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name: commission implementing decision (eu) 2016/1360 of 8 august 2016 terminating the anti-subsidy proceeding concerning imports of european sea bass and gilthead sea bream originating in turkey type: decision_impl subject matter: international trade; fisheries; competition; trade; europe; foodstuff date published: 2016-08-10 10.8.2016 en official journal of the european union l 215/31 commission implementing decision (eu) 2016/1360 of 8 august 2016 terminating the anti-subsidy proceeding concerning imports of european sea bass and gilthead sea bream originating in turkey the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) 2016/1037 of the european parliament and of the council of 8 june 2016 on protection against subsidised imports from countries not members of the european union (1), and in particular article 14 thereof, whereas: a. procedure initiation (1) on 14 august 2015, the european commission (the commission) initiated an anti-subsidy investigation with regard to imports into the union of european sea bass and gilthead sea bream originating in turkey on the basis of article 10 of regulation (eu) 2016/1037 (the basic regulation) by a notice published in the official journal of the european union (2) (the notice of initiation). (2) the investigation was initiated following a complaint lodged on 1 july 2015 by asociaci n empresarial de productores de cultivos marinos (apromar or the complainant) on behalf of producers representing more than 25 % of the total union production of european sea bass and gilthead sea bream. (3) the complaint contained prima facie evidence of subsidisation of the turkish industry producing european sea bass and gilthead sea bream and of material injury caused by it. (4) in accordance with article 10(7) of the basic regulation, the commission notified the government of turkey (got) prior to the initiation of the proceeding that it had received a properly documented complaint alleging that subsidised imports of european sea bass and gilthead sea bream originating in turkey were causing material injury to the union industry. the commission invited the got for consultations with the aim of clarifying the situation as regards the contents of the complaint and arriving at a mutually agreed solution. (5) the got accepted the offer of consultations which were subsequently held. during the consultations no mutually agreed solution was reached. however, the commission took due note of comments made by the got. (6) the commission invited the complainant, other known union producers, users and importers, known exporting producers in turkey and the turkish authorities as well as associations known to be affected by the initiation of the investigation to participate. interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation. (7) the complainant, other union producers, the exporting producers in turkey, importers and traders made their views known. all interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing. b. withdrawal of the complaint and termination of the proceeding (8) on 5 may 2016 a decree was published in the turkish official gazette, by which the turkish authorities withdrew the main subsidy scheme with the effect of 1 january 2016. (9) by letter of 1 june 2016 addressed to the commission, the complainant withdrew its complaint. in accordance with article 14 of the basic regulation, a proceeding may be terminated when the complaint is withdrawn, unless such termination would not be in the union interest. (10) the investigation has not brought to light any considerations showing that such termination would not be in the union interest. therefore, the commission considers that the present proceeding should be terminated. (11) interested parties were informed accordingly and were given an opportunity to comment. however, no comments were received. (12) the commission therefore concludes that the anti-subsidy proceeding concerning imports of european sea bass and gilthead sea bream originating in turkey should be terminated without the imposition of measures. (13) this decision is in accordance with the opinion of the committee established by article 15(1) of regulation (eu) 2016/1036 of the european parliament and of the council (3), has adopted this decision: article 1 the anti-subsidy proceeding concerning imports into the union of european sea bass and gilthead sea bream originating in turkey and currently falling under cn codes 0302 84 10, 0302 85 30, 0303 84 10, 0303 89 55, ex 0304 49 90 and ex 0304 89 90 is hereby terminated. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 8 august 2016. for the commission the president jean-claude juncker (1) oj l 176, 30.6.2016, p. 55. (2) notice of initiation of an anti-subsidy proceeding concerning imports of european sea bass and gilthead sea bream originating in turkey (oj c 266, 14.8.2015, p. 4). (3) regulation (eu) 2016/1036 of the european parliament and of the council of 8 june 2016 on protection against dumped imports from countries not members of the european union (oj l 176, 30.6.2016, p. 21).

name: commission implementing decision (eu) 2016/1344 of 4 august 2016 authorising the placing on the market of organic silicon (monomethylsilanetriol) as a novel food ingredient under regulation (ec) no 258/97 of the european parliament and of the council (notified under document c(2016) 4975) type: decision_impl subject matter: foodstuff; iron, steel and other metal industries; health; marketing date published: 2016-08-06 6.8.2016 en official journal of the european union l 213/12 commission implementing decision (eu) 2016/1344 of 4 august 2016 authorising the placing on the market of organic silicon (monomethylsilanetriol) as a novel food ingredient under regulation (ec) no 258/97 of the european parliament and of the council (notified under document c(2016) 4975) (only the english text is authentic) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (ec) no 258/97 of the european parliament and of the council of 27 january 1997 concerning novel foods and novel food ingredients (1), and in particular article 7 thereof, whereas: (1) on 27 march 2013, the company llr-g5 ltd made a request to the competent authorities of ireland to place organic silicon (monomethylsilanetriol) on the market as a novel food ingredient within the meaning of point (c) of article 1(2) of regulation (ec) no 258/97. (2) on 17 april 2013, the competent food assessment body of ireland issued its initial assessment report. in that report it came to the conclusion that an additional assessment was required in line with article 6(3) of the novel food regulation (ec) no 258/97. (3) on 26 april 2013, the commission forwarded the initial assessment report to the other member states. (4) on 10 october 2013, the commission consulted the european food safety authority (efsa) asking it to carry out an additional assessment for organic silicon (monomethylsilanetriol) as novel food ingredient in accordance with regulation (ec) no 258/97. (5) on 9 march 2016, efsa concluded in its opinion on the safety of organic silicon (monomethylsilanetriol, mmst) as a novel food ingredient for use as a source of silicon in food supplements and bioavailability of orthosilicic acid from the source (2), that organic silicon (monomethylsilanetriol) is safe under the proposed conditions of use. (6) that opinion gives sufficient grounds to establish that organic silicon (monomethylsilanetriol) as a novel food ingredient complies with the criteria laid down in article 3(1) of regulation (ec) no 258/97. (7) directive 2002/46/ec of the european parliament and of the council (3) lays down requirements on food supplements. the use of organic silicon (monomethylsilanetriol) should be authorised without prejudice to the requirements of this legislation. (8) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 organic silicon (monomethylsilanetriol) as specified in the annex to this decision may be placed on the market in the union as a novel food ingredient to be used in food supplements in liquid form intended for the adult population with a maximum dose of 10,40 mg silicon per day as recommended by the manufacturer without prejudice to the specific provisions of directive 2002/46/ec. article 2 the designation of organic silicon (monomethylsilanetriol) authorised by this decision for the labelling of the foodstuffs shall be organic silicon (monomethylsilanetriol). article 3 this decision is addressed to llr-g5 ltd, golden mile industrial park, breaffy road, castlebar, co. mayo, f23 vx58, ireland. done at brussels, 4 august 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 43, 14.2.1997, p. 1. (2) efsa journal 2016;14(4):4436 (3) directive 2002/46/ec of the european parliament and of the council of 10 june 2002 on the approximation of the laws of the member states relating to food supplements (oj l 183, 12.7.2002, p. 51). annex specification of organic silicon (monomethylsilanetriol) identity of organic silicon (monomethylsilanetriol) chemical name silanetriol, 1-methyl- chemical formula ch6o3si molecular weight 94,14 g/mol cas no 2445-53-6 organic silicon (monomethylsilanetriol) preparation (aqueous solution) parameters specification value acidity (ph) 6,4-6,8 silicon 100-150 mg si/l lead not more than 1 g/l mercury not more than 1 g/l cadmium not more than 1 g/l arsenic not more than 3 g/l methanol not more than 5 mg/kg (residual presence)

name: council implementing decision (cfsp) 2016/1340 of 4 august 2016 implementing decision (cfsp) 2015/1333 concerning restrictive measures in view of the situation in libya type: decision_impl subject matter: africa; criminal law; international affairs; civil law date published: 2016-08-05 5.8.2016 en official journal of the european union l 212/113 council implementing decision (cfsp) 2016/1340 of 4 august 2016 implementing decision (cfsp) 2015/1333 concerning restrictive measures in view of the situation in libya the council of the european union, having regard to the treaty on european union, and in particular article 31(2) thereof, having regard to council decision (cfsp) 2015/1333 of 31 july 2015 concerning restrictive measures in view of the situation in libya and repealing decision 2011/137/cfsp (1), and in particular article 13(2) thereof, having regard to the proposal of the high representative of the union for foreign affairs and security policy, whereas: (1) on 31 july 2015, the council adopted decision (cfsp) 2015/1333. (2) the information relating to two persons listed in annexes ii and iv to decision (cfsp) 2015/1333 should be updated. (3) decision (cfsp) 2015/1333 should therefore be amended, has adopted this decision: article 1 annexes ii and iv to decision (cfsp) 2015/1333 shall be amended as set out in the annex to this decision. article 2 this decision shall enter into force on the day following its publication in the official journal of the european union. done at brussels, 4 august 2016. for the council the president m. laj k (1) oj l 206, 1.8.2015, p. 34. annex the entries concerning the persons listed below, as set out in section a of annex ii to decision (cfsp) 2015/1333, are replaced by the following: name identifying information reasons date of listing 16. saleh issa gwaider, agila d.o.b. 1 june 1942 place of birth: elgubba, libya passport d001001 (libya) issued 22 january 2015 agila saleh has been president of the libyan council of deputies in the house of representatives since 5 august 2014. on 17 december 2015 saleh stated his opposition to the libya political agreement signed on 17 december 2015. as president of the council of deputies saleh has obstructed and undermined the libyan political transition, including by refusing to hold a vote in the house of representatives on 23 february 2016 on the government of national accord ( gna ). on 23 february 2016 saleh decided to create a committee which is expected to meet other members of the libyan-libyan process which is opposed to the libya political agreement. 1.4.2016 17. ghwell, khalifa a.k.a. al ghweil, khalifa al-ghawail, khalifa d.o.b. 1 january 1956 place of birth misurata, libya nationality: libya passport: a005465 (libya), issued 12 april 2015, expires 11 april 2017 khalifa ghwell is the so-called prime minister and defence minister of the internationally unrecognised general national congress ( gnc ) (also known as the national salvation government ), and as such is responsible for their activities. on 7 july 2015 khalifa ghwell showed his support for the steadfastness front (alsomood), a new military force of seven brigades to prevent a unity government from forming in tripoli, by attending the signing ceremony to inaugurate the force with gnc president nuri abu sahmain. as gnc prime minister ghwell has played a central role in obstructing the establishment of the gna established under the libya political agreement. on 15 january 2016, in his capacity as the tripoli gnc's prime minister and minister of defence , ghwell ordered the arrest of any members of the new security team, appointed by the prime minister designate of the government of national accord, who set foot in tripoli. 1.4.2016. the entries concerning the persons listed below, as set out in section a of annex iv to decision (cfsp) 2015/1333, are replaced by the following: name identifying information reasons date of listing 21. saleh issa gwaider, agila d.o.b. 1 june 1942 place of birth: elgubba, libya. passport d001001 (libya) issued 22 january 2015 agila saleh has been president of the libyan council of deputies in the house of representatives since 5 august 2014. on 17 december 2015 saleh stated his opposition to the libya political agreement signed on 17 december 2015. as president of the council of deputies saleh has obstructed and undermined the libyan political transition, including by refusing to hold a vote in the house of representatives on 23 february 2016 on the government of national accord ( gna ). on 23 february 2016 saleh decided to create a committee which is expected to meet other members of the libyan-libyan process which is opposed to the libya political agreement. 1.4.2016 22. ghwell, khalifa a.k.a. al ghweil, khalifa al-ghawail, khalifa d.o.b. 1 january 1956 place of birth misurata, libya nationality: libya passport: a005465 (libya), issued 12 april 2015, expires 11 april 2017 khalifa ghwell is the so-called prime minister and defence minister of the internationally unrecognised general national congress ( gnc ) (also known as the national salvation government ), and as such is responsible for their activities. on 7 july 2015 khalifa ghwell showed his support for the steadfastness front (alsomood), a new military force of seven brigades to prevent a unity government from forming in tripoli, by attending the signing ceremony to inaugurate the force with gnc president nuri abu sahmain. as gnc prime minister ghwell has played a central role in obstructing the establishment of the gna established under the libya political agreement. on 15 january 2016, in his capacity as the tripoli gnc's prime minister and minister of defence , ghwell ordered the arrest of any members of the new security team, appointed by the prime minister designate of the government of national accord, who set foot in tripoli. 1.4.2016.

