# Official Journal C 138/2010

| | ISSN 1725-2423
  doi:10.3000/17252423.C_2010.138.eng |
| --- | --- |
| Official Journal
  of the European Union | C 138 |
| | |
| English edition | Information and Notices | Volume 5328 May 2010 |

ISSN 1725-2423

doi:10.3000/17252423.C_2010.138.eng

Official Journal

of the European Union

C 138

English edition

Information and Notices

Volume 5328 May 2010

---

| Notice No | Contents | page |
| --- | --- | --- |
| | I   Resolutions, recommendations and opinions |
| | OPINIONS |
| | Council |
| 2010/C 138/01 | Council Opinion on the updated convergence programme of the Czech Republic, 2009-2012 | 1 |
| 2010/C 138/02 | Council Opinion on the updated convergence programme of Denmark, 2009-2015 | 6 |
| 2010/C 138/03 | Council Opinion on the updated stability programme of Finland, 2009-2013 | 11 |

Notice No

Contents

page

I   Resolutions, recommendations and opinions

OPINIONS

Council

2010/C 138/01

Council Opinion on the updated convergence programme of the Czech Republic, 2009-2012

1

2010/C 138/02

Council Opinion on the updated convergence programme of Denmark, 2009-2015

6

2010/C 138/03

Council Opinion on the updated stability programme of Finland, 2009-2013

11

| | IV   Notices |
| --- | --- |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | European Commission |
| 2010/C 138/04 | Euro exchange rates | 15 |
| 2010/C 138/05 | Commission notice — Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles (
  1
  ) | 16 |
| | NOTICES FROM MEMBER STATES |
| 2010/C 138/06 | Summary information concerning State aid allocated in accordance with Commission Regulation (EC) No 736/2008 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of fisheries products (
  1
  ) | 28 |
| 2010/C 138/07 | Extract from the decision on the opening of winding-up proceedings concerning the Banco Privado Português, S.A. under Article 9 of Directive 2001/24/EC of the European Parliament and of the Council on the reorganisation and winding up of credit institutions (Publication provided for in Article 13 of that Directive and in Article 21 of Decree-Law No 199/2006 of 25 October 2006) | 29 |

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

2010/C 138/04

Euro exchange rates

15

2010/C 138/05

Commission notice — Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles (
  1
  )

1

16

NOTICES FROM MEMBER STATES

2010/C 138/06

Summary information concerning State aid allocated in accordance with Commission Regulation (EC) No 736/2008 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of fisheries products (
  1
  )

1

28

2010/C 138/07

Extract from the decision on the opening of winding-up proceedings concerning the Banco Privado Português, S.A. under Article 9 of Directive 2001/24/EC of the European Parliament and of the Council on the reorganisation and winding up of credit institutions (Publication provided for in Article 13 of that Directive and in Article 21 of Decree-Law No 199/2006 of 25 October 2006)

(Publication provided for in Article 13 of that Directive and in Article 21 of Decree-Law No 199/2006 of 25 October 2006)

29

| | V   Announcements |
| --- | --- |
| | ADMINISTRATIVE PROCEDURES |
| | European Commission |
| 2010/C 138/08 | Call for Proposals — EACEA/14/10 — ICI Education Co-operation Programme — Co-operation in Higher Education and Training between the European Union and Australia and the European Union and the Republic of Korea — Call for Proposals 2010 for Joint Mobility Projects (JMP) and Joint Degree Projects (JDP) | 30 |
| | PROCEDURES RELATING TO THE IMPLEMENTATION OF COMPETITION POLICY |
| | European Commission |
| 2010/C 138/09 | Prior notification of a concentration (Case COMP/M.5885 — Altarea/Predica/ABP/Aldeta) — Candidate case for simplified procedure (
  1
  ) | 33 |
| 2010/C 138/10 | Notice published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/39.398 — Visa MIF (
  1
  ) | 34 |
| | OTHER ACTS |
| | European Commission |
| 2010/C 138/11 | Publication of an application pursuant to Article 6(2) of Council Regulation (EC) No 510/2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs | 37 |
| 2010/C 138/12 | Notice of invitation to tender for the reduction in the import duty on maize originating in third countries | 40 |
| 2010/C 138/13 | Notice of invitation to tender for the reduction in the import duty on maize originating in third countries | 42 |
| 2010/C 138/14 | Notice of invitation to tender for the reduction in the import duty on sorghum originating in third countries | 44 |

V   Announcements

ADMINISTRATIVE PROCEDURES

European Commission

2010/C 138/08

Call for Proposals — EACEA/14/10 — ICI Education Co-operation Programme — Co-operation in Higher Education and Training between the European Union and Australia and the European Union and the Republic of Korea — Call for Proposals 2010 for Joint Mobility Projects (JMP) and Joint Degree Projects (JDP)

30

PROCEDURES RELATING TO THE IMPLEMENTATION OF COMPETITION POLICY

European Commission

2010/C 138/09

Prior notification of a concentration (Case COMP/M.5885 — Altarea/Predica/ABP/Aldeta) — Candidate case for simplified procedure (
  1
  )

1

33

2010/C 138/10

Notice published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/39.398 — Visa MIF (
  1
  )

1

34

OTHER ACTS

European Commission

2010/C 138/11

Publication of an application pursuant to Article 6(2) of Council Regulation (EC) No 510/2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs

37

2010/C 138/12

Notice of invitation to tender for the reduction in the import duty on maize originating in third countries

40

2010/C 138/13

Notice of invitation to tender for the reduction in the import duty on maize originating in third countries

42

2010/C 138/14

Notice of invitation to tender for the reduction in the import duty on sorghum originating in third countries

44

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| | (1)   Text with EEA relevance |

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(1)   Text with EEA relevance

1

| EN | |
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EN

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I Resolutions, recommendations and opinions

OPINIONS

Council

| 28.5.2010 | EN | Official Journal of the European Union | C 138/1 |
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28.5.2010

EN

Official Journal of the European Union

C 138/1

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COUNCIL OPINION

on the updated convergence programme of the Czech Republic, 2009-2012

2010/C 138/01

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 26 April 2010 the Council examined the updated convergence programme of the Czech Republic, which covers the period 2009 to 2012. |
| --- | --- |

(1)

On 26 April 2010 the Council examined the updated convergence programme of the Czech Republic, which covers the period 2009 to 2012.

| (2) | The global crisis had a strong impact on the Czech economy. Following a three-year period of growth above 6 %, real GDP grew by only 2,5 % in 2008 and declined by 4 % in 2009, according to the updated convergence programme. The economy was mainly affected through the trade channel, but also through confidence effects, a tightening of credit conditions, and shrinking foreign investment inflows. The authorities reacted determinedly to the crisis.
  The Czech National Bank reduced its key policy interest rate from 3,75 % in mid-2008 to 1 % currently, and the government designed and implemented a sizeable fiscal stimulus package in line with the European Economic Recovery Plan (EERP), amounting to 2,2 % of GDP in 2009. The Czech koruna depreciated by about one fifth against the euro between mid-July 2008 and mid-February 2009 (it then appreciated by some 14 % by mid-February 2010). In the current immediate post-crisis period, the Czech economy does not suffer from important macroeconomic vulnerabilities. The main challenge is to reduce the high structural government deficit, estimated at around 6 % of GDP in 2009, to a sustainable level. Furthermore, it is also important to ensure a rapid adjustment of the labour market to the downturn and progress towards long-lasting convergence. On 2 December 2009, in view of the planned deficit for 2009, the Council decided on the existence of an excessive deficit and issued recommendations to bring the deficit below the 3 % of GDP threshold by 2013. |
| --- | --- |

(2)

The global crisis had a strong impact on the Czech economy. Following a three-year period of growth above 6 %, real GDP grew by only 2,5 % in 2008 and declined by 4 % in 2009, according to the updated convergence programme. The economy was mainly affected through the trade channel, but also through confidence effects, a tightening of credit conditions, and shrinking foreign investment inflows. The authorities reacted determinedly to the crisis.

The Czech National Bank reduced its key policy interest rate from 3,75 % in mid-2008 to 1 % currently, and the government designed and implemented a sizeable fiscal stimulus package in line with the European Economic Recovery Plan (EERP), amounting to 2,2 % of GDP in 2009. The Czech koruna depreciated by about one fifth against the euro between mid-July 2008 and mid-February 2009 (it then appreciated by some 14 % by mid-February 2010). In the current immediate post-crisis period, the Czech economy does not suffer from important macroeconomic vulnerabilities. The main challenge is to reduce the high structural government deficit, estimated at around 6 % of GDP in 2009, to a sustainable level. Furthermore, it is also important to ensure a rapid adjustment of the labour market to the downturn and progress towards long-lasting convergence. On 2 December 2009, in view of the planned deficit for 2009, the Council decided on the existence of an excessive deficit and issued recommendations to bring the deficit below the 3 % of GDP threshold by 2013.

| (3) | Although much of the observed decline in actual GDP in the context of the crisis is cyclical, the level of potential output has also been negatively affected. In addition, the crisis may also affect potential growth in the medium term through lower investment and increasing structural unemployment. Moreover, the impact of the economic crisis compounds the negative effects of demographic ageing on potential output and the sustainability of public finances. Against this background it will be essential to accelerate the pace of structural reforms with the aim of supporting potential growth. In particular, for the Czech Republic it is important to undertake reforms aimed at raising productivity (enhancing R&D and innovation, business environment and competition) as well as labour supply and skills. |
| --- | --- |

(3)

Although much of the observed decline in actual GDP in the context of the crisis is cyclical, the level of potential output has also been negatively affected. In addition, the crisis may also affect potential growth in the medium term through lower investment and increasing structural unemployment. Moreover, the impact of the economic crisis compounds the negative effects of demographic ageing on potential output and the sustainability of public finances. Against this background it will be essential to accelerate the pace of structural reforms with the aim of supporting potential growth. In particular, for the Czech Republic it is important to undertake reforms aimed at raising productivity (enhancing R&D and innovation, business environment and competition) as well as labour supply and skills.

| (4) | The macroeconomic scenario underlying the programme projects real GDP growth at 1,3 % in 2010, 2,6 % in 2011 and 3,8 % in 2012. Assessed against currently available information, this scenario appears to be plausible until 2011 and it is consistent with monetary and exchange rate assumptions.
  The programme real GDP growth projection for 2012, which envisages an increase of growth to a level above its potential, seems to be on the favourable side. Inflation is expected to increase moderately in 2010, mainly due to increases in indirect taxes, and to remain moderate throughout the programme period. The programme foresees a further deterioration of the situation on the labour market in 2010. Overall, the inflation and labour market projections seem plausible and consistent with real GDP growth projections. |
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(4)

The macroeconomic scenario underlying the programme projects real GDP growth at 1,3 % in 2010, 2,6 % in 2011 and 3,8 % in 2012. Assessed against currently available information, this scenario appears to be plausible until 2011 and it is consistent with monetary and exchange rate assumptions.

The programme real GDP growth projection for 2012, which envisages an increase of growth to a level above its potential, seems to be on the favourable side. Inflation is expected to increase moderately in 2010, mainly due to increases in indirect taxes, and to remain moderate throughout the programme period. The programme foresees a further deterioration of the situation on the labour market in 2010. Overall, the inflation and labour market projections seem plausible and consistent with real GDP growth projections.

| (5) | The programme estimates the general government deficit in 2009 at 6,6 % of GDP. The significant deterioration from a deficit of 2,1 % of GDP in 2008 reflects to a large extent the impact of the crisis on government finances, but was also brought about by significant stimulus measures amounting to 2,2 % of GDP in 2009 adopted by the government in line with the EERP. The main measures included cuts in social contributions, increases in public infrastructure investment, and financial support to businesses and to employment. Remarkably, in 2009, general government expenditure increased less than planned in the previous update of the convergence programme. The structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures calculated according to the commonly agreed methodology on the basis of the data in the programme) deteriorated by some 2 percentage points of GDP in 2009. According to the programme, the Czech authorities plan a frontloaded consolidation starting in 2010, which in view of the Czech Republic's large structural deficit and the projected improvement in economic conditions is in line with the exit strategy advocated by the Council. |
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(5)

The programme estimates the general government deficit in 2009 at 6,6 % of GDP. The significant deterioration from a deficit of 2,1 % of GDP in 2008 reflects to a large extent the impact of the crisis on government finances, but was also brought about by significant stimulus measures amounting to 2,2 % of GDP in 2009 adopted by the government in line with the EERP. The main measures included cuts in social contributions, increases in public infrastructure investment, and financial support to businesses and to employment. Remarkably, in 2009, general government expenditure increased less than planned in the previous update of the convergence programme. The structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures calculated according to the commonly agreed methodology on the basis of the data in the programme) deteriorated by some 2 percentage points of GDP in 2009. According to the programme, the Czech authorities plan a frontloaded consolidation starting in 2010, which in view of the Czech Republic's large structural deficit and the projected improvement in economic conditions is in line with the exit strategy advocated by the Council.

| (6) | The programme projects the general government deficit at 5,3 % of GDP in 2010. This would imply an improvement in the structural balance by 2 percentage points of GDP, which is more than recommended by the Council in December 2009 — the recommendation was to achieve an average annual structural effort of 1 % of GDP over 2010-2013. In 2010, consolidation will be based on an increase in the revenue ratio by 1,5 percentage point of GDP.
  The underlying measures include increases in VAT, excise duties and real estate taxes (around 0,8 % of GDP). It also reflects the early withdrawal of temporary cuts of social contributions and an increase of social security ceilings. Measures on the expenditure side include cuts in social benefits covering sickness and maternity leave (around 0,1 % of GDP) and unused possibility of pension indexation (around 0,2 % of GDP). |
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(6)

The programme projects the general government deficit at 5,3 % of GDP in 2010. This would imply an improvement in the structural balance by 2 percentage points of GDP, which is more than recommended by the Council in December 2009 — the recommendation was to achieve an average annual structural effort of 1 % of GDP over 2010-2013. In 2010, consolidation will be based on an increase in the revenue ratio by 1,5 percentage point of GDP.

The underlying measures include increases in VAT, excise duties and real estate taxes (around 0,8 % of GDP). It also reflects the early withdrawal of temporary cuts of social contributions and an increase of social security ceilings. Measures on the expenditure side include cuts in social benefits covering sickness and maternity leave (around 0,1 % of GDP) and unused possibility of pension indexation (around 0,2 % of GDP).

| (7) | The main goal of the medium-term budgetary strategy is to continue consolidation after 2010 and reduce the government deficit below 3 % of GDP by 2013, in line with the December Council Recommendation. According to the programme, the deficit will decrease from 5,3 % of GDP in 2010 to 4,8 % and 4,2 % of GDP in 2011 and 2012 respectively. Despite the expected economic recovery, the improvement in the structural balance would slow markedly compared to 2010, and would not exceed 0,6 percentage point of GDP over 2011-2012. Most of the adjustment would be made on the expenditure side. The programme indicates that half of the spending cuts would involve operational expenditure and the other half mandatory spending, but does not provide sufficient details on how to achieve these reductions. Revenue side measures are small but better specified and include higher social security contributions and higher personal income tax. For the year 2013, the programme provides the target for the government deficit (3 % of GDP) but no details on how to reach it (including the underlying growth assumptions), for which reason it is not possible to determine the annual average fiscal effort for the period 2010-2013. As communicated by the authorities, the MTO of the Czech Republic is a government balance of – 1,0 % of GDP in structural terms. Given the most recent projections and debt level, the MTO reflects the objectives of the Pact. However, the programme does not envisage achieving it within the programme period. |
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(7)

The main goal of the medium-term budgetary strategy is to continue consolidation after 2010 and reduce the government deficit below 3 % of GDP by 2013, in line with the December Council Recommendation. According to the programme, the deficit will decrease from 5,3 % of GDP in 2010 to 4,8 % and 4,2 % of GDP in 2011 and 2012 respectively. Despite the expected economic recovery, the improvement in the structural balance would slow markedly compared to 2010, and would not exceed 0,6 percentage point of GDP over 2011-2012. Most of the adjustment would be made on the expenditure side. The programme indicates that half of the spending cuts would involve operational expenditure and the other half mandatory spending, but does not provide sufficient details on how to achieve these reductions. Revenue side measures are small but better specified and include higher social security contributions and higher personal income tax. For the year 2013, the programme provides the target for the government deficit (3 % of GDP) but no details on how to reach it (including the underlying growth assumptions), for which reason it is not possible to determine the annual average fiscal effort for the period 2010-2013. As communicated by the authorities, the MTO of the Czech Republic is a government balance of – 1,0 % of GDP in structural terms. Given the most recent projections and debt level, the MTO reflects the objectives of the Pact. However, the programme does not envisage achieving it within the programme period.

| (8) | The budgetary outcomes in 2010 could turn out somewhat below than projected in the programme. Revenue from VAT and excise duties may turn slightly lower than expected due to possibly weaker private consumption.
  On the expenditure side, spending may increase due to spending pressures before the parliamentary elections. Uncertainties to fiscal targets are larger for the outer years. The expenditure targets set in the current update for 2011 and 2012 are not supported by concrete measures, making their attainment uncertain, and the revenue projections for 2012 are based on a favourable real GDP growth assumption. Finally, the programme does not provide any information on how to bring the deficit from 4,2 % in 2012 to below 3 % of GDP in 2013. |
| --- | --- |

(8)

The budgetary outcomes in 2010 could turn out somewhat below than projected in the programme. Revenue from VAT and excise duties may turn slightly lower than expected due to possibly weaker private consumption.

On the expenditure side, spending may increase due to spending pressures before the parliamentary elections. Uncertainties to fiscal targets are larger for the outer years. The expenditure targets set in the current update for 2011 and 2012 are not supported by concrete measures, making their attainment uncertain, and the revenue projections for 2012 are based on a favourable real GDP growth assumption. Finally, the programme does not provide any information on how to bring the deficit from 4,2 % in 2012 to below 3 % of GDP in 2013.

| (9) | Government gross debt is estimated at 35 % of GDP in 2009, up from 30 % in the year before. The debt ratio is projected to increase by further 7 percentage points over the programme period, reaching 42 % of GDP in 2012, mainly driven by still relatively high government deficits. The evolution of the debt ratio is likely to be less favourable than projected in the programme, especially after 2010, in view of the risks identified for budgetary consolidation compounded by the possibility of less favourable real GDP growth in 2012 than assumed in the programme. The government debt ratio will however remain well below the 60 % of GDP threshold over the whole programme period. |
| --- | --- |

(9)

Government gross debt is estimated at 35 % of GDP in 2009, up from 30 % in the year before. The debt ratio is projected to increase by further 7 percentage points over the programme period, reaching 42 % of GDP in 2012, mainly driven by still relatively high government deficits. The evolution of the debt ratio is likely to be less favourable than projected in the programme, especially after 2010, in view of the risks identified for budgetary consolidation compounded by the possibility of less favourable real GDP growth in 2012 than assumed in the programme. The government debt ratio will however remain well below the 60 % of GDP threshold over the whole programme period.

| (10) | Medium-term debt projections that assume GDP growth rates to gradually recover to the values projected before the crisis, tax ratios to return to pre-crisis levels and include the projected increase in age-related expenditure show that the budgetary strategy envisaged in the programme, taken at face value and with no further policy change, would not be enough to stabilise the debt-to-GDP ratio by 2020. |
| --- | --- |

(10)

Medium-term debt projections that assume GDP growth rates to gradually recover to the values projected before the crisis, tax ratios to return to pre-crisis levels and include the projected increase in age-related expenditure show that the budgetary strategy envisaged in the programme, taken at face value and with no further policy change, would not be enough to stabilise the debt-to-GDP ratio by 2020.

| (11) | The long-term budgetary impact of ageing is clearly above the EU average, mainly as a result of a relatively high increase in pension expenditure as a share of GDP over the coming decades. The budgetary position in 2009, as estimated in the programme, compounds the budgetary impact of population ageing on the sustainability gap.
  Achieving primary surpluses over the medium term and undertaking reforms of pension and health care systems with a view of containing the future increase in these expenditures would contribute to reducing the risks to the sustainability of public finances which were assessed in the Commission 2009 Sustainability Report as high. An expert advisory group of the Minister of Finance and the Minister of Labour and Social Affairs was established in January 2010 with the aim of preparing alternative proposals for pension reform. These will be finalised by the end of May 2010 and conveyed to the new government. |
| --- | --- |

(11)

The long-term budgetary impact of ageing is clearly above the EU average, mainly as a result of a relatively high increase in pension expenditure as a share of GDP over the coming decades. The budgetary position in 2009, as estimated in the programme, compounds the budgetary impact of population ageing on the sustainability gap.

Achieving primary surpluses over the medium term and undertaking reforms of pension and health care systems with a view of containing the future increase in these expenditures would contribute to reducing the risks to the sustainability of public finances which were assessed in the Commission 2009 Sustainability Report as high. An expert advisory group of the Minister of Finance and the Minister of Labour and Social Affairs was established in January 2010 with the aim of preparing alternative proposals for pension reform. These will be finalised by the end of May 2010 and conveyed to the new government.

| (12) | With respect to budgetary procedures, preparation of the budget is rather decentralised but at the same time not governed by strong fiscal rules. In 2004, the Czech Republic introduced a medium-term budgetary framework which sets ceilings for nominal expenditure for the state budget over three years. Experience however shows that ceilings have been revised upwards several times in the past beyond the revisions permitted by the budgetary rules. The main weaknesses of the current set-up include low enforceability, limited ex-post monitoring, operational complexity and limited public scrutiny of the process. On 2 December 2009, the Council recommended the Czech Republic to ‘enforce rigorously its medium-term budgetary framework and improve the monitoring of the budget execution throughout the year to avoid expenditure overruns compared to budget and multiannual plans’. The programme does not include sufficient proposals in this direction. Some progress is however being made to improve fiscal governance. The ongoing implementation of significant changes in tax collection and tax management as well as a rapid shift to a treasury system of budgetary management will contribute to more efficient management of public finances. |
| --- | --- |

(12)

With respect to budgetary procedures, preparation of the budget is rather decentralised but at the same time not governed by strong fiscal rules. In 2004, the Czech Republic introduced a medium-term budgetary framework which sets ceilings for nominal expenditure for the state budget over three years. Experience however shows that ceilings have been revised upwards several times in the past beyond the revisions permitted by the budgetary rules. The main weaknesses of the current set-up include low enforceability, limited ex-post monitoring, operational complexity and limited public scrutiny of the process. On 2 December 2009, the Council recommended the Czech Republic to ‘enforce rigorously its medium-term budgetary framework and improve the monitoring of the budget execution throughout the year to avoid expenditure overruns compared to budget and multiannual plans’. The programme does not include sufficient proposals in this direction. Some progress is however being made to improve fiscal governance. The ongoing implementation of significant changes in tax collection and tax management as well as a rapid shift to a treasury system of budgetary management will contribute to more efficient management of public finances.

| (13) | There is some scope to improve the quality of public spending in the Czech Republic. In particular, spending on R&D is lower than the EU average and efficiency of public expenditure in areas such as healthcare, education and public procurement could be improved.
  By contrast, the level of government investment is high relative to the EU average and regional peers (close to 5 % of GDP over the last four years). On the revenue side, the Czech authorities implemented several reforms since 2007 aiming at a gradual shift from direct to indirect taxation. However, further reforms of the tax and benefits system would be needed to increase work incentives and reduce inactivity traps. Furthermore, the system of direct taxation and tax collection is complex and would benefit from further simplification. |
| --- | --- |

(13)

There is some scope to improve the quality of public spending in the Czech Republic. In particular, spending on R&D is lower than the EU average and efficiency of public expenditure in areas such as healthcare, education and public procurement could be improved.

By contrast, the level of government investment is high relative to the EU average and regional peers (close to 5 % of GDP over the last four years). On the revenue side, the Czech authorities implemented several reforms since 2007 aiming at a gradual shift from direct to indirect taxation. However, further reforms of the tax and benefits system would be needed to increase work incentives and reduce inactivity traps. Furthermore, the system of direct taxation and tax collection is complex and would benefit from further simplification.

| (14) | Overall, in 2010 the budgetary strategy set out in the programme is consistent with the Council recommendations under Article 126(7). The deficit target appears appropriate and is underpinned by specific consolidation measures. From 2011 on, taking into account the risks mentioned above, the budgetary strategy may not be fully consistent with the Council recommendations under Article 126(7). In particular, the consolidation plans for the years 2011 and 2012 are not ambitious enough, with an average fiscal adjustment of 0,3 % of GDP per year, and subject to risks. The expenditure targets are not backed up by specific measures, the revenue projections for 2012 are based on favourable macroeconomic assumptions, and no detail is provided on how the deficit will be reduced from 4,2 % of GDP in 2012 to below 3 % of GDP in 2013. Information on budgetary strategy for 2013 is missing. The annual fiscal effort over the programme period (2010-2012) amounts to 0,8 % on average, which is close to but below the 1 % average annual fiscal effort recommended by the Council. Meeting the recommendation will require implementation of further consolidation measures during the period 2011-2013 to ensure the recommended fiscal effort of 1 % on average. |
| --- | --- |

(14)

Overall, in 2010 the budgetary strategy set out in the programme is consistent with the Council recommendations under Article 126(7). The deficit target appears appropriate and is underpinned by specific consolidation measures. From 2011 on, taking into account the risks mentioned above, the budgetary strategy may not be fully consistent with the Council recommendations under Article 126(7). In particular, the consolidation plans for the years 2011 and 2012 are not ambitious enough, with an average fiscal adjustment of 0,3 % of GDP per year, and subject to risks. The expenditure targets are not backed up by specific measures, the revenue projections for 2012 are based on favourable macroeconomic assumptions, and no detail is provided on how the deficit will be reduced from 4,2 % of GDP in 2012 to below 3 % of GDP in 2013. Information on budgetary strategy for 2013 is missing. The annual fiscal effort over the programme period (2010-2012) amounts to 0,8 % on average, which is close to but below the 1 % average annual fiscal effort recommended by the Council. Meeting the recommendation will require implementation of further consolidation measures during the period 2011-2013 to ensure the recommended fiscal effort of 1 % on average.

| (15) | As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required data (2). In its recommendations under Article 126(7) of 2 December 2009 with a view to bring the excessive deficit situation to an end, the Council also invited the Czech Republic to report on progress made in the implementation of the Council’s recommendations in a separate chapter in the updates of the convergence programmes. The Czech Republic partly complied with this recommendation. |
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(15)

As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required data (2). In its recommendations under Article 126(7) of 2 December 2009 with a view to bring the excessive deficit situation to an end, the Council also invited the Czech Republic to report on progress made in the implementation of the Council’s recommendations in a separate chapter in the updates of the convergence programmes. The Czech Republic partly complied with this recommendation.

The overall conclusion is that the budgetary strategy of the Czech Republic for 2010 is appropriate and in line with the Council Recommendation under Article 126(7) TFEU. The fiscal strategy for the following years lacks ambition and fiscal targets are subject to risks both on the revenue and expenditure side. In particular, the expenditure targets are not backed up by specific measures from 2011 on and the favourable macro-economic assumptions put some doubt on the revenue projections for 2012. Moreover, while the target date for bringing the government deficit below 3 % of GDP (2013) is in line with the Council Recommendation, it is not possible to fully assess the budgetary strategy as the programme does not provide details on the consolidation measures that are necessary to achieve the planned significant adjustment in that year. Therefore, more information on the broad strategy underpinning the correction of the excessive deficit, including in particular 2013, would be welcome. With respect to the fiscal framework, there are noticeable weaknesses in several areas, in particular in budgetary procedures, enforcement of the medium-term budgetary framework. Furthermore, the long-term budgetary impact of ageing is clearly above the EU average which remains a concern for long-term sustainability of public finances and points to the need for reforms in the areas of pensions and healthcare.

In view of the above assessment and also in the light of the recommendation under Article 126 TFEU of 2 December 2009 and also given the need to ensure sustainable convergence the Czech Republic is invited to:

| (i) | implement the 2010 budget rigorously and avoid expenditure slippages; in line with the Council Recommendation under Article 126(7), target, in the context of the 2011 and 2012 budgets, a larger budgetary adjustment than the one planned in the programme and specify in more detail the measures that are necessary to correct the excessive deficit by 2013 at the latest; |
| --- | --- |

(i)

implement the 2010 budget rigorously and avoid expenditure slippages; in line with the Council Recommendation under Article 126(7), target, in the context of the 2011 and 2012 budgets, a larger budgetary adjustment than the one planned in the programme and specify in more detail the measures that are necessary to correct the excessive deficit by 2013 at the latest;

| (ii) | take action to improve budgetary procedures and to enforce and monitor more rigorously the medium-term budgetary targets; in particular, avoid upward revisions of expenditure ceilings beyond the revisions permitted by the budgetary rules; |
| --- | --- |

(ii)

take action to improve budgetary procedures and to enforce and monitor more rigorously the medium-term budgetary targets; in particular, avoid upward revisions of expenditure ceilings beyond the revisions permitted by the budgetary rules;

| (iii) | implement the necessary reforms in order to improve the long-term sustainability of public finances. |
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(iii)

implement the necessary reforms in order to improve the long-term sustainability of public finances.

The Czech Republic is also invited to add in its next update of the convergence programme more substantial information in the separate chapter on progress made to bring the excessive deficit situation to an end, as requested by the Council in its recommendations under Article 126(7) of 2 December 2009.

