Communication from the Commission - Participation of European Economic Interest Groupings (EEIGs) in public contracts and programmes financed by public funds
Date: 1997-09-09
Institutions: European Commission
Subjects: EU programme, European Economic Interest Grouping, inter-company cooperation, public contract, small and medium-sized enterprises

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  09.09.1997 
COM(97) 434 final 

COMMUNICATION  FROM THE COMMISSION 

Participation of European Economic Interest Groupings  (EEIGs) 
in public contracts and programmes financed  by public  funds 

- < L-

COMMUNICATION  FROM THE COMMISSION 

Participation  of European Economic Interest Groupings (EEIGs) 
in public contracts and programmes financed  by public  funds 

INTRODUCTION 

In  its  communication  of  10 July 1996  on  the  integrated  programme  for  small  and 
medium-sized  enterprises  (SMEs) and the craft  sector,1 the Commission  decided to issue 
a  communication  on  measures  designed  to  ensure  that  the  European  Economic  Interest 
Grouping  (EEIG) can tender  on an equal  footing  for  public contracts  and can participate 
fully  in programmes financed  by public funds.  In this way, better use can be made of the 
EEIG as a means of enabling SMEs to combine their resources. 

The European Economic Interest Grouping was established by Council Regulation (EEC) 
No 2137/85 of 25 July  1985 (referred  to below as "the Regulation").2 

The  creation  at  Community  level  of  a  legal  instrument  for  facilitating  transnational 
cooperation  between  firms  is  an  important  element  in  the  completion  of  the  internal 
market. 

The  EEIG  is  currently  the  only  legal  vehicle  for  cooperation  that  is  directly  connected 
with  the  Community  system,  and  it  thus  constitutes  a  key  element  in  European 
cooperation,  particularly  for  SMEs  wishing  to  participate  in  European-scale  projects. 
More  than 800 groupings are currently  developing economic activities in a wide range of 
sectors.  This  is  an  encouraging  figure  given  that  the  first  EEIGs  could  only  be  set  up 
from  1  July  1989, the date on which the Regulation came into force. 

However, a recent conference  organized by the Commission3 showed that optimum use is 
not  yet  being  made  of  the  EEIG  by  firms  wishing  to  cooperate  at  transnational  level, 
particularly  where they  hope to participate  in public contracts and programmes  financed 
by public  funds. 

1  COM(96) 329 final. 

2  OJ No L 199 of 31 July  1985, p.  1 

3 

The  1996 "Regie" conference  held on 25 and 26 March  1996 to review  six years of experience  of the 
EEIG. 

- 2-

This communication  describes  the  EEIG  and  clarifies  some  of  its  characteristics  and  ±e 
way  in  which  it  operates  so  as  to  ensure  that  it  can-tender  for  public  contracts  and 
participate  in programmes financed  by public funds  on  an equal  footing  with other  firms. 
This  clarification  should  ultimately  lead to better  use of  the  EEIG  by  firms,  particularly 
SMEs.  The  Commission  has  pointed  out  on  a  number  of  occasions  that  the  access  of 
SMEs  to  public  contracts,  the  mles  governing  which  are  frequently  applied  in 
programmes  financed  by  public  funds,  is  a  means  of  speeding  up  completion  of  the 
internal market and regional economic development.4 

From  a  wider  viewpoint,  the  Commission  intends  to  encourage  EEIG  participation  in 
such contracts and programmes; the EEIG  represents considerable progress  for  all Union 
firms in that it enables them to organize their cooperation  within a transnational  structure 
that guarantees its members' freedom  to pursue their own activities. 

I. 

DEFINITION  OF THE EEIG 

The EEIG is a flexible and light structure which enables its members to interlink some of 
their economic activities while retaining their economic and legal independence. 

The  formation  of  an  EEIG  gives  rise  to  an  independent  legal  entity  with  legal  capacity 
whose purpose is to facilitate  or develop its members' economic activities and to improve 
or increase the results of those activities. 

This definition  shows that the objective  pursued  by those who conceived  this  instrument 
is  to  promote  transnational  cooperation  between  firms  at  European  level  through  the 
development of a common activity that is ancillary to their own activities. 

