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Home | Media | News | Blocking the admission on the market of an economic operator by another operator – unconstitutional
11.10
2016 Blocking the admission on the market of an economic operator by another operator – unconstitutionalOn 11 October 2016, the Constitutional Court of Moldova delivered its judgment on the exception of unconstitutionality of Article 19.5 of Law No. 303 of 13 December 2013 on public service of water supply and sewerage. Circumstances of the case The case originated in the exception of unconstitutionality of Article 19.5 of Law No. 303 of 13 December 2013 on the public service of water supply and sewerage, raised by the lawyer Alexander Carapunarlî in the case No. 3-463/16, pending before the Buiucani District Court of Chişinău. According to Article 19.5 of the Law on public service of water supply and sewerage, in the localities that have public systems of water supply, whose consumers are provided with water in full volume, there was prohibited the drilling of new artesian wells and the exploitation of the existing ones for groundwater use, except the cases when there is obtained a consent of the operator which is coordinated with the local public administration authority, when: a) there are needed backup sources of water supply to be created for strategically important objects and for their well-functioning in exceptional circumstances; b) the water requirements of the consumer cannot be fully covered by the operator. The Constitutional Court of Moldova ruled on the complaint in the following composition: Mr Alexandru TĂNASE, President, Mr Aurel BĂIEȘU, Mr Igor DOLEA, Mr Victor POPA, Mr Veaceslav ZAPOROJAN, judges Conclusions of the Court Hearing the reasoning of the parties and examining the casefiles, the Court held that under Article 127.4 of the Constitution all the underground resources, airspace, waters and forests used to the benefit of the public at large, natural resources of the economic regions and continental shelf, lines of communication, as well as other assets stipulated by law, shall constitute the exclusive objects of public property. The Court noted that water represents a renewable natural resource, vulnerable and limited, an indispensable element for life and society, a key factor in maintaining the ecological balance. Also, water is not an unimportant commercial product, but a natural heritage that must be protected, defended and treated as such. The water belongs to the public domain of the State. In this context, the protection, valorisation and sustainable development of water resources are actions of general interest. According to the Law on public service of water supply and sewerage, the authorities of local public administration may delegate the management of public service of water supply and sewerage, as well as the management and exploitation of systems and technical infrastructure related thereto to one or more operators which are companies with private or mixed capital, or state or municipal enterprises. Also, the Court observed that granting the right to management delegated to the operator shall be carried out under transparent conditions, within a tender organised in accordance with law. At the same time, the Court found that Article 19.5 of the Law on public service of water supply and sewerage, prohibits the drilling of new artesian wells and the exploitation of the existing ones for groundwater, except the cases when there is obtained a consent of the operator which is coordinated with the local public administration authority. The Court held that competition is a sine qua non element of the existence of a market economy and a true regulatory force of the latter. It may be defined as a confrontation between economic agents with the same activities or similar activities, exercised in branches accessible for the market. Freedom of competition represents a pre-requisite for the development of trade relations and a guarantee of the progress. Also, the Court noted that in the structure of any market economy, in addition to competition, there exists the monopoly established by the State. The Court holds that the State is entitled to establish its monopoly on certain activities or fields. The basic requirement for State monopoly is that it has to be established by law. In its caselaw the Court found that under Article 126.2.c of the Constitution, the State monopoly on certain fields – thereby public administration authorities exercise their functions on production and distribution of certain types of goods or services – does not affect the principles of market economy and free competition. In this case, the Court noted that the legislator authorised an operator (economic agent) to issue the consent for the drilling of artesian wells and the exploitation of the existing ones for groundwater use, respectively to issue the consent for admission to the market of new operators. The Court held that the by challenged provisions the protection of an economic agent is carried out, which is contrary to the transparent and antimonopoly requirements of the public service of water supply and sewerage. The Court noted that Article 13.10 of the Law on public service of water supply and sewerage expressly provides that newly-started operators may be admitted to the procedure on deciding the delegation of management, under the same conditions as the existing ones. The Court underscored that given the aim to protect groundwater, a ban for drilling of artesian wells and the exploitation of the existing ones may be established. At the same time, the respective decision rests with State authorities - in this case - with local public authority. The Court held that an economic agent may not be an authority that issues permissible acts in the field of natural resources exploitation. The Court noted that local public authorities, when admitting a new operator to the market, are entitled to consult the opinion of an existing operator, so as not to jeopardize the reliability of available centralised systems of water supply and sewerage. At the same time, the Court held that although local public authorities delegate the management of water to an operator, however under the law they preserve, in line with their competences, their prerogatives on and are held accountable for the adoption of policies and development strategies of the service, including development programs of the system of water supply and sewerage, as well as an obligation to monitor, control and supervise the manner there is provided the public service of water supply and sewerage. In conclusion, the Court held that the provisions of Article 19.5 of the Law on public service of water supply and sewerage, which imposes the requirement for the new operator to obtain the consent of the existing operator for the use of groundwater, in the localities that have public systems of water supply, transgresses the principle of respecting fair competition and the exclusive right of the State over public property, the measure being excessive in relation to the objective which is to be achieved, thereby affecting Article 9.3 combined with Articles 126.1 and 127.4 of the Constitution. Judgment of the Court Stemming from the above reasoning, the Constitutional Court of Moldova: - partially admitted the exception of unconstitutionality; - declared unconstitutional the phrase „coordinated with the operator" from Article 19.5 of Law No. 303 of 13 December 2013 on public service of water supply and sewerage.
The Judgment of the Constitutional Court is final, cannot be appealed, shall enter into force on the date of passing, and shall be published in the Official Journal of Moldova. |