Statement at the EP public Services

CEEP Statement at the EP Public Services Intergroup (4th May 2011)

04 May 2011
Posted in Stakeholders News

CEEP Statement at the EP Public Services Intergroup
4th May 2011 – Meeting on the Revision of the Monti Kroes Package

CEEP welcomes the communication on the reform of the EU State Aid Rules on Services of General Economic Interest published in March. The European Commission seeks to achieve a clarification and develop a diversified and proportionate approach, two issues that had been highlighted by CEEP in its former opinions. Public service providers need clarity and legal certainty, but they also need simplicity and a framework enabling them to provide affordable and quality services.

Indeed, when applying the Monti Kroes Package, CEEP members have faced two main problems:

– The persisting legal uncertainty regarding the definition of the Services of General Economic and Services of General Non-Economic Interest which hinders the use of the package.
– The existing asymmetry in terms of responsibility for not correctly applying the Monti-Kroes package, in which case local enterprises have to bear the costs of returning the unduly assigned aid without having a possibility to interfere with the assignment process.

The Commission should invite Member States to take appropriate measures at all levels –national, regional and local – in order to fulfil their obligations.

Moreover, CEEP would like to suggest ways to improve the provision of public services.

(1) Creating a reserve earmarked to finance exclusively the public service obligation (PSO), following the lines of the rules on public broadcasting approved by the Commission. Sometimes the Public Service Obligation financing difficulties occur due to inflexibility of public budgets and the income received from users falling behind expectations. For these budgetary gaps to fill in, availability of a reserve could prove to be a solution.

(2) Securing the fund for investments and extraordinary costs
Annual compensations do not cover investment needs deemed essential to cover a public service. Following the lines of the public broadcasting new guidelines, rules governing SGEIs should envisage the possibility to finance a special fund to be earmarked for investment and other extraordinary costs (for instance indemnities in case of a reduction of the work force) devoted to PSO.

(3) Tackling the problem of paying back excessive compensation
The payment back of a sizeable amount can disrupt the normal functioning of an enterprise. It should be possible to affect that excess to the following compensation, reducing it, without damaging the going concern.

Finally, CEEP would like to refer to a recent speech of Commissioner Almunia[1] stating that the revision “is not based on Article 14 of the Treaty [but] on Article 106, which grants the Commission exclusive power to assess the compensation for the provision of public services”.

In CEEP view, considering public service obligations as a matter subject to Article 107 of the Treaty (on “state aids”) generates all the constraints that such qualification implies in the field of public finances. These compensations should not fall within the provisions of the Treaty on state aids, but within a range of possible ways of financing, in accordance with the principle of proportionality: public subventions, fiscal advantages, compensation funds between operators, equalisation between users and/or providers, associated or not to the grant of exclusive or special rights, “play or pay” mechanisms, etc.”.

[1] Joaquin Almunia Vice President of the European Commission responsible for Competition Policy, Reforming EU State aid rules on public services: The way forward, EPC policy Dialogue, Brussels, 2nd May 2011

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