The  EEIG  is  similar  to  a  partnership  (or  "société  en  nom  collectif,  "offene 
Handelsgesellschaft") in that, for example, its members have unlimited joint  and  several 
liability  for its debts (see point II.5).  However, the EEIG has features  which are peculiar 
to more structured  forms of companies:  for example, it has the capacity  to act in its own 
name through managers who can be appointed  independently  of their status as members5 
on the basis of a rule which applies generally to limited companies (see point II.2). 

See  Commission  notice  C(88)2510  to  the  Member States  on  monitoring  compliance  with  public 
procurement  rules  in  the  case  of  projects  and  programmes  financed  by  the  Structural Funds  and 
financial  instruments, OJ No C 22 of 28 January  1989, p. 3. 

See  also  the  following  Commission  communications: 
procurement  in  the  Community",  COM(90)166  of  7 May  1990; 
procurement in the Community", SEC(92) 722 final of  1  June  1992. 

"Promoting  SME  participation  in  public 
"SME  participation  in  public 

Article  19 of the Regulation. 

- 3-

II. 

CHARACTERISTICS OF THE EEIG 

i-  Community nature 0f foe EftlQ 

EEIGs are connected  with the Community  legal  system.  Their  formation  and  legal 
existence  can  therefore  come  about  only  on  the  terms,  in  the  manner  and  with  the 
effects  laid down by Community law, even if that law refers back to national laws in 
certain respects. 

The  EEIG's  legal  neutrality  places  its members  on an  equal  footing,  which  is very 
important  for overcoming  members'  fears that one of them may be more  favourably 
placed because it is operating in a more familiar  legal environment. 

2.  The EEIG's legal capacity and its members' autonomy 

The EEIG has full  and independent legal capacity which differentiates  it from  purely 
contractual  forms  of  cooperation.  In  particular,  the  fact  that  it  has  its  own  organs 
gives  it  a much  greater  power  to negotiate  and  represent  its  members  than  each  of 
those members could exercise individually.  The EEIG has the capacity  to act in its 
own name through managers who can  be appointed  independently  of their status as 
grouping  members  and whose representative  powers are directly  based  on the  rules 
applicable  to  limited  companies.  This  feature  is  important  for  the  EEIG's 
participation  in public  contracts  and programmes  financed  by public  funds  because 
it  enables  its  members  to  present  a  united  front  when  negotiating  contracts  and 
seeking loans or financial  guarantees directly linked to public contracts.6 

3.  The ancillary nature of an EEIG's activity 

An  EEIG  differs  from  a  company  principally  in  its  aim,  which  is  to  facilitate  or 
develop  the economic  activities  of its members  in order to enable them  to  increase 
their own profits.  A company, by contrast, generally aims to make profits for itself. 

Owing  to  its  ancillary  nature,  the  grouping's  activity  must  be  connected  with  its 
members' economic activities and not replace them. 

However,  the  formation  of  an  EEIG  should  establish  a  legal  framework  which 
facilitates the adaptation of its members' activities to the economic conditions of the 
market.7 

The  ancillary  nature  of the  EEIG's  activity  should  not  therefore  be  regarded  as  an 
operational limitation which confines the grouping to a subsidiary or minor role. 

6  Article  1(2) of the Regulation. 

7 

First recital of the Regulation. 

Notwithstanding  the ancillary  nature of  its activities, a grouping  can be regarded  as 
being capable of carrying out any of the functions  which may  fail to any other  form 
of grouping  participating  in a public contract or in a programme  financed  by  public 
funds. 

it  can  be  used  simply  as  a 
In this  context,  the  EEIG  can have  different  functions: 
framework  for  coordinating  and  organizing  its  members'  activities  or  it  can 
conclude in its own name and execute contracts awarded by the public authorities or 
under programmes financed  by public  funds. 

In  particular,  the  Regulation  does  not  prohibit  the  EEIG  from  completely  but 
temporarily  taking  over  some of  its members'  activities.  This  matter  was  clarified 
by  the  Commission  in  1991  when  it  stated:  "there  is  nothing  to  prevent  an  EEIG 
carrying  on  some  of  the  activities  of  its  members  for  a  limited  period,  for  the 
purposes of performing  site work, for example".8 

4.  Structural aspects of the EEIG:  stability and  flexibility 

The  Regulation  guarantees  a  grouping's  ability  to  adapt  to  economic  conditions 
through the considerable freedom  its members have in their contractual relations and 
the internal organization of the grouping.9 

This flexibility is reflected  both in the formation  and duration of the EEIG and in the 
arrangements governing its financing or operation. 

