The legal framework of services of general economic interest in the ...

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economic, social and territorial cohesion, and solidarity among Member States». These objectives, together with the convergence of economic performance, must be achieved through an internal market. This is characterized by: i) the abolition of obstacles to free movement of goods, persons, services and capital among Member States; ii) a system which ensures that competition is not distorted; iii) the approximation of national laws necessary to its functioning; iv) a contribution to the strengthening of consumer protection. From the combination of these factors it seems possible to affirm how the liberalization of services of general economic interest on the one hand contributes to the objectives identified in art. 3, para. 3 TEU and, on the other hand, is a necessary means to achieve the same objectives. Within this ambit, an area without internal frontiers, in which the free movement of goods, persons, services and capital in accordance with the principle of an open market economy with free competition, allows the establishment of a common model for the liberalization of services of general economic interest 18 . These must be also considered in the light of art. 37 TFEU. It makes Member States to proceed in an adjustment of public monopolies with a commercial character, so that no discrimination results between nationals of Member States regarding the terms of supply. It is addressed to Member States and to monopolies delegated to private operators. It does not impose total and unconditional abolition of monopolies. Their maintenance, like that of exclusive or special rights, may be admitted under the condition that Member States comply with the provisions of the Treaty, in particular, with those relating to competition. As a result, article 37 TFEU justifies certain exclusive rights to import and trade. It also concerns market monopolies of goods having commercial nature. Art. 37 TFEU must be analyzed in combination with art. 106 TFEU. Its first paragraph deals with the monopolies of goods of a non-commercial origin, service monopolies and special rights. It affirms that Member States shall neither enact nor maintain in force any measure contrary to competition rules. Its second paragraph contains an exception. This is addressed to companies which provide services of general economic interest and not to Member States. Even this rule offers an exemption from competition rules when they do not cause prejudice to the development of trade in the internal market and when they are compatible with the Treaty, in order to achieve certain goals deemed worthy of protection. In other words, the prediction of a preferential regime in line with the principle of proportionality shall be strictly necessary and shall aim to the completion of a clear mandate to meet a specific interest. Its pursuit should justify the subjugation, by the undertakings, to special rules, different from those normally applicable to firms operating in similar conditions. Article 106 para. 3 TFEU gives the Commission exclusive powers that are not subjected to limitations under the principle of subsidiarity provided by art. 5 TEU. The power to take actions against Member States granting to companies exclusive rights, that are contrary to the provisions contained in the Treaty, is essential in the liberalization processes. With regard to secondary law, the opening to competition of services of general economic interest must be placed in the legal and socio-economic path by Directive 80/723/EEC on the transparency of financial relations between Member States and their public enterprises 19 . According to it, all businesses, whether public or private, must operate in conditions of perfect equality, consecrating the primacy of competition rules on monopolies and exclusive rights and special rights. 18 ‟Green Paper on the Liberalization of Telecommunication Infrastructures and Cable Television Network”, COM (1994) 440 final. 19 Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings (O.J. 1980 L 195/35-37). 8
5. Privatization, liberalization and regulatory authorities The neutral approach of the Treaty on the Functioning of the European Union concerning the property right seems not to consider privatization and liberalization as two related phenomena. The establishment of an economic system intended to protect the competitive environment has, in fact, led the European Union institutions to have a role in boosting the sale of public enterprises. Admitting that liberalization renders the market more efficient, it is possible to affirm that privatization can be facilitated by the progressive statement of the incompatibility of certain domestic provisions relating to monopolies with the ultimate goal of market integration. The formal privatization of a public enterprise, in which its ownership remains firmly in the hands of the State, is considered mandatory in view of its possible sale to private operators. This phase leaves open questions concerning the regulation of the economic actors involved, both in public and private market. The set of rules to introduce into national legal orders will affect the discipline, the structure and operation of the privatized undertaking 20 . It manifests the danger to compromise the freedom of competition in the European Union. Direct negotiations with prospective purchaser would take place where national governments reckon necessary to develop a plan for economic rehabilitation and recovery, in consultation with the operators to which it is intended to transfer the control of the enterprise to privatize. This process shows its anti-competition nature supporting, through the sale of State shareholdings, the transition from an organized market in the form of a public monopoly to a framework of private monopoly. Since the income resulting from a monopoly position makes it more reliable to dispose of estimates of profit for the company and, consequently, more advantageous its acquisition, direct negotiations allow national governments to determine the value of issue of shares at a level higher than the offer to the public depositors. As a result, this transfer does not lead to improved efficiency of firms operating in a particular economic sector. There is no evidence to open a protected market but, rather, it merely reflects a desire to reduce public debt. With regard to services of general economic interest, the establishment of organized markets in a monopolist framework is, in almost all cases, an option. The process of their erosion does not cover their scope only in the transformation into private monopolies. In this case, the effective liberalization of protected markets would be frustrated. It should allow a general redefinition of skills, approaches and means of intervention models functional and compatible with the objectives of promoting competition. In this sense, direct Member States intervention to safeguard public interest gives way to a form of indirect intervention. It consists in determining the legal framework and thus the rules of competition law before letting the market make its interactions 21 . As a result, privatization and liberalization could be appreciated as two independent but combined phenomena employed by States to draw back their direct involvement in domestic economic systems for a new role of authority regulator. Within this ambit, the creation of national independent and monitoring authorities is fundamental. The regulation of tariffs and quality of the services protects consumers. Moreover, it facilitates the review and possible repeal of the rules that assign special powers to Member States, coherently with the domestic discipline of corporate governance. 20 ROTT, P. (2007) ‟The Responsibility of the State and the State Liability with a View to Services of General Interest”, Diritto e Politiche dell’Unione Europea, 2: 89-100. 21 TRIANTAFYLLOU, D.N. (2007) ‟De la libéralisation à la régulation des marchés”, Revue Droit Union Européene, 653- 660. 9
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