State Aids for public services

Within the internal market of the EU, governments are in principal not supposed to intervene to support any particular enterprise or business, since this distorts competition. However in certain circumstances – such as the provision of services which are of interest to society as a whole – it is recognised that so-called “state aids” can be necessary to ensure a well-functioning and equitable economy.

In 2005 the EU adopted a series of laws to govern this, and these laws have an important effect on how economic actors, including providers of social services, operate and finance themselves. It is know as the Monti-Kroes package as it was drawn up by Mario Monti and Neelie Kroes who were at that time Commissioners for Internal Market and Competition respectively.

The European Commission has launched a public consultation to evaluate the impact and success of the package, with a view to possibly reworking it in 2011.

In the European parliament, MEPs from different political groups sit in the Public Services Intergroup which is chaired by the Françoise Castex of the Socialists and Democrats (S&D). The intergroup held a public hearing in Brussels this week in order to inform their response to the consultation. It was attended by stakeholders including representatives of public authorities, who are often the ones ultimately distributing the money which counts as State Aid. The current Competition commissioner, Joaquín Almunia, was also on the panel.
Participants urged the EU to think about the effect the laws have on service providers, and pointed to problems of interpretation of what they actually mean. A representative of a French regional authority said that without a clear definition of what publicly subsidised services means, the Monti Kroes package spells problems for the service providers and emphasised the need to be cautious about national diversity.Furthermore it was mentioned that when public authorities make errors in payment of state aids – which it appears is quite frequent – it is difficult for service providers to pay the money back. Greater symmetry in the responsibilities of the different parties involved is needed, it was argued.Beyond these technical points, both Commissioner Alumnia and the Irish MEP Proinsias De Rossa (S&D) underlined the great need for better and clearer communication with those concerned. Mr Alumina acknowledged that the entire issue is wrapped up in euro-jargon which is incomprehensible outside of Brussels, and Mr De Rossa underlined the need for and effective information service.

For more information on the consultation, and to submit a response, see the Commission’s webpage: ec.europa.eu/competition/consultations/2010_sgei/index_en.html available in all official languages of the EU.

The next hearing of the Public Services Intergroup is on July 8^th in Strasbourg