The formalities  involved in the formation  of an EEIG are very simple, being  limited 
to the  conclusion  of  a  written  Contract  (the  notarial  procedure  is  not  required)  and 
the  filing  of  the  contract  at  the  registry  in  the  Member State  in  which  the  official 
address is situated. 

Furthermore,  the  EEIG  can  be  formed  for  an  indefinite  or  a  limited  period.  This 
flexibility  of  formation  makes  the  grouping  a  particularly  suitable  instrument  for 
projects with a limited life, such as feasibility  studies or the carrying out of work. 

The  very  wide  access  to  the  EEIG  form  enables  it  to  respond  effectively,  where 
necessary,  to  any  change  in the  conditions  of  cooperation.  This  openness  is  made 
unequivocally clear in the sixth recital of the Regulation, which states that "access to 
grouping  form  must  be  made  as  widely  available  as  possible  to  natural  persons, 
companies,  firms  and  other  legal  bodies,  in  keeping  with  the  aims  of  the 
Regulation".10 

The flexibility  which an EEIG's members enjoy  regarding  its financing is also very 
attractive to  firms.  Capital is not required when it is formed.  This flexibility  is very 
important  and  distinguishes  the  formation  of  an  EEIG  from  that  of  a  company, 
where  large  sums  of  money  may  be  tied  up  for  a  given  period.  In  the  case  of  a 
grouping, 

8  Answer  given  by  MrBangemann  on  behalf  of  the  Commission  to  Written  Question  No  1587/91, 

OJ No C 323 of  13 December  1991, pp. 32 and 33. 

9 

Fourth recital of the Regulation. 

1 °  See also Article 4 of the Regulation. 

- 5-

by contrast,  intermediate  stages are possible which  permit  optimum  use to be made 
of the funds which will subsequently be released. 

It is important  to point out that all types of contribution  are possible:  contributions 
in  cash,  in  kind  or  even  in  industrial  property  (technological  knowledge,  patents, 
commercial or trade relationships, etc.). 

The  EEIG  may  even  function  in  some  cases  through  the  payment  of  regular 
contributions or through funds being made available on current account. 

Furthermore,  although  the  Regulation  prohibits  an  EEIG  from  inviting  investment 
by the public, it is permitted to borrow from  a bank.1, 

The flexibility of operation of an EEIG is further  reflected  in its ability to transfer  its 
official  address  from  one  Member State  to  another  while  retaining  its  legal 
personality  or  capacity.  Such  an  operation  cannot  therefore  be  regarded  as  the 
winding-up of the grouping or be taxed as such. 

themselves. 

to  organize  relations 
The  Regulation  broadly  leaves  it  to  an  EEIG's  members 
between 
includes  certain  peremptory  and 
it  also 
However, 
non-peremptory  arrangements in the interests of third parties but also in those of the 
members  themselves,  enabling  the  latter  to  gauge  the  extent  of  their  personal 
commitment.12 

Certain  major  decisions  affecting  the  operation  and  composition  of  the  grouping 
must be adopted  unanimously.  These  include modification  of the grouping's  aims, 
changes in the number of votes allotted to each member, alteration of the conditions 
under  which  decisions  are  taken,  amendment  of  the  members'  or  some  members' 
contributions to the grouping's  financing,  transfer  of the grouping's  official  address 
where  that  transfer  involves  a  change  in  the  law  applicable  to  the  grouping,  and 
authorisation for a member to assign all or part of its rights. 

The winding-up of a grouping requires a unanimous decision, unless the contract  for 
the formation  of the grouping provides otherwise. 

