Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - White Paper on services of general interest
Date: 2004-05-12
Institutions: European Commission
Subjects: citizens' Europe, competitiveness, economic and social cohesion, liability, provision of services, public authorities, public service, services of general interest

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.5.2004 
COM(2004) 374 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS  

White Paper on services of general interest 

EN 

   EN 

 
 
 
  
TABLE OF CONTENTS 

Introduction...............................................................................................................................3 

A shared responsibility of Public Authority in the Union.........................................................4 

An essential component of the European model.......................................................................4 

A responsibility for public authorities ......................................................................................5 

A shared responsibility of the Union and its Member States....................................................6 

Guiding principles of the Commission’s approach...................................................................6 

Enabling public authorities to operate close to the citizens ......................................................7 

Achieving public service objectives within competitive open markets ....................................7 

Ensuring cohesion and universal access ...................................................................................7 

Maintaining a high level of quality, security and safety ...........................................................8 

Ensuring consumer and user rights ...........................................................................................9 

Monitoring and evaluating the performance .............................................................................9 

Respecting diversity of services and situations.......................................................................10 

Increasing transparency ..........................................................................................................10 

Providing legal certainty .........................................................................................................11 

New Orientations for a Coherent policy....................................................................... 11 

Respecting diversity in a coherent framework........................................................................11 

Clarifying and simplifying the legal framework for the compensation of public service 
obligations...............................................................................................................................12 

Providing a clear and transparent framework for the selection of undertakings entrusted with 
a service of general interest.....................................................................................................15 

Recognising fully the general interest in social and health services .......................................16 

Assessing the results and evaluating performance..................................................................18 

Reviewing sectoral policies ....................................................................................................19 

Reflecting our internal policies in our international trade policy ...........................................20 

Promoting services of general interest in development co-operation .....................................21 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

3.6. 

3.7. 

3.8. 

3.9. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

ANNEX 

2 

 
 
  
 
1. 

INTRODUCTION 

the  crucial 

In recent years, the role of the European Union in shaping the future of services of 
general  interest1  has  been  at  the  centre  of  the  debate  on  the  European  model  of 
society.  Recognising 
importance  of  well-functioning,  accessible, 
affordable  and  high-quality  services  of  general  interest  for  the  quality  of  life  of 
European citizens, the environment and the competitiveness of European enterprises, 
the  European  Commission  adopted  a  Green  Paper  on  services  of  general  interest,2 
which launched a broad public consultation on how best to promote the provision of 
high-quality  services  of  general  interest  in  the  European  Union.  The  Green  Paper 
invited  comments  on  the  overall  role  of  the  European  Union  in  defining  the  public 
service  objectives  pursued  by  services  of  general  interest  and  on  the  way  these 
services are organised, financed and evaluated. 

The  debate  launched  by  the  Green  Paper  met  with  considerable  interest  and  was 
welcomed  by  many  interested  parties.  The  Commission  received  close  to  300 
contributions  from  a  wide  variety  of  respondents,  including  many  of  the  Member 
States3.  Commission  staff  have prepared a Report on the public consultation which 
analyses the contributions submitted and provides background material to the present 
White Paper4. 

In  line  with  the  request  made  by  the  European  Parliament  in  its  Resolution  on  the 
Green  Paper  of  14  January  20045,  the  Commission  draws  its  conclusions  from  the 
debate in the present White Paper.  

The European Economic and Social Committee6 and the Committee of the Regions7 
have also discussed the issues raised by the Green Paper and given their views. 

In addition, services of general interest were also the subject of intense debate within 
the Convention on the future of Europe.  

Finally, the Court of Justice has also examined various questions related to services 
of general economic interest, in particular with regard to their financing, and handed 
down a landmark decision on public service compensation8. 

The  debate  has  revealed  considerable  differences  of  views  and  perspectives. 
Nevertheless,  a  consensus  seems  to  have  emerged  on  the  need  to  ensure  the 
harmonious  combination  of  market  mechanisms  and  public  service  missions. 

1 
2 
3 

4 

5 

6 
7 

8 

See definition of terms in Annex 1 
COM(2003) 270, 21.5.2003 
The full text of the contributions is available on the Commission’s website at: 
http://europa.eu.int/comm/secretariat_general/service_general_interest/comments/public_en.htm 
Report on the public consultation on the Green Paper on services of general interest, Commission Staff 
Working Paper, SEC(2004) 326, 15.03.2004, available at: 
http://europa.eu.int/comm/secretariat_general/service_general_interest 
European Parliament  Resolution on  the  Green  Paper on  services of general  interest,  14.01.2004,  (T5-
0018/2004) 
Opinion on the Green Paper on services of general interest, CESE 1607/2003, 11.12.2003 
Opinion  of  the  Committee  of  the  Regions  of  20  November  2003  on  the  Green  Paper  on  services  of 
general interest, CdR 149/2003 final 
Judgment of 24 July 2003 in the case C-280/00 Altmark Trans 

3 

 
 
  
 
                                                 
Services of general interest and the context in which they are provided, including the 
European  Union  itself,  are  constantly  evolving  and  will  continue  to  evolve.  By 
submitting this White Paper, the Commission does not intend to conclude the debate 
that has developed at European level. Its aim is to make a contribution to the ongoing 
discussion and to take it further by defining the Union’s role and a framework that 
allows these services to function properly. 

The White Paper sets out the Commission’s approach in developing a positive role 
for  the  European  Union  in  fostering  the  development  of  high-quality  services  of 
general interest and presents the main elements of a strategy aimed at ensuring that 
all  citizens  and  enterprises  in  the  Union  have  access  to  high-quality  and  affordable 
services.  The  document  focuses  on  just  some  of  the  key  issues  of  the  debate  as  it 
would  be  impossible  to  address  all  the  issues  raised  during  the  public  consultation. 
More specific issues will be addressed in the context of the relevant policies. 

2. 

A SHARED RESPONSIBILITY OF PUBLIC AUTHORITY IN THE UNION  

The public discussion on the Green Paper has shown that there is broad agreement on 
the  importance  of  high-quality  services  of  general  interest  for  European  societies. 
The division of tasks and powers between the Union and the Member States leads to 
a shared responsibility of the Union and the public authorities in the Member States 
but  detailed  definition  of  services  to  be  provided  and  delivery  of  those  services 
remain the responsibility of the Member States.. 

2.1. 

An essential component of the European model 

The debate on the Green Paper has strongly confirmed the importance of services of 
general  interest  as  one  of  the  pillars  of  the  European  model  of  society.  In  spite  of 
sometimes  substantial  differences  in  the  views  and  perspectives  of  the  various 
participants in the debate, the consultation has shown a broad consensus on the need 
to ensure the provision of high-quality and affordable services of general interest to 
all  citizens  and  enterprises  in  the  European  Union.  It  has  also  confirmed  the 
existence  of  a  common  concept  of  services  of  general  interest  in  the  Union.  This 
concept  reflects  Community  values  and  goals  and  is  based  on  a  set  of  common 
elements, including: universal service, continuity, quality of service, affordability, as 
well as user and consumer protection.  

In  the  Union,  services  of  general  interest  remain  essential  for  ensuring  social  and 
territorial  cohesion  and  for  the  competitiveness  of  the  European  economy.  Citizens 
and  businesses  rightly  expect  to  have  access  to  affordable  high-quality  services  of 
general  interest  throughout  the  European  Union.  For  the  citizens  of  the  Union,  this 
access  is  an  essential  component  of  European citizenship and necessary in order to 
allow them to fully enjoy their fundamental rights. For enterprises, the availability of 
high-quality  services  of  general  interest  is  an  indispensable  prerequisite  for  a 
competitive  business  environment.  The  provision  of  high  quality,  accessible  and 
affordable  services  of  general  interest  meeting  the  needs  of  consumers  and 
enterprises is therefore an important element contributing to reach the strategic goal 
of  the  Union  “to  become  the  most  competitive  and  dynamic  knowledge-based 

4 

 
 
  
 
economy in the world capable of sustainable economic growth with more and better 
jobs and greater social cohesion9”. 

As the Commission highlighted in the Green Paper, services of general interest have 
helped to achieve the Union’s objectives in a large number of Community policies. 
At  the  same  time,  Community  policies  have  significantly  contributed  to  improving 
the quality, choice and efficiency of a number of services of general interest. 

