Amended proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning protection against subsidisation and unfair pricing practices causing injury to Community air carriers in the supply of airline services from countries not members of the European Community (presented by the Commission pursuant to Article 250(2) of the EC Treaty)

EXPLANATORY MEMORANDUM

1. HISTORY OF THE PROPOSAL

On 12 March 2002, the Commission submitted a proposal for a regulation of the European Parliament and of the Council concerning protection against subsidisation and unfair pricing practices in the supply of airline services from countries not members of the European Community (COM (2002) 110 final - 2002/0067 (COD)) for adoption by the co-decision procedure laid down in Article 251 of the Treaty establishing the European Community.

On 18 September 2002, the European Economic and Social Committee delivered its opinion [1].

[1] OJ C 61, 14.3.2003, p.29

On 14 January 2003, the European Parliament approved at first reading a series of amendments. On this occasion the Commission gave its position on each amendment, indicating which amendments it could accept entirely or partially and which amendments could not be included. Of the 60 amendments adopted by the European Parliament, the Commission accepted 38 (some with redrafting or in principle) and 8 partially.

2. OBJECTIVE OF THE PROPOSAL

The airline industry in the Community is faced with a critical challenge: the need for it to compete with third-country airlines which benefit from generous subsidies, while the Community industry is subject to strict rules on government aid.

The recent crisis in some parts of the industry has led third-country governments to subsidise their airlines in a manner which is likely to distort competition. Community airlines have provided information about the pressure which these airlines exert on ticket prices and to which they are unable to respond.

Additionally, subsidisation is not the only type of state-involvement which can result in distortion of international supply of airline services. Pricing practices by foreign air carriers may be at unfair levels by virtue of them being state-controlled rather than being openly subsidised. In fact, any subsidies granted by foreign governments to carriers they themselves control would be extremely difficult to detect.

Some third countries have introduced instruments to deal with such situations. Also the Community has, for the maritime sector, provided for redress in case of unfair pricing practices. However, for the airline sector, no such possibility exists at the Community level. The only currently available means are bilateral agreements which often lack, both in terms of coverage and remedies, the potential to provide swift and comprehensive protection against subsidisation and unfair pricing practices. Indeed, even if one of the Member States had been able to take any action under its bilateral agreements, this would have just widened the gulf even further between the ways in which different Community airlines are treated.

The proposed instrument is designed to address this problem. It will allow Community action against unfair competition from non-Community carriers on routes to and from the Community due to trade-distorting third country subsidies. Additionally, it will provide for a remedy against unfair pricing practices by state-controlled air carriers.

3. AMENDMENTS ACCEPTED/ACCEPTED IN PART

3.1. Amendments accepted as such, with redrafting or in principle

The Commission has accepted, subject to redrafting where appropriate, half of the amendments adopted by the European Parliament as they strengthen or clarify the Commission text. The amendments accepted in the form proposed by the European Parliament or after a minor redrating are n° 1, 2, 3, 4, 5, 6, 7, 13, 14, 15, 16, 17, 18, 20, 24, 28, 29, 30, 31, 34, 37, 41, 44, 45, 46, 47, 48, 50, 53, 56, 57 and 59.

As a result of the above, the title, recitals 1, 2, 3, 4, 10, 11, 12, 13 and 15 were modified, new recitals 2a, 3a, 11a, 11b and 19a were inserted in the proposal and article 2(1)a, article 3(1), article 3(1a), article 3(2), article 3(3), article 4(2), article 4(4), article 5(1), article 5(1a), article 5(2), article 5(3), article 5(5), article 7(1), article 9(2), article 9(3), article 9(4), article 10(1), and article 11(1) were modified or inserted in the amended proposal.

The Commission has accepted in principle amendments n° 12, 21, 27, 49, 54 and 65. In this regard, the following changes should be underlined :

- Amendment 12 (Recital 9) : it is not subsidies as such which cause injury, but rather the low price levels;

- Amendment 21 (New recital 16a) : Further to a minor redrafting of the proposed text, the Commission proposes the insertion of a new recital 16b to ensure legal consistency with Council Regulation 95/93 on common rules for the allocation of slots at Community airports;

- Amendments 27 (New article 1(1a)) and 54 (New article 9a) : The Commission proposes to merge the substance of these two amendments into a new article 6a outlining what redressive measures, whether provisional or definitive, may entail; appropriate reference to Council Regulation 95/93 is made to ensure the overall consistency of Community law;

- Amendment 49 (Article 6(1)) : it would have been difficult to understand why the deadline for concluding the investigation should be shorter than the time frame available for the imposition of transitional measures; accordingly, the Commission proposes a period of nine months for the conclusion of investigations under normal circumstances.