It should be added that, if the contract for the formation  of the grouping contains no 
provision  governing the collective  decision-taking, the unanimity  rule applies  in all 
cases  13 

The  Regulation  also  imposes  fairly  strict  conditions  on  the  admission  and 
withdrawal  of  members  of  the  grouping.  These  rules  confirm  the  very  marked 
intuitu personae  nature  of  the  relationships  between  members.  The  admission  of 
new  members  thus  requires  a  unanimous  decision  of  the  grouping's  members.  A 
member's withdrawal  from  the grouping  is possible under the conditions  laid  down 

1 !  Article 23 of the  Regulation. 

12  Article  17 of the  Regulation. 

13  Article  17(3) of the  Regulation. 

in  the  contract  for  the  formation  of  the  grouping  or,  in  the  absence  of  such 
conditions, with the unanimous agreement of the other members.14 

The  Regulation  subjects  assignment  of  participations  in  the  grouping  to  the 
unanimous  authorisation  of the  other  members.  In the  absence  of  any  clause  in  the 
contract for the formation  of the grouping concerning  the provision  of guarantees  in 
respect of a member's  participation,  such an operation  can be carried  out  only  with 
the unanimous agreement of the other members.15 

The Regulation therefore  reduces the risk of structural  change within a grouping by 
imposing effective  controls on the admission and withdrawal of members. 

Such  control 
is  important  as  a  means  of  reassuring  an  EEIG's  potential 
co-contracting  parties,  in  particular  banks  and  insurance  companies  from  which 
credit or guarantees may be sought  in connection  with  a grouping's  participation  in 
public  contracts,  or  the  authorities  from  whom  funding  is  requested  in  connection 
with programmes. 

Unlimited joint and several liability of members 

Independently  of  the  credit  and  guarantees  which  may  be  granted  to  the  EEIG 
depending  on  its  members'  financial  position,  maximum  effective  protection  is 
provided for third parties entering into a business relationship with the grouping. 

The  Regulation  establishes  the  principle  that  the  members  of  a  grouping  have 
unlimited joint and several liability for its debts.16 

The  EEIG  may  enter  into  commitments  in  its  own  name  that  have  financial 
implications.  It  will  of  course  be  required  to  meet  the  cost  from  its  own  assets. 
Where  payment  has  not  been  made  within  an  appropriate  period  by  the  grouping 
itself, its members have unlimited joint  and  several  liability  for  debts of any kind  it 
may have.  This personal commitment  of the members  is the  natural  counterweight 
to  the  contractual  freedom  underlying  the  EEIG  and  to  the  lack  of  a  capital 
requirement. 

14  Articles 26( 1 ) and 27( 1 ) of the Regu lation. 

A  member  may  withdraw  at  any  time  on  just  and  proper  grounds  without  having  to  obtain  the 
unanimous agreement of the other members (second paragraph of Article 27( I )). 

15  Article 22 of the Regu lation. 

16  Article 24 of the Regulation. 

In addition, former  members of an EEIG remain answerable for five years  following 
their  withdrawal  for  the  debts  and  other  liabilities  arising  out  of  the  grouping's 
activities  during  the  period  they  were  members.17  The  unlimited joint  and  several 
liability  of the grouping's  members constitutes  a fundamental  guarantee that  makes 
it  easier  for  third  parties  to  enter  into  a  business  relationship  with  the  EEIG,  to 
insure  it  or  lend  to  it  in  the  light  of  the  financial  position  of  one  or  more  of  its 
members. 

This rule demonstrates, particularly  in the case of an EEIG  formed  without  capital, 
that  the  combined  financial  standing  of  its  members  and  the  guarantees  they  may 
provide  should  be  taken  into  account  where  a  grouping  tenders  for  a  contract  or 
applies for funding  or credit. 

17  Articles 34 and 37(1) of the Regulation. 

- 8-

III. 

EEIG PARTICIPATION IN PUBLIC  PROCUREMENT 

(a)  General  considerations 

The  Community  directives  on  public  procurement  require  compliance,  throughout 
information  and 
the  European Union,  with  certain  minimum  conditions  of 
procedures  for  the  award  of  public  supply  contracts  by,  on  the  one  hand,  public 
authorities  ("traditional  sectors"  directives)  and,  on  the  other  hand,  by  the  entities 
operating  in  the  water,  energy,  transport  and  telecommunications  sectors  (the 
"special  sectors" directives).  This  legal  framework  is supplemented  by certain  rules 
on the legal remedies available when  it is necessary  to settle disputes between  firms 
and contracting  bodies.  These rules together  constitute  what are commonly  referred 
to as the Procurement Directives.18 

Although  they  differ  on  a  number  of  points,  the  two  groups  of  directives  ban 
discrimination,  provide  for  transparent  candidate  selection  and  contract  award 
procedures,  based  on  objective  criteria  which  must  be  known  in  advance  and 
compliance with the rules applicable  in the technical field. 

