Commission adopts new rules on Services of General Economic Interest (SGEI)

On 20 December 2011, after public consultations, the European Commission adopted a revised package of EU State aid rules for the assessment of public compensation for SGEI. The new package includes four instruments: a new Communication (clarifies basic concepts being of relevance to SGEI, e.g. State aid, SGEI or economic activity), a revised Decision (exempts Member States from the obligation to notify public service compensation for certain SGEI, lowers notification threshold from €30 million to €15 million), a revised Framework (provides rules on assessing large compensation amounts granted to operators outside the social services field that require notification, introduces more precise methodology to determine the amount of compensation as well as establishes a requirement for Member States to introduce efficiency incentives in compensation mechanisms and a requirement to comply with EU public procurement rules and equal treatment of providers of the same service for determining compensation) and a proposal for a de minimis Regulation (the Commission proposes an amount of €500,000 over three years). A final decision on de minimis Regulation is expected to be taken in the Spring of 2012 after final consultations.

Member States have a large leeway in defining the SGEI, 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 replace the so-called "Monti-Kroes" Package of July 2005 (“Altmark Package”- see Altmark case of 2003). They aim particularly at facilitating the application of State aid rules not only by national, but also regional and local governments.

All social services become exempted from the obligation of notification regardless of the amount of compensation provided that the services in question 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". Formerly only hospitals and social housing were exempted. Other SGEIs are exempted if the compensation is lower than €15 million a year.

The objective of the proposed de minimis Regulation is to reduce red tape for small SGEIs. However, a greater scrutiny shall concern compensation amounts higher than €15 million a year and where the potential for distortions of competition within the single market is higher. Moreover, the Commission encourages entrusting the provision of SGEI through an open and transparent public tender to ensure the best quality at the cheapest cost for taxpayers who pay for the services.

For a short introduction to the most important changes and novelties in the new SGEI Package see – Frequently Asked Questions.