WRITTEN QUESTION E-2250/02 by Robert Goebbels (PSE) to the Commission. Broad economic policy guidelines for Luxembourg.
Date: 2002-07-23
Institutions: European Parliament, Provisional data
Subjects: Luxembourg, consumer price, consumer protection, free price, inflation, price control, prices policy

C 137 E/60

Official Journal of the European Union

EN

12.6.2003

(2003/C 137 E/067)

WRITTEN QUESTION E-2249/02

by Pedro Marset Campos (GUE/NGL) to the Council

(23 July 2002)

Subject: Construction of a hydroelectric power station on indigenous land in Chile

The company Endesa Chile, which has been privatised and acquired by Endesa España, is in the process of
constructing the Ralco hydroelectric power station. This will result in the flooding of 630 hectares of
indigenous land and the disappearance of two Pehuenche Indian communities which have always existed
in the Alto Bio Bio, and contravenes Indigenous Law No 19.253 of 5 October 1993 and the Basic Law on
the Environment No 19.300 of 9 March 1994.

Furthermore, adverse opinions on this construction project have been issued by 22 relevant Chilean public
bodies, and the World Bank has refused to grant it funding because it contravenes its code of ethics.

Eight of the 93 families living in the area have asserted their rights under the Indigenous Law and refused
to be relocated, while the others have caved in to pressure, threats and blackmail.

The Chilean government is affecting ignorance of its own laws, and has set up a Committee of Wise Men
to put a figure on the compensation payable to these eight families. This is unlawful and sets an alarming
precedent for the indigenous peoples of Chile and their survival.

1.

Is the Council aware of this situation?

Does it not feel there is a need, in the light of the recently signed EU-Chile Association Agreement,

2.
to demand respect of democracy clauses and the indigenous rights they contain?

3. What measures is it considering taking with regard to this violation of indigenous rights and
therefore of the EU-Chile Association Agreement?

Reply

(6 February 2003)

As the situation referred to in the Honourable Member’s written question has not come to the

1.
Council’s notice, the Council has not had occasion to discuss it.

2.
The EU-Chile Association Agreement was initialled by its negotiators (cid:1) the Commission and the
Chilean authorities (cid:1) on 10 June 2002. The Council received the Commission proposal on 7 October
2002. The signing of the Agreement has been placed on the agenda for the Council meeting on
18 November 2002. Following the signing, the Chilean authorities will set in motion their domestic
ratification procedure. Once that ratification has been completed and notified, the Council will take a
decision,
the
provisional application of the Agreement.

in accordance with established procedures, on the implementation of measures for

3.
The Council would point out, however, that it does hold regular political dialogue meetings with the
Chilean authorities, at various levels. If necessary, it will not hesitate to raise with the Chilean authorities
any questions concerning serious violations of human rights in general or any specific cases of violation of
indigenous communities’ rights.

(2003/C 137 E/068)

WRITTEN QUESTION E-2250/02

by Robert Goebbels (PSE) to the Commission

(23 July 2002)

Subject: Broad economic policy guidelines for Luxembourg

In its proposals on broad economic policy guidelines adopted by the Council on 21 June CSL 10093/2002
(cid:1) COM(2002) 191 final, the Commission stated with regard to the Luxembourg economy that ‘some
elements of the competition framework, such as obsolete legislation on prices, have the potential to restrict
competition on product markets’. The ‘abolition of fixed and monitored prices’ was therefore proposed.

12.6.2003

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Official Journal of the European Union

C 137 E/61

Given that Luxembourg has tended to be in the group of Member States with the lowest rates of inflation
for the last 15 to 20 years, on what verifiable facts has the Commission based its assertion of the supposed
ineffectiveness of the price administration system in that country? Can it quote specific cases in which
competition has been restricted on the Luxembourg products market?

Did the Luxembourg government suggest that the Commission hand it a pretext to attack a price control
system that is in no way obsolete, having proved its worth down the years? Or do the Commission’s
proposals draw on that liberal ideology which bristles at the words ‘price control’?

Answer given by Mr Solbes Mira on behalf of the Commission

(16 September 2002)

As the Honourable Member rightly points out, the ‘broad economic policy guidelines’ adopted by the
Council in June 2002 refer to the danger of restricted competition on the product market arising from
certain laws and regulations in force in the Grand Duchy of Luxembourg, and in particular the provisions
relating to fixed and monitored prices.

The question is not whether the price controls are effective or not in holding inflation down. The point is
that there is legislation which can limit the degree of competition in the Luxembourg economy to the
detriment of the consumers.

In Luxembourg, prices are controlled by the Prices Office Act 1983; the Office’s task is to supervise,
monitor and fix prices. This body is part of the Competition and Consumer Protection Directorate in the
Ministry of Economic Affairs. It authorises increases in the maximum prices of certain products.

The official maximum price can be applied to the prices of household bread, petroleum products,
proprietary medicinal products, taxi rides, home-produced wines such as Ebling and Rivaner served in
cafés, the maximum margins in trade in household furniture, gingerbread,
imported branded goods,
heating equipment and cinema tickets.

The fixing of maximum prices may at first sight seem to be to the consumer’s advantage, but unfortunately
this is not borne out in practice. The Luxembourg Minister for Economic Affairs has stated that, in the
past, state intervention on prices led to rigid markets and the imminent danger that all products would be
aligned on the fixed maximum price. This could distort competition and prevent the seller from passing on
legitimate cost increases, and also have the practical effect of making consumers pay the maximum price
because producers could align their prices on the price implicitly deemed acceptable by the Office.

The Luxembourg authorities came to the conclusion that there were no grounds for applying these rules to
all products and that it was accordingly more prudent to liberalise prices to enable producers to evaluate
the parameters of their firms’ individual situation and determine the selling price independently. This new
form of competition should generate the lowest prices that are possible on each sector’s own parameters.

Luxembourg has already repealed, among others, the 1992 regulation fixing the price of home-produced
wine and the regulation fixing the price of bakery products. A Bill has been drafted to reform the price
legislation. Dropping the current system will not fully liberalise prices. Initially, the reform will not apply
to pharmaceutical products, and state intervention will always be possible in cases where competition is
lacking or in the event of a short term dysfunctioning of a market.