Opinion of the Committee of the Regions 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’
Date: 2005-02-23
Institutions: European Committee of the Regions
Subjects: competition policy, freedom to provide services, services of general interest

5.7.2005

EN

Official Journal of the European Union

C 164/53

Opinion of the Committee of the Regions on the ‘Communication from the Commission to the
the European Economic and Social Committee and the
European Parliament,

the Council,

Committee of the Regions on the White Paper on services of general interest’

(2005/C 164/06)

THE COMMITTEE OF THE REGIONS,

Having regard to 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),

Having regard to the decision of the European Commission of 13 May 2004 to consult it on this subject,
under the first paragraph of Article 265 of the Treaty establishing the European Community,

Having regard to the decision of its President of 5 April 2004 to instruct its Commission for Economic
and Social Policy to draw up an opinion on this subject,

Having regard to Article 16 of the Treaty establishing the European Community, concerning services of
general economic interest, as well as Articles 2, 5, 73, 81, 86, 87, 88 and 295 of the Treaty,

Having regard to Article 36 of the European Charter of Fundamental Rights, concerning access to services
of general economic interest,

Having regard to Article III-122 of the Treaty establishing a Constitution for Europe, signed by the Heads
of State and Government in Rome on 29 October 2004,

Having regard to its opinion on the Green Paper on services of general interest (CdR 149/2003 fin) (1),

Having regard to its opinion on the Communication from the European Commission on Services of
General Interest in Europe (CdR 470/2000 fin) (2),

Having regard to its opinion on the Draft Commission decision on the application of Article 86 of the
Treaty to state aid in the form of public service compensation, the draft directive amending Commission
Directive 80/723/EEC on the transparency of financial relations between Member States and public under-
takings and the Community framework for state aid in the form of public service compensation (CdR
155/2004 fin) (3),

Having regard to its opinion on the Proposal for a Directive of the European Parliament and of the
Council on services in the internal market (CdR 154/2004 fin) (4),

Having regard to its opinion on the European Commission's Green Paper on public-private partnerships
and Community law on public contracts and concessions (CdR 239/2004 fin),

Having regard to the draft opinion (CdR 327/2004 rev. 1) adopted on 8 December 2004 by its Commis-
sion for Economic and Social Policy (Rapporteur: Mr Claudio Martini, President of the Tuscany Region
(IT — PES)),

adopted the following opinion at its 58th plenary session, held on 23 and 24 February 2005
(meeting of 23 February):

1. The Committee of the Regions' views

THE COMMITTEE OF THE REGIONS

Introduction

The White Paper outlines the actions of the Commission
1.1
up to 2006. The Committee of the Regions, in close coordina-
tion with regional and local authorities, made a substantial
contribution to the broad public debate leading up to it.

1.2
considers that the White Paper provides an opportunity
to continue the debate on the strategies, proposals and commit-
ments it outlines. The public authorities and, in particular, the
regional and local authorities and social partners, should contri-
bute to the following points:

(1) OJ C 73 of 23.3.2004, p. 7.
(2) OJ C 19 of 22.1.2002, p. 8.
(3) OJ C 43 of 18.2.2005, p. 13
(4) OJ C 43 of 18.2.2005, p.18

— striking the right balance between the public interest
inherent to services of general interest (SGI), and compli-
ance with competition rules, not least in the light of the
recognition granted to SGI in the Constitutional Treaty;

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— establishing a legal framework for SGI (in particular, with
the choice of
long-term funding guarantees,

regard to the role of public authorities,
management procedures,
regulation and evaluation);

rities to choose the management and financing method
(these developments are scheduled for July 2005, as is a
precise definition of
the distinction between SGI and
services of general economic interest (SGEI));

— taking stock of

the implementation and effects of

the
sectoral directives on liberalisation in the
electronic
communications, postal services, electricity and gas sectors
in the light of the consultations on the Green and White
Papers and, where necessary, preparing a revision of the
directives;

— developing general interest objectives according to the citi-
zen's needs and thereby contributing to greater social and
territorial cohesion and the competitiveness of the Euro-
the
pean economy (Lisbon process);
Committee of the Regions is disappointed that the Euro-
pean Commission has not prioritised the follow-up to the
White Paper on Services of general
interest within the
context of the immediate objectives for implementing the
Lisbon strategy in its Communication on Working together
for growth and jobs — A new start for the Lisbon Strategy (1);

in this context,

— ensuring a democratic, pluralist and open-minded assess-
ment of the debate, involving all the interested parties;

— undertaking to ensure that

international regulations for
trade in services safeguard the objective of providing all citi-
zens with access to public services;

— the fact that SGI objectives and considerations are to take
in case of conflict
precedence over competition rules
between them (sectoral directives are scheduled for review
in 2006);

— the commitment to draft a specific Communication on
social and health services of general interest in the course
of 2005;

— the commitment to review procedures for assessing the

impact of liberalisation;

— notes, however, that despite the predominantly positive
aspects of the White Paper, service undertakings and provi-
ders are still left with a high level of uncertainty and inse-
curity:

— of a legal nature, regarding the hierarchy of legislation and

its interpretation and application;

— of an economic nature, in the absence of a reliable frame-
work that guarantees long-term funding for investments
and compensation for SGI obligations;

— tailoring international cooperation programmes with devel-
oping countries to include the promotion of investment in
basic general interest services and maximum public access
to them.

