Mechanism for enhancing liberalisation (telecom, energy, post, railways).
Date: 2024-09-19
Institutions: Directorate-General for Parliamentary Research Services
Subjects: energy industry, liberalisation of the market, postal service, railway industry, telecommunications industry

Directorate-General for Research 

WORKING PAPER 

MECHANISM 
FOR ENHANCING LIBERALISATION 
(TELECOM, ENERGY, POST, RAILWAYS) 

Industry Series 

INDU 100 EN 

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This publication is only available in English.  However, German and French versions of the 
Executive Summary are also contained within this document. 

Publisher:  

EUROPEAN PARLIAMENT 
L-2929 Luxembourg 

Authors: 

Oppenheimer Wolff & Donnelly LLP 
Belgium 
and 
Schalast & Partner 
Germany 

Responsible:   Peter Palinkas 

Directorate-General for Research 
Division for Industry, Research, Energy, Environment and STOA 

E-Mail: DG4-industrie@europarl.eu.int  

The opinions expressed in this working paper are those of the authors and do not necessarily reflect 
the position of the European Parliament.  

Reproduction  and  translation  for  non-commercial  purposes are  authorised, provided  the  source  is 
acknowledged and the publisher is given prior notice and sent a copy. 

Manuscript completed in April 2001 

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Directorate-General for Research 

WORKING PAPER 

MECHANISM 
FOR ENHANCING LIBERALISATION 
(TELECOM, ENERGY, POST, RAILWAYS) 

Industry Series 

INDU 100 EN 

10-2001

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

ii 

PE 307.894 

Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

EXECUTIVE SUMMARY  

The objective of this study is an analysis of the energy, telecommunications, railways, postal 
services  and  water  sectors  with  a  view  to  assessing  past,  present  and  potential  future 
Community liberalisation measures. 

As a starting point, the study explores in Section I how, and to what extent, the Community 
applies liberalisation as a technique within the context of completing the internal market. The 
analysis briefly explains the internal market objectives since the Single European Act, (i.e. the 
envisaged nature of the internal market and progress in terms of completion). The study then 
proceeds by exploring which specific key tools the Community applies beyond liberalisation 
to  attain  this  objective  and  how  they  relate  to  one  another.  It  can  be  concluded  that 
liberalisation is only one of the techniques that the Community applies.  

For  the  purpose  of  this  study,  liberalisation  is  defined  as  the  act  of  reducing  government-
imposed  constraints  on  the  economy.  While  liberalisation  presents  one  key  tool  for  the 
completion  of  the  Community  internal  market,  it  is  complemented  by  harmonisation  as  a 
second  key  tool.  Harmonisation,  within  the  scope  of  EC  internal  market  law,  aims  to  attain 
what has been called “a level playing field” in which a uniform legal framework creates equal 
conditions  for  economic  actors,  as  well  as  for  private  citizens,  throughout  the  whole 
Community.  The  study  then  further  explores  the  common  limits  of  liberalisation  within  the 
context of the internal market.  The notion of liberalisation, while furthering the sustainability 
of  the  European  economies,  to  some  extent  conflicts  with  other  objectives  that  are  also 
recognised by the Treaty. These include environmental protection, consumer protection and a 
certain  minimum  level  of  quality  for  services  of  general  economic  interest.  The  study  thus 
analyses  to  what  extent  these  potentially  conflicting  objectives  generally  impose  limits  on 
liberalisation. 

Section  II  of  the  study  provides  an  extensive  analysis  of  liberalisation  in  the  energy, 
telecommunications,  railways,  postal  services  and  water  sectors.  An  overriding  common 
feature  of  the  selected  sectors  is  that  they  all  operate  on  a  network  basis.  The  specific 
characteristics of network-bound services are identified in order to provide an understanding 
of the background against which liberalisation is generally taking place. The study determines 
that network-bound services, while sharing some common features, also vary widely between 
sectors  and  thus  have to  be  analysed  separately.  The  actual  analysis  of  the  present  status  of 
liberalisation is carried out on a sector by sector approach. Each area is analysed thoroughly 
in  terms  of  its  specific  characteristics,  past  Community  liberalisation,  the  present  status  of 
liberalisation  and  potential  for  further  liberalisation  with  regard  to  liberalisation  gaps 
identified  in  the  course  of  the  analysis.  Specific  attention  is  paid  to  pending  Community 
action in the various sectors, for example to the anticipated policy package of the Commission 
in the  area of postal services. Generally, it can  be  concluded that  the status of  liberalisation 
varies  significantly  from  one  sector  to  another.  While  the  Community  in  the  energy  and 
telecommunications  sectors  has  progressed  a  long  way  toward  liberalisation,  the  postal 
services and railway sectors lag behind to some degree, while the water services sector is still 
characterised by a general absence of Community liberalisation action. 

Section III of the study identifies, based on the findings of Section II, a set of priority actions 
that Community legislators should analyse and adopt with a view to further liberalisation in 
the sectors examined. While the set of  measures that is proposed obviously varies from one 
area to the other depending on the liberalisation progress made to date, the establishment of 
separate European Regulatory Authorities is recommended as a common action for all sectors. 

4 

iii 

PE 307.894 

 
 
 
 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

In the final section of the study, Section IV, the findings of the study are analysed in terms of 
their  overall  importance  for  the  CEECs  that  are  currently  in  the  process  of  accession  to  the 
European Union. 

4 

iv 

PE 307.894 

Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

ZUSAMMENFASSUNG 

Gegenstand  der  Studie  ist  eine  Analyse  der  Bereiche  Energie,  Telekommunikation, 
Schienenverkehr,  Postdienste  und  Wasser,  im  Hinblick  auf  die  Überprüfung  vergangener, 
gegenwärtiger und möglicher künftiger Liberalisierungsmaßnahmen der Gemeinschaft. 

Als Ausgangspunkt wird in Teil I untersucht, in welcher Weise und in welchem Ausmaß die 
Gemeinschaft die Liberalisierung als ein Mittel  zur Vollendung des Binnenmarktes  einsetzt. 
Die  Untersuchung  erläutert  kurz  die  Ziele  des  Binnenmarktes,  wie  sie  seit  der  einheitlichen 
Europäischen  Akte  ins  Auge  gefasst  sind  (d.h.  die  Struktur des  angestrebten  Binnenmarktes 
die  Schritte  zu  seiner  Vollendung).  Die  Studie  fährt  sodann  fort  mit  einer  spezifischen 
Untersuchung,  welche  Schlüsselinstrumente  die  Gemeinschaft  generell  über  die 
Liberalisierung  hinaus  anwendet,  um  dieses  Ziel  zu  erreichen,  und  in  welcher  Beziehung 
diese Instrumente zu einander stehen. Es kann die Schlussfolgerung gezogen werden, dass die 
Liberalisierung  lediglich  eine  unter  mehreren  Techniken  darstellt,  die  die  Gemeinschaft 
verwendet.  

Für  die  Zwecke  dieser  Studie  wird  Liberalisierung  definiert  als  Abbau  staatlicher 
Beschränkungen  für  die  Volkswirtschaft.  Die  Liberalisierung  stellt  ein  Schlüsselinstrument 
für die Vollendung des  Binnenmarktes dar,  aber sie wird  ergänzt durch die Harmonisierung 
als  zweites  Schlüsselinstrument.  Harmonisierung  zielt  bei  den  Rechtsvorschriften  für  den 
Binnenmarkt  darauf  ab,  das  zu  erreichen,  was  man  im  englischen  Sprachgebrauch  „a  level 
playing  field“  nennt,  nämlich  einen  Bereich,  in  welchem  ein  einheitlicher  Rechtsrahmen  zu 
gleichen Bedingungen für die Wirtschaftsakteure wie für die Bürger innerhalb der gesamten 
Gemeinschaft führt. Die Studie untersucht ferner die Grenzen der Liberalisierung im Kontext 
des  Binnenmarktes.  Die  Liberalisierung  fördert  zwar  die  nachhaltige  Entwicklung  der 
europäischen  Volkswirtschaften,  sie  steht  jedoch  in  gewissem  Maße  in  Widerspruch  zu 
anderen  Zielen,  die  ebenfalls  vertraglich  verankert  sind.  Dazu  gehören  Umweltschutz, 
Verbraucherschutz sowie bestimmte qualitative Mindestanforderungen an die Leistungen der 
Daseinsvorsorge.  Folglich  wird  in  der  Studie  auch  untersucht,  in  welchem  Ausmaß  diese 
potenziell konfliktären Zielsetzungen generell der Liberalisierung Grenzen setzen. 

Teil  II  der  Studie  liefert  eine  ausführliche  Analyse  der  Liberalisierung  in  den  Bereichen 
Energie,  Telekommunikation,  Schienenverkehr,  Postdienste  und  Wasser.  Als  gemeinsamer 
Wesenszug  der  Bereiche  kann  festgestellt  werden,  dass  sie  sich  sämtlich  auf  Netzwerke 
stützen.  Die  spezifischen  Merkmale  netzwerkgestützter  Dienste  werden  bestimmt,  um  zu 
einem besseren Verständnis dafür zu kommen, vor welchem Hintergrund die Liberalisierung 
generell  erfolgt.  Die  Untersuchung  kommt  zu  der  Feststellung,  dass  netzgestützte  Dienste, 
auch wenn sie einige gemeinsame Merkmale aufweisen, von Sektor zu Sektor stark variieren, 
weshalb  die  Analyse  getrennt  für  jeden  Sektor  erfolgen  muss.  Die  tatsächliche  Analyse  des 
derzeitigen  Standes  der  Liberalisierung  wird  sodann  im  Wege  einer  sektorbezogenen 
Betrachtung  durchgeführt.  Für  jeden  Bereich  wird  eine  tiefgreifende  Untersuchung  unter 
Berücksichtigung  seiner  spezifischen  Merkmale,  der  Liberalisierungsmaßnahmen  der 
Gemeinschaft  in  der  Vergangenheit,  des  derzeitigen  Standes  der  Liberalisierung  sowie  des 
Potenzials  zu  ihrer  Weiterführung  durchgeführt,  wobei  auf  ‚Liberalisierungslücken‘,  die  im 
Zuge der Analyse zu Tage getreten sind, eingegangen wird. Besonderes Augenmerk wird auf 
anhängige  Gemeinschaftsmaßnahmen  in  diesen  Bereichen  gerichtet,  beispielsweise  auf  das 
derzeit  behandelte  Maßnahmenpaket  der  Kommission  im  Bereich  der  Postdienstleistungen. 
Im Allgemeinen kann festgestellt werden, dass der Stand der Liberalisierung stark von Sektor 
in  den  Bereichen  Energie  und 
zu  Sektor  variiert.  Während  die  Gemeinschaft 

4 

v 

PE 307.894 

 
 
 
 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

Telekommunikation  einen  weiten  Weg  in  Richtung  Liberalisierung  zurückgelegt  hat,  ist  bei 
den  Postdiensten  und  bei  der  Schiene  ein  gewisser  Rückstand  zu  verzeichnen;  bei  der 
Wasserversorgung  ist  schließlich  immer  noch  ein  völliges  Fehlen  gemeinschaftlicher 
Liberalisierungsmaßnahmen festzustellen. 

Teil  III  der  Studie  identifiziert  sodann,  auf  der  Grundlage  der  Ergebnisse  von  Teil  II,  einen 
Katalog  vordringlicher  Maßnahmen,  die  die  rechtsetzenden  Organe  der  Gemeinschaft 
analysieren  und  umsetzen  sollten,  um  zu  einer  weitergehenden  Liberalisierung  in  den 
ausgewählten  Bereichen  zu  kommen.  Auch  wenn  die  vorgeschlagenen  Maßnahmen 
augenscheinlich  von  Bereich  zu  Bereich  je  nach  bisher  erzieltem  Liberalisierungsstand 
variieren,  wird  doch  die  Schaffung  eigenständiger  europäischer  Regulierungsbehörden  als 
eine  gemeinsame  Maßnahme  für  alle  Bereiche  empfohlen.  Im  abschließenden  Teil  der 
Untersuchung, dem Teil IV, werden sodann die gefundenen Ergebnisse im Hinblick auf ihre 
Bedeutung  für  die  MOEL,  die  sich  derzeit  im  Prozess des  Beitritts  zur  Europäischen Union 
befinden, analysiert. 

4 

vi 

PE 307.894 

 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

SOMMAIRE 

La présente étude consiste à analyser les domaines de l'énergie, des télécommunications, des 
chemins de fer, des services postaux et de l'approvisionnement en eau sous l'angle de l'action 
que la Communauté a mené dans le passé, mène actuellement et compte mener à l'avenir en 
termes de libéralisation de ces secteurs. 

L'étude examine d'abord, à la section I, comment et dans quelle mesure la Communauté utilise 
la libéralisation comme technique dans le cadre de l'achèvement du marché intérieur. À cette 
fin, l'analyse expose brièvement l'objectif essentiel de la politique de la Communauté depuis 
l'adoption de l'Acte unique européen, à savoir l'achèvement du marché intérieur, y compris la 
nature qu'il a été envisagé de donner au marché intérieur et les progrès généraux qui ont été 
réalisés  sur  la  voie  de  son  achèvement.  L'étude  passe  ensuite  à  l'exploration  spécifique  des 
instruments auxquels la Communauté recourt généralement, au-delà de la libéralisation, pour 
atteindre cet objectif et de la manière dont ces instruments se renvoient l'un à l'autre. En un 
mot on peut conclure que la libéralisation n'est jamais qu'une des techniques utilisées par la 
Communauté. 

Pour les besoins de la présente étude, on entend par libéralisation l'action visant à limiter les 
contraintes  imposées  par  les  gouvernements  des  États  au  niveau  de  l'économie.  Si  la 
libéralisation  représente  un  instrument  clé  pour  l'achèvement  du  marché  intérieur,  il  est 
complété par le deuxième instrument clé que constitue l'harmonisation. L'harmonisation, dans 
le contexte   de  la  législation de  la  Communauté  européenne concernant le  marché  intérieur, 
vise à  établir une sorte de terrain neutre où un cadre juridique uniforme crée des conditions 
égales aussi bien pour les opérateurs économiques que pour le simple citoyen, dans l'ensemble 
de  la  Communauté.  L'étude  s'interroge  ensuite  sur  les  limites  communes  de  la  libéralisation 
dans  le  contexte  du  marché  intérieur.  La  notion  de  libéralisation,  tout  en  jouant  en  faveur 
d'économies  européennes  durables,  s'oppose  dans  une  certaine  mesure  à  d'autres  objectifs, 
également  reconnus  par  le  traité.  Parmi  ceux-ci,  la  protection  de  l'environnement,  la 
protection  du  consommateur  et  une  certaine  qualité  minimum  pour  les  services  d'intérêt 
économique général. L'étude vérifie dès lors dans quelle mesure ces objectifs potentiellement 
conflictuels imposent des limites à la libéralisation dans le contexte du marché intérieur. 

Alors  que  la  section  I  se  borne  aux  principes  de  libéralisation,  la  section  II  de  l'étude  est 
consacrée  à  une  large  analyse  de  la  libéralisation  dans  les  domaines  retenus.  A  priori,  il  est 
établi qu'un des principaux points communs à tous les domaines étudiés est qu'ils fonctionnent 
tous  sur  la  base  de  réseaux.  Une  définition  des  particularités  qu'offrent  des  services  mis  en 
réseau  est  donc  donnée  pour  mieux  faire  comprendre  dans  quel  contexte  la  libéralisation 
s'applique  généralement.  L'étude  établit  que    tout  en  ayant  certaines  caractéristiques  en 
commun, des services mis en réseau présentent également d'importantes disparités et doivent 
dès lors être analysés tout à fait isolément. Une analyse des progrès actuels de la libéralisation 
est  donc  menée  selon  une  approche  sectorielle.  Chaque  domaine  se  trouve  analysé  en 
profondeur  quant  à  ses  particularités  :  la  libéralisation  qui  a  été  réalisée  par  le  passé  par  la 
Communauté,  la  libéralisation  qui  s'opère  actuellement  et  les  libéralisations  éventuelles  qui 
seront nécessaires pour combler les déficits identifiés en la matière au cours de cette analyse. 
Une  attention  toute  particulière  est  accordée  aux  actions  communautaires  toujours  en  cours 
dans  les  différents  domaines,  comme  la  politique  de  la  Commission  dans  le  domaine  des 
services  postaux.  On  peut  conclure,  en  règle  générale,  que  les  progrès  de  la  libéralisation 
varient  fortement  d'un  domaine  à  l'autre.  Alors  que,  dans  les  domaines  de  l'énergie  et  des 
télécommunications,  la  Communauté  est  déjà  allée  très  loin  en  matière  de  libéralisation,  les 

4 

vii 

PE 307.894 

 
 
 
 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

domaines des services postaux et des chemins de fer sont encore largement à la traîne tandis 
que  celui  de l'approvisionnement  en  eau pèche  encore  par  une  absence  générale  de  mesures 
communautaires de libéralisation. 

La section III de l'étude identifie, quant à elle, sur la base des constatations de la section II, 
une  série  d'actions  prioritaires  que  les  législateurs  communautaires  devraient  envisager  et 
adopter  de  manière  à  poursuivre  la  libéralisation  dans  les  domaines  retenus.  Si  la  série  de 
mesures  proposées  varie  manifestement  d'un  domaine  à  l'autre  selon  les  progrès  réalisés 
jusqu'ici  en  matière  de  libéralisation,  l'établissement  d'autorités  réglementaires  européennes 
distinctes  est  recommandé  à  titre  d'action  commune  à  tous  les  domaines.  Dans  la  section 
finale de l'étude, à savoir la section IV, les constatations de l'étude sont analysées quant à leur 
importance  générale  pour  les  PECO  qui  se  préparent  actuellement  à  adhérer  à  l'Union 
européenne. 

4 

viii 

PE 307.894 

 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

CONTENTS 

Executive Summary in English ................................................................................................. iii 
Zusammenfassung ..................................................................................................................... v 
Sommaire ................................................................................................................................ viii 

Section I: The Role and Meaning of Liberalisation in the EC ............................................. 1 
1.  The Internal Market as an Overriding Objective of the EC ................................................ 1 
2.  The Present Status of the Internal Market........................................................................... 1 
3.  The Envisaged Nature of the Internal Market..................................................................... 1 
4.  Liberalisation  as  a  Key  Tool  to  Attain  the  Completion  of  the  Internal 

Market ................................................................................................................................. 2 

5.  Harmonisation:  A  Fundamental  Prerequisite  for  a  Liberalised  Internal 

Market ................................................................................................................................. 3 
5.1. Negative  harmonisation  -  The  Judicial  Contribution  to  the  Internal 

Market Concept............................................................................................................ 3 

5.2. Positive Harmonisation: EC Legislation in the Pursuit of the Creation 

of a Level Playing Field  .............................................................................................. 4 
6.  Liberalisation versus the Obligations of General Interest................................................... 6 
6.1. Environmental Protection as an Obligation of General Interest .................................. 6 
6.2. The Specific Obligations of Services of General Interest ........................................... 6 
7.  The Basic Treaty Provisions on the Internal Market .......................................................... 7 

Section II:  Potential  for  Further  Liberalisation  in  the  Selected  Areas  on 

the Basis of the Existing Legal Situation........................................................... 9 

1.  General  Characteristics  of  Network-Bound  Services  and  the  Sectors 

Examined by the Study ....................................................................................................... 9 
1.1. Capital Intensity of Network-Bound Services ............................................................. 9 
1.2. Differences in Network-Access Capacity in Network-Bound Services .................... 19 
1.3. Discrepancies in Technical Standards in the Member States..................................... 10 
1.4. Discrepancies  in  Infrastructure  of  Network-Bound  Services  in  the 

Member States............................................................................................................ 10 
1.5. Network Transportation of Real Matter versus Immaterial Transport ...................... 11 
1.6. Technological Production versus Natural Resources................................................. 11 
2.  Liberalisation in the Energy Sector................................................................................... 13 
2.1. Distinctive Characteristics of Energy Services .......................................................... 13 
2.2. The Legal Situation in the Energy Sector .................................................................. 14 
2.3. Potential for further Action in the Energy Sector ...................................................... 18 
3.  Liberalisation in the Water Services Sector ...................................................................... 19 
3.1. The General Situation in the Water Services Sector.................................................. 19 
3.2. Obstacles to Liberalisation in the Water Services Sector .......................................... 20 
3.3. The Legal Situation in the Water Services Sector ..................................................... 23 

4 

ix 

PE 307.894 

 
 
 
 
 
Enhancing Liberalisation (Telecom, Energy, Post, Railways) 

4.  Liberalisation in Telecommunications Sector................................................................... 27 
4.1. General Characteristics of the Telecommunications Sector ...................................... 27 
4.2. The Beginning of Liberalisation in the Telecommunications Sector......................... 28 
4.3. The Legal Situation in the Telecommunications Sector ............................................ 28 
4.4. Potential for Further Liberalisation in the Telecommunications Sector .................... 33 
5.  Liberalisation in the Railway Sector ................................................................................. 35 
5.1. Distinctive Features of the Railway Sector................................................................ 35 
5.2. The Existing Legal Situation in the Railway Sector .................................................. 36 
5.3. Potential 

for  Further  Action  and  Recent  Developments: 

the 

Commission´s “Railway Infrastructure Package”...................................................... 38 
6.  Potential for Further Liberalisation in the Postal Services Sector .................................... 41 
6.1. General Characteristics of Postal Services................................................................. 41 
6.2. Outline of the General Situation in the Postal Services Sector prior to 

Community Action..................................................................................................... 42 
6.3. The Policy Objectives of the Community in the Postal Services Sector ................... 43 
6.4. The Legal Situation in the Postal Services Sector ..................................................... 44 
6.5. Liberalisation Gaps .................................................................................................... 47 
6.6. Potential  for  Further  Liberalisation  and  Recent  Developments  in  the 

Postal Services Sector ................................................................................................ 47 

Section III:   Mechanisms  for  Further  Liberalisation  in  the  selected 

Sectors.............................................................................................................. 49 

1.  Mechanisms  to  Enhance  Further  Liberalisation  in  the  Energy  Services 

Sector................................................................................................................................. 49 
2.  Mechanisms for Further Liberalisation in the Water Sector ............................................. 50 
3.  Mechanisms for Further Liberalisation in the Telecommunications Sector ..................... 50 
4.  Mechanisms for Further Liberalisation in the Railway Sector ......................................... 51 
5.  Mechanisms  for  Enhancing  Further  Liberalisation  in  the  Postal  Services 

Sector................................................................................................................................. 53 

Section IV:  Meaning  and  Importance  for  the  Proposed  Liberalisation 

Mechanism for CEECs................................................................................... 55 

1.  The  Importance  of  Liberalisation  for  the  Accession  of  CEECs  to  the 

European Union ................................................................................................................ 55 
2.  The Importance of Liberalisation of Network-Bound Services for CEECs ..................... 56 

Bibliography............................................................................................................................. 59 

4 

x 

PE 307.894 

 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

SECTION I: 

THE ROLE AND MEANING OF LIBERALISATION IN THE EC 

1.  The Internal Market as an Overriding Objective of the EC 

The creation of an internal  market in the Community has been a driving force of EC policy 
ever  since  the  Commission  presented  a  White  Paper  on  this  subject  in  June  19851.  In  this 
White  Paper  (which  envisaged  the  completion  of  the  internal  market  by  1992),  the 
Commission classified barriers to trade in fiscal, physical and technical terms and, moreover, 
proposed a set of up to 300 potential measures that needed to be adopted in order to make the 
internal market a reality. 

The internal market was defined in Article 8a EEC as amended by the Single European Act, 
which was signed in February 1986 and came into force on 1st July 1987, as 'an area without 
internal frontiers in which free movement of goods, persons, services and capital is ensured in 
accordance with the provisions of this Treaty'2. The Community thereby obviously faced an 
enormous task. 

Since then, Community policy has been dedicated to attaining this goal and indeed, enormous 
progress has been made towards completing the internal market.  

