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Soft Law and Safe Havens

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Social Services of General Interest in the EU

Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

This chapter argues that SSGIs are not a legal concept in EU law. They have been constructed as a separate concept, emerging through political processes, as a special category of SGEIs. This has occurred because the crude legal tools deployed by EU law to separate (or demarcate) the application of the EU law to ‘economic’ activity only, and to allow Member States to continue to organise ‘non-economic’ activity, cannot capture the confused and dynamic changes to SSGI over the last few years. These changes have brought many SSGIs within the scope of the application of EU law. This chapter argues that SSGIs have been Europeanised through two methods. Firstly, by the Commission capturing a central role in moulding an EU agenda for the modernisation of SSGIs, using soft law and new governance techniques and providing legitimacy to such processes by creating a stakeholder constituency. It is argued that other EU Institutions have been drawn into this constituency and have not been able to exercise a decisive or independent role in the Europeanisation process. Secondly, through the Member States in the Council seeking justifications and exemptions for SSGIs in secondary legislation. These are referred to as ‘safe havens’. The result is a casuistic approach deploying inconsistent terminology and inconsistent approaches towards SSGIs in EU law and policy. However, it is unlikely that any harder legal processes could be successfully negotiated to manage the interests at stake for SSGIs exposed to EU law and policy. Thus, SSGIs are subject to a variable geometry in EU law and policy.

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Notes

  1. 1.

    COM(2001) 598. My thanks to Ulla Neergaard for this point.

  2. 2.

    Commission, Communication from the Commission, Implementing the Community Lisbon Programme: Social Services of General Interest in the European Union, COM(2006) 177 final, 26 April 2006.

  3. 3.

    See Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, White Paper on Services of General Interest, COM(2004) 374, 12 May 2004. See Chap. 2 in this volume, by Bauby.

  4. 4.

    González-Orús 1999; Buendia Sierra 1999.

  5. 5.

    COM(2004) 374.

  6. 6.

    See, for e.g., in the UK where the Office of Fair Trading (OFT) has estimated that public sector spending is around some £220 billion per annum on the purchase of goods and services from the private/third sectors (OFT, Commissioning and competition in the public sector, March 2011, OFT1314). Available at: http://www.oft.gov.uk/shared_oft/reports/comp_policy/OFT1314.pdf (last accessed on 9 June 2011). The UK Government advisor, Sir Philip Green, a well-known high street retailer, was engaged to conduct an Efficiency Review of public procurement where he reported back: ‘Government must leverage its name, its credit rating and its buying power’. Efficiency Review by Philip Green—Key Findings and Recommendations. Available at: http://download.cabinetoffice.gov.uk/efficiency/sirphilipgreenreview.pdf (last accessed on 9 June 2011). For academic work on monopsony practices in buying social care in the UK see: Hancock and Hviid 2010.

  7. 7.

    See Bekkedal 2011.

  8. 8.

    Van de Gronden 2011.

  9. 9.

    Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on Services in the Internal Market, OJ 2006 L 376/36.

  10. 10.

    Szyszczak 2006.

  11. 11.

    See Chap. 9 in this volume by Neergaard for a classification of the SGI ‘family.’ See Chap. 12 in this volume by Baquero Cruz, for a discussion of whether there is the necessity for a special category of SSGI in EU law.

  12. 12.

    Senden 2004; Neergaard 2011.

  13. 13.

    Wallace et al. 2005.

  14. 14.

    De Búrca 2010.

  15. 15.

    Dawson 2011.

  16. 16.

    Commission, Communication form the Commission, European Governance—A White Paper, COM(2001) 428 final, 25 July 2011.

  17. 17.

    Commission, Commission Staff Working Document, Second Biennial Report on Social Services of General Interest, SEC(2010) 1284 final, 22 October 2010.

  18. 18.

    A project financed through the Commission’s PROGRESS project on social services quality. PROGRESS is the EU programme for employment and social solidarity managed by the DG for Employment, Social affairs and Equal Opportunities of the European Commission. This programme was established to financially support the objectives of the EU in the employment and social affairs area, set out in the Social Agenda.

  19. 19.

    COM(2001) 598.

  20. 20.

    COM(2006) 177 final.

  21. 21.

    This involved: (i) responses to a questionnaire prepared by the Social Protection Committee (SPC) in September 2006; (ii) a study on health and social services of general interest commissioned in 2006 (but finalised in 2008) organised within the framework of the open method of coordination by the Belgian authorities; (iii) the results of a peer review on long-term care; (iv) the opinion of the EP (FINAL A6-0057/2007); (v) the opinion of the ESC (CESE 426/2007); and (vi) the opinion of the Committee of the Regions (CoR ECOS-IV-006).

