Services of General Economic Interest and EC Competition Law

Abstract

In most countries, electricity, gas, railroad and sometimes telecommunications have generally been treated as natural monopolies and owned or run by publicly owned utilities. The universal aspects of these services were assured through price and entry regulations. Everywhere in the world, however, new technologies have rendered possible new types of services, resulting in the dismantling of monopolies which had provided services through one system and one policy. Each country today has to find a new balance between regulation and competition, which the history of its institutions will allow.
In the EU, public utilities services are highly developed, but their conceptual foundations vary from one country to another. The French service public, for example, had been supported by the concept of citizens' rights and solidarity. This tradition differs significantly from the more decentralised local administrations in many of France's neighboring countries.
Among EU members with radically different administrative traditions, how has the new balance between regulations and competition been struck? How, at the EU level, has the pace of liberalisation of services of general economic interest been decided? What is the role of EC competition law in this process? And what are the consequences?
The report consists of three parts. The first part deals with the ways in which the pace and method of liberalisation have been decided at the EU level in different public service sectors. A significant part of the European Commission's powers to regulate competition issues is involved in the liberalisation of telecommunications. For example, access charges, interconnection, exclusive licence, etc. are based on Article 86 (3), (former Article 90 (3)), whereas other sectors rely mostly on Article 95 (former Article 100 (A)). Secondly, the report analyses how the Commission and the EC Court changed their methods of competition law enforcement from applying solely to private undertakings involving regulations, to include public undertakings and the authorities themselves. The third part examines the various ways in which EU competition law has been applied to the process of transition from public monopolies to private ones.
The report pays particular attention to the so-called “essential facilities” doctrine. Through the analysis of Commission decisions and Court decisions which relied on this doctrine or were inspired by it, the report attempts to identify the scope of essential facilities, the criteria for judging what is “essential”, and the types of competition analysis employed (for example, whether the aim is to protect competition or competitors). The European essential facilities doctrine is then compared to the American one. The report affirms that particular concern for EC competition law is justified in part by the fact that the European markets have many state-made bottlenecks.
The application of EC competition law to services of general economic interest has a wide range of regulatory purposes including fair pricing and non-discriminatory treatment, whereas the American Antitrust analyses are narrowly focused on consumer prices and economic efficiency. Opposing approaches to competition among EU members for regulated industries were reflected acutely in the negotiations leading to Article 7D, as well as the attached two declarations and a protocol of the Amsterdam Treaty.