2.  The Present Status of the Internal Market 

Whilst one of the initial objectives of Community policy was the establishment of the internal 
market,  the  focus  of  Community  policy  has  been  revised  in  recent  years.  A  revision  of  the 
policy became necessary since market integration in many areas that fall within the scope of 
EC  policy  and  EC  law  had  reached  a  high  level  of  maturity.    In  fact,  the  kind  of  internal 
market  originally  envisaged  by  the  Community  actually  existed  in  many  areas.  While  the 
level  of  maturity  of  the  integrated  market  obviously  varies  from  one  area  to  another  (a  fact 
which  will  be  illustrated  in  the  course  of  this  Study),  Community  policy  in  general  is 
increasingly  concerned  with  the  functioning  rather  than  the  establishment  of  the  internal 
market. The Commission’s latest statement concerning review of the internal market strategy 
emphasises the need for further action in key sectors such as transport and postal services – a 
factor which will be discussed in the study3. 

3.  The Envisaged Nature of the Internal Market 

The concept for the Internal Market was based on a vision of a common market in which the 
national  economies  should,  as  a  long  term  aim,  merge  to  a  single  European  domestic  home 
market.  The  main  characteristic  of  this  concept  and  principal  difference  from  the  previous 
concept of the Common Market, was therefore the idea of totally removing national frontiers 
(see  also  Art. 14  Treaty  of  Amsterdam).  The  objective  remains  that  the  whole  Community 
market  should  develop  into  a  single  market  area,  where  all  resources  (material,  immaterial, 
human,  etc.)  could  move  freely  without  restriction,  to  ensure  optimum  use  and  optimum 

1 
2 
3 

COM (85) 310. 
Later contained in Article 7a EC and in today Article 14. 
European  Commissioner  Bolkestein  on  the  forthcoming  review  of  the  internal  market  strategy  to  the 
European Parliament’s Legal Affairs Committee in Brussels on 19th March 2001. 

1 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

allocation  of  resources.    The  internal  market  initiative  was  endorsed  by  the  1988  Cecchini 
report  which  demonstrated  that  a  genuinely  barrier-free  market  would  liberate  a  wave  of 
competitive energy that would lead to European-based structures4.  

The  overriding  character  of  the  internal  market  can  be  summarised  with  regard  to  external 
relations  by  the  principle  of  market  uniformity,  and  with  regard  to  internal  relations  (intra-
Community relations) by the following three main principles: 

•  market freedom (free movement of goods, services, capital, workers), 
•  market equality (equal or nearly equal conditions of competition), 
• 

freedom of competition (free markets for all competitors and fair competition). 

The above mentioned three principles are closely related to each other. They make possible a 
structure  of  economic  exchange  relationships  which  guarantee  free  access  to  markets.  All 
three principles can be narrowed down to the leading principle “right of access to market” – 
the fundamental principle of the European single market. 

4.  Liberalisation as a Key Tool to Attain the Completion of the Internal Market 

The  EC  internal  market  as  defined  in  Art.  7a  of  the  Treaty  is  based  on  an  open-market 
economy  in  which  competition  plays  a  vital  role.  Since  the  1980’s,  liberalisation  has  been 
used as a major policy approach to achieve this competitive market environment. 

•  Liberalisation  can  be  defined  as  the  act  of  reducing  government-imposed  constraints  on 
the  behaviour  of  actors  in  the  economy.  The  two  ways  that  this  is  achieved  are  by 
privatisation and deregulation. 

•  Privatisation can be described as the exposure of the public sector production process to 
free market forces. There exist several means of carrying out privatisation in practice, the 
most common approach being the sale of state-owned enterprises, but it can also include 
the contracting/sourcing-out of services traditionally carried out by the state. 

•  Deregulation means the loosening of the regulatory framework under which a firm or an 
industry  operates,  allowing  expansion  within  the  sector  or  diversification  into  other 
sectors,  as  well  as  opening  the  sector  to  other  entrants.  The  aforementioned  regulatory 
framework is referred to in the OECD Report on Regulatory Reform as:  

“the  diverse  set  of  instruments  by  which  governments  set  requirements  on 
enterprises  and  citizens.  Regulations  include  laws,  formal  and  informal 
orders  and  subordinate  rules  issued  by  all  levels  of  government,  and  rules 
issued by non-governmental or self-regulatory bodies to whom governments 
have delegated regulatory powers. Regulations fall into three categories: 

-  Economic  regulations  intervene  directly  in  market  decisions  such  as 
pricing,  competition,  market  entry,  or  exit.  Reform  aims  to  increase 
economic  efficiency  by 
to  competition  and 
innovation, often through deregulation and use of efficiency-promoting 
regulation,  and  by  improving  regulatory  frameworks  for  market 
functioning and prudential oversight. 

reducing  barriers 

4  Weatherill,  Stephen  and  Beaumont,  Paul,  EC  Law,  The  Essential  Guide  to  the  Legal  workings  of  the 

European Community, 2nd ed., London, 1995. 

2 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Social regulations 

- 
-  Administrative regulations”5. 

The  main  benefits  which  are  expected  to  be  brought  by  liberalisation  are  summarised  as 
follows: 

•  To improve the efficiency of national economies and their ability to adapt to change and 

to remain competitive; 

•  To decrease the costs of goods; 
•  To  boost  productivity  and  so  ultimately  boosting  the  Member  States’  GDP  and  creating 

jobs; 

•  To support entrepreneurship, market entry and economic growth; 
•  To support technological innovation; 
•  To promote small/medium size enterprises; 
•  To improve government credibility and effectiveness in achieving important public goals. 

Having  regard  to  the  sectors  discussed  in  this  study,  liberalisation  encompasses  the 
deregulation  of  those  economic-related  public  services  sectors  that  have  been  strongly 
regulated  by  state  authorities  in  the  past  and  which  are  still  regulated  and/or  under  state 
control  at  present.  The  strategy  of  liberalisation  is  central  to  regulatory  reform  in  these 
sectors. 

5.  Harmonisation: A Fundamental Prerequisite for a Liberalised Internal Market 

As stated above (1), market liberalisation refers to the reduction or elimination of barriers to 
the  free  movement  of  goods,  services,  labour  and  capital.  The  fundamental  mechanism  for 
market  liberalisation  is  the  harmonisation  of  Member  States’  regulations  under  Community 
law. 

Standardisation and uniformity of laws can be described as the constitutional glue6 that holds 
together  the  European  Community.  Uniformity  and  standardisation  as  the  basis  of  the  EC 
internal market require, on one hand, the elimination of all barriers to inter-state trade and, on 
the  other  hand,  the  ultimate  harmonisation  of  laws  throughout  the  Community.  These  two 
legal  techniques  can  be  labelled  as  negative  or  positive  harmonisation7.  While  the  negative 
harmonisation  is  not  of  further  relevance  to  this  Study,  its  basic  features  shall  be  briefly 
summarised to provide a better understanding of the general tools used for the completion of 
the internal market. 

5.1.  Negative Harmonisation - The Judicial Contribution to the Internal Market Concept 

One  of  the  key  methods  of  the  EC,  to  achieve  uniformity  and  standardisation  within  the 
EC internal  market,  is  negative  EC  law,  i.e.,  legislation  that  eliminates  national  laws  which 
obstruct the integration of markets. The European Court of Justice has the power to harmonise 
trade  law  in  the  Community  by  removing  trade  restrictive  national  laws,  thus  create  a  level 

OECD, Report on Regulatory Reform, Paris 1997, p.11. 

5 
6  Weatherill, Stephen, Law and Integration in the European Union, Clarendon Press, 1995, p. 135. 
7 

Ibid., p.282. 

3 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

playing field for traders in the Community territory.  The Court has used the basic prohibitive 
provisions  of  the  Treaty,  especially  Art.  28  (ex-30),  to  develop  judicial  “negative 
harmonisation”8. In the well-known ‘Dassonville’ case, the European Court of Justice showed 
its  willingness  for  this  task  by  adopting  a  strikingly  broad  interpretation  of  the  Treaty 
provision on “quantitative restrictions on imports and all measures having equivalent effect”9. 
According to the ruling in Dassonville, Art. 28 outlaws “all trading rules enacted by Member 
States  which  are  capable  of  hindering,  directly  or  indirectly,  actually  or  potentially,  intra-
Community trade”. The landmark Cassis de Dijon decision10 added further clarification of the 
Court´s notion of negative harmonisation. The Court established the rule that goods that have 
been manufactured lawfully in one Member State should, in principle, be able to be marketed 
in  all  other  Member  States.  Thus,  negative  harmonisation  has  the  effect  that  differences 
between  national  rules  may  not  restrict  the  importation  of  goods11.  Uniformity  of  the  law 
governing intra-Community trade can be achieved on a very large scale. 

5.2. 

Positive  Harmonisation:  EC  Legislation  in  the  Pursuit  of  the  Creation  of  a  Level 
Playing Field   

Judicial harmonisation by the European Court of Justice applying Art. 28 (ex-30) only leads 
to negative market integration, i.e., the elimination of barriers to trade for imported goods. As 
indicated  already,  negative  and  positive  law  operate  in  a  complementary  fashion.  It  is 
indisputable  that  the  Court´s  broad  interpretation  of  Art.  28´s  concept  of  “measures  having 
equivalent  effect”  in  Dassonville  and  the  pro-integrative  emphasis  in  Cassis  de  Dijon  and 
subsequent case law has reduced the need for the application of positive harmonisation since 
most  trade  restrictive  differences  in  national  laws  can  be  ironed  out  through  the  procedures 
under Art. 28. However, there remains a body of national laws that constitute lawful barriers 
to  trade  which  are  justified  under  either  Art.  28  or  mandatory  requirements  in  the  sense  of 
Cassis de Dijon. The strict adherence to uniformity and standardisation in the internal market 
also requires the replacement of these divergent national laws by a single Community rule. 

In  the  European  Community’s  early  days,  total  or  exhaustive  harmonisation  permitting  no 
derogation in national laws was the preferred method creating a uniform body of Community 
law which  was applicable in all Member States, using Art. 100 (now 94) as the legal basis. 
Total  harmonisation  under  the  classic  pre-emption  doctrine  undoubtedly  has  the  appeal  of  
simplicity and is geared towards the core objective of the internal market. Trade on a uniform 
basis is permitted since producers are able to use a single production line to service the whole 
Community.  This  allows  the  realisation  of  economies  of  scale  where  the  allocation  of 
resources is beneficial to the consumers12. But the total harmonisation approach has proven to 
be  very  time  consuming13  because  major  political  effort  in  decision  making  is  needed  to 
create  an  exhaustive  Community  measure  which  accommodates  all  peculiarities  of  the 
Member  States.    Thus,  it  seems  that  the  classic  approach  to  harmonisation  replacing  15 
different legal regimes with one is neither feasible nor desirable. The problem becomes more 
and  more  acute  as  the  Community  sets  itself  higher  legislatory  targets  which  can  only  be 

8  Mc  Gee,  Andrew  and  Weatherill,  Stephen,  The  Evolution  of  the  Single  Market-  Harmonisation  or 

Liberalisation, 1990, 53 M.L.Rev. 578 (580).   
Dassonville C 8/74 [1974] ECR 837, 852. 

9 
10  Cassis de Dijon C 120/78 [1974] ECR 837. 
11 
12 
13 

supra n.4 380. 
ibid., 138,139. 
Pelkmans, J., The New Approach to Technical Harmonisation and Standardisation, 1987, 25 JCMS 249.  

4 

PE 307.894 

 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

achieved by a proactive approach to the adaptation of legislation. Total harmonisation under 
the  classic  pre-emption  doctrine  cannot  serve  to  accommodate  the  divergences  in  the 
European Community. That’s why in the mid 1980´s a new trend in policy-making emerged 
which  attempted  to  retain  the  advantages  of  classic  pre-emption  -  predictability  and  clear 
consequences – and combine those features with a greater sensitivity to new developments14. 
Under this approach it is clear that the Member States also have a role to play. The new policy 
was encapsulated in 1985 in the “New Approach to Technical Harmonisation”15 which played 
an authoritative role in the Community’s harmonisation policy since that date. 

This new model altered the patterns of technical standards-making by abolishing lengthy and 
detailed  mandatory  Community 
technical  rules,  and  establishing  “essential  safety 
requirements”  that  have  to  be  satisfied  by  all  products  that  are  to  be  placed  on  the  market. 
Guidance as how to interpret the “essential safety requirements” is provided in annexes to the 
New Technical Approach directives16. Thus, harmonisation is limited to the flexible notion of 
the  essential  safety  requirements.  The  Community  legislator  sets  up  these  requirements  as 
overall  performance  goals17  to  be  attained  by  a  product  in  order  to  secure  the  right  of  free 
movement  throughout  the  Community.  One  step  further  in  the  pursuit  of  Member  States’ 
demand for flexibility in the harmonisation of laws is achieved by the inclusion of options and 
derogations in directives. 

The Single European Act brought dramatic changes for the rules on harmonisation of law. It 
inserted Art.100a which was designed to accelerate the completion of the internal market. To 
achieve  this  aim,  this  provision  substituted  unanimity  by  qualified  majority  voting  in  the 
political  decision-making  process.  However,  the  pro-integrationistic  forces  had  to  make  a 
significant  concession  to  those  wanting  to  uphold  Member  States  regulatory  autonomy: 
Art 100a  (4)  states  that  even  after  the  adoption  of  a  harmonisation  measure  under 
Art.100a (1),  a  State  is  permitted,  consistent  with  Treaty  safeguards,  to  apply  national 
provisions  on  grounds  of  major  needs  referred  to  in  Art.36,  or  in  order  to  protect  the 
environment or the working environment. The fact that Member States are allowed to invoke 
national  measures  even  post-harmonisation  undermines  the  notion  of  classic  pre-emption. 
Art. 100a  (4)  establishes  within  the  Treaty  the  legitimisation  for  Member  States’  regulatory 
autonomy within the Community framework.  

The  regulatory  technique  of  minimum  harmonisation  also  uses  the  upward  derogation 
approach that can be found in Art.100a (4). Under  minimum harmonisation, Member States 
are obliged to secure the regulatory level set in the relevant directive but they are permitted to 
introduce or maintain a higher national standard. Thus, this model follows the same strategy 
of ensuring a lighter regulatory impact of Community measures and increasing sensitivity for 
national regulatory initiatives.  

Minimum  harmonisation  differs  from  Art.100a  (4)  concerning  the  scope  of  Member  States 
regulatory  autonomy.  Minimum  harmonisation  permits  greater  national  action 
than 
Art.100a (4)18  which  defines  exhaustively  the  available  grounds  for  national  initiatives  that 
exceed  the  Community  standard19.  Furthermore,  stricter  national  rules  under  Art.100a  (4) 

supra n. 6, 144. 
[1985] OJ, 136. 
supra n.6, 145. 
supra n.8, 583. 

14 
15 
16 
17 
18  Weatherill, Stephen, EC Consumer Law and Policy, London, 1997, p .27. 
19 

supra n.6, 152. 

5 

PE 307.894 

 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

have  to  be  notified  to  the  Commission.  None  of  these  restrictions  apply  to  minimum 
harmonisation. 

6.  Liberalisation versus the Obligations of General Interest 

It  has  been  mentioned  above  that  the  EC  Treaty  contains  a  wide  range  of  objectives  that 
require  consideration  in  order  to  secure  the  completion  of  the  internal  market.  The  basic 
means  that  promote  this  task  have  been  summarised  above.  Yet,  while  the  application  of 
liberalisation and harmonisation provides the basis for the completion of the internal market, 
these  basic  tools  are  of  a  limited  nature.  While  the  market  is  intended  to  function  in  a 
competitive  and  efficient  manner  in  order  to  further  economic  prosperity  for  all  consumers, 
both private and industrial, the notion of the internal market in the Treaty is not limited to the 
promotion of economic causes. To the contrary, the Treaty recognises a number of areas that 
may  conflict  with  these  economic  objectives,  most  prominently  environmental  protection, 
health protection, consumer protection but also services of general economic interest. In these 
areas,  the  economic  rationale  of  the  Treaty  comes  up  against  some  important  limits  to 
liberalisation. 

Insofar  as  harmonisation  is  concerned,  two  areas  in  which  in  the  underlying  economic 
rationale  of  the  internal  market  may  potentially  conflict  with  other  objectives  of  the  Treaty 
shall  be  emphasised,  namely  environmental  protection  and  services  of  general  economic 
interest. 

6.1.  Environmental Protection as an Obligation of General Interest 

In respect of environmental protection it is clear that this objective, as referred to in Article 6 
of  the  Treaty,  could  potentially  conflict  with  the  notion  of  liberalisation.  For  instance,  with 
respect  to  the  liberalisation  of  energy  services  in  Europe,  the  promotion  of  access  to 
environmentally  friendly  energy  resources  could  be  required  as  a  matter  of  environmental 
protection even if these resources are not yet regarded as economically justified. While this is 
merely one illustration of a possible clash, it demonstrates general limitations that may arise 
as a result of the conflicting policy objectives. 

6.2.  The Specific Obligations of Services of General Interest  

Services of general economic interest are explicitly referred to in Articles 16 and 86 para. 2, 
EC  Treaty.  While,  on  the  one  hand,  services  of  general  economic  interest  provide  an 
important  contribution  to  the  overall  competitiveness  of  European  industries  and  economic 
cohesion, such services are also characterised by the fact that they affect the daily life of the 
average European citizen. A conflict thus exists in this area. The resolution of this conflict is 
envisaged by these Articles of the Treaty. 

On the one hand, Art. 86 para. 2 confirms clearly that all the rules contained in the EC Treaty, 
in particular the competition rules, are also valid for public services with a general economic 
interest.  On the other hand, this Article provides for the possibility of exempting these public 
services if necessary to enable them to perform the particular tasks assigned to them. Art. 86 
para. 3 gives the Commission special responsibility to ensure that the provisions of Article 86 

6 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

are complied with. Under Article 86 para. 3 the Commission has the power to take decisions 
and to adopt directives  - and so gives a legal basis for the liberalisation of services of general 
interest. 

The EU has been aware of the conflict between the necessity of such regulatory reforms and 
the  public  services  sector.  While  in  the  1980s  the  impact  of  services  of  general  interest  on 
Community policy was still minor, in the 1990s their importance with a view to their potential 
to  impose  limits  to  liberalisation  has  been  progressively  emphasised20.  In  this  respect,  the 
Treaty of Amsterdam has reaffirmed the importance of giving consideration to such services 
in  Community  policies  in  Article  16  EC  Treaty.  A  further  indicator  of  their  growing 
importance is the Commission Communications on Services of General Interest in Europe of 
199621  and  200022.  In  these  Communications,  the  Commission,  while  emphasising  the 
importance  of  liberalisation,  has  at  the  same  time  acknowledged  that  services  of  general 
economic  interest  may  remain  reserved  areas  and  they  be  exempted  from  competition.  The 
Commission  thus  has  rightly  confirmed  that  once  services  are  of  general  economic  interest, 
the general interest may override the economic interest. Interests that might be at stake in this 
respect are the very basic general interest with respect to services, for instance the provision 
of  a  universal  service,  a  sufficient  quality  of  services  supplied,  security  of  service  supply, 
transparent  setting  of  tariffs  and  services  at  affordable  prices.  Accordingly,  only  if  the 
opening up of a market would endanger these basic objectives of services of general interest, 
will  an  area  of  service  be  exempt  from  the  application  of  the  economic  rationale  of  the 
internal  market,  and  in  particular  specifically  from  the  impact  of  the  competition  rules. 
Liberalisation thus remains the general rule even in respect of services of general interest. 

7.  The Basic Treaty Provisions on the Internal Market 

The  mechanisms that are fundamental to the completion of the internal market are provided 
for in the Treaty. The nature of the internal market is outlined in Articles 2, 3 and 14. 

The basic provisions that govern the internal market can be summarised as follows: 

•  Article  12  (ex-  6)  prohibits  any  discrimination  on  grounds  of  nationality  as  between 

Member States and their nationals; 

•  Article 16 (ex- 7d) refers to the areas of general economic interest; 
•  Article  18  (ex-  8a)  establishes  the  right  of  citizens  to  move  and  reside  freely  within  the 

territory of the Community;  

•  Articles  23  to  25  (ex-  9  to  12)  require  the  abolition  of  customs  duties  and  taxes  having 

equivalent effect on trade between the Member States;  

•  Articles  28  to  30  (ex-  30  to  36)  prohibit  quantitative  restrictions  and  measures  having 

equivalent effect on trade in goods and establish the conditions for exceptions;  

•  Article 31 (ex- 37) forbids discrimination by State monopolies;  
•  Articles 39 to 42 (ex- 48 to 51) establish the principles which ensure the free movement of 

workers; 

20  Heritier,  Adrienne,  The  Politics  of  Public  Services  in  European  Regulation  (Pre  print),  Max  Planck 

Projektgruppe Recht der Gemeinschaftsgüter, Bonn, 2001, p.4. 

21  OJ C 281/3 26.09.1996. 
22  COM (2000) 0580 final. 

7 

PE 307.894 

 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

•  Articles 43 to 48 (ex- 52-57) ensure freedom of movement and freedom of establishment 

for self-employed people and Article 58 for companies;  

•  Articles 49 to 55 (ex- 59-66) establish for the freedom to provide services;  
•  Article  56  (ex-  73b)  provides  for  the  abolition  of  restrictions  on  the  free  movement  of 

capital;  

•  Articles  81,  82  (ex-  85,86)  prohibit  anti-competitive  behaviour  by  undertakings  which 

could otherwise negate the effects of the internal market; 

•  Article  86  (ex-  90)  ensures  that  the  competition  rules  apply  to  public  undertakings  and 

undertakings granted special or exclusive rights;  

•  Article  87  (ex-  92)  establishes  strict  conditions  for  aids  granted  by  states  to  their 

undertakings to protect the integrity of the internal market;  

•  Article 90 (ex- 95) concerns the obligation of Member States not to discriminate in fiscal 

matters. 

8 

PE 307.894 

 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

SECTION II:  POTENTIAL  FOR  FURTHER  LIBERALISATION 

IN  THE 
SELECTED  AREAS  ON  THE  BASIS  OF  THE  EXISTING  LEGAL 
SITUATION 

1. 

General  Characteristics  of  Network-Bound  Services  and  the  Sectors  Examined 
by the Study 

Prior to a specific review of the characteristics of the different sectors covered this Study, this 
section will determine the common characteristics of the selected sectors in order to provide 
an  understanding  of  the  general  issues  and  difficulties  that  have  arisen  in  the  past  and  still 
arise with respect to liberalisation in these sectors. 

It  is  a  common  feature  of  the  sectors  examined  that  they  are  all  network-bound  industries. 
Network-bound  services  generally  impose  specific  requirements  that  have  to  be  duly 
considered  with  a  view  to  liberalisation.  While  on  the  one  hand  they  share  some  common 
characteristics,  this  does  not  imply  that  liberalising  network-bound  services  from  a 
Community perspective can be regarded as a simple task. To the contrary, Community action 
with a view to liberalising network-bound services has faced and continues to face obstacles 
that  vary  from  factual  technical  incompatibilities  of  existing  Member  State  systems  to 
fundamental  organisational  differences.  These  characteristics  of  network-bound  services 
provide  the  basic  backdrop  in  which  liberalisation at  Community  level  takes place.   It  must 
also be taken into account that this area requires long-term investment planning. 

1.1.  Capital Intensity of Network-Bound Services 

One  significant  common  distinctive  feature  of  the  network-bound  services  examined  is  that 
the  respective  networks  are  usually  capital  intensive,  not  only  in  terms  of  construction  or 
establishment,  but  also  in  terms  of  maintenance.  This  capital  intensity  is  one  of  the  reasons 
why liberalisation generally takes hold rather slowly in the area of network-bound services. It 
was  previously  assumed  that  due  to  this  specific  capital  intensity  such  services  had  to  be 
natural monopolies in which one provider could offer services cheaper than several providers. 
Liberalisation, being aimed at access to existing networks, provides a direct challenge to this 
traditional  assumption23.  Obviously  the  capital  intensity  varies  from  sector  to  sector,  for 
instance the construction and maintenance of energy networks is more capital intensive than 
the establishment and maintenance of a network for postal services. Yet, generally, the capital 
intensity  of  network-based  services  is  considerably  higher  than  in  other  non-network-bound 
services. The capital intensity of network-bound services is a major reason why these services 
have  in  general  been  exempted  from  competition  for  so  long  and  have  been  and  still  are 
partially operating as natural monopolies in the Member States. 