- Amendment 65 (Article 15) : the Commission fully subscribes to the political message of urgency conveyed by this amendment. However, the Commission regrets that the proposed time frame is not realistic since the date of 1st April 2003 is passed.

3.2. Amendments accepted in part

These are amendments 10, 11, 25, 26, 33, 40, 43 and 64.

Amendment 10:

The Commission cannot accept the last condition ("and an injury ... ") since this recital refers to determining the existence or not of a subsidy, which per se, has nothing to do with the injuries inflicted on Community carriers.

Amendment 11

The Commission can accept the first part, related to the difference to be made between normal competitive pricing and unfair practices, but the second part that refers to promotions and special offers cannot be accepted since any third country carrier competing unfairly would advocate that its practices relate to normal promotions of commercial nature. Moreover, such a distinction is a concept rejected in the trade in goods area.

Amendments 25, 26, 33 and 43

For the Commission, the introduction of the words "significant" and material before "injury" affects the legal security and may fail to fulfil the objectives pursued by the Parliament. The notion of injury is already defined in Article 4(1)a of the proposal. In addition the wording "material injury" is widely used in other Community trade defence instruments in which it has a precise meaning.

Amendment 40

By adding "or of the aid received", the amendment mixes the notion of injury with that of the aid received, which is not appropriate. It may run against the idea that reddressive measures should exceed neither the amount of the aid nor that of the injury.

Amendment 64

The Commission could accept the principle of submitting within two years an evaluation of the implementation and the impact of this regulation, however it is not appropriate to make a reference in the body of a regulation to the ECJ case law. Moreover the proposed sentence gives the impression of a very unclear situation with regard to external Community competence in international civil aviation.

4. AMENDMENTS REJECTED

These are amendments 8, 9, 19, 22, 23, 32, 35, 38, 39, 55, 58, 60, 61, 62 and 63. They have been rejected for the following reasons:

Amendment 8:

The link should not be made between this proposal and the development of a broader external Community competence in the area of international civil aviation. Even if the Member States were to refuse to pass on to the Community broad competencies in that area, Community airlines ought to be protected against unfair practises from third country carriers.

Amendments 9 and 38 :

The introduction of the words "significant" and material before "injury" affects the legal security and may fail to fulfil the objectives pursued by the Parliament. The notion of injury is already defined in Article 4(1)a of the proposal. In addition the wording "material injury" is widely used in other Community trade defence instruments in which it has a precise meaning.

Amendment 19:

The proposed amendment, i.e. the replacement of "or" by "and" just before "...the injury is negligible" in recital 14, would result in a contradiction with Article 9(2) and not be consistent with proposed amendments number 20, 51 and 52. Indeed, the proposed Regulation provides for a double safety mechanism: reddressive measures can exceed neither the amount of subsidies, nor the amount of the injury. Amendments 20, 51 and 52 refer to and/or reinforce that mechanism but replacing here « or » by « and » goes against the objective.

Amendments 22 and 55:

As a matter of general principle, it is acknowledged that it would be appropriate for excessive duties imposed on non-Community carriers to be reimbursed. However, this regulation and proposed amendments to it pave the way for other forms of reddressive measures than the "usual" purely financial reddressive duties that are commonly imposed in trade defence instruments. And it is unclear how the reimbursement procedures proposed in these amendments should be applied for these other reddressive measures.

In any event, reimbursement procedures would have to provide for the reimbursement of duties in excess of the level of the measure or subsidy granted to the non Community carrier, but not for the reimbursement of duties in excess of the level of the injury suffered by Community carriers (see trade in goods provisions).

Amendments 23, 60, 61 and 62:

The safeguard procedure is used in questions, which have to be dealt with as a matter of urgency. It is thus usually referred to alongside other procedures for those decisions and acts which are not so urgent. This is not the case with the proposed amendments 23, 60, 61 and 62.

