Opinion of the Economic and Social Committee on the 'XXVIth Report on Competition Policy (1996)'
Date: 1997-12-10
Institutions: European Economic and Social Committee
Subjects: State aid, activity report, competition policy, competitiveness, single market

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plan for transit in Europe. It is to be welcomed in
principle. The criteria for the modular guarantee are
to be specified in the Customs Code implementing
provisions.

4.5. Amendment to Article 96

The deletion of Article 96(2) has no effect
4.5.1.
legally, since the incurrence of a customs debt through
the removal from customs supervision is regulated in
Article 203 of the Customs Code. Non-punishment in
the event of deadlines being slightly exceeded must still
be ensured. The amendment is welcomed.

Brussels, 10 December 1997.

4.6. Amendment to Article 97

The deletion of Article 97(2) poses no problems,
4.6.1.
since there is no scope any more for national transit
procedures. The flexibility which Member States also
require is guaranteed by the Customs Code (Article 91).

4.7. Amendment to Article 192

4.7.1.
ment.

The Committee endorses the proposed amend-

4.8. Amendment to Article 215

4.8.1.
The rewording seems advisable because of the
differing turnover and consumption taxes in the Member
States.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on the ‘XXVIth Report on Competition
Policy (1996)’

(98/C 73/06)

On 24 April 1997, the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the ‘XXVIth Report
on Competition Policy (1996)’.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 3 December 1997. The rapporteur
was Mr Simpson.

At its 350th plenary session (meeting of 10 December 1997) the Economic and Social Committee
adopted the following opinion by 98 votes to two with four abstentions.

1. Preliminary comments

1.1.
The Economic and Social Committee (ESC) has,
each year, taken the opportunity to comment on the
report prepared by the European Commission on Com-
petition Policy.

1.2.
The report on developments in 1996, the XXVIth
in the series, was published in April 1997, within days
of the separate publication of the Fifth Survey on State
Aid in the European Union. The report on State aid,
containing information for the years 1990 to 1994,
updates the last survey published in 1994.

1.3.
Because of the close relationship between the
policy questions raised by the analysis in the Fifth Survey
and the review of policy and decisions on State aid in
the Competition Policy report, the ESC decided to
prepare one opinion dealing with both documents.

1.4.
These reports offer a valuable insight into many
of the difficult questions faced by the Commission in
the evolution and promotion of competition policy and
the application of State aids.

The ESC commends the Commission on the

1.5.
expeditious publication of both documents.

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1.6.

The ESC:

— congratulates the Commission on the clarity of
exposition of the general principles of competition
policy;

— endorses the methods used to evaluate whether
various business agreements are compatible with
Treaty obligations;

— accepts the rationale underpinning the review of the

impact of State aid; and

— welcomes the measures taken to create an outcome
which balances the often conflicting interests of
consumers and businesses, or between citizens living
in different parts of the Union.

1.7.
In later sections of this opinion, the Committee
offers comments and suggestions which, it is hoped, will
assist the Commission in the further evolution of its
competition policies and practices.

2. Principles underpinning competition policy

2.1.
Competition policy is a critical component of
the range of economic policies affecting the development
of the EU. Whilst the practical basis is determined by
the content of the Treaties and subsequent decisions,
the objective is to try to ensure that economic resources
are allocated in the best possible way. This should have
as a consequence consumers who gain protection from
many business arrangements which might unreasonably
prevent or restrict the operation of normal competitive
market forces, or where an abuse of market influence
could allow consumers to be exploited. In addition,
competition policy can be an aid to securing improved
business efficiency, better market integration and cre-
ating more advantageous trading links between Member
States.

2.2.
The Treaties envisage possible actions against
agreements to fix prices or trading conditions; control
production, markets, technical development or invest-
ment; market sharing; and actions which are discrimina-
tory between customers or suppliers. Exceptions are
possible where business arrangements contribute to
improvements in production, distribution or technical
or economic progress, provided that the consumer is
allowed a fair share of the resulting benefits.

2.3.
Comparable actions by a single firm, or a group
of firms, holding a dominant position in the markets
within the Union, which are adjudged to be an abuse of
that position, are also prohibited (Article 86).

which can give a cause for concern about unacceptable
arrangements is so wide and varied that an adjudication
mechanism must be created. As the Commission notes,
there is a presumption that ‘market forces produce a
better allocation of resources..., the principal beneficiary
being the consumer, who gets better quality at a lower
price.’ (1) However, ‘these mechanisms sometimes have
their limits; as a result the potential benefits might not
extend to the entire population... The public authority
must then ensure that the general interest is taken into
account.’

2.5.
The ESC shares this point of view and considers
that on some occasions competition policies must also
take account of, or be modified to acknowledge, the
need to ensure that identified essential services are made
available on a universal basis.

2.6.
A further possible consideration for competition
policy relates to the inter-relationship of competition
questions and those based on environmental consider-
ations. The Commission published guidelines in the
1995 report on the consideration of overlapping environ-
mental and competition issues. Clearly the Commission
needs to consider when, and in what circumstances,
environmental issues would offer a justifiable case for
exemption from the normal competition criteria and
when environmental criteria should be constrained by
the need to avoid distortion of competition.

2.7.
Commission competition policy is aimed to
identify where market forces have, or potentially could,
lead to barriers to trade which, as a result, affect trade
between Member States and adversely affect the smooth
functioning of the market. Corporate conduct and State
aid policies must be monitored. Judgements are needed
to determine when ‘market failure’ or ‘market abuse’
need to be addressed. Inevitably, the Commission must
continuously ensure that relevant actions are reported
and investigated, decisions made on those adjudged
unacceptable and enforcement procedures put in place.

2.8. With the increased globalization of trade, this
process is gaining increased significance for all businesses
and all consumers. Some of the emerging questions
relate not only to competition policy within the European
Union but to wider international implications. Where
the decisions of a business relate to activities on a
world-wide scale, a dominant position within the EU
should be evaluated not simply with respect to internal
EU market arrangements since the ‘relevant market’ is
an international one. The Commission needs to take

2.4. Whilst the objectives as stated in the Treaties are
widely supported, in practice the range of activities

(1) SEC(97) 628 final, paragraph 1.3 quoting from the earlier
Communication on ‘Services of general interest in Europe’.