1.2.  Differences in Network-Access Capacity in Network-Bound Services 

Network-access is obviously a crucial issue in respect of the liberalisation of network-bound 
services. Liberalisation can only produce economically viable results where existing networks 
possess the technical capability to handle the effects of increased competition. As a result, the 

23  Heritier,  Adrienne,  The  Politics  of  Public  Services  in  European  Regulation,  Max  Planck  Projektgruppe 

Recht der Gemeinschaftsgüter (Preprint), Bonn, 2001, p. 2. 

9 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

pre-conditions  for  access  to  the  different  sectors  vary  from  one  sector  to  another.  Some 
network-bound  services  are  generally  better  prepared  to  provide  access  for  potential 
competitors while other sectors are technically rather limited in this respect.  

Besides  access,  problems  in  the  area  of  telecommunications  are  rather  limited  as  existing 
networks are technically capable of delivering separately services to different competitors in 
parallel.  Furthermore  it  is  possible  to  create  new  telecommunications  networks,  see  for 
instance, mobile, WLL, UMTS, etc. A different situation occurs in the railway sector where 
the technical capability to provide services to different competitors is rather limited compared 
to  telecommunications.  Huge  problems  with  respect  to  network  access  by  different 
competitors arise in the area of water services. Here existing networks are technically limited 
in terms of transmission capacity but concerns also arise in terms of health issues as a result 
of  the  potential  different  quality  of  the  water  delivered.  In  the  extreme  case,  each  private 
water supplier could be required to establish his own water supply transport line, which may 
make economic sense only in a few cases. 

In  networks  with  capacity  limits  such  as  railways  and  water,  liberalisation  means  more 
privatisation and public tendering.  

1.3.  Discrepancies in Technical Standards in the Member States 

This  Section  closely  relates  to  what  has  been  outlined  in  the  previous  Section  concerning 
access  problems.  One  major  problem  for  the  liberalisation  of  network-bound  services  is 
conflicting  technical  standards  of  the  existing  networks.  The  technical  compatibility  of 
existing  networks  is  a  key  prerequisite  as  otherwise  services  cannot  be  delivered  across 
Member State borders, and as a result competitors are denied access to national markets. The 
harmonisation  and  standardisation  of  the  technical  standards  of  network  systems  within  the 
Community is thus required. The level of technical compatibility of networks naturally again 
varies  from  sector  to  sector.  While  the  specific  features  of  the  areas  examined  will  be 
discussed further below, some brief examples illustrate the technical difficulties that arise in 
respect of liberalisation of network-bound services. For instance in the railway sector, existing 
networks are compatible only to a very limited degree as, e.g. track-networks and signalling 
have not yet been completely standardised within the Community and are not yet technically 
compatible. Another example of technical discrepancies is provided by water services, which 
are traditionally organised in relatively small units with a limited number of connecting points 
inside the Member States and hardly any cross-border connecting points. Furthermore, water 
networks  are  characterised  by  a  limited  technical  capacity  in  comparison  to,  for  instance, 
telecoms-networks. The characteristic technical features of water networks give rise to serious 
questions about the success of liberalisation in this context as it can only be successful where 
network structures provide sufficient access points and sufficient capacity for competitors not 
only within the Member States but also across the borders of Member States. 

1.4.  Discrepancies in Infrastructure of Network-Bound Services in the Member States 

Another  major  issue  that  has  to  be  taken  into  consideration  with  respect  to  liberalisation  of 
network-based services are the varying organisational structures in the Member States in the 
areas  examined.  These  differences  originate  from  different  factors,  specifically  from  the 
diverse traditions and culture but also from the specific conditions that apply in the Member 

10 

PE 307.894 

 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

States,  e.g.  in  terms  of  size,  geography  or  population  density.  The  existing  organisational 
differences in the Member States can be summarised in three groups: 

•  Centralised versus decentralised organisational structure. 
•  Vertical versus separate organisational structure. 
•  Public ownership versus private ownership. 

The energy sector can be used to illustrate the practical implications of these three categories 
of traditional differences.  In France, the energy industry has been traditionally organised as a 
centralised service. Here EDF operated as a vertically integrated monopoly of large size under 
public ownership. A similar organisational structure can be found in Greece. In other Member 
States,  the  energy  sector  has  traditionally  been  organised  on  a  more  decentralised  basis, 
operating in medium-sized units under either public or private ownership or in a combination 
of  ownership.  For  example,  in  Germany  energy  networks  operate  traditionally  on  a 
decentralised basis, either on a Länder-, regional- or  municipal level, on a  medium or small 
size,  and  partially  under  private,  partially  under  public  ownership.  A  further  example  is 
provided by the United Kingdom. Here energy services are organised on a decentralised basis 
in  large  scale  units  that  operate  separately  from  each  other  under  private  ownership.  Such 
differences exist also in the other sectors subject to this analysis. 

1.5.  Network Transportation of Real Matter versus Immaterial Transport 

It  is  a  common  feature  of  network-bound  services  that  the  final  service  product  has  to  be 
transported  within  an  established network. Yet,  there  exist  basic  differences  in  the  principal 
kinds of the transported “product”. Electricity, gas, postal services and railways are by their 
very  essence  means  of  transportation  of  real  physical  matter:  in  the  case  of  postal  services 
(physical  transport  of  letters,  packages  etc.),  railways  (passenger  and  freight  transport)  and 
water this is evident; but even also electricity and gas are physically transported. In the case 
of energy transportation, for example, the carriers of the current are the electrons that must be 
transported by power lines to the location of the consumers. 

In  contrast  to  the  above-mentioned  sectors,  the  product  transported  by  telecommunications 
network  is  information  including  voice  communication  –  an  immaterial  product.  This  is 
evident when one considers mobile telecommunications. 

But sometimes the boundaries between the material and immaterial subjects may overlap each 
other; this is particularly the case between telecommunications and postal services. A typical 
example may be the “Non-Physical-Remailing”(in contrary to the normal physical remailing). 
It is of note that physical and non-physical-remailing have been (and still are) the subject of 
legal  proceedings  against  the  German  Post  concerning  an  alleged  infringement  of  the 
competition rules (the former at the EU-level, the latter at the national level). 

1.6.  Technological Production versus Natural Resources 

Further differences of network-bound services arise in terms of their production. For instance, 
power  production  can  be  done  theoretically  in  each  place  of  the  world.  In  contrast,  the 
production places of gas and water are not freely disposable but bound to the natural place of 
availability  of  the  resources.  In  Germany,  for  example  more  than  75  %  of  the  gas  supply 

11 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

comes from only five foreign supply sources – the same range of magnitude is valid for the 
whole  of  Western  Europe.    This  limits  the  degree  of  competition  on  the  supply  side  in 
comparison to the electricity market. 

Despite  these  differences,  the  electricity  and  gas/water  sectors  have  a  property  in  common: 
their reliance on natural resources. The electricity sector relies to a large extent on scarce final 
fossil  resources,  in  addition  to  renewable  resources  such  as  wind  and  sun.  The  legal, 
economic treatment and management of natural resources, in particular vital resources such as 
water,  under  free  liberalised  market  conditions,  is  a  subject  of  particular  concern  (see  for 
example: Eichhorn, W.: Economic theory of natural resources,...). 

Excessive exploitation of a natural resource can lead to severe environmental impact. When a 
gas reservoir is exhausted it is merely ”empty”, but excessive exploitation of water can lead to 
dramatic damages, e.g., the reduction of the ground water level can result in the collapse of 
houses and is therefore a danger for the life of citizens. 

Although gas and water are both natural resources, but there is a an essential difference: gas 
as  a  fossil  fuel  is  a  final  resource,  whereas  water  is  in  general  a  renewable  resource 
(exceptions to this rule are, for example, isolated ground water reservoirs without any inflow).  
Despite  the  character  of  water  as  a  renewable  resource  there  exists  a  dramatic  shortage  of 
drinking  water  in  the  world.  In  addition,  the  renewable  character  of  water  depends  on  the 
season  and  the  weather.  As  a  result  many  EU  countries,  in  particular  the  Mediterranean 
Member States, often suffer from shortages in drinking water. This aspect must be taken into 
account  in  EU  harmonisation  of  quality  standards.  Frequently,  the  following  argument  is 
made:  when  there  exists  an  extreme  shortage  of  water,  the  first  priority  is  to  actually  have 
(drinking) water and all other questions are of minor importance, in particular the question of 
water  quality  and  how  a  sophisticated  high-tech  water  treatment  may  fulfil  these  ambitious 
quality standards. 

In  the  context  of  liberalisation,  it  is  often  argued  that  private  companies  would  prefer  to 
exploit water resources with the greatest potential for economic reasons and that they would 
not  exploit  resources  of  lower  potential  –  even  if  the  latter  resources  are  nearer  to  the 
consumers. 

The telecommunications sector can also be regarded as at least partially dependent on natural 
resources.  This  is  evident  with  respect  to  the  discussion  about  the  UMTS  licenses  for 
frequencies. Frequencies are “natural resources” which are a scarce “natural good”. 

Even the railway sector can not be regarded as a “pure” production sector; ground and land is 
needed  for  the  tracks.  Ground  and  land  are  equally a  natural  resource  for  all  network  based 
systems.  Indeed,  this  feature  is  of  great  importance  for  liberalisation.  Normally,  a  kind  of 
“way fees or way costs”  must be paid for the use of ground and land for the network given 
that this ground normally belongs to the public. 

Only the postal services can be regarded as a subject of pure “production” without any direct 
link to “natural resources”. 

12 

PE 307.894 

 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

2. 

Liberalisation in the Energy Sector 

The area of energy services is another core area of the internal market. Just like in the other 
sectors  subject  to  this  Study,  energy  services  in  the  Member  States  were  mostly  protected 
9from competitive market pressure before the Community defined the creation of an internal 
market as one of its core objectives. 

2.1.  Distinctive Characteristics of Energy Services 

While  the  general  distinctive  features  and  problems  with  a  view  a  view  to  liberalisation  of 
network-bound services have been presented above, this Section will determine the distinctive 
characteristics of energy services in order to provide a better understanding of the problems 
that have been arising with respect to liberalisation. 

An  important  feature  of  the  energy  sector  that  continues  to  present  difficulties  for 
liberalisation are the organisational differences between the Member States. Some examples 
illustrate  the  different  backgrounds  in  the  Member  States  against  which  Community  action 
has taken place. For instance in Germany, the German electricity market was characterised in 
the past by private regional monopolies that were divided into three levels of supply, namely 
large  scale  generation  and  long  distance  transmission  companies,  regional  power  transport 
companies and local distribution companies. While most companies in the area belong to the 
private  sector,  public  institutions  (municipalities)  often  hold  considerable  shares  in  the 
companies24. Another example is provided by France, where electricity services are delivered 
traditionally  by  a  vertically  integrated  supplier,  EdF,  under  a  quasi-monopoly  since  the 
Nationalisation  Act  of  194625.  These  differences  result  in  large  differences  in  terms  of 
readiness for liberalisation. In this respect, the varying economic capacities of large monopoly 
suppliers and the potentially distorting effects with a view to competition initially gave rise to 
concerns. 

Another important technical feature of energy services is that they are delivered by a network-
bound  system.  However,  a  distinction  has  to  be  made  between  electricity  and  gas  services. 
The  major  difference  between  the  two  types  of  energy  services  is  in  terms  of  their  storage 
capacity.  While  gas  can  be  stored,  electricity  cannot.  This  requires  a  continuous  flow  of 
electricity  to  maintain  the  continuous  availability  of  electricity.  Short  term  fluctuations  of 
electricity  consumption  must  be  immediately  balanced  on  the  production  side.  This  is  a 
difficult task considering the large number of various electricity producers on the production 
side  and  in  particular  the  numerous  consumers  on  the  demand  side.  Therefore,  electricity 
production  is  based  on  load  (demand)  and  consumption  profiles  in  order  to  meet  the 
electricity  demand  more  accurately  and  ensure  a  flexible  demand  fluctuation.  Each 
interruption of the continuous electricity network transport line leads not only to a delay but 
may lead to a total crash or a so called “black out” of the total electricity network. Gas is, in 
contrast,  storable26.  Due  to  this  difference  in  storage  capability,  there  exists  no  close  time 

24 

25 

26 

Pritzsche,  Kai  Uwe,  (Germany),  in:  'Electricity  Liberalisation  in  the  European  Union;  Law  and 
Commentary', Oil & Gas Law and Taxation Review, Special Issue, Sweet & Maxwell, London 1998, p. 94.  
Lauriol, Thierry, (France), in: 'Electricity Liberalisation in the European Union; Law and Commentary', Oil 
& Gas Law and Taxation Review, Special Issue, Sweet & Maxwell, London 1998, p.89. 
European  Commission,  'Liberalisation  of  Network  Industries-  Economic  implications  and  main  policy 
issues',  in:  European  Economy,  Office  for  Official  Publications  of  the  European  Communities, 
Luxembourg, 1999, p. 204. 

13 

PE 307.894 

 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

correlation  between  gas  consumption  and  production  as  in  the  case  of  electricity.  The  other 
general characteristic features of electricity and gas are comparable. 

While  the  above  mentioned  distinctive  features  have  provided  difficulties  for  liberalisation, 
the technical capacity for network access that has imposed problems for liberalisation in, e.g. 
the railway and water sectors, has never generally been a problem in the energy sector. 

2.2.  The Legal Situation in the Energy Sector 

2.2.1.  The Background to Development of Energy Liberalisation 

The initial policy steps for liberalisation of energy services in the Community were taken as 
long  back  as  1986  when  the  Council  formulated  a  set  of  policy  objectives  for  this  sector, 
including  the  need  for  greater  integration  of  the  internal  energy  market.  Specifically,  it 
envisaged  this  market  should  operate  free  from  barriers  to  trade,  with  a  view  to  improving 
security  of  supply,  reducing  costs  and  improving  economic  efficiency27.  Subsequently  in 
1988, the Commission approved a working paper on the internal energy market based on the 
Council’s  objectives28.  This  lead  to  the  adoption  of  the  Directive  on  Electricity  Transit, 
90/547/EEC29,  and  the  Directive  on  Price  Transparency,  90/377/EEC30.  Neither  of  the 
Directives decisively liberalised the sector. While the first measure increased transparency of 
prices  it  did  not  align  them,  and  the  second  Directive  attempted  to  facilitate  exchanges 
between  existing  networks  but  did  not  impose  an  obligation  on  Member  States  to  ensure 
access.  

The first decisive step towards the creation of the internal energy market by Treaty was made 
by the Commission in 1992 when it drew up a first proposal for an Electricity Directive31. The 
Commission  proposed  the  following  objectives  in  order  to  ensure  a  competitive  energy 
market in Europe: 

• 

the  establishment  of  a  transparent  licensing  system  for  power  electricity  generation  and 
building of networks based on the principle of non discrimination; 

•  unbundling  vertically  integrated  structures  in  order  to  increase  transparency  of  services; 

and 

•  allowing  regulated  third  party  access  (TPA):  energy  suppliers  would  provide  third  party 
access to their networks if sufficient capacity was available. The third party would pay for 
the access. 

The proposal did not yet envisage a general transmission obligation but only a limited access 
for third parties to existing networks. The Commission proposal became subject to intensive 
discussion in the European Parliament in the course of 1993. It is important to note that the 
powers  of  the  European  Parliament  had  been  considerably  strengthened  by  the  Treaty  of 
Maastricht,  by  inserting  Article  189b  into  the  EC  Treaty.  On  the  basis  of  this  Article,  the 
Parliament was given powers of co-decision with the Council in various fields, including the 
internal  energy  market.  The  Parliament  exercised  its  newly  attributed  powers  and  made  a 

[1986] O.J. C-241. 

27 
28  COM (88) 238 final. 
29 
[1990] O.J. L 313/30. 
30 
[1990] O.J. L 185/16. 
31  COM (91), 548 final. 

14 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

decisive  contribution  to  the  evolving  new  structures  in  the  internal  energy  market.  The 
Parliament  presented  its  position  in  a  resolution  in  199332  which  essentially  confirmed  the 
Commission proposal, but required some important changes: 

•  Member  States  should  be  obliged  to  abolish  exclusive  rights  for  new  production 

transmission capacity; 

•  an emphasis on the public service obligation as laid down in Article 90 para. 2 EC Treaty 
(now  Article  86  EC  Treaty)  for  the  area  of  network-bound  energy  services  in  order  to 
guarantee energy supply to European citizens; 
replacing  the  limited  TPA  model  proposed  by  the  Commission  by  the  negotiated  TPA 
model  in order  to  allow  consumers  to  directly  negotiate  with  suppliers  and  to  determine 
their supplier according to their own choice; 

• 

•  maintaining the status quo in terms  of distribution structures in the Member States, thus 
leaving  the  existing  concessions  regime  in  terms  of  distribution  in  place  and  at  the 
discretion of the Member States; 

•  adapting  the  existing  Commission  proposal  to  ensure  the  highest  standards  of  consumer 

protection, environmental protection and labour law. 

The  Commission  reacted  promptly  to  the  Parliament  resolution  by  an  amended  proposal33 
that, inter alia, envisaged: 

• 
• 

the possibility for negotiated TPA; 
the drafting of a working plan for further harmonisation in the energy sector. 

While this proposal took into account the Parliament's position on negotiated TPA, it ignored 
its other positions particularly with respect to environmental protection. However, the revised 
Commission  proposal  did  not  receive  majority  support  in  the  Council.  Specifically,  France 
proposed as an alternative the so-called ‘Single Buyer Concept’ that is based on the following 
notion: 

•  network operators should be granted exclusive rights for existing networks; 
•  network providers should have exclusive rights for selling and buying; 
• 

large consumers, specifically industrial consumers, should have the right to propose to the 
network operator the import electricity from a foreign electricity supplier.  

The Commission was then requested to formulate a working paper in which it would explore 
to what extent the existing competing positions could be brought into line, or were compatible 
with  each  other.  The  Commission  presented  its  findings  on  these  questions  in  199534  and 
highlighted the following factors as being essential to the compatibility of the two proposed 
models: 

transparency with respect to import and export of electricity by a monopolist, 

• 
•  unbundling as far as ‘Single Buyers’ are concerned, 
•  public tendering procedures for new production capacities, 
• 
the possibility of parallel licenses for electricity producers. 

[1993] O.J. C 329/74. 
[1994] O.J. C 123/1. 

32 
33 
34  COM (95) 464 final (Competition Newsletter, Volume 1, No.4, 1995, p. 43. 

15 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

In  summary,  by  this  time  the  discussion  was  focusing  on  how  to  open  up  the  electricity 
market to liberalisation and no longer on whether it should be liberalised. On the basis of the 
Commission’s  conclusions,  1996  saw  the  first  decisive  step  towards  completing  the  internal 
electricity market. 

2.2.2.  The Existing Legal Situation in the Electricity and Gas Sectors 

While various pieces of legislation exist in the energy field, this study will only analyse those 
pieces of legislation that are important for the central topic of this Study, that is liberalisation. 

As  mentioned,  in  1996  there  was  a  breakthrough  with  respect  to  liberalisation  and  the 
completion  of  the  internal  energy  market.  This  was  achieved  by  the  adoption  of  Directive 
96/92/EC  of  the  Council  and  of  the  European  Parliament  of  19  December  1996  concerning 
common rules for the internal market in electricity35. The Directive provides for: 

•  common rules for the generation, transmission and distribution on electricity, 
•  network access under TPA or the ‘Single Buyer’ concept, 
•  a gradual timeframe for market opening, 
• 

the  possibility  for  Member  States  to  introduce  specific  environmental  requirements  as 
public service obligations. 

Ultimately, a  decision  between  the  different  access  systems that  were  discussed  prior  to the 
adoption of the Directive was avoided. Under the Directive, the Member States have a margin 
of  discretion  between  opting  for  negotiated  TPA,  regulated  TPA  and  the  ‘Single  Buyer’ 
concept. 

Under  negotiated  TPA,  consumers  and  producers  of  electricity  can  enter  into  service 
agreements directly with one another, while network access, tariffs for transmission and other 
relevant factors have to be negotiated with the network operator. According to the Directive, 
however, the network-operator may only deny network access where it is able to demonstrate 
a lack of capacity in a substantiated fashion. Disputes with regard to network access must be 
settled  by  a  competent  authority  that  is  designated  by  the  Member  State.  Under  regulated 
TPA,  customers  and  producers  are  also  free  to  enter  into  a  supply  agreement  directly  with 
each  other,  yet  the  tariff  for  transmission  and  distribution  is  not  negotiable  but  is  based  on 
published  tariffs.  Under  the  ‘Single  Buyer’  concept,  eligible  customers  may  contract  freely 
supply  contracts  for  their  own  needs  outside  or  inside  the  area  of  the  ‘Single  Buyer’;  the 
‘Single  Buyer’  is  then  obliged  to  purchase  the  electricity  from  the  contracted  producer  at  a 
price that equals the sales price of the ‘Single Buyer’s own published price minus the price for 
the use of the network. 

While  Member  States  are  free  to  fully  liberalise  their  markets  sooner  than  envisaged,  the 
Directive establishes in Article 19 a timetable for gradual market opening according to which 
the  internal  energy  market  shall  be  liberalised  in  three  stages:  by  February  1999,  February 
2000  and  February  2003. By  the  end of this  period,  the  electricity  market  is  expected to  be 
opened up for approximately 33% of domestic consumption. 

35  O.J. L 27, 30.1.1997, p. 20-29. 

16 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Furthermore,  Member  States  are  provided  with  the  opportunity  to  promote  environmental 
objectives  as  public  service  obligations.  In  this  respect,  under  Article  8  para.  3  and 
Article 11 (3),  operators  of  transmission  and  distribution  systems  can  be  required  to  use 
renewable energy sources or waste or combined heat and power. The Directive translates the 
environmental  objective  of  the  Treaty  into  a  binding  obligation  to  progressively  utilise 
renewable  energy  sources  or  a  similar  obligation  that  would  serve  to  further  the 
environmental objectives of the Treaty. 

A  similar  development  took  place  in  the  gas  sector.  Directive  93/30/EC36  of  the  European 
Parliament and the Council concerning common rules for the internal market in natural gas is 
based  to  a  large  extent  on  the  same  key  measures  as  the  Electricity  Directive  in  order  to 
ensure the opening up of the gas market to competition, while reflecting the specific technical 
and  commercial  characteristics  of  the gas  sector.  This  Directive,  which  is  also  based  on  the 
concept of market opening through TPA and the ‘Single Buyer’ concept, provides that the gas 
markets  of  the  Member  States  will  be  opened  for  approximately  28%  of  domestic 
consumption by 2003. 

2.2.3.  Liberalisation Gaps in the Energy Sector 

While  the  current  situation  in  the  energy  sector  provides  a  solid  first  step  towards  the 
completion of the internal energy market, three main areas remain to be discussed with a view 
to future liberalisation: 

•  The existing measures only envisage market opening of 33% for electricity and 28% for 

gas by 2003. Obviously potential for further liberalisation remains, 

•  The  current  situation  is  characterised  by  a  lack  of  consideration  of  the  environmental 

objectives of the Treaty. In this respect a necessity for discussion exists, 

•  The present system does not allocate clear regulatory structures to safeguard the standards 

established within the Member States. 

While the first area of concern has been exhaustively reviewed, the second area still requires 
action as will become clear in the next Section. 

Recent Developments and Potential for Further Liberalisation of the Energy Sector 

With a view to the failings identified above it has to be emphasised that, the Commission has 
exhaustively  reviewed  the  existing  situation  in  the  energy  sector  and  has  identified  the 
potential for further liberalisation as well as for strengthening the environmental objectives of 
the  Treaty.  The  existing  legal  situation  thus  has  to  be  placed  in  context  in  the  light  of  the 
recent Commission review, which is analysed in the next Section. 

36  O.J. L 204, 21.7.1998. 

17 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

2.3. 

Potential for Further Action in the Energy Sector 

2.3.1.  Potential for Further Market Opening 

The  Commission  has  acknowledged  that  further  market  opening  is  required  in  the  energy 
sector with a view to realising the completion of the internal energy market. The results of the 
in-depth  review  were  presented  by  the  Commission  in  a  policy  package  on  the  12th  March 
2001.  Based  on  the  findings  of  the  review,  the  Commission  has  proposed  a  policy  package 
that aims to further strengthen and speed up the completion of the internal energy market:  

•  a proposal for an amendment of the Electricity and Gas Directives;37 
•  a  proposal  for  a  Regulation  on  access  conditions  to  the  network  for  cross-border 

exchanges in electricity38.  