name: commission implementing decision (eu) 2016/1251 of 12 july 2016 adopting a multiannual union programme for the collection, management and use of data in the fisheries and aquaculture sectors for the period 2017-2019 (notified under document c(2016) 4329) type: decision_impl subject matter: european construction; fisheries; economic policy; information technology and data processing date published: 2016-08-01 1.8.2016 en official journal of the european union l 207/113 commission implementing decision (eu) 2016/1251 of 12 july 2016 adopting a multiannual union programme for the collection, management and use of data in the fisheries and aquaculture sectors for the period 2017-2019 (notified under document c(2016) 4329) the european commission, having regard to the treaty on the functioning of the european union, having regard to council regulation (ec) no 199/2008 of 25 february 2008 concerning the establishment of a community framework for the collection, management and use of data in the fisheries sector and support for scientific advice regarding the common fisheries policy (1), and in particular article 3 thereof, whereas: (1) pursuant to article 3 of regulation (ec) no 199/2008, a multiannual union programme for the collection, management and use of data in the fisheries sector is to be adopted for a period of three years for the purpose of ensuring uniform application of the obligation to collect and manage data. (2) the current multiannual union programme is based on the multiannual programme for the period 2011-2013, that was prolonged by commission implementing decision c(2013)5243 in order to bridge the period between the adoption of regulation (eu) no 1380/2013 of the european parliament and of the council (2) and 31 december 2016. it is therefore necessary to establish a multiannual union programme for a three-year period starting 1 january 2017. (3) pursuant to article 25 of regulation (eu) no 1380/2013, the member states shall collect biological, environmental, technical and socioeconomic data necessary for fisheries management. the multiannual union programme is necessary for member states to specify and plan their data collection activities in their national work plans. in accordance with article 21 of regulation (eu) no 508/2014 of the european parliament and of the council (3) these national work plans have to be submitted to the commission by 31 october preceding the year from which the work plan is to apply. (4) the multiannual union programme should define data collection requirements in accordance with article 1 of regulation (ec) no 199/2008. it should contain the elements needed for the implementation of the common fisheries policy in as far as they are not already required under other legislative frameworks. (5) in order to achieve the objectives of the reformed common fisheries policy set out in article 2 of regulation (eu) no 1380/2013, it is necessary to update the union data requirements for sound scientific advice for the period starting from 1 january 2017. (6) moreover, new international obligations and commitments imposed upon member states and the union by multilateral and bilateral agreements with regard to fisheries require incorporation of certain requirements concerning data collection into the multiannual union programme, in particular those stemming from sustainable fisheries partnership agreements (sfpas). (7) evaluation of the current framework for the collection, management and use of data in the fisheries sector and subsequent stakeholder consultations have indicated that the multiannual union programme should focus on what data are required from member states, rather than on the methods to collect them. methodological requirements shall be described in member states' work plans to be approved by the commission, following close cooperation between member states at the level of marine regions. (8) the union programme for the period 2017-2019 should therefore take account of all these elements and of the objectives of regulation (eu) no 1380/2013, in particular articles 2 and 25 thereof, to the extent possible within the current legal framework provided by regulation (ec) no 199/2008. where new data requirements go beyond the current legislative framework, they should be optional. once a new legal framework amending regulation (ec) no 199/2008 will enter into force, the commission may amend the multiannual union programme, if necessary, to reflect any new data collection requirements. (9) the commission has taken account of the recommendations resulting from consultation with the regional coordination meetings referred to in article 5 of regulation (ec) no 199/2008 and the scientific, technical and economic committee for fisheries (stecf). other appropriate consultative scientific bodies such as the international council for the exploration of the seas (ices) have also been consulted, as well as representatives of member states gathered in dedicated expert groups. (10) for reasons of legal certainty, implementing decision c(2013)5243 should be repealed. (11) the measures provided for in this decision are in accordance with the opinion of the management committee for fisheries and aquaculture, has adopted this decision: article 1 the multiannual union programme for the collection, management and use of data in the fisheries sector for the period 2017-2019, as referred to in article 3 of regulation (ec) no 199/2008, is set out in the annex to this decision. article 2 implementing decision c(2013)5243 is repealed with effect from 1 january 2017. article 3 this decision is addressed to the member states. done at brussels, 12 july 2016. for the commission karmenu vella member of the commission (1) oj l 60, 5.3.2008, p. 1. (2) regulation (eu) no 1380/2013 of the european parliament and of the council of 11 december 2013 on the common fisheries policy, amending council regulations (ec) no 1954/2003 and (ec) no 1224/2009 and repealing council regulations (ec) no 2371/2002 and (ec) no 639/2004 and council decision 2004/585/ec (oj l 354, 28.12.2013, p. 22). (3) regulation (eu) no 508/2014 of the european parliament and of the council of 15 may 2014 on the european maritime and fisheries fund and repealing council regulations (ec) no 2328/2003, (ec) no 861/2006, (ec) no 1198/2006 and (ec) no 791/2007 and regulation (eu) no 1255/2011 of the european parliament and of the council (oj l 149, 20.5.2014, p. 1). annex chapter i definitions for the purpose of this annex, definitions in council regulation (ec) no 1224/2009 (1), commission implementing regulation (eu) no 404/2011 (2), and regulation (eu) no 1380/2013 of the european parliament and of the council (3) shall apply. in addition, the following definitions shall also apply: (1) active vessels : vessels that have been engaged in any fishing operation (one day or more) during a calendar year. a vessel that has not been engaged in fishing operations during a year is considered inactive. (2) anadromous species : living aquatic resources with lifecycle starting by hatching in freshwater, migrating to saltwater, returning and finally spawning in freshwater. (3) catadromous species : living aquatic resources with lifecycle starting by hatching in saltwater, migrating to freshwater, returning and finally spawning in saltwater. (4) catch fraction : a part of the total catch, such as the part of the catch landed above the minimum conservation reference size, the part landed below the minimum conservation reference size, the part discarded below the minimum conservation reference size, de minimis discards or discards. (5) days at sea : any continuous period of 24 hours (or part thereof) during which a vessel is present within an area and absent from port. (6) fishing days : any calendar day at sea in which a fishing operation takes place, without prejudice to the international obligations of the union and its member states. one fishing trip can contribute to both the sum of the fishing days for passive gears and the sum of the fishing days for active gears on that trip. (7) fishing ground : (group of) geographical units where fishing takes place. these units shall be agreed at marine region level on the basis of existing areas defined by regional fisheries management organisations or scientific bodies. (8) fleet segment : group of vessels with the same length class (loa, length overall) and predominant fishing gear during the year. (9) metier : a group of fishing operations targeting a similar (assemblage of) species, using similar gear (4), during the same period of the year and/or within the same area and which are characterised by a similar exploitation pattern. (10) research surveys at sea : trips carried out on a research vessel, or a vessel dedicated to scientific research for stock and ecosystem monitoring, and designated for this task by the body in charge of the implementation of the national work plan established in accordance with article 21 of regulation (eu) no 508/2014. chapter ii data collection methods data collection methods and quality shall be appropriate for the intended purposes defined in article 25 of regulation (eu) no 1380/2013 and shall follow the best practices and relevant methodologies advised by the relevant scientific bodies. to this end, the methods and the result of the application of the methods shall be examined at regular intervals by independent scientific bodies in order to verify their appropriateness with respect to the management of the common fisheries policy. chapter iii data requirements 1. data sets 1.1. member states shall establish, as part of the work plans drawn up in accordance with article 21 of regulation (eu) no 508/2014, the data to be collected amongst the following sets as specified in points 2 to 7 of this chapter: (a) biological data, by catch fraction, on stocks caught by union commercial fisheries in union and outside union waters and by recreational fisheries in union waters; (b) data to assess the impact of union fisheries on the marine ecosystem in union waters and outside union waters; (c) detailed data on the activity of union fishing vessels in union waters and outside union waters as reported under regulation (ec) no 1224/2009; (d) social and economic data on fisheries (5); (e) social, economic and environmental data on aquaculture; 1.2. the data to be collected shall be established in accordance with articles 3, 4 and 5 of regulation (ec) no 199/2008 and taking into account the thresholds set out in chapter v of this annex. 1.3. data shall be collected to enable valid estimates to be derived for the type of fisheries, temporal periods and areas based on end-user needs agreed at marine region level. the frequency of data collection is to be coordinated at marine region level, unless stated otherwise in this annex and corresponding tables. 2. biological data on stocks caught by union commercial fisheries in union and outside union waters and by recreational fisheries in union waters. those data shall consist of the following: (a) catch quantities by species and biological data from individual specimens enabling the estimation of: (i) for commercial fisheries, volume and length frequency of all catch fractions (including discards and unwanted catches) for the stocks listed in tables 1a, 1b and 1c, reported at the aggregation level 6 as set out in table 2. the temporal resolution shall be coordinated at marine region level based on end-user needs; (ii) for commercial fisheries, mean-weight and age distribution of catches of the stocks listed in table 1a, 1b and 1c. the selection of stocks from which these variables have to be collected and the temporal resolution shall be coordinated at marine region level based on end-user needs; (iii) for commercial fisheries, sex-ratio, maturity and fecundity data for stocks listed in tables 1a, 1b and 1c of catches at frequencies needed for scientific advice. the selection of stocks from which these variables have to be collected and the temporal resolution shall be coordinated at marine region level based on end-user needs; (iv) for recreational fisheries, annual volume (numbers and weights or length) of catches and releases for the species listed in table 3 and/or the species identified at marine region level as needed for fisheries management purposes end-user needs for age or other biological data as specified in paragraphs (i)-(iii) shall be evaluated for recreational fisheries at marine region level. (b) in addition to data collected under point (a), data on anadromous and catadromous species listed in table 1e caught by commercial fisheries during the freshwater part of their lifecycle, irrespective of the way these fisheries are undertaken, as follows: (i) stock-related variables (for individual specimens, on age, length, weight, sex, maturity and fecundity, by life stage, but further specified on a species and regional basis); and (ii) annual catch quantities by age class or life stage. (c) in addition: as regards eel, information (e.g. data, estimates, relative trends, etc.) collected annually in at least one river basin per eel management unit on: (i) the abundance of recruits; (ii) the abundance of the standing stock (yellow eel); and (iii) the number or weight and sex ratio of emigrating silver eels; and as regards all wild salmon: information collected annually unless agreed otherwise at regional level on the abundance of smolt and parr and number of ascending individuals. the designation of rivers to be monitored for eel and salmon shall be defined at regional level. the selection of stocks from which these variables have to be collected shall be coordinated at regional level based on end-user needs. 3. data to assess the impact of union fisheries on marine ecosystems in union waters and outside union waters those data shall consist of the following: (a) for all types of fisheries, incidental by-catch of all birds, mammals and reptiles and fish protected under union legislation and international agreements, including the species listed in table 1d, including absence in the catch, during scientific observer trips on fishing ships or by the fishers themselves through logbooks. where data collected during observer trips are not considered to provide sufficient data on incidental by-catch for end-user needs, other methodologies, shall be implemented by member states. the selection of these methodologies shall be coordinated at marine region level and be based on end-user needs. (b) data to assist in the assessment of the impact of fisheries in union waters and outside union waters on marine habitats. the variables used for assessing the impact of fisheries on marine habitat shall be those recorded under regulation (ec) no 1224/2009. data shall be disaggregated at fishing activity level 3 (6), unless a lower level of aggregation is required at regional level, in particular in the case of marine protected areas. when data recorded under regulation (ec) no 1224/2009 are not at the correct resolution or are not of sufficient quality or coverage for the intended scientific use, they shall be collected in an alternative way by using appropriate sampling methods. data as recorded under regulation (ec) no 1224/2009 are to be made available at the appropriate level of aggregation to the national institutions implementing the work plans. (c) data for estimating the level of fishing and the impact of fishing activities on marine biological resources and on marine ecosystems, such as effects on non-commercial species, predator-prey relationships and natural mortality of fish species in each marine region. these data shall be first assessed within pilot studies. based on the outcomes of these pilot studies, member states shall determine future data collection specific for each marine region, coordinated at marine region level and based on end-user needs. 4. detailed data on the activity of union fishing vessels (7) in union waters and outside union waters as recorded under regulation (ec) no 1224/2009. data to assess the activity of union fishing vessels in union waters and outside union waters consist of the variables as indicated in table 4. data as recorded, reported and transmitted under regulation (ec) no 1224/2009 are to be made available in the form of primary data to the national institutions implementing the work plans. when these data are not to be collected under regulation (ec) no 1224/2009 or when data collected under regulation (ec) no 1224/2009 are not at the correct resolution or are not of sufficient quality or coverage for the intended scientific use, they shall be collected in an alternative way by using appropriate sampling methods. these methods shall allow for the estimation of variables listed in table 4 at the lowest relevant geographic level by fleet segment (table 5a) and metier level 6 (table 2). 5. social and economic data on fisheries to enable the assessment of the social and economic performance of the union fisheries sector. those data shall consist of the following: (a) economic variables as indicated in table 5a according to the sector segmentation of table 5b and according to the supraregions as defined in table 5c. the population shall be all active and inactive vessels registered in the union fishing fleet register as defined in commission regulation (ec) no 26/2004 (8) on 31 december of the reporting year and vessels that do not appear on the register at that date but have fished at least one day during the reporting year for inactive vessels only capital value and capital cost shall be collected. in cases where there is a risk of natural persons and/or legal entities being identified clustering may be applied to report economic variables in order to ensure statistical confidentiality. clustering may also be used if necessary to design a statistically sound sampling plan. such a clustering scheme shall be consistent over time. economic data shall be collected on an annual basis. (b) social variables as indicated in table 6. social data shall be collected every three years starting in 2018. data on employment by education level and employment by nationality may be collected on the basis of pilot studies. 6. social, economic and environmental data on marine aquaculture, and optionally on freshwater aquaculture, to enable the assessment of the social, economic and environmental performance of the union aquaculture sector. those data shall consist of the following: (a) economic variables as indicated in table 7 according to the sector segmentation set out in table 9. the population shall be all enterprises whose primary activity is defined according to the european classification of economic activities nace (9) codes 03.21 and 03.22 and who operate for profit. economic data shall be collected on an annual basis. (b) social variables as indicated in table 6. social data shall be collected every three years starting in 2018. data on employment by education level and employment by nationality may be collected on the basis of pilot studies. (c) environmental data on aquaculture as indicated in table 8 to enable the assessment of aspects of its environmental performance. environmental data may be collected on the basis of pilot studies and extrapolated to indicate totals relevant to the total volume of fish produced in the member state. environmental data shall be collected every two years. chapter iv research surveys at sea 1. at least all research surveys at sea listed in table 10 shall be carried out, unless a review of surveys leads to the conclusion that a survey is no longer appropriate for informing stock assessment and fisheries management. based on the same scientific review criteria, new surveys can be added to this table. 2. member states shall set out, as part of the work plans defined in article 21 of regulation (eu) no 508/2014, the research surveys at sea to be carried out and shall be responsible for these surveys. 3. member states' respective contribution to international research surveys shall be coordinated within the same marine region. 4. member states shall guarantee within their national work plans continuity with previous survey designs. chapter v thresholds 1. this chapter shall apply to union fisheries. 2. no biological data need to be collected if, for a certain fish stock or species: (a) a member state's share of the related total allowable catch (tac) is less than 10 % of the total of the union; or (b) in case no tac is fixed, the total landings of a member state of a stock or species are less than 10 % of the average total eu landings in the previous 3 years; or (c) the total annual landings of a member state of a species is less than 200 tonnes. for species with a specific management need, a lower threshold may be defined at marine region level. when the sum of the relevant quotas of several member states, whose share of a tac is less than 10 %, is higher than 25 % of the share of the tac for a certain stock, the 10 % threshold referred to under (a) shall not apply and member states shall ensure task-sharing at regional level in order to ensure that the stock is covered by sampling in concordance with end-user needs. no threshold shall apply to large pelagic species and anadromous and catadromous species. 3. without prejudice to more specific provisions relating to international obligations under rfmos, no biological data need to be collected if, for a certain internationally exploited fish stock other than stocks of large pelagic or highly migratory species, the union's share is less than 10 %. 4. member states shall provide catch estimates from existing recreational fishery surveys, including those carried out under the data collection framework or from an additional pilot study, within two years from the date on which this decision takes effect. these surveys shall allow assessment of the share of catches from recreational fisheries in relation to commercial catches for all species in a marine region for which recreational catch estimates are required under this multiannual union programme. the subsequent design and extent of national surveys of recreational fisheries, including any thresholds for data collection, shall be coordinated at marine region level and shall be based on end-user needs. no threshold shall apply to recreational catches of fish stocks which are subject to recovery or multiannual management plans such as those applying to large pelagic species and highly migratory species. 5. no social and economic data on aquaculture need to be collected if the total production of the member state is less than 1 % of the total union production volume and value. no data need to be collected on aquaculture for species accounting for less than 10 % of the member state's aquaculture production by volume and value. additionally, member states with a total production of less than 2,5 % of the total union aquaculture production volume and value may define a simplified methodology such as pilot studies with a view to extrapolate the data required for species accounting for more than 10 % of the member states' aquaculture production by volume and value. the reference data shall be the member states' latest submission under regulation (ec) no 762/2008 of the european parliament and of the council (10) and the corresponding data published by eurostat. 6. no environmental data on aquaculture need to be collected where the total aquaculture production of the member state is less than 2,5 % of the total union aquaculture production volume and value. the reference data shall be the member states' latest submission under regulation (ec) no 762/2008 of the european parliament and of the council, and corresponding data published by eurostat. 7. a member state's participation (physical or financial) in research surveys at sea listed in table 10 is not mandatory when its share of a union tac of the survey target species is below a threshold of 3 %. where no tac is set, a member state's participation (physical or financial) in research surveys at sea is not mandatory when its share of the total union landings of the preceding 3 years of a stock or species is below a threshold of 3 %. thresholds for multispecies and ecosystem surveys may be defined at marine region level. 8. notwithstanding points 2 to 7, within the same marine region, member states may agree on alternative thresholds. biological data table 1a stocks in union waters species (common name) species (scientific name) area (ices (11), ibsfc (12) or fao (13) area code) where the stock is located/stock code east arctic, norwegian sea and barents sea european eel anguilla anguilla i, ii tusk brosme brosme i, ii atlanto-scandian herring clupea harengus i, ii, cod gadus morhua i, ii capelin mallotus villosus i, ii haddock melanogrammus aeglefinus i, ii blue whiting micromesistius poutassou i-ii northern shrimp pandalus borealis i, ii saithe pollachius virens i, ii greenland halibut reinhardtius hippoglossoides i, ii salmon salmo salar i, ii mackerel scomber scombrus ii, golden redfish sebastes marinus. i, ii deep sea redfish sebastes mentella. i, ii horse mackerel trachurus trachurus iia, skagerrak and kattegat sand eel ammodytidae iiia european eel anguilla anguilla iiia herring clupea harengus iiia/22-24, iiia roundnose grenadier coryphaenoides rupestris iiia grey gurnard eutrigla gurnardus iiia red gurnard aspitrigla cuculus iiia, cod gadus morhua iiian cod gadus morhua iiias witch flounder glyptocephalus cynoglossus iiia dab limanda limanda iiia haddock melanogrammus aeglefinus iiia whiting merlangius merlangus iiia hake merluccius merluccius iiia, blue whiting micromesistius poutassou iiia norway lobster nephrops norvegicus functional unit northern shrimp pandalus borealis iiia plaice pleuronectes platessa iiia saithe pollachius virens iiia salmon salmo salar iiia turbot psetta maxima iiia mackerel scomber scombrus iiia brill scophthalmus rhombus iiia sole solea solea iiia sprat sprattus sprattus iiia norway pout trisopterus esmarki iiia all commercial sharks, rays & skates (14) selachii, rajidae iiia baltic sea european eel anguilla anguilla 22-32 herring clupea harengus 22-24/25-29, 32/30/31/gulf of riga common whitefish/houting coregonus lavaretus iiid vendace coregonus albula 22-32 cod gadus morhua 22-24/25-32 dab limanda limanda 22-32 perch perca fluviatilis iiid flounder platichthys flesus 22-32 plaice pleuronectes platessa 22-32 turbot psetta maxima 22-32 salmon salmo salar 22-31/32 sea trout salmo trutta 22-32 pike-perch sander lucioperca iiid brill scophthalmus rhombus 22-32 sole solea solea 22 sprat sprattus sprattus 22-32 north sea and eastern channel sand eel ammodytidae iv catfish anarhichas spp. iv european eel anguilla anguilla iv, viid argentine argentina spp. iv grey gurnard eutrigla gurnardus iv tusk brosme brosme iv herring clupea harengus iv, viid common shrimp crangon crangon iv, viid sea bass dicentrarchus labrax iv, viid grey gurnard eutrigla gurnardus iv cod gadus morhua iv, viid witch flounder glyptocephalus cynoglossus iv blue-mouth rockfish helicolenus dactylopterus iv four-spot megrim lepidorhombus boscii iv, viid megrim lepidorhombus whiffiagonis iv, viid dab limanda limanda iv, viid black-bellied angler lophius budegassa iv, viid anglerfish lophius piscatorius iv roughhead grenadier macrourus berglax iv haddock melanogrammus aeglefinus iv whiting merlangius merlangus iv, viid hake merluccius merluccius iv vii blue whiting micromesistius poutassou iv, viid lemon sole microstomus kitt iv, viid blue ling molva dypterygia iv ling molva molva iv red mullet mullus barbatus iv, viid striped red mullet mullus surmuletus iv, viid norway lobster nephrops norvegicus all functional units northern shrimp pandalus borealis iva east/iva/iv common scallop pecten maximus viid greater forkbeard phycis blennoides iv forkbeard phycis phycis iv flounder platichthys flesus iv plaice pleuronectes platessa iv plaice pleuronectes platessa viid saithe pollachius virens iv turbot psetta maxima iv, viid greenland halibut reinhardtius hippoglossoides iv salmon salmo salar iv, viid mackerel scomber scombrus iv, viid brill scophthalmus rhombus iv, viid redfish sebastes mentella. iv sole solea solea iv sole solea solea viid sprat sprattus sprattus iv/viid horse mackerel trachurus trachurus iv, viid tub gurnard trigla lucerna iv norway pout trisopterus esmarki iv john dory zeus faber iv, viid all commercial sharks, rays & skates (14) selachii, rajidae iv, viid north-east atlantic and western channel smoothhead alepocephalus bairdii vi, xii sand eel ammodytidae via boarfish capros aper v, vi,vii scallop pecten maximus iv, vi, vii queen scallop aequipecten opercularis vii spider crab maja squinado v, vi,vii european eel anguilla anguilla all areas scabbardfish aphanopus spp. all areas argentine argentina spp. all areas meagre argyrosomus regius all areas red gurnard aspitrigla cuculus all areas alfonsinos beryx spp. all areas, excluding x and ixa alfonsinos beryx spp. ixa and x edible crab cancer pagurus all areas herring clupea harengus via/vian/ via s, viibc/viia/viij conger conger conger all areas, excluding x conger conger conger x roundnose grenadier coryphaenoides rupestris all areas kitefin shark dalatias licha all areas common stingray dasyatis pastinaca vii, viii birdbeak dogfish deania calcea v, vi, vii, ix, x, xii sea bass dicentrarchus labrax all areas, excluding ix sea bass dicentrarchus labrax ix wedge sole dicologlossa cuneata viiic, ix anchovy engraulis encrasicolus ixa (only c diz) anchovy engraulis encrasicolus viii velvet belly etmopterus spinax vi, vii, viii grey gurnard eutrigla gurnardus viid,e cod gadus morhua va/vb/via/vib/viia/viie-k witch glyptocephalus cynoglossus vi, vii bluemouth rockfish helicolenus dactylopterus all areas lobster homarus gammarus all areas orange roughy hoplostethus atlanticus all areas silver scabbardfish lepidopus caudatus ixa four-spot megrim lepidorhombus boscii viiic, ixa megrim lepidorhombus whiffiagonis vi/vii, viiiabd/viiic, ixa dab limanda limanda viie/viia,f-h common squid loligo vulgaris all areas, excluding viiic, ixa common squid loligo vulgaris viiic, ixa black-bellied angler lophius budegassa iv, vi/viib-k, viiiabd black-bellied angler lophius budegassa viiic, ixa anglerfish lophius piscatorious iv, vi/viib-k, viiiabd anglerfish lophius piscatorious viiic, ixa capelin mallotus villosus xiv haddock melanogrammus aeglefinus va/vb haddock melanogrammus aeglefinus via/vib/viia/viib-k whiting merlangius merlangus viii/ix, x whiting merlangius merlangus vb/via/vib/viia/viie-k hake merluccius merluccius iiia, iv, vi, vii, viiiab/viiic, ixa wedge sole microchirus variegatus all areas blue whiting micromesistius poutassou i-ix, xii, xiv lemon sole microstomus kitt all areas blue ling molva dypterygia all areas, excluding x spanish ling molva macrophthalma x ling molva molva all areas striped red mullet mullus surmuletus all areas starry smooth-hound mustelus asterias vi, vii, viii, ix smooth-hound mustelus mustelus vi, vii, viii, ix blackspotted smooth-hound mustelus punctulatus vi, vii, viii, ix norway lobster nephrops norvegicus vi fuctional unit norway lobster nephrops norvegicus vii functional unit norway lobster nephrops norvegicus viii, ix functional unit common octopus octopus vulgaris all areas, excluding viiic, ixa common octopus octopus vulgaris viiic, ixa blackspot sea bream pagellus bogaraveo ixa, x pandalid shrimps pandalus spp. all areas deepwater rose shrimp parapenaeus longirostris ixa greater forkbeard phycis blennoides all areas forkbeard phycis phycis all areas plaice pleuronectes platessa viia/viie/viifg plaice pleuronectes platessa viibc/viih-k/viii, ix, x pollack pollachius pollachius all areas except ix, x pollack pollachius pollachius ix, x saithe pollachius virens va/vb/iv, iiia, vi saithe pollachius virens vii, viii wreckfish polyprion americanus x turbot psetta maxima all areas greenland halibut reinhardtius hippoglossoides v, xiv/vi atlantic halibut hippoglossus hippoglossus v, xiv salmon salmo salar all areas sardine sardina pilchardus viiiabd/viiic, ixa spanish mackerel scomber colias viii, ix, x mackerel scomber scombrus ii, iiia, iv, v, vi, vii, viii, ix brill scophthalmus rhombus all areas golden redfish sebastes marinus ices sub-areas v, vi, xii, xiv & nafo sa 2 + (div. 1f + 3k). deep sea redfish sebastes mentella ices sub-areas v, vi, xii, xiv & nafo sa 2 + (div. 1f + 3k) cuttlefish sepia officinalis all areas sole solea solea viia/viifg sole solea solea viibc/viihjk/ixa/viiic sole solea solea viie sole solea solea viiiab sea breams (in plural) sparidae all areas mediterranean horse mackerel trachurus mediterraneus viii, ix blue jack mackerel trachurus picturatus viii, ix, x horse mackerel trachurus trachurus iia, iva, vb, via, viia-c, e-k, viiiabde/x horse mackerel trachurus trachurus viiic, ixa pouting trisopterus spp. all areas john dory zeus faber all areas all commercial sharks, rays & skates (14) selachii, rajidae iv, viid mediterranean sea and black sea european eel anguilla anguilla all areas in the med giant red shrimp aristeomorpha foliacea all areas in the med red shrimp aristeus antennatus all areas in the med bogue boops boops 1.3, 2.1, 2.2, 3.1, 3.2 dolphinfish coryphaena equiselis all areas in the med dolphinfish coryphaena hippurus all areas in the med sea bass dicentrarchus labrax all areas in the med horned/curled octopus eledone cirrhosa 1.1, 1.3, 2.1, 2.2, 3.1 musky octopus eledone moschata 1.3, 2.1, 2.2, 3.1 anchovy engraulis encrasicolus all areas in the med anchovy engraulis encrasicolus black sea gsa 29 grey gurnard eutrigla gurnardus 2.2, 3.1 squid illex spp., todarodes spp. all areas in the med billfish istiophoridae all areas in the med common squid loligo vulgaris all areas in the med black-bellied angler lophius budegassa 1.1, 1.2, 1.3, 2.2, 3.1 anglerfish lophius piscatorius 1.1, 1.2, 1.3, 2.2, 3.1 whiting merlangius merlangus black sea gsa 29 hake merluccius merluccius all areas in the med blue whiting micromesistius poutassou 1.1, 3.1 grey mullets mugilidae 1.3, 2.1, 2.2, 3.1 red mullet mullus barbatus all areas in the med red mullet mullus barbatus black sea gsa 29 striped red mullet mullus surmuletus all areas in the med common octopus octopus vulgaris all areas in the med norway lobster nephrops norvegicus all areas in the med pandora pagellus erythrinus all areas in the med deepwater rose shrimp parapenaeus longirostris all areas in the med caramote prawn penaeus kerathurus 3.1 turbot psetta maxima black sea gsa 29 sardine sardina pilchardus all areas in the med mackerel scomber spp. all areas in the med cuttlefish sepia officinalis all areas in the med sole solea vulgaris 1.2, 2.1, 3.1 gilthead sea bream sparus aurata 1.2, 3.1 picarels spicara smaris 2.1, 3.1, 3.2 sprat sprattus sprattus black sea gsa 29 mantis shrimp squilla mantis 1.3, 2.1, 2.2 mediterranean horse mackerel trachurus mediterraneus all areas in the med mediterranean horse mackerel trachurus mediterraneus black sea gsa 29 horse mackerel trachurus trachurus all areas in the med horse mackerel trachurus trachurus black sea gsa 29 tub gurnard trigla lucerna 1.3, 2.2, 3.1 clam veneridae 2.1, 2.2 transparent gobid aphia minuta gsa 9,10,16 and 19 sand smelt atherina spp. gsa 9,10,16 and 19 poor cod trisopterus minutus all regions all commercial sharks, rays & skates (14) selachii, rajidae all regions biological data table 1b stocks of outermost regions of the union species (common name) species (scientific name) french guyana red snapper lutjanus purpureus prawns farfantepenaeus subtilis acoupa weakfish cynoscion acoupa smalltooth weakfish cynoscion steindachneri green weakfish cynoscion virescens sea catfishes ariidae tripletail lobotes surinamensis torroto grunt genyatremus luteus snooks centropomus spp. groupers serranidae mullets mugil spp. guadeloupe and martinique snappers lutjanidae grunters haemulidae groupers serranidae lion fish pterois volitans tuna-like fish scombridae blue marlin makaira nigricans dolphinfish coryphaena hippurus r union and mayotte snappers lutjanidae groupers serranidae tuna-like fish scombridae swordfish xiphias gladius other bill fishes istiophoridae dolphinfish coryphaena hippurus bigeye scad selar crumenophthalmus azores, madeira and canary islands atlantic chub mackerel scomber colias sardinella sardinella maderensis horse mackerel trachurus spp. sardine sardina pilchardus parrotfish sparisoma cretense limpets patellidae biological data table 1c stocks in marine regions under regional fisheries management organisations (rfmos) and sustainable fishing partnership agreements (sfpas) iattc (inter-american tropical tuna commission) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or regional fisheries organisations (rfos), shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data must be done timely to fit the schedule of the stock assessments. thunnus albacares yellowfin tuna east pacific ocean high thunnus obesus bigeye tuna east pacific ocean high katsuwonus pelamis skipjack tuna east pacific ocean high thunnus alalunga albacore tuna east pacific ocean high thunnus orientalis pacific bluefin tuna east pacific ocean high xiphias gladius swordfish east pacific ocean high makaira nigricans (or mazara) blue marlin east pacific ocean high makaira indica black marlin east pacific ocean high tetrapturus audax striped marlin east pacific ocean high iccat (the international commission for the conservation of atlantic tunas) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data must be done timely to fit the schedule of the stock assessments. thunnus albacares yellowfin tuna atlantic ocean and adjacent seas high thunnus obesus bigeye tuna atlantic ocean and adjacent seas high katsuwonus pelamis skipjack tuna atlantic ocean and adjacent seas high thunnus alalunga albacore tuna atlantic ocean and adjacent seas high thunnus thynnus bluefin tuna atlantic ocean and adjacent seas high xiphias gladius swordfish atlantic ocean and adjacent seas high makaira nigricans (or mazara) blue marlin atlantic ocean and adjacent seas high istiophorus albicans sailfish atlantic ocean and adjacent seas high tetrapturus albidus white marlin atlantic ocean and adjacent seas high prionace glauca blue shark atlantic ocean and adjacent seas high auxis rochei bullet tuna atlantic ocean and adjacent seas high sarda sarda atlantic bonito atlantic ocean and adjacent seas high euthynnus alleteratus atlantic back skipjack atlantic ocean and adjacent seas medium thunnus atlanticus blackfin tuna atlantic ocean and adjacent seas medium orcynopsis unicolor plain bonito atlantic ocean and adjacent seas medium scomberomorus brasiliensis serra spanish mackerel atlantic ocean and adjacent seas medium scomberomorus regalis cero atlantic ocean and adjacent seas medium auxis thazard frigate tuna atlantic ocean and adjacent seas medium scomberomorus cavalla king mackerel atlantic ocean and adjacent seas medium scomberomorus tritor west african spanish mackerel atlantic ocean and adjacent seas medium scomberomorus maculatus atlantic spanish mackerel atlantic ocean and adjacent seas medium acanthocybium solandri wahoo atlantic ocean and adjacent seas medium coryphaena hippurus dolphinfish atlantic ocean and adjacent seas medium nafo (north atlantic fisheries organisation) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name stocks as defined by the rfmo priority the data collection is annual and the updating/processing of the data must be done timely to fit the schedule of the stock assessments. gadus morhua cod nafo 2j 3kl low gadus morhua cod nafo 3m high gadus morhua cod nafo 3no high gadus morhua cod nafo 3ps high gadus morhua cod nafo sa1 high glyptocephalus cynoglossus witch flounder nafo 3no high glyptocephalus cynoglossus witch flounder nafo 2j3kl low hippoglossoides platessoides american plaice nafo 3lno high hippoglossoides platessoides american plaice nafo 3m high limanda ferruginea yellowtail flounder nafo 3lno medium coryphaenoides rupestris roundnose grenadier nafo sa0 + 1 low macrourus berglax roughhead grenadier nafo sa2 + 3 high pandalus borealis northern shrimp nafo 3lno high pandalus borealis northern shrimp nafo 3m high amblyraja radiata thorny skate nafo 3lnops high reinhardtius hippoglossoides greenland halibut nafo 3klmno high reinhardtius hippoglossoides greenland halibut nafo sa1 high hippoglossus hippoglossus atlantic halibut nafo sa1 low sebastes mentella redfish nafo sa1 high sebastes spp. redfish nafo 3ln high sebastes spp. redfish nafo 3m high sebastes spp. redfish nafo 3o high urophycis tenuis white hake nafo 3no high mallotus villosus capelin nafo 3no high beryx sp. alfonsinos nafo 6g high illex illecebrosus shortfin squid nafo subareas 3 + 4 low salmo salar salmon nafo s1 + ices sub-area xiv, neaf, nasco high fao marine area 34 fisheries committee for the eastern central atlantic (cecaf) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. brachydeuterus spp. grunt 34.1.3, 34.3.1, 34.3.3-6 high caranx spp. jack 34.3.1, 34.3.3-6 high cynoglossus spp. tongue sole 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high decapterus spp. scad 34.3.1, 34.3.3-6 high dentex canariensis canary dentex 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 medium dentex congoensis congo dentex 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 medium dentex macrophthalmus large-eye dentex 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high dentex maroccanus morocco dentex 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 medium dentex spp. dentex 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high engraulis encrasicolus anchovy 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high epinephelus aeneus white grouper 34.1.3, 34.3.1, 34.3.3-6 high ethmalosa fimbriata bonga shad 34.3.1, 34.3.3-6 high farfantepenaeus notialis southern pink shrimp 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high galeoides decadactylus lesser african threadfin 34.1.3, 34.3.1, 34.3.3-6 high the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. loligo vulgaris common squid 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high merluccius polli benguela hake 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high merluccius senegalensis senegalese hake 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high merluccius spp. other hake 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 medium octopus vulgaris common octopus 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high pagellus acarne axillary sea bream 34.1.1 high pagellus bellottii red pandora 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high pagellus bogaraveo blackspot sea bream 34.1.1 medium pagellus spp. pandora 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high pagrus caeruleostictus blue spotted sea bream 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high parapenaeus longirostris deepwater rose shrimp 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high pomadasys incisus bastard grunt 34.1.1 medium pomadasys spp. grunt 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high pseudotolithus spp. west african croakers 34.1.1 high sardina pilchardus sardine 34.1.1, 34.1.3 high sardinella aurita round sardinella 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high sardinella maderensis short-body sardinella 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. scomber japonicus chub mackerel 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high scomber spp. other mackerel 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high sepia hierredda cuttlefish 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high sepia officinalis common cuttlefish 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high sepia spp. cuttlefishes 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 medium sparidae sea bream 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high sparus spp. sea bream 34.1.1 high trachurus trachurus atlantic horse mackerel 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high trachurus trecae cunene horse mackerel 34.1.1, 34.1.3, 34.3.1, 34.3.3-6 high umbrina canariensis canary drum 34.3.3-6 medium seafo (south-east atlantic fisheries organisation) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. dissostichus eleginoides patagonian toothfish south-east atlantic high beryx spp. alfonsinos south-east atlantic high chaceon spp. red/golden crabs south-east atlantic high pseudopentaceros richardsoni pelagic armourhead/southern boarfish south-east atlantic high helicolenus spp. blackbelly rosefishes south-east atlantic high hoplostethus atlanticus orange roughy south-east atlantic high trachurus spp. horse mackerel south-east atlantic high scomber spp. mackerel south-east atlantic high polyprion americanus wreckfish south-east atlantic medium jasus tristani tristan rock lobster south-east atlantic medium lepidotus caudatus silver scabbardfish south-east atlantic medium schedophilus ovalis imperial blackfish south-east atlantic low schedophilus velaini violet warehou south-east atlantic low allocyttus verucossus oreo dories south-east atlantic low neocyttus romboidales south-east atlantic allocyttus guineensis south-east atlantic pseudocyttu smaculatus south-east atlantic emmelichthys nitidus cape bonnetmouth south-east atlantic low ruvettus pretiosus oilfish south-east atlantic low promethichthys prometheus roudi escolar south-east atlantic low macrourus spp. grenadiers south-east atlantic low antimora rostrata blue antimora south-east atlantic low epigonus spp. cardinal fish south-east atlantic low merluccius spp. hake south-east atlantic low notopogon fernandezianus orange bellowfish south-east atlantic low octopodidae and loliginidae octopus and squids south-east atlantic low wcpfc (western and central pacific fisheries commission) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. thunnus albacares yellowfin tuna west central pacific ocean high thunnus obesus bigeye tuna west central pacific ocean high katsuwonus pelamis skipjack tuna west central pacific ocean high thunnus alalunga albacore tuna west central pacific ocean high thunnus orientalis pacific bluefin tuna west central pacific ocean high xiphias gladius swordfish west central pacific ocean high makaira nigricans (or mazara) blue marlin west central pacific ocean high makaira indica black marlin west central pacific ocean high tetrapturus audax striped marlin west central pacific ocean high acanthocybium solandri wahoo west central pacific ocean medium coryphaena hippurus dolphinfish west central pacific ocean medium elagatis bipinnulata rainbow runner west central pacific ocean medium lepidocybium flavobrunneum escolar west central pacific ocean medium lampris regius moonfish (opah) west central pacific ocean medium mola mola sunfish west central pacific ocean medium istiophorus platypterus sailfish west central pacific ocean medium tetrapturus angustirostris spearfish west central pacific ocean medium ruvettus pretiosus oilfish west central pacific ocean medium prionace glauca blue shark west central pacific ocean high carcharhinus longimanus oceanic whitetip shark west central pacific ocean high carcharhinus falciformis silky shark west central pacific ocean high alopias superciliosus big eye thresher west central pacific ocean high alopias vulpinus common thresher west central pacific ocean high alopias pelagicus pelagic thresher west central pacific ocean high nb: for wcpf, the following reporting requirements for long liners shall be added: (1) number of branch lines between floats. the number of branch lines between floats shall be reported for each set. (2) number of fish caught per set, for the following species: albacore (thunnus alalunga), bigeye (thunnus obesus), skipjack (katsuwonus pelamis), yellowfin (thunnus albacares), striped marlin (tetrapturus audax), blue marlin (makaira mazara), black marlin (makaira indica) and swordfish (xiphias gladius), blue shark, silky shark, oceanic whitetip shark, mako sharks, thresher sharks, porbeagle shark (south of 20 s, until biological data shows this or another geographic limit to be appropriate), hammerhead sharks (winghead, scalloped, great, and smooth), whale shark, and other species as determined by the commission. if the total weight or average weight of fish caught per set has been recorded, then the total weight or average weight of fish caught per set, by species, shall also be reported. if the total weight or average weight of fish caught per set has not been recorded, then the total weight or average weight of fish caught per set, by species, shall be estimated and the estimates reported. the total weight or average weight shall refer to whole weights, rather than processed weights. wecafc (western central atlantic fishery commission) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. panulirus argus caribbean spiny lobster west central atlantic high strombus gigas queen conch west central atlantic high shark-like selachii, rajidae sharks, rays & skates west central atlantic high coryphaena hippurus dolphin fish west central atlantic high acanthocybium solandri wahoo west central atlantic high epinephelus guttatus red hind west central atlantic high lutjanus vivanus silk snapper west central atlantic high lutjanus buccanella blackfin snapper west central atlantic high lutjanus campechanus red snapper west central atlantic high penaeus subtilis penaeus shrimp french guiana eez high iotc (indian ocean tuna commission) species when designing sampling plans aiming at collecting biological information as laid down in chapter iii of this annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. thunnus albacares yellowfin tuna indian ocean western and eastern high thunnus obesus bigeye tuna indian ocean western and eastern high katsuwonus pelamis skipjack tuna indian ocean western and eastern high thunnus alalunga albacore tuna indian ocean western and eastern high xiphias gladius swordfish indian ocean western and eastern high makaira nigricans (or mazara) blue marlin indian ocean western and eastern high makaira indica black marlin indian ocean western and eastern high tetrapturus audax striped marlin indian ocean western and eastern high istiophorus platypterus indo-pacific sailfish indian ocean western and eastern high auxis rochei bullet tuna indian ocean western and eastern medium auxis thazard frigate tuna indian ocean western and eastern medium euthynnus affinis kawakawa indian ocean western and eastern medium thunnus tonggol longtail tuna indian ocean western and eastern medium scomberomorus guttatus indo-pacific king mackerel indian ocean western and eastern medium scomberomorus commerson narrow-barred spanish mackerel indian ocean western and eastern medium prionace glauca blue shark indian ocean western and eastern high alopias superciliosus bigeye thresher shark indian ocean western and eastern high carcharhinus falciformes silky shark indian ocean western and eastern high carcharhinus longimanus oceanic whitetip shark indian ocean western and eastern high alopias pelagicus pelagic thresher shark indian ocean western and eastern high sphyrna lewini scalloped hammerhead shark indian ocean western and eastern high other rfmos species when designing sampling plans aiming at collecting biological information as laid down in chapter iii annex, stock boundaries, as fixed by the competent rfmos or rfos, shall be taken into account and appropriate sampling effort shall be allocated to each stock. frequency of collection of biological variables scientific name common name geographical area priority the data collection is annual and the updating/processing of the data shall be done timely to fit the schedule of the stock assessments. trachurus murphyi jack mackerel sprfmo convention area high euphausia superba krill ccamlr convention area high dissostichus spp. dissostichus eleginoides and dissostichus mawsoni) toothfish ccamlr convention area high champsocephalus gunnari mackerel icefish ccamlr convention area low resources of fish, molluscs, crustaceans and other sedentary species within the competence area, but excluding: (i) sedentary species subject to the fishery jurisdiction of coastal states pursuant to article 77(4) of the 1982 un convention on the law of the sea; and (ii) highly migratory species listed in annex i of the 1982 un convention on the law of the sea. siofa convention area biological data table 1d species to be monitored under protection programmes in the union or under international obligations common name scientific name region/rfmo legal framework bony fishes teleostei sturgeons acipenser spp. mediterranean sea and black sea; baltic sea; ospar ii, iv annex ii of the barcelona convention (15), annex iv of the black sea biodiversity and landscape conservation protocol; ospar (16); helcom (17) smoothheads (slickheads) alepocephalidae all regions relevant for deep sea fisheries (18) baird's smoothhead alepocephalus bairdii all regions relevant for deep sea fisheries risso's smoothhead alepocephalus rostratus all regions relevant for deep sea fisheries pontic shad alosa immaculata black sea annex iv of the black sea biodiversity and landscape conservation protocol allis shad alosa alosa ospar ii, iii, iv ospar common whitefish/houting coregonus lavaretus ospar ii ospar cod gadus morhua ospar ii, iii; baltic sea ospar; helcom long-snouted seahorse hippocampus guttulatus (synonym: hippocampus ramulosus) ospar ii, iii, iv, v ospar short-snouted seahorse hippocampus hippocampus ospar ii, iii, iv, v ospar black sea shad alosa tanaica black sea annex iv of the black sea biodiversity and landscape conservation protocol blue antimora (blue hake) antimora rostrata all regions relevant for deep sea fisheries black scabbardfish aphanopus carbo all regions relevant for deep sea fisheries scabbardfish aphanopus intermedius all regions relevant for deep sea fisheries crayfish astacus spp. black sea annex iv of the black sea biodiversity and landscape conservation protocol big-scale sand smelt atherina pontica black sea annex iv of the black sea biodiversity and landscape conservation protocol garfish belone belone euxini g nther black sea annex iv of the black sea biodiversity and landscape conservation protocol alfonsinos beryx spp. all regions relevant for deep sea fisheries brotula cataetyx laticeps all regions relevant for deep sea fisheries vendace coregonus albula baltic sea rcm baltic recommendation lumpfish cyclopterus lumpus all regions relevant for deep sea fisheries annular seabream diplodus annularis mediterranean sea council regulation (ec) no 1967/2006 (19) (min. cons. size) sharpsnout sea bream diplodus puntazzo mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) white sea bream diplodus sargus mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) two-banded sea bream diplodus vulgaris mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) patagonian toothfish dissostichus eleginoides all regions relevant for deep sea fisheries antarctic toothfish dissostichus mawsoni all regions relevant for deep sea fisheries groupers epinephelus spp. mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) black cardinalfish epigonus telescopus all regions vulnerable species relevant for deep sea fisheries gobies gobiidae black sea annex iv of the black sea biodiversity and landscape conservation protocol bluemouth (bluemouth redfish) helicolenus dactylopterus all regions relevant for deep sea fisheries atlantic halibut hippoglossus hippoglossus all regions relevant for deep sea fisheries orange roughy hoplostethus atlanticus all regions; ospar i, v vulnerable species relevant for deep sea fisheries silver roughy (pink) hoplosthetus mediterraneus all regions relevant for deep sea fisheries silver scabbard fish (cutless fish) lepidopus caudatus all regions relevant for deep sea fisheries stripped sea bream lithognathus mormyrus mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) golden grey mullet liza aurata black sea annex iv of the black sea biodiversity and landscape conservation protocol leaping mullet liza saliens black sea annex iv of the black sea biodiversity and landscape conservation protocol greater eelpout lycodes esmarkii all regions relevant for deep sea fisheries grenadiers (rattails) other than roundnose grenadier and roughhead grenadier macrouridae other than coryphaenoides rupestris and macrourus berglax all regions relevant for deep sea fisheries roughhead grenadier (rough rattail) macrourus berglax all regions relevant for deep sea fisheries whiting merlangius merlangus baltic sea and black sea rcm baltic recommendation; annex iv of the black sea biodiversity and landscape conservation protocol european eel anguilla anguilla ospar i, ii, iii, iv, baltic sea ospar; helcom atlantic salmon *salmo salar ospar i, ii, iii, iv, baltic sea ospar; helcom bluefin tuna *thunnus thynnus ospar v ospar; helcom blue ling molva dypterygia all regions relevant for deep sea fisheries common mora mora moro all regions relevant for deep sea fisheries mullet mugil spp. black sea annex iv of the black sea biodiversity and landscape conservation protocol black gemfish nesiarchus nasutus all regions relevant for deep sea fisheries snubnosed spiny eel notocanthus chemnitzii all regions relevant for deep sea fisheries smelt osmerus eperlanus baltic sea rcm (regional coordination meeting) baltic recommendation, helcom spanish sea bream pagellus acarne mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) blackspot seabream pagellus bogaraveo mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) common sea bream pagrus pagrus mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) wreckfish polyprion americanus mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) wreckfish polyprion americanus all regions relevant for deep sea fisheries bluefish pomatomus saltatrix black sea annex iv of the black sea biodiversity and landscape conservation protocol small redfish (norway redfish) sebastes viviparus all regions relevant for deep sea fisheries beluga huso huso black sea annex iv of the black sea biodiversity and landscape conservation protocol spiny (deep sea) scorpionfish trachyscorpia cristulata all regions relevant for deep sea fisheries oceanic sea breams brama spp. gsa 1.1, 1.2, 1.3 and black sea gsa 29 annex viii of council regulation (ec) no 894/97 (20) atlantic chub mackerel scomber colias gmelin black sea annex iv of the black sea biodiversity and landscape conservation protocol crystal gobid crystallogobius linearis black sea national management plans rabbit fish chimaera monstrosa baltic sea helcom allis shad alosa alosa baltic sea helcom twaite shad alosa fallax baltic sea helcom autumn-spawning herring clupea harengus subsp. baltic sea helcom zope abramis ballerus baltic sea helcom bleak alburnus alburnus baltic sea helcom asp aspius aspius baltic sea helcom barbel barbus barbus baltic sea helcom gudgeon gobio gobio baltic sea helcom ziege pelecus cultratus baltic sea helcom eurasian minnow phoxinus phoxinus baltic sea helcom vimba vimba vimba baltic sea helcom spined loach cobitis taenia baltic sea helcom trout salmo trutta baltic sea helcom vendace coregonus albula baltic sea helcom baltic houting coregonus balticus synonym: coregonus lavaretus, migratory baltic sea helcom maraena coregonus maraena synonym: coregonus lavaretus, stationary baltic sea helcom pallas's houting coregonus pallasii baltic sea helcom marine smelt osmerus eperlanomarinus baltic sea helcom black-bellied angler lophius budegassa baltic sea helcom sea stickleback spinachia spinachia baltic sea helcom snake pipefish entelurus aequoreus baltic sea helcom straightnose pipefish nerophis ophidion baltic sea helcom worm pipefish nerophis lumbriciformis baltic sea helcom greater pipefish syngnathus acus baltic sea helcom broad-nosed pipefish syngnathus typhle baltic sea helcom roundnose grenadier coryphaenoides rupestris baltic sea helcom haddock melanogrammus aeglefinus baltic sea helcom pollack pollachius pollachius baltic sea helcom ling molva molva baltic sea helcom snakeblenny lumpenus lampretaeformis baltic sea helcom ocean perch sebastes marinus baltic sea helcom norway redfish sebastes viviparus baltic sea helcom miller's thumb cottus gobio baltic sea helcom alpine bullhead cottus poecilopus baltic sea helcom shorthorn sculpin myoxocephalus scorpius baltic sea helcom longspined bullhead taurulus bubalis baltic sea helcom fourhorn sculpin triglopsis quadricornis baltic sea helcom lumpsucker cyclopterus lumpus baltic sea helcom striped seasnail liparis liparis baltic sea helcom montagu's seasnail liparis montagui baltic sea helcom john dory zeus faber baltic sea helcom european seabass dicentrarchus labrax baltic sea helcom ballan wrasse labrus bergylta baltic sea helcom cuckoo wrasse labrus mixtus baltic sea helcom corkwring wrasse symphodus melops baltic sea helcom greater weever trachinus draco baltic sea helcom wolf-fish anarhichas lupus baltic sea helcom lesser sandeel ammodytes marinus baltic sea helcom small sandeel ammodytes tobianus baltic sea helcom painted goby pomatoschistus pictus baltic sea helcom bullet tuna auxis rochei baltic sea helcom little thunny euthynnus alleteratus baltic sea helcom plain bonito orcynopsis unicolor baltic sea helcom atlantic mackerel scomber scombrus baltic sea helcom atlantic halibut hippoglossus hippoglossus baltic sea helcom swordfish xiphias gladius baltic sea helcom niger blackfish centrolophus niger baltic sea helcom cartilaginous fishes chondrichthyes narrow sawfish anoxypristis cuspidata all oceans rfmos, high priority birdbeak dogfish deania calcea all oceans rfmos, high priority smooth lanternshark etmopterus pusillus all oceans rfmos, high priority dwarf sawfish pristis clavata all oceans rfmos, high priority green sawfish pristis zijsron all oceans rfmos, high priority norwegian skate raja (dipturus) nidarosiensis all oceans rfmos, high priority thornback ray raja clavata all oceans rfmos, high priority ospar; helcom undulate ray raja undulata all oceans rfmos, high priority pelagic thresher alopias pelagicus all oceans rfmos, high priority big eye thresher alopias superciliosus all oceans rfmos, high priority common thresher alopias vulpinus all oceans rfmos, high priority; helcom starry ray amblyraja radiata all oceans rfmos, high priority iceland catshark apristurus spp. all oceans rfmos, high priority, vulnerable species relevant for deep sea fisheries silky shark carcharhinus falciformis all oceans rfmos, high priority galapagos shark carcharhinus galapagensis all oceans rfmos, high priority oceanic whitetip shark carcharhinus longimanus all oceans rfmos, high priority sandbar shark carcharhinus plumbeus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii sand tiger shark carcharias taurus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii great white shark carcharodon carcharias all oceans rfmos, high priority gulper shark centrophorus granulosus all oceans and seas rfmos, high priority, barcelona convention annex iii; ospar gulper shark species centrophorus spp. all regions relevant for deep sea fisheries leafscale gulper shark centrophorus squamosus all oceans and seas rfmos, high priority; ospar black dogfish centroscyllium fabricii all oceans rfmos, high priority, relevant for deep sea fisheries portuguese dogfish centroscymnus coelolepis all oceans rfmos, high priority, relevant for deep sea fisheries; ospar longnose velvet dogfish centroscymnus crepidater all oceans rfmos, high priority, vulnerable species relevant for deep sea fisheries basking shark cetorhinus maximus all oceans and seas rfmos, high priority; ospar; helcom rabbit fish (rattail) chimaera monstrosa all regions relevant for deep sea fisheries frilled shark chlamydoselachus anguineus all oceans rfmos, high priority, vulnerable species relevant for deep sea fisheries kitefin shark dalatias licha all oceans rfmos, high priority, vulnerable species relevant for deep sea fisheries stingray dasyatis pastinaca black sea annex iv of the black sea biodiversity and landscape conservation protocol; helcom birdbeak dogfish deania calcea all oceans rfmos, high priority, relevant for deep sea fisheries common skate dipturus batis all oceans and seas rfmos, high priority, barcelona convention annex ii; ospar; helcom white skate *rostroraja alba ospar ii, iii, iv ospar greater lanternshark etmopterus princeps all oceans rfmos, high priority, vulnerable species relevant for deep sea fisheries velvet belly etmopterus spinax all oceans rfmos, high priority, relevant for deep sea fisheries; helcom winghead hammerhead eusphyra blochii all oceans rfmos, high priority school shark, tope shark galeorhinus galeus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii; helcom blackmouth dogfish galeus melastomus all oceans rfmos, high priority, relevant for deep sea fisheries mouse catshark galeus murinus all oceans rfmos, high priority, relevant for deep sea fisheries spiny butterfly ray gymnura altavela all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii sharpnose sevengill shark heptranchias perlo all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex iii bluntnose six-gilled shark hexanchus griseus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii; helcom large-eyed rabbitfish (ratfish) hydrolagus mirabilis all regions relevant for deep sea fisheries shortfin mako isurus oxyrinchus all oceans rfmos, high priority longfin mako isurus paucus all oceans rfmos, high priority porbeagle lamna nasus all oceans rfmos, high priority, ospar; helcom sandy skate leucoraja circularis all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii maltese skate leucoraja melitensis all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii reef manta ray manta alfredi all oceans rfmos, high priority giant manta ray manta birostris all oceans rfmos, high priority longhorned mobula mobula eregoodootenkee all oceans rfmos, high priority lesser devil ray mobula hypostoma all oceans rfmos, high priority spinetail mobula mobula japanica all oceans rfmos, high priority shortfin devil ray mobula kuhlii all oceans rfmos, high priority devil fish mobula mobular all oceans rfmos, high priority munk's devil ray mobula munkiana all oceans rfmos, high priority lesser guinean devil ray mobula rochebrunei all oceans rfmos, high priority chilean devil ray mobula tarapacana all oceans rfmos, high priority smoothtail mobula mobula thurstoni all oceans rfmos, high priority starry smooth-hound mustelus asterias all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex iii common smooth-hound mustelus mustelus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex iii blackspotted smooth-hound mustelus punctulatus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex iii blackmouth catshark galeus melanostomus baltic sea helcom small-spotted catshark scyliorhinus canicula baltic sea helcom thorny skate amblyraja radiata baltic sea helcom shagreen ray leucoraja fullonica baltic sea helcom spotted torpedo torpedo marmorata baltic sea helcom sailfin roughshark (sharpback shark) oxynotus paradoxus all oceans rfmos, high priority, vulnerable species relevant for deep sea fisheries smalltooth sawfish pristis pectinata all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii common sawfish pristis pristis all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii crocodile shark pseudocarcharias kamoharai all oceans rfmos, high priority blue stingray pteroplatytrygon violacea all oceans rfmos, high priority round skate raja fyllae all regions relevant for deep sea fisheries arctic skate raja hyperborea all regions relevant for deep sea fisheries norwegian skate raja nidarosiensus all regions relevant for deep sea fisheries spotted ray raja montagui ospar i, ii, iii, iv ospar; helcom whale shark rhincodon typus all oceans rfmos, high priority blackchin guitarfish rhinobatos cemiculus all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii common guitarfish rhinobatos rhinobatos all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii straightnose rabbitfish rhinochimaera atlantica all regions relevant for deep sea fisheries bottlenose skate rostroraja alba all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii knifetooth dogfish scymnodon ringens all oceans rfmos, high priority, relevant for deep sea fisheries other sharks selachimorpha (or selachii), batoidea (to be defined by species according to landing, survey or catch data) all oceans rfmos, high priority; helcom greenland shark somniosus microcephalus all oceans rfmos, high priority, relevant for deep sea fisheries; helcom scalloped hammerhead sphyrna lewini all oceans rfmos, high priority great hammerhead sphyrna mokarran all oceans rfmos, high priority smooth hammerhead sphyrna zygaena all oceans rfmos, high priority spurdog, spiked dogfish squalus acanthias all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex iii, ospar; helcom sawback angelshark squatina aculeata all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii smoothback angelshark squatina oculata all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii angel shark squatina squatina all oceans + mediterranean and black sea rfmos, high priority, barcelona convention annex ii, ospar; helcom sea lamprey petromyzon marinus ospar i, ii, iii, iv ospar; helcom river lamprey lampetra fluviatilis baltic sea helcom mammals mammalia cetaceans all species cetacea all species all areas council directive 92/43/eec (21) minke whale balaenoptera acutorostrata mediterranean sea rec. gfcm (22)/36/2012/2 & annex ii of the barcelona convention bowhead whale balaena mysticetus ospar i ospar blue whale balaenoptera musculus all ospar ospar northern right whale eubalaena glacialis all ospar ospar sei whale balaenoptera borealis mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention fin whale balaenoptera physalus mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention short-beaked common dolphin delphinus delphis mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention north atlantic right whale eubalaena glacialis mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention long-finned pilot whale globicephala melas mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention risso's dolphin grampus griseus mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention dwarf sperm whale kogia simus mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention humpback whale megaptera novaeangliae mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention blainville's beaked whale mesoplodon densirostris mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention killer whale orcinus orca mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention harbour porpoise phocoena phocoena mediterranean sea; ospar ii, iii rec. gfcm/36/2012/2 & annex ii of the barcelona convention; directive 92/43/eec; ospar sperm whale physeter macrocephalus mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention false killer whale pseudorca crassidens mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention striped dolphin stenella coeruleoalba mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention rough-toothed dolphin steno bredanensis mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention bottlenose dolphin tursiops truncatus mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention cuvier's beaked whale ziphius cavirostris mediterranean sea rec. gfcm/36/2012/2 & annex ii of the barcelona convention monk seal monachus monachus all areas rec. gfcm/35/2011/5 & annex ii of the barcelona convention; directive 92/43/eec saimaa ringed seal phoca hispida saimensis all areas directive 92/43/eec grey seal halichoerus grypus all areas directive 92/43/eec harbour seal phoca vitulina all areas directive 92/43/eec baltic ringed seal phoca hispida bottnica all areas directive 92/43/eec birds aves cory's shearwater calonectris borealis all areas directive 2009/147/ec of the european parliament and of the council (23) great cormorant phalacrocorax carbo all areas directive 2009/147/ec northern gannet morus bassanus all areas directive 2009/147/ec atlantic puffin fratercula arctica all areas directive 2009/147/ec balearic shearwater puffinus mauretanicus all areas directive 2009/147/ec black-headed gull larus ridibundus all areas directive 2009/147/ec common scoter melanitta nigra all areas directive 2009/147/ec european shag phalacrocorax aristotelis all areas directive 2009/147/ec great shearwater ardenna gravis all areas directive 2009/147/ec manx shearwater puffinus puffinus all areas directive 2009/147/ec northern fulmar fulmarus glacialis all areas directive 2009/147/ec scopoli's shearwater calonectris diomedea all areas directive 2009/147/ec sooty shearwater ardenna grisea all areas directive 2009/147/ec yelkouan shearwater puffinus yelkouan all areas directive 2009/147/ec audouin's gull larus audouinii all areas directive 2009/147/ec barrow's goldeneye bucephala islandica all areas directive 2009/147/ec bulwer's petrel bulweria bulwerii all areas directive 2009/147/ec common goldeneye bucephala clangula all areas directive 2009/147/ec european herring gull larus argentatus all areas directive 2009/147/ec glaucous gull larus hyperboreus all areas directive 2009/147/ec great black-backed gull larus marinus all areas directive 2009/147/ec great skua catharacta skua all areas directive 2009/147/ec greater scaup aythya marila all areas directive 2009/147/ec; annex iv of the black sea biodiversity and landscape conservation protocol common pochard aythya ferina black sea annex iv of the black sea biodiversity and landscape conservation protocol lesser black-backed gull larus fuscus all areas directive 2009/147/ec little auk alle alle all areas directive 2009/147/ec long-tailed jaeger stercorarius longicaudus all areas directive 2009/147/ec razorbill alca torda all areas directive 2009/147/ec arctic jaeger stercorarius parasiticus all areas directive 2009/147/ec arctic loon gavia arctica all areas directive 2009/147/ec audubon's shearwater puffinus lherminieri all areas directive 2009/147/ec black guillemot cepphus grylle all areas directive 2009/147/ec black scoter melanitta americana all areas directive 2009/147/ec black-necked grebe podiceps nigricollis all areas directive 2009/147/ec caspian gull larus cachinnans all areas directive 2009/147/ec common eider somateria mollissima all areas directive 2009/147/ec common guillemot uria aalge all areas directive 2009/147/ec common loon gavia immer all areas directive 2009/147/ec common merganser mergus merganser all areas directive 2009/147/ec great crested grebe podiceps cristatus all areas directive 2009/147/ec harlequin duck histrionicus histrionicus all areas directive 2009/147/ec horned grebe podiceps auritus all areas directive 2009/147/ec iceland gull larus glaucoides all areas directive 2009/147/ec king eider somateria spectabilis all areas directive 2009/147/ec long-tailed duck clangula hyemalis all areas directive 2009/147/ec mediterranean gull larus melanocephalus all areas directive 2009/147/ec mew gull larus canus all areas directive 2009/147/ec red-breasted merganser mergus serrator all areas directive 2009/147/ec red-necked grebe podiceps grisegena all areas directive 2009/147/ec red-throated loon gavia stellata all areas directive 2009/147/ec slender-billed gull larus genei all areas directive 2009/147/ec steller's eider polysticta stelleri all areas directive 2009/147/ec pomarine jaeger stercorarius pomarinus all areas directive 2009/147/ec thick-billed murre/br nnig's guillemot uria lomvia all areas directive 2009/147/ec velvet scoter melanitta fusca all areas directive 2009/147/ec yellow-billed loon gavia adamsii all areas directive 2009/147/ec yellow-legged gull larus michahellis all areas directive 2009/147/ec zino's petrel pterodroma madeira all areas directive 2009/147/ec pallas's gull larus ichthyaetus all areas directive 2009/147/ec black-legged kittiwake rissa tridactyla all areas directive 2009/147/ec great white pelican pelecanus onocrotalus all areas directive 2009/147/ec leach's storm-petrel oceanodroma leucorhoa all areas directive 2009/147/ec red phalarope phalaropus fulicarius all areas directive 2009/147/ec red-necked phalarope phalaropus lobatus all areas directive 2009/147/ec wilson's storm-petrel oceanites oceanicus all areas directive 2009/147/ec arctic tern sterna paradisaea all areas directive 2009/147/ec band-rumped storm-petrel hydrobates castro all areas directive 2009/147/ec black tern chlidonias niger all areas directive 2009/147/ec caspian tern hydroprogne caspia all areas directive 2009/147/ec common gull-billed tern gelochelidon nilotica all areas directive 2009/147/ec common tern sterna hirundo all areas directive 2009/147/ec desertas petrel pterodroma deserta all areas directive 2009/147/ec ivory gull pagophila eburnea all areas directive 2009/147/ec lesser crested tern thalasseus bengalensis all areas directive 2009/147/ec little gull hydrocoloeus minutus all areas directive 2009/147/ec little tern sternula albifrons all areas directive 2009/147/ec monteiro's storm-petrel hydrobates monteiroi all areas directive 2009/147/ec roseate tern sterna dougallii all areas directive 2009/147/ec ross's gull rhodostethia rosea all areas directive 2009/147/ec sabine's gull xema sabini all areas directive 2009/147/ec sandwich tern thalasseus sandvicensis all areas directive 2009/147/ec thayer's gull larus thayeri all areas directive 2009/147/ec white-faced storm-petrel pelagodroma marina all areas directive 2009/147/ec european storm-petrel hydrobates pelagicus all areas directive 2009/147/ec lesser black-backed gull larus fuscus fuscus ospar i ospar list of threatened and declining species ivory gull pagophila eburnea ospar i ospar list of threatened and declining species steller's eider polysticta stelleri ospar i ospar list of threatened and declining species little shearwater puffinus assimilis baroli (auct.incert.) ospar v ospar list of threatened and declining species balearic shearwater puffinus mauretanicus ospar ii, iii, iv, v ospar list of threatened and declining species black-legged kittiwake rissa tridactyla ospar i, ii, ospar list of threatened and declining species roseate tern sterna dougallii ospar ii, iii, iv, v ospar list of threatened and declining species iberian guillemot uria aalge iberian population (synonyms: uria aalge albionis, uria aalge ibericus) ospar iv ospar list of threatened and declining species thick-billed murre uria lomvia ospar i ospar list of threatened and declining species reptiles reptilia kemp's ridley sea turtle lepidochelys kempii all areas directive 92/43/eec; rec. gfcm/35/2011/4 & annex ii of the barcelona convention loggerhead turtle caretta caretta all areas directive 92/43/eec; rec. gfcm/35/2011/4 & annex ii of the barcelona convention; ospar leatherback turtle dermochelys coriacea all areas directive 92/43/eec; rec. gfcm/35/2011/4 & annex ii of the barcelona convention; ospar hawksbill sea turtle eretmochelys imbricata all areas directive 92/43/eec; rec. gfcm/35/2011/4 & annex ii of the barcelona convention green turtle chelonia mydas all areas directive 92/43/eec; rec. gfcm/35/2011/4 & annex ii of the barcelona convention nile soft-shelled turtle trionyx triunguis mediterranean sea rec. gfcm/35/2011/4 & annex ii of the barcelona convention molluscs mollusca striped venus chamelea gallina black sea annex iv of the black sea biodiversity and landscape conservation protocol banded wedge shell donacilla cornea black sea annex iv of the black sea biodiversity and landscape conservation protocol eledone especies eledone spp. all areas national management plans mediterranean mussel mytilus galloprovincialis all areas out of med national management plans mediterranean mussel mytilus galloprovincialis black sea annex iv of the black sea biodiversity and landscape conservation protocol patella patella spp. mediterranean sea annex ii of the barcelona convention rapa whelk rapana venosa black sea annex iv of the black sea biodiversity and landscape conservation protocol tuberculate cockle acanthocardia tuberculata all areas national management plans murex bolinus brandaris all areas national management plans hard clam callista chione all areas national management plans wedge shell donax trunculus all areas national management plans ocean quahog arctica islandica ospar ii ospar azorean barnacle megabalanus azoricus ospar v all where it occurs ospar dog whelk nucella lapillus ospar ii, iii, iv ospar flat oyster ostrea edulis ospar ii ospar azorean limpet patella ulyssiponensis aspera all ospar where it occurs ospar crustaceans crustacea lobster homarus gammarus mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) deep-water red crab chaceon (geryon) affinis all regions relevant for deep sea fisheries brown shrimp crangon crangon black sea annex iv of the black sea biodiversity and landscape conservation protocol baltic prawn palaemon adspersus black sea annex iv of the black sea biodiversity and landscape conservation protocol rockpool prawn palaemon elegans black sea annex iv of the black sea biodiversity and landscape conservation protocol crawfish palinuridae mediterranean sea regulation (ec) no 1967/2006 (min. cons. size) cnidarians cnidaria red coral corallium rubrum mediterranean sea rec. gfcm/36/2012/1 & rec. gfcm/35/2011/2 for prohibited species: only individuals captured dead shall be used. they shall be discarded after the measurements, the data collection is annual and the updating/processing of the data must be done timely to fit the schedule of the stock assessments. biological data table 1e freshwater anadromous and catadromous species species (common name) species (scientific name) non-marine areas where the stock is located/stock code european eel anguilla anguilla eel management units as defined in accordance with council regulation (ec) no 1100/2007 (24) salmon salmo salar all areas of natural distribution sea trout salmo trutta all inland waters that exit in the baltic sea table 2 fishing activity (metier) by region level 1 level 2 level 3 level 4 level 5 level 6 loa classes (m) (d) activity gear classes gear groups gear type target assemblage (a) mesh size and other selective devices < 10 10-< 12 12-< 18 18-< 24 24-< 40 40 & + fishing activity dredges dredges boat dredge [drb] anadromous species (ana) catadromous species (cat) cephalopods (cep) crustaceans (cru) demersal species (def) deep-water species (dws) finfish (fif) freshwater species (no code) miscellaneous (mis) mixed cephalopod and demersal (mcf) mixed crustaceans and demersal (mcd) mixed deep-water species and demersal (mdd) mixed pelagic and demersal (mpd) molluscs (mol) large pelagic fish (lpf) small pelagic fish (spf) large pelagic fish (lpf) and small pelagic fish (spf) (b) mechanised/suction dredge [hmd] (b) trawls bottom trawls bottom otter trawl [otb] (b) multi-rig otter trawl [ott] (b) bottom pair trawl [ptb] (b) beam trawl [tbb] (b) pelagic trawls midwater otter trawl [otm] (b) midwater pair trawl [ptm] (b) hooks and lines rods and lines hand and pole lines [lhp] [lhm] (b) trolling lines [ltl] (b) longlines drifting longlines [lld] (b) set longlines [lls] (b) traps traps pots and traps [fpo] (b) fyke nets [fyk] (b) stationary uncovered pound nets [fpn] (b) fixed installations for fences and weirs (code needed) (b) nets nets trammel net [gtr] (b) set gillnet [gns] (b) driftnet [gnd] (b) seines surrounding nets purse seine [ps] (b) lampara nets [la] (b) seines (c) fly shooting seine [ssc] (b) anchored seine [sdn] (b) pair seine [spr] (b) beach and boat seine [sb] [sv] (b) other gear other gear glass eel fishing (no code) glass eel (b) misc. (specify) misc. (specify) (b) other activity than fishing other activity than fishing inactive inactive (a) according to existing coding in relevant regulations. (b) according to existing coding in relevant regulations. (c) with fish aggregating devices (fads)/in free schools. (d) in the mediterranean < 6m and 6-12 m. table 3 species to be collected for recreational fisheries area species 1 baltic sea (ices subdivisions 22-32 salmon, eels and seatrout (including in fresh water) and cod. 2 north sea (ices areas iiia, iv and viid) salmon and eels (including in fresh water). seabass, cod, pollack and elasmobranchs 3 eastern arctic (ices areas i and ii) salmon and eels (including in fresh water). cod, pollack and elasmobranchs 4 north atlantic (ices areas v-xiv and nafo areas) salmon and eels (including in fresh water). seabass, cod, pollack, elasmobranchs and highly migratory iccat species. 5 mediterranean sea eels (including in fresh water), elasmobranchs and highly migratory iccat species. 6 black sea eels (including in fresh water), elasmobranchs and highly migratory iccat species table 4 fishing activity variables variables (25) unit capacity number of vessels number gt, kw, vessel age number effort days at sea days hours fished (optional) hours fishing days days kw * fishing days number gt * fishing days number number of trips number number of fishing operations number number of nets/length (*) number/metres number of hooks, number of lines (*) number numbers of pots, traps (*) number landings value of landings total and per commercial species euro live weight of landings total and per species tonnes prices by commercial species euro/kg fleet economic data table 5a economic variables for the fleet variable group variable unit income gross value of landings euro income from leasing out quota or other fishing rights euro other income euro labour costs personnel costs euro value of unpaid labour euro energy costs energy costs euro repair and maintenance costs repair and maintenance costs euro other operating costs variable costs euro non-variable costs euro lease/rental payments for quota or other fishing rights euro subsidies operating subsidies euro subsidies on investments euro capital costs consumption of fixed capital euro capital value value of physical capital euro value of quota and other fishing rights euro investments investments in tangible assets, net euro financial position long/short debt euro total assets euro employment engaged crew number unpaid labour number total hours worked per year number fleet number of vessels number mean loa of vessels metres total vessel's tonnage gt total vessel's power kw mean age of vessels years effort days at sea days energy consumption litres number of fishing enterprises/units number of fishing enterprises/units number production value per species value of landings per species euro average price per species euro/kg fleet economic data table 5b fleet segmentation length classes (loa) (26) active vessels 0-< 10 m 0-< 6 m 10-< 12 m 6-< 12 m 12-< 18 m 18-< 24 m 24-< 40 m 40 m or larger using active gears beam trawlers demersal trawlers and/or demersal seiners pelagic trawlers purse seiners dredgers vessel using other active gears vessels using polyvalent active gears only using passive gears vessels using hooks (27) (27) drift and/or fixed netters vessels using pots and/or traps vessels using other passive gears vessels using polyvalent passive gears only using polyvalent gears vessels using active and passive gears inactive vessels fleet economic data table 5c geographical stratification by region sub-region/fishing ground region supra region i ii iii cluster of spatial units on level 3 as defined in table 3 (nafo division) nafo (fao area 21) baltic sea; north sea; eastern arctic; nafo; extended north-western waters (ices areas v, vi and vii) and southern western waters cluster of spatial units on level 4 as defined in table 3 (ices subdivision) baltic sea (ices areas iii b-d) cluster of spatial units on level 3 as defined in table 3 (ices division) north sea (ices areas iiia and iv), eastern arctic (ices areas i and ii) north-western waters (ices areas vb (only union waters), vi and vii) non-union north-western waters (ices areas va and vb) (only non-union waters)) cluster of spatial units on level 3 as defined in table 3 (ices/cecaf division) southern western waters (ices zones viii, ix and x (waters around azores), cecaf areas 34.1.1, 34.1.2 and 34.2.0 (waters around madeira and the canary islands)) cluster of spatial units on level 4 as defined in table 3 (gsa) mediterranean sea (maritime waters of the mediterranean to the east of line 5 36 west), black sea (gfcm geographical sub-area as defined in resolution fcm/33/2009/2) mediterranean sea and black sea rfmo's sampling sub-areas (except gfcm) other regions where fisheries are operated by union vessels and managed by rfmos to which the european union is contracting party or observer (e.g. iccat, iotc, cecaf etc.) other regions. table 6 social variables for the fishing and aquaculture sectors variable unit employment by gender number fte by gender number unpaid labour by gender number employment by age number employment by education level number per education level employment by nationality number from eu, eea and non-eu/eea employment by employment status number fte national number table 7 economic variables for the aquaculture sector variable group variable unit income (**) gross sales per species euro other income euro personnel costs personnel costs euro value of unpaid labour euro energy costs energy costs euro raw material costs livestock costs euro feed costs euro repair and maintenance repair and maintenance euro other operating costs other operating costs euro subsidies operating subsidies euro subsidies on investments euro capital costs consumption of fixed capital euro capital value total value of assets euro financial results financial income euro financial expenditures euro investments net investments euro debt debt euro raw material weight livestock used kg fish feed used kg weight of sales weight of sales per species kg employment persons employed number/fte unpaid labour number/fte number of hours worked by employees and unpaid workers hours number of enterprises number of enterprises (by category on the number of persons employed) number table 8 environmental variables for the aquaculture sector variable specification unit medicines or treatments administered (28) by type gram mortalities (29) per cent table 9 segmentation to be applied for the collection of aquaculture data (30) fish farming techniques (31) polyculture hatcheries and nurseries (32) shellfish farming techniques ponds tanks and raceways enclosures and pens (35) recirculation systems (34) other methods cages (36) all methods off-bottom on-bottom (33) other rafts long line salmon trout sea bass & sea bream carp tuna eel sturgeon (eggs for human consumption) other fresh water fish other marine fish mussel oyster clam crustaceans other molluscs multispecies seaweeds other aquatic organisms table 10 research surveys at sea name of the survey acronym area period main targeted species baltic sea baltic international trawl survey bits q1 bits q4 iiias, iiib-d 1st and 4th quarter cod and other demersal species baltic international acoustic survey (autumn) bias iiia, iiib-d sep-oct herring and sprat gulf of riga acoustic herring survey grahs iiid 3rd quarter herring sprat acoustic survey spras iiid may sprat and herring r gen herring larvae survey rhls iiid march-june herring north sea and eastern arctic (ices areas i and ii) international bottom trawl survey ibts q1 ibts q3 iiia, iv 1st and 3rd quarter haddock, cod, saithe, herring, sprat, whiting, mackerel, norway pout. north sea beam trawl survey bts ivb,ivc,viid 3rd quarter plaice, sole demersal young fish survey dyfs coasts of ns 3rd and 4th quarter plaice, sole, brown shrimp sole net survey sns ivb, ivc 3rd quarter sole, plaice north sea sandeels survey nsss iva, ivb 4th quarter sandeels international ecosystem survey in the nordic seas ash iia may herring, blue whiting redfish survey in the norwegian sea and adjacent waters rednor ii august- september redfish mackerel egg survey (triennial) nsmegs iv may-july mackerel egg production herring larvae survey ihls iv,viid 1st and 3rd quarter herring, sprat larvae ns herring acoustic survey nhas iiia, iv,via june, july herring, sprat nephrops tvsurvey (fu 3&4) ntv3&4 iiia 2nd or 3rd quarter nephrops nephrops tvsurvey (fu 6) ntv6 ivb september nephrops nephrops tvsurvey (fu 7) ntv7 iva 2nd or 3rd quarter nephrops nephrops tvsurvey (fu 8) ntv8 ivb 2nd or 3rd quarter nephrops nephrops tvsurvey (fu 9) ntv9 iva 2nd or 3rd quarter nephrops north atlantic (ices areas v-xiv and nafo areas) international redfish trawl and acoustic survey (biennial) redtas va, xii, xiv; nafo sa 1-3 june/july redfish flemish cap groundfish survey fcgs 3m july demersal species greenland groundfish survey ggs xiv, nafo sa1 october/november cod, redfish and other demersal species 3lno groundfish survey platuxa nafo 3lno 2nd or 3rd quarter demersal species western ibts 4th quarter (including porcupine survey) ibts q4 via, vii, viii, ixa 4th quarter demersal species scottish western ibts ibts q1 via,viia march gadoids, herring, mackerel isbcbts september isbcbts viia f g september sole, plaice wcbts viie bts viie october sole, plaice, anglerfish, lemon sole blue whiting survey vi, vii 1st and 2nd quarter blue whiting international mackerel and horse mackerel egg survey (triennial) megs via, vii,viii, ixa january-july mackerel, horse mackerel egg production sardine, anchovy horse mackerel acoustic survey viii, ix march-april-may sardine, anchovy, mackerel, horse mackerel abundance indices sardine depm (triennial) viiic, ixa 2nd and 4th quarter sardine ssb and use of cufes spawning/pre-spawning herring/boarfish acoustic survey via, viia-g july, sept, nov, march, jan herring, sprat biomass of anchovy bioman viii may anchovy ssb (dep) nephrops uwtv survey (offshore) uwtv (fu 11-13) via 2nd or 3rd quarter nephrops nephrops uwtv irish sea uwtv (fu 15) viia august nephrops nephrops uwtv survey aran grounds uwtv (fu 17) viib june nephrops nephrops uwtv survey celtic sea uwtv (fu 20-22) viig,h,j july nephrops nephrops survey offshore portugal neps uwtv (fu 28-29) ixa june nephrops mediterranean waters and black sea pan-mediterranean acoustic survey () medias gsa 1, 6, 7, 9, 10, 15, 16, 17, 18, 20, 22 spring-summer (qtrs 2-3) small pelagic species bottom trawl survey in black sea, btsbs gsa 29 spring-autumn (qtrs 2, 3, 4) turbot pelagic trawl survey in black sea, ptsbs gsa 29 spring-autumn (qtrs 2, 3, 4) sprat and whiting international bottom trawl survey in the mediterranean (), medits gsa 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 15, 16, 17, 18, 19, 20, 22, 23, 25 spring-summer (qtrs 2-3) demersal species table 11 economic and social variables for the processing industry sector that may be collected on a voluntary basis variable group variable unit economic variables income turnover euro other income euro personnel costs personnel costs euro value of unpaid labour euro payment for external agency workers (optional) euro energy costs energy costs euro raw material costs purchase of fish and other raw material for production euro other operational costs other operational costs euro subsidies operating subsidies euro subsidies on investments euro capital costs consumption of fixed capital euro capital value total value of assets euro financial results financial income euro financial expenditures euro investments net investments euro debt debt euro employment number of persons employed number fte national number unpaid labour number number of hours worked by employees and unpaid workers number number of enterprises number of enterprises number weight of raw material (optional) weight of raw material per species and origin (optional) kg social variables employment by gender number employment by age number employment by education level number per education level employment by nationality number per country in the world fte national number (1) council regulation (ec) no 1224/2009 of 20 november 2009 establishing a community control system for ensuring compliance with the rules of the common fisheries policy, amending regulations (ec) no 847/96, (ec) no 2371/2002, (ec) no 811/2004, (ec) no 768/2005, (ec) no 2115/2005, (ec) no 2166/2005, (ec) no 388/2006, (ec) no 509/2007, (ec) no 676/2007, (ec) no 1098/2007, (ec) no 1300/2008, (ec) no 1342/2008 and repealing regulations (eec) no 2847/93, (ec) no 1627/94 and (ec) no 1966/2006 (oj l 343, 22.12.2009, p. 1). (2) commission implementing regulation (eu) no 404/2011 of 8 april 2011 laying down detailed rules for the implementation of council regulation (ec) no 1224/2009 establishing a community control system for ensuring compliance with the rules of the common fisheries policy (oj l 112, 30.4.2011, p. 1). (3) regulation (eu) no 1380/2013 of the european parliament and of the council of 11 december 2013 on the common fisheries policy, amending council regulations (ec) no 1954/2003 and (ec) no 1224/2009 and repealing council regulations (ec) no 2371/2002 and (ec) no 639/2004 and council decision 2004/585/ec (oj l 354, 28.12.2013, p. 22). (4) as specified in annex xi of regulation (eu) no 404/2011. (5) data on the processing industry may be collected on a voluntary base, in that case the segmentation and variable in table 11 may be used. (6) see table 2. (7) including specific requirements for rfmos such as specified in regulation (eu) no 1343/2011 of the european parliament and of the council of 13 december 2011 on certain provisions for fishing in the gfcm (general fisheries commission for the mediterranean) agreement area and amending council regulation (ec) no 1967/2006 concerning management measures for the sustainable exploitation of fishery resources in the mediterranean sea (oj l 347, 30.12.2011, p. 44). (8) commission regulation (ec) no 26/2004 of 30 december 2003 on the community fishing fleet register (oj l 5, 9.1.2004, p. 25). (9) regulation (ec) no 1893/2006 of the european parliament and of the council of 20 december 2006 establishing the statistical classification of economic activities nace revision 2 and amending council regulation (eec) no 3037/90 as well as certain ec regulations on specific statistical domains (oj l 393, 30.12.2006, p. 1). (10) regulation (ec) no 762/2008 of the european parliament and of the council of 9 july 2008 on the submission by member states of statistics on aquaculture and repealing council regulation (ec) no 788/96 (oj l 218, 13.8.2008, p. 1). (11) international council for the exploration of the sea. (12) international baltic sea fisheries commission. (13) food and agricultural organisation of the united nations. (14) to be reported at species level. (15) barcelona convention for the protection of the marine environment and the coastal region of the mediterranean. (16) ospar convention for the protection of the marine environment of the north-east atlantic. (17) helcom convention on the protection of the marine environment of the baltic sea area. (18) council regulation (ec) no 2347/2002 of 16 december 2002 establishing specific access requirements and associated conditions applicable to fishing for deep-sea stocks (oj l 351, 28.12.2002, p. 6). (19) council regulation (ec) no 1967/2006 of 21 december 2006 concerning management measures for the sustainable exploitation of fishery resources in the mediterranean sea, amending regulation (eec) no 2847/93 and repealing regulation (ec) no 1626/94 (oj l 409, 30.12.2006, p. 11). (20) council regulation (ec) no 894/97 of 29 april 1997 laying down certain technical measures for the conservation of fishery resources (oj l 132, 23.5.1997, p. 1). (21) council directive 92/43/eec of 21 may 1992 on the conservation of natural habitats and of wild fauna and flora (oj l 206, 22.7.1992, p. 7). (22) general fisheries commission for the mediterranean. (23) directive 2009/147/ec of the european parliament and of the council of 30 november 2009 on the conservation of wild birds (oj l 20, 26.1.2010, p. 7). (24) council regulation (ec) no 1100/2007 of 18 september 2007 establishing measures for the recovery of the stock of european eel (oj l 248, 22.9.2007, p. 17). (25) all variables to be reported at the aggregation level (metiers and fleet segment) specified in table 3 and table 5b. and by sub-region/fishing ground as specified in table 5cb. (*) collection of these variables for vessels less than 10 metres is to be agreed at marine region level (26) for vessels less than 12 metres in the mediterranean sea and the black sea, the length categories are 0-< 6, 6-< 12 metres. for all other regions, the length categories are defined as 0-< 10, 10-< 12 metres. (27) vessels less than 12 metres using passive gears in the mediterranean sea and the black sea may be disaggregated by gear type. the fleet segment definition shall also include an indication of the supraregion and, if available, a geographical indicator to identify vessels fishing in outermost regions and exclusively outside eu waters (**) includes direct payments, e.g. compensation for stopping trading, refunds of fuel duty or similar lump sum compensation payments; excludes social benefit payments and indirect subsidies, e.g. reduced duty on inputs such as fuel or investment subsidies. (28) extrapolated from data recorded under annex i, point 8(b), of regulation (ec) no 852/2004 of the european parliament and of the council (oj l 139, 30.4.2004, p. 1). (29) extrapolated as a percentage of national production from data recorded under council directive 2006/88/ec (oj l 328, 24.11.2006, p. 14), article 8, paragraph 1(b). (30) for definitions of farming techniques, see regulation (ec) no 762/2008. (31) enterprises shall be segmented according to their main farming technique. (32) hatcheries and nurseries are defined as places for the artificial breeding, hatching and rearing through the early life stages of aquatic animals. for statistical purposes, hatcheries are limited to the production of fertilised eggs. further juveniles stages of aquatic animals are considered being produced in nurseries. when hatcheries and nurseries are closely associated, statistics shall refer only to the latest juvenile stage produced. (com(2006) 864 of 19 july 2007) (33) on-bottom techniques cover shellfish farming in inter-tidal areas (directly on the ground or surelevated) (34) recirculation systems means systems where the water is reused after some form of treatment (e.g. filtering). (35) enclosures and pens are defined as areas of water confined by nets, mesh and other barriers allowing uncontrolled water interchange and distinguished by the fact that enclosures occupy the full water column between substrate and surface; pens and enclosures generally enclose a relatively large volume of water. (com(2006) 864 of 19 july 2007). (36) cages are defined as open or covered enclosed structures constructed with net, mesh or any porous material allowing natural water interchange. these structures may be floating, suspended or fixed to the substrate but still permitting water interchange from below. (com(2006) 864 of 19 july 2007).

