Abstract
This chapter examines, with a special focus on social services, how the 2014 procurement directives and the Commission’s 2011 SGEI Package relate to the Treaty principles and rules on services of general interest, including series of general economic interest and non-economic services of general interest. Part I sheds first light on the ambiguous relationship between the 2014 procurement directives and the SGEI framework in the Treaties. The analysis leads to conclude that the EU legislator thrives at maintaining an understanding of SGEI that is narrower than the CJEU’s discreet but discernible understanding of SGEI as a broad concept of EU law. The chapter focuses secondly on the relationship between the SGEI state aid package and the SGEI framework in the Treaties. The analysis suggests that the EU legislator avoids forcing the Member States to formulate clearly the SGEI existing in their welfare systems. It concludes that although the package may be regarded as a significant step towards an EU approach to social services, its impact depends on whether its rules are applied loyally, which the package does not put pressure on the Member States to do. The chapter concludes that the Commission is presently not so preoccupied by the proportionality of public service compensation of social services. In particular, systems of choice and voucher systems are exempted from both the procurement directives and state aid notification. The de facto leeway consented for systems of choice for social services may come into conflict with the “Union’s interest” that EU institutions and Member States show loyalty to the Treaty principles related to SGEIs, and to the state aid rules enforcing those principles. This legislative bias for systems of choice may be meant to support their development, which can be logical in the perspective of the SGI Quality Framework, pursuing the aim of facilitating cross-border trade of services.
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Notes
- 1.
Commission Decision 2012/21/EU on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest [2012] OJ L7/3.
- 2.
Commission, “Communication on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest” 2012/C 8/02, p. 4–14.
- 3.
Recitals 15, 16 and 43 of the 2004 Public Sector Directive.
- 4.
In response to the fear of a long-lasting economic crisis, the EU adopted the “Europe 2020 strategy” (Commission, “Europe 2020, A strategy for smart, sustainable and inclusive growth” (Communication) COM (2010) 2020). In its Conclusions of 24/25 March 2011, the European Council held that the Single Market had a key role to play to deliver growth and employment and promote competitiveness, and the Commission identified twelve levers in order to boost growth on the EU market, with a key action for each lever by the end of 2012, see Commission, “Single Market Act—Twelve levers to boost growth and strengthen confidence—Working together to create new growth” (Communication) SEC (2011) 467 final.
- 5.
In Case T-258/06 Germany v Commission [2010] ECR II-2027, the GC found inadmissible an action brought by Germany against the Commission’s Interpretative Communication of 23 June 2006 on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives. The General Court found that it did not contain new rules for the award of public contracts, in other words the rules formulated by the Communication did follow from the Treaties.
- 6.
See the information leaflet New rules on public contracts and concessions simpler and more flexible, published by the Commission and available per 31 December 2014 on its website at http://ec.europa.eu/internal_market/publications/docs/public-procurement-and-concessions_en.pdf.
See also the many references to simplification and flexibility in the preambles of the Directives, for instance Recital 42 in the 2014 Public Sector Directive. Another general feature highlighted by the Commission is the reinforcement of rules allowing to fight corruption.
- 7.
Recital 2 of the 2014 Public Sector Directive, Recital 4 of the 2014 Utilities Directive and Recitals 1 and 3 of the 2014 Concessions Directive.
- 8.
Bordalo Faustino 2014, p. 125–126. As underlined by Bordino Faustino, the price or cost is now a mandatory element of the MEAT, according to Article 67(2) of the 2014 Public Sector Directive, but Member States may exclude or restrict the sole use of price or cost, which she considers to be in line with the Sintesi case law, see Case C-247/02 Sintesi [2004] ECR. I-9231. Imposing a price or cost element in the MEAT implies that a composition, where non-cost criteria are part of the MEAT instead of price, is not possible any longer except for the case where price or cost is fixed, which follows from Article 67(2) second paragraph of the Directive, providing that “[t]he cost element may also take the form of a fixed price or cost on the basis of which economic operators will compete on quality criteria only.” Recital 93 clarifies that where national provisions determine the remuneration of certain services, it remains possible to assess value for money on the basis of other factors than solely the price or remuneration.