The  Commission  proposes  to  tighten-up  the  timetable  for  the  completion  of  the  internal 
energy  market.  To  this  end,  the  existing  Directives  shall  be  amended  so  as  to  provide  for 
complete  market  opening  by  2005  in  three  steps.  According  to  the  proposed  timetable,  by 
2003 all non-domestic customers shall be free to choose their electricity supplier. By 2004, all 
non-domestic customers shall be free to choose their gas supplier and by 2005 all consumers 
without  exception,  shall  have  the  right  to  choose  their  gas  and  electricity  suppliers. 
Consequently, the internal energy market by the year 2005 will serve all customers, whether 
small or large, private or industrial, in the same way. 

The proposals also provide for the full liberalisation of the internal energy market in terms of 
competitive structures. In this respect, consumers and producers shall in the future enjoy full 
access  to  the  electricity  and  gas  networks  based  on  the  principle  of  non-discrimination.  In 
order  to  ensure  such  non-discriminatory  access  the  Commission’s  policy  package  proposes 
the strengthening of the existing Directives in terms of access, through the introduction of the 
following provisions: 

•  an obligation that the existing networks shall be managed on a legally separate basis from 

production and sales activities, 

•  an obligation to publicise network access tariffs after approval by the competent national 

regulatory authority, 

•  an  obligation  for  each  Member  State  to  establish  a  national  regulatory  authority  that 
defines  common  network  access  standards,  specifically  tariffs  and  access  conditions  in 
order to prevent distortions of competition. 

If the measures that have been proposed by the Commission are adopted as envisaged, it can 
be concluded that by 2005 a truly liberalised internal energy market will exist in the European 
Union. Further scope for liberalisation cannot be identified. 

Potential for further action may, however, still be identified. Firstly, the proposed system of 
national  regulatory  authorities  requires  further  review.  Secondly,  the  environmental 
objectives,  insofar  as  they  remain  at  the  discretion  of  Member  States,  are  not  binding 
obligations. The potential for steps that may be required with regard to these two issues will 
be discussed in the next Section. 

37  COM (2001) 125 provisional version; final version not available at time of drafting. 
38 

For a summary of the policy package refer to Commission press release IP/01/356, 2001-03-13. 

18 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

2.3.2.  Potential  to  Enhance  the  Utilisation  of  Renewable  Energy  Sources  in  the  Electricity 

Sector 

The  Commission  has  demonstrated  an  increasing  awareness  with  regard  to  environmental 
objectives  of  the  Treaty  in  the  energy  sector.  The  first  step  in  this  respect,  possibly  given 
impetus to by the reinforcement of the environmental objectives by the Treaty of Amsterdam 
in 1996, was taken in 1997 when the Commission analysed for the first time the scope for the 
use of renewable energy sources in the White Paper on Renewable Energy Sources39. Based 
on the findings of this White Paper, the Commission then drew up in the course of 2000 a set 
of concrete measures with regard to the utilisation of renewable  energy sources which were 
presented in its proposal for a Directive on the promotion electricity from renewable energy 
sources  in  the  internal  electricity  market40.  If  this  proposal  should  be  adopted  in  its  present 
form,  it would  oblige  Member  States to  ensure  that  a  minimum  of  12%  of  domestic  energy 
consumption  originates  from  renewable  energy  sources  by  2010.  The  proposal  further 
envisages  that  producers  of  energy  from  renewable  energy  sources  shall  be  provided  with 
priority access to existing networks. 

This  proposal,  should  it  be  adopted,  would  provide  a  decisive  step  in  the  right  direction 
towards the to realisation of the environmental objectives of the Treaty in the energy sector. 
Nevertheless,  the  proposal  does  not  provide  for  an  explicit  obligation  on  Member  States  to 
facilitate by an active promotion policy the use of energy from renewable energy sources. It 
also  has  still  to  be  seen  whether  the  proposal  will  be  adopted  in  the  current  form.  In  this 
respect, the recently refusal to comply with the Kyoto protocol by the US may prove to have 
an impact on European policy. Generally, however, the approach taken in the proposal is an 
important  first  step  towards  balancing  the  environmental  objectives  of  the  Treaty  with  the 
rationale of the internal energy market. 

3. 

Liberalisation in the Water Services Sector 

3.1.  The General Situation in the Water Services Sector 

The situation in the water services sector differs considerably from the other sectors that are 
examined  by  this  Study.  Unlike  the  other  sectors,  water  services  are  still  characterised  by  a 
general  absence  of  Community  liberalisation  action.  Community  action  has  up  to  now  been 
confined  to  the  environmental  objectives  of  the  Treaty  and  to  health  protection41.  The 
completion of a liberalised internal market for water services has not yet been attained. 

As a result, water services in the Community still operate only within national markets and, 
depending  on  the  national  legal  regime  applicable  in  the  area,  mostly  protected  from  free 
market  forces.  As  a  result,  the  potential  competitors  and  consumers  are  excluded  from  the 
benefits of liberalisation in this sector. 

Based  on  the  lack  of  competitive  structures  in  this  important  area  of  general  interest,  an 
intense  debate  on  the  future  of  water  services  has  developed  in  recent  years  at  both  the 
Member States and Community level. While the necessity for Community action is generally 

39  COM (97) 599 final. 
40  COM (2000) 279 final (Text of Proposed Directive, including the inclusive Explanatory Memorandum). 
41 

For examples of Community action in the field note: Pricing policies for Enhancing the Sustainability of 
resources, COM (2000) 477 final, see also COM (96) 315 final. 

19 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

recognised,  the  nature  of  such  action  is  disputed.  The  difficulties  of  developing  a  common 
position for political and legal action arise as a result of different reasons such as the major 
differences in the organisational structure according to which water services are provided in 
the Member States, and because of concerns about the technical standards in the sector. These 
differences  in  terms  of  current  Member  State  structures  are  considerably  deeper  than  in  the 
other sectors covered by this Study42. 

Generally,  the  European  debate  focuses  on  the  question  of  whether  the  liberalisation 
mechanisms  that  the  Community  has  applied  in  other  sectors  to  attain  the  completion  of  a 
competitive and efficient internal market, can be applied in a similar way in the water services 
sector. The major issues that arise in a liberalised water market are analysed next. 

3.2 

Obstacles to Liberalisation in the Water Services Sector 

In the water services sector there are still a number of issues that have to be resolved before 
liberalisation can be achieved. These issues can be categorised as technical issues, economic 
issues and environmental issues.  

3.2.1.  Technical Obstacles 

Water  services  are,  similar  to  the  energy  and  telecommunications  sectors,  provided  by  an 
existing network and thus are at first sight comparable. However, the technical requirements 
in the area of water services are fundamentally different from the other sectors subject to this 
Study.  It  is  a  basic  feature  of  water  networks  that  they  are  neither  technically  prepared  nor 
designed  to  be  compatible  with  other  water  networks.  As  already  mentioned  above,  water 
services are provided in the Member States on the basis of mostly closed regional distribution 
and  supply  systems.  Although,  fixed  connections  between  the  different  networks  usually 
exist,  this  does  not  change  the  general  nature  of  existing  networks  functioning  mostly  in 
closed systems43. The existing network connections were designed to guarantee the supply of 
water in case of difficulties, with network access never being envisaged. Although this does 
not  exclude  the  possibility  that  the  existing  structure  of  water  networks  could  function  in  a 
competitive  water  services  market,  strong  doubts  in  terms  of  their  capacity  remain  in  this 
respect. 

Further  doubts  arise  from  another  perspective  which  is  closely  connected  to  the  general 
existing structure of water networks as closed systems. The necessity for mostly closed water 
networks is driven by health requirements. In a liberalised water  market, competitors would 
potentially  seek  to  use  water  network  systems  to  supply  their  services  across  different 
networks. As water does not always have the same level of quality, the question thus arises 
how  a  constant  level  of  quality  of  water  services  could  be  guaranteed  in  a  liberalised  water 
market.  

Before  the  Community  takes  steps  to  liberalise  the  area  of  water  services,  the  above 
mentioned technical problems have to be considered. It has to be explored in-depth as to what 
extent  the  existing  networks  have  the  technical  capacity  to  deal  with  the  effects  of  market 

42 

For a general account on problems arising in the area of water services: Dähne, Spanisches und deutsches 
Wasserrecht, Baden-Baden 2000. 

43  Daiber, "Wasserpreise und Wettbewerb", Wirtschaft und Wettbewerb, 2000, p. 352, 362. 

20 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

opening  and  increased  competition  in  the  sector.  In  addition,  before  liberalisation  can  take 
place,  the  question  of  securing  a  high  and  constant  level  of  water  quality  with  respect  to 
health  requirements  needs  to  be  resolved  satisfactorily  taking  into  account  the  specific 
technical standards in the area.  

3.2.2.  Economic and Organisational Obstacles 

Diverse  economic  structures  exist  in  the  water  sector.  In  this  regard,  two  sub-categories  of 
water services have to be considered separately from each other: water supply services on the 
one  hand  and  waste  water  disposal  services  on  the  other.  While  often  one  service  provider 
may  provide  both  categories  of  services,  this  organisational  set-up  is  not  a  necessity. 
Competition  as  a  result  of  enhanced  liberalisation  through  Community  action  could  thus  be 
introduced in both categories. 

The  aforementioned  differences  are  illustrated  by  a  comparison  of  the  situation  in  three 
Member States: while in France and Britain, water supply services are provided by large scale 
private suppliers that cover large areas, in Germany water supply services are provided mostly 
by  small  and  medium  scale  enterprises  that  operate  at  municipal  or  regional  level44.  Water 
suppliers like the French companies Eaux/Vivendi serve 80 million customers and, the British 
undertaking Thames  Water  supplies  16,9  million  customers.  In  contrast,  the  largest  German 
water  suppliers,  like  e.g.  Gelsenwasser  or  Berliner  Wasserbetreiber,  serve  merely  between 
2 and 3  million customers. These differences are reflected  also by the economic  capacity of 
turnover  of  about 
these  water  suppliers.  While  Eaux/Vivendi  generate  a  yearly 
12,2 billion DM, and Thames Water achieves a turnover of about 3 billion, the German small 
scale suppliers only attain a fraction of these amounts45.  

These illustrations demonstrate that the level of readiness for liberalisation of the actors in the 
area of water services varies a great degree in terms of their organisational set-up as well as in 
terms of their economic capacity. Obviously, before steps to liberalise the area can be initiated 
by the Community, a thorough analysis of how to safeguard a level of equal opportunity for 
the different potential competitors in this sector has to be carried out. 

3.2.3.  Diversity of Applicable Legal Regimes in the Member States 

The above mentioned different organisational set-ups are also reflected in the applicable legal 
regimes  of  the  Member  States.  As  already  indicated,  suppliers  in  France  and  the  United 
Kingdom operate under private law, while suppliers in Germany are still considerably bound 
by  obligations  arising  from  public  law  even  if  organised  to  some  degree  under  private  law. 
However, the German legislators also have noted the requirement for change, with the result 
that many water supply enterprises are currently in a process of privatisation. However, some 
time will pass before the German framework in the area of water services will be compatible 

44  Nunes/ Kraemer, Institutionen der Wasserwirtschaft in Europa, Bd.1 (1997), including the section on the 
Member  States,  Germany,  p.  13,  France,  p.  189,  Netherlands,  p.923,  Portugal,  p.479,  United  Kingdom, 
p. 583; also: Rat von Sachverständigen für Umweltfragen, Umweltgutachten 2000, p.167. 
Schmitz, Die Struktur der Trinkwasserversorgung in Deutschland und ein Leistungsvergleich mit anderen 
Mitgliedsstaaten  der  Europäischen  Union,  EVM-Seminar:  "Der  deutsche  Wassermarkt  im  Wandel", 
18.10.1999, Koblenz (Bundesverband der deutschen Gas- und Wasserwirtschaft e.V.). 

45 

21 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

with the framework in other Member States. A further obstacle to liberalisation in the water 
sector are differences in the applicable legal regime in the Member States.   

3.2.4.  Environmental Requirements 

A further point for debate with respect to liberalisation in the water sector arises in connection 
with  the  environmental  objectives  as  envisaged  by  the  Treaty  in  Article  6.  Similar  to  other 
sectors, e.g. the energy sector, if a decision to liberalise the area of water services were to be 
taken,  the  Community  institutions  will  face  the  complex  task  of  striking  a  balance  between 
the economic and environmental objectives of Treaty.  In particular, an examination would be 
needed  of  the  extent  to  which  the  existing  competition  regime  can  be  brought  in  line  with 
environmental  requirements.  The  two  objectives  are  often  contradictory.  In  this  respect  the 
Community  policy  makers  will  have  to  make  a  choice  before  legislating  in  the  area.  In 
defining liberalisation guidelines for the sector, will have to take into account that, since the 
Treaty  of  Amsterdam  entered  into  force,  the  environmental  objective  inserted into  Article  6 
EC  Treaty  has  to  be  duly  considered  whenever  the  Community  takes,  defines  or  applies 
measures  in  a  field  in  which  environmental  objectives  could  be  affected46.  Thus,  the  policy 
makers can no longer give environmental objectives a subordinate role when liberalising the 
water  sector.  An  indication  that  the  policy  makers  of  the  Community  have  already 
acknowledged the new stance of environmental objectives in the water sector can be found in 
the Water Framework Directive47. 

As  a  result,  the  Community  policy  makers  may,  if  environmental  targets  are  not  duly 
considered when legislating in a new area like water services, risk their measures being found 
invalid by the European Court of Justice. In this respect it has to emphasised that the Court 
has already had to strike a balance between environmental objectives and other objectives of 
the Treaty48. However, to what extent the Court responds to the challenge of the water sector 
has yet to be seen.  

3.2.5.  Examples of Organisational Structures in the Member States 

In  order  to  provide  for  a  better  understanding  of  the  critical  issues  involved,  examples  of 
water  services  in  France  and  the  UK  illustrate  some  of  the  differences  between  the 
organisational structures in the Member States: 

(a) 

The Organisation of Water Services in France: 

In France the provision of water services falls within the competence of the local authorities. 
However,  the  local  authorities  do  not  provide  water  services  themselves  but  assign  these 
services  to  private  companies.  Examples  for  this  are  provided  by  the  Vivendi  or  Suez 
companies  which  cover  approximately  70%  of  the  supply  side  in  France49.  A  similar 
organisational structure exists in Germany. The regular involvement of private companies in 

46 

Thun-Hohenstein, Der Vertrag von Amsterdam, 1997, p.86; for a general account on Article 6 EC-Treaty as 
inserted by the Treaty of Amsterdam: Schwarze, Europäische Union, Kommentar, 1. edn., Article 6 EGV, 
rm. 22ff. 

'Umweltschutz  in  der  Rechtsprechung  des  Europäischen  Gerichtshofs',  Neue  Juristische 

47  COM (2000) 17 final. 
48 

Zuleeg, 
Wochenschrift, 1993, p.33. 

49  Rat der Sachverständigen für Umweltfragen, Umweltgutachten 2000, p.168. 

22 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

France  is  limited  to  the  supply  of  water  services  and  maintenance  of  networks  while  the 
ownership  of  the  networks  remains  with  the  local  authorities.  Structurally,  supply  of  water 
services  is  guaranteed  by  a  concessions  contract  under  the  applicable  legal  regime  on 
concessions and public tendering.  

(b) 

The Organisation of Water Services in England and Wales 

In England and Wales, water services are supplied under a different organisational structure. 
The existing structure originates from the reform policy of the Government of Prime Minister 
Margret Thatcher which brought about deregulation in various policy fields including water. 
As a result of the reform, water services were fully privatised, including network ownership, 
and are now carried out in ten different large zones by private companies. While connecting 
points between these ten networks exist, the various suppliers operate factually in ten different 
monopolies50.  As  a  result  two  regulatory  authorities,  one  for  environmental  issues  and  the 
other for pricing issues,  control whether  the operators comply with  existing requirements  in 
terms of quality and prices. The aim is to seek enhanced competitive pricing of suppliers by 
increased competition through network access between the different suppliers51. 

3.3.  The Legal Situation in the Water Services Sector 

3.3.1.  General Development 

initial 

legislative  measure  was 

As  mentioned  above,  the  water  services  sector  is  characterised  by  a  general  absence  of 
Community action in terms of liberalisation. Yet, this does not mean that the Community has 
neglected the area in general terms52. In the contrary, Community action dates back as early as 
197553.  The 
the  Bathing  Water  Quality  Directive, 
(76/160/EEC),  which  sought  to  ensure  the  protection  of  health  and  defined  a  common 
minimum  standard  of  quality  for  bathing  water  in  the  Member  States.  Another  important 
piece  of  Community  action  in  the  area  of  water  has  been  the  Drinking  Water  Quality 
Directive,  (80/778/EEC)  as  amended  (98/83/EC),  which  established  strict  quality  standards 
for water used for human consumption. Both pieces of legislation have as a common feature 
their aim of securing a minimum standard of health protection for European citizens. 

A second wave of Community legislation in the area of water services came in 1991, after a 
review  of  existing  legislation  lead  to  the  conclusion  that  a  number  of  gaps  had  to  be  filled. 
The Urban Waste Water Treatment Directive, (91/271/EEC) was adapted which provides for 
the  regulation  of  secondary  (biological)  waste  water  treatment  and  even  more  stringent 
treatment  where  necessary.  This  Directive  aims  to  prevent  environmental  damage  by 
discharging urban waste water and from waste water originating from industrial processes. It 
is  thus  committed  to  promoting  environmental  standards  as  well  as  to  strengthening  the 
existing  health  protection  standards.  A  further  Directive  in  the  area  of  water  that  promotes 

50  Nunes/Correia/Kraemer, Institution der Wasserwirtschaft in Europa, S. 583; Rat von Sachverständigen für 

Umweltfragen, Umweltgutachten 2000, p. 173. 

51  Rat von Sachverständigen für Umweltfragen, Umweltgutachten 2000, p. 177. 
52  Only the main Directives in the area of Water Policy that are currently in force are discussed. Directives 
that  were  repealed  are:  Dangerous  Substances  Directive  (76/464/EEC),  Surface  Water  Directive 
(75/440/EEC), Fish Water Directive (78/659/EEC), Shellfish Water Directive (79/923/EEC), Groundwater 
Directive (80/68/EEC). 
For  a general account of  Community activities  in the  area of  water: European Commission,  EU focus  on 
clean water, Luxembourg, Office for Official Publications of the European Communities, 1999. 

53 

23 

PE 307.894 

 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

both of the aforementioned objectives is the Nitrates Directive (91/676/EEC), which is aimed 
at preventing the high concentration of nitrates in water. 

The aforementioned pieces of Community legislation illustrate that while a general absence of 
legislation  in  the  water  services  area  exists,  the  sector  has  been  to  a  large  extent  addressed 
with  respect  to  health  and  environmental  concerns.  While  health  concerns  were  the  initial 
objective of Community policy in the sector, environmental concerns brought about a second 
wave of legislation after environmental protection awareness became widespread throughout 
the Member States during the 1980s. 

3.3.2.  The  Water  Framework  Directive:  Rethinking  and  Streamlining  Community  Water 

Policy 

While  it  has  been  concluded  that  the  Community  took  important  action  in  the  water  sector, 
this  Study  at  the  same  time  reveals  that  the  action  was  not  based  on  an  integrated  policy 
approach  that  would  envisage  a  general  coherent  strategy  for  the  whole  sector.  Community 
action  in  the  area  of  water  was  generally  of  a  piecemeal  nature  without  an  overriding 
rationale.  Pressure  for  a  review  of  the  Community  policy  came  first  in  1995  when  the 
Commission  considered  the  need  for  a  more  global  strategy  in  the  water  sector  on  the 
initiative of the European Parliament and the Environment Council. After public consultation 
of various experts and NGOs in the field, the Commission then drafted the Water Framework 
Directive  that  provides  for  the  first  integrated  policy  approach.    It  contains  a  set  of 
fundamental objectives for Community water policy and thus is to be regarded as a milestone 
of Community policy in this sector.  

The key objectives of the Water Framework Directive can be summarised as follows: 

• 
• 
• 
• 
• 

to prevent and reduce pollution, 
to promote sustainable water use, 
to protect the aquatic environment, 
to improve the status of aquatic ecosystems, 
to mitigate the effects of floods and droughts. 

The  ultimate  overriding  goal  of  the  Directive  is  to  achieve  a  "good  status"  for  all 
groundwaters  and  surface  waters  throughout  the  Member  States  by  2010  at  the  latest. 
Furthermore, the Directive is the first EU measure which applies to all types of water and thus 
integrates some of the existing legislation. In light of this integrated policy approach some of 
the  existing  Directives  in  the  area  were  repealed54  while  the  Directives  mentioned  above 
remain in force as complementary legislation. Furthermore, the Directive provides for: 

• 
• 
• 
• 

the installation of management units for all water issues in river basins; 
the monitoring of the status of its surface and groundwaters; 
the reflection of the true costs for provision of water in the prices of water; 
the  establishment  of  programmes  to  achieve  the  defined  objectives  and  to  streamline 
existing legislation. 

54  Repealed:  Dangerous  Substances  Directive  (76/464/EEC),  Surface  Water  Directive  (75/440/EEC),  Fish 
Water  Directive  (78/659/EEC),  Shellfish  Water  Directive  (79/923/EEC),  Groundwater  Directive 
(80/68/EEC); The Directives discussed in the course of this Study remain in force. 

24 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

While  imposing  the  mentioned  minimum  obligations  on  the  Member  States,  the  Directive 
thereby leaves a margin of discretion with a view to its implementation and thus follows the 
general  rationale  of  minimum  harmonisation.  The  Member  States  remain  free  to  define  and 
establish the general administrative structures in the area of water services themselves as long 
the  chosen  structures ensure compliance  with  the  defined Community  standards.  As  already 
mentioned above, the Water Framework Directive thereby does not liberalise the water sector 
but establishes common Community quality standards for water services with respect  to the 
environmental  and  health  protection  objectives  of  the  Treaty.  It  provides  an  incentive  for 
more  efficient  use  of  water  services  in  Article  9,  which  requires  that  the  prices  of  water 
services reflect the true costs of water services, including environmental and resource costs. 

It  can  be  concluded  that  the  Water  Framework  Directive  finally  defines  some  common 
minimum  standards  for  the  water  sector  with  respect  to  quality  and  streamlines  existing 
Community legislation in the area. It thereby promotes health requirements in the area as well 
as  contributing  to  the  attainment  of  the  environmental  objectives  of  the  Treaty.  While  it  is 
currently not envisaged that water services shall be liberalised in the future, the existing legal 
standards  will  provide  the  framework  within  which  future  liberalisation  can  take  place. 
However,  while  establishing  some  common  quality  standards,  the  Water  Framework 
Directive does not prevent the existing diversity in organisational set-up of water services in 
the  Member  States  from  increasing  further.  At  least,  it  does  not  urge  them  to  approximate 
their  systems.  Given  that  it  is  almost  certain  that  liberalisation  of  existing  water  service 
systems will move on to the agenda of Community discussions in the short-term or medium-
term, the Water Framework Directive cements the existing differences rather than moving the 
current  structures  in  a  direction  that  would  have  prepared  them  to  some  degree  for  the 
anticipated Community action.  

3.3.3.  The Necessity for Liberalisation in the Water Services Sector 

It  has  been  determined  that  the  water  services  sector  remains  largely  unaffected  by 
Community  liberalisation  action  to  date.  Thus,  gaps  in  liberalisation  are  widespread. 
Consequently,  unlike  the  other  sectors  that  are  subject  to  this  Study,  this  chapter  will  not 
analyse which gaps exist in the sector in terms of liberalisation but instead will examine what 
liberalisation options the Community policy makers have available to them. However, before 
potential  models  are  discussed  in  this  respect,  a  few  remarks  on  the  general  necessity  of 
liberalisation in this area seem to be required. 