name: commission implementing decision (eu) 2016/1255 of 29 july 2016 amending implementing decisions (eu) 2015/1500 and (eu) 2015/2055 on protective measures and vaccination against lumpy skin disease in greece (notified under document c(2016) 5035) (text with eea relevance) type: decision_impl subject matter: agricultural policy; health; europe; means of agricultural production; regions of eu member states; agricultural activity date published: 2016-07-30 30.7.2016 en official journal of the european union l 205/20 commission implementing decision (eu) 2016/1255 of 29 july 2016 amending implementing decisions (eu) 2015/1500 and (eu) 2015/2055 on protective measures and vaccination against lumpy skin disease in greece (notified under document c(2016) 5035) (only the greek text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 89/662/eec of 11 december 1989 concerning veterinary checks in intra-community trade with a view to the completion of the internal market (1), and in particular article 9(4) thereof, having regard to council directive 90/425/eec of 26 june 1990 concerning veterinary and zootechnical checks applicable in intra-community trade in certain live animals and products with a view to the completion of the internal market (2), and in particular article 10(4) thereof, having regard to council directive 92/119/eec of 17 december 1992 introducing general community measures for the control of certain animal diseases and specific measures relating to swine vesicular disease (3), and in particular article 19(1)(a), (3)(a) and article 19(6) thereof, having regard to council directive 2002/99/ec of 16 december 2002 laying down the animal health rules governing the production, processing, distribution and introduction of products of animal origin for human consumption (4), and in particular article 4(3) thereof, whereas: (1) directive 92/119/eec lays down general control measures to be applied in the event of an outbreak of certain animal diseases, including lumpy skin disease (lsd). these control measures include the establishment of protection and surveillance zones around the infected holding, and they also provide for emergency vaccination in the case of an outbreak of lsd as a supplement to other control measures. (2) commission implementing decision (eu) 2015/1500 (5) lays down certain protective animal health control measures in relation to the confirmation of lsd in greece in 2015. those measures include the establishment of a restricted zone which is described in the annex to that implementing decision, and which includes the area where lsd was confirmed and the protection and surveillance zones established by greece in accordance with directive 92/119/eec. (3) following the evolution of the epidemiological situation in greece, the commission adopted commission implementing decision (eu) 2015/2055 (6). that implementing decision provides that greece may carry out emergency vaccination of bovine animals kept on holdings in the vaccination zone as set out in annex i to that implementing decision. implementing decision (eu) 2015/2055 also amended certain provisions of implementing decision (eu) 2015/1500, including the extension of the restricted zone set out in the annex thereto. (4) implementing decisions (eu) 2015/1500 and (eu) 2015/2055 were subsequently amended by commission implementing decision (eu) 2015/2311 (7), in order to extend the restricted zone set out in the annex to implementing decision (eu) 2015/1500 and the vaccination zone as set out in annex i to implementing decision (eu) 2015/2055, following confirmation of additional outbreaks in the regional unit of chalkidiki and the receipt of notification from greece of its intention to carry out vaccination against lsd in certain regional units. (5) the annex to implementing decision (eu) 2015/1500 and annex ii to implementing decision (eu) 2015/2055 were later amended by commission implementing decision (eu) 2016/1116 (8), in order to take account of subsequent developments in the epidemiological situation in greece and vaccination measures taken by that member state. (6) since 19 july 2016, greece has reported a new outbreak of lsd in the regional unit of achaia, an area of mainland greece, in the peloponnese peninsula, where no outbreaks of lsd have previously been reported and which is located more than 150 km south from the closest regional unit currently subject to restrictions and vaccination measures in relation to lsd. (7) taking into account the current epidemiological situation in greece, and the speed of transmission of lsd, it is necessary to extend the restricted zone set out in the annex to implementing decision (eu) 2015/1500, as well as the vaccination zone as set out in annex i to implementing decision (eu) 2015/2055 to include the entire territory of mainland greece. implementing decisions (eu) 2015/1500 and (eu) 2015/2055 should therefore be amended accordingly. (8) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 the annex to implementing decision (eu) 2015/1500 is replaced by the text set out in annex i to this decision. article 2 annex i to implementing decision (eu) 2015/2055 is replaced by the text set out in annex ii to this decision. article 3 this decision is addressed to the hellenic republic. done at brussels, 29 july 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 395, 30.12.1989, p. 13. (2) oj l 224, 18.8.1990, p. 29. (3) oj l 62, 15.3.1993, p. 69. (4) oj l 18, 23.1.2003, p. 11. (5) commission implementing decision (eu) 2015/1500 of 7 september 2015 concerning certain protective measures against lumpy skin disease in greece and repealing implementing decision (eu) 2015/1423 (oj l 234, 8.9.2015, p. 19). (6) commission implementing decision (eu) 2015/2055 of 10 november 2015 laying down the conditions for setting out the programme for emergency vaccination of bovine animals against lumpy skin disease in greece and amending implementing decision (eu) 2015/1500 (oj l 300, 17.11.2015, p. 31). (7) commission implementing decision (eu) 2015/2311 of 9 december 2015 amending implementing decisions (eu) 2015/1500 and (eu) 2015/2055 on protective measures against lumpy skin disease in greece (oj l 326, 11.12.2015. p. 65). (8) commission implementing decision (eu) 2016/1116 of 7 july 2016 amending implementing decisions (eu) 2015/1500 and (eu) 2015/2055 on protective measures and vaccination against lumpy skin disease in greece (oj l 186, 9.7.2016, p. 24). annex i the annex to implementing decision (eu) 2015/1500 is replaced by the following: annex restricted zones referred to in article 2(b) a. the following regions in greece: region of attica region of central greece region of central macedonia region of eastern macedonia and thrace region of epirus region of peloponnese region of thessaly region of western greece region of western macedonia b. the following regional units in greece: regional unit of limnos. annex ii annex i to implementing decision (eu) 2015/2055 is replaced by the following: annex i a. the following regions in greece: region of attica region of central greece region of central macedonia region of eastern macedonia and thrace region of epirus region of peloponnese region of thessaly region of western greece region of western macedonia b. the following regional units in greece: regional unit of limnos.

name: council decision (eu) 2016/1225 of 18 july 2016 on the conclusion of the protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part, on a framework agreement between the european union and the republic of lebanon on the general principles for the participation of the republic of lebanon in union programmes type: decision subject matter: european construction; international affairs; asia and oceania; cooperation policy date published: 2016-07-28 28.7.2016 en official journal of the european union l 202/3 council decision (eu) 2016/1225 of 18 july 2016 on the conclusion of the protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part, on a framework agreement between the european union and the republic of lebanon on the general principles for the participation of the republic of lebanon in union programmes the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 212, in conjunction with article 218(6)(a) and article 218(7) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) in accordance with council decision (eu) 2015/268 (2), the protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part (3), on a framework agreement between the european union and the republic of lebanon on the general principles for the participation of the republic of lebanon in union programmes (the protocol) was signed on behalf of the union on 9 february 2015. (2) the objective of the protocol is to lay down the financial and technical rules enabling the republic of lebanon to participate in certain union programmes. the horizontal framework established by the protocol sets out principles for economic, financial and technical cooperation and allows the republic of lebanon to receive assistance, in particular financial assistance, from the union pursuant to those programmes. that framework applies only to those union programmes for which the relevant constitutive legal acts provide for the possibility of the participation of the republic of lebanon. the conclusion of the protocol does not therefore entail the exercise of powers under the various sectoral policies pursued by the programmes, which are exercised when establishing the programmes. (3) the protocol should be approved on behalf of the union, has adopted this decision: article 1 the protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part, on a framework agreement between the european union and the republic of lebanon on the general principles for the participation of the republic of lebanon in union programmes is hereby approved on behalf of the union (4). article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 10 of the protocol (5). article 3 the commission is authorised to determine, on behalf of the union, the specific terms and conditions applicable to the participation of the republic of lebanon in each particular union programme, including the financial contribution to be paid. the commission shall keep the relevant working party of the council informed. article 4 this decision shall enter into force on the date of its adoption. done at brussels, 18 july 2016. for the council the president f. mogherini (1) consent of 23 june 2016 (not yet published in the official journal). (2) council decision (eu) 2015/268 of 17 december 2014 on the signing, on behalf of the european union, and provisional application of the protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part, on a framework agreement between the european union and the republic of lebanon on the general principles for the participation of the republic of lebanon in union programmes (oj l 47, 20.2.2015, p. 1). (3) oj l 143, 30.5.2006, p. 2. (4) the protocol has been published in oj l 47, 20.2.2015, p. 3 together with the decision on signature. (5) the date of entry into force of the protocol will be published in the official journal of the european union by the general secretariat of the council.