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account of
the global competitive position in the
assessment of the actions of large individual firms (as,
for example, in the recent consideration of the actions of
British Airways or the merger of Boeing and McDonnell
Douglas).

tition issues. Questions of competition policy at an
international level need to be seen as critically linked to
developments in international trade policy and will
benefit from the highest possible level of organizational
links between the relevant Directorates-General in the
Commission.

A consequence of decisions relating to businesses
2.9.
which are located outside the EU is that it may be
more difficult to monitor compliance with approved
arrangements. Receiving monitoring reports, gathering
credible evidence, and ensuring that behavioural obli-
gations are observed from organizations based in ‘third’
countries may pose particular difficulties which require
international cooperation (see section 3 below).

2.10.
by the Commission to:

The ESC recognizes the importance attached

— modernizing the instruments of competition policy;

— developing appropriate analytical instruments;

— improving cooperation with Member States;

— modernizing the legislative instruments and through
the WTO, developing an international framework
of competition rules.

3.

International cooperation

3.4.
The ESC regards these steps to set competition
policy in a global framework as significant and relevant.
Of course, the EU Treaties have been formulated to give
effect to competition policy within the Union. Securing
global cooperation requires an extra dimension in
addition to the internal EU competition policies. As
already suggested (paragraph 2.8) a dominant position
within the EU should be evaluated not simply with
respect to internal EU market arrangements when the
‘relevant market’ is an international one.

3.5. However, whilst the objective may be easy to
express in principle, securing the desirable levels of
international cooperation may be difficult to deliver in
practice. The ESC hopes that the Commission will
further develop its approach, policies and methodology
on these global aspects of competition questions. Any
enquiries about a firm’s competitive position, or that of
a specific sector, within the EU should systematically be
accompanied by an analysis of the situation in relation
to world-wide competition. A similar comparative
analysis should be made of financial aid given by
Member States and compared with the aid given by
other countries to the same sectors.

3.1.
The ESC has noted with particular interest the
recommendation (paragraph 235) that the World Trade
Organization should set up a working group to do initial
work on the development of an international framework
for competition rules. This is a necessary project which
is relevant where globalization is increasingly affecting
trade.

3.6.
There are particular critical opportunities for
extended cooperation with countries in Eastern Europe,
some of which have an aspiration to become members
of the European Union. The ESC welcomes the accep-
tance by some of these countries of the current EU
competition policies.

3.2.
Improved relations with the US competition
authorities have facilitated, with agreement from the
businesses concerned, some exchange of information.
The bilateral arrangements with the US antitrust author-
ities opens up further opportunities for cooperation in
the exchange of non-confidential information. Confiden-
tial information can also be exchanged but only with
the agreement of the business involved. However, there
is a concern that the relative openness of investigations
by the Commission can be commercially disadvan-
tageous to firms in the EU when competitors outside the
EU, possibly in the USA, may obtain competitive data
that is not available on a reciprocal basis to EU
businesses.

The recent work within OECD also has enhanced
3.3.
international understanding and cooperation on compe-

3.7.
The Commission should ensure that the effective
implementation of competition policy is part of the
pre-accession strategy for the potential new Member
States in Eastern Europe. In addition, assistance from
the Community will be an important contribution as
they prepare for entry and would help to maintain and
sustain social, economic and industrial stability during
the transition.

A critical feature in the pre-accession stages is
3.8.
the implementation of national rules on the granting of
State aid and the means of enforcing these rules. The
ESC endorses the actions of the Commission in its efforts
to ensure that appropriate measures on State aids and
competition policy are taken in each aspirant Member
State at an early stage.

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4. Competition policy developments: Articles 85
and 86 — Changes in legislation and interpretative
rules

4.5. Technology transfer agreements

4.1.
A key objective of Articles 85 and 86 is to
ensure that the different forms of cooperation between
businesses should not be disadvantageous to consumers.
They should be mutually beneficial. Within the European
Union, businesses know that Articles 85 and 86 of the
Treaties set the parameters for their actions if they affect
trade between Member States. However, the general
principles have, over time, been amplified and illustrated
by particular decisions which set the framework for
more detailed questions.

4.2.
To reduce the burden of administrative investi-
gation, to increase the degree of legal certainty to
decision makers and to improve transparency, one of
the desirable features of Commission policy is that,
where possible, further guidelines, or rules, on the
form and content of acceptable cooperation in specific
circumstances should be prepared.

During 1996 (and early 1997) the Commission

4.3.
published:

— a new block exemption regulation on technology

transfer agreements (1);

— a draft notice on cooperation between national
competition authorities and the Commission in
handling cases within the scope of Articles 85 and
86 (2);

— a notice on the non-imposition of fines in cartel

cases (3);

— a draft revised notice on agreements of minor
importance, which do not fall under Article 85(1)(4);

— a notice on procedure for processing requests for a
right of access to files by firms being investigated for
a presumed infringement (5);

— a revised policy on SMEs (6).

4.4.
Each of these decisions, or draft proposals,
should help to codify the application of competition
policy and reduce the number of notifications which
must be processed by the Commission.

(1) OJ L 31, 9.2.1996.
(2) OJ C 262, 10.9.1996.
(3) OJ C 207, 18.7.1996.
(4) OJ C 29, 30.1.1997.
(5) OJ C 23, 23.1.1997.
(6) OJ L 107, 30.4.1996.

Whilst the block-exemption agreement is welcome, its
introduction was not without problems. The agreement
was finalized in March 1996 but the Regulation (EC)
No 240/96 did not come into force until 30 January
1997. This created a period of legal uncertainty.

A more detailed examination of Regulation (EC)
4.6.
No 240/96 suggests that the absence of a severability
clause, which would have clarified the treatment of
non-exempt clauses, may be a weakness.

4.7.
The Commission is invited to consider, for
future clarification, a more precise interpretation of the
Regulation,
‘ancillary
in particular the concept of
provisions’ in Article 10, to ensure that the goals of the
regulation are not unduly hampered.

4.8. Role of national competition authorities

The Committee endorses the efforts to ensure that
national authorities adopt decisions which are compat-
ible with Community law by introducing national
legislation enabling their competition authorities to
apply Articles 85(1) and 86 effectively.

4.9.
The relationship between the Commission and
the national authorities in the application of Competi-
tion Law is evolving. With the fuller realization of the
internal market and the pending introduction of EMU,
this may be an appropriate time to re-orientate the
relationships to develop the principles of subsidiarity,
ensure greater consistency, share the workload and
integrate actions based on common policy decisions.

