CELEX: 52012PC0725
Language: en
Date: 2012-12-05
Title: Proposal for a COUNCIL REGULATION amending Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty

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		52012PC0725
		
			Proposal for a COUNCIL REGULATION amending Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty /* COM/2012/0725 final - 2012/0342 (NLE) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
The European State aid rules were first
introduced in the Treaties establishing the European Coal and Steel Community
in 1952 and the European Economic Community in 1957. They are currently
enshrined in the Treaty on the Functioning of the European Union (hereinafter:
"TFEU" or "the Treaty"). 
Article 107 TFEU contains the definition of
State aid and the grounds on which aid may be considered to be compatible with
the internal market, while Article 108 TFEU sets out the main procedural
principles governing the Commission's action to ensure Member States'
compliance with the substantive State aid rules. Article 109 TFEU allows the
Council, acting upon a proposal from the Commission and after consulting the European
Parliament, to make any appropriate regulations for the application of Articles
107 and 108 TFEU.
In 1999, the Council adopted Regulation
(EC) No 659/1999[1] (hereinafter, the "Procedural Regulation"), setting out
in more details the rules of procedure governing the enforcement of Articles
107 and 108 TFEU, which have been applied until today without any significant
modifications.
State aid procedures, as laid down by
Article 108 TFEU and further detailed by the Procedural Regulation, are built
around three main axes:
–              
Prior notification by Member States of all
planned aid measures is compulsory, except in cases covered by a block
exemption regulation or a decision, and the Member State concerned may not put
the measure into effect until a Commission decision authorising that aid is
taken; to that end, following an essentially bilateral (Member
State/Commission) preliminary investigation ("first phase"), limited
in principle to two months, the Commission may either approve the aid or open a
formal investigation ("second phase"), subject to a best endeavour
deadline of 18 months, with a view to thereafter approving (if necessary,
subject to conditions) or prohibiting the aid;
–              
The Commission is
required to conduct a diligent and impartial examination of complaints submitted
from interested parties and take a decision thereon
without undue delay. Where the Commission takes a
decision finding that there exists no State aid as alleged by a complainant,
the Commission must at least provide the complainant with an adequate explanation
of the reasons for which the facts and points of law put forward in the complaint
have failed to demonstrate the existence of State aid;
–              
Finally, the Commission must keep under constant
review all existing aid systems in Member States and may propose to them any
appropriate measures required by the progressive development of the functioning
of the internal market.
Those main features of the State aid
procedure are a direct consequence of the system of State aid control foreseen
in the Treaty, which is based on the Commission's exclusive competence to
assess the compatibility of State aid measures with the internal market. 
More than 13 years after its entry into
force, a modernisation of the Procedural Regulation is needed to adapt State
aid procedure in a European Union of 27 Member States, 500 million inhabitants,
and 23 official languages.
The economic and financial crisis has
threatened the integrity of the internal market and shown the importance of
streamlined and efficient State aid control and enforcement. That experience
pointed out the need for the Commission to have better tools in order to
intervene within business-relevant timeframes and promote sound use of public
resources for growth-oriented policies.
On 8 May 2012, the Commission therefore
adopted the Communication on "EU State aid modernisation (SAM)"[2] which launches a comprehensive
reform of the State aid framework. It will ensure that State aid policy
contributes both to the implementation of the Europe 2020 agenda[3] which is Europe's growth
strategy for the current decade, and to budget consolidation. 
The revision of the Procedural Regulation is
one of the elements that should allow the Commission to achieve the objectives
of that initiative. Reforming the State aid procedures should primarily improve
the effectiveness of State aid control[4].
The need to reform State aid procedures has
also been emphasised by the Court of Auditors in its Special Report n°15/2011
"Do the Commission’s procedures ensure effective management of State
aid control?"[5].
With the proposed reform of the State aid procedural framework, the Commission
will in particular respond to the recommendations of the Court of Auditors to: 
–              
minimise the number of requests for information
sent to Member States;
–              
deal swiftly with unfounded complaints, in order
to provide more legal certainty to all stakeholders;
–              
periodically inform the complainant, the Member
State and the beneficiary about the progress of each case and about the outcome
of the investigation;
–              
improve the efficiency and reliability of its
data-gathering process. 
Those recommendations were explicitly
endorsed by the Council[6]
and the European Parliament[7].
2.           OVERVIEW OF THE PROPOSED AMENDMENTS
Against that background, the proposed
reform of the Procedural Regulation will focus on two areas, as announced in
the SAM Communication[8]:
improving the handling of complaints (2.1) and ensuring effective and
reliable gathering of information from the market (2.2).
2.1.        IMPROVING THE HANDLING OF COMPLAINTS
Complaints are in principle a very useful
source of information to direct Commission investigations towards those
economic sectors where unlawful State aid hampers competition at the level of
the EU. However, the Commission receives on average more than 300 complaints
every year, whether lodged by interested parties[9]
or not, among which many are either not motivated by genuine competition
concerns or not sufficiently substantiated. Most complaints are not treated as
a priority and the average duration of those cases therefore tends to increase[10]. Therefore, the complaints
handling procedure is sometimes perceived by Member States and complainants as
unpredictable and lacking transparency. 
In 2009, the Best Practices Code for the
conduct of State aid procedures[11] set out a staged and transparent procedure
to handle complaints. Two years into its application, however, experience shows
that the benefits it sought – of shorter duration, increased efficiency and greater
predictability – have not fully materialised. Best Practices could not address
some of the main shortcomings of the current system, since they directly stem
from the Procedural Regulation. That is why a reform of the Procedural
Regulation itself is proposed to address those issues. 
*          *
*
In that respect, the proposed amendments to
the Procedural Regulation aim at improving the quality of the information
received by clarifying the requirements to lodge a complaint and formalising a
staged, predictable and transparent procedure. 
