Article 1 Definitions
For the purpose of this Regulation: (a) ‘aid’ shall mean any measure fulfilling all the criteria laid down in Article 92(1) of the Treaty; (b) ‘existing aid’ shall mean: (i) without prejudice to Articles 144 and 172 of the Act of Accession of Austria, Finland and Sweden, to Annex IV, point 3 and the Appendix to said Annex of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, and to Annex V, point 2 and 3(b) and the Appendix to said Annex of the Act of Accession of Bulgaria and Romania, all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the Treaty; (ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council; (iii) aid which is deemed to have been authorised pursuant to Article 4(6) of this Regulation or prior to this Regulation but in accordance with this procedure; (iv) aid which is deemed to be existing aid pursuant to Article 15; (v) aid which is deemed to be an existing aid because it can be established that at the time it was put into effect it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without having been altered by the Member State. Where certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation; (b) ‘existing aid’ shall mean: (i) without prejudice to Articles 144 and 172 of the Act of Accession of Austria, Finland and Sweden, to Annex IV, point 3 and the Appendix to said Annex of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, and to Annex V, point 2 and 3(b) and the Appendix to said Annex of the Act of Accession of Bulgaria and Romania, all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the Treaty; (ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council; (iii) aid which is deemed to have been authorised pursuant to Article 4(6) of this Regulation or prior to this Regulation but in accordance with this procedure; (iv) aid which is deemed to be existing aid pursuant to Article 15; (v) aid which is deemed to be an existing aid because it can be established that at the time it was put into effect it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without having been altered by the Member State. Where certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation; (c) ‘new aid’ shall mean all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid; (d) ‘aid scheme’ shall mean any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be awarded to one or several undertakings for an indefinite period of time and/or for an indefinite amount; (e) ‘individual aid’ shall mean aid that is not awarded on the basis of an aid scheme and notifiable awards of aid on the basis of an aid scheme; (f) ‘unlawful aid’ shall mean new aid put into effect in contravention of Article 93(3) of the Treaty; (g) ‘misuse of aid’ shall mean aid used by the beneficiary in contravention of a decision taken pursuant to Article 4(3) or Article 7(3) or (4) of this Regulation; (h) ‘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.
Amendment rationale: 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.
Revised version (Article 1 Definitions):
For the purpose of this Regulation: (a) ‘aid’ shall mean any measure fulfilling all the criteria laid down in Article 92(1) of the Treaty; (b) ‘existing aid’ shall mean: (i) without prejudice to Articles 144 and 172 of the Act of Accession of Austria, Finland and Sweden, to Annex IV, point 3 and the Appendix to said Annex of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, to Annex V, point 2 and 3(b) and the Appendix to said Annex of the Act of Accession of Bulgaria and Romania, and to Annex IV, points 2 and 3(b) and the Appendix to said Annex of the Act of Accession of Croatia, all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the Treaty; (ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council; (iii) aid which is deemed to have been authorised pursuant to Article 4(6) of this Regulation or prior to this Regulation but in accordance with this procedure; (iv) aid which is deemed to be existing aid pursuant to Article 15; (v) aid which is deemed to be an existing aid because it can be established that at the time it was put into effect it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without having been altered by the Member State. Where certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation; (b) ‘existing aid’ shall mean: (i) without prejudice to Articles 144 and 172 of the Act of Accession of Austria, Finland and Sweden, to Annex IV, point 3 and the Appendix to said Annex of the Act of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, to Annex V, point 2 and 3(b) and the Appendix to said Annex of the Act of Accession of Bulgaria and Romania, and to Annex IV, points 2 and 3(b) and the Appendix to said Annex of the Act of Accession of Croatia, all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the Treaty; (ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council; (iii) aid which is deemed to have been authorised pursuant to Article 4(6) of this Regulation or prior to this Regulation but in accordance with this procedure; (iv) aid which is deemed to be existing aid pursuant to Article 15; (v) aid which is deemed to be an existing aid because it can be established that at the time it was put into effect it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without having been altered by the Member State. Where certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation; (c) ‘new aid’ shall mean all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid; (d) ‘aid scheme’ shall mean any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be awarded to one or several undertakings for an indefinite period of time and/or for an indefinite amount; (e) ‘individual aid’ shall mean aid that is not awarded on the basis of an aid scheme and notifiable awards of aid on the basis of an aid scheme; (f) ‘unlawful aid’ shall mean new aid put into effect in contravention of Article 93(3) of the Treaty; (g) ‘misuse of aid’ shall mean aid used by the beneficiary in contravention of a decision taken pursuant to Article 4(3) or Article 7(3) or (4) of this Regulation; (h) ‘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.
