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«COMPILATION OF THE RESPONSES TO THE UNCTAD QUESTIONNAIRE Part I: Public Monopolies, Concessions and Competition Law and Policies COMPILATION OF THE ...»

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When considering the purposes of creating a concession based system in waste transport activities, this was created mainly due to the need for decreasing harm to environment. A single waste transport operator, chosen by an open tender to exclusively service a certain area, could in theory provide services on a comparable price level and quality to that in a market where competition exists with decreased levels of pollution to the environment.

Council Regulation (EC) No 104/2000 of 17 December 1999 on the common organization of the markets in fishery and aquaculture products Council Regulation (EC) 1184/2006 of 24 July 2006 applying certain rules of competition to the production of, and trade in, agricultural products In water distribution sector, the reasons why prolonged exclusive rights have been granted to water undertakings are mainly connected to the need of ensuring largescale investments to water infrastructure, which necessitates a longer period of exploitation to the water undertakings. Whether, the decreased competition to the longer exclusive right is outweighed by needs of investment and service reliability is open to interpretation, but as competition in this sector is scarce, due to the inseparable connection between water infrastructure and service provision, public tenders in this field seem to be ineffective.

Finland In Finland, public monopolies exist, for example, on the retail sale of alcoholic beverages, on betting and on slot machines.

In addition, the electricity network operations are subject to a monopoly and require a grid permit granted by the electricity Market Authority. Some of the network companies are owned by the municipalities whereas other are owned business undertakings. The Electricity Market Authority controls the electricity market in Finland. The national grid operator in Finland, Fingrid Oyj, is placed under the socalled system operator responsibility by the Energy Market Authority.

Germany

1. How many and what type of concessions have been granted in your country?

What is the typical/average duration of a concession?

In the context of German law, a concession is an administrative measure in which a public authority entrusts a third party with the total (or partial) management of an economic activity which is normally the authority's responsibility and for which the third party assumes the operating risk.23 Germany is a federal state. Concessions may be granted by the Federal Government, the Laender (state entities), their administrative districts and local/municipal authorities.

The spectrum of fields where concessions may be granted is wide, ranging from e.g. building concessions to the permission to run a lottery, a taxi service or to produce alcohol. Depending on the type of concession their duration can vary and may last up to more than ten years.

2. What were the modalities for creating a concession (Public offering/tender, decree, etc.)? Is there a law in your country for the granting/termination of concessions? Are there provisions in concession agreements which allow the government to terminate the concession?

The modalities for granting concessions differ according to the type of concession. The two categories of concessions under German law are building concessions and service concessions. Only the procurement of building concessions24 has to follow the national and EU-rules for public procurement. Service concessions can be tendered or publicly offered etc., but there is no legal obligation to do so (and this would not necessarily be deemed reasonable in every case).

There are a number of sector specific regulations governing concessions in Germany. A significant regulation in this context is the regulation about concessions in the gas and electricity sector (Verordnung über Konzessionsabgaben für Strom und Gas25). This regulation details the rules for granting concessions in the gas and electricity sector and for the reliability and adequacy of payments for such concessions by the energy supply companies.

Concessions are of a civil nature and it is, generally, within the discretion of the contracting parties to agree on the duration of the concession or the circumstances for terminating it (however, in specific cases, competition law can set a limit; cf.

question 3). In practice, a lot of concessions follow model contracts which have been published, for instance, by the Laender.26 Please see Langen/Bunte, GWB, 10. Print run, § 32 ref. 3 According to § 99 III ARC building contracts are contracts covering the execution or the planning and execution of surface or underground construction projects.

Please see http://bundesrecht.juris.de/bundesrecht/kav/gesamt.pdf http://www.staedtetagbw.de/media/custom/1198_1600_1.PDF?loadDocument&ObjSvrID=1198&ObjID=1600&ObjLa=1&Ext=PDF

3. Were competition concerns taken into account at the time of granting a concession? What are the competition concerns or issues that have arose from concessions in your country? Was special protection in regard to dominance, entry or price control granted to concessionaires at the time of granting a concession?

As a general rule, concessions have to comply with competition law.

E.g. in 2005/2006 the Federal Cartel Office investigated long-term municipalconcessions (running for decades) that had been granted to gas suppliers.

These concession resulted in a market foreclosure and higher prices because other suppliers could not enter the markets for years. These concessions had a foreclosure and thus price-raising effect because they prevented the market entry of newcomers and deprived third providers of supply possibilities for years.27 As regards the conclusion of new contracts with regional and local gas companies, those contracts are to be prohibited which run for more than four years and which cover more than 50 per cent of actual gas requirements, or which run for more than two years and cover more than 80 per cent of requirements.





4. Which sectors from your economy are exempted from competition law? Which sectors or what type of concessions are under a specific regulatory oversight?

Are concessions subject to the national competition law?

There are no general rules that exempt concessions from competition law. In fact, as a general principle, concessions have to meet the standards of competition law (please see also answer to question 3).

Over the years, Germany has brought a number of formerly exempted sectors under competition law. However, there are sector specific laws for some economic sectors, which are enforced by the specific regulatory authorities. The Federal Network Agency is the regulatory authority for electricity, gas, telecommunications, the postal service and railways. In some respect, regulatory law may take precendence over competition law in these sectors.

5. Is there evidence in your country that concessions have brought about benefits for consumers in terms of greater infrastructure, diversification, higher quality, better prices; overall consumer welfare?