As regards the participation  of  EEIGs  in public  procurement,  it  is important  to  note 
that the Community directives in this area do not contain any provisions which  could 
impede  such participation.  On  the  contrary,  all  the  procurement  directives  provide 
for  the  possibility  of  groupings  participating  in  contracts  without  requiring  them  to 
have  a specific  legal  form.  However,  such  groupings  may  be required  to  assume  a 
specific  legal  form  when  they  have  been  awarded  a  contract  by  the  contracting 
authorities or contracting body.19 

The  ancillary  nature  of  the  activity  of  an  EEIG  should  not  be  an  obstacle  to  its 
participation in public procurement.  In this connection, the Court of Justice recently 
stated that "not  only  a natural  or  legal  person  who  will  himself  carry  out  the  works 
but also a person who will have the contract carried out through agencies or branches 
or will have recourse to technicians or outside technical divisions, or even a group of 

service 

contracts,  OJNoL209, 

18  Council Directive 93/36/EEC of  14 June 1993 coordinating procedures for the award of public supply 
contracts,  OJNoL199,  9.8.1993;  Council  Directive 93/37/EEC  of  14 June 1993  concerning  the 
coordination of procedures for the award of public works contracts, OJ No L 199, 9.8.1993;  Council 
Directive 92/50/EEC  of  18 June 1992  relating  to  the  coordination  of  procedures  for  the  award  of 
public 
of 
24.7.1992; 
21 December  1989 on the coordination  of the laws, regulations  and  administrative  provisions  relating 
to  the  application  of  review  procedures  to  the  award  of  public  supply  and  public  works  contracts, 
the 
OJNoL395,  30.12.1989; 
procurement  procedures  of  entities  operating  in  the  water,  energy,  transport  and  telecommunications 
sectors,  OJNoL199,  9.8,1993;  Council  Directive 92/13/EEC  of  25 February  1992  on 
the 
coordination  of  the  laws,  regulations  and  administrative  provisions  relating  to  the  application  of  the 
Community  rules  on  the  procurement  procedures  of  entities  operating  in the  water,  energy,  transport 
and telecommunications sectors, OJ No L 76, 23.3.1992. 

Council  Directive 93/38/EEC  of  14 June  1993  coordinating 

Council  Directive 89/665/EEC 

19  Article  18 

of  Directive 93/36/EEC,  Article 21 

of  Directive 93/37/EEC,  Article 26 

of 

Directive 92/50/EEC and Article 33 of Directive 93/38/EEC. 

- 9-

undertakings,  whatever  its  legal  form,  may  seek  to  be  awarded  public  works 
contracts".20  An  EEIG  may  therefore  participate  in  and  perform  a  public  works 
contract. 

(b)  Consolidated assessment of public prcurement contract participation criteria 

In  the  above-mentioned  Judgment,  the  Court  establishes  the  principle  of  a 
consolidated  assessment  of  the  resources  and  capacities  of  all  the  members  of  a 
group  of  enterprises  when  one  of  the  firms  in  the  group  participates  in  a  public 
procurement  contract,  provided  that  the  latter  actually  has  available  to  it  the 
resources  and  capacities  of the  other  members  of the  group  which  are necessary  for 
carrying out the contract. 

In applying the reasoning  of the Court to an EEIG, a contracting  body  should,  when 
selecting  tenderers  or  candidates  for  a  public  procurement  contract,  apply  the 
assessment  criteria  laid  down  by  the  directives  taking  account  not  only  of  the 
capacities of the EEIG itself but also of those of its members. 

