Policy Paper 60

Public Services and European Competition: Contradiction or Conciliation?

The Policy Paper explains why single market rules are applied for the services of general economic interest in the EU. The author argues that these rules are needed to achieve more transparency and equality and they will not result in cut-throat competition destructive of public services.

The European Union makes it its business to ensure that public services – whether we are talking about network services or social services – function in the kind of economic and financial environment that can allow them to fulfil their mission. After a long and lively date, the Lisbon Treaty has recognised the values of public service and has thus acknowledged the fact that the application of the treaty rules, in particular the rules of competition, should not prevent them from functioning well. Despite this development, the notion that the rules governing the single market can be applied, under given circumstances, to the provision of certain social services is still broadly disputed by a large part of publicopinion, especially in France.


This question is well worth asking. After all, why should the rules governing the European single market be applied to initiatives that citizens adopt in response to social needs? These initiatives have often preceded initiatives taken by government, by local communities and by profit-oriented businesses because none of these players was in a position to address those needs. More often than not, these initiatives offer a solution characterized by criteria of quality, proximity and availability which are not always to be found in competitive markets – when the latter exist, that is. Thus it is perfectly legitimate to question the social usefulness of the application of single market rules to such activities, in view of the fact that the market-based approach has proven to be inadequate in the first place.


This policy paper attempts to identify the legal situation in order to prove that the implementation of single market rules is not an attempt to introduce unbridled, destructive competition in the field of public services. Instead, its primary objective is to ensure that transparency and equality becomes the rule for public service providers whenever a market can be identified.

Undoubtedly, this marks a profound shift in the relationship between public authorities and private institutions entrusted with a mission of general interest. Public authorities have an enormous responsibility in this respect because they enjoy broad discretionary power in the definition of what constitutes a social service of general interest. This is a process that is going to take time bearing in mind theextent of changes in behaviour that it demands.

If some opposition still remains, it is primarily because the transition process has not been managed well: obstacles have not been identified and stages of evolution have not been figured out. Consequently, we have got stuck in a debate on a matter of principle, occasionally even ideological in nature, over the merits or damaging effects of competition; and this, to the detriment of the European construction process.