name: commission implementing decision (eu) 2016/1209 of 12 july 2016 replacing the annex to commission implementing decision 2013/115/eu on the sirene manual and other implementing measures for the second generation schengen information system (sis ii) (notified under document c(2016) 4283) type: decision_impl subject matter: communications; information and information processing; information technology and data processing; documentation; international law date published: 2016-07-28 28.7.2016 en official journal of the european union l 203/35 commission implementing decision (eu) 2016/1209 of 12 july 2016 replacing the annex to commission implementing decision 2013/115/eu on the sirene manual and other implementing measures for the second generation schengen information system (sis ii) (notified under document c(2016) 4283) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (ec) no 1987/2006 of the european parliament and of the council of 20 december 2006 on the establishment, operation and use of the second generation schengen information system (sis ii) (1), and in particular article 8(4), article 9(1), article 20(3), point (a) of article 22, article 36(4) and article 37(7) thereof, having regard to council decision 2007/533/jha of 12 june 2007 on the establishment, operation and use of the second generation schengen information system (sis ii) (2), and in particular article 8(4), article 9(1), article 20(4), point (a) of article 22, article 51(4) and article 52(7) thereof, whereas: (1) the second generation schengen information system (sis ii) entered into operation on 9 april 2013. it contains sufficient information allowing the identification of a person or an object and the necessary action to be taken. in addition, for sis ii to function effectively, member states exchange supplementary information related to the alerts. this exchange of supplementary information is carried out by the sirene bureaux. (2) to facilitate the work of the sirene bureaux and of users of sis ii involved in sirene operations in their daily work, a sirene manual was adopted in 2008 through a former first pillar legal instrument, commission decision 2008/333/ec (3), as well as a former third pillar instrument, commission decision 2008/334/jha (4). those decisions were replaced by commission implementing decision 2013/115/eu (5) in order to better reflect the operational needs of users and staff involved in sirene operations, to improve consistency of working procedures and to ensure that technical rules correspond to the state of the art. (3) the overall revision and update of the sirene manual took place in the beginning of 2015 with the adoption of commission implementing decision (eu) 2015/219 (6). certain measures provided for in implementing decision (eu) 2015/219 were intended to accelerate the information exchange on subjects of discreet and specific checks involved in terrorism and serious crime. due to the urgency to adopt such measures in the light of the increasing threat of terrorism, in particular following the attack in paris on 7 january 2015 implementing decision (eu) 2015/219 had to be adopted without the complete croatian linguistic version. this deficiency needs to be remedied by re-adopting the rules contained in implementing decision (eu) 2015/219 in all official languages of the institutions of the union. (4) in order to facilitate the information exchange on terrorist suspects and persons involved in serious crime it is necessary to waive the alert compatibility rules with regard to alerts on discreet and specific check without prejudice to the priority rules on alerts. member states should ensure that their end-users carry out the action related the alerts having priority. (5) given that regulation (ec) no 1987/2006 builds upon the schengen acquis, denmark, in accordance with article 5 of the protocol on the position of denmark annexed to the treaty on european union and the treaty establishing the european community, notified by letter of 15 june 2007 the transposition of this acquis into its national law. denmark participates in decision 2007/533/jha. it is therefore bound to implement this decision. (6) the united kingdom is taking part in this decision to the extent that it does not concern the exchange of supplementary information in relation to articles 24 and 25 of regulation (ec) no 1987/2006, in accordance with article 5(1) of protocol no 19 on the schengen acquis integrated into the framework of the european union, annexed to the treaty on european union and to the treaty on the functioning of the european union, and article 8(2) of council decision 2000/365/ec (7). (7) ireland is taking part in this decision to the extent that it does not concern the exchange of supplementary information in relation to articles 24 and 25 of regulation (ec) no 1987/2006, in accordance with article 5(1) of protocol no 19 on the schengen acquis integrated into the framework of the european union annexed to the treaty on european union and to the treaty on the functioning of the european union, and article 6(2) of council decision 2002/192/ec (8). (8) this decision constitutes an act building upon, or otherwise relating to, the schengen acquis within, respectively, the meaning of article 3(2) of the 2003 act of accession, article 4(2) of the 2005 act of accession and article 4(2) of the 2011 act of accession. (9) as regards iceland and norway, this decision constitutes a development of the provisions of the schengen acquis within the meaning of the agreement concluded by the council of the european union and the republic of iceland and the kingdom of norway concerning the latters' association with the implementation, application and development of the schengen acquis (9), which fall within the area referred to in article 1, point g of council decision 1999/437/ec (10). (10) as regards switzerland, this decision constitutes a development of the provisions of the schengen acquis within the meaning of the agreement signed between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis (11), which fall within the area referred to in article 1, point g of decision 1999/437/ec read in conjunction with article 3 of council decision 2008/146/ec (12) and with article 3 of council decision 2008/149/jha (13). (11) as regards liechtenstein, this decision constitutes a development of the provisions of the schengen acquis within the meaning of the protocol between the european union, the european community, the swiss confederation and the principality of liechtenstein on the accession of the principality of liechtenstein to the agreement between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis (14), which fall within the area referred to in article 1, point g, of decision 1999/437/ec read in conjunction with article 3 of council decision 2011/349/eu (15) and article 3 of council decision 2011/350/eu (16). (12) the measures provided for in this decision are in accordance with the opinion of the committee set up by article 51 of regulation (ec) no 1987/2006 and article 67 of decision 2007/533/jha, has adopted this decision: article 1 the annex to implementing decision 2013/115/eu is replaced by the text in the annex to this decision. article 2 this decision is addressed to the member states. done at brussels, 12 july 2016. for the commission dimitris avramopoulos member of the commission (1) oj l 381, 28.12.2006, p. 4. (2) oj l 205, 7.8.2007, p. 63. (3) commission decision 2008/333/ec of 4 march 2008 adopting the sirene manual and other implementing measures for the second generation schengen information system (sis ii) (oj l 123, 8.5.2008, p. 1). (4) commission decision 2008/334/jha of 4 march 2008 adopting the sirene manual and other implementing measures for the second generation schengen information system (sis ii) (oj l 123, 8.5.2008, p. 39). (5) commission implementing decision 2013/115/eu of 26 february 2013 on the sirene manual and other implementing measures for the second generation schengen information system (sis ii) (oj l 71, 14.3.2013, p. 1). (6) commission implementing decision (eu) 2015/219 of 29 january 2015 replacing the annex to implementing decision 2013/115/eu on the sirene manual and other implementing measures for the second generation schengen information system (sis ii) (oj l 44, 18.2.2015, p. 75). (7) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (8) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (9) oj l 176, 10.7.1999, p. 36. (10) council decision 1999/437/ec of 17 may 1999 on certain arrangements for the application of the agreement concluded by the council of the european union and the republic of iceland and the kingdom of norway concerning the association of those two states with the implementation, application and development of the schengen acquis (oj l 176, 10.7.1999, p. 31). (11) oj l 53, 27.2.2008, p. 52. (12) council decision 2008/146/ec of 28 january 2008 on the conclusion, on behalf of the european community, of the agreement between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis (oj l 53, 27.2.2008, p. 1). (13) council decision 2008/149/jha of 28 january 2008 on the conclusion on behalf of the european union of the agreement between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis (oj l 53, 27.2.2008, p. 50). (14) oj l 160, 18.6.2011, p. 21. (15) council decision 2011/349/eu of 7 march 2011 on the conclusion on behalf of the european union of the protocol between the european union, the european community, the swiss confederation and the principality of liechtenstein on the accession of the principality of liechtenstein to the agreement between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis, relating in particular to judicial cooperation in criminal matters and police cooperation (oj l 160, 18.6.2011, p. 1). (16) council decision 2011/350/eu of 7 march 2011 on the conclusion, on behalf of the european union, of the protocol between the european union, the european community, the swiss confederation and the principality of liechtenstein on the accession of the principality of liechtenstein to the agreement between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis, relating to the abolition of checks at internal borders and movement of persons (oj l 160, 18.6.2011, p. 19). annex annex the sirene manual and other implementing measures for the second generation schengen information system (sis ii) table of contents introduction 42 1. the sirene bureaux and supplementary information 44 1.1. the sirene bureau 44 1.2. sirene manual 45 1.3. appendices to this sirene manual 45 1.4. catalogue of recommendations for the correct application of the schengen acquis and best practices (schengen information system) 45 1.5. role of the sirene bureaux in police cooperation in the european union 45 1.5.1. transfer of sis ii data and supplementary information to third countries or international organisations 45 1.6. relations between sirene bureaux and europol 46 1.7. relations between sirene bureaux and eurojust 46 1.8. relations between sirene bureaux and interpol 46 1.8.1. priority of sis ii alerts over interpol alerts 46 1.8.2. choice of communication channel 46 1.8.3. use and distribution of interpol diffusions in schengen states 46 1.8.4. hit and deletion of an alert 47 1.8.5. improvement of cooperation between the sirene bureaux and the interpol ncbs 47 1.9. standards 47 1.9.1. availability 47 1.9.2. continuity 47 1.9.3. confidentiality 47 1.9.4. accessibility 47 1.10. communications 47 1.10.1. language of communication 47 1.10.2. data exchange between sirene bureaux 47 1.10.3. network, messages and mailboxes 48 1.10.4. communication in exceptional circumstances 48 1.11. sirene address book (sab) 48 1.12. sirene workflow system 49 1.13. time limits for response 49 1.13.1. indication of urgency in sirene forms including urgent reporting of a hit 49 1.14. transliteration/transcription rules 49 1.15. data quality 49 1.16. archiving 50 1.17. staff 50 1.17.1. heads of sirene bureaux 50 1.17.2. sirene contact person (sircop) 50 1.17.3. knowledge 51 1.17.4. training 51 1.17.5. exchange of staff 52 2. general procedures 52 2.1. definitions 52 2.2. multiple alerts (article 34(6) of the sis ii regulation and 49(6) of the sis ii decision) 52 2.2.1. compatibility of alerts 53 2.2.2. order of priority of alerts 54 2.2.3. checking for incompatibility and entering multiple alerts 55 2.2.4. special situation of the united kingdom and ireland 56 2.3. the exchange of information after a hit 57 2.4. when the procedures following a hit cannot be followed (article 48 of the sis ii decision and article 33 of the sis ii regulation) 57 2.5. processing of data for purpose other than that for which it was entered in the sis ii (article 46(5) of the sis ii decision) 58 2.6. flagging 58 2.6.1. introduction 58 2.6.2. consulting the member states with a view to adding a flag 59 2.6.3. a request for deletion of a flag 59 2.7. data found to be legally or factually inaccurate (article 34 of the sis ii regulation and article 49 of the sis ii decision) 59 2.8. the right to access and rectify data (articles 41 of the sis ii regulation and 58 of the sis ii decision) 60 2.8.1. requests for access to or rectification of data 60 2.8.2. exchange of information on requests for access to alerts issued by other member states 60 2.8.3. exchange of information on requests to rectify or delete data entered by other member states 60 2.9. deleting when the conditions for maintaining the alert cease to be met 60 2.10. entering proper names 61 2.11. different categories of identity 61 2.11.1. misused identity (article 36 of the sis ii regulation and 51 of the sis ii decision) 61 2.11.2. entering an alias 62 2.11.3. further information to establish a person's identity 62 2.12. exchange of information in case of interlinked alerts 63 2.12.1. operational rules 63 2.13. format and quality of biometric data in sis ii 63 2.13.1. further use of the data exchanged, including archiving 63 2.13.2. exchanging fingerprints and photographs 64 2.13.3. technical requirements 64 2.13.4. format and quality of biometric data 64 2.14. special types of search 64 2.14.1. geographically targeted search 64 2.14.2. search with participation of special police units for targeted search (fast) 65 3. alerts for arrest for surrender or extradition purposes (article 26 of the sis ii decision) 65 3.1. entering an alert 65 3.2. multiple alerts 65 3.3. misused identity 66 3.4. entering an alias 66 3.5. supplementary information to be sent to member states 66 3.5.1. supplementary information to be sent with regard to provisional arrest 66 3.6. adding a flag 67 3.6.1. systematic request for a flag to be added to alerts on persons wanted for arrest for extradition purposes where decision 2002/584/jha (1) does not apply 67 3.7. action by sirene bureaux upon receipt of an alert for arrest 67 3.8. the exchange of information after a hit 68 3.9. supplementary information exchange about surrender or extradition 68 3.10. supplementary information exchange about transit through another member state 68 3.11. deletion of alerts upon surrender or extradition 68 4. alerts for refusal of entry or stay (article 24 of the sis ii regulation) 69 4.1. entering an alert 69 4.2. multiple alerts 70 4.3. misused identity 70 4.4. entering an alias 70 4.5. exchange of information when issuing residence permits or visas 70 4.5.1. special procedures as provided for in article 25 of the schengen convention 70 4.5.2. special procedures as provided for in article 5(4)(a) and (c) of the schengen borders code 71 4.6. common rules concerning procedures referred to in section 4.5 72 4.7. exchange of information following a hit and when refusing entry or expelling from the schengen area 72 4.8. exchange of information following a hit on a third-country national who is a beneficiary of the right of free movement 73 4.9. exchange of information if, in the absence of a hit, a member state discovers that there is an alert for refusal of entry for a third-country national who is a beneficiary of the right of free movement 74 4.10. deletion alerts for refusal of entry or stay 74 5. alerts on missing persons (article 32 of the sis ii decision) 75 5.1. multiple alerts 75 5.2. misused identity 75 5.3. entering an alias 75 5.4. adding a flag 75 5.5. provision of descriptive detail on missing minors and other persons assessed as being at risk 75 5.6. the exchange of information after a hit 76 5.7. deletion of alerts on missing persons 76 5.7.1. minors 77 5.7.2. adults where no protective measures are requested 77 5.7.3. adults, protective measures requested 77 6. alerts for persons sought for a judicial procedure (article 34 of the sis ii decision) 77 6.1. multiple alerts 77 6.2. misused identity 77 6.3. entering an alias 77 6.4. the exchange of information after a hit 77 6.5. deletion of alerts on persons sought for a judicial procedure 78 7. alerts for discreet and specific checks (article 36 of the sis ii decision) 78 7.1. multiple alerts 78 7.2. misused identity 78 7.3. entering an alias 78 7.4. informing other member states when issuing alerts 78 7.5. adding a flag 79 7.6. the exchange of information after a hit 79 7.7. deletion of alerts on discreet and specific check 79 7.8. automatic number plate recognition systems (anpr) 79 8. alerts on objects for seizure or use as evidence (article 38 of the sis ii decision) 79 8.1. multiple alerts 79 8.2. vehicle alerts 80 8.2.1. checking for multiple alerts on a vehicle 80 8.2.2. vin-twins 80 8.3. the exchange of information after a hit 81 8.4. deletion of alerts on objects for seizure or use as evidence in criminal proceedings 81 9. automatic number plate recognition systems (anpr) 82 10. statistics 83 introduction the schengen area on 14 june 1985, the governments of the kingdom of belgium, the federal republic of germany, the french republic, the grand duchy of luxembourg and the kingdom of the netherlands signed an agreement at schengen, a small town in luxembourg, with a view to enabling ( ) all nationals of the member states to cross internal borders freely ( ) and to enable the free circulation of goods and services . the five founding countries signed the convention implementing the schengen agreement (2) on 19 june 1990, and were later joined by the italian republic on 27 november 1990, the kingdom of spain and the portuguese republic on 25 june 1991, the hellenic republic on 6 november 1992, the republic of austria on 28 april 1995 and by the kingdom of denmark, the kingdom of sweden and the republic of finland on 19 december 1996. subsequently, as of 26 march 1995, the schengen acquis was fully applied in belgium, germany, france, luxembourg, netherlands, spain and portugal (3). as of 31 of march 1998, in austria and italy (4); as of 26 of march 2000 in greece (5) and finally, as of 25 march 2001, the schengen acquis was applicable in full in norway, iceland, sweden, denmark and finland (6). the united kingdom (uk) and ireland only take part in some of the provisions of the schengen acquis, in accordance with decision 2000/365/ec and decision 2002/192/ec respectively. in the case of the uk, the provisions in which the united kingdom wished to take part (with exception of sis) are applicable as of the 1 january 2005 (7). the schengen acquis was incorporated into the legal framework of the european union by means of protocols attached to the treaty of amsterdam (8) in 1999. a council decision was adopted on 12 may 1999, determining the legal basis for each of the provisions or decisions which constitute the schengen acquis, in conformity with the relevant provisions of the treaty establishing the european community and the treaty on european union. from 1 may 2004, the schengen acquis as integrated into the framework of the european union by the protocol annexed to the treaty on european union and to the treaty establishing the european community (hereinafter referred to as the schengen protocol), and the acts building upon it or otherwise related to it are binding on the czech republic, the republic of estonia, the republic of latvia, the republic of lithuania, hungary, the republic of malta, the republic of poland, the republic of slovenia and the slovak republic. these member states became full members of the schengen area on 21 december 2007. cyprus is a signatory to the convention implementing the schengen agreement but enjoys a derogation under its act of accession of 2003. the republic of bulgaria and romania acceded to the european union on 1 january 2007; as from that date the schengen acquis and the acts building upon it or otherwise related to it are binding upon them, with the derogation provided by their act of accession of 2005. croatia acceded to the european union on 1 july 2013. it applies the schengen acquis with the derogation provided by its act of accession of 2011. some of the provisions of the schengen acquis apply upon accession of new member states to the eu. other provisions shall only apply in these member states pursuant to a council decision to that effect. finally, the council takes a decision on the lifting of border checks, after verification that the necessary conditions for the application of all parts of the acquis concerned have been met in the member state in question, in accordance with the applicable schengen evaluation procedures and after consultation of the european parliament. certain other european countries joined the schengen area. the kingdom of norway and the republic of iceland concluded an association agreement with the member states on 18 may 1999 (9) in order to be associated to the schengen convention. in 2004, the swiss confederation signed an agreement with the european union and the european community concerning its association with the implementation, application and development of the schengen acquis (10), based upon which it became a member of the schengen area on 12 december 2008. on the basis of the protocol between the european union, the european community, the swiss confederation and the principality of liechtenstein on the accession of the principality of liechtenstein to the agreement between the european union, the european community and the swiss confederation on the swiss confederation's association with the implementation, application and development of the schengen acquis (11), signed in 2008, the principality of liechtenstein became a member of the schengen area on 19 december 2011. the second generation schengen information system (sis ii) sis ii, set up pursuant to regulation (ec) no 1987/2006 (sis ii regulation) and decision 2007/533/jha (sis ii decision) on the establishment, operation and use of the second generation information system (sis ii) (together: the sis ii legal instruments) as well as regulation (ec) no 1986/2006 of the european parliament and of the council (12) constitute a common information system allowing the competent authorities in the member states to cooperate by exchanging information and is an essential tool for the application of the provisions of the schengen acquis as integrated into the framework of the european union. these instruments as of 9 april 2013 when in application, repealed title iv of the convention implementing the schengen agreement. sis ii replaces the first generation schengen information system that began operating in 1995 and was extended in 2005 and 2007. the purpose of sis ii as laid down in article 1 of the sis ii legal instruments is ( ) to ensure a high level of security within an area of freedom, security and justice of the european union including the maintenance of public security and public policy and the safeguarding of security in the territories of the member states, and to apply the provisions of title iv of part three of the (ec) treaty (hereinafter referred to as the ec treaty) relating to the movement of persons in their territories, using information communicated via this system . in accordance with the sis ii legal instruments, by means of an automated consultation procedure, sis ii shall provide access to alerts on persons and objects to the following authorities: (a) authorities responsible for border controls, in accordance with regulation (ec) no 562/2006 of the european parliament and of the council (13); (b) authorities carrying out and coordinating other police and customs checks within the country; (c) national judicial authorities and their coordination authorities; (d) authorities responsible for issuing visas, the central authorities responsible for examining visa applications, authorities responsible for issuing residence permits and for the administration of legislation on third-country nationals in the context of the application of the union law relating to the movement of persons; (e) authorities responsible for issuing vehicle registration certificates (in accordance with regulation (ec) no 1986/2006). in accordance with the sis ii decision, europol and eurojust also have access to certain categories of alerts. sis ii is made up of the following components: 1. a central system (the central sis ii) composed of: (a) a technical support function (cs-sis) containing a database (the sis ii database); (b) a uniform national interface (ni-sis); 2. a national system (n.sis ii) in each of the member states, consisting of the national data systems which communicate with the central sis ii. an n.sis ii may contain a data file (a national copy), containing a complete or partial copy of the sis ii database; 3. a communication infrastructure between the cs-sis and the ni-sis that provides an encrypted virtual network dedicated to sis ii data and the exchange of data between sirene bureaux as defined below. 1. the sirene bureaux and supplementary information 1.1. the sirene bureau sis ii only contains the indispensable information (i.e. alert data) allowing the identification of a person or an object and the necessary action to be taken. in addition, according to the sis ii legal instruments, member states shall exchange supplementary information related to the alert which is required for implementing certain provisions foreseen under the sis ii legal instruments, and for sis ii to function properly, either on a bilateral or multilateral basis. this structure, built to deal with the exchange of supplementary information, has been given the name sirene , which is an acronym of the definition of the structure in english: supplementary information request at the national entries. a national sirene bureau shall be set up by each of the member states in accordance with common article 7(2) of the sis ii legal instruments. it shall serve as a single contact point for the member states, fully operational on 24/7 basis, for the purpose of exchanging supplementary information in connection with the entry of alerts and for allowing the appropriate action to be taken in cases where persons and objects have been entered in sis ii and are found as a result of a hit. the sirene bureaux' main tasks include (14) ensuring the exchange of all supplementary information is in accordance with the requirements of this sirene manual, as provided in common article 8 of the sis ii legal instruments for the following purposes: (a) to allow member states to consult or inform each other whilst entering an alert (e.g. when entering alerts for arrest); (b) following a hit to allow the appropriate action to be taken (e.g. matching an alert); (c) when the required action cannot be taken (e.g. adding a flag); (d) when dealing with the quality of sis ii data (e.g. when data has been unlawfully entered or is factually inaccurate), including the validation of outgoing alerts and the verification of incoming alerts, if it is provided for by national law; (e) when dealing with the compatibility and priority of alerts (e.g. when checking for multiple alerts); (f) when dealing with data subjects' rights, in particular the right of access to data. member states are encouraged to organise all national bodies responsible for international police cooperation, including sirene bureaux, in a structured way so as to prevent conflicts of competence and duplication of work. 1.2. sirene manual the sirene manual is a set of instructions which describes in detail the rules and procedures governing the bilateral or multilateral exchange of supplementary information. 1.3. appendices to this sirene manual since certain rules of a technical nature have a direct impact on the work of users in the member states, including the sirene bureaux, it is appropriate to include such rules in the sirene manual. therefore appendices to this manual set out, inter alia, rules on transliteration, code tables, forms for communication of supplementary information and other technical implementing measures for data processing. 1.4. catalogue of recommendations for the correct application of the schengen acquis and best practices (schengen information system) the catalogue serves to provide legally non-binding recommendations and best practices for member states in the light of experience. it also serves as a reference tool for evaluation of the correct implementation of the sis ii legal instruments. accordingly, it should, as far as possible, be followed. 1.5. role of the sirene bureaux in police cooperation in the european union the exchange of supplementary information shall not prejudice the tasks entrusted to the sirene bureaux in the area of international police cooperation by national law implementing other legal instruments of the european union. additional tasks may be entrusted to the sirene bureaux, in particular, by the national law implementing framework decision 2006/960/jha, articles 39 and 46 of the schengen convention, in as far as they are not replaced by framework decision 2006/960/jha, articles 40 or 41 of the schengen convention or if the information falls within the scope of mutual legal assistance. if a sirene bureau receives, from another sirene bureau, a request falling outside its competence under national law it should immediately forward it to the competent authority and inform the requesting sirene bureau about this action. if necessary, it should provide support to the requesting sirene bureau to facilitate communication. 1.5.1. transfer of sis ii data and supplementary information to third countries or international organisations according to article 39 of the sis ii regulation and 54 of the sis ii decision, data processed in sis ii in application of these two legal instruments shall not be transferred or made available to third countries or to international organisations. this prohibition shall apply to the transfer of supplementary information to third countries or international organisations. article 55 of the sis ii decision foresees derogation from this general rule regarding the exchange of data on stolen, misappropriated, lost or invalidated passports with interpol, subject to the conditions laid down in this article. 1.6. relations between sirene bureaux and europol europol has the right to access and to directly search data entered in sis ii according to articles 26, 36 and 38 of the sis ii decision. europol may request further information from the member states concerned in accordance with the provisions of the europol decision (15). in accordance with national law, it is strongly recommended that cooperation with the national europol unit (enu) should be established in order to ensure that the sirene bureau is informed of any exchange of supplementary information between europol and the enu concerning alerts in sis ii. in exceptional cases where communication at national level concerning sis ii alerts is done by the enu, all parties to the communication, especially the sirene bureau, should be made aware of this fact to avoid confusion. 1.7. relations between sirene bureaux and eurojust the national members of eurojust and their assistants have the right to access and to directly search data entered in sis ii according to articles 26, 32, 34 and 38 of the sis ii decision. in accordance with national law, cooperation with them should be established in order to ensure the smooth exchange of information in case of a hit. in particular, the sirene bureau should be the contact point for national members of eurojust and their assistants for supplementary information related to alerts in sis ii. 1.8. relations between sirene bureaux and interpol (16) the role of the sis ii is neither to replace nor to replicate the role of interpol. although tasks may overlap, the governing principles for action and cooperation between the member states under schengen differ substantially from those under interpol. it is therefore necessary to establish rules for cooperation between the sirene bureaux and the ncbs (national central bureaux) at the national level. the following principles shall apply: 1.8.1. priority of sis ii alerts over interpol alerts in case of alerts issued by member states, sis ii alerts and the exchange of all information on these alerts shall always have priority over alerts and information exchanged via interpol. this is of particular importance if the alerts conflict. 1.8.2. choice of communication channel the principle of schengen alerts taking precedence over interpol alerts issued by member states shall be respected and it shall be ensured that the ncbs of member states comply with this. once the sis ii alert is created, all communication related to the alert and the purpose for its creation and execution of action to be taken shall be provided by sirene bureaux. if a member state wants to change channels of communication, the other parties have to be consulted in advance. such a change of channel is possible only in specific cases. 1.8.3. use and distribution of interpol diffusions in schengen states given the priority of sis ii alerts over interpol alerts, the use of interpol alerts shall be restricted to exceptional cases (i.e. where there is no provision, either in the sis ii legal instruments or in technical terms, to enter the alert in the sis ii, or where not all the necessary information is available to form a sis ii alert). parallel alerts in the sis ii and via interpol within the schengen area should be avoided. alerts which are distributed via interpol channels and which also cover the schengen area or parts thereof shall bear the following indication: except for the schengen states . 1.8.4. hit and deletion of an alert in order to ensure the sirene bureau's role as a coordinator of the verification of the quality of the information entered in the sis ii member states shall ensure that the sirene bureaux and the ncbs inform each other of hits and deletion of alerts. 1.8.5. improvement of cooperation between the sirene bureaux and the interpol ncbs in accordance with national law, each member state shall take all appropriate measures to provide for the effective exchange of information at the national level between its sirene bureau and the ncbs. 1.9. standards the standards that underpin the cooperation via sirene bureaux are the following: 1.9.1. availability each sirene bureau shall be fully operational 24 hours a day, seven days a week in order to be able to react within the time-limit as required in section 1.13. provision of technical and legal analysis, support and solutions shall also be available 24 hours a day, seven days a week. 1.9.2. continuity each sirene bureau shall build an internal structure which guarantees the continuity of management, staff and technical infrastructure. 1.9.3. confidentiality pursuant to common article 11 of the sis ii legal instruments, relevant national rules of professional secrecy or other equivalent obligations of confidentiality shall apply to all sirene staff. this obligation shall also apply after staff members leave office or employment. 1.9.4. accessibility in order to fulfil the requirement to provide supplementary information, the sirene staff shall have direct or indirect access to all relevant national information and expert advice. 1.10. communications 1.10.1. language of communication in order to achieve the utmost efficiency in bilateral communication between sirene bureaux, a language familiar to both parties shall be used. 1.10.2. data exchange between sirene bureaux the technical specifications concerning the exchange of information between sirene bureaux are laid down in the document: data exchange between sirene bureaux (debs) . these instructions shall be respected. 1.10.3. network, messages and mailboxes sirene bureaux shall use an encrypted virtual network exclusively dedicated to sis ii data and the exchange of supplementary information between sirene bureaux, as referred to in common articles 4(1)(c) and 8(1) of the sis ii legal instruments. only if this channel is not available, another adequately secured and appropriate means of communication may be used. the ability to choose the channel means that it shall be determined on a case-by-case basis, according to technical possibilities and the security and quality requirements that the communications have to meet. written messages shall be divided into two categories: free text and standard forms. appendix 3 describes the forms exchanged between sirene bureaux and set out guidance on the expected content of the fields, including whether they are mandatory or not. there shall be four different mailboxes within the above-mentioned network for free text messages and sirene forms. mailbox mailbox address purpose operational oper@xx.sirenemail2.eu used for the exchange of forms and attachments between sirene bureaux technical tech@xx.sirenemail2.eu used for e-mail exchange between the technical support staff of the sirene bureaux head of sirene director@xx.sirenemail2.eu used for e-mail exchange with the heads of the sirene bureaux e-mail message@xx.sirenemail2.eu used for free text message exchange between sirene bureaux for testing purposes a second domain exists (17) (testxx.sirenemail2.eu) within which any of the mailboxes in the table above may be replicated for test purposes without interfering the live message exchange and workflow environment. the detailed rules on sirene mailboxes and transmission of sirene forms described in debs shall apply. the sirene workflow system (see section 1.12) shall monitor the operational and e-mail mailboxes ( oper and message ) to detect incoming forms, related emails and attachments. urgent messages shall only be sent to the operational mailbox. 1.10.4. communication in exceptional circumstances where normal communication channels are not available and it is necessary to send standard forms by fax, for example, the procedure described in debs shall apply. 1.11. sirene address book (sab) the contact details of the sirene bureaux and relevant information for mutual communication and cooperation are collected and provided in the sirene address book (sab). the commission will update the sab. the updated sab shall be issued by the commission at least twice per year. each sirene bureau shall ensure that: (a) information from the sab is not disclosed to third parties; (b) the sab is known and used by the sirene staff; (c) any update of the information listed in the sab is provided without delay to the commission; 1.12. sirene workflow system the effective management of the sirene bureaux' workload can be best achieved through each sirene bureau having a computerised management system (workflow system), which allows a great deal of automation in the management of the daily workflow. the sirene bureau may have a back-up computer and database system for its workflow at a secondary site in case of a serious emergency at the sirene bureau. this should include sufficient back-up power and communication supply. appropriate it support should be provided for sirene workflow to ensure its high availability. 1.13. time limits for response the sirene bureau shall answer all requests for information on alerts and hit procedures, made by the other member states via their sirene bureaux, as soon as possible. in any event a response shall be given within 12 hours (see also section 1.13.1 on indication of urgency in sirene forms). priorities in daily work shall be based on the category of alert and the importance of the case. 1.13.1. indication of urgency in sirene forms including urgent reporting of a hit sirene forms to be dealt with by the requested sirene bureau with highest priority may be marked urgent , in field 311 ( important notice ), followed by the reason for urgency. the reason for urgency shall be explained in the appropriate fields of the sirene forms. telephone communication or notification may also be used where an urgent response is required. where the circumstances of a hit on an alert dictate, such as a case of genuine urgency or significant importance, the sirene bureau of the member state that matched the alert shall, where appropriate, inform the sirene bureau of the issuing member state of the hit by telephone after sending a g form. 1.14. transliteration/transcription rules the transliteration and transcription definitions and rules are set out in appendix 1. they shall be respected in the communication between sirene bureaux (see also section 2.10 on entering proper names). 1.15. data quality pursuant to article 7(2) of the sis ii legal instruments, sirene bureaux shall coordinate the verification of the quality of the information entered in the sis ii. sirene bureaux should have the necessary national competence to perform this role. therefore, an adequate form of national data quality audit should be provided for, including a review of the rate of alerts/hits and of data content. in order to allow each sirene bureau to perform its role of data quality verification coordinator, the necessary it support and appropriate rights within the systems should be available. national standards for training users on data quality principles and practice should be established in cooperation with the national sirene bureau. member states may call upon the staff of the sirene bureaux to be involved in the training of all authorities entering alerts, stressing data quality and maximisation of the use of sis ii. 1.16. archiving (a) each member state shall establish conditions for storing information. (b) the sirene bureau of the issuing member state shall keep all information on its own alerts available to the other member states, including a reference to the decision giving rise to the alert. (c) the archives of each sirene bureau shall allow swift access to the relevant information to meet the very short deadlines for transmitting information. (d) in accordance with article 12(4) of the sis ii legal instruments personal data, held in files by the sirene bureau as a result of exchanging information, shall be kept only for such time as may be required to achieve the purposes for which they were supplied. as a rule, this information shall be deleted immediately after the related alert has been deleted from sis ii, and in any event at the latest one year thereafter. however, data relating to a particular alert which a member state has entered or to an alert in connection with which action has been taken on its territory may be stored for longer in accordance with national law. (e) supplementary information sent by other member states shall be stored according to national data protection laws in the recipient member state. common article 12 of the sis ii legal instruments, directive 95/46/ec of the european parliament and of the council (18) and council framework decision 2008/977/jha (19) also apply. (f) information on misused identity shall be deleted after the deletion of the relevant alert. (g) access to archives shall be recorded, controlled and restricted to designated staff. 1.17. staff a high level of experienced staff leads to a workforce able to function on their own initiative and thereby able to handle cases efficiently. therefore a low turnover of personnel is desirable, which requires the unambiguous support of management to create a devolved working environment. member states are encouraged to take appropriate measures to avoid loss of qualification and experience caused by staff turnover. 1.17.1. heads of sirene bureaux the heads of sirene bureaux should meet at least twice a year to assess the quality of the cooperation between their services, to discuss necessary technical or organisational measures in the event of any difficulties and to clarify procedures where required. the meeting of the heads of sirene bureaux is organised by the member state holding the presidency of the council of the european union. 1.17.2. sirene contact person (sircop) in cases where standard procedures may be insufficient, the sirene contact person (sircop) may deal with files on which progress is complex, problematic or sensitive and a degree of quality assurance and/or longer term contact with another sirene bureau may be required in order to resolve the issue. the sircop is not intended for urgent cases where the 24/7 front desk services shall in principle be used. the sircop may formulate proposals to enhance quality and describe options to resolve such issues in the longer term. as a general rule sircop are contactable by another sircop only during office hours. an annual assessment shall be carried out within the framework of the annual statistical reporting as it is set out in appendix 5 based upon the following indicators: (a) number of sircop interventions per member state; (b) reason for contact; (c) result of the interventions based on information available during the reporting period. 1.17.3. knowledge sirene bureau staff shall have linguistic skills covering as wide a range of languages as possible and on-duty staff shall be able to communicate with all sirene bureaux. they shall have the necessary knowledge on: national, european and international legal aspects, their national law enforcement authorities, and national and european judiciary and immigration administration systems. they need to have the authority to deal independently with any incoming case. operators on duty outside office hours shall have the same competence, knowledge and authority and it should be possible for them to refer to experts available on-call. legal expertise to cover both normal and exceptional cases should be available in the sirene bureau. depending on the case, this may be provided by any personnel with the necessary legal background or experts from judicial authorities. 1.17.4. training national level at the national level, sufficient training shall ensure that staff meet the required standards laid down in this manual. before being authorised to process data stored in the sis ii, staff shall in particular receive appropriate training about data security and data protection rules and shall be informed of any relevant criminal offences and penalties. european level common training courses shall be organised at least once a year, to enhance cooperation between sirene bureaux by allowing staff to meet colleagues from other sirene bureaux, share information on national working methods and create a consistent and equivalent level of knowledge. it will furthermore make staff aware of the importance of their work and the need for mutual solidarity in view of the common security of member states. the delivery of training should be in compliance with the sirene trainers manual. article 3 of regulation (eu) no 1077/2011 of the european parliament and of the council (20) sets out that the european agency for the operational management of large-scale it systems in the area of freedom, security and justice (the agency) shall perform tasks relating to training on the technical use of sis ii, in particular for sirene staff. 1.17.5. exchange of staff as far as possible, sirene bureaux should also foresee setting up staff exchanges with other sirene bureaux at least once a year. these exchanges are intended to help improve staff knowledge of working methods, to show how other sirene bureaux are organised and to establish personal contacts with colleagues in other member states. 2. general procedures the procedures described below are applicable to all categories of alerts. the procedures specific to each category of alert can be found in the relevant parts of this manual. 2.1. definitions issuing member state : member state which entered the alert in sis ii; executing member state : member state which takes the required actions following a hit; providing sirene bureau : sirene bureau of a member state which has fingerprints or pictures of the person for whom an alert was entered by another member state. hit : a hit occurs in sis ii when: (a) a search is conducted by a user, (b) the search reveals a foreign alert in sis ii, (c) data concerning the alert in sis ii matches the search data, and (d) further actions are requested as a result of the hit. flag : a suspension of validity at the national level that may be added to alerts for arrest, alerts on missing persons and alerts for checks, where a member state considers that to give effect to an alert is incompatible with its national law, its international obligations or essential national interests. when the alert is flagged, the requested action on the basis of the alert shall not be taken on the territory of this member state. 2.2. multiple alerts (article 34(6) of the sis ii regulation and 49(6) of the sis ii decision) only one alert per member state may be entered in sis ii for any one person or object. therefore, wherever possible and necessary, second and subsequent alerts on the same person or object shall be kept available at national level so that they can be introduced when the first alert expires or is deleted. several alerts may be entered by different member states for the same subjects. it is essential that this does not cause confusion to users, and that it is clear to them what measures must be taken when seeking to enter an alert and which procedure shall be followed when a hit occurs. procedures shall therefore be established for detecting multiple alerts, as shall a priority mechanism for entering them in sis ii. this calls for: checks before entering an alert, in order to determine whether the subject is already in sis ii, consultation with the other member states, when the entry of an alert causes multiple alerts that are incompatible. 2.2.1. compatibility of alerts several member states may enter an alert on the same person or object if the alerts are compatible. member states may derogate from the rules on compatibility when issuing an alert for discreet or specific check, in particular in case of alerts issued for national security purposes. this derogation shall be without prejudice to the order of priority of alerts and the consultation procedure as it is set out in section 2.2.2. table of compatibility of alerts on persons order of importance alert for arrest alert for refusal of entry alert on missing person (protection) alert for specific check immediate action alert for specific check alert for discreet check immediate action alert for discreet check alert on missing person (whereabouts) alert for judicial procedure alert for arrest yes yes yes no no no no yes yes alert for refusal of entry yes yes no no no no no no no alert on missing person (protection) yes no yes no no no no yes yes alert for specific check immediate action no no no yes yes no no no no alert for specific check no no no yes yes no no no no alert for discreet check immediate action no no no no no yes yes no no alert for discreet check no no no no no yes yes no no alert on missing person (whereabouts) yes no yes no no no no yes yes alert for judicial procedure yes no yes no no no no yes yes table of compatibility for alerts on objects order of importance alert for use as evidence document invalidated for travel purposes alert for seizure alert for specific check immediate action alert for specific check alert for discreet check immediate action alert for discreet check alert for use as evidence yes yes yes no no no no document invalidated for travel purposes yes yes yes no no no no alert for seizure yes yes yes no no no no alert for specific check immediate action no no no yes yes no no alert for specific check no no no yes yes no no alert for discreet check immediate action no no no no no yes yes alert for discreet check no no no no no yes yes 2.2.2. order of priority of alerts in case of incompatible alerts the order of priority for alerts on persons shall be as follows: arrest with a view to surrender or extradition (article 26 of decision), refusing entry or stay in the schengen territory (article 24 of regulation), placing under protection (article 32 of decision), specific check immediate action (article 36 of decision), specific check (article 36 of decision), discreet check immediate action (article 36 of decision), discreet check (article 36 of decision), communicating whereabouts (articles 32 and 34 of the decision). the order of priority for alerts on objects shall be as follows: use as evidence (article 38 of decision), seizure of document invalidated for travel purposes (article 38 of decision), seizure (article 38 of decision), specific check immediate action (article 36 of decision), specific check (article 36 of decision), discreet check immediate action (article 36 of decision), discreet check (article 36 of decision), departures from this order of priority may be made after consultation between the member states if essential national interests are at stake. 2.2.3. checking for incompatibility and entering multiple alerts in order to avoid incompatible multiple alerts, it is important to distinguish accurately between persons or objects that have similar characteristics. consultation and cooperation between the sirene bureaux is therefore essential, and each member state shall establish appropriate technical procedures to detect such cases before an entry is made. the sirene bureau shall ensure that only one alert exists in sis ii in accordance with national procedure if a request for an alert conflicts with an alert entered by the same member state. the following procedure shall apply in order to verify if multiple alerts exist on the same person or same object: (a) the mandatory identity description elements shall be compared when establishing the existence of multiple alerts: (i) on a person: surname, forename, date of birth, sex; (ii) on a vehicle: the vin, the registration number and country of registration, the make, the type; (iii) on an aircraft: category of aircraft, icao registration number; (iv) on a boat: category of boat, number of hulls, boat external identification number (not mandatory but may be used); (v) on a container: bic number (21). (b) when entering a new alert on a vehicle or other object with a vin or registration number see procedures in section 8.2.1. (c) for other objects, the most appropriate fields for identifying multiple alerts are the mandatory fields, all of which are to be used for automatic comparison by the system. the procedures described in section 8.2.1 (checking for multiple alerts on a vehicle) shall be used to distinguish between other categories of objects in sis ii when it becomes apparent that two similar objects have the same serial number. if the outcome of the check is that the details relate to two different persons or objects, the sirene bureau shall approve the request for entering the new alert (22). if the check for multiple alerts reveals that the details are identical and relate to the same person or object, the sirene bureau of the member state which intends to enter a new alert shall consult the sirene bureau of the issuing member state if the alerts are incompatible. the following procedure shall apply to verify the compatibility of alerts: (a) prior to entering an alert it is mandatory to carry out a check to ensure that there are no incompatible alerts; (b) if another alert exists which is compatible, the sirene bureaux do not need to consult one another. however, if there is a need to clarify whether the alert relates to the same person the sirene bureau shall consult the sirene bureau of the issuing member state using the l form; (c) if the alerts are incompatible, the sirene bureaux shall consult one another using an e form so that ultimately only one alert is entered; (d) alerts for arrest shall be entered immediately without awaiting the result of any consultation with other member states; (e) if an alert that is incompatible with existing alerts is given priority as the outcome of consultation, the member states that entered the other alerts shall delete them when the new alert is entered. any disputes shall be settled by member states via the sirene bureaux. (f) member states who were not able to enter an alert may subscribe to be notified by the cs-sis about the deletion of the alert; (g) the sirene bureau of the member state that was not able to enter the alert may request that the sirene bureau of the member state that entered the alert informs it of a hit on this alert. 2.2.4. special situation of the united kingdom and ireland the united kingdom and ireland do not take part in the sis ii regulation therefore they cannot access the alerts on refusal of entry or stay (articles 24 and 26 of the sis ii regulation). they shall, nevertheless, be bound by the rules on compatibility of alerts as set out in section 2.2 and in particular they shall apply the procedure referred in section 2.2.3. the following procedure shall apply: (a) should the united kingdom or ireland enter an alert which is potentially incompatible with an existing alert on refusal of entry or stay in accordance with section 2.2.1 the central sis ii notifies these two member states on the potential incompatibility by communicating only the schengen id of the existing alert. (b) should an alert inserted by the united kingdom or ireland be notified of a potential incompatibility with an alert on refusal of entry or stay entered by another member state, the sirene bureau of the united kingdom or ireland shall initiate a consultation with the issuing member state by using free text message and shall delete the potentially incompatible alert during the consultation. (c) depending on the outcome of the consultation the united kingdom or ireland can reinsert an alert which has been shown to be compatible. 2.3. the exchange of information after a hit if the user requires supplementary information after a hit, the sirene bureau shall contact the sirene bureau of the issuing member state without delay and request the necessary information. where appropriate, the sirene bureaux shall act as intermediaries between the national authorities and shall provide and exchange supplementary information pertinent to the alert in question. unless stated otherwise, the issuing member state shall be informed of the hit and its outcome (see also section 1.13.1 on indication of urgency) the following procedure shall apply: (a) without prejudice to section 2.4 of this manual, one hit on an individual or an object for which an alert has been entered, shall in principle be communicated to the sirene bureau of the issuing member state using one g form. (b) when notifying the issuing member state of a hit, the applicable article of the sis ii legal instruments shall be indicated in field 090 of the g form, including additional information if necessary (e.g. minor). the g form shall provide as much information as possible on the hit, including on the action taken in field 088. provision of supplementary information may be requested from the issuing member state in field 089. (c) if the sirene bureau of the executing member state intends to provide further information after a g form has been sent, it shall use an m form. (d) if necessary, the sirene bureau of the issuing member state shall then send any relevant, specific information and indicate any particular measures that it requests the sirene bureau of the executing member state to take. for the reporting procedure on hits achieved via automatic number plate recognition (anpr) systems see section 9. 2.4. when the procedures following a hit cannot be followed (article 48 of the sis ii decision and article 33 of the sis ii regulation) in accordance with article 48 of the sis ii decision and article 33 of the sis ii regulation, the following procedure shall apply: (a) the member state, which is on the basis of all available information definitely unable to follow the procedure, shall inform the issuing member state via its sirene bureau that it is not able to perform the requested action, and give the reasons in field 083 of an h form; (b) the member states concerned may agree on the action to be taken in line with their own national laws and the sis ii legal instruments. 2.5. processing of data for purpose other than that for which it was entered in the sis ii (article 46(5) of the sis ii decision) the data contained in sis ii may only be processed for the purposes laid down for each category of alert. however, if prior authorisation has been obtained from the issuing member state, the data may be processed for a purpose other than that for which they were entered, in order to prevent an imminent serious threat to public policy and security, for serious reasons of national security or for the purposes of preventing a serious criminal offence. if a member state intends to process data in sis ii for a purpose other than that for which they were entered, the exchange of information shall take place according to the following rules: (a) through its sirene bureau, the member state that intends to use data for a different purpose shall explain to the member state that entered the alert the grounds for having the data processed for another purpose, by using an i form; (b) as soon as possible, the issuing member state shall study whether this request can be met and inform the other member state by using an m form, through its sirene bureau, of its decision; (c) if need be, the member state that entered the alert may grant authorisation subject to certain conditions on how the data are to be used this authorisation shall be sent by using an m form. once the member state that entered the alert has agreed, the other member state shall only use the data for the purpose for which it obtained authorisation. it shall take account of any conditions set by the issuing member state. 2.6. flagging 2.6.1. introduction (a) article 24 of the sis ii decision provides for the following cases where a member state may require a flag: (i) where a member state considers that to give effect to an alert entered in accordance with articles 26, 32 or 36 of the sis ii decision is incompatible with its national law, its international obligations or essential national interests, it may subsequently require that a flag be added to the alert to the effect that the action to be taken on the basis of the alert will not be taken in its territory. the flag shall be added by the sirene bureau of the issuing member state. (ii) in order to enable member states to require that a flag be added to an alert issued in accordance with article 26, all member states shall be notified automatically about any new alert of that category by the exchange of supplementary information. (iii) if in particularly urgent and serious cases, a member state issuing an alert requests the execution of the action, the member state executing the alert shall examine whether it is able to allow the flag added at its behest to be withdrawn. if the member state executing the alert is able to do so, it shall take the necessary steps to ensure that the action to be taken can be carried out immediately. (b) an alternative procedure exists only for alerts for arrest (see section 3.6). (c) when a flag is added to alerts for missing persons and alerts for discreet or specific checks the alert does not appear on the screen when the user consults the system. (d) without prejudice to section 3.6.1 a member state shall not request a flag solely on the basis that a given member state is the issuing member state. flags shall only be requested on a case-by-case basis. 2.6.2. consulting the member states with a view to adding a flag a flag shall be added only at the request or agreement of another member state. the following procedure shall apply: (a) if a member state requests a flag to be added, it shall request the flag from the issuing member state using an f form, explaining the reason for the flag. field 071 shall be used for this purpose, explaining in field 080 the reason for the flag. for other supplementary information concerning the alert field 083 shall be used. (b) the member state that entered the alert shall add the requested flag immediately; (c) once information has been exchanged, based on the information provided for in the consultation process by the member state requesting the flag, the alert may need to be amended or deleted or the request may be withdrawn, leaving the alert unchanged. 2.6.3. a request for deletion of a flag member states shall request the deletion of the previously requested flag as soon as the reason for the flag is no longer valid. this may be the case, in particular, if national legislation has changed or if further information exchange about the case reveals that the circumstances referred to in article 24(1) or 25 of the sis ii decision no longer exist. the following procedure shall apply: (a) the sirene bureau which previously requested the flag to be added shall request the sirene bureau of the issuing member state to delete the flag, using an f form. field 075 shall be used for this purpose (23). for more details concerning national law field 080 shall be used and, where appropriate, for inserting supplementary information explaining the reason for the deletion of the flag and for other supplementary information concerning the alert field 083 shall be used. (b) the sirene bureau of the issuing member state shall delete the flag immediately. 2.7. data found to be legally or factually inaccurate (article 34 of the sis ii regulation and article 49 of the sis ii decision) if data is found to be factually incorrect or has been unlawfully stored in the sis ii, then the exchange of supplementary information shall take place in line with the rules set out in article 34(2) of the sis ii regulation and 49(2) of the sis ii decision, which provide that only the member state that issued the alert may modify, add to, correct, update or delete data. the member state which found that data contains an error or that it has been unlawfully stored shall inform the issuing member state via its sirene bureau at the earliest opportunity and not later than 10 calendar days after the evidence suggesting the error has come to its attention. the exchange of information should be carried out using a j form. (a) following the result of consultations, the issuing member state may have to delete or correct the data, in accordance with its national procedures for correcting the item in question; (b) if there is no agreement within two months, the sirene bureau of the member state that discovered the error or that the data has been unlawfully stored shall advise the authority responsible within its own country to refer the matter to the european data protection supervisor, who shall, jointly with the national supervisory authorities concerned, act as mediator. 2.8. the right to access and rectify data (articles 41 of the sis ii regulation and 58 of the sis ii decision) 2.8.1. requests for access to or rectification of data without prejudice to national law, when the national authorities need to be informed of a request to access or rectify data, then the exchange of information will take place according to the following rules: (a) each sirene bureau applies its national law on the right to access personal data. depending on the circumstances of the case and in accordance with the applicable law, the sirene bureaux shall either forward any requests they receive for access to or for rectification of data to the competent national authorities, or they shall adjudicate upon these requests within the limits of their remit. (b) if the competent national authorities so require, the sirene bureaux of the member states concerned shall, in accordance with their national law, forward them information on exercising the right to access data. 2.8.2. exchange of information on requests for access to alerts issued by other member states information on requests for access to alerts entered in sis ii by another member state shall be exchanged via the national sirene bureaux using a k form for persons or an m form for objects. the following procedure shall apply: (a) the request for access shall be forwarded to the sirene bureau of the issuing member state as soon as possible, so that it can take a position on the question; (b) the sirene bureau of the issuing member state shall inform the sirene bureau of the member state that received the request of access of its position; (c) the response by the sirene bureau of the issuing member state shall take into account any deadlines for processing the request set by the sirene bureau of the member state that received the request for access; (d) the sirene bureau of the member state receiving an enquiry from an individual for access, correction or deletion shall take all the necessary measures to ensure a timely response. if the sirene bureau of the issuing member state sends its position to the sirene bureau of the member state that received the request for access, the sirene bureau, according to national law and within the limits of its competence, shall either adjudicate upon the request or shall ensure that the position is forwarded to the authority responsible for adjudication of the request as soon as possible. 2.8.3. exchange of information on requests to rectify or delete data entered by other member states when a person requests to have his or her data rectified or deleted, this may only be done by the member state that entered the alert. if the person addresses a member state other than the one that entered the alert, the sirene bureau of the requested member state shall inform the sirene bureau of the issuing member state by means of a k form and the procedure described in 2.8.2 shall apply. 2.9. deleting when the conditions for maintaining the alert cease to be met alerts entered in sis ii shall be kept only for the time required to meet the purposes for which they were entered. as soon as the conditions for maintaining the alert are no longer fulfilled, the issuing member state shall delete the alert without delay. when the alert has an expiry date, the deletion will occur automatically in the cs-sis. in case of a hit, the particular procedures described in sections 3.11, 4.10, 5.7, 6.5, 7.7 and 8.4 apply. the cs-sis deletion message shall be processed automatically by the n.sis ii. member states have the possibility to subscribe to an automatic notification of the deletion of an alert. 2.10. entering proper names within the constraints imposed by national systems for entry of data and availability of data, proper names (forenames and surnames) shall be entered in sis ii in a format (script and spelling) in the format used on official travel documents in accordance with the icao standards for travel documents, which are also used in the transliteration and transcription functionalities of central sis ii. in the exchange of supplementary information, sirene bureaux shall use the proper names as they are entered in sis ii. both users and sirene bureaux within the issuing member states shall use, as a general rule, latin characters for entering data in sis ii, without prejudice to transliteration and transcription rules laid down in appendix 1. where it is necessary to exchange supplementary information on a person who is not subject of an alert but may be related to it (e.g. a person who may be accompanying a missing minor) then the presentation and spelling of the name shall follow the rules set out in appendix 1 and be provided in latin characters and original format, if the member state providing the information has the capacity to also input any special characters in the original format. 2.11. different categories of identity confirmed identity a confirmed identity means that the identity has been confirmed on the basis of genuine id documents, by passport or by statement from competent authorities. not confirmed identity a not confirmed identity means that there is not sufficient proof of the identity. misused identity a misused identity (surname, forename, date of birth) occurs if a person, entered in sis ii, uses the identity of another real person. this can happen, for example, when a document is used to the detriment of the real owner. alias alias means an assumed identity used by a person known under other identities. 2.11.1. misused identity (article 36 of the sis ii regulation and 51 of the sis ii decision) due to the complexity of misused identity cases, on becoming aware that a person for whom an alert exists in sis ii is misusing someone else's identity, the issuing member state shall check whether it is necessary to maintain the misused identity in the sis ii alert. subject to the person's explicit consent, and as soon as it has been established that a person's identity has been misused, additional data shall be added to the alert in sis ii in order to avoid the negative consequences of misidentification. the person whose identity has been misused may, according to national procedures, provide the competent authority with the information specified in article 36(3) of the sis ii regulation and article 51(3) of the sis ii decision. any person whose identity has been misused has the right to withdraw his/her consent for the information to be processed. the issuing member state is responsible for inserting the remark misused identity in the alert and for entering additional data of the victim of misused identity such as photos, fingerprints and information on any valid id document(s). when a member state discovers that an alert on a person entered by another member state relates to a case of misused identity, and it has been established that the person's identity is misused it shall inform the sirene bureau of the issuing member state using a q form, in order that the misused identity extension can be used in the sis ii alert. taking into account the purpose for entering data of this nature, where the photographs and fingerprints of the person whose identity has been misused are available, they shall be added to the alert. for there to be a case of misused identity an innocent person's details must match an existing identity in an alert. the q form must contain the identity details, including alias number, from the alert so that the issuing member state may ascertain to which identity in the alert the form refers. the mandatory fields for completion of a q form in such cases are set out in appendix 3. the data of the person whose identity has been misused shall only be available for the purpose of establishing the identity of the person being checked and shall in no way be used for any other purpose. information on misused identity, including any fingerprints and photographs, shall be deleted at the same time as the alert or earlier if the person concerned so requests. 2.11.2. entering an alias in order to avoid incompatible alerts of any category due to an alias to be entered, to avoid problems for innocent victims and to ensure sufficient data quality, member states shall as far as possible inform each other about aliases and exchange all relevant information about the real identity of the sought subject. the member state that entered the alert shall be responsible for adding any aliases. if another member state discovers an alias, it shall inform the issuing member state using an m form. 2.11.3. further information to establish a person's identity the sirene bureau of the issuing member state may also, if the data in sis ii is insufficient, provide further information after consultation, on its own initiative or at the request of another member state, to help clarify a person's identity. an l form (and attachments) shall be used for this purpose. this information shall, in particular, cover the following: the origin of the passport or identity document in the possession of the person sought, the passport or identity document's reference number, date of issue, place and authority as well as the expiry date, description of the person sought, surname and forename of the mother and father of the person sought, other possible spellings of the surname and forenames of the person sought, photographs and fingerprints if available, last known address. as far as possible, this information shall be available in the sirene bureaux, or immediately and permanently accessible to them for speedy transmission. the common objective shall be to minimise the risk of wrongly stopping a person whose identity details are similar to those of the person on whom an alert has been issued. 2.12. exchange of information in case of interlinked alerts each link allows for the establishment of a relationship between at least two alerts. a member state may create a link between alerts that it enters in sis ii and only this member state may modify and delete the link. links shall only be visible to users when they have correct user access rights which permit at least two alerts in the link to be visible to them. member states shall ensure that only authorised access to links is possible. 2.12.1. operational rules links between alerts do not require special procedures for the exchange of supplementary information. nevertheless the following principles shall be observed: in case there is a hit on each of two or more interlinked alerts, the sirene bureau of the executing member state shall send a g form for each of them indicating in field 086 that other g forms on the linked alerts will be forwarded. no forms shall be sent on alerts which, although linked to an alert on which there was a hit, were not respectively the object of the hit. however, if there is a linked alert for surrender/extradition or for a missing person (for their own protection or in order to prevent threats) the communication of this discovery shall be carried out using an m form if appropriate and the information is available. 2.13. format and quality of biometric data in sis ii in accordance with article 23(2) of the sis ii decision, photographs and fingerprints of the person shall be added to the alert when available. sirene bureaux shall be able to exchange fingerprints and pictures for the purpose of completing the alert and/or to support the execution of the requested action to be taken. when a member state has a picture or fingerprints of a person for whom an alert has been issued by another member state, it may send the pictures and fingerprints as an attachment in order to allow the issuing member state to complete the alert. this exchange takes place without prejudice to exchanges in the framework of police cooperation in application of council framework decision 2006/960/jha. 2.13.1. further use of the data exchanged, including archiving limitations on the use of data provided for alerts in sis ii are set out in the sis ii legal instruments. any further use of pictures and fingerprints exchanged, including archiving, shall comply with the relevant provisions of the sis ii legal instruments, applicable national provisions on data protection, in accordance with directive 95/46/ec and framework decision 2008/977/jha. any storage of fingerprints at the national level shall fully respect the data protection rules of sis ii. member state shall keep fingerprint data downloaded from cs-sis separately from national fingerprint databases and such data shall be deleted at the same time as corresponding alerts and supplementary information. 2.13.2. exchanging fingerprints and photographs the following procedure shall apply: (a) the providing sirene bureau shall send an l form through the usual electronic path and shall mention in field 083 of an l form that the fingerprints and pictures are being sent to complete an alert in sis ii; (b) the sirene bureau of the issuing member state shall add the fingerprints or pictures to the alert in sis ii or shall send them to the competent authority to complete the alert. 2.13.3. technical requirements fingerprints and pictures shall be collected and transmitted in accordance with the standards to be defined in the implementing rules for entering biometric data in sis ii. every sirene bureau shall fulfil those technical standards. 2.13.4. format and quality of biometric data all biometric data entered in the system shall be subject of a specific quality check to ensure a minimum quality standard common to all sis ii users. before entry, checks shall be carried out at the national level to ensure that: (a) fingerprint data is compliant with the ansi/nist itl 1-2000 specified format, as implemented for the purposes of interpol and adapted for sis ii; (b) photographs, that shall only be used to confirm the identity of a person who has been located as a result of an alphanumeric search made in sis ii, are compliant with the following requirements: full frontal face pictures aspect rate shall be, as far as possible, 3:4 or 4:5. when available, a resolution of at least 480 600 pixels with 24 bits of colour depth shall be used. if the image has to be acquired through a scanner, the image size shall be, as far as possible, less than about 200 kbytes. 2.14. special types of search 2.14.1. geographically targeted search a geographically targeted search is a search carried out in a situation where a member state has firm evidence of the whereabouts of a person or object, subject of an alert, within a restricted geographical area. geographically targeted searches in the schengen area shall take place on the basis of an alert in sis ii. in circumstances where the whereabouts of a person or object are known, field 311 (important notice) may be completed indicating a geographical search and selecting the appropriate countries. additionally, if the whereabouts are known when issuing an alert for arrest, field 061 of an a form shall include the information on whereabouts of the wanted person. in all other cases, including for communicating the whereabouts of objects, an m form (field 083) shall be used. an alert for the wanted person shall be entered in sis ii to ensure that a request for action to be taken is immediately enforceable (article 9(3) of framework decision 2002/584/jha). when the subject of a geographical search is located at a place other than that indicated in the geographical search the sirene bureau of the issuing member state shall indicate this fact, using an m form, to the member state(s) involved in the geographical search in order for any related work to be stopped. 2.14.2. search with participation of special police units for targeted search (fast) the services provided by special units that conduct targeted searches (fugitive, active search teams, fast) should also be used in suitable cases by sirene bureaux in the requested member states. the alert in sis ii should not be replaced by international cooperation of the above-mentioned police units. such cooperation should not overlap the sirene bureau's role as a focal point for searches using sis ii. cooperation, as appropriate, should be established to ensure that the sirene bureau of the issuing member state is informed by their national fast about any ongoing operation relating to an alert entered in sis ii. where appropriate this sirene bureau shall provide this information to other sirene bureaux. any coordinated operation of enfast (european network of fugitive active search teams) which entails the cooperation of the sirene bureau shall be reported in advance to the sirene bureau. the sirene bureaux shall ensure fast flow of supplementary information, including information on a hit, to the national fast if the latter is involved in the search. 3. alerts for arrest for surrender or extradition purposes (article 26 of the sis ii decision) 3.1. entering an alert most of the alerts for arrest are accompanied by a european arrest warrant (eaw). however, under an alert for arrest, a provisional arrest is also possible prior to obtaining a request for extradition (er) according to article 16 of the european convention on extradition. the eaw/er shall be issued by a competent judicial authority carrying out this function in the issuing member state. when entering an alert for arrest for surrender purposes, a copy of the original eaw shall be entered in sis ii. a translation of the eaw in one or more of the official languages of the institutions of the union may be entered. in addition, photographs and fingerprints of the person shall be added to the alert when available. the relevant information including eaw or er, provided with regard to persons wanted for arrest for surrender or extradition purposes, shall be available to the sirene bureau when the alert is entered. a check shall be made to ensure that the information is complete and correctly presented. member states shall be able to enter more than one eaw per alert for arrest. it is the responsibility of the issuing member state to delete an eaw that loses its validity and to check if there are any other eaw attached to the alert and extend the alert if needed. in addition to an eaw which a member state has attached to an alert for arrest it shall also be possible to attach translations of the eaw, if necessary in separate binary files. for scanned documents that are to be attached to alerts, as far as possible, a minimum resolution of 150 dpi shall be used. 3.2. multiple alerts for general procedures see section 2.2. in addition, the following rules shall apply: several member states may enter an alert for arrest on the same person. if two or more member states have issued an alert for the same person, the decision on which warrant shall be executed in the event of an arrest shall be taken by the executing judicial authority in the member state where the arrest occurs. the sirene bureau of the executing member state shall send a g form to each member state concerned. 3.3. misused identity see general procedure in section 2.11.1. 3.4. entering an alias see general procedure in section 2.11.2. in the case of alerts for arrest, the sirene bureau shall use field 011 of an a form (24) (at the time of entry of the alert) or subsequently an m form, when informing the other member states of aliases regarding an alert for arrest, if this information is available to the sirene bureau. 3.5. supplementary information to be sent to member states when entering the alert, supplementary information regarding the alert shall be sent to all member states. the information referred to in section 3.5.1 shall be sent to the other sirene bureaux by a form, at the same time as entering the alert. any further information required for identification purposes shall be sent after consultation and/or at the request of another member state. in the case where several eaws or ers exist for the same person, separate a forms shall be completed for each of the eaws or ers. there shall be sufficient detail contained in the eaw/er and in the a form (in particular, eaw section (e): description of the circumstances in which the offence(s) was (were) committed, including the time and place , fields 042, 043, 044, 045: description of the circumstances ) for other sirene bureaux to verify the alert. appendix 3 sets out the information required and its relation to the fields on the eaw. when an eaw is replaced or revoked this shall be indicated in field 267 of an a form (article 26 sis ii decision) or in field 044 of an a form (extradition request/migrated alerts) by using the following text: this form replaces the form (reference number) referring to eaw (reference number) issued on (date) . 3.5.1. supplementary information to be sent with regard to provisional arrest 3.5.1.1. when entering an alert based on both an eaw and an extradition request (er) when entering the alert for arrest for extradition purposes, supplementary information shall be sent to all member states using an a form. if the data in the alert and the supplementary information sent to member states with regard to an eaw is not sufficient for extradition purposes, additional information shall be provided. in field 239 it shall be indicated that the form relates to both an eaw and an er. 3.5.1.2. when issuing an alert based on er only when entering the alert for arrest for extradition purposes, supplementary information shall be sent to all member states using an a form. in field 239 it shall be indicated that the form relates to an er. 3.6. adding a flag for general rules see section 2.6. if at least one of the eaws attached to the alert can be executed, the alert shall not be flagged. if an eaw contains more than one offence and if surrender can be carried out in respect of at least one of those offences, the alert shall not be flagged. as highlighted in section 2.6, a flagged alert under article 26 of the sis ii decision shall, for the period of duration of the flag, be regarded as being entered for the purposes of communicating the whereabouts of the person for whom it was issued. 3.6.1. systematic request for a flag to be added to alerts on persons wanted for arrest for extradition purposes where decision 2002/584/jha does not apply the following procedure shall apply: (a) in the case of alerts on persons wanted for arrest for extradition purposes, where decision 2002/584/jha does not apply, a sirene bureau may ask other sirene bureau(x) to add a flag systematically to alerts entered under article 26 of the sis ii decision on its nationals; (b) any sirene bureau wishing to do so shall send a written request to other sirene bureau(x); (c) any sirene bureaux to whom such a request is addressed shall add a flag for the member state in question immediately after the alert is issued; (d) the flag shall remain until the requesting sirene bureau asks for its deletion. 3.7. action by sirene bureaux upon receipt of an alert for arrest when a sirene bureau receives an a form, it shall, as soon as possible, search all available sources to try to locate the subject. if the information provided by the issuing member state is not sufficient for acceptance by the receiving member state, this shall not prevent the searches being carried out. the receiving member states shall carry out searches to the extent permissible under national law. if the alert for arrest is verified and the subject is located or arrested in a member state, then the information contained in an a form may be forwarded by the receiving sirene bureau to the competent authority of the member state which executes the eaw or the er. if the original eaw or er is requested, the issuing judicial authority may transmit it directly to the executing judicial authority (unless alternative arrangements have been made by the issuing and/or executing member state). 3.8. the exchange of information after a hit see general procedure in section 2.3. in addition, the following procedure shall apply: (a) a hit on an individual for whom an alert for arrest has been issued shall always be communicated immediately to the sirene bureau of the issuing member state. moreover, after sending a g form the sirene bureau of the executing member state shall also communicate the hit to the sirene bureau of the issuing member state where appropriate by telephone; (b) if necessary the sirene bureau of the issuing member state shall then send any relevant, specific information on the particular measures that shall be taken by the sirene bureau of the executing member state; (c) the authority competent for receiving the eaw or er, its full communication contacts (postal address, phone and, if available, fax and e-mail), reference number (if available), competent person (if available), requested language, time limit for and form of delivery shall be provided in field 091 of a g form; (d) in addition, the sirene bureau of the issuing member state shall inform other sirene bureaux of the hit, using an m form, where a clear link has been established with particular member states from the facts of the case and further enquiries initiated; (e) the sirene bureaux may transmit further information on alerts under article 26 of the sis ii decision, and in so doing may act on behalf of judicial authorities if this information falls within the scope of mutual judicial assistance. 3.9. supplementary information exchange about surrender or extradition when the competent judicial authorities provide information to the sirene bureau of the executing member state on whether the surrender or extradition may take place of a person for whom an alert for arrest has been issued, that sirene bureau shall immediately provide that information to the sirene bureau of the issuing member state by means of an m form, marked in field 083 with the words surrender or extradition (25). the detailed arrangements of the surrender or extradition shall, where appropriate, be communicated via the sirene bureaux as soon as possible. 3.10. supplementary information exchange about transit through another member state if the transit of a person is necessary, the sirene bureau of the member state through which the person is to be taken shall provide the necessary information and support, in response to a request by the sirene bureau of the issuing member state or the competent judicial authority, sent by the sirene bureau, by means of an m form marked with the word transit written at the start of field 083. 3.11. deletion of alerts upon surrender or extradition deletion of alerts for arrest for surrender or extradition purposes shall take place once the person has been surrendered or extradited to the competent authorities of the issuing member state but may also occur when the judicial decision on which the alert was based has been revoked by the competent judicial authority according to national law. 4. alerts for refusal of entry or stay (article 24 of the sis ii regulation) introduction the exchange of information on third-country nationals on whom an alert has been issued under article 24 of the sis ii regulation allows member states to take decisions in the case of entry or visa application. if the individual is already on the territory of the member state, it allows national authorities to take the appropriate action for issuing residence permits, long-stay visas or expulsion. in this section references to visas concern long-stay visas, unless otherwise clearly explained (e.g. re-entry visa). carrying out the information procedures laid down under article 5(4) of the schengen borders code and the consultation procedures laid down under article 25 of the schengen convention, falls within the competence of the authorities responsible for border controls and issuing residence permits or visas. in principle, the sirene bureaux shall be involved in these procedures only in order to transmit supplementary information directly related to the alerts (e.g. notification of a hit, clarification of identity) or to delete alerts. however, the sirene bureaux may also be involved in transmitting supplementary information necessary for the expulsion of, or for refusing entry to, a third-country national; and, may be involved in transmitting any supplementary information further generated by these actions. directive 2004/38/ec of the european parliament and of the council (26) is not applicable in switzerland. therefore in the case of hit on a third country national who is the beneficiary of the right of free movement, normal consultation procedures shall be undertaken between switzerland, the issuing member state and any other member state which may hold relevant information on the third country national's right of free movement. 4.1. entering an alert according to article 25 of the sis ii regulation, specific rules apply to third-country nationals who are beneficiaries of the right of free movement within the meaning of directive 2004/38/ec. the sirene bureau shall, as far as possible, be able to make available any information that was used to assess whether an alert for refusal of entry or stay was entered for a beneficiary of the right of free movement (27). in the exceptional case of entry of an alert on a third-country national enjoying the right of free movement, the sirene bureau of the issuing member state shall send an m form to all the other member states, based on the information provided by the authority that has entered the alert (see sections 4.6 and 4.7) in addition, article 26 of the sis ii regulation provides that, subject to certain specific conditions, alerts relating to third-country nationals who are the subject of a restrictive measure intended to prevent entry into or transit through the territory of member states, taken in accordance with article 29 of the treaty on european union (28), shall also be entered. the alerts shall be entered and kept up-to-date by the competent authority of the member state which holds the presidency of the council of the european union at the time of the adoption of the measure. if that member state does not have access to sis ii or alerts under article 24 of the sis ii regulation the responsibility shall be taken up by the member state which will holds the subsequent presidency and has access to sis ii, including access to the alerts under article 24 of the sis ii regulation. member states shall put in place the necessary procedures for entering, updating and deleting such alerts. 4.2. multiple alerts see general procedure in section 2.2. 4.3. misused identity see general procedure in section 2.11.1. problems may occur when a third country national who is subject of an alert for refusal of entry or stay unlawfully uses the identity of a citizen of a member state in order to seek to gain entry. if such a situation is discovered the competent authorities in the member states may be made aware of the correct use of the misused identity function within sis ii. alerts for refusal of entry shall not be issued in the main identity of a citizen of a member state. 4.4. entering an alias for general rules see section 2.11.2. 4.5. exchange of information when issuing residence permits or visas the following procedure shall apply: (a) without prejudice to the special procedure concerning the exchange of information, which takes place in accordance with article 25 of the schengen convention; and without prejudice to section 4.8, which concerns the exchange of information following a hit on a third-country national who is the beneficiary of the right of free movement (in which case the consultation of the sirene of the issuing member state is obligatory); the executing member state may inform the issuing member that the alert for refusal of entry has been matched in the course of the procedure for granting a residence permit or a visa. the issuing member state may then inform other member states using an m form if appropriate; (b) if so requested, in accordance with national law, the sirene bureaux of the member states concerned may assist in transmitting the necessary information to the appropriate authorities responsible for granting residence permits and visas. 4.5.1. special procedures as provided for in article 25 of the schengen convention procedure under article 25(1) of the schengen convention if a member state that is considering granting a residence permit or visa discovers that the applicant concerned is the subject of an alert for refusal of entry or stay issued by another member state, it shall consult the issuing member state via the sirene bureaux. the member state considering granting a residence permit or visa shall use an n form to inform the issuing member state about the decision to grant the residence permit or visa. if the member state decides to grant the residence permit or visa, the alert shall be deleted. the person may, nevertheless, be put on the issuing member state's national list of alerts for refusal of entry. procedure under article 25(2) of the schengen convention if a member state that entered an alert for refusal of entry or stay finds out that the person who is the subject of the alert has been granted a residence permit or visa, it shall instigate a consultation procedure with the member state that granted the residence permit or visa, via the sirene bureaux. the member state which granted the residence permit or visa shall use an o form to inform the issuing member state about the decision whether or not to withdraw the residence permit or visa. if this member state decides to maintain the residence permit or visa, the alert shall be deleted. the person can, nevertheless, be put on a member state's national list of alerts for refusal of entry. the consultation via sirene bureaux using an o form shall also take place if the member state that granted the residence permit or visa discovers later that there is an alert for refusal of entry or stay on that person entered in sis ii (29). if a third member state (i.e. neither that which granted the residence permit/visa nor that which issued the alert) discovers that there is an alert on a third-country national who holds a residence permit or visa from one of the member states, it shall notify both the member state which granted the permit/visa and the issuing member state via sirene bureaux using an h form. if the procedure foreseen under article 25 of the schengen convention entails deleting an alert for refusal of entry or stay, the sirene bureaux shall, whilst respecting their national law, offer their support if so requested. 4.5.2. special procedures as provided for in article 5(4)(a) and (c) of the schengen borders code procedure in cases falling under article 5(4)(a) according to article 5(4)(a) of the schengen borders code, a third-country national who is subject to an alert for refusal of entry or stay and, at the same time, has a residence permit, long stay visa or a re-entry visa granted by one of the member states, shall be allowed entry for transit purposes to the member state which granted the residence permit or re-entry visa, when crossing a border in a third member state. the entry may be refused if this member state has issued a national alert for refusal of entry. in both cases, at the request of the competent authority, the sirene bureau of the member state that the person is seeking to enter shall send the sirene bureaux of the two member states in question a message (an h form if the transit was allowed/a g form if the entry was refused) informing them of the contradiction and requesting that they consult each other in order to either delete the alert in sis ii or to withdraw the residence permit/visa. it may also request to be informed of the result of any consultation. if the third-country national concerned tries to enter the member state which has entered the alert in sis ii, his/her entry may be refused by this member state. however, at the request of the competent authority, the sirene bureau of that member state shall consult the sirene bureau of the member state that granted the residence permit or visa in order to allow the competent authority to determine whether there are sufficient reasons for withdrawing the residence permit/visa. the member state which granted the residence permit or visa shall use an o form to inform the issuing member state about the decision whether or not to withdraw the residence permit or visa. if this member state decides to maintain the residence permit or visa, the alert shall be deleted. the person can, nevertheless, be put on a member state's national list of alerts for refusal of entry. if this person tries to enter the member state that issued the residence permit or visa, he/she shall be allowed entry into the territory but the sirene bureau of that member state, at the request of the competent authority, shall consult the sirene bureau of the issuing member state in order to enable the competent authorities concerned to decide on withdrawal of the residence permit or visa or deletion of the alert. the member state which granted the residence permit or visa shall use an o form to inform the issuing member state about the decision whether or not to withdraw the residence permit or visa. if this member state decides to maintain the validity of the residence permit or visa, the alert shall be deleted. the person can, nevertheless, be put on a member state's national list of alerts for refusal of entry. procedure in cases falling under article 5(4)(c) according to article 5(4)(c) a member state may derogate from the principle that a person for whom an alert for refusal of entry was issued shall be refused entry on humanitarian grounds, on grounds of national interest or because of international obligations. at the request of the competent authority, the sirene bureau of the member state that allowed entry shall inform the sirene bureau of the issuing member state of this situation using an h form. 4.6. common rules concerning procedures referred to in section 4.5 (a) only one n form or o form shall be sent per consultation procedure by the sirene bureau of the member state which has granted or intends to grant or retain a residence permit or long-stay visa in order to inform the member state which has issued or is planning to issue a refusal of entry alert about the final decision on granting, retaining or revoking the residence permit or visa. (b) the consultation procedure shall be either a procedure for the purposes of article 25(1) of the schengen convention or a procedure for the purposes of article 25(2) of the schengen convention. (c) when a m, g or h form is sent in the context of a consultation procedure, it may be marked with the keyword consultation procedure . (m form: field 083; g form: field 086; h form: field 083). 4.7. exchange of information following a hit and when refusing entry or expelling from the schengen area without prejudice to the special procedures concerning the exchange of information, which takes place in accordance with article 5(4)(a) and (c) of the schengen borders code; and without prejudice to section 4.8 which concerns the exchange of information following a hit on a third-country national who is the beneficiary of the right of free movement (in which case the consultation of the issuing member state via its sirene bureau is obligatory), a member state may ask to be informed of any hits on alerts for refusal of entry or stay that it has entered. the sirene bureaux of member states that have entered alerts for refusal of entry shall not necessarily be informed of any hits as a matter of course, but may be informed in exceptional circumstances. a g form or an h form, depending on the action taken, may in any case be sent if, for example, supplementary information is required. a g form shall always be sent when there is a hit on a person benefiting from the right of free movement. notwithstanding the provisions of the paragraph above, as set out in section 10 all sirene bureaux shall provide statistics on hits on all foreign alerts on their territory. the following procedure shall apply: (a) a member state may ask to be informed of any hits on alerts for refusal of entry or stay that it has issued. any member state that wishes to take up this option shall ask the other member states in writing; (b) the executing member state may take the initiative and inform the issuing member state that the alert has been matched and that the third-country national has not been granted entry or has been expelled from the schengen territory; (c) once an action has been taken on the basis of a hit the sirene bureau of the executing member state shall send a g form to the sirene bureau of the issuing member state; a g form shall also be sent in case of a hit, when more information is needed for the execution of the measure. (d) upon the receipt of the information referred to in point (c) from the issuing member state: (i) if the action is executed the executing member state shall notify the sirene bureau of the issuing member state using an m form (not another g form for the same hit), (ii) if the action is not executed the executing member state shall notify the sirene bureau of the issuing member state using an h form, or (iii) if further consultation is required this shall take place using an m form, (iv) for the final form exchange in a consultation procedure an n or o form shall be used. (e) if, on its territory, a member state discovers a third-country national for whom an alert has been issued, the sirene bureau of the issuing member state, upon request, shall forward the information required to return the person concerned. depending on the needs of the executing member state this information, given in an m form, shall include the following: the type and reason for the decision, the authority issuing the decision, the date of the decision, the date of service (the date on which the decision was served), the date of enforcement, the date on which the decision expires or the length of validity, the information whether the person was convicted and the nature of the penalty. if a person on whom an alert has been issued is intercepted at the border, the procedures set out in the schengen borders code, and by the issuing member state, shall be followed. there may also be an urgent need for supplementary information to be exchanged via the sirene bureaux in specific cases in order to identify an individual with certainty. 4.8. exchange of information following a hit on a third-country national who is a beneficiary of the right of free movement concerning a third-country national who is a beneficiary of the right of free movement within the meaning of directive 2004/38/ec special rules shall apply (30). if there is a hit on a third-country national who is beneficiary of the right of free movement within the meaning of directive 2004/38/ec special rules shall apply (but see the introduction to section 4 on the position of switzerland). the following procedure shall apply: (a) at the request of the competent authority, the sirene bureau of the executing member state shall immediately contact the sirene bureau of the issuing member state using a g form in order to obtain the information necessary to decide, without delay, on the action to be taken, (b) upon receipt of a request for information, the sirene bureau of the issuing member state shall immediately start gathering the required information and send it as soon as possible to the sirene bureau of the executing member state, (c) the sirene bureau of the issuing member state shall check with the competent authority, if this information is not yet available, whether the alert may be kept in accordance with directive 2004/38/ec. if the competent authority decides to keep the alert, the sirene bureau of the issuing member state shall inform all the other sirene bureaux thereof, by means of an m form; (d) the executing member state shall inform, via its sirene bureau, the sirene bureau of the issuing member state whether the requested action to be taken was carried out (using an m form) or not (using an h form). (31) 4.9. exchange of information if, in the absence of a hit, a member state discovers that there is an alert for refusal of entry for a third-country national who is a beneficiary of the right of free movement if, in the absence a hit, a member state discovers that there is an alert for refusal of entry for a third-country national who is a beneficiary of the right of free movement, the sirene bureau of this member state shall, at the request of the competent authority, send an m form to the sirene bureau of the issuing member state informing it about this. the sirene bureau of the issuing member state shall check with the competent authority, if this information is not yet available, whether the alert may be kept in accordance with directive 2004/38/ec. if the competent authority decides to keep the alert, the sirene bureau of the issuing member state shall inform all the other sirene bureaux thereof, by means of an m form. 4.10. deletion alerts for refusal of entry or stay without prejudice to the special procedures provided for by article 25 of the schengen convention and article 5(4)(a) and (c) of the schengen borders code the alerts for refusal of entry or stay on third country nationals shall be deleted upon: (a) the expiry of the alert; (b) the decision to delete by the competent authority of the issuing member state; (c) the expiry of the time limit on refusal of entry where the competent authority of the issuing member state set an expiry date on its decision; or (d) the acquisition of citizenship of one of the member states. if the acquisition of citizenship comes to the attention of a sirene bureau of a member state other than the issuing one, the former shall consult the sirene bureau of the issuing member state and, if needed, send a j form, in accordance with the procedure for rectification and deletion of data found to be legally or factually inaccurate (see section 2.7). 5. alerts on missing persons (article 32 of the sis ii decision) 5.1. multiple alerts see general procedure in section 2.2. 5.2. misused identity see general procedure in section 2.11.1. 5.3. entering an alias see general procedure in section 2.11.2. 5.4. adding a flag circumstances may arise where a hit occurs on an alert on a missing person and the competent authorities within the executing member state decide that the action requested may not be taken and/or that no further action will be taken on the alert. this decision may be taken even if the issuing member state's competent authorities decide to retain the alert in sis ii. in such circumstances the executing member state may request a flag after the hit has occurred. with a view to adding a flag, the general procedures as described in section 2.6 shall be followed. there is no alternative action to be taken for alerts for missing persons. 5.5. provision of descriptive detail on missing minors and other persons assessed as being at risk sirene bureaux shall have ready access to all relevant supplementary information at national level regarding missing person alerts in order for the sirene bureaux to be able to play a full role in reaching a successful outcome to cases, facilitating identification of the person and providing supplementary information promptly on matters linked to the case. relevant supplementary information may cover, in particular, national decisions on the custody of a child or vulnerable person or requests for the use of child alert mechanisms. as not all vulnerable missing persons will cross national borders, decisions on the provision of supplementary information (on descriptive details) and its recipients shall be taken on a case-by-case basis, covering the entire range of circumstances. following a decision at national level on the extent of forwarding required for such supplementary information, the sirene bureau of the issuing member state shall, as far as is appropriate, take one of the following measures: (a) retain the information in order to be able to forward supplementary information upon the request of another member state; (b) forward an m form to the relevant sirene bureau if enquiries indicate a likely destination for the missing person; (c) forward an m form to all the relevant sirene bureaux, based on the disappearance circumstances for the purpose of supplying all data concerning the person in a short period of time. in the case of a high-risk missing person, field 311 of the m form shall begin with the word urgent and an explanation of the reason for the urgency. (when the missing minor is unaccompanied (32), the explanatory term unaccompanied minor shall be indicated.) this urgency may be reinforced by a telephone call highlighting the importance of the m form and its urgent nature. a common method for entering structured supplementary information in an agreed order on a high-risk missing person shall be used. (33) this shall be entered in field 083 of the m form. once information has been received by a sirene bureau, it shall, in order to maximise the opportunities for locating the person in a targeted and reasoned fashion, be communicated, as far as is appropriate, to: (a) relevant border posts; (b) the competent administrative and police authorities for the location and protection of persons; (c) the relevant consular authorities of the issuing member state, after a hit is achieved in sis ii. 5.6. the exchange of information after a hit see general procedure in section 2.3. in addition the following rules shall apply: (a) as far as it is possible, the sirene bureaux shall communicate the necessary medical details of the missing person(s) concerned if measures have to be taken for their protection. the information transmitted shall be kept only as long as it is strictly necessary and shall be used exclusively for the purposes of medical treatment given to the person concerned; (b) the sirene bureau of the executing member state shall always communicate the whereabouts to the sirene bureau of the issuing member state; (c) in accordance with article 33(2) of the sis ii decision, the communication of the whereabouts of the missing person, who is of age, to the person who reported him/her missing shall be subject to the missing person's consent (34). the consent shall be in writing or at least a written record shall be available. in cases where consent is refused, this shall be in writing or recorded officially. however, the competent authorities may communicate the fact that the alert has been deleted following a hit, to the person who reported him or her missing. 5.7. deletion of alerts on missing persons if there is to be any significant delay in the deletion of the alert by the issuing member state this delay shall be notified to the sirene bureau of the executing member state in order for a flag to be placed on the alert as described in section 5.4 of the sirene manual. 5.7.1. minors an alert shall be deleted upon: (a) the resolution of the case (e.g. the minor is repatriated; the competent authorities in the executing member state take a decision on the care of the child); (b) the expiry of the alert; or (c) the decision by the competent authority of the issuing member state. 5.7.2. adults where no protective measures are requested an alert shall be deleted upon: (a) the execution of the action to be taken (whereabouts ascertained by the executing member state); (b) the expiry of the alert; or (c) the decision by the competent authority of the issuing member state. 5.7.3. adults, protective measures requested an alert shall be deleted upon: (a) carrying out of the action to be taken (person placed under protection); (b) the expiry of the alert; or (c) the decision by the competent authority of the issuing member state. subject to national law, where a person is in official protective care an alert may be retained until that person has been repatriated. 6. alerts for persons sought for a judicial procedure (article 34 of the sis ii decision) 6.1. multiple alerts see general procedure in section 2.2. 6.2. misused identity see general procedure in section 2.11.1. 6.3. entering an alias see general procedure in section 2.11.2. 6.4. the exchange of information after a hit see general procedure in section 2.3. in addition, the following rules shall apply: (a) the real place of residence or domicile shall be obtained using all measures allowed by the national law of the member state where the person was located; (b) national procedures shall be in place, as appropriate, to ensure that alerts are only kept in sis ii for the time required to meet the purposes for which they were supplied. the sirene bureaux may transmit further information on alerts entered under article 34 of sis ii decision, and in so doing may act on behalf of judicial authorities if this information falls within the scope of mutual judicial assistance. 6.5. deletion of alerts on persons sought for a judicial procedure an alert shall be deleted upon: (a) the communication of the whereabouts of the person to the competent authority of the issuing member state. where the information forwarded cannot be acted upon (e.g. incorrect address or no fixed abode) the sirene bureau of the issuing member state shall inform the sirene bureau of the executing member state in order to resolve the problem; (b) the expiry of the alert; or (c) the decision by the competent authority of the issuing member state. where a hit has been achieved in a member state and the address details were forwarded to the issuing member state and a subsequent hit in that member state reveals the same address details the hit shall be recorded in the executing member state but neither the address details nor a g form shall be re-sent to the issuing member state. in such cases the executing member state shall inform the issuing member state on the repeated hits, and the issuing member state shall consider the need to maintain the alert. 7. alerts for discreet and specific checks (article 36 of the sis ii decision) 7.1. multiple alerts see general procedure in section 2.2. 7.2. misused identity see general procedure in section 2.11.1. 7.3. entering an alias see general procedure in section 2.11.2. 7.4. informing other member states when issuing alerts when issuing an alert the sirene bureau of the issuing member state shall inform all the other sirene bureaux by using an m form in the following cases: (a) an alert for discreet or specific check is issued with the request that hits are reported without any delay to the issuing sirene bureau; in the m form it shall use the text article 36(2) of the sis ii decision immediate action or article 36(3) of the sis ii decision immediate action . justification for the immediate action should also be set out in field 083 of an m form; or (b) an authority responsible for national security requests the issuance of an alert in accordance with article 36(3) of the sis ii decision; in the m form it shall use the text article 36(3) of the sis ii decision . if the alert is issued under article 36(3) of the sis ii decision the m form shall contain, in field 080, the name of the authority requesting entry of the alert, first in the language of the issuing member state and then also in english and its contact details in field 081 in a format not requiring translation. the confidentiality of certain information shall be safeguarded in accordance with national law, including keeping contact between the sirene bureaux separate from any contact between the services responsible for national security. 7.5. adding a flag see general procedure in section 2.6. there is no alternative action to be taken for alerts for discreet or specific checks. in addition, if the authority responsible for national security in the executing member state decides that the alert requires a flag, it shall contact its national sirene bureau and inform it that the required action to be taken cannot be carried out. the sirene bureau shall then request a flag by sending an f form to the sirene bureau of the issuing member state. as with other flag requests a general reason shall be given. however, matters of a sensitive nature need not be disclosed (see also section 7.6(b) below). 7.6. the exchange of information after a hit see general procedure in section 2.3. in addition the following rules shall apply: a) when a hit occurs on an alert issued pursuant to article 36(3) of the sis ii decision, the sirene bureau of the executing member state shall inform the sirene bureau of the issuing member state of the results (discreet check or specific check) via the g form. at the same time the sirene bureau of the executing member state shall inform its own authority responsible for national security. b) a specific procedure is required to safeguard the confidentiality of information. therefore, any contact between the authorities responsible for national security shall be kept separate from the contact between the sirene bureaux. consequently, the detailed reasons for requesting a flag shall be discussed directly between authorities responsible for national security and not through sirene bureaux. c) when a hit occurs on an alert which requests the hit to be reported immediately a g form should be sent without delay to the sirene bureau of the issuing member state. 7.7. deletion of alerts on discreet and specific check an alert shall be deleted upon: (a) the expiry of the alert; or (b) a decision to delete by the competent authority of the issuing member state. 7.8. automatic number plate recognition systems (anpr) see section 9. 8. alerts on objects for seizure or use as evidence (article 38 of the sis ii decision) 8.1. multiple alerts see general procedure in section 2.2. 8.2. vehicle alerts 8.2.1. checking for multiple alerts on a vehicle the mandatory identity description elements for checking for multiple alerts on a vehicle include: (a) the registration/number plate, and/or (b) the vehicle identification number (vin). both numbers may feature in sis ii. if, when entering a new alert, it is found that the same vin and/or registration plate number already exist in sis ii, it is assumed that the new alert will result in multiple alerts on the same vehicle. however, this method of verification is effective only where the description elements used are the same. comparison is therefore not always possible. the sirene bureau shall draw the users' attention to the problems which may arise where only one of the numbers has been compared, vin-twins and re-use of licence plates. a positive response does not mean automatically that there is a hit, and a negative response does not mean that there is no alert on the vehicle. the identity description elements used for establishing whether two vehicle entries are identical are detailed in section 2.2.3. the consultation procedures for checking multiple and incompatible alerts to be applied by the sirene bureaux for vehicles shall be the same as for persons. for general procedures see section 2.2. the sirene bureau of the member state issuing an alert shall maintain a record of any requests to enter a further alert which, after consultation, have been rejected by virtue of the provisions given above, until the alert is deleted. 8.2.2. vin-twins vin-twin refers to a vehicle, entered in sis ii, of the same type with the same vehicle identification number (vin) as an original manufactured vehicle (e.g. a tractor and a motorcycle with the same vin do not fall into this category). the following specific procedure shall apply to avoid the negative consequences of a repeated seizure of the original manufactured vehicle with the same vin: (a) where the possibility of a vin-twin is established, the sirene bureau shall, as appropriate: (i) ensure that there is no error in the sis ii alert and the alert information is as complete as possible; (ii) check the circumstances of the case giving rise to an alert in sis ii; (iii) find out the history of both vehicles from their production; (iv) request a thorough check of the seized vehicle, in particular its vin, to verify whether it is the original manufactured vehicle. all sirene bureaux involved shall closely cooperate in taking such measures. (b) where the existence of a vin-twin is confirmed, the issuing member state shall consider whether it is necessary to maintain the alert in sis ii. if the member state decides to maintain the alert in sis ii the issuing member state shall: (i) add a vehicle related remark suspicion of clone (35) in the alert; (ii) invite the owner of the original manufactured vehicle to, subject to his explicit consent and according to national law, provide the sirene bureau of the issuing member state with all relevant information required to avoid the negative consequences of misidentification; (iii) send out an m form via its sirene bureau to all other bureaux including, as appropriate, the marks or features describing the original manufactured vehicle and distinguishing it from the vehicle entered in sis ii. the m form shall indicate words to the effect of original manufactured vehicle prominently in field 083. (c) if, when sis ii is consulted, the vehicle related remark, suspicion of clone is found, the user conducting the check shall contact the national sirene bureau to obtain additional information in order to clarify whether the vehicle being checked is the vehicle sought or the original manufactured vehicle. (d) if during the check, it is established that the information on the m form is no longer up-to-date the sirene bureau of the executing member state shall contact the sirene bureau of the issuing member state in order to verify the current legal ownership of the vehicle. the latter sirene bureau shall send a new m form accordingly, indicating words to the effect of original manufactured vehicle prominently in field 083. 8.3. the exchange of information after a hit the sirene bureaux may transmit further information on alerts entered under article 38 of the sis ii decision and in so doing may act on behalf of judicial authorities, if this information falls within the scope of mutual judicial assistance in accordance with national law. the sirene bureaux shall send supplementary information as quickly as possible via a p form, if requested in field 089 of a g form, when a hit is achieved on an alert for seizure or use as evidence issued on a vehicle, aircraft, boat, industrial equipment or container pursuant to article 38 of the sis ii decision. given that the request is urgent and that it will not therefore be possible to collate all the information immediately, it shall not be necessary to fill all the fields of the p form. however, efforts shall be made to collate the information relating to the main headings: 041, 042, 043, 162, 164, 165, 166, 167 and 169. where a hit is achieved on an identifiable component of an object the sirene bureau of the executing member state shall inform the sirene bureau of the issuing member state of the circumstances of the hit using a g form, explaining in field 090 (additional information) that the seizure is not of the complete object but of a component or components. where several components are found at the same time, as they relate to one alert, only one g form will be sent. any subsequent hits on the alert shall be notified to the sirene bureau of the issuing member state by means of a g form. the alert shall not be deleted unless the conditions set out in section 8.4 are met. 8.4. deletion of alerts on objects for seizure or use as evidence in criminal proceedings an alert shall be deleted upon: (a) the seizure of the object or equivalent measure once the necessary follow-up exchange of supplementary information has taken place between sirene bureaux or the object becomes subject of another judicial or administrative procedure (e.g. judicial procedure on good faith purchase, disputed ownership or judicial cooperation on evidence); (b) the expiry of the alert; or (c) the decision to delete by the competent authority of the issuing member state. 9. automatic number plate recognition systems (anpr) these systems are relevant for alerts under articles 36 and 38 of the sis ii decision. due to the widespread use of anpr for law enforcement purposes there is the technical capability to achieve numerous hits on a vehicle or number plate over a short period of time. given that some anpr sites are manned there is the possibility of a vehicle being detected and the requested action undertaken. in this case, before any action is undertaken, the users of the anpr system shall verify whether the hit achieved through anpr relates to an alert under article 36 or 38 of the sis ii decision. however, many fixed anpr sites are not constantly manned. accordingly, although the technology will register the passage of the vehicle and a hit will be achieved, the requested action may not be undertaken. for both article 36 and article 38 alerts where the requested action could not be taken the following general procedure shall apply: one h form shall be sent for the first hit. if more information is required on the movement of the vehicle it is for the sirene bureau of the issuing member state to contact the sirene bureau of the executing member state bilaterally to discuss information needs. for alerts under article 36 the following procedure shall apply: (a) the sirene bureau of the member state achieving the hit shall inform the issuing sirene bureau of the circumstances of the hit using one g form, using the word anpr in field 086. if more information is required on the movement of the vehicle, the sirene bureau of the issuing member state shall contact the sirene bureau of the executing member state. (b) the sirene bureau of the member state achieving a hit on an alert for a specific check whereby the requested action could not be taken, shall inform the issuing sirene bureau of the circumstances of the hit using an h form, with the word anpr in field 083, followed by words to the effect of: this hit has been achieved by use of anpr. please inform us if your country wishes to be informed of further hits achieved through anpr for this vehicle or number plate where the requested action could not be undertaken ; (c) the issuing member state shall decide whether the alert has achieved its purpose, shall be deleted or not and whether bilateral discussions should take place on information needs. for alerts under article 38 the following procedure shall apply: (a) in circumstances where a hit occurs and the requested action has been taken the sirene bureau of the member state achieving the hit shall inform the issuing sirene bureau of the circumstances of the hit using one g form; (b) in circumstances where a hit occurs and the requested action has not been taken the sirene bureau of the member state achieving the hit shall inform the sirene bureau of the issuing member state of the circumstances of the hit using an h form and the word anpr in field 083 followed by words to the effect of; this hit has been achieved by the use of anpr. please inform us if your country wishes to be informed of further hits achieved through anpr for this vehicle or number plate where the requested action could not be taken. ; (c) when receiving such an h form, the sirene bureau of the issuing member state shall consult the competent authorities, which shall have the responsibility of deciding on the necessity of receiving further h forms or information passed bilaterally from the sirene bureau of the executing member state. 10. statistics once a year the sirene bureaux shall provide statistics, which have to be sent to the agency and the commission. the statistics shall also be sent, upon request, to the european data protection supervisor and the competent national data protection authorities. the statistics shall comprise the number of forms of each type sent to each of the member states. in particular, the statistics shall show the number of hits and flags. a distinction shall be made between hits found on alerts issued by another member state and hits found by a member state on alerts it issued. appendix 5 sets out the procedures and formats for the provision of statistics under this section. (1) council framework decision 2002/584/jha of 13 june 2002 on the european arrest warrant and the surrender procedures between member states (oj l 190, 18.7.2002, p. 1). (2) oj l 239, 22.9.2000, p. 19. (3) decision of the executive committee of 22 december 1994 on bringing into force the implementing convention (sch/com-ex (94)29 rev. 2. (oj l 239, 22.9.2000, p. 130). (4) decisions of the executive committee of 7 october 1997 (sch/com-ex 97(27) rev. 4) for italy and (sch/com-ex 97(28)rev. 4) for austria. (5) council decision 1999/848/ec of 13 december 1999 on the full application of the schengen acquis in greece (oj l 327, 21.12.1999, p. 58). (6) council decision 2000/777/ec of 1 december 2000 on the application of the schengen acquis in denmark, finland and sweden, and in iceland and norway (oj l 309, 9.12.2000, p. 24). (7) council decision 2004/926/ec of 22 december 2004 on putting into effect of parts of the schengen acquis by the united kingdom of great britain and northern ireland (oj l 395, 31.12.2004, p. 70). (8) oj c 340, 10.11.1997, p. 92. (9) agreement with the republic of iceland and the kingdom of norway concerning the latter's association with the implementation, application and development of the schengen acquis (oj l 176, 10.7.1999, p. 36). (10) oj l 370, 17.12.2004, p. 78. (11) oj l 160, 18.6.2011, p. 3. (12) regulation (ec) no 1986/2006 of the european parliament and of the council of 20 december 2006 regarding access to the second generation schengen information system (sis ii) by the services in the member states responsible for issuing vehicle registration certificates (oj l 381, 28.12.2006, p. 1). (13) regulation (ec) no 562/2006 of the european parliament and of the council of 15 march 2006 establishing a community code on the rules governing the movement of persons across borders (schengen borders code) (oj l 105, 13.4.2006, p. 1). (14) this is without prejudice to other tasks given to sirene bureaux based on respective legislation in the framework of police cooperation, e.g. in the application of council framework decision 2006/960/jha of 18 december 2006 on simplifying the exchange of information and intelligence between law enforcement authorities of the member states of the european union (oj l 386, 29.12.2006, p. 89). (15) council decision 2009/371/jha of 6 april 2009 establishing the european police office (europol) (oj l 121, 15.5.2009, p. 37). (16) see also schengen catalogue, recommendations and best practices. (17) this second domain exists in the technical pre-production environment . (18) directive 95/46/ec of the european parliament and of the council of 24 october 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (oj l 281, 23.11.1995, p. 31). (19) council framework decision 2008/977/jha of 27 november 2008 on the protection of personal data processed in the framework of police and judicial cooperation in criminal matters (oj l 350, 30.12.2008, p. 60). (20) regulation (eu) no 1077/2011 of the european parliament and of the council of 25 october 2011 establishing a european agency for the operational management of large-scale it systems in the area of freedom, security and justice (oj l 286, 1.11.2011, p. 1). (21) certain transportation companies use other reference numbers. sis ii has a provision for entering serial numbers other than the bic. (22) due to the lack of standardisation in serial numbers for objects it is possible, for example, for two different firearms of different makes to have the same serial number. equally it is possible for an object to have the same serial number as a very different object, for example, an issued document and a piece of industrial equipment. where it is clear that the serial numbers are identical but the objects are clearly not the same no consultation between sirene bureaux is required. users may be made aware that this situation can arise. additionally, it is possible that an object, such as a passport or car, has been stolen and reported in one country and is subsequently reported in the country of origin. this could result in two alerts for the same object. if this matter comes to light it may be resolved by the sirene bureaux concerned. (23) for the technical implementation see the data exchange between sirenes document referred to in section 1.10.2. (24) see footnote 23. (25) see also section 1.13.1 on indication of urgency in sirene forms. (26) directive 2004/38/ec of the european parliament and of the council of 29 april 2004 on the right of citizens of the union and their family members to move and reside freely within the territory of the member states (oj l 158, 30.4.2004, p. 77). (27) article 30 of directive 2004/38/ec provides that the person refused entry shall be notified in writing thereof and informed in full on grounds on which the decision was taken unless it is contrary to the interests of state security. (28) article 26 of the sis ii regulation refers to article 15 of the treaty on european union. however, following the entry into force of the lisbon treaty this article 15 became article 29 in the consolidated version of the treaty on european union. (29) in the case of alerts for refusal of entry issued for the family members of eu citizens, it is necessary to recall that it is not possible as a matter of routine to consult sis ii prior to issuing a residence card for such a person. article 10 of directive 2004/38/ec lists the necessary conditions for acquiring right of residence for more than three months in a host member state by family members of union citizens who are third-country nationals. this list, which is exhaustive, does not allow for routine consultation of the sis prior to the issuing of residence cards. article 27(3) of this directive specifies that member states may request, should they consider it essential, information from other member state only regarding any previous police record (that is not all of the sis ii data). such enquiries shall not be made as a matter of routine. (30) according to directive 2004/38/ec, a person benefiting from the right of free movement may only be refused entry or stay on the grounds of public policy or public security when their personal conduct represents a genuine, immediate, and sufficiently serious threat affecting one of the fundamental interests of society and when the other criteria laid down in article 27(2) of the said directive are respected. article 27(2) stipulates: measures taken on grounds of public policy or public security shall comply with the principle of proportionality and shall be based exclusively on the personal conduct of the individual concerned. previous criminal convictions shall not in themselves constitute grounds for taking such measures. the personal conduct of the individual concerned must represent a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society. justifications that are isolated from the particulars of the case or that rely on considerations of general prevention shall not be accepted. moreover, there are additional limitations for persons enjoying the right of permanent residence who can only be refused entry or stay on serious grounds of public policy or public security as stated in article 28(2) of directive 2004/38/ec. (31) in conformity with directive 2004/38/ec the executing member state cannot limit the free movement of third country nationals benefiting from the right of free movement on the sole ground that the issuing member state maintains the alert unless the conditions referred to in footnote 29 are met. (32) unaccompanied minors are children, as defined in article 1 of the convention on the rights of the child of 20 november 1989 (crc), who have been separated from both parents and other relatives and are not being cared for by an adult who, by law or custom, is responsible for doing so. (33) data of disappearance: (a) place, date and time of the disappearance. (b) circumstances of disappearance. details of the missing person: (c) apparent age. (d) height. (e) skin colour. (f) colour and shape of hair. (g) colour of eyes. (h) other physical details (i.e. piercings, deformations, amputations, tattoos, marks, scars, etc.). (i) psychological particulars: at risk of suicide, mental illness, aggressive behaviour, etc. (j) other details: necessary medical treatment, etc. (k) clothes worn at the time of the disappearance. (l) photograph: available or not. (m) ante-mortem form: available or not. related information: (n) person/s who could accompany him or her (and schengen id if available). (o) vehicle/s relating to the case (and schengen id if available). (p) if available: number of mobile phone/last log-in , contact via on-line social networks. the titles of the different sub-fields themselves are not to be included as part of field 083, but just the reference letter. when details are already available in the fields of an alert the information shall be included in the alert, including fingerprints or photographs. (34) for clarity on consent in matters of on the protection of individuals with regard to the processing of personal data and on the free movement of such data see article 2(h) directive 95/46/ec. (35) suspicion of clone relates to cases where, for example, the registration documents of a vehicle are stolen and used to re-register another vehicle of the same make, model and colour which has also been stolen.