— regarding compliance with the subsidiarity principle, and
consequently with the powers and responsibilities of all
tiers of authority (local, regional and national);

Specific comments on the White Paper

— of a political nature, regarding the role of SGI in the Euro-

pean integration process.

THE COMMITTEE OF THE REGIONS

SGI in the European institutional framework

1.3 welcomes the following aspects of the White Paper:

THE COMMITTEE OF THE REGIONS

— acknowledgement of the fact that the Commission, regional
and local authorities, and Member States share responsi-
bility;

— the Commission's endorsement of Article III-122 of the
Constitutional Treaty as the legal basis for services of
general economic interest;

emphasises that SGI are a part of the value system that
1.4
underpins life in the EU and its Member States, where the close
interaction between economic and social progress results in a
social market economy and helps to maximise citizen participa-
tion in Europe's economy and society;

— the desire to provide greater legal certainty for financing
SGI whilst recognising the right of local and regional autho-

(1) COM(2005) 24, p.17

points out that

1.5
the organisation of SGI contributes
towards: economic, social and territorial cohesion; solidarity
and a sense of belonging to a community; the general interest
of citizens; and sustainable development, including for genera-
tions to come;

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1.6
is pleased that the Commission is adopting a stance on
the status of services of general interest at European level. This
builds a bridge between the current situation which, based on
the Treaties and the case law of the European Court of Justice,
places competition policy centre-stage, and the new scene
presented by the Constitutional Treaty;

1.7
is satisfied that the principle of subsidiarity has been
upheld in the statement that ‘it is primarily for the relevant
national, regional and local authorities to define, organise,
finance
interest’. The
Committee of the Regions would also highlight the fact that
national, regional and local authorities are able to develop and
implement systems to enhance citizens' ability to decide for
themselves who is to provide a specific service;

services of general

and monitor

1.8 welcomes the Commission's appreciation of the amend-
ment to current Article 16 (now III-122) of the new Constitu-
tional Treaty, which provides for a European law by co-deci-
sion ‘within the limits of the Union's competences’, to give SGI
a clear legal basis. The persistence of arguments against a
general legal framework does not justify prolonging the current
situation, where lack of legislation compels the European Court
of Justice to establish law rather than apply it. The White Paper
foresees further consideration of the possibility of drafting a
framework law following the ratification of the Constitutional
Treaty.
In view of this, the Commission has undertaken to
publish an evaluation report on possible proposals;

1.9
emphasises that there is broad consensus regarding the
need to make the EU's role clearer and more transparent,
without bestowing upon it further competences. The White
Paper appears to accept this fact by acknowledging the compe-
tences of Member States and local authorities in relation to
services of general
including the right to select the
legal framework or the public or private character of undertak-
ings with general interest obligations.

interest,

SGI and cohesion policy

THE COMMITTEE OF THE REGIONS

1.10
is convinced that universal access to high-quality
services of general interest at reasonable prices calculated on
the basis of production costs is a fundamental aspect of
economic, social and territorial cohesion throughout the EU,
and that local authorities are best situated to assess their citi-

zens' needs and identify the most appropriate form and struc-
tures for providing SGI in their areas;

1.11
underlines that, as a result, the objective of territorial
cohesion brings a need to develop local public services and
pan-European service networks. The Structural Funds — an
indispensable instrument
for European cohesion policy —
should be reformed to promote SGI in relation to cohesion
objectives, with particular reference to cross-border cooperation
and the promotion of SGI in central and eastern European
countries.

SGI and competition

THE COMMITTEE OF THE REGIONS

1.12
principles of a single market and SGI;

emphasises the sensitive interconnections between the

1.13
thinks that, as a consequence, securing long-term
funding for investments and for fulfilling public service obliga-
tions remains central to ensuring universal access to quality
SGI throughout the EU;

considers that the Green Paper was responsible for
1.14
highlighting the advantages of sectoral
liberalisation policies,
but did not paid enough attention to the right balance between
a fair competition and SGI;

1.15 welcomes the Commission's explicit acknowledgment,
in the White Paper, that there are incompatibilities between the
rules of the internal market and competition on the one hand,
and SGI operations, on the other. Nevertheless, the imbalance
between general interest considerations and competition rules
has yet to be fully addressed;

