brussels, 20 September 2001.

The President

of the Committee of the Regions

Jos Chabert

(1) OJ C 116, 14.4.1997, p. 52.