A Broader Definition of Social Services (SSGI) devising a specific treament

1. A Broader Definition of Social Services (SSGI)devising a specific treament GCLC and DG COMP Conference on revising the Monti/Kroes package Bruges 30 September 2011 Wolf Sauter

2. Social services of general interest • What are SSGI and where do they come from? • What is their status in EU law? • What is the impact of the proposed changes?

3. What is origin of SSGI concept? • Identified by the Commission in 2006 • Context difficulties adopting Services Directive • Final version excluded • health services • (certain) social services • Services of general economic interest (SGEI) Commission came to focus on social services in context SGEI and competition/state aid

4. What are social services? • Broadly speaking Community documents since 2006 distinguish three categories • Health services • Statutory and complementary social services • e.g. related to unemployment, retirement and disability • Other essential services provided directly to the person or family • e.g. social housing, debt management, drug treatment

5. Social or economic services? • Classification as “social” is not enough • If economic: SGEI and EU law relevant • On one hand internal market, state aid, competition rules apply • On other hand qualified exceptions to these rules may apply • If non-economic SGI: EU law irrelevant So far SSGI no separate legal signifcance

6. Defining SSGI • National authorities: subsidiarity principle • But in order to qualify for Monti/Kroes package • Act of entrustment • Clear mandate: public service task • Detailed rules for public service compensation • Sometimes derived from context (BUPA)

7. Relevance of qualification SSGI • Binary systems of EU law rules • Free movement based on the definition of services • Competition/state aid based on the definition of undertaking • Proportionality based system of exceptions • Article 106(2) TFEU  Altmark • Exception to competition state aid and free movement • Analysis analogous to free movement exceptions: proportional pursuit of public interest

8. Competition rules • For competition and state aid norm is undertaking • Functional approach • Provision of goods or services (potentially) in competition (Glöckner) • Not: state prerogatives; solidarity

9. Exceptions to the state aid rules • SGEI Article 106(2) TFEU • Altmark case and 2005 Monti/Kroes framework: relevance to social services • Healthcare examples of Commission Decisions • Irish risk equalisation system I and II • Dutch risk equalisation system • Brussels hospitals

10. Social services after Altmark • Commission Decision 2005/842/EC of November 2005 • General de minimis threshhold € 100 million turnover and € 30 million compensation • Special volume threshholds for sea and air transport • Hospitals and social housing carrying out SGEIs irrespective of compensation level

11. Devising a specific treatment? Hospital and social housing services • Exempt from prior notification requirement • Hence standard “stand still” obligation lifted • And compatible with internal market • Provided legal act of entrustment with SGEI • Nature and duration of obligations • Undertaking and territory connerned • Nature of special/exclusive rights • Parameters of compensation • Arrangements for overcompensation

12. Comments on the 2005 regime • Selective: just hospitals and social housing: why? • “At current stage of development of the internal market the intensity of distortion of competition in those sectors is not necessarily proportionate to the level of turnover and competition.” • Implications not always clearly understood at national level • E.g. not sufficient to be a hospital • Need for SGEI entrustment  Is the SGEI discipline effective in absense of notification?  2011 proposals broader scope but similar reasoning

13. Scope of the 2011 Proposal • Hospitals providing medical care including emergency services as SGEI • SGEI meeting essential social needs regarding healthcare, childcare, labour market access, social housing and the care and social inclusion of vulnerable groups  Also healthcare other than hospital care and new set of social services now covered • Selection criteria not clear: how are the services concerned selected? • Are certain social services excluded or is this set meant to be all-inclusive? • Why list hospital and emergency services separately from healthcare? And why have a separate regime for healthcare and social services?

14. Reasoning of the Proposal • Not the urgency of health and social needs is cited • “Relatively minor distortion of competition is involved in the sectors concerned at current stage of development” • Standard is actual competition • Not potential competition or stepping stones for competition • Present approach may become a brake on competition • At odds with foreclosure and network arguments in Framework • What data based on the application of the current system? • How will we know if Decision leads to more SGEI designations?

15. Conclusion • Purpose of concept of social services of general interest not clear: economic dimension is decisive • If state prerogatives or solidarity are predominant  no undertaking so competition rules and SGEI are not applicable • SSGI that are undertakings providing SGEI will now enjoy a broader block exemption

16. Conclusion • The requirements for applying the proposed Decision may de facto mean additional controls on SSGIs • However, the proposed Commission block exemption may also chill competition • Social services that are SGEI can by definition be provided in competition: why go down the road of specific treatment?