Comparison of key macroeconomic and budgetary projections

| | 2008 | 2009 | 2010 | 2011 | 2012 |
| --- | --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP Feb 2010 | 2,5 | –4,0 | 1,3 | 2,6 | 3,8 |
| COM Nov 2009 | 2,5 | –4,8 | 0,8 | 2,3 | n.a. |
| CP Oct 2008 | 4,4 | 3,7 | 4,4 | 5,2 | n.a. |
| HICP inflation
  (%) | CP Feb 2010 | 6,3 | 0,6 | 1,8 | 1,5 | 1,8 |
| COM Nov 2009 | 6,3 | 0,6 | 1,5 | 1,8 | n.a. |
| CP Oct 2008 | 6,4 | 2,9 | 3,0 | 2,5 | n.a. |
| Output gap (3)

  (% of potential GDP) | CP Feb 2010 | 4,8 | –2,0 | –2,9 | –2,6 | –1,1 |
| COM Nov 2009 (4) | 5,6 | –1,8 | –2,9 | –2,5 | n.a. |
| CP Oct 2008 | 1,9 | 0,4 | –0,4 | –0,2 | n.a. |
| Net lending/borrowing vis-à-vis the rest of the world
  (% of GDP) | CP Feb 2010 | –2,4 | –0,2 | 1,0 | 0,2 | 0,6 |
| COM Nov 2009 | –2,2 | –1,5 | –0,7 | –0,4 | n.a. |
| CP Oct 2008 | –1,0 | –0,5 | 0,4 | 1,2 | n.a. |
| General government revenue
  (% of GDP) | CP Feb 2010 | 40,9 | 39,0 | 40,5 | 40,8 | 40,5 |
| COM Nov 2009 | 40,9 | 40,3 | 41,0 | 40,9 | n.a. |
| CP Oct 2008 | 41,0 | 40,6 | 39,6 | 39,0 | n.a. |
| General government expenditure
  (% of GDP) | CP Feb 2010 | 43,0 | 45,5 | 45,8 | 45,6 | 44,7 |
| COM Nov 2009 | 43,0 | 46,9 | 46,5 | 46,6 | n.a. |
| CP Oct 2008 | 42,2 | 42,2 | 41,1 | 40,2 | n.a. |
| General government balance
  (% of GDP) | CP Feb 2010 | –2,1 | –6,6 | –5,3 | –4,8 | –4,2 |
| COM Nov 2009 | –2,1 | –6,6 | –5,5 | –5,7 | n.a. |
| CP Oct 2008 | –1,2 | –1,6 | –1,5 | –1,2 | n.a. |
| Primary balance
  (% of GDP) | CP Feb 2010 | –1,0 | –5,3 | –3,5 | –2,8 | –2,0 |
| COM Nov 2009 | –1,0 | –5,2 | –3,9 | –4,1 | n.a. |
| CP Oct 2008 | 0,0 | –0,4 | –0,4 | –0,1 | n.a. |
| Cyclically-adjusted balance (3)

  (% of GDP) | CP Feb 2010 | –3,8 | –5,9 | –4,2 | –3,8 | –3,8 |
| COM Nov 2009 | –4,1 | –6,0 | –4,5 | –4,8 | n.a. |
| CP Oct 2008 | –2,0 | –1,7 | –1,4 | –1,1 | n.a. |
| Structural balance (5)

  (% of GDP) | CP Feb 2010 | –3,7 | –6,1 | –4,1 | –3,7 | –3,5 |
| COM Nov 2009 | –4,1 | –6,3 | –4,7 | –4,9 | n.a. |
| CP Oct 2008 | –1,9 | –1,7 | –1,3 | –1,1 | n.a. |
| Government gross debt
  (% of GDP) | CP Feb 2010 | 30,0 | 35,2 | 38,6 | 40,8 | 42,0 |
| COM Nov 2009 | 30,0 | 36,5 | 40,6 | 44,0 | n.a. |
| CP Oct 2008 | 28,8 | 27,9 | 26,8 | 25,5 | n.a. |
| Convergence programme (CP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations. |

2008

2009

2010

2011

2012

Real GDP

(% change)

CP Feb 2010

2,5

–4,0

1,3

2,6

3,8

COM Nov 2009

2,5

–4,8

0,8

2,3

n.a.

CP Oct 2008

4,4

3,7

4,4

5,2

n.a.

HICP inflation

(%)

CP Feb 2010

6,3

0,6

1,8

1,5

1,8

COM Nov 2009

6,3

0,6

1,5

1,8

n.a.

CP Oct 2008

6,4

2,9

3,0

2,5

n.a.

Output gap (3)

(% of potential GDP)

CP Feb 2010

4,8

–2,0

–2,9

–2,6

–1,1

COM Nov 2009 (4)

5,6

–1,8

–2,9

–2,5

n.a.

CP Oct 2008

1,9

0,4

–0,4

–0,2

n.a.

Net lending/borrowing vis-à-vis the rest of the world

(% of GDP)

CP Feb 2010

–2,4

–0,2

1,0

0,2

0,6

COM Nov 2009

–2,2

–1,5

–0,7

–0,4

n.a.

CP Oct 2008

–1,0

–0,5

0,4

1,2

n.a.

General government revenue

(% of GDP)

CP Feb 2010

40,9

39,0

40,5

40,8

40,5

COM Nov 2009

40,9

40,3

41,0

40,9

n.a.

CP Oct 2008

41,0

40,6

39,6

39,0

n.a.

General government expenditure

(% of GDP)

CP Feb 2010

43,0

45,5

45,8

45,6

44,7

COM Nov 2009

43,0

46,9

46,5

46,6

n.a.

CP Oct 2008

42,2

42,2

41,1

40,2

n.a.

General government balance

(% of GDP)

CP Feb 2010

–2,1

–6,6

–5,3

–4,8

–4,2

COM Nov 2009

–2,1

–6,6

–5,5

–5,7

n.a.

CP Oct 2008

–1,2

–1,6

–1,5

–1,2

n.a.

Primary balance

(% of GDP)

CP Feb 2010

–1,0

–5,3

–3,5

–2,8

–2,0

COM Nov 2009

–1,0

–5,2

–3,9

–4,1

n.a.

CP Oct 2008

0,0

–0,4

–0,4

–0,1

n.a.

Cyclically-adjusted balance (3)

(% of GDP)

CP Feb 2010

–3,8

–5,9

–4,2

–3,8

–3,8

COM Nov 2009

–4,1

–6,0

–4,5

–4,8

n.a.

CP Oct 2008

–2,0

–1,7

–1,4

–1,1

n.a.

Structural balance (5)

(% of GDP)

CP Feb 2010

–3,7

–6,1

–4,1

–3,7

–3,5

COM Nov 2009

–4,1

–6,3

–4,7

–4,9

n.a.

CP Oct 2008

–1,9

–1,7

–1,3

–1,1

n.a.

Government gross debt

(% of GDP)

CP Feb 2010

30,0

35,2

38,6

40,8

42,0

COM Nov 2009

30,0

36,5

40,6

44,0

n.a.

CP Oct 2008

28,8

27,9

26,8

25,5

n.a.

Convergence programme (CP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations.

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website: http://ec.europa.eu/economy_finance/sgp/index_en.htm

(2)  In particular, the data on general government expenditure by function and on liquid financial assets and net financial debt are not provided.

(3)  Output gaps and cyclically-adjusted balances according to the programmes as recalculated by Commission services on the basis of the information in the programmes.

(4)  Based on estimated potential growth of 2,4 %, 2,0 %, 2,0 % and 2,2 % respectively in the period 2009-2012.

(5)  Cyclically-adjusted balance excluding one-off and other temporary measures. One-off and other temporary measures are 0,2 % of GDP in 2009 (deficit reducing) and – 0,1 % in 2010 and 2011 (deficit-increasing) according to the most recent programme and 0,3 % of GDP in 2009, 0,2 % of GDP in 2010 and 0,1 % of GDP in 2011 (all deficit-reducing) in the Commission services’ autumn 2009 forecast.

Source:

Convergence programme (CP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations.

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/6 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/6

---

COUNCIL OPINION

on the updated convergence programme of Denmark, 2009-2015

2010/C 138/02

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 26 April 2010 the Council examined the updated convergence programme of Denmark, which covers the period 2009 to 2015. |
| --- | --- |

(1)

On 26 April 2010 the Council examined the updated convergence programme of Denmark, which covers the period 2009 to 2015.

| (2) | The economic crisis hit the Danish economy hard in 2009, pushing Denmark into its deepest recession since the end of the Second World War. Denmark entered the crisis from a relatively comfortable position after a period of sustained strong growth with substantial surpluses in the current account and government finances and low public debt. The downturn began in 2008 when the housing bubble burst and was aggravated by falling exports, reflecting the collapse in world trade and declining investment on the back of receding final demand and tighter financing conditions. Despite disposable incomes still rising, private consumption weakened significantly, as the bleak economic outlook, falling real estate prices and rising unemployment affected consumer confidence. In response to the sharp fall in output, the Danish authorities adopted several large fiscal stimulus measures in line with the European Economic Recovery Plan (EERP) comprising tax cuts, investment projects and raising public consumption expenditures. On top of the fiscal support to economic activity, two bank rescue packages were adopted, providing guarantees and capital injections. These measures are expected to turn a comfortable budget surplus in 2008 into a deficit as from 2009 that is set to exceed the 3 %-of-GDP reference value of the Stability and Growth Pact between 2010 and 2012. Public debt, while moving up in parallel, is still expected to remain below the 60 %-of-GDP reference value. The exchange rate has been stabile throughout 2009 and the interest rate spread vis-à-vis the ECB has come down substantially. In order to ensure a sustainable development of public finances, a key challenge will be to ensure continued reform to increase labour supply. Another challenge for the Danish authorities will be to ensure that the scaling back of stimulus measures takes place in a timely manner once the recovery is self-sustaining. |
| --- | --- |

(2)

The economic crisis hit the Danish economy hard in 2009, pushing Denmark into its deepest recession since the end of the Second World War. Denmark entered the crisis from a relatively comfortable position after a period of sustained strong growth with substantial surpluses in the current account and government finances and low public debt. The downturn began in 2008 when the housing bubble burst and was aggravated by falling exports, reflecting the collapse in world trade and declining investment on the back of receding final demand and tighter financing conditions. Despite disposable incomes still rising, private consumption weakened significantly, as the bleak economic outlook, falling real estate prices and rising unemployment affected consumer confidence. In response to the sharp fall in output, the Danish authorities adopted several large fiscal stimulus measures in line with the European Economic Recovery Plan (EERP) comprising tax cuts, investment projects and raising public consumption expenditures. On top of the fiscal support to economic activity, two bank rescue packages were adopted, providing guarantees and capital injections. These measures are expected to turn a comfortable budget surplus in 2008 into a deficit as from 2009 that is set to exceed the 3 %-of-GDP reference value of the Stability and Growth Pact between 2010 and 2012. Public debt, while moving up in parallel, is still expected to remain below the 60 %-of-GDP reference value. The exchange rate has been stabile throughout 2009 and the interest rate spread vis-à-vis the ECB has come down substantially. In order to ensure a sustainable development of public finances, a key challenge will be to ensure continued reform to increase labour supply. Another challenge for the Danish authorities will be to ensure that the scaling back of stimulus measures takes place in a timely manner once the recovery is self-sustaining.

| (3) | Although much of the observed decline in actual GDP in the context of the crisis is cyclical, the level of potential output has also been negatively affected. In addition, the crisis may also affect potential growth in the medium term through lower investment, constraints in credit availability and increasing structural unemployment. Moreover, the impact of the economic crisis compounds the negative effects of demographic ageing on potential output and the sustainability of public finances. Against this background it will be essential to accelerate the pace of structural reforms with the aim of supporting potential growth. In particular, for Denmark it is important to undertake reforms in the areas of the labour market and early retirement benefits in order to increase labour supply. |
| --- | --- |

(3)

Although much of the observed decline in actual GDP in the context of the crisis is cyclical, the level of potential output has also been negatively affected. In addition, the crisis may also affect potential growth in the medium term through lower investment, constraints in credit availability and increasing structural unemployment. Moreover, the impact of the economic crisis compounds the negative effects of demographic ageing on potential output and the sustainability of public finances. Against this background it will be essential to accelerate the pace of structural reforms with the aim of supporting potential growth. In particular, for Denmark it is important to undertake reforms in the areas of the labour market and early retirement benefits in order to increase labour supply.

| (4) | The macroeconomic reference scenario underlying the programme envisages that real GDP growth, after a setback of – 4,3 % in 2009, will resume to 1,3 % in 2010, accelerating to an average rate of 2,2 % over the rest of the programme period. Assessed against currently available information (2), this scenario appears to be based on plausible growth assumptions until 2011 and favourable ones thereafter. There are differences between the programme and the Commission services’ 2009 autumn forecast in terms of the composition of growth. The programme assumes that the recovery will be driven by domestic demand, primarily by private consumption from 2010 and followed by gross fixed capital formation as from 2011, with public consumption growth levelling off from 2011 onwards and the external contribution turning slightly negative. The Commission services’ 2009 autumn forecast assumes the recovery to be driven by both private consumption and net exports. The programme's projections for inflation and employment appear realistic. The macro-economic scenario is deemed consistent with the Danish fixed exchange rate policy. |
| --- | --- |

(4)

The macroeconomic reference scenario underlying the programme envisages that real GDP growth, after a setback of – 4,3 % in 2009, will resume to 1,3 % in 2010, accelerating to an average rate of 2,2 % over the rest of the programme period. Assessed against currently available information (2), this scenario appears to be based on plausible growth assumptions until 2011 and favourable ones thereafter. There are differences between the programme and the Commission services’ 2009 autumn forecast in terms of the composition of growth. The programme assumes that the recovery will be driven by domestic demand, primarily by private consumption from 2010 and followed by gross fixed capital formation as from 2011, with public consumption growth levelling off from 2011 onwards and the external contribution turning slightly negative. The Commission services’ 2009 autumn forecast assumes the recovery to be driven by both private consumption and net exports. The programme's projections for inflation and employment appear realistic. The macro-economic scenario is deemed consistent with the Danish fixed exchange rate policy.

| (5) | The programme estimates the general government deficit in 2009 at 2,9 % of GDP. The massive swing from a surplus of 3,4 % of GDP in 2008 reflects to a large extent the impact of the crisis on government finances, but was also brought about by stimulus measures amounting to 2,2 % of GDP which the government adopted in line with the European Economic Recovery Plan (EERP). The deterioration was mainly driven by an increase in expenditure due to the working of automatic stabilisers, although the government's stimulus measures also included significant tax cuts. According to the programme, fiscal policy is planned to remain supportive in 2010 before turning restrictive in the outer years of the programme. In view of Denmark's relatively favourable starting situation the continued fiscal expansion in 2010 is appropriate and in keeping with the EERP. In order to return to a sustainable public finance position, the programme assumes fiscal consolidation to begin from 2011 and states that the measures needed to this effect — over and above what follows from the phasing-in of financing elements in the 2010 tax reform and bringing public investment back down to normal — will be specified later. |
| --- | --- |

(5)

The programme estimates the general government deficit in 2009 at 2,9 % of GDP. The massive swing from a surplus of 3,4 % of GDP in 2008 reflects to a large extent the impact of the crisis on government finances, but was also brought about by stimulus measures amounting to 2,2 % of GDP which the government adopted in line with the European Economic Recovery Plan (EERP). The deterioration was mainly driven by an increase in expenditure due to the working of automatic stabilisers, although the government's stimulus measures also included significant tax cuts. According to the programme, fiscal policy is planned to remain supportive in 2010 before turning restrictive in the outer years of the programme. In view of Denmark's relatively favourable starting situation the continued fiscal expansion in 2010 is appropriate and in keeping with the EERP. In order to return to a sustainable public finance position, the programme assumes fiscal consolidation to begin from 2011 and states that the measures needed to this effect — over and above what follows from the phasing-in of financing elements in the 2010 tax reform and bringing public investment back down to normal — will be specified later.

| (6) | The programme plans for the general government deficit to widen to 5,3 % of GDP in 2010 caused by both a decreasing revenue ratio and an increasing expenditure ratio. The decreasing revenue ratio reflects the coming into force of the 2010 tax reform while the increasing expenditure share of GDP reflects the working of automatic stabilisers and additional government stimulus measures. Stimulus measures and tax cuts are expected to amount to 1,3 % of GDP, while volatile elements reported in the programme, including revenue from North Sea oil extraction and subsidies to Greenland and the Faroe Islands amount to – 1,7 % of GDP in 2010 (3). The structural balance, i.e. cyclically-adjusted balance recalculated by the Commission services using the commonly agreed methodology, is set to worsen by 2,5 p.p. confirming a markedly expansionary fiscal stance. The difference compared to the size of the stimulus measures and tax cuts is mainly explained by revenue shortfalls. |
| --- | --- |

(6)

The programme plans for the general government deficit to widen to 5,3 % of GDP in 2010 caused by both a decreasing revenue ratio and an increasing expenditure ratio. The decreasing revenue ratio reflects the coming into force of the 2010 tax reform while the increasing expenditure share of GDP reflects the working of automatic stabilisers and additional government stimulus measures. Stimulus measures and tax cuts are expected to amount to 1,3 % of GDP, while volatile elements reported in the programme, including revenue from North Sea oil extraction and subsidies to Greenland and the Faroe Islands amount to – 1,7 % of GDP in 2010 (3). The structural balance, i.e. cyclically-adjusted balance recalculated by the Commission services using the commonly agreed methodology, is set to worsen by 2,5 p.p. confirming a markedly expansionary fiscal stance. The difference compared to the size of the stimulus measures and tax cuts is mainly explained by revenue shortfalls.

| (7) | The goals of the programme's medium-term budgetary strategy are a structurally balanced budget by 2015, a long term sustainability indicator (4) of minimum zero and an improvement of the structural balance by a total of 1,5 % of GDP from 2010 to 2013. The programme expects the headline and primary deficits to gradually narrow from 2011 onwards, with the primary balance set to turn positive from 2013 and the headline balance reaching zero in 2015. The corresponding path of the structural balance recalculated according to the commonly agreed methodology on the basis of the information in the programme, indicates that the fiscal policy stance is somewhat expansionary in 2015 by – 0,4 % of GDP, which is slightly below the goal set out in the programme. Besides assuming zero real growth in public consumption expenditures from 2011 to 2013, normalization of public investment and implementation of the financing elements in the tax reform, the envisaged consolidation is based on yet unspecified measures, but the programme states that consolidation is to be based on expenditure restraint, while ruling out tax increases. The programme update sets the medium-term objective (MTO) for the budgetary position at a structurally balanced budget. Given the most recent projections and current debt levels, the MTO more than adequately reflects the objectives of the Pact. |
| --- | --- |

(7)

The goals of the programme's medium-term budgetary strategy are a structurally balanced budget by 2015, a long term sustainability indicator (4) of minimum zero and an improvement of the structural balance by a total of 1,5 % of GDP from 2010 to 2013. The programme expects the headline and primary deficits to gradually narrow from 2011 onwards, with the primary balance set to turn positive from 2013 and the headline balance reaching zero in 2015. The corresponding path of the structural balance recalculated according to the commonly agreed methodology on the basis of the information in the programme, indicates that the fiscal policy stance is somewhat expansionary in 2015 by – 0,4 % of GDP, which is slightly below the goal set out in the programme. Besides assuming zero real growth in public consumption expenditures from 2011 to 2013, normalization of public investment and implementation of the financing elements in the tax reform, the envisaged consolidation is based on yet unspecified measures, but the programme states that consolidation is to be based on expenditure restraint, while ruling out tax increases. The programme update sets the medium-term objective (MTO) for the budgetary position at a structurally balanced budget. Given the most recent projections and current debt levels, the MTO more than adequately reflects the objectives of the Pact.

| (8) | While the budgetary projections in the programme appear plausible for 2010, the outturn for 2011 and beyond could be worse than projected. The revenue projections in the update remain realistic but subject to downside risks and the planned consolidation on the expenditure side is not underpinned by measures. In addition, the macroeconomic scenario underlying the budgetary projections assumes strong growth in private consumption and restraint on public consumption. Given the track record of expenditure frequently exceeding targets, the assumed zero real growth in public consumption expenditures between 2011 and 2013 appears optimistic. The financial sector appears stable, but the financial rescue measures enacted during the crisis have increased the government's risk exposure to the sector. |
| --- | --- |

(8)

While the budgetary projections in the programme appear plausible for 2010, the outturn for 2011 and beyond could be worse than projected. The revenue projections in the update remain realistic but subject to downside risks and the planned consolidation on the expenditure side is not underpinned by measures. In addition, the macroeconomic scenario underlying the budgetary projections assumes strong growth in private consumption and restraint on public consumption. Given the track record of expenditure frequently exceeding targets, the assumed zero real growth in public consumption expenditures between 2011 and 2013 appears optimistic. The financial sector appears stable, but the financial rescue measures enacted during the crisis have increased the government's risk exposure to the sector.

| (9) | Government gross debt is estimated at 38,5 % of GDP in 2009 and is set to increase to 48,3 % in 2012 before declining to 45,0 % of GDP in 2015. This is largely driven by the rapid increase in the deficit and the fall in GDP in 2009. In view of the negative risks to the budgetary targets, the debt ratio could rise more than projected in the programme. However, the net financial position of the general government is positive at the beginning of the programme period but will turn slightly negative during the programme period. The gross debt ratio is projected to remain below the 60 %-of-GDP reference value stipulated by the Stability and Growth Pact. |
| --- | --- |

(9)

Government gross debt is estimated at 38,5 % of GDP in 2009 and is set to increase to 48,3 % in 2012 before declining to 45,0 % of GDP in 2015. This is largely driven by the rapid increase in the deficit and the fall in GDP in 2009. In view of the negative risks to the budgetary targets, the debt ratio could rise more than projected in the programme. However, the net financial position of the general government is positive at the beginning of the programme period but will turn slightly negative during the programme period. The gross debt ratio is projected to remain below the 60 %-of-GDP reference value stipulated by the Stability and Growth Pact.

| (10) | Medium-term debt projections that assume GDP growth rates to only gradually recover to the values projected before the crisis, and tax ratios to return to pre-crisis levels and that include the projected increase in age-related expenditures show that the budgetary strategy envisaged in the programme, taken at face value and with no further policy change, would be more than enough to stabilise the debt-to-GDP ratio by 2020. |
| --- | --- |

(10)

Medium-term debt projections that assume GDP growth rates to only gradually recover to the values projected before the crisis, and tax ratios to return to pre-crisis levels and that include the projected increase in age-related expenditures show that the budgetary strategy envisaged in the programme, taken at face value and with no further policy change, would be more than enough to stabilise the debt-to-GDP ratio by 2020.

| (11) | The long-term budgetary impact of ageing is clearly lower than the EU average. The budgetary position in 2009, as estimated in the programme, contributes to the reduction of gross debt. Ensuring high primary surpluses over the medium-term would contribute to reducing the risks to the sustainability of public finances which were assessed in the Commission 2009 Sustainability Report (5) as low. |
| --- | --- |

(11)

The long-term budgetary impact of ageing is clearly lower than the EU average. The budgetary position in 2009, as estimated in the programme, contributes to the reduction of gross debt. Ensuring high primary surpluses over the medium-term would contribute to reducing the risks to the sustainability of public finances which were assessed in the Commission 2009 Sustainability Report (5) as low.

| (12) | As reflected by its budgetary track record, Denmark has benefited from a relatively strong fiscal framework, notable for its wide coverage and the transparency and visibility of its fiscal rules. General government consumption expenditure has, however, been prone to exceeding targets. Recent initiatives involving economic sanctions could enhance incentives for municipalities to adhere to agreed targets. Since 2002 the Danish tax policy has been centred on the tax-freeze, whereby no indirect or direct taxes can be raised. The tax-freeze can as such be seen as an instrument to control public expenditures. The tax-freeze has not stood in the way of a major tax reform in 2009, but strict observance of the tax-freeze may render further adjustments difficult and it locks in certain inefficiencies in the tax structure, especially in relation to real-estate taxation. |
| --- | --- |

(12)

As reflected by its budgetary track record, Denmark has benefited from a relatively strong fiscal framework, notable for its wide coverage and the transparency and visibility of its fiscal rules. General government consumption expenditure has, however, been prone to exceeding targets. Recent initiatives involving economic sanctions could enhance incentives for municipalities to adhere to agreed targets. Since 2002 the Danish tax policy has been centred on the tax-freeze, whereby no indirect or direct taxes can be raised. The tax-freeze can as such be seen as an instrument to control public expenditures. The tax-freeze has not stood in the way of a major tax reform in 2009, but strict observance of the tax-freeze may render further adjustments difficult and it locks in certain inefficiencies in the tax structure, especially in relation to real-estate taxation.

| (13) | As one of the main long-term challenges for the Danish economy is to increase labour supply, the government has initiated measures to strengthen work incentives and discourage absentees. In 2009, prompted by the global economic crisis and within the limits of the tax freeze, a tax reform was passed effective from 2010, which significantly lowers the tax burden on labour. The different elements of the tax reform will gradually be implemented in the period from 2010 to 2019. In 2010 the net revenue losses are estimated at around 0,6 % of GDP, but the financing elements render the reform fully financed over time in terms of direct revenue effects (with a neutral impact in 2013 and positive by 2015). In addition, the improved incentives to labour supply are estimated by the Danish authorities to strengthen public finances in the longer run (by about 0,3 pct. of GDP). |
| --- | --- |

(13)

As one of the main long-term challenges for the Danish economy is to increase labour supply, the government has initiated measures to strengthen work incentives and discourage absentees. In 2009, prompted by the global economic crisis and within the limits of the tax freeze, a tax reform was passed effective from 2010, which significantly lowers the tax burden on labour. The different elements of the tax reform will gradually be implemented in the period from 2010 to 2019. In 2010 the net revenue losses are estimated at around 0,6 % of GDP, but the financing elements render the reform fully financed over time in terms of direct revenue effects (with a neutral impact in 2013 and positive by 2015). In addition, the improved incentives to labour supply are estimated by the Danish authorities to strengthen public finances in the longer run (by about 0,3 pct. of GDP).

| (14) | Overall, the strategy to maintain supportive fiscal policies also in 2010 can be considered in line with the EERP. Following the negative effects of the economic crisis, the general government deficit is projected to breach the 3 %-of-GDP reference value in 2010, 2011 and 2012. However, in view of the risks to the budgetary projections in the outer years of the programme, the planned return to a balanced budget may not be achieved and the planned correction of the structural budget balance of 1,5 % by 2013 may not be reached. The projected fiscal stance, as measured by the change in structural balance, indicate that fiscal consolidation takes hold from 2011, albeit at a moderate pace approaching the 0,5 % of GDP benchmark (6). The programme mentions that consolidation through new measures will take place on the expenditure side, but, this is not backed up by specific consolidation measures apart from the assumption that zero real growth in public consumption will form the basis for budget planning in 2011-2013. Therefore, the budgetary strategy would need to be reinforced to be in line with the requirements of the Pact. Moreover, whereas the programme targets the achievement of the structural balance by 2015, the structural balance, as recalculated by the Commission services’ using the commonly agreed method, is projected to be slightly negative by – 0,4 % in 2015, and is subject to the same risks as mentioned above. |
| --- | --- |

(14)

Overall, the strategy to maintain supportive fiscal policies also in 2010 can be considered in line with the EERP. Following the negative effects of the economic crisis, the general government deficit is projected to breach the 3 %-of-GDP reference value in 2010, 2011 and 2012. However, in view of the risks to the budgetary projections in the outer years of the programme, the planned return to a balanced budget may not be achieved and the planned correction of the structural budget balance of 1,5 % by 2013 may not be reached. The projected fiscal stance, as measured by the change in structural balance, indicate that fiscal consolidation takes hold from 2011, albeit at a moderate pace approaching the 0,5 % of GDP benchmark (6). The programme mentions that consolidation through new measures will take place on the expenditure side, but, this is not backed up by specific consolidation measures apart from the assumption that zero real growth in public consumption will form the basis for budget planning in 2011-2013. Therefore, the budgetary strategy would need to be reinforced to be in line with the requirements of the Pact. Moreover, whereas the programme targets the achievement of the structural balance by 2015, the structural balance, as recalculated by the Commission services’ using the commonly agreed method, is projected to be slightly negative by – 0,4 % in 2015, and is subject to the same risks as mentioned above.

| (15) | As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme provides all required and most of the optional data (7). |
| --- | --- |

(15)

As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme provides all required and most of the optional data (7).

The overall conclusion is that that the severe economic crisis has substantially affected public finances. The programme's projections, based on current policies, indicate that the general government deficit will exceed the 3 %-of-GDP reference value from 2010 to 2012. Whereas the projected consolidation path foresees that the MTO of a structurally balanced budget would be reached by the end of the programme period in 2015, the structural balance, as recalculated by the Commission services’ using the commonly agreed method, is projected to be slightly negative. Taking also account of the downside risks attached to these projections, it would be desirable that the government specifies the consolidation measures to be taken.

In view of the above assessment Denmark is invited to:

| (i) | reinforce efforts ensuring that the planned breach of the 3 %-of-GDP reference value would remain contained as well as to swiftly correct the projected excess of the deficit over the reference value, and to |
| --- | --- |

(i)

reinforce efforts ensuring that the planned breach of the 3 %-of-GDP reference value would remain contained as well as to swiftly correct the projected excess of the deficit over the reference value, and to

| (ii) | specify the measures to underpin fiscal consolidation for the MTO to be reached by 2015 as planned. |
| --- | --- |

(ii)

specify the measures to underpin fiscal consolidation for the MTO to be reached by 2015 as planned.