On the basis of the procurement  directives, any  contractor  wishing  to take part  in a 
public procurement  contract  may  be requested  to prove his  identity  or his  economic 
and  financial  standing  or  his  technical  capacity21  (qualitative  selection  criteria).  If 
the  EEIG  does  not  itself,  as  an  independent  legal  entity,  satisfy  these  selection 
criteria,  the principle  of consolidated  assessment  requires  account to be taken  of the 
capacities of its members.  This means that: 

•  Where all the members of the EEIG are firms satisfying  the selection criteria, an EEIG 

may not be required to satisfy  these conditions as well. 

•  On the other hand,  if the members of an EEIG do not all  satisfy  the  selection  criteria, 
the  members  that  will  in  practice  perform  the  contract  must  satisfy  the  conditions 
imposed by the contracting authority. 

Lastly,  if  none  of  the  members  of  an  EEIG  satisfy  the  conditions  imposed  by  the 
contracting  authority,  the  EEIG  may  not  be  used  as  a  means  of  avoiding  the 
conditions. 

National law governing the registration and authorisation of contractors as a condition 
of their participation  in public contracts  should not impede the participation  of  EEIGs 
in such contracts.  Where national  law makes EEIGs'  participation  conditions on their 
registration  or  authorisation,  it  should  either  permit  EEIGs  to  be  registered  or 
authorised  as such or provide  for  an exception  to enable  them  to participate  in  public 
contracts without being registered or authorised. 

20 

Judgment  in  Case C-389/92  Ballast  Nedam  Groep  NVC  v  Belgische  staat  [1994]  ECR1-1306, 
point  13.  This Judgment  is currently the subject of a reference  for  a preliminary  ruling (Case C 5/97). 

21  Articles 21-25  of  Directive 93/36/EEC,  Articles 25-29  of  Directive 93/37/EEC,  Articles 30-35  of 

Directive 92/50/EEC.  See also Articles 30-32 of Directive 93/38/EC. 

- 1 0-

IV.  EEIG  PARTICIPATION  IN  PROGRAMMES  FINANCED  BY  PUBLIC 

FUNDS 

The particular  features  of an EEIG should enable  it to take part fully  in  programmes 
financed by public funds.  These features are analysed below. 

1.  Transnational character of the EEIG 

A  number  of  Community  support  programmes  require  projects  to  be  submitted  by 
several  partners  belonging  to  different  Member States.  An  example  is provided  by 
Article 2(b),  second  tiret,  of  Council  Decision  94/763/EC  concerning  the  rules  for 
the  participation  of  undertakings,  research  centres  and  universities  in  research, 
technological  development  and  demonstration  activities  of 
the  European 
Community.22 

Under that Article, Community  contributions  may  benefit  only  activities  carried  out 
"by  at  least  two  legal  entities.  Such  entities  must  not  be  affiliated  and  must  be 
established  in different  Member States, or in at least one Member State and one State 
associated with the programme". 

Cross-border  cooperation  is  also  an  objective  of  operational  Community  initiative 
programmes  financed  by  the  Structural  Funds.  This  is true  of  Interreg II,23  one  of 
whose  objectives  is to promote  regional  cross-border  cooperation,  Leader II,  which 
also  subsidizes  (part C)  transnational  rural  development  cooperation  projects,24  or 
Regis II,  which  encourages  transnational  cooperation  between  the  most  remote 
regions of the Community.25 

22  Council Decision of 21 November  1994, OJ No L 306, 30.11.1994, p. 8. 

23  See  Commission  Notice  to  the  Member States  laying  down  guidelines  for  operational  programmes 
which  Member States  are  invited  to establish  in the  framework  of a Community  initiative  concerning 
border  developments,  cross-border  cooperation  and  selected  energy  networks 
(Interreg II), 
OJ No C  180, 1.7.1994, p. 60. 

24  See Notice  to  the  Member States  laying  down  guidelines  for  global  grants  or  integrated  operational 
programmes  for  which  Member States  are  invited  to  submit  applications  for  assistance  in  the 
framework  of a Community  initiative for rural development,  Leader II, OJ No C  180,  1.7.1994, p. 48. 

25  See  Notice  to  the  Member States  laying  down  guidelines  for  operational  programmes  which 
Member States  are  invited  to  establish  in  the  framework  of  a  Community  initiative  concerning  the 
most remote regions, Regis II, OJ No C  180,  1.7.1994, p. 44. 

