State Aid

State aid: New rules on public service compensation

25.1.2012

PR(12)03

The EFTA Surveillance Authority has adopted two new sets of guidelines dealing with state aid in the form of public service compensation. Such aid may be granted to service providers explicitly requested by the State to supply the population with specific services of general economic interest (SGEIs).


The service in question must be genuine and correctly defined as  an SGEI. In the absence of a specific EEA rule defining the scope of an SGEI, the EFTA States have a wide margin of discretion in defining a given service as an SGEI and in granting compensation for the costs of the service.

Examples of such services may include transport services, public broadcasting services, development of broadband in remote areas, waste collection or social housing. However, EFTA States cannot define a given service as an SGEI if the service can be provided satisfactorily by the market.  The EFTA States should show that they have given proper consideration to the need for a public service and a public consultation should take place to make sure that the interests of users and providers are taken into account.  

The new rules update and replace the previous guidelines on public service compensation. The new features include:

  • an explicit requirement to comply with public procurement rules;
  • a more precise methodology to determine the amount of compensation;
  • a requirement to introduce efficiency incentives in compensation mechanisms;
  • new reporting obligations.

Further, the Authority has clarified certain key state aid concepts, in particular in relation to SGEIs, such as the notion of economic activity and the details of public service compensation for a provider selected by way of public tender or outside the public procurement rules.

In line with the EEA state aid rules, the Authority has a task to ensure that public funding of such services does not unduly distort competition conditions in the EEA. The Authority's assessment criteria are laid down in the State Aid Guidelines.

 

The new guidelines are available online under:

Part VI – Compensation
Part VI – Framework


For further information, please contact:

 

Mr. Trygve Mellvang-Berg,
Press & Information officer
tel. (+32)(0)2 286 18 66
gsm (+32)(0)492 900 187




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