We are testing a new beta website for gov.scot go to new site

Altmark Judgement

 

In its Altmark judgment of 24 July 2003, the European Court of Justice provided clarification as to when public service compensation does not constitute State aid owing to the absence of any advantage. According to the judgment, for a State measure to be considered aid-free, four cumulative conditions have to be satisfied:

 

• there must be an entrustment act clearly defining the public service obligation;

• the parameters for calculating the compensation must be established in advance in an objective and transparent manner;

• the compensation cannot exceed the relevant costs and a reasonable profit (i.e. there is no overcompensation); and

• the provider is either chosen through a public procurement procedure or the level of compensation is determined based on an analysis of the costs of an average "well-run" undertaking in the sector concerned.

 

The Altmark ruling highlighted the fact that many instances of public service compensation for SGEI providers represent State aid.  In order to provide legal certainty, the Commission adopted in 2005 a set of specific rules for the compatibility of such State aid with the internal market which have been revised with this new Package of rules.

 

Services of General Economic Interest

On 20 December 2011, following extensive public consultation, the EC adopted a Communication outlining a new package of State aid rules for Services of General Economic Interest (SGEI).

Background

An SGEI is a service of an economic nature that public authorities identify as being of particular importance to citizens, but which are not supplied by market forces alone, or at least not to the extent and under the conditions required by society. Their provision may therefore require public intervention.

Examples of SGEI range from providing large commercial services to the entire population at affordable conditions (such as postal services, energy security of supply, electronic communication services, public transport), to a wide range of health and social services (such as care for elderly or disabled people).  SGEI are carried out in the public interest under conditions defined by the State, which imposes a public service obligation on the provider(s). Since SGEI provision under such conditions may not generate a (sufficient) profit for the provider, public service compensation might be needed to offset the additional costs stemming from the public service obligation.

 

A brief summary of the newly adopted SGEI package

On publication of the new SGEI package, the Commission Vice-President in charge of competition policy, Joaquín Almunia, stated that "the new SGEI package provides Member States with a simpler, clearer and more flexible framework for supporting the delivery of high-quality public services to citizens which have become even more necessary in these crisis times."

The new SGEI package has three main strands and aims to provide clarification of key concepts in the field of State aid for SGEI.  The new SGEI de minimis Regulation aims to provide simplification for small, local SGEI, for which compensation below a given threshold is deemed not to constitute State aid.  The new SGEI Decision acts as a block exemption from notification of compensation that is State aid, but fulfils relatively simple compatibility criteria. Finally, the revised SGEI Framework includes a more thorough check for large compensation amounts that have to be notified to and assessed by the Commission. Please click on the links for more information.

 

Click here to return to our main page