Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the White Paper on services of general interest (COM(2004) 374 final)
Date: 2005-02-09
Institutions: European Economic and Social Committee
Subjects: citizens' Europe, competitiveness, economic and social cohesion, liability, provision of services, public authorities, public service, services of general interest

8.9.2005

EN

Official Journal of the European Union

C 221/17

Opinion of the European Economic and Social Committee on the Communication from the
Commission to the European Parliament,
the European Economic and Social
Committee and the Committee of the Regions on the White Paper on services of general interest

the Council,

(COM(2004) 374 final)

(2005/C 221/04)

On 13 May 2004, the Commission decided to consult the European Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the abovementioned communi-
cation.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 17 January 2005. (rapporteur: Mr
Hencks — co-rapporteur: Mr Hernández Bataller).

At its 414th plenary session of 9 and 10 February 2005 (meeting of 9 February), the European Economic
and Social Committee adopted the following opinion by 131 votes to 5, with 2 abstentions:

1. Introduction

and the Member States in relation to services of general
economic interest.

Services of general interest (SGI) today form an area of

1.1
society that is closely linked to European integration.

1.2
Services of general economic interest (SGEI) are recog-
nised by the current Treaties as being among the shared values
of the Union and contributing to its social and territorial cohe-
sion (Article 16); access to SGEI and the rights relating to the
(social
specific components of services of general
security and social assistance, health protection, environmental
protection, etc.) are laid down in the Charter of Fundamental
Rights (Title IV, Articles II-34 to II-36).

interest

Not only are SGI central

1.3
to competitiveness and an
important element for contributing to the achievement of the
Lisbon objectives, they are also fundamental elements of the
European social model. They help to guarantee basic human
rights, contribute to the knowledge-based economy and to
social, economic and territorial cohesion and form elements of
sustainable development.

Although the EESC's request

to have promotion of
1.4
services of general interest included as an objective in Article 3
of the Constitutional Treaty has not been met, a certain step
forward was made with regard to SGI in the finalised Constitu-
tional Treaty: under Article III-122 the EU can legislate on
services of general economic interest in a horizontal manner
concerning the principles and conditions relating to the provi-
sion of such services. The Constitutional Treaty also recognises
the principle of administrative freedom for local authorities and
raises to the level of a constitutional principle the possibility
for local authorities to provide services of general economic
interest themselves, thereby giving effect to the subsidiarity
principle as regards the respective competences of the Union

in

secondary

Nevertheless,

legislation
substance
1.5
continues to be characterised by a general imbalance between,
on the one hand, competition law, which is detailed EU legisla-
tion and takes direct effect, and, on the other hand, the general
interest objectives that fall under exceptions to competition
law.

1.6
The European Union still has difficulty in overcoming
the contradictions between building a market based solely on
competition and the need to ensure a process of public control
that economic mechanisms alone will be unable to provide.
Services of general interest are not techniques, or instruments,
but embody human rights, social links, inclusion and integra-
tion.

1.7
Furthermore, we should not ignore the fact that an atti-
tude of incomprehension, criticism and rejection is emerging
among Europe's citizens towards policies which seem to aim at
achieving a European integration that appears more and more
irrelevant
is exacerbating the social
divide, endangering social cohesion and jeopardising the social
model.

to their concerns,

that

The European Union must succeed in delivering a
1.8
balanced combination of market mechanisms and general
service missions in areas in which such complementarity is
compatible with the objectives of services of general interest
and can offer added value to the user or consumer. This means
that, subject to the conditions laid down in Article 86(2) of the
EC Treaty, the effective performance of a general interest task
prevails, in cases of tension, over the application of competi-
tion rules, in accordance with EU case law.

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Services of general

1.9
interest call for a political will to
control the management of collective interests and to meet
needs and fundamental rights in the context of a European
model of society, a model which offers appropriate social
protection to everyone, whatever their age or social status or
the region they live in, and also ensures good-quality, afford-
able and easy access to essential goods such as food, housing,
water, travel, communication, etc. Services of general interest
are clearly, therefore, part of the social market economy, which
should not be provided simply by the interplay of competitive
forces. In the absence of adequate public intervention a two-
speed Union will develop that will accentuate disparities in
development, inequalities and social exclusion.

