The public services are in the European Union services subjected to a particular legal mode in the general interest.

The concept of public services is not the subject of a consensus in the European Union: it indicates sometimes services offered to the general public, sometimes of the abundant services by an organization of the public sector, sometimes of the services subjected to a “obligation of public service” in the general interest.

It is only with this last concept of General interest that the European commission refers; it thus forged the concepts of service of general interest and service of general economic interest , which it considers more general and less likely of errors or ambiguities of translation between different the Langue S, whereas the 25 Convention countries have very diverse traditions in this field, from the public service of State theorized by Leon Duguit in France with the Daseinsvorsorge practiced by the local government agencies in Germany.

Public service among the missions of the European Union

The public service does not form part of the traditional missions of the European Union. The expression “public service” is mentioned only once in the Traité establishing the European Community (treated EC), about the constraints of public service in the field of transport (article 73).

The organization of the public service concerns the States or the local government agencies. However, the authorities of the European Union were brought to wonder about the companies in charge of a public service because of the potential conflict between the public service and the principle of free Concurrence, which concerns the Union for its part.

Moreover, the differences in design on the principles of the public service from one country to another can lead to conflicts which can be managed only at the European level. It is the case of the public service of the electricity, ensured in Germany by multiple actors limited to their local zone while the French national operator, EDF, extend his activities abroad.

The evolution of the reflection on the public service in Europe thus brought, with article 16 of the Traité THIS added by the Traité of Amsterdam, to classify the services of general economic interest among the “common values of the Union”.

SIG and SIEG

The Commission worked out, with the Court of justice of the European Communities, two concepts considered to be clearer than that of public service:

  • the services of general interest (SIG), not mentioned in the Treated THIS: they are “commercial and noncommercial services that the public authorities regard as being of general interest and subject to specific obligations of Public service”

  • the services of general economic interest (SIEG), mentioned in articles 16 and 86 of the Treated THIS: these are “services of an economic nature that the Member States or the Community subject to specific obligations of Public service under the terms of a criterion of General interest. The concept of services of general economic interest thus covers more particularly certain abundant services by big industries of network like transport, the postal services, energy and the communications. However, the expression also extends to the other economic activities subjected they also to obligations of public service. ”

and 87 are those which have the greatest legal consequences with regard to the legal mode of the public service in the European Union.

Article 87 poses in its first paragraph the incompatibility of the State aid with the Common Market, insofar as these assistances affect the exchanges between Member States. It specifies however in the two following paragraphs a whole of exemptions for certain types of aid. Article 86, as for him, explains why the rules of competition should not be opposed to the achievement of an assigned mission with a company charged with a SIEG.

The articulation of these two articles is delicate and is the subject of an important jurisprudence. The debate relates to the following question: a “compensation of public service” allotted to a company it is or not a “State aid” within the meaning of article 87? In the affirmative, this compensation must be subjected to the appreciation of the European commission; in the contrary case, article 87 does not apply and article 86 makes it possible to regard this compensation as a means of ensuring the achievement of the mission of general interest entrusted to the company.

The Altmark stop of the Court of justice made it possible to specify in which case a compensation of public service is regarded as a State aid. Thereafter, in July 2005, a series of texts known as “Monti package” formalized this solution.

The Altmark stop

This stop returned by the Court of justice the July 24th 2003, excludes from the field of the State aid the compensations of public service if they observe the four following conditions:

  • the profit company must have actually been in charge of the execution of clearly definite obligations of public service.

  • this compensation must be calculated on objective and transparent parameters.

  • this compensation should not exceed what is necessary to cover the costs caused by the achievement of the obligations of public service, by including a “reasonable benefit”.

  • if there no were Government contract, the level of the compensation must be calculated on the basis of an analysis of the costs by taking like reference a “medium-sized company, managed well and adequately equipped”.

The “Monti package”

The Altmark stop, did not make it possible however to decide in all the cases of the qualification or not of aid State for a given compensation of public service and thus to determine if the Commission were to intervene. The criteria of “reasonable” and “medium-sized company, well managed benefit and adequately equipped” are in particular rather difficult to evaluate in practice.

This is why the Commission adopted on July 13rd, 2005 a whole of three texts, called “Monti package”, which frame the mode of the State aid by distinguishing three categories of compensations from public service:

  • those which observe the four conditions of the stop Altmark : they do not constitute State aid. However a company must hold of the separate accounts for its activities carried out within the framework of a public service mission which has to him conferred and its other activities, placed within the normal competing framework. This will facilitate the control of the financing of these activities.

  • those which constitute State aid but are supposed compatible with the Common Market, within the framework of article 86, paragraph 2, of the treaty. It is the most innovative point of the Monti package. That relates to in particular the compensations of less than 30 million euros granted a company of which the turnover does not exceed 100 million euros. Certain sectors, like the hospital, the companies of social Housing or transport towards islands are also excluded from the field of the assistances subjected to preliminary notification. Controls a posteriori remain however possible.

  • those which constitute State aid and remain subjected to the preliminary obligation of notification. They are assistances of amount important or allotted at large companies. These assistances must be notified at the Commission, which can decide to accept them or to reject them.

Article 122 of the TCE

The Treated establishing a Constitution for Europe, signed in Rome in 2004, took again articles 86 and 87 (become III-166 and III-167), but added a new provision in the last sentence of article III-122, relating to the principles governing the SIEG and their “in particular economic and financial” conditions of exercise: The European law establishes these principles and fixes these conditions, without damage of the competence which the Member States have, in the respect of the Constitution, to provide, make carry out and to finance these services.

This provision underlined the place of the public services among competences of the States and provided a base to legislate as regards SIEG and to ensure their financing in particular. The mode of adoption of the European laws provided for in the constitutional treaty, near to the current procedure of Joint decision, made it possible the the European Parliament to take part in decision making in this field.

The ratification of the treaty being suspended since the failure of the referendums of May and June 2005 in France and with the Netherlands, this article cannot apply and the public services remain subjected to the mode of the treaties of Amsterdam and Nice.

Relative tendencies with certain sectors

Public service in transport

The transport sector is the only one for which the Traité THIS mentions the existence of needs for “public service”. Article 73 of the title V, devoted to transport, authorizes the assistances “which correspond to the refunding of certain constraints inherent in the concept of public service”.

The two principal texts in the field of terrestrial public transport of passengers are the payment n°1191/69 of June 26th, 1969 for the obligations of public service and the payment n°1107/70 for the State aid.

The States thus have the possibility of setting up obligations of public service, definite like “obligations that, if she considered her commercial own interest, the haulage company would not assume, or not in same measurement nor under the same conditions”. They must then grant the companies concerned of the calculated compensations following of the precise rules.

The Altmark stop, described previously, applies to the transport sector. It confirms that article 73, because it applies specifically to the public transport sector, at the priority on the provisions of article 86, more general.

The precise details brought by the texts of the Monti package, on the other hand, whose range is total, do not apply in the field of the surface transports because this one is equipped with a specific legislation with the payment of 1969. However, the payment of 1969 does not appear any more adapted to the current location of public transport in the European Union. Several Member States opened their market with competition, either in the direction of a Déréglementation with large scales (the United Kingdom, years 1980), or to generally found a “controlled competition” under the terms of which the authorities grant an exclusive right at a company after a Invitation to tender.

Consequently, the European authorities discuss since year 2000 a proposal for a Regulation aiming at replacing the payment of 1969. This proposal would pose the principle of contractualisation of the relationship between the authority in charge of transport and the owner. The attribution of the contracts would be transparent and nondiscriminatory the competition object. Certain exceptions however are envisaged (railroad, subway, contract of weak amount…) and are the subject of debates within the European authorities. The proposal, after examination of the the European Parliament, is currently on standby of first reading of the Conseil.

See too

Internal bonds

External bonds

  • financing of the services of general interest: information paper n°2619 deposited by the Delegation of the National Assembly for the European Union and presented by Bernard Derosier and Christian Philip.

  • competition and public services in the TCE, a point of view of the European deputy Alain Lipietz.

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