With the support of The European Commission
DG Health and Consumer Protection

1. General Comments.

EURO COOP welcomes the European Commission Green Paper on Services of General Interest (SGI).

Both historically and in practice, SGI are a fundamental element of the European model of society and play an important role in ensuring economic, social and territorial cohesion. As stated in the Green Paper, these services are "a pillar of European Citizenship".

Due to economic, social and technological changes over the past two decades, some of these services are now supplied according to market rules - especially services of economic nature such as energy or telecommunications. Nevertheless, since SGI are essential for consumers and users, it is necessary that they be supplied taking into account principles and values such as accessibility and affordability.

EURO COOP believes it necessary to establish a common set of principles and values concerning SGI across Europe in order to ensure that consumers and users have access to high quality SGI.

2. Specific Comments.

a) The scope of Community action (Questions 1 to 3 of the Green Paper):

There is no doubt about the need for Community action concerning certain services of general economic interest (e.g., large network industries) given their effect on trade in the Single Market. This is not the case however with SGI of an economic nature which do not have an effect on trade and even less so with services of non-economic nature.

EURO COOP believes that the Community should be given additional powers over these services although the extent of these powers may vary according to the nature of the services concerned.

EURO COOP finds that the EU Treaty does not provide an adequate legal basis for the development of SGI since it is overly concerned with economic issues (effect on trade and competition) and not enough with social ones.

SGI are a pillar of European Citizenship and should be regarded as such at the highest levels. EURO COOP favours the introduction of a specific article in the Treaty (or European Constitution) setting the development of high-quality and affordable SGI as a main Community objective.

In order for this to be done, there is a need - indeed a highly challenging one - to clarify the concept of SGI of a non-economic nature. First of all, it would be necessary to agree a definition of these services and then agree which services fit that definition. Then it would be necessary to establish a common set of principles and values and agree upon the role of the Community. EURO COOP would support a Community-wide public consultation specifically on these question. Nevertheless, this should not prevent the Member States and the Community from supporting the inclusion of a general clause in the Treaty concerning these services.

EURO COOP supports the establishment of a comprehensive regulatory framework at the European level for certain services of general economic interest which do not yet have it, namely water supply, waste management and public broadcasting. We believe these services are essential for the health, safety and social participation of citizens and they should therefore be subject to common standards across Europe.

Other services such as banking (minimum access to bank accounts, payment cards, etc.) and insurance (mandatory car insurance) should also be considered as SGI and therefore subject to the same principles and values.

b) Institutional Framework (Question 4 of the Green Paper):

EURO COOP believes that the institutional framework regarding SGI should be improved.

The sector-specific approach and the Subsidiarity Principle have led to differences in the regulation of these services: different Member States adopted different institutional frameworks and even within Member States, different sectors are regulated differently.

In some cases the regulatory powers are given to independent agencies, with in turn differing degrees of independence, while in others they remain within the traditional public structure.

EURO COOP believes that the institutional framework is important because it will affect the way the services and service providers behave. We would therefore like to see a common general framework set-out at Community level for all services of general economic interest 1.

Given the differences in administrative culture and between the services themselves, the regulatory framework should be a general one in order to allow Member States to react on a case-by-case basis. Nevertheless, we believe it is important to set-out a certain number of specific obligations which should apply irrespective of the concrete framework adopted.

The regulatory body should be independent from Government in the sense that decisions should take into account all interests involved (Government, suppliers, users, consumers, etc.).

Evidently, regulatory bodies must be independent from the professionals of the sector being regulated. In order to do this it is important to ensure that:

• Regulators have a relatively long period in office (5 to 7 years), preferably not renewable;
• During the term in office, regulators must not be allowed to exercise activities that may cause a conflict of interest;
• They may only be removed from office on a legally defined basis and never as a result of their decisions; and
• After their term in office they should not be allowed to work for a regulated undertaking for a period of at least 3 years ("revolving door" effect).