Currently, the Commission has to
investigate every alleged infringement of the State aid rules received from
whatever source. Unlike the competition rules laid down in Articles 101 TFEU
and 102 TFEU, in relation to which the lodging of a complaint is regulated by
Regulations 1/2003[12]
and 773/2004[13],
no specific formal requirement is attached to the lodging of a State aid
complaint. In the absence of any concrete rules in the Procedural Regulation,
the General Court consequently considered, in the Ryanair judgment of 29
September 2011[14],
that there are currently no formal requirements to be met in order to put the
Commission in possession of a State aid complaint. 
In the interests of transparency and legal
certainty, the conditions to lodge a complaint which put the Commission in
possession of information regarding alleged unlawful aid and thereby set in
motion the preliminary examination should therefore be clarified (Amendment
to Article 10). Indeed it is appropriate to require that:
–              
complainants submit a certain amount of
compulsory information. To that end, it is appropriate to empower the
Commission to adopt implementing provisions to define the form and the content of a complaint (Amendment to Article 27).
–              
complainants demonstrate that they are
interested parties within the meaning of Article 108(2) TFEU[15] and Article 1(h) of the
Procedural Regulation[16]
and that they therefore have a legitimate interest to lodge a complaint. To reach that objective, it is proposed to specify in Article
20(2) on the "rights of interested parties" that "any
interested party may lodge a complaint". 
In cases where the information received
will not be classified as a complaint since it will not have passed the
admissibility criteria, the Commission will no longer be under an obligation to
adopt formal decisions. Those submissions will be registered as market
information and could be used at a later stage to conduct ex officio
investigations.
To complete the staged procedure introduced
by the Best Practices Code[17],
the Procedural Regulation should formalise the possibility for the Commission to
deem complaints withdrawn if the complainant does not return to it with
meaningful information or otherwise fails to cooperate during the procedure. In
that way, the treatment of complaints could be streamlined and improved (Amendment to Article 20(2)).
*          *
*
Complainants mainly draw the attention of
the Commission to aid which has already been granted and therefore constitutes
potential illegal aid. In 2009, the Commission adopted
a Notice on the enforcement of State aid law by national courts[18] in order to inform national courts and interested parties about the
remedies available and has sought to develop its cooperation with national
courts by introducing more practical tools for supporting national judges in
their daily work. 
It is proposed to expressly provide that national
courts have the right to obtain from the Commission information for the purpose
of applying Articles 107(1) and 108 TFEU and to ask for an opinion of the
Commission on questions related to the application of State aid rules (New
Article 23a(1)).
It is also proposed to introduce the right
for the Commission to make submissions to national courts in written or oral
form (New Article 23a(2)). The Commission may act under that provision
only in the Union public interest (as amicus curiae), i.e. not in support of
one of the parties. That proposed provision aims in particular at permitting
the Commission to draw the attention of Member States' courts to issues of
considerable importance for the consistent application of EU State aid law
across the internal market. The national courts are not bound to follow an
opinion of the Commission. The new Article 23a is also without prejudice to the
right or duty of national courts to request preliminary rulings from the Court
of Justice under Article 267 TFEU. 
*          *
*
The above proposals should ensure that the Commission
receives better substantiated complaints and will therefore have a positive
impact on all the actors involved in the handling of State aid complaints. 
The compulsory use of the complaints form
will facilitate the work of the Commission to identify whether a complaint
involves State aid issues and to determine the degree of priority which should
be given to each complaint, without having to send iterative information
requests to the Member State concerned or the complainant. Given that the
Member States are entitled to comment upon and react to each complaint, a possible
reduction in the number of complaints would moreover reduce the workload for
the Member State concerned.
Where complainants also lodge actions
before national courts based on claims of breaches of EU State aid law,
national courts will find in the Procedural Regulation the tools at their
disposal to obtain the Commission's support. That cooperation which will take
place within an appropriate timeline should facilitate the implementation of EU
State law by national courts. The fact that the Commission can also offer its
assistance on its own initiative to national courts will also be useful to
raise national courts and litigants' awareness of the cooperation mechanisms
between the Commission and the national courts, demonstrate their usefulness
and foster their use. 
Since complainants are not always aware of
the information that the Commission needs to be able to swiftly assess a State
aid complaint, a compulsory complaints form will guide complainants in the
process of collecting and presenting the information needed for the Commission
to conclude on the existence of aid in a given case. This should significantly
reduce the need to send subsequent information requests to complainants, since they
will have provided all the necessary information at their disposal from the
start. The increased transparency and predictability of the procedure will in
itself give complainants a clearer view on the state of play and progress of
the investigation, thereby avoiding unnecessary correspondence. 
2.2.        ENSURING AN EFFECTIVE AND RELIABLE
GATHERING OF INFORMATION FROM THE MARKET 
Over the last years, there has been a
significant refinement in the compatibility assessment of State aid measures. The
Commission relies on an effects-based approach which seeks to balance the positive
and negative effects of State aid measures under assessment. The compatibility
assessment of an aid measure depends on the design of the measure and its
impact on the market. A proper facts-based assessment has therefore become more
important, in particular for complex cases.
To meet the Commission's needs in terms of
information gathering, it is therefore proposed to
introduce market information tools (MIT) (2.2.1) and a legal basis for conducting
investigations into particular sectors of the economy and into particular aid instruments
(2.2.2) in order to enable the Commission to obtain
timely, reliable, factually correct and complete information directly from the
market. 
2.2.1    Market information tools (MIT)
The current procedural framework as regards
the Commission's powers to obtain information during State aid proceedings
gives rise to a number of difficulties. Where the Commission is dependent on
information provided by the Member State, delays can arise when the information
is not readily available to the national authorities and can place a
significant burden on those authorities in certain cases. 
The Commission tried to tackle some of
those issues in the Best Practices Code[19].
