9. Privatisation and Liberalisation

Question 1

The process of liberalisation and privatisation took almost ___ decades in Europe

Answer 1

The process of liberalisation and privatisation took almost three decades in Europe

Question 2

Two views on privatisation:

Answer 2

1. Participation of individuals or companies in administration (traditional “statist” view)
2. Re-establishment of civil society in sectors conquered by the state (libertarian view)

Question 3

Types of privatisation:

Answer 3

1. Formal privatisation = transition from a public enterprise to a business under private law , cf. German Railway (Deutsche Bahn)
2. Material privatisation = total or partial transfer of public assets to private ownership or control
3. Hybrid structures
   o Joint stock company
   o Public-private partnership

Question 4

Chances of privatisation:

Answer 4

• increased efficiency
• cutting losses
• budget cuts
• extraordinary revenue
• Giving up responsibility
• Increase in flexibility
• Better management
• Economic dynamics
• Increased responsiveness
• Lower consumer prices

Question 5

Risks of privatisation:

Answer 5

• Jeopardizing long-term sustainability
• Losing Revenue
• Budget “cosmetics”
• Selling most valuable assets (“tafelsilber”)
• Losing control
• Lack of transparency
• Excessive marketing
• Oversupply
• Cherry picking
• Higher consumer prices

Question 6

Pros Privatisation:

Answer 6

1. puts an end to inefficiency
2. restitutes rights to civil society
3. overcomes the tragedy of the commons
4. abolishes state monopolies and introduces or strengthens competition

Question 7

Cons Privatisation:

Answer 7

1. may lead to monopolies and oligopolies
2. restricts free or affordable access to SGEI/services of general economic interest/universal services
3. creates insecurity
4. challenges the role of the state

Question 8

Rules and principles that promote privatisation:

Answer 8

• Freedom of establishment and to provide services
• Competition law
• Liberalisation by regulation and directives
• Budgetary constraints

Question 9

Privatisation became important in the EU in the:

a. 60s
b. 70s
c. 90s
d. 80s

Answer 9

d

Question 10

Total or partial transfer of public assets to private ownership/control is called:

a. Formal Privatisation
b. Material Privatisation

Answer 10

b

Question 11

What are some pros of privatisation? Privatisation:

a. Strengthens competition
b. Increases overall efficiency
c. Challenges the role of the state
d. Might create monopolies/oligopolies

Answer 11

a and b

Question 12

Privatisation is codified in the treaties and as such is considered to be official EU policy:

a. Yes
b. No

Answer 12

b

Question 13

Can the selling of public utilities be in conflict with the EU treaties?

a. Yes, competition law (Art. 107 TFEU) might apply
b. No, because privatisation is not covered by the EU treaties

Answer 13

b.

> > Selling public utilities must be compatible with competition law (Art 107 et seq. TFEU)