Comparison of key macroeconomic and budgetary projections

| | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP Feb 2010 | –0,9 | –4,3 | 1,3 | 1,6 | 2,0 | 2,3 | 2,6 | 2,6 |
| COM Nov 2009 | –1,2 | –4,5 | 1,5 | 1,8 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 0,2 | –0,2 | 0,7 | 1,9 | 1,7 | 1,6 | 1,6 | 1,6 |
| HICP inflation
  (%) | CP Feb 2010 | 3,6 | 0,8 | 2,1 | 1,5 | 2,3 | 2,1 | 1,9 | 1,9 |
| COM Nov 2009 | 3,6 | 1,1 | 1,5 | 1,8 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 3,6 | 1,3 | 2,1 | 1,4 | 1,8 | 1,9 | 1,9 | 1,8 |
| Output gap (8)

  (% of potential GDP) | CP Feb 2010 | 0,3 | –4,5 | –3,9 | –3,1 | –2,0 | –0,9 | 0,1 | 0,7 |
| COM Nov 2009 (9) | –0,1 | –5,1 | –4,1 | –3,2 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 0,0 | –1,4 | –1,8 | –1,2 | n.a. | n.a. | n.a. | n.a. |
| Net lending/borrowing vis-à-vis the rest of the world
  (% of GDP) | CP Feb 2010 | 2,2 | 2,9 | 2,4 | 2,4 | 2,6 | 2,9 | 3,2 | 3,5 |
| COM Nov 2009 | 2,2 | 2,0 | 0,5 | 1,0 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 1,7 | 1,8 | 2,3 | 2,6 | 2,6 | 2,4 | 2,1 | 1,8 |
| General government revenue
  (% of GDP) | CP Feb 2010 | 54,3 | 53,3 | 52,4 | 52,4 | 51,8 | 51,8 | 51,9 | 52,0 |
| COM Nov 2009 | 55,3 | 53,9 | 52,8 | 53,0 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 53,2 | 51,2 | 51,5 | 52,1 | 51,8 | 51,7 | 51,6 | 51,5 |
| General government expenditure
  (% of GDP) | CP Feb 2010 | 50,9 | 56,3 | 57,7 | 56,5 | 54,9 | 53,6 | 52,8 | 52,0 |
| COM Nov 2009 | 51,9 | 55,9 | 57,6 | 56,4 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 50,2 | 51,2 | 52,8 | 51,8 | 51,7 | 51,6 | 51,6 | 51,6 |
| General government balance
  (% of GDP) | CP Feb 2010 | 3,4 | –2,9 | –5,3 | –4,1 | –3,1 | –1,8 | –0,8 | 0,0 |
| COM Nov 2009 | 3,4 | –2,0 | –4,8 | –3,4 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 3,0 | 0,0 | –1,2 | 0,3 | 0,1 | 0,1 | 0,0 | –0,1 |
| Primary balance
  (% of GDP) | CP Feb 2010 | 4,8 | –1,3 | –3,7 | –2,3 | –1,2 | 0,3 | 1,3 | 2,1 |
| COM Nov 2009 | 4,8 | –0,5 | –3,3 | –1,9 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | –4,2 | –1,5 | –0,2 | –1,6 | –1,3 | –1,2 | –0,9 | –0,7 |
| Cyclically-adjusted balance (8)

  (% of GDP) | CP Feb 2010 | 3,2 | 0,0 | –2,8 | –2,1 | –1,7 | –1,1 | –0,8 | –0,4 |
| COM Nov 2009 | 3,4 | 1,3 | –2,1 | –1,3 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 3,0 | 0,9 | 0,0 | 1,1 | n.a. | n.a. | n.a. | n.a. |
| Structural balance (10)

  (% of GDP) | CP Feb 2010 | 3,2 | 1,4 | –1,1 | –1,0 | –0,8 | –0,3 | –0,5 | –0,4 |
| COM Nov 2009 | 3,4 | 1,4 | –1,5 | –1,3 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 4,0 | 2,6 | 1,7 | 1,3 | n.a. | n.a. | n.a. | n.a. |
| Government gross debt
  (% of GDP) | CP Feb 2010 | 33,4 | 38,5 | 41,8 | 46,2 | 48,3 | 48,1 | 46,1 | 45,0 |
| COM Nov 2009 | 33,5 | 33,7 | 35,3 | 35,2 | n.a. | n.a. | n.a. | n.a. |
| CP Oct 2008 | 30,3 | 27,9 | 26,3 | 25,4 | 24,6 | 23,8 | 23,2 | 22,6 |
| Convergence programme (CP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations. |

2008

2009

2010

2011

2012

2013

2014

2015

Real GDP

(% change)

CP Feb 2010

–0,9

–4,3

1,3

1,6

2,0

2,3

2,6

2,6

COM Nov 2009

–1,2

–4,5

1,5

1,8

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

0,2

–0,2

0,7

1,9

1,7

1,6

1,6

1,6

HICP inflation

(%)

CP Feb 2010

3,6

0,8

2,1

1,5

2,3

2,1

1,9

1,9

COM Nov 2009

3,6

1,1

1,5

1,8

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

3,6

1,3

2,1

1,4

1,8

1,9

1,9

1,8

Output gap (8)

(% of potential GDP)

CP Feb 2010

0,3

–4,5

–3,9

–3,1

–2,0

–0,9

0,1

0,7

COM Nov 2009 (9)

–0,1

–5,1

–4,1

–3,2

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

0,0

–1,4

–1,8

–1,2

n.a.

n.a.

n.a.

n.a.

Net lending/borrowing vis-à-vis the rest of the world

(% of GDP)

CP Feb 2010

2,2

2,9

2,4

2,4

2,6

2,9

3,2

3,5

COM Nov 2009

2,2

2,0

0,5

1,0

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

1,7

1,8

2,3

2,6

2,6

2,4

2,1

1,8

General government revenue

(% of GDP)

CP Feb 2010

54,3

53,3

52,4

52,4

51,8

51,8

51,9

52,0

COM Nov 2009

55,3

53,9

52,8

53,0

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

53,2

51,2

51,5

52,1

51,8

51,7

51,6

51,5

General government expenditure

(% of GDP)

CP Feb 2010

50,9

56,3

57,7

56,5

54,9

53,6

52,8

52,0

COM Nov 2009

51,9

55,9

57,6

56,4

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

50,2

51,2

52,8

51,8

51,7

51,6

51,6

51,6

General government balance

(% of GDP)

CP Feb 2010

3,4

–2,9

–5,3

–4,1

–3,1

–1,8

–0,8

0,0

COM Nov 2009

3,4

–2,0

–4,8

–3,4

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

3,0

0,0

–1,2

0,3

0,1

0,1

0,0

–0,1

Primary balance

(% of GDP)

CP Feb 2010

4,8

–1,3

–3,7

–2,3

–1,2

0,3

1,3

2,1

COM Nov 2009

4,8

–0,5

–3,3

–1,9

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

–4,2

–1,5

–0,2

–1,6

–1,3

–1,2

–0,9

–0,7

Cyclically-adjusted balance (8)

(% of GDP)

CP Feb 2010

3,2

0,0

–2,8

–2,1

–1,7

–1,1

–0,8

–0,4

COM Nov 2009

3,4

1,3

–2,1

–1,3

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

3,0

0,9

0,0

1,1

n.a.

n.a.

n.a.

n.a.

Structural balance (10)

(% of GDP)

CP Feb 2010

3,2

1,4

–1,1

–1,0

–0,8

–0,3

–0,5

–0,4

COM Nov 2009

3,4

1,4

–1,5

–1,3

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

4,0

2,6

1,7

1,3

n.a.

n.a.

n.a.

n.a.

Government gross debt

(% of GDP)

CP Feb 2010

33,4

38,5

41,8

46,2

48,3

48,1

46,1

45,0

COM Nov 2009

33,5

33,7

35,3

35,2

n.a.

n.a.

n.a.

n.a.

CP Oct 2008

30,3

27,9

26,3

25,4

24,6

23,8

23,2

22,6

Convergence programme (CP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations.

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website: http://ec.europa.eu/economy_finance/sgp/index_en.htm

(2)  The assessment notably takes into account the Commission services’ autumn 2009 forecast, but also other information that has become available since then.

(3)  The programme update considers that for these volatile sources of revenue and expenditure, deviations from a structural level are ‘temporary or one-off measures’. Apart from a capital transfer of 0,3 % of GDP in 2010 stemming from a reform of the pension yield taxation, these measures do not qualify as one-offs according to the Commission Services’ definition. Using the Commission Services’ definition of one-offs, the structural balance would be – 2,5 % of GDP in 2010 and equal to the cyclically-adjusted balance in the remaining years of the programme period.

(4)  The Danish long term sustainability indicator is comparable to the S2 indicator used by the Commission services.

(5)  In the Council conclusions from 10 November 2009 on sustainability of public finances ‘the Council calls on Member States to focus attention to sustainability-oriented strategies in their upcoming stability and convergence programmes’ and further ‘invites the Commission, together with the Economic Policy Committee and the Economic and Financial Committee, to further develop methodologies for assessing the long-term sustainability of public finances in time for the next Sustainability report’, which is foreseen in 2012.

(6)  The change in structural balance recalculated according to the commonly agreed methodology, using the one-offs according to the Commission Services’ definition indicates a planned structural improvement close to 0,5 % of GDP in 2011, totalling close to 1,5 % of GDP over 2011-2013.

(7)  In particular, the data on detailed categories of stock-low adjustments are not provided, which has made the effect of making the assessment objectively more difficult.

(8)  Output gaps and cyclically-adjusted balances from the programmes as recalculated by Commission services on the basis of the information in the programmes.

(9)  Based on estimated potential growth of 1,4 %, 0,6 %, 0,5 % and 0,9 % respectively in the period 2008-2011.

(10)  Cyclically-adjusted balance excluding one-off and other temporary measures. One-off and other temporary measures are 1,4 % of GDP in 2009, 1,7 % in 2010, 1,1 % in 2011, 0,9 % in 2012, 0,8 % in 2013 and 0,0 % in 2015; all deficit-reducing according to the most recent programme and 0,1 % of GDP in 2009 and 0,6 % in 2010; all deficit-reducing according to the Commission services’ autumn 2009 forecast. Due to differencees in methodology, the one-offs reported in the programme does not qualify as one-offs according to the Commission Services’ definition. Using this definition, the one-offs would be 0,3 %-of-GDP deficit reducing in 2010 and zero in the remaining years.

Source:

Convergence programme (CP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations.

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/11 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/11

---

COUNCIL OPINION

on the updated stability programme of Finland, 2009-2013

2010/C 138/03

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 26 April 2010 the Council examined the updated stability programme of Finland, which covers the period 2009 to 2013. |
| --- | --- |

(1)

On 26 April 2010 the Council examined the updated stability programme of Finland, which covers the period 2009 to 2013.

| (2) | While Finland entered the global crisis in 2008 from a relatively strong position, having built up a substantial surplus in the current account and in government finances, the global crisis has had a particularly strong impact on its highly export-oriented industry, as well as on the domestic sectors through negative confidence effects. Finland allowed full operation of automatic stabilisers and in addition provided for a relatively large discretionary fiscal stimulus. The general government finances therefore weakened by over 6,5 % of GDP in 2009. While consumer confidence quickly rebounded in the course of 2009 to levels exceeding the long-term average, and industrial confidence indicators also improved moderately, the improvement in the real economy has been more gradual. The labour market reaction to the crisis has so far been more subdued than could have been expected from the steep fall in output. |
| --- | --- |

(2)

While Finland entered the global crisis in 2008 from a relatively strong position, having built up a substantial surplus in the current account and in government finances, the global crisis has had a particularly strong impact on its highly export-oriented industry, as well as on the domestic sectors through negative confidence effects. Finland allowed full operation of automatic stabilisers and in addition provided for a relatively large discretionary fiscal stimulus. The general government finances therefore weakened by over 6,5 % of GDP in 2009. While consumer confidence quickly rebounded in the course of 2009 to levels exceeding the long-term average, and industrial confidence indicators also improved moderately, the improvement in the real economy has been more gradual. The labour market reaction to the crisis has so far been more subdued than could have been expected from the steep fall in output.

| (3) | Although much of the observed decline in actual GDP in the context of the crisis is cyclical, the level of potential output has also been negatively affected. In addition, the crisis may also affect potential growth in the medium term through lower investment, constraints in credit availability and increasing structural unemployment. Moreover, the impact of the economic crisis compounds the negative effects of demographic ageing on potential output and the sustainability of public finances. Against this background it will be essential to accelerate the pace of structural reforms with the aim of supporting potential growth. In particular, for Finland it is important to undertake reforms to increase labour supply in the longer term in order to counter the negative effects on the labour market from the ageing of the population. |
| --- | --- |

(3)

Although much of the observed decline in actual GDP in the context of the crisis is cyclical, the level of potential output has also been negatively affected. In addition, the crisis may also affect potential growth in the medium term through lower investment, constraints in credit availability and increasing structural unemployment. Moreover, the impact of the economic crisis compounds the negative effects of demographic ageing on potential output and the sustainability of public finances. Against this background it will be essential to accelerate the pace of structural reforms with the aim of supporting potential growth. In particular, for Finland it is important to undertake reforms to increase labour supply in the longer term in order to counter the negative effects on the labour market from the ageing of the population.

| (4) | The macroeconomic scenario underlying the programme envisages that after a sharp contraction by 7,6 % in 2009, real GDP growth will resume to 0,7 % in 2010, accelerating to 2,4 % and 3,5 % in 2011 and 2012 respectively, before moderating to 3 % in 2013. Assessed against currently available information (2), this scenario appears to be based on plausible growth assumptions until 2011 and markedly favourable ones thereafter, given that the projected growth rates are substantially higher than the estimated medium term growth potential. The programme’s projections for inflation appear realistic over the programme period. |
| --- | --- |

(4)

The macroeconomic scenario underlying the programme envisages that after a sharp contraction by 7,6 % in 2009, real GDP growth will resume to 0,7 % in 2010, accelerating to 2,4 % and 3,5 % in 2011 and 2012 respectively, before moderating to 3 % in 2013. Assessed against currently available information (2), this scenario appears to be based on plausible growth assumptions until 2011 and markedly favourable ones thereafter, given that the projected growth rates are substantially higher than the estimated medium term growth potential. The programme’s projections for inflation appear realistic over the programme period.

| (5) | The programme estimates the general government deficit in 2009 at 2,2 % of GDP. The significant deterioration from a surplus of 4,4 % of GDP in 2008 reflects to a large extent the impact of the crisis on government finances and stimulus measures amounting to almost 2 % of GDP which the government adopted in line with the European Economic Recovery Plan (EERP). The deterioration in public finances was primarily driven by weaker revenues, especially due to a sharp drop in income tax accrual, particularly corporate income tax. According to the programme, fiscal policy is planned to remain supportive in 2010 before turning broadly neutral in the outer years of the programme. Since the fiscal stimulus measures are largely permanent by nature, their completion will not automatically lead to fiscal consolidation. In line with the exit strategy advocated by the Council, and with a view to returning to a sustainable public finance position, the medium term fiscal stance needs to be tightened. The programme states that the government will decide on budgetary consolidation measures later, planned to be specified in the upcoming 2011 budget and in the next stability programme update. |
| --- | --- |

(5)

The programme estimates the general government deficit in 2009 at 2,2 % of GDP. The significant deterioration from a surplus of 4,4 % of GDP in 2008 reflects to a large extent the impact of the crisis on government finances and stimulus measures amounting to almost 2 % of GDP which the government adopted in line with the European Economic Recovery Plan (EERP). The deterioration in public finances was primarily driven by weaker revenues, especially due to a sharp drop in income tax accrual, particularly corporate income tax. According to the programme, fiscal policy is planned to remain supportive in 2010 before turning broadly neutral in the outer years of the programme. Since the fiscal stimulus measures are largely permanent by nature, their completion will not automatically lead to fiscal consolidation. In line with the exit strategy advocated by the Council, and with a view to returning to a sustainable public finance position, the medium term fiscal stance needs to be tightened. The programme states that the government will decide on budgetary consolidation measures later, planned to be specified in the upcoming 2011 budget and in the next stability programme update.

| (6) | The programme envisages the general government deficit to widen to 3,6 % of GDP in 2010, thus temporarily breaching the deficit threshold of 3 % of GDP set in the Stability and Growth Pact. The projected increase in the deficit is driven by a further stimulus amounting to somewhat more than 1 % of GDP, mainly in the form of tax cuts, but also higher social benefit payments, due chiefly to the expected rise in unemployment. The structural balance, i.e. the cyclically-adjusted balance net of one-off measures recalculated according to the commonly agreed methodology, is set to decline by over 1 % in 2010 from the previous year, broadly matching the size of the stimulus measures taking effect in 2010. |
| --- | --- |

(6)

The programme envisages the general government deficit to widen to 3,6 % of GDP in 2010, thus temporarily breaching the deficit threshold of 3 % of GDP set in the Stability and Growth Pact. The projected increase in the deficit is driven by a further stimulus amounting to somewhat more than 1 % of GDP, mainly in the form of tax cuts, but also higher social benefit payments, due chiefly to the expected rise in unemployment. The structural balance, i.e. the cyclically-adjusted balance net of one-off measures recalculated according to the commonly agreed methodology, is set to decline by over 1 % in 2010 from the previous year, broadly matching the size of the stimulus measures taking effect in 2010.

| (7) | The main aim of the programme's medium-term budgetary strategy is to support economic activity and the labour market over the economic crisis, at the same time taking account of the fiscal constraints set by long-term sustainability needs. While the programme emphasises the importance of achieving a sustainable fiscal position, it also states that the current fiscal projections based on existing policies do not fulfil this aim. The programme expects the headline and primary deficits to gradually narrow from 2011 onwards, with the headline deficit reaching about 2 % of GDP in 2013. The corresponding path of the structural balance indicates that the fiscal policy stance turns neutral from 2011 onwards. This is in line with the programme scenario built on a no-policy change assumption and given that the government has not yet announced any major medium term consolidation measures. The programme update sets the medium-term objective (MTO) for the budgetary position at a structural surplus of 0,5 % of GDP. Given the most recent projections and debt level, the MTO appears to reflect the objectives of the Pact. However, under current policies the updated stability programme does not envisage achieving the medium-term budgetary objective within the programme period. |
| --- | --- |

(7)

The main aim of the programme's medium-term budgetary strategy is to support economic activity and the labour market over the economic crisis, at the same time taking account of the fiscal constraints set by long-term sustainability needs. While the programme emphasises the importance of achieving a sustainable fiscal position, it also states that the current fiscal projections based on existing policies do not fulfil this aim. The programme expects the headline and primary deficits to gradually narrow from 2011 onwards, with the headline deficit reaching about 2 % of GDP in 2013. The corresponding path of the structural balance indicates that the fiscal policy stance turns neutral from 2011 onwards. This is in line with the programme scenario built on a no-policy change assumption and given that the government has not yet announced any major medium term consolidation measures. The programme update sets the medium-term objective (MTO) for the budgetary position at a structural surplus of 0,5 % of GDP. Given the most recent projections and debt level, the MTO appears to reflect the objectives of the Pact. However, under current policies the updated stability programme does not envisage achieving the medium-term budgetary objective within the programme period.

| (8) | The budgetary outcomes could turn out worse than projected in the programme. While the risks to the more immediate growth outlook are limited as the latest forward-looking indicators confirm a relatively robust and continuous recovery of consumer confidence and albeit less so, of business confidence, the budgetary outcome in the outer years may be worse than projected given the markedly favourable growth assumptions underlying the budgetary projections. The risks to the targets are somewhat counterbalanced by the commitment of the government to specify exit measures in the 2011 budget and the next stability programme update. |
| --- | --- |

(8)

The budgetary outcomes could turn out worse than projected in the programme. While the risks to the more immediate growth outlook are limited as the latest forward-looking indicators confirm a relatively robust and continuous recovery of consumer confidence and albeit less so, of business confidence, the budgetary outcome in the outer years may be worse than projected given the markedly favourable growth assumptions underlying the budgetary projections. The risks to the targets are somewhat counterbalanced by the commitment of the government to specify exit measures in the 2011 budget and the next stability programme update.

| (9) | Government gross debt is estimated at 41,8 % of GDP in 2009, up from 34,2 % in the year before. This is largely driven by the rapid increase in the deficit and the slump in GDP. The debt ratio is projected to increase by a further 14,6 pps. over the programme period, up to 56,4 % of GDP by 2013, mainly driven by continued high government deficits. In view of the negative risks to the budgetary targets the debt ratio could rise even more than projected in the programme. As suggested by the sensitivity analysis carried out in the programme, the debt ratio is not projected to exceed the 60 % of GDP ceiling stipulated by the Stability and Growth Pact. As in previous years, the social security funds continue to accumulate financial assets, which amounted to about 52,4 % of GDP in 2008, and thus currently exceeding government gross debt. |
| --- | --- |

(9)

Government gross debt is estimated at 41,8 % of GDP in 2009, up from 34,2 % in the year before. This is largely driven by the rapid increase in the deficit and the slump in GDP. The debt ratio is projected to increase by a further 14,6 pps. over the programme period, up to 56,4 % of GDP by 2013, mainly driven by continued high government deficits. In view of the negative risks to the budgetary targets the debt ratio could rise even more than projected in the programme. As suggested by the sensitivity analysis carried out in the programme, the debt ratio is not projected to exceed the 60 % of GDP ceiling stipulated by the Stability and Growth Pact. As in previous years, the social security funds continue to accumulate financial assets, which amounted to about 52,4 % of GDP in 2008, and thus currently exceeding government gross debt.

| (10) | Medium-term debt projections that assume GDP growth rates to gradually recover to the values projected before the crisis, tax ratios to return to pre-crisis levels, and include the projected increase in age-related expenditure show that the budgetary strategy envisaged in the programme, taken at face value and with no further policy change, would not be sufficient to stabilise the debt-to-GDP ratio by 2020. |
| --- | --- |

(10)

Medium-term debt projections that assume GDP growth rates to gradually recover to the values projected before the crisis, tax ratios to return to pre-crisis levels, and include the projected increase in age-related expenditure show that the budgetary strategy envisaged in the programme, taken at face value and with no further policy change, would not be sufficient to stabilise the debt-to-GDP ratio by 2020.

| (11) | While the long-term budgetary impact of ageing is slightly higher than on average in the EU, enacted pension reforms have helped to contain the projected increase in pension expenditure over the coming decades. Moreover, the large assets accumulated by the public pension funds will help finance a part of the future increase in pension expenditure. The budgetary position in 2009, as estimated in the programme, compounds the budgetary impact of population ageing on the sustainability gap. Ensuring high primary surpluses over the medium term and implementing appropriate structural reforms would contribute to limiting the risks to the sustainability of public finances which were assessed in the Commission 2009 Sustainability Report (3) as low. |
| --- | --- |

(11)

While the long-term budgetary impact of ageing is slightly higher than on average in the EU, enacted pension reforms have helped to contain the projected increase in pension expenditure over the coming decades. Moreover, the large assets accumulated by the public pension funds will help finance a part of the future increase in pension expenditure. The budgetary position in 2009, as estimated in the programme, compounds the budgetary impact of population ageing on the sustainability gap. Ensuring high primary surpluses over the medium term and implementing appropriate structural reforms would contribute to limiting the risks to the sustainability of public finances which were assessed in the Commission 2009 Sustainability Report (3) as low.

| (12) | The main tool in controlling central government expenditure continues to be the multiannual spending limits, which exclude cyclically sensitive expenditure items and have therefore allowed the full operation of automatic stabilisers. While this setup has supported economic activity and social cohesion over the crisis period, it has also led to a relatively sharp downward swing in public finances. Given its good track record, the spending ceilings device can be expected to remain an effective tool in containing non-cyclical central government expenditure. The programme recognises that emphasis should be given to the post-crisis exit strategy and to developing fiscal policy rules that ensure long-term sustainability of public finances. The central government also attempts to achieve productivity increases for municipally provided services, which could in turn contain expenditure pressures. To this end, a framework law was passed by Parliament in 2007. |
| --- | --- |

(12)

The main tool in controlling central government expenditure continues to be the multiannual spending limits, which exclude cyclically sensitive expenditure items and have therefore allowed the full operation of automatic stabilisers. While this setup has supported economic activity and social cohesion over the crisis period, it has also led to a relatively sharp downward swing in public finances. Given its good track record, the spending ceilings device can be expected to remain an effective tool in containing non-cyclical central government expenditure. The programme recognises that emphasis should be given to the post-crisis exit strategy and to developing fiscal policy rules that ensure long-term sustainability of public finances. The central government also attempts to achieve productivity increases for municipally provided services, which could in turn contain expenditure pressures. To this end, a framework law was passed by Parliament in 2007.

| (13) | The government has not substantially altered the ongoing reform strategy concerning the reorganisation of service provision both at the central and local government level, with both progressing according to plan. However, the hoped-for productivity gains at the municipal level would likely materialise substantially only in the medium- to long run. |
| --- | --- |

(13)

The government has not substantially altered the ongoing reform strategy concerning the reorganisation of service provision both at the central and local government level, with both progressing according to plan. However, the hoped-for productivity gains at the municipal level would likely materialise substantially only in the medium- to long run.

| (14) | Overall, taking into account the risks to the budgetary targets mentioned above, the strategy to maintain supportive fiscal policies also in 2010 can be considered in line with the EERP. Following the negative effects of the economic crisis, the general government deficit limit of 3 % of GDP is projected to be temporarily breached in 2010, gradually abating below the reference value thereafter. However, in view of the risks to the growth projections in the outer years of the programme, even the planned moderate reduction in the deficit may not be achieved. The projected fiscal stance, as measured by the change in structural balances, does not indicate fiscal consolidation to take hold in the medium term and the programme does not envisage progress towards its MTO within the programme period. While the programme states that a consolidation strategy is being planned, it does not specify its precise objectives or main elements. A timely implementation of a comprehensive strategy aiming at a structural fiscal consolidation would be necessary to bring the budgetary strategy in line with the requirements of the Pact. |
| --- | --- |

(14)

Overall, taking into account the risks to the budgetary targets mentioned above, the strategy to maintain supportive fiscal policies also in 2010 can be considered in line with the EERP. Following the negative effects of the economic crisis, the general government deficit limit of 3 % of GDP is projected to be temporarily breached in 2010, gradually abating below the reference value thereafter. However, in view of the risks to the growth projections in the outer years of the programme, even the planned moderate reduction in the deficit may not be achieved. The projected fiscal stance, as measured by the change in structural balances, does not indicate fiscal consolidation to take hold in the medium term and the programme does not envisage progress towards its MTO within the programme period. While the programme states that a consolidation strategy is being planned, it does not specify its precise objectives or main elements. A timely implementation of a comprehensive strategy aiming at a structural fiscal consolidation would be necessary to bring the budgetary strategy in line with the requirements of the Pact.

| (15) | As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required and optional data (4). |
| --- | --- |

(15)

As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required and optional data (4).

The overall conclusion is that that the severe economic crisis has substantially weakened public finances, including the long-term sustainability position. The planned expansionary fiscal policies in 2010 are in line with the EERP. However, the programme's projections, based on current policies, indicate that the general government deficit would exceed the 3 %-of-GDP reference value in 2010. Moreover, the projected sluggish medium term fiscal consolidation path would not ensure progress towards the programme's MTO. Taking also account of the downside risks attached to these projections, it would be highly desirable that the Government takes timely action to specify a comprehensive and concrete medium term fiscal strategy to consolidate from 2011 onwards. In view of the above assessment, Finland is invited to:

| (i) | implement the 2010 fiscal policy as planned in line with the EERP, while ensuring that the planned breach of the 3 %-of-GDP reference value would remain contained and temporary; |
| --- | --- |

(i)

implement the 2010 fiscal policy as planned in line with the EERP, while ensuring that the planned breach of the 3 %-of-GDP reference value would remain contained and temporary;

| (ii) | take timely action to define a comprehensive and concrete medium term fiscal strategy to consolidate from 2011 onwards, also with a view to achieve the MTO and to restore the long-term sustainability of public finances. |
| --- | --- |

(ii)

take timely action to define a comprehensive and concrete medium term fiscal strategy to consolidate from 2011 onwards, also with a view to achieve the MTO and to restore the long-term sustainability of public finances.

Comparison of key macro economic and budgetary projections

| | | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Real GDP
  (% change) | SP Feb 2010 | 1,0 | –7,6 | 0,7 | 2,4 | 3,5 | 3,0 |
| COM Nov 2009 | 1,0 | –6,9 | 0,9 | 1,6 | n.a. | n.a. |
| SP Dec 2008 | 2,6 | 0,6 | 1,8 | 2,4 | 2,2 | n.a. |
| HICP inflation
  (%) | SP Feb 2010 | 3,9 | 1,7 | 1,8 | 1,7 | 2,0 | 2,0 |
| COM Nov 2009 | 3,9 | 1,8 | 1,6 | 1,5 | n.a. | n.a. |
| SP Oct 2008 | 4,0 | 2,3 | 1,9 | 2,0 | 2,0 | n.a. |
| Output gap (5)

  (% of potential GDP) | SP Feb 2010 | 3,7 | –5,0 | –5,0 | –4,0 | –2,2 | –1,2 |
| COM Nov 2009 (6) | 3,5 | –4,5 | –4,3 | –3,8 | n.a. | n.a. |
| SP Dec 2008 | 1,3 | –0,6 | –1,0 | –1,2 | n.a. | n.a. |
| Net lending/borrowing vis-à-vis the rest of the world
  (% of GDP) | SP Feb 2010 | 2,7 | 0,8 | 1,2 | 1,5 | 1,8 | 2,0 |
| COM Nov 2009 | 3,0 | 1,1 | 1,2 | 1,3 | n.a. | n.a. |
| SP Dec 2008 | 4,0 | 3,6 | 3,7 | 3,9 | 3,9 | n.a. |
| General government revenue
  (% of GDP) | SP Feb 2010 | 53,4 | 53,1 | 52,6 | 53,4 | 53,2 | 52,8 |
| COM Nov 2009 | 53,4 | 51,5 | 50,5 | 50,6 | n.a. | n.a. |
| SP Dec 2008 | 51,4 | 50,3 | 49,7 | 49,4 | 49,4 | n.a. |
| General government expenditure
  (% of GDP) | SP Feb 2010 | 49,0 | 55,3 | 56,2 | 56,4 | 55,5 | 54,7 |
| COM Nov 2009 | 48,9 | 54,3 | 55,0 | 55,0 | n.a. | n.a. |
| SP Dec 2008 | 47,0 | 48,2 | 48,6 | 48,4 | 48,5 | n.a. |
| General government balance
  (% of GDP) | SP Feb 2010 | 4,4 | –2,2 | –3,6 | –3,0 | –2,3 | –1,9 |
| COM Nov 2009 | 4,5 | –2,8 | –4,5 | –4,3 | n.a. | n.a. |
| SP Dec 2008 | 4,4 | 2,1 | 1,1 | 1,0 | 0,9 | n.a. |
| Primary balance
  (% of GDP) | SP Feb 2010 | 5,9 | –0,8 | –2,3 | –1,2 | –0,2 | 0,4 |
| COM Nov 2009 | 5,9 | –1,4 | –3,1 | –2,9 | n.a. | n.a. |
| SP Dec 2008 | 5,4 | 4,0 | 3,3 | 2,8 | 2,4 | n.a. |
| Cyclically-adjusted balance (5)

  (% of GDP) | SP Feb 2010 | 2,6 | 0,3 | –1,1 | –1,0 | –1,2 | –1,3 |
| COM Nov 2009 | 2,7 | –0,5 | –2,3 | –2,4 | n.a. | n.a. |
| SP Dec 2008 | 3,7 | 2,4 | 1,7 | 1,6 | n.a. | n.a. |
| Structural balance (7)

  (% of GDP) | SP Feb 2010 | 2,6 | 0,3 | –0,9 | –1,0 | –1,2 | –1,3 |
| COM Nov 2009 | 2,7 | –0,5 | –2,2 | –2,4 | n.a. | n.a. |
| SP Dec 2008 | 3,7 | 2,4 | 1,7 | 1,6 | n.a. | n.a. |
| Government gross debt
  (% of GDP) | SP Feb 2010 | 34,2 | 41,8 | 48,3 | 52,2 | 54,4 | 56,4 |
| COM Nov 2009 | 34,1 | 41,3 | 47,4 | 52,7 | n.a. | n.a. |
| SP Dec 2008 | 32,4 | 33,0 | 33,7 | 34,1 | 34,6 | n.a. |
| Stability programme (SP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations. |

2008

2009

2010

2011

2012

2013

Real GDP

(% change)

SP Feb 2010

1,0

–7,6

0,7

2,4

3,5

3,0

COM Nov 2009

1,0

–6,9

0,9

1,6

n.a.

n.a.

