Plan to set basic service standards for utility firms

Date: 12/09/1996

By Tim Jones

AFTER a decade-long campaign to create a single market, the European Commission is proposing minimal rules to protect peripheral regions and the poor from losing basic services in the liberalisation stampede.

The campaign led by French President Jacques Chirac for a guarantee that utility companies will provide a standard service to all citizens regardless of income has finally born fruit.

The Commission is calling for an amendment to Article 3 of the treaty - which sets out the basic activities of the EU - committing the Union to make a “contribution to the promotion of services of general interest”.

The Commission held a long debate on the proposal, which came directly from President Jacques Santer, and continued to air long-held differences over guaranteeing high-quality basic public services.

Competition Commissioner Karel Van Miert, for example, was originally opposed to treaty amendments in favour of the public services. He and Trade Commissioner Leon Brittan feared that such changes could be used by governments already dragging their heels to hold back the pace of services liberalisation.

In particular, the 'liberals' were concerned that proposals from French ministers to beef-up Article 90(2) of the treaty, to specify that firms with public service obligations should not be obstructed in their statutory tasks by competition rules, should not be adopted.

However, they were prepared to accept that certain companies serving a “general interest” should meet specific requirements on quality and security, prices, equal treatment of customers and transparency of management.

This approach was reflected in Van Miert's proposal for a universal service commitment for basic telecoms services. This draft directive suggests that a basic telephone service should provide a normal telephone line, directory enquiry services, public pay-telephones and special services for disabled users and special interest groups (where appropriate) at “affordable prices”.

Many of the liberals' concerns have been met in the final proposal on public service, which will now be submitted to the Intergovernmental Conference.

It stresses that there is no conflict between the EU's competition policy and the promotion of the general interests of its citizens as well as the defence of their basic services.

Santer's compromise proposal simply promises to reinforce coordination between member states in services that have a cross-border element (such as postal, telecoms, electricity and gas services).

This will require common rules for the state financing of public service companies and the establishment of what is meant by a public service obligation. Transparent accounts will be required if these obligations are to be measured in money terms.

The proposal will be submitted to the IGC, where the differences between the French and Belgians on one side, and the British and Germans on the other, will ensure it has a turbulent ride.