WRITTEN QUESTION E-2621/00

by Carles-Alfred Gasòliba i Böhm (ELDR) to the Commission

(1 August 2000)

Subject: Unequal conditions for certain undertakings

The Treaty provides for the creation of an internal market in which, among other factors, free competition and non-discrimination among undertakings are vital conditions if its proper operation is to be ensured.

Foreseeable developments on the market for water in the European Union make it likely that distortions of competition will be produced among undertakings in the various Member States. If the common market for water is to function properly, it is necessary to guarantee transparency, non-discrimination among undertakings and reciprocity.

With regard to the Commission's interpretative communication on concessions in Community law governing public service contracts, why has the Commission not taken up a position in its communication on administrative concessions regarding the unequal conditions of competition to which private undertakings from states whose markets have largely been opened up are subject by comparison with public undertakings from countries whose market is closed to competition?

Why has the Commission made no provision for opening up the market in water and requiring reciprocity, as is the case in other sectors such as electricity?

Why has the Commission not taken up a position on public undertakings responsible for supplying water in their own countries which take part in invitations to tender for the supply of water in a country whose market is more open? Why has no provision been made for greater transparency in such cases so as to prevent the undertakings concerned from using public resources to finance activities outside the area of public service for which they are responsible?

Answer given by Mr Bolkestein on behalf of the Commission

(18 October 2000)

As the Honourable Member rightly points out, in contrast to the electricity or gas sectors, there are no specific measures applicable at European level designed to eliminate national barriers in the water sector. However, this absence of specific standards does not preclude the application of the rules of the EC Treaty on the internal market and competition. Indeed, water supply and sewage treatment fall under the economic activities covered by these rules.

The interpretative communication on concessions under Community law(1) (hereafter referred to as communication) mentioned by the Honourable Member is intended to inform economic operators and government authorities of the rules governing concessions in all sectors, including water.

The Commission understands the concerns raised by the Honourable Member. However, it would reiterate that this communication does not set out to examine the conditions of competition referred to between public and private undertakings, specifically in the water sector, and still less to take a position on the issue. The Commission's intention was in fact to identify and explain the rules and general principles of the EC Treaty which already apply to the conditions for granting concessions, without prejudice to any specific sectoral systems and the rules of competition.

As to the distortions of competition affecting private undertakings which are based in Member States with very open markets, in contrast to public undertakings in Member States whose markets are closed to competition, this issue concerns the rules on competition, specifically Article 86 (ex Article 90) of the EC Treaty and the rules on state aid, and falls outside the scope of this communication. Nevertheless, it should be noted that the EC Treaty remains neutral in regard to the system of property ownership in the Member States (Article 295 (ex Article 222)) and that the Commission must therefore take a neutral stance on the Member States' option of choosing between direct management of services of general interest and allocating such services to third parties.

The Commission considers its interpretative communication to be an important instrument for providing greater transparency in the public utilities, including water. The Commissions states that the Member States must ensure these concessions are granted under conditions which comply with Community law, specifically in regard to advertising, and competition and equal opportunities between qualified operators. Correct application of these principles and rules should therefore allow undertakings in the Community to benefit from wider access and greater transparency in the management of public utilities, and water in particular.

As regards the application of rules on competition under the EC Treaty, the Commission also draws the Honourable Member's attention to the recent adoption by the Commission of a communication on services of general interest(2). This communication clarifies the Commission's policy in respect of services of general interest in response to a request from the Lisbon European Council. The absence of specific rules harmonising the conditions for opening up the water sector to competition does not present an obstacle to applying the principles of the EC Treaty and the existing rules on competition to this sector.

Finally, the Commission would inform the Honourable Member of the existence of a Directive on the transparency of financial relations between Member States and public undertakings(3). This Directive requires Member States to ensure that public undertakings maintain separate and reliable accounts relating to different activities carried out by the same undertaking. This measure is specifically intended to guarantee the fair and effective application of the rules on competition to these undertakings in accordance with Article 86 of the EC Treaty.

(1) OJ C 121, 29.4.2000.

(2) IP/00/1022 of 20 September 2000.

(3) Commission Directive 2000/52/EC of 26 July 2000 amending Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings (OJ L 193, 29.7.2000).