In line with the principles set out in Article 16 of the Treaty10 and in Article 36 of the 
Charter  of  Fundamental  Rights,11  the  Commission  is  committed  to  taking  full 
account  of  the  specific  role  of  services  of  general  interest  in  the  policies  and 
activities  falling  within  its  sphere  of  competence.  It  will  aim  to  ensure  that  the 
European  Union  continues  to  make  a  positive  contribution  to  the  development  of 
services  of  general  interest  as  part  of  the  European  model,  while  respecting  the 
diversity of traditions, structures and situations that exists in the Member States. In 
line with the principles of better regulation12, the prior assessment of the impact of 
major  initiatives13  as  well  as  the  regular  evaluation  of  the  relevant  Community 
policies will assist in achieving this objective. 

At this crucial point in the development of the Union, particular attention will have to 
be  paid  to  developments  in  the  new  Member  States  and  to  their  specific  needs 
resulting in particular from the transformation of their economies during the last two 
decades. 

2.2. 

A responsibility for public authorities 

While  the  provision  of  services  of  general  interest  can  be  organised  in  cooperation 
with  the  private  sector  or  be  entrusted  to  private  or  public  undertakings,  the 
definition  of  public  service  obligations  and  missions  remains  a  task  for  the  public 
authorities at the relevant level. The relevant public authorities are also responsible 
for  market  regulation  and  for  ensuring  that  operators  accomplish  the  public  service 
missions entrusted to them.  

It was stressed in the consultation on the Green Paper that within the framework of a 
competitive internal market the relevant public authorities must retain the powers to 
ensure  that  defined  public  policy  objectives  are  effectively  being  achieved  and  that 
democratic  choices  are  respected,  including  with  regard  to  the  level  of  quality  and 
the resulting costs. It is necessary for the relevant public authorities to have adequate 
instruments and expertise at their disposal. The existing sector-specific Community 

9 

10 

11 

12 

13 

Lisbon  European  Council  of  23  and  24  March  2000,  Presidency  conclusions,  paragraph  5.  See 
http://europa.eu.int/comm/lisbon_strategy/intro_en.html for detail 
Article 16 reads: “Without prejudice to Articles 73, 86 and 87, and given the place occupied by services 
of general economic interest in the shared values of the Union as well as their role in promoting social 
and  territorial  cohesion,  the  Community  and  the  Member  States,  each  within  their  respective  powers 
and within the scope of application of this Treaty, shall take care that such services operate on the basis 
of principles and conditions which enable them to fulfil their missions” 
Article 36 reads: “The Union recognises and respects access to services of general economic interest as 
provided for in national laws and practices, in accordance with the Treaty establishing the European 
Community, in order to promote the social and territorial cohesion of the Union” 
European  Governance:  Better  lawmaking,  Communication  from  the  Commission,  COM(2002)  275 
final, 5.6.2002 
Commission Communication on Impact Assessment, COM(2002) 276, 5.6.2002 

5 

 
 
  
 
                                                 
rules provide for specific legal instruments and powers that allow the authorities of 
the  Member  States  to  enforce  public  policy  objectives.  Above  all,  Member  States 
should  pay  attention  to  the  increasingly  complex  tasks  of  the  regulatory  authorities 
and provide them with all necessary instruments and resources. 

2.3. 

A shared responsibility of the Union and its Member States 

In  its  Green  Paper,  the  Commission  already  stated  that  the  Treaty  provides  the 
Community  with  a  whole  range  of  means  to  ensure  that  users  have  access  to  high-
quality  and  affordable  services  of  general  interest  in  the  European  Union. 
Nevertheless, it is primarily for the relevant national, regional and local authorities to 
define, organise, finance and monitor services of general interest.  

This shared responsibility is the concept underlying the provision of Article 16 of the 
EC Treaty that confers responsibility upon the Community and the Member States to 
ensure,  each  within  their  respective  powers,  that  their  policies  enable  operators  of 
services  of  general  economic  interest  to  fulfil  their  missions.  The  right  of  the 
Member  States  to  assign  specific  public  service  obligations  to  economic  operators 
and  to  ensure  compliance  is  also  implicitly  recognised  in  Article  86(2)  of  the  EC 
Treaty14. 

In the debate on the Green Paper there was broad agreement that it was not necessary 
to bestow the Community with additional powers in the area of services of general 
interest. In principle, the Commission agrees with this analysis. It is of the opinion 
that  the  powers  currently  conferred  on  the  Community  with  regard  to  services  of 
general interest are appropriate and sufficient in order to ensure that well-functioning 
services can be maintained and developed throughout the Union. 

At the same time, the Commission welcomes the amendment of the provisions of the 
current Article 16 EC Treaty as proposed by the European Convention in Article III-
6 of the draft Constitutional Treaty. Article III-6 reads: 

“Without  prejudice  to  Articles  III-55,  III-56  and  III-136,  and  given  the  place 
occupied  by  services  of  general  economic  interest  as  services  to  which  all  in  the 
Union  attribute  value  as  well  as  their  role  in  promoting  social  and  territorial 
cohesion, the Union and the Member States, each within their respective powers and 
within the scope of application of the Constitution, shall take care that such services 
operate  on  the  basis  of  principles  and  conditions,  in  particular  economic  and 
financial,  which  enable  them  to  fulfil  their  missions.  European  laws  shall  define 
these principles and conditions.” 

Once the Constitutional Treaty has entered into force, this provision will provide an 
additional  legal  basis  for  Community  action  in  the  field  of  services  of  general 
economic  interest,  within  the  powers  of  the  Union  and  within  the  scope  of 
application of the Constitution. 

14 

Article  86  (2)  provides:  “Undertakings  entrusted  with  the  operation  of  services  of  general  economic 
interest  …  shall  be  subject  to  the  rules  contained  in  this  Treaty,  in  particular  to  the  rules  on 
competition,  insofar  as  the  application  of  such  rules  does  not  obstruct  the  performance,  in  law  or  in 
fact, of the particular tasks assigned to them. The development of trade must not be affected to such an 
extent as would be contrary to the interests of the Community” 

6 

 
 
  
 
                                                 
3. 

Guiding principles of the Commission’s approach 

The Commission’s approach is based on a number of principles which are reflected 
in the Community’s sectoral policies and can be clarified on the basis of the results 
of the debate on the Green Paper: 

3.1. 

Enabling public authorities to operate close to the citizens 

In  the  consultation  it  was  highlighted  that  services  of  general  interest  should  be 
organised and regulated as closely as possible to the citizens and that the principle of 
subsidiarity must be strictly respected.  

The Commission respects the essential role of the Member States and of regional and 
local authorities in the area of services of general interest. This role is reflected in the 
Community’s  policies  on  services  of  general  interest,  which  are  based  on  various 
degrees  of  action  and  the  use  of  different  instruments  in  line  with  the  principle  of 
subsidiarity. 

As  in  the  past,  the  Commission  intends,  whenever  required,  to  make  proposals  for 
sector-specific regulation only in areas that, like the large network industries, have a 
clear  Europe-wide  dimension  and  present  a  strong  case  for  defining  a  European 
concept  of  general  interest.  Such  Community  regulation  defines,  as  a  general  rule, 
only a regulatory framework that can be implemented and specified by the Member 
States, taking into account country-specific situations. 

3.2. 

Achieving public service objectives within competitive open markets 

On  the  basis  of  the  consultation,  the  Commission  remains  of  the  view  that  the 
objectives  of  an  open  and  competitive  internal  market  and  of  developing  high-
quality, accessible and affordable services of general interest are compatible. Indeed, 
the creation of an internal market has significantly contributed to an improvement in 
efficiency,  making  a  number  of  services  of  general  interest  more  affordable.  In 
addition,  it  has  led  to  an  increase  in  choice  of  services  offered,  as  it  is  particularly 
visible in the telecommunications and transport sectors15.  

However, in certain situations, the achievement of a national public policy objective 
may need to be co-ordinated with certain Community objectives. At the level of the 
Treaty, these situations are addressed by Article 86(2), which provides that services 
of general economic interest are not subject to the application of Treaty rules to the 
extent that this is necessary to allow them to fulfil their general interest mission. This 
means that, under the EC Treaty and subject to the conditions set out in Article 86(2), 
the effective performance of a general interest task prevails, in case of tension, over 
the  application  of  Treaty  rules16.  Thus,  missions  are  protected  rather  than  the  way 
they  are  fulfilled.  The  Treaty  provision  therefore  allows  the  reconciliation  of  the 
pursuit and achievement of public policy objectives with the competitive objectives 

15 

16 

A  detailed  assessment  will  be  provided  in  the  forthcoming  Commission  staff  working  document 
“Evolution  of  the  performance  of  network  industries  providing  services  of  general  interest  –  Report 
2004” 
The application of Article 86(2) is explained in detail in the Commission Communication on Services 
of general interest in Europe, OJ C 17, 19.1.2001, p. 4 

7 

 
 
  
 
                                                 
of  the  European  Union  as  a  whole,  in  particular  the  need  to  ensure  a  level  playing 
field for all providers and the best use of public money. 

