Notice by the Commission concerning a draft Directive amending Commission Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings
Date: 1999-12-29
Institutions: European Commission
Subjects: EU Member State, State aid, administrative transparency, economic relations, public sector, publication of accounts

C 377/2

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Official Journal of the European Communities

29.12.1999

Notice by the Commission concerning a draft Directive amending Commission Directive
80/723/EEC on the transparency of financial relations between Member States and public under-
takings

(1999/C 377/02)

The Commission approved a draft Directive amending Commission Directive 80/723/EEC on the trans-
parency of financial relations between Member States and public undertakings.

The Commission intends to adopt the Directive after having heard the comments of all interested parties.

The Commission invites interested parties to submit their observations on the draft Directive published
below.

Observations must reach the Commission not later than two months following the date of this publication.
Observations may be sent to the Commission to the following address:

European Commission
Directorate-General for Competition
Directorate H, Unit 3
Rue de la Loi/Wetstraat 200
B-1049 Brussels
Fax (32-2) 296 95 80

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

is compatible with the common market, without prejudice
to the possible application of Article 86(2) of the Treaty;

Having regard to the Treaty establishing the European
Community, and in particular Article 86(3) thereof,

and public undertakings

(1) Whereas Commission Directive 80/723/EEC (1), as last
amended by Directive 93/84/EEC (2), requires Member
States to ensure that financial relations between public
transparent;
authorities
whereas Directive 80/723/EEC requires certain financial
information to be
retained by Member States and
supplied to the Commission when requested, while
other information has to be supplied in the form of
annual reports;

are

(2) Whereas various sectors of the economy which were char-
acterised in the past by the existence of national, regional
or local monopolies have been or are being opened partly
or fully to competition by the Treaty or by rules adopted
by the Member States and the Community; whereas this
process has highlighted the importance of ensuring that
the rules on competition contained in the Treaty are fairly
and effectively applied in these sectors, in particular that
there is no abuse of a dominant position within the
meaning of Article 82 of the Treaty, and no State aid
within the meaning of Article 87 of the Treaty unless it

(1) OJ L 195, 29.7.1980, p. 35.
(2) OJ L 254, 12.10.1993, p. 16.

(3) Whereas in such sectors Member States often grant special
or exclusive rigths to particular undertakings, or make
payments or give some other kind of compensation to
particular undertakings entrusted with the operation of
services of general economic interest; whereas
these
undertakings are often also in competition with other
undertakings;

(4) Whereas Article 86(1) of the Treaty requires that, in the
case of public undertakings and undertakings to which
Member States grant special or exclusive rigths, Member
States must neither enact nor maintain in force any
measure contrary to the rules contained in the Treaty;
the Treaty applies to under-
whereas Article 86(2) of
takings entrusted with the operation of
services of
general economic interest; whereas Article 86(3) of the
Treaty requires the Commission to ensure the application
of the provisions of Article 86 and to address appropriate
directives or decisions to Member States; whereas in order
to ensure the application of the provisions of Article 86
of the Treaty the Commission must have the necessary
information; whereas this entails defining the conditions
for achieving transparency;

(5) Whereas complexities linked to the diverse forms of
public
and private undertakings granted special or
exclusive rights or entrused with the operation of
services of general economic interest as well as the
range of activities that might be carried on by a single
undertaking and the different degrees of market liberali-
sation in the various Member States tend to hinder
the competition rules, and particularly
application of

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Article 86 of the Treaty; whereas it is therefore necessary
for Member States and the Commission to have detailed
data about the internal organisation of such undertakings,
in particular separate and reliable accounts relating to
different activities carried on by the same undertaking,
as they would be required to maintain if the activities in
question were carried on by separate undertakings;
whereas such information is not always available or is
not always sufficiently detailed or reliable;

(6) Whereas

the

such accounts

should show the distinction
between different activities,
costs and revenues
associated with each activity, the methods of cost and
revenue assignment and allocation and the use of net
revenues generated by a specific activity; whereas such
separate accounts should be available in relation to, on
the one hand, products or services in respect of which the
Member State has granted a special or exclusive right or
entrusted the undertaking with the operation of a service
of general economic interest, as well as, on the other
hand,
for each other product or service in respect of
which the undertaking is active;

