(May 2012) Municipalities and departments in France have begun to take advantage of a new form of public company to replace privatised services with public provision.
Legislation adopted in 2010 with all-party support, enables two or more communes or municipalities to create a ‘local public company’ (société publique locale - SPL), 100% owned by public authorities, to carry out local public services, without the need to invite tenders from private companies.
The new French law includes two crucial features, which are designed meet the conditions of the European Court of Justice, which has ruled that work cannot be assigned to municipal companies without private sector tendering, unless they are entirely owned by, and working for, public authorities.
100% ownership and no tendering required
Firstly, a SPL must be 100% owned by public authorities – it cannot ever be owned, even partly, by private companies. Secondly, the authorities which own it can assign it any work they wish, for as long as they wish, without any compulsory tendering from the private sector (although it cannot do work for any authorities which do not own any shares in the SPL).
Previously, municipalities and departments in France could only own ‘mixed’ companies (societies d’économie mixte – SEM) where a private company also held at least 15% of the shares: the number of SEMs fell by over 25% between 1994 and 2007 because they could not be given work without tendering and because they had gained a reputation for fraud.
Private employment status
However, the SPL is a company with commercial status, and so its employees are subject to private sector employment rules. This means that municipal workers risk a worsening in their status and conditions, compared with being direct employees of a commune – although a SPL provides greater security than a private contractor or a ‘mixed’ company whose contracts are normally limited to a few years.
Growth in SPLs
In the first year following the new law, 22 SPLs were created, some of which replaced mixed public-private companies and private contractors, especially in public transport. The town of Saumur created a new SPL to re-municipalise its public transport services, which had been outsourced to Veolia through a mixed public-private company. As a result of eliminating Veolia’s profit margin, it expected to achieve significant annual savings of between €400000 and €800000.
In 2011 a number of départements also decided to replace expiring private contracts with municipal SPLs, including Ille-et-Villaine, Tarn, and Pyrenees-orientales. The vice-president of Ille-et-Villaine said that he expected a municipal service to be 15% cheaper, as well as more responsive to policy needs; he also pointed out that when the service was outsourced in 2005 there was only one bidder, so tendering does not necessarily result in competitive bids.
Euralille, the company which manages the city centre in Lille, used to be run by a ‘mixed’ company, but in December 2011 was transformed into a SPL, and so is entirely public. All employees were transferred automatically with no change to conditions, and the municipality can now continue to use the SPL to manage the city centre for as long as it wishes without being compelled to offer the work to tender to private companies.
References
- Éric Landot July 2010, Sociétés publiques locales : en faire ou pas ? La Lettre du Cadre Territorial
- Mobili cités26 Septembre 2010, Saumur crée la première Société publique locale de transport, La FNTV s'inquiète du développement des SPL dans le transport interurbain
- Agir Mars 2011, Ille-et-Vilaine : “La présence de la Régie garantira des conditions de concurrence optimales”
- Maire info, Juillet 2011, 64 entreprises publiques locales ont été créées depuis un an
- Nord éclair, 25 December 2011, Euralille : changement de statut anodin ?
- Les Echos 28 December 2011, Les entreprises publiques locales en pleine forme
- Cercle National Du Recyclage, 2011, Qu'est-ce qu'une société d'économie mixte?->http://www.cercle-recyclage.asso.fr/publi/vade/chap3/fiche23.htm
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