Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments

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Local and regional governments as service providers

Public services - 09.09.2004

CEMR's response to the Monti package on compensation for public services
The Council of European Municipalities and Regions (CEMR) has published its reponse to the Monti package on rules governing compensation for public
services obligations.
In its response, CEMR calls on the European Commission to clarify the distinction between services of general economic interest (SGEIs) and services of general interest (SGIs). The Commission must make it clear that public services that are not primarly commercial in their purpose should not be considered as SGEIs. The Commission itself has aknowledged this principle in its new public procurement directive, says CEMR secretary general Jeremy Smith. In its directive, it says that a body governed by public law means any body established for the special purpose of meeting needs in the general interest, and not having an industrial or commercial character. If the Commission itself makes such a distinction in the public procurement directive, why doesn't it do the same in the Monti Package that addresses public services too?
CEMR also stresses the importance of the right for local and regional government to provide public services directly to their citizens. If we followed the Commission's logic, it would mean that any public compensation in the absence of a public tender has to be proven not to be state aid. However we think that the logical approach would be to have a clear definition of what constitutes state aid on the one hand and, on the other to acknowledge the freedom of local authorities to organise (internally or via external providers) and finance their public services. Besides, the majority of services provided by public authorities have no, or no significant, effect on the internal market.
CEMR also objects to the 15 million euros annual threshold proposed by the
Commission for public services compensation granted to undertakings. A higher figure around 30 million euros would be more appropriate so as to ensure freedom and flexibility for public authorities. It would also avoid adding
administrative burden on both the public authorities and the Commission.
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