It was in particular formalised that the Commission services can send, in the
context of the formal investigation procedure, a copy of the decision to initiate
the formal investigation procedure to interested parties and invite them to
comment on specific aspects of the case. By introducing the possibility to
impose sanctions for submitting incomplete or incorrect information in replying
to an information request, it will be possible to improve the quality of
information received by the Commission. 
To improve the efficiency and transparency
of the procedure, it is proposed to go a step further and codify the power that
the European Court of Justice recognised to the Commission on multiple
occasions to consult the market[20].
It is proposed that the Commission may
require information via simple request for information or by decision from
entities other than the Member State concerned in notified and unlawful aid procedures
after the opening of the formal investigation (New Article 6a and amended
Article 10).
As in antitrust and mergers, those market
information tools would consist in the possibility to request information from
any undertaking, association of undertakings or Member State (New Article 6a),
coupled with the possibility to sanction the companies concerned through fines
or penalty payments (New Article 6b) if they fail to respond or to
provide complete information. This would deter third parties from submitting
biased information. Furthermore, the fact that the same question will be asked
to different companies and the replies received submitted to the Member State
for comments would allow the Commission to cross check the information and
ensure the reliability of the data received. 
In setting the amount of fines and periodic
penalty payments, the Commission would take into account the experience
gathered in the field of mergers and antitrust. Therefore, the pecuniary
sanctions would be in line with the existing values under Council Regulation
139/2004[21]
and Council Regulation 1/2003[22].
The values chosen offer sufficient incentives for
parties concerned to comply, being proportionate as to the potential gravity of
the offence:
–              
fines not exceeding 1% of the total turnover for
supplying incorrect or misleading information in response to simple requests or
requests made by decisions or for not replying to requests made by decisions (New
Article 6b(1)). 
–              
periodic penalty payments not exceeding 5% of
the average daily turnover for each working day of delay, calculated from the
date set in the decision in order to compel them to supply complete and correct
information which has been requested by decision (New Article 6b(2)).
In line with the principle of sincere cooperation
enshrined in the Treaty on the European Union, requests sent to Member States
and public authorities would not entail the possible imposition of fines or periodic
penalty payments under the Procedural Regulation. 
For reasons of legal certainty, it is
appropriate to establish limitation periods for the imposition and enforcement
of fines or periodic penalty payments which are in line with the provisions of
Council Regulation 1/2003[23]
(New Articles 15a and 15b). 
Market information tools would be mostly
used in complex individual cases requiring an in-depth assessment, in order to
tackle a series of issues as regards the qualification of aid or its
compatibility assessment. The following examples may serve to illustrate the
future use of the instrument: assessing normal market practice (e.g. State aid
element in guarantees/loans), market failures and/or incentive effect
benchmarking. Selecting the addressees of the information requests will be
based on objective criteria depending on each case. For example, besides the
aid beneficiary, requests could be sent to competitors, customers, consumer
associations, etc., while ensuring that within each category the sample of
respondents is representative.
The information sought will be readily
available to the market actors concerned and consist in particular in:
–              
Factual market data (e.g. market size, market
shares, level of imports etc.) and company data (e.g. cost structure, profits,
ownership and control, participations in other companies, etc.); 
–              
Facts-based analysis of the functioning of the
market (e.g. entry barriers, cost of entry, regulatory barriers, growth rate of
the market and growth perspectives, overcapacity), likely impact of the aid on
the beneficiary, assessment of proposed remedies or compensatory measures.
Confidentiality of the sensitive
information provided by the Member States will be fully guaranteed when using
MIT. The opening decision already aims at informing third parties of the main
features of a case in a manner that protects potentially sensitive information.
The Commission will also ensure that no sensitive information is disclosed when
drafting requests to third parties.
When replying to a request for information,
market participants will be invited to provide the Commission with the
non-confidential version of their reply. If certain data are considered
confidential, the Commission will ensure that they are adequately protected
(for example, by aggregating data or providing a range in which the figures
fall). 
If the Commission wants to use confidential
information provided by third parties which cannot be aggregated or otherwise
be anonymised, it will have to obtain their agreement before it discloses that
information to the Member State to be able to use it in the Decision. 
In cases where the information marked as
confidential does not seem to be covered by obligations of professional
secrecy, it is appropriate to establish a mechanism by which the Commission can
decide the extent to which such information can be disclosed. Any such decision
not to accept a claim that information is confidential should indicate a period
at the end of which the information will be disclosed, so that the third party
concerned can make use of any judicial protection available to it, including
any interim measure (New Article 7(9)).
*          *
*
Introducing MIT should lead to a reduction
of the administrative burden for Member States. By allowing the Commission to
relieve the national authorities of some of the burden of information-gathering,
especially in cases where the information is not at the disposal of the Member
State and obtaining it would entail significant additional efforts from its
part, and to directly tap into already existing information at companies' level
(e.g. for market shares, market structure etc.), a better balance between the
aid grantor and the final aid beneficiary could ultimately be achieved. 
However, the Member State's obligation to
provide all evidence demonstrating the compatibility of an aid measure will not
be modified under the modernised rules. Nor will they alter the bilateral
nature of the State aid procedure. MIT would duly associate Member States to
the procedure, by giving them the possibility to present their comments on the
replies to information requests (New Article 7(8)). In that way, their
rights of defence will be upheld and the transparency of the procedure
guaranteed. 
Direct correspondence between the aid
beneficiary and the Commission services would help better identify what is
truly needed to conclude the compatibility assessment in a timely manner, which
would be beneficial for the aid recipient and the Member State. That
development would also improve the predictability of the beneficiary's
situation. The targeted factual data requested will be readily available to the
beneficiary and should entail only a fairly limited effort from its part, which
it will be ready to exert swiftly in order to demonstrate that the aid it seeks
to obtain is actually justified.
