Proposal for a Council and Commission Decision on the position to be taken by the Community within the Association Council established by the Europe Agreement between the European Communities and their Member States, of the one part, and the Republic of Bulgaria, of the other part, signed on 8 March 1993, with regard to the adoption of the necessary rules on state aids for implementation of Articles 64(1) (iii) and (2) and Article 9(1) (iii) and (2) of Protocol 2 on European Coal and Steel Community products to that Agreement
Date: 1999-07-14
Institutions: European Commission
Subjects: Bulgaria, State aid, agreement (EU), control of State aid, iron and steel product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.07.1999
COM(1999) 357 final

99/0146 (ACC)

Proposal for a

COUNCIL AND COMMISSION DECISION

on the position to be taken by the Community within the Association Council
established by the Europe Agreement between the European Communities and
their Member States, of the one part, and the Republic of Bulgaria, of the other
part, signed on 8 March 1993 , with regard to the adoption of the necessary rules
on state aids for implementation of Articles 64(1) (iii) and (2) and Article 9(1) (iii)
and (2) of Protocol 2 on European Coal and Steel Community products to that
Agreement

(presented by the Commission)

EXPLANATORY MEMORANDUM

between

The Europe Agreements
the European
establishing Associations
Communities and their Member States, of the one part, and respectively Republic of
Bulgaria, Republic of Estonia, Republic of Latvia, Republic of Lithuania, Republic of
Poland, Romania and the Republic of Slovenia, of the other part, lay down that the
Association Council shall adopt the necessary implementing rules for the application
of the provisions on state aids. The relevant Articles are: Article 63 of the Europe
Agreement with the Republics of Estonia and Poland; Article 64 of the Europe
Agreement with Romania and the Republics of Bulgaria, Latvia and Lithuania; and
Article 65 of the Europe Agreement with the Republic of Slovenia.

The provisions on state aids are one of the basic points of the Europe Agreement
between the European Communities and the respective States. Covering any aid
granted by the State or through State resources in any forms whatsoever which might
affect trade between the European Community and the respective States, the proposed
decision lays down co-operation between the two parties' monitoring authorities.

According to the respective Decisions of the Council and the Commission on the
conclusion of the Europe Agreements the position to be taken by the Community
within the Association Councils shall be laid down in accordance with the
corresponding provisions of
the Treaties establishing the three Communities.
Articles 133 and 300 of the EC Treaty as well as Article 95 of the European Coal and
Steel Community Treaty are an appropriate legal basis for the position to be adopted
by the Community in the Association Councils with regard to the implementing rules
for the application of the provisions on state aids.

The Council has so far agreed to the implementing rules for the application of the
provisions on state aids concerning the Czech Republic and the Slovak Republic. The
Implementing Rules for the application of the State aid provisions in the Czech
Republic were adopted by the Association Council on 24 June 1998 (OJ L 195,
11.07.1998). The attached proposal follows the model as agreed for the Slovak
Republic.

The Commission therefore requests the Council to adopt the attached proposal for a
Council and Commission Decision.

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Proposal for a

COUNCIL AND COMMISSION DECISION

on the position to be taken by the Community within the Association Council
established by the Europe Agreement between the European Communities and
their Member States, of the one part, and the Republic of Bulgaria, of the other
part, signed on 8 March 1993 , with regard to the adoption of the necessary rules
on state aids for implementation of Articles 64(1) (iii) and (2) and Article 9(1) (iii)
and (2) of Protocol 2 on European Coal and Steel Community products to that
Agreement

THE COUNCIL OF THE EUROPEAN UNION,

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular
Article 133 in conjunction with the first sentence of Article 300(2) thereof,

Having regard to the Treaty establishing the European Coal and Steel Community and
in particular Article 95 thereof,

Having regard to the proposal of the Commission of the European Communities,

Having regard to the opinion of the Consultative Committee

(1)

(2)

(3)

Whereas the European Community and its Member States concluded the
Europe Agreement with the Republic of Bulgaria on 19 December 1994;