3.3. 

Ensuring cohesion and universal access 

The  access  of  all  citizens  and  enterprises  to  affordable  high-quality  services  of 
general  interest  throughout  the  territory  of  the  Member  States  is  essential  for  the 
promotion  of  social  and  territorial  cohesion  in  the  European  Union,  including  the 
reduction of handicaps caused by the lack of accessibility of the outermost regions. 
The  Commission  is  committed  to  promoting  and  improving  an  effective  universal 
access to services of general interest across all its policies. 

In this context, universal service is a key concept the Community has developed in 
order to ensure effective accessibility of essential services17. It establishes the right of 
everyone  to  access  certain  services  considered  as  essential  and  imposes  obligations 
on  service  providers  to  offer  defined  services  according  to  specified  conditions, 
including complete territorial coverage and at an affordable price. Universal service 
is  a  dynamic  and  flexible  concept  and  has  proven  to  be  an  effective  safety  net 
provision for those who could otherwise not buy essential services for themselves. It 
can  be  redefined  periodically  in  order  to  be  adapted  to  the  social,  economic  and 
technological environment. The concept allows common principles to be defined at 
Community level and the implementation of these principles to be left to the Member 
States, thus making it possible to take account of specific situations in each country, 
in line with the principle of subsidiarity. 

In the framework of its structural policies the Community helps to prevent vulnerable 
social groups or regions from being excluded from access to essential services18. The 
structural  funds  can  be  used  to  co-finance  investments  in  network  infrastructures, 
subject to certain criteria19. In addition, the Commission’s policy in the area of trans-
European  networks  is  improving  access  to  transport,  energy  and  communications 
networks in the more remote areas and will assist in linking the new Member States 
with  the  infrastructure  of  the  Fifteen,  thus  maintaining  a  high  level  of  quality, 
security and safety. In its European Growth Initiative, the Commission has set out an 
ambitious programme for the implementation of priority cross-border projects in the 
area of transport, energy and broadband communications networks20. 

3.4. 

Maintaining a high level of quality, security and safety 

The  public  consultation  highlighted  that  it  was  crucial  to  ensure  high  levels  of 
quality, security and safety. The Commission agrees that all citizens and users should 
be  provided  with  services  of  general  interest  of  a  high  quality.  Also,  the  physical 
safety  of  consumers  and  users,  of  all  persons  involved  in  the  production  and 
provision of these services, and of the general public must be guaranteed, including 

17 
18 

19 

20 

See Green Paper on services of general interest, COM(2003) 270, 21.5.2003, paragraphs 50 to 54 
A  new  partnership  for  cohesion,  Third  report  on  economic  and  social  cohesion,  COM(2004)  107, 
18.2.2004 
See  for  instance,  Commission  Staff  Working  Paper :  Guidelines  on  Criteria  and  Modalities  of 
Implementation of Structural Funds in Support of Electronic Communications, SEC(2003) 895 
Communication  from  the  Commission,  A  European  Initiative  for  Growth,  Investing  in  Networks  and 
Knowledge for Growth and Jobs, Final Report to the European Council, 11.11.2003, COM(2003) 690 
final 

8 

 
 
  
 
                                                 
the  protection  against  possible  threats  such  as  terrorist  attacks  and  environmental 
catastrophes.  Furthermore,  the  security  of  service  provision,  and  in  particular  the 
security  of  supply,  constitutes  an  essential  requirement  which  needs  to  be  reflected 
when  defining  service  missions.  The  conditions  under  which  services  are  supplied 
also have to provide operators with sufficient incentives to maintain adequate levels 
of  long-term  investment.  Quality  and  security  of  supply  entail  an  economic  cost  to 
society  which  should  be  sufficiently  and  transparently  balanced  against  expected 
benefits. 

In line with the Union’s policy on sustainable development, due consideration has to 
be  taken  also  of  the  role  of  services  of  general  interest  for  the  protection  of  the 
environment and of the specific characteristics of services of general interest directly 
related to the environmental field, such as the water and waste sectors.  

The  Commission  takes  full  account  of  these  requirements  and  will  ensure  that 
Community  policies  contribute  to  and  facilitate  maintaining  quality,  safety  and 
security standards. It will monitor progress in particular in its regular evaluations and 
sectoral reports. 

3.5. 

Ensuring consumer and user rights 

The consultation on the Green Paper has shown that there is broad agreement that the 
provision of services of general interest must be organised in such a way that a high 
level  of  consumer  and  user  rights  is  ensured.  The  Commission  intends  to  base  its 
policies  on  the  principles  identified  in  the  Green  Paper  and  in  the  Commission 
Communication on services of general interest in Europe of September 200021. 

These include in particular the access to services, including to cross-border services, 
throughout  the  territory  of  the  Union  and  for  all  groups  of  the  population, 
affordability  of  services,  including  special  schemes  for  persons  with  low  income, 
physical safety, security and reliability, continuity, high quality, choice, transparency 
and access to information from providers and regulators. 

The  implementation  of  these  principles  generally  requires  the  existence  of 
independent regulators with clearly defined powers and duties. These include powers 
of sanction (means to monitor the transposition and enforcement of universal service 
provisions)  and  should  include  provisions  for  the  representation  and  active 
participation of consumers and users in the definition and the evaluation of services, 
the  availability  of  appropriate  redress  and  compensation  mechanisms  and  the 
existence  of  an  evolutionary  clause  allowing  requirements  to  be  adapted  in 
accordance with changing user and consumer needs and concerns, and with changes 
in  the  economic  and  technological  environment.  Regulators  should  also  monitor 
market developments and provide data for evaluation purposes. 

3.6. 

Monitoring and evaluating the performance  

On  the  basis  of  the  public  consultation,  the  Commission  remains  convinced  that 
systematic  evaluation  and  monitoring  is  a  vital  instrument  for  maintaining  and 
developing  high-quality,  accessible,  affordable  and  efficient  services  of  general 

21 

COM(2000) 580, 20.9.2000, OJ C 17, 19.1.2001. See in particular paragraphs 8 to 13 

9 

 
 
  
 
                                                 
interest  in  the  European  Union.  The  Commission  recognises  the  particular 
responsibility  of  the  Community  institutions,  with  the  help  of  data  provided  at 
national  level,  in  the  evaluation  of  services  that  are  subject  to  a  sector-specific 
regulatory  framework  established  by  the  Community.  However,  an  evaluation  at 
Community level could be also considered in other areas if it can be established in 
specific cases that such an evaluation would create added value. 

In line with the prevailing view expressed in the public consultation, the Commission 
considers  that  any  evaluation  should  be  multi-dimensional  and  cover  all  relevant 
legal, economic, social and environmental aspects. In any case, any evaluation will 
have to take due account of the specific characteristics of the sector evaluated and of 
the different situations that exist in the different Member States and their regions. It 
should  be  based  on  the  periodic  provision  of  comparable  data  by  Member  States 
and/or national regulators. 

3.7. 

Respecting diversity of services and situations 

The  consultation  has  also  highlighted  the  differences  between  various  services  of 
general  interest  and  the  different  needs  and  preferences  of  users  and  consumers 
resulting  from  different  economic,  social,  geographical  or  cultural  situations.  In 
addition, it was stressed that the personal nature of many social and health services 
leads  to  requirements  that  are  significantly  different  from  those  in  the  network 
industries. As regards broadcasting, the importance of public service broadcasting for 
the  democratic,  social  and  cultural  needs  of  each  society  must  be  taken  into 
consideration22. The Commission supports these views. 

Any  Community  policy  in  the  area  of  services  of  general  interest  must  take  due 
account  of  the  diversity  that  characterises  different  services  of  general  interest  and 
the situations in which they are provided. However, this does not mean that it is not 
necessary  to  ensure  the  consistency  of  the  Community’s  approach  across  different 
sectors  or that the development of common concepts that can  be applied in several 
sectors cannot be useful. 

In this context, it should be noted that the Commission proposal for a Directive on 
services in the Internal Market23 only covers services that correspond to an economic 
activity. It does not cover non-economic services of general interest but only services 
of general economic interest. Furthermore, in this proposal, certain activities which 
may  be  considered  by  Member  States  as  services  of  general  economic  interest  are 
excluded  from  the  scope  of  the  proposal  such  as  transport  or  are  subject  to 
derogations  from  the  country  of  origin  principle,  such  as  postal  services  and 
electricity,  gas  and  water  distribution  services.  More  important,  the  proposal  does 
neither require the Member States to open up services of general economic interest to 
competition nor does it interfere with the way they are financed or organised. 

3.8. 

Increasing transparency 

The  principle  of  transparency  is  a  key  concept  for  the  development  and 
implementation  of  public  policies  regarding  services  of  general  interest.  It  ensures 

22 

23 

See  also  the  Protocol  on  the  system  of  public  broadcasting  in  the  Member  States  annexed  to  the  EC 
Treaty by the Treaty of Amsterdam 
COM(2004) 2, 13.1.2004 

10 

 
 
  
 
                                                 
that public authorities can exercise their responsibilities and that democratic choices 
can  be  made  and  are  respected.  The  principle  should  apply  to  all  aspects  of  the 
delivery process and cover the definition of public service missions, the organisation, 
financing  and  regulation  of  services,  as  well  as  their  production  and  evaluation, 
including complaint-handling mechanisms. 

The  application  of  Community  law  has  already  contributed  to  improving  the 
transparency  of  the  provision  of  services  of  general  interest  in  the  Union.  The 
Commission is committed to working towards further increasing the transparency of 
service  provision  in  all  its  policies  relating  to  services  of  general  interest.  Member 
States should also guarantee full transparency in the implementation of Community 
legislation and in other relevant national provisions.  

3.9. 

Providing legal certainty 

In the consultation on the Green Paper the point was made that in certain areas the 
application  of  Community  rules  to  services  of  general  interest  was  not  sufficiently 
clear. The application of state aid rules to the financing of services of general interest 
and  the  rules  on  procurement  and  service  concessions  were  frequently  highlighted 
specifically. Also, the situation of social and health services was mentioned. 

The  Commission  is  aware  that  the  application  of  Community  law  to  services  of 
general interest might raise complex issues. It will therefore make a continuous effort 
to  improve  legal  certainty  regarding  the  application  of  Community  law  to  the 
provision  of  services  of  general  interest,  without  prejudice  to  the  case  law  of  the 
European  Court  of  Justice  and  the  Court  of  First  Instance.  As  set  out  below,  it  has 
already accomplished the modernisation of the existing public procurement rules and 
launched  initiatives  in  the  area  of  state  aid  and  with  regard  to  public-private 
partnerships24. 

4. 

NEW ORIENTATIONS FOR A COHERENT POLICY 

4.1. 

Respecting diversity in a coherent framework 

One  of  the  key  questions  raised  by  the  Green  Paper  concerned  the  need  for  a 
framework  directive  on  services  of  general  interest.  The  views  expressed  on  the 
subject in the public consultation remained divided, a number of Member States and 
the  European  Parliament  being  sceptical  on  the  issue.  As  a  result,  it  remained 
doubtful whether a framework directive would be the most appropriate way forward 
at  this  stage.  Furthermore,  in  the  consultation,  the  added  value  of  a  horizontal 
framework as compared to the sector-specific approach followed so far has not been 
demonstrated. 

The  Commission  therefore  considers  appropriate  not  to  proceed  to  submitting  a 
proposal at this point in time but to re-examine the issue at a later stage. As part of 
this examination, the Commission would subject any legislative proposals to a prior 

24 

See sections 4.2 and 4.3 below 

11 

 
 
  
 
                                                 
extended impact assessment of its economic, social and environmental implications 
25.  

As  regards  the  calendar  for  such  re-examination  account  may  also  be  taken  of  the 
fact that the future entry into force of the Constitutional Treaty and of the proposed 
Article  III-6  of  the  Constitution  will  bring  another  possible  legal  basis  that  would 
complement  those  already  existing.  The  Commission  considers  appropriate  to  re-
examine the issue once the Constitutional Treaty is in force. 

For  the  time  being,  the  Commission  will,  as  a  general  rule,  pursue  and  develop  its 
sectoral  approach  by  proposing,  where  necessary  and  appropriate,  sector-specific 
rules  that  allow  account  to  be  taken  of  the  specific  requirements  and  situations  in 
each sector. However, without prejudice to existing sector-specific Community rules, 
a horizontal approach will be considered with regard to a number of specific issues, 
such  as  consumers’  interests,  the  monitoring  and  evaluation  of  services  of  general 
interest,  the  application  of  state  aid  rules  to  financial  compensation  or  the  use  of 
structural funds for the support of services of general interest. 

While the need for a framework instrument was an issue of considerable controversy, 
the necessity of ensuring the consistency and coherence of Community measures in 
the  area  of  services  of  general  interest  was  widely  recognised  in  the  public 
consultation.  At  the same  time, it was stressed that it was essential for Community 
policies  to  respect  and  take  account  of  the  different  characteristics  of  different 
services and of the diverse realities in the Member States. 

The  Commission  will  step  up  its  efforts  to  ensure  full  consistency  of  the 
Community’s policies in the area of services of general interest and will look at full 
coherence  of  its  sectoral  policies  with  regard  to  its  general  approach  during  the 
forthcoming reviews of the sectors concerned26. 

In addition, the Commission will review the situation of services of general interest 
in the European Union and the need for any horizontal measures in 2005. It intends 
to submit a report on its findings to the European Parliament, to the Council, to the 
European  Economic  and  Social  Committee  and  to  the  Committee  of  the  Regions 
before the end of 2005. 

The Commission 

•  will re-examine the feasibility of and the need for a framework law for services of 

general interest on the entry into force of the Constitutional Treaty, 

•  will  launch  a  review  of  the  situation  of  services  of  general  interest  and  submit  a 

report before the end of 2005. 

The Member States 

•  should  pursue  the  modernisation  of  services  of  general  interest  at  their  level  in 
order  to  ensure  that  all  citizens  have  access  to  quality  services  adapted  to  their 
needs and requirements.  

25 
26 

Commission Communication on Impact assessment, COM(2002) 276 final, 5.6.2002 
See Annex 2 

12 

 
 
  
 
                                                 
4.2. 

Clarifying and simplifying the legal framework for the compensation of public 
service obligations 

There are in particular two areas – financing and awarding of contracts - where the 
Member  States’  discretion  to  define  and  design  the  missions  of  services  of  general 
interest  usually  interact  with  Community  law.  The  present  section  deals  with 
financing. The issue of public procurement will be addressed in section 4.3. 

The  principle  of  the  Member  States’  autonomy  to  make  policy  choices  regarding 
services  of  general  economic  interest  equally  applies  with  regard  to  financing  the 
latter.  Indeed,  Member  States  enjoy  a  wide  margin  of  discretion  when  deciding 
whether  and  in  what  way  to  finance  the  provision  of  services  of  general  economic 
interest.  The  financing  mechanisms  applied  by  Member  States  include  direct 
financial support through the State budget, special or exclusive rights, contributions 
by market participants, tariff averaging and solidarity-based financing. As a general 
rule, Member States can choose which financing mechanism is used. In the absence 
of Community harmonisation, the main limit to this discretion is the requirement that 
such financing mechanism must not distort competition within the common market. 
It  is  for  the  Commission,  as  the  guardian  of  the  Treaty,  to  ensure  that  this  rule  is 
respected to the benefit of taxpayers and the economy at large. 

However, the practical application of this rule is at times a complex matter. It has not 
always been clear, for example, under what conditions compensation for services of 
general  economic  interest  would  actually  constitute  state  aid.  Likewise,  once  the 
existence of state aid was established there might have been some uncertainty as to 
the  conditions  under  which  such  aid  could  be  considered  compatible  with  the 
common market. And finally, the obligation under the Treaty to formally inform the 
Commission about plans to grant or alter aid creates an administrative burden which 
may be out of proportion for relatively modest amounts of aid. 

The  public  consultation  has  confirmed  the  demand  for  greater  legal  certainty  and 
predictability when it comes to the application of the state aid rules to public service 
compensation.  This  call  was  particularly  strong  at  local  level,  concerning  local 
services.  It  is  true  that  the  Court  of  Justice  has  recently  set  out  a  number  of 
conditions under which compensation for services of general economic interest does 
not constitute state aid27. But the need for increased legal certainty remains and it is 
for  the  Commission  to  bring  about  such  certainty  to  the  greatest  extent  possible. 
Therefore, the Commission proposes a number of initiatives. 

