Public Companies and Trade Regulation in the Market Economy

Item 7: Public Companies

Public Enterprise Initiative

State intervention and public administrations through their firms in the economy are addressed in Article 38 of the European Community (EC) Treaty. This article recognizes the freedom of enterprise within the market economy. Public authorities guarantee and protect freedom of enterprise, in accordance with the requirements of the general economy and planning.

Article 128 EC establishes the possibility of public initiative, stating: "Public initiative recognizes economic activity. By law, resources can be reserved for public service or essential services, and intervention in companies may be agreed upon for reasons of general interest."

Conclusions:

• There may be areas that do not allow the involvement of private companies.
• For general interest, companies may be intervened.
• The public administration can create companies. The possibility of intervention by public enterprises in the economy is nuanced, but businesses can be set up. There are certain limits:

1. The activity to be developed must be of considerable public interest and appreciated at the time of its creation.
2. In the exercise of such business, the enterprise must undergo public rules governing the market without exception or privilege.
3. All public companies are subject to the principle that public administrations must always serve the general interest. Therefore, a public company would be entitled if the sector is effectively served by private companies.

Control of Public Enterprises

There is a triple control:

1. Political control: This is normally done through the Congress of Deputies or regional parliaments.
2. Accounting control: Performed by the national audit office.
3. Legal Control: The courts also control the operation of public enterprises.

Item 8: Major Regulatory Sector Groups

There are four major groups of rules intended to regulate trade:

1. Competition

   Competition is a basic principle in Europe. Defending free competition implies that public administration must ensure fair competition and act as arbiters of discrepancies that may arise in this matter among traders.

   The law establishes competition rules to prevent abusive practices and creates courts to defend free competition.

   The Competition Court:

   • Decides disputes and imposes sanctions.
   • Has some powers of arbitration.
   • Has consultative powers.

2. Consumer Protection

   Article 51 EC states that the authorities must guarantee the protection of consumers. General characteristics include:

   • Ensuring the performance of claims.
   • All these laws provide for the promotion of consumer associations.
   • They set out principles for all public administrations to carry out.

3. Management of Retail

   There is a basic principle of free trade, but this principle is subject to numerous rules and exceptions.

4. The Problem of Large Retail Areas

   • They have altered traditional trade with the presence of multinationals.
   • They have become engines of the economy.
   • They harm or alter traditional trade.
   • Large areas directly affect town planning in the area.
   • For these reasons, supermarkets have a separate legal regime from small traders.