Article 2 Notification of new aid
1. Save as otherwise provided in regulations made pursuant to Article 94 of the Treaty or to other relevant provisions thereof, any plans to grant new aid shall be notified to the Commission in sufficient time by the Member State concerned. The Commission shall inform the Member State concerned without delay of the receipt of a notification. 2. In a notification, the Member State concerned shall provide all necessary information in order to enable the Commission to take a decision pursuant to Articles 4 and 7 (hereinafter referred to as ‘complete notification’).
Article 3 Standstill clause
Aid notifiable pursuant to Article 2(1) shall not be put into effect before the Commission has taken, or is deemed to have taken, a decision authorising such aid.
Article 4 Preliminary examination of the notification and decisions of the Commission
1. The Commission shall examine the notification as soon as it is received. Without prejudice to Article 8, the Commission shall take a decision pursuant to paragraphs 2, 3 or 4. 2. Where the Commission, after a preliminary examination, finds that the notified measure does not constitute aid, it shall record that finding by way of a decision. 3. Where the Commission, after a preliminary examination, finds that no doubts are raised as to the compatibility with the common market of a notified measure, in so far as it falls within the scope of Article 92(1) of the Treaty, it shall decide that the measure is compatible with the common market (hereinafter referred to as a ‘decision not to raise objections’). The decision shall specify which exception under the Treaty has been applied. 4. Where the Commission, after a preliminary examination, finds that doubts are raised as to the compatibility with the common market of a notified measure, it shall decide to initiate proceedings pursuant to Article 93(2) of the Treaty (hereinafter referred to as a ‘decision to initiate the formal investigation procedure’). 5. The decisions referred to in paragraphs 2, 3 and 4 shall be taken within two months. That period shall begin on the day following the receipt of a complete notification. The notification will be considered as complete if, within two months from its receipt, or from the receipt of any additional information requested, the Commission does not request any further information. The period can be extended with the consent of both the Commission and the Member State concerned. Where appropriate, the Commission may fix shorter time limits. 6. Where the Commission has not taken a decision in accordance with paragraphs 2, 3 or 4 within the period laid down in paragraph 5, the aid shall be deemed to have been authorised by the Commission. The Member State concerned may thereupon implement the measures in question after giving the Commission prior notice thereof, unless the Commission takes a decision pursuant to this Article within a period of 15 working days following receipt of the notice.
Article 5 Request for information
1. Where the Commission considers that information provided by the Member State concerned with regard to a measure notified pursuant to Article 2 is incomplete, it shall request all necessary additional information. Where a Member State responds to such a request, the Commission shall inform the Member State of the receipt of the response. 2. Where the Member State concerned does not provide the information requested within the period prescribed by the Commission or provides incomplete information, the Commission shall send a reminder, allowing an appropriate additional period within which the information shall be provided. 3. The notification shall be deemed to be withdrawn if the requested information is not provided within the prescribed period, unless before the expiry of that period, either the period has been extended with the consent of both the Commission and the Member State concerned, or the Member State concerned, in a duly reasoned statement, informs the Commission that it considers the notification to be complete because the additional information requested is not available or has already been provided. In that case, the period referred to in Article 4(5) shall begin on the day following receipt of the statement. If the notification is deemed to be withdrawn, the Commission shall inform the Member State thereof.