The first proposed measure is a Commission decision that considers relatively small-
scale  public  funding  to  undertakings  entrusted  with  the  operation  of  services  of 
general  economic  interest  to  be  compatible  with  the  common  market  under  certain 
conditions.  Likewise,  such  funding  should  also  be  exempt  from  the  obligation  of 
prior notification, as long as it is proportionate to the actual costs of the services, and 
certain thresholds are not exceeded. The Commission proposes the same for funding 
of  services  of  general  economic  interest  provided  by  hospitals  and  social  housing, 
irrespective of the amounts involved.  

27 

Judgment of 24 July 2003 in the case C-280/00 Altmark Trans and judgment of 24 November 2003 in 
joined cases C-34/01 to 38/01 Enirisorse SpA  

13 

 
 
  
 
                                                 
In essence, the Commission hereby seeks to exempt compensation to local providers 
of  services  of  general  economic  interest  from  the  obligation  of  prior  notification. 
Once  the  thresholds  are  set  in  the  light  of  the  results  of  the  currently  ongoing 
consultation process, legal certainty for relatively small-scale public funding will be 
significantly increased. 

In  addition,  the  Commission  also  proposes  to  increase  legal  certainty  for 
compensation  for  services  of  general  economic  interest  which  exceeds  the  above-
mentioned  thresholds  –  and  thus  will  have  to  be  notified  to  the  Commission  -  by 
means  of  a  Community  framework  that  sets  out  the  criteria  for  assessment  of  such 
compensation for services of general economic interest.  

Furthermore,  the  Commission  intends  to  amend  Directive  80/723/EEC  on  the 
transparency of financial relations between Member States and public undertakings. 
The  amendment  will  specify  that  the  directive  is  applicable  to  public  service 
compensations,  whatever  the  legal  qualification  of  these  under  Article  87  of  the 
Treaty.  Both  the  Commission  decision  and  the  Community  framework  will  not  be 
applicable to the transport sector28.  

Finally,  the  Commission  plans  to  further  clarify  the  conditions  under  which 
compensation can constitute state aid following the recent case law of the Court of 
Justice. As requested in a number of comments received in the public consultation on 
the  Green  Paper,  this  will  also  include  a  further  clarification  of  the  distinction 
between economic and non-economic activities29.  

Taken  together,  those  measures  that  are  elaborated  on  the  basis  of  extensive 
consultations  with  interested  parties  are  likely  to  ensure  legal  certainty  and 
predictability  for  both  operators  and  authorities  to  the  greatest  extent  possible.  The 
Commission  will,  moreover,  continue  its  pragmatic  approach  when  assessing 
compensation  for  public  service  obligations  in  order  to  ensure  that  high-quality, 
accessible and affordable services of general interest continue to be provided close to 
the citizens while respecting common basic rules. 

28 

29 

The decision may be applicable to certain  maritime links to islands, on which annual traffic does not 
exceed a defined threshold 
For more detail see the Commission Communication on services of general interest in Europe, OJ C 17, 
19.1.2001, p. 4 (paragraphs 28 to 30) and the Green Paper on services of general interest, COM(2003) 
270, 21.5.2003, paragraphs 43 to 45 

14 

 
 
  
 
                                                 
The Commission 

•  will adopt a Decision on the application of Article 86 of the Treaty to state aid in the 
form  of  public  service  compensation  granted  to  certain  undertakings  entrusted 
with the operation of services of general economic interest by July 2005, 

•  will  adopt  a  Community  framework  for  state  aid  in  the  form  of  public  service 

compensation by July 2005, 

•  will adopt an amendment of Directive 80/723/EEC on the transparency of financial 

relations between Member States and public undertakings by July 2005, 

•  will  further  clarify  under  which  conditions  public  service  compensations  may 

constitute state aid within the meaning of Article 87 (1) by July 2005. 

The Member States 

•  should assist the Commission in applying the new legal framework, in particular by 
clearly  defining  public  service  obligations  and  by  applying  transparent  rules  on 
compensation. 

4.3. 

Providing a clear and transparent framework for the selection of undertakings 
entrusted with a service of general interest 

In principle, Member States have a wide margin to decide how to organise services 
of general interest. In the absence of Community harmonisation, the relevant public 
authorities in the Member States are in principle free to decide whether to provide a 
service of general interest themselves or whether to entrust its provision to another 
(public  or  private)  entity30.  However,  providers  of  services  of  general  economic 
interest, including in-house service providers, are undertakings and therefore subject 
to the competition rules of the Treaty31. In practice, Member States increasingly use 
public-private 
contracts, 
concessions and the creation of mixed-economy companies to ensure the delivery of 
infrastructure projects or services of general interest. 

design-build-finance-operate 

including 

schemes, 

In  the  public  consultation,  calls  were  made  for  clarity  on  a  number  of  questions 
relating to the Community rules applicable to such schemes, and in particular on the 
scope  and  substance  of  the  Community  rules  that  public  authorities  may  have  to 
respect when they entrust a public service mission to another entity. 

In  order  to  clarify  the  rules  applicable,  the  Community  has  undertaken  an  effort  of 
simplification  and  clarification  of  the  public  procurement  directives32.  The  new 
directives, adopted by the European Parliament and the Council last March, are due 
to be transposed by all Member States by January 2006 and should make it easier, for 

30 

31 

32 

As regards local inland transport, the Commission has proposed legislation that would require Member 
States  to  use  public  service  concessions.  Cf.  Amended  proposal  for  a  Regulation  of  the  European 
Parliament and of the Council on action by Member States concerning public service requirements and 
the award of public service contracts in passenger transport by rail, road and inland waterway, OJ C 151 
E, 25.6.2002, p. 146 
For detail see Green Paper on services of general interest, COM(2003) 270, 21.5.2003, paragraphs 79 to 
83 
Directive 2004/18 of 31 March 2004 on the coordination of procedures for the award of public works 
contracts, public supply contracts and public service contracts and Directive 2004/17 of 31 March 2004 
coordinating the procurement procedures of entities operating in the water, energy, transport and postal 
services sectors, OJ L 134, 30.4.2004, p. 1 and p. 114 

15 

 
 
  
 
 
                                                 
all awarding authorities concerned, to comply with their obligations of transparency 
under the EC Treaty.  

Furthermore,  in  order  to  establish  whether  Community  legislation  should  be 
proposed  in  particular  on  the  transparent  award  of  service  concessions  by  public 
authorities, and other forms of cooperation between the public and the private sector, 
the Commission has recently adopted a Green Paper on public-private partnerships in 
the  European  Union33.  This  Green  Paper  launches  a  broad  consultation  on  the 
procurement aspects of public-private partnerships.  

The Commission 

•  will conduct a public consultation on the Green Paper on the procurement aspects 

of public-private partnerships , 

•  will  submit,  where  appropriate,  on  the  basis  of  the  results  of  the  public 

consultation, proposals before the end of 2004. 

The Member States 

•  should  ensure  that  the  national  frameworks  for  the  award  of  public  service 

contracts are based on transparent and non-discriminatory rules. 

4.4. 

Recognising fully the general interest in social and health services  

The  Green  Paper  on  services  of  general  interest  raised  a  considerable  interest  from 
interested parties in the area of social services, including health services, long term 
care,  social  security,  employment  services,  and  social  housing.  Social  services  of 
general interest have a specific role to play as an integral part of the European model 
of society. Based on the principle of solidarity, social and health services of general 
interest  are  person-centred  and  ensure  that  citizens  can  effectively  enjoy  their 
fundamental  rights  and  a  high level  of  social  protection,  and  they  strengthen  social 
and territorial cohesion. Their provision, development and modernisation is fully in 
line  with  the  achievement  of  the  objectives  set  at  the  Lisbon  European  Council  of 
March  2000,  and  in  particular  with  the  goal  of  achieving  a  positive  link  between 
economic,  social  and  employment  policies.  The  public  consultation  has  shown  that 
providers of social services are ready to engage in a modernisation process in order 
to  better  respond  to  changing  needs  of  European  citizens.  However,  they  also 
expressed a need for greater clarity and predictability necessary to ensure a smooth 
evolution of social services, including health services. 