- 9.
Article 1(4) first sentence of the Public Sector Directive, Article 1(4) first sentence of the 2014 Utilities Directive, and Article 4(1) of the 2014 Concessions Directive.
- 10.
Recital 7 of the 2014 Public Sector Directive, Recital 9 of the 2014 Utilities Directive, and Recital 6 of the 2014 Concessions Directive.
- 11.
Recital 7 of the 2014 Public Sector Directive, Recital 9 of the 2014 Utilities Directive, and Recital 6 of the 2014 Concessions Directive.
- 12.
Case C-480/06 Commission v Germany [2009] ECR I-4747.
- 13.
Ibid.
- 14.
Recital 5 of the 2014 Pubic Sector Directive and Recital 7 of the 2014 Utilities Directive.
- 15.
Recital 4 of the 2014 Public Sector Directive. In the Concessions Directive, it is held that this “situation” should not either be regarded as concession, see Recital 13, stating that “arrangements where all operators fulfilling certain conditions are entitled to perform a given task, without any selectivity, such as customer choice and service voucher systems, should not qualify as concessions, including those based on legal agreements between the public authority and the economic operators. Such systems are typically based on a decision by a public authority defining the transparent and non-discriminatory conditions on the continuous access of economic operators to the provision of specific services, such as social services, allowing customers to choose between such operators.”
- 16.
Recital 114 fourth paragraph of the Public Sector Directive, Recital 120 fourth paragraph of the 2014 Utilities Directive, and Recital 54 Directive of the 2014 Concessions Directive.
- 17.
Question 7 in the Questionnaire established as a platform for the FIDE Sessions on public procurement addressed the boundaries of EU procurement law and read: “Do the principles of non-discrimination/equal treatment and transparency (or rules derived therefrom) also apply to the selection of the beneficiary of unilateral administrative measures?” In his report on this question, Caranta held that “One can assume that non-discrimination, equal treatment and transparency are general principles potentially applicable to all instances where the State or any other public law entity disburses money or grant benefits or privileges (including the right to carry out an economic activity), on a selective basis, choosing among a number of market participants potentially exceeding the resources being distributed, such as for instance when exclusive rights are granted to a specific economic operator in connection with the provision of a SGEI”. See Caranta R., 2014, p. 79–175.
- 18.
Article 2(1) of the 2014 Concessions Directive.
- 19.
Article 1(6) of the 2014 Utilities Directive reads: “[t]he scope of this Directive shall not include non-economic services of general interest”.
- 20.
Article 4(2) of the 2014 Concessions Directive reads: “[n]on-economic services of general interest shall fall outside the scope of this Directive”.
- 21.
Recital 6 of the 2014 Public Sector Directive.
- 22.
Recital 6 of the 2014 Public Sector Directive and Recital 6 of the Concessions Directive. The word “recall” is strange in that context, given the fact that the case law on this issue is quite unclear, and that the only EU institution summing up and interpreting this case law is the Commission, in soft law documents.
- 23.
Recital 5 of the 2014 Public Sector Directive and Recital 7 of the 2014 Utilities Directive, which provide examples of services not covered because their provision is based on laws, regulations or employment contracts: regarding the public sector “certain administrative and government services such as executive and legislative services or the provision of certain services to the community, such as foreign affairs services or justice services or compulsory social security services” and regarding the utilities sector “in some Member States/…/the provision of certain services to the community, such as the supply of drinking water.”
- 24.
“Public contracts between entities within the public sector” under Article 12 of the 2014 Public Sector Directive and “contracts between contracting authorities” under Article 28 of the 2014 Utilities Directive.
- 25.
- 26.
Article 12(1)(c) of the 2014 Public Sector Directive and Article 28(1)(c) of the 2014 Utilities Directive.
- 27.
Recital 32 of the 2014 Public Sector Directive clarifies namely that “contracting authorities such as bodies governed by public law, that may have private capital participation, should be in a position to avail themselves of the exemption for horizontal cooperation”.
- 28.
Article 12(4)(c) of the 2014 Public Sector Directive and Article 28(4)(c) of the 2014 Utilities Directive. See Wiggen 2014, Directive 2014/24/EU: the new provision on co-operation in the public sector, Public Procurement Law Review, 2014 Issue 3, p. 91.