-11 -

As  an  EEIG  must  necessarily  comprise  at  least  two  partners  from  two  different 
Member States,26  it  is  inherently  transnational,  and  the  EEIG  can  therefore  be 
considered  as a "consortium".  This  is why  EEIGs  are always  entitled  to  apply  to 
participate 
those  which  require  the 
including 
in  Community  programmes, 
participation of legal entities in several Member States. 

Members of an EEIG cannot therefore  be required to submit tenders in parallel  with 
that submitted by the grouping itself. 

With  this  in  mind,  the  Commission  intends  to  add to  its official  lists  of  approved 
contractors and to the forms to be filled in as part of the tender procedure, in addition 
to  the fifteen  existing  categories  for  classifying  national  participants,  a new purely 
European  category,  called  "EUR".  EEIGs  will  be  classified  automatically  in  this 
category because of their transnational  character. 

2.  The presence of several independent operators 

The members of an EEIG retain full  legal and economic independence in the running 
of their  affairs.  EEIGs  should  therefore  be able to participate  fully  in  programmes 
which  require  at  least  two  separate  legal  entities  to  submit  a joint  project.  One 
example  is  the  Council  Decision  of  23 November  1994  adopting  a  specific 
programme  for research  and technological  development,  including  demonstration in 
the field of non-nuclear energy (1994 to 1998).27 

The  Decision  groups  together  most  of  the activities  of the  "Thermie  Programme" 
relating  to  the  technical  demonstration  of  projects. 
Its  Annex III  provides  that 
Community  funding  for  cooperative  research  projects,  involving  normally  at  least 
four  non-affiliated  SMEs from  at least two different  Member States, will cover 50% 
of the cost of research. 

This  means  that  EEIGs  should  participate  in the  programmes  on  an  equal  footing 
with  the other  eligible  firms, as the grouping  must  comprise  at  least  two  members 
from two different  Member States who remain economically and legally  independent 
throughout their cooperation.28 

An  EEIG  must  therefore  be able  to participate  on its own in programmes,  even  in 
those which explicitly require several independent partners.  In that case, members of 
an EEIG  should  not be required to submit  individual  proposals  in parallel  with  that 
made by the grouping itself. 

26  See Article 4(2) of Regulation No 2137/85. 

27  OJNoL  334, 22.12.1994, p. 87. 

28  See Articles 3 and 4 of Regulation No 2137/85. 

3.  Creating synergy 

-12-

In certain cases, the selection of proposals takes account  of the effective  capacity  of 
the  proposed  action  to  create  synergy  between  various  categories  of  participants.29 
Such  programmes  call  for  the participation  of  newly  formed  cooperative  structures. 
In this  context,  ad hoc  consortia  should  not  be  preferred  to  recently  formed  EEIGs 
without a detailed investigation of their characteristics and capacities. 

V.  ACCESS OF EEIGs TO CREDIT 

Access to credit  is essential  to most  economic  operators.  However,  it  is not  always 
easy  for  firms  to  obtain  external  financing,  especially  in  the  case  of  SMEs  which 
could be regarded as high-risk borrowers. 

That is why the grouping together of firms within an EEIG can be a major  advantage 
in discussions with credit institutions. 

The Commission  wishes  to clarify  and  specify  certain  questions  concerning  EEIGs' 
access to credit in order to avoid any risk of discriminating between EEIGs and other 
forms of national enterprises better known to economic operators. 

1.  Guarantees 

Despite  the  considerable  degree  of  freedom  and  operational  autonomy  retained  by 
members  of  an  EEIG,  their  unlimited joint  and  several  liability  can  make  it  much 
easier to obtain credit and strengthens the negotiating powers of its members. 

The  creditors  of  an  EEIG,  in  particular  banks  and  other  financial  institutions,  can 
make a claim  on the personal  assets of members  in respect  of debts  incurred  by  the 
grouping and not settled by it in good time. 

A  requirement  that  each  member  of  an  EEIG  should  provide  a  personal  guarantee 
would  add  considerably  to  the  cost  of  a  loan  and  so  should  not  be  imposed  in 
practice, as  members  are  already  liable  to  pay  the  debts  of the  grouping  from  their 
personal assets. 