The use of MIT by the Commission will also
be in the interest of competitors and complainants, as it will allow the
Commission to more carefully assess the compatibility of the aid in question, thereby
preventing or remedying the undue distortions of competition stemming from incompatible
aid. 
By using MIT, the Commission will be able
to reach the appropriate third parties directly and simultaneously. This will
contribute to more transparent, accurate, and swift information flows, which
should reduce the number for repetitive and successive information requests,
thereby shortening the duration of the investigation. The Commission will apply
a proportionality criterion when requesting information from the market.
Thereby, the burden on the companies concerned will be reduced to the minimum
necessary for the Commission to complete its assessment of a State aid measure.
Small and medium-sized enterprises (SMEs) will only be
exceptionally concerned by MIT, given that MIT would be mostly used in complex
individual cases requiring an in-depth assessment, while most of the aid SMEs
receive is granted through schemes, either approved or blocked-exempted[24]. In the very rare cases where
MIT could concern SMEs, the Commission will adapt its requirements in light of
the above-mentioned principle of proportionality.
Introducing MIT after the opening of the
formal investigation would not change the role of third parties as a source of
information which is already currently foreseen and confirmed by clear case-law
of the Court of Justice. Nevertheless, the addressees of decisions imposing
fines and/or penalty payments will have the right to make their views known (New
Article 6b(5)) and to challenge such decisions (New Article 6b(6)).
The new rules regarding
information-gathering are necessary in order to ensure that the Commission
adopts sound and substantiated decisions within business-relevant timelines. In
that way, the Commission will increase legal certainty for Member States and
companies, while at the same time making the State aid policy more efficient
and transparent.
2.2.2    Investigations into sectors of
the economy and into aid instruments
In accordance with the objectives of the State
Aid Modernisation initiative, the Commission is committed to focusing its
efforts on the most distortive cases for the functioning of the internal
market. By applying an enhanced horizontal approach in its investigations, the
Commission would be in a better position to detect aid in a particular sector
or based on a particular instrument which may restrict or distort competition. 
The need for reinforced horizontal
information is particularly manifest in cases where the data in the possession
of the Commission (whether obtained via complaints, notifications or market
information) would raise issues linked to a specific sector in several Member
States and there are indications that similar problems may exist in other
Member States.
Following the recommendations of the Court
of Auditors that the Commission should step up its monitoring activities both
in terms of sample size and of scope[25],
the Commission has already increased the use of its currently existing powers
to monitor approved aid measures and exempted schemes ex-post. By so doing, it
can collect horizontal information from Member States on specific economic
sectors or the use of particular aid instruments in several Member States. To
increase its knowledge of a particular sector of the economy or State aid
issue, the Commission may also send questionnaires, address requests to Member
States or order expert reports and in the future address information requests
to market participants.
To complete the existing powers of the
Commission and to obtain an ex ante holistic view of the market, it is
proposed to introduce a specific legal basis to launch investigations
into sectors of the economy and into types of aid measures (New Article 20a).

The Commission would carry out that
activity by using its power to send requests for information to the Member
States and to any relevant market players. At the end of its inquiry, the
Commission may publish a report on the results of the inquiry into particular sectors
of the economy.
Before formally launching a sector inquiry, the Commission would have to analyse all information
which is already at its disposal or available in the public domain. For proportionality
reasons, launching a sector inquiry will therefore require indications from
publicly available sources that State aid issues in a particular sector or
concerning the use of a particular aid instrument exist in several Member
States: e.g. that existing aid measures in a particular sector or based on a particular
aid instrument in several Member States are not, or no longer, compatible with
the internal market. 
Sector inquiries would entail a limited
initial effort from some market players to which requests for non-public
information will be addressed in the first place. The Commission will then also
ask the Member States for information and invite them to comment and give their
views on its findings. The impact of that initial workload would however be
outweighed by a significant reduction in the workload involved in the future
investigation of individual cases for all concerned (Member States,
beneficiaries, market players and the Commission) via a reduction of the number
of requests for information needed, and the efficiency gains to be expected in
the enforcement of State aid rules through greater transparency and speed.
3.           RESULTS OF CONSULTATIONS WITH THE
INTERESTED PARTIES AND IMPACT ASSESSMENTS
Consultation of interested parties and
use of expertise
The reform of State aid procedures was
presented to and discussed with the Member States at high level meetings
organised on 6 March, 11 July 2012. In addition, a technical workshop on market
information tools and sector inquiries took place on 19 September 2012. 
A public consultation on the handling of
State aid complaints and on information gathering in State aid investigations
was carried out from 13 July 2012 to 5 October 2012. The replies to this public
consultation are available on the DG Competition website and the results were
presented to the Member States at a high level meeting organised on 9 November
2012. 
Impact assessment
Not applicable
4.           LEGAL ELEMENTS OF THE PROPOSAL
Summary of the proposed action
The proposal consists in amending the
provisions of Council Regulation (EC) No 659/99 laying down the rules of
procedure in State aid investigations as regards the handling of complaints and
the gathering of information from the market. 
Legal basis
The legal basis of the proposal is Article
109 of the Treaty on the Functioning of the European Union.
Subsidiarity and proportionality
The proposed amendments to the Procedural
Regulation aim at making State aid procedures more efficient, thereby
contributing to maintaining the integrity of the internal market and achieving
the objectives of the State aid modernisation initiative and more generally the
Europe 2020 strategy. They will inter alia also alleviate the administrative
burden put on Member States and third parties. Therefore, the present proposal
of the Commission is proportionate to the political objective pursued.
The present proposal concerns the
application of State aid rules, which falls within the exclusive competence of
the European Union. Therefore the principle of subsidiarity does not apply.
Choice of instrument
Council Regulation amending Council
Regulation (EC) No. 659/99 of 22 March 1999 laying down detailed rules for the
application of Article 93 of the EC Treaty.