It has been repeatedly argued that liberalisation in the sector could have a negative impact in 
various respects. For instance, it could adversely affect European consumers as it may lower 
the quality of water services and could also result in higher prices. It has also been claimed 
that water services are not suitable for enhanced competition because of their limited capacity. 
These  points  reflect  criticism  that  has  been  made  with  regard  to  liberalisation  of  water 
services. And in fact, some of the critical views may have some truth. In this respect it has to 
be  acknowledged  that  various  obstacles  to  liberalisation  exist  in  the  area  of  water  services. 
Yet, the mere existence of technical obstacles or of diverse national organisational structures 
or  other  general  difficulties  should  not  generally  prevent  liberalisation  in  the  sector.  Maybe 
Community deliberations need to be adapted in the water services sector. The question in this 
respect should not be 'whether' to liberalise but rather 'how', or in other words, it is rather the 
means  which  should  be  questioned.  Community  policy  makers  will  have  to  rethink  how 
liberalisation  can  be  brought  about  given  the  specific  and  difficult  factors  present  in  the 

25 

PE 307.894 

 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

sector. Policy  makers  may have to  analyse how competition could be enhanced  in  medium-
sized  or  small-sized  networks  rather  than  focusing  on  liberalisation  on  large  scale  networks 
like, e.g. the telecommunications sector. Community policy in this respect will have to adapt 
to  the  specific  characteristics  of  the  sector.  This  discussion  should  not  lead  to  a  conclusion 
that the area should be automatically exempted from liberalisation. 

3.3.4.  Potential Models for Water Services in the Community 

With a view to the above findings on the existing situation in the water sector in the Member 
States,  the  specific  characteristics  of  this  area  and  the  experience  with  liberalisation  in  the 
other  sectors  that  are  subject  to  this  Study,  different  models  for  future  water  services  in  the 
Community can be discussed. Some of them require further Community action with a view to 
liberalisation, others do not. 

• 

It  may  be  possible  that  the  Member  States  subject  water  services  to  public  tendering 
procedures and award concession contracts to suppliers of services under Community and 
national rules. While this would potentially generate efficiency and transparency to some 
degree, it would mean however that Member States organise water services in the absence 
of  the  regulation  of  the  competitive  structures  of  services.  Liberalisation  would  become 
subject  to  the  discretion  of  the  Member  States.  In  terms  of  liberalisation  this  would 
obviously  be  the  least  desirable  model  for  a  future  organisational  structure  in  the  area. 
Yet, if such a system should be deemed adequate it would not require further steps from 
the Community insofar as liberalisation is concerned. This model would operate under the 
existing Community legal regime in the area of public tendering. 

•  A  second  option  for  the  water  sector  could  be  to  enhance  privatisation  in  the  area.  Yet, 
mere  privatisation  would  again  not  guarantee  higher  competition  and  efficiency  of 
services. Although internal administrative structures of fully private services may be more 
efficient,  competition  between  service  providers  would  not  be  enhanced.  This  option 
would  thereby  also  not  be  desirable  with  a  view  to  the  notion  of  liberalisation  in  the 
Community. Yet, if this model should be deemed adequate by Community policy makers 
no action would be required from the Community with respect to liberalisation. 

•  The most favourable model in terms of liberalisation of water services would be achieved 
if  water  services  were  provided  in  a  network  that  guarantees  access  for  the  various 
potential  competitors  in  the  market.  This  model  would  obviously  require  Community 
action with a view to liberalisation. Policy makers would have to thoroughly analyse the 
specific characteristics of the sector including the existing Community legal framework in 
the area. The specific points that would require due consideration if a decision in favour of 
liberalising the area is taken are summarised in the next chapter. 

Whatever choice is made by the Community legislator with a view to the above models, the 
issue  of  a  Community  regulatory  authority  also  requires  due  consideration.  The  existing 
situation of various regulatory authorities in the Member States inherently leads to different 
standards. The Community legislators should thus set up a European regulatory authority that 
safeguards the established quality objectives in the area of water services and - if a decision in 
favour  of  liberalising  the  area  is  ultimately  taken  -  also  ensures  that  the  future  liberalised 
standards are complied with adequately. 

26 

PE 307.894 

 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Basically, the Community policy makers are confronted with different models between which 
ultimately  a  choice  has  to  be  made.  It  depends  on  the  specific  choice  made  whether  action 
with a view to liberalisation is necessary. 

4. 

Liberalisation in the Telecommunications Sector 

4.1.  General Characteristics of the Telecommunications Sector 

Telecommunications are based on two different networks: a stationary network bound to fixed 
lines and wires and a mobile network based on electromagnetic waves. The mobile network 
contains several fixed stationary infrastructure points, such as sending and receiving stations, 
but  the  transfer  between  these  stations  is  wireless.  The  terminal  equipment  is  central  to  the 
infrastructure.  This  network  structure  is  important  for  the  market  structure  and  the 
liberalisation process. Given that the stationary cable bound network was the starting position 
of  telecommunications  development,  normally  in  the  first  instance  the  “old”  former 
monopolists  have  retained  these  networks.  New  competitors  at  the  beginning  of  the 
liberalisation  process  usually  own  no  physical  network.  The  “network-access”  problem  has 
been solved on a similar basis as in the other network based systems like gas and electricity. 
The new competitors of the service-based-competition could use under specific conditions the 
network  facilities  of  the  former  monopolist;  for  example  they  rent  lines  to  offer  their 
communication services. The “old” telecommunications monopolist remains the only operator 
of the transmission lines and of the telephone exchange nodes, as well as of “basic services” 
such as simple voice communication. 

At the beginning of the liberalisation process this strategy was used in most Member States: 
maintenance  of  the  network  monopoly,  but  a  successive  deregulation  of  communication 
services based on a right to use partially the network of the old “monopolist”. Due to the rapid 
technological  development  of  the  information  and  communications  sector,  the  original  EU-
approach  of  service-based-competition  was  abandoned.  The  “Bangemann-Report”  (1994) 
gave  up  service-based-competition  and  proclaimed  “network-facility-based-competition”  to 
be  the  central  leading  goal  of  the  European  “information  society”.  The  beginning  of  the 
development  of  mobile  networks  and  broadly  speaking  the  beginning  of  the  “network 
revolution”  have  promoted  this  move  towards  a  Europe-wide  “network-facility-based-
competition”. 

Currently,  many  competitors  build  up  and  expand  their  own  network  infrastructures,  in 
particular,  mobile  networks.  But  even  now  the  new  competitors  are  still  dependent  at  least 
partially  on  central  network  elements  of  the  “old”  network  monopoly.  In  particular  the  so 
called  “last  mile”  to  households  or  to  the  end  consumers  is  still  in  the  hands  of  the  “old” 
network monopolist. This is an on-going subject of concern. As long as newer market entrants 
depend on this “last mile”-infrastructure, the “old” monopolist may threaten its competitors. 

27 

PE 307.894 

 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

4.2.  The Beginning of Liberalisation in the Telecommunications Sector 

The whole process of liberalisation began when Member States realised that State monopolies 
lead  to  problems  caused  by  the  combination  of  public  and  private  functions.  Public 
telecommunication administrations had over many years demonstrated their incompetence as 
far as competitiveness and price policy were concerned. In the early 1980´s, Member States 
became increasingly convinced of the need to reform this sector. Taking this into account, the 
Commission´s Green Paper in 1987 then became, in addition to the Single European Act, the 
basis for liberalisation of the telecommunication markets in Europe. 

4.3.  The Legal Situation in the Telecommunications Sector 

There  are  essentially  three  pillars  on  which  European  measures  in  the  telecommunications 
sector may be based: 

•  Approximation of laws in relation to networks and services (Art. 94, 95, 14 EC-Treaty), 
•  Liberalisation by abolishing exclusive rights (Art. 86 para. 3 and para. 1 EC-Treaty), 
•  Ensuring fair competition within the EU by application of Art. 81 EC-Treaty on a case to 

case basis. 

Directives can be categorised as those which concern competition, “liberalisation” directives 
relying on Art. 86 para. 3 EC Treaty, and the so-called “ONP directives” that are adopted to 
approximate laws. 

In  the  last  fifteen  years,  the  law  of  telecommunications  has  been  developed  by  many 
directives.  From  the  beginning  of  1998,  Member  States`  monopolies  were  abolished  within 
the  internal  market.  However,  although  a  gradual  opening  of  this  market  can  be  seen,  a 
number of former state enterprises still hold a dominant position.  

Although this sector is now liberalised and more competitively structured, the question about 
the future European telecommunications policy must be addressed. Additionally, the matter of 
structuring the law itself must be examined given the occasionally overlapping application of 
over a dozen directives. 

Following  the  Green  Paper  in  1987,  the  Commission  adopted  Directive  88/301/EEC  on 
competition in the markets in telecommunication equipment55 which sought to open the entire 
equipment market by 1990. 

In  1990  the  Commission´s  Directive  90/388/EEC  on  competition  in  the  markets  for 
telecommunication  services56  extended  the  liberalisation  process  to  the  service  itself  and 
included a definition in order to separate it from other telecommunications services because 
the implementation of different licence regimes was envisaged. 

This  Directive  was  then  amended  by  the  “satellite  communication”  Directive 94/46/EC57  to 
extend the process of liberalisation into this area also. 

55  OJ L 131, 27. 5. 1988, p. 73. 
56  OJ L 192, 24. 7. 1990, p. 15. 
57  OJ L 268, 19. 10. 1994, p. 15. 

28 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

In 1995, the Commission recognised the relevance of cable TV networks. It therefore issued 
Directive  95/51/EC  amending  Directive  90/388/EEC  with  regard  to  the  abolition  of 
restrictions  on  the  use  of  cable  television  networks  for  the  provision  of  telecommunications 
services58. 

In  order  to  take  account  of  developments  in  technology  and  the  spread  of  mobile 
communications,  Directive  96/2/EC59  with  regard  to  mobile  and  personal  communications 
was brought into force and guaranteed liberalisation in this area as well. 

Finally,  Directive  96/19/EC60,  with  regard  to  full  competition  in  the  telecommunications 
sector, can be seen as concluding the Commission´s legal action plan in this area. 

Besides  the  Commission´s  activities,  the  Council  together  with  the  Parliament  adopted  the 
“Open Network Provision” Directives, which provided for equal access to the network. 

Firstly, Directive 90/387/EEC61 on the creation of the internal market for telecommunication 
services  by  introducing  the  open  network  was  adopted  as  a  broad  legal  framework  and 
Directive  92/44/  EC62  implemented  the  system  of  open  network  for  leased  lines  in  this 
particular field. 

To  guarantee  the  open  network  principle  in  special  sectors,  the  Council  and  the  Parliament 
then  adopted  Directive  95/62/EC63  to  introduce  it  in  the  area  of  voice  telephony.    This  has 
already  been  substituted  by  Directive  98/10/EC64  of  the  Parliament  and  the  Council  with 
regard  to  the  application  of  ONP  to  voice  telephony  and  universal  service  in  the  area  of 
telecommunications. 

The  application  of  the  ONP  principle  was  then  extended  by  Directive  97/33/EC65  on 
Interconnection and Interoperability through ONP, and by Directive 98/61/EC66 amending the 
former measure. 

On  the  basis  of  Art.  95  EC  Treaty,  the  Council  and  the  Parliament  amended  Directives 
90/387/EEC and 92/44/EEC by Directive 97/51/EC67 in order to adapt them to the conditions 
of competition in the telecommunications markets. 

Concluding the entire legal framework of ONP harmonisation, Directive 97/13/EC68 creates a 
licensing regime for telecommunication services. 

In  July  2000,  the  Commission  adopted  a  package  of  legislative  proposals  in  order  to 
strengthen competition in the electronic markets in the EU for the benefit of consumers and 
the  European  economy.  These  proposals  are  aimed  at  supporting  the  liberalisation  of 

58  OJ L 256, 26. 10. 1995, p. 49. 
59  Amending directive 90/388/EEC, OJ L 20, 26. 1. 1996, p. 13. 
60  OJ L 74, 22. 3. 1996, p. 13. 
61  OJ L 192, 24. 7. 1990, p. 1.  
62  OJ L 165, 19.6. 1992, p. 27. 
63  OJ L  321, 30. 12. 1995, p. 16. 
64  OJ L 101, 26. 2. 1998, p. 24. 
65  OJ L 199, 26. 7. 1997, p. 33. 
66  OJ L 268, 24. 9. 1998, p. 37. 
67  OJ L 295, 29. 10. 1997, p. 23. 
68  OJ L 117, 7. 5. 1997, p. 15. 

29 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

telecommunications markets by adapting them to the requirements of the Information Society 
and  the  digital  revolution.  These  proposals  are  intended  to  reform  the  entire  regulatory 
framework for telecommunications in Europe. They result from a broad public consultation69 
including  the  Green  Paper  on  the  convergence  of  the  telecommunications,  media  and 
information  technology  sectors,  and  the  implications  for  the  regulation  towards  an 
Information Society70, the Green Paper on radio spectrum policy in the context of European 
Community policies such as telecommunications, broadcasting, transport and R&D71, and the 
1999  Communications  Review  of  the  existing  regulatory  framework  and  the  public 
consultation that followed72. 

The new legislative step consists of the adoption of five harmonisation Directives (including a 
Framework  Directive  and 
four  specific  Directives  on  authorisation,  access  and 
interconnection, universal service and user rights) and a Directive on (??) data protection in 
telecommunications  services,  and  a  Regulation  on  the  unbundling  of  the  local  loop; 
additionally  the  Commission  adopted  a  draft  Competition  Directive  on  the  basis  of  Art.  86 
para. 3 EC Treaty. 

So far, the legislative framework has been primarily designed to manage the transition from a 
monopolistic  to  a  competitive  market  and  is  aimed  at  the  creation  of  a  competitive  market. 
Although  these  objectives  were  already  achieved  the  market  is  changing  rapidly.  With  the 
new  legislative  proposals  the  Commission  therefore  intends  to  review  the  operation  of  the 
existing Directives which make up the regulatory framework in the light of developments in 
the market, the evolution in technology, and the changes in user demand. 

With  the  proposal  for  a  Directive  on  a  common  regulatory  framework  for  electronic 
communications  networks  and  services73,  the  Commission  aims  to  establish  a  harmonised 
regulatory  framework  across  the  EU.  It  corresponds  to  the  convergence  phenomenon  by 
bringing all electronic communications networks and services within its scope and lays down 
a number of principles and objectives for regulators to follow, as well as a series of tasks in 
respect  of  management  of  scarce  resources  such  as  radio  spectrum  and  numbering. 
Additionally, the Directive has an impact on the application of competition law principles to 
telecommunications.  Art.  13  of  the  proposal provides  a  new  definition  of  undertakings  with 
“Significant Market Power” (SMP)  based on the concept of “dominant position” of Art. 82 
EC  Treaty.  Further,  Art.  14  makes  it  possible  for  the  Commission  to  adopt  Guidelines  on 
market definition and the calculation of Significant Market Power to provide guidance to the 
national regulatory authorities in the application of SMP.  

Further,  the  proposal  for  a  Directive  on  the  authorisation  of  electronic  communications 
networks and services74 is intended to replace Directive 97/13/EC on  a common framework 
for general  authorisation and  individual  licences in the field of telecommunications services 
which was adopted by the European Parliament and Council on 10 April 199775 and had to be 
implemented  by  1  January  1998.  Most  importantly,  the  existing  Directive  prohibits  any 

69  COM (1999) 108. 
70  COM (97) 623. 
71  COM (98) 596; the results of this consultation are published in the Commission´s Communication on next 
steps in radio spectrum policy - Results of the public consultation on the Green Paper, COM (1999) 538. 

72  COM (1999) 539. 
73  COM (2000) 393 final. 
74  COM (2000) 386 final. 
75  OJ L 117, 7.5. 1997, p. 15. 

30 

PE 307.894 

 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

limitation in the number of new entrants (except to the extent required to ensure an efficient 
use  of  radio  frequencies),  gives  priority  to  general  authorisations  as  opposed  to  individual 
licences,  and  defines  harmonised  principles,  including  an  exhaustive  list  of  licensing 
conditions.  In  this  context,  the  Commission  believes  there  are  shortcomings  relating  to  the 
way  in  which  the  Directive  has  been  implemented  within  the  EU76.  The proposed  Directive 
therefore  is  intended  to  revise  the  existing  authorisation  and  licensing  regimes  based on the 
need to stimulate a dynamic, competitive market for communications services, to consolidate 
the  internal  market  in  a  converging  environment,  to  restrict  regulation  to  the  necessary 
minimum,  and  to  aim  at  technological  neutrality  and  accommodate  converging  markets. 
Within  the  EU  there  is  no  harmonised  approach  to  authorising  market  entry  for 
communications  service  providers  but  a  patchwork  of  fifteen  national  regimes  which  are 
widely  divergent  in  their  basic  approach.  Thus,  to  achieve  an  efficient  and  effectively 
functioning  single  European  market,  existing  national  regimes  are  intended  to  be  simplified 
by using the lightest existing regimes as a model. The Commission believes that if procedures 
and  conditions  for  authorising  electronic  communication  services  are  reduced  to  what  is 
strictly  necessary,  a  single  European  authorisation  or  mutual  recognition  of  authorisations 
would  not  appear  to  be  needed  to  allow  and  support  development  of  a  dynamic  and 
competitive  internal  market.  The  proposed  Authorisation  Directive  therefore  provides  for 
remedies such as a general authorisation instead of individual licences, disentangling different 
categories of conditions, simplifying procedures, reducing fees and charges and their range of 
divergence within the EU and strengthening the internal market. 

The  Commission  also  proposed  a  Directive  on  access  to,  and  interconnection  of,  electronic 
communications networks and associated facilities77 to establish a new regulatory framework 
for  dealing  with  these  issues  in  the  EU.  It  is  intended  to  ensure  that,  during  a  period  of 
converging  technologies  and  services  and  strong  market  growth,  the  market  in  electronic 
communications  services  continues  to  develop  in  a  manner  that  stimulates  innovation, 
competition  and  user  choice.  In  this  Directive  a  framework  of  rules  is  laid  down  that  are 
technologically  neutral,  but  which  may  be  applied  to  specific  product  or  service  markets  in 
particular geographical areas to address identified market problems.  

The Commission’s proposal for a Directive on universal service and users’ rights relating to 
electronic  communications  networks  and  services78  aims  to  adapt  and  modernise  existing 
measures on universal service so as to define the scope of this service, the rights of users and 
the  measures  for  compensating  providers  of  the  service  without  distorting  competition.  The 
proposal  for  a  Directive  is  also  intended  to  create  a  process  for  reviewing  the  scope  of 
universal  service  obligations,  to  lay  down  specific  users  and  consumers’  rights  where 
necessary, to carry forward current measures and ensure the availability of leased lines in the 
EU until competition in these services develops, to allow National Regulatory Authorities to 
take measures on behalf of users and consumers, and to underpin industry’s efforts to ensure 
interoperability of consumer digital television equipment.  

Additionally, the proposal for a Directive concerning the processing of personal data and the 
protection  of  privacy  in  the  electronic  communications  sector79  is  intended  to  replace 
Directive 97/66/EC concerning the processing of personal data and the protection of privacy 

76 

See  Commission´s  Fifth  Report  on  the  Implementation  of  the  Telecommunications  Regulatory  Package, 
COM (1999) 537, 10. 11. 1999. 

77  COM (2000) 384 final. 
78  COM (2000) 392 final. 
79  COM (2000) 385 final. 

31 

PE 307.894 

 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

in  the  telecommunications  sector,  which  was  adopted  by  the  European  Parliament  and  the 
Council on 15 December 1997 and had to be transposed by 24 October 1998 at the latest. This 
proposed  Directive  seeks  to  take  into  account  the  move  away  from  telecommunications 
technology  towards  electronic  communications  technology.  It  aims  to  ensure  that  the  same 
service is regulated in an equivalent manner irrespective of the means by which it is delivered. 
Thus  consumers  and  users  should  get  the  same  level  of  protection  regardless  of  the 
technology  used.  It  is  not  intended  to  create  major  changes  in  the  substance  of  the  existing 
Directive,  but  merely  adapts  and  updates  the  existing  provisions  to  new  and  foreseeable 
developments  in  electronic  communications  services  and  technologies.  The  majority  of 
provisions of the existing Directive are therefore carried over in the new proposal subject to 
minor drafting changes. 

Before  the  Commission  adopted  the  Regulation  on  the  unbundling  of  the  local  loop  it  had 
already taken action in this area by adopting a Recommendation80 and a Communication81 on 
local loop unbundling in April 2000. 

However, the state of development subsequently showed that, although liberalisation in some 
Member States had  made progress, non-binding  measures  are less  effective to  achieve  local 
loop unbundling on a sufficiently harmonised basis across the EU by 31 December 2000. The 
Commission then proposed the Regulation of the European Parliament and of the Council on 
unbundled access to the local loop82 with the following key provisions: 

•  Requirement  for  incumbent  operators  to  provide  competitors  with  full  and  shared 
unbundled  access  to  their  local  copper  loops  on  fair,  reasonable  and  non-discriminatory 
terms. This includes the right for competitors to have access on the same terms as those 
offered to the operators themselves or their associated companies. 

•  Physical  access  must  be  granted  at  any  technically  feasible  point  on  the  copper  loop. 

Provision is made for the new entrant to co-locate its own network equipment. 

•  The  price  for  unbundled  access  to  the  local  loop  must  be  cost-oriented,  as  long  as 

competition is not sufficient to prevent excessive pricing. 

•  Operators  must  publish  a  reference  offer  for  unbundled  access  to  local  loop,  including 

prices, terms and conditions. 

The copper local loop refers to the physical circuit between the customers’ premises and the 
telecommunications operator’s local switch or equivalent facility in the local access network. 
This  remains  one  of  the  least  competitive  segments  of  the  liberalised  telecommunications 
market, and is one of the areas which has been examined in the Commissions inquiry into the 
telecommunications  sector83.  The  Commission’s  aim  is  to  provide  unbundled  local  loops  to 
all new entrants to increase the level of competition and technological innovation in the local 
access  network,  which  in  turn  stimulates  the  competitive  provision  of  a  full  range  of 
telecommunication  services  from  voice  telephony  to  broadband  multimedia  and  high-speed 
internet services. This ought to facilitate the growth of e-commerce and e-business in Europe. 

80  Commission  Recommendation  of  25.  5.  2000  on  unbundled  access  to  the  local  loop:  enabling  the 
competitive  provision  of  a  full  range  of  electronic  communications  services  including  broadband 
multimedia and high-speed Internet, OJ No L 156, p. 44. 

81  Communication from the Commission, 26. April 2000, Unbundled Access to Local Loop, COM (2000) 237 

final. 

82  COM (2000) 394 final. 
83  COM (2000) 237 final. 

32 

PE 307.894 

 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

The Commission also adopted a draft Directive on competition in the markets for electronic 
communications  services84  on  the  basis  of  Art.  86  para.  3  EC  Treaty  consolidating  existing 
Directives on competition in the telecommunication markets. This draft Directive is intended 
to replace with a single text all existing “liberalisation” Directives in the telecommunications 
sector  previously  adopted  by  the  Commission.  It  consists  of  all  relevant  provisions  of 
Directive  90/388/EEC  which  are  now  to  be  found  in  six  different  Directives.  The  draft 
Directive  does  not  impose  new  obligations  on  Member  States.  However,  this  proposal  is 
supposed to restate the obligation imposed on Member States to abolish exclusive and special 
rights  in  the  field  of  telecommunications,  for  example  Art.  2  para.  1  again  stipulates  that 
“Member  States  shall  not  grant  exclusive  or  special  rights  for  the  establishment  and/or  the 
provision  of  electronic  communications  networks,  or  for  the  provision  of  electronic 
communications  services.”  Given  the  developments  which  have  marked  the  liberalisation 
process  of  telecommunications  markets  in  Europe  since  1990  when  Directive  90/388/EEC 
was first adopted, only those provisions which are still necessary for attaining the objectives 
of  that  Directive,  as  successively  amended  by  Directives  94/46/EC,  95/51/EC,  96/2/EC, 
96/19/EC and 1999/64/EC, are being maintained. Additionally a number of definitions used in 
the  consolidated  Directives  have  been    amended  in  order  to  reflect  the  latest  technological 
developments  in  telecommunications  in  general,  and  the  wording  of  certain  provisions  has 
been clarified in order to facilitate their application. This corresponds to the other six newly 
proposed  Directives  and  the  experience  which  the  Commission  had  so  far  acquired  through 
the implementation of Directive 90/388/EEC. 