While in principle the definition of the missions and objectives of social and health 
services  is  a  competence  of  the  Member  States,  Community  rules  may  have  an 
impact on the instruments for their delivery and financing. A clear recognition of the 
distinction between missions and instruments should help to create more clarity with 
a  view  to  the  modernisation  of  these  services  in  a  context  of  evolving  user  needs 
while  preserving  their  specific  nature  in  terms  of  the  particular  requirements  of, 
amongst others, solidarity, voluntary service and the inclusion of vulnerable groups 
of  people.  Clarifying  this  distinction  will  in  particular  assist  Member  States  which 
use  market-based  systems  to  deliver  social  and  health  services  to  anticipate  the 
possible impact of EU competition law on them. It will of course remain a matter of 

33 

Green Paper on public-private partnerships and on Community law on public contracts and concessions, 
COM(2004) 327, 30.4.2004 

16 

 
 
  
 
                                                 
political  choice  for  Member  States  whether  to  use  such  systems  or  to  provide 
services directly via tax funded state agencies. 

The Commission is of the view that it is useful to develop a systematic approach in 
order  to  identify  and  recognise  the  specific  characteristics  of  social  and  health 
services of general interest and to clarify the framework in which they operate and 
can  be  modernised.  This  approach  will  be  set  out  in  a  Communication  on  social 
services of general interest, including health services, to be adopted in the course of 
2005. 

This Communication will take stock of the Community policies that are related to the 
provision  of  social  and  health  services  of  general  interest.  It  will  also  describe  the 
ways  social  and  health  services  are  organised  and  function  in  the  Member  States. 
This description will be prepared in close co-operation with the Member States34 and 
with organisations from civil society. 

The  Communication  would  also  set  out,  in  line  with  the  Commission’s  general 
principles on evaluation, a mechanism for a regular assessment and evaluation of the 
national  frameworks  for  the  provision  of  social  services  of  general  interest.  The 
existing  open  methods  of  coordination  in  the  field  of  social  inclusion  and  social 
protection  could  be  used  to  this  effect.  The  Commission  has  recently  proposed  an 
open  method  of  coordination  in  the  field  of  health  care  and  long  term  care  which 
would  usefully  contribute  to  the  exchange  of  best  practices  in  the  field  of  health 
services and support the reforms undertaken in the field35. 

The  Commission  is  currently  also  working  on  the  follow-up  to  the  high-level 
reflection process on patient mobility and health care developments and has adopted 
a Communication in April 200436 which recalls the principles of the case law of the 
European  Court  of  Justice  and  sets  out  a  range  of  initiatives  on  subjects  such  as 
sharing  spare  capacity  and  cooperating  on  cross-border  care  identifying  and 
networking European centres of reference and coordinating assessment of new health 
technologies.  The  accompanying  Decision  establishes  a  new  High  Level  Group  to 
facilitate cooperation among Member States in this area.  

The Commission 

•  will  submit  a  Communication  on  social  and  health  services  of  general  interest  in 

the course of 2005. 

•  will  facilitate  cooperation  among  Member  States  on  health  services  and  medical 
care in order to contribute to ensuring a high level of health protection throughout 
the Union. 

Member States  

•  should improve cooperation on health services and medical care in order to ensure 

a high level of health protection throughout the Union. 

34 

35 

36 

In  particular  with  the  Social  Protection  Committee  and  the  newly  established  « High  level  group  on 
health services and medical care » 
Communication  of  the  Commission  on  Modernising  social  protection  for  the  development  of  high-
quality,  accessible  and  sustainable  health  care  and  long-term  care:  support  fro  the  national  strategies 
using the “open method of coordination”, COM(2004) 304, 20.4.2004 
Communication  from  the  Commission,  Follow-up  to  the  high-level  reflection  process  on  patient 
mobility and health care developments in the European Union, COM(2004) 301, 20.4.2004 

17 

 
 
  
 
                                                 
4.5. 

Assessing the results and evaluating performance  

The public consultation has confirmed the Commission’s view that the evaluation of 
performance  at  Community  as  well  as  at  national  level  is  crucial  for  ensuring  the 
development of high-quality, accessible and affordable services of general interest in 
a  constantly  evolving  environment.  Moreover,  there  was  broad  agreement  among 
contributors  that  such  evaluation  should  be  based  not  only  on  criteria  of  economic 
efficiency but also on broader social, economic and environmental criteria. 

In  recent  years,  the  Commission  has  indeed  increased  its  evaluation  efforts  in  the 
area  of  services  of  general  interest.  With  regard  to  network  industries,  the 
Commission’s evaluation strategy covers both sectoral and horizontal evaluations on 
a regular basis and involves the other European Union institutions and bodies as well 
as  interested  parties37.  Given  that  the  Commission  started  to  perform  horizontal 
evaluations in 2001, and will submit in 2004 its first horizontal evaluation report that 
is fully based on the methodology presented in 2002, it appears appropriate to gather 
more  experience  with  this  process  before  reflecting  on  additional  evaluation 
mechanisms. 

At  the  same  time,  there  is  room  for  improving  the  involvement  of  all  parties 
concerned.  The  Commission  will  therefore  consider  how  to  amend  the  current 
methodology  and  procedures  so  as  to  ensure  that  all  interested  parties,  including 
public authorities, consumers, users, providers and employees, are fully involved. It 
will also examine the need for any amendments with regard to assessing the impact 
of liberalisation on citizens, enterprises and employees.  

Better  integration  should  be  considered  between  the  current  evaluation  efforts 
specifically  focusing  on  services  of  general  interest  and  the  Commission’s  more 
wide-ranging reporting tools. This would ensure a broader and more comprehensive 
approach to evaluating services of general interest  and could thus generate genuine 
added  value  without  increasing  reporting  requirements  and  statistics  for  the 
Community, Member States, undertakings and indeed citizens themselves. 

In this context the link between, on the one hand, the above-mentioned sectoral and 
horizontal evaluations and, on the other, the “Implementation Package” – consisting 
of  the  Broad  Economic  Policy  Guidelines  Implementation  Report,  the  Joint 
Employment Report and the Implementation Report on the Internal Market Strategy 
and submitted together with the Report to the Spring European Council is important 
and should be maintained. 

In addition, the evaluation of services of general interest could usefully be integrated 
into the analysis made regularly by the Commission of several Community policies. 
This could be relevant in particular in the area of social and health services. 

On the basis of its experience with the application of its amended methodology, the 
Commission  will  review  its  evaluation  mechanisms,  including  their  scope,  when 
evaluating  its  approach  in  2006  as  provided  for  in  its  Communication  of  18  June 
2002.  This  review  will  also  look  into  the  need  for  additional  measures  aiming  at 

37 

For  details  see  Communication  from  the  Commission:  A  Methodological  Note  for  the  Horizontal 
Evaluation of Services of General Economic Interest, COM(2002)331 final, 18.6.2002  

18 

 
 
  
 
                                                 
improving the availability and quality of data, the exchange of information and best 
practices, and the participation of interested parties. 

The Commission 

•  will  submit  its  first  horizontal  evaluation  on  services  of  general  interest  on  the 

basis of its evaluation methodology in 2004, 

•  will review its evaluation mechanisms for services of general interest in 2006. 

Member States 

•  should  assist  the  Commission  in  the  development  and  application  of  evaluation 

mechanisms,  

•  should  consider  the  development  of  evaluation  instruments  at  national,  regional 

and local level, where appropriate. 

4.6. 

Reviewing sectoral policies 

Currently,  sector-specific  regulation  at  Community  level  covers  essentially  the  big 
network industries such as telecommunications, postal services, transport and energy, 
which have a clear trans-European dimension. In the Commission’s view, the public 
consultation has confirmed this approach. As far as the water sector is concerned, the 
Commission will publish before the end of the year the results of the assessment it 
has undertaken38. 

The  public  consultation  has  confirmed  the  relevance  and  importance  of  the  set  of 
obligations  on  which  current  sector-specific  Community  legislation  is  based  and 
which are set out in the Green Paper (universal service, continuity, quality of service, 
affordability,  user  and  consumer  protection,  safety  and  security,  access  and 
interconnectivity). Where appropriate, on the basis of the sectoral reviews foreseen, 
the Commission will propose to adapt these obligations. 

Concerning media pluralism, the public consultation highlighted that, in the light of 
the  differences  that  exist  across  the  Member  States,  the  issue  should  be  left  to  the 
Member States at this point in time. The Commission concurs and concludes that at 
present  it  would  not  be  appropriate  to  submit  a  Community  initiative  on  pluralism. 
At the same time, the Commission will continue to closely monitor the situation. 