  22. 22.

    Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Services of General Interest, Including Social Services of General Interest: A New European Commitment, COM(2007) 725, 20 November 2007. The Communication accompanies the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A Single Market for 21st Century Europe, COM(2007) 724 final, 20 November 2007.

  23. 23.

    Available at: http://ec.europa.eu/services_general_interest/docs/sec_2007_1515_en.pdf (last accessed on 15 September 2011).

  24. 24.

    CJEU, Case C-280/00 Altmark Trans [2003] ECR I-7747.

  25. 25.

    Ibid.

  26. 26.

    SPC, Report of the Social Protection Committee on the Application of Community Rules to SSGI, SPC 2008/17 final.

  27. 27.

    In the light of CJEU, Case C-532/03 Commission v. Ireland [2007] ECR I-11353.

  28. 28.

    Commission, Commission Staff Working Document, Biennial Report on Social Services of General Interest, COM(2008) 418 final, 2 July 2008. Available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52008SC2179:EN:NOT (last on accessed 9 June 2011).

  29. 29.

    Szyszczak 2002; Szyszczak 2003; Armstrong 2010.

  30. 30.

    Commission, Commission Staff Working Document, Second Biennial Report on Social Services of General Interest, SEC(2010) 1284 final, 22 October 2010.

  31. 31.

    Mario Monti, A New Strategy for the Single Market, At the Service of Europe’s Economy and Society, Report to the President of the European Commission Jose Manuel Barroso, May 9 2010, p. 73. Referred to as the ‘Monti Report’ in this chapter.

  32. 32.

    Ibid.

  33. 33.

    Cf. Prosser 2005, p. 172 writing on public services in the EU ‘Initially they were seen as something of an irritant, limiting the creation of a full internal market’.

  34. 34.

    At the time of writing, most recently in the Speech to the College of Europe, Bruges, 30 September 2011 ‘SGEI reform: Presenting the draft legislation.’ Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/618&format=HTML&aged=0&language=EN&guiLanguage=en (last accessed 13 October 2011).

  35. 35.

    Commission, Commission Staff Working Document, Guide to the Application of the European Union Rules on State Aid, Public Procurement and the Internal Market to Services of General Economic Interest, and in Particular to Social Services of General Interest, SEC(2010) 1545 final, 7 Dec 2010. Available at: http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=977&furtherNews=yes (last accessed on 14 June 2011).

  36. 36.

    Report of 6 March 2007 on Social Services of General Interest in the European Union, Rapporteur Joel Hasse Ferreira, 2006/2134(INI), PE 378.584v04-00 A6-0057/2007.

  37. 37.

    Available at: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P6-TA-2007-0070.

  38. 38.

    Rapporteur: Proinsias De Rossa: Report on the Future of Social Services of General Interest, PE 438.251v03-00 A7-0239/2011. See also de Rossa 2011.

  39. 39.

    Available at: http://www.publicservices-europa.eu/ (last accessed on 30 August 2011).

  40. 40.

    In response to the Commission Green Paper on the Modernisation of EU Public Procurement Policy Towards a More Efficient European Procurement Market, COM(2011) 15 final, 27 January 2011. Rapporteur: Heide Rühle, Draft Report on Modernisation of Public Procurement, 2011/2048(INI). Available at: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-467.024+03+DOC+PDF+V0//EN&language=EN (last accessed on 30 August 2011).

  41. 41.

    Rapporteur: Evelyne Gebhardt, Draft Report on Implementation of the Services Directive 2006/123/EC, 2010/2053(INI). Available at: (http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-452.694+01+DOC+PDF+V0//EN&language=EN (last accessed on 30 August 2011).

  42. 42.

    The third Forum involved some 300 participants from the Member States, the EU Institutions and stakeholders.

  43. 43.

    Article 9 TFEU states: ‘In defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health’.

  44. 44.

    Dawson 2010, 409.

  45. 45.

    Cohen and Sabel 1997.

  46. 46.

    CJEU, Case C-280/00 Altmark Trans [2003] ECR I-7747.

  47. 47.

    Commission, State Aid Action Plan, Less and Better Targeted State Aid: A Roadmap for State Aid Reform 2005–2009, COM(2005) 107 final, 7 June 2005, p. 10.

  48. 48.