SP Dec 2008

2,6

0,6

1,8

2,4

2,2

n.a.

HICP inflation

(%)

SP Feb 2010

3,9

1,7

1,8

1,7

2,0

2,0

COM Nov 2009

3,9

1,8

1,6

1,5

n.a.

n.a.

SP Oct 2008

4,0

2,3

1,9

2,0

2,0

n.a.

Output gap (5)

(% of potential GDP)

SP Feb 2010

3,7

–5,0

–5,0

–4,0

–2,2

–1,2

COM Nov 2009 (6)

3,5

–4,5

–4,3

–3,8

n.a.

n.a.

SP Dec 2008

1,3

–0,6

–1,0

–1,2

n.a.

n.a.

Net lending/borrowing vis-à-vis the rest of the world

(% of GDP)

SP Feb 2010

2,7

0,8

1,2

1,5

1,8

2,0

COM Nov 2009

3,0

1,1

1,2

1,3

n.a.

n.a.

SP Dec 2008

4,0

3,6

3,7

3,9

3,9

n.a.

General government revenue

(% of GDP)

SP Feb 2010

53,4

53,1

52,6

53,4

53,2

52,8

COM Nov 2009

53,4

51,5

50,5

50,6

n.a.

n.a.

SP Dec 2008

51,4

50,3

49,7

49,4

49,4

n.a.

General government expenditure

(% of GDP)

SP Feb 2010

49,0

55,3

56,2

56,4

55,5

54,7

COM Nov 2009

48,9

54,3

55,0

55,0

n.a.

n.a.

SP Dec 2008

47,0

48,2

48,6

48,4

48,5

n.a.

General government balance

(% of GDP)

SP Feb 2010

4,4

–2,2

–3,6

–3,0

–2,3

–1,9

COM Nov 2009

4,5

–2,8

–4,5

–4,3

n.a.

n.a.

SP Dec 2008

4,4

2,1

1,1

1,0

0,9

n.a.

Primary balance

(% of GDP)

SP Feb 2010

5,9

–0,8

–2,3

–1,2

–0,2

0,4

COM Nov 2009

5,9

–1,4

–3,1

–2,9

n.a.

n.a.

SP Dec 2008

5,4

4,0

3,3

2,8

2,4

n.a.

Cyclically-adjusted balance (5)

(% of GDP)

SP Feb 2010

2,6

0,3

–1,1

–1,0

–1,2

–1,3

COM Nov 2009

2,7

–0,5

–2,3

–2,4

n.a.

n.a.

SP Dec 2008

3,7

2,4

1,7

1,6

n.a.

n.a.

Structural balance (7)

(% of GDP)

SP Feb 2010

2,6

0,3

–0,9

–1,0

–1,2

–1,3

COM Nov 2009

2,7

–0,5

–2,2

–2,4

n.a.

n.a.

SP Dec 2008

3,7

2,4

1,7

1,6

n.a.

n.a.

Government gross debt

(% of GDP)

SP Feb 2010

34,2

41,8

48,3

52,2

54,4

56,4

COM Nov 2009

34,1

41,3

47,4

52,7

n.a.

n.a.

SP Dec 2008

32,4

33,0

33,7

34,1

34,6

n.a.

Stability programme (SP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations.

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website: http://ec.europa.eu/economy_finance/sgp/index_en.htm

(2)  The assessment notably takes into account the Commission services’ autumn 2009 forecast, but also other information that has become available since then.

(3)  In the Council conclusions from 10 November 2009 on sustainability of public finances ‘the Council calls on Member States to focus attention to sustainability-oriented strategies in their upcoming stability and convergence programmes’ and further ‘invites the Commission, together with the Economic Policy Committee and the Economic and Financial Committee, to further develop methodologies for assessing the long-term sustainability of public finances in time for the next Sustainability report’, which is foreseen in 2012.

(4)  In particular, external assumptions are not provided for the outer years of the programme period.

(5)  Output gaps and cyclically-adjusted balances from the programmes as recalculated by Commission services on the basis of the information in the programmes.

(6)  Based on estimated potential growth of 2,1 %, 1,0 %, 0,7 % and 1,1 % respectively in the period 2008-2011.

(7)  Cyclically-adjusted balance excluding one-off and other temporary measures. One-off and other temporary measures concern only 2010 when they amount to 0,2 % of GDP and are deficit-increasing according to both the most recent programme and the Commission services’ autumn 2009 forecast.

Source:

Stability programme (SP); Commission services’ autumn 2009 forecasts (COM); Commission services’ calculations.

---

IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

| 28.5.2010 | EN | Official Journal of the European Union | C 138/15 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/15

---

Euro exchange rates (1)

27 May 2010

2010/C 138/04

1 euro =

| | Currency | Exchange rate |
| --- | --- | --- |
| USD | US dollar | 1,2255 |
| JPY | Japanese yen | 110,79 |
| DKK | Danish krone | 7,4396 |
| GBP | Pound sterling | 0,84625 |
| SEK | Swedish krona | 9,6660 |
| CHF | Swiss franc | 1,4164 |
| ISK | Iceland króna | |
| NOK | Norwegian krone | 7,9860 |
| BGN | Bulgarian lev | 1,9558 |
| CZK | Czech koruna | 25,629 |
| EEK | Estonian kroon | 15,6466 |
| HUF | Hungarian forint | 276,86 |
| LTL | Lithuanian litas | 3,4528 |
| LVL | Latvian lats | 0,7079 |
| PLN | Polish zloty | 4,0848 |
| RON | Romanian leu | 4,1465 |
| TRY | Turkish lira | 1,9255 |
| AUD | Australian dollar | 1,4620 |
| CAD | Canadian dollar | 1,2919 |
| HKD | Hong Kong dollar | 9,5437 |
| NZD | New Zealand dollar | 1,8252 |
| SGD | Singapore dollar | 1,7219 |
| KRW | South Korean won | 1 500,26 |
| ZAR | South African rand | 9,4074 |
| CNY | Chinese yuan renminbi | 8,3720 |
| HRK | Croatian kuna | 7,2654 |
| IDR | Indonesian rupiah | 11 356,57 |
| MYR | Malaysian ringgit | 4,0374 |
| PHP | Philippine peso | 56,951 |
| RUB | Russian rouble | 37,7950 |
| THB | Thai baht | 39,908 |
| BRL | Brazilian real | 2,2556 |
| MXN | Mexican peso | 15,8347 |
| INR | Indian rupee | 57,4270 |

Currency

Exchange rate

USD

US dollar

1,2255

JPY

Japanese yen

110,79

DKK

Danish krone

7,4396

GBP

Pound sterling

0,84625

SEK

Swedish krona

9,6660

CHF

Swiss franc

1,4164

ISK

Iceland króna

NOK

Norwegian krone

7,9860

BGN

Bulgarian lev

1,9558

CZK

Czech koruna

25,629

EEK

Estonian kroon

15,6466

HUF

Hungarian forint

276,86

LTL

Lithuanian litas

3,4528

LVL

Latvian lats

0,7079

PLN

Polish zloty

4,0848

RON

Romanian leu

4,1465

TRY

Turkish lira

1,9255

AUD

Australian dollar

1,4620

CAD

Canadian dollar

1,2919

HKD

Hong Kong dollar

9,5437

NZD

New Zealand dollar

1,8252

SGD

Singapore dollar

1,7219

KRW

South Korean won

1 500,26

ZAR

South African rand

9,4074

CNY

Chinese yuan renminbi

8,3720

HRK

Croatian kuna

7,2654

IDR

Indonesian rupiah

11 356,57

MYR

Malaysian ringgit

4,0374

PHP

Philippine peso

56,951

RUB

Russian rouble

37,7950

THB

Thai baht

39,908

BRL

Brazilian real

2,2556

MXN

Mexican peso

15,8347

INR

Indian rupee

57,4270

---

(1)  Source: reference exchange rate published by the ECB.

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/16 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/16

---

Commission notice

Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles

(Text with EEA relevance)

2010/C 138/05

I.   INTRODUCTION

1.   Purpose of the Guidelines

| (1) | These Guidelines set out principles for assessing under Article 101 of the Treaty on the Functioning of the European Union (1) particular issues arising in the context of vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts. They accompany Commission Regulation (EU) No 461/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector (2) (hereinafter ‘the Motor Vehicle Block Exemption Regulation’) and are aimed at helping companies to make their own assessment of such agreements. |
| --- | --- |

(1)

These Guidelines set out principles for assessing under Article 101 of the Treaty on the Functioning of the European Union (1) particular issues arising in the context of vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts. They accompany Commission Regulation (EU) No 461/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector (2) (hereinafter ‘the Motor Vehicle Block Exemption Regulation’) and are aimed at helping companies to make their own assessment of such agreements.

| (2) | These Guidelines provide clarification on issues that are particularly relevant for the motor vehicle sector, including the interpretation of certain provisions of Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (3) (hereinafter ‘the General Vertical Block Exemption Regulation’). They are without prejudice to the applicability of the Guidelines on Vertical Restraints (4) (hereinafter ‘the General Vertical Guidelines’) and are therefore to be read in conjunction with and as a supplement to the General Vertical Guidelines. |
| --- | --- |

(2)

These Guidelines provide clarification on issues that are particularly relevant for the motor vehicle sector, including the interpretation of certain provisions of Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (3) (hereinafter ‘the General Vertical Block Exemption Regulation’). They are without prejudice to the applicability of the Guidelines on Vertical Restraints (4) (hereinafter ‘the General Vertical Guidelines’) and are therefore to be read in conjunction with and as a supplement to the General Vertical Guidelines.

| (3) | These Guidelines apply to both vertical agreements and concerted practices relating to the conditions under which the parties may purchase, sell or resell spare parts and/or provide repair and maintenance services for motor vehicles, and to vertical agreements and concerted practices relating to the conditions under which the parties may purchase, sell or resell new motor vehicles. As explained in Section II of these Guidelines, the latter category of agreements and concerted practices will remain subject to the relevant provisions of Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector (5) until 31 May 2013. Therefore, as regards vertical agreements and concerted practices for the purchase, sale or resale of new motor vehicles, these Guidelines will only apply as from 1 June 2013. These Guidelines do not apply to vertical agreements in sectors other than motor vehicles, and the principles set out herein may not necessarily be used to assess agreements in other sectors. |
| --- | --- |

(3)

These Guidelines apply to both vertical agreements and concerted practices relating to the conditions under which the parties may purchase, sell or resell spare parts and/or provide repair and maintenance services for motor vehicles, and to vertical agreements and concerted practices relating to the conditions under which the parties may purchase, sell or resell new motor vehicles. As explained in Section II of these Guidelines, the latter category of agreements and concerted practices will remain subject to the relevant provisions of Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector (5) until 31 May 2013. Therefore, as regards vertical agreements and concerted practices for the purchase, sale or resale of new motor vehicles, these Guidelines will only apply as from 1 June 2013. These Guidelines do not apply to vertical agreements in sectors other than motor vehicles, and the principles set out herein may not necessarily be used to assess agreements in other sectors.

| (4) | These Guidelines are without prejudice to the possible parallel application of Article 102 of the Treaty to vertical agreements in the motor vehicle sector, or to the interpretation that the Court of Justice of the European Union may give in relation to the application of Article 101 of the Treaty to such vertical agreements. |
| --- | --- |

(4)

These Guidelines are without prejudice to the possible parallel application of Article 102 of the Treaty to vertical agreements in the motor vehicle sector, or to the interpretation that the Court of Justice of the European Union may give in relation to the application of Article 101 of the Treaty to such vertical agreements.

| (5) | Unless otherwise stated, the analysis and arguments set out in these Guidelines apply to all levels of trade. The terms ‘supplier’ and ‘distributor’ (6) are used for all levels of trade. The General Vertical Block Exemption Regulation and the Motor Vehicle Block Exemption Regulation are collectively referred to as ‘the Block Exemption Regulations’. |
| --- | --- |

(5)

Unless otherwise stated, the analysis and arguments set out in these Guidelines apply to all levels of trade. The terms ‘supplier’ and ‘distributor’ (6) are used for all levels of trade. The General Vertical Block Exemption Regulation and the Motor Vehicle Block Exemption Regulation are collectively referred to as ‘the Block Exemption Regulations’.

| (6) | The standards set forth in these Guidelines must be applied to each case having regard to the individual factual and legal circumstances. The Commission will apply (7) these Guidelines reasonably and flexibly, and having regard to the experience that it has acquired in the course of its enforcement and market monitoring activities. |
| --- | --- |

(6)

The standards set forth in these Guidelines must be applied to each case having regard to the individual factual and legal circumstances. The Commission will apply (7) these Guidelines reasonably and flexibly, and having regard to the experience that it has acquired in the course of its enforcement and market monitoring activities.

| (7) | The history of competition enforcement in this sector shows that certain restraints can be arrived at either as a result of explicit direct contractual obligations or through indirect obligations or indirect means which nonetheless achieve the same anti-competitive result. Suppliers wishing to influence a distributor's competitive behaviour may, for instance, resort to threats or intimidation, warnings or penalties. They may also delay or suspend deliveries or threaten to terminate the contracts of distributors that sell to foreign consumers or fail to observe a given price level. Transparent relationships between contracting parties would normally reduce the risk of manufacturers being held responsible for using such indirect forms of pressure aimed at achieving anticompetitive outcomes. Adhering to a Code of Conduct is one means of achieving greater transparency in commercial relationships between parties. Such codes may inter alia provide for notice periods for contract termination, which may be determined in function of the contract duration, for compensation to be given for outstanding relationship-specific investments made by the dealer in case of early termination without just cause, as well as for arbitration as an alternative mechanism for dispute resolution. If a supplier incorporates such a Code of Conduct into its agreements with distributors and repairers, makes it publicly available, and complies with its provisions, this will be regarded as a relevant factor for assessing the supplier's conduct in individual cases. |
| --- | --- |

(7)

The history of competition enforcement in this sector shows that certain restraints can be arrived at either as a result of explicit direct contractual obligations or through indirect obligations or indirect means which nonetheless achieve the same anti-competitive result. Suppliers wishing to influence a distributor's competitive behaviour may, for instance, resort to threats or intimidation, warnings or penalties. They may also delay or suspend deliveries or threaten to terminate the contracts of distributors that sell to foreign consumers or fail to observe a given price level. Transparent relationships between contracting parties would normally reduce the risk of manufacturers being held responsible for using such indirect forms of pressure aimed at achieving anticompetitive outcomes. Adhering to a Code of Conduct is one means of achieving greater transparency in commercial relationships between parties. Such codes may inter alia provide for notice periods for contract termination, which may be determined in function of the contract duration, for compensation to be given for outstanding relationship-specific investments made by the dealer in case of early termination without just cause, as well as for arbitration as an alternative mechanism for dispute resolution. If a supplier incorporates such a Code of Conduct into its agreements with distributors and repairers, makes it publicly available, and complies with its provisions, this will be regarded as a relevant factor for assessing the supplier's conduct in individual cases.

2.   Structure of the Guidelines

| (8) | These Guidelines are structured as follows:






  (a) | Scope of the Motor Vehicle Block Exemption Regulation and relationship with the General Vertical Block Exemption Regulation (Section II) |
| --- | --- | --- |

(8)

These Guidelines are structured as follows:

(a)

Scope of the Motor Vehicle Block Exemption Regulation and relationship with the General Vertical Block Exemption Regulation (Section II)

| (b) | The application of the additional provisions in the Motor Vehicle Block Exemption Regulation (Section III) |
| --- | --- |

(b)

The application of the additional provisions in the Motor Vehicle Block Exemption Regulation (Section III)

| (c) | The assessment of specific restraints: single branding and selective distribution (Section IV) |
| --- | --- |

(c)

The assessment of specific restraints: single branding and selective distribution (Section IV)

II.   SCOPE OF THE MOTOR VEHICLE BLOCK EXEMPTION REGULATION AND RELATIONSHIP WITH THE GENERAL VERTICAL BLOCK EXEMPTION REGULATION

| (9) | Pursuant to Article 4 thereof, the Motor Vehicle Block Exemption Regulation covers vertical agreements relating to the purchase, sale or resale of spare parts for motor vehicles and to the provision of repair and maintenance services for motor vehicles. |
| --- | --- |

(9)

Pursuant to Article 4 thereof, the Motor Vehicle Block Exemption Regulation covers vertical agreements relating to the purchase, sale or resale of spare parts for motor vehicles and to the provision of repair and maintenance services for motor vehicles.

| (10) | Article 2 of the Motor Vehicle Block Exemption Regulation extends the application of the relevant provisions of Regulation (EC) No 1400/2002 until 31 May 2013 as far as they relate to vertical agreements for the purchase, sale or resale of new motor vehicles. Pursuant to Article 3 of the Motor Vehicle Block Exemption Regulation vertical agreements for the purchase, sale and resale of new motor vehicles will be covered by the General Vertical Block Exemption Regulation, from 1 June 2013 (8). |
| --- | --- |

(10)

Article 2 of the Motor Vehicle Block Exemption Regulation extends the application of the relevant provisions of Regulation (EC) No 1400/2002 until 31 May 2013 as far as they relate to vertical agreements for the purchase, sale or resale of new motor vehicles. Pursuant to Article 3 of the Motor Vehicle Block Exemption Regulation vertical agreements for the purchase, sale and resale of new motor vehicles will be covered by the General Vertical Block Exemption Regulation, from 1 June 2013 (8).

| (11) | The distinction that the new framework makes between the markets for the sale of new motor vehicles and the motor vehicle aftermarkets reflects the differing competitive conditions on these markets. |
| --- | --- |

(11)

The distinction that the new framework makes between the markets for the sale of new motor vehicles and the motor vehicle aftermarkets reflects the differing competitive conditions on these markets.

| (12) | On the basis of an in-depth market analysis set out in the Evaluation Report on the operation of Commission Regulation (EC) No 1400/2002 of 28 May 2008 (9) and in the Commission Communication on The Future Competition Law Framework applicable to the Motor Vehicle Sector of 22 July 2009 (10), it appears that there are no significant competition shortcomings distinguishing the new motor vehicle distribution sector from other economic sectors and which could require the application of rules different from and stricter than those in the General Vertical Block Exemption Regulation. Consequently, the application of a market share threshold of 30 % (11), the non-exemption of certain vertical restraints and the conditions provided for in the General Vertical Block Exemption Regulation will normally ensure that vertical agreements for the distribution of new motor vehicles satisfy the conditions laid down in Article 101(3) of the Treaty without the need for any additional requirements over and above those applicable to other sectors. |
| --- | --- |

(12)

On the basis of an in-depth market analysis set out in the Evaluation Report on the operation of Commission Regulation (EC) No 1400/2002 of 28 May 2008 (9) and in the Commission Communication on The Future Competition Law Framework applicable to the Motor Vehicle Sector of 22 July 2009 (10), it appears that there are no significant competition shortcomings distinguishing the new motor vehicle distribution sector from other economic sectors and which could require the application of rules different from and stricter than those in the General Vertical Block Exemption Regulation. Consequently, the application of a market share threshold of 30 % (11), the non-exemption of certain vertical restraints and the conditions provided for in the General Vertical Block Exemption Regulation will normally ensure that vertical agreements for the distribution of new motor vehicles satisfy the conditions laid down in Article 101(3) of the Treaty without the need for any additional requirements over and above those applicable to other sectors.

| (13) | However, in order to allow all operators time to adapt to the general regime, in particular in view of relationship-specific investments which have been made in the long term, the period of application of Regulation (EC) No 1400/2002 is extended by three years until 31 May 2013 with regard to those requirements that relate specifically to vertical agreements for the purchase, sale or resale of new motor vehicles. From 1 June 2010 until 31 May 2013, those provisions of Regulation (EC) No 1400/2002 which relate to both agreements for the distribution of new motor vehicles and agreements for the purchase, sale and resale of spare parts for motor vehicles and/or the provision of repair and maintenance services, will apply only in respect of the former. During that period these Guidelines will not be used for interpreting the provisions of Regulation (EC) No 1400/2002. Instead, reference should be made to the Explanatory Brochure on that Regulation (12). |
| --- | --- |

(13)

However, in order to allow all operators time to adapt to the general regime, in particular in view of relationship-specific investments which have been made in the long term, the period of application of Regulation (EC) No 1400/2002 is extended by three years until 31 May 2013 with regard to those requirements that relate specifically to vertical agreements for the purchase, sale or resale of new motor vehicles. From 1 June 2010 until 31 May 2013, those provisions of Regulation (EC) No 1400/2002 which relate to both agreements for the distribution of new motor vehicles and agreements for the purchase, sale and resale of spare parts for motor vehicles and/or the provision of repair and maintenance services, will apply only in respect of the former. During that period these Guidelines will not be used for interpreting the provisions of Regulation (EC) No 1400/2002. Instead, reference should be made to the Explanatory Brochure on that Regulation (12).

| (14) | As regards vertical agreements relating to the conditions under which the parties may purchase, sell or resell spare parts for motor vehicles and/or provide repair and maintenance services for motor vehicles, the Motor Vehicle Block Exemption Regulation applies from 1 June 2010. This means that, in order to be exempted pursuant to Article 4 of that Regulation, those agreements not only need to fulfil the conditions for an exemption under the General Vertical Block Exemption Regulation, but must also not contain any serious restrictions of competition, commonly referred to as hardcore restrictions as listed in Article 5 of the Motor Vehicle Block Exemption Regulation. |
| --- | --- |

(14)

As regards vertical agreements relating to the conditions under which the parties may purchase, sell or resell spare parts for motor vehicles and/or provide repair and maintenance services for motor vehicles, the Motor Vehicle Block Exemption Regulation applies from 1 June 2010. This means that, in order to be exempted pursuant to Article 4 of that Regulation, those agreements not only need to fulfil the conditions for an exemption under the General Vertical Block Exemption Regulation, but must also not contain any serious restrictions of competition, commonly referred to as hardcore restrictions as listed in Article 5 of the Motor Vehicle Block Exemption Regulation.

| (15) | Because of the generally brand-specific nature of the markets for repair and maintenance services and for the distribution of spare parts, competition on those markets is inherently less intense compared to that on the market for the sale of new motor vehicles. While reliability has improved and service intervals have lengthened thanks to technological improvement, this evolution is outpaced by an upward price trend for individual repair and maintenance jobs. On the spare parts markets, parts bearing the motor vehicle manufacturer's brand face competition from those supplied by the original equipment suppliers (OES) and by other parties. This maintains price pressure on those markets, which in turn maintains pressure on prices on the repair and maintenance markets, since spare parts make up a large percentage of the cost of the average repair. Moreover, repair and maintenance as a whole represent a very high proportion of total consumer expenditure on motor vehicles, which itself accounts for a significant slice of the average consumer's budget. |
| --- | --- |

(15)

Because of the generally brand-specific nature of the markets for repair and maintenance services and for the distribution of spare parts, competition on those markets is inherently less intense compared to that on the market for the sale of new motor vehicles. While reliability has improved and service intervals have lengthened thanks to technological improvement, this evolution is outpaced by an upward price trend for individual repair and maintenance jobs. On the spare parts markets, parts bearing the motor vehicle manufacturer's brand face competition from those supplied by the original equipment suppliers (OES) and by other parties. This maintains price pressure on those markets, which in turn maintains pressure on prices on the repair and maintenance markets, since spare parts make up a large percentage of the cost of the average repair. Moreover, repair and maintenance as a whole represent a very high proportion of total consumer expenditure on motor vehicles, which itself accounts for a significant slice of the average consumer's budget.

| (16) | In order to address particular competition issues arising on the motor vehicle aftermarkets, the General Vertical Block Exemption Regulation is supplemented with three additional hardcore restrictions in the Motor Vehicle Block Exemption Regulation applying to agreements for the repair and maintenance of motor vehicles and for the supply of spare parts. Further guidance on those additional hardcore restrictions is given in Section III of these Guidelines. |
| --- | --- |

(16)

In order to address particular competition issues arising on the motor vehicle aftermarkets, the General Vertical Block Exemption Regulation is supplemented with three additional hardcore restrictions in the Motor Vehicle Block Exemption Regulation applying to agreements for the repair and maintenance of motor vehicles and for the supply of spare parts. Further guidance on those additional hardcore restrictions is given in Section III of these Guidelines.

III.   THE APPLICATION OF THE ADDITIONAL PROVISIONS IN THE MOTOR VEHICLE BLOCK EXEMPTION REGULATION

| (17) | Agreements will not benefit from the block exemption if they contain hardcore restrictions. These restrictions are listed in Article 4 of the General Vertical Block Exemption Regulation and Article 5 of the Motor Vehicle Block Exemption Regulation. Including any such restrictions in an agreement gives rise to the presumption that the agreement falls within Article 101(1) of the Treaty. It also gives rise to the presumption that the agreement is unlikely to satisfy the conditions laid down in Article 101(3) of the Treaty, for which reason the block exemption does not apply. However, this is a rebuttable presumption which leaves open the possibility for undertakings to plead an efficiency defence under Article 101(3) of the Treaty in an individual case. |
| --- | --- |

(17)

Agreements will not benefit from the block exemption if they contain hardcore restrictions. These restrictions are listed in Article 4 of the General Vertical Block Exemption Regulation and Article 5 of the Motor Vehicle Block Exemption Regulation. Including any such restrictions in an agreement gives rise to the presumption that the agreement falls within Article 101(1) of the Treaty. It also gives rise to the presumption that the agreement is unlikely to satisfy the conditions laid down in Article 101(3) of the Treaty, for which reason the block exemption does not apply. However, this is a rebuttable presumption which leaves open the possibility for undertakings to plead an efficiency defence under Article 101(3) of the Treaty in an individual case.

| (18) | One of the Commission's objectives as regards competition policy for the motor vehicle sector is to protect access by spare parts manufacturers to the motor vehicle aftermarkets, thereby ensuring that competing brands of spare parts continue to be available to both independent and authorised repairers, as well as to parts wholesalers. The availability of such parts brings considerable benefits to consumers, especially since there are often large differences in price between parts sold or resold by a car manufacturer and alternative parts. Alternatives for parts bearing the trademark of the motor vehicle manufacturer (OEM parts) include original parts manufactured and distributed by original equipment suppliers (OES parts), while other parts matching the quality of the original components are supplied by ‘matching quality’ parts manufacturers. |
| --- | --- |

(18)

One of the Commission's objectives as regards competition policy for the motor vehicle sector is to protect access by spare parts manufacturers to the motor vehicle aftermarkets, thereby ensuring that competing brands of spare parts continue to be available to both independent and authorised repairers, as well as to parts wholesalers. The availability of such parts brings considerable benefits to consumers, especially since there are often large differences in price between parts sold or resold by a car manufacturer and alternative parts. Alternatives for parts bearing the trademark of the motor vehicle manufacturer (OEM parts) include original parts manufactured and distributed by original equipment suppliers (OES parts), while other parts matching the quality of the original components are supplied by ‘matching quality’ parts manufacturers.

| (19) | ‘Original parts or equipment’ means parts or equipment which are manufactured according to the specifications and production standards provided by the motor vehicle manufacturer for the production of parts or equipment for the assembly of the motor vehicle in question. This includes parts or equipment which are manufactured on the same production line as those parts or equipment. It is presumed unless the contrary is proven, that parts constitute original parts if the part manufacturer certifies that the parts match the quality of the components used for the assembly of the motor vehicle in question and have been manufactured according to the specifications and production standards of the motor vehicle (see Article 3(26) of Directive 2007/46/EC of the European Parliament and of the Council of 5 September 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such motor vehicles (Framework Directive) (13)). |
| --- | --- |

(19)

‘Original parts or equipment’ means parts or equipment which are manufactured according to the specifications and production standards provided by the motor vehicle manufacturer for the production of parts or equipment for the assembly of the motor vehicle in question. This includes parts or equipment which are manufactured on the same production line as those parts or equipment. It is presumed unless the contrary is proven, that parts constitute original parts if the part manufacturer certifies that the parts match the quality of the components used for the assembly of the motor vehicle in question and have been manufactured according to the specifications and production standards of the motor vehicle (see Article 3(26) of Directive 2007/46/EC of the European Parliament and of the Council of 5 September 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such motor vehicles (Framework Directive) (13)).

| (20) | In order to be considered as ‘matching quality’, parts must be of a sufficiently high quality that their use does not endanger the reputation of the authorised network in question. As with any other selection standard, the motor vehicle manufacturer may bring evidence that a given spare part does not meet this requirement. |
| --- | --- |

(20)

In order to be considered as ‘matching quality’, parts must be of a sufficiently high quality that their use does not endanger the reputation of the authorised network in question. As with any other selection standard, the motor vehicle manufacturer may bring evidence that a given spare part does not meet this requirement.

| (21) | Article 4(e) of the General Vertical Block Exemption Regulation describes it as a hardcore restriction for an agreement between a supplier of components and a buyer who incorporates those components, to prevent or restrict the supplier's ability to sell its components to end-users, independent repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods. Article 5(a), (b) and (c) of the Motor Vehicle Block Exemption Regulation lay down three additional hardcore restrictions relating to agreements for the supply of spare parts. |
| --- | --- |

