On 20 December 2011, the European Commission (Commission)
adopted a revised package of measures setting out the application
of the EU state aid rules to the financing of services of general
economic interest (SGEI). The main elements come into effect
at the end of January 2012.
This follows a public consultation in 2010 on possible updating of
the package of SGEI rules which were put in place in 2005. The 2005
rules were adopted in response to the ECJ judgment in Altmark which
set out the conditions for establishing when compensation for
public services did not amount to state aid under what is now the
Treaty on the Functioning of the European Union (TFEU).
The revised package comprises:
a new Communication on the application of the EU state aid
rules to compensation granted for the provision of SGEI (the Communication);
a revised Decision on the application of Article 106(2) TFEU to
state aid in the form of public service compensation granted to
certain undertakings entrusted with the operation of SGEI (the Decision);
a revised Framework for state aid in the form of public service
compensation (the Framework); and
a draft Regulation on the application of Article 107 and 108
TFEU to de minimis aid granted to undertakings providing SGEI (the
In addition, the Commission has adopted a Quality Framework for Services of General
Interest in the EU. During the 2010 public consultation
it became apparent that greater clarification was needed of the
distinction between services of general interest (which encompass
both non-economic and economic services) and SGEI. Only
economic services – SGEI - are subject to assessment
under competition law.
The Communication clarifies the key concepts underlying the
application of the EU state aid rules to public service
compensation. It explains the notions of aid, SGEI, economic
activity, and of the convergence between public procurement
procedures and absence of aid.
The Decision extends the exemption from notification from
hospitals and social housing to a much wider range of social
services, regardless of the amount of compensation received.
For all other SGEI activities, the Decision lowers the notification
threshold from €30 million to €15 million to take
into account concerns that the previous ceiling removed very
sizeable contracts in important areas from the Commission's
scrutiny. The Decision will replace the current 2005 Decision
from 31 January 2012.
The Framework clarifies the conditions under which compensation
not covered by the Decision (because it is of a higher amount and
more commercial in nature) will be compatible with the EU state aid
rules. It introduces a more precise methodology to determine
the amount of compensation, a requirement for Member States to
introduce efficiency incentives in compensation mechanisms, a
requirement to comply with EU public procurement rules and equal
treatment of providers of the same service for determining
compensation. Moreover, under the Framework, the Commission
may require Member States to adopt measures to reduce the
anticompetitive effects of certain compensation which presents a
particularly strong potential for distorting competition within the
EU's internal market. The Framework will replace the
current 2005 Framework from 31 January 2012.
The de minimis Regulation
The draft de minimis Regulation provides that public service
compensation will no longer constitute state aid if the amount
granted by the public authority does not exceed €500,000
over three years (currently €200,000). The de
minimis Regulation is expected to be adopted in April 2012,
following a final round of consultation.
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