In Germany concessions have helped to (pre-)finance public construction projects like the widening of streets, the modernisation of public swimming pools or sewages.

- An important example is the use of concessions for the extension of the federal motorways (e.g. the widening of two-lane motorways). In return and http://www.ravensburg.de/session/bi/pdf/00017583.pdf Please see: http://www.Federal Cartel Office.de/wEnglisch/News/Archiv/ArchivNews2006/2006_01_17.php

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See Heiermann/Riedl/Rusam: Handkommentar zur VOB, 8. Aufl. zu A §32 Rn1.

Greece Grenada

1. How many and what type of concessions have been granted in your country?

What is the typical/average duration of a concession?

Concessions are granted to sectors to include: tourism, agriculture, manufacturing, agro processing, and services.

An "approved enterprise" within a specific sector can be granted relief from customs

duties and taxes as follows:

- 100% relief from import duties and taxes on building materials, fixtures and furnishings for first installation, extension, refurbishment, and renovation of buildings

- 100% relief from import duties and taxes on production machinery, equipment

- 100% relief from import duties and taxes on raw material, packaging material, spare parts for production machinery, and equipment for use in manufacturing

- 100% relief from import duties and taxes on office supplies and stationery for 100% export services operations

- 50% relief from import duties and taxes on commercial vehicles required for the production of the approved product or service Approved enterprises can also qualify for an investment allowance where capital investment into the project can be written off against taxable income for a period of ten (10) years.

2. What were the modalities for creating a concession (Public offering/tender, decree, etc.)? Is there a law in your country for the granting/termination of concessions? Are there provisions in concession agreements which allow the government to terminate the concession?

The grant of concessions is governed by Acts passed by Parliament.

The concessions could be terminated if:

a. The concessionaire commits an act of bankruptcy, becomes insolvent, makes an assignment for the benefit of creditors, or enters into any arrangement or composition with creditors, or in the event that any proceedings shall be commenced by or against the developer under any bankruptcy or insolvency laws, or proceedings for the appointment of a receiver or any other official with similar powers are commenced;

b. It is discovered that there has been material changes in the business being carried out or that the concessionaire made a false or fraudulent declaration or provided false information, c. In the case of winding- up, and or d. If the concessionaire commits a material breach of the terms and conditions of the incentives and if such breach (if capable of being remedied) remains un-remedied for thirty days after notice has been given.

3. Were competition concerns taken into account at the time of granting a concession? What are the competition concerns or issues that have arose from concessions in your country? Was special protection in regard to dominance, entry or price control granted to concessionaires at the time of granting a concession?

Concessions are granted to "approved enterprises" within the various sectors. These sectors identified are recognized for their potential positive impact they can have on the economy.

4. Which sectors from your economy are exempted from competition law? Which sectors or what type of concessions are under a specific regulatory oversight?

Are concessions subject to the national competition law?

Approved enterprises which receive concessions can contribute to the following:

- capital formation

- foreign exchange savings/ earnings

- transfer of skills

- job creation

5. Is there evidence in your country that concessions have brought about benefits for consumers in terms of greater infrastructure, diversification, higher quality, better prices; overall consumer welfare?

Yes, there are evidence as seen in the higher quality of manufactured products and processing plants, which results in greater cost savings and prices to consumer and improved hotel restaurant infrastructure.

Hungary

1. How many and what type of concessions have been granted in your country?

What is the typical/average duration of a concession?

There are no available statistics on the number of granted concessions. Their number varies over time: some concessions’ contractually guaranteed exclusivity has already expired, the market is liberalized, and the market entry is bound to the fulfillment of objective conditions.

Since the democratic transformation of Hungary, the state attempted to develop several sectors by involvement of the private capital and granted concessions.

–  –  –

Practically all telecommunication concessions were in force for 15 years, the wired telecommunication providers were guaranteed an 8-year long exclusivity.

2. What were the modalities for creating a concession (Public offering/tender, decree, etc.)? Is there a law in your country for the granting/termination of concessions? Are there provisions in concession agreements which allow the government to terminate the concession?

The concessions’ legal institution in Hungary was established by the Act No. XVI. of 1991, to provide a potential method for the effective operation of the state’s and local authorities’ absolute property; and also a possible way of carrying out the authorities’ exclusive jurisdiction.

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This list contains the exclusive rights in accordance with the operative law. In 1991 the electric power stations, the distributive and service networks, the gas service’s public utility network, the telecommunication’s radiofrequencies, the entire telecommunication network and the national railway network were exclusive state property. The operation of the different networks and the public services were carried out exclusively by the state.

Following the democratic transformation, the scope of the law begun to narrow step by step in relation with the progress of the privatization and liberalization.

–  –  –

The principal rule according to the law, is that a public tender and the responsible economic chamber’s preliminary evaluation has to precede the selection of the concession’s obtainer. (The requirement for a public tender does not stand if it would be contradictory to national security and this risk is confirmed by the Parliament’s responsible committee. In this case a non-public tender shall be conducted.)

–  –  –

The concessions duration is maximised in 35 years. The contract may be prolonged once without a new call for tenders by the half of the originally agreed duration. The law guarantees the state’s right to terminate unilaterally the contract in the following

cases:

o the concession’s winner does not apply the contractual requirements in the articles of foundation of the business company;

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