(7) Whereas requiring Member States to ensure that

emphasises

in which it

in Europe (1)

the
relevant undertakings maintain such separate accounts is
the most efficient means by which fair and effective
application of the rules on competition to such under-
takings can be assured; whereas the Commission has
general
adopted a Communication on services of
their
interest
importance; whereas it is necessary to take account of
the sectors concerned, which may
the importance of
involve services of general
the strong market
position that
the relevant undertakings may have and
the vulnerability of emerging competition in the sectors
in accordance with the
being liberalised; whereas,
principle of proportionality,
it is necessary and appro-
priate for the achievement of the basic objective of trans-
parency to lay down rules on such separate accounts;
is
whereas
necessary in order to achieve the objectives pursued in
accordance with the third paragraph of Article 5 of the
Treaty;

this Directive

to what

confines

interest,

itself

(8) Whereas,

in certain sectors, provisions adopted by the
Community require Member States and certain under-
takings
is
to maintain separate accounts; whereas
necessary to ensure an equal treatment for all economic
activities throughout the Community and to extend the
requirement
to all
comparable situations; whereas this Directive should not
amend specific rules established for the same purpose in
other Community provisions and should not apply to
activities of undertakings covered by those provisions;

to maintain separate

accounts

it

(9) Whereas, having regard to the limited potential impact on
competition it is not necessary, at this time, to require
than
enterprises with a total net

turnover of

less

EUR 40 million to maintain separate accounts; whereas,
having regard to the limited potential for an effect on
trade between Member States, it is not necessary, at this
time, to require separate accounts in relation to the supply
of certain categories of services; whereas this Directive
rules
should apply without prejudice to any other
concerning the provision of
information by Member
States to the Commission;

(10) Whereas in cases where special or exclusive rights have
been obtained by an undertaking following an open,
transparent and non-discriminatory procedure, or where
the compensation for the fulfilment of services of general
economic interest has been fixed following an open, trans-
parent and non-discriminatory procedure it does not seem
necessary at this time to require such undertakings to
maintain separate accounts;

(11) Whereas Article 295 of

the Treaty provides that

the
Treaty is in no way to prejudice the rules in Member
States governing the system of property ownership;
whereas there should be no unjustified discrimination
between
the
private
the rules on competition; whereas this
application of
Directive should apply to both public and private under-
takings;

undertakings

public

and

in

(12) Whereas the Member States have differing administrative
territorial structures; whereas this Directive should cover
public authorities at all levels in each Member State;

(13) Whereas Directive 80/723/EEC should therefore be

amended accordingly,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 80/723/EEC is amended as follows:

1. The title is replaced by the following:

(cid:145)Commission Directive 80/723/EEC of 25 June 1980 on the
transparency of financial relations between Member States
and public undertakings as well as on financial transparency
within certain undertakings(cid:146);

2. Articles 1 and 2 are replaced by the following:

(cid:145)Article 1

1.
The Member States shall ensure that financial relations
between public authorities and public undertakings are
transparent as provided in this Directive,
the
following emerge clearly:

so that

(a) public funds made available directly by public auth-

orities to the public undertakings concerned;

(b) public

funds made available by public authorities
through the intermediary of public undertakings or
financial institutions;

(1) OJ C 281, 26.9.1996, p. 3.

(c) the use to which these public funds are actually put.

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Official Journal of the European Communities

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The Member States shall ensure that the financial and
2.
organisational structure of any undertaking required to
maintain separate accounts is transparent as provided in
this Directive, so that the following emerge clearly:

(a) the costs and revenues associated with different activ-

ities;

(cid:151) designates several competing undertakings, or

(cid:151) confers on any undertaking or undertakings any
legal or regulatory advantages which substantially
the ability of any other undertaking to
affect
operate the same activity in the same geographical
area under substantially equivalent conditions.

(b) full details of the methods by which costs and revenues
are assigned or allocated to different activities; and

2.
A dominant influence on the part of the public auth-
orities shall be presumed when these authorities, directly or
indirectly in relation to an undertaking:

(c) the use of net revenues generated by different activities.

(a) hold the major part of

the undertaking’s subscribed

capital; or

Article 2

1.

For the purpose of this Directive:

(b) control the majority of the votes attaching to shares

issued by the undertakings; or

(a) (cid:147)public

authorities(cid:148): means

authorities,
including the State and regional, local and all other terri-
torial authorities;

public

all

(b) (cid:147)public undertakings(cid:148): means

any undertaking over
which the public authorities may exercise directly or
indirectly a dominant
their
ownership of it, their financial participation therein, or
the rules which govern it;

influence by virtue of

(c) (cid:147)public undertakings operating in the manufacturing
sector(cid:148): means all undertakings whose principal area of
activity, defined as being at least 50 % of total annual
turnover,
is in manufacturing. These undertakings are
those whose operations fall to be included in Section
D (cid:151) Manufacturing (being subsection DA up to and
including subsection DN) of the NACE (Rev. 1) classifi-
cation (*);

