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Competition Rules in the Water Sector

Competition Rules in the Water Sector

The Study "The Application of the Competition Rules to the Water Sector in the European Community", carried out jointly by Ecologic and the Water Research centre (WRc) for the DG Competition of the European Commission examined to what extent EC competition rules and policies could be applied to the water sector.

In the wake of the liberalisation of the telecommunications and energy markets, the influence of competition policies on monopolistic economic sectors has increased greatly over the last years. To some extent it created efficiency improvements and benefits for customers in terms of lower prices and a greater diversity in services and choices. These industries have also benefited from greater increases in innovation, research and investment, and in many cases established themselves as leading international businesses. Against this background, it was only a matter of time that liberalisation would also come under discussion in the water sector across Europe. The aim of the study was to examine to what extent EC competition rules and policies could be applied to the water sector. This included:

  1. a description of the economic and legal framework of the water sector in the EC and its Member States;
  2. the identification of possibilities to increase competition and ways to improve the regulatory framework;
  3. an exploration of ways for EC competition rules to contribute to effective competition in the water sector, as it is currently structured.

It is important to point out that the intent of the study, was not to establish any definitive conclusion regarding the introduction of competition in the water sector, but rather to provide an overview of the different markets of the water sector, its possible limitations to competition and to indicate to what extent EC competition law could be applied on these limitations. In addition, the study is neither about the promotion of private sector efficiency, nor is it about liberalisation, per se.

Discussions and developments in the water sector mainly focus on the competition in the concession market. In this connection, EC competition law does not provide for a general rule that concessions for water utilities must be put out to tender. Nevertheless, there is considerable scope for the application of EC competition rules within the water sector.

You can download the final report [pdf, 776 kB, English] here.


Funding
European Commission, Directorate-General for Competition (GD Wettbewerb)
Partner
Water Research Centre (WRc), United Kingdom
Partner
Duration
May 2002 to December 2002
Project ID
1974
Keywords
competition, water, services of general interest, Europe, liberalisation, privatisation, DG Competition