(21)

Article 4(e) of the General Vertical Block Exemption Regulation describes it as a hardcore restriction for an agreement between a supplier of components and a buyer who incorporates those components, to prevent or restrict the supplier's ability to sell its components to end-users, independent repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods. Article 5(a), (b) and (c) of the Motor Vehicle Block Exemption Regulation lay down three additional hardcore restrictions relating to agreements for the supply of spare parts.

| (22) | Article 5(a) of the Motor Vehicle Block Exemption Regulation concerns the restriction of the sale of spare parts for motor vehicles by members of a selective distribution system to independent repairers. This provision is most relevant for a particular category of parts, sometimes referred to as captive parts, which may only be obtained from the motor vehicle manufacturer or from members of its authorised networks. If a supplier and a distributor agree that such parts may not be supplied to independent repairers, this agreement would be likely to foreclose such repairers from the market for repair and maintenance services and fall foul of Article 101 of the Treaty. |
| --- | --- |

(22)

Article 5(a) of the Motor Vehicle Block Exemption Regulation concerns the restriction of the sale of spare parts for motor vehicles by members of a selective distribution system to independent repairers. This provision is most relevant for a particular category of parts, sometimes referred to as captive parts, which may only be obtained from the motor vehicle manufacturer or from members of its authorised networks. If a supplier and a distributor agree that such parts may not be supplied to independent repairers, this agreement would be likely to foreclose such repairers from the market for repair and maintenance services and fall foul of Article 101 of the Treaty.

| (23) | Article 5(b) of the Motor Vehicle Block Exemption Regulation concerns any direct or indirect restriction agreed between a supplier of spare parts, repair tools or diagnostic or other equipment and a manufacturer of motor vehicles, which limits the supplier's ability to sell these goods to authorised and/or independent distributors and repairers. So-called ‘tooling arrangements’ between component suppliers and motor vehicle manufacturers are one example of possible indirect restrictions of this type. Reference should be made in this respect to the Commission notice of 18 December 1978 concerning its assessment of certain subcontracting agreements in relation to Article 85(1) of the EEC Treaty (14) (the Sub-contracting Notice). Normally, Article 101(1) of the Treaty does not apply to an arrangement whereby a motor vehicle manufacturer provides a tool to a component manufacturer which is necessary for the production of certain components, shares in the product development costs, or contributes necessary (15) intellectual property rights, or know-how, and does not allow this contribution to be used for the production of parts to be sold directly in the aftermarket. On the other hand, if a motor vehicle manufacturer obliges a component supplier to transfer its ownership of such a tool, intellectual property rights, or know-how, bears only an insignificant part of the product development costs, or does not contribute any necessary tools, intellectual property rights, or know-how, the agreement at issue will not be considered to be a genuine sub-contracting arrangement. Therefore, it may be caught by Article 101(1) of the Treaty and be examined pursuant to the provisions of the Block Exemption Regulations. |
| --- | --- |

(23)

Article 5(b) of the Motor Vehicle Block Exemption Regulation concerns any direct or indirect restriction agreed between a supplier of spare parts, repair tools or diagnostic or other equipment and a manufacturer of motor vehicles, which limits the supplier's ability to sell these goods to authorised and/or independent distributors and repairers. So-called ‘tooling arrangements’ between component suppliers and motor vehicle manufacturers are one example of possible indirect restrictions of this type. Reference should be made in this respect to the Commission notice of 18 December 1978 concerning its assessment of certain subcontracting agreements in relation to Article 85(1) of the EEC Treaty (14) (the Sub-contracting Notice). Normally, Article 101(1) of the Treaty does not apply to an arrangement whereby a motor vehicle manufacturer provides a tool to a component manufacturer which is necessary for the production of certain components, shares in the product development costs, or contributes necessary (15) intellectual property rights, or know-how, and does not allow this contribution to be used for the production of parts to be sold directly in the aftermarket. On the other hand, if a motor vehicle manufacturer obliges a component supplier to transfer its ownership of such a tool, intellectual property rights, or know-how, bears only an insignificant part of the product development costs, or does not contribute any necessary tools, intellectual property rights, or know-how, the agreement at issue will not be considered to be a genuine sub-contracting arrangement. Therefore, it may be caught by Article 101(1) of the Treaty and be examined pursuant to the provisions of the Block Exemption Regulations.

| (24) | Article 5(c) of the Motor Vehicle Block Exemption Regulation relates to the restriction agreed between a manufacturer of motor vehicles which uses components for the initial assembly of motor vehicles and the supplier of such components, which limits the supplier's ability to place its trade mark or logo effectively and in an easily visible manner on the components supplied or on spare parts. In order to improve consumer choice, repairers and consumers should be able to identify which spare parts from alternative suppliers match a given motor vehicle, other than those bearing the car manufacturer's brand. Putting the trade mark or logo on the components and on spare parts facilitates the identification of compatible replacement parts which can be obtained from OES. By not allowing this, motor vehicle manufacturers can restrict the marketing of OES parts and limit consumers’ choice in a manner that runs counter to the provisions of Article 101 of the Treaty. |
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(24)

Article 5(c) of the Motor Vehicle Block Exemption Regulation relates to the restriction agreed between a manufacturer of motor vehicles which uses components for the initial assembly of motor vehicles and the supplier of such components, which limits the supplier's ability to place its trade mark or logo effectively and in an easily visible manner on the components supplied or on spare parts. In order to improve consumer choice, repairers and consumers should be able to identify which spare parts from alternative suppliers match a given motor vehicle, other than those bearing the car manufacturer's brand. Putting the trade mark or logo on the components and on spare parts facilitates the identification of compatible replacement parts which can be obtained from OES. By not allowing this, motor vehicle manufacturers can restrict the marketing of OES parts and limit consumers’ choice in a manner that runs counter to the provisions of Article 101 of the Treaty.

IV.   THE ASSESSMENT OF SPECIFIC RESTRAINTS

| (25) | Parties to vertical agreements in the motor vehicle sector should use these Guidelines as a supplement to and in conjunction with the General Vertical Guidelines in order to assess the compatibility of specific restraints with Article 101 of the Treaty. This section gives particular guidance as to single branding and selective distribution, which are two areas which may have particular relevance for assessing the category of agreements referred to in Section II of these Guidelines. |
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(25)

Parties to vertical agreements in the motor vehicle sector should use these Guidelines as a supplement to and in conjunction with the General Vertical Guidelines in order to assess the compatibility of specific restraints with Article 101 of the Treaty. This section gives particular guidance as to single branding and selective distribution, which are two areas which may have particular relevance for assessing the category of agreements referred to in Section II of these Guidelines.

1.   Single branding obligations

(i)   Assessment of single-branding obligations under the Block Exemption Regulations

| (26) | Pursuant to Article 3 of the Motor Vehicle Block Exemption Regulation read in conjunction with Article 5(1)(a) of the General Vertical Block Exemption Regulation, a motor vehicle supplier and a distributor having a share of the relevant market that does not exceed 30 % may agree on a single-branding obligation that obliges the distributor to purchase motor vehicles only from the supplier or from other firms designated by the supplier, on condition that the duration of such non-compete obligations is limited to five years or less. The same principles apply to agreements between suppliers and their authorised repairers and/or spare parts distributors. A renewal beyond five years requires explicit consent of both parties, and there should be no obstacles that hinder the distributor from effectively terminating the non-compete obligation at the end of the five-year period. Non-compete obligations are not covered by the Block Exemption Regulations when their duration is indefinite or exceeds five years, although in those circumstances the Block Exemption Regulations would continue to apply to the remaining part of the vertical agreement. The same applies to non-compete obligations that are tacitly renewable beyond a period of five years. Obstacles, threats of termination, or intimations that single-branding will be re-imposed before a sufficient period has elapsed to allow either the distributor or the new supplier to amortise their sunk investments would amount to a tacit renewal of the single-branding obligation in question. |
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(26)

Pursuant to Article 3 of the Motor Vehicle Block Exemption Regulation read in conjunction with Article 5(1)(a) of the General Vertical Block Exemption Regulation, a motor vehicle supplier and a distributor having a share of the relevant market that does not exceed 30 % may agree on a single-branding obligation that obliges the distributor to purchase motor vehicles only from the supplier or from other firms designated by the supplier, on condition that the duration of such non-compete obligations is limited to five years or less. The same principles apply to agreements between suppliers and their authorised repairers and/or spare parts distributors. A renewal beyond five years requires explicit consent of both parties, and there should be no obstacles that hinder the distributor from effectively terminating the non-compete obligation at the end of the five-year period. Non-compete obligations are not covered by the Block Exemption Regulations when their duration is indefinite or exceeds five years, although in those circumstances the Block Exemption Regulations would continue to apply to the remaining part of the vertical agreement. The same applies to non-compete obligations that are tacitly renewable beyond a period of five years. Obstacles, threats of termination, or intimations that single-branding will be re-imposed before a sufficient period has elapsed to allow either the distributor or the new supplier to amortise their sunk investments would amount to a tacit renewal of the single-branding obligation in question.

| (27) | Pursuant to Article 5(1)(c) of the General Vertical Block Exemption Regulation, any direct or indirect obligation causing the members of a selective distribution system not to sell the brands of particular competing suppliers, are not covered by the exemption. Particular attention should be paid to the manner in which single branding obligations are applied to existing multi-brand distributors, in order to ensure that the obligations in question do not form part of an overall strategy aimed at eliminating competition from one or more specific suppliers, and in particular from newcomers or weaker competitors. This type of concern could arise in particular if the market share thresholds indicated in paragraph 34 of these Guidelines are exceeded and if the supplier applying this type of restraint has a position on the relevant market that enables it to contribute significantly to the overall foreclosure effect (16). |
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(27)

Pursuant to Article 5(1)(c) of the General Vertical Block Exemption Regulation, any direct or indirect obligation causing the members of a selective distribution system not to sell the brands of particular competing suppliers, are not covered by the exemption. Particular attention should be paid to the manner in which single branding obligations are applied to existing multi-brand distributors, in order to ensure that the obligations in question do not form part of an overall strategy aimed at eliminating competition from one or more specific suppliers, and in particular from newcomers or weaker competitors. This type of concern could arise in particular if the market share thresholds indicated in paragraph 34 of these Guidelines are exceeded and if the supplier applying this type of restraint has a position on the relevant market that enables it to contribute significantly to the overall foreclosure effect (16).

| (28) | Non-compete obligations in vertical agreements do not constitute hardcore restrictions, but depending on the market circumstances, can nonetheless have negative effects which may cause the agreements to fall under Article 101(1) of the Treaty (17). One such harmful effect may arise if barriers to entry or expansion are raised that foreclose competing suppliers, and harm consumers in particular by increasing the prices or limiting the choice of products, lowering their quality or reducing the level of product innovation. |
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(28)

Non-compete obligations in vertical agreements do not constitute hardcore restrictions, but depending on the market circumstances, can nonetheless have negative effects which may cause the agreements to fall under Article 101(1) of the Treaty (17). One such harmful effect may arise if barriers to entry or expansion are raised that foreclose competing suppliers, and harm consumers in particular by increasing the prices or limiting the choice of products, lowering their quality or reducing the level of product innovation.

| (29) | However, non-compete obligations may also have positive effects which may justify the application of Article 101(3) of the Treaty. They may in particular help to overcome a ‘free-rider’ problem, by which one supplier benefits from investments made by another. A supplier may, for instance, invest in a distributor's premises, but in doing so attract customers for a competing brand that is also sold from the same premises. The same applies to other types of investment made by the supplier which may be used by the distributor to sell motor vehicles of competing manufacturers, such as investments in training. |
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(29)

However, non-compete obligations may also have positive effects which may justify the application of Article 101(3) of the Treaty. They may in particular help to overcome a ‘free-rider’ problem, by which one supplier benefits from investments made by another. A supplier may, for instance, invest in a distributor's premises, but in doing so attract customers for a competing brand that is also sold from the same premises. The same applies to other types of investment made by the supplier which may be used by the distributor to sell motor vehicles of competing manufacturers, such as investments in training.

| (30) | Another positive effect of non-compete obligations in the motor vehicle sector relates to the enhancement of the brand image and reputation of the distribution network. Such restraints may help to create and maintain a brand image by imposing a certain measure of uniformity and quality standardisation on distributors, thereby increasing the attractiveness of that brand to the final consumer and increasing its sales. |
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(30)

Another positive effect of non-compete obligations in the motor vehicle sector relates to the enhancement of the brand image and reputation of the distribution network. Such restraints may help to create and maintain a brand image by imposing a certain measure of uniformity and quality standardisation on distributors, thereby increasing the attractiveness of that brand to the final consumer and increasing its sales.

| (31) | Article 1(d) of the General Vertical Block Exemption Regulation defines a non-compete obligation as:






  ‘(a) | any direct or indirect obligation causing the buyer not to manufacture, purchase, sell or resell goods or services which compete with the contract goods or services; or |
| --- | --- | --- |

(31)

Article 1(d) of the General Vertical Block Exemption Regulation defines a non-compete obligation as:

‘(a)

any direct or indirect obligation causing the buyer not to manufacture, purchase, sell or resell goods or services which compete with the contract goods or services; or

| (b) | any direct or indirect obligation on the buyer to purchase from the supplier or from another undertaking designated by the supplier more than 80 % of the buyer's total purchases of the contract goods or services and their substitutes on the relevant market.’ |
| --- | --- |

(b)

any direct or indirect obligation on the buyer to purchase from the supplier or from another undertaking designated by the supplier more than 80 % of the buyer's total purchases of the contract goods or services and their substitutes on the relevant market.’

| (32) | Apart from direct means to tie the distributor to its own brand(s), a supplier may also have recourse to indirect means having the same effect. In the motor vehicle sector, such indirect means may include qualitative standards specifically designed to discourage the distributors from selling products of competing brands (18), bonuses made conditional on the distributor agreeing to sell exclusively one brand, target rebates or certain other requirements such as the requirement to set up a separate legal entity for the competing brand or the obligation to display the additional competing brand in a separate showroom in a geographic location where the fulfilment of such a requirement would not be economically viable (for example sparsely populated areas). |
| --- | --- |

(32)

Apart from direct means to tie the distributor to its own brand(s), a supplier may also have recourse to indirect means having the same effect. In the motor vehicle sector, such indirect means may include qualitative standards specifically designed to discourage the distributors from selling products of competing brands (18), bonuses made conditional on the distributor agreeing to sell exclusively one brand, target rebates or certain other requirements such as the requirement to set up a separate legal entity for the competing brand or the obligation to display the additional competing brand in a separate showroom in a geographic location where the fulfilment of such a requirement would not be economically viable (for example sparsely populated areas).

| (33) | The block exemption provided for in the General Vertical Block Exemption Regulation covers all forms of direct or indirect non-compete obligations provided that the market shares of both the supplier and the distributor do not exceed 30 % and the duration of the non-compete obligation does not exceed five years. However, even in cases where individual agreements satisfy those conditions, the use of non-compete obligations may result in anti-competitive effects not outweighed by their positive effects. In the motor vehicle industry, such net anti-competitive effects could in particular result from cumulative effects leading to the foreclosure of competing brands. |
| --- | --- |

(33)

The block exemption provided for in the General Vertical Block Exemption Regulation covers all forms of direct or indirect non-compete obligations provided that the market shares of both the supplier and the distributor do not exceed 30 % and the duration of the non-compete obligation does not exceed five years. However, even in cases where individual agreements satisfy those conditions, the use of non-compete obligations may result in anti-competitive effects not outweighed by their positive effects. In the motor vehicle industry, such net anti-competitive effects could in particular result from cumulative effects leading to the foreclosure of competing brands.

| (34) | For the distribution of motor vehicles at the retail level, foreclosure of this type is unlikely to occur in markets where all suppliers have market shares below 30 % and where the total percentage of all motor vehicle sales that are subject to single-branding obligations on the market in question (that is to say the total tied market share) is below 40 % (19). In a situation where there is one non-dominant supplier with a market share of more than 30 % of the relevant market whereas all other suppliers’ market shares are below 30 %, cumulative anticompetitive effects are unlikely as long as the total tied market share does not exceed 30 %. |
| --- | --- |

(34)

For the distribution of motor vehicles at the retail level, foreclosure of this type is unlikely to occur in markets where all suppliers have market shares below 30 % and where the total percentage of all motor vehicle sales that are subject to single-branding obligations on the market in question (that is to say the total tied market share) is below 40 % (19). In a situation where there is one non-dominant supplier with a market share of more than 30 % of the relevant market whereas all other suppliers’ market shares are below 30 %, cumulative anticompetitive effects are unlikely as long as the total tied market share does not exceed 30 %.

| (35) | If access to the relevant market for the sale of new motor vehicles and competition therein is significantly restricted by the cumulative effect of parallel networks of similar vertical agreements containing single branding obligations, the benefit of the block exemption may be withdrawn by the Commission, pursuant to Article 29 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (20). A withdrawal decision may be addressed in particular to those suppliers that contribute in a significant manner to a cumulative foreclosure effect on the relevant market. Where that effect occurs on a national market, the National Competition Authorities of that Member State may also withdraw the benefit of the block exemption in respect of that territory. |
| --- | --- |

(35)

If access to the relevant market for the sale of new motor vehicles and competition therein is significantly restricted by the cumulative effect of parallel networks of similar vertical agreements containing single branding obligations, the benefit of the block exemption may be withdrawn by the Commission, pursuant to Article 29 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (20). A withdrawal decision may be addressed in particular to those suppliers that contribute in a significant manner to a cumulative foreclosure effect on the relevant market. Where that effect occurs on a national market, the National Competition Authorities of that Member State may also withdraw the benefit of the block exemption in respect of that territory.

| (36) | In addition, if parallel networks of agreements containing similar vertical restraints cover more than 50 % of a given market, the Commission may adopt a Regulation declaring the block exemption inapplicable to the market in question in respect of such restraints. In particular, such a situation may arise if cumulative effects resulting from the widespread use of single-branding obligations lead to consumer harm on that market. |
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(36)

In addition, if parallel networks of agreements containing similar vertical restraints cover more than 50 % of a given market, the Commission may adopt a Regulation declaring the block exemption inapplicable to the market in question in respect of such restraints. In particular, such a situation may arise if cumulative effects resulting from the widespread use of single-branding obligations lead to consumer harm on that market.

| (37) | With regard to the assessment of minimum purchasing obligations calculated on the basis of the distributor's total annual requirements, it may be justified to withdraw the benefit of the block exemption if cumulative anticompetitive effects arise even if the supplier imposes a minimum purchasing obligation that is below the 80 % limit established in Article 1(d) of the General Vertical Block Exemption Regulation. The parties need to consider whether, in the light of the relevant factual circumstances, an obligation on the distributor to ensure that a given percentage of its total purchases of motor vehicles bear the supplier's brand will prevent the distributor from taking on one or more additional competing brands. From that perspective, even a minimum purchasing requirement set at a level lower than 80 % of total annual purchases will amount to a single-branding obligation if it obliges a distributor wishing to take up a new brand of its choice from a competing manufacturer to purchase so many motor vehicles of the brand that it currently sells that the distributor's business is made economically unsustainable (21). Such a minimum purchasing obligation will also amount to a single branding obligation if it forces a competing supplier to split its envisaged sales volume in a given territory over several distributors, leading to duplication of investments and a fragmented sales presence. |
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(37)

With regard to the assessment of minimum purchasing obligations calculated on the basis of the distributor's total annual requirements, it may be justified to withdraw the benefit of the block exemption if cumulative anticompetitive effects arise even if the supplier imposes a minimum purchasing obligation that is below the 80 % limit established in Article 1(d) of the General Vertical Block Exemption Regulation. The parties need to consider whether, in the light of the relevant factual circumstances, an obligation on the distributor to ensure that a given percentage of its total purchases of motor vehicles bear the supplier's brand will prevent the distributor from taking on one or more additional competing brands. From that perspective, even a minimum purchasing requirement set at a level lower than 80 % of total annual purchases will amount to a single-branding obligation if it obliges a distributor wishing to take up a new brand of its choice from a competing manufacturer to purchase so many motor vehicles of the brand that it currently sells that the distributor's business is made economically unsustainable (21). Such a minimum purchasing obligation will also amount to a single branding obligation if it forces a competing supplier to split its envisaged sales volume in a given territory over several distributors, leading to duplication of investments and a fragmented sales presence.

(ii)   Assessment of single-branding obligations outside the scope of the Block Exemption Regulations

| (38) | Parties may also be called upon to assess the compatibility with the competition rules of single-branding obligations in respect of agreements that do not qualify for block exemption because the parties’ market shares exceed 30 % or the duration of the agreement exceeds five years. Such agreements will therefore be subject to individual scrutiny in order to ascertain whether they are caught by Article 101(1) of the Treaty and if so, whether efficiencies offsetting any possible anti-competitive effect can be demonstrated. If that is the case, they may be able to benefit from the exception laid down in Article 101(3) of the Treaty. For assessment in an individual case the general principles set out in Section VI.2.1 of the General Vertical Guidelines will apply. |
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(38)

Parties may also be called upon to assess the compatibility with the competition rules of single-branding obligations in respect of agreements that do not qualify for block exemption because the parties’ market shares exceed 30 % or the duration of the agreement exceeds five years. Such agreements will therefore be subject to individual scrutiny in order to ascertain whether they are caught by Article 101(1) of the Treaty and if so, whether efficiencies offsetting any possible anti-competitive effect can be demonstrated. If that is the case, they may be able to benefit from the exception laid down in Article 101(3) of the Treaty. For assessment in an individual case the general principles set out in Section VI.2.1 of the General Vertical Guidelines will apply.

| (39) | In particular, agreements entered into between a motor vehicle manufacturer or its importer, on the one hand, and spare parts distributors and/or authorised repairers, on the other, will fall outside the Block Exemption Regulations when the market shares held by the parties exceed the 30 % threshold, which is likely to be the case for most such agreements. Single-branding obligations that will need to be assessed in such circumstances include all types of restriction that directly or indirectly limit authorised distributors’ or repairers’ ability to obtain original or matching quality spare parts from third parties. However, an obligation on an authorised repairer to use original spare parts supplied by the motor vehicle manufacturer for repairs carried out under warranty, free servicing and motor vehicle recall work would not be considered to be a single-branding obligation, but rather an objectively justified requirement. |
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(39)

In particular, agreements entered into between a motor vehicle manufacturer or its importer, on the one hand, and spare parts distributors and/or authorised repairers, on the other, will fall outside the Block Exemption Regulations when the market shares held by the parties exceed the 30 % threshold, which is likely to be the case for most such agreements. Single-branding obligations that will need to be assessed in such circumstances include all types of restriction that directly or indirectly limit authorised distributors’ or repairers’ ability to obtain original or matching quality spare parts from third parties. However, an obligation on an authorised repairer to use original spare parts supplied by the motor vehicle manufacturer for repairs carried out under warranty, free servicing and motor vehicle recall work would not be considered to be a single-branding obligation, but rather an objectively justified requirement.

| (40) | Single-branding obligations in agreements for the distribution of new motor vehicles will also need to be individually assessed where their duration exceeds five years or/and where the market share of the supplier exceeds 30 %, which may be the case for certain suppliers in some Member States. In such circumstances, the parties should have regard not only to the supplier's and buyer's market share, but also to the total tied market share taking into account the thresholds indicated in paragraph 34. Above those thresholds, individual cases will be assessed in accordance with the general principles set out in Section VI.2.1 of the General Vertical Guidelines. |
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(40)

Single-branding obligations in agreements for the distribution of new motor vehicles will also need to be individually assessed where their duration exceeds five years or/and where the market share of the supplier exceeds 30 %, which may be the case for certain suppliers in some Member States. In such circumstances, the parties should have regard not only to the supplier's and buyer's market share, but also to the total tied market share taking into account the thresholds indicated in paragraph 34. Above those thresholds, individual cases will be assessed in accordance with the general principles set out in Section VI.2.1 of the General Vertical Guidelines.

| (41) | Outside the scope of the Block Exemption Regulations, the assessment of minimum purchasing obligations calculated on the basis of the distributor's total annual requirements will take into account all the relevant factual circumstances. In particular, a minimum purchasing requirement set at a level lower than 80 % of total annual purchases will amount to a single-branding obligation if it has the effect of preventing distributors from dealing in one or more additional competing brands. |
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(41)

Outside the scope of the Block Exemption Regulations, the assessment of minimum purchasing obligations calculated on the basis of the distributor's total annual requirements will take into account all the relevant factual circumstances. In particular, a minimum purchasing requirement set at a level lower than 80 % of total annual purchases will amount to a single-branding obligation if it has the effect of preventing distributors from dealing in one or more additional competing brands.

2.   Selective distribution

| (42) | Selective distribution is currently the predominant form of distribution in the motor vehicle sector. Its use is widespread in motor vehicle distribution, as well as for repair and maintenance and the distribution of spare parts. |
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(42)

Selective distribution is currently the predominant form of distribution in the motor vehicle sector. Its use is widespread in motor vehicle distribution, as well as for repair and maintenance and the distribution of spare parts.

| (43) | In purely qualitative selective distribution, distributors and repairers are only selected on the basis of objective criteria required by the nature of the product or service, such as the technical skills of sales personnel, the layout of sales facilities, sales techniques and the type of sales service to be provided by the distributor (22). The application of such criteria does not put a direct limit on the number of distributors or repairers admitted to the supplier's network. Purely qualitative selective distribution is in general considered to fall outside Article 101(1) of the Treaty for lack of anti-competitive effects, provided that three conditions are satisfied. First, the nature of the product in question must necessitate the use of selective distribution, in the sense that such a system must constitute a legitimate requirement, having regard to the nature of the product concerned, to preserve its quality and ensure its proper use. Second, distributors or repairers must be chosen on the basis of objective criteria of a qualitative nature which are laid down uniformly for all potential resellers and are not applied in a discriminatory manner. Third, the criteria laid down must not go beyond what is necessary. |
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(43)

In purely qualitative selective distribution, distributors and repairers are only selected on the basis of objective criteria required by the nature of the product or service, such as the technical skills of sales personnel, the layout of sales facilities, sales techniques and the type of sales service to be provided by the distributor (22). The application of such criteria does not put a direct limit on the number of distributors or repairers admitted to the supplier's network. Purely qualitative selective distribution is in general considered to fall outside Article 101(1) of the Treaty for lack of anti-competitive effects, provided that three conditions are satisfied. First, the nature of the product in question must necessitate the use of selective distribution, in the sense that such a system must constitute a legitimate requirement, having regard to the nature of the product concerned, to preserve its quality and ensure its proper use. Second, distributors or repairers must be chosen on the basis of objective criteria of a qualitative nature which are laid down uniformly for all potential resellers and are not applied in a discriminatory manner. Third, the criteria laid down must not go beyond what is necessary.

| (44) | Whereas qualitative selective distribution involves the selection of distributors or repairers only on the basis of objective criteria required by the nature of the product or service, quantitative selection adds further criteria for selection that more directly limit the potential number of distributors or repairers either by directly fixing their number, or for instance, requiring a minimum level of sales. Networks based on quantitative criteria are generally held to be more restrictive than those that rely on qualitative selection alone, and are accordingly more likely to be caught by Article 101(1) of the Treaty. |
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(44)

Whereas qualitative selective distribution involves the selection of distributors or repairers only on the basis of objective criteria required by the nature of the product or service, quantitative selection adds further criteria for selection that more directly limit the potential number of distributors or repairers either by directly fixing their number, or for instance, requiring a minimum level of sales. Networks based on quantitative criteria are generally held to be more restrictive than those that rely on qualitative selection alone, and are accordingly more likely to be caught by Article 101(1) of the Treaty.

| (45) | If selective distribution agreements are caught by Article 101(1) of the Treaty, the parties will need to assess whether their agreements can benefit from the Block Exemption Regulations, or individually, from the exception in Article 101(3) of the Treaty. |
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(45)

If selective distribution agreements are caught by Article 101(1) of the Treaty, the parties will need to assess whether their agreements can benefit from the Block Exemption Regulations, or individually, from the exception in Article 101(3) of the Treaty.

