Given Their Weight in the Economy and Their Importance for the Production of Other Goods

Green Paper on Services of General Interest

UEAPME Position Paper

1. General Remarks

Given their weight in the economy and their importance for the production of other goods and services, services of general interest(SGI) are fundamental factors for competitiveness and cohesion, in particular terms for attracting investment in less-favoured regions.

The quality, efficiency and non-discriminatory provision of SGI are also conditions for the smooth functioning of the Single Market and for further economic integration in the European Union.

SMEs, Crafts and Trades rely on a wide range of SGI - some of which have a greatstrategic importance (telecommunications, energy, transport, education, social protection facilities etc) - and considerably dependon high quality, affordability, continuity of supply, safety and security of supply of these services.

Given that SMEs have also to fund SGI through taxation and user charges, they are very interested in the efficient production of SGI so that services are delivered in a competitive manner.

1. SMEs and private providers

For this reason, SMEs are in favour of the SGI private provision: the liberalisation of markets has in fact stimulated the modernisation, interconnection and integration of the liberalised sectors and has led to price reductions, higher-quality of services, more choice for consumers and net positive impact on employment. All these effects have proved to be very useful for SMEs’ activities.

In any case, the success of liberalisation depends strongly from an efficient regulatory environment that could guarantee the fulfilment of the general interest mission.

If the regulatory environment for a private provision of such services fails to ensure a proper common public service obligation, the resultant commercial failures can be very damaging. The deregulation disaster in Californian electricity and British Railways are good examples of such failure.

These failures can not be used as a blanket condemnation of sensible well-directed efforts to bring more efficiency in the provision of SGI by the private sector activities. We have on the contrary to improve and reinforce, where necessary, the regulatory framework.

1. SMEs and Trans-European Networks

Where SGI have a clear Community-wide dimension and influence the internal market, UEAPME agrees with a regulation at European level which specifies obligations and includes aspects of general interests such as universal service obligations.

This is the case for SGI provided by large network industries, where the Community has specific responsibilities. But that couldbe also the case of other SGI , which become relevant for the internal market and could affect trade between Member States (waste management, water supply, broadband internet and transport infrastructures, just to mention few).

1. SMEs against a European Framework directive on SGI

In principle, SMEs think European legislation has to intervene only to regulate issues that have relevant effects on internal market or on the Pan European security of supply. In other cases, the subsidiarity principle applies and actions have to be taken at national/regional/local level.

Moreover, SMEs are against a European framework directivefor SGI, because the common elements, which define the concept of SGI (universality, continuity, quality, affordability and consumer-protection) have different meaning in relation to different sectors.

Considering that, a European framework directive on SGI:

• would weaken the effectiveness of the current sector and issue specific-approach to Community action, which is tailored to suit the different market issues that arise;
• can not increase legal certainty, because of its too broad principles: in any case additional legislation would be required to decline them in the different sectors. It should on the contrary create legal uncertainty in how its broad principles interact with the current detailed legislation.
• would dilute the Community’s focuson its crucial responsibilities (single market and fair competition) and counteract the existing State aid legislation, competition law and Public Procurement directive.

SMEs are against whatever can undermine or by-pass State aid rules, competition law or Public Procurement directive and suggest that, if this existing legislation is not sufficient to solve SGI problems within the Member States, specific directives have to be promoted.

1. SMEs and European regulator: the need of a reflection

Whilst the creation of national regulatory authorities is to a large extent a reality, the creation of a European regulator for SGI has not yet been widely discussed.

Among the objectives of such a proposal there is the necessity to avoid distortions stemming:

• from different approaches of the national regulators regarding the interpretation of European legislation, which could have an impact on the good functioning of the internal market;
• from cross borderallocation decisions in the case of a shortage of supply of a given service (for example gas or electricity)
• from European multinational service providers, which use such differences to bypass the intention of a directive;
• from pressure put by political/economical operators (e.g. public companies) on the national regulators;
• from slowness of decisions. This is the reason for which the Court of Justice in Luxemburg can not be a helpful alternative: its sentences take too long to be compatible with business needs and activities.

Therefore, UEAPME asks for a serious discussionon the need of an European Regulator in all areas, where specific EU sector legislation exists.

UEAPME (final)2004-01-27

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