- 29.
Article 12(4)(a) of the 2014 Public Sector Directive and Article 28(4)(a) of the 2014 Utilities Directive, emphasis added.
- 30.
It is important to note the difference between the notion of “public service” in these provisions and the notion of “public tasks” used in Article 1(6) of the 2014 Public Sector Directive establishes that “Agreements, decisions or other legal instruments that organise the transfer of powers and responsibilities for the performance of public tasks between contracting authorities or groupings of contracting authorities and do not provide for remuneration to be given for contractual performance, are considered to be a matter of internal organization of the Member State concerned and, as such, are not affected in any way by this Directive.”
- 31.
Articles 74 to 77 of the 2014 Public Sector Directive, Articles 91-94 of the 2014 Utilities Directive, Article 19 of the 2014 Concessions Directive. Article 4(d) of the 2014 Public Sector Directive, apply to a list of services found in Annex XIV of the Public sector Directive, Annex XVII of the Utilities Directive, and in Annex IV of the Concessions Directive.
- 32.
Article 75 of the 2014 Public Sector Directive, Article 92 of the 2014 Utilities Directive and Articles 19, 31(3) and 32 of the 2014 Concessions Directive.
- 33.
Recital 53 of the 2014 Concessions Directive, which reads: “An obligation to publish a prior information notice and a concession award notice of any concession with a value equal to or greater than the threshold established in this Directive is an adequate way to provide information to potential tenderers on business opportunities, as well as to provide information to all interested parties on the number and type of contracts awarded. Furthermore, Member States should put in place appropriate measures with reference to the award of concession contracts for those services, aimed at ensuring compliance with the principles of transparency and equal treatment of economic operators, while allowing contracting authorities and contracting entities to take into account the specificities of the services in question. Member States should ensure that contracting authorities and contracting entities are allowed to take into account the need to ensure innovation and, in accordance with Article 14 TFEU and Protocol No 26, a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of users’ rights.”
- 34.
Article 76(1) of the 2014 Public Sector Directive and Article 93(1) of the 2014 Utilities Directive, emphasis added.
- 35.
Article 76(2) of the 2014 Public Sector Directive and Article 93(2) of the 2014 Utilities Directive. This is also stressed in Recital 53 of the 2014 Concessions Directive.
- 36.
Article 1(5) of the 2014 Public Sector Directive and of the 2014 Utilities Directive, Article 4(1) of the 2014 Concessions Directive. This is reinforced by recitals stating that the Directives should not affect the social security legislation of the Member States, see Recital 6 of the 2014 Public Sector Directive, Recital 8 of the 2014 Utilities Directive, and recital 7 of the 2014 Concessions Directive.
- 37.
Article 4(1) of the 2014 Concessions Directive.
- 38.
Recital 114 of the 2014 Public Sector Directive, Recital 120 of the 2014 Utilities Directive, and Recital 53 of the 2014 Concessions Directive.
- 39.
Recital 114 of the 2014 Public Sector Directive, Recital 120 of the 2014 Utilities Directive.
- 40.
A Voluntary European Quality Framework for Social Services, The Social Protection Committee, SPC/2010/10/8 final.
- 41.
The policy frame of the Voluntary European Quality Framework for Social Services builds in particular on arguments of growing financial constraints, cost-effectiveness, individual preferences, and growth potential. It holds in particular that “[a]s most social services are highly dependent on public funding, a consensus on the quality of social services in the present context when public authorities in the Member States are exposed to growing financial constraints will help policy-makers to prioritize investments that promote continuous development of both quality and cost-effectiveness of social service provision.” (p. 1), that “the cross-border provision of social services, presently very limited but expected to grow, in particular in the area of long-term care, will call for a greater level of service comparability and transparency, as well as for new forms of protecting both users and workers” (p. 2) and that “[t]he service provision should empower users to define their personal needs and should aim to strengthen or maintain their capacities while retaining as much control as possible over their own lives.” (p. 7).
- 42.
