Protectionists win pledge on public service

Date: 11/07/1996

By Fiona McHugh

THE European Commission is expected to add fuel to an already intense debate over EU market liberalisation next week by making a formal commitment to safeguard certain key public sector services.

In a draft communication due to be sent to member states, the Commission says that companies which perform tasks of general interest, such as phone, electricity or water firms, ought to provide all of their customers, whether based in Paris or the Alps, with basic services at an affordable price.

But, to avoid distortions of competition in the single market, it also insists that state-owned companies must only receive as much financial help as is strictly necessary to fulfil their public service obligations.

The document underlines the need for greater transparency in state firms' book-keeping methods, saying that the cost of fulfilling special obligations must be clearly calculated and spending rigorously policed by the Commission.

The draft document, which will make official what has until now been a tacit EU policy, will provide protectionist countries seeking to slow the pace of market opening with extra ammunition and fuel fears among more market-oriented member states about a possible backlash against liberalisation.

France has spearheaded a campaign in recent months to beef up treaty protection for essential service suppliers - such as Electricité de France, La Poste and the SNCF railway operator - during the Intergovernmental Conference.

While Paris has won some concessions, it has not been entirely successful.

The communication does not, for example, ask for extra flesh to be added to Article 90(2) of the Treaty of Rome, which says that public enterprises should not be obstructed in their statutory tasks by the EU's competition rules. Competition Commissioner Karel Van Miert fiercely resisted moves to blunt his anti-trust powers through treaty changes.

Although, in the words of one commentator, there is “nothing revolutionary” in the communication, it will nevertheless add considerable political weight to the arguments of protectionist countries such as France which claim that the Commission has been on a privatisation crusade for almost a decade and that the time has come to restore balance to its increasingly lopsided position.

“The aim of the paper is not to push the Commission one way or another, rather to restore some neutrality to its approach,” said one Commission official. “Many people feel that we have been blindly pushing through liberalisation measures without taking into account possible social problems.”

The document takes stock of past liberalisation decisions, running through a number of sectors and explaining the Commission's position on universal service in each case.

The Commission hopes that by shedding light on past decisions, in the telecoms sector for example, a clear line of thought for the future will emerge.

“We are trying to establish once and for all a balance between the need to ensure the free flow of goods and services across borders, the need to safeguard competition in the bloc and the need to protect citizens' rights,” said another official.

Conspicuously absent from the text, however, is any mention of the media sector. With competition cases pending against state-owned television stations in both France and Spain, this has become a highly sensitive political issue.

Whether the communication will add impetus to France's campaign remains to be seen. But it should, at the very least, clear some muddy waters.

“There has been a lot of uncertainty about this in the past. And when you create uncertainty in life, people become afraid. We have to remember that the Commission is here to serve citizens, not to scare them,” added the official.

The communication, due to be adopted next week, is still in draft form and may be amended over the coming days before it is considered by the full college.