5.           BUDGETARY IMPLICATION 
This proposal for an amendment has no
impact on the EU budget (Articles 28 of the Financial Regulation and 22 of the
implementing rules). 
2012/0342 (NLE)
Proposal for a
COUNCIL REGULATION
amending Regulation (EC) No 659/1999
laying down detailed rules for the application of Article 93 of the EC Treaty
(Text with EEA relevance)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 109 thereof,
Having regard to the proposal from the
European Commission,
Having regard to the opinion of the
European Parliament[26],
Whereas:
(1)       In the context of a
thorough modernization of State aid rules to contribute
both to the implementation of the Europe 2020 strategy for growth[27] and to budgetary consolidation,
Article 107 of the Treaty should be applied effectively and uniformly
throughout the Union. Council Regulation (EC) No 659/1999
of 22 March 1999 codified and reinforced the Commission's previous practice to
increase legal certainty and to support the development of State aid policy in
a transparent environment. However, in the light of the experience gained in
its application and of recent developments such as enlargement and the economic
and financial crisis, certain aspects of that Regulation should be amended in
order to enable the Commission to be more effective. 
(2)       In order to assess the
compatibility with the internal market of any notified or unlawful State aid,
for which the Commission has exclusive competence under Article 108 of the
Treaty, it is appropriate to ensure that the Commission has the power, for the
purposes of enforcing the State aid rules, to request all necessary information
from any undertaking, association of undertakings or Member State whenever it
has doubts as to the compatibility of the measure concerned and has therefore
opened the formal investigation. 
(3)       For the purpose of
assessing the compatibility of an aid measure after the opening of the formal
investigation procedure, in particular as regards novel or technically complex
measures subject to detailed assessment, the Commission should be able, by
simple request or by decision, to require any undertaking, association of
undertakings or Member State to provide all information necessary for
completing its assessment, if the information at its disposal is not sufficient,
taking due account of the principle of proportionality, in particular for small
and medium-sized enterprises.
(4)       The Commission should be
able to enforce compliance with requests for information addressed to any
undertaking or association of undertakings, as appropriate, by means of proportionate
fines and periodic penalty payments. The rights of the parties requested to
provide information should be safeguarded by giving them the opportunity to
make their views known before any decision imposing fines or periodic penalty
payments. The Court of Justice of the European Union should have unlimited
jurisdiction with regard to such fines and periodic penalties pursuant to
Article 261 of the Treaty.
(5)       Fines and periodic penalty
payments are not applicable to Member States since they are under a duty to
cooperate sincerely with the Commission in accordance with Article 4 of the
Treaty on European Union, and to provide it with all information required to
allow the Commission to carry out its duties under Regulation (EC) No 659/1999.

(6)       In order to safeguard the
rights of defence of the Member State concerned, they should be informed of the
content of requests for information sent to undertakings, associations of
undertakings or Member States and be able to submit their observations on the
comments received that raise doubts as regards the compatibility of the aid
measure at stake. 
(7)       The Commission should take
due account of the legitimate interest of undertakings in the protection of
their business secrets. The Commission should not be able to use confidential information
provided by respondents, which cannot be aggregated or otherwise be anonymised,
in any decision unless it has previously obtained their agreement to disclose
that information to the Member State concerned. 
(8)       In cases where that
information marked as confidential does not seem to be covered by obligations
of professional secrecy, it is appropriate to establish a mechanism by which
the Commission can decide the extent to which such information can be
disclosed. Any such decision not to accept a claim that information is
confidential should indicate a period at the end of which the information will
be disclosed, so that the third party concerned can make use of any judicial
protection available to it, including any interim measure.
(9)       The Commission may, on its
own initiative, examine information from whatever source on unlawful aid, in
order to ensure compliance with Article 108 of the Treaty, and in particular
with the notification obligation and standstill clause laid down in Article
108(2) of the Treaty, and to assess their compatibility with the internal
market. In that context, complaints are an essential source of information for
detecting infringements of Union State aid rules. 
(10)     To improve the quality of
the complaints submitted to the Commission and at the same time increase
transparency and legal certainty, it is appropriate to define the conditions
that a complaint should fulfil in order to put the Commission in possession of
information regarding alleged unlawful aid and set in motion the preliminary
examination. 
(11)     Complainants should be
required to demonstrate that they are interested parties within the meaning of Article
108(2) TFEU and of Article 1(h) of Regulation
659/99. They should also be required to provide a certain amount of information
in a form that the Commission should be empowered to define in an implementing
provision. 
(12)     For reasons of legal
certainty, it is appropriate to establish limitation periods for the imposition
and enforcement of fines and periodic penalty payments. 
(13)     In order to ensure that the
Commission addresses similar issues in a consistent manner across the internal
market, it is appropriate to complete the existing powers of the Commission by
introducing a specific legal basis to launch investigations into sectors
of the economy or into certain aid instruments across several Member States. For
reasons of proportionality, sector inquiries should be based on a prior
analysis of publicly available information pointing to the existence of State
aid issues in a particular sector or concerning the use of a particular aid
instrument in several Member States, for example, that existing aid measures in
a particular sector or based on a particular aid instrument in several Member
States are not, or no longer, compatible with the internal market. Such
inquiries would enable the Commission to deal in an efficient and transparent
way with horizontal State aid issues. 
(14)     Consistency in the
application of State aid rules requires that arrangements be established for
cooperation between the courts of the Member States and the Commission. Such
cooperation is relevant for all courts of the Member States that apply Article
107(1) and Article 108 of the Treaty, in whatever context. In particular, national courts should be able to ask the Commission for
information or for its opinion on points concerning the application of State
aid law. The Commission should also be able to submit written or oral
observations to courts which are called upon to apply Article 107(1) or Article
108 of the Treaty. Those observations should be submitted within the framework
of national procedural rules and practices including those safeguarding the
rights of the parties. 
(15)     In the interests of
transparency and legal certainty, information on Commission decisions should be
made public. It is therefore appropriate to publish decisions to impose fines
or periodic penalty payments, given that they affect the interests of the sources
concerned. The Commission, when
publishing its decisions, should respect the rules on professional secrecy, in
accordance with Article 339 of the Treaty.
(16)     The
Commission, in close liaison with the Advisory Committee on State aid, should
be able to adopt implementing provisions laying down detailed
rules concerning the form, content and other criteria of the complaints submitted
in accordance with Article 10(1) and Article 20 of Regulation (EC) No 659/1999.

(17)     Council Regulation (EC) No 659/1999
should therefore be amended accordingly,
HAS ADOPTED THIS REGULATION:
Article 1
Regulation
(EC) No 659/1999 is amended as follows: 
(1)        The
title of Article 5 is replaced by the following:
"Request for information made to the
notifying Member State";
(2)        The
following Articles 6a and 6b are inserted: 
"Article 6a
Request for information made to other sources

1.
After the initiation of the formal investigation procedure provided for in
Article 6, the Commission may, if it considers it to be relevant, require
an undertaking, an association of undertakings or another Member State to
provide all information necessary to enable it to complete its assessment of
the measure at stake, if the information available to it is not sufficient. 
2.
Member States shall provide the information on the basis of a simple request
and within a time limit which should normally not exceed one month.
3.
The Commission may require an undertaking or an association of undertakings to
provide information by simple request. Where the Commission sends a simple
request for information to an undertaking or an association of undertakings, it
shall state the legal basis and the purpose of the request, specify what
information is required and fix the time limit within which the information is
to be provided. It shall also refer to the fines provided for in Article 6b(1)
for supplying incorrect or misleading information.
4.
The Commission may require an undertaking or an association of undertakings to
provide information by decision. Where the Commission requires an undertaking
or an association of undertakings to supply information by decision, it shall
state the legal basis, the purpose of the request, specify what information is
required and fix the time limit within which the information is to be provided.
It shall also indicate the fines provided for in Article 6b(1) and indicate or
impose the periodic penalties payments provided for in Article 6b(2). It shall
further indicate the right for the undertaking or association of undertakings
to have the decision reviewed by the Court of Justice.
5.
The Commission shall inform the Member State concerned of the content of
requests for information sent pursuant to paragraphs 1 to 4.
6.
The owners of the undertakings or their representatives and, in the case of
legal persons, companies or firms, or associations having no legal personality,
the persons authorised to represent them by law or by their constitution, shall
supply the information requested on behalf of the undertaking concerned.
Persons duly authorised to act may supply the information on behalf of their
clients. The latter shall remain fully responsible if the information supplied
is incomplete, incorrect or misleading.
Article 6b
Fines and periodic penalty payments
1.
The Commission may by decision impose on undertakings or associations of
undertakings fines not exceeding 1% of the total turnover in the preceding
business year where, intentionally or negligently:
(a)
they supply incorrect or misleading information in response to a request made
pursuant to Article 6a(3);
(b)
they supply incorrect, incomplete or misleading information in response to a
decision adopted pursuant to Article 6a(4), or do not supply the information
within the specified time limit.
2.
The Commission may, by decision, impose on undertakings or associations of
undertakings periodic penalty payments not exceeding 5% of the average daily
turnover in the preceding business year for each working day of delay,
calculated from the date established in the decision, until they supply
complete and correct information as requested by the Commission by decision adopted
pursuant to Article 6a(4).
3.
In fixing the amount of the fine or periodic penalty payment, regard shall be
had to the nature, gravity and duration of the infringement.
4.
Where the undertakings or associations of undertakings have satisfied the
obligation which the periodic penalty payment was intended to enforce, the
Commission may fix the definitive amount of the periodic penalty payment at a
figure lower than that which would arise under the original decision imposing periodic
penalty payments. 
5.
Before adopting any decision in accordance with paragraphs 1 and 2, the
Commission shall give the undertakings or associations of undertakings concerned
the opportunity of making known their views.
6.
The Court of Justice of the European Union shall have unlimited jurisdiction
within the meaning of Article 261 of the Treaty on the Functioning of the
European Union to review fines or periodic penalty payments imposed by the
Commission. It may cancel, reduce or increase the fine or periodic penalty
payment imposed.";
(3)        In
Article 7, the following paragraphs 8 to 10 are added:
"8.
Before adopting any decision in accordance with paragraphs 2 to 5, the Commission
shall give the Member State concerned the opportunity of making known its views
on the information received by the Commission pursuant to Article 6a, to the
extent that such information raises doubts as to the compatibility of the
measure. 
9.
The Commission shall not use confidential information provided by respondents,
which cannot be aggregated or otherwise be anonymised, in any decision taken in
accordance with paragraphs 2 to 5 unless it has obtained their agreement to
disclose that information to the Member State concerned. The Commission may
take a reasoned decision, which shall be notified to the undertaking or
association of undertakings concerned, finding that information marked as
confidential provided by a respondent is not protected and fixing a period at
the end of which the information will be disclosed. That period shall not be
less than one month.
10.
The Commission shall take due account of the legitimate interest of
undertakings in the protection of their business secrets. If an undertaking or
association of undertakings providing information pursuant to Article 6a so
requests, on grounds of potential damage, its identity shall be withheld from
the Member State concerned.";
(4)        Article
10 is amended as follows:
Paragraphs 1 and 2 are replaced by the following: 
"1. Without prejudice to Article 20, the
Commission may on its own initiative examine information from whatever source
regarding alleged unlawful aid.
The Commission
shall examine without undue delay any complaint submitted by any interested party in accordance with
Article 20(2).
