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State aid: Commission adopts new rules on services of general economic interest (SGEI)

European Commission - IP/11/1571   20/12/2011

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European Commission - Press release

State aid: Commission adopts new rules on services of general economic interest (SGEI)

Brussels, 20 December 2011 – After extensive public consultations, the European Commission has adopted a revised package of EU state aid rules for the assessment of public compensation for services of general economic interest (SGEI). The new package clarifies key state aid principles and introduces a diversified and proportionate approach with simpler rules for SGEIs that are small, local in scope or pursue a social objective, while better taking account of competition considerations for large cases.

Commission Vice-President in charge of competition policy, Joaquín Almunia, stated: "The new SGEI package provides Member States with a simpler, clearer and more flexible framework for supporting the delivery of high-quality public services to citizens which have become even more necessary in these crisis times. The Commission's duty, of course, is to ensure companies entrusted with services of general interest do not get overcompensated, which safeguards competing activity and jobs, and guarantees an efficient use of scarce public resources."

Member States are largely free to define which services are of general interest. But, the Commission must ensure that public funding granted for the provision of such services does not unduly distort competition in the Internal Market.

The new rules, which replace the so-called "Monti-Kroes" Package of July 2005, clarify basic notions such as 'economic activity' to facilitate the application of the rules by national but also regional or local governments.

All social services become exempted from the obligation of notification to the Commission, regardless of the amount of the compensation received. The services concerned must meet "social needs as regards health and long term care, childcare, access to and reintegration in the labour market, social housing and the care and social inclusion of vulnerable groups". Previously only hospitals and social housing were exempted. Other SGEIs are exempted provided the compensation amount is less than €15 million a year.

The Commission also proposes to set a minimum compensation amount for all other services below which the measure is deemed free of aid. The SGEI de minimis amount would be set at €500,000 over three years. This will reduce red tape for small SGEIs. A final decision will be taken in the spring.

On the other hand, in future there will be a greater scrutiny of other SGEIs involving compensation amounts of more than €15 million a year and where the potential for distortions of competition within the single market is higher. Whenever possible, the SGEI should be entrusted through an open and transparent public tender to ensure the best quality at the cheapest cost for taxpayers who pay for the services.

More information

The new package consists of four instruments that will apply to all authorities (national, regional, local) that grant compensation for the provision of SGEI:

A new Communication, clarifying basic concepts of State aid, which are relevant for SGEI, such as the notions of aid, SGEI, economic activity, convergence between public procurement procedures and absence of aid, etc.

A revised Decision, exempts Member States from the obligation to notify public service compensation for certain SGEI-categories to the Commission. The exemption is extended from hospitals and social housing to a much wider range of social services and a lower compensation threshold applies for triggering notifications for other SGEI activities. The notification threshold was lowered from €30 million to €15 million, taking account of stakeholders’ concerns that the previous ceiling withdrew very sizeable contracts in important areas of the Internal Market from the Commission's scrutiny.

A revised Framework for assessing large compensation amounts granted to operators outside the social services field. Those cases have to be notified to the Commission and may be declared compatible if they meet certain criteria. The new rules introduce, in particular, a more precise methodology to determine the amount of compensation, a requirement for Member States to introduce efficiency incentives in compensation mechanisms, the requirement to comply with EU public procurement rules and equal treatment of providers of the same service for determining compensation. Moreover, the Commission may require Member States to adopt measures to reduce the anticompetitive effects of certain compensations that present a particularly strong potential for distorting competition in the Internal Market.

A new proposal for a de minimis Regulation, providing that compensation below a certain threshold does not fall under state aid scrutiny, is expected to be adopted in the spring of 2012, after a final round of consultation.

Background

In 2003, the European Court of Justice ruled on the assessment of public service compensations in the context of EU state aid rules (case C-280/00 Altmark Trans). To take account of this ruling, the Commission adopted the first SGEI package (also known as the "Monti-Kroes-Package", see IP/05/937). The package entered into force in July 2005 and specified the conditions under which state aid in the form of public service compensation is compatible with the EC Treaty (now the Treaty on the Functioning of the EU).

In March 2011, the Commission launched a broad debate on the review of the package, which is due to expire at the end of 2011 (see IP/11/347). In September 2011, the Commission consulted stakeholders on the proposals for new rules (see http://ec.europa.eu/competition/consultations/2011_sgei/index_en.html). The Commission received valuable contributions from Member States, European institutions and stakeholders. Subsequently, the drafts were revised to take into account stakeholders' comments.

The new legislative package (the three already adopted texts) can be found at: http://ec.europa.eu/competition/state_aid/legislation/sgei.html

For further details, please see IP/11/1579,MEMO/11/929

Contacts :

Amelia Torres (+32 2 295 46 29)

Maria Madrid Pina (+32 2 295 45 30)


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