1. Review of Member States' reports on the implementation of the EC Decision on the provision of State aid to the provision of services of general economic interest (SGEI)
10 May 2017, Brussels

2. Disclaimer
The information and views set out in this study are those of the author(s) and do not necessarily reflect the official opinion of the European Economic and Social Committee. The European Economic and Social Committee does not guarantee the accuracy of the data included in this study. Neither the European Economic and Social Committee nor any person acting on the European Economic and Social Committee’s behalf may be held responsible for the use which may be made of the information contained therein.

3. 2005 Package
2011 Package
Communication on the application of Art. 107
general de miminis rule applied:
€ over 3 years
specific de minimis regulation:
€ of compensation over 3 years
Block exemption decision
•Hospitals and social housing
•Aid below €30M per year for providers with turnover below €100M per year
•Annual approach
•Hospitals and social services:
•Aid below €15M per year
•Multi-annual approach
•Entrustment act <10 years (exc. investment)
Framework
•Compensation of all the net costs incurred by the provider
•Compensation of the net avoided costs (NAC)
•Efficiency incentives
•Equal treatment
•Control of serious competition distortions
•Compliance with PP rules when applicable
•Strengthened transparency
Action
No retroactive action
Retroactive action

4. Contract Information
Service Contract N° EESC/CSS/6/2016/23157 between the European Union, represented by the EESC, and ESTAT Ltd.
Activities:
Review of MS reports and
Review of additional literature (academic and stakeholder views) and data
Outputs:
2 Summary Excel Datasheets
2 Interview Guides (NRAs and USPs)
6 Conducted Interviews (in France, Italy, Bulgaria)
1 Draft and 1 Final Study
1 Universal Postal Service (UPS) Case Study
Results:
Findings concerning all the 7 Study Questions + Postal Services Case

5. Study Question 1: Do the current SGEI rules foster the provision of public services? Do they provide clear guidance and legal certainty? List the main difficulties encountered.
Scope of public interest realm and SGEI
Right balance between fostering provision and preventing distortions of competition
Adequate working of exemptions from notification with possible need to extend
Problematic aspects of mixing procurement, concessions and SGEI
Unnecessary focus on efficiency, instead of framework for efficiency incentives
Flexibility at central level, but lack of capacity and participation at regional and local level

6. Study Question 2: Are requirements on definition and entrustment adapted to SGEI needs? e.g. does the 10-year standard entrustment period give rise to particular problems and/or concerns?
Reasonable requirement up to 10 years, with preventive character
Typical exceptions of SGEIs requiring significant investment justifying > 10 years
Unaddressed cases, e.g. related to exceeding the time limit, exempted or not; also, renewals or prolongations of existing contracts; in-house/publicly-owned with service provision as the main mission
Inertia vs. selection
Privatization forces that may be affecting decisions

7. Study Question 3: Do the PP rules and requirements, in particular the SGEI provision on the issue, create particular challenges for designing SGEI entrustments and designating the providers? To what extent can such as requirement be met by MS without undue burden or restrictions?
Transparency and equal treatment as valid principles
Debates whether PP could be compulsory
Issue of direct no aid if PP/concessions procedure followed (type of procedure)
Setting up and definition of public remit
Competence distribution and subsidiarity issue
MS decide on quality + access + affordability + continuity
MS decide whether the standard requires public service
MS decide on whether/how to fund

8. Study Question 4: How do public authorities tackle the need to draw ex ante the parameters for compensation? List the difficulties encountered in meeting this requirement.
Compensatory amounts ex ante resulting in overcompensation or even more frequently under-compensation
Reasonable profit avoided (not to be in breach) as well as risk calculations
Cases of systematic underfunding
Difficulties as to whether additional support is possible
Difficulties with the method of calculating additional support without coupling ex ante with ex post (net cost) methodology

9. Study Question 5: How do public authorities meet the requirement to avoid and replay any overcompensation? List the problems.
Expected vs. actually incurred costs and revenues
Recovery procedure to avoid overcompensation in most MS
No clear procedure to avoid systematic under-compensation
Lack of procedure for triggering update of the parameters (reappraisal)
Minor overruns (up to 10%) could ensure a more flexible approach on an annual basis.
Ex ante and ex post methodologies complement each other

10. Study Question 6: Do public authorities face particular difficulties in granting aid through guarantees or soft loans? To what extent do SGEI rules discourage such compensatory schemes?
Limited application of soft loans, guarantees, equity and tax deferrals
Tiers for compensations
Lack of knowledge and risk aversion
Chain of options from public provision to privatization
Need for transparency of good practices

11. Study Question 7: Do Member States face difficulties in applying compatibility method based on net avoided cost? Does coping with the need to set up a counterfactual scenario involving the absence of public services obligations implies any special difficulty? Do Community rules provide enough guidance on this critical issue?
NAC presenting overall difficulties as mandatory ex ante tool
Existing fear of rigidity
Counterfactual scenario interpreted in different ways, de facto divergences
Profitability cost approach advocated, but not undoubtedly introduced
Issues of own capacity and resources for external expertise

12. Universal Postal Service (UPS) Case Study
France
special SGEI based on rural areas
high number of auxiliary postal offices meant to cover this SGEI fostering a territorial coherence in rural and low populated areas
running this non-USO network involves much higher unit costs (La Poste receives funding separate from Third Postal Directive)
Italy
the compensation for Poste Italiane is defined ex ante
subsequently the state relies upon ex post assessment based on actual data for determining the cost of the universal service of the Poste Italiane
the assumptions of the counterfactual scenario if discretional question the NAC method
Bulgaria
Three-tier system (Bulgarian Posts, CRC and Ministry of Finance)
ex ante NAC performed by MF, Bulgarian Posts submit an application to CRC for annual costs of UPS provision

13. Thank you very much for your attention!