Whereas Article 64(3) of the Europe Agreement
the
Association Council shall adopt the rules necessary for the implementation
of paragraphs 1 and 2 of that Article;

lays down that

Whereas Article 9(3) of Protocol 2 to the Europe Agreement on products
covered by the European Coal and Steel Community Treaty lays down that
the Association Council
the
implementation of paragraph 1 and 2 of that Article;

the necessary rules

shall adopt

for

HAVE DECIDED AS FOLLOWS

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The position to be taken by the Community within the Association Council
established by the Europe Agreement between the European Communities and their
Member States, of the one part, and the Republic of Bulgaria, of the other part, with
regard to the rules implementing Article 64(1)(iii) and (2) of the aforementioned
Europe Agreement, and to the rules implementing Article 9(1)(iii) and (2) of
Protocol 2 on European Coal and Steel Community products to the Europe Agreement
shall be based on the draft decision of the Association Council annexed to this
Decision.

Done at Brussels,

For the Council

For the Commission

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ANNEX

ASSOCIATION BETWEEN THE
EUROPEAN UNION
AND THE REPUBLIC OF BULGARIA

- The Association Council -

DECISION No ....../99 OF THE ASSOCIATION COUNCIL

BETWEEN THE EUROPEAN COMMUNITIES AND
THEIR MEMBER STATES, OF THE ONE PART,
AND THE REPUBLIC OF BULGARIA, OF THE OTHER PART

adopting the implementing rules for the application of the provisions on state aid referred to in
Articles 64(1)(iii) and (2) pursuant to Article 64(3) of the Europe Agreement establishing an
association between the European Communities and their Member States, of the one part, and the
Republic of Bulgaria, of the other part, and in Article 9(1)(iii) and (2) of Protocol 2 on European
Coal and Steel Community (ECSC) products to that Agreement

THE ASSOCIATION COUNCIL,

Having regard to the Europe Agreement establishing an association between the European
Communities and their Member States, of the one part, and the Republic of Bulgaria, of the other
part, and in particular Article 64(3) thereof,

Having regard to Protocol 2 on European Coal and Steel Community (ECSC) products to the
Europe Agreement and in particular Article 9(3) thereof,

Whereas Article 64(3) of the Europe Agreement lays down that the Association Council shall,
within three years of the entry into force of the Agreement, adopt by decision the necessary rules for
the implementation of paragraphs 1 and 2 of that Article;

Whereas it is recalled that in accordance with Article 64(2) of the Europe Agreement, the concept
of "public aid" as contained in Article 64(1)(iii) of the Europe Agreement is to be assessed on the
basis of criteria arising from the application of the rules of Article 87 of the Treaty establishing the
European Community, and thus covers any aid granted by the State or through State resources in
any form whatsoever which distorts or threatens to distort competition by favouring certain
undertakings or the production of certain goods, insofar as it may affect trade between the European
Community and the Republic of Bulgaria (state aid);

Whereas the Republic of Bulgaria will appoint a national institution or administration to become a
monitoring authority with responsibility for state aid matters;

Whereas this monitoring authority will be responsible for the analysis of existing and future
individual aid awards and programmes in the Republic of Bulgaria and will give an opinion as to
their compatibility with Article 64(1)(iii) and (2) of the Europe Agreement, and Article 9(1)(iii) and

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(2) and (4) of Protocol 2 on European Coal and Steel Community (ECSC) products to the Europe
Agreement;

Whereas the Republic of Bulgaria will, when providing for the necessary rules to ensure effective
supervision, ensure in particular that the monitoring authority receives in due time all the relevant
information from the other government departments at central, regional and local level;

Whereas the Commission of the European Communities will, under the relevant Community
programmes, assist the monitoring authority by providing for documentation, training, study tours
and other relevant technical assistance,

HAS DECIDED AS FOLLOWS:

Article 1

The implementing rules for the application of the provisions on state aid referred to in
Article 64(1)(iii) and (2) pursuant
to Article 64(3) of the Europe Agreement establishing an
association between the European Communities and their Member States, of the one part, and the
Republic of Bulgaria of the other part, and in Article 9(1)(iii) and (2) of Protocol 2 on European
Coal and Steel Community (ECSC) products to that Agreement as set out in the Annex to this
Decision, are hereby adopted.

Article 2

These Implementing Rules enter into force on the first day of the following month of the adoption
of the rules.