See Case C-173/73 Italy v Commission 119741 ECR 709, para 26. Opinion of AG Léger of 19 March 2002 in Case C-280/00 Altmark [2003] ECR I-7747, para 77.
- 43.
Baquero-Cruz 2013, p. 296–300. Article 107(2)(a) TFEU, which allows aid having a social character granted to individual consumers, seems to be interpreted by the Commission as covering services. The provision is arguably of no use in case of qualified market failure, but may be of interest to address equity concerns on existing markets. In the latter case, Baquero Cruz holds that the provision can be used to finance provision of social services, but normally in combination with public service obligations and subject to tariff regulation. Article 107(3)(a) and (c) TFEU may allow to justify aid to providers of social services, but “to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment” (Article 107(3)(a) TFEU, for instance employment and training aid) or “to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest” (Article 107(3)(c) TFEU, for instance regional aid schemes or rescue and restructuring aid schemes). Thus, under these exemptions, the aid’s main concern must be to protect or create employment. Baquero Cruz noted that the Commission had approved on the basis of Article 17(3)(c) TFEU a Swedish aid scheme aimed at encouraging the construction of elderly housing in Northern Sweden. Indeed, in decision SA 33896 (2011/N), the Commission examined a scheme notified by Sweden, aimed at offering a financial incentive to property owners to construct special housing for elderly people, in the face of “a growing demand”. The Commission raised no objections, finding the scheme compatible with the internal market as “aid to certain economic sectors” under Article 107(3)(c) TFEU, thereby accommodating the Swedish government’s choice not to rely on Article 106(2) TFEU to motivate an aid scheme for elderly housing in a scarcely populated area.
- 44.
Commission, “Commission proposes new rules to increase legal certainty for services of general economic interest” (Press Release of 18 February 2004) IP/04/235, available at http://europa.eu/rapid/press-release_IP-04235_en.htm?locale=en.
- 45.
Commission Decision 2005/842/EC of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest [2005] OJ L 312/67; Community framework 2005/C 297/04 for State aid in the form of public service compensation, [2005] OJ C 297/4; and Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings, [1980] OJ L 195/35.
- 46.
The exemption concerned more precisely “hospitals providing medical care, including, where applicable, emergency services and ancillary services directly related to the main activities, notably in the field of research, and undertakings in charge of social housing providing housing for disadvantaged citizens or socially less advantaged groups, which due to solvability constraints are unable to obtain housing at market conditions”, see Recital 16 in Commission Decision 2005/842/EC.
- 47.
Sauter 2014, p. 10. It may be interesting to note that, under point 167 of the state aid IRIS-H decision—NN54/2009, commented on in section 11.2.2.1 and 11.2.2.2—the Commission gave a picture of how the material criteria of its 2005 SGEI Package relate to the conditions formulated in case law for public service compensation to comply with the proportionality principle in Article 106(2) TFEU.
- 48.
Commission Decision of 22 December 2005 on the introduction of a risk equalization system in the Dutch Health Insurance (Netherlands) in cases N541/2004 and N542/2004—C (2005) 1329 final.
- 49.
Van de Gronden 2009, p. 13.
- 50.
Commission Decision of 15 October 2014 on the measures implemented by Slovak Republic for Spoločná zdravotná poisťovňa, a.s (SZP) and Všeobecná zdravotná poisťovňa, a.s (VZP) in case SA.23008 (C (2014) 7277 final), points 84 to 89. Szyszczak 2015, p. 682.
- 51.
Case T-216/15 Dôvera zdravotná poist’ovňa v Commission. The applicants claim that the Commission has committed errors of law and manifest errors of assessment in finding that SZP/VZP does not qualify as an undertaking.
- 52.
Commission Decision of 28 October 2009 on the public financing of Brussels public IRIS hospitals (Belgium), in case SA.19864 (2014/C) (ex NN54/2009).
- 53.
Ibid, point 109.
- 54.