Independence must not mean lack of democratic accountability. It is necessary that regulators be held accountable to a democratic institution (preferably the national parliament) and to the general public. Several measures can be implemented to ensure this accountability:

• Regulators to present an annual public report of their activities;
• Regulators to publicise their decisions;
• Procedures to be transparent and pre-defined;
• Regulators to justify all decisions and give explicit reasons for not accepting specific suggestions from stakeholders, etc.

Independence and accountability are also ensured if there is participation from all stakeholders in the regulatory body on a "level playing field" basis (including public authorities, suppliers, users, consumers, etc.).

EURO COOP also finds there is a need to clarify the respective roles of the regulatory and competition authorities. In our view, the competition authority should act only when a "general" competition issue arises2 . There will always be some "grey" areas, of course; therefore it is important that Member States ensure administrative co-operation between the two authorities (previous consultation, reciprocal information requirements, etc.).

EURO COOP does not support the idea of a European regulator for each regulated industry; we do not see the need for this and we believe that the political conditions do not exist. Rather, the creation of a European regulator would raise several problems (subsidiarity, democratic accountability, and proximity to the population, among others). On the other hand, we agree that the EU has an increasing role to play in setting-up and actively participating in European-wide networks of national regulators. EURO COOP supports the creation of such networks.

c) A general framework for SGI (Questions 5 to 17 of the Green Paper):

EURO COOP supports the creation of a general Community framework for Services of General Interest. We believe that the added value of this framework compared with the existing sectoral legislation would be to clarify and structure the principles and obligations inherent to these services. Also, a general framework would harmonise concepts and ensure that the basic and fundamental rules governing these services apply to all sectors. Sectoral legislation has caused some incoherence of certain rules (e.g., the concept of affordable prices is only applicable to certain services).

EURO COOP believes that the best way of providing an appropriate legal base for this general framework would be an amendment of the Treaty, although it could also be done with the current text.

In our view, the ideal instrument for this general framework would be a Regulation; if this is not possible, a Directive would also be an acceptable second option. In any case, it should be a legally-binding instrument and not a non-legislative one, as the latter would not be adequate to achieve the objectives of a general framework.

The existence of a general framework does not mean that there is no need for sectoral legislation. The difference will be that sectoral legislation must take into account the principles set-out in the general framework, thus giving an overall consistency of approach to all sectors involved.

The general framework should apply to all sectors of SGI. We admit, however, that services of non-economic nature must be treated separately given the comparative lack of development in this area.

The general framework should include a definition of services of general interest and a clarification of the difference between services of general economic interest and those of a non-economic nature 3.

Evidently, the main core of the general framework should be the establishment of a common set of principles and obligations applicable to all (economic) SGI. In generally, EURO COOP supports the set of obligations mentioned in the Green Paper: universal service, continuity, quality, affordability and user and consumer protection. We believe that these mechanisms are very effective in achieving the objectives of social and territorial cohesion.

Regarding universal service, EURO COOP agrees that the implementation of this principle can be left to the Member States, thus allowing different traditions and specific national or regional circumstances to be taken into account. Nevertheless, in any general framework this should not serve as the exception that becomes the rule. In other words, the taking account of specific national or regional conditions must be done in a limited way, so that the principle is not subverted. Thus, the general framework must set objective criteria to access if this principle is being de facto applied. EURO COOP would support the establishment of the rule of "obligation to contract", i.e., the supplier may not deny supplying the service of general economic interest unless s/he can prove it is impossible to do so (e.g., non-existence of infrastructure).

Concerning continuity, EURO COOP feels that even if it is in the economic interest of the supplier to ensure continuity of service, this requirement should be imposed to all services of general economic interest. This way users and consumers can demand continuity and be protected against interruption of supply. The general framework must copper-fasten this rule and also establish the right of users and consumers to adequate compensation in cases of breach.

Quality of service is very important to users and consumers. A general principle of high-quality SGI must be affirmed. EURO COOP believes that Community (sectoral) legislation should develop mandatory requirements to ensure the highest possible quality of service.

The fundamental right of access to SGI implies that these services are supplied at affordable prices. EURO COOP feels that this principle should be applicable to all SGI. The general framework should also set out the general criteria to determine whether prices are affordable. These criteria must take into account the elements stressed in the Green Paper (page 18, paragraph 61), especially the price of a basket of basic services related to the disposable income of specific categories of customers.