1.10
In the near future many Europeans will be called upon
to express their opinion in a referendum on the ratification of
the Constitutional Treaty. Without public support there will be
no political Europe. And there will be no public support if the
Union is unable to provide guarantees for the protection and
development of the European model of society and the Euro-
pean social model.

In this context the White Paper on services of general
1.11
insofar as it establishes a basis for ensuring high-
interest,
quality, accessible and affordable services of general interest, is
one of a number of important steps in promoting Europe to its
citizens and preventing a ‘No’ vote from disrupting the
momentum of European integration.

The debate launched by the White Paper and the
1.12
results of that debate are inextricably linked with the debate
over public-private partnerships, the services market, especially
social services, state aid, the report being prepared on the water
sector, the review of the Lisbon strategy and the assessment
reports.

2. White Paper on services of general interest

2.2
The debate on the Green Paper has revealed differences
of views and perspectives. Nevertheless, a consensus has
emerged on the need to ensure a harmonious combination
between market mechanisms and public service missions.

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

2.4 The Commission's approach is based on nine principles:

2.4.1
Enabling public authorities to operate close to the citi-
zens: services of general interest should be organised and regu-
lated as closely as possible to the citizens and the principle of
subsidiarity must be strictly respected.

2.4.2
Achieving public service objectives within competitive
open markets: 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
interest are compatible. Under the EC Treaty and
general
subject to the conditions set out in Article 86(2), the effective
performance of a general
in case of
interest
tension, over the application of Treaty rules.

task prevails,

2.4.3
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. In this context, universal service is a
key concept the Community has developed in order to ensure
effective accessibility of essential services.

2.1
The White Paper adopted by the European Commission
on 12 May 2004 provides an overview of the important Euro-
pean debate following on from the publication of the Green
Paper in 2003 and the many contributions it gave rise to, in
particular from the European institutions and civil society. It
proposes strategic orientations for the years ahead.

2.4.4 Maintaining a high level of quality, security and safety:
furthermore, the security of service provision, and in particular
the security of supply, constitutes an essential requirement
which needs to be reflected when defining public 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.

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2.4.5
Ensuring consumer and user rights: these include in
particular the access to services,
including to cross-border
services,
throughout the territory of the Union and for all
including
groups of the population, affordability of services,
special schemes for persons with low incomes, physical safety,
security and reliability, continuity, high quality, choice, trans-
parency and access to information from providers and regula-
tors. 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 representa-
tion 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 technolo-
gical environment.

2.4.6 Monitoring and evaluating performance: 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.

take due account of

Respecting the diversity of services and situations: any
2.4.7
interest
Community policy in the area of services of general
must
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.

2.4.8
Increasing transparency: this principle should apply to
all aspects of the delivery process and cover the definition of
public service missions, the organisation, financing and regu-
lation of services, as well as their production and evaluation,
including complaint-handling mechanisms.

2.4.9
Providing legal security: 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 Euro-
pean Court of Justice and the Court of First Instance.

2.5 Based on these principles the White Paper proposes eight new

orientations:

2.5.1
the
Commission will re-examine the feasibility of and the need for

Respecting diversity in a coherent

framework:

a framework law for services of general interest on the entry
into force of the Constitutional Treaty; it will launch a review
of the situation of services of general
interest and submit a
report before the end of 2005.

2.5.2
Clarifying and simplifying the legal framework for the
compensation of public service obligations: 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;
it will
adopt a Community framework for state aid in the form of
public service compensation by July 2005;
it will adopt an
amendment of Directive 80/723/EEC on the transparency of
financial relations between Member States and public undertak-
ings by July 2005; it will further clarify under which conditions
public service compensations may constitute state aid within
the meaning of Article 87(1) by July 2005.

2.5.3
Providing a clear and transparent framework for the
selection of undertakings entrusted with a service of general
interest: the Commission will conduct a public consultation on
the Green Paper on the procurement aspects of public-private
partnerships; where appropriate,
it will submit proposals on
the basis of the results of the public consultation.

Recognising fully the general

interest in social and
2.5.4
health services: the Commission will submit a Communication
on social and health services of general interest in the course of
2005; it will facilitate cooperation among Member States on
health services and medical care in order to contribute to
the
ensuring a high level of health protection throughout
Union.