    CJEU, Case C-280/00 Altmark Trans [2003] ECR I-7747, para 81. See also CJEU, Joined Cases C-34/01 to C-38/01 Enirisorse [2003] ECR I-14243, para 28: ‘It must be recalled that there is no threshold or percentage below which it may be considered that trade between Member States is not affected. The relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that trade between Member States might be affected….’

  49. 49.

    Community Framework for State Aid in the Form of Public Service Compensation, OJ 2005 C 297/4.

  50. 50.

    Commission, Commission Decision of 28 November 2005, C(2005) 2673 on the Application of Article 86(2) of the EC Treaty to State Aid in the Form of Public Service Compensation Granted to Certain Undertakings Entrusted With the Operation of Services of General Economic Interest, OJ 2005 L 312/67.

  51. 51.

    Note, however, that Commission has intervened in social housing projects in the Member States, most notably in the Netherlands, see Szyszczak 2011; van de Gronden 2011; and Chap. 6 in this volume, by van de Gronden.

  52. 52.

    See Klasse 2010; Hancher and Larouche 2011; Szyszczak 2011.

  53. 53.

    The responses are available at: http://ec.europa.eu/competition/consultations/2010_sgei/reports.html (last accessed on 4 May 2011).

  54. 54.

    Commission, Commission Staff Working Paper, The Application of EU State Aid Rules on Services of General Economic Interest since 2005 and the Outcome of the Public Consultation, SEC(2011) 397. Available at: http://ec.europa.eu/competition/state_aid/legislation/sgei_report_en.pdf (last accessed 4 May 2011).

  55. 55.

    Commission, Communication from the Commission to the European Parliament, the Council, the European Social and Economic Committee and the Committee of the Regions, Reform of the EU State Aid Rules on Services of General Economic Interest, Com(2011) 146, 23 March 2011. The Opinion of the Economic and Social Committee can be found at: OJ 2011 C 248/149 and the Opinion of the Committee of the Regions at: OJ 2011 C 259/40. For more detailed discussion see Sinnaeve 2011.

  56. 56.

    Available at: http://ec.europa.eu/competition/state_aid/legislation/sgei.html (last accessed on 10 October 2011).

  57. 57.

    Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest, OJ 2012 C 8/4; Commission Decision of 20 December on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest, OJ 2012 L 7/3; Communication from the Commission, European Union framework for State aid in the form of public service compensation, OJ 2012 C 8/15. See State aid: Commission adopts new rules on services of general economic interest (SGEI) IP/11/1571, 20/12/2011; Geradin 2012; Szyszczak 2012.

  58. 58.

    Draft Commission Regulation on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest, 2012l C 8/23. Adopted on 25 April 2012: OJ 2012 L 114/8

  59. 59.

    VP Almunia, Speech to the College of Europe, Bruges, 30 September 2011 ‘SGEI reform: Presenting the draft legislation,’ supra n. 34.

  60. 60.

    Commission Directive 80/723/EEC of 25 June 1980 on the Transparency of Financial Relations Between Member States and Public Undertakings As Well As on Financial Transparency within Certain Undertakings, OJ 1980 L 195/35. The Directive had been amended several times before the 2006 revision. For a discussion of the case see Chap. 6 in this volume, by van de Gronden.

  61. 61.

    Commission Directive 2006/111/EC of 16 November 2006 on the Transparency of Financial Relations between Member States and Public Undertakings As Well As on Financial Transparency within Certain Undertakings, OJ 2006 L 318/17.

  62. 62.

    State Aid: Commission Provides Greater Legal Certainty for Financing Services of General Economic Interest, Press Release IP/05/937, Reference: MEMO/05/258 Date: 15/07/2005. Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/05/937&format=HTML&aged=0%3Cuage=EN&guiLanguage=en (last accessed on 9 June 2011).

  63. 63.

    Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004, Coordinating the Procurement Procedures of Entities Operating in the Water, Energy, Transport and Postal Services Sectors, OJ 2004 L 17/1; Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on Coordination of Procedures for the Award of Public Works Contracts, Public Supply Contracts and Public Service Contracts, OJ 2004 L 134/114; Council Directive 89/665/EEC of 21 December 1989 on the Coordination of the Laws, Regulations and Administrative Provisions Relating to the Application of Review Procedures to the Award of Public Supply and Public Works Contracts, OJ 1989 L395/33; Council Directive 92/13/EEC of 25 February 1992, Coordinating the Laws, Regulations and Administrative Provisions Relating to the Application of Community Rules on the Procurement Procedures of Entities Operating in the Water, Energy, Transport and Telecommunication Sectors, OJ 1992 L 76/14; Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007, Amending Council Directives 89/665/EEC and 92/13/EEC With Regard to Improving the Effectiveness of review Procedures Concerning the Award of Public Contracts, OJ 2007 L335/31; Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the Coordination of Procedures for the Award of Certain Works Contracts by Contracting Authorities or Entities in the Fields of Defence and Security, and Amending Directives 2004/17/EC and 2004/18/EC, OJ 2009 L 216/76.