1.16
confirms that the use of a public procurement proce-
dure to select the company which will be given the task of
fulfilling a public service obligation is optional, and is not a
requirement for fulfilling the conditions for the legality of state
aid in the form of public service compensation; feels that, in
the light of recent case law which considerably restricts the
concept of direct management of public services by a local or
regional authority, the European Commission should propose
an amendment to the legislation on public procurement to
establish a definition of direct management geared to what
local autonomy really entails;

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agrees with the Commission that

1.17
the objective of
creating an open internal market is compatible with the devel-
opment of SGI, but feels that there is a need to clarify the
concept of ‘impact on trade’, which, on the basis of Articles 12
and 81 to 89 of the EC Treaty, provides a framework for the
application of competition rules to SGI. As matters stand at
the CJEC's broad interpretation of
present,
the concept of
potential
impact on intra-Community trade means that even
those undertakings entrusted with discharging a public service
at a strictly delimited local level may be subject to the provi-
sions of Article 87(1) of the Treaty;

Distinction between SGI and SGEI:

1.18
urges the Commission to take rapid steps to draw up,
on the basis of the Constitutional Treaty, a proposal for a legal
framework which should make possible a definition of positive
principles, including, for instance:

— criteria for distinguishing between economic SGI and non-

economic SGI;

— principles and general obligations of SGI, such as universal
service, continuity, quality, efficiency, accessibility and user
and consumer protection;

— criteria for curbing trade distortions;

THE COMMITTEE OF THE REGIONS

1.20
considers that unless a clear distinction is made
between services of general economic interest and non-
economic interest, and unless SGI are more clearly defined in
the Treaties, the unequal automatic application of competition
rules will persist;

1.21
reiterates in this context the demand it made in its
opinion on the proposal for a directive on services in the
internal market that ‘services of general interest be excluded as a
matter of principle from the directive's scope (and not only in part
from the application of the country of origin principle), in order to
avert any discussion when the time comes to implement the directive
and so as to avoid the need to have to harmonise this sector in the
short term with the aid of Community-wide provisions’; welcomes
the European Commission's recognition, in its Communication
on Working together for growth and jobs — A new start for the
Lisbon Strategy (1), of concerns about the application of the
country of origin principle in that directive;

1.22 welcomes the serious approach to solving problems
concerning SGEI, on the one hand, and public service obliga-
tions, on the other; is surprised, however, that the European
Commission's three-month work programme provides for the
publication in December 2004 of a revised proposal for a
Regulation of the Council and of the European Parliament
relating to public service obligations in the land passenger
transport sector, even though the consultations on the White
Paper on SGI are far from being completed;

— the right of

local and regional authorities to provide
themselves, and

services of general economic interest
guiding principles for financing;

— evaluation mechanisms.

A common language would have horizontal value for sectors
under Community legislation, whilst serving as a useful refer-
ence point for other sectors.

1.23
points out, however, that the White Paper fails to
provide a precise definition of SGI, restricting itself to noting
that the delivery of goods and services of general interest gives
rise to public service obligations. The White Paper mentions
nine guiding principles for identifying SGI. These provide a
framework for a posteriori evaluation without, however, calling
into question the principle of competition. The White Paper
therefore underscores the difficulties involved in finding a
balance between SGI and competition rules;

this legal

stresses that

framework is all

1.19
the more
important in view of the fact that, as far as public service
compensation is concerned, the first two criteria outlined in the
Altmark Trans judgment — i.e. the need to clearly define the
public service obligation with which the recipient undertaking
is entrusted and to establish the parameters on the basis of
which the compensation is calculated beforehand in an objec-
tive and transparent manner — already entail a requirement for
local authorities to define their public service contracts better.
This in turn will lead to greater transparency and democratic
services of general
accountability in the management of
economic interest;

(1) COM(2005) 24, p.17

is concerned that

1.24
the tendency to apply internal
market rules should not prevail over the rightful protection of
SGI. In reality, with the exception of services provided free of
charge by the public authorities in performance of their duties,
all SGI may have an economic aspect;

notes that

1.25
this has a considerable impact on the
responsibility of regional and local authorities to manage SGI
through self-administration;

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1.26
considers that SGI and SGEI can only be accurately
distinguished from each other if they are assessed according to
criteria that guarantee fundamental rights, universal access, soli-
darity and sustainable development.

including water supply and distribution, waste treatment, urban
transport and public television, should be covered by a Com-
munity framework and,
legal basis should be
if so, what
adopted (environment, cultural diversity, freedom of informa-
tion, etc.).