Assessing the results and evaluating performance: the
2.5.5
Commission submitted its
first horizontal evaluation on
services of general interest on the basis of its evaluation metho-
dology in 2004; it will review its evaluation mechanisms in
2006.

Reviewing sectoral policies:

2.5.6
the Commission will
encourage the cooperation of national regulatory authorities on
the basis of networks of regulators; it will take into account the
results of the public consultation on the Green Paper in the
reviews already foreseen for the different sectors: the review of
the scope of universal service in electronic communications by
July 2005;
the electronic communications
package by July 2006; the review of the postal services direc-
tive by the end of 2006; the review of the internal markets for
electricity and gas by 1 January 2006; the review of the ‘Televi-
sion without frontiers’ directive at the beginning of 2005; the
assessment of the water sector is ongoing.

the review of

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2.5.7
Reflecting our internal policies in our international
trade policy: the Commission will continue to ensure that the
positions taken by the Community in international trade nego-
tiations are fully consistent with the EU's internal regulatory
framework regarding services of general interest.

2.5.8
Promoting services of general interest in development
cooperation: 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.

EESC would point out that 20 % of the population of the EU of
Fifteen are currently denied access to such services. Now,
broadband is a service of general interest that improves living
conditions by reducing distances and facilitating access to
health care, education and public services, both for geographi-
cally isolates citizens and for the worst-off. It therefore follows
that unless universal telecommunications service at an afford-
able price is extended to broadband and mobile telephony, the
European Union's delay in setting up and using the new infor-
mation and communication technologies and the technologies
of a knowledge society will grow, while the digital divide will
become more pronounced, particularly in the new Member
States.

3. General comments

The EESC welcomes the publication of the White Paper.
3.1
It notes
the nine principles and eight new orientations
proposed in the White Paper for reinforcing the existence of
services of general interest. It regrets, however, that its repeated
requests in recent years (1)
for a framework directive or a
framework law to guarantee the existence of SGI, the Member
States' freedom to define, organise and choose management
methods for SGI, the long-term financing and performance
evaluation of SGI, consumers' rights etc. have not yet been
taken up, even if the Commission has undertaken to produce a
report on this matter by the end of 2005.

3.2
The EESC welcomes in particular the fact that the White
Paper sets out a precise timetable of proposals and measures
which the European Commission intends to take in order to
apply these principles and orientations over the coming years.

The EESC will

3.3
follow closely the implementation of
these commitments and is prepared to contribute towards
ensuring their effectiveness.

4. Specific comments

4.1
The first principle — enabling public authorities to
operate close to the citizens — implies that services of general
interest are organised and regulated as closely as possible to the
citizens and that ‘the principle of subsidiarity must be strictly
respected’. However, footnote 30 refers to the draft regulation
on local inland transport, which ‘would require Member States
to use public service concessions’ and thus systematic invita-
tions to tender. There can be no subsidiarity unless each
authority is free to choose how it manages the services of
general interest within its responsibility.

4.2
The third principle — ensuring cohesion and universal
access — led the Commission to stress, ‘universal service is a
key concept the Community has developed in order to ensure
effective accessibility of essential services’. This means allowing
‘requirements to be adapted in accordance with changing user
and consumer needs and concerns, and with changes in the
economic and technological environment’.
In line with this
thinking and as part of the e-Europe plan, which recommends
the
general broadband use for electronic communications,

(1) EESC opinions on Services of general interest, OJ C 241 of 7.10.2002,
and on the Green Paper on Services of General Interest, OJ C 80 of
30.3.2004.

4.3
The sixth principle — monitoring and evaluating perfor-
mance — is also in line with the focus of the EESC, and of
many other actors, on developing a progressive evaluation of
the performance of services of general
interest in order to
improve their effectiveness, make access to them more equal
and help them adapt to the changing needs of consumers, citi-
zens and society, as well as to changes in rules. The White
Paper rightly emphasises that evaluation must be ‘multi-dimen-
sional and cover all relevant legal, economic, social and envir-
onmental aspects’; the EESC would like evaluation to include
employment issues. The EESC stresses that the role of the Euro-
pean Union is to establish a common methodology and
common criteria, in particular with regard to quality, and to
stimulate a process of objective and independent evaluation,
which must be conducted in accordance with the principle of
subsidiarity. In the EESC's view, the White Paper's proposals to
review sectoral policies (see point 2.5.6) must be accompanied
by reports assessing the effects of previous measures. Given
that it brings together all the interested parties, the EESC reiter-
ates its proposal to help steer the evaluation. In this context,
the EESC will examine the possibility of setting up a permanent
study group on SGI.