(i)   The assessment of selective distribution under the Block Exemption Regulations

| (46) | The Block Exemption Regulations exempt selective distribution agreements, irrespective of whether quantitative or purely qualitative selection criteria are used, so long as the parties’ market shares do not exceed 30 %. However, that exemption is conditional on the agreements not containing any of the hardcore restrictions set out in Article 4 of the General Vertical Block Exemption Regulation and Article 5 of the Motor Vehicle Block Exemption Regulation, or any of the excluded restrictions described in Article 5 of the General Vertical Block Exemption Regulation. |
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(46)

The Block Exemption Regulations exempt selective distribution agreements, irrespective of whether quantitative or purely qualitative selection criteria are used, so long as the parties’ market shares do not exceed 30 %. However, that exemption is conditional on the agreements not containing any of the hardcore restrictions set out in Article 4 of the General Vertical Block Exemption Regulation and Article 5 of the Motor Vehicle Block Exemption Regulation, or any of the excluded restrictions described in Article 5 of the General Vertical Block Exemption Regulation.

| (47) | Three of the hardcore restrictions in the General Vertical Block Exemption Regulation relate specifically to selective distribution. Article 4(b) describes as hardcore the restriction of the territory into which, or of the customers to whom, a buyer party to the agreement may sell the contract goods or services, except the restriction of sales by the members of a selective distribution system to unauthorised distributors in markets where such a system is operated. Article 4(c) describes as hardcore agreements restricting active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment, while Article 4(d) relates to the restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different levels of trade. Those three hardcore restrictions have special relevance for motor vehicle distribution. |
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(47)

Three of the hardcore restrictions in the General Vertical Block Exemption Regulation relate specifically to selective distribution. Article 4(b) describes as hardcore the restriction of the territory into which, or of the customers to whom, a buyer party to the agreement may sell the contract goods or services, except the restriction of sales by the members of a selective distribution system to unauthorised distributors in markets where such a system is operated. Article 4(c) describes as hardcore agreements restricting active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment, while Article 4(d) relates to the restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different levels of trade. Those three hardcore restrictions have special relevance for motor vehicle distribution.

| (48) | The internal market has enabled consumers to purchase motor vehicles in other Member States and take advantage of price differentials between them, and the Commission views the protection of parallel trade in this sector as an important competition objective. The consumer's ability to buy goods in other Member States is especially important as far as motor vehicles are concerned, given the high value of the goods and the direct benefits in the form of lower prices accruing to consumers buying motor vehicles elsewhere in the Union. The Commission is therefore concerned that distribution agreements should not restrict parallel trade, since this cannot be expected to satisfy the conditions laid down in Article 101(3) of the Treaty (23). |
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(48)

The internal market has enabled consumers to purchase motor vehicles in other Member States and take advantage of price differentials between them, and the Commission views the protection of parallel trade in this sector as an important competition objective. The consumer's ability to buy goods in other Member States is especially important as far as motor vehicles are concerned, given the high value of the goods and the direct benefits in the form of lower prices accruing to consumers buying motor vehicles elsewhere in the Union. The Commission is therefore concerned that distribution agreements should not restrict parallel trade, since this cannot be expected to satisfy the conditions laid down in Article 101(3) of the Treaty (23).

| (49) | The Commission has brought several cases against motor vehicle manufacturers for impeding such trade, and its decisions have been largely confirmed by the European Courts (24). This experience shows that restrictions on parallel trade may take a number of forms. A supplier may, for instance, put pressure on distributors, threaten them with contract termination, fail to pay bonuses, refuse to honour warranties on motor vehicles imported by a consumer or cross-supplied between distributors established in different Member States, or make a distributor wait significantly longer for delivery of an identical motor vehicle when the consumer in question is resident in another Member State. |
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(49)

The Commission has brought several cases against motor vehicle manufacturers for impeding such trade, and its decisions have been largely confirmed by the European Courts (24). This experience shows that restrictions on parallel trade may take a number of forms. A supplier may, for instance, put pressure on distributors, threaten them with contract termination, fail to pay bonuses, refuse to honour warranties on motor vehicles imported by a consumer or cross-supplied between distributors established in different Member States, or make a distributor wait significantly longer for delivery of an identical motor vehicle when the consumer in question is resident in another Member State.

| (50) | One particular example of indirect restrictions on parallel trade arises when a distributor is unable to obtain new motor vehicles with the appropriate specifications needed for cross-border sales. In those specific circumstances, the benefit of the block exemption may depend on whether a supplier provides its distributors with motor vehicles with specifications identical to those sold in other Member States for sale to consumers from those countries (the so-called ‘availability clause’) (25). |
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(50)

One particular example of indirect restrictions on parallel trade arises when a distributor is unable to obtain new motor vehicles with the appropriate specifications needed for cross-border sales. In those specific circumstances, the benefit of the block exemption may depend on whether a supplier provides its distributors with motor vehicles with specifications identical to those sold in other Member States for sale to consumers from those countries (the so-called ‘availability clause’) (25).

| (51) | For the purposes of the application of the Block Exemption Regulations, and in particular as regards the application of Article 4(c) of the General Vertical Block Exemption Regulation, the notion of ‘end users’ includes leasing companies. This means in particular that distributors in selective distribution systems may not be prevented from selling new motor vehicles to leasing companies of their choice. However, a supplier using selective distribution may prevent its distributors from selling new motor vehicles to leasing companies when there is a verifiable risk that those companies will resell them while still new. A supplier can therefore require a dealer to check, before selling to a particular company, the general leasing conditions applied so as to verify that the company in question is indeed a leasing company rather than an unauthorised reseller. However, an obligation on a dealer to provide its supplier with copies of each leasing agreement before the dealer sells a motor vehicle to a leasing company could amount to an indirect restriction on sales. |
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(51)

For the purposes of the application of the Block Exemption Regulations, and in particular as regards the application of Article 4(c) of the General Vertical Block Exemption Regulation, the notion of ‘end users’ includes leasing companies. This means in particular that distributors in selective distribution systems may not be prevented from selling new motor vehicles to leasing companies of their choice. However, a supplier using selective distribution may prevent its distributors from selling new motor vehicles to leasing companies when there is a verifiable risk that those companies will resell them while still new. A supplier can therefore require a dealer to check, before selling to a particular company, the general leasing conditions applied so as to verify that the company in question is indeed a leasing company rather than an unauthorised reseller. However, an obligation on a dealer to provide its supplier with copies of each leasing agreement before the dealer sells a motor vehicle to a leasing company could amount to an indirect restriction on sales.

| (52) | The notion of ‘end users’ also encompasses consumers who purchase through an intermediary. An intermediary is a person or an undertaking which purchases a new motor vehicle on behalf of a named consumer without being a member of the distribution network. Those operators perform an important role in the motor vehicle sector, in particular by facilitating consumers’ purchases of motor vehicles in other Member States. Evidence of intermediary status should as a rule be established by a valid mandate including the name and address of the consumer obtained prior to the transaction. The use of the Internet as a means to attract customers in relation to a given range of motor vehicles and collect electronic mandates from them does not affect intermediary status. Intermediaries are to be distinguished from independent resellers, which purchase motor vehicles for resale and do not operate on behalf of named consumers. Independent resellers are not to be considered as end users for the purposes of the Block Exemption Regulations. |
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(52)

The notion of ‘end users’ also encompasses consumers who purchase through an intermediary. An intermediary is a person or an undertaking which purchases a new motor vehicle on behalf of a named consumer without being a member of the distribution network. Those operators perform an important role in the motor vehicle sector, in particular by facilitating consumers’ purchases of motor vehicles in other Member States. Evidence of intermediary status should as a rule be established by a valid mandate including the name and address of the consumer obtained prior to the transaction. The use of the Internet as a means to attract customers in relation to a given range of motor vehicles and collect electronic mandates from them does not affect intermediary status. Intermediaries are to be distinguished from independent resellers, which purchase motor vehicles for resale and do not operate on behalf of named consumers. Independent resellers are not to be considered as end users for the purposes of the Block Exemption Regulations.

(ii)   The assessment of selective distribution outside the scope of the Block Exemption Regulations

| (53) | As paragraph 175 of the General Vertical Guidelines explains, the possible competition risks brought about by selective distribution are a reduction in intra-brand competition and, especially in case of cumulative effect, foreclosure of certain type(s) of distributors and facilitation of collusion between suppliers or buyers. |
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(53)

As paragraph 175 of the General Vertical Guidelines explains, the possible competition risks brought about by selective distribution are a reduction in intra-brand competition and, especially in case of cumulative effect, foreclosure of certain type(s) of distributors and facilitation of collusion between suppliers or buyers.

| (54) | To assess the possible anti-competitive effects of selective distribution under Article 101(1) of the Treaty, a distinction needs to be made between purely qualitative selective distribution and quantitative selective distribution. As pointed out in paragraph 43, qualitative selective distribution is normally not caught by Article 101(1) of the Treaty. |
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(54)

To assess the possible anti-competitive effects of selective distribution under Article 101(1) of the Treaty, a distinction needs to be made between purely qualitative selective distribution and quantitative selective distribution. As pointed out in paragraph 43, qualitative selective distribution is normally not caught by Article 101(1) of the Treaty.

| (55) | The fact that a network of agreements does not benefit from the block exemption because the market share of one or more of the parties is above the 30 % threshold for exemption does not imply that such agreements are illegal. Instead, the parties to such agreements need to subject them to an individual analysis to check whether they fall under Article 101(1) of the Treaty and, if so, whether they may nonetheless benefit from the exception in Article 101(3) of the Treaty. |
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(55)

The fact that a network of agreements does not benefit from the block exemption because the market share of one or more of the parties is above the 30 % threshold for exemption does not imply that such agreements are illegal. Instead, the parties to such agreements need to subject them to an individual analysis to check whether they fall under Article 101(1) of the Treaty and, if so, whether they may nonetheless benefit from the exception in Article 101(3) of the Treaty.

| (56) | As regards the specificities of new motor vehicle distribution, quantitative selective distribution will generally satisfy the conditions laid down in Article 101(3) of the Treaty if the parties’ market shares do not exceed 40 %. However, the parties to such agreements should bear in mind that the presence of particular selection standards could have an effect on whether their agreements satisfy the conditions laid down in Article 101(3) of the Treaty. For instance, although the use of location clauses in selective distribution agreements for new motor vehicles, that is to say agreements containing a prohibition on a member of a selective distribution system from operating out of an unauthorised place of establishment, will usually bring efficiency benefits in the form of more efficient logistics and predictable network coverage, those benefits may be outweighed by disadvantages if the market share of the supplier is very high, and in those circumstances such clauses might not be able to benefit from the exception in Article 101(3) of the Treaty. |
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(56)

As regards the specificities of new motor vehicle distribution, quantitative selective distribution will generally satisfy the conditions laid down in Article 101(3) of the Treaty if the parties’ market shares do not exceed 40 %. However, the parties to such agreements should bear in mind that the presence of particular selection standards could have an effect on whether their agreements satisfy the conditions laid down in Article 101(3) of the Treaty. For instance, although the use of location clauses in selective distribution agreements for new motor vehicles, that is to say agreements containing a prohibition on a member of a selective distribution system from operating out of an unauthorised place of establishment, will usually bring efficiency benefits in the form of more efficient logistics and predictable network coverage, those benefits may be outweighed by disadvantages if the market share of the supplier is very high, and in those circumstances such clauses might not be able to benefit from the exception in Article 101(3) of the Treaty.

| (57) | Individual assessment of selective distribution for authorised repairers also raises specific issues. Insofar as a market exists (26) for repair and maintenance services that is separate from that for the sale of new motor vehicles, this is considered to be brand-specific. On that market, the main source of competition results from the competitive interaction between independent repairers and authorised repairers of the brand in question. |
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(57)

Individual assessment of selective distribution for authorised repairers also raises specific issues. Insofar as a market exists (26) for repair and maintenance services that is separate from that for the sale of new motor vehicles, this is considered to be brand-specific. On that market, the main source of competition results from the competitive interaction between independent repairers and authorised repairers of the brand in question.

| (58) | Independent repairers in particular provide vital competitive pressure, as their business models and their related operating costs are different from those in the authorised networks. Moreover, unlike authorised repairers, which to a large extent use car manufacturer-branded parts, independent garages generally have greater recourse to other brands, thereby allowing a motor vehicle owner to choose between competing parts. In addition, given that a large majority of repairs for newer motor vehicles are currently carried out in authorised repair shops, it is important that competition between authorised repairers remains effective, which may only be the case if access to the networks remains open for new entrants. |
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(58)

Independent repairers in particular provide vital competitive pressure, as their business models and their related operating costs are different from those in the authorised networks. Moreover, unlike authorised repairers, which to a large extent use car manufacturer-branded parts, independent garages generally have greater recourse to other brands, thereby allowing a motor vehicle owner to choose between competing parts. In addition, given that a large majority of repairs for newer motor vehicles are currently carried out in authorised repair shops, it is important that competition between authorised repairers remains effective, which may only be the case if access to the networks remains open for new entrants.

| (59) | The new legal framework makes it easier for the Commission and National Competition Authorities to protect competition between independent garages and authorised repairers, as well as between the members of each authorised repairer network. In particular, the reduction in the market share threshold for exemption of qualitative selective distribution from 100 % to 30 % broadens the scope for competition authorities to act. |
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(59)

The new legal framework makes it easier for the Commission and National Competition Authorities to protect competition between independent garages and authorised repairers, as well as between the members of each authorised repairer network. In particular, the reduction in the market share threshold for exemption of qualitative selective distribution from 100 % to 30 % broadens the scope for competition authorities to act.

| (60) | When assessing the competitive impact of vertical agreements on the motor vehicle aftermarkets, the parties should therefore be aware of the Commission’s determination to preserve competition both between the members of authorised repair networks and between those members and independent repairers. To this end, particular attention should be paid to three specific types of conduct which may restrict such competition, namely preventing access of independent repairers to technical information, misusing the legal and/or extended warranties to exclude independent repairers, or making access to authorised repairer networks conditional upon non-qualitative criteria. |
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(60)

When assessing the competitive impact of vertical agreements on the motor vehicle aftermarkets, the parties should therefore be aware of the Commission’s determination to preserve competition both between the members of authorised repair networks and between those members and independent repairers. To this end, particular attention should be paid to three specific types of conduct which may restrict such competition, namely preventing access of independent repairers to technical information, misusing the legal and/or extended warranties to exclude independent repairers, or making access to authorised repairer networks conditional upon non-qualitative criteria.

| (61) | Although the following three subsections refer specifically to selective distribution, the same anti-competitive foreclosure effects could stem from other types of vertical agreements that limit, directly or indirectly, the number of service partners contractually linked to a motor vehicle manufacturer. |
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(61)

Although the following three subsections refer specifically to selective distribution, the same anti-competitive foreclosure effects could stem from other types of vertical agreements that limit, directly or indirectly, the number of service partners contractually linked to a motor vehicle manufacturer.

Access to technical information by independent operators

| (62) | Although purely qualitative selective distribution is in general considered to fall outside Article 101(1) of the Treaty for lack of anti-competitive effects (27), qualitative selective distribution agreements concluded with authorised repairers and/or parts distributors may be caught by Article 101(1) of the Treaty if, within the context of those agreements, one of the parties acts in a way that forecloses independent operators from the market, for instance by failing to release technical repair and maintenance information to them. In that context, the notion of independent operators includes independent repairers, spare parts manufacturers and distributors, manufacturers of repair equipment or tools, publishers of technical information, automobile clubs, roadside assistance operators, operators offering inspection and testing services and operators offering training for repairers. |
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(62)

Although purely qualitative selective distribution is in general considered to fall outside Article 101(1) of the Treaty for lack of anti-competitive effects (27), qualitative selective distribution agreements concluded with authorised repairers and/or parts distributors may be caught by Article 101(1) of the Treaty if, within the context of those agreements, one of the parties acts in a way that forecloses independent operators from the market, for instance by failing to release technical repair and maintenance information to them. In that context, the notion of independent operators includes independent repairers, spare parts manufacturers and distributors, manufacturers of repair equipment or tools, publishers of technical information, automobile clubs, roadside assistance operators, operators offering inspection and testing services and operators offering training for repairers.

| (63) | Suppliers provide their authorised repairers with the full scope of technical information needed to perform repair and maintenance work on motor vehicles of their brands and are often the only companies able to provide repairers with all of the technical information that they need on the brands in question. In such circumstances, if the supplier fails to provide independent operators with appropriate access to its brand-specific technical repair and maintenance information, possible negative effects stemming from its agreements with authorised repairers and/or parts distributors could be strengthened, and cause the agreements to fall within Article 101(1) of the Treaty. |
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(63)

Suppliers provide their authorised repairers with the full scope of technical information needed to perform repair and maintenance work on motor vehicles of their brands and are often the only companies able to provide repairers with all of the technical information that they need on the brands in question. In such circumstances, if the supplier fails to provide independent operators with appropriate access to its brand-specific technical repair and maintenance information, possible negative effects stemming from its agreements with authorised repairers and/or parts distributors could be strengthened, and cause the agreements to fall within Article 101(1) of the Treaty.

| (64) | Moreover, a lack of access to necessary technical information could cause the market position of independent operators to decline, leading to consumer harm, in terms of a significant reduction in choice of spare parts, higher prices for repair and maintenance services, a reduction in choice of repair outlets and potential safety problems. In those circumstances, the efficiencies that might normally be expected to result from the authorised repair and parts distribution agreements would not be such as to offset these anti-competitive effects, and the agreements in question would consequently fail to satisfy the conditions laid down in Article 101(3) of the Treaty. |
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(64)

Moreover, a lack of access to necessary technical information could cause the market position of independent operators to decline, leading to consumer harm, in terms of a significant reduction in choice of spare parts, higher prices for repair and maintenance services, a reduction in choice of repair outlets and potential safety problems. In those circumstances, the efficiencies that might normally be expected to result from the authorised repair and parts distribution agreements would not be such as to offset these anti-competitive effects, and the agreements in question would consequently fail to satisfy the conditions laid down in Article 101(3) of the Treaty.

| (65) | Regulation (EC) No 715/2007 of the European Parliament and of the Council of 20 June 2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information (28) as well as Commission Regulation (EC) No 692/2008 of 18 July 2008 implementing and amending Regulation (EC) No 715/2007 of the European Parliament and of the Council on type-approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information (29) provide for a system for disseminating repair and maintenance information in respect of passenger cars put on the market from 1 September 2009. Regulation (EC) No 595/2009 of the European Parliament and of the Council of 18 June 2009 on type approval of motor vehicles and engines with respect to emissions from heavy duty vehicles (Euro 6) and on access to vehicle repair an maintenance information (30) and the ensuing implementing measures provide for such a system in respect of commercial vehicles put on the market from 1 January 2013. The Commission will take those Regulations into account when assessing cases of suspected withholding of technical repair and maintenance information concerning motor vehicles marketed before those dates. When considering whether withholding a particular item of information may lead the agreements at issue to be caught by Article 101(1) of the Treaty, a number of factors should be considered, including:






  (a) | whether the item in question is technical information, or information of another type, such as commercial information (31), which may legitimately be withheld; |
| --- | --- | --- |

(65)

Regulation (EC) No 715/2007 of the European Parliament and of the Council of 20 June 2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information (28) as well as Commission Regulation (EC) No 692/2008 of 18 July 2008 implementing and amending Regulation (EC) No 715/2007 of the European Parliament and of the Council on type-approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 5 and Euro 6) and on access to vehicle repair and maintenance information (29) provide for a system for disseminating repair and maintenance information in respect of passenger cars put on the market from 1 September 2009. Regulation (EC) No 595/2009 of the European Parliament and of the Council of 18 June 2009 on type approval of motor vehicles and engines with respect to emissions from heavy duty vehicles (Euro 6) and on access to vehicle repair an maintenance information (30) and the ensuing implementing measures provide for such a system in respect of commercial vehicles put on the market from 1 January 2013. The Commission will take those Regulations into account when assessing cases of suspected withholding of technical repair and maintenance information concerning motor vehicles marketed before those dates. When considering whether withholding a particular item of information may lead the agreements at issue to be caught by Article 101(1) of the Treaty, a number of factors should be considered, including:

(a)

whether the item in question is technical information, or information of another type, such as commercial information (31), which may legitimately be withheld;

| (b) | whether withholding the technical information in question will have an appreciable impact on the ability of independent operators to carry out their tasks and exercise a competitive constraint on the market; |
| --- | --- |

(b)

whether withholding the technical information in question will have an appreciable impact on the ability of independent operators to carry out their tasks and exercise a competitive constraint on the market;

| (c) | whether the technical information in question is made available to members of the relevant authorised repair network; if it is made available to the authorised network in whatever form, it should also be made available to independent operators on a non-discriminatory basis; |
| --- | --- |

(c)

whether the technical information in question is made available to members of the relevant authorised repair network; if it is made available to the authorised network in whatever form, it should also be made available to independent operators on a non-discriminatory basis;

| (d) | whether the technical information in question will ultimately (32) be used for the repair and maintenance of motor vehicles, or rather for another purpose (33), such as for the manufacturing of spare parts or tools. |
| --- | --- |

(d)

whether the technical information in question will ultimately (32) be used for the repair and maintenance of motor vehicles, or rather for another purpose (33), such as for the manufacturing of spare parts or tools.

| (66) | Technological progress implies that the notion of technical information is fluid. Currently, particular examples of technical information include software, fault codes and other parameters, together with updates, which are required to work on electronic control units with a view to introducing or restoring settings recommended by the supplier, motor vehicle identification numbers or any other motor vehicle identification methods, parts catalogues, repair and maintenance procedures, working solutions resulting from practical experience and relating to problems typically affecting a given model or batch, and recall notices as well as other notices identifying repairs that may be carried out without charge within the authorised repair network. The part code and any other information necessary to identify the correct car manufacturer-branded spare part to fit a given individual motor vehicle (that is to say the part that the car manufacturer would generally supply to the members of its authorised repair networks to repair the motor vehicle in question) also constitute technical information (34). The lists of items set out in Article 6(2) of Regulation (EC) No 715/2007 and Regulation (EC) No 595/2009 should also be used as a guide to what the Commission views as technical information for the purposes of applying Article 101 of the Treaty. |
| --- | --- |

(66)

Technological progress implies that the notion of technical information is fluid. Currently, particular examples of technical information include software, fault codes and other parameters, together with updates, which are required to work on electronic control units with a view to introducing or restoring settings recommended by the supplier, motor vehicle identification numbers or any other motor vehicle identification methods, parts catalogues, repair and maintenance procedures, working solutions resulting from practical experience and relating to problems typically affecting a given model or batch, and recall notices as well as other notices identifying repairs that may be carried out without charge within the authorised repair network. The part code and any other information necessary to identify the correct car manufacturer-branded spare part to fit a given individual motor vehicle (that is to say the part that the car manufacturer would generally supply to the members of its authorised repair networks to repair the motor vehicle in question) also constitute technical information (34). The lists of items set out in Article 6(2) of Regulation (EC) No 715/2007 and Regulation (EC) No 595/2009 should also be used as a guide to what the Commission views as technical information for the purposes of applying Article 101 of the Treaty.

| (67) | The way in which technical information is supplied is also important for assessing the compatibility of authorised repair agreements with Article 101 of the Treaty. Access should be given upon request and without undue delay, the information should be provided in a usable form, and the price charged should not discourage access to it by failing to take into account the extent to which the independent operator uses the information. A supplier of motor vehicles should be required to give independent operators access to technical information on new motor vehicles at the same time as such access is given to its authorised repairers and should not oblige independent operators to purchase more than the information necessary to carry out the work in question. Article 101 of the Treaty does not, however, oblige a supplier to provide technical information in a standardised format or through a defined technical system, such as the CEN/ISO standard and the OASIS format as provided for by Regulation (EC) No 715/2007 and Commission Regulation (EC) No 295/2009 of 18 March 2009 concerning the classification of certain goods in the Combined Nomenclature (35). |
| --- | --- |

(67)

The way in which technical information is supplied is also important for assessing the compatibility of authorised repair agreements with Article 101 of the Treaty. Access should be given upon request and without undue delay, the information should be provided in a usable form, and the price charged should not discourage access to it by failing to take into account the extent to which the independent operator uses the information. A supplier of motor vehicles should be required to give independent operators access to technical information on new motor vehicles at the same time as such access is given to its authorised repairers and should not oblige independent operators to purchase more than the information necessary to carry out the work in question. Article 101 of the Treaty does not, however, oblige a supplier to provide technical information in a standardised format or through a defined technical system, such as the CEN/ISO standard and the OASIS format as provided for by Regulation (EC) No 715/2007 and Commission Regulation (EC) No 295/2009 of 18 March 2009 concerning the classification of certain goods in the Combined Nomenclature (35).

| (68) | The above considerations also apply to the availability of tools and training to independent operators. ‘Tools’ in this context includes electronic diagnostic and other repair tools, together with related software, including periodic updates thereof, and after-sales services for such tools. |
| --- | --- |

(68)

The above considerations also apply to the availability of tools and training to independent operators. ‘Tools’ in this context includes electronic diagnostic and other repair tools, together with related software, including periodic updates thereof, and after-sales services for such tools.

Misuse of warranties

| (69) | Qualitative selective distribution agreements may also be caught by Article 101(1) of the Treaty if the supplier and the members of its authorised network explicitly or implicitly reserve repairs on certain categories of motor vehicles to the members of the authorised network. This might happen, for instance, if the manufacturer's warranty vis-à-vis the buyer, whether legal or extended, is made conditional on the end user having repair and maintenance work that is not covered by warranty carried out only within the authorised repair networks. The same applies to warranty conditions which require the use of the manufacturer's brand of spare parts in respect of replacements not covered by the warranty terms. It also seems doubtful that selective distribution agreements containing such practices could bring benefits to consumers in such a way as to allow the agreements in question to benefit from the exception in Article 101(3) of the Treaty. However, if a supplier legitimately refuses to honour a warranty claim on the grounds that the situation leading to the claim in question is causally linked to a failure on the part of a repairer to carry out a particular repair or maintenance operation in the correct manner or to the use of poor quality spare parts, this will have no bearing on the compatibility of the supplier's repair agreements with the competition rules. |
| --- | --- |

(69)

Qualitative selective distribution agreements may also be caught by Article 101(1) of the Treaty if the supplier and the members of its authorised network explicitly or implicitly reserve repairs on certain categories of motor vehicles to the members of the authorised network. This might happen, for instance, if the manufacturer's warranty vis-à-vis the buyer, whether legal or extended, is made conditional on the end user having repair and maintenance work that is not covered by warranty carried out only within the authorised repair networks. The same applies to warranty conditions which require the use of the manufacturer's brand of spare parts in respect of replacements not covered by the warranty terms. It also seems doubtful that selective distribution agreements containing such practices could bring benefits to consumers in such a way as to allow the agreements in question to benefit from the exception in Article 101(3) of the Treaty. However, if a supplier legitimately refuses to honour a warranty claim on the grounds that the situation leading to the claim in question is causally linked to a failure on the part of a repairer to carry out a particular repair or maintenance operation in the correct manner or to the use of poor quality spare parts, this will have no bearing on the compatibility of the supplier's repair agreements with the competition rules.

Access to authorised repairer networks

| (70) | Competition between authorised and independent repairers is not the only form of competition that needs to be taken into account when analysing the compatibility of authorised repair agreements with Article 101 of the Treaty. Parties should also assess the degree to which authorised repairers within the relevant network are able to compete with one another. One of the main factors driving this competition relates to the conditions of access to the network established under the standard authorised repairer agreements. In view of the generally strong market position of networks of authorised repairers, their particular importance for owners of newer motor vehicles, and the fact that consumers are not prepared to travel long distances to have their cars repaired, the Commission considers it important that access to the authorised repair networks should generally remain open to all firms that meet defined quality criteria. Submitting applicants to quantitative selection is likely to cause the agreement to fall within Article 101(1) of the Treaty. |
| --- | --- |

(70)

Competition between authorised and independent repairers is not the only form of competition that needs to be taken into account when analysing the compatibility of authorised repair agreements with Article 101 of the Treaty. Parties should also assess the degree to which authorised repairers within the relevant network are able to compete with one another. One of the main factors driving this competition relates to the conditions of access to the network established under the standard authorised repairer agreements. In view of the generally strong market position of networks of authorised repairers, their particular importance for owners of newer motor vehicles, and the fact that consumers are not prepared to travel long distances to have their cars repaired, the Commission considers it important that access to the authorised repair networks should generally remain open to all firms that meet defined quality criteria. Submitting applicants to quantitative selection is likely to cause the agreement to fall within Article 101(1) of the Treaty.

| (71) | A particular case arises when agreements oblige authorised repairers to also sell new motor vehicles. Such agreements are likely to be caught by Article 101(1) of the Treaty, since the obligation in question is not required by the nature of the contract services. Moreover, for an established brand, agreements containing such an obligation would not normally be able to benefit from the exception in Article 101(3) of the Treaty, since the impact would be to severely restrict access to the authorised repair network, thereby reducing competition without bringing corresponding benefits to consumers. However, in certain cases, a supplier wishing to launch a brand on a particular geographic market might initially find it difficult to attract distributors willing to make the necessary investment unless they could be sure that they would not face competition from ‘stand-alone’ authorised repairers that sought to free-ride on these initial investments. In those circumstances, contractually linking the two activities for a limited period of time would have a pro-competitive effect on the motor vehicle sales market by allowing a new brand to launch, and would have no effect on the potential brand-specific repair market, which would in any event not exist if the motor vehicles could not be sold. The agreements in question would therefore be unlikely to be caught by Article 101(1) of the Treaty. |
| --- | --- |

(71)

A particular case arises when agreements oblige authorised repairers to also sell new motor vehicles. Such agreements are likely to be caught by Article 101(1) of the Treaty, since the obligation in question is not required by the nature of the contract services. Moreover, for an established brand, agreements containing such an obligation would not normally be able to benefit from the exception in Article 101(3) of the Treaty, since the impact would be to severely restrict access to the authorised repair network, thereby reducing competition without bringing corresponding benefits to consumers. However, in certain cases, a supplier wishing to launch a brand on a particular geographic market might initially find it difficult to attract distributors willing to make the necessary investment unless they could be sure that they would not face competition from ‘stand-alone’ authorised repairers that sought to free-ride on these initial investments. In those circumstances, contractually linking the two activities for a limited period of time would have a pro-competitive effect on the motor vehicle sales market by allowing a new brand to launch, and would have no effect on the potential brand-specific repair market, which would in any event not exist if the motor vehicles could not be sold. The agreements in question would therefore be unlikely to be caught by Article 101(1) of the Treaty.

---

(1)  With effect from 1 December 2009, Articles 81 and 82 of the EC Treaty have become Articles 101 and 102, respectively, of the Treaty on the Functioning of the European Union (‘TFEU’). The two sets of provisions are in substance identical. For the purposes of these Guidelines, references to Articles 101 and 102 of the TFEU should be understood as references to Articles 81 and 82, respectively, of the EC Treaty where appropriate. The TFEU also introduced certain changes in terminology, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout these Guidelines.

(2)  OJ L 129, 28.5.2010, p. 52.

(3)  OJ L 102, 23.4.2010, p. 1.

(4)  OJ C 130, 19.5.2010, p. 1.

(5)  OJ L 203, 1.8.2002, p. 30.

(6)  Retail level distributors are commonly referred to in the sector as ‘dealers’.

(7)  Since the modernisation of the Union competition rules, the primary responsibility for such analysis lies with the parties to agreements. The Commission may however investigate the compatibility of agreements with Article 101 of the Treaty, on its own initiative or following a complaint.

(8)  The expiry of Regulation (EC) No 1400/2002 and its replacement with the new legal framework explained in these Guidelines does not of itself require that existing contracts be terminated. See for example Case C-125/05 Vulcan Silkeborg A/S v Skandinavisk Motor Co. A/S. [2006] ECR I-7637.

(9)  SEC(2008) 1946.

(10)  COM(2009) 388.