4.10.
The draft Notice on Cooperation with national
authorities might be developed by an agreement that
Community law should be translated into national law
in each Member State and then enforced, in defined
types of case, by the national authorities. The Com-
mission would then exercise, in part, a supervisory role,
as well as determining those cases remaining within its
remit. But, as the Committee suggested recently (7), ‘an
efficient and workable decentralization would require
more incisive action, such as a revision of Regulation
(EEC) No 17/62;’.

(7) ESC opinion of 19.12.1996, point 11, OJ C 75, 10.3.1997,

p. 22.

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4.11.
As an initial pilot project, these principles might
be developed to apply to those agreements which are
defined as ‘vertical’ restraints on competition.

4.16. Access to files

4.12. Non-imposition of fines

The Commission now has discretionary power to waive
or reduce fines in cases where cartel activities have been
voluntarily disclosed. The ESC understands the logic of
this change since it may offer an incentive to firms
to cooperate in an investigation. Nevertheless, this
discretion contains an inherent danger that investi-
gations will produce unpredictable ‘plea bargaining’
which may damage the perception of the independence
of the official investigation. Whilst there are arguments
that such bargains should be confidential, the ESC
agrees with the Commission notice that where a decision
is made that a fine should be reduced, or not imposed,
the identity of the offending business should be revealed
along with details of the scale of the remission of the
potential fine.

4.13. Agreements of minor importance

The Commission has proposed that the de minimis rule,
which establishes the turnover thresholds below which
agreements are considered to be of minor importance,
should be extended to include large firms with modest
market shares. This proposal is still subject to wide
ranging consultations. However, the ESC would support
the removal of the turnover criterion and the increased
reliance on the proportion of the market share held by
individual businesses. The ESC has already commented
on the Green Paper on vertical restraints (1). It accepts
that a limit of 5 % for horizontal agreements and 10 %
for vertical agreements seems appropriate.

The notice allows firms being investigated to gain access
to relevant files held by the Commission in DG IV and
this may not be as helpful as it could be. Pending a
major review of Regulation 17, the Commission should
consider an amendment to the Notice to allow access to
relevant files held elsewhere in the Commission as well
as in DG IV.

4.17.
The ESC has considered a further suggestion
for a possible improvement in the application of the
procedures under Article 85. This stems from a concern
about the timeliness of the Commission procedures
when assessing applications for individual exemption
or negative clearance. The existing procedure, using
Regulation (EEC) No 17/62, might be changed to add a
series of trigger points for the automatic clearance of an
application using similar concepts to those already
included in the merger control system. If, after acknowl-
edging an application, the Commission has not reacted
within, say, four months, then that application should
be automatically approved. This might be further
supplemented by setting a time limit of, say, one year if
the Commission decides that an application should
receive a full investigation. (This suggestion is similar
to a procedure which is in force in Swedish national
competition law.) Provision might be made for cases
where a particular application merited an extended
period for detailed consideration. A predetermined
extended period might be permitted, exceptionally, on
the basis of a reasoned statement which could be
challenged in the European Court.

5. Competition policy and the Information Society

The draft Notice on Agreements of Minor
4.14.
Importance has attracted some criticism in two respects.
First, the proposed definition used to determine ‘types
of agreement’ may need to be further refined. Second,
the concept of ‘serious’ restrictions may itself be too
restrictive. The Commission should consider how these
concepts might be redefined to give reassurance on legal
certainty and to give greater clarity to make them more
capable of general application.

5.1. One of the sectors of economic activity which is
expanding rapidly and is posing opportunities and
problems which also affect trade between Member
States is the range of enterprises forming part of (what
is known as) the Information Society. As the Commission
notes, the new and emerging technological developments
have not only raised questions about restrictive practices
and dominant positions which affect the liberalization
of markets but they have also highlighted the need to
carefully consider the impact of possible mergers.

4.15.
The extension of the de minimis rule to include
all actions of SMEs is also a welcome recognition both
of the importance of encouraging SMEs to engage in
intra-Community business as well as a useful simplifi-
cation of the procedures.

(1) ESC opinion of 9.7.1997, OJ C 296, 29.9.1997, p. 19.

5.2.
A critical feature of the actions by the Com-
mission in 1996 was the examination of restructuring
proposals. In authorizing the Atlas project, between
France Telecom and Deutsche Telekom, as well as
Global One, a joint venture between Atlas and the Sprint
Corporation, the Commission insisted on modifications,
including liberalization of the telecoms infrastructure,
which helped to ensure that these projects did not
eliminate competition.

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5.3.
Similar conditions were relevant to the Unisour-
ce/Telefonica and Uniworld cases for which the Com-
mission was, in 1996, preparing to take a favourable
view. This is expected to be confirmed late in 1997.

5.4.
A feature of the telecommunications sector across
the European Union, and indeed on a global scale, is the
need to balance the economic logic of an existing
single infrastructure network with the provision of
opportunities for service providers to have access to
core elements of the network at prices which are
determined in a manner which does not attempt,
unreasonably, to restrict competition.

The Commission has shown that it is prepared
5.5.
to intervene if existing service providers reduce tariffs
where competition is more intense and cross-subsidize
these services by higher tariffs on other services which
is effectively a method of unfairly exploiting the con-
sumers.

5.6.
In 1998, national operators who still hold a
monopoly in the provision of voice telephony will lose
the right to a legally protected monopoly. The risk,
prior to 1998, is that operators would distort the market
place for voice telephony by imposing higher prices, or
price increases, for residential customers. The Com-
mission is aware of this threat and will be expected to
take appropriate preventative measures.

5.7.
The ESC hopes that Member States will be able
to ensure that this is not a serious problem but,
nevertheless, welcomes the statement of intent by the
Commission.

5.8.
Because of the international implications of the
liberalization of telecommunications, a critical feature
is that the conditions of access by one enterprise to the
networks of others should be clear and operate to avoid
distortion of competition. The Commission is called on
to closely scrutinize the most recent merger plans of the
German media conglomerates Bertelsmann and Leo
Kirch in the area of pay-TV, and to prevent the
monopolization of this sector which this would entail.
The ESC notes that the Commission has published a
draft notice on the application of competition rules to
access agreements in the telecommunications sector.
The ESC has welcomed this initiative (1).