EURO COOP also agrees with the requirements regarding user and consumer protection as set-out in the Commission Communication on SGI of September 2000.

Further specific obligations should also be set-down in the general framework, namely safety and security of supply, network access and interconnectivity and media pluralism. EURO COOP believes that in all SGI these issues are important although we recognise that sectoral legislation may be the best way to deal with specific sectoral issues.

A general requirement of sustainable development should also be set-out as a principle underlying SGI. It should guarantee respect for the environment and corporate social responsibility.

d) Good Governance (Questions 18 to 28 of the Green Paper):

In our view, good governance must be based on three fundamental principles: transparency, accountability and stakeholder participation.

The different administrative traditions and cultures dictate that the definition of public service obligations and choice of organisation must be left to national or regional public authorities, insofar as they respect Community rules and the three principles mentioned above.

EURO COOP agrees with exchange of best practice and benchmarking on questions concerning the organisation of SGI. These exchanges must involve all stakeholders (including regulators, industry, consumers and users, etc.).

Considering the financing of SGI, EURO COOP believes that transparency is key. Thus, we feel that the best financing mechanisms are the contribution of market participants (e.g., a universal service fund) and tariff averaging, as long as these tariffs are set via open and transparent procedures, with the participation of stakeholders.

Community legislation should also take into account the efficiency and redistributive effects of the financing mechanisms.

As regards the evaluation of SGI, EURO COOP agrees that a comprehensive evaluation must be multidisciplinary and multidimensional and include political, economic, social and environmental aspects, including externalities. All interested parties should have a say in the evaluation of these services. It is very important to gather data and statistics at Community level on all services of general interest. The evaluation must bear in mind the differences between Member States, for example when evaluating the affordability of the service it is important to take into account not only the price of the services but all other relevant factors (EU average price, cost of the service, average income, existence of social tariffs, etc.).

e) The Challenge of Globalisation (Questions 29 and 30 of the Green Paper):

SGI play an important role in the development of society as a whole. As such, it is important to promote access to SGI in developing countries. The EU has an important role to play in ensuring that on the one hand, European private investment in those countries takes account of the same economic and social criteria as in their home countries, while on the other hand making sure that those countries have an adequate legislative and institutional framework that benefits society as a whole.

Consumer co-operatives across Europe are working hard at promoting fair and ethical trade in consumer products. EURO COOP would like to see the same principles apply to services and more specifically to SGI. The Commission should offer greater support to organisations who are willing to act responsibly not only in the field of economic development but also in the social and environmental development (existence of trade unions, equality of men and women, no child labour, good environmental practices, etc.).

f) Non-economic services and organisations (Questions 7 and 8 of the Green Paper):

EURO COOP believes that it is important to clarify the distinction between economic and non-economic services of general interest.

The basic criteria to determine if a service is of an economic nature is to consider whether it is offered on a market basis (supply; demand; price); non-economic services are all others. Therefore, as stated in the Green Paper, the two categories can co-exist within the same sector and sometimes even be provided by the same organisations. This basic criteria, however, may be too general and cause problems of interpretation.

EURO COOP therefore suggests that the general framework establish the distinction based on that criteria and, furthermore, that it establishes an indicative list of activities considered to be of a non-economic nature: education, health, culture, social services, etc. This list may be subject to revision considering economic or social developments within European society.

Non-economic SGI must follow the same principles and obligations as those of an economic nature but the rules of the Treaty (competition and state aid rules for instance) must not be applicable to them 4.

As regards "organisations of general interest", i.e., non-profit organisations that perform largely social functions, EURO COOP believes that their role should also be clarified.

EURO COOP calls for clear and explicit recognition in the Treaty of the "Social Economy" sector, the third sector independent - as distinct from the public and private sectors. Social Economy organisations including co-operatives, mutual societies, associations and foundations must be considered as alternatives to the other two sectors and as general interest organisations.

Therefore, either Social Economy organisations must be exempt from market rules, or specific provisions should be put in place to regulate their activities while performing their general interest goals, irrespective of whether they provide economic or non-economic services.