Will we end up with a directive on concessions even if it is limited to principles based on consensus? Based on discussions on such a legislative initiative, this is in serious doubt.

The challenge is to clarify a notion which has very different interpretations from one country to another, to promote legal certainty in an area that has largely depended on detailed case law, to introduce more transparency and competition to avoid the arbitrary selection of operators. This all needs to be done whilst respecting the necessary flexibility for these types of concession contracts, which aim to transfer the management of a public service to a private operator who takes responsibility for the investments and management risks and is remunerated based on the price paid by the user of the service, with the public body keeping overall control.

And to balance all this without, in addition, encroaching on the prerogatives of member states and their adjudicating powers in terms of the management of public services seems to be mission impossible. Because the EU27, adjudicating authorities and companies - especially the big ones - who obtain concessions do not look kindly on the idea that Community law is seeking to frame - even on a minimum basis - these long-term agreements and therefore imposing on them new procedural burdens. And the Council’s decision to block the attempt to legislate in this area at the end of the 1980s has led the EU to ignore concessions and only get involved in 1989 and then in 2004 with those relating to works due to the similarity with public contracts in the directives on these public contracts. Awarding concessions of services is subject to the general principles of transparency and equality of treatment and the interpretation of the EU Court of Justice.

Despite several fruitless attempts, the Commission has once again taken up this challenge and tabled a new proposal, on 20 December 2011, which fits into the framework of the revision of the EU legislative framework for public procurement. It has had a mixed reception both from member states, the European Parliament and the Committee of the Regions. Companies are not alone in challenging the excessive number of exclusions, which contradict the publicised wish to leave more room “for the positive effects of competition”. Trade unions fear a corollary worsening in working conditions for lots of concessions and stress that the added value of such delegations of public services has not been proven. The European Confederation of Independent Trade Unions (CESI – la confédération européenne des syndicats indépendants) puts forward a fair few examples of public bodies taking back control of public services once granted either due to an increase in the costs of fees for users, the abandonment of a transport service by the concessionaire company or because of challenges to pay agreements.

This Insight on public service concessions aims to provide an update on these particular partnerships between the public and private domains: definition(s), characteristics, economic weight, treatment by the EU institutions, criticisms and ideas for further reflection.