An EEIG thus provides a means of increasing the borrowing potential of its members 
whilst generally reducing the cost of a loan. 

29  See Article 4 of the Council  Decision  of 21 November  1994 concerning the rules for the  participation 
of  undertakings,  research  centres  and  universities  in  research,  technological  development  and 
demonstration  activities of the European Community, OJ No L 306, 30.11.1994, p. 8. 

Managerial competences 

- 1 3-

The  legal  autonomy  of  an  EEIG  also  enables  it  to  act  as  a  single  interlocutor  with 
financial  institutions,  as  the  manager  or  managers  represent  the  grouping  in 
negotiations. 

Direct  negotiation  with  each  member  of  the  grouping  and  its  financial  partners  is 
therefore  not necessary. 

Evidence of financial soundness 

An EEIG, like any other loan applicant, must be able to prove its creditworthiness. 

Like  the  procedures  described  in  Chapter III  above  on  public  procurement,  credit 
institutions  should  be  able  to  carry  out  an  overall  assessment  of  the  solvency  of 
groupings on the basis of the financial  status of their members. 

Consolidation  of  the  assets  of  an  EEIG  and  of  its  members  would  facilitate  the 
necessary assessments by the financial  institutions. 

The  drawing-up  by  an  EEIG  of  a  balance  sheet  and  a  consolidated  profit  and  loss 
account could considerably  facilitate  the assessment. 

In  addition,  an  EEIG  which  has  equity  capital,  which  is  not  compulsory  under 
Regulation No 2137/85, offers  security to all creditors dealing with a grouping. 

An  EEIG  with  its  own  equity  thus  has  a  significant  competitive  edge  and  could  be 
included as one of the elements of assessment referred to above. 

Without equity capital, the financial  viability  of the member or members  established 
in the  State where the crédit institution  is located  will clearly be a decisive factor  in 
obtaining a loan or guarantee. 

Creditors of an EEIG can avoid time-consuming procedures for the recovery of sums 
due  from  abroad,  the  principle  of  members'  unlimited  joint  and  several  liability 
allowing them  to  select the member they  will  have recourse  against  in the event  of 
default  of the grouping itself. 

VI.  CONCLUSION 

- 1 4-

The  EEIG  is currently  the  only  vehicle  offering  firms  a  framework  for  cooperation 
directly  attached  to  the  Community  legal  order.  For  that  reason,  and  in  order  to 
facilitate  its use, the Commission  will continue  to monitor application  of  Regulation 
(EEC) No 2137/85 closely. 

In a constantly  changing market, the EEIG offers  businesses in the Union, especially 
SMEs,  the  opportunity  to  develop  their  potential  in  projects  with  a  Community 
dimension.  SMEs are now recognised as firms which play a crucial part in achieving 
the  objectives  of  growth,  competitiveness  and  employment  which  are  part  of  the 
priorities of the European Union.30  The Regie project  thus represents  a good  means 
of promoting the use of the EEIG among SMEs. 

The  Commission  considers  it  essential  that  all  the  actors  concerned  by  the  use  of 
EEIGs, firms or bodies concluding  contracts  with a grouping, should  be fully  aware 
of its characteristics and potential. 

This  Communication  is  intended  to provide  the  clarifications  which  should  remove 
all  uncertainty  still  preventing  maximum  use  of  the  EEIG  in  public  procurement, 
access to credit with which  it is directly  linked, and  programmes  financed  by  public 
funds. 

30  See  the  Commission  communication  on  an  integrated  programme  for  small  and  medium-sized 

enterprises and the craft  sector, COM(96) 329 final  of  10 July  1996. 

See also- "Maximum  enhancement  of the employment,  growth  and competitive  potential  of  European 
SMEs", Council  Decision No. 97/15/EC of 9 December  1996 on a Third Multiannual  Programme  for 
SMEs in the European  Union (1997-2000), Official  Journal No. 6,  10/01/97, p. 25. 

IS 

ISSN 0254-1475 

COM(97) 434  final 

DOCUMENTS 

EN 

02  06  08  10 

Catalogue number  :  CB-CO-97-460-EN-C 

ISBN  92-78-24433-3 

Office  for  Official  Publications of the European  Communities 

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