name: council decision (eu) 2016/1224 of 18 july 2016 on the conclusion of a protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part, to take account of the accession of the czech republic, the republic of estonia, the republic of cyprus, the republic of latvia, the republic of lithuania, hungary, the republic of malta, the republic of poland, the republic of slovenia, and the slovak republic to the european union type: decision subject matter: european construction; international affairs; asia and oceania; economic geography date published: 2016-07-28 28.7.2016 en official journal of the european union l 202/1 council decision (eu) 2016/1224 of 18 july 2016 on the conclusion of a protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part, to take account of the accession of the czech republic, the republic of estonia, the republic of cyprus, the republic of latvia, the republic of lithuania, hungary, the republic of malta, the republic of poland, the republic of slovenia, and the slovak republic to the european union the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 217, in conjunction with point (a) of article 218(6) and article 218(8) thereof, having regard to the 2003 act of accession, and in particular article 6(2) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament, whereas: (1) the protocol to the euro-mediterranean agreement establishing an association between the european community and its member states, of the one part, and the republic of lebanon, of the other part (protocol), was signed on behalf of the union and its member states on 1 april 2015. (2) the protocol should be approved, has decided as follows: article 1 the protocol to the euro-mediterranean agreement establishing an association between the european communities and their member states, of the one part, and the republic of lebanon, of the other part, to take account of the accession of the czech republic, the republic of estonia, the republic of cyprus, the republic of latvia, the republic of lithuania, hungary, the republic of malta, the republic of poland, the republic of slovenia, and the slovak republic to the european union, is hereby approved on behalf of the union and its member states (1). article 2 the president of the council shall, on behalf of the union, make the following notification: as a consequence of the entry into force of the treaty of lisbon on 1 december 2009, the european union has replaced and succeeded the european community and from that date exercises all rights and assumes all obligations of the european community. therefore, references to the european community ; or to the community in the text of the euro-mediterranean agreement and of the protocol are, where appropriate, to be read as to the european union or to the union . article 3 this decision shall enter into force on the date of its adoption. done at brussels, 18 july 2016. for the council the president f. mogherini (1) the protocol is attached to the decision on signature.

