The last piece of the puzzle is finally in place. The European Commission completed the Almunia package on state aid for services of general economic interest (SGEI) with its adoption, on 25 April, of the final element, a new de minimis regulation. This text exempts from prior notification or authorisation “small” public services that do not affect competition, when compensation is less than €500,000.

“This new exemption will facilitate the provision of many small, local public services,” commented Competition Commissioner Joaquin Almunia.

Published on 20 December 2011 (see Europolitics 4331), the system for the revision of rules on state aid for SGEI aims to clarify concepts and introduce a more proportionate approach by easing constraints for more sectors. It amends the 2005 Altmark (or Monti-Kroes) package, which spelled out conditions for the compatibility of compensation granted to a company that provides a public service. It includes four elements with separate legal force: a decision on exemption from notification; a revised framework for compensation for SGEIs that are more commercial in nature and a very general communication that clarifies the concepts of rules on SGEI compensation. These texts entered into force on 31 January. The fourth element of the package, the de minimis regulation was one of the main stumbling blocks in the debate and was temporarily separated from the package to allow for further consultation of the parties.

SINGLE THRESHOLD

At the heart of the controversy was the technical (and highly political) question of thresholds. The initial proposal established that public service compensation does not constitute state aid if the amount of aid granted by a public authority does not exceed €500,000 over three years (€200,000 previously), if the company providing the SGEI has turnover of less than €5 million and if the community has fewer than 10,000 inhabitants.

The national and local public authorities of many member states found that the accumulation of three criteria made the de minimis regulation inapplicable. Many argued that the threshold of 10,000 inhabitants failed to take account of the local reality in which a large proportion of SGEIs are provided at intermunicipal level for reasons of economies of scale, an approach backed by the European Commission.

The dropping of the last two thresholds signals the victory of pragmatism over the Commission’s more technical mindset. The Chair of the EP Public Services Intergroup, Françoise Castex (S&D, France), applauded the new text: “The Commission’s earlier proposal set a threshold for the number of inhabitants that did not correspond to the local reality in Europe”.