5.9.
In other opinions the ESC has drawn attention
to the problems of concentration of ownership and
growing alliances in the audiovisual sector (which
includes terrestrial, satellite and cable services). The
Commission needs to be aware of the wider range of
policy questions which need to be taken into account,

over and above questions of market dominance and
adequate access for alternative providers. There are a
number of public policy issues, such as ensuring that
public service obligations are met and maintaining
minimum standards in the content of programmes. The
decision by the Commission to conduct a wide-ranging
consultation on the application of competition rules to
the broadcasting of sports events raises a topic of specific
interest to many people. The ESC believes that a solution
must be found which allows general public access to an
agreed number of major sports events which are of
national interest in a Member State(s).

6. Other sectors affected by competition policy

The Commission report contains a review of
6.1.
including
developments affecting transport services,
inland rate fixing by liner
liner shipping consortia,
conferences, price consultations allowed or not allowed,
between competitors, and cooperation between airlines.

Two of these topics raise questions which the

6.2.
Commission may wish to further consider.

Air transport is now of particular interest in
6.3.
terms of competition policy. Since 1987, civil aviation
has been progressively liberalized, at least on paper. In
reality, the competition between airlines, except on some
routes, is limited. A number of features continue to have
the potential to constrain the emergence of normal
competition. There is provision for a block exemption
on tariff consultations (Regulation (EC) No 1617/93); a
shortage of ‘slots’; further State aid to some airlines; the
effects of economies of scale within the industry;
the expanding use of ‘code-sharing’ agreements; and
restrictions on the foreign ownership of airlines. The
ESC suggests that the Commission should carry out an
evaluation study on the effects of deregulation of the
European air transport market.

6.4.
Similarly with respect to liner shipping, there is
a block exemption for some of the actions of liner
shipping conferences (Regulation (EEC) No 4056/86).
The structure of this sector has changed significantly
since this Regulation was adopted. Consortia and
global alliances now play an important role. Since this
Regulation has no expiry date, the ESC requests the
Commission to evaluate the effects of the existing
regulations on maritime liner services.

7. State monopolies and monopoly rights

(1) ESC opinion of 28.5.1997, OJ C 287, 22.9.1997, p. 8.

7.1.
further secure the liberalization of

The Commission has reported on its actions to
the traditional

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state-owned monopolies in services such as telecom-
munications, energy, postal services, certain transport
services, and the state monopolies in Austria (affecting
alcohol and tobacco), Sweden and Finland (affecting
alcohol sales).

In many cases, the liberalization measures need
7.2.
to be supplemented by measures to supervise the
operations of these enterprises in the wider market place
of the whole of the European Union on a competitive
basis.

7.3.
Reflecting the experience to date on the efforts
to liberalize these sectors, the Commission argues that
‘the objectives of liberalization and of public service can
be kept fully compatible under the existing Community
rules. It was therefore opposed to the proposals to amend
Article 90 of the Treaty..’ at the Intergovernmental
Conference.

The proposals to amend Article 90, considered

7.4.
at the IGC, were, in June 1997, not accepted.

In principle the ESC agrees that no change in
7.5.
Article 90, which under the proposal to the IGC would
have had the effect of protecting some state-owned
undertakings in at least one Member State from the
disciplines of competition policy, would have been
acceptable, particularly if this created unfair competitive
conditions between operators in different Member
States.

7.6.
In a related but wider discussion about the scope
for Community policies which specify minimum levels
for universal services for all citizens, the Commission
suggests that this should be seen in the context of the
liberalized public sector services. The ESC has stated
its Opinion on the Commission Communication on
‘Services of General Interest’ and has emphasized the
importance of the principle that appropriate measures
should be in place to make public services accessible to
all consumers (1).

7.7.
These efforts by the Commission to extend the
concept of minimum levels of universal service into
including initiatives concerning the
a wider setting,
environment, consumer policy and trans-European net-
works, would be underpinned by a Commission proposal
to add a new paragraph to Article 3 of the EU Treaties.
The new paragraph (u) would add ‘a contribution to
the promotion of services of general interest’.

7.8. Whilst this precise recommendation was not
adopted at the Amsterdam IGC, the intention was
fulfilled by a proposed new Article 7d on this topic
which is to be inserted in the Treaties.

(1) Notice on Services of general interest, OJ C 281, 26.9.1996
and ESC Opinion of 29.5.1997, OJ C 287, 22.9.1997, p. 85.

7.9.
In other opinions, the ESC has already comment-
ed on the recent legislation on telecommunications (2) (3),
energy (4), postal services (5) and airports (6).

8. Merger control

8.1.
As the Single European Market becomes more
deeply embedded in the commercial realities for business
enterprises, there is no surprise in a trend for more
businesses to see the advantages of integrating their
activities to take advantage of the single market. In part
this economic process will give an incentive to more
mergers and take-overs which have cross-border effects.

8.2.
The Commission has the responsibility to ensure,
as far as its legislative remit permits, that the economic
gains are to the mutual benefit of consumers and
businesses. Mergers which affect cross-border trade and
have the potential to allow an abuse of market influence
by the operator must be notified and scrutinized. The
Commission must interpret notifications of intended
mergers or take-overs using the 1989 Merger Regu-
lation (7).

8.3.
A proposal for a review of the Merger Regulation
was published in a Green Paper in January 1996. This
proposed, inter alia;

— lower turnover thresholds for compulsory notifi-
cation (ECU 3 billion instead of 5 billion for
worldwide turnover and ECU 200 million instead of
250 million for Community-wide turnover);

— lower turnover thresholds for mergers which would
require notification in at least three Member States
(ECU 2,5 billion and 100 million respectively);

— extension of the procedure to full-function joint

ventures;

(2) Directive with regard to mobile and personal communi-
cations, OJ L 20, 26.1.1996 preceded by ESC opinion OJ
C 15, 20.1.1996.

(3) Directive with regard to the implementation of full compe-
tition in telecommunications markets, OJ L 74, 22.3.1996,
preceded by ESC opinion OJ C 39, 12.2.1996.

(4) Directive concerning common rules for the internal market
in electricity, OJ L 27, 30.1.1997, preceded by ESC opinion
OJ C 73, 15.3.1993.

(5) Proposal for a Communication on competition rules as
applied to the postal sector, SEC(95)830 final, 26.7.1995;
ESC opinion OJ C 174, 17.6.1996.