Article 6 Formal investigation procedure
1. The decision to initiate the formal investigation procedure shall summarise the relevant issues of fact and law, shall include a preliminary assessment of the Commission as to the aid character of the proposed measure and shall set out the doubts as to its compatibility with the common market. The decision shall call upon the Member State concerned and upon other interested parties to submit comments within a prescribed period which shall normally not exceed one month. In duly justified cases, the Commission may extend the prescribed period. 2. The comments received shall be submitted to the Member State concerned. If an interested party so requests, on grounds of potential damage, its identity shall be withheld from the Member State concerned. The Member State concerned may reply to the comments submitted within a prescribed period which shall normally not exceed one month. In duly justified cases, the Commission may extend the prescribed period.
Article 7 Decisions of the Commission to close the formal investigation procedure
1. Without prejudice to Article 8, the formal investigation procedure shall be closed by means of a decision as provided for in paragraphs 2 to 5 of this Article. 2. Where the Commission finds that, where appropriate following modification by the Member State concerned, the notified measure does not constitute aid, it shall record that finding by way of a decision. 3. Where the Commission finds that, where appropriate following modification by the Member State concerned, the doubts as to the compatibility of the notified measure with the common market have been removed, it shall decide that the aid is compatible with the common market (hereinafter referred to as a ‘positive decision’). That decision shall specify which exception under the Treaty has been applied. 4. The Commission may attach to a positive decision conditions subject to which an aid may be considered compatible with the common market and may lay down obligations to enable compliance with the decision to be monitored (hereinafter referred to as a ‘conditional decision’). 5. Where the Commission finds that the notified aid is not compatible with the common market, it shall decide that the aid shall not be put into effect (hereinafter referred to as a ‘negative decision’). 6. Decisions taken pursuant to paragraphs 2, 3, 4 and 5 shall be taken as soon as the doubts referred to in Article 4(4) have been removed. The Commission shall as far as possible endeavour to adopt a decision within a period of 18 months from the opening of the procedure. This time limit may be extended by common agreement between the Commission and the Member State concerned. 7. Once the time limit referred to in paragraph 6 has expired, and should the Member State concerned so request, the Commission shall, within two months, take a decision on the basis of the information available to it. If appropriate, where the information provided is not sufficient to establish compatibility, the Commission shall take a negative decision.
Amendment rationale: 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.
Revised version (Article 7 Decisions of the Commission to close the formal investigation procedure):
1. Without prejudice to Article 8, the formal investigation procedure shall be closed by means of a decision as provided for in paragraphs 2 to 5 of this Article. 2. Where the Commission finds that, where appropriate following modification by the Member State concerned, the notified measure does not constitute aid, it shall record that finding by way of a decision. 3. Where the Commission finds that, where appropriate following modification by the Member State concerned, the doubts as to the compatibility of the notified measure with the common market have been removed, it shall decide that the aid is compatible with the common market (hereinafter referred to as a ‘positive decision’). That decision shall specify which exception under the Treaty has been applied. 4. The Commission may attach to a positive decision conditions subject to which an aid may be considered compatible with the common market and may lay down obligations to enable compliance with the decision to be monitored (hereinafter referred to as a ‘conditional decision’). 5. Where the Commission finds that the notified aid is not compatible with the common market, it shall decide that the aid shall not be put into effect (hereinafter referred to as a ‘negative decision’). 6. Decisions taken pursuant to paragraphs 2, 3, 4 and 5 shall be taken as soon as the doubts referred to in Article 4(4) have been removed. The Commission shall as far as possible endeavour to adopt a decision within a period of 18 months from the opening of the procedure. This time limit may be extended by common agreement between the Commission and the Member State concerned. 7. Once the time limit referred to in paragraph 6 has expired, and should the Member State concerned so request, the Commission shall, within two months, take a decision on the basis of the information available to it. If appropriate, where the information provided is not sufficient to establish compatibility, the Commission shall take a negative decision. 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, within a time-limit that shall not normally exceed one month, on the information received by the Commission and provided to the Member State concerned pursuant to Article 6a(3). 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 provided by a respondent and marked as confidential is not protected, and setting a date after 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 interests of undertakings in the protection of their business secrets and other confidential information. An undertaking or an association of undertakings providing information pursuant to Article 6a, and which is not a beneficiary of the State aid measure in question„ may request, on grounds of potential damage, that its identity be withheld from the Member State concerned.