Ibid, points 108–109. The Commission’s reasoning is worth quoting: “Sur base des arguments développés par la jurisprudence et rappelés ci-dessus, les financements que peuvent recevoir les H-IRIS par le biais de diverses allocations des autorités publiques centrales ou locales peuvent être analysés comme constituant la contrepartie économique des prestations hospitalières fournies, au même titre que les financements accordés par le biais des caisses maladies et autres organismes publics octroyant des fonds de manière similaire. Tel que mentionné par la Cour, le fait que par ailleurs le montant des paiements faits par les patients soit nul ou faible ne saurait altérer cette analyse (footnote omitted). En l’espèce, les activités principales des H-IRIS sont des activités hospitalières consistant dans la prestation de soins de santé médicaux, de services d’urgence et de services auxiliaires directement liés. Ces activités hospitalières prestées par les H-IRIS sont également fournies par d’autres types d’organismes ou entités, parmi lesquels des cliniques, des hôpitaux privés et d’autres centres spécialisés, dont les hôpitaux privés plaignants. Dès lors, ces activités hospitalières prestées par les H-IRIS doivent être considérées comme économiques (footnote omitted and emphasis added).”
- 55.
In the Belgian hospital system described in the IRIS-H decision, both public and private hospitals had mostly an identical public financing, in particular through payments from sickness and invalidity insurance funds (see points 28–30), and through budgets covering their running costs and decided by the Ministry of Social Affairs according to rates decided by law and laid down in ordinations (see points 33–40). Thus as a whole, in the Belgian system, it seems that public financing to any hospital was largely based on unilateral conditions set by the State rather than on “contractual arrangements”. While private hospitals could express their decisional autonomy by seeking agreement, thereby establishing a kind of “non-contractual but bilateral arrangement” with public authorities, it is less clear whether the public hospitals had such an autonomy and whether their financing could come close to any “bilateral arrangement”. Another thing is that the additional SGEI tasks for which public IRIS hospitals received compensation were entrusted through conventions with public bodies for social action (with some decisional autonomy on the part of these hospitals).
- 56.
Ibid, para 110.
- 57.
Hancher and Sauter 2013, p. 259–260, footnote omitted and emphasis added. In this paper, the authors conduct an in-depth discussion of the case.
- 58.
Case T-137/10 CBI [decided on 7 November 2012, nyr].
- 59.
Ibid, paras 86–89.
- 60.
The link between the degree of solidarity in a system and the exercise of public authority in its management is not studied here.
- 61.
Case T-137/10 CBI [decided on 7 November 2012, nyr], para 91.
- 62.
Commission Decision of 10 December 2014 on rescue aid to PICFIC in A.S (Italy, health care services operator in the Region of Lazio in case SA.39426 (C(2014) 9255 final), point 24.
- 63.
Commission Decision of 8 November 2006 on aid to the Přerov Logistics College (Czech Republic) in case NN54/2006 (C (2006) 5228).
- 64.
Ibid, point 14. It is not clear from the decision whether the Czech Republic had ever claimed that the college conducted a non-economic activity.
- 65.
Case 263/86 Humbel [1988] ECR I-5365, para 20.
- 66.
This consideration was important not only to regard the college as covered by the Humbel doctrine; it was also relevant to exclude a risk that public subsidization received for a non-economic activity could be used to distort competition in another economic activity.
- 67.
Ibid, point 16.
- 68.
See EFTA Surveillance Authority Decision No 39/07/COL on public financing of municipal day-care institutions in Norway, p. 5–6. The financing came from parental payments (up to 20 % of the cost of services) and public subsidies (50 % from the state channelled through the municipalities, and 30 % directly from the municipalities).
- 69.
Ibid, p. 7–8. The Norwegian State motivated the cost-coverage principle by cost variations between kindergartens caused by e.g. geographical cost differences, personnel education level, children with special needs, and held that granting a lump sum to all kindergartens would not fulfil the objective of equal treatment of all kindergartens.
- 70.
Ibid, p. 9.
- 71.
It was underlined that, according to Norwegian law, the municipal kindergartens’ activity was entirely non-profit and that their financing was based on the principle of solidarity, as user fees were fixed, not proportional to the cost of the individual service and reduced for parents with more than one child and families with low income demonstrates the principle of solidarity. Ibid, p. 10–11.
- 72.
Case E-5/07 Private Barnehagers, Efta Court Report 2008, p. 62, para 79.
- 73.
Ibid, para 84.
- 74.