2. If necessary, the Commission shall request
information from the Member State concerned. Article 2(2) and Article 5(1) and
(2) shall apply mutatis mutandis. 
After the initiation of the formal investigation procedure,
the Commission may also request information from other sources. The provisions
of Article 6a and 6b shall apply mutatis mutandis.";
(5)        The following chapter heading is inserted
after Article 14:
"Chapter
IIIa 
Limitation
periods";
(6)        The
title of Article 15 is replaced by the following: 
"Limitation period for the recovery of aid";
(7)        The
following Articles 15a and 15b are inserted:
"Article 15a
Limitation period for the imposition of fines and
periodic penalty payments
1.
The powers conferred on the Commission by Article 6b shall be subject to a
limitation period of three years. 
2.
Time shall start running on the day on which the infringement is committed. However,
in the case of continuing or repeated infringements, time shall begin to run on
the day on which the infringement ceases.
3.
Any action taken by the Commission for the purpose of the investigation or
proceedings in respect of an infringement shall interrupt the limitation period
for the imposition of fines or periodic penalty payments, with effect from the
date on which the action is notified to the undertaking or association of
undertakings concerned.
4.
Each interruption shall start time running afresh. However, the limitation
period shall expire at the latest on the day on which a period equal to twice
the limitation period has elapsed without the Commission having imposed a fine
or a periodic penalty payment. That period shall be extended by the time during
which the limitation period is suspended in accordance with paragraph 5.
5.
The limitation period for the imposition of fines or periodic penalty payments
shall be suspended for as long as the decision of the Commission is the subject
of proceedings pending before the Court of Justice.
Article 15b
Limitation periods for the enforcement of fines and
periodic penalty payments
1.
The powers of the Commission to enforce decisions taken pursuant to Article 6b
shall be subject to a limitation period of five years. 
2.
Time shall start running on the day on which the decision becomes final.
3.
The limitation period for the enforcement of fines or periodic penalty payments
shall be interrupted:
(a)
by notification of a decision varying the original amount of the fine or
periodic penalty payment or refusing an application for variation;
(b)
by any action of the Commission or of a Member State, acting at the request of
the Commission, intended to enforce payment of the fine or periodic penalty
payment.
4.
Each interruption shall start time running afresh.
5.
The limitation period for the enforcement of fines or periodic penalty payments
shall be suspended for so long as:
(a)
time to pay is allowed;
(b)
enforcement of payment is suspended pursuant to a decision of the Court of
Justice.";
(8)        Article 16 is replaced by the following:
"Article 16
Misuse of aid
Without prejudice to Article 23, the Commission may in
cases of misuse of aid open the formal investigation procedure pursuant to
Article 4(4). Articles 6, 6a and 6b, Article 7(1) to (5), Articles 9 and 10,
Article 11(1) and Articles 12 to 15 shall apply mutatis mutandis." ;

(9)        In Article 20, paragraph 2 is replaced by the following:
"2. Any interested party may submit a
complaint to inform the Commission of any alleged unlawful aid and any alleged
misuse of aid. To that effect, the interested party shall duly complete a form
that the Commission should be empowered to define in an implementing provision
and provide all the mandatory information requested in it.
Where the Commission considers that the facts and points of law put forward by the interested party do
not provide sufficient grounds to show, on the basis of a first examination,
the existence of unlawful aid or misuse of aid, it shall inform the interested party thereof and call upon it to
submit comments within a prescribed period which shall not normally exceed one
month. If the interested party fails to make known its
views within the prescribed period, the complaint shall be deemed to have been
withdrawn. 
The Commission shall send a copy of the
decision on a case concerning the subject matter of the complaint to the
interested party.";
(10)      The following Chapter VIa is inserted after Article
20: 
"Chapter VIa 
Investigations
into sectors of the economy and into aid instruments
Article
20a
Investigations
into sectors of the economy and into aid instruments
1. Where the information available suggests
that State aid measures in a particular sector or based
on a particular aid instrument may restrict or distort
competition within the internal market in several Member States, or that existing aid measures in a particular sector or based on a
particular aid instrument in several Member States are not, or no longer,
compatible with the internal market, the Commission may
conduct its inquiry into the sector of the economy or the use of the aid
instrument concerned across various Member States. In the course of that
inquiry, the Commission may request the Member States, or the undertakings or associations of undertakings concerned to supply the
necessary information for the application of Articles 107 and 108 of the
Treaty, taking due account of the principle of proportionality. 
The Commission may publish a report on the
results of its inquiry into particular sectors of the economy or particular aid
instruments across various Member States and invite the Member States and any
undertakings or associations of undertakings concerned to submit comments.
2. Articles 5, 6a and 6b shall apply mutatis
mutandis.";
(11) The following Chapter VIIa is inserted after Article 23: 
" Chapter VIIa 
Cooperation
with national courts
Article23a
Cooperation with national courts
1. For the application of Article 107(1) and Article 108 of the
Treaty, the courts of the Member States may ask the Commission to transmit to
them information in its possession or its opinion on questions concerning the
application of State aid rules.
2. Where the coherent application of Article 107(1) and Article 108
of the Treaty so requires, the Commission, acting on its own initiative, may
submit written observations to courts of the Member States. With the permission
of the court in question, it may also make oral observations.
For the purpose of the preparation of its observations only, the
Commission may request the relevant court of the Member State to transmit or
ensure the transmission to it of any documents necessary for the assessment of
the case."; 
(12)      Article 25 is replaced by the
following:
"Article
25
Addressee of decisions
1.
Decisions taken pursuant to Article 6a(4) and Article 6b(1) and (2) and Article 7(9) shall be addressed to the undertaking or
association of undertakings concerned. The Commission shall notify them to the addressee
without delay and give the addressee the opportunity to indicate to the
Commission which information it considers to be covered by the obligation of
professional secrecy.
