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COMMISSION RECOMMENDATION

of 22 December 1987

to the Portuguese Republic concerning the adjustment of the State monopoly of a commercial character in petroleum products vis-à-vis the other Member States

(Only the Portuguese text is authentic)

(88/90/EEC)

I

1. Scope of Article 208 of the Accession Treaty

1.1. Article 208 of the Act of Accession of Spain and Portugal provides that, without prejudice to paragraph 2 of that Article, Portugal shall, from 1 January 1986, progressively adjust State monopolies of a commercial character within the meaning of Article 37 (1) of the EEC Treaty so as to ensure that by 1 January 1993 no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States.

1.2. With regard to motor spirit, kerosene, gas oils and fuel oils, it is stipulated that the adjustment of the exclusive marketing right shall begin from the date of accession and that the existing Portuguese marketing quotas allocated to current beneficiary companies other than Petrogal shall be abolished on 1 January 1986. The total liberalization of the markets for these products is to be completed on 31 December 1992.

1.3. Article 208 (2) provides that the Commission shall make its recommendations for adjustment concerning the execution of this liberalization by taking as the starting reference point the lowest annual market share per product held by the public undertaking Petrogal during the period 1 January 1981 to 31 December 1985.

Upon accession Portugal is required to open for each product concerned a quota equal to the total marketing quotas held before that date by undertakings other than Petrogal. This quota is to be progressively increased by the quantities liberalized following the Commission's recommendations.

2. Setting of the initial quotas

2.1. For each of the products specified in Article 208 of the Act of Accession, the lowest market share held by Petrogal from 1 January 1981 to 31 December 1985 was as follows:

- motor spirit: 59,18 %,

- kerosene: 51,64 %,

- gas oils: 68,14 %,

- fuel oils: 79,36 %.

2.2. Under paragraph 3 of Decree 969/85 of 31 December 1985, the Portuguese Government set the quotas for 1986 as follows, taking as its basis an estimate of anticipated consumption in 1986:

- motor spirit: 359 216 tonnes,

- kerosene: 14 993 tonnes,

- gas oils: 573 480 tonnes,

- fuel oils: 309 500 tonnes.

2.3. The Commission considers that, for the purposes of Article 208, the quota for 1986 should have been at least equal to the total volume of the marketing quotas allocated to companies other than Portugal in 1985, while at the same time taking account of any increase in national consumption.

In 1985, the total Portuguese market, the share reserved for Petrogal and that reserved for undertakings other than Petrogal, account being taken of an increase in motor spirit consumption in 1986 anticipated by the Portuguese authorities, were as follows: (tonnes)

1.2.3.4 // // // // // // Total market // Share reserved for Petrogal // Share reserved for undertakings other than Petrogal // // // // // Motor spirit // 855 000 // 505 989 // 349 011 // (Forecast 1986) // (880 000) // (520 784) // (359 216) // Kerosene // 32 000 // 16 525 // 15 475 // Gas oils // 1 918 000 // 1 306 925 // 611 075 // Fuel oils // 3 287 000 // 2 608 563 // 678 437 // // // //

2.4. Under Article 5 (3) of Law 525/85 and paragraph 3 of Decree 969/85, the Portuguese Government by its own authority set the annual liberalized rate of increase in 1986 at 5 %.

In view of the shortness of the transitional period for adjusting Portugal's monopoly in petroleum products and the need to ensure that the opening-up of the market is sufficiently gradual and does not take place too suddenly at the end of the transitional period, the Commission considers that a 10 % rate of increase would be more equitable and more appropriate for ensuring the progressive adjustment called for by Article 208.

Accordingly, the quota to be opened in 1987 by the Portuguese authorities should be as follows:

- motor spirit: 395 138 tonnes,

- kerosene: 17 022 tonnes,

- gas oils: 672 182 tonnes,

- fuel oils: 746 280 tonnes.

3. Administration of the quota

By Decree 969/85, the Portuguese Government laid down criteria for allocating the quotas and the procedure for implementing such allocation.

By decision of the Portuguese Prime Minister, adopted on 23 December 1986, the Portuguese Government allocated the quotas for 1986, without having published in advance a notice to the undertakings concerned. The allocation does not in practice seem to have resulted in any substantial change in the shares of the Portuguese market held by the undertakings operating on it before accession.