The seventh principle — respecting diversity of services
4.4
and situations — ‘does not mean, however, that it is not neces-
sary 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’. Under the proposed orientation 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 and submit a report before the end of
2005. The White Paper does not therefore take up the call by
the EESC and many other European actors for a framework
directive (see the EESC opinion on the Green Paper on Services
of General Interest — OJ C 80 of 30 March 2004). However,
there is a clear need to consolidate SGI as a whole, including
social and health services of general interest, bearing in mind
their specific features, as far as they relate to competition law,
financing, the implementation of the subsidiarity principle and
their role in European integration.

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4.5
The ninth principle — providing legal certainty — will
lead the Commission to ‘make a continuous effort’, without
prejudice to the case law of the European Court of Justice and
the Court of First Instance. This principle gives rise to two
proposed orientations:

‘to clarify and simplify the legal framework for the
4.5.1
compensation of public service obligations by July 2005’,
which should help to ensure the security of long-term financing
both for the investment needed to provide continuity and
sustainability of services as well as for compensation of public
service or universal service obligations, without infringing the
principles of transparency, non-discrimination and proportion-
ality;
this compensation may take very
different forms and that these forms must be able to adapt to
objectives: public subsidies, internal adjustments enabling costs
to be financed from profits on commercial activities, whether
or not accompanied by exclusive rights, a compensation fund
among operators, tax or other exemptions, public-private part-
nerships, aid for the provision of services to users, etc.

to recognise that

4.5.2
‘providing a clear and transparent framework for the
selection of undertakings entrusted with a service of general
interest’, based on a public consultation on the Green Paper on
public-private partnerships. For the EESC this means recog-
nising that there needs to be scope for diversity in the way
services of general interest are managed and freedom of choice
for each authority concerned: either direct operation of the SGI
by the public authority itself (as a public service or a public
corporation), or the handing-over of management tasks to a
public undertaking or a joint undertaking over which the
public authority exercises a degree of supervision equivalent to
that over its own departments or operating in the non-profit,
social, cooperative or associative economy, or delegation to an
undertaking for a fixed period (concession with a prior compe-
tition), without forgetting the possibility of reversibility from
one form of management to another.

Brussels, 9 February 2005.

5. Conclusions

The White Paper on services of general interest marks a
5.1
these services in the
step forward in the consideration of
Union. It represents a solid basis on which to develop the
conceptual elements of a European policy on services of
general interest capable of enabling European enterprises and
all of Europe's citizens to benefit from accessible, affordable
and effective public services using leading technologies.

Services of general

interest are not only central

5.2
to
economic competitiveness but also a key element in the social
and environmental fields. They are a major asset in the three-
pronged approach of the Lisbon Strategy (economic, social and
environmental aspects) and are vital to making the EU the
and dynamic knowledge-based society,
most
founded on sustainable economic growth,
the provision of
more and better jobs, and improved social cohesion. Services
of general interest, bearing in mind their specific features, trans-
cend the single market and are an essential prerequisite for the
economic and social well-being of individuals and enterprises.

competitive

5.3
The task facing the European Union is to achieve a
balanced combination of market mechanisms and public
service missions in areas in which such complementarity is
compatible with the objectives of services of general interest
and can offer added value in terms of improvements in the
quality of life of Europe's citizens, bearing in mind economic
growth, job creation and sustainable well-being.

5.4
‘The rights of citizens to benefit from services of general
interest that are accessible, affordable and efficient must be
safeguarded and affirmed in the name of
solidarity and
economic and social cohesion, which are recognised as basic
principles of
the Treaty. Any liberalisation of services of
general interest decided by a Member State must be carried out
while respecting the above-mentioned criteria. Consequently,
there is a need to establish a body of universal principles for
different services that are delivered in different ways from one
Member State to another, while fully respecting the principle of
subsidiarity.’

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND