WRITTEN QUESTION E-0184/04 by Avril Doyle (PPE-DE) to the Commission. Eircom telephone line rental charges in Ireland.
Date: 2004-01-29
Institutions: European Parliament, Provisional data
Subjects: Ireland, competition law, impact study, single market, telecommunications industry, telephone

3.4.2004

EN

Official Journal of the European Union

C 84 E/329

The Commission agrees with the consistent application of accounting practices and works towards
achieving it each year in its annual accounts. New accounting standards are currently being prepared and
an accounting manual should aid the consistent application of accounting practices.

On the basis of an actuarial valuation, a provision for pension liabilities was included in the 2001 and
2002 accounts. For the 2002 accounts, the Commission also received the advice of an external accounting
expert on this subject. Furthermore, an Accounting Standard on this matter is currently being prepared,
and was first discussed in the Accounting Standard Committee meeting in December 2003. Finally, a new
actuarial valuation is currently being made and its results should be available to be reflected in the pension
provision of 31 December 2003.

The rules on the valuation of stocks are clear and explained in the present accounting manual.
The Accounting Officer insists on the correct application of these rules. A new accounting standard has
also been prepared on stocks and was discussed in the Accounting Standard Committee.

The changes of valuation rules are already explained in the annual accounts. An effort is of course always
made to continue to improve the explanations provided.

Additional staff have been allocated to DG Budget in 2003 which, together with external resources made
available under two framework contracts, have enabled the modernisation project to be undertaken, and
the IT structures to be adapted as necessary. A project team has been established within DG Budget,
headed by the Accounting Officer. The resource needs of other services during the 2004 implementation
team charged with
phase are presently being assessed. Each service is setting up a management
implementing the project’s requirements.

The Commission is currently in the process of examining its accounting treatment of the sickness
insurance scheme for the 2003 accounts, based on the opinion of the Court of Auditors and external
accounting experts.

The Commission has improved the quality of its financial reports, and will continue to do so in the future.
Clearly the improvement in the quality of the annual accounts is an ongoing process (cid:1) thus the
Commission reviews its presentation of financial information each year with the goal of improving its
financial reports. This has, in the last couple of years, included the involvement of external experts in
accounting.

The present accounting manual will be updated if important changes occur in the Commission’s activities.
It is being redrafted in order to be in line with the new accounting standards and integrated accounting
system as part of the modernisation project.

(1) Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the
implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the
general budget of the European Communities, OJ L 357, 31.12.2002.

(2004/C 84 E/0387)

WRITTEN QUESTION E-0184/04

by Avril Doyle (PPE-DE) to the Commission

(29 January 2004)

Subject: Eircom telephone line rental charges in Ireland

Given the dominance of Eircom in the Irish fixed line phone market, and the fact that Ireland’s line rental
charges are currently the highest in the EU at EUR 22,50.

Can the Commission comment on the decision of ComReg, Ireland’s telecoms regulator, to approve a
telephone line rental increase from 4 February 2004 which will bring monthly fixed line rental charges at
Eircom to just under EUR 24?

Can the Commission advise on the impact this will have as regards competition within the single market?

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.