SGI within the social and health sectors

SGI, trade and international cooperation

THE COMMITTEE OF THE REGIONS

THE COMMITTEE OF THE REGIONS

1.27 welcomes the Commission's commitment to draft a
specific Communication on social and health services of
general interest during the course of 2005 in order to identify
the specific characteristics together with necessary modernisa-
tion measures and overcome the current legal uncertainty. In
the absence of clear legislation, social and health services tend
to become unduly subject to competition rules, to the detri-
ment of their specific vocations. At the same time, mobility
within the EU requires that steps be taken towards obtaining
the right of access to social and health services throughout the
EU. The specificities of this sector should therefore be evalu-
ated, common definitions should be found, mixed situations
dealt with, and the specific roles of the relevant operators
should be properly coordinated;

emphasises that

the Commission,

in framing its
1.28
proposals, must develop an effective level of cooperation with
national, regional and local authorities, as well as all interested
parties, since social and health services in most European coun-
tries are founded on the principles of solidarity and collective
funding.

the

fact

that

appreciates

1.30
the White Paper also
addresses the matter of cooperating with developing countries
to help them establish quality SGI. Access to basic services is
an essential tool for supporting development. Unfortunately,
there are no shared principles for SGI at international level, nor
equitable funding procedures.
In order to contribute to the
development of SGI in developing countries, the EU should
formulate a regional cooperation policy that facilitates the crea-
tion of public assets on an international scale by establishing a
sound institutional and regulatory framework that encourages
investment in basic SGI;

1.31
nevertheless believes that a thorough public debate is
required to clarify SGI-related choices in international negotia-
tions on trade in services. By applying the principle that the
internal regulatory framework should be consistent with inter-
national trade agreements, EU policy has hitherto led to the
exclusion of publicly funded essential SGI (health, education,
culture) and placed numerous restrictions on those sectors that
the EU has chosen to liberalise, without providing the necessary
guarantees.

Sectoral directives

2. Recommendations for future developments

THE COMMITTEE OF THE REGIONS

THE COMMITTEE OF THE REGIONS

sectoral

directives:

notes that

1.29
the White Paper foresees an evaluation
report on the effects of sectoral directives in 2005 and efforts
to achieve greater horizontal coherence in anticipation of their
review in 2006. Pan-European SGEI are subject to the internal
market's
postal
services, electricity, gas, and air, maritime and road transport.
These directives entail both competition obligations and public
service obligations. They must undergo periodic evaluations to
facilitate their review. The reviews must flesh out the public
service obligations, make public service obligations in different
sectors more consistent, and improve the regulatory frame-
work. Discussions are still ongoing as to whether other SGEI,

telecommunications,

considers

that, with regard to the legal aspects,
2.1
although the White Paper proposes
an intensive work
programme for the next two years and takes into consideration
many of
the
Commission has not provided sufficient information regarding
future legal instruments and amendments to existing internal
market and competition law;

the concerns expressed by local authorities,

2.2
notes that the Commission has undertaken to present
proposals by July 2005 for guaranteeing SGI funding condi-
tions in application of the Altmark Trans ruling;

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2.3
asks the Commission to continue to involve all inter-
ested parties in matters such as competition, on which, for the
first time, informal consultations were held, thus enabling the
CoR to put forward the views of regional and local authorities
on matters that affect them closely (see opinion CdR 155/2004
fin,
session of
at
29 September 2004);

unanimously

adopted

plenary

the

2.4
reasserts that Community legislation should be drafted
in strict compliance with the principle of subsidiarity in order
to ensure that the local authorities remain free to choose their
organisational modalities and to exercise their prerogatives, in
accordance with national legislation;

2.5
underlines that the obligation arising from compliance
with these principles rules out any possibility of calling into
question the decisions that local authorities have already taken
regarding the manner in which they are to fulfil their commit-
ments to ensure that citizens have access to services throughout
urban, rural and less populated areas;

considers that, given the urgency of securing funding
2.6
conditions for SGI, the onerous two-year work programme

Brussels, 23 February 2005

(reports, decisions, draft legislative acts, studies, communica-
tions, etc.) must be completed within the stipulated deadlines if
concrete operational measures are to be attained;

the

appreciates

2.7
to
reviewing evaluation procedures for liberalisation in 2005, in
the light of opinions expressed by all interested parties as well
as the social and environmental impact;

Commission's

commitment

2.8
agrees that the Commission should strive to guarantee
local and regional authorities' freedom to choose the appro-
priate procedures for managing services and should exclude
binding EU legislative initiatives which would restrict
that
freedom. It is important to develop a system that guarantees
quality and comparability of national data. The existing evalua-
tion of the quality and efficiency of SGEI that are subject to
sectoral directives should be improved, whereas evaluation obli-
gations for SGEI that are not subject to sectoral directives
should be developed according to principles of independence,
pluralism and quality. Under no circumstance should liberalisa-
tion be pursued without careful and constant evaluation of its
economic, social, territorial and environmental impact.

The President

of the Committee of the Regions

Peter STRAUB