Ibid, para 80.
- 75.
Ibid, para 80.
- 76.
Ibid, para 83. Under para 82 the EFTA-Court had particularly emphasized that ca 80 % of the costs of municipal kindergartens were borne by the public purse there was no connection between the actual costs of the service provided and the fee paid by the parents whose child is attending the kindergarten the municipalities had a statutory duty to ensure that sufficient places for children below compulsory school age exist for their population kindergartens in Norway have important social, cultural, educational and pedagogical purposes. It may be recalled here that in Commission v Italy, the Court of Justice established that in the field of competition law, a distinction must be made between the State carrying on economic activities of an industrial or commercial nature by offering goods and services on the market on the one side and on the other side the State acting by exercising public powers. The EFTA-Court’s finding implies a strong correlation between the fulfilment of the state’s duties towards its own population and the exercise of public powers.
- 77.
Ibid, para 84. The ESA’s obligation to open a formal investigation procedure in case of doubts on a national measure’s compatibility with state aid rules follows from Article 61(1) EEA, which corresponds to the Commission’s obligation under Article 108(2) TFEU. The ESA held that there were several ways trade could potentially be affected. One was that the users of services from other EEA states would be more inclined to use the Norwegian service than the one in other EEA states. A second possible effect was that the support the municipal kindergartens receive would enable them to expand the scope of their services abroad. The third possible effect was that service providers from other Member States would be affected in their actual or potential operation in Norway. See Decision No 39/07/COL p. 12.
- 78.
291/03/COL EFTA Surveillance Authority decision of 18 December 2003 regarding the establishment of private day-care facilities on public sites with subsidized real estate leasehold fees in Oslo (Norway). Not mentioned in the 2013 SGEI Guide.
- 79.
Ibid, under Sect. 2.2.
- 80.
Indeed, it seems that private kindergartens allowed to provide for-profit, see Sect. 2.3 in fine.
- 81.
However, it seems that the rules on financing of public and private kindergartens at issue in the Barnehagers case were already in force in the Oslo kindergartens decision, as suggested in Sect. 2.5 in the latter decision.
- 82.
Letter to the Head of Section for Market and Competition Division at the Swedish Ministry of Enterprise, Energy and Communication, registered under reference COMP/H-2/BC—(2012)33624, dated 29.03.2012.
- 83.
Case C-53/00 Ferring [2001] ECR I-9067.
- 84.
Commission Decision of 13 March 2003 on a risk equalization scheme in the Irish health insurance market (Ireland) in case N 46/2003—C (2003) 1322 final, points 60–61.
- 85.
Commission Decision of 22 December 2005 on the introduction of a risk equalization system in the Dutch Health Insurance (Netherlands) in cases N541/2004 and N542/2004—C (2005) 1329 final. The Dutch Act is outlined in Hamilton 2005, p. 8ff.
- 86.
For a detailed analysis of this decision, see Van de Gronden 2009, p. 14–17.
- 87.
Van de Gronden 2009, p. 14–15.
- 88.
Ibid, p. 15.
- 89.
Ibid, p. 16. Van de Gronden held that, concerning health care systems, this is not necessarily unquestionable, as Article 152(5) EC stipulates that the organization and delivery of health care belong to the competences of the Member States. As a matter of fact, the Treaty of Lisbon makes more generally clearer that competences which have not been conferred on the EU remain by the Member States, which is the case in general for services to the person and to a large extent for education.
- 90.
Ibid, p. 15.
- 91.
Commission Decision of 28 October 2009 on the financing of public hospitals of the IRIS-network of the region Brussels-capitale (Belgium) in case NN54/2009—C (2009) 8120 final. The CBI ruling is commented in Sect. 4.1.3.5 above.
- 92.
Ibid, points 1 and 9.
- 93.
