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On the right track towards a competition neutral compensation?

Andersson, Emanuela LU (2010) HARM02 20101
Department of Business Law
Abstract
Passenger transport services constitute public utilities, exactly like all the other similar public networks e.g. energy & water distribution, TV broadcasting or postal services. The Member States in the EU have a keen interest in the development of passenger transport and therefore the financing of public transport is such an important economic, political and social issue. In its ideal form, the financing of public transport should be handled by the transport operators and the use of State money would be restricted to exceptional cases. However, due to the existent failures in the public transport markets, the quality and intensity of these services depend on the public intervention. Therefore, the existence of State aid in this sector is... (More)
Passenger transport services constitute public utilities, exactly like all the other similar public networks e.g. energy & water distribution, TV broadcasting or postal services. The Member States in the EU have a keen interest in the development of passenger transport and therefore the financing of public transport is such an important economic, political and social issue. In its ideal form, the financing of public transport should be handled by the transport operators and the use of State money would be restricted to exceptional cases. However, due to the existent failures in the public transport markets, the quality and intensity of these services depend on the public intervention. Therefore, the existence of State aid in this sector is still necessary and the compatibility of such an aid is often motivated by the protection of public interest. On the other hand, according to the EU law rules, the State intervention should be kept under control in order to ensure that the competition between Member States is not distorted in a disproportional manner. There is a presumption that all the financial aids granted by the State to certain service providers have a distortive influence and even smaller aids in the transport sector can have a negative effect on competition between Member States. In this context, the stand-still clause has been stipulated in the Treaty, in order to make sure that the presumptive negative effects are held under control and the principles of proportionality, transparency and non-discrimination are respected, as well. The scope of the prohibition rule in Article 107(1) TFEU has nevertheless been reduced in court practice and according to this amended definition of State aid for public service interest, the focus falls on the existence of a real advantage granted by the public authorities instead of the distortive effect of the financial measure under review. The existence of a real advantage has to be disclosed by applying a simple formula that inputs the necessary costs, the reasonable profit and the possible extra-revenues incurred in fulfilling public service obligations. May this formula be too simple in order to ensure an effective control of State aid or ought the legal approach adopted by the case-law to be tuned to the effect doctrine expressed by the Treaty rules? These are the main questions that the present study endeavours to answer. (Less)
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author
Andersson, Emanuela LU
supervisor
organization
course
HARM02 20101
year
type
H1 - Master's Degree (One Year)
subject
keywords
Stand-still clause, State aid control, Compensation for PSO, Quality Requirements., Reasonable Profit
language
English
id
1613725
date added to LUP
2010-06-26 17:14:01
date last changed
2010-07-06 08:04:31
@misc{1613725,
  abstract     = {Passenger transport services constitute public utilities, exactly like all the other similar public networks e.g. energy & water distribution, TV broadcasting or postal services. The Member States in the EU have a keen interest in the development of passenger transport and therefore the financing of public transport is such an important economic, political and social issue. In its ideal form, the financing of public transport should be handled by the transport operators and the use of State money would be restricted to exceptional cases. However, due to the existent failures in the public transport markets, the quality and intensity of these services depend on the public intervention. Therefore, the existence of State aid in this sector is still necessary and the compatibility of such an aid is often motivated by the protection of public interest. On the other hand, according to the EU law rules, the State intervention should be kept under control in order to ensure that the competition between Member States is not distorted in a disproportional manner. There is a presumption that all the financial aids granted by the State to certain service providers have a distortive influence and even smaller aids in the transport sector can have a negative effect on competition between Member States. In this context, the stand-still clause has been stipulated in the Treaty, in order to make sure that the presumptive negative effects are held under control and the principles of proportionality, transparency and non-discrimination are respected, as well. The scope of the prohibition rule in Article 107(1) TFEU has nevertheless been reduced in court practice and according to this amended definition of State aid for public service interest, the focus falls on the existence of a real advantage granted by the public authorities instead of the distortive effect of the financial measure under review. The existence of a real advantage has to be disclosed by applying a simple formula that inputs the necessary costs, the reasonable profit and the possible extra-revenues incurred in fulfilling public service obligations. May this formula be too simple in order to ensure an effective control of State aid or ought the legal approach adopted by the case-law to be tuned to the effect doctrine expressed by the Treaty rules? These are the main questions that the present study endeavours to answer.},
  author       = {Andersson, Emanuela},
  keyword      = {Stand-still clause,State aid control,Compensation for PSO,Quality Requirements.,Reasonable Profit},
  language     = {eng},
  note         = {Student Paper},
  title        = {On the right track towards a competition neutral compensation?},
  year         = {2010},
}