    Available at: http://ec.europa.eu/internal_market/publicprocurement/legislation_en.htm.

  64. 64.

    SEC(2010) 1545 final. Available at: http://ec.europa.eu/internal_market/publicprocurement/other_aspects/index_en.htm#green.

  65. 65.

    See:http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/106&format=HTML&aged=0&language=en&guiLanguage=fr.

  66. 66.

    Buying Social: A Guide on Taking Account of Social Considerations in Public Procurement. Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/106&format=HTML&aged=0&language=en&guiLanguage=fr.

  67. 67.

    SEC(2010) 1545 final.

  68. 68.

    Where there is a cross-border element to the procurement the basic rules of the TFEU apply, in particular adherence to the principles of transparency, equal treatment and non-discrimination, as well as the case law of the CJEU.

  69. 69.

    Article 7 of Directive 2004/18/EC. See Chap. 6 in this volume, by van de Gronden on the difficulties of applying the Transparency Directive in procurement issues.

  70. 70.

    CJEU, Case C-26/03 Stadt Halle [2005] ECR I-1, paras 49, 50. Cf. CJEU, Case C-107/98 Teckal [1999] ECR I-8121; CJEU, Case C-324/07 Coditel Brabant [2008] ECR I-8457; CJEU, Case C-573/07 Sea [2009] ECR I-8127; CJEU, Case C-340/04 Carbotermo [2006] ECR I-4137; CJEU, Case C-295/05 Asemfo [2007] ECR I-2999. Public–Private Partnerships (PPPs) which have been pioneered by the UK and adopted not only in Europe, but also in the developing world (Schwartz 2011), are covered by the public procurement rules.

  71. 71.

    See Article 11 of the proposal for a Directive on public procurement, COM (2011) 896 final; Article 15 in the Proposal for a Directive on the award of concession contracts COM (2011) 897 final.

  72. 72.

    Where a service concession is granted the basic TFEU rules and principles of EU law apply where there is a cross-border interest. Because many SSGIs are subsidised by the central or local state authorities there is a thin line between whether the subsidy allows a service concession to truly operate since the definition of a service concession is that there must be an essential element of risk undertaken by the operator: CJEU, Cases C-300/07 Oymanns (2009) ECR I-4779 and C-206/08 Eurawasser (2009) ECR I-8377.

  73. 73.

    Article 21, read in conjunction with Article 23 of Directive 2004/18/EC.

  74. 74.

    Article 21, read in conjunction with Article 23 of Directive 2004/18/EC.

  75. 75.

    CJEU, Case C-76/97 Tögel [1998] ECR I-5357, paras 29–40.

  76. 76.

    Examples are given at p. 66 of the Commission Working Document. Cf. CJEU, Case C-234/03 Contse [2005] ECR I-9315, para 79.

  77. 77.

    Cf. with the use of Public Finance Initiative (PFI) since 1992 in the UK.

  78. 78.

    CJEU, Case C-70/95 Sodemare [1997] ECR I-3395.

  79. 79.

    Commission, Communication from the Commission to the European Parliament, the Council, The Economic and Social Committee and the Committee of the Regions, Single Market Act Twelve Levers to Boost Growth and Strengthen Confidence ‘Working Together to Create New Growth,’ {SEC(2011) 467 final}, COM(2011) 206, 13 April 2011.

  80. 80.

    COM/2011/0015 final. Available at: http://www.europarl.europa.eu/oeil/FindByProcnum.do?lang=2&procnum=INI/2011/2048.

  81. 81.

    Commission, Commission Staff Working Paper, Concerning the Application of EU Procurement Law to Relations Between Contracting Authorities, SEC(2011) 1169, 4 October 2011.

  82. 82.

    European Commission, Proposal for a Directive on procurement by entities operating in the water, energy, transport and postal service, COM (2011) 895 final; Proposal for a Directive on public procurement COM(2011) 896 final; Proposal for a directive on the award of concession contracts COM (2011) 897 final.