Moreover, it is not unlikely that the Member States would be divided on such dossiers and that the Council would subsequently, as the case may be, fail to reach decisions on Commission decisions referred to it by a single Member State.

In that regard, the proposed amendments are likely to undermine the credibility and efficiency of the proposed regulation and to de facto deprive the Commission of one of its key institutional prerogatives, i.e. acting as the watchdog of Community interests.

Amendment 32

This amendment exceeds the scope of the subsidy definition in the trade in goods where there is no requirement that subsidies must be "discriminatory" or "trade distorting". It is uncertain how this should be established. Moreover, the introduction of the word "significant" before "material injury" affects the legal security and, for that reason, it may fail to fulfil the objectives pursued by the Parliament. In addition, the wording "material injury" is widely used in other Community trade defence instruments in which it has a precise meaning.

Amendment 35

Introducing the word "operated" as suggested will imply that rates charged by marketing carriers in the framework of code share agreements may not be taken into account.

This may prove counter productive in some instances.

Amendment 39

Airline alliances are in a great variety of forms, shape and scope. Some are very loose, others entail very close co-operation. Whether or not related carriers deserve protection depends on the level of integration/control within the alliance, this can only be done on a case-by-case basis.

It is therefore essential that the need for the exclusion of "related" Community carriers may be appreciated on a case-by-case basis. Without that discretion, the instrument might not be operational in many cases, considering the vast number of relationships in the form of alliances in this sector.

Amendment 58

The exact background and scope of the proposed amendment are unclear to the Commission since the procedure laid down in Article 12 (2) provides per se for the Commission to make a proposal and for an appropriate information of the Council.

Amendment 63

This would be a clear derogation to the important principle in the trade in goods area that there is a built-in presumption that measures against unfair trade are in the Community interest, if the substantive conditions are fulfilled. Only when there are compelling reasons against this presumption, measures are not imposed.

2002/0067(COD)

Amended proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning protection against subsidisation and unfair pricing practices causing injury to Community air carriers in the supply of airline services from countries not members of the European Community

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 80(2) thereof,

Having regard to the proposal from the Commission [2],

[2] OJ C [...], [...], p. [...].

Having regard to the opinion of the European Economic and Social Committee [3]

[3] OJ C

Having regard to the Opinion of the Committee of the Regions [4]

[4] OJ C

Acting in accordance with the procedure laid down in Article 251 of the Treaty

Whereas:

(1) The competitive position of Community air carriers when providing air services to, via or from the Community could be adversely affected by unfair and discriminatory practices of non-Community air carriers providing like air services;

(2) Such unfair practices may result from a subsidy or subsidies or other forms of aid granted by a government or regional body or other public organisation of a country not being a member of the Community or from certain pricing practices by a non-Community air carrier or carriers which are state-controlled;

(2a) It is necessary to define the redressive measures to be taken against such unfair practices;

(3) Within the Community there are strict rules regarding the granting of government aid to airlines, and for Community airlines not to be placed at a competitive disadvantage and suffer injury there is a need for an instrument to offer protection against subsidised non-Community air carriers or those receiving other benefits from governments;

(3a) It would be preferable for airline services to be included within the scope of the GATS process of the WTO, so that competition and subsidisation in the sector could be regulated fairly on a global basis;

(4) The Community should, in the mean time, be able to take action to redress such unfair practices resulting from subsidies granted by the government of a country which is not a member of the Community;

(5) The Community should also be able to address unfair pricing practices when the air carrier is controlled by a government of a country which is not a member of the Community;

(6) It should be explained when a subsidy shall be deemed to exist and according to which principles it shall be countervailable (in particular whether the subsidy has been targeted at certain enterprises or sectors or is contingent upon service supply to third countries);

(7) In determining the existence of a subsidy, it is necessary to demonstrate that there has been a financial contribution by a government via a transfer of funds or that debts of any kind representing government revenue that are otherwise due are foregone or not collected, and that a benefit has thereby been conferred on the recipient enterprise;

(8) It should be explained when an unfair pricing practice is deemed to exist;

(8a) It should be made clear that an unfair pricing practice can only be deemed to exist in cases where that practice is clearly distinguishable from normal competitive pricing practices;