(11)  Pursuant to Article 7 of the General Vertical Block Exemption Regulation, the calculation of this market share threshold is normally based on market sales value data or, if such data are not available, on other reliable market information, including market sales volumes. In this respect, the Commission takes note of the fact that, for the distribution of new motor vehicles, market shares are currently calculated by the industry on the basis of the volume of motor vehicles sold by the supplier on the relevant market, which includes all motor vehicles that are regarded by the buyer as interchangeable or substitutable, by reason of the products’ characteristics, prices and intended use.

(12)  Explanatory brochure for Commission Regulation (EC) No 1400/2002 of 31 July 2002 — Distribution and Servicing of Motor Vehicles in the European Union.

(13)  OJ L 263, 9.10.2007, p. 1.

(14)  OJ C 1, 3.1.1979, p. 2.

(15)  Where the motor vehicle manufacturer provides a tool, intellectual property rights (IPR) and/or know-how to a component supplier, this arrangement will not benefit from the Sub-contracting Notice if the component supplier already has this tool, IPR or know-how at its disposal, or could, under reasonable conditions obtain them, since under these circumstances the contribution would not be necessary.

(16)  Commission notice on agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the Treaty establishing the European Community (de minimis), OJ C 368, 22.12.2001, p. 13.

(17)  As regards the relevant factors to be taken into account to carry out the assessment of non-compete obligations under Article 101(1) of the Treaty, see the relevant section in the General Vertical Guidelines, in particular paragraphs 129 to 150.

(18)  See cases BMW, IP/06/302 — 13.3.2006 and Opel 2006, IP/06/303 — 13.3.2006.

(19)  See General Vertical Guidelines at paragraph 141.

(20)  OJ L 1, 4.1.2003, p. 1.

(21)  For instance, if a dealer purchases 100 cars of brand A in a year to meet demand, and wishes to buy 100 cars of brand B, an 80 % minimum purchasing obligation as regards brand A would imply that the following year, the dealer would have to buy 160 brand A cars. Given that penetration rates are likely to be relatively stable, this would likely leave the dealer with a large unsold stock of brand A. It would therefore be forced to dramatically reduce its purchases of brand B in order to avoid such a situation. Depending on the specific circumstances of the case, such a practice can be viewed as a single-branding obligation.

(22)  It should be recalled however that, in accordance with the established case law of the European Courts, purely qualitative selective distribution systems may nevertheless restrict competition where the existence of a certain number of such systems does not leave any room for other forms of distribution based on a different way of competing. This situation will generally not arise on the markets for the sale of new motor vehicles, on which leasing and other similar arrangements are a valid alternative to outright purchase of a motor vehicle, nor in the markets for repair and maintenance, as long as independent repairers provide consumers with an alternative channel for the upkeep of their motor vehicles. See for example Case T-88/92 Groupement d'achat Édouard Leclerc v Commission [1996] ECR II-1961.

(23)  The notion that cross-border trade restrictions may harm consumers has been confirmed by the Court in Case C-551/03 P, General Motors, [2006] ECR I-3173, paragraphs 67 and 68; Case C-338/00 P, Volkswagen/Commission, [2003] ECR I-9189, paragraphs 44 and 49, and Case T-450/05, Peugeot/Commission, judgment of 9 July 2009, not yet reported, paragraphs 46-49.

(24)  Commission Decision 98/273/EC of 28 January 1998 in Case IV/35.733 — VW, Commission Decision 2001/146/EC of 20 September 2000 in Case COMP/36.653 — Opel, OJ L 59, 28.2.2001, p. 1, Commission Decision 2002/758/EC of 10 October 2001 in Case COMP/36.264 — Mercedes-Benz, OJ L 257, 25.9.2002, p. 1, Commission Decision 2006/431/EC of 5 October 2005 in Cases F-2/36.623/36.820/37.275 — SEP et autres/Peugeot SA.

(25)  Joined Cases 25 and 26/84 Ford-Werke AG and Ford of Europe Inc. v Commission of the European Communities, [1985] ECR 2725.

(26)  In some circumstances, a system market which includes motor vehicles and spare parts together may be defined, taking into account, inter alia, the life-time of the motor vehicle as well as the preferences and buying behaviour of the users. See Commission notice on the definition of the relevant market for the purposes of Community competition law, OJ C 372, 9.12.1997, p. 5, paragraph 56. One important factor is whether a significant proportion of buyers make their choice taking into account the lifetime costs of the motor vehicle or not. For instance, buying behaviour may significantly differ between buyers of trucks who purchase and operate a fleet, and who take into account maintenance costs at the moment of purchasing the motor vehicle and buyers of individual motor vehicles. Another relevant factor is the existence and relative position of part suppliers, repairers and/or parts distributors operating in the aftermarket independently from motor vehicle manufacturers. In most cases, there is likely to be a brand-specific aftermarket, in particular because the majority of buyers are private individuals or small and medium-size enterprises that purchase motor vehicles and aftermarket services separately and do not have systematic access to data permitting them to assess the overall costs of motor vehicle ownership in advance.

(27)  As pointed out in paragraph 54 above, this will generally be the case on the markets for repair and maintenance as long as independent repairers provide consumers with an alternative channel for the upkeep of their motor vehicles.

(28)  OJ L 171, 29.6.2007, p. 1.

(29)  OJ L 199, 28.7.2008, p. 1.

(30)  OJ L 188, 18.7.2009, p. 1.

(31)  Commercial information can be thought of as information that is used for carrying on a repair and maintenance business but is not needed to repair or maintain motor vehicles. Examples include billing software, or information on the hourly tariffs practiced within the authorised network.

(32)  Such as information supplied to publishers for resupply to motor vehicle repairers.

(33)  Information used for fitting a spare part to or using a tool on a motor vehicle should be considered as being used for repair and maintenance, while information on the design, production process or the materials used for manufacturing a spare part should not be considered to fall within this category, and may therefore be withheld.

(34)  The independent operator should not have to purchase the spare part in question to be able to obtain this information.

(35)  OJ L 95, 9.4.2009, p. 7.

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NOTICES FROM MEMBER STATES

| 28.5.2010 | EN | Official Journal of the European Union | C 138/28 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/28

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Summary information concerning State aid allocated in accordance with Commission Regulation (EC) No 736/2008 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of fisheries products

(Text with EEA relevance)

2010/C 138/06

Aid No: XF 14/09

Member State: France

Region/Authority granting the aid: The French State represented by the Minister for Agriculture and Fisheries

Content description: Aid awarded to the Groupement de Défense Sanitaire Aquacole d'Aquitaine (GDSAA) pursuant to Commission Regulation (EC) No 736/2008 of 22 July 2008 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of fisheries products.

Legal basis: Contrat de Projets État-Région (CPER) Aquitaine 2007-2013

Annual expenditure planned under the scheme or amount of ad hoc aid granted: EUR 147 900

Maximum aid intensity: 60 %

Date of implementation:

Duration of the scheme or individual aid award (no later than 30 June 2014) to be added: The deadline for submitting the request for payment of the balance of the aid is 30 June 2012.

Objective of aid: To maintain a high health and environmental status for aquaculture in Aquitaine. The collective actions led by the GDSAA are for the benefit of all fish farmers in the region.

Indicate which Article(s) are used: Article 17 — Aid for collective actions

Activity concerned: Aquaculture, fish-farming

Name and address of the granting authority:

| Ministère de l'agriculture et de la pêche |
| --- |
| Direction des pêches maritimes et de ľaquaculture |
| Bureau de la pisciculture et de la pêche continentale |
| 3 place de Fontenoy |
| 75007 Paris |
| FRANCE |

Ministère de l'agriculture et de la pêche

Direction des pêches maritimes et de ľaquaculture

Bureau de la pisciculture et de la pêche continentale

3 place de Fontenoy

75007 Paris

FRANCE

Web address where the full text of the scheme or the criteria and conditions under which ad hoc aid is granted outside of an aid scheme can be found: http://www.aquitaine.pref.gouv.fr

or

http://www.aquitaine.fr

Justification: The aid provided for in the Contrat de Projets État-Région makes it possible to finance the proposed action without using the EFF.

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| 28.5.2010 | EN | Official Journal of the European Union | C 138/29 |
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28.5.2010

EN

Official Journal of the European Union

C 138/29

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Extract from the decision on the opening of winding-up proceedings concerning the Banco Privado Português, S.A. under Article 9 of Directive 2001/24/EC of the European Parliament and of the Council on the reorganisation and winding up of credit institutions

(Publication provided for in Article 13 of that Directive and in Article 21 of Decree-Law No 199/2006 of 25 October 2006)

2010/C 138/07

The Banco de Portugal, the administrative authority competent for the winding up of credit institutions within the meaning of the sixth indent of Article 2 of Directive 2001/24/EC, on 15 April 2010 decided, pursuant to Article 23 of the General Rules on Credit Institutions and Finance Companies (Regime Geral das Instituições de Crédito e Sociedades Financeiras), approved by Decree-Law No 298/92 of 31 December 1992, and taking into account the provisions of Article 152 and Article 22(1)(f) of the same Decree-Law, to withdraw the authorisation to pursue activity of the Banco Privado Português, S.A., having ascertained the unviability of the recapitalisation and recovery efforts of that institution pursued within the context of the extraordinary reorganisation measures adopted by the Banco de Portugal. By law the decision reached entails the dissolution and winding up of the Banco Privado Português, S.A.

It was also decided that the withdrawal of the authorisation of the Banco Privado Português, S.A., shall have effect from 12.00 on 16 April 2010 for the purposes, in particular, of Article 5(3) of Decree-Law No 199/2006 of 25 October 2006.

An appeal may be lodged against the above decision by initiating proceedings before the Lisbon Administrative Court, Rua Filipe Folque, n.o 12-A, 1.o, Lisbon, PORTUGAL, within 90 days of notification or publication thereof.

The Secretary of the Boards

Paulo Ernesto CARVALHO AMORIM

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V Announcements

ADMINISTRATIVE PROCEDURES

European Commission

| 28.5.2010 | EN | Official Journal of the European Union | C 138/30 |
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28.5.2010

EN

Official Journal of the European Union

C 138/30

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CALL FOR PROPOSALS — EACEA/14/10

ICI Education Co-operation Programme

Co-operation in Higher Education and Training between the European Union and Australia and the European Union and the Republic of Korea

Call for Proposals 2010 for Joint Mobility Projects (JMP) and Joint Degree Projects (JDP)

2010/C 138/08

1.   Objectives and description

The general objective is to enhance mutual understanding between people of the EU and the Partner Countries including broader knowledge of their languages, cultures and institutions and to enhance the quality of higher education and training by stimulating balanced partnerships between higher education and training institutions in the EU and in Partner Countries.

2.   Eligible applicants

Submission of grant requests under this call is open to higher education and training institutions and to consortia of higher education and/or training institutions.

Eligible applicants must be from one of the Partner Countries and from one of the 27 Member States of the European Union. This year the programme focuses on co-operation with Australia and the Republic of Korea.

3.   Eligible actions

There are two types of actions under this call, namely Joint Mobility Projects and Joint Degree Projects.

For Joint Mobility Projects (JMP) support is provided to enable EU-Partner Country consortia of higher education and training institutions, to carry out joint study and training programmes and to implement student and faculty mobility. Support includes lump sum funding for administration, grants for students and members of the academic and administrative staff. A consortium applying for an ICI-ECP Joint Mobility Project must include at least three higher education and/or training institutions from three different EU Member States and at least two such institutions from the Partner Country. The maximum duration of JMP projects is 36 months.

For Joint Degree Projects (JDP) support is provided to develop and implement dual/double or joint degree programmes. Support includes lump sum funding for the development work and administration, grants for students and members of the academic and administrative staff. A consortium applying for an ICI-ECP Joint Degree Project must include at least two higher education and/or training institutions from two different EU Member States and at least two institutions from the Partner Country. The maximum duration of JDP projects is 48 months.

Activities are planned to start in November 2010.

4.   Award criteria

The following quality criteria will be applied to determine the overall quality score of each eligible proposal:

The significance of the project for the relationship between the EU and the Partner Countries (representing 25 % of the total score) will be determined by:

| (a) | The relevance of the proposal to the objectives of the Call; |
| --- | --- |

(a)

The relevance of the proposal to the objectives of the Call;

| (b) | The added value of the programme of study in the proposed discipline and profession from the perspective of the relations between the EU and a Partner Country. |
| --- | --- |

(b)

The added value of the programme of study in the proposed discipline and profession from the perspective of the relations between the EU and a Partner Country.

Contribution to quality and excellence (representing 25 % of the total score) as determined by:

| (a) | The likely project contribution to educational quality, excellence and innovation; |
| --- | --- |

(a)

The likely project contribution to educational quality, excellence and innovation;

| (b) | The significance of the project towards improvement of teaching methods and students’ further study/professional opportunities; |
| --- | --- |

(b)

The significance of the project towards improvement of teaching methods and students’ further study/professional opportunities;

| (c) | The extent of an academic quality control system definition and its efficiency towards ensuring a contribution to academic excellence. |
| --- | --- |

(c)

The extent of an academic quality control system definition and its efficiency towards ensuring a contribution to academic excellence.

The quality of project implementation (50 % of the total score) as determined by:

| (a) | Well defined co-operation mechanisms and administrative structure of a functioning partnership; |
| --- | --- |

(a)

Well defined co-operation mechanisms and administrative structure of a functioning partnership;

| (b) | The balance of the mobility and/or degree scheme integration among the partner institutions; the balance of the proposed mobility flows; |
| --- | --- |

(b)

The balance of the mobility and/or degree scheme integration among the partner institutions; the balance of the proposed mobility flows;

| (c) | The soundness of the application of students selection mechanisms based on transparency, equality and merit principle, and common standards agreed by the partnership for joint application, selection admission and exams procedure; |
| --- | --- |

(c)

The soundness of the application of students selection mechanisms based on transparency, equality and merit principle, and common standards agreed by the partnership for joint application, selection admission and exams procedure;

| (d) | The soundness and clarity of the arrangements for academic credits and credit transfer and the extent of compatibility with ECTS; |
| --- | --- |

(d)

The soundness and clarity of the arrangements for academic credits and credit transfer and the extent of compatibility with ECTS;

| (e) | The quality of resources available for hosting foreign students and faculty members; |
| --- | --- |

(e)

The quality of resources available for hosting foreign students and faculty members;

| (f) | The quality of a language plan; |
| --- | --- |

(f)

The quality of a language plan;

| (g) | The quality of a monitoring system and evaluation plan; |
| --- | --- |

(g)

The quality of a monitoring system and evaluation plan;

| (h) | The quality of dissemination activities; and |
| --- | --- |

(h)

The quality of dissemination activities; and

| (i) | The quality and development of a sustainability plan. |
| --- | --- |

(i)

The quality and development of a sustainability plan.

5.   Budget

The budget available is approximately EUR 2,45 million. Comparable funding will be provided by the Partner Countries in accordance with the rules applicable for each of them. It is anticipated that 3-4 EU-Australia and 3-4 EU-Korea projects will be funded in 2010, from which at least two are planned to be Joint Degree Projects.

The maximum amount of funding on the EU side will be EUR 465 000 for a four-year JDP project, EUR 232 500 for a three-year JMP project with three EU institutions and EUR 310 000 for a three-year JMP project with four or more EU institutions.

6.   Deadline

Applications have to be submitted both to the EU and the implementing institutions in Australia (Australian Department of Education — DEEWR) and in the Republic of Korea (Ministry of Education, Science and Technology — MEST).

The Applications on behalf of the EU lead institution must be sent to the Education, Audiovisual and Culture Executive Agency no later than 6th September 2010. Applications bearing a postmark after this date will not be considered. Applications must be sent to the following address:

| The Education, Audiovisual and Culture Executive Agency |
| --- |
| EU-ICI Call for Proposals 2010 |
| Avenue du Bourget 1 |
| BOUR 02/17 |
| 1140 Bruxelles/Brussel |
| BELGIQUE/BELGIË |

The Education, Audiovisual and Culture Executive Agency

EU-ICI Call for Proposals 2010

Avenue du Bourget 1

BOUR 02/17

1140 Bruxelles/Brussel

BELGIQUE/BELGIË

Applications on behalf of the EU lead institution must be submitted on the correct form, duly completed, signed by the person authorised to enter into legally binding commitments on behalf of the applicant organisation and dated.

Australian applications and supporting documents should be sent by registered mail to:

| Mr Steve Nerlich |
| --- |
| Director |
| Research, Analysis and Europe Section (C72NB3) |
| Department of Education, Employment and Workplace Relations |
| GPO Box 9880 |
| Canberra ACT 2601 |
| AUSTRALIA |

Mr Steve Nerlich

Director

Research, Analysis and Europe Section (C72NB3)

Department of Education, Employment and Workplace Relations

GPO Box 9880

Canberra ACT 2601

AUSTRALIA

Korean applications and supporting documents should be sent by registered mail to:

| ICI Education Co-operation Programme |
| --- |
| Youngki YOON, Deputy Director |
| Global Human Resource Division |
| Ministry of Education, Science and Technology |
| 55, Sejong-no, Jongno-gu, Seoul |
| REPUBLIC OF KOREA 110-760 |

ICI Education Co-operation Programme

Youngki YOON, Deputy Director

Global Human Resource Division

Ministry of Education, Science and Technology

55, Sejong-no, Jongno-gu, Seoul

REPUBLIC OF KOREA 110-760

7.   Further information

The Guidelines and the application forms are available on the following website:

http://eacea.ec.europa.eu/extcoop/ici-ecp/index_en.htm

Applications must be submitted using the form provided and they have to include all the annexes and information requested.

---

PROCEDURES RELATING TO THE IMPLEMENTATION OF COMPETITION POLICY

European Commission

| 28.5.2010 | EN | Official Journal of the European Union | C 138/33 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/33

---

Prior notification of a concentration

(Case COMP/M.5885 — Altarea/Predica/ABP/Aldeta)

Candidate case for simplified procedure

(Text with EEA relevance)

2010/C 138/09

| 1. | On 20 May 2010 the Commission received notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) (‘the Merger Regulation’) by which the undertakings Altarea (‘Altarea’, France), Predica (‘Predica’, France) belonging to the group Crédit Agricole SA (‘GCA’) and Stichting Pensioenfonds ABP (‘ABP’, Netherlands) acquire, within the meaning of Article 3(1)(b) of the Merger Regulation, joint control of the company Aldeta (‘Aldeta’, France) by way of purchase of shares. |
| --- | --- |

1.

On 20 May 2010 the Commission received notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) (‘the Merger Regulation’) by which the undertakings Altarea (‘Altarea’, France), Predica (‘Predica’, France) belonging to the group Crédit Agricole SA (‘GCA’) and Stichting Pensioenfonds ABP (‘ABP’, Netherlands) acquire, within the meaning of Article 3(1)(b) of the Merger Regulation, joint control of the company Aldeta (‘Aldeta’, France) by way of purchase of shares.

| 2. | The business activities of the undertakings concerned are:






  — | Altarea: parent company of the Altarea Cogedim group, active principally in the commercial real estate market in France. Its main activity is owning and managing commercial centres on its own behalf, |
| --- | --- | --- |

2.

The business activities of the undertakings concerned are:

—

Altarea: parent company of the Altarea Cogedim group, active principally in the commercial real estate market in France. Its main activity is owning and managing commercial centres on its own behalf,

| — | Predica: subsidiary of GCA, a group active in banking and insurance-related services. Predica holds and manages real estate assets on its own behalf, |
| --- | --- |

—

Predica: subsidiary of GCA, a group active in banking and insurance-related services. Predica holds and manages real estate assets on its own behalf,

| — | ABP: pension fund of employers and employees of the government and the State education sector in the Netherlands. It has holdings in the real estate sector in France, |
| --- | --- |

—

ABP: pension fund of employers and employees of the government and the State education sector in the Netherlands. It has holdings in the real estate sector in France,

| — | Aldeta: company whose only activity is to own and manage a shopping centre called ‘Cap 3 000’ in Saint-Laurent du Var (Alpes Maritimes, France). |
| --- | --- |

—

Aldeta: company whose only activity is to own and manage a shopping centre called ‘Cap 3 000’ in Saint-Laurent du Var (Alpes Maritimes, France).

| 3. | On preliminary examination, the Commission finds that the notified transaction could fall within the scope of the EC Merger Regulation. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under the EC Merger Regulation (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice. |
| --- | --- |

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope of the EC Merger Regulation. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under the EC Merger Regulation (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice.

| 4. | The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.
  Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (+32 22964301), by email to COMP-MERGER-REGISTRY@ec.europa.eu or by post, under reference number COMP/M.5885 — Altarea/Predica/ABP/Aldeta, to the following address:





  European Commission |
| --- | --- |
| Directorate-General for Competition |
| Merger Registry |
| J-70 |
| 1049 Bruxelles/Brussel |
| BELGIQUE/BELGIË |

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (+32 22964301), by email to COMP-MERGER-REGISTRY@ec.europa.eu or by post, under reference number COMP/M.5885 — Altarea/Predica/ABP/Aldeta, to the following address:

European Commission

Directorate-General for Competition

Merger Registry

J-70

1049 Bruxelles/Brussel

BELGIQUE/BELGIË

---

(1)  OJ L 24, 29.1.2004, p. 1 (the ‘EC Merger Regulation’).

(2)  OJ C 56, 5.3.2005, p. 32 (‘Notice on a simplified procedure’).

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/34 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/34

---

Notice published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/39.398 — Visa MIF

(Text with EEA relevance)

2010/C 138/10

1.   INTRODUCTION

| (1) | According to Article 9 of the Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 101 and 102 of the TFEU (1), the Commission may decide — in cases where it intends to adopt a decision requiring that an infringement is brought to an end and the parties concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment — to make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission. According to Article 27(4) of the same Regulation, the Commission shall publish a concise summary of the case and the main content of the commitments. Interested parties may submit their observations within the time limit fixed by the Commission. |
| --- | --- |

(1)

According to Article 9 of the Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 101 and 102 of the TFEU (1), the Commission may decide — in cases where it intends to adopt a decision requiring that an infringement is brought to an end and the parties concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment — to make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission. According to Article 27(4) of the same Regulation, the Commission shall publish a concise summary of the case and the main content of the commitments. Interested parties may submit their observations within the time limit fixed by the Commission.

2.   SUMMARY OF THE CASE

| (2) | On 3 April 2009, the Commission adopted a Statement of Objections against Visa Europe Limited (‘Visa Europe’), Visa Inc. and Visa International Services Association. |
| --- | --- |

(2)

On 3 April 2009, the Commission adopted a Statement of Objections against Visa Europe Limited (‘Visa Europe’), Visa Inc. and Visa International Services Association.

| (3) | The Statement of Objections, which constitutes a preliminary assessment within the meaning of Article 9(1) of Regulation (EC) No 1/2003, outlines the Commission’s preliminary view that Visa Europe, which is an association of European banks, has infringed Article 101 of the TFEU and Article 53 of the EEA Agreement by setting multilaterally agreed interchange fees (‘MIFs’) that apply to cross-border and certain domestic (2) point of sale transactions with VISA, VISA Electron and V PAY consumer payment cards within the EEA. |
| --- | --- |

(3)

The Statement of Objections, which constitutes a preliminary assessment within the meaning of Article 9(1) of Regulation (EC) No 1/2003, outlines the Commission’s preliminary view that Visa Europe, which is an association of European banks, has infringed Article 101 of the TFEU and Article 53 of the EEA Agreement by setting multilaterally agreed interchange fees (‘MIFs’) that apply to cross-border and certain domestic (2) point of sale transactions with VISA, VISA Electron and V PAY consumer payment cards within the EEA.

| (4) | Interchange fees are in effect paid by a merchant's bank (‘acquirer’) to a cardholder's bank (‘issuer’) for each transaction made at a merchant outlet with a payment card. When a cardholder uses a payment card to buy goods or services from a merchant, the merchant in effect pays a merchant service charge to its acquirer. The acquirer keeps part of this charge (the acquirer's margin), part is passed on to the issuer (the MIF) and a small part is passed to the scheme operator (in this case Visa). In practice, a large part of the merchant service charge is determined by the MIF. |
| --- | --- |

(4)

Interchange fees are in effect paid by a merchant's bank (‘acquirer’) to a cardholder's bank (‘issuer’) for each transaction made at a merchant outlet with a payment card. When a cardholder uses a payment card to buy goods or services from a merchant, the merchant in effect pays a merchant service charge to its acquirer. The acquirer keeps part of this charge (the acquirer's margin), part is passed on to the issuer (the MIF) and a small part is passed to the scheme operator (in this case Visa). In practice, a large part of the merchant service charge is determined by the MIF.

| (5) | The Statement of Objections expressed a concern that the MIFs have as their object and effect an appreciable restriction of competition in the acquiring markets to the detriment of merchants and indirectly their customers. The MIFs appeared to inflate the base on which acquirers set merchant service charges by creating an important cost element common to all acquirers. According to the Commission’s preliminary view, Visa Europe's MIFs are not objectively necessary. The restrictive effect in the acquiring markets is further reinforced by the effect of the MIFs on the network and issuing markets as well as by other network rules and practices (Honour All Cards Rule (‘HACR’), No Discrimination Rule (‘NDR’), blending, and application of different MIFs to cross-border as opposed to domestic acquirers). Furthermore, according to the Statement of Objections, the MIFs do not meet the requirements for receiving an exception under Article 101(3) TFEU of producing efficiencies with a fair share of the resulting benefit being passed on to consumers. |
| --- | --- |

(5)

The Statement of Objections expressed a concern that the MIFs have as their object and effect an appreciable restriction of competition in the acquiring markets to the detriment of merchants and indirectly their customers. The MIFs appeared to inflate the base on which acquirers set merchant service charges by creating an important cost element common to all acquirers. According to the Commission’s preliminary view, Visa Europe's MIFs are not objectively necessary. The restrictive effect in the acquiring markets is further reinforced by the effect of the MIFs on the network and issuing markets as well as by other network rules and practices (Honour All Cards Rule (‘HACR’), No Discrimination Rule (‘NDR’), blending, and application of different MIFs to cross-border as opposed to domestic acquirers). Furthermore, according to the Statement of Objections, the MIFs do not meet the requirements for receiving an exception under Article 101(3) TFEU of producing efficiencies with a fair share of the resulting benefit being passed on to consumers.

| (6) | The Statement of Objections was also addressed to Visa Inc. and Visa International Service Association on 29 May 2009 in particular regarding the potential application of their Inter-Regional MIF rates by default (i.e., inasmuch as these fees could apply to cross-border or domestic transactions with VISA and V PAY consumer cards within EEA) and their involvement in setting the HACR and the NDR. |
| --- | --- |

(6)

The Statement of Objections was also addressed to Visa Inc. and Visa International Service Association on 29 May 2009 in particular regarding the potential application of their Inter-Regional MIF rates by default (i.e., inasmuch as these fees could apply to cross-border or domestic transactions with VISA and V PAY consumer cards within EEA) and their involvement in setting the HACR and the NDR.