  83. 83.

    Rodrigues 2010.

  84. 84.

    Inter alia: CJEU, Case C-109/92 Wirth [1993] ECR I-6447; CJEU, Case C-172/98 Commission v. Belgium [1999] ECR 3999; CJEU, Case C-157/99 Smits and Peerbooms [2001] ECR I-5473; CJEU Case C-196/87 Steymann [2001] ECR I-5473; CJEU, Joined Cases 51/96 and C-191/97 Deliège [2000] ECR I-2549. See Chaps. 6, 7, 8, 9 in this volume, by van de Gronden, Tryfonidou, Flynn, and Neergaard, respectively.

  85. 85.

    CJEU, Case C-70/95 Sodemare[1997] ECR I-3395.

  86. 86.

    Directive 2006/123/EC.

  87. 87.

    Barnard 2008; Davies 2007; Neergaard 2008.

  88. 88.

    See Recital 8, and 17 of the Services Directive.

  89. 89.

    For example, CJEU, Case C-355/00 Freskot [2003] ECR 5263; CJEU, Case C-263/86 Humbel [1988] ECR I-5365; CJEU, Case C-109/92 Wirth [1993] ECR I-6447.

  90. 90.

    Neergaard 2008, p. 70.

  91. 91.

    Neergaard 2008, p. 96.

  92. 92.

    The concept of a ‘charity’ was referred to in the Commission’s Handbook on implementation of the Services Directive. See also the Question and Answer 7.10 in the Commission Guide to the Application of the European Union Rules on State Aid, Public Procurement and the Internal Market to Services of General Economic Interest, and in Particular to Social Services of General Interest. The Commission states that the concept of ‘charities’ is specific to the Services Directive and its interpretation does not depend upon national law or other EU instruments but is intended to only identify certain operators whose services can be excluded from the scope of the Directive by virtue of Article 2(2)(j). The Commission moves on to provide an EU definition of such charities: ‘… not only that the providers of the service in question must be non-profit making but also that they must perform activities of a charitable nature (specifically recognised as such by the authorities) for third parties (in other words, not their members) in need. It follows from this inter alia that mere recognition as a non-profit-making organisation (for instance for tax purposes) or the general interest nature of the activities performed are not enough in themselves for an organisation to be recognised as coming under the heading of “charities recognised as such by the State”’.

  93. 93.

    SEC(2010) 1545 final.

  94. 94.

    Articles 9–13 of the Services Directive 2006/123/EC. Note, however, that Article 9 of the Services Directive imposes an obligation upon the Member States to review national legislation and evaluate access schemes governing the exercise of a service activity. Member States were required to abolish authorisation schemes that were incompatible with Article 9, or replace such schemes with less restrictive measures that were compatible with the Directive. Such self-evaluation is unlikely to recognise obstacles which have not been challenged before using the free movement rules and it may take several years for a scheme to be challenged through litigation before the CJEU, which may involve application of the TFEU rules.

  95. 95.

    Article 15(4) Directive 2006/123/EC.

  96. 96.

    See, for example, Council Conclusions, Social Services of General Interest at the heart of the European social model, 305rd Employment, Social Policy Health and Consumer Affairs Council Meeting Brussels, 6 December 2010. See also the essays in Neergaard et al. 2008.

  97. 97.

    Neergaard 2011.

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Authors and Affiliations

  1. School of Law, University of Leicester, Leicester, LE1 7RH, UK

    Erika Szyszczak

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  1. Erika Szyszczak
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Correspondence to Erika Szyszczak .

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  1. , Faculty of Law, University of Copenhagen, Studiestræde 6, Copenhagen K, 1455, Denmark

    Ulla Neergaard

  2. , School of Law, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Erika Szyszczak

  3. , Faculty of Law, Radboud University, Comeniuslaan 4, Nijmegen, 6525 HP, Netherlands

    Johan Willem van de Gronden

  4. , Fachbereich Rechtswissenschaft, Universität Erlangen-Nürnberg, Schillerstraße 1, Erlangen, 91054, Germany

    Markus Krajewski

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© 2013 T.M.C. ASSER PRESS, The Hague, The Netherlands, and the editors

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Szyszczak, E. (2013). Soft Law and Safe Havens. In: Neergaard, U., Szyszczak, E., van de Gronden, J., Krajewski, M. (eds) Social Services of General Interest in the EU. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague, The Netherlands. https://doi.org/10.1007/978-90-6704-876-7_13

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