Done at Brussels,

For the Association Council
The President

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IMPLEMENTING RULES FOR THE APPLICATION OF THE PROVISIONS ON STATE AID
REFERRED TO IN ARTICLE 64(1)(iii) and (2) PURSUANT TO ARTICLE 64(3) OF THE
EUROPE AGREEMENT ESTABLISHING AN ASSOCIATION BETWEEN THE EUROPEAN
COMMUNITIES AND THEIR MEMBER STATES, OF THE ONE PART, AND THE
REPUBLIC OF BULGARIA, OF THE OTHER PART, AND IN ARTICLE 9(1)(iii) AND (2) OF
PROTOCOL 2 ON EUROPEAN COAL AND STEEL COMMUNITY (ECSC) PRODUCTS TO
THAT AGREEMENT

SURVEILLANCE OF STATE AID BY MONITORING AUTHORITIES

Article 1

Surveillance of state aid by monitoring authorities

Subject to the procedural rules in force in the European Community ("the Community") and the
Republic of Bulgaria, the granting of state aid shall be surveyed and assessed as to its compatibility
with the Europe Agreement by the responsible monitoring authorities in the Community and the
Republic of Bulgaria, respectively. The monitoring authority in the Community shall be the
Commission of the European Communities ("the Commission"), and in the Republic of Bulgaria the
Ministry of Finance.

GUIDANCE FOR DEALING WITH CASES

Article 2

Criteria for compatibility

1.

The assessment of compatibility of individual aid awards and programmes with the Europe
Agreement, as provided for in Article 1 of these Rules, shall be made on the basis of the
criteria arising from the application of the rules of Article 87 of the Treaty establishing the
European Community, including the present and future secondary legislation, frameworks,
guidelines and other relevant administrative acts in force in the Community, as well as the case
law of the Court of First Instance and the Court of Justice of the European Communities and
the special guidance to be developed pursuant to Article 4(3).

Insofar as the aid awards or aid programmes are destined for products covered by Protocol 2 to
the Europe Agreement, the first sentence of this paragraph applies fully with the exception that
the assessment shall not be made on the basis of the criteria arising from the application of the
rules of Article 87 of the Treaty establishing the European Community but on the basis of the
criteria arising from the application of the rules on State aid of the Treaty establishing the
European Coal and Steel Community.

2.

The monitoring authority of the Republic of Bulgaria shall be informed of any acts relating to
the adoption, abolition or modification of the Community criteria of compatibility referred to
in paragraph 1, insofar as these are not published but are specifically brought to the attention of
all Member States.

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3. Where such changes do not encounter objections from the Republic of Bulgaria within three
months from the date of receiving the official information about them, they shall become
criteria of compatibility as provided for in paragraph 1 of this Article. Where such changes
encounter objections from the Republic of Bulgaria and having regard to the approximation of
legislation as provided for in the Europe Agreement, consultations shall
in
accordance with Articles 7 and 8 of these Rules.

take place,

4.

The same principles shall apply in respect of other significant changes in Community policy
on state aids.

Article 3

De minimis aid

Aid programmes or individual aid awards which do not involve export aid and which fall below the
threshold applicable in the Community for de minimis aid1 shall be considered as having only a
negligible effect on competition and trade between the Parties and shall therefore not be treated
under these Rules. This Article does not apply to the industries covered by the Treaty establishing
the European Coal and Steel Community,
to transport nor to aid towards
expenditure in connection with agriculture or fisheries.

to shipbuilding,

Article 4

Derogations

1.

2.

3.

In accordance with and within the limits of Article 64(4)(a) of the Europe Agreement, the
Republic of Bulgaria shall be regarded as an area identical to those areas of the Community
referred to in Article 87(3)(a) of the Treaty establishing the European Community.

The monitoring authorities shall jointly evaluate the maximum aid intensities and specific
regional coverage of areas in the Republic of Bulgaria eligible for national regional aid. They
shall submit a joint proposal to the Association Committee which shall establish a decision to
this effect.

The Commission and the monitoring authority of the Republic of Bulgaria shall also work out,
and modify if necessary, in addition to the types of aid allowed in the Community, a special
guidance on the compatibility of aid designed to combat the specific problems of the Republic
of Bulgaria as it completes transition to a market economy.