The  entirety  of  the  new  regulatory  framework  is  anticipated  to  come  into  force  at  the 
beginning of 2002. 

4.4. 

Potential for Further Liberalisation in the Telecommunications Sector 

Since  1998,  the  above  initiatives  have  impacted  on  telecommunications  markets  in  general 
and  on  the  service/price  relation  in  particular  where  Member  States  have  implemented  the 
Directives.  In  December  2000,  the  Commission  published  a  Communication85  which 
described  the  development  of  the  telecommunications  market  in  the  EU.  The  Commission 
states that after three years of full liberalisation of telecommunications services, Europe is not 
only capitalising on its strengths but also rapidly making good its traditional weaknesses, and 
thus  progressing  towards  the  objectives  set  out  by  the  eEurope  initiative  and  the  Lisbon 
Summit.  The  key  conclusion  of  this  market  analysis  is  that  almost  every  segment  of  the 
market has improved: 

•  The telecommunications services market continues to grow at an average rate of 9% over 

1999, and is a significant driver of growth in the EU. 

•  The market continues to provide users and consumers with an increasingly wide choice of 
operators and services, with around 80% more voice telephony operators than a year ago. 
•  With  mobile service penetration rates as high as 70% and not lower than 39%, Member 

States continue to build on their achievements. 

•  Prices are decreasing steadily overall, for both retail services and leased line. 

See pdf.-document in: http://europa.eu.int/comm/competition/liberalization/others/. 

84 
85  Communication from the Commission to the Council, the European Parliament, the Economic and Social 
Committee and the Committee of the Regions, Sixth Report on the Implementation of Telecommunication 
Regulatory Package, COM (2000) 814. 

33 

PE 307.894 

 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

• 

Internet usage is increasing, but penetration is still significantly below the USA. 

In so far as the regulatory framework is concerned, the Commission sees a number of matters 
to be addressed: 

• 

Incumbents still have a strong hold on the market. Regulators must make sure that they do 
not cross-subsidise their tariffs, which should be oriented towards costs. 

•  Regulators  must  tackle  the  lengthy  delivery  times  of  leased  lines,  which  is  becoming  as 

significant a problem as price levels. 

•  The  full  range  of  carrier  pre-selection  services  must  be  made  available,  so  that  new 

entrants can reach end-customers in the same way as incumbents. 

•  Regulators  must  work  to  ensure  that  new  entrants  can  install  their  equipment  at  local 

exchanges for the provision of local access services. 

•  Call termination on mobile networks is still not competitively priced, and the calculation 

and charging of these tariffs needs to be tackled.  

Thus  the  Commission  in  this  Communication  funds  support  for  its  proposals  for  the  new 
regulatory framework. 

In recent years, the law of telecommunications has been evaluated as being of a more chaotic 
nature than regulative86. The fact of over twenty Directives being potentially applicable to the 
same  area  has  provoked  criticism87.  As  a  consequence,  the  National  Regulatory  Authorities 
found  themselves  in  a  competitive  relationship  with  the  European  Commission  and  the 
National  Anti-Trust-Authorities88.  Another  development  that  occurred  was  competition 
among licensing regimes as well as the sometimes differing application of telecommunication 
laws by the National Regulatory Authorities89. 

Taking these aspects into account, the Commission’s new legislative proposal can be seen as 
a step in the right direction. The proposal for a Directive for a common regulatory framework 
and  the  draft  Competition  Directive  clearly  address  the  problem  of  a  surplus  of 
telecommunications laws. Furthermore, the proposed Directive on a new authorisation regime 
deals with the problem of having different licensing regimes in Europe.  

Although  this  particular  problem  is  targeted  by  the  proposed  Directive,  the  question  still 
remains on the agenda whether a European regulatory authority would be a more appropriate 
response  to  the  growing  importance  of  telecommunications  markets.  Experience  in  the  past 
has shown that the decentralised organisation of regulatory tasks can work as an obstacle to 
greater  efficiency  in  regulating  EU-wide  services.  An  independent  European  regulatory 
authority is likely to act more efficiently if it does not deal with the day-to-day-policy in the 
field of telecommunications. 

86  Möschel  for  instance  calls  his  article  “Regulierungswirrwarr  in  der  Telekommunikation”,  Beilage 

Multimedia und Recht, 1999, p. 3ff. 
Paulweber, Zeitschrift für Urheber- und Medienrecht, 2000, p. 12. 

87 
88  Möschel,  in:  Erfahrungen  mit  der  Privatisierung  von  Staatsmonopolen,  Referate  des  XXXII.  FIW-
Symposiums  am  18./19.2.1999,  1999;  see  also  the  position  of  the  Commission  on  this  issue, 
Communication,  22  August  1998,  application  of  competition  rules  of  the  Treaty  to  access  and 
interconnection agreements, OJ 1998, No C 265, p.2ff.   
See  Scherer  (ed.), Baker  &  McKenzie´s  Telecommunication  Laws  in  Europe,  fifth  edn.,  London  2000,  p. 
137ff., 317ff. 

89 

34 

PE 307.894 

 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Art.  6  of  the  proposed  Directive  on  a  common  regulatory  framework  firstly  sets  out 
obligations on National Regulatory Authorities to consult when they take decisions affecting 
third  parties  and  secondly  establishes  a  procedure  which  provides  for  the  possibility  for  the 
Commission to require an NRA to amend or withdraw the measure if it is not justified under 
the  regulatory  framework.  Whereas  this  provision  can  be  seen  as  having  a  supportive 
harmonising character, it could also lead to a delay in national regulatory decisions leading to 
legal  uncertainty.  This  is  again  an  issue  which  could  be  clarified  by  a  central  European 
regulatory authority. 

5. 

Liberalisation of the Railway Sector 

5.1.  Distinctive Features of the Railway Sector 

Although the transport market in the European Community has gone through a major process 
of liberalisation, this development has taken place at various speeds and to differing extents in 
the sectors of road, rail, maritime and inland waterway and air traffic. 

European  transport  policy  has  its  legal  basis  in  Article  70  of  the  Treaty  on  the  “Common 
Transport Policy” which reflects the specific challenges faced in opening the transport market 
to Community-wide competition. Since the late 1950’s, this policy approach has been carried 
out on a sector-by-sector basis. As a result, depending on the time period and the development 
in  the  transport  market,  one  sector  was  given  more  attention  than  the  others.  The 
Community’s  focus  has  varied  from  road  transport  to  air  traffic  more  recently.  Despite  the 
widespread recognition that the Community’s railways were facing severe financial problems, 
the  EU’s  railway  policy  made  little  progress  for  a  long  time.  The  reasons  for  the  standstill 
were twofold. On the one hand, there was a strong political resistance at Member State level 
to  any  Community  attempt  to  intervene  in  domestic  railway  policy.  The  railways  were  not 
perceived  as  purely  economic  actors  but  as  public  services  which  had  to  be  maintained  for 
political reasons. On the other hand, the Commission only had limited legal and institutional 
power  to  overcome  Member  States’  resistance  until  the  coming  into  force  of  the  Single 
European  Act  in  198790.  However,  the  early  1990’s  have  seen  a  change  of  policy  direction 
towards the so-called integrated policy approach which takes into consideration all modes of 
transport and environmental concerns91.  

Under  this  policy  approach,  liberalisation  is  not  the  product  of  a  dogmatic  commitment  to 
markets  in  the  abstract  but has to take into  account the peculiar characteristics of the sector 
concerned.  In  addition,  effective  market  opening  of  the  railway  sector  has  to  ensure  the 
maintenance  of  a  universal  service.  This implies for the  rail  transport  sector  the  recognition 
that the promotion of more competition through liberalisation has to work within a framework 
of responsible safety and environmental standards, as well as the responsibilities of a public 
service.  

Liberalisation  of  land  transportation  on  the  whole  and  rail  transport  in  particular  has  been 
delayed  through  the  requirement  of  Article  71  EC  Treaty  for  specific  market  access 
legislation.  

90  Knill,  C.,  Lehmkuhl,  D.,  'An  Alternative  Route  of  Legal  Integration:  The  Community’s  Railway  Policy' 
(European Integration online papers (EioP) Vol. 2 (1998); http:// eipo.or.at/eiop/texte/1998-003a.htm. 
See:  The  European  Commission’s  White  Paper  on  'The  Future  of  the  Common  Transport  Policy' 
(December 1992). 

91 

35 

PE 307.894 

 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Contrary to other business sectors, which could be immediately liberalised through the Treaty 
provisions on freedom to provide services, full market access to the railway market has still to 
be achieved.  

This  situation  can  be  traced  back  to  historical  relations  between  the  State  and  the  railways: 
railway  operators  and  networks  are  traditionally  administered  by  the  Member  States 
themselves.  Consequently,  the  railway  enterprises  were  denied  the  freedom  of  commercial 
businesses. Until now, many railways have been insulated from market forces. With regard to 
European  rail  transport,  the  fact  that  rail  operators  are  still  largely  nationally  based  with 
complicated  arrangements  requiring  inter-company  negotiations  regarding  through  traffic 
between  countries  is  affecting  the  flexibility  and  the  quality  of  service  offered  to  the 
consumer. 

The  second  impediment  to  the  liberalisation  of  the  railway  sector  can  be  identified  in  the 
network  based  infrastructure  of  the  railway  service  which  has  the  reputation  of  being  a 
”natural monopoly”, since setting up a parallel infrastructure in competition with the existing 
system would not be economically justified. Therefore the railway sector has been excluded 
from  intra  modal  competition  for  a  long  time  and  remains  partially  so  at  present. 
Consequently  the  railways  have  steadily  lost  market  share  and  required  increasing  levels  of 
subsidy.  In  order  to  make  liberalisation  work,  the  abovementioned  (5)  ”network-access” 
problem  (in  which  way  and  under  which  conditions  different  market  competitors  can  have 
free access to only one railway infrastructure available) has still to be solved. 

A third point which currently prevents the railway sector from being eligible for liberalisation 
is the lack of an EU-wide interoperable environment for railways. The railway market is still 
fragmented  along  national  lines  due  to  major  differences  between  the  technical  and 
operational standards of railways in the Member States. There obviously exists the problem of 
technical harmonisation in terms of signalling and electric traction which leads to difficulties 
in terms of through running of rolling stock.  

Against this background, the Community views the railway sector as an important part of its 
overall  transport  policy  with  a  clear  focus  on  the  introduction  of  market  forces  through  the 
medium of liberalisation. The liberalisation process encompasses two major steps: 

•  The abolition of railways as state-owned enterprises. 
•  The separation of railway operations and infrastructure. 

5.2.  The Existing Legal Situation in the Railway Sector 

5.2.1.  General Developments 

The  various  liberalisation  measures  that  have  been  taken  with  regard  to  freedom  to  provide 
rail transport services can be summarised as follows: 

First  EC  Initiatives  towards  Liberalisation:  Loosening  the  Ties  between  Railway  Operators 
and Member States 

The first Community legislative initiatives towards a liberalised railway market were aimed at 
encouraging a degree of commercial independence of the railways from the Member States. 

36 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

An initial measure to achieve this goal, at least in accounting terms, was Council decision of 
20  May  1975  on  the  improvement  of  the  situation  of  railway  undertakings  and  the 
harmonisation of rules governing relations between such undertakings and the State92. In 1985 
the application of the Transparency Directive was extended to encompass undertakings in the 
rail,  road  and  inland  waterway  sectors,  thus  requiring,  inter  alia,  greater  transparency  in  the 
accounts of railway undertakings93. 

An  Approach  towards  a  Common  EU  Railway  Policy:  Directive  91/440/EEC  on  the 
Development of the Community’s Railways 

A major step towards the liberalisation of the rail sector began in 1991 with the adoption of 
Council  Directive  91/440/EEC  on  the  development  of  the  Community’s  railways94.  The 
following can be identified as objectives of the Directive95: 

•  evolution of rail market in the light of the economy globalisation; 
•  contribution to the sustainable mobility in freight transport; 
•  completion of Trans-European Networks; 
• 
insurance of long-term operational profitability; 
• 
increase in competitiveness of European railway supply industry in world wide markets; 
•  development  of  efficient  and  competitive  services,  forming  an  integrated  part  of  an 

intermodal transport system; 

•  convergence with the mobility needs of people and response to new market opportunities. 

The overall goal of this Directive was to improve the efficiency of the railway system and to 
integrate  it  into  a  competitive  market  turning  the  railways  into  independent,  commercially-
viable and market-led enterprises. In pursuit of this goal, a further cutback of links between 
the  railways  and  the  state  was  to  be  achieved  by  providing  management  independence  of 
railway  undertakings;  the  separation  of  accounts  of  railway  operations  and  infrastructure 
(with optional management separation); and an improvement in the financial structure of the 
railways by the reduction of the historical indebtedness. As a result of political compromise 
between the participating countries, the separation of infrastructure from operations could not 
be  achieved  in  the  institutional  sense  but  only  in  the  form  of  separate  accounts  with 
transparent infrastructure charges. 

The Directive introduces a degree of liberalisation into certain areas of rail transport since it 
contains  the  most  prominent  feature  of  liberalisation:  market  access  rights:  Art.10  of  the 
Directive  provides,  in  principle,  access  and  transit  rights  for  international  groupings  of 
railway  undertakings  (two  or  operations  from  different  countries  wishing  to  run 
international  services  between  the  Member  States  where  the  undertakings  are  based) 
and  for  railway  undertakings  engaged  in  the  combined  transports  of  goods  throughout 

92  Council  decision  of  20  May  1975  on  the  improvement  of  the  situation  of  railway  undertakings  and  the 
harmonisation  of  rules  governing  relations  between  such  undertakings  and  the  State  (OJ  L  152/3, 
12.06.1975). 

93  Council  Directive  85/413  EEC  of  24  July  1985  amending  Directive  80/723  EEC  on  the  transparency  of 

financial relations between Member States and public undertakings (OJ L 229/20, 28.8.1985). 

94  Council Directive 91/440/EEC on  the development of the Community’s railways (OJ  L 237, 24.08.1991, 

95 

p.25). 
Liberail,  Research  Study  on  Liberalised  and  Interoperable  Railways  (1997-1998)  within  the  Fourth  RTD 
Framework Programme, Workpackage Nr.3, Vol.1, Main Report, p.5. 

37 

PE 307.894 

 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

the EC. These access rights and track access prices have to be granted under a regime of non-
discriminatory rules. 

Competition was introduced into the transit freight and international combined freight market 
only since it was generally accepted that rail freight is subject to competition than passenger 
services which are characterised as a public service obligation. The classification of a service 
in this way can be an obstacle to liberalisation96.   

The  general  assessment  of  the  efficiency  of  the  Directive  in  terms  of  liberalisation  is 
regrettably  poor:  the  Directive  contains  hardly  any  serious  challenges  to  the  established 
national railway policies in the Member States. It is endowed with a non-compulsory nature 
and ambiguous text, giving domestic implementing authorities far-reaching discretion in the 
way they decide to comply with its modest requirements.  

5.2.2.  Directives 95/18/EC and 95/19/EC: Complementary Rules to Directive 91/440/EEC 

There are two Directives which can be seen as complementary to Directive 91/440/EEC:  

Firstly,  rules  governing  the  freedom  of  establishment  for  railway  undertakings  are  provided 
for  in  Council  Directive  95/18/EC  on  the  licensing  of  railway  undertakings97.  This 
provision  lays  down  the  broad  principles  of  a  Community  licensing  system  for  the  railway 
sector.  It  requires  States  to  designate  licensing  authorities,  making  clear  that  any  operator 
wishing  to  run  international  train  services  has  appropriate  financial  capacity,  professional 
qualifications,  insurance  and  safety  certification.  Trains  engaged  in  these  services  may  only 
be operated if they hold the Community operating license.  

Secondly, it was recognised that access rights provided under Directive 91/440/EEC could be 
unusable in the absence of rules governing the setting of access charges and the allocation of 
track  capacity.  Rules  governing  these  issues  and  safety  certification  were  laid  down  in 
Council Directive 95/19/EC on the allocation of railway infrastructure capacity and the 
charging  of  infrastructure  fees98.  Directive  95/19/EC  required  governments  to  define  an 
infrastructure manager and a path allocation body, and to lay down non-discriminatory rules 
for the allocation of paths and for access charges. 

5.3. 

Potential  for  Further  Action  and  Recent  Developments:  the  Commission´s  “Railway 
Infrastructure Package” 

It soon became clear that the scope of Directive 91/440/EEC was too limited to be effective 
since Art.10 of this Directive grants access and transit rights only to international groupings 
of railway undertakings and for railway undertakings engaged in the combined transport of 
goods.  Consequently  the  European  Community’s  railway  market  was  still  organised  along 
national lines. 

96  Domergue  Philippe  and  Quintet,  Emile,  'Situation  and  Problems  of  Railway  Industry  in  Europe',  Japan 

Railway & Transport Review (26) 2001, 4-7. 

97  OJ L 143/70, 27.06.1995. 
98  Council  Directive  95/19/EC  of  19.06.1995  on  the  allocation  of  railway  infrastructure  capacity  and  the 

charging of infrastructure fees. OJ L 143, 27.6.1995. 

38 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

In 1995 the Commission presented a proposal for a Directive amending Art. 10 of Directive 
91/440/EEC, in order to extend its scope to freight in general and to international passenger 
services99. 

Another  problem  was  the  vagueness  of  some  provisions  under  the  Directives  95/18/EC  and 
95/19/EC which prevented the Directives from being effective. Under the current regime the 
railway  undertakings  were  not  confident  that  they  could  use  the  access  rights  created  under 
Directive  91/440/EEC.  Regrettably,  Directive  95/19/EC  is  confined  to  general  statements 
concerning  capacity  allocation  and  charges.  The  major  legislatory  competence  is  left  to  the 
national legislators. Although a common system for the licensing of railway undertakings was 
established,  its  practical  implementation  was  prevented  due  to  a  lack  of  uniform  technical 
licences applicable in the Community as a whole. 

In  1998,  the  Commission  responded  with  the  so-called  ”rail  infrastructure  package”  of 
regulatory  initiatives  which  aims  at  revitalising 
the  European  Railway  system  by 
progressively  opening  up  its  markets  in  terms  of  service  provision  and  purchase  of  rail 
equipment.  In  particular,  the  package  of  proposals extends  the licensing  rules to all railway 
undertakings in the Community and establishes clear rules and procedures for setting charges 
and capacity allocation100. This set of proposals aimed at a clearer separation of infrastructure 
from operations, at least into separate divisions, for a gradual extension of access rights and 
for  transparent  and  non-discriminatory  infrastructure  charges.  In  particular,  the  Commission 
presented three proposals: 

• 

• 

• 

to replace Directive 95/19/EC by clearer rules on the allocation of railway infrastructure 
capacity and charges for the use of railway infrastructure (to be calculated on the basis of 
marginal costs and to be decided by an independent body i. e. a rail regulator), 

to  amend Directive 91/440/EEC laying down specific accounting rules for infrastructure 
and  transport  services  in  order  to  make  the  various  activities  in  the  rail  sector  more 
transparent  by  ensuring  separate  accounting  for  infrastructure  management  and  rail 
services, 

to amend Directive 95/18/EC and extend the provisions of this Directive to all the railway 
undertakings established in the Community, irrespective of whether they offer the services 
referred to in Art. 10 of Directive 91/440/EEC. According to this proposal, the licensing 
prerequisite should not become an obstacle to market entry. 

In the pursuit of these initiatives, the “Transport Council” (the Ministers of Transport of the 
Member  States)  reached  a  political  compromise  on  the  basis  of  the  Council  conclusions  of 
6 October 1999 concerning the revitalisation of Europe’s railways. 

99  COM (35) 3378 final, adopted by the Commission on 19 July 1995: Communication from the Commission 
on the development of the Community’s railways; application of Directive 91/440/EEC; Future measures to 
develop  the  railways;  Proposal  for  a  Council  Directive  amending  Directive  91/440/EEC  on  the 
development of the Community’s railways. 

100  COM (1998) 480 final, adopted by the Commission on 22 July 1999, OJ C 321/6, 20.10.1998 and amended 
proposal COM (99) 616 final, adopted by the Commission on 25 November 1999: Proposal for a Council 
Directive amending Directive 91/440/EEC on the development of the Community’s railways; Proposal for 
a Council Directive amending Directive 95/18/EC on the licensing of railway undertakings, Proposal for a 
Council Directive relating to the allocation of railway infrastructure capacity and the levying of charges for 
the use of railway infrastructure and safety certification. 

39 

PE 307.894 

 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

The main points of the agreement can be summarised as follows: 

• 

the separation of essential functions on the basis of an exhaustive list of tasks that have to 
be  assigned  to  an  authority  other  than  the  rail  operator  to  ensure  the  principle  of  non-
discrimination concerning the granting of access rights. Additionally, an independent rail 
regulator has to be established in each Member State. Account was taken of the specific 
situation in some Member States, for instance a general derogation from the obligation to 
keep the essential functions separate was granted at the request of Austria; 

•  an agreement on guaranteed access rights to the common rail corridors for freight (Trans 
European  Railway  Freight  Network).  Access  rights  were  to  be  guaranteed  to  all 
community  railways  holding  a  license  and  meeting  the  safety  conditions  on  request.  An 
upward derogation by Member States (the granting of more extensive access rights) was 
possible; 

• 

the setting of charges based on the principle of marginal cost, but with the possibility of 
mark-ups if the  market  permitted on condition  that the charges were set  in a transparent 
and non-discriminatory manner and the competitiveness of international freight transport 
was guaranteed. The option of discounts compared with the basic charges had also been 
accepted to encourage the use of under-utilised routes. 

As  an  accompanying  measure  to  the  intended  wide-ranging  process  of  railway  market 
liberalisation, the Commission presented a proposal for a Directive on the interoperability of 
the trans-European conventional rail system101 which aims at the integration of conventional 
rail  systems  to  accompany  the  creation  of  access  rights  for  the  provision  of  international 
freight services. 

The  Council’s  common  position  only  allowed  access  to  the  Trans  European  Rail  Freight 
Network  and  did  not  recognise  the  legal  separation  of  transport  services  and  infrastructure 
management. The European Parliament approved at its second reading in July 2000 a number 
of amendments which went far beyond the balance achieved in the common position. 

The Parliament demanded: 

•  a more extensive opening of the sector by extending access rights at the end of a five year 

transition period beginning on the date of entry into force of the directive; 
the rejection of exemptions; 
the complete legal separation of transport services and infrastructure management. 

• 
• 

The  conciliation  agreement  between  the  European  Parliament  and  the  Council,  struck  on 
22 November  provides as follows for: 

fair and non-discriminatory access to rail infrastructure; 

• 
•  separation  of  accounts  between  rail  infrastructure  management  activities  &  services 

activities and between commercial and public service activities; 
technical harmonisation of the networks; 

• 

101  Based on COM (1999) 617. 

40 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

•  concerning the future stages in market-opening, it was agreed that, 7 years after the entry 
into  force  of  the  directive,  railway  undertakings  will  have  access  to  the  entire  European 
rail network for international freight transport; 

•  with  respect  to  infrastructure  charging,  the  agreement  confirms  the  principle  that 
infrastructure costs should be covered by the user, while this is acknowledged as a long-
term goal which depends on charges in relation to other modes of transport; 
the so-called ”Austrian” not defined clause was deleted. 

• 

On  this  basis,  the  European  Parliament  and  the  Council  have  adopted  Directives  modifying 
Directives 91/440 and 95/18 and replacing Directive 95/19: Directive 2001/12/EC; Directive 
2001/13/EC and Directive 2001/14/EC102.  

Assessment of the Year 2000 Railway Package 

The  conciliation  agreement  globally  preserves  the  compromise  reached  by  the  ”transport 
council” in 1999, particularly as far as access rights and the separation of infrastructure from 
operations  are  concerned.  But,  on  the  other  hand,  some  of  the  measures  in  favour  of 
liberalisation  proposed  by  the  European  Parliament  have  been  watered  down  in  the 
conciliation agreement. 

6. 

Potential for Further Liberalisation in the Postal Services Sector 

The postal services sector is another core area of the internal market. Similar to other sectors 
subject  to  this  Study,  postal  services  in  the  Member  States  were  mostly  protected  from 
competitive market pressure until the Community defined the creation of an internal  market 
as one of its fundamental objectives.  

