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The Belgian Governement's Tender for the Press Distribution SGEI – Issues for Discussion

Over the last few years, the European Commission adopted a number of important State aid decisions in the postal sector. One of these decisions concerned the compensation granted by the Belgian Government to bpost for the delivery of services of general economic interest (“SGEIs”) over 2013-2015. Among these SGEIs figure the early delivery of newspapers and the distribution of periodicals at reduced prices (the “Press Distribution SGEI”), which the Belgian Government considers as “particularly important to ensure a wide distribution of the written press throughout Belgium in order to enhance the level of information and diversity of opinion, and to foster public participation in the political debate.” As regards the Press Distribution SGEI, the Belgian authorities committed to organize a competitive, transparent and non-discriminatory tendering procedure with a view to award a service concession at national level by end of 2014 to the selected operator that will take over the provision of press distribution SGEI as of 1 January 2016. This paper addresses some of the key questions faced by the Belgian Governement with respect to the organisation of the tender for Press Distribution SGEI. Given the limited experience in tendering SGEIs in Europe, this is a challenging exercise, which the Commission will look at with a keen interest given its insistence that compensation for the provision of SGEIs be attributed through a tendering procedure. While the Altmark judgment of the Court of Justice of the European Union (“CJEU”) suggested that tendering a SGEI may be one of the ways in which the compensation paid for the provision of this service could escape the State aid qualification, the Commission’s so-called “SGEI Package” makes it clear that the tendering of SGEIs is compulsory if the contracting authority wants to ensure that the compensation is not qualified as State aid. Against this background, this paper is divided in five sections. Section II briefly analyses the Altmark decision and the Commission’s SGEI package with a specific focus on the 2012 Communication of the Commission on the application of the European Union (“EU”) State aid rules to compensation granted for the provision of services of general economic interest (the “Communication”), which elaborates on the so-called Altmark conditions. Section III discusses some of the challenges suggested by international experience with respect to the organisation of tenders. As will be seen, tendering may be affected by the irrational behaviour of some tenderers (the so-called “winner’s curse”), as well as strategic behaviour (“moral hazard”) with the risk that the service is not provided at the right level of quality or is even discontinued. Section IV analyses these challenges in the context of the Belgian tender for the Press Distribution SGEI and suggests ways in which they can be addressed. Finally, Section V briefly concludes.