(9) It is desirable to lay down clear and detailed guidance as to the factors which may be relevant for the determination of whether the subsidised or unfairly priced air services provided by non-Community air carriers have caused material injury or are threatening to cause injury; in order to demonstrate that the pricing practices related to the supply of such air services cause injury to the Community industry, attention should be given to the effect of other factors, since consideration will be given to all relevant and known factors and economic indicators which have a bearing on the state of the industry, and in particular prevailing market conditions in the Community;

(10) It is essential to define the terms 'Community air carrier', 'Community industry', 'like air service' and 'state-controlled';

(11) It is necessary to specify who may lodge a complaint, and the information that such a complaint should contain;

(11a) It is necessary to determine that a complaint should be rejected where there is insufficient evidence of injury to proceed and that proceedings should be limited to third country air carriers whose services have a significant impact on the Community market;

(11b) It is desirable to lay down the procedure to be followed in the investigation of unfair practices by non-Community carriers; this procedure should be limited in time;

(12) It is necessary to lay down the manner in which interested parties should be given notice of the information which the authorities require; and interested parties should have ample opportunity to present all relevant evidence and to defend their interests; it is also desirable to set out the rules and procedures to be followed during the investigation, in particular the rules whereby interested parties are to make themselves known, present their views and submit information within specified time limits, if such views and information are to be taken into account; it is necessary to allow interested parties access to all information pertaining to the investigation which is relevant to the presentation of their case; it is necessary to provide that, where parties do not co-operate satisfactorily, other information may be used to establish findings and that such information may be less favourable to the parties than if they had co-operated;

(13) It is necessary to lay down the conditions under which provisional measures may be imposed; such measures may in all cases be imposed by the Commission normally no later than six months after the initiation of proceedings and only for a six-month period;

(14) An investigation or proceeding should be terminated whenever there is no need to take measures, for example if the amount of subsidisation, the degree of unfair pricing or the injury is negligible; a proceeding shall not be terminated unless such a decision is duly motivated; that measures should be less than the amount of countervailable subsidies or the degree of unfair pricing if such lesser amount would remove the injury;

(15) It is necessary to provide that measures should not exceed the value of subsidies or the non-commercial advantages granted as the case may be or the sum corresponding to the injury caused, where this is lower;

(16) It is necessary to provide that measures are to remain in force only for as long as it is necessary to counteract the subsidies or unfair pricing practices causing injury;

(16a) Preference should be given to duties when it comes to the imposition of redressive measures; where such duties prove not to be appropriate, other redressive measures may be considered;

(16b) The application of this Regulation shall be without prejudice to Council Regulation (EEC) No 95/93 on common rules for the allocation of slots at Community airports;

(17) It is necessary to specify procedures for the acceptance of undertakings eliminating or offsetting the countervailable subsidies or unfair pricing practices and injury in lieu of the imposition of provisional or definitive measures; it is also appropriate to lay down the consequences of breach or withdrawal of undertakings;

(18) It is necessary to provide, in cases where sufficient evidence is submitted of changed circumstances, for review of existing measures;

(19) In accordance with Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission, measures for the implementation of this Regulation should be adopted by use of the advisory procedure provided for in Article 3 of that Decision.

(19a) It is necessary to ensure that any measures taken by virtue of this regulation are in full accordance with the Community interest, with particular regard to the interests of the industry and of users and consumers of air transport services;

HAVE ADOPTED THIS REGULATION:

Article -1

Objective

The Regulation lays down the procedure to be followed in order to respond to unfair practices by non-Community air carriers which operate in competition with Community air carriers on specific routes to or from the Community, in so far as these practices cause injury to Community air carriers on those routes, and to Community interests.

Article 1

Principles

A redressive measure may be imposed for the purpose of:

(1) Offsetting any subsidy granted, directly or indirectly to a non-Community air carrier, or

(2) Offsetting the unfair pricing practices by state-controlled non-Community air carriers

concerning the supply of air services on certain routes to and from the Community which cause injury to the Community industry.

Article 2 Subsidisation

1. A subsidy shall be deemed to exist if:

(a) there is a financial contribution by a government of a country not member of the European Community, that is to say,

(i) where a government or other public body practice involves a direct transfer of funds such as grants, loans, equity infusion, potential direct transfer of funds to the company or the assumption of liabilities of the company such as loan guarantees;

(ii) debts representing government or other public body revenue that are otherwise due are foregone or not collected such as fiscal incentives such as tax credits;

(iii) a government or other public body provides goods or services other than general infrastructure, or purchases goods or services from the company;

(iv) a government or other public body makes payments via a funding mechanism or entrusts or directs a private body to carry out one or more of the type of functions illustrated above which would normally be vested in the government or public body and, in practice, in no real sense, differs from practices which may be followed by governments or public bodies; and

(b) a benefit is thereby conferred.