In view of the actual situation on the Portuguese market and the presence of certain operators who already have extensive sales networks, the Commission considers that the criteria to be applied must not favour only the undertakings already established on the Portuguese market, to the detriment of those wishing to begin distributing products on it.

Consequently, so as to ensure not only the continuity of supplies by established operators, but also real and effective access for new operators not active on the Portuguese market in 1985, the allocation of quotas should be based on the following criteria:

- the size of sales networks and the volume of sales the previous year in the case of established operators,

- establishment plans and sales programmes in the case of new operators,

- the total quantity granted to new operators as a whole should, at all events, not be less than 15 % of the quota opened for the product concerned,

- at least half of the annual increase in the quota opened for each product concerned should go to new operators, so as to increase gradually their presence on the market.

The annual quota should be divided into two equal parts to be allocated on a six-monthly basis. If one or more operators have not actually used the quota allocated to them, the unused portion should be added to the relevant quota for the following six months.

4. Publication of the opening of the quota

No notice has yet been published for 1987, and the notice published in the daily press regarding allocation of the 1988 quotas does not mention either the quantities to be allocated or the criteria that will govern such allocation.

So as to ensure that the quota allocation procedure is sufficiently transparent, the Commission considers that a notice setting out the following particulars should be published in the Portuguese official gazette:

- the volume of the quotas for each product,

- the volume for submitting applications,

- the address to which applications should be submitted,

- the criteria governing the allocation of the quotas. The notice should be published at half-yearly intervals, three months before the deadline for submitting applications. The quotas should be opened for all operators without restrictions, and the products imported must be able to be distributed in a non-discriminatory manner.

5. Arrangements applicable regarding the selling prices of petroleum products

By Decree 99/87 of 12 February 1987, the Portuguese Government laid down a new formula for establishing the maximum prices or petroleum products marketed in Portugal. The Commission reserves its position with regard to the comparability of the price rules with Community law, and in particular with Articles 12, 30 and 95 of the EEC Treaty, taking into account the relevant judgments of the Court of Justice.

6. Criteria governing admission to the activity of petroleum-product import and distribution

The activity of petroleum-product distribution may be made subject in Portugal to objective and non-discriminatory commercial regulations. However, the conditions with which operators are required to comply under such regulations must take account of the different initial situations of undertakings already established on the Portuguese market and of those wishing to commence distribution in the country.

II

Substance of the Recommendation

For these reasons, and subject to the position the Community may subsequently adopt in the light of the results of applying this Recommendation, the Commission hereby recommends, pursuant to the third subparagraph of Article 208 (1) of the Act of Accession, that the Portuguese Republic should:

1. open for 1987 an annual quota equal to not less than the following volumes:

- motor spirit: 395 138 tonnes,

- kerosene: 17 022 tonnes,

- gas oils: 672 182 tonnes,

- fuel oils: 746 280 tonnes,

and increase the previous year's quotas by 10 % in the years thereafter;

2. allocate the quotas on a six-monthly basis, each allocation being for half of the total quota set for each product, ensuring that, if one or more operators has not used up the product volumes allowed them under the quotas for the first half-year, the unused quantities are redistributed and added to the second six-monhtly quota to be allocated;

3. publish at six-monhtly intervals in the Portuguese official gazette a notice to interested parties setting out the volume of the quotas, the deadline for submitting applications, the address to which applications should be submitted, and the critiera that will be applied in allocating the quotas;

4. apply quota allocation criteria which, while taking account of the size of existing operators' sales networks and the volumes sold through them, take into consideration the establishment plans and sales programmes of new operators not authorized on the Portuguese market in 1985;

5. ensure that the total quantity granted to new operators as a whole is not less than 15 % of the total quota opened for the product concerned, and that at least half of the planned annual increases go to them;

6. ensure that the arrangements governing prices applicable to petroleum products imported under the quotas comply with the requirements of Articles 12, 30 and 95 of the EEC Treaty, taking into account the relevant judgments of the Court of Justice;

7. introduce, in respect of the activity of petroleum product distribution in Portugal, commercial regulations which, while taking account of the need to ensure the security of supplies in Portugal, are at the same time objective and non-discriminatory.

Done at Brussels, 22 December 1987.

For the Commission

Peter SUTHERLAND

Member of the Commission