WRITTEN QUESTION E-0191/04 by Roberta Angelilli (UEN) to the Commission. Financial collapse of Parmalat: protecting savers and setting up a supervisory body.
Date: 2004-01-29
Institutions: European Parliament, Provisional data
Subjects: European Central Bank, auditing, bankruptcy, business ethics, committee (EU), dairy industry, financial legislation, protection of shareholders, securities, shareholder, supervisory body

C 84 E/330

Official Journal of the European Union

EN

3.4.2004

Answer given by Mr Monti on behalf of the Commission

(8 March 2004)

Under Article 10 of the Treaty on European Union, ComReg may not approve tariffs of dominant
undertakings which would infringe Article 82 of the EC Treaty, such as excessive tariffs. As regards the
envisaged line rental charge increase by Eircom, the Commission understands that the latter is part of a
process to align this charge to the underlying cost, a process known as ‘tariff rebalancing’ (1). This process
involves, on the one hand, decreases of usage charges and, on the other, increases of fixed charges, such as
the line rental, to reflect the change in the relative cost of the relevant network elements of digitized
communication networks. Under the price cap imposed by ComReg, Eircom reduced its regulated retail
tariffs each year on average by an amount equal to the consumer price index (CPI) minus 8 %. From 2004
onwards, ComReg does not allow Eircom to increase its regulated tariffs by more than the evolution of the
CPI. In such circumstances, ComReg could not be considered to be approving tariffs contrary to the
competition rules of the EC Treaty. One should also take into account that entrants will only invest in
alternative access infrastructure if Eircom’s retail price allows them a sufficient margin on the cost of
rolling out such infrastructure.

Under the new EU regulatory framework for electronic communications, ComReg will
in the coming
months review, among others, the market for access to the public telephone network at a fixed location
for residential customers in Ireland. In this context it will examine the market power of Eircom and assess
the possible impact of the pricing strategy of the latter on competition, and, depending on the outcome,
propose remedies. ComReg will, under Article 7 of Directive 2002/21/EC (2) notify its assessment and the
envisaged remedies, if any, to the Commission, which will have the opportunity to give its comments.

(1) See recital 20 of Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the
implementation of full competition in telecommunications markets, OJ L 74, 22.3.1996, p.13. Although this
Directive has been repealed and replaced by Commission Directive 2002/77/EC of 16 September 2002, OJ L 249,
17.9.2002, the recital explains the Commission’s approach to tariff rebalancing.

(2) Directive 2002/21/EC of the Parliament and of the Council of 7 March 2002 on a common regulatory framework

for electronic communications networks and services (Framework Directive), OJ L 108, 24.4.2002.

(2004/C 84 E/0388)

WRITTEN QUESTION E-0191/04

by Roberta Angelilli (UEN) to the Commission

(29 January 2004)

Subject: Financial collapse of Parmalat: protecting savers and setting up a supervisory body

The financial collapse of the multinational Parmalat is an unprecedented and very serious episode for Italy
that has embroiled thousands of Italian small investors (approximately 80 000 bond holders and 40 000
shareholders) and which could potentially damage financial credibility and lead to a general lack of trust in
our country in the future, not least amongst foreign investors.

Sources of information have indicated that one of the main causes of this financial collapse was the
certification of false and misleading accounts of Parmalat by a leading auditor, Deloitte & Touche, who
apparently hid the true nature of the company’s balance of assets. Furthermore, press reports indicate that
the competent national authorities, Banca d’Italia and Consob, also failed to carry out effective controls,
despite having been informed of all the dubious activities of Parmalat in the past.

The press further reports that the case has led to the involvement of a number of Italian credit institutions,
such as Capitalia, Banca Intesa, Monte dei Paschi, San Paolo Imi, Unicredit and Bnl, along with a number
of European banking institutions,
including some of the leading institutions on the world’s financial
markets, such as Deutsche Bank, these institutions having issued an uncontrolled number of non-reimburs-
able bonds.

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Official Journal of the European Union

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For all these reasons, the Parmalat affair has been called the ‘European Enron’, although in reality it is more
serious than the American scandal, as America’s GDP is far greater than Italy’s.

The Commission:

1. What steps does it consider can be taken to protect the savers involved?

2. What instruments can be adopted to avoid further activities of this type in future and to limit as far as

possible savers’ exposure to them?

3. Does not the Commission think it possible to set up a supervisory and control body at European level
(a kind of European SEC) with power of inspection and sanction, under the direct control of the ECB,
able to verify the effectiveness and transparency of the stock market so as to provide the best
protection for investors?

Answer given by Mr Bolkestein on behalf of the Commission

(11 March 2004)

The Commission does not comment on ongoing legal procedures. As the investigation is still in progress,
it is too early to draw any final conclusions from this complex case.

The Financial Services Action Plan contains a number of measures which specifically aim at improving
investor protection throughout the Union. A number of measures provided for in this Action Plan (such as
international accounting
the Regulation 1606/2002/EC of 14 September 2002 on the adoption of
standards (1), Directive 2003/6/EC of 28 January 2003 on insider dealing and market manipulation (2) and
Directive 2003/71/EC of 4 November 2003 concerning the prospectus to be published when securities are
offered to the public or admitted to trading (3)) have been adopted recently by the European Parliament and
the Council. Other measures (such as the Proposal for a Directive on the harmonisation of transparency
requirements with regard to information about issues whose securities are admitted to trading on a
regulated market) are in an advanced stage of negotiation. Furthermore, in its Communications of 21 May
2003 on Modernising Company Law and Enhancing Corporate Governance in the EU and on Reinforcing
the statutory audit in the EU, the Commission has listed a number of initiatives which it intends to take in
order to improve corporate governance and the quality of the statutory audit. Following the Parmalat case,
the Commission intends to accelerate some of the proposals contained in these Communications.

Although these various measures, once they have been implemented by Member States, will not prevent
corporate failures in the future, they will make it more difficult for such failures to happen, thereby
contributing to the protection of investors.

As far as the supervision of capital markets is concerned, the Committee of European Securities Regulators
(CESR) was officially established by Commission Decision in June 2001. The role of CESR is to improve
coordination among European Securities Regulators, to act as an advisory group to assist the Commission,
in particular in its preparation of draft implementing measures in the field of securities regulation and to
work to ensure more consistent and timely day to day implementation of Community legislation in the
Member States. It is not the task of the European Central Bank (ECB) to supervise securities markets.
Likewise, recently two new committees in the banking: the Committee of European Banking Supervisors
(CEBS) and insurance: the Committee of European Insurance and Occupational Pensions Supervisors
(CEIOPS) fields have been set by the Commission to enhance European regulatory cooperation, and to
provide advice to the Commission.

(1) OJ L 243, 11.9.2002.
(2) OJ L 96, 12.4.2003.
(3) OJ L 345, 31.12.2003.