Privatisation

Two decades ago the majority of ‘Services of General Interest’ were organised through state-owned or state-controlled monopolies.

The government bore the obligation to ensure consumers’ access to these services and influenced price levels, amongst other objectives. Many governments subsidized these monopolies to help ensure access to essential services for all consumers.

The sectors that provide these services have been undergoing a process of fundamental change. This change has been caused by technological developments, globalisation and privatisation.

State-controlled or owned enterprises are being privatised, new enterprises are entering these market sectors, and more legislation on fair competition is being developed. There have been major changes to the structure of competition and of ownership across these sectors.

Competition is, however, affected by the fact that parts of some of these sectors are natural monopolies due to the infrastructure in place to deliver these services. For example, there is now choice for consumers about who supplies their gas but only one network of pipes exists to supply the gas through.

The challenge with privatisation is, therefore, to secure a well-defined limitation of the natural monopoly in each sector and to ensure that all sections operate to the benefit of consumers.

The European Commission believes that:

‘As network infrastructure (rail tracks, telephone cables, pipelines etc) can be separated from services to clients, competitive market conditions are coming closer.’