Article 8 Withdrawal of notification
1. The Member State concerned may withdraw the notification within the meaning of Article 2 in due time before the Commission has taken a decision pursuant to Article 4 or 7. 2. In cases where the Commission initiated the formal investigation procedure, the Commission shall close that procedure.
Article 9 Revocation of a decision
The Commission may revoke a decision taken pursuant to Article 4(2) or (3), or Article 7(2), (3), (4), after having given the Member State concerned the opportunity to submit its comments, where the decision was based on incorrect information provided during the procedure which was a determining factor for the decision. Before revoking a decision and taking a new decision, the Commission shall open the formal investigation procedure pursuant to Article 4(4). Articles 6, 7 and 10, Article 11(1), Articles 13, 14 and 15 shall apply mutatis mutandis .
Article 10 Examination, request for information and information injunction
1. Where the Commission has in its possession information from whatever source regarding alleged unlawful aid, it shall examine that information without delay. 2. If necessary, it shall request information from the Member State concerned. Article 2(2) and Article 5(1) and (2) shall apply mutatis mutandis . 3. Where, despite a reminder pursuant to Article 5(2), the Member State concerned does not provide the information requested within the period prescribed by the Commission, or where it provides incomplete information, the Commission shall by decision require the information to be provided (hereinafter referred to as an ‘information injunction’). The decision shall specify what information is required and prescribe an appropriate period within which it is to be supplied.
Amendment rationale: 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.
Revised version (Article 10 Examination, request for information and information injunction):
1. Without prejudice to Article 20, the Commission may on its own initiative examine information regarding alleged unlawful aid from whatever source. The Commission shall examine without undue delay any complaint submitted by any interested party in accordance with Article 20(2) and shall ensure that the Member State concerned is kept fully and regularly informed of the progress and outcome of the examination. 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 any other Member State, from an undertaking, or association of undertakings in accordance with Article 6a and 6b, which shall apply mutatis mutandis . 3. Where, despite a reminder pursuant to Article 5(2), the Member State concerned does not provide the information requested within the period prescribed by the Commission, or where it provides incomplete information, the Commission shall by decision require the information to be provided (hereinafter referred to as an ‘information injunction’). The decision shall specify what information is required and prescribe an appropriate period within which it is to be supplied.
Article 11 Injunction to suspend or provisionally recover aid
1. The Commission may, after giving the Member State concerned the opportunity to submit its comments, adopt a decision requiring the Member State to suspend any unlawful aid until the Commission has taken a decision on the compatibility of the aid with the common market (hereinafter referred to as a ‘suspension injunction’). 2. The Commission may, after giving the Member State concerned the opportunity to submit its comments, adopt a decision requiring the Member State provisionally to recover any unlawful aid until the Commission has taken a decision on the compatibility of the aid with the common market (hereinafter referred to as a ‘recovery injunction’), if the following criteria are fulfilled: — according to an established practice there are no doubts about the aid character of the measure concerned — and — according to an established practice there are no doubts about the aid character of the measure concerned — and — there is an urgency to act — and — there is an urgency to act — there is a serious risk of substantial and irreparable damage to a competitor. Recovery shall be effected in accordance with the procedure set out in Article 14(2) and (3). After the aid has been effectively recovered, the Commission shall take a decision within the time limits applicable to notified aid. The Commission may authorise the Member State to couple the refunding of the aid with the payment of rescue aid to the firm concerned. The provisions of this paragraph shall be applicable only to unlawful aid implemented after the entry into force of this Regulation.
Article 12 Non-compliance with an injunction decision
If the Member State fails to comply with a suspension injunction or a recovery injunction, the Commission shall be entitled, while carrying out the examination on the substance of the matter on the basis of the information available, to refer the matter to the Court of Justice of the European Communities direct and apply for a declaration that the failure to comply constitutes an infringement of the Treaty.
