Using public resources to ensure the availability of economic services that are important to citizens
Services of general economic interest (SGEI)
If the market is not functioning properly but the authorities want to ensure that a service that is important to citizens is available in all circumstances, State aid rules concerning services of general economic interest (SGEI) may be applied under certain conditions.
Not all services can be safeguarded under SGEI legislation as it only applies to services that are important to citizens or the functioning of the society.
In practice, the availability of services is ensured by assigning a company a mandate to provide a specific service. The public service obligation imposed on a company is often compensated by financing the production of services through public resources.
What to take into account?
When considering the possibility of applying SGEI legislation, authorities must take into account, for example, the following matters:
How is the functioning of the market analysed in practice? Is the market able to provide the service in question at a reasonable price and with good quality while also ensuring the regional availability and continuity of the service?
If the arrangement is a public contract or concession within the meaning of the Act on Public Contracts, the service provider must be selected in accordance with the provisions of the Act. If the arrangement meets the criteria of a subsidy, the procedure for selecting a service provider does not have to comply with the Act on Public Contracts.
The EU State aid rules concerning SGEI are presented on the website of the European Commission’s Directorate-General for Competition.
When applying the Commission Decision on SGEI, the related transparency obligations, i.e. requirements concerning the separation of accounts, must also be met. In other SGEI situations, the provisions of the Act on the Obligation Concerning the Transparency and Information Dissemination of Economic Activities Binding on Certain Undertakings (19/2003) must be taken into account.
Application of SGEI regulation in Finland
So far, the use of the general SGEI legislation has been limited in Finland. In practice, it has only been applied at national level based on special legislation. The following website includes information on all arrangements in accordance with the European Commission’s SGEI Decision as reported to the Commission by Finland and the other EU Member States.
The same website also includes the Commission’s SGEI Guide.
Arrangements in accordance with the European Commission’s SGEI Decision
SGEI legislation can be applied at local, regional and national level. The guide “Service obligation in rural areas – a tool for providing SGEI” (only available in Finnish and Swedish) contains useful information on assigning service obligations at the municipal level.
Division of duties in the regulation of SGEI
The authority in charge of an aid measure is responsible for determining whether it falls within the scope of SGEI legislation. The Ministry of Employment and the Economy is responsible for overall coordination.
The Ministry coordinates the preparation of the country report that Finland has to submit to the Commission every other year under the SGEI Decision (2012/21/EU) and participates in the development of regulation in the field within the EU institutions. The Ministry is also responsible for the State aid notification procedure, including aid measures that require prior notification to the Commission under the SGEI Framework (2012/C8/03).
The European Commission has exclusive competence to assess the compatibility of EU State aid regulation. The Commission may intervene in “manifest” errors in SGEI arrangements, assessing whether the nature of the service in question meets the SGEI criteria or whether the compensation has been excessive.