EN Official Journal of the European Union CE 84/383

(2004/C 84 E/0446)

WRITTEN QUESTION P-0385/04

by Theresa Villiers (PPE-DE) to the Commission

(6 February 2004)

Subject: Commercial activities of Ordnance Survey

Ordnance Survey, the UK's national mapping agency, receives significant funds from UK Government grants and in closed tender government mapping contracts. Since 1999, it has undertaken its own commercial aerial survey business. Before this date, aerial surveys had been an exclusively private sector business, and there was a well-established division of interest between Ordnance Survey (maps) and the private sector (aerial surveys). However, it has been alleged that OS is now using the money it receives from public funds in part to support its own commercial aerial survey business. The competitors of Ordnance Survey claim that their business has been severely damaged by this unfair and subsidised competition with the private sector.

1. Does any of the government funding of Ordnance Survey amount to improper state aid? Do the commercial activities undertaken by Ordnance Survey since 1999 contravene any EU laws on competition? If so, what action is the Commission able to take to ensure fair competition between Ordnance Survey and its private sector competitors in the future?

2. Does Ordnance survey fall within the scope of the EU rules which require accounting transparency for entities which mix state-funded and private sector activities? In particular, does EU law require OS to account for its commercial and state-funded activities separately? If yes, is the Commission satisfied that OS is complying fully with these rules?

Answer given by Mr Monti on behalf of the Commission

(9 March 2004)

The Commission has not been informed that Ordnance Survey receives funding from the UK authorities. It is therefore not in a position to state whether the funding to which the Honourable Member refers constitutes state aid within the meaning of the EC Treaty and, if so, whether it is compatible with the common market. Such funding could be regarded as compensation for services provided and not state aid.

If Ordnance Survey's work is regarded as a service of general economic interest, the funding would be regarded as compensation if:

— Ordnance Survey undertakes public service obligations and these obligations are clearly defined,

— the parameters on the basis of which the compensation is calculated are established in advance in an objective and transparent manner,

— the compensation does not exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations,

— and Ordnance Survey was chosen to discharge the public service obligations pursuant to a public procurement procedure which allows for the selection of the tenderer capable of providing those services at the least cost to the community or, if not, the level of compensation was determined on the basis of an analysis of the costs which a typical undertaking, well-run and adequately equipped so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations (see judgment of 24 July 2003 in Altmark Trans and Regierungspräsidium Magdeburg, C-280/00).

The fact that Ordnance Survey has discharged public service obligations since 1999 is not in itself a breach of the competition rules. However, it may not use funding received as compensation for any public service work to subsidise purely commercial activities. Such overcompensation could, if it affected competition and trade between Member States, constitute state aid incompatible with the common market.

Commission Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings (1) requires separate accounts to be kept:

— by ‘any undertaking that enjoys a special or exclusive right granted by a Member State pursuant to Article 86(1) of the Treaty, or that is entrusted with the operation of a service of general economic interest pursuant to Article 86(2) of the Treaty and receives state aid in any form whatsoever, including any grant, support or compensation, in relation to such service and which carries on other activities’;

— if its total annual net turnover was not less than EUR 40 million over the period of the two financial years preceding that in which it enjoyed a special or exclusive right or was entrusted with the operation of a service of general economic interest;

— and if it receives aid which was not fixed for an appropriate period following an open, transparent and non-discriminatory procedure.

Ordnance Survey could therefore be subject to an obligation to keep separate accounts if it is entrusted with the operation of a service of general economic interest.

The UK authorities have told the Commission that they have introduced the necessary legislative, regulatory and administrative measures to comply with the transparency obligations imposed by the Community directives.

(1) Commission Directive 80/723/EEC of 25 June 1980, OJ L 195, 29.7.1980, as amended by Directives 85/413/EEC of 24 July 1985, OJ L 229, 28.8.1985, 93/84/EEC of 30 September 1993, OJ L 254, 12.10.1993 and 2000/52/EC of 26 July 2000, OJ L 193, 29.7.2000.