Article 13 Decisions of the Commission
1. The examination of possible unlawful aid shall result in a decision pursuant to Article 4(2), (3) or (4). In the case of decisions to initiate the formal investigation procedure, proceedings shall be closed by means of a decision pursuant to Article 7. If a Member State fails to comply with an information injunction, that decision shall be taken on the basis of the information available. 2. In cases of possible unlawful aid and without prejudice to Article 11(2), the Commission shall not be bound by the time-limit set out in Articles 4(5), 7(6) and 7(7). 3. Article 9 shall apply mutatis mutandis .
Article 14 Recovery of aid
1. Where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary (hereinafter referred to as a ‘recovery decision’). The Commission shall not require recovery of the aid if this would be contrary to a general principle of Community law. 2. The aid to be recovered pursuant to a recovery decision shall include interest at an appropriate rate fixed by the Commission. Interest shall be payable from the date on which the unlawful aid was at the disposal of the beneficiary until the date of its recovery. 3. Without prejudice to any order of the Court of Justice of the European Communities pursuant to Article 185 of the Treaty, recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission's decision. To this effect and in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available in their respective legal systems, including provisional measures, without prejudice to Community law.
Article 15 Limitation period
1. The powers of the Commission to recover aid shall be subject to a limitation period of ten years. 2. The limitation period shall begin on the day on which the unlawful aid is awarded to the beneficiary either as individual aid or as aid under an aid scheme. Any action taken by the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid shall interrupt the limitation period. Each interruption shall start time running afresh. The limitation period shall be suspended for as long as the decision of the Commission is the subject of proceedings pending before the Court of Justice of the European Communities. 3. Any aid with regard to which the limitation period has expired, shall be deemed to be existing aid.
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, 7, 9 and 10, Article 11(1), Articles 12, 13, 14 and 15 shall apply mutatis mutandis .
Amendment rationale: 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.
Revised version (Article 16 Misuse of aid):
Without prejudice to Article 23, the Commission may, in cases of misuse of aid, initiate the formal investigation procedure pursuant to Article 4(4). Articles 6, 6a, 6b, 7, 9 and 10, Article 11(1) and Articles 12 to 15 shall apply mutatis mutandis .
Article 17 Cooperation pursuant to Article 93(1) of the Treaty
1. The Commission shall obtain from the Member State concerned all necessary information for the review, in cooperation with the Member State, of existing aid schemes pursuant to Article 93(1) of the Treaty. 2. Where the Commission considers that an existing aid scheme is not, or is no longer, compatible with the common market, it shall inform the Member State concerned of its preliminary view and give the Member State concerned the opportunity to submit its comments within a period of one month. In duly justified cases, the Commission may extend this period.
Article 18 Proposal for appropriate measures
Where the Commission, in the light of the information submitted by the Member State pursuant to Article 17, concludes that the existing aid scheme is not, or is no longer, compatible with the common market, it shall issue a recommendation proposing appropriate measures to the Member State concerned. The recommendation may propose, in particular: (a) substantive amendment of the aid scheme, or (a) substantive amendment of the aid scheme, (b) introduction of procedural requirements, or (b) introduction of procedural requirements, (c) abolition of the aid scheme.
Article 19 Legal consequences of a proposal for appropriate measures
1. Where the Member State concerned accepts the proposed measures and informs the Commission thereof, the Commission shall record that finding and inform the Member State thereof. The Member State shall be bound by its acceptance to implement the appropriate measures. 2. Where the Member State concerned does not accept the proposed measures and the Commission, having taken into account the arguments of the Member State concerned, still considers that those measures are necessary, it shall initiate proceedings pursuant to Article 4(4). Articles 6, 7 and 9 shall apply mutatis mutandis .