name: council decision (eu) 2016/1230 of 12 july 2016 establishing that no effective action has been taken by portugal in response to the council recommendation of 21 june 2013 type: decision subject matter: public finance and budget policy; europe; national accounts; budget date published: 2016-07-28 28.7.2016 en official journal of the european union l 202/21 council decision (eu) 2016/1230 of 12 july 2016 establishing that no effective action has been taken by portugal in response to the council recommendation of 21 june 2013 the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 126(8) thereof, having regard to the recommendation from the european commission, whereas: (1) according to article 126 of the treaty, member states shall avoid excessive government deficits. (2) the stability and growth pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation. the stability and growth pact includes council regulation (ec) no 1467/97 (1), which was adopted in order to further the prompt correction of excessive general government deficits. (3) the council, acting upon a recommendation by the commission, decided on 2 december 2009, in accordance with article 126(6) of the treaty, that an excessive deficit existed in portugal and issued a recommendation to correct the excessive deficit by 2013 at the latest, in accordance with article 126(7) of the treaty and article 3 of regulation (ec) no 1467/97 (2). following the request by the portuguese authorities for financial assistance from the union, the member states whose currency is the euro and the international monetary fund (imf), the council granted union financial assistance to portugal (3). the memorandum of understanding on specific economic policy conditionality (the memorandum of understanding) between the commission and the portuguese authorities was signed on 17 may 2011. since then, the council has issued two recommendations to portugal (on 9 october 2012 and 21 june 2013) on the basis of article 126(7) of the treaty, which extended the deadline for correcting the excessive deficit to 2014 and 2015 respectively. in both recommendations, the council considered that portugal had taken effective action, but unexpected adverse economic events with major unfavourable consequences for government finances had occurred. (4) specifically, in order to bring the headline government deficit below the 3 %-of-gdp reference value by 2015 in a credible and sustainable manner, portugal was recommended to: (a) bring the headline deficit to 5,5 % of gdp in 2013, 4,0 % of gdp in 2014 and 2,5 % of gdp in 2015, which was deemed consistent with an improvement in the structural balance of 0,6 % of gdp in 2013, 1,4 % of gdp in 2014 and 0,5 % of gdp in 2015, based on the commission services may 2013 update of the economic outlook for portugal; (b) implement measures amounting to 3,5 % of gdp to confine the 2013 deficit to 5,5 % of gdp, including the measures defined in the 2013 budget law and additional measures included in the supplementary budget, namely, reductions in the wage bill, increased efficiency in the functioning of public administration, lower public consumption and better use of union funds; (c) building on the public expenditure review (per), adopt permanent consolidation measures worth at least 2,0 % of gdp in view of attaining a headline deficit of 4,0 % of gdp in 2014 and aim at streamlining and modernising the public administration, addressing redundancies across the public sector functions and entities, improving the sustainability of the pension system and achieving targeted cost savings in individual line ministries; (d) adopt the necessary permanent consolidation measures to achieve the 2015 deficit target of 2,5 % of gdp. furthermore, portugal was recommended to maintain reform momentum in public financial management by revising the budget framework law by the end of 2013 to further enhance budgetary procedures and principles of budgetary management, accountability, transparency and simplification and to continue efforts to limit contingent liabilities stemming from state-owned enterprises and public-private partnerships. (5) the commission services may 2013 update of the economic outlook for portugal, which underpinned the council recommendation of 21 june 2013, projected that the portuguese economy would contract by 2,3 % in 2013 before growing by 0,6 % and 1,5 %, respectively, in the two subsequent years. nominal gdp growth was forecast at 0,6 % and 1,8 % in 2013 and 2014, respectively, and at 2,7 % in the following year. (6) in its recommendation of 21 june 2013, the council established a deadline of 1 october 2013 for effective action to be taken in line with the provisions of article 3(4) of regulation (ec) no 1467/97. in line with article 10(2)(a) of regulation (eu) no 472/2013, portugal was exempted from a separate reporting under the excessive deficit procedure and reported in the framework of its macroeconomic adjustment programme. (7) risks of non-compliance with the council recommendation of 21 june 2013 were highlighted in subsequent assessments. in july 2015, based on its assessment of the 2015 stability programme, the first after the exit from the economic adjustment programme, the council concluded that there was a risk that portugal would not comply with the provisions of the stability and growth pact. similarly, the commission's opinion on portugal's draft budget plan for 2015 concluded that portugal was at risk of not complying with the rules of the stability and growth pact. in particular, the commission pointed to a risk to the timely correction of the excessive deficit by 2015. moreover, the commission also pointed to the shortfall in structural effort as compared to the one referred to in the recommendation, indicating the need for additional structural consolidation measures for 2015 to underpin a credible and sustainable correction of the excessive deficit. (8) a new assessment of the action taken by portugal to correct the excessive deficit by 2015 in response to the council recommendation of 21 june 2013, leads to the following conclusions: following the notification of the 2015 general government deficit and its validation by the commission (eurostat), the 2015 deficit came out at 4,4 % of gdp, above the treaty reference value of 3,0 % of gdp. the gap vis- -vis the reference value was largely due to a financial sector support measure in the context of the resolution of banif (banco internacional do funchal, sa) at the end of 2015, which had a negative impact of 1,4 % of gdp on the government deficit. taking that element together with one-off revenue items, the deficit net of one-off measures would still have been just above the treaty reference value. the cumulative improvement in the structural balance in the period from 2013 to 2015 is estimated at 1,1 % of gdp, significantly below the 2,5 % of gdp recommended by the council. when adjusted for the effects of revised potential output growth and revenue windfalls or shortfalls compared to the baseline scenario underpinning the recommendation, the cumulative improvement is reduced markedly to 0,1 % of gdp. the amount of measures implemented until june 2014 was in line with the targets under the macroeconomic adjustment programme. thereafter, the amount of permanent consolidation measures underpinning the budgetary targets for 2014 was significantly reduced over time from 2,3 % of gdp planned at the time of the 2014 budget to around 1,5 % of gdp in the projection underlying the 2015 budget. thus, the amount of measures taken falls clearly short of the recommendation to take at least 2,0 % of gdp of additional measures in 2014. for 2015, the amount of permanent fiscal consolidation measures was further reduced to around 0,6 % of gdp in the 2015 budget and the headline target was set at 2,7 % of gdp. thus, the planned structural consolidation measures were insufficient to achieve the recommended 2015 deficit target of 2,5 % of gdp. the 2015 deficit outturn confirmed that the planned measures were insufficient. overall, since june 2014 the improvement of the headline deficit has been driven by the economic recovery and reduced interest expenditure in a low-interest rate environment. windfall gains were not used to accelerate the deficit reduction and the volume of structural consolidation measures was not sufficient to reach the targets. general government gross debt has broadly stabilised since the council recommendation of 21 june 2013 reaching 129,2 % of gdp at the end of 2013, 130,2 % of gdp in 2014 and 129,0 % of gdp in 2015 according to the commission 2016 spring forecast. fiscal-structural reforms have progressed in most areas albeit at a differentiated pace. the budget framework law was revised and strengthened and it is set to fully enter into force in september 2018. considerable efforts have been made to curb tax fraud and evasion and to reform the tax administration. the long-term sustainability of the pension system has been improved in recent years, while short- and medium-term challenges remain. reform in the healthcare system with a view to ensure the sustainability of the national health service (nhs) are progressing at an adequate pace. public administration reforms to improve fiscal management at regional and local levels have been implemented over the past years as well as reforms to the public-private partnerships (ppps) and state-owned enterprises (soes), particularly during the economic adjustment programme duration. (9) this leads to the conclusion that the response of portugal to the council recommendation of 21 june 2013 has been insufficient. portugal did not put an end to its excessive deficit by 2015. the fiscal effort falls significantly short of what was recommended by the council, has adopted this decision: article 1 portugal has not taken effective action in response to the council recommendation of 21 june 2013. article 2 this decision is addressed to the portuguese republic. done at brussels, 12 july 2016. for the council the president p. ka im r (1) council regulation (ec) no 1467/97 of 7 july 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (oj l 209, 2.8.1997, p. 6). (2) all documents related to the excessive deficit procedure of portugal can be found at: http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/countries/portugal_en.htm (3) council implementing decision 2011/344/eu of 17 may 2011 on granting union financial assistance to portugal (oj l 159, 17.6.2011, p. 88).

name: commission implementing decision (eu) 2016/1223 of 25 july 2016 amending decision 2011/30/eu on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the european union (notified under document c(2016) 4637) (text with eea relevance) type: decision_impl subject matter: accounting; labour market; cooperation policy; management date published: 2016-07-27 27.7.2016 en official journal of the european union l 201/23 commission implementing decision (eu) 2016/1223 of 25 july 2016 amending decision 2011/30/eu on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the european union (notified under document c(2016) 4637) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to directive 2006/43/ec of the european parliament and of the council of 17 may 2006 on statutory audits of annual accounts and consolidated accounts, amending council directives 78/660/eec and 83/349/eec and repealing council directive 84/253/eec (1), and in particular the first subparagraph of article 46(2) thereof, whereas: (1) by virtue of commission decision 2011/30/eu (2), the auditors and audit entities that provide audit reports concerning the annual or consolidated accounts of companies incorporated in the third countries listed in annex ii to that decision and whose transferable securities are admitted to trading on a regulated market of a member state, have been exempted from the requirements of article 45 of directive 2006/43/ec for certain financial years provided that they provide the competent authorities of that member state with a certain set of information. (2) the commission has carried out assessments of the public oversight, quality assurance, investigation and penalty systems for auditors and audit entities of the third countries listed in annex ii to decision 2011/30/eu. the assessments were carried out with the assistance of the european group of auditors' oversight bodies in light of the criteria set out in articles 29, 30 and 32 of directive 2006/43/ec, which govern the public oversight, quality assurance, investigation and penalty systems for auditors and audit firms of the member states. following such assessments, it appears that mauritius, new zealand and turkey have public oversight, quality assurance, investigation and penalty systems for auditors and audit entities that meet requirements equivalent to those set out in articles 29, 30 and 32 of directive 2006/43/ec. therefore, it is appropriate to consider those systems equivalent to the public oversight, quality assurance, investigation and penalty systems for auditors and audit firms of the member states. (3) the ultimate objective of cooperation between member states and third countries with respect to systems of public oversight, quality assurance, investigation and penalties for auditors and audit entities should be to reach mutual reliance on each other's oversight systems based on their equivalence. (4) bermuda, cayman islands, egypt and russia have established or are in the process of establishing public oversight, quality assurance, investigation and penalty systems for auditors and audit entities. however, due to the recent establishment of those systems, certain information is still missing, rules are not fully implemented, inspections are not carried out or sanctions are not imposed. in order to carry out a further assessment for the purpose of taking a decision in respect of the equivalence of such systems, there is a need to obtain additional information from those third countries in order to better understand those systems. therefore, it is appropriate to extend the transitional period granted by decision 2011/30/eu in respect of the auditors and audit entities that provide audit reports concerning the annual or consolidated accounts of companies incorporated in those third countries and whose transferable securities are admitted to trading on a regulated market of a member state. (5) in order to protect investors, auditors and audit entities that provide audit reports concerning the annual or consolidated accounts of companies that are incorporated in the third countries listed in annex ii to decision 2011/30/eu and whose transferable securities are admitted to trading on a regulated market of a member state should be able to continue their audit activities in the union without being registered under article 45 of directive 2006/43/ec during an additional period running from 1 august 2016 to 31 july 2018 on condition that they provide the required information. in such a case, those auditors and audit entities should be able to continue their activities in accordance with the requirements of the relevant member state in relation to audit reports concerning annual or consolidated accounts for financial years starting during the period from 1 august 2016 to 31 july 2018. this decision does not affect the power of the member states to apply their investigation and penalty systems in respect of such auditors and audit entities. (6) the commission will monitor developments in the supervisory and regulatory cooperation with third countries on a regular basis. the decision to grant equivalence or to extend the transitional period is without prejudice to the possibility of the commission to undertake a review of the decision at any time. that review may lead to the withdrawal of the recognition of equivalence or the premature end of the transitional period. decision 2011/30/eu should therefore be amended accordingly. (7) the measures provided for in this decision are in accordance with the opinion of the committee established by article 48(1) of directive 2006/43/ec, has adopted this decision: article 1 decision 2011/30/eu is amended as follows: (1) in article 1, the following third paragraph is added: for the purposes of article 46(1) of directive 2006/43/ec, the public oversight, quality assurance, investigation and penalty systems for auditors and audit entities of the following third countries meet requirements which shall be considered equivalent to those of articles 29, 30 and 32 of that directive in relation to audit activities concerning annual or consolidated accounts for financial years starting from 1 august 2016: (1) mauritius; (2) new zealand; (3) turkey.; (2) article 2(2) is replaced by the following: 2. a member state shall not apply article 45 of directive 2006/43/ec in relation to auditors and audit entities that provide audit reports concerning the annual or consolidated accounts of companies incorporated in the third countries listed in annex ii to this decision and whose transferable securities are admitted to trading on a regulated market of that member state within the meaning of point 14 of article 4(1) of directive 2004/39/ec of the european parliament and of the council (*), for financial years starting during the period from 2 july 2010 to 31 july 2018, provided that the auditor or audit entity concerned provides the competent authorities of that member state with all of the following: (a) the name and address of the auditor or the audit entity concerned and information about its legal structure; (b) where the auditor or the audit entity belongs to a network, a description of the network; (c) the auditing standards and independence requirements which have been applied to the audit concerned; (d) a description of the internal quality control system of the audit entity; (e) an indication of whether and when the last quality assurance review of the auditor or of the audit entity was carried out and, unless this information is being provided by the third country competent authority, the necessary information about the outcome of the review. where the necessary information about the outcome of the last quality assurance review is not public, the competent authorities of member states shall treat such information on a confidential basis. (*) directive 2004/39/ec of the european parliament and of the council of 21 april 2004 on markets in financial instruments amending council directives 85/611/eec and 93/6/eec and directive 2000/12/ec of the european parliament and of the council and repealing council directive 93/22/eec (oj l 145, 30.4.2004, p. 1).;" (3) annex ii is replaced by the text in the annex to this decision. article 2 this decision is addressed to the member states. done at brussels, 25 july 2016. for the commission valdis dombrovskis vice-president (1) oj l 157, 9.6.2006, p. 87. (2) commission decision 2011/30/eu of 19 january 2011 on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the european union (oj l 15, 20.1.2011, p. 12). annex annex ii list of third countries bermuda cayman islands egypt russia.

name: commission implementing decision (eu) 2016/1176 of 18 july 2016 terminating the partial interim review concerning imports of certain threaded tube or pipe cast fittings of malleable cast iron originating in the people's republic of china and thailand type: decision_impl subject matter: asia and oceania; iron, steel and other metal industries; competition; international trade; mechanical engineering; trade date published: 2016-07-19 19.7.2016 en official journal of the european union l 193/115 commission implementing decision (eu) 2016/1176 of 18 july 2016 terminating the partial interim review concerning imports of certain threaded tube or pipe cast fittings of malleable cast iron originating in the people's republic of china and thailand the european commission, having regard to the treaty on the functioning of the european union, having regard to council regulation (ec) no 1225/2009 of 30 november 2009 on protection against dumped imports from countries not members of the european community (1), and in particular article 9(1) thereof, whereas: 1. procedure (1) by council implementing regulation (eu) no 430/2013 (2) anti-dumping measures were imposed on certain threaded tube or pipe cast fittings of malleable cast iron originating in the people's republic of china (the prc) and thailand following an investigation under article 5 of regulation (ec) no 1225/2009 (the basic regulation). (2) on 25 november 2015, the european commission (the commission) initiated a partial interim review with regard to imports into the union of certain threaded tube or pipe cast fittings of malleable cast iron originating in the prc and thailand on the basis of 11(3) of the basic regulation. it published a notice of initiation in the official journal of the european union (3) (the notice of initiation). (3) the commission initiated the review concerning the prc following a request lodged on 2 march 2015 by metpro limited (the applicant), an importer of certain types of threaded tube or pipe cast fittings of malleable cast iron, with regard to imports from the prc. the applicant requested the review with the purpose to determine whether electrical conduit fittings (elbows, bends and t-shaped) with a standard metric thread pitch of 1,5 mm according to iso metric form bs3643 (the product for potential exclusion) should be excluded from the product scope of implementing regulation (eu) no 430/2013. as the measures also apply to imports originating in thailand, the commission decided on its own initiative to initiate the review for imports from thailand as well. the request contained sufficient evidence to justify the initiation of the review. (4) in the notice of initiation, the commission invited interested parties to contact it in order to participate in the review. in addition, the commission specifically informed the applicant, known union producers, the known exporting producers in the prc and thailand and the chinese and thai authorities, known importers, suppliers and users, traders, as well as an association about the initiation of the review and invited them to participate. (5) interested parties had an opportunity to comment on the initiation of the review and to request a hearing with the commission and/or the hearing officer in trade proceedings. 2. withdrawal of the request for review and termination of the proceeding (6) by letter dated 5 april 2016 addressed to the commission, the applicant withdrew its request for review. (7) in accordance with articles 9(1) and 11(5) of the basic regulation, when the applicant withdraws its request, the review may be terminated unless such termination would not be in the union interest. (8) the commission considered that the review should be terminated with regard to the prc since the investigation had not brought to light any consideration demonstrating that such termination would not be in the union interest. (9) with regard to thailand, none of the contacted known companies or thai authorities provided any relevant information for the investigation with regard to the product for potential exclusion that would allow for the review to be carried out. none of the contacted known importers reported any imports of the product for potential exclusion from thailand. the investigation revealed no other relevant information that would be the basis for carrying out a review of a product scope. (10) since the applicant withdrew its request with regard to the prc and since there is no further relevant information with regard to thailand, the review should be terminated ex officio with regard to thailand in accordance with articles 9(2) and 11(5) of the basic regulation. (11) interested parties were informed accordingly and were given an opportunity to comment. no comments were received within the prescribed deadline. (12) the commission therefore concludes that the partial interim review concerning imports of certain threaded tube or pipe cast fittings of malleable cast iron originating in the prc and thailand should be terminated. (13) this decision is in accordance with the opinion of the committee established by article 15(1) of the basic regulation, has adopted this decision: article 1 the partial interim review concerning imports of certain threaded tube or pipe cast fittings of malleable cast iron, excluding bodies of compression fittings using iso din 13 metric thread and malleable iron threaded circular junction boxes without having a lid, currently falling within cn code ex 7307 19 10 (taric code 7307191010) is terminated. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 18 july 2016. for the commission the president jean-claude juncker (1) oj l 343, 22.12.2009, p. 51. (2) council implementing regulation (eu) no 430/2013 of 13 may 2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of threaded tube or pipe cast fittings, of malleable cast iron, originating in the people's republic of china and thailand and terminating the proceeding with regard to indonesia (oj l 129, 14.5.2013, p. 1). (3) notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of threaded tube or pipe cast fittings, of malleable cast iron, originating in the people's republic of china and thailand (oj c 392, 25.11.2015, p. 14) and corrigendum to the notice of initiation (oj c 52, 11.2.2016, p. 27).