(6) Directive on access to the ground handling market at
Community airports, OJ L 272, 25.10.1996, preceded by
ESC opinion OJ C 301, 13.11.1995.

(7) Regulation (EEC) No 4064/89, 21.12.1989.

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— simplified conditions for referral from the Com-

9. State aid: overview

mission to a Member State, or vice versa.

The ESC issued a broadly favourable opinion on

8.4.
the proposals (1).

8.5.
The Council of Ministers was unable to com-
pletely endorse the proposals, which required a qualified
majority, insofar as they suggested reduced turnover
thresholds for notification to the Commission. However,
new criteria on Commission competence have been
agreed (see Regulation (EC) No 1310/97) which extend
the competence of the Commission to analyse the
implications of a wider range of merger proposals at
lower thresholds and also where three, or more, Member
States could be involved.

Since some critical aspects of the original pro-
8.6.
posal to amend the Merger Regulation did not secure
ready agreement from the Member States, the ESC
suggests that the Commission might now undertake a
more fundamental review of the balance between agreed
EU policy and appropriate national responsibilities.
In this setting, a reconsideration of the appropriate
mechanisms to make decisions on a revised merger
regulation could be combined with the consideration of
proposals on competition policy as summarized (above)
in point 4.8 et seq.

The ESC has reviewed the summary reports of
8.7.
various merger proposals (paragraphs 140-157) con-
sidered by the Commission and welcomes the availability
of this information in this summarized form and notes
that the decisions taken, when merger proposals are
evaluated, have had particular regard to the interests of
consumers.

The ESC is pleased to note the action taken to
8.8.
examine mergers which, although outside the EU, could
severely affect competition within the EU (as in the case
of Boeing-McDonnell Douglas). As this opinion has
already noted (see point 2.8) such action needs to be
followed by arrangements to oversee the compliance
with any stated conditions (for example the avoidance
of exclusive supply agreements by Boeing with clients).

8.9. When merger proposals are examined in detail
by the Commission, the ESC is concerned that this
procedure can sometimes be unduly prolonged. The
Committee considers that the Commission should accept
that decisions should be within (as far as possible)
predetermined time limits.

(1) ESC opinion: OJ C 295, 7.10.1996.

9.1. Within the European Union, state financial
and/or fiscal aid to enterprises in different sectors is not
uncommon. The provision of State aid is regulated
particularly by the terms of Articles 92 and 93 of the
Treaties. However, in an integrated Single Market, the
existence of State aid can potentially distort competition
and create a perception of unfairness between firms,
some of which receive aid and others do not.

9.2. Whilst there is a major concern, underlined by
the most recent Commission survey (see Section 10),
that the scale of State aid is too large, a revision of
the rules to regulate State aid depends on a clearer
understanding of the circumstances in which State aid
can be justified and the scale on which it might be
available. Achieving this consensus will necessitate a
re-examination of some difficult questions.

9.3. One of the simplest principles to endorse is that
State aid might be justified where the adverse social, or
environmental, impact of normal economic (or market)
forces outweighs the effects of the possible distortion of
competition which the aid may cause. In turn, this
principle opens the possibility that State aid may help
to maintain or create employment in areas of high
unemployment or facing restructuring as a result of
other changes. State aid may also be introduced in
circumstances where the objective is to speed up the
development of an industry, area, or type of business
(e.g. to assist with the development of SMEs).

9.4. Whilst there is a shared interest in minimizing
the scale and cost of State aids, at levels which are
proportionate with the agreed objectives, within the EU
there is also a shared interest in avoiding undesirable
distortions to competition by an inappropriate use of
State aid in some countries, industries or regions. The
need to harmonize the permitted scale and circumstances
for the provision of State aid is accepted. The Committee
has a growing concern that in a reconsideration of the
impact of State aid, account should be taken of fiscal
differences as well as the other forms of more direct
financial support.

9.5.
The Commission proposed to the Council
in November 1996 which accepted that it should prepare
proposals for two regulations on the basis of Article 94
of the Treaty: the first one shall codify procedures in
the field of State aid; the second one shall enable the

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Commission to exempt certain types of aid (environ-
ment, SME, R&D, training and employment aid) under
certain circumstances from the notification obligation,
since such aid can be considered as compatible with the
common market, as long as certain criteria are fulfilled.

The ESC welcomes this review and wishes to be
9.6.
consulted about proposals to amend the framework of
State aid both in the context of proposed formal decisions
from the Council (which normally are addressed to
the ESC for an opinion) and in the adoption of formal
procedural rules and guidelines which will be used by
the Member States (which might otherwise not be
subject to scrutiny by the ESC). This debate will also
need to examine the relationship of State aid to the role
and operations of the Structural Funds and the Cohesion
Fund which are themselves currently under review.

9.7.
The essential objective is that the review should
reinforce the means available within the European Union
to assist the less prosperous regions, and regions affected
by deep recessions in key sectors, to generate improved
living standards and employment prospects for their
residents.

10. The Fifth Survey on State Aid (1)

10.1.
The Fifth Survey on State Aid is a comprehensive
assessment, as far as can be achieved by the Commission,
bearing in mind the problems of obtaining data from
Member States and the further problems of quantifying
indirect, or fiscal, aid. The ESC congratulates the
Commission on its completion, even though some of the
evidence is not as reliable as would have been wished.

10.2.
The Fifth Survey includes State aid for manufac-
turing and certain other sectors and estimates that the
Member States in 1994 (twelve members at that time)
spent more than ECU 95 billion a year in public
assistance to manufacturing, agriculture (excluding the
price guarantees of the CAP), transport, fisheries and
coal mining. Manufacturing alone received ECU
43 billion a year.

10.3. Whilst the quality of the information in the
Fifth Survey has improved on earlier surveys, because
of the value of a study of this type in framing future
policy, the ESC hopes that the Commission will continue
to undertake this work on a biannual basis in a
standardized format and that Member States whose
data sources are incomplete or inadequate will be
required to improve the quality and quantity of the data
available.

(1) COM(97) 170 final.

10.4. Of course, the cost of some forms of aid, such
as loan or interest guarantees, equity investments and
is inherently difficult
more favourable tax regimes,
to quantify and must always be a more subjective
calculation. This is, of course,
indirectly a further
argument to ask Member States to make offers of aid in
more transparent form (2)

10.5.
The estimated cost of State aid as assessed
in the Fifth Survey is large. The Commission has
commented on its size, concentration, distribution by
sector and country, and the overall trend which, it
believes,
is not showing the reductions which the
Commission thinks are desirable.

