The Commission’s New SGEI Package: The Rules for State Aid and the Compensation of Services of General Economic Interest

Abstract

In December 2011 the European Commission updated its original SGEI package of 2005 in which it spelled out under which conditions public service compensation constituted aid but was compatible with the internal market. As such both versions of the Package complement the 2003 Altmark ruling of the European Court of Justice which outlined the four conditions under which compensation would not be considered to form aid in the first place. The new regime seeks to distinguish on the one hand generally compatible social services (such as healthcare and social housing) and on the other the utilities where individual exemption decisions are believed to be more frequently required. Compared to the 2005 version there is now also more emphasis on efficiency and the use of public procurement procedures and more detail on what constitutes acceptable costs and a reasonable rate of return.

Keywords: EU law, state aid, services of general economic interest, public service

JEL Classification: K21, K23, L43, L44