name: commission implementing decision (eu) 2016/1156 of 14 july 2016 on the adequacy of the competent authorities of the united states of america pursuant to directive 2006/43/ec of the european parliament and of the council (notified under document c(2016) 4364) (text with eea relevance) type: decision_impl subject matter: accounting; information and information processing; information technology and data processing; documentation; management; america date published: 2016-07-15 15.7.2016 en official journal of the european union l 190/83 commission implementing decision (eu) 2016/1156 of 14 july 2016 on the adequacy of the competent authorities of the united states of america pursuant to directive 2006/43/ec of the european parliament and of the council (notified under document c(2016) 4364) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to directive 2006/43/ec of the european parliament and of the council of 17 may 2006 on statutory audits of annual accounts and consolidated accounts, amending council directives 78/660/eec and 83/349/eec and repealing council directive 84/253/eec (1), and in particular the first subparagraph of article 47(3) thereof, whereas: (1) under article 47(1) of directive 2006/43/ec, the competent authorities of member states may allow the transfer of audit working papers or other documents held by statutory auditors or audit firms approved by them and of inspection or investigation reports relating to the audits in question to the competent authorities of a third country only if those authorities meet requirements that have been declared adequate by the commission and there are reciprocal working arrangements between them and the competent authorities of the member states concerned. (2) by implementing decision 2013/280/eu (2), the commission considered that the competent authorities of the united states, namely the public company accounting oversight board of the united states of america and the securities and exchange commission of the united states of america, meet requirements that are adequate for the purposes of article 47(1)(c) of directive 2006/43/ec. that implementing decision is applicable since 1 august 2013 and will cease to apply on 31 july 2016. therefore, it is necessary to determine whether the competent authorities of the united states continue to meet requirements which are adequate for the purpose of having audit working papers or other documents held by statutory auditors or audit firms and inspection or investigation reports transferred to them. (3) the limitation in time of the application of implementing decision 2013/280/eu was due to the lack of mutual reliance on each other's oversight systems. therefore, in particular, the mechanism of cooperation between the competent authorities of the member states and the competent authorities of the united states has been reviewed in order to assess the progress made towards reaching mutual reliance. since the adoption of implementing decision 2013/280/eu, certain forms of reliance have been established, including a commitment to avoid unnecessary duplication of work and to define approaches to cooperation leading to a higher degree of reliance in the future. (4) a decision on adequacy under article 47(3) of directive 2006/43/ec does not address other specific requirements for the transfer of audit working papers and other documents held by statutory auditors or audit firms and of inspection or investigation reports, such as the agreement on reciprocal working arrangements between the competent authorities set out in article 47(1)(d) of that directive, or the requirements for the transfer of personal data set out in article 47(1)(e) of that directive. (5) a transfer of audit working papers or other documents held by statutory auditors or audit firms and of inspection or investigation reports to the competent authority of a third country reflects the substantial public interest in carrying out independent public oversight. accordingly, the competent authorities of member states should, in the framework of the working arrangements referred to in article 47(2) of directive 2006/43/ec, ensure that the competent authorities of the united states use any documents transferred to them in accordance with article 47(1) of that directive only to exercise their functions of public oversight, external quality assurance and investigations of auditors and audit firms. (6) the transfer of audit working papers or other documents held by statutory auditors or audit firms to the competent authority of a third country includes the granting of access to or transmission of such papers to such an authority by the statutory auditor or audit firm holding the paper upon prior agreement of the competent authority of the member state concerned or by that authority itself. (7) when inspections or investigations are carried out, statutory auditors and audit firms are not allowed to grant access to or to transmit their audit working papers or other documents to the competent authorities of the united states under any other conditions than those set out in article 47 of directive 2006/43/ec and in this decision. (8) without prejudice to article 47(4) of directive 2006/43/ec, member states should ensure that, for the purposes of public oversight, quality assurance and investigations of statutory auditors and audit firms, contacts between the statutory auditors or audit firms approved by them and the competent authorities of the united states take place via the competent authorities of the member states concerned. (9) member states should ensure that the working arrangements required by directive 2006/43/ec to transfer audit working papers or other documents held by statutory auditors or audit firms and of inspection or investigation reports between their competent authorities and the competent authorities of the united states are agreed on the basis of reciprocity and include protection of any professional secrets and sensitive commercial information contained in such papers relating to the entities audited, including their industrial and intellectual property, or to the statutory auditors and audit firms that audited those entities. (10) where a transfer of audit working papers or other documents held by statutory auditors or audit firms and of inspection or investigation reports to the competent authorities of the united states involves the disclosure of personal data, such a disclosure is lawful only if it also complies with the requirements for international data transfers laid down in directive 95/46/ec of the european parliament and of the council (3). article 47(1)(e) of directive 2006/43/ec therefore requires member states to ensure that the transfer of personal data between their competent authorities and the competent authorities of the united states complies with chapter iv of directive 95/46/ec. member states should ensure that there are appropriate safeguards for the protection of personal data transferred, in particular through binding agreements between their competent authorities and the competent authorities of the united states, and that the competent authorities of the united states will not further disclose personal data contained in the documents transferred without the prior agreement of the competent authorities of the member states concerned. (11) member states may decide to accept that in exceptional circumstances inspections by their competent authorities are carried out jointly with the competent authorities of the united states where this is necessary to ensure effective supervision. member states may allow that cooperation with the competent authorities of the united states takes place under the form of joint inspections or through observers without inspection or investigation powers and without access to the confidential audit working papers, to other documents held by statutory auditors or audit firms, or to inspection or investigation reports. such cooperation should always take place under the conditions set out in article 47(2) of directive 2006/43/ec and in this decision, in particular as regards the need to respect sovereignty, confidentiality and reciprocity. member states should ensure that any joint inspections carried out in the union by their competent authorities and the competent authorities of the united states under article 47 of directive 2006/43/ec are, as a general rule, under the leadership of the competent authority of the member state concerned. (12) the securities and exchange commission of the united states of america has competence in investigating auditors and audit firms; this decision should only cover the competences of the securities and exchange commission of the united states of america to investigate auditors and audit firms. the securities and exchange commission of the united states of america implements adequate safeguards prohibiting and sanctioning disclosure by its current and former employees of confidential information to any third person or authority. under the laws and regulations of the united states, the securities and exchange commission may transfer to the competent authorities of the member states documents equivalent to those referred to in article 47(1) of directive 2006/43/ec which relate to investigations it may perform on such auditors and audit firms. on that basis, the securities and exchange commission of the united states of america meets requirements which should be declared adequate for the purposes of article 47(1)(c) of directive 2006/43/ec. (13) the public company accounting oversight board of the united states of america has competence in the public oversight, external quality assurance and investigation of auditors and audit firms. it implements adequate safeguards prohibiting and sanctioning disclosure by its current and former employees of confidential information to any third person or authority. under the laws and regulations of the united states, the public company accounting oversight board may transfer to the competent authorities of the member states documents equivalent to those referred to in article 47(1) of directive 2006/43/ec. on that basis, the public company accounting oversight board of the united states of america meets requirements which should be declared adequate for the purposes of article 47(1)(c) of directive 2006/43/ec. (14) this decision does not affect the cooperation arrangements referred to in article 25(4) of directive 2004/109/ec of the european parliament and of the council (4). (15) any conclusion on the adequacy of the requirements met by the competent authorities of a third country pursuant to the first subparagraph of article 47(3) of directive 2006/43/ec does not pre-empt any decision that the commission may adopt on the equivalence of the public oversight, quality assurance, investigation and penalty systems for auditors and audit entities of that third country pursuant to article 46(2) of that directive. (16) this decision aims to facilitate effective cooperation between the competent authorities of the member states and those of the united states. its purpose is to allow those authorities to exercise their functions of public oversight, external quality assurance and investigations and, at the same time, to protect the rights of the parties concerned. member states are under the obligation to communicate to the commission the reciprocal working arrangements concluded with the competent authorities of the united states to allow the commission to assess whether cooperation is in accordance with article 47 of directive 2006/43/ec. (17) the ultimate objective of cooperation on audit oversight between member states' competent authorities and the competent authorities of the united states is to reach mutual reliance on each other's oversight systems. in that way, transfers of audit working papers or other documents held by statutory auditors or audit firms and of inspection or investigation reports should become the exception. mutual reliance would be based on the equivalence of auditor oversight systems of the union and of the united states. (18) the competent authorities of the united states intend to further evaluate the auditor oversight systems in the member states before deciding to fully rely on the oversight performed by their competent authorities. therefore, the mechanism of cooperation between the competent authorities of the member states and the competent authorities of the united states should be reviewed to assess the progress made towards reaching mutual reliance on each other's oversight systems. for that reason, this decision should be applicable for a limited period of time. (19) notwithstanding the time limitation, the commission will monitor developments in the supervisory and regulatory cooperation on a regular basis. this decision will be reviewed as appropriate in light of the supervisory and regulatory changes in the union and in the united states, taking into account available sources of relevant information. that review may lead to the withdrawal of the declaration of adequacy. (20) the european data protection supervisor delivered an opinion on 27 may 2016. (21) the measures provided for in this decision are in accordance with the opinion of the committee established by article 48(1) of directive 2006/43/ec, has adopted this decision: article 1 the public company accounting oversight board of the united states of america and the securities and exchange commission of the united states of america meet requirements which shall be considered adequate within the meaning of article 47(1)(c) of directive 2006/43/ec for the purpose of transfers of audit working papers or other documents and of inspection and investigation reports under article 47(1) of directive 2006/43/ec. article 2 1. member states shall ensure that where audit working papers or other documents held by statutory auditors or audit firms are exclusively held by a statutory auditor or audit firm registered in a member state other than the member state where the group auditor is registered and whose competent authority has received a request from any of the authorities referred to in article 1, such papers or documents shall be transferred to the requesting competent authority only if the competent authority of the first member state has given its express agreement to the transfer. 2. member states shall ensure that any joint inspections carried out in the union by their competent authorities and the competent authorities of the united states fulfil the conditions laid down in article 47 of directive 2006/43/ec and that they are, as a general rule, under the leadership of the competent authority of the member state concerned. 3. member states shall ensure that any bilateral working arrangements between their competent authorities and the competent authorities of the united states comply with the conditions for cooperation set out in this article. article 3 this decision shall apply from 1 august 2016 to 31 july 2022. article 4 this decision is addressed to the member states. done at brussels, 14 july 2016. for the commission jonathan hill member of the commission (1) oj l 157, 9.6.2006, p. 87. (2) commission implementing decision 2013/280/eu of 11 june 2013 on the adequacy of the competent authorities of the united states of america pursuant to directive 2006/43/ec of the european parliament and of the council (oj l 161, 13.6.2013, p. 4). (3) directive 95/46/ec of the european parliament and of the council of 24 october 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (oj l 281, 23.11.1995, p. 31). (4) directive 2004/109/ec of the european parliament and of the council of 15 december 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending directive 2001/34/ec (oj l 390, 31.12.2004, p. 38).

name: commission decision (eu) 2016/1126 of 4 april 2016 on state aid sa. 35484 (2013/c) (ex sa. 35484 (2012/nn)) regarding general healthcare control activities pursuant to the milk and fat law (notified under document c(2016) 1878) type: decision subject matter: health; competition; economic policy; agricultural activity; europe; agricultural policy date published: 2016-07-12 12.7.2016 en official journal of the european union l 187/16 commission decision (eu) 2016/1126 of 4 april 2016 on state aid sa. 35484 (2013/c) (ex sa. 35484 (2012/nn)) regarding general healthcare control activities pursuant to the milk and fat law (notified under document c(2016) 1878) (only the german text is authentic) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof, having called on interested parties to submit their observations pursuant to the provision cited above (1) and having regard to their comments, whereas: 1. procedure (1) by letters dated 28 november 2011 and 27 february 2012, the european commission (hereinafter: the commission) asked germany for additional information concerning the 2010 annual report on state aid in the agricultural sector which germany had submitted in accordance with article 26 of council regulation (eu) 2015/1589 (2). germany answered the commission's questions by letters dated 16 january 2012 and 27 april 2012. in the light of germany's answers, it emerged that germany had granted financial support to the german dairy sector pursuant to the 1952 milk and fat law (gesetz ber den verkehr mit milch, milcherzeugnissen und fetten, hereinafter: the mfg). (2) by letter dated 2 october 2012, the commission informed germany that the measures in question had been registered as non-notified aid under the number sa.35484 (2012/nn). by letters dated 16 november 2012, 7, 8, 11, 13, 14, 15 and 19 february, 21 march, 8 april, 28 may, 10 and 25 june and 2 july 2013, germany submitted further information. (3) by letter of 17 july 2013 (c(2013) 4457 final) the commission informed germany that it had decided to initiate with regard to certain sub-measures under the mfg the procedure laid down in article 108(2) of the treaty of functioning of the european union (tfeu) (3) (hereinafter: the opening decision). in the same letter, the commission came to the conclusion that other sub-measures were compatible with the internal market, either during the period from 28 november 2001 to 31 december 2006 or in the period starting 1 january 2007 or in both periods, or that further sub-measures did not constitute state aid within the meaning of article 107(1) tfeu or that they fell outside the scope of state aid rules. (4) as regards the sub-measures that are subject to the current decision, namely the general healthcare control sub-measures referred by the opening decision as contaminant monitoring sub-measures (4), bw 9, by 5, he 8, ni 2, nw 1, rp 3, sl 4 and th 8 (hereinafter the sub-measures) the commission stated that those sub-measures appeared to have all the characteristics of state aid and requested germany to submit its comments and to provide all information which may be helpful for the assessment of the aid concerning the period from 28 november 2001. (5) by letter dated 20 september 2013, germany submitted comments concerning the opening decision. (6) the opening decision was published in the official journal of the european union (5). the commission invited interested parties to submit their comments within one month. the commission received 10 comments from interested parties on the sub-measures referred to in recital 4. those comments received were transmitted to germany by letters of 27 february, 3 march and 3 october 2014. germany did not respond to those comments. 2. description of the scheme (7) the mfg is a german federal law which entered into force in 1952. it constitutes the legal framework of the sub-measures, and its validity is unlimited in time. (8) section 22(1) of the mfg authorises the german federal states (hereinafter: l nder) to impose a milk levy on dairies based on the quantities of delivered milk. (9) section 22(2) of the mfg provides that the revenues obtained from the milk levy may be used solely for: (a) improving and sustaining quality on the basis of certain implementing provisions; (b) improving hygiene during milking and the delivery, processing and distribution of milk and milk products; (c) milk yield recording; (d) advice to operators on matters relating to the dairy industry and ongoing training of young employees; (e) advertising aimed at increasing the consumption of milk and milk products; (f) performance of the tasks conferred by the mfg. (10) section 22(2a) of the mfg provides that, by derogation from paragraph 2, the revenues obtained from the milk levy may also be used for: (a) reducing increased structural collection costs in respect of the supply of milk and cream from the producer to the dairy; (b) reducing increased transport costs in respect of the supply of milk between dairies where such supply is necessary to ensure the supply of drinking milk to the recipient dairy's sales area; and (c) improving quality regarding the central distribution of milk products. (11) in the following l nder: baden-w rttemberg, bayern, hessen, niedersachsen, nordrhein-westfalen, rheinland-pfalz, saarland and th ringen the milk levy was used to finance the sub-measures referred to in recital 4. (12) the sub-measures include controls of different contaminants in milk and milk products such as dioxin, polychlorobiphenyls (pcbs), aflatoxin, detergents, pesticides, polychlorinated hydrogen that can be harmful for human health. the controls were carried out by special control bodies to which these tasks were assigned by the responsible public authorities in the l nder where the sub-measures were carried out. the control samples were taken from the milk transportation vehicles at random basis and anonymously. the objective of the controls was to survey the presence of the contaminants in the milk with a view to preventing human health risks and protecting consumers. these activities are referred to in this decision as contaminants monitoring. between 2001 and 2011, the total budget of those activities (all l nder where the sub-measures were carried out compounded) amounted to around eur 9 million. (13) according to the assessment undertaken by the commission in the opening decision germany failed to present the provisions of national or union law which would justify the classification of the contaminants monitoring as a non-aid. in addition, the commission had doubts on whether the sub-measures did not confer an advantage to the dairies as the commission considered that the controls seek to ensure milk product quality and therefore the costs incurred for carrying out such controls have to be typically borne by the dairy undertakings concerned. moreover, the commission raised the concern that the quality controls at stake are carried out on a routine basis. 3. comments from germany (14) germany described the legal basis for the contaminants monitoring. there were two sets of rules. the first set of legal provisions regulated the execution of the controls in the framework of the contaminants monitoring. this included the methodological preparation and the establishment of controls schedule, the way of sampling, the testing method, and the use of the results. these activities were substantially governed by the food safety law. (15) the second set of legal provisions concerned the financing of those activities. as already explained in the opening decision those activities were financed by the milk levy paid by the dairies. the legal basis was section 22(2) of the mfg. additional implementing provisions existed at regional level including budgetary rules. (16) germany presented an overview of the applicable food safety law: (a) at union level: the official food safety control was regulated in the following legal acts: regulation (ec) no 178/2002 of the european parliament and of the council (6), regulation (ec) no 882/2004 of the european parliament and of the council (7), regulation (ec) no 854/2004 of the european parliament and of the council (8), in particular annex iv thereof, regulation (ec) no 852/2004 of the european parliament and of the council (9), in particular annex i, part a thereof, commission regulation (ec) no 1881/2006 (10), regulation (ec) no 396/2005 of the european parliament and of the council (11). the monitoring of residues or substances was regulated in council directive 96/23/ec (12) and commission decision 97/747/ec (13). (b) at national level: the official food safety control and monitoring of residues or substances were regulated in the food and feed safety law (lebensmittel- und futtermittelgesetzbuch), the administrative ordinance on the principles of execution of the official food and feed safety controls (allgemeine verwaltungsvorschrift ber die grunds tze zur durchf hrung der amtlichen berwachung der erhaltung lebensmittelrechtlicher, weinrechtlicher, futtermittelrechtlicher und tabakrechtlicher vorschriften) and the regulation on limitation of contaminants in food (verordnung zur begrenzung von kontaminanten in lebensmittel), the national residues control plan (nationaler r ckstandskontrollplan). (c) in addition to those food safety official controls the contaminants monitoring was performed, based on the following provisions of union and national law: regulation (ec) no 178/2002, regulation (ec) no 882/2004 and commission recommendation 2011/516/eu (14), section 14 mfg, sections 50 and 51 of the food and feed safety law and the annually issued regional (l nder) provisions approving the contaminants monitoring exercise and its financing. (17) germany presented statistics on the food safety official controls, the residues controls and the contaminants monitoring as well as a list of the bodies responsible for those controls. 3.1. comments from germany concentring the character of the contaminants monitoring as an additional component to the official food safety surveillance system (18) the main comment put forward by germany was that the contaminants monitoring is an additional component to the official food safety surveillance system and does not confer any advantage to the dairies. in this regards, germany explained the following: (19) the contaminants monitoring qualified as an additional component to the official food safety surveillance system which was based on union and national law and served the preventive and healthcare oriented consumer protection as well as the risk based crises management. (20) the contaminants monitoring could not be qualified as routine control. the controls under the contaminants monitoring were executed on the basis of samples after the milk is collected by the milk transportation vehicles. the sampling schedule was developed by specially control bodies to which this task is assigned officially. the assigned bodies determined from which vehicles and when the samples will be taken and what will be the duration of the controls. the assigned bodies also determined the contaminants to be analysed. (21) when determining the control schedule and the contaminants subject to analyse the assigned bodies based themselves on previous analyses, on results gathered beforehand, on existent health and food safety risks, on regional particularities, on environmental factors, incidents and other similar reasons. the control schedule and the contaminants could vary depending on the region and can periodically be changed. not all contaminants for which legal limits exist were controlled. on the other hand, other contaminants that are not subject to legal limits but are considered, based on analyses, to bear health risk could be controlled. controls focussed therefore on different priorities over time in some cases the controls of radioactive contaminants preceded, in other cases the controls on aflatoxin or dioxin; it was also possible to carry out the controls in accordance with regional priorities. (22) the information obtained in the course of these controls was used to determine the status of a given milk region with respect to its exposure to given contaminants that have health risk effects. this information was further used by the competent public authorities to take preventive health measures in the form of official food safety and health controls, legislative measures, dissemination of information and others. this type of control fell under the system of official controls and other activities as appropriate to the circumstances, including public communication on food and feed safety and risk, food and feed safety surveillance and other monitoring activities covering all stages of production, processing and distribution referred to in article 17(2) of regulation (ec) no 178/2002. (23) in particular, the information obtained from the controls was used to adjust the official control plans pursuant to regulation (ec) no 882/2004. in general, regulation (ec) no 178/2002 requested member states to base the food safety measures on a risk assessment using objective, transparent and independent scientific information and data. this requirement was further specified in regulation (ec) no 852/2004 and regulation (ec) no 854/2004. the results obtained from the contaminants monitoring were used by the competent german food safety authorities as a basis for such risk assessment and measures. (24) in accordance with article 17(2) of regulation (ec) no 178/2002, member states were obliged to maintain other activities as appropriate to the circumstances to guarantee food safety alongside the system of official controls. although those activities were not concretely listed in that provision germany argued that the member states bodies that maintain such appropriate control activities in addition to the official controls did not violate state aid rules. based on this approach, germany argued that the contaminants monitoring represented a control which is complementary to the food safety official control. (25) the same approach was followed in other union legal acts in the field of food safety. the first paragraph of article 3 of regulation (ec) no 882/2004 provided for the execution of regular official controls and the second paragraph of that article envisaged the execution of additional official ad hoc controls; those controls had to be risk based. also directive 96/23/ec followed this structure: article 11 thereof provided for complementary official sample tests in addition to the regular official tests. further on, the commission recommendation on the reduction of the presence of dioxins, furans and pcbs in feed and food sets out action levels that were below the legal limits set out in regulation (ec) no 1881/2006 and served a tool for competent authorities and operators to detect cases where it was appropriate to identify a source of contamination and to take measures for its reduction or elimination. (26) furthermore, union legislation aiming at ensuring a high level of protection of human health and consumers' interests in relation to food (article 1 of regulation (ec) no 178/2002) provided that the food safety measures had to be justified by independent, objective and transparent risk assessments on the basis of the existing scientific data. the results of the contaminants monitoring were used as a basis to comply with those principles as further specified in regulation (ec) no 852/2004 and regulation (ec) no 854/2004. in addition, as regards the dioxin and pcb controls germany refers to commission recommendation on the reduction of the presence of dioxins, furans and pcbs in feed and food. (27) moreover, the results of the controls were also used to identify long-term trends, to analyse the risk factors and reasons and to maintain databases for scientific and crisis preventive purposes. the gathered information was a useful source for further reaching political and administrative decisions for case studies and dissemination of neutral information. (28) the samples for the controls were taken from pools (one pool consists of milk collected by a milk transportation vehicle from several milk producers whereby the number of the milk producers could vary). the dairy enterprises were not informed about the sampling and the controls. nor were they informed about the control results. therefore, the tests were not used and were not useful for them in order to place their products on the market or as a tool to determine the products' quality or the products' price. only in case the tests showed that the presence of contaminant is high or that legal limits were reached or exceeded the control bodies started separate investigations and informed the dairy enterprises concerned about this investigation. (29) if in the course of the contaminants monitoring the assigned body found out values that were high but below the legal limits it would start an assessment process to identify the source of the contamination like feed, disinfection means, environmental incidents, and others. the enterprise(s) that caused this contamination had to take measures to eliminate the source of contamination at own expenses. this assessment was useful for preventive purposes. (30) if in the course of the contaminants monitoring the assigned body detected values that exceed the legal limits or a presence of a substance that is prohibited by law, a full additional control was initiated. the competent authority would then issue a milk delivery ban and order additional tests. the contaminated milk quantity was disposed off. if the contamination values exceeding the legal limits were detected again, the competent authority would apply sanctions in accordance with german administrative or, as the case may be, criminal law. thus, the contaminants monitoring was for the dairy enterprises either neutral (if no problems were detected) or connected to negative consequences (if the legal limits for the contaminants were found to be exceeded). the milk delivery ban would only be lifted when tests demonstrated that the milk was free of contamination. (31) germany concludes that the contaminants monitoring did not constitute a task inherent to the dairy industry but a measure for the protection of consumers and in particular for the protection of consumers' health. the consumer protection was an objective pursued by the tfeu, in particular in accordance with article 4(2) in connection with article 169(1) thereof and by the charter of fundamental rights of the european union (15), in particular in accordance with article 38 thereof. (32) furthermore, the contaminants monitoring corresponded to the clear obligation of the member states to guarantee that official food safety controls are carried out and therefore the costs for these controls were to be borne by the member state. (33) germany states that the dairy enterprises undertook own controls to verify the compliance of the milk with the legal limits for contaminants. the costs for these self-controls were covered by the dairy enterprises themselves. the obligation for those self-controls followed from article 17(1) of regulation (ec) no 178/2002. the food safety obligations of the dairy enterprises, as regards harmful substances, were furthermore specified in other legal acts, for example regulation (ec) no 1881/2006, regulation (ec) no 396/2005 and commission regulation (eu) no 37/2010 (16). (34) there was no national legal provision that the dairy enterprises had to bear the costs for the official controls and there was no obligation to pay fees to them. the dairy enterprises had to bear the costs for their own controls of compliance with the food safety legislation and the legal limits of contaminants and residues which are different from the public controls under the contaminants monitoring. 3.2. other comments from germany (35) germany justified the right of the member states to carry out control measures such as the contaminants monitoring. this followed from the demarcation of the competences conferred by the treaties (teu and tfeu) on the union institutions and the member states as regards the implementation of union law. reference was made to articles 290 and 291 of the tfeu that defined the respective roles of the union institutions and the member states. accordingly, the member states were primary responsible to guarantee the implementation of union legislation. functions such as control fell under their responsibility. reference was also made to joined cases 205 to 215/82 (17) where the court stated that in accordance with the general principles on which the institutional system of the union was based and which governed the relations between the union and the member states, it was for the member states to ensure that union provisions are implemented within their territory. (36) consequently, germany argued that it would have breached article 291 tfeu only if it had carried out less controls than those imposed by article 17(2) of regulation (ec) no 178/2002 and not, as in the current case, when it carried out additional controls that were complementary to the official food safety control and which were in compliance with the said provision of regulation (ec) no 178/2002. (37) in reply to a question from the commission as regards the possible application of the rules on the services of general economic interest (sgei), germany rebuffed the character of the contaminants monitoring as such within the meaning of the communication from the commission on the application of the european union state aid rules to compensation granted for the provision of services of general economic interest (18). on the opposite, germany stated that the contaminants monitoring qualified as non-economic activity. in this context, germany referred to cases c-364/92, c-343/95 and c-288/11p (19) where it was maintained that a task involving the exercise of public regulatory authority that aimed at guaranteeing the public safety was not of an economic nature, since that activity constitute a task the public interest which was intended to protect the whole population. moreover, the fact that such task was assigned to a private body did not change its character as public. in the current case of contaminants monitoring the assigned control bodies exercised a public task that contributed to the improvement of the healthcare system. the state was obliged to guarantee a high level of healthcare protection in accordance with both union law (20) and the german federal constitutional law and the state enjoyed in this regard discretional powers. (38) in reply to commission question whether the provision of article 17(2) of regulation (ec) no 178/2002 imposed on member states a clear and precise obligation in the meaning of case t-351/02 to the extent that the imputability on the state can be excluded, germany answered that in case t-351/02 the question concerned the imputability on the state, whereas in the present case the issue was the presence of an advantage for the dairy enterprises. (39) in addition, nordrhein-westfalen argued that sub-measure nw1 was not selective because it targeted the whole dairy industry in that federal state (land). nordrhein-westfalen enjoyed legal sovereignty allowing it to define the material and the regional scope of the sub-measure. nordrhein-westfalen emphasised again that the measure served to carry out general healthcare controls and was in the public interest. 4. comments from interested parties (40) between 6 and 18 february 2014, the commission received a total of 10 letters from interested parties with comments on the support granted in respect of the sub-measures (21). (41) in its letter registered by the commission on 6 february 2014 the milchwirtschaftlicher verein allg u-schwaben e.v. stated that the programmes for controls of residuals and contaminants in milk products had to be seen as an addition to the national monitoring programme and served the consumer protection and crisis prevention. the association pointed out that the samples were taken from different undertakings in order to gain an overview of the different bavarian regions. the results were disseminated. in this way preventive strategies and measures could be developed that would lead eventually to a reduction of the contamination levels. for those reasons, the measure did not confer any advantage to the controlled dairy undertakings. (42) in its letter registered by the commission on 10 february 2014 the gewerkschaft nahrung-genuss-gastst tten region allg u stated that the monitoring of the levels of contaminants and radioactive substances in milk products formed a very important part of the consumer protection. this measure was very valuable not for the given dairy undertakings but for all milk consumers. (43) in its letter registered by the commission on 10 february 2014, the landeskontrollverband nordrhein-westfalen e.v. stated that it supported the opinion of the land nordrhein-westfalen (that was submitted to the commission as a part of germany's submission of 20 september 2013). (44) in its letter registered by the commission on 10 february 2014, the landesvereinigung der milchwirtschaft nrw e.v. stated that it supported the opinion of the land nordrhein-westfalen (that was submitted to the commission as a part of germany's submission of 20 september 2013). (45) in its letter registered by the commission on 11 february 2014, the landesvereinigung th ringer milch e.v. stated that it supported the opinion of the freistaat th ringen (that was submitted to the commission as a part of germany's submission of 20 september 2013). (46) in its letter registered by the commission on 13 february 2014, the genossenschaftsverband bayern stated that the monitoring programme to detect residuals and contaminants in milk and milk products did not confer competitive advantages on the dairy enterprises. this programme served in the first place the creation of capacities to react in case of crisis, the protection of the consumers against unsafe products and like this it served the public interest. the samples were undertaken in an irregular manner, the dairy enterprises did not keep any records nor were they informed about the result unless the legal limits were exceeded. on the contrary, the dairy enterprises carried out on their own a more comprehensive and detailed quality safety system that could not be compared to the contaminants monitoring. (47) in its letter registered by the commission on 14 february the milchwirtschaftliche arbeitsgemeinschaft rheinland-pfalz e.v. stated that sub-measure rp 3 did not qualify as state aid because there was no advantage granted to undertakings or a given production sector that distorted or threatened to distort competition or affected trade between member states. the association argued that the levy was not used to cover the costs for controls that the dairy enterprises were obliged to carry out pursuant to regulation (ec) no 852/2004, regulation (ec) no 853/2004 of the european parliament and of the council (22) and regulation (ec) no 854/2004. on the contrary, the controls at stake were carried out on behalf of the public authorities, as samples and were not of a routine nature. thus, the controls at stake were part of the public crisis prevention and management in accordance with article 17(2) of regulation (ec) no 178/2002. therefore, the association concludes that the payment of those controls did not relieve the dairy enterprises from their own costs but constituted costs the public authorities bear due to their public food safety function. (48) alternatively, the milchwirtschaftliche arbeitsgemeinschaft rheinland-pfalz e.v. stated that if sub-measure rp 3 was to be qualified as state aid, their compatibility for the period as from the year 2007 had to be assessed in accordance with chapter iv.j of the community guidelines for state aid in the agriculture and forestry sector 2007 to 2013 (23). (49) in its letter registered by the commission on 18 february 2014, dhb-netzwerk haushalt e.v stated that the pollutants monitoring programme, the programme for assessment of the radioactivity and the analyses of the nutrition substances represented an important contribution towards consumer protection and consumer awareness. the association underlined the neutrality of the control results (which were not influenced by the dairy industry), the quick recognition of harmful substances in milk products and the possibility to react rapidly in crisis situations. (50) in its letter registered by the commission on 18 february 2014, the landesvereinigung der bayerischen milchwirtschaft e.v. stated that the controls to identify harmful substances in the milk and milk products were important for the trust of consumers in the safety of milk products. those controls served as an early detection system to detect and to fight off risks or to take the necessary preventive measures. 5. assessment of the existence of aid (51) in the opening decision the commission has taken the view that the sub-measures appeared to have all the characteristics of state aid. the commission stated that germany failed to present the applicable law in the field of food safety official control and contaminants monitoring that entrust this task on the state. the commission assessed that the obligation to carry out the contaminants monitoring concerns the dairies so that they received advantage if the controls were executed and paid by the state. (52) during the formal investigation procedure germany and the interested parties argued that the contaminants monitoring did not confer any advantage on the dairies. germany presented comprehensive information on the legal, administrative and factual elements of the sub-measures. therefore, it is necessary to re-examine the question of the presence of aid and in particular the presence of advantage for the dairies. (53) in accordance with article 107(1) tfeu any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market. (54) the conditions laid down in article 107(1) tfeu are cumulative. therefore, in order to determine whether a measure constitutes state aid within the meaning of article 107(1) tfeu, all the above mentioned conditions need to be fulfilled. as a result, if one of the conditions is not fulfilled, the relevant measure cannot be considered to be state aid. (55) the condition for the presence of aid will be examined before the other conditions laid down in article 107(1) tfeu because the main argument of germany and the interested parties was that the sub-measures did not confer any advantage on the dairies. (56) the arguments of germany and the interested parties are based on the existence of different control tasks provided for in union and national food safety law and in particular the division between the official controls undertaken by the competent bodies and the self-controls undertaken by the dairy enterprises. according to germany in this regard, the contaminants monitoring undertaken by the assigned bodies and financed publicly by the milk levy is complementary to the official food safety control and is distinguished from the self-controls carried out by the dairy enterprises themselves for which the latter bear the costs. therefore, the dairies do not receive any advantage from the fact that the state carries out the contaminants monitoring. (57) in order to verify whether those arguments are valid it is necessary to analyse (1) where to place the contaminants monitoring in the system of control responsibilities as established by union and national food safety law, namely whether it is carried out as an obligation attributed to the state or attributed to the private food operators (dairies) and (2) based on the outcome, if the execution of the contaminants monitoring confers an advantage on the dairy enterprises in the sense of article 107(1) tfeu. 5.1. control responsibilities under union and national food safety law (58) as set out in the opening decision the period of investigation begins on 28. november 2001 (see recital 152 of the opening decision). the analysis of the relevant provisions of food safety law will cover the period running from that date. 5.1.1. union food safety law 5.1.1.1. union law related to contaminants in food, including milk (59) council regulation (eec) no 315/93 (24) establishes certain basic principles regarding contaminants in food, notably that (1) food containing a contaminant of an amount that is unacceptable from a public health viewpoint and in particular at a toxicological level, shall not be placed on the market; and (2) maximum levels must be set for certain contaminants in order to protect public health. (60) commission regulation (ec) no 466/2001 (25) and regulation (ec) no 1881/2006 set out the maximum levels of certain contaminants in food. they cover in particular the following contaminants in milk: aflatoxins, lead (pb), dioxin, polychlorinated dibenzofurans and polychlorinated biphenyls (pcbs). (61) in accordance with the legal acts referred to in recitals 59 and 60 it is prohibited to place certain foodstuffs (including milk) on the market where those foodstuffs contain certain contaminants at a level exceeding the maximum level set out in those legal acts. those legal acts also require member states to adopt appropriate surveillance measures to control the presence of contaminants in foodstuffs. (62) furthermore, the commission in its recommendation on the reduction of the presence of dioxins, furans and pcbs in food (26) recommends action levels and target levels for food, including milk, in order to stimulate a pro-active approach to reduce the presence of dioxins and dioxin-like pcbs in food. the action levels are, in particular, a tool for competent authorities and operators to highlight those cases where it is appropriate to identify a source of contamination and to take measures for its reduction or elimination. the commission further recommends that member states perform, proportionate to their production, use and consumption of foodstuffs, including milk, random monitoring of the presence of dioxins and dioxin-like pcbs and if possible non-dioxin-like pcbs in foodstuffs, including milk. with respect to cases of non-compliance with the provisions of regulation (ec) no 466/2001, and to cases where levels of dioxins and/or dioxin-like pcbs in excess of the action levels are found, the commission recommends that member states, in cooperation with operators, initiate investigations to identify the source of contamination and take measures to reduce or eliminate the source of contamination. (63) it can be concluded that union law related to contaminants in food, including milk, contains (1) legal limits for certain food contaminants, including contaminants in milk, which are directly addressed to the food operators who are not allowed to place on the market food, including milk, that is not compliant with those limits; and (2) the obligation of the member states to carry out surveillance of the compliance with those legal limits. in addition, there is a recommendation at union level (commission recommendation) addressed to the member states to survey the action levels of dioxin and similar contaminants and to take preventive measures. 5.1.1.2. union law related to residues in animal products, including milk (64) directive 96/23/ec requires member states to adopt measures in order to monitor the substances and groups of residues listed in annex i to that directive. the substances and residues monitored in the case of milk are certain compounds, antibacterial substances, anthelmintics, non-steroidal anti-inflammatory drugs, organochlorides, organophosphorus, chemical elements, mycotoxins. (65) directive 96/23/ec obliges the member states to monitor certain animal products, including milk, for the purpose of detecting the presence of residues and substances. for that reason, the member states submit to the commission monitoring plans for approval. in addition, member states may have official random checks without prior notice conducted throughout the production chain of raw materials of animal origin, including milk. (66) furthermore, directive 96/23/ec provides for a self-monitoring and co-responsibility on the part of operators. the owners or persons in charge of the establishment of initial processing of primary products of animal origin (namely milk) have to take all necessary measures, in particular by carrying out their own checks, to satisfy themselves that the products brought into the establishment do not contain residue levels or prohibited substances which exceed maximum permitted limits. (67) it can be concluded that union law related to residuals in animal products, including milk, contains (1) a list of harmful substances and residuals in milk that needs to be monitored; (2) the task of the member states to monitor and undertake additional checks on the presence of those substances and residuals in milk; (3) the obligation of the economic operators engaged in milk production and processing to carry out self-controls. 5.1.1.3. horizontal union law related to food safety control (68) regulation (ec) no 178/2002 lays down the general principles and responsibilities in matters of food safety. as regards the responsibilities, article 17 of regulation (ec) no 178/2002 provides for the following: (1) food and feed business operators at all stages of production, processing and distribution within the businesses under their control shall ensure that foods or feeds satisfy the requirements of food law which are relevant to their activities and shall verify that such requirements are met. (2) member states shall enforce food law, and monitor and verify that the relevant requirements of food law are fulfilled by food and feed business operators at all stages of production, processing and distribution. for that purpose, they shall maintain a system of official controls and other activities as appropriate to the circumstances, including public communication on food and feed safety and risk, food and feed safety surveillance and other monitoring activities covering all stages of production, processing and distribution. member states shall also lay down the rules on measures and penalties applicable to infringements of food and feed law. the measures and penalties provided for shall be effective, proportionate and dissuasive. (69) in accordance with article 2 of regulation (ec) no 178/2002 food includes milk whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans. (70) the responsibilities described in article 17 of regulation (ec) no 178/2002 refer to both, the food operators and the national competent authorities. article 17 of regulation (ec) no 178/2002 clearly distinguishes between the food business operators (namely dairy enterprises) who are responsible for their own controls inside their establishments to comply with the food law requirements, including the obligation to respect legal limits for contaminants and residues on the one hand, and, on the other hand, the member states authorities who are responsible to monitor and verify the compliance with the food law requirements. the activities of the member states authorities in this respect are twofold: member states have to carry out official controls in a strict sense and member states have to undertake additional appropriate activities such as food safety surveillance and other monitoring activities covering all stages of production, processing and distribution. (71) regulation (ec) no 882/2004 lays down, amongst others, further rules on the official controls of the member states as regards food of animal origin, including milk. it provides for that member states develop official national control plans and regularly update them in the light of developments. adjustment and amendments of the control plans may be made in the light of, or in order to take account of, factors including the emergence of new diseases or other health risks or scientific findings as provided for in article 42(3) of regulation (ec) no 882/2004. (72) it can be concluded that union provisions on food (including milk) safety controls provide for two different levels of responsibility that are required to exist in parallel: the food business operators' (dairy enterprises') responsibility to comply with the food safety requirements and the member states' control responsibility to verify that the relevant requirements of food law are complied with by food business operators. furthermore, the member states are responsible for carrying out the food safety official controls in a strict sense and additional appropriate activities as monitoring activities including monitoring of health risks which can facilitate the adjustment of their controls to new developments. 5.1.2. national food safety law (73) before the entry into force of regulation (ec) no 178/2002, the german food law (section 8 of the lebensmittel- und bedarfsgegenst ndegesetz) contained a prohibition to produce and to place on the market food that is dangerous to the human health. this ban was directed to all food producers, including those of milk. the official controls were regulated in section 40 of the german food law. in accordance with that provision, the competent official authorities were obliged to carry out the necessary tests and samples. (74) after the entry into force of regulation (ec) no 178/2002, union law provides for a directly applicable obligation of the food producers to produce and to place on the market safe food and a directly applicable obligation of the member states to carry out official controls. the german food and feed safety law contains further clarifications with respect to those obligations, including rules on the distribution of the competences between the federal and the regional level and the preparation and the execution of the official control plans. the costs for the food operators (including dairies) own controls are to be borne by the enterprises themselves. the costs for the official controls, including the contaminants monitoring, are covered by the state. (75) as regards the contaminants monitoring it is regarded as complementary to the food safety official control in a strict sense. the contaminants monitoring is a monitoring activity as provided for in sections 50 und 51 of the food and feed safety law. the exact relation between the food safety official controls and the contaminants monitoring is described in the german submission (see recitals 18 to 34). its characteristics can be summarised as follows: (76) the contaminants monitoring is of a preventive nature. the main subject of that monitoring is not to observe whether the legal limits are complied with (as this is the subject of the food safety official controls) but to observe the development in the presence of the contaminants within the legal limits and to detect higher values than the usual ones which can give an early warning or signals for potential risks. (77) the parameters (the exact contaminants to be checked, the time schedule, the regions) of the contaminants monitoring are proposed by special bodies assigned by the competent food safety authorities of the l nder. those parameters are determined ad hoc on the basis of a risk assessment. those parameters are approved by the competent food safety authorities of the l nder. the contaminant monitoring is executed by the bodies assigned by the competent food safety authorities of the l nder. those l nder exercise a steering function over the bodies assigned to carry out the contaminants monitoring executing the contaminants monitoring. (78) the contaminants monitoring that is complementary to the food safety official control contributes in the following ways to the latter the results of the contaminants monitoring are used to adjust and to amend the official control plans, where deemed necessary, and to undertake further preventive measures such as those that are able to detect health risks early on, the dissemination of information to the public on health and environment risks, the establishment of databases and analysing the data available and the submission of proposals for legislative amendments. (79) it can, therefore, be concluded that: (1) the national food safety law conforms to the union food safety law and introduces two levels of responsibility: one at the level of the dairies and one at the level of the member state; (2) the contaminants monitoring is performed as a part of the member states' official control function and more precisely as another appropriate activity in the sense of article 17(2) of regulation (ec) no 178/2002. moreover, the contaminants monitoring stays in direct connection with the obligations of the member states arising from regulation (ec) no 466/2001 and regulation (ec) no 1881/2006, recommendation on the reduction of the presence of dioxins, furans and pcbs in food and directive 96/23/ec to monitor and undertake additional checks on the presence of contaminants in milk; (3) the contaminants monitoring is directly linked to the food safety official control performed by the member state as it delivers information used to complement it; (4) the contaminants monitoring is based on a risk assessment carried out by a publicly assigned body, it is performed following a publicly approved schedule which determines the regions, the time, the substances to be checked and which is updated in accordance with the risk assessment. it can therefore be concluded that the contaminants monitoring is not of a routine nature; (5) the contaminants monitoring is carried out in the form of random sample tests, taken at the level of the milk collection transport vehicle; both the samples and the results are anonymous; (6) the results of the tests are used for early risk detection and public preventive measures; (7) the contaminants monitoring does not relieve the dairy enterprises from their obligation to perform their own checks to comply with the legal limits set for the levels of contaminates and residuals in milk. 5.2. the presence of advantage on the side of the dairy enterprises (80) based on the above conclusions on the nature of the contaminants monitoring it has to be analysed if it confers an advantage on the dairy enterprises. (81) all types of measures that mitigate the normal burdens on the budget of an undertaking and which therefore, without being subsidies in the strict sense of the word, are of the same character and have the same effect confer an advantage on that undertaking (27). therefore, it is necessary to examine whether the contaminants monitoring financed by the state exempts the dairies from a burden normally to be borne by their budget. (82) the concept of a burden (charge) which is normally borne by the budget of an undertaking covers costs considered to be an inherent cost of the economic activity of that undertaking as well as additional costs which undertakings must bear by virtue of obligations imposed by the law applicable to the economic activity (28). (83) as regards the milk sector such inherent costs, including additional costs imposed by law, of the dairy enterprises are for example: the costs for establishing the quality of the milk that are inherent to the economic activity because they are necessary to determine the price of the milk (29), the costs for food safety self-controls carried out by the dairy enterprises themselves in order to comply with the obligation to produce and to place on the market only milk that is safe for human consumption. those controls are undertaken and paid by the dairies (see recitals 33 and 34). (84) on the opposite, the costs for the contaminants monitoring are not an inherent cost of the production, processing and placing on the market of milk or additional costs which the undertakings must bear by virtue of their obligations imposed by law. (85) the contaminants monitoring is not related to individual dairies but is executed randomly, at the level of the milk collection, it is thus anonymous (see recitals 20 and 28). moreover, it does not cover all quantities of the milk produced, transported and placed on the market, but just a fraction thereof and the frequency and the location of those controls is determined based on a risk assessment; thus it is not of a routine nature (see recitals 20 and 21). (86) furthermore, the contaminants monitoring does not aim at establishing whether the legal limits for the presence of different harmful substances have been complied with. firstly, the dairies carry out own controls for this purpose (see recital 83, second indent); and secondly, the contaminants monitoring aims at early detecting of risks by analysing values that are within the legal limits but higher than the usual ones for a given region (see recitals 26, 27, 29). (87) the dairies cannot use the contaminants monitoring and the results thereof to determine the quality of their milk. the contaminants monitoring is also not an indispensable condition to process the collected milk and to place on the market the produced milk products. only if in the framework of the contaminants monitoring it is found out that the legal values are exceeded, measures which have negative consequences for the individual dairy will be adopted by the competent food safety authority in a separate procedure. (see recital 30) (88) the costs for the contaminants monitoring are not additional costs which the undertakings must bear by virtue of obligations imposed by law which apply to milk production (see recital 32, 33, 34). the obligation that exists for the dairies is to perform own food safety controls inside the enterprise in order to comply with the obligation to produce and to place on the market milk and milk products that are safe for human consumption including the compliance with legal limits for contaminants and residuals (see recital 83, second indent). the contaminants monitoring does no relieve the dairies from performing own safety controls in order to comply with their legal obligations' (see recital 34). (89) the contaminants monitoring qualifies as a task related to the official food safety controls for which the public authorities are responsible and which is financed by the state (see recitals 32, 63, 67, 72 and 79(2)) without relieving the dairy enterprises of their own food safety control obligation imposed by union and national law. (90) recent case law, namely the judgment of the general court in case t-538/11 kingdom of belgium v european commission (30) has reiterated that the concept of a charge which is normally borne by the budget of an undertaking covers, in particular, the additional costs which undertakings must bear by virtue of obligations imposed by law, regulation or agreement which apply to an economic activity (see no 76 of the judgement). in that case the bse screening tests were explicitly made compulsory for the undertakings concerned by law. (91) on the contrary, in the current case of contaminants monitoring the controls are not imposed on the dairies by law, regulation or agreement which apply to an economic activity. the controls imposed on the dairies by law, regulation or agreement which apply to an economic activity are described in recitals 63, point 1, 67, point 3, and 83, second dash, above. those controls are necessary for the dairies to prove that they comply with the legal limits for the presences of contaminates as prescribed by the legislation. (92) the contaminant monitoring, however, is not a tool to prove a compliance with those legal limits. the objective of the contaminants monitoring is to detect values of presence of contaminants below the legal limits for preventive purposes as explained above and the controls are executed randomly and unregularly (see recital 76). the contaminants monitoring does not form part of the controls that are necessary for the dairies to prove that they comply with the legal limits for the presences of contaminants as prescribed by the legislation. therefore, the findings of case t-538/11 regarding the presence of advantage for the undertakings concerned by the compulsory bse tests are not applicable to the current case of contaminants monitoring. (93) consequently, the costs for the contaminants monitoring do not qualify as inherent costs of the economic activities of the dairies or as additional costs which they must bear by virtue of obligations imposed by law which apply to their economic activity. (94) for that reason, the contaminants monitoring does not exempt the dairies from charges that are normally borne by their budget and do not mitigate the normal burdens on their budget; therefore, the contaminants monitoring does not confer any advantage on them. (95) as result, as one of the conditions, of article 107(1) tfeu, notably the presence of advantage, is not fulfilled, the commission concludes that the contaminants monitoring does not constitute state aid within the meaning of article 107(1) tfeu, has adopted this decision: article 1 the general healthcare activities pursuant to the milk and fat law known as contaminants monitoring and referred to in the opening decision as sub-measures bw 9, by 5, he 8, ni 2, nw 1, rp 3, sl 4 and th 8 do not constitute aid within the meaning of article 107(1) tfeu. article 2 this decision is addressed to the federal republic of germany. done at brussels, 4 april 2016. for the commission phil hogan member of the commission (1) oj c 7, 10.1.2014, p. 8. (2) council regulation (eu) 2015/1589 of 13 july 2015 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 248, 24.9.2015, p. 9). (3) with effect from 1 december 2009, articles 87 and 88 of the ec treaty have become articles 107 and 108, respectively, of the treaty on the functioning of the european union (tfeu). the two sets of provisions are, in substance, identical. for the purposes of this decision, references to articles 87 and 88 of the ec treaty should be understood as references to articles 107 and 108 of the tfeu where appropriate. the tfeu also introduced certain changes in terminology, such as the replacement of community by union and common market by internal market. the terminology of the tfeu will be used throughout this decision. (4) although the short description of measures bw9 and rp3 in the annex to the opening decision also refers to other quality controls, it became clear from the further information submitted by germany, that these measure only cover contaminants monitoring, subject to the present decision, and not other quality controls. (5) oj c 7, 10.1.2014, p. 8. (6) regulation (ec) no 178/2002 of the european parliament and of the council of 28 january 2002 laying down the general principles and requirements of food law, establishing the european food safety authority and laying down procedures in matters of food safety (oj l 31, 1.2.2002, p. 1. (7) regulation (ec) no 882/2004 of the european parliament and of the council of 29 april 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules (oj l 165, 30.4.2004, p. 1). (8) regulation (ec) no 854/2004 of the european parliament and of the council of 29 april 2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption (oj l 139, 30.4.2004, p. 206). (9) regulation (ec) no 852/2004 of the european parliament and of the council of 29 april 2004 on the hygiene of foodstuffs (oj l 139, 30.4.2004, p. 1). (10) commission regulation (ec) no 1881/2006 of 19 december 2006 setting maximum levels for certain contaminants in foodstuffs (oj l 364, 20.12.2006, p. 5). (11) regulation (ec) no 396/2005 of the european parliament and of the council of 23 february 2005 on maximum residue levels of pesticides in or on food and feed of plant and animal origin and amending council directive 91/414/eec (oj l 70, 16.3.2005, p. 1). (12) council directive 96/23/ec of 29 april 1996 on measures to monitor certain substances and residues thereof in live animals and animal products and repealing directives 85/358/eec and 86/469/eec and decisions 89/187/eec and 91/664/eec (oj l 125, 23.5.1996, p. 10). (13) commission decision 97/747/ec of 27 october 1997 fixing the levels and frequencies of sampling provided for by council directive 96/23/ec for the monitoring of certain substances and residues thereof in certain animal products (oj l 303, 6.11.1997, p. 12). (14) commission recommendation 2011/516/eu of 23 august 2011 on the reduction of the presence of dioxins, furans and pcbs in feed and food (oj l 218, 24.8.2011, p. 23). (15) oj c 364, 18.12.2000, p. 1. (16) commission regulation (eu) no 37/2010 of 22 december 2009 on pharmacologically active substances and their classification regarding maximum residue limits in foodstuffs of animal origin (oj l 15, 20.1.2010, p. 1). (17) judgment of the court of 21 september 1983 deutsche milchkontor gmbh and others v federal republic of germany, joined cases 205 to 215/82, ecli:eu:c:1983:233. (18) oj c 8, 11.1.2012, p. 4. (19) judgment of the court of 19 january 1994, c-364/92 sat fluggesellschaft v eurocontrol, ecli:eu:c:1994:7, judgment of the court of 18 march 1997, c-343/95 cal & figli v servizi ecologici porto di genova, ecli:eu:c:1997:160, judgment of the court of 19 december 2012, c-288/11p mitteldeutsche flughafen and flughafen leipzig-halle v commission, ecli:eu:c:2012:821. (20) article 35 of the charter of fundamental rights of the european union, article 114(3) and article 168(1) of tfeu, article 2(2) of the german constitution (grundgesetz). (21) the commission received comments from the landesvereinigung der milchwirtschaft niedersachsen e.v. in general on all measures financed via the milk levy and not only on the sub-measures at stake here. the association argued that there was no aid. full description of these comments is given in commission decision c(2015) 6295 final of 18 september 2015 concerning state aid sa.35484 (2013/c) (ex sa.35484 (2012/nn)) granted by germany in respect of milk quality tests pursuant to the milk and fat law. (22) regulation (ec) no 853/2004 of the european parliament and of the council of 29 april 2004 laying down specific hygiene rules for food of animal origin (oj l 139, 30.4.2004, p. 55). (23) oj c 319, 27.12.2006, p. 1. (24) council regulation (eec) no 315/93 of 8 february 1993 laying down community procedures for contaminants in food (oj l 37, 13.2.1993, p. 1). (25) commission regulation (ec) no 466/2001 of 8 march 2001 setting maximum levels for certain contaminants in foodstuffs (oj l 77, 16.3.2001, p. 1). (26) oj l 67, 9.3.2002, p. 69. (27) see judgment in case t-538/11 kingdom of belgium v european commission, paragraph 71, ecli:eu:t:2015:188 and the case-law cited there (28) (see, by analogy, judgments in case t-538/11 kingdom of belgium v european commission, paragraph 76, ecli:eu:t:2015:188; in case c-172/03 heiser, paragraph 38, eu:c:2005:130; in case c-126/01 gemo, paragraphs 31, 32, ecli:eu:c:2003:622; in case c-251/97 france v commission, paragraph 40, eu:c:1999:480; in case 173/73 italy v commission, paragraphs 15 to 18, cli:eu:c:1974:71 (29) (see commission decision c(2015) 6295 final 18 september 2015 concerning state aid sa.35484 (2013/c) (ex sa.35484 (2012/nn)) granted by germany in respect of milk quality tests pursuant to the milk and fat law, recitals 136-140 (30) ecli:eu:t:2015:188

