European Union Competition Policy and the European Territorial Cohesion Agenda: An Impossible Reconciliation? State Aid Rules and Public Service Liberalization through the European Spatial Planning Lens

Abstract

The territorial and spatial planning impacts of European Union (EU) economic and competition policies have remained under-researched in the field of European spatial planning, in contrast to other EU policy fields. This briefing explores how two elements of the EU competition policy, the regulation of “state aid” and the liberalization of “services of general interest (SGI)”, have significant implications for the pursuit of the objective of territorial cohesion through spatial planning and territorial development policies at different scales. The paper first reviews the development of the concept of territorial cohesion in the EU discourse and policy agenda since the mid-1990s, as well as the contribution of public services (Services of General Interest, or SGI in EU jargon) to it. It, then, reviews how the EU state aid rules and liberalization policies affect the state's ability to intervene (i) in support of sub-national territories which are lagging behind or suffering decline, and (ii) in the provision of public services across the national territory, specifically in peripheral regions or areas where the provision is not catered for by the market. The conclusion of the paper outlines the additional challenges to the pursuit of territorial cohesion in the EU posed by the post-2008 economic crisis and suggests avenues for future research.

Acknowledgements

The initial review of the EU competition policy which formed the basis of this paper was carried out by the first author for the book “European Spatial Planning and Territorial Cooperation” (2010), jointly written with Stefanie Dühr and Vincent Nadin. These two authors have provided useful comments on earlier versions of this paper, which was later expanded, updated and modified jointly with Gonçalo Santinha.

Notes

1. For a good overview of the debates surrounding the origins, conceptualization and policy application of territorial cohesion, see the edited volume by Faludi, 2007a. Territorial cohesion draws from the French conception of “aménagement du territoire”, public services, spatial equity and regional economic planning (Peyrony, 2007) and from the German integrated comprehensive approach to spatial planning (Davoudi, 2005, 2007; Schön, 2005).

2. The total amount of state aid spent annually by EU member states represented, in the mid-2000s, 1% of the total EU GDP (Molle, 2007, p. 261), whilst the budget for EU Cohesion policy for the period 2007–2013 represented 0.45% of the total EU GDP.

3. Another contentious field, not addressed here, is that of devolved taxation, which may result in spatially differentiated rates between local authorities (Wishlade, 2003). For the Commission, tax and social security exemptions granted on a regional or municipal basis are considered state aid.

4. In the aftermath of the 2008 crisis, state aid rules were first lifted to allow national governments to bail out banks. In 2009, the European Commission relaxed the state aid rules applying to small businesses for a two-year period.

5. In the case of network industries (e.g. railways, electricity and gas), the European Commission required member states to separate the management of the network's physical infrastructure from the provision and operation of services using that network, and required the latter to be open to competition.

6. This explains why the liberalizing agenda of the EU has been highly controversial. Attacks on national service providers (in particular, in the utilities sector) have generated strong resistance in member states such as France, where the issue of liberalization was the key bone of contention which led to the French “no” vote in the referendum of 2005 about the proposed EU Constitutional Treaty (Milner, 2006).

7. It should be noted that the project's terms of reference are not about evaluating the impacts of EU liberalization measures on the spatial distribution and quality of services, but about defining indicators to analyse the territorial distribution of SGI throughout the European territory and to identify the main imbalances which challenge the achievement of the objectives of territorial cohesion and competitiveness.