2. Subsidies shall be subject to redressive measures only if the subsidies are limited, in law or in fact, to an enterprise or industry or group of enterprises or industries within the jurisdiction of the granting authority, including subsidies contingent upon export performance.

Article 3

Unfair pricing practices

1. Unfair pricing practices shall be deemed to exist where state-controlled non-Community air carriers benefiting from a non-commercial advantage continuously charge on a particular air service to or from the Community air fares which are sufficiently below the normal fare rate to cause sustained injury to competing Community carriers.

1a. Such practices must be clearly distinguishable from normal competitive pricing practices. To determine whether this is the case, account shall be taken of the following elements:

- the actual price at which tickets are proposed for sale;

- the number of seats proposed at an allegedly unfair price out of the total number of seats available on the aircraft;

- the restrictions and conditions attached to the tickets sold at an allegedly unfair price; and

- the level of service proposed by all carriers providing the like air service in question.

2. The term 'normal fare rate' means

a) the comparable rate actually charged during a period of at least 6 months in the ordinary course of air transport for the like air service on the same or comparable route by an established and representative air carrier which is not a government controlled air carrier; or where such rate cannot be determined

b) the constructed rate which is determined by the costs of a comparable air carrier plus a reasonable margin of profit. These costs shall be computed on the basis of all costs incurred in the ordinary course of trade, both fixed and variable, plus a reasonable amount for overhead expenses.

3. A non-Community air carrier shall be deemed to be "state-controlled" if the Government or any other public body within the territory of a third country owns, directly or indirectly, more than 50 per cent of the equity interest in it, or of the specific rights over a majority of its liabilities, or are able to determine its fares and revenue, or have the power to name a majority of its directors or otherwise legally control or direct its actions

Article 4

Determination of injury

1. For the purposes of this Regulation:

(a) the term "injury" shall be taken to mean material injury to the Community industry, or threat of material injury to the Community industry;

(b) the term "Community industry" shall be interpreted as referring to the Community air carriers supplying like air services as a whole or those of them whose collective share constitutes a major proportion of the total Community supply of those services;

(c) the term "Community air carrier" shall be taken to mean an air carrier with a valid operating licence granted by a Member State in accordance with Council Regulation (EEC) No 2407/92 of 23 July 1992 on licensing of air carriers [5];

[5] OJ L 240 , 24.8.1992, p. 1

(d) the term "like air service" shall be interpreted to mean air services which are supplied on the same route or routes as the air services under consideration or such air services that are supplied on a route or routes closely resembling the route or routes on which the air service under consideration is supplied.

2. A determination of injury shall be based on positive evidence , following a prior objective examination of both:

(a) the level of fares of the air services under consideration, and the effect of such air services on fares offered by Community air carriers; and

(b) the consequent impact of those subsidised air services on the Community industry as indicated by, amongst others, trends in a number of objectively quantifiable economic indicators such as number of flights, utilisation of capacity and occupation levels, passenger bookings, market share obtained, geographical sphere of activity, profits obtained on these routes and overall, return on capital, investment, level of employment. As a reference period for such a trend at least one scheduling season shall be considered.

These indicators should be considered together and no single indicator should provide decisive guidance.

3. It must be demonstrated, from all the relevant evidence presented in relation to paragraph 2, that the air services under consideration are causing injury within the meaning of this Regulation.

4. Factors other than the air services under consideration which are injuring the Community industry at the same time shall also be examined to ensure the injury caused by these other factors is not attributed to the air services under consideration.

5. Threat of material injury shall only be positively determined and redressive measures imposed if the totality of the factors considered leads to the conclusion that, unless redressive measures are taken, injury will occur imminently.

Article 5

Initiation of proceedings

1. An investigation under this Regulation shall be initiated upon a written complaint by any natural or legal person acting on behalf of the Community industry such as an association representing the Community industry, or on the Commission's own initiative, if there is sufficient evidence of the existence of countervailable subsidies (including, if possible, of their amount) or unfair pricing practices within the meaning of this Regulation, injury and a causal link between the allegedly subsidised air services and the alleged injury.

