Water is a common good:
do not let the private sector act with impunity!
Dear European, national and local politicians,
On January 18th 2012, an antitrust procedure was opened in France on 18th of January 2012 by the European Commission’ Directorate General for Competition concerning a potential cartel on price between Suez, Veolia and La Saur. According to the press release, “the Commission will examine in the following weeks the behaviour of the targeted companies as well as the Professional Water Company Federation (FP2E)”. This case was opened following unexpected inspections led in France in April 2010. At this time, the Lyonnaise des Eaux (Suez) was fined EUR 8 million based on a EC breached seal.
According to the TFEU article 101, horizontal agreements between companies are forbidden. The Directorate General for Competition can on its own initiative trigger a cartel case based on serious criteria which can then lead to fine the companies up to 10% of their annual turnover.
We are expecting the conclusions of the European Commission to be published early 2013, hoping that the serious criteria on illegal behaviours would reveal to be unfounded accusations. In the mean time, we believe that the precautionary principle should apply, bearing in mind the contracts’ length (10-20 years) and the financial volume at stake.
We can state as an example the selling conditions for the cession of 24,9% of RWE (THAMES WATER) in the Berlin Lander. The negotiated price based on business law of EUR 659 Millions for anticipated breach of provider’s agreement.
This amount does not reflect any sale of assets or infrastructure but opaque calculations of unrealised gains of a 30 years contract that was supposed to end in 2028. We are talking about taxpayers’ money spent for unrealised gains, without any activity, management costs or any performance in return. It is a form of golden hand shake that is simply unbearable at a time of public finances’ indebtedness.
We also notice in this contract with Berlin that the second private partner, Veolia, could also ask for a similar golden hand shake, which would then mean a potential overall amount of EUR 1,3 Billion!
A very great deal is at stake: these types of agreements are currently negotiated in 14 different cities in France, e.g. in Marseille (for a EUR 3 Billion financial volume), but also in Lille, Lyon, Rennes, Montpellier, Nice, Bordeaux or Toulouse for equivalent amounts.
At a time of austerity measures and budget cuts, it would be irresponsible from local politicians to engage public money in 10-20 years agreements without having previously demonstrated real financial advantages of an open tender in the water sector as well as a clear negotiation over the agreement termination clause.
In light of these elements, we appeal local, national and European politicians on economic challenges at stake and call for a moratorium that would suspend current pending or future negotiations between local authorities and the aforementioned companies until the end of the antitrust case opened by the European Commission.
European Parliament Members: