“Obstruction of performance” under Article 86(2) of the EC Treaty and its application to the water sector

“Obstruction of performance” under Article 86(2) and its application to water sector 1. Introduction Provision of water and sewerage services has traditionally lies upon the responsibilty of the state for ages. Internal market integration and liberalisation processes so far had always exclude water sector from its agenda. Even until today, there has been no sectoral regulation adopted by the EU concerning liberalisation of water and sewerage services. The Parliament in its Resolution makes clear of its position that it rejects water being put in a sectoral directive due to its regional characteristics, but calls for “…without going as far as liberalisation, for water supply to be ‘modernised' with economic principles in accordance with quality and environment standards and the needs of efficiency”. 1 However, the Comission had shown its interest in liberalising water and sewerage service. 2 The annual turnover of the water sector in EU is estimated at 80 billion Euro, more than the turnover of the gas sector. The Commission has expressed concerns that horizontal and vertical restrictions from long term supply dealings “…may be harmful and contrary to EC law even where national law allows them”. 3 In its internal market strategy for 2003-2006, water is listed as one of the area where” new action may be required”, by reviewing legal and administrative situation in the water and waste-water sector, which include an analysis of the competition aspects. 4 In addition to the Commission’s explicit and implicit practices, the pressure for liberalisation and 1 European Parliament resolution on the Green Paper on services of general interest (COM(2003) 270 — 2003/2152(INI)) P5_TA(2004)0018 Wednesday 14 January 2004 2 DG Comp, Study Contract NO. COMP/2002/E3/SI2.334052 on the application of the competition rules to the water sector in the European Community, December 2002. http://ec.europa.eu/comm/competition/publications/studies/water_sector_report.pdf 3 See Alexander Gee, “Competition and the water sector”, Competition Policy Newsletter, DG. Comp, European Union, Number 2, Summer 2004. In addition to what Alexander Gee said, we shall see however, that in certain cases long term supply dealings can be justified 4 Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Internal Market Strategy - Priorities 2003-2006, COM/2003/0238 final 1