10.6. Whatever the qualifications, the Fifth Survey
confirms that, for manufacturing industry alone, nearly
ECU 43 billion was made available in 1994, at 1993
prices. This was the equivalent of 3,8 % of the value
added by manufacturing industry, ECU 1 472 per person
employed and 20,7 % of the value of intra-community
exports. Aid on this scale obviously has a potential to
affect trading conditions between Member States.

The qualification which can be added is that
10.7.
these global indicators, which are available for each
Member State (12) as well, show how significant State
aid is, but do not illustrate its impact in particular
regions or sectors. For example, State aid was the
equivalent of 3,8 % of value added in all manufacturing
industry. Whilst it may not yet be possible to prepare
refined calculations it is obvious that this figure would
be higher if it measured the value of State aid as a
proportion of value added in the enterprises which
received State aid. This is particularly significant where
only some regions (or some sectors) of a national
economy are eligible to receive State aid.

10.8.
Some of the aid to other sectors is determined
by criteria relevant to the sector concerned. For example,
State aid to the railway sector is heavily influenced by
the fulfilment of public service obligations and social
obligations by the operators and accounts for over ECU
32,6 billion on average each year. Aid to the coal mining
industry cost ECU 13,2 billion. Both of these might be
regarded as based on justifications which are concep-
tually different from that to manufacturing industry.

(2) There is, of course, a need to understand how the impact
of State aid in other, non-EU countries is operating and its
impact on business decisions which, indirectly, are relevant
to EU policies. The work of agencies such as the OECD,
in its review of Public Support to Industry, 1996, illustrates
the benefit of setting the EU survey in an international
setting.

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Almost half of the total State aid, 45 %, is
10.9.
targeted in the manufacturing sector.
In terms of
industrial, regional and competition policy, the aid to
manufacturing is the most critical area of debate for
future policy.

b) steps are needed to counteract the damaging effects
of national aid policies on economic cohesion in
Europe. The rich central regions receive 85 % of the
total aid while the share of the cohesion countries,
excluding Ireland, is shrinking;

The evidence in the Fifth Survey on the trend
10.10.
and amount of aid to manufacturing industry is not as
clear as the ESC would have wished. For example, whilst
the Commission concludes that for the period 1990 to
1994 ‘the gradual downward trend observed in the past
appears to have come to an end’ (paragraph 9), this
conclusion is reached without making explicit allowance
for the additional expenditure directed to the ‘new’
Lander in Germany. If these amounts are excluded, as
introducing a big non-comparable element in this decade,
the annual cost in 1993-1994 was lower than in 1990-
1992. The known annual value in 1993 prices was just
under ECU 29 billion in both 1993 and 1994, compared
to over ECU 40 billion in 1990. However, this takes no
account of the probable re-allocation of aid within
Germany in favour of the eastern Lander.

10.11. Whilst the concerns about the merits and scale
of State aid are an important part of Commission
thinking, if the total for manufacturing industry is, on a
comparable basis, continuing to decrease, then this
suggests that some progress has been made and this may
have some influence on the policy prerogatives.

10.12.
The impact of the new Lander also affects
other parts of the analysis. One of the stark conclusions
(paragraph 38) is that ‘ad hoc’ aids have increased from
7 % of the total in 1990 to 36 % in 1994. This would
suggest a major policy change in this period but for the
next comment that this consists in ‘the main of aid
granted for rescue and restructuring of companies
together with aid granted by the Treuhandanstalt (in
the new Lander)’. The Commission could have been
expected to offer this evidence in a more helpful way.
To draw any conclusions, some evidence is needed of
the allocation of «ad hoc» aid in each of the Member
States and with particular information on the impact of
the German changes.

11. Policy questions arising from the Fifth Survey

11.1.
Arising from the Fifth Survey and other evidence
available to the Commission, the following policy
conclusions are highlighted in the published reactions
of the Commission:

c)

the Commission is proposing new guidelines for the
regional aid granted by Member States including, it
is expected, a proposal to reduce the permitted
ceilings on maximum financial aid by one-third;

d) the Commission intends to propose a simplification
of procedure for the approval of aid schemes which
contribute to EU objectives;

e)

f)

the Commission proposes to tighten even further the
rules on aid towards the rescue and restructuring of
enterprises in difficulty;

the Commission intends to propose a set of across-
the-board guidelines which will allow it to vet
individual cases in which large amounts of aid are
to be paid and which may cause serious distortions
in competition.

11.2.
Each of these suggestions raises questions which
need to be examined in detail before decisions are made
on the direction and scale of changes in the application
of State aid.

11.3.
The Fifth Survey helps to place these questions
in a factual perspective of the division between the
responsibilities of the Member States (and their sub-
national administrative structures) and those of the
Community as represented by the Commission.

It also helps to give cogency to a debate about
11.4.
the scale of spending on State aid and to examine the
suggestion by the Commission that it is too large and
not falling fast enough.

11.5.
Critical, and implicit to the policy questions, is
the debate about the scale and sources of funding for
the ‘poorer’ Member States for whom, for example,
budgetary constraints are more important than permit-
ted maximum levels of State aid. In this context, the EU
will need to have clearer policies on the allocation of
funds from the Community budget, whether through
the Structural Funds or the Cohesion Fund, or through
redesigned financial instruments.

11.6.
The recent Conference on Cohesion Policy was
a useful introduction to some of these questions. The
publication of Agenda 2000 has provided an immediate
opportunity to reconsider them.

a) dialogue with the Member States is needed to
establish precise targets and a timetable for the
reduction of aid budgets alongside actions to be
taken by the Commission itself;

11.7.
The ESC hopes that each of these topics will
form a part of the review which the Commission has
now launched on the policy constraints on State aid.

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In addition, the ESC, as possibly the most broadly
representative body of the citizens of Europe, alongside
the European Parliament, is willing to contribute to this
debate and expects to be consulted at an early stage by
the Commission.

11.8.
At this early stage in the review, the ESC
suggests that the Commission should identify a number
of principles which should underpin the policy decisions.
In particular, the ESC reminds the Commission of the
relevance of the First Report on Cohesion Policy which
was published in 1996 and on which the ESC has
expressed an opinion (1).

