Bid to lift veil of secrecy in public sector

Date: 15/06/2000

By Peter Chapman

COMPETITION Commissioner Mario Monti is planning tough new rules to force firms offering public services to publish separate accounts for their forays into the commercial world.

The proposal due to to be adopted next month follows a raft of complaints from

private companies that rivals which have been granted special monopoly rights by governments - for example, to offer public service broadcasting services - could be cross-subsidising their commercial activities unfairly. They say that this is distorting markets, allowing public sector firms to drive competitors out of business by undercutting their prices.

Commission sources say forcing those operating in the public sector to publish separate accounts would make it far easier for anti-trust watchdogs to spot abuses and rule on complaints under the Union's competition regulations.

The proposal to update existing EU legislation on the 'transparency' of public undertakings covers all sectors of industry except a handful which are already regulated separately such as post and telecoms. "We try to avoid naming specific sectors, because we do not want to look like we are picking on them," said an official. "But in the past we have had problems, for example, with the port sector, weather forecasting, broadcasting and even soil analysis."

He said the rules could also be applied to banks with a public service remit and to the health sector, where private hospitals have lodged complaints against state-funded institutions 'competing' for patients. But Commission officials admit that this could bring them into conflict with member states, which jealously guard their right to set policy in the health sector.

The plan to include public service broadcasters within the scope of in the new rules has angered many MEPs, who argue that they should be excluded from the proposal. The funding of public service broadcasters is one of the EU's hottest political issues. French, Italian and Spanish public broadcasters met Commission President Romano Prodi last week to argue the case for continued state funding for broadcasting in the digital era.

A spokesman for Germany's ZDF said there was a risk of "grey zones" where it would be unclear whether separate accounts were needed. "We want to be able to fulfil our public service remit without the interference from accountants who would say this finance stream can pay for this or that," he added.

European employers' federation UNICE said it "firmly supported" the

proposed directive, but added that early drafts did not go far enough to avoid "all cross-subsidisation and serious distortions of competition". UNICE also argues that the proposal to limit the requirement to separate accounts to companies with a turnover of more than €40 million would allow many smaller public enterprises or firms which also benefit from special rights to slip through the net.

Competition Commissioner Mario Monti is planning tough new rules to force firms offering public services to publish separate accounts for their forays into the commercial world.