6.1.  General Characteristics of Postal Services 

While  the  general  characteristic  features  of  network-bound  services  have  been  determined 
above, a few remarks on the specific characteristic features of postal services should provide a 
better understanding of the issues involved. 

From the start, the general importance of postal services for the European citizens as well as 
for  business,  has  to  be  emphasised.  Postal  services  literally  link  people  and  business  within 
the  Member  States  but  also  across  borders  no  matter  how  remote  an  area,  town  or  village. 
Postal  services  thus  have  a  vital  meaning  for  European  citizens  and  for  European  industries 
and  as  a  consequence  for  social  cohesion,  as  well  as  for  the  economic  objectives  of  the 
Community. 

Unlike the other areas of network-bound services that are reviewed in this Study, the delivery 
of postal services does not depend on a fixed static network, like for instance energy services 

102  Directive  2001/12/EC  of  the  European  Parliament  and  of  the  Council  of  26  February  2001  amending 
Council Directive 91/440/EEC on the development of the Community’s railways OJ. L 75 p.1-25; Directive 
2001/13/EC  of  the  European  Parliament  and  of  the  Council  of  26  February  2001  amending  Council 
Directive  95/18/EC  on the  licensing  of  railway  undertakings  OJ.  L  75  p.26-29;  Directive  2001/14/EC  on 
the  allocation  of  railway  infrastructure  capacity  and  the  levying  of  charges  for  the  use  of  railway 
infrastructure and safety certification, OJ. L 75 29-46. 

41 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

or  water  services.  The  existence  of  parallel  networks  and  thus  also  the  existence  of  parallel 
competitors does not impose any technical difficulties with a view to liberalisation. Contrary 
to the other sectors, neither network access problems in terms of real capacity nor technical 
access problems have a serious impact on postal services. 

Another  fundamental  difference  from  other  network-bound  services  is  that,  unlike 
telecommunications or  water, postal services are delivered  on a  'people-based' basis and are 
not based on hard wire assets. The costs of labour naturally present an important share of the 
real costs of postal services. While the costs of labour are thus an important economic factor 
that  has  to  be  remembered,  the  'people-based'  type  of  service  obviously  has  another  vital 
implication: postal services in comparison to other network-bound services that are examined 
by this Study are very employee intensive103. This obviously requires careful consideration of 
liberalisation in this sector as it may lead to results that conflict with the social, and general 
interest obligations of the Treaty. 

Another  issue  that  requires  due  consideration  is  the  fact  that  unlike,  e.g.  in  the  area  of 
telecommunications,  demand  for  classical  postal  letter  services  is  likely  to  decrease  rather 
than  increase,  as  it  is  increasingly  exposed  to  competition  from  electronic  mail  and  other 
forms of modern communication. This is particularly important as the letter market is the core 
market of postal services. 

A  further  distinctive  feature  of  postal  services  is  that  the  sector,  unlike  for  instance 
telecommunications, does not have a great potential for further technical innovations. While 
further  progress  may  be  made  in  the  future  in  comparison  to  other  sectors,  the  margin  for 
scope appears to be rather limited104. 

6.2.  Outline  of  the  General  Situation  in  the  Postal  Services  Sector  prior  to  Community 

Action 

The  general  problems  that  the  Community  faced  with  respect  to  the  establishment  and 
completion  of  the  internal  market  existed  also  in  the  postal  services  sector  prior  to 
Community action. Similar to the other sectors that are subject to this Study, the area of postal 
services  in  the  Member  States  was  mostly  characterised  by  an  absence  of  competition  and 
market pressure due to  the general assumption  that  market  forces could produce results that 
may  be  damaging  to  services  of  general  interest.  As  a  result,  postal  services  and  the  postal 
operators were protected in the Member States prior to Community action. As a result of this 
absence of market pressure, postal services in the Member States were therefore characterised 
by  a  truly  universal  service  for  consumers.  Yet,  while  this  universality  of  postal  services  in 
the  Member  States  presented  merits  for  the  consumer,  the  same  postal  services  were  at  the 
same time often operating at a poor level of efficiency, resulting in low quality of services and 
prices that were either too high and not competitive or low as a result of state subsidies. This 
situation, that obviously directly contradicted the rationale of the internal market, provides the 

103  European  Commission,  'Liberalisation  of  Network  Industries-  Economic  Implications  and  main  policy 
issues',  Reports  and  Studies,  No  4  1999,  Office  for  Official  Publications  of  the  European  Communities, 
Luxembourg 1999, p.200. 

104  European  Commission,  'Liberalisation  of  Network  Industries-  Economic  Implications  and  main  policy 
issues',  Reports  and  Studies,  No  4  1999,  Office  for  Official  Publications  of  the  European  Communities, 
Luxembourg 1999, p.201. 

42 

PE 307.894 

 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

backdrop  against  which  the  Community  has  acted  since  it  started  to  formulate  policy 
objectives and to legislate for the postal services sector. 

6.3.  The Policy Objectives of the Community in the Postal Services Sector 

The postal services sector, is a core area of the internal market. The Community institutions in 
defining  a  policy  for  the  area  thus  faced  the  challenge  of  striking  a  balance  between 
formulating  a  policy  that  would  balance  the  economic  requirements  of  the  internal  market 
with the fact that postal services present an area of general interest. The postal service sector 
was an area that was characterised by a high level of state protection and, as a result of this, an 
absence of market pressure and competition. The underlying rationale applied by the Member 
States  was  that  the  nature  of  postal  services  as  an  area  of  general  interest  required  the 
safeguarding  of  the  security  of  supply  of  postal  services.  Increased  competition  and  market 
pressure by this logic imposed a threat to universality of postal services. While this approach 
obviously  enabled  the  Member  States  to  secure  universal  postal  services,  it  resulted  in 
inefficient  and  low  quality  services.  This  clearly  conflicted  with  the  creation  of  the  internal 
market as envisaged by the Treaty. 

In order to establish an internal market for postal services, the Community aimed to define the 
policy guidelines under which postal services would operate. The policy guidelines that were 
developed aim to open up the sector to competition in a gradual and controlled way, within a 
regulatory framework, which assures a universal service. The improvement of the quality of 
service, in particular in terms of delivery time and affordable tariffs, are fundamental aspects 
of this policy. Specifically, the Community policy in the area aims to implement the internal 
market in compliance with the following basic policy guidelines105: 

• 

• 

• 

• 

• 

• 
• 
• 

to define at Community level a universal postal service, conceived as a right of access to 
postal services for users, encompassing a minimum range of services of specified quality 
which  must  be  provided  in  all  Member  States  at  affordable  prices  for  the  benefit  of  all 
users, irrespective of their geographical location;  
to  set  a  common  maximum  limit  to  the  extent  of  the  postal  reserved  areas  which  each 
Member State may grant to its provider(s) of the universal service, in order to ensure the 
economic and financial viability of the provision of the universal service;  
to  develop  a  process  of  gradual  and  controlled  opening  of  the  market  to  competition 
within  the  postal  sector  while  giving  the  Member  States  the  means  to  ensure  that  the 
provision of universal service is guaranteed on a lasting basis;  
to improve the quality of postal services by setting at Community level common quality of 
service standards for intra-Community cross-border mail and ensuring that standards for 
national  mail  are set  and publicised  (in line with those intra-Community standards),  and 
that performance results are published;  
to  establish  the  principle  that  tariffs  should  be  related  to  costs  and  to  ensure  that  the 
financing  of  the  provision  of  universal  service  is  carried  out  in  a  transparent  manner 
compatible with Community law;  
to encourage harmonisation of technical standards, taking users' interests into account;  
to ensure that fair conditions of competition exist outside the reserved sector;  
to encourage and assist the postal sector to adapt rapidly and effectively to technological 
progress and changes in demand;  

105  OJ C 48, 16.02.1994, p.2. 

43 

PE 307.894 

 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

• 

• 

to ensure that the needs of users, the interests of employees and the general importance of 
the  postal  sector  for  the  economic,  cultural  and  social  development  and  cohesion  of  the 
Community  (including  the  special  difficulties  encountered  by  remote  regions)  are  taken 
into account when regulating the sector; 
to  co-ordinate  the  development  of  postal  policy  with  other  Community  policies  and  to 
ensure a consistent approach to overlapping issues. 

6.4.  The Legal Situation in the Postal Services Sector 

6.4.1.  Introduction to the Present Regulatory Framework in the Postal Services Sector 

The regulatory framework for postal services in the Community evolved at a rather late stage 
in  comparison  to,  for  instance,  telecommunications.  The  first  significant  step  towards 
establishing  a  regulatory  framework  was  taken  in  1992  when  the  Commission,  upon  the 
request  of  the  Council,  published  a  Green  Paper  on  the  development  of  a  single  market  for 
postal services106. After this Green Paper had been discussed extensively in the Parliament as 
well  as  in  the  Council,  the  Commission  drew  up  general  guidelines  for  the  development  of 
Community  postal  services107.  On  the  basis  of  the  findings  of  the  discussion  on  the  Green 
Paper  and  the  guidelines,  the  Council  in  its  February  7th  1994  Resolution  defined  a  set  of 
basic objectives for the Community policy on postal services for the first time108. This basic 
set  of  objectives,  which  are  mentioned  above,  included  as  cornerstones  in  guaranteeing  a 
universal  postal  service,  and  ensuring  its  financial  viability  and  reconciling  gradual  and 
controlled liberalisation of the postal services market with a sustainable guarantee of service. 
In  addition,  the  Council  invited  the  Commission  to  formulate  and  propose  the  measures 
necessary  to  implement  these  policy  objectives  without  delay.  Following  this  invitation,  the 
Commission in 1995 adopted a proposal for a Directive on common rules for the development 
of  Community  postal  services  and  on  the  improvement  of  quality  of  service109  as  well  as  a 
draft notice on the application of the competition rules in the postal sector110. 

The above actions form the background to the presently applicable regulatory framework in 
the  postal  services  sector.  This  framework  is  largely  provided  by  a  dual  regulatory  regime. 
The first part of this dual regime was introduced by the so-called Postal Directive, while the 
second part was set up by a Postal Notice of the Commission.111 It has to be stressed in this 
respect that while the Directive has the force of law, the Commission Notice does not. Yet, as 
will be demonstrated, the Commission Notice forms an integral part of the regime applicable 
to postal services and will thus also be analysed below. 

6.4.2.  The Postal Services Directive 

Directive  97/67/EC  of  the  European  Parliament  and  the  Council,  dated  15th  December 
1997 on common rules for the development of the internal market of Community postal 

106  COM (91) 476 final. 
107  COM (93) 247 final. 
108  OJ C 48, 16.02.1994, p.2. 
109  OJ C 322, 02.12.1995, p.22. 
110  OJ C 322, 02.12.1995, p.2. 
111  OJ C 39, p. 2, 6.2.98. 

44 

PE 307.894 

 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

services  and  the  improvement  of  quality  of  service112  was  adopted  under  the  co-decision 
procedure by the Council on 1 December 1997 and entered into force in the Member States on 
February 1st 1999113. 

The Key Features of the Postal Directive: 

The key elements of the Postal Directive can be summarised as follows:  

• 

lays  down  the  minimum  characteristics  of  the  universal  service  that  each  Member  State 
has to guarantee on its territory;  

•  defines  common  limits  for  reserved  services  which  may  be  reserved  for  a  universal 

service provider or providers in each Member States; 

•  establishes a timetable for further gradual and controlled liberalisation of the area;  
•  provides  for  the  principles  that  shall  govern  the  authorisation/licensing  of  non-reserved 

services; 

•  establishes the tariff principles that shall be applicable to the universal service;  
•  governs the setting of quality of service standards for national and intra-Community cross-

border services;  

•  confirms the mechanisms to encourage technical harmonisation in the postal sector; 
• 

requires the creation of independent national regulatory authorities. 

Analysis of Selected Key Aspects of the Postal Directive 

(a) 

Timeframe for Implementation and Further Gradual Liberalisation 

The Postal Directive while providing that it enters into force in the Member States on 1st of 
January 1999, also contains a timetable for further Community action with a view to further 
gradual liberalisation of the postal markets. In this respect, Article 7.3 of the Directive calls 
upon  the  Commission  to  review  the  potential  for  further  liberalisation  of  direct  mail  and 
cross-border mail and of the price and weight limits as established by the Postal Directive and 
to  formulate  the  findings  in  a  proposal  to  be  tabled  no  later  than  the  end  of  1998.  The 
Commission  was  thus  required  to  explore the  potential  for  further  liberalisation  in  the  areas 
that remain reserved for the Member States by the Postal Directive. 

Article  7.3  of  the  Directive  further  required  the  European  Parliament  and  the  European 
Council to take a decision, based on the above proposal of the Commission, at the latest by 1st 
January  2000  on  the  further  gradual  and  controlled  liberalisation  of  the  postal  market, 
focusing  in  particular  on  areas  that  were  subject  to  the  review  of  the  Commission.  This 
decision is must take effect no later than 1st January 2003. 

(b) 

The Minimum Harmonised Quality Standards of Universal Postal Services 

One of the major achievements of the Postal Directive is that it defines for the first time the 
minimum  harmonised  standards  that  universal  postal  services  in  the  Community  have  to 
comply  with.  Member  States  have  the  option  of  providing  for  higher  standards  than  those 
established by the Directive. The basic standards of Community postal services are laid down 

112  This Directive (97/67/EC) is subsequently referred to as the 'Postal Directive'. 
113  OJ L 15, 21.1.1998, p.14. 

45 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

in Article 3 of the Directive. The general quality objective that postal services have to meet is 
defined  in  Article 3.1  of  the  Directive,  according  to  which  Member  States  must  ensure  that 
users enjoy the right to universal service involving the permanent provision of postal services 
of  specified  quality  at  all  points  in  their  territory  at  affordable  prices  for  all  users.  The 
remaining  paragraphs  of  Article  3  further  define  the  general  objective  as  laid  down  in 
paragraph  1.  These  provisions  stipulate  that  Member  States  must  ensure  that  the  universal 
postal service provides: 
•  one clearance, one delivery to the home of every natural or legal person or an appropriate 
installation  on  every  working  day  and  not  less  than  five  days  a  week,  if  no  specific 
circumstances justify an exception from this rule. 
the minimum facilities for clearance, sorting, transport and distribution of postal items up 
to 2 kg, postal packages up to 10 kg and services for registers and insured items. 

• 

The  Directive further  specifies  that  exceptions  to the  above  rule  can  only  be  granted by  the 
national  regulatory  authority,  which  then  has  to  communicate  any  exception  to  the 
Commission. The Directive thereby aims to ensure that Member States do not fail to comply 
with  the  universal  service  standards  as  laid  down  in  the  Directive.  It  is,  according  to 
Article 3.5  of  the  Directive,  also  in  the  competence  of  the  national  regulatory  authority  to 
increase the above stated weight limit of universal service coverage for postal packages to any 
weight not exceeding 20 kg.  

(c) 

Reserved Area as a Limit of the Postal Directive 

While  the  Postal  Directive  can  be  regarded  as  a  milestone  of  Community  postal  policy,  the 
scope of liberalisation of the Directive does not apply to all postal services. Article 7.1 of the 
Directive  in  this  respect  states  'that  to  the  extent  necessary  to  ensure  maintenance  of 
universal  service,  the  services  which  may  be  reserved  by  each  Member  State  for  the 
universal  service  provider(s)  shall  be  the  clearance,  sorting,  transport  and  delivery  of 
items  of  domestic  correspondence,  whether  by accelerated  delivery  or  not, the price  of 
which is less than five times the public tariff for an item of correspondence in the first 
weight  step  of  the  fastest  standard  category  where  such  category  exists,  provided  that 
they  weigh  less  than  350  grams'.  The  same  reservation  according  to  Article  7.2  of  the 
Directive may be applied by Member States with regard to cross-border mail and direct  mail. 

(d) 

Evaluation of the Directive 

While  the  Directive  indeed  has  to  be  regarded  as  a  significant  step  forward  in  terms  of 
liberalisation of postal services, at the same time it has be noted that the actual impact of the 
Directive is rather limited as it only opened up 3% of postal services in the Member States. 
The  reason  for  this  is  that  the  Member  States  under  the  provisions  of  the  Directive  were 
allowed  to  exempt  practically  the  whole  core  market  of  letter  services  from  the  scope  of 
market  opening.  However,  as  already  mentioned,  the  exemption  of  the  letter  market  from 
market opening for a transitional period seems viable given the characteristics of the sector, 
specifically  the  decreasing  demand  for  letter  services  as  a  result  of  modern  communication 
technologies. It is also reasonable to secure the universality of service for a transitional period 
as the immediate opening of the letter market may have endangered the achievement of this 
goal in the medium term, as not all service providers would have been willing and/or capable 
of  meeting  the  defined  standards  for  universal  services.  The  reservation  is  thus  a  safeguard 
that  meets  the  specific  obligations  of  services  of  general  interest,  that  is,  those  of  the 
European citizens who are the ultimate beneficiaries of the core letter market.  It also has to 

46 

PE 307.894 

 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

be emphasised that the Postal Directive safeguards these interests by the high level of quality 
standards that are defined in the area. 

6.4.3.  The Commission Notice 

The Commission's Notice on the application of the competition rules to the postal sector and 
on  the  assessment  of  certain  state  measures  relating  to  postal  services  was  adopted  on  the 
17th of  December  1997.    The  Notice  forms  the  second  important  part  of  the  dual  regime 
applicable in the postal services sector in the Community. It lays down the guiding principles 
according to which the Commission applies the competition rules of the Treaty to the sector. 
While not having direct legal force in the Member States, the importance of the Notice should 
not be underestimated. By formulating the basic guidelines according to which it applies the 
competition  rules  of  the  Treaty,  the  Commission  has  not  only  considerably  increased  the 
transparency of its own actions in the area but has also contributed to more legal certainty for 
the different actors in this area. Participants in the postal services sector enjoy the benefit of 
being able to judge the impact and compatibility of their action with the rules of the internal 
market prior to taking them. 

6.5.  Liberalisation Gaps 

It can be concluded from the analysis above that a major liberalisation gap exists in the core 
area of postal services, the letter market. This remains protected as a reserved area as a result 
of the Postal Directive. This reservation will thus provide the primary topic for analysis and 
discussion  in  the  forthcoming  section.  Further  gaps  exist  in  the  other  reserved  areas,  cross-
border  mail  and  direct  mail.  In  sum,  the  following  specific  liberalisation  gaps  can  be 
identified with a view to the existing situation in postal services: 

•  direct mail; 
•  cross border mail; 
• 

the letter market under the defined weight and price thresholds. 

In addition, it has to be noted that with a view to safeguarding the established standards in the 
postal services sector the present situation holds the Member States responsible for achieving 
this  by  the  establishment  of  independent  national  regulatory  authorities.  While  the  current 
regulatory structure does not amount to an obstacle to the achievement of full harmonisation, 
this organisational structure requires further consideration. 

6.6. 

Potential  for  Further  Liberalisation  and  Recent  Developments  in  the  Postal  Services 
Sector 

As stated in the above Section, three major gaps exist in terms of liberalisation in the postal 
services  sector.  Similar  to  the  energy  sector,  however,  the  Commission  has  meanwhile 
reviewed the existing situation and formulated, based on the findings of this review, proposals 
for  new  action  in  the  area.  The  existing  situation  in  the  area  could  thus  change  in  the  near 
future. The analysis in this Section will thus focus on determining whether the envisaged next 
steps proposed by the Commission would satisfactorily liberalise the postal services sector.   

47 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

This initiative towards further liberalisation was taken by the Commission on 30th May 2000 
when the  Commission  adopted  a proposal for  amending the Postal Directive with a view  to 
further  opening  of  the  area  of  postal  services  to  competition114.  The  proposal  can  be 
summarised as follows: 

• 

• 
• 

the further opening of approximately 20% on average of the universal service providers'  
revenues from postal services through decreasing the weight/price limits for the reservable 
area to 50gr/2.5 times the basic tariff by 2003; 
the total opening of express mail and outgoing cross-border mail by 2003; 
further  steps  for  market  opening  by  2007;  in  this  respect  the  proposal  leaves  open  the 
exact  scope  of  the  further  measures,  yet,  such  measures  shall  be  based  on  an  extensive 
analysis on how universal service could be safeguarded in a fully opened postal market. 

With  a  view  to  the  above  findings  on  existing  omissions  in  the  liberalisation  of  postal 
services,  it  can  be  concluded  that  the  present  proposal  recognises  these  gaps  and 
acknowledges the necessity for further liberalisation. Specifically in the area of cross-border 
liberalisation  of  postal  services  the  proposed  action  is  decisive.  No  further  scope  for 
liberalisation will thus remain for cross-border mail if the proposal is adopted in the present 
form. 

A different picture, however, emerges concerning the core market of postal services, the letter 
market.  The  proposed  reduction  of  the  present  price/weight  limit  that  is  envisaged  by  2003 
will  open up only  an  approximate  average  of  20%  of postal  services.  It  has  to  noted in  this 
respect  that  private  citizens  will  not  generally  be  able  to  benefit  from  the  liberalised  postal 
market  as  the  letter  market  for  private  letters  would  be  further  exempted  by  the  envisaged 
price/weight  threshold  for  an  uncertain  period  of  time  to  come.  In  fact,  while  the  initial 
increase in market opening is considerable, the proposal remains rather vague with a view to 
further liberalisation in the area which is of particular interest for private consumers. In this 
respect it envisages further measures only by 2007 and then subject to a further review of the 
impact  of  further  liberalisation  on  the  universal  service.  Doubts  remain  as  to  whether  such 
slow progress is necessary. 

It thus has to be concluded that further action with a view to speeding up the liberalisation of 
the core area of postal services is both required and in the interests of European consumers as 
the envisaged Commission proposal further exempts large proportions of the letter market. 

A further point of concern is the present regulatory structure which is intended to safeguard 
the  present  standards  in  the  postal  services  sector.  It  has  been  noted  above  that  the  current 
legal  regime  holds  the  Member  States'  national  regulatory  authorities  responsible  for 
safeguarding the existing standards in the sector. Like the other sectors subject to review, this 
raises doubts in respect of the very rationale of internal market. The danger is that the various 
regulators could apply different standards in the Member States. The conditions under which 
the Member States’ postal services operate could thus vary within the margin of the applied 
different  standards.  As  a  result,  the  application  of  the  legal  standards  in  the  postal  services 
sector could be fragmented across the Community. Such differences would neither be in the 
interest  of  private  nor  industrial  consumers.  While  a  real  gap  does  not  in  this  respect  now 
exist  in  the  postal  services  sector,  further  attention  to  and  review  of  the  existing  regulatory 
structure in the area is recommended. 

114  COM (2000) 319 final. 

48 

PE 307.894 

 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

SECTION III:  MECHANISMS  FOR  FURTHER  LIBERALISATION  IN  THE 

SELECTED SECTORS 

This Section of the study will identify on a sector by sector approach the potential for further 
liberalisation, based on the findings in Section II. 

1. 

Mechanisms to Enhance Further Liberalisation in the Energy Services Sector 

It  can  be  concluded  in  respect  of  the  existing  legal  framework  in  the  energy  sector  and  the 
recent developments in this area, that the internal energy market has generally reached a high 
level  of  maturity.  Obviously  this  conclusion  is  subject  to  the  adoption  of  the  proposals  that 
have  been  outlined  above.  In  terms  of  liberalisation,  no  major  gaps  in  the  area  will  exist  as 
from 2005. However, the impact of liberalisation raises concerns as there has up to now been 
a strong tendency to emphasise the liberalisation process at the expense of the environmental 
objectives  of  the  Treaty.  In  this  respect  it  has  to  be  hoped  that  the  European  policy  makers 
adopt the pending proposal on renewable energy sources in the electricity sector despite the 
Trans-Atlantic concerns. 