As  regards  the  institutional  framework  for  regulation,  the  need  for  closer  co-
operation  between  the  Commission  and  the  national  regulatory  authorities  was 
frequently  highlighted.  The  Commission  intends  to  encourage  the  creation  and 
development  of  close  co-operation  between  regulators  in  the  framework  of  the 
existing  networks  of  regulatory  authorities39.  Where  appropriate,  the  Commission 
will  make  proposals  with  a  view  to  strengthening  the  legal  framework  for  this  co-
operation. 

The Commission will take account of the positions set out above as well as any other 
results of the public consultation on the Green Paper in the reviews that are foreseen 
for the different sectors. 

38 
39 

Internal market strategy, Priorities 2003 - 2006, COM(2003)238, 7.5.2003 
See points 53 – 59 of the Annex to the Green Paper on services of general interest for details 

19 

 
 
  
 
                                                 
The Commission  

•  will  encourage  the  co-operation  of  national  regulatory  authorities  on  the  basis  of 

networks of regulators, 

•  will take into account the results of the public consultation on the Green Paper in 

the review of the scope of universal service in electronic communications by 

the reviews already foreseen for the different sectors, in particular: 
- 
July 2005 
- 
- 
- 
- 
- 
2005 
- 

the review of the electronic communications package by July 2006 
the review of the postal services directive by the end of 2006  
the review of the internal market for electricity by 1 January 2006 
the review of the internal market for gas by 1 January 2006 
the review of the “Television without frontiers” directive at the beginning of 

the assessment of the water sector by the end of 2004. 

(For more details see the non-exhaustive table in the Annex). 

Member States 

•  should  ensure  that  existing  sector-specific  legislation  is  fully  transposed  and 

applied, 

•  should  provide  national regulatory  authorities with  all  necessary  instruments and 

resources. 

•  should  assist  the  Commission  in  encouraging  closer  co-operation  within  the 

framework of networks of regulators. 

4.7. 

Reflecting our internal policies in our international trade policy 

As  the  Commission  has  pointed  out  in  the  Green  Paper,  the  Community 
commitments made in the context of the World Trade Organisation (WTO) or in the 
context  of  bilateral  agreements,  have  been  fully  consistent  with  the  internal  market 
rules  applying  to  these  services  and  have  not,  to  date,  led  to  problems  for  the 
organisation, provision and financing of services of general interest in practice. The 
same  applies  to  new  commitments  being  offered  in  the  framework  of  present 
negotiations. 

The  public  consultation  has  shown  that  there  is  widespread  desire  to  ensure  the 
continued  consistency  between  the  internal  Community  regulatory  framework  and 
the obligations accepted by the Community and its Member States in the framework 
of  international  trade  arrangements,  in  particular  the  WTO.  There  is  a  strong 
expectation  that  international  trade  agreements  should  not  go  beyond  the  positions 
agreed within the European Union. 

In  driving  the  Community’s  trade  policy,  the  Commission  is  fully  committed  to 
ensure  such  consistency  and  counts  on  the  support  of  the  Member  States  and  the 
European Parliament in this respect. To that effect, the Commission will continue to 
make full use of the institutional framework provided for by the Treaty (Articles 133 
and 300) and to involve the European Parliament in the formulation of trade policy 
no  matter  its  limited  powers  under  that  framework,  while  looking  forward  to  the 
desired  improvement  of  those  powers  under  the  draft  Constitutional  Treaty.  The 
Commission will also continue to maintain a regular dialogue with civil society and 
to  ensure  the  maximum  degree  of  transparency  in  trade  negotiations,  of  which  the 
publication of the Community’s initial offer in the present GATS negotiations is an 
example. 

20 

 
 
  
 
 
 
 
 
The Commission 

•  will continue to ensure that the positions taken by the Community in international 
trade negotiations are fully consistent with the EU’s internal regulatory framework 
regarding services of general interest. 

The Member States 

•  should work with the Commission in order to ensure that internal policy positions 

are fully reflected in our trade policy. 

4.8. 

Promoting services of general interest in development co-operation 

In the consultation on the Green Paper, the essential importance of basic services of 
general interest for the development of the poorest countries was widely recognised. 
It was highlighted that the absence of investment was a major obstacle to improving 
these  services  in  the poorest countries. In line with the  recommendations set out in 
the  Commission  Communication  on  the  reform  of  state-owned  enterprises  in 
developing countries40 the Commission intends to continue to assist in the creation of 
a sound regulatory and institutional framework in the developing countries as a key 
prerequisite  for  the  promotion  of  investment  in  and  access  to  finance  for  basic 
services of general interest.  

The  EU  Initiatives  on  Water  and  Energy,  launched  at  the  World  Summit  on 
Sustainable Development have the objective to contribute to the achievement of the 
Millennium  Development  Goals  through  the  provision  of  modern  and  affordable 
services  to  the  poor.  The  initiatives  involve  Member  States  and  stakeholders  from 
civil society and the private sector, and is developed through a continued dialogue, 
based on the key principle of ownership, with partners in Africa and other regions, to 
initiate  activities  at  national  and  regional  levels.  Both  the  Water  and  the  Energy 
Initiative  aim  at  institutional  capacity  building,  cross-sectoral  planning  and  market 
development,  by  means  of  targeted  technical  co-operation  and  an  extended 
cooperation with financial institutions. 

The Commission  

•  will  assist  developing  countries  in  creating  a  sound  regulatory  and  institutional 
framework as a key prerequisite for the promotion of investment in and access to 
finance for basic services of general interest. 

40 

The  Reform  of  State-Owned  Enterprises  in  Developing  Countries  with  focus  on  public  utilities:  The 
Need to Assess All the Options, Communication from the Commission, COM(2003) 326, 3.6.2003 

21 

 
 
  
 
 
                                                 
ANNEX 1 

Definition of Terms41 

Terminological differences, semantic confusion and different traditions in the Member States have led 
to many misunderstandings in the discussion at European level. In the Member States different terms 
and definitions are used in the context of services of general interest, thus reflecting different historical, 
economic, cultural and political developments. Community terminology tries to take account of these 
differences. 

Services of general interest 

The term «services of general interest» cannot be found in the Treaty itself. It is derived in Community 
practice  from  the  term  «services  of  general  economic  interest»,  which  is  used  in  the  Treaty.  It  is 
broader  than  the  term  «services  of  general  economic  interest»  and  covers  both  market  and  non-
market services which the public authorities class as being of general interest and subject to specific 
public service obligations.  

Services of general economic interest 

The term «services of general economic interest» is used in Articles 16 and 86(2) of the Treaty. It is 
not defined in the Treaty or in secondary legislation. However, in Community practice there is broad 
agreement  that  the  term  refers  to  services  of  an  economic  nature  which  the  Member  States  or  the 
Community  subject  to specific public service  obligations  by  virtue  of  a general  interest criterion.  The 
concept of services of general economic interest thus covers in particular certain services provided by 
the big network industries such as transport, postal services, energy and communications. However, 
the term also extends to any other economic activity subject to public service obligations. 

Like  the  Green  Paper,  the  White  Paper  focuses  mainly,  but  not  exclusively,  on  issues  related  to 
«services  of  general  economic  interest»,  as  the  Treaty  itself  focuses  mainly  on  economic  activities. 
The term «services of general interest» is used in the White Paper only where the text also refers to 
non-economic services or where it is not necessary to specify the economic or non-economic nature of 
the services concerned.  

Public service 

The  terms  «service  of  general  interest»  and  «service  of  general  economic  interest»  must  not  be 
confused with the term «public service». This term is less precise. It can have different meanings and 
can therefore lead to confusion. The term sometimes refers to the fact that a service is offered to the 
general public, it sometimes highlights that a service  has been assigned a specific role in the public 
interest,  and  it  sometimes  refers  to  the  ownership  or  status  of  the  entity  providing  the  service42. 
Therefore, this term will not be used in the White Paper. 

41 

42 

These definitions are based on the definitions used in the Green Paper on services of general interest, 
COM(2003)270, 21.5.2004 
There  is  often  confusion  between  the  term  «public  service»  and  the  term  «public  sector».  The  term 
«public  sector»  covers  all  public  administrations  together  with  all  enterprises  controlled  by  public 
authorities 

22 

 
 
  
 
                                                 
Public service obligations 

The term «public service obligations» is used in the White Paper. It refers to specific requirements that 
are imposed by public authorities on the provider of the service in order to ensure that certain public 
interest objectives are met, for instance, in the matter of air, rail and road transport and energy. These 
obligations can be applied at Community, national or regional level. 