2.
All other decisions taken pursuant to Chapters II, III, IV, V and VII shall be
addressed to the Member State concerned. The Commission shall notify them to
the Member State concerned without delay and give that Member State the
opportunity to indicate to the Commission which information it considers to be
covered by the obligation of professional secrecy.";
(13)      In
Article 26, the following paragraph 2a is inserted :
"2a.
The Commission shall publish in the Official Journal of the European Union
the decisions which it takes pursuant to Article 6b(1) and (2).";
(14)      Article 27 is replaced by the following:
"Article
27
Implementing provisions
The Commission, acting in accordance with the procedure laid down in
Article 29, shall have the power to adopt implementing provisions concerning:
(a) the form, content and other details of
notifications, 
(b) the form, content and other details of
annual reports,
(c) the form, content and other details of
complaints submitted in accordance with Article 10(1) and Article 20(2),
(d) details of time-limits and the
calculation of time-limits, 
(e) the interest rate referred to in Article
14(2)."
Article 2
This Regulation shall enter into force on
the on the twentieth day following that of its publication in the Official
Journal of the European Union.
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels, 
                                                                       For
the Council
                                                                       The
President
LEGISLATIVE FINANCIAL STATEMENT
This proposal for an
amendment has no impact on the EU budget. 
[1]               Council
Regulation (EC) N° 659/1999 of 22 March 1999 laying down detailed rules for the
application Article 93 of the EC Treaty, OJ L 83, 27.3.1999, p. 1.
[2]               Communication from the Commission to the European
Parliament, the Council, the European Economic and Social Committee and the
Committee of the Regions, EU State Aid Modernisation
(SAM), 8.05.2012, COM(2012)
209 final.
[3]               Communication from the Commission, Europe 2020: A
strategy for smart, sustainable and inclusive growth, 3.3.2010, COM(2010)
2020 final.
[4]               Paragraph 23b, Communication "EU State Aid Modernisation (SAM)",
cited above in footnote 2.
[5]               European Court of Auditors, "Do the
Commission’s procedures ensure effective management of State aid control?",
Special Report n°15, 15.12.2011: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SRCA:2011:15:FIN:EN:PDF
[6]               Council of the European Union, Conclusions on Special
report n°15/2011 by the European Court of Auditors: "Do the
Commission’s procedures ensure effective management of State aid control?"-
Adoption, 2.5.2012, 9149/12.
[7]               European Parliament, Resolution on the Court of
Auditors‘ special reports in the context of the 2010 Commission discharge,
10.5.2012, Paragraphs 116 to 125, 2011/2225(DEC).
[8]               Paragraph 23b, Communication "EU State Aid Modernisation (SAM)",
cited above in footnote 2.
[9]               Within the meaning of Article 108(2) TFEU and Article
1(h) of the Procedural Regulation.
[10]             As of 31 March 2012, the average duration of pending
complaint cases in DG COMP was 17 months. 
[11]             Communication from the Commission, Best Practices
Code for the conduct of State aid procedures, OJ C 136, 16.06.2009, p. 13.
[12]             Council Regulation (EC) No 1/2003 of 16 December 2002 on
the implementation of the rules on competition laid down in Articles 81 and 82
of the Treaty, OJ L 1, 4.1.2003, p. 1.
[13]             Commission Regulation (EC) No 773/2004 of 7 April 2004 relating
to the conduct of proceedings by the Commission pursuant to Articles 81 and 82
of the EC Treaty, OJ L 123, 27.4.2004, p.18.
[14]             Case T-442/07 Ryanair v Commission [2011], not yet
published, paragraph 33.
[15]             See Case 323/82 Intermills v Commission [1984] ECR
3809, paragraph 16.
[16]             Article 1(h) of Council Regulation 659/99: "‘interested
party’ shall mean any Member State and any person, undertaking or association
of undertakings whose interests might be affected by the granting of aid, in
particular the beneficiary of the aid, competing undertakings and trade
associations."
[17]             Communication from the Commission, Best Practices
Code for the conduct of State aid procedures, cited
above footnote 11.
[18]             Commission notice on the enforcement of State aid
law by national courts, OJ C 85, 09.04.2009, p. 1.
[19]             Point 34, Communication from the Commission, Best
Practices Code for the conduct of State aid procedures, cited above footnote 11.
[20]             Case 84/82 Germany v Commission [1984] ECR 1451; Case
T-198/01 Technische Glaswerke Ilmenau v Commission [2004] ECR II-2717; Case
T-73/98 Prayon-Rupel v Commission [2001] ECR II-867; Case T-304/08 Smurfit
Kappa v Commission [2012], not yet published;.
[21]             Articles 13 and 14, Council Regulation (EC) No 139/2004
of 20 January 2004 on the control of concentrations between undertakings (the
EC Merger Regulation), OJ L 24, 29.01.2004, p. 1. 
[22]             Articles 22 and 23, Council Regulation (EC) No 1/2003
of 16 December 2002 on the implementation of the rules on competition laid down
in Articles 81 and 82 of the Treaty, OJ L 1, 04.01.2003, p. 1.
[23]             Articles 25 and 26, Council Regulation (EC) No 1/2003
of 16 December 2002 cited above footnote 22.
[24]             According to the data published in the latest State aid
Scoreboard (SEC(2011) 1487 final), in 2010 88.5% of the total amount of aid granted
by Member States was done through approved schemes or blocked-exempted
measures. Moreover, 100% of the aid for the horizontal objective SMEs was
granted through schemes or block exempted measures. 
[25]             Special report n°15/2011, European Court of Auditors,
p. 41, cited above footnote 5.
[26]             OJ C […], […], p.
[27]             Communication from the Commission, Europe 2020: A
strategy for smart, sustainable and inclusive growth, 3.3.2010, COM(2010)
2020 final.