Ibid, point 161. Hancher and Sauter underlined that in IRIS-hospitals the Commission considered that SGEI compensation granted to several undertakings and based on their average costs without requiring evidence of sound management would inevitably lead to overcompensation, and noted that at a later stage of the decision the Commission adopted what they considered to be the opposite view, namely that compensation based on average costs can lead to under-compensation; see Hancher and Sauter 2013, p. 263 and 264. In fact, it is argued here that the Commission’s views are not illogical, as the point of departure is that compensation on the basis of average costs can involve both a risk of over-compensation and of under-compensation. In assessing the fulfilment of the fourth Altmark criterion, only the risk of over-compensation is relevant, while the risk of under-compensation may exist but needs not be mentioned at that stage. The risk of under-compensation is relevant as an issue when taking care that the conditions of operation enable the SGEI mission to be fulfilled, and may be invoked to justify an ex post measure allowing the SGEI mission to be ensured. The problem is of course that ex post measures do not allow much efficiency control, but do ex-ante compensation measures not have the same drawback, unless the tasks are précised, the parameters of compensation well adapted, and the efficiency control efficient? This emerges arguably from the Swedish case studied in Chap. 9.
- 94.
Point 174.
- 95.
Hancher and Sauter 2013, p. 264.
- 96.
Point 199.
- 97.
Hancher and Sauter 2013, p. 267.
- 98.
Case T-137/10 CBI [decided on 7 November 2012, nyr], paras 308–309.
- 99.
See Recital 8 of Commission Decision 2005/842/EC and point 12 (a) and (b) of Community Framework 2005/C 297/04.
- 100.
See 2014, p. 16, where Sauter adds that as a result conformity with EU norms is likely to increase.
- 101.
Hancher and Sauter 2013, p. 271.
- 102.
Some Member States pointed at their efforts and costs to inform public authorities responsible for social services on these rules, and at their difficulty to assess whether the market for certain social services was purely local and whether in that case public funding would not be seen as aid. Some mentioned that local authorities tended to regard the very fact that an activity had to be organized on the basis of public funding as a sign that there was no “market” for it. Several Member States requested more emphasis on the CJEU’s case law to the effect that social services are under certain conditions non-economic and therefore not covered by state aid rules, and emphasized that post Lisbon, the Commission had to consider how it would secure their discretion to organise and finance social services, considering that public procurement is not the only manner to secure the compliance of public service funding with EU state aid rules. Some reports also held that a single horizontal framework could not give sufficient precision on the way state aid rules could be complied with. It must be underlined that the views gathered here have been formulated in reports drafted in languages which the author of this study could most easily understand, i.e. from Germany, UK, France, and Sweden.
- 103.
Commission, “Reform of the EU State Aid Rules on Services of General Economic Interest” (Communication) COM (2011) 146 final, p. 4.
- 104.
The 2011 SGEI Package or “Almunia Package” consists of five instruments adopted by the European Commission between December 2011 and April 2012 for the modernization of SGEI rules: (1) Commission, “A Quality Framework for Services of General Interest in Europe” (Communication) COM(2011) 900 final (the “SGI Quality Framework”) JO C/2012/102/35; (2) Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (the “2011 SGEI Decision”) [2012] OJ L7/3; (3) Commission, “Communication on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest” (the “2011 SGEI Communication”) 2012/C 8/2; (4) Commission, “European Union framework for State aid in the form of public service compensation” (Communication) (the “2011 SGEI Framework”) 2012/C 8/03; and (5) Commission Regulation (EU) No 360/2012 of 25 April 2012 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest (the “SGEI de minimis Regulation”) [2012] OJ L114/8.
- 105.
Point 12 of the Communication.
- 106.
See Buendia Sierra and Panero Rivas 2013, p. 134–135.
- 107.
Point 123 of the 2011 SGEI Framework.
- 108.
Buendia Sierra and Panero Rivas 2013, p. 136.
- 109.
Kavanagh 2013, p. 152.
- 110.
At this stage in the development of the Treaties, another approach had arguably been difficult to justify in a subsidiarity perspective. It is stated under Recital 11 that “in the present economic conditions and at the current stage of development of the internal market”, social services may require an amount of aid beyond the threshold of EUR 15 million to compensate for the public service costs, and thus that a large amount of compensation for social services does not necessarily produce a greater risk of distortions of competition.
- 111.
Van de Gronden and Rusu 2013, p. 213.
- 112.
Article 4 of Decision C (2011) 9380.
- 113.