Public undertaking 

The term «public undertaking» is normally also used to define the ownership of the service provider. 
The  Treaty  provides  for  strict  neutrality.  It  is  irrelevant  under  Community  law  whether  providers  of 
services of general interest are public or private; they are subject to the same rights and obligations. 

23 

 
 
  
 
ANNEX 2:  Main Results of the Public Consultation 43 

1. Importance of Services of general interest 

•  There  is  a  broad  consensus  on  the  essential  importance  of  services  of  general  interest  for 
European societies. It is also generally accepted that these services should be provided in a way 
that puts users first. 

•  No agreement exists concerning the relationship between services of general interest and market 

principles. 

2. The role of the European Union 

•  While views differ on the need to amend the Treaty, there is broad agreement that the Community 

should not be given additional powers in the area of services of general interest. 

•  The  responsibilities  of  the  Community  and  the  Member  States  seem  to  be  clear.  However,  there 

are calls for the clarification of Community rules in some areas. 

•  Broad  agreement  exists  that  sector-specific  regulation  must  not  be  extended  to  all  services. 
However, for some services (water, waste, local public transport) diverging views are expressed as 
to  whether  a  specific  regulatory  framework  is  desirable  at  Community  level.  The  need  to  take 
account of specificities of sectors such as health is highlighted. 

•  There is a large consensus that there is no need for the creation of European regulatory authorities 
at  this  stage.  Networks  of  national  regulators  co-ordinated  at  European  level  seem  to  be  the 
preferred option. 

3. Sector-specific legislation and general legal framework 

•  The  views  on  the  need  for  a  general  legislative  framework  remain  divided.  However,  there  is 

agreement on the continued need for sector-specific legislation. 

•  Many  contributions  highlight  the  benefits  of  existing  sectoral  policies.  Others  point  out  that 

liberalisation has had negative social and economic consequences. 

4. Services of general economic interest and non-economic services 

•  Many contributors feel that the distinction is important. However, a number of contributions call for 
other  criteria  beyond  the  economic  –  non-economic  distinction  in  order  to  create  more  legal 
certainty. 

•  While there is some interest in further clarification of the situation of organisations providing social 
services under Community law and in protecting non-economic services of general interest as part 
of the European social model, there is broad agreement that the Community should not be given 
additional powers in the area of non-economic services. 

43 

The  following  points  are  based  on  the  Commission  Staff  Working  Paper,  Report  on  the  public 
consultation on the Green Paper on services of general interest, SEC (2004) 326, 15.3.2004 

24 

 
 
  
 
                                                 
5. A common set of obligations 

•  Views  are  divided  on  the  need  and  feasibility  of  establishing  a  common  set  of  obligations  at 
Community level. While some contributions stress the need to establish public service obligations 
sector-by-sector, other comments argue that a common concept is appropriate and necessary. 

•  There  seems  to  be  a  broad  consensus  that  regulation  at  Community  level  should  establish 
principles and objectives, while Member States should be able to implement and specify the rules 
in line with the specific situations and needs existing at national and regional level. 

•  There is no agreement on the effective implementation of requirements in Community legislation or 
on the impact of these requirements on social and territorial cohesion. It is suggested that it is too 
early to form an opinion and that a more detailed assessment is necessary. 

•  Different views exist regarding the need to introduce additional obligations at Community level and 

the need to extend existing requirements to other services of general interest. 

6. Sector-specific obligations 

•  There seems to be little support for the introduction at Community level of additional sector-specific 
obligations  at  this  stage.  However,  it  is  suggested  that  the  situation  should  be  closely  monitored 
with  regard  to  the  different  sectors,  in  particular  with  regard  to  security  of  supply.  There  are  also 
some calls for an improvement of access and interconnectivity in some sectors. 

•  No agreement exists with regard to the opening of the water sector at Community level. 

•  There  is  broad  agreement  that  no  specific  Community  measures  should  be  taken  on  media 
pluralism at this stage and that the protection of pluralism should be left to the Member States. 

7. Definition of obligations and choice of organisation 

•  Some contributions highlight problems resulting from the application, as perceived by respondents, 
of  Community  law,  in  particular  in  the  areas  of  procurement  and  state  aid.  There  is  a  call  for 
clarification of the rules on concessions and public-private partnerships. Some comments also refer 
to situations where an obstacle to the completion of the internal market is created at national level. 

•  The comments largely agree that further harmonisation of public service obligations at Community 

level is not desirable.  

•  Many contributions express an interest in a flexible and non-bureaucratic exchange of best practice 

and benchmarking as regards the organisation of services of general interest. 

8. Financing of services of general interest 

•  There  is  a  firm  call  for  clarification  and  simplification  of  the  rules  applying  to  the  financing  of 
services of general interest, in particular as regards state aid. The recent judgment of the ECJ in 
the Altmark case is seen as positive but not as sufficient.  

•  There  is  also  a  broad  consensus  that  Member  States  must  remain  free  to  determine  the  most 
appropriate  way  of  financing  a  service  of  general  interest,  provided  competition  is  not  unduly 
distorted. 

25 

 
 
  
 
9. The evaluation of services of general interest 

•  While there are different views on the overall importance of evaluation, there is a broad consensus 
that  evaluation  should  be  comprehensive  and  take  account  of  political,  social,  economic  and 
environmental criteria. 

•  No agreement exists as to the range of services to be subject to an evaluation or as regards the 

necessary procedural and institutional arrangements. 

10. The international dimension 

•  There is a clear request to ensure that the positions taken by the Community in international trade 

negotiations are fully consistent with the EU’s internal regulatory framework. 

•  A  number  of  comments  also  call  for  more  information  and  transparency  as  regards  international 

trade negotiations. 

•  The crucial importance of basic essential services for the development of the poorest countries is 
widely recognised. Access to finance and the attraction of foreign investment are identified as the 
main problem. 

26 

 
 
  
 
ANNEX 3: 

OVERVIEW OF IMPORTANT SECTORAL REVIEWS 

Electronic communications 

–  Review of the eEurope action plan by June 2004 

–  Review of the provisions on Cable TV networks of Commission Directive 2002/77/EC by the end of 

2004 

–  Review of the scope of universal service under the Universal Service Directive 2002/22/EC by July 

2005 

–  Review of the electronic communications package by July 2006  

Postal Services 

–  Report on the application of the postal directive before the end of 2004, and then every two years 

–  Report by the end of 2006 based on a prospective study on the impact on universal service of full 
accomplishment of the internal postal market in 2009. Proposal confirming, if appropriate, the date 
of 2009 for full accomplishment of the internal postal market or determining any other step in the 
light of the study's conclusions 

Electricity 

–  Annual Reports on the application of Directive 2003/54/EC, including every second year a report on 

public service obligations 

–  Detailed  progress  report  on  the  creation  of  the  internal  market  for  electricity  by  1  January  2006. 

Proposals to EP and Council, where appropriate, to guarantee high public service standards 

–  Report  on  the  implementation  of  Regulation  1228/2003  on  network  access  for  crossborder 

exchanges in electricity by July 2006 

–  Proposals  to  EP  and  Council,  where  appropriate,  to  ensure  full  and  effective  independence  of 
distribution  system  operators  before  1  July  2007.  When  necessary,  these  proposals  will  also 
address  issues  of  market  dominance,  market  concentration  and  predatory  or  anti-competitive 
behaviour 

Gas 

–  Annual Reports on the application of Directive 2003/55/EC, including every second year a report on 

public service obligations 

–  Detailed  progress  report  on  the  creation  of  the  internal  market  for  gas  by  1  January  2006. 

Proposals to EP and Council, where appropriate, to guarantee high public service standards 

–  Proposals  to  EP  and  Council,  where  appropriate,  to  ensure  full  and  effective  independence  of 
distribution  system  operators  before  1  July  2007.  When  necessary,  these  proposals  will  also 
address  issues  of  market  dominance,  market  concentration  and  predatory  or  anti-competitive 
behaviour 

Water 

–  Presentation by the Commission of the results of its assessment of the water sector by the end of 

2004 

27 

 
 
  
 
Transport 

–  2004: Adoption by EP and Council of the second railways package currently in conciliation 

–  Adoption by EP and Council of the third railways package before the end of 2004 

–  Adoption  by  EP  and  Council  of  the  proposed  regulation  on  public  service  requirements  and  the 
award of public service contracts in passenger transport by rail, road, and inland waterway before 
the end of 2004 

Broadcasting 

–  Report on the application of the “Television without frontiers” directive, if appropriate, accompanied 

by legislative proposals at the beginning of 2005  

28