Next step on the way to adopt the new SGEI package

The European Commission published the results of the closed on 21 October 2011 public consultations on the new texts concerning the application of State aid rules to Services of General Economic Interest: Draft Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest, Draft Commission Decision 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, Draft Communication from the Commission: EU framework for State aid in the form of public service compensation (2011) and Draft Commission Regulation 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.

Those are to replace the so-called Monti-Kroes package, i.e. Altmark package of 2005. In 2003 the Court handed down its landmark judgment in case C-280/00 Altmark. Meeting the provided therein four cumulative criteria rules out the presence of State aid under Article 107(1) TFEU and, respectively, 61(1) EEA in case of financing SGEI (the so-called conditional compensation approach). The Altmark package addresses the situations when the criteria are not met, but aid is or may be considered compatible with the Internal Market (Decision and Framework).

The Commission published the proposals for the new texts for consultation of Member States and stakeholders before submitting a final text to the College. The new package is expected to be adopted by the end of January 2012.

Interesting comments regarding i.e. the concept of undertaking and economic activity and the relation between the rules governing State aid public procurement were submitted by EFTA Surveillance Authority. The Authority commented as well on the proposed by the Commission cost methodology applied for calculating compensation. Likewise, Fornyings-, administrasjons- og kirkedepartamentet drew attention to that issue in its submission.

SGEI are economic activities that public authorities consider as being of particular importance to citizens and that would not be supplied (or would be supplied under different conditions) if there were no public intervention (e.g. transport networks, postal services and social services). If SGEI are financed by the State budget, there may rise the question of the presence of State aid. Overcompensation may lead to competition distortions in the form of e.g. cross-subsidisation.