Article 2(2) of Decision C (2011) 9380. As an example of service where significant investments may be necessary, Recital 12 names social housing.
- 114.
Article 5 of Decision C (2011) 9380.
- 115.
Article 6(1) of Decision C (2011) 9380.
- 116.
This information must be available on request of the Commission, see Article 8 Decision C (2011) 9380.
- 117.
Van de Gronden and Rusu 2013, p. 214–215.
- 118.
2011 SGEI Communication, points 63–64: “The simplest way for public authorities to meet the fourth Altmark criterion is to conduct an open, transparent and non-discriminatory public procurement procedure in line with [Directive 2004/18 …] the conduct of such a public procurement procedure is often a mandatory requirement under existing Union rules. […] Also in cases where it is not a legal requirement, an open, transparent and non-discriminatory public procurement procedure is an appropriate method to compare different potential offers and set the compensation so as to exclude the presence of aid.”
- 119.
Sanchez-Graells 2013, p. 178.
- 120.
2011 SGEI Communication, point 64.
- 121.
- 122.
Baquero-Cruz 2013, p. 309 and 310, emphasis and precision added.
- 123.
“Some SGEI but not too much SGEI” would be the translation of this metaphor inspired by instructions in Italian accompanying many musical scores.
- 124.
Regarding this issue, it is important to note that the Commission has issued a draft Notice on the notion of aid, where it anew tries to charter “what is an economic activity for the purpose of state aid rules” in different fields of activity. The Commission writes: “In the absence of a definition of economic activity in the Treaties, the case-law appears to follow different criteria for the application of internal market rules and for the application of competition law (Case C-519/04 P Meca-Medina [2006] ECR I-6991, para 30–33; Case C-350/07 Kattner Stahlbau [2009] ECR I-1513, paras 66, 72, 74 and 75; Opinion of Advocate General Poiares Maduro in Case C-205/03 P FENIN [2006] ECR I-6295, paras 50–51.)” Communication from the Commission, Draft Commission Notice on the notion of State aid pursuant to Article 107(1) TFEU, para 16. The inconsistency of the Commission’s view that the notion of economic activity may be dual with its own decision-making practice has been noted by King’s College in London in its comments on the draft notice in the following terms: “Para 16 is rather ambiguous, as it does not explain to what extent the interpretation of Court of the notion of economy/non-economic activities in the context of internal market, competition and State aid is different. Further explanations are needed in this regard—or alternatively the paragraph should be deleted altogether. This is especially so as many footnotes in Sect. 2 of the draft Notice, refer interchangeably to internal market/competition case law suggesting an identical application.”
Comments on the Draft Commission Notice on the notion of State aid pursuant to Article 107(1) TFEU from Centre of European Law, King’s College London, available at http://ec.europa.eu/competition/consultations/2014_state_aid_notion/index_en.html, point 3.7.
- 125.
The final version of the Commission Notice on the notion of state aid, which was planned to be adopted in the second quarter of 2014, has not yet been adopted. In December 2014, Commissioner Vestager declared: “[a]s for the Communication on the Notion of Aid, the one piece of the SAM which has not yet been adopted, I have decided to take a moment for reflection at the start of my mandate. This document is too important for us to rush into a decision. But once I have had the chance to better assess where the limits of State aid control are, I intend to propose a Communication to the College for adoption.”/…/ Speech at High Level Forum of Member States by Margrethe Vestager, Commissioner for Competition, 18 December 2014 available at http://ec.europa.eu/commission/20142019/vestager/announcements/speech-high-level-forum-member-states-margrethe-vestager-commissionercompetition-18-december-2014_en.
- 126.
Sauter 2014, p. 179.
- 127.
Fiedziuk 2013, p. 18.
- 128.
Sanchez-Graells 2015, p. 17. The treatment of local public services is also considered by Szyszczak as a significant aspect of the Draft Notice on the Notion of State Aid, see Szyszczak E., 2015, p. 681.
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Wehlander, C. (2016). EU Legislation on Public Procurement and State Aid: What Is the Pressure on Member States to Enforce SGEI Principles in the Field of Social Services?. In: Services of General Economic Interest as a Constitutional Concept of EU Law. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-117-3_7
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