1a. Complaints submitted to the Commission shall contain sufficient evidence of the existence of the unfair pricing practice and the injury resulting therefrom. Even if no complaint has been lodged, any Member State which has sufficient evidence regarding the granting of subsidies and the injury resulting therefrom to the Community sector shall immediately forward such evidence to the Commission.

2. When it is apparent that there is sufficient evidence to justify initiating a proceeding, the Commission shall, acting in accordance with the procedure laid down in Article 12(2), initiate the proceeding within 45 days of the lodging of the complaint and shall publish a notice in the Official Journal of the European Communities. Where insufficient evidence has been presented, the Commission shall, acting in accordance with the procedure laid down in Article 12(2), inform the complainant within 45 days of the date on which the complaint has been lodged with the Commission. A complaint shall be rejected if injury or threat of injury has not been sufficiently demonstrated to justify proceeding with the case.

3. The notice of initiation of the proceedings shall announce the initiation of an investigation, indicate the scope of the investigation, the airline services on the routes concerned, the countries whose governments allegedly granted the subsidies or control the air carriers allegedly engaged in unfair pricing practices and the period within interested parties may make themselves known, present their views in writing and submit information, if such views are to be taken into account during the investigation; it shall also state the period within which interested parties may apply to be heard by the Commission in accordance with Article 6(2).

4. The Commission shall inform the air carriers supplying the air services under consideration, the government concerned and the complainants of the initiation of the proceedings.

5. The Commission may, at any time before initiation of the proceedings and thereafter, invite the non-Community government concerned for consultations with the aim of clarifying the situation as to the matters referred to in paragraph 2 in order to attempt to arrive at a mutually acceptable solution.

Article 6

The investigation

1. Following the initiation of the proceeding, the Commission shall commence an investigation which shall cover both subsidisation or unfair pricing practices of airline services supplied by non-Community carriers on certain routes, and injury. This investigation must be carried out expeditiously and shall normally be concluded within a period of nine months, except in the following circumstances, where it may be prolonged:

- negotiations with the foreign governments concerned have progressed to a point that a satisfactory resolution of the complaint appears imminent; or

- additional time is needed in order to achieve a resolution which is in the Community interest.

2. The interested parties which have made themselves known in accordance with time limits set forth in the notice of initiation, shall be heard if they have made a timely request for a hearing showing that they are an interested party likely to be affected by the result of the proceeding and that there are particular reasons why they should be heard.

3. In cases in which an interested party refuses access to, or otherwise does not provide, necessary information within the appropriate time limits, or significantly impedes the investigation, provisional or final findings, affirmative or negative, may be made on the basis of facts available. Where it is found that any interested party has supplied false or misleading information, the information shall be disregarded and use may be made of the facts available.

Article 6a

Redressive measures

Without prejudice to any appropriate action to be taken under regulation 95/93/EEC, redressive measures, whether provisional or definitive, shall preferably take the form of duties imposed upon the non-Community carrier concerned.

Article 7

Provisional measures

1. Normally no later than six months after the initiation of the proceeding, provisional measures may be imposed if a provisional affirmative determination has been made that the air carriers under consideration benefit from subsidies or are engaged in unfair pricing practices and consequent injury to the Community industry and that the Community interest calls for intervention to prevent such injury.

2. Provisional action may be taken in accordance with the procedure laid down in Article 12(2).

3. Provisional measures shall be imposed for a maximum of six months.

Article 8

Termination without measures

1. Where the complaint is withdrawn, the proceeding may be terminated by the Commission unless such termination would not be in the Community interest.

2. Where protective measures are unnecessary the proceeding shall be terminated in accordance with the procedure laid down in Article 12(2). Any decision to terminate a proceeding must be duly motivated.

Article 9

Imposition of definitive measures

1. Where the facts as finally established show the existence of subsidies or unfair pricing practices and injury caused thereby, and the Community interest calls for intervention in accordance with Article 13, a definitive measure shall be imposed in accordance with the procedure laid down in article 12(2).