3.   THE MAIN CONTENT OF THE OFFERED COMMITMENTS

| (7) | The parties subject to the proceedings do not agree with the Commission’s preliminary assessment. Visa Europe has nevertheless offered commitments pursuant to Article 9 of Regulation (EC) No 1/2003, to meet the Commission’s competition concerns in the segment of immediate debit cards. |
| --- | --- |

(7)

The parties subject to the proceedings do not agree with the Commission’s preliminary assessment. Visa Europe has nevertheless offered commitments pursuant to Article 9 of Regulation (EC) No 1/2003, to meet the Commission’s competition concerns in the segment of immediate debit cards.

| (8) | The commitments are briefly summarised below and published in full in English on the website of the Directorate-General for Competition at:
  http://ec.europa.eu/competition/index_en.html |
| --- | --- |

(8)

The commitments are briefly summarised below and published in full in English on the website of the Directorate-General for Competition at:

http://ec.europa.eu/competition/index_en.html

| (9) | Visa Europe commits to cap its yearly weighted average cross-border MIFs applicable to transactions with its consumer immediate debit cards at 20 basis points (0,2 %) two months following the notification of the commitment decision to Visa Europe. The cap will also apply separately in each of those EEA countries for which Visa Europe directly sets specific domestic consumer immediate debit MIF rates and in those EEA countries where the cross-border MIF rates apply in the absence of other MIFs. |
| --- | --- |

(9)

Visa Europe commits to cap its yearly weighted average cross-border MIFs applicable to transactions with its consumer immediate debit cards at 20 basis points (0,2 %) two months following the notification of the commitment decision to Visa Europe. The cap will also apply separately in each of those EEA countries for which Visa Europe directly sets specific domestic consumer immediate debit MIF rates and in those EEA countries where the cross-border MIF rates apply in the absence of other MIFs.

| (10) | Based on studies conducted by the central banks of several EEA countries comparing the costs of cards with those of cash, the Commission is of the preliminary view that the MIF Visa Europe has committed to apply to consumer immediate debit card transactions is in conformity with the ‘merchant indifference methodology’ (or ‘tourist test’) developed in economic literature (3). The fee that meets this test (also referred to as the balancing fee) is set at such a level that merchants are indifferent as to whether they receive a card or cash payment. The balancing is such that merchants do not pay higher charges than the transactional benefit that the card use generates for them. For instance, transactional benefits arise where card payments reduce merchants’ costs as compared to cash payments (e.g., because transportation and security expenses for cash are saved or check-out times at cashier desks are reduced). Under certain assumptions (e.g., the extent to which the fee is passed on to cardholders), it will ensure that cardholders make efficient choices across payment instruments. In that case, the MIF will allow giving correct price signals to cardholders who will adjust their behaviour accordingly. |
| --- | --- |

(10)

Based on studies conducted by the central banks of several EEA countries comparing the costs of cards with those of cash, the Commission is of the preliminary view that the MIF Visa Europe has committed to apply to consumer immediate debit card transactions is in conformity with the ‘merchant indifference methodology’ (or ‘tourist test’) developed in economic literature (3). The fee that meets this test (also referred to as the balancing fee) is set at such a level that merchants are indifferent as to whether they receive a card or cash payment. The balancing is such that merchants do not pay higher charges than the transactional benefit that the card use generates for them. For instance, transactional benefits arise where card payments reduce merchants’ costs as compared to cash payments (e.g., because transportation and security expenses for cash are saved or check-out times at cashier desks are reduced). Under certain assumptions (e.g., the extent to which the fee is passed on to cardholders), it will ensure that cardholders make efficient choices across payment instruments. In that case, the MIF will allow giving correct price signals to cardholders who will adjust their behaviour accordingly.

| (11) | In addition, Visa Europe commits to continue to implement and to further improve the transparency measures that were introduced by the Visa Europe Board in March 2009. In particular, Visa Europe commits:






  — | to continue to operate the rule against blending merchant services charges applicable to more than one payment card system or more than one type of Visa Europe's cards and to require acquirers to invoice merchant service charges itemised according to different types of cards, |
| --- | --- | --- |

(11)

In addition, Visa Europe commits to continue to implement and to further improve the transparency measures that were introduced by the Visa Europe Board in March 2009. In particular, Visa Europe commits:

—

to continue to operate the rule against blending merchant services charges applicable to more than one payment card system or more than one type of Visa Europe's cards and to require acquirers to invoice merchant service charges itemised according to different types of cards,

| — | to continue to require Visa Europe members to register all MIF rates and apply them to cross-border issued and cross-border acquired transactions, |
| --- | --- |

—

to continue to require Visa Europe members to register all MIF rates and apply them to cross-border issued and cross-border acquired transactions,

| — | to continue to publish all intra-regional and domestic MIFs on its website in a way that identifies an applicable interchange rate for all types of transactions and to require acquirers to inform merchants of the publication, |
| --- | --- |

—

to continue to publish all intra-regional and domestic MIFs on its website in a way that identifies an applicable interchange rate for all types of transactions and to require acquirers to inform merchants of the publication,

| — | to ensure that commercial cards issued in the EEA are fully visibly identifiable and that all such cards can be electronically identified at POS terminals by the acquirer or merchant if the terminal has the necessary capability, |
| --- | --- |

—

to ensure that commercial cards issued in the EEA are fully visibly identifiable and that all such cards can be electronically identified at POS terminals by the acquirer or merchant if the terminal has the necessary capability,

| — | Visa Europe already has separate Honour All Cards Rules (HACR) for VISA, VISA Electron and V PAY cards, i.e. merchants may freely choose to accept VISA and/or VISA Electron and/or V PAY cards. Visa Europe will not make any changes to the HACR as it applies to Immediate Debit transactions. Also, Visa Europe will require its acquirers to inform merchants that they are permitted to accept VISA and/or VISA Electron and/or V PAY cards and/or the competing schemes’ cards. |
| --- | --- |

—

Visa Europe already has separate Honour All Cards Rules (HACR) for VISA, VISA Electron and V PAY cards, i.e. merchants may freely choose to accept VISA and/or VISA Electron and/or V PAY cards. Visa Europe will not make any changes to the HACR as it applies to Immediate Debit transactions. Also, Visa Europe will require its acquirers to inform merchants that they are permitted to accept VISA and/or VISA Electron and/or V PAY cards and/or the competing schemes’ cards.

| — | to maintain its current position whereby merchants are permitted to have different acquirers for handling transactions with each type of payment card within the Visa Europe system and/or competing schemes. |
| --- | --- |

—

to maintain its current position whereby merchants are permitted to have different acquirers for handling transactions with each type of payment card within the Visa Europe system and/or competing schemes.

| (12) | Visa Europe shall appoint a Monitoring Trustee to monitor Visa Europe’s compliance with the commitments. Before appointment, the Commission shall have the power to approve or reject the proposed Trustee. |
| --- | --- |

(12)

Visa Europe shall appoint a Monitoring Trustee to monitor Visa Europe’s compliance with the commitments. Before appointment, the Commission shall have the power to approve or reject the proposed Trustee.

| (13) | The commitments will be valid for a period of four years from the date of notification of the commitment decision to Visa Europe and include a review mechanism. |
| --- | --- |

(13)

The commitments will be valid for a period of four years from the date of notification of the commitment decision to Visa Europe and include a review mechanism.

| (14) | The commitments do not cover Visa Europe's current MIFs for consumer credit and deferred debit card transactions, which will be included in the ongoing antitrust investigation by the Commission covering Visa Europe's past MIFs for consumer credit and deferred debit card transactions. The proposed commitments are also without prejudice to the right of the Commission to initiate or continue proceedings against other Visa network rules, such as the HACR, Visa Europe's MIFs for commercial card transactions, or the Inter-Regional MIFs. |
| --- | --- |

(14)

The commitments do not cover Visa Europe's current MIFs for consumer credit and deferred debit card transactions, which will be included in the ongoing antitrust investigation by the Commission covering Visa Europe's past MIFs for consumer credit and deferred debit card transactions. The proposed commitments are also without prejudice to the right of the Commission to initiate or continue proceedings against other Visa network rules, such as the HACR, Visa Europe's MIFs for commercial card transactions, or the Inter-Regional MIFs.

| (15) | These commitments only apply to Visa Europe. Consequently, the current antitrust investigation (supra point 6) against Visa Inc. and Visa International Service Association, including consumer immediate debit card MIFs, will remain open pending further assessment by the Commission, possibly including any comments made in response to this notice. |
| --- | --- |

(15)

These commitments only apply to Visa Europe. Consequently, the current antitrust investigation (supra point 6) against Visa Inc. and Visa International Service Association, including consumer immediate debit card MIFs, will remain open pending further assessment by the Commission, possibly including any comments made in response to this notice.

4.   INVITATION TO MAKE COMMENTS

| (16) | Subject to the comments in response to this notice, the Commission intends to adopt a decision under Article 9(1) of Regulation (EC) No 1/2003 declaring the commitments summarised above and published on the Internet, on the website of the Directorate-General for Competition, to be binding. If there are substantial changes to the commitments a new market test will be launched. |
| --- | --- |

(16)

Subject to the comments in response to this notice, the Commission intends to adopt a decision under Article 9(1) of Regulation (EC) No 1/2003 declaring the commitments summarised above and published on the Internet, on the website of the Directorate-General for Competition, to be binding. If there are substantial changes to the commitments a new market test will be launched.

| (17) | In accordance with Article 27(4) of Regulation (EC) No 1/2003, the Commission invites interested third parties to submit their observations on the proposed commitments. These observations must reach the Commission no later than one month following the date of this publication. Interested third parties are also asked to submit a non-confidential version of their comments, in which commercial secrets and other confidential passages are deleted and are replaced as required by a non-confidential summary or by the words ‘commercial secrets’ or ‘confidential’. Legitimate requests will be respected. If no non-confidential version of the comments is sent, the Commission will be entitled to consider that the comments do not contain confidential information. |
| --- | --- |

(17)

In accordance with Article 27(4) of Regulation (EC) No 1/2003, the Commission invites interested third parties to submit their observations on the proposed commitments. These observations must reach the Commission no later than one month following the date of this publication. Interested third parties are also asked to submit a non-confidential version of their comments, in which commercial secrets and other confidential passages are deleted and are replaced as required by a non-confidential summary or by the words ‘commercial secrets’ or ‘confidential’. Legitimate requests will be respected. If no non-confidential version of the comments is sent, the Commission will be entitled to consider that the comments do not contain confidential information.

| (18) | Observations can be sent to the Commission under reference number ‘Case COMP/39.398 — Visa MIF’ either by e-mail (COMP-GREFFE-ANTITRUST@ec.europa.eu), by fax (+32 22950128) or by post, to the following address:





  European Commission |
| --- | --- |
| Directorate-General for Competition |
| Antitrust Registry |
| 1049 Bruxelles/Brussel |
| BELGIQUE/BELGIË |

(18)

Observations can be sent to the Commission under reference number ‘Case COMP/39.398 — Visa MIF’ either by e-mail (COMP-GREFFE-ANTITRUST@ec.europa.eu), by fax (+32 22950128) or by post, to the following address:

European Commission

Directorate-General for Competition

Antitrust Registry

1049 Bruxelles/Brussel

BELGIQUE/BELGIË

---

(1)  OJ L 1, 4.1.2003, p. 1. With effect from 1 December 2009, Articles 81 and 82 of the EC Treaty have become Articles 101 and, respectively, 102 of the TFEU. The two sets of provisions are in substance identical. For the purposes of this notice references to Articles 101 and 102 of the TFEU should be understood as references to Articles 81 and 82 of the EC Treaty when applicable.

(2)  Currently, domestic MIF rates are set by Visa Europe in nine countries. In the remaining EEA countries, domestic MIF rates are set by Visa Europe's members.

(3)  See Jean-Charles Rochet and Jean Tirole, ‘Must Take Cards and the Tourist Test’, No 496, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse, http://idei.fr/doc/wp/2008/must_take_cards.pdf

---

OTHER ACTS

European Commission

| 28.5.2010 | EN | Official Journal of the European Union | C 138/37 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/37

---

Publication of an application pursuant to Article 6(2) of Council Regulation (EC) No 510/2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs

2010/C 138/11

This publication confers the right to object to the application pursuant to Article 7 of Council Regulation (EC) No 510/2006 (1). Statements of objection must reach the Commission within six months from the date of this publication.

SINGLE DOCUMENT

COUNCIL REGULATION (EC) No 510/2006

‘HOFER RINDFLEISCHWURST’

EC No: DE-PGI-0005-0722-10.10.2008

PGI ( X ) PDO ( )

1.   Name:

‘Hofer Rindfleischwurst’

2.   Member State or third country:

Germany

3.   Description of the agricultural product or foodstuff:

3.1.   Product type:

| Class 1.2: | Meat products |
| --- | --- |

Class 1.2:

Meat products

3.2.   Description of product to which the name in (1) applies:

The ‘Hofer Rindfleischwurst’ is a spreadable uncooked sausage. The ‘Hofer Rindfleischwurst’ is elongated in shape and is packed into a synthetic gut (cellophane), the calibre of which measures from 40 mm to 55 mm. Depending on the size of calibre, individual ‘Hofer Rindfleischwurst’ measure up to 50 cm in length and weigh from 150 to 800 grams. The colour of ‘Hofer Rindfleischwurst’ is an intense but pleasant meat-coloured shade of red.

The ‘Hofer Rindfleischwurst’ is distinguished by its unique finely spiced flavour typical of this kind of sausage, seasoned with a hint of pepper. Cold smoking on beech wood also lends the ‘Hofer Rindfleischwurst’ a pleasant smoky aroma.

The ‘Hofer Rindfleischwurst’ is a finely-minced spreadable uncooked sausage, distinguished by its freshness. It retains its special flavour and unique aroma for only two to three days and for this reason is not intended for long-term storage.

When vacuum-packed, the ‘Hofer Rindfleischwurst’ can be stored for slightly longer periods, up to at least 10 days, provided however that the vacuum-packed sausage is stored in a refrigerator.

Further quality criteria that must be demonstrated by the ‘Hofer Rindfleischwurst’ are a stable reddening, marked spreadability and uniform consistency.

Since lean beef is used as a base material for the production of ‘Hofer Rindfleischwurst’, the result is a high level of meat protein free of connective tissue protein. This level must not fall below 10 % in ‘Hofer Rindfleischwurst’. Analyses carried out by the independent company and quality test board for specialist butcher's shops in the Bavarian butcher's trade (NBPQ) show the following values as technical characteristics of ‘Hofer Rindfleischwurst’: the water content is between 50 % and 55 %, the fat content is between 25 % and 30 % and the proportion of pork and back fat is a maximum of 30 %.

The main additives used are nitrite curing salt, with ascorbic acid used as a further reddening agent. The proportion of these additives is 2,5 % for nitrite curing salt and 0,5 % for ascorbic acid (reddening agent). The main raw spices used are salt and finely-ground pepper mixed in. In order to refine and lend an individual flavour to the sausage it is possible to use additional small amounts of mixed herbs and spices.

3.3.   Raw materials (for processed products only):

The quality of the raw materials meat and fat is of crucial importance to the proper production of ‘Hofer Rindfleischwurst’. Preference is given to meat from mature and older slaughter animals. The advantages are an intense meat colour and matured meat. Beef and pigmeat are used. Meat from young bovines is therefore not employed in the production of ‘Hofer Rindfleischwurst’. The main base material contained in ‘Hofer Rindfleischwurst’ is R I grade beef low in fatty tissue and free of sinews (two-thirds) and S VIII grade pork back fat (one third). Although it is possible to add a small amount of S I grade pigmeat together with pork back fat, this is not often the practice.

The beef used comes predominantly from cows, rarely from bulls. The cut to use is beef round, which has a fat content of approx. 5 %. If pork is used, it is taken from the leg, which has a fat content of approx. 4 %. The back fat used has a fat content of 70 %.

The ‘Hofer Rindfleischwurst’ is distinguished by its particular quality and freshness. Only freshly slaughtered meat is used in the production of ‘Hofer Rindfleischwurst’. No matured, hung or frozen meat is used in the production process.

3.4.   Feed (for products of animal origin only):

—

3.5.   Specific steps in production that must take place in the defined geographical area:

‘Hofer Rindfleischwurst’ is produced in the geographical area.

3.6.   Specific rules concerning slicing, grating, packaging, etc.:

—

3.7.   Specific rules concerning labelling:

—

4.   Concise definition of the geographical area:

The urban district of Hof and the rural district of Hof (see attached map).

5.   Link with the geographical area:

5.1.   Specificity of the geographical area:

The ‘Hofer Rindfleischwurst’ is part of a tradition going back over 50 years in the defined geographical area.

In 1950, the master butcher Hans Millitzer began producing the ‘Rindfleischwurst’ in Hof from lean beef. This tradition was continued by his former apprentice Gottfried Rädlein, who produced the ‘Hofer Rindfleischwurst’ from 1962 to 1993 in his own firm in Hof and made it famous well beyond the city limits.

Demand for the ‘Hofer Rindfleischwurst’ was so great that Gottfried Rädlein processed up to 15 hindquarters of beef per week into the ‘Rindfleischwurst’ and sometimes even worked on Sundays and public holidays to produce the ‘Rindfleischwurst’ according to his special recipe. As a fine spreadable raw sausage, the ‘Rindfleischwurst’ was an especially fresh product and as such retained its special flavour and its unique aroma for only two or three days. ‘Hofer Rindfleischwurst’ is particularly low in fat and easily digestible, its consumption was even recommended by doctors at that time.

In the years that followed, other butchers in the region latched onto production of the ‘Hofer Rindfleischwurst’, all eager to produce and offer for sale the traditional ‘Hofer Rindfleischwurst’. In January 1993, Gottfried Rädlein passed his specialist butcher's shop on to the renowned butcher's Albert Schiller in Hof, which today continues to specialise in producing the ‘Hofer Rindfleischwurst’ in the same way as Gottfried Rädlein. Thanks to the efforts of the then head of the Hof Butchers’ Guild, in 1993 the ‘Hofer Rindfleischwurst’ was included in the German Federal guidelines on meat and meat products under guideline No 2.2120.1.

5.2.   Specificity of the product:

As described, ‘Hofer Rindfleischwurst’ is a high-quality product with a distinctive flavour; it enjoys a prestigious reputation and is very well-known as a regional speciality, particularly in the City of Hof and the rural district of Hof. It is extremely popular and in great demand not only among local people but is also especially prized by guests and visitors from out of town. The ‘Hofer Rindfleischwurst’ has already been honoured and awarded prizes at various sausage competitions. Its inclusion in the Guidelines of the German Foodstuffs Manual is also proof of its importance and renown.

‘Hofer Rindfleischwurst’ has already won awards at different sausage competitions. Butchers from the designated geographical area take part in the Bavarian Butchers Association's annual quality test presenting ‘Hofer Rindfleischwurst’. In previous years, it has always been awarded a gold or silver medal. It has achieved similar results at national level in the German Food Society (DLG)'s quality tests. A public sausage test was held at the last Upper Franconia exhibition in April 2009 in Hof and the local media reported in detail on the ‘Hofer Rindfleischwurst’ as a prominent regional product.

5.3.   Causal link between the geographical area and the quality or characteristics of the product (for PDO) or a specific quality, the reputation or other characteristic of the product (for PGI):

The ‘Hofer Rindfleischwurst’ is a product typical of the Hof region. It originates from this area and has been produced by local enterprises traditionally for over 50 years according to a special recipe and technique. The renown and prestige of this product are therefore fundamentally rooted in its origins in the defined geographical area.

Reference to publication of the specification:

(Article 5(7) of Regulation (EC) No 510/2006)

Markenblatt vol. 16 of 18.4.2008, part 7a-aa, p. 31 817

(http://register.dpma.de/DPMAregister/geo/detail.pdfdownload/106)

---

(1)  OJ L 93, 31.3.2006, p. 12.

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/40 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/40

---

Notice of invitation to tender for the reduction in the import duty on maize originating in third countries

2010/C 138/12

I.   PURPOSE

| 1. | A tendering procedure is opened for the reduction in the import duty on maize falling within CN code 1005 90 00 originating in third countries. |
| --- | --- |

1.

A tendering procedure is opened for the reduction in the import duty on maize falling within CN code 1005 90 00 originating in third countries.

| 2. | The tendering procedure will be conducted in accordance with Commission Regulation (EU) No 463/2010 (1). |
| --- | --- |

2.

The tendering procedure will be conducted in accordance with Commission Regulation (EU) No 463/2010 (1).

II.   TIME LIMITS

| 1. | The deadline for the submission of tenders for the first partial invitation to tender shall be 10.00 (Brussels time) on 10 June 2010.
  The deadline for the submission of tenders under subsequent partial invitations to tender shall be on the following Thursdays at 10.00 (Brussels time):






  — | 24 June 2010, |
| --- | --- | --- |

1.

The deadline for the submission of tenders for the first partial invitation to tender shall be 10.00 (Brussels time) on 10 June 2010.

The deadline for the submission of tenders under subsequent partial invitations to tender shall be on the following Thursdays at 10.00 (Brussels time):

—

24 June 2010,

| — | 15 and 29 July 2010, |
| --- | --- |

—

15 and 29 July 2010,

| — | 26 August 2010, |
| --- | --- |

—

26 August 2010,

| — | 16 and 30 September 2010, |
| --- | --- |

—

16 and 30 September 2010,

| — | 14 and 28 October 2010, |
| --- | --- |

—

14 and 28 October 2010,

| — | 11 and 25 November 2010, |
| --- | --- |

—

11 and 25 November 2010,

| — | 9 and 16 December 2010. |
| --- | --- |

—

9 and 16 December 2010.

| 2. | This notice is published for the purposes of the present invitation to tender only. Until such time as it is amended or replaced, its terms will apply to each partial award held during the period of validity of this invitation. |
| --- | --- |

2.

This notice is published for the purposes of the present invitation to tender only. Until such time as it is amended or replaced, its terms will apply to each partial award held during the period of validity of this invitation.

III.   TENDERS

| 1. | Tenders must be submitted in writing and delivered no later than the dates and time indicated in Title II, either by personal delivery against a receipt or by electronic means, to the following address:
  Delivery address:





  Ministério das Finanças |
| --- | --- |
| Direcção Geral das Alfândegas e dos Impostos Especiais sobre o Consumo |
| Terreiro do Trigo — Edifício da Alfândega |
| 1149-060 Lisbon |
| PORTUGAL |
| Tel. +351 218814263 |
| Fax +351 218814261 |

1.

Tenders must be submitted in writing and delivered no later than the dates and time indicated in Title II, either by personal delivery against a receipt or by electronic means, to the following address:

Delivery address:

Ministério das Finanças

Direcção Geral das Alfândegas e dos Impostos Especiais sobre o Consumo

Terreiro do Trigo — Edifício da Alfândega

1149-060 Lisbon

PORTUGAL

Tel. +351 218814263

Fax +351 218814261

Tenders not submitted by electronic means must be enclosed in two sealed envelopes, one inside the other. The inner envelope must be marked ‘Tender under invitation to tender for the reduction in the import duty on maize — Regulation (EC) No 463/2010’.

Once submitted, no tender may be withdrawn before the Member State concerned has informed the tenderer of the result of the tender.

| 2. | The tender, as well as the proof and statement referred to in Article 7(3) of Commission Regulation (EC) No 1296/2008 (2), must be worded in the official language or one of the official languages of the Member State to whose competent authority the tender is addressed. |
| --- | --- |

2.

The tender, as well as the proof and statement referred to in Article 7(3) of Commission Regulation (EC) No 1296/2008 (2), must be worded in the official language or one of the official languages of the Member State to whose competent authority the tender is addressed.

IV.   TENDER SECURITY

The tendering security must be made out in favour of the competent authority concerned.

V.   AWARD OF CONTRACTS

Award of the contract will establish:

| (a) | the right to the issue in the Member State in which the tender is submitted of an import licence specifying the reduction in the import duty referred to in the tender and awarded for the quantity concerned; |
| --- | --- |

(a)

the right to the issue in the Member State in which the tender is submitted of an import licence specifying the reduction in the import duty referred to in the tender and awarded for the quantity concerned;

| (b) | the obligation to apply in the Member State referred to in point (a) for an import licence for that quantity. |
| --- | --- |

(b)

the obligation to apply in the Member State referred to in point (a) for an import licence for that quantity.

---

(1)  OJ L 129, 27.5.2010, p. 60.

(2)  OJ L 340, 19.12.2008, p. 57.

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/42 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/42

---

Notice of invitation to tender for the reduction in the import duty on maize originating in third countries

2010/C 138/13

I.   PURPOSE

| 1. | A tendering procedure is opened for the reduction in the import duty on maize falling within CN code 1005 90 00 originating in third countries. |
| --- | --- |

1.

A tendering procedure is opened for the reduction in the import duty on maize falling within CN code 1005 90 00 originating in third countries.

| 2. | The tendering procedure will be conducted in accordance with Commission Regulation (EU) No 462/2010 (1). |
| --- | --- |

2.

The tendering procedure will be conducted in accordance with Commission Regulation (EU) No 462/2010 (1).

II.   TIME-LIMITS

| 1. | The deadline for the submission of tenders for the first partial invitation to tender shall be 10:00 (Brussels time) on 10 June 2010.
  The deadline for the submission of tenders under subsequent partial invitations to tender shall be on the following Thursdays at 10:00 (Brussels time):






  — | 24 June 2010, |
| --- | --- | --- |

1.

The deadline for the submission of tenders for the first partial invitation to tender shall be 10:00 (Brussels time) on 10 June 2010.

The deadline for the submission of tenders under subsequent partial invitations to tender shall be on the following Thursdays at 10:00 (Brussels time):

—

24 June 2010,

| — | 15 and 29 July 2010, |
| --- | --- |

—

15 and 29 July 2010,

| — | 26 August 2010, |
| --- | --- |

—

26 August 2010,

| — | 16 and 30 September 2010, |
| --- | --- |

—

16 and 30 September 2010,

| — | 14 and 28 October 2010, |
| --- | --- |

—

14 and 28 October 2010,

| — | 11 and 25 November 2010, |
| --- | --- |

—

11 and 25 November 2010,

| — | 9 and 16 December 2010. |
| --- | --- |

—

9 and 16 December 2010.

| 2. | This notice is published for the purposes of the present invitation to tender only. Until such time as it is amended or replaced, its terms will apply to each partial award held during the period of validity of this invitation. |
| --- | --- |

2.

This notice is published for the purposes of the present invitation to tender only. Until such time as it is amended or replaced, its terms will apply to each partial award held during the period of validity of this invitation.

III.   TENDERS

| 1. | Tenders must be submitted in writing and delivered no later than the dates and times indicated in Title II, either by personal delivery against a receipt or by electronic means, to one of the following addresses:
  Delivery address:





  Fondo Español de Garantía Agraria (FEGA) |
| --- | --- |
| C/ Beneficencia, 8 |
| 28004 Madrid |
| ESPAÑA |
| E-mail: intervec@fega.mapya.es |
| Fax +34 915219832 / 913476387 |

1.

Tenders must be submitted in writing and delivered no later than the dates and times indicated in Title II, either by personal delivery against a receipt or by electronic means, to one of the following addresses:

Delivery address:

Fondo Español de Garantía Agraria (FEGA)

C/ Beneficencia, 8

28004 Madrid

ESPAÑA

E-mail: intervec@fega.mapya.es

Fax +34 915219832 / 913476387

Tenders not submitted by electronic means must be enclosed in two sealed envelopes, one inside the other. The inner envelope must be marked ‘Tender under invitation to tender for the reduction in the import duty on maize — Regulation (EU) No 462/2010’.

Once submitted, no tender may be withdrawn before the Member State concerned has informed the tenderer of the result of the tender.

| 2. | The tender, as well as the proof and statement referred to in Article 7(3) of Commission Regulation (EC) No 1296/2008 (2), must be worded in the official language or one of the official languages of the Member State to whose competent authority the tender is addressed. |
| --- | --- |

2.

The tender, as well as the proof and statement referred to in Article 7(3) of Commission Regulation (EC) No 1296/2008 (2), must be worded in the official language or one of the official languages of the Member State to whose competent authority the tender is addressed.

IV.   TENDER SECURITY

The tendering security must be made out in favour of the competent authority concerned.

V.   AWARD OF CONTRACTS

Award of the contract will establish:

| (a) | the right to the issue in the Member State in which the tender is submitted of an import licence specifying the reduction in the import duty referred to in the tender and awarded for the quantity concerned; |
| --- | --- |

(a)

the right to the issue in the Member State in which the tender is submitted of an import licence specifying the reduction in the import duty referred to in the tender and awarded for the quantity concerned;

| (b) | the obligation to apply in the Member State referred to in point (a) for an import licence for that quantity. |
| --- | --- |

(b)

the obligation to apply in the Member State referred to in point (a) for an import licence for that quantity.

---

(1)  OJ L 129, 27.5.2010, p. 58.

(2)  OJ L 340, 19.12.2008, p. 57.

---

| 28.5.2010 | EN | Official Journal of the European Union | C 138/44 |
| --- | --- | --- | --- |

28.5.2010

EN

Official Journal of the European Union

C 138/44

---

Notice of invitation to tender for the reduction in the import duty on sorghum originating in third countries

2010/C 138/14

I.   PURPOSE

| 1. | A tendering procedure is opened for the reduction in the import duty on sorghum falling within CN code 1007 00 90 originating in third countries. |
| --- | --- |

1.

A tendering procedure is opened for the reduction in the import duty on sorghum falling within CN code 1007 00 90 originating in third countries.

| 2. | The tendering procedure will be conducted in accordance with Commission Regulation (EU) No 464/2010 (1). |
| --- | --- |

2.

The tendering procedure will be conducted in accordance with Commission Regulation (EU) No 464/2010 (1).

II.   TIME LIMITS

| 1. | The deadline for the submission of tenders for the first partial invitation to tender shall be 10.00 (Brussels time) on 10 June 2010.
  The deadline for the submission of tenders under subsequent partial invitations to tender shall be on the following Thursdays at 10.00 (Brussels time):






  — | 24 June 2010, |
| --- | --- | --- |

1.

The deadline for the submission of tenders for the first partial invitation to tender shall be 10.00 (Brussels time) on 10 June 2010.

The deadline for the submission of tenders under subsequent partial invitations to tender shall be on the following Thursdays at 10.00 (Brussels time):

—

24 June 2010,

| — | 15 and 29 July 2010, |
| --- | --- |

—

15 and 29 July 2010,

| — | 26 August 2010, |
| --- | --- |

—

26 August 2010,

| — | 16 and 30 September 2010, |
| --- | --- |

—

16 and 30 September 2010,

| — | 14 and 28 October 2010, |
| --- | --- |

—

14 and 28 October 2010,

| — | 11 and 25 November 2010, |
| --- | --- |

—

11 and 25 November 2010,

| — | 9 and 16 December 2010. |
| --- | --- |

—

9 and 16 December 2010.

| 2. | This notice is published for the purposes of the present invitation to tender only. Until such time as it is amended or replaced, its terms will apply to each partial award held during the period of validity of this invitation. |
| --- | --- |

2.

This notice is published for the purposes of the present invitation to tender only. Until such time as it is amended or replaced, its terms will apply to each partial award held during the period of validity of this invitation.

III.   TENDERS

| 1. | Tenders must be submitted in writing and delivered no later than the dates and times indicated in Title II, either by personal delivery against a receipt or by electronic means, to one of the following addresses:
  Delivery address:





  Fondo Español de Garantía Agraria (FEGA) |
| --- | --- |
| C/ Beneficencia, 8 |
| 28004 Madrid |
| ESPAÑA |
| E-mail: secreint@fega.mapya.es |
| Fax +34 915219832 / 913476387 |

1.

Tenders must be submitted in writing and delivered no later than the dates and times indicated in Title II, either by personal delivery against a receipt or by electronic means, to one of the following addresses:

Delivery address:

Fondo Español de Garantía Agraria (FEGA)

C/ Beneficencia, 8

28004 Madrid

ESPAÑA

E-mail: secreint@fega.mapya.es

Fax +34 915219832 / 913476387

Tenders not submitted by electronic means must be enclosed in two sealed envelopes, one inside the other. The inner envelope must be marked ‘Tender under invitation to tender for the reduction in the import duty on sorghum — Regulation (EU) No 464/2010’.

Once submitted, no tender may be withdrawn before the Member State concerned has informed the tenderer of the result of the tender.

| 2. | The tender, as well as the proof and statement referred to in Article 7(3) of Commission Regulation (EC) No 1296/2008, must be worded in the official language or one of the official languages of the Member State to whose competent authority the tender is addressed. |
| --- | --- |

2.

The tender, as well as the proof and statement referred to in Article 7(3) of Commission Regulation (EC) No 1296/2008, must be worded in the official language or one of the official languages of the Member State to whose competent authority the tender is addressed.

IV.   TENDER SECURITY

The tendering security must be made out in favour of the competent authority concerned.

V.   AWARD OF CONTRACTS

Award of the contract will establish:

| (a) | the right to the issue in the Member State in which the tender is submitted of an import licence specifying the reduction in the import duty referred to in the tender, for the quantity offered; |
| --- | --- |

(a)

the right to the issue in the Member State in which the tender is submitted of an import licence specifying the reduction in the import duty referred to in the tender, for the quantity offered;

| (b) | the obligation to apply in the Member State referred to in point (a) for an import licence for that quantity. |
| --- | --- |

(b)

the obligation to apply in the Member State referred to in point (a) for an import licence for that quantity.

---

(1)  OJ L 129, 27.5.2010, p. 62.

---