11.9.
In addition, the ESC would commend a clear
distinction between (1) the role of the Community in
setting guidelines for State aid in the context of regional
policy or of industrial policies and (2) the role of the
Community in providing financial resources to support
acceptable policies in Member States, or their regions.
The former is critical to the coordination of policy
across the Community and, especially for the richer
Member States,
is important in the context of the
subsidiarity of actions. The latter is a core element in
the debate about the reform of the Community budget.

11.10. When the Commission proposes revised guide-
lines on the permitted levels of State aid for individual
business projects, the ESC recognizes the conflicting
tensions between ensuring that (1) aid is only permitted
for enterprises (whether newly formed or subject to
rescue arrangements) which have the prospect of viable
operations and avoid the need for continuing aid, (2) aid
can be large enough to offset the scale of initial
disadvantage in an industry or region, (3) maximum aid
levels are gradually lowered and (4) the outcome of
making aid available is that the economic and social
disadvantage of defined regions or industries is reduced.

There is a particularly pressing need for the
11.11.
Commission to publish proposals on future policies on
the use of aid for the rescue and restructuring of firms
in difficulty. The present guidelines expire at the end of
1997. The ESC acknowledges that there is a balance to
be struck between avoiding job losses at firms in difficulty
and the safeguarding of the competitive position of
enterprises. Whilst the aim must be to maximize durable
employment in viable projects, the risk to be avoided is
that short-term expediency should over-ride longer term
objectives.

11.12.
The ESC recommends that, where large
amounts of financial assistance are likely to be needed
to launch a new enterprise or maintain an existing
enterprise, the assistance should be scrutinized by the
Commission to test the potential for the survival of a
competitive entity. This market study, conducted by
the Member State, on the basis already used in the
Commission’s merger control procedures and in some
specified sectors, should apply to businesses in all sectors
and should include an examination of the effects on the
competitive position of other firms in the same sector.

12. Action taken on State aid in 1996

12.1.
The Report on Competition Policy in 1996
reflects the emerging policy debate in the review of State
aid which has been initiated and also reports on the
actions of the Commission during the year. A number
of steps were taken which clarify aspects of the existing
criteria used to assess aid under Articles 92 and 93.

12.2.
In an effort to reduce the involvement of the
Commission in notified assistance which is unlikely to
be significant in scale or potentially distorting to trade
in the EU, the Commission introduced a notice on ‘de
minimis’ aid (2), and new guidelines on State aid for
SMEs which introduces the prospect of aid for intangible
investments, possibly in the form of technology trans-
fers (3), and a framework for the extension of the scope
of State aid for firms in deprived urban areas (4).

12.3.
The ESC welcomes each of these initiatives
which will allow greater concentration by the Com-
mission on the more difficult decisions related to State
aid. However, the ESC hopes that the Commission will
be prepared, after a short period of experience of the
effects of the relaxation of the rules for aid in defined
and deprived urban areas, to widen the list of activities
which are eligible for this type of incentive.

12.4. During the past year the Commission continued
to refine the features of the measures which are, legally
and technically, regarded as aid and therefore falling
within the ambit of Article 92(1). The ESC welcomes
the statement of the four criteria, all of which must
be satisfied, which determine when Article 92(1) is
applicable.

(1) ESC opinion: OJ C 206, 7.7.1997.

(2) OJ C 68, 6.3.1996.
(3) OJ C 213, 23.7 1996.
(4) SEC(96) 1706/2.

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12.5.
Three of the four criteria seem unlikely to be
controversial. The aid must give a firm an advantage; it
must be granted by the state, or using state resources;
and it must affect trade between Member States.

12.6.
The fourth is less certain. It requires that the
aid must have particular characteristics to the point of
favouring certain undertakings or the production of
certain goods. The ESC notes that this condition is
capable of differing interpretations. To illustrate the
the Commission should clarify
possible difference,
whether it would exist if a Member State extended the
aid only to manufacturers as opposed to all other
businesses or would it only exist if applied to a smaller
industrial sector? The Commission relies on a distinction
between ‘general’ measures, available to all firms,
and ‘specific’ measures available to a limited group.
However, this distinction does not, without further
clarification, answer the question posed. The ESC
suggests that the Commission should clarify how the
term ‘certain undertakings’ is to be defined.

12.7.
The defining of aid relative to ‘certain undertak-
ings’ has been a recurring problem for the Commission.
During 1996, the issue was relevant to decisions on aid
to reduce labour costs. The Commission has decided
that measures to reduce labour costs on a national basis
do not
to be considered under Article 92(1).
Reductions on labour costs in specified industrial sectors
would however not escape. The details have been
published in an explanatory notice. (1) The ESC wel-
comes this step which helps to clarify the position.

fall

12.8.
The Commission pursues a number of specific
aid policies in relation to a number of sectors such as
shipbuilding, steel, coal, motor vehicles, synthetic fibres,
clothing and textiles, transport, agriculture and fisheries.
The ESC has noted the consistent application of these
policies in 1996.

12.9. Nevertheless, the ESC regrets that the proposed
OECD sponsored international agreement on shipbuild-
ing has not yet been ratified by all the participants. The
delay by the USA has now placed the future of this
agreement in doubt. The ESC reminds the Commission
of the earlier opinion which proposed that, in the event
of such a delay, the Commission should make alternative
proposals as quickly as possible, and notes that a new
draft regulation has indeed been published (2).

replaced by the same regime as applies in general to
other industries (see paragraph 194 of the Annual
report). This decision was postponed until 1997. In the
particular circumstances of severe competition faced by
this sector, the ESC would urge caution that such a
change would not further erode the viability of, and
employment offered by, firms in this sector.

12.11.
The ESC has noted the modest success in the
first year of application of the guidelines which define
when employment aid is acceptable. It also noted
the positive outcomes of aid linked to environmental
protection.

12.12. With rather more apprehension, the ESC has
noted that some ‘direct investments abroad’ are now
coming to the attention of the Commission as possible
sources of distortion of competition in the Community
(see paragraph 224 of the Annual report). The ESC
appreciates that this raises complex questions on whether
(a) aid takes place and (b) the incidence of that aid, as
opposed to (c) the location of the investment. The ESC
requests the Commission to engage in a wide-ranging
consultation before reaching definite conclusions on the
appropriateness of the existing rules for aid to cases of
this kind.