A  few  minor  steps  for  further  measures  in  the  internal  energy  market  can,  however,  be 
recommended. The first step is related to liberalisation. The current regulatory system which 
is applied in the energy sector should be reviewed carefully. The regulatory role is currently 
exercised  by  independent  national  regulatory  authorities  in  the  Member  States.  While  the 
establishment  of  such  independent  regulatory  authorities  is  the  right  step  (e.g.,  in  order  to 
safeguard  transparent  structures  and  the  principle  of  non-discrimination,  prevent  non-
competitive  market  practices  and  ensure  affordable  prices  for  consumers  in  the  internal 
energy  market),  it  may  also  be  necessary  to  set  up  a  European  regulatory  authority.  The 
current  system  could  easily  lead  to  a  fragmented  level  of  quality  and  different  applicable 
standards within the Member States. This obviously would be contradictory to the rationale of 
the  internal  market.  The  Commission  should  in  this  respect  thoroughly  explore  whether  the 
presently envisaged regulatory system secures the same standards and conditions throughout 
the internal energy market. 

With  a  view  to  further  strengthening  the  promotion  and  attainment  of  the  environmental 
objectives  of  the  Treaty  in  the  internal  energy  market,  another  measure  that  should  be 
considered  by  the  Community  policy  makers  is  the  potential  for  an  energy  tax  based  on 
energy  consumption.   A  first  step in  this  direction  was  already  made  by  the  Commission  in 
1992 and in 1995 when it explored the potential for taxation of CO2 emissions115. However, 
since  then  no  further  action  has  been  taken.  Community  action  in  the  field  would  be  surely 
more  useful  than  national  fragmented  taxation.  The potential  for  such  action  should  thus  be 
reviewed again by Community policy makers.  

In  conclusion,  the  following  Action  should  be  taken  with  a  view  to  furthering  the  internal 
market in the energy sector: 

•  adoption of the Commission Proposals that were outlined in the previous Section; 
• 

review of the necessity for a European energy regulatory authority; 

115  COM (92) 226 final, revised COM (95) 172 final. 

49 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

•  analysis of the potential for taxation of CO2 emissions. 

2. 

Mechanisms for Further Liberalisation in the Water Services Sector 

It  has  been  concluded  that  a  number  of  issues  have  to  be  thoroughly  assessed  before  the 
Community may take action to liberalise water services. Specifically, the potential impact of 
liberalisation has to be assessed against the following characteristics of the water sector: 

• 
• 

the different organisational set-ups in the water markets of the Member States; 
the different economic conditions which result from the differences in the organisational 
structures in the Member States; 
limited capacity of networks; 
the deep rooted differences in the applicable legal regimes in the Member States; 

• 
• 
•  health risks and consumer protection as an overriding objective of the Treaty; 
• 

the requirements of environmental protection as an over-riding objective of the Treaty. 

The Community, when formulating a policy in the area of water services, thus has to resolve 
the following complex questions: 

• 
to what extent are the existing water networks technically prepared for liberalisation; 
•  how  can  a  high  level  of  quality  of  water  be  secured  in  compliance  with  the  existing 

• 

• 

Community legislatory framework; 
to  what  extent  do  the  currently  existing  different  organisational  set-ups  in  the  Member 
States and the resulting different economic capacities of the supply-side actors require at 
least transitional safeguards; 
to  what  extent  is  harmonisation  of  the  existing  different  legal  regimes  required  and  to 
what  extent  may  the  Member  States  retain  competence  for  the  basic  organisation  of  the 
sector in accordance with the principle of subsidiarity; 

•  how can liberalisation and the environmental objectives of the Treaty be brought into line, 

given the heightened profile of the environment since the Treaty of Amsterdam; 
is it necessary to establish a European regulatory authority for water services.   

• 

3. 

Mechanisms for Further Liberalisation in the Telecommunications Sector 

It  has  been  concluded  in  Section  II  on  the  telecommunications  sector  that  liberalisation  has 
taken a firm hold which is generally in the right direction. 

However,  one  major  problem  remains  to  resolved,  that  is  the  issue  of  national  regulators 
versus a European Regulator. Just like in the other sectors covered by this Study, the question 
remains  on  the  agenda  whether  a  European  regulatory  authority  would  be  an  appropriate 
response  to  the  growing  importance  of  telecommunications  markets.  Experience  in  the  past 
has  shown  that  the  decentralised  organisation  of  regulatory  tasks  can  act  as  an  obstacle  to 
greater  efficiency  in  regulating  EU-wide  services.  Furthermore,  an  independent  European 
regulatory authority is likely to act more efficiently if it does not have to deal with to day-to-
day policy in the field. 

50 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

In addition, Art. 6 of the proposed Directive on a common regulatory framework sets out an 
obligation  on  National  Regulatory Authorities  to  consult  when  they  take  decisions  affecting 
third parties and establishes a procedure, with the possibility for the Commission to require an 
NRA to amend or withdraw the measure, if it is not justified under the regulatory framework. 
While this provision can be seen as supporting harmonisation character, it may also lead to a 
delay  in  national  regulatory  decisions  resulting  in  legal  uncertainty.  This  is  again  an  issue 
where a European regulatory authority would be able to provide clarification. 

It  can  thus  be  concluded  that,  at  a  minimum,  European  policy  makers  should  thoroughly 
review the potential for a European telecommunications regulatory authority. 

4. 

Mechanisms for Further Liberalisation in the Railway Sector 

The steady growth in Europe-wide trade has led to an increased demand for rapid delivery of 
goods. In order to satisfy this demand, companies are dependent on user-oriented intermodal 
transport  networks.  Only  a  liberalised  and  interoperable  rail  system  that  is  open  to 
competition will meet this need, both as a link in the transport chain and as a separate mode of 
transportation.  The  re-launch  of  the  liberalisation  process  by  the  Community’s  year  2000 
railway package and the resulting Directives 2001/12/EC, 2001/13/EC, 2001/14/EC are a first 
step  to  making  rail  more  market  oriented  and  competitive.  Criticism  can  still  be  made 
concerning the pace and depth of these liberalisation measures, in particular:  

•  The 7 year period until free access to the European rail network for freight is guaranteed 

(instead of the 5 year period proposed by the EP) seems too long; 

•  Cabotage  will  not  be  opened  to  foreign  railway  undertakings  which  implies  that  a  real 

obstacle to complete market integration remains within the EU territory; 

•  The  separation  between  infrastructure  and  operation  remains  ambiguous.  In  order  to 
ensure competition in the rail transport sector, the EU’s policy approach is that providers 
of infrastructure and transport operators must have clear and separate responsibilities. The 
textual ambiguity raises difficulties. It remains unclear if the infrastructure managers are 
seen as key partners implementing policies for market opening, or whether they have to be 
closely  monitored  since  they  could  potentially  be  colluding  with  traditional/dominant 
railway operators when they carry out their functions on capacity allocation; 

•  The  existence  of  the  current  patchwork  of  solutions  in  the  various  Member  States,  for 

example: 

France: 
Germany: 

where management and operational service lie with the SNCF 
separation  under  arm’s  length  dealing  standards  (but  under  a 
single holding company) 
Scandinavia: 
infrastructure in the hands of State agencies 
Belgium and Austria: only  accounting  separation  between  infrastructure  and  service 
operation; 
the 
implementation  of  the  railway  package    since  the  “Austrian 
clause” has been deleted  
a  private  company  owns,  manages  and  maintains  the  railway 
infrastructure 

these  models  will  not  be  possible  after 

UK: 

51 

PE 307.894 

 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

In light of these different models of separation which will not radically change under the new 
regulatory regime, the analysis of the potential for further liberalisation should (as a long-term 
goal)  be  transferred  from  a  national  towards  a  European  perspective,  i.e.  whether  the 
European single railway system should encompass areas of infrastructure which are made the 
responsibility  of  centralised  action  at  the  EU  level.  This  proposed  policy  shift  would 
presuppose  a  policy  debate  on  the  financial  responsibility  for  railway  infrastructure  at  the 
European level116: 

•  Reinforcement of the liberalisation policy: creation of a body to measure the development 
of  implementation  of  the  liberalisation  measures.  Enhanced  efficiency  can  be  brought 
about  with  benchmarking  which  promotes  improved  rail  performance  through  best 
practice. 

•  Pan-European  rail  interoperability  needs  to  be  enhanced:  the  European  Rail  ”Freeways” 
concept  has  been  a  good  first  step  to  achieve  the  overall  aims  of  access  for  additional 
operators, co-ordinated infrastructure and simplified border transactions. The time frame 
for free access to the whole railway network has been criticised above but the problem can 
also  be  found  at  the  implementation  level:  even  the  implementation  of  the  ”Freeways” 
concept has been slow due to a lack for incentives for national railways to make it work 
and  because  of  insufficient  logistical  co-ordination.  Another  requirement  for  ensuring 
interoperability  is  the  implementation  of  common  European  standards  on  signalling 
control systems and information systems.  
In  essence,  the  EU  policy  approach  towards  rail  liberalisation  (which  is  based  on  the 
premise that the way to introduce competition into the sector is to separate infrastructure 
from operations and the creation of access rights for a variety of competing actors using 
the infrastructure) is a questionable one117: 

• 

Firstly,  the  problem  that  arises  is  the  “network-problem”;  train  services 
operate  as  integrated  networks  which  implies  that  they  are  themselves 
subject  to  economies  of  traffic  density.  If  traffic  increases,  either  the 
operator has to provide longer trains achieving operating cost economies or 
a  more  frequent  service  with  through  trains  to  a  wider  variety  of  points. 
Under  these  conditions  there  is  no  guarantee  that  competition  will  achieve 
an optimal trade-off between these two options, or a well integrated network 
in terms of connections, information and ticketing. Instead, competition may 
provide  duplication  of  services  which  loses  economies  of  traffic  density 
without appropriate benefit for the passengers. The parallel drawn with the 
successful 
the 
characteristics  of  rail  services  in  terms  of  economies  of  traffic  density  and 
network  effect,  shows  that  the  abovementioned  effect  is  less  significant  in 
respect  of  longer  distances,  so  one  of  the  basic  market  failures  is  less 
prominent.  On  the  other  hand,  it  is  incontestable  that  short  distance  air 
traffic is unprofitable so that the chances of open access entry are minimal. 

liberalisation  of  European  air 

traffic,  which  shares 

116  Speech  by  Anna  Ottavianelli,  Secretary  General,  Community  of  European  Railways  at  the  Conference 
”Competition and the Development of European Railways: Paths and Perspectives Compared” (Rome 14-
16.02.2001), published by CER. 

117  Chris  Nash,  Institute  for  Transport  Studies  University  of  Leeds,  ”Directive  91/440  and  the  evolution  of 
community  rules  on  separation  of  operations  and  infrastructure,  paper  presented  at  the  Seminar  of  Rail 
transport in the EU, ERA Trier, 23-24 Feb 2001. 

52 

PE 307.894 

 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Secondly,  a  problem  of  this  policy  approach  is  the  difficult  interface 
between  a  number  of  railway  operators  and  a  monopoly  infrastructure 
manager.  It  is  difficult  to  imagine  whether  the  latter  can  be  efficiently 
managed  and  given  sufficient  incentives  to  provide  appropriate  levels  of 
quality of infrastructure capacity in a cost-effective way. 

5. 

Mechanisms for Enhancing Further Liberalisation in the Postal Services Sector 

This  Study  has  shown  that  two  major  areas  for  further  action  exist  in  the  postal  services 
sector. This situation requires: 

•  Careful review of the necessity of reserved areas in postal services in respect of economic 

implications and general interest obligations. 

In  the  interests  of  consumers  both  private  and  industrial  consumers,  it  should  be  reviewed 
how  the  core  market  of  postal  services,  the  letter  market  could  be  liberalised  under  the 
presently envisaged threshold within a tightened timetable. In this respect an in-depth analysis 
should  be  carried  out  of  whether  the  presently  envisaged  reservations  are  justified  by  the 
general  interest.  It  should  be  explored  whether  the  provision  of  universal  postal  services 
would  be  endangered  if  the  reservation  would  be  abolished  earlier.  While  it  has  been 
emphasised  that  the  obligations  of  general  interest  indeed  may  provide  a  justification  to 
partially exempt competition in some areas, it has to be emphasised that the general interest 
obligations should not be abused by the Member States to protect their existing monopolists 
in order to allow them further time to prepare for future increased competition in the market. 
The envisaged timeframe for further market opening in the postal services sector, should thus 
be reviewed with a view to whether such slow progress is justified. 

•  Thorough review of the present regulatory system in the postal services sector.   

It  has  been  noted  above  and  in  other  sectors  that  are  subject  to  this  Study  that  doubts  arise 
with  respect  to  the  evolving  Community  regulatory  system  in  the  area  of  network-bound 
services. As a general rule, Community law holds national regulatory authorities responsible 
for safeguarding the quality standards imposed by Community law. This system obviously is 
contradictory in the sense that the various national regulatory authorities may apply different 
standards  in  postal  services.  Such  different  standards  would  be  in  sharp  contrast  to  the 
rationale  of  harmonisation  within  the  internal  market  and  could  result  in  distortions  of 
competition.  In  this  respect  the  present  regulatory  system  for  postal  services  has  to  be 
reviewed.  It  has  to  be  determined  whether  the  current  system  adequately  coincides  with  the 
goal  of  an  internal  market  An  alternative  would  be  an  independent  European  regulatory 
authority. 

53 

PE 307.894 

 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

54 

PE 307.894 

Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

SECTION IV:  MEANING  AND 

IMPORTANCE  FOR  THE  PROPOSED 

LIBERALISATION MECHANISM FOR CEECs 

For  the  Central  and  Eastern  European  Countries  in  transition  (CEECs),  the  proposed 
mechanisms for liberalisation in the sectors covered by this Study are of significance in two 
respects.  Firstly,  they  are  of  key  importance  with  a  view  to  the  accession  process  of  the 
CEECs that have applied to become members of the European Union. These CEECs have to 
meet a set of standards, the so-called obligations of membership, which the Community has 
defined  as  accession  criteria.  Secondly,  liberalisation  presents  a  key  tool  for  the  economic 
development of all CEECs, whether the country aims to become a member of the European 
Union or not. 

1. 

The  Importance  of  Liberalisation  for  the  Accession  of  CEECs  to  the  European 
Union 

Twelve  countries  have  applied  to  become  members  of  the  European  Union118.  The 
Community  in  this  respect  has  defined  a  set  of  basic  criteria,  the  so-called  obligations  of 
membership,  that  the  applicant  countries  have  to  meet  prior  to  accession.  These  basic 
obligations of membership can be summarised as follows: 

The Applicant Countries have to: 

•  achieve stability of institutions guaranteeing democracy, the rule of law, human rights and 

respect for and protection of minorities; 

•  achieve  the  existence  of  a  functioning  market  economy  as  well  as  the  capacity  to  cope 

with competitive pressures and market forces within the Union; 

•  achieve  the  ability  to  take  on  the  obligations  of  membership  including  adherence  to  the 

aims of political, economic and monetary union; 

•  create  the  conditions  for  its  integration  through  the  adjustment  of  its  administrative 
structures, so that European Community legislation is transposed into national legislations 
and implemented effectively through appropriate administrative and judicial structures. 

Furthermore, the Luxembourg European Council in December 1997 also underlined that “as a 
prerequisite  for  enlargement  of  the  Union,  the  operation  of  the  institutions  must  be 
strengthened  and  improved  in  keeping  with  the  institutional  provisions  of  the  Amsterdam 
Treaty.” 

Liberalisation  does  not  form  an  explicit  part  of  the  obligations  of  membership.  However, 
liberalisation  is  an  underlying  key  rationale  of  the  defined  obligations.  While  the  accession 
criteria  refer  to  internal  reforms of the  European Union,  the  obligations  of  membership  that 
the  applicant  countries  have  to  meet  can  be  divided  into  three  basic  types  of  obligations: 
political,  economic  and  legal.  Key  economic  obligations  which  the  CEECs  are  required  to 
achieve are  a functioning  market economy as well  as the  capacity to stand  market pressure. 
With  respect  to  legal  criteria,  they  are  required  to  comply  with  the  legal  standards  of  the 
Community.  What  is  thereby  required  in  essence  from  the  CEECs  is  the  progressive 

118  Poland,  Hungary,  Czech  Republic,  Slovenia,  Cyprus,  Slovakia,  Estonia,  Lithuania,  Latvia,  Turkey, 

Bulgaria, Romania. 

55 

PE 307.894 

 
 
 
 
 
 
 
 
 
                                                 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

approximation  of  their  legal  framework  in  every  area  that  falls  within  the  scope  of 
Community law. This covers approximation of the legal framework of the applicant countries 
with  the  legal  standards  of  the  internal  market  and,  consequently,  liberalisation,  given  the 
importance  of  completing  the  internal  market  within  the  Community.  Accordingly, 
liberalisation  assumes  a  key  role  within  the  accession  process  of  CEECs  as  far  as  the 
approximation  of  the  legal  framework  of  those  countries  to  the  standards  of  the  legal 
framework of the Community internal market is concerned. 

In  this  respect,  the  dynamically  changing  Community  policies  and  legal  framework  in  the 
areas that have been analysed in the course of this Study have to be constantly reviewed and 
implemented by the CEECs. It is of specific strategic importance in this respect to keep up to 
date with the changes and to foresee the general direction that Community policy takes in the 
different sectors.  

For instance, in the postal services sector, the existing legal situation reflects the Community 
policy  in  the  area  in  the  first  phase  of  liberalisation  as  of  1997.  Yet,  since  then,  a  dynamic 
discussion  on  further  liberalisation  has  taken  place  and  the  cornerstones  for  a  new  phase  of 
Community  policy  and  legal  action  with  a  view  to  liberalisation  have  been  shaped  and  the 
changes to be taken are imminent. The competent authorities in the applicant countries in the 
area  of  postal  services  should  thus  not  merely  comply  with  the  existing  Community  legal 
framework on postal services but, with a view to the imminent Community action to further 
liberalise  the  area,  also  constantly  monitor  the  dynamic  developments  in  the  area  and 
subsequently  prepare  themselves  to  flexibly  adopt  and  implement  the  upcoming  changes  in 
Community  policy.  The  area  of  postal  services  only  serves  as  an  illustration.  The  principle 
applies to the other sectors of this Study. Rapid developments are also currently taking place 
in the energy sector. 

Liberalisation thus assumes a key role for the CEECs with a view to becoming  members of 
the European Union.  

2. 

The Importance of Liberalisation of Network-Bound Services for CEECs 

Beyond  what  has  been  determined  with  view  to  accession  to  the  European  Union,  adopting 
and implementing the economic and legal rationale of liberalisation is a matter of self-interest 
for all CEECs. 

In particular, this stands true for the area of network-bound services. It has been established 
that it is a characteristic feature of such services that they provide vital services to the citizens 
of  every  State.  At  the  same  time  it  has  been  determined  that  network-bound  services  are 
generally  very  capital  intensive.  Liberalising  the  areas  that  are  subject  to  the  review  in  this 
Study is thus in the interest of the CEECs from the perspective of the citizens as well as from 
the  perspective  of  Governments.  While  for  Governments  enhancing  liberalisation  in  the 
respective  sectors  would,  in  the  medium-term,  have  considerable  positive  benefits  for  State 
budgets as a result of increased competition, the citizens of the CEECs could also benefit in 
terms  of  higher  quality  of  services  if  the  existing  Community  standards  would  be 
implemented. 

However, while the CEECs should indeed aim to comply with the liberalisation process of the 
Community  with  regard  to  network-bound  services,  some  potential  dangers  should  also  be 

56 

PE 307.894 

 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

noted.  For  instance,  while  liberalisation  would  presumably  produce  positive  results  in  the 
medium-term  for  the  employment  situation  in  these  sectors,  in  the  short-term  it  may  have  a 
negative  impact  on  employment.  While  the  potential  impact  of  liberalisation  on  the 
employment situation in the CEECs would vary from sector to sector, the short-term impact 
should not be ignored. It thus may be advisable to introduce liberalisation progressively over 
a  transition  period  as  it  is  being  done  in  the  Community.  Thus  a  crucial  balance  has  to  be 
found for the liberalisation of network-bound services in the CEECs. 

*   *   * 

57 

PE 307.894 

 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

58 

PE 307.894 

Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

BIBLIOGRAPHY 

Dähne, Spanisches und deutsches Wasserrecht, Baden-Baden, 2000. 

Daiber, 'Wasserpreise und Wettbewerb', Wirtschaft und Wettbewerb, 2000. 

Domergue, Quintet, 'Situation and Problems of Railway Industry in Europe', Japan Railway 
& Transport Review, (26), 2001. 

European  Commission,  'Liberalisation  of  Network  Industries  -  Economic  implications  and 
main policy issues', in: European Economy, Office for Official Publications of the European 
Communities, Luxembourg, 1999. 

European  Commission,  EU  focus  on  clean  water,  Luxembourg,  Office  for  Official 
Publications of the European Communities, 1999. 

Heritier,  'The  Politics  of  Public  Services  in  European  Regulation'  (Pre  print),  Max  Planck 
Projektgruppe Recht der Gemeinschaftsgüter, Bonn, 2001 . 

Lauriol, 'Electricity Liberalisation in the European Union; Law and Commentary', Oil & Gas 
Law and Taxation Review, Special Issue, Sweet & Maxwell, London 1998. 

Liberail,  'Research Study on Liberalised and Interoperable Railways (1997-1998) within the 
Fourth RTD Framework Programme', Workpackage Nr.3, Vol.1, Main Report. 

Mc  Gee,  Weatherill,  The  Evolution  of  the  Single  Market  -  Harmonisation  or  Liberalisation 
(1990) 53 M.L.Rev. 578. 

Möschel,  'Erfahrungen  mit  der  Privatisierung  von  Staatsmonopolen',  Referate  des  XXXII. 
FIW-Symposiums am 18./19.2.1999, 1999. 

Möschel,  'Regulierungswirrwarr in der  Telekommunikation',  Beilage  Multimedia  und  Recht, 
1999. 

Nunes-Correia/Kraemer,  Institutionen  der  Wasserwirtschaft  in  Europa,  Bd.  I,  Heidelberg 
1997. 

OECD, Report on Regulatory Reform, Paris 1997. 

Paulweber, Zeitschrift für Urheber- und Medienrecht, 2000. 

Pelkmans,  The  New  Approach  to  Technical  Harmonisation  and  Standardisation,1987,  25 
JCMS 249. 

Pritzsche,  'Electricity  Liberalisation  in  the  European  Union;  Law  and  Commentary',  Oil  & 
Gas Law and Taxation Review, Special Issue, Sweet & Maxwell, London 1998. 

Rat von Sachverständigen für Umweltfragen, Umweltgutachten, 2000. 

59 

PE 307.894 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enhancing Liberalisation (Telecoms, Energy, Post, Railways) 

Scherer  (ed.),  Baker  &  McKenzie,  Telecommunication  Laws  in  Europe,  fifth  edn.,  London 
2000. 

Schwarze (editor), EU-Kommentar, 1. ed., Baden-Baden 2000. 

Thun-Hohenstein, Der Vertrag von Amsterdam, 1997. 

Weatherhill, Beaumont; EC Law, The Essential Guide to the Legal workings of the European 
Community, 2nd ed., London 1995. 

Weatherill, Law and Integration in the European Union, Clarendon Press 1995. 

Weatherill, EC Consumer Law and Policy, London, 1997. 

Zuleeg,  "Umweltschutz  in  der  Rechtsprechung  des  Europäischen  Gerichtshofs",  Neue 
Juristische Wochenschrift, 1993. 

Further sources: 

C.  Knill,  D.  Lehmkuhl,  'An  Alternative  Route  of  Legal  Integration:  The  Community’s 
Railway  Policy',  European  Integration  online  papers  (EioP),  Vol.  2  (1998),  http:// 
eipo.or.at/eiop/texte/1998-003a.htm. 

See pdf.-document in: http://europa.eu.int/comm/competition/liberalization/others/. 

Nash, Institute for Transport Studies University of Leeds, Directive 91/440 and the evolution 
of  community  rules  on  separation  of  operations  and  infrastructure,  paper  presented  at  the 
Seminar of Rail transport in the EU, ERA Trier, 23-24 Feb 2001. 

Schmitz, Die Struktur der Trinkwasserversorgung in Deutschland und ein Leistungsvergleich 
mit  anderen  Mitgliedsstaaten  der  Europäischen  Union,  EVM-Seminar:  "Der  deutsche 
Wassermarkt  im  Wandel",  18.10.1999,  Koblenz  (Bundesverband  der  deutschen  Gas-  und 
Wasserwirtschaft e.V.). 

60 

PE 307.894