WRITTEN QUESTION E-0205/03

by Manuel dos Santos (PSE) to the Commission

(3 February 2003)

Subject: Business closure

Having already asked the Commission about C. & J. Clark's relocation from Castelo de Paiva (Portugal) to India and, possibly, Romania, I learned that the Gerry Weber clothing company is preparing to take similar steps to relocate its Figueiró dos Vinhos (Portugal) fabrics plant abroad.

If this relocation (or even the simple closure of the business) takes place, it will generate considerable unemployment in the region, with disastrous social consequences.

Gerry Weber is another example of a company which applied for and obtained considerable amounts of Community funding.

I am fully aware that the Commission, as the guardian of Community legislation, needs to give pride of place to freedom of movement and the rules of the market, but it also has a duty to ensure that contractual obligations concerning location are fully complied with.

As before, there are good grounds for believing that the company has not strictly complied with its contractual obligations.

Would the Commission therefore state:

1. whether it was notified of this fresh relocation development;

2. whether, if it was not, it is going to investigate the issue;

3. whether it is considering the possible drafting of Community legislation which will, without violating the principle of freedom of movement and the rules of the market, make it possible to circumscribe speculative operations of this kind, which are damaging to the interests both of people and of regions, and violate the true spirit of Community subsidy?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(20 March 2003)

The Commission is not aware of the relocation of the business in question.

As far as the European Social Fund (ESF) is concerned, the Commission would remind the Honourable Member that investment in continuing training is absolutely vital in Portugal in order to boost the competitiveness of the country's economy. However, ESF support for this purpose, as well as support from the European Regional Development Fund (ERDF), is allocated by the Member State under its approved state aid scheme. The Member State must therefore ensure that Community competition rules are adhered to, particularly the current guidelines on national regional aid(1), which were adopted by the Commission in March 1998 and require the assets financed to be maintained in the establishment for at least five years from the date of the investment for which aid was granted.

Various Community directives may apply in the event of business closures with serious social consequences (e.g. collective redundancies), namely Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies(2) and Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council(3). These directives require workers' representatives to be informed and consulted before such decisions are taken, with a view to avoiding or attenuating the social consequences of collective redundancies.

These directives have been transposed into Member States' national law, and it is the task of the competent national authorities to ensure that the rules in question are properly applied.

Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees(4) develops these principles by making provision for the anticipatory and preventive involvement of workers' representatives in strategic decisions taken by the employer and in the development of employment within the business. This directive must be transposed by 21 March 2005, but the point is made that most Member States already have provisions on this subject.

In January 2002 the Commission also recommended the European social partners to identify the principles to be observed by businesses embarking on restructuring operations and to establish appropriate means of ensuring compliance with these principles throughout the European Union. At the end of 2002 the social partners decided to include this subject in their multiannual work programme. The Commission hopes that the efforts deployed in connection with the European social dialogue will yield concrete and beneficial results in terms of influencing the way in which restructuring operations are carried out in Europe.

(1) OJ C 74, 10.3.1998.

(2) OJ L 225, 12.8.1998.

(3) OJ L 254, 30.9.1994.

(4) OJ L 80, 23.3.2002.