13. Outlook for 1997

13.1.
The Commission has included in the 1996 report
a final section summarizing the work programme
contemplated for 1997. The ESC welcomes this increased
transparency about the activities of the Commission.

13.2. Many of the legislative priorities are logical
developments from the policies already reviewed in this
opinion. The ESC agrees that they are all of considerable
significance. The caveat which the Committee would
enter is that some of the policy reviews deserve an
open and full debate before decisions are finalized. In
particular, the Committee would request an opportunity
to comment on new guidelines for the granting of State
aid, sectoral aid and regional aid rules.

13.3.
The ESC also welcomes the acknowledgement
that effective enforcement policy is becoming more
necessary as the complexity and range of competition
policy proceedings increase.

12.10.
The ESC has noted that an advisory study has
recommended that the special sectoral framework for
the textiles and clothing industries be abolished and

14. Conclusions

(1) OJ C 1, 3.1.1997.
(2) OJ C 153, 22.5.1997.

14.1.
The ESC commends the Commission on the
expeditious publication of the Report on Competition
Policy (1996) and the Fifth Survey of State Aids
(point 1.5).

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14.2.
Because of the growing significance of global
trading, the ESC has noted with particular interest the
recommendation that the World Trade Organization
should set up a working group to do initial work on
the development of an international framework for
competition rules. The ESC hopes that the Commission
will further develop its approach, policies and method-
ology on these global aspects of competition questions
(point 3.5). In support of this work, the Commission
should call on the resources of the offices of the EU in
other States to collect information on the way in which
competition policies are being developed elsewhere,
often to the disadvantage of the businesses in the EU.

This opinion has reviewed a number of aspects
14.3.
of competition policy which were outlined in the 1996
report. It also reflects the early reactions of the ESC to
the publication of the Fifth Survey of State Aids. The
Committee hopes that the Commission will consider the
suggestions outlined in this opinion in the further
evolution of its important work in ensuring that compe-
tition policy functions to the benefit of the citizens of
the Union.

14.4.
In particular (and inter alia) the ESC would
draw the attention of the Commission to the following
conclusions:

— a dominant position within the EU should be
evaluated not simply with respect to the internal
market when the relevant market is an international
one (3.4);

— in a reconsideration of the impact of State aid
account should be taken of fiscal differences as well
as other forms of more direct financial support (9.4);
this should take account of the code of conduct
agreed by the ECOFIN Council in December 1997;

— during the reconsideration of the impact of State
aid, the issue of employment must also be clearly
taken into consideration;

— the relationship of State aid to the role and operations
of the Structural Funds and the Cohesion Fund
should be reviewed;

— a clear distinction should be made between (1) the
role of the Community in setting guidelines for State
aid in the context of regional policy or of industrial
policies and (2) the role of the Community in
providing financial resources to support acceptable
policies in Member States, or their regions (11.9);

— after a short period of experience of the effects of
the relaxation of the rules for aid in defined and
deprived urban areas, the Commission should widen
the list of activities which are eligible for this type
of incentive (12.3);

— the Commission should clarify how the distinction
is made between general measures and specific aid
as it applies to different groups of undertakings
(12.6).

— appropriate measures should be taken to ensure that
EU policies on competition policy and State aids are
developed in each of the aspirant countries prior to
enlargement (3.8);

The ESC notes that the suggestions made in this
14.5.
opinion will have relevance in the debate on Agenda
2000, published in July 1997, which has implications
for competition, regional, industrial and agricultural
policies in the next millennium.

— Community competition law should be translated
into national law in each Member State and then
enforced, in defined types of case, by the national
authorities (4.10);

— when agreements are submitted for consideration
under Article 85, the procedure might be changed to
add a series of trigger points for the automatic
clearance of an application, using similar concepts
to those already included in the merger control
system (4.17);

— State aid (and aid from the Community) should be
carefully targeted in a disciplined manner which
minimizes the effects on competition, limits the scale
of any subsidies, and reduces the scale of State aid
where possible;

In view of the evolution of several critical
14.6.
aspects of competition policy in recent years, this may
be an appropriate time to reconsider the application of
competition policy. The general principles might be
reviewed and then used as a basis for a reallocation of
responsibilities for enforcement which allows for both
decentralization and the application of subsidiarity. In
this way, openness and transparency could be enhanced
and a sharper focus on the needs of consumers and the
role of SMEs might be developed.

As globalization increasingly affects compe-
14.7.
tition, the ESC suggests that the Commission should

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amplify its annual report on competition with a review
of the state of competition policies in major competitor

countries, particularly where their actions may affect
the business of EU firms.

Brussels, 10 December 1997.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on the ‘Annual Report on the Cohesion Fund
1996’

(98/C 73/07)

On 25 June 1997 the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the ‘Annual Report
on the Cohesion Fund 1996’.

The Section for Regional Development and Town and Country Planning, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on
18 November 1997. The rapporteur was Mr J. Bento Gonçalves.

At its 350th plenary session (meeting of 10 December 1997), the Economic and Social
Committee adopted the following opinion by 106 votes with three abstentions.

1.

Introduction

1.1. Scope

2. General comments

2.1.

Improvements in the report

The report covers current actions which commenced in
previous years together with completed and planned
actions, providing a fuller and more comprehensive
analysis of the Fund’s main interventions and its positive
effects on economic and social cohesion.

1.2. Structure of the report

Reflecting the approach adopted in its earlier opinions
on the reports on the cohesion financial instrument and,
more recently, on the Cohesion Fund, the Committee is
pleased to note the improvements introduced with the
present report, particularly in relation to the organ-
ization, transparency and scope of its content, providing
a clearer picture of how the various projects have been
implemented.

The comments made by the European Parliament and
the ESC in previous years, particularly concerning
the analytical description of how conditionality is
implemented, and completed actions, are reflected in
the structure of the report, with a view to improving
information and publicity measures.

1.2.1.
A separate section has been included on projects
implemented in the most remote regions of the Union
and on assessing the impact of different aspects of Fund
projects.

2.2.

Interaction with other funds

Improvements have been noted in comparative pro-
cedures on the interaction and complementarity of
Cohesion Fund projects with the Structural Funds
(ERDF, ESF, EAGGF, FIFG), providing a comprehen-
sive, overall view of support and its effects on social,
economic and environmental aspects.

The Commission pays particular attention,
2.2.1.
when carrying out prior appraisal of investment projects,