1

Currently the Community de minimis threshold according to the Commission Notice on de minimis aid
(OJ C 68, 6.3.1996) is EURO 100 000 of total aid per firm over a three-year period.

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PROCEDURES FOR CONSULTATION AND PROBLEM SOLVING

Article 5

Examination of certain aid

1. Where the amount of the aid in question amounts to over EURO 3 million, aid programmes or
individual aid awards, whether or not covered by frameworks and guidelines in the
Community, may be referred by the relevant monitoring authority to the Sub-Committee
dealing with competition policy and state aids for examination. The Sub-Committee may
submit a report to the Association Committee which may adopt appropriate decisions or
recommendations concerning the compatibility of the aid programme or aid award with the
Europe Agreement and these Rules.

2.

3.

The principal purpose of such decisions or recommendations shall be to avoid the resorting to
commercial defence measures as a consequence of the aid in question.

The Association Committee may decide to extend further the possibility of examination as
provided for in this Article.

Article 6

Request for information

Whenever the monitoring authority of a Party becomes aware of the fact that an aid programme or
individual aid award appears to affect important interests of that Party, it may request information
about this from the authority responsible. In any event, both monitoring authorities shall endeavour
to keep each other informed of important developments that may be of practical interest for the
other.

Article 7

Consultation and comity

1. Whenever the Commission or the monitoring authority of the Republic of Bulgaria considers
that the award of state aid on the territory for which the other authority is responsible
substantially affects its important interests, it may request consultation with the other authority,
and consequently it may request
that the other Party's monitoring authority initiate any
appropriate procedures with a view to taking remedial action. This is without prejudice to any
action under the respective Parties' relevant legislation and does not hamper the full freedom of
ultimate decision of the authority so addressed, within the framework of the Europe
Agreement.

2.

The monitoring authority so addressed shall give full and sympathetic consideration to such
views and factual material as may be presented by the requesting authority and in particular to
the alleged harmful effects on the important interests of the requesting Party.

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3. Without prejudice to any of their rights and obligations, the monitoring authorities involved in
consultations under this Article shall endeavour to find, within three months, a mutually
acceptable solution in the light of the respective important interests involved.

Article 8

Problem solving

1. Where consultations under Article 7 do not lead to a mutually acceptable solution, an exchange
of views shall take place within the Sub-Committee dealing with competition policy and state
aids established in the framework of the Europe Agreement at the request of one Party within
three months following the request.

2. Where this exchange of views does not lead to a mutually acceptable solution, or after the
expiration of the period referred to in paragraph 1, the matter may be submitted to the
Association Committee which may make appropriate recommendations for the settlement of
these cases.

3.

These procedures shall be without prejudice to any action under Article 64(6) of the
Europe Agreement and Article 9(6) of Protocol 2 on European Coal and Steel Community
(ECSC) products to the Europe Agreement. Trade instruments should however only be used as
a last resort.

Article 9

Secrecy and confidentiality of information

1. With respect

to Article 64(7) of the Europe Agreement, neither monitoring authority is
required to provide information to the other authority if disclosure of that information to the
requesting authority is prohibited by the law of the authority possessing the information.

2.

Each monitoring authority agrees to maintain the confidentiality of any information provided
to it in confidence by the other authority.

TRANSPARENCY

Article 10

Inventory

1. Under the relevant Community programmes, the Commission shall assist the Republic of
Bulgaria to draw up and thereafter update an inventory of its aid programmes and individual
aid awards, established on the same basis as in the Community, in order to ensure and
continuously improve transparency.

2.

The Commission shall provide the Republic of Bulgaria with regular information on the
documentation it produces with a similar aim in relation to the Member States of the
Community.

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Article 11

Mutual information

Both Parties shall ensure transparency in the domain of state aid by providing for appropriate
publications and the exchange of information on state aid policy on a regular and reciprocal basis.

MISCELLANEOUS

Article 12

Administrative assistance (languages)

The Commission and the monitoring authority of the Republic of Bulgaria shall provide for
practical arrangements for mutual assistance or any other appropriate solution concerning in
particular the question of translations.

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