2. The level of measures imposed to offset subsidies shall not exceed the amount of subsidies, calculated in terms of benefit conferred on the recipient, from which the non-Community carriers have been found to benefit, and shall be less than the total amount of subsidies, if such lesser level were to be adequate to remove the injury to the Community industry

3. The level of measures imposed to offset unfair pricing practices benefiting from a non-commercial advantage, shall not exceed the difference between the fares charged by the non-Community air carrier concerned and the normal fare rate established in accordance with Article 3 and shall be less than that difference if a such lesser level would be adequate to remove injury to Community industry. In any event, the level of measures should not exceed the value of the non-commercial advantage granted to the non-Community air carrier.

4 A redressive measure shall be imposed in the reasonable and proportional amounts as determined in each case, on a non-discriminatory basis on air services supplied by all non-Community air carriers found to benefit from subsidies or engaged in unfair pricing practices on the respective routes, except as to air services supplied by those non-Community air carriers for which undertakings under the terms of this Regulation have been accepted.

5. A measure shall remain in force only as long as, and to the extent that, it is necessary to counteract the subsidies or unfair pricing practices which are causing injury.

Article 10

Undertakings

1. Investigations may be terminated without the imposition of provisional or definitive measures if undertakings are received from or agreements reached with the subsidised enterprises and/or non-Community states entailing satisfactory voluntary undertakings under which:

(a) the government granting the subsidy or non-commercial advantage agrees to eliminate or limit the subsidy or non-commercial advantage or take other measures concerning its injurious effects; or

(b) any non-Community air carrier undertakes to revise its prices or to cease the supply of airline service to the route in question so that the injurious effect of the subsidy or non-commercial advantage is eliminated.

2. Undertakings shall be accepted in accordance with the procedure laid down in Article 12(2).

3. In case of breach or withdrawal of undertakings by any party, a definitive measure shall be imposed in accordance with Article 9, on the basis of the facts established within the context of the investigation which led to the undertaking, provided that such investigation was concluded with a final determination as to subsidisation and that the non-Community air carrier concerned, or the government granting the subsidy, has, except in the case of withdrawal of the undertaking by the non-Community air carrier or such government, been given an opportunity to comment.

Article 11

Reviews

1. The need for the continued imposition of measures in their initial form shall be reviewed on the initiative of the Commission or upon the request of a Member State or, provided that a reasonable time of at least one year has elapsed since the imposition of the definitive measure, upon a duly substantiated request by non-Community air carriers subject to measures or by Community air carriers.

2. Reviews shall be initiated by the Commission acting in accordance with the procedure laid down in Article 12(2). The relevant provisions of Articles 5 and 6 shall apply to reviews under paragraph 1. Where warranted by reviews, measures shall be repealed, amended or maintained, as appropriate in accordance with the procedure laid down in Article 12(2).

Article 12

Committee

1. The Commission shall be assisted by the Committee instituted by Article 11 of Regulation 2408/92.

2. Where reference is made to this paragraph, the advisory procedure laid down in Article 3 of Decision 1999/468/EC/ shall apply, in compliance with Article 7 and Article 8 thereof.

Article 13

Community interest

A determination as to whether the Community interest calls for intervention should be based on an appraisal of all the various interests taken as a whole. In such an examination the need to eliminate the trade-distorting effects of injurious subsidisation or unfair pricing practices and to restore effective competition shall be given special consideration. Measures may not be applied where the authorities can clearly conclude that it is not in the Community interest to apply such measures.

Article 14

General provisions

1. Provisional or definitive redressive measures shall be imposed by Regulation, and enforced by Member States in the form, at the rate specified and according to the other criteria laid down in the Regulation imposing such measures. If measures other than duties are imposed, the Regulation shall define the precise form of the measures in accordance with the provisions of this Regulation.

2. Regulations imposing provisional or definitive redressive measures, and Regulations or Decisions accepting undertakings or suspending or terminating investigations or proceedings, shall be published in the Official Journal of the European Union.

3. This Regulation shall not preclude the application of any special rules laid down in agreements concluded between the Community and third countries.

Article 14a

Evaluation

Within two years of the entry into force of this Regulation, the Commission shall submit to the European Parliament and the Council an evaluation of its application and the associated impact on the Community's air transport sector, including service providers, users and consumers.

Article 15

Entry into force

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, [...]

For the European Parliament For the Council

The President The President

[...] [...]