(d) (cid:147)undertaking

to

required

maintain

separate
accounts(cid:148): means any undertaking that enjoys a special
or exlusive right granted by a Member State pursuant to
Article 86(1) of the Treaty, or that is entrusted with the
operation of a service of general economic interest
pursuant to Article 86(2) of
the Treaty and receives
State aid in any form whatsoever, including any grant,
support or compensation, in relation to such service;

is granted to an undertaking or

(e) (cid:147)different activities(cid:148): means, on the one hand, products
or services in respect of which a special or exclusive
right
services of
general economic interest with which an undertaking
is entrusted and, on the other hand, each other
product or service in respect of which the undertaking
is active;

(f)

(cid:147)special rights(cid:148): means rights that are granted by a
Member State to a limited number of undertakings,
regulatory or administrative
through any legislative,
instrument, which, within a given geographical area,

(cid:151) limits to two or more the number of such under-

takings, or

(c) can appoint more than half of

the
undertaking’s administrative, managerial or supervisory
body.

the members of

___________
(*) OJ L 83, 3.4.1993, p. 1.(cid:146)

3.

in Article 3, (cid:145)Article 1(cid:146) is replaced by (cid:145)Article 1(1)(cid:146):

4. the following Article 3a is inserted:

(cid:145)Article 3a

To ensure the transparency referred to in Article 1(2),
1.
the Member States shall take the measures necessary to
ensure that
for any undertaking required to maintain
separate accounts:

(a) the operating accounts
activities are separate;

corresponding to different

(b) all costs and revenues are correctly assigned or allocated
on the basis of consistently applied and objectively
justifiable cost accounting principles;

(c) the cost accounting principles according to which
separate accounts are maintained are clearly established.

Paragraph 1 shall only apply to activities which are
2.
laid down by the
not covered by specific provisions
Community and shall not
any obligations of
affect
Member States or undertakings arising from the Treaty or
from such specific provisions(cid:146);

5. Articles 4 and 5 are replaced by the following:

(cid:145)Article 4

As far as the transparency referred to in Article 1(1) is
this Directive shall not apply to financial

1.
concerned,
relations between the public authorities and:

(a) public undertakings, as regards services the supply of
trade between Member

which is not
liable to affect
States to an appreciable extent;

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(b) central banks;

(c) public credit institutions, as regards deposits of public
funds placed with them by public authorities on normal
commercial terms;

(d) public undertakings whose total net turnover over the
period of the two financial years preceding that in which
the funds referred to in Article 1(1) are made available
or used has been less than EUR 40 million. Hovewer,
for public credit institutions the corresponding threshold
shall be a balance sheet total of EUR 800 million.

As far as the transparency referred to in Article 1(2) is

2.
concerned, this Directive shall not apply:

(a)

(b)

(c)

to undertakings, as regards services the supply of which
is not liable to affect trade between Member States to
an appreciable extent;

to undertakings whose total net turnover is less than
EUR 40 million;

to undertakings which have been granted special or
exclusive rights pursuant to Article 86(1) of the EC
Treaty or have been entrusted with the operation of
services of general economic interest pursuant
to
Article 86(2) of
the EC Treaty for an appropriate
period and following an open, transparent and non-dis-
criminating procedure.

Article 5

shall

States

ensure

information
1. Member
concerning the financial relations referred to in Article
1(1) be kept at the disposal of the Commission for five
years from the end of
the financial year in which the
public funds were made available to the public undertakings
concerned.

that

shall

States

ensure

information
2. Member
concerning the financial and organisational structure of
undertakings referred to in Article 1(2) be kept at
the
disposal of the Commission for five years from the end of
the financial year to which the information refers.

that

3. Member States shall, where the Commission considers
the information
it necessary so to request, supply to it
together with any
referred to in paragraphs 1 and 2,
necessary background information, notably the objectives
pursued.(cid:146)

6. In Article 5a(3), (cid:145)ECU(cid:146) is replaced by (cid:145)EUR(cid:146).

7.

In Article 6(1), (cid:145)Article 5(2)(cid:146) is replaced by (cid:145)Article 5(3)(cid:146).

Article 2

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this
Directive by 31 December 2000 at
the latest. They shall
forthwith inform the Commission thereof.

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such a
reference on the occasion of
their official publication.
Member States shall determine how such reference is to be
made.

Article 3

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

However, where the same funds are used during a later
financial year, the five-year time-limit shall run from the
end of that financial year.

Article 4

This Directive is addressed to the Member States.