Article 20 Rights of interested parties
1. Any interested party may submit comments pursuant to Article 6 following a Commission decision to initiate the formal investigation procedure. Any interested party which has submitted such comments and any beneficiary of individual aid shall be sent a copy of the decision taken by the Commission pursuant to Article 7. 2. Any interested party may inform the Commission of any alleged unlawful aid and any alleged misuse of aid. Where the Commission considers that on the basis of the information in its possession there are insufficient grounds for taking a view on the case, it shall inform the interested party thereof. Where the Commission takes a decision on a case concerning the subject matter of the information supplied, it shall send a copy of that decision to the interested party. 3. At its request, any interested party shall obtain a copy of any decision pursuant to Articles 4 and 7, Article 10(3) and Article 11.
Amendment rationale: 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.
Revised version (Article 20 Rights of interested parties):
1. Any interested party may submit comments pursuant to Article 6 following a Commission decision to initiate the formal investigation procedure. Any interested party which has submitted such comments and any beneficiary of individual aid shall be sent a copy of the decision taken by the Commission pursuant to Article 7. 2. Any interested party may submit a complaint to inform the Commission of any alleged unlawful aid or any alleged misuse of aid. To that effect, the interested party shall duly complete a form that has been defined in an implementing provision referred to in Article 27 and shall provide the mandatory information requested therein. Where the Commission considers that the interested party does not comply with the compulsory complaint form, or 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 prima facie 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 inform the Member State concerned when a complaint has been 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 complainant. 3. At its request, any interested party shall obtain a copy of any decision pursuant to Articles 4 and 7, Article 10(3) and Article 11.
Article 21 Annual reports
1. Member States shall submit to the Commission annual reports on all existing aid schemes with regard to which no specific reporting obligations have been imposed in a conditional decision pursuant to Article 7(4). 2. Where, despite a reminder, the Member State concerned fails to submit an annual report, the Commission may proceed in accordance with Article 18 with regard to the aid scheme concerned.
Article 22 On-site monitoring
1. Where the Commission has serious doubts as to whether decisions not to raise objections, positive decisions or conditional decisions with regard to individual aid are being complied with, the Member State concerned, after having been given the opportunity to submit its comments, shall allow the Commission to undertake on-site monitoring visits. 2. The officials authorised by the Commission shall be empowered, in order to verify compliance with the decision concerned: (a) to enter any premises and land of the undertaking concerned; (b) to ask for oral explanations on the spot; (c) to examine books and other business records and take, or demand, copies. The Commission may be assisted if necessary by independent experts. 3. The Commission shall inform the Member State concerned, in good time and in writing, of the on-site monitoring visit and of the identities of the authorised officials and experts. If the Member State has duly justified objections to the Commission's choice of experts, the experts shall be appointed in common agreement with the Member State. The officials of the Commission and the experts authorised to carry out the on-site monitoring shall produce an authorisation in writing specifying the subject-matter and purpose of the visit. 4. Officials authorised by the Member State in whose territory the monitoring visit is to be made may be present at the monitoring visit. 5. The Commission shall provide the Member State with a copy of any report produced as a result of the monitoring visit. 6. Where an undertaking opposes a monitoring visit ordered by a Commission decision pursuant to this Article, the Member State concerned shall afford the necessary assistance to the officials and experts authorised by the Commission to enable them to carry out the monitoring visit. To this end the Member States shall, after consulting the Commission, take the necessary measures within eighteen months after the entry into force of this Regulation.
Article 23 Non-compliance with decisions and judgments
1. Where the Member State concerned does not comply with conditional or negative decisions, in particular in cases referred to in Article 14, the Commission may refer the matter to the Court of Justice of the European Communities direct in accordance with Article 93(2) of the Treaty. 2. If the Commission considers that the Member State concerned has not complied with a judgment of the Court of Justice of the European Communities, the Commission may pursue the matter in accordance with Article 171 of the Treaty.
Article 24 Professional secrecy
The Commission and the Member States, their officials and other servants, including independent experts appointed by the Commission, shall not disclose information which they have acquired through the application of this Regulation and which is covered by the obligation of professional secrecy.