name: council decision (eu) 2016/1123 of 17 june 2016 establishing the position to be adopted on behalf of the european union within the relevant committees of the united nations economic commission for europe as regards the proposals for amendments to un regulations nos 9, 11, 13, 13-h, 14, 16, 30, 41, 44, 49, 54, 55, 60, 64, 75, 78, 79, 83, 90, 106, 113, 115, 117, 129 and 134, the proposals for amendments to un global technical regulations nos 15 and 16, the proposals for new un regulations on brake assist systems (bas), on electronic stability control (esc), on tyre pressure monitoring systems (tpms) and on tyre installation, the proposal for a new un global technical regulation on the measurement procedure for emissions of two- or three-wheeled motor vehicles and the proposal for a new special resolution no 2 (s.r.2) for improving the implementation of the 1998 global agreement type: decision subject matter: international affairs; technology and technical regulations; organisation of transport; deterioration of the environment; land transport; united nations date published: 2016-07-12 12.7.2016 en official journal of the european union l 187/9 council decision (eu) 2016/1123 of 17 june 2016 establishing the position to be adopted on behalf of the european union within the relevant committees of the united nations economic commission for europe as regards the proposals for amendments to un regulations nos 9, 11, 13, 13-h, 14, 16, 30, 41, 44, 49, 54, 55, 60, 64, 75, 78, 79, 83, 90, 106, 113, 115, 117, 129 and 134, the proposals for amendments to un global technical regulations nos 15 and 16, the proposals for new un regulations on brake assist systems (bas), on electronic stability control (esc), on tyre pressure monitoring systems (tpms) and on tyre installation, the proposal for a new un global technical regulation on the measurement procedure for emissions of two- or three-wheeled motor vehicles and the proposal for a new special resolution no 2 (s.r.2) for improving the implementation of the 1998 global agreement the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 114, in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) in accordance with council decision 97/836/ec (1), the union acceded to the agreement of the united nations economic commission for europe (unece) concerning the adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts which can be fitted to and/or be used on wheeled vehicles and the conditions for reciprocal recognition of approvals granted on the basis of these prescriptions (the revised 1958 agreement). (2) in accordance with council decision 2000/125/ec (2), the union acceded to the agreement concerning the establishing of global technical regulations for wheeled vehicles, equipment and parts which can be fitted and/or be used on wheeled vehicles (the parallel agreement). (3) directive 2007/46/ec of the european parliament and of the council (3) replaced the approval systems of the member states with a union approval procedure and established a harmonised framework containing administrative provisions and general technical requirements for all new vehicles, systems, components and separate technical units. that directive incorporated regulations adopted under the revised 1958 agreement (hereinafter referred to as un regulations) in the eu type-approval system, either as requirements for type-approval or as alternatives to union legislation. since the adoption of that directive, un regulations have increasingly been incorporated into union legislation in the framework of the eu type-approval. (4) in the light of experience and technical developments, the requirements relating to certain elements or features covered by un regulations nos. 9, 11, 13, 13-h, 14, 16, 30, 41, 44, 49, 54, 55, 60, 64, 75, 78, 79, 83, 90, 106, 113, 115, 117, 129 and 134, as well as by un global technical regulations (gtr) nos. 15 and 16, need to be adapted to technical progress. (5) in order to lay down uniform provisions concerning the approval of brake assist systems (bas), electronic stability control (esc), tyre pressure monitoring systems (tpms) and tyre installation, four new un regulations should be adopted. (6) in order to lay down uniform technical provisions concerning the measurement procedure for two- or three-wheeled motor vehicles with regard to certain types of emissions, a new un global technical regulation (gtr) should be adopted. (7) in order to improve the implementation of the 1998 global agreement, a new special resolution no 2 (s.r.2) should be adopted. (8) it is appropriate to establish the position to be adopted on behalf of the union within the relevant committees of the unece, namely the administrative committee of the revised 1958 agreement and the executive committee of the parallel agreement, as regards the adoption of the un acts referred to above, has adopted this decision: article 1 the position to be adopted on behalf of the union within the administrative committee of the revised 1958 agreement and the executive committee of the parallel agreement during the period from 20 to 24 june 2016 shall be to vote in favour of the proposals listed in the annex to this decision. article 2 this decision shall enter into force on the date of its adoption. done at luxembourg, 17 june 2016. for the council the president j.r.v.a. dijsselbloem (1) council decision 97/836/ec of 27 november 1997 with a view to accession by the european community to the agreement of the united nations economic commission for europe concerning the adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts which can be fitted to and/or be used on wheeled vehicles and the conditions for reciprocal recognition of approvals granted on the basis of these prescriptions (revised 1958 agreement) (oj l 346, 17.12.1997, p. 78). (2) council decision 2000/125/ec of 31 january 2000 concerning the conclusion of the agreement concerning the establishing of global technical regulations for wheeled vehicles, equipment and parts which can be fitted and/or be used on wheeled vehicles (parallel agreement) (oj l 35, 10.2.2000, p. 12). (3) directive 2007/46/ec of the european parliament and of the council of 5 september 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles (framework directive) (oj l 263, 9.10.2007, p. 1). annex agenda item title document reference proposal for supplement 2 to the 07 series of amendments to un regulation no 9 (noise of three-wheeled vehicles) ece/trans/wp.29/2016/45 proposal for supplement 4 to the 03 series of amendments to un regulation no 11 (door latches and hinges) ece/trans/wp.29/2016/33 proposal for supplement 1 to the 04 series of amendments to un regulation no 11 (door latches and hinges) ece/trans/wp.29/2016/34 proposal for supplement 14 to the 11 series of amendments to un regulation no 13 (heavy vehicle braking) ece/trans/wp.29/2016/49 proposal for the 01 series of amendments to un regulation no 13-h (brakes of m1 and n1 vehicles) ece/trans/wp.29/2016/50 proposal for supplement 7 to the 07 series of amendments to un regulation no 14 (safety-belt, isofix and i-size anchorages) ece/trans/wp.29/2016/35 proposal for supplement 7 to the 06 series of amendments to un regulation no 16 (safety-belts, isofix and i-size) ece/trans/wp.29/2016/36 proposal for supplement 18 to the 02 series of amendments to un regulation no 30 (tyres for passenger cars and their trailers) ece/trans/wp.29/2016/51 proposal for supplement 5 to the 04 series of amendments to un regulation no 41 (noise emissions of motorcycles) ece/trans/wp.29/2016/46 proposal for supplement 11 to the 04 series of amendments to un regulation no 44 (child restraint systems) ece/trans/wp.29/2016/37 proposal for supplement 8 to the 05 series of amendments to un regulation no 49 (emissions of compression ignition and positive ignition (lpg and cng) engines) ece/trans/wp.29/2016/40 proposal for supplement 4 to the 06 series of amendments to un regulation no 49 (emissions of compression ignition and positive ignition (lpg and cng) engines) ece/trans/wp.29/2016/41 proposal for supplement 21 to the 01 series of amendments to un regulation no 54 (tyres for commercial vehicles and their trailers) ece/trans/wp.29/2016/52 proposal for supplement 6 to the 01 series of amendments to un regulation no 55 (mechanical couplings) ece/trans/wp.29/2016/53 proposal for supplement 5 to un regulation no 60 (driver operated controls (mopeds/motorcycles)) ece/trans/wp.29/2016/27 proposal for a new 03 series of amendments to un regulation no 64 (temporary use spare unit, run flat tyres, run flat-system and tyre pressure monitoring system) ece/trans/wp.29/2016/54 proposal for supplement 16 to un regulation no 75 (tyres for l-category vehicles) ece/trans/wp.29/2016/55 proposal for supplement 3 to the 03 series of amendments to un regulation no 78 (braking (category l vehicles)) ece/trans/wp.29/2016/56 and wp.29-169-03 proposal for supplement 5 to the 01 series of amendments to un regulation no 79 (steering equipment) ece/trans/wp.29/2016/57 proposal for supplement 7 to the 06 series of amendments to un regulation no 83 (emissions of m1 and n1 vehicles) ece/trans/wp.29/2016/42 proposal for supplement 3 to the 07 series of amendments to un regulation no 83 (emissions of m1 and n1 vehicles) ece/trans/wp.29/2016/43 proposal for supplement 3 to the 02 series of amendments to un regulation no 90 (replacement braking parts) ece/trans/wp.29/2016/58 proposal for supplement 14 to un regulation no 106 (tyres for agricultural vehicles) ece/trans/wp.29/2016/59 proposal for supplement 6 to the 01 series of amendments to un regulation no 113 (headlamps emitting a symmetrical passing-beam) ece/trans/wp.29/2016/74 proposal for supplement 7 to the original version of un regulation no 115 (lpg and cng retrofit systems) ece/trans/wp.29/2016/44 proposal for supplement 9 to the 02 series of amendments to un regulation no 117 (tyres, rolling resistance, rolling noise and wet grip) ece/trans/wp.29/2016/60 proposal for 01 series of amendments to un regulation no 129 (enhanced child restraint systems (ecrs)) ece/trans/wp.29/2016/38 proposal for supplement 2 to supplement 2 to un regulation no 134 (hydrogen and fuel cells vehicles (hfcv)) ece/trans/wp.29/2016/39 proposal for a new un regulation on brake assist systems (bas) ece/trans/wp.29/2016/61 proposal for a new un regulation on electronic stability control (esc) ece/trans/wp.29/2016/62 proposal for a new un regulation on tyre pressure monitoring systems (tpms) ece/trans/wp.29/2016/63 proposal for a new un regulation on tyre installation ece/trans/wp.29/2016/64 proposal for amendment 1 to global technical regulation (un gtr) no 15 (worldwide harmonized light vehicles test procedures (wltp)) ece/trans/wp.29/2016/68 proposal for amendment 1 to global technical regulation (un gtr) no 16 (tyres) ece/trans/wp.29/2016/70 proposal for new special resolution no 2 (s.r.2) improvement in the implementation of the 1998 global agreement ece/trans/wp.29/2016/65 proposal for a global technical regulation (un gtr) on the measurement procedure for two- or three-wheeled motor vehicles equipped with a combustion engine with regard to the crankcase and evaporative emissions ece/trans/wp.29/2016/66

name: commission implementing decision (eu) 2016/1109 of 6 july 2016 on a request for derogation by italy in accordance with article 9(4) of council directive 98/41/ec on the registration of persons sailing on board passenger ships operating to or from ports of the member states of the community (notified under document c(2016) 4137) type: decision_impl subject matter: transport policy; information technology and data processing; organisation of transport; maritime and inland waterway transport; europe; social affairs; european union law date published: 2016-07-08 8.7.2016 en official journal of the european union l 183/66 commission implementing decision (eu) 2016/1109 of 6 july 2016 on a request for derogation by italy in accordance with article 9(4) of council directive 98/41/ec on the registration of persons sailing on board passenger ships operating to or from ports of the member states of the community (notified under document c(2016) 4137) (only the italian text is authentic) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 98/41/ec of 18 june 1998 on the registration of persons sailing on board passenger ships operating to or from ports of the member states of the community (1), and in particular article 9(4) thereof, whereas: (1) directive 98/41/ec aims at enhancing the safety and possibilities of rescue of passengers and crew on board passenger ships and ensuring that search and rescue and the aftermath of any accident can be dealt with more effectively. (2) article 5(1) of directive 98/41/ec requires certain information to be recorded regarding every passenger ship that departs from a port located in a member state to undertake a voyage of more than 20 miles from the point of departure. (3) article 9(4) of directive 98/41/ec allows member states to request the commission to derogate from this requirement. (4) by letter of 3 march 2015, the italian republic transmitted to the commission a request to derogate from the requirement to record information on persons on board specified in article 5(1) of directive 98/41/ec concerning all passenger ships travelling on the following routes: (a) termoli tremiti islands and vice versa; (b) terracina ponza and vice versa; and (c) ponza ventotene and vice versa. (5) the commission requested on 4 june 2015 additional information from the italian republic, in order to allow it to assess the request. on 10 november 2015, the italian republic submitted its response. (6) on 31 march 2016, the italian republic modified the scope of the derogation request regarding some exemptions for categories of persons on board for which the number will need to be recorded. (7) the commission, assisted by emsa, assessed the derogation request on the basis of the information at its disposal. (8) the italian republic provided the following information: (1) the annual probability of the significant wave height's exceeding 2 metres is less than 10 % on the identified routes; (2) the ships to which the derogation would apply are engaged in regular services; (3) the voyages do not exceed 30 miles from the point of departure; (4) the sea area where the passenger ships are sailing is provided with shore-based navigational guidance, weather forecast services as well as permanent search and rescue facilities of the italian coast guard; (5) there is a lack of adequate buffer infrastructure and port facilities for registering passenger details in a way compatible with the schedule of the voyages and with the synchronization with land transport; (6) the derogation request would apply to all operators sailing on the specified routes; and (7) the derogation would not apply as regards recording information concerning the number of infants on board and, when volunteered by a passenger, the need for assistance in emergency situations. (9) the final outcome of the assessment demonstrates that all the conditions for the approving the derogation are fulfilled. (10) the measures provided for in this decision are in accordance with the opinion of the committee on safe seas and the prevention of pollution from ships, has adopted this decision: article 1 1. the derogation request of the italian republic pursuant to article 9(4) of directive 98/41/ec regarding recording information on persons on board for all passengers ships in regular service sailing on the following routes: termoli tremiti islands and vice versa, terracina ponza and vice versa, ponza ventotene and vice versa, is hereby approved. 2. the derogation provided in paragraph 1 does not apply as regards recording information concerning the number of infants on board and, when volunteered by a passenger, the need for assistance in emergency situations. article 2 this decision is addressed to the italian republic. done at brussels, 6 july 2016. for the commission violeta bulc member of the commission (1) oj l 188, 2.7.1998, p. 35.

name: commission implementing decision (eu) 2016/1100 of 5 july 2016 amending the annex to decision 2007/453/ec as regards the bse status of costa rica, germany, lithuania, namibia and spain (notified under document c(2016) 4134) (text with eea relevance) type: decision_impl subject matter: health; cooperation policy; america; agricultural activity; europe; africa date published: 2016-07-07 7.7.2016 en official journal of the european union l 182/47 commission implementing decision (eu) 2016/1100 of 5 july 2016 amending the annex to decision 2007/453/ec as regards the bse status of costa rica, germany, lithuania, namibia and spain (notified under document c(2016) 4134) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (ec) no 999/2001 of the european parliament and of the council of 22 may 2001 laying down rules for the prevention, control and eradication of certain transmissible spongiform encephalopathies (1), and in particular the third subparagraph of article 5(2) thereof, whereas: (1) regulation (ec) no 999/2001 provides that member states, third countries or regions thereof (countries or regions) are to be classified according to their bovine spongiform encephalopathy (bse) status into one of three categories: negligible bse risk, controlled bse risk and undetermined bse risk. (2) the annex to commission decision 2007/453/ec (2) lists the bse status of countries or regions according to their bse risk. (3) the world organisation for animal health (oie) plays a leading role in the categorisation of oie member countries and zones by their bse risk, according to the provisions of its terrestrial animal health code (terrestrial code (3)). (4) on 27 may 2016, the oie world assembly of delegates adopted resolution no 20 titled recognition of the bovine spongiform encephalopathy risk status of member countries (4). in addition to the countries previously recognised as having a negligible bse risk status, that resolution recognised costa rica, germany, lithuania, namibia and spain as having a negligible bse risk. (5) the list of countries or regions in the annex to decision 2007/453/ec should therefore be amended to recognise the negligible bse risk status of these countries. (6) the annex to decision 2007/453/ec should therefore be amended accordingly. (7) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 the annex to decision 2007/453/ec is replaced by the text set out in the annex to this decision. article 2 this decision is addressed to the member states. done at brussels, 5 july 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 147, 31.5.2001, p. 1. (2) commission decision 2007/453/ec of 29 june 2007 establishing the bse status of member states or third countries or regions thereof according to their bse risk (oj l 172, 30.6.2007, p. 84). (3) http://www.oie.int/international-standard-setting/terrestrial-code/access-online/ (4) http://www.oie.int/fileadmin/home/eng/animal_health_in_the_world/docs/pdf/2016_a20_reso_bse.pdf annex the annex to decision 2007/453/ec is replaced by the following: annex list of countries or regions a. countries or regions with a negligible bse risk member states belgium bulgaria czech republic denmark germany estonia croatia italy cyprus latvia lithuania luxembourg hungary malta netherlands austria portugal romania slovenia slovakia spain finland sweden european free trade association countries iceland liechtenstein norway switzerland third countries argentina australia brazil chile colombia costa rica india israel japan namibia new zealand panama paraguay peru singapore united states uruguay b. countries or regions with a controlled bse risk member states ireland greece france poland united kingdom third countries canada mexico nicaragua south korea taiwan c. countries or regions with an undetermined bse risk countries or regions not listed in points a or b.

name: commission implementing decision (eu) 2016/1102 of 5 july 2016 approving the national programmes to improve the production and marketing of apiculture products submitted by the member states under regulation (eu) no 1308/2013 of the european parliament and of the council (notified under document c(2016) 4133) type: decision_impl subject matter: agricultural policy; economic geography; eu finance; marketing; agricultural activity; european construction date published: 2016-07-07 7.7.2016 en official journal of the european union l 182/55 commission implementing decision (eu) 2016/1102 of 5 july 2016 approving the national programmes to improve the production and marketing of apiculture products submitted by the member states under regulation (eu) no 1308/2013 of the european parliament and of the council (notified under document c(2016) 4133) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) no 1308/2013 of the european parliament and of the council of 17 december 2013 establishing a common organisation of the markets in agricultural products and repealing council regulations (eec) no 922/72, (eec) no 234/79, (ec) no 1037/2001 and (ec) no 1234/2007 (1), and in particular point (c) of the first paragraph of article 57 thereof, whereas: (1) pursuant to article 55 of regulation (eu) no 1308/2013, all the member states sent the commission their triennial national programmes for the production and marketing of apiculture products for the 2017, 2018 and 2019 apiculture years. (2) the 28 programmes meet the goals of regulation (eu) no 1308/2013, and contain the information required by article 4 of commission implementing regulation (eu) 2015/1368 (2). (3) the union contribution to each national programme is to be decided in accordance with article 55(2) of regulation (eu) no 1308/2013 and article 4 and article 8(2) of commission delegated regulation (eu) 2015/1366 (3). (4) the measures provided for in this decision are in accordance with the opinion of the committee for the common organisation of the agricultural markets, has adopted this decision: article 1 the national programmes for the production and marketing of apiculture products for the 2017, 2018 and 2019 apiculture years submitted by belgium, bulgaria, czech republic, denmark, germany, estonia, ireland, greece, spain, france, croatia, italy, cyprus, latvia, lithuania, luxembourg, hungary, malta, the netherlands, austria, poland, portugal, romania, slovenia, slovakia, finland, sweden and the united kingdom are hereby approved. article 2 the union contribution to the national programmes referred to in article 1 shall be limited to the maximum amounts as laid down in the annex for the 2017, 2018 and 2019 apiculture years. article 3 this decision is addressed to the member states. done at brussels, 5 july 2016 for the commission phil hogan member of the commission (1) oj l 347, 20.12.2013, p. 671. (2) commission implementing regulation (eu) 2015/1368 of 6 august 2015 laying down rules for the application of regulation (eu) no 1308/2013 of the european parliament and of the council with regard to aid in the apiculture sector (oj l 211, 8.8.2015, p. 9). (3) commission delegated regulation (eu) 2015/1366 of 11 may 2015 supplementing regulation (eu) no 1308/2013 of the european parliament and of the council with regard to aid in the apiculture sector (oj l 211, 8.8.2015, p. 3). annex amount of the union contribution to the national apiculture programmes for the 2017, 2018 and 2019 apiculture years (eur) 2017 apiculture year 2018 apiculture year 2019 apiculture year belgium 249 313 249 313 249 313 bulgaria 1 216 533 1 216 534 1 216 533 czech republic 1 250 510 1 250 511 1 250 509 denmark 174 202 174 202 174 202 germany 1 645 049 1 645 050 1 645 048 estonia 82 800 82 800 82 800 ireland 36 333 36 333 36 333 greece 3 632 500 3 632 500 3 632 500 spain 5 634 999 5 635 001 5 634 999 france 3 783 641 3 783 645 3 783 640 croatia 1 127 767 1 127 767 1 127 767 italy 3 045 356 3 045 357 3 045 354 cyprus 100 000 100 000 100 000 latvia 193 810 193 810 193 810 lithuania 324 090 324 090 324 090 luxembourg 18 049 18 049 18 049 hungary 2 517 625 2 517 627 2 517 624 malta 8 333 8 333 8 333 netherlands 173 986 173 971 174 000 austria 870 712 870 712 870 711 poland 2 961 910 2 961 911 2 961 908 portugal 1 299 259 1 299 259 1 299 259 romania 3 584 747 3 584 749 3 584 744 slovenia 382 814 382 814 382 814 slovakia 589 423 589 423 589 422 finland 115 637 115 637 115 637 sweden 346 911 346 911 346 911 united kingdom 633 691 633 691 633 690 eu-28 36 000 000 36 000 000 36 000 000

name: commission decision (eu) 2016/1031 of 6 november 2015 on the measures sa.35956 (13/c) (ex 13/nn) (ex 12/n) implemented by estonia for as estonian air and on the measures sa.36868 (14/c) (ex 13/n) which estonia is planning to implement for as estonian air (notified under document c(2015) 7470) (text with eea relevance) type: decision subject matter: economic policy; business organisation; europe; air and space transport; competition; regions of eu member states date published: 2016-06-30 30.6.2016 en official journal of the european union l 174/1 commission decision (eu) 2016/1031 of 6 november 2015 on the measures sa.35956 (13/c) (ex 13/nn) (ex 12/n) implemented by estonia for as estonian air and on the measures sa.36868 (14/c) (ex 13/n) which estonia is planning to implement for as estonian air (notified under document c(2015) 7470) (only the english text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof, having regard to the agreement on the european economic area, and in particular article 62(1)(a), having regard to the decisions by which the commission decided to initiate the procedure laid down in article 108(2) of the treaty, in respect of the aid sa.35956 (13/c) (ex 13/nn) (ex 12/n) (1) and in respect of the aid sa.36868 (14/c) (ex 13/n) (2), having called on interested parties to submit their comments pursuant to the provisions cited above and having regard to their comments, whereas: 1. procedure 1.1. the rescue case (sa.35956) (1) by letter dated 3 december 2012, estonia notified the commission of its plans to provide rescue aid in favour of as estonian air (estonian air or the airline) as well as of several capital injections carried out in the past. a meeting with the estonian authorities took place on 4 december 2012. (2) following those pre-notification contacts, by sani notification number 7853 of 20 december 2012, estonia notified to the commission the planned provision of rescue aid to the airline in the form of a loan facility amounting to eur 8,3 million. (3) on the basis of the information provided by the estonian authorities, it appeared that the first tranche of the rescue loan was disbursed to estonian air on 20 december 2012. for this reason, the commission registered the case as non-notified aid (13/nn) and informed estonia of the reclassification of the case by letter of 10 january 2013. furthermore, the commission requested additional information by letter of 10 january 2013, to which estonia replied by letter of 21 january 2013. (4) by letter dated 20 february 2013, the commission informed estonia that it had decided to initiate the procedure laid down in article 108(2) of the treaty in respect of the rescue aid amounting to eur 8,3 million and the measures granted in the past. (5) by letter dated 4 march 2013, estonia informed the commission of its decision of 28 february 2013 to increase the rescue loan granted to estonian air by eur 28,7 million. by letter dated 16 april 2013, the commission informed estonia that it had decided to extend the procedure laid down in article 108(2) of the treaty to the additional rescue aid (jointly with the decision referred to in recital 4, the rescue aid opening decisions). (6) estonia submitted comments on the rescue aid opening decisions by letters dated 9 april and 17 may 2013. the commission requested additional information from estonia by letter of 8 april 2013, which estonia replied to on 18 april 2013. (7) the rescue aid opening decisions were published in the official journal of the european union on 29 may 2013 (3). the commission invited interested parties to submit comments on the measures. the commission received comments from two interested parties, namely international airlines group (iag) and ryanair. the commission forwarded them to estonia, which was given the opportunity to react; estonias observations were received on 5 august 2013. 1.2. the restructuring case (sa.36868) (8) following informal contacts with the commission, estonia notified a restructuring plan including a recapitalisation of the airline amounting to eur 40,7 million on 20 june 2013, by sani notification number 8513. the notification was registered with number sa.36868 (13/n). (9) the commission requested additional information by letters dated 16 july and 28 october 2013, to which the estonian authorities replied by letters dated 28 august and 25 november 2013. estonia submitted additional information by e-mail of 22 december 2013. (10) in addition, the commission received a complaint from ryanair dated 23 may 2013 concerning estonias plans to increase the capital of estonian air as well as a sale-and-lease-back agreement between estonian air and tallinn airport regarding an office building owned by estonian air. on 25 june 2013, the commission forwarded the complaint to estonia. estonias comments were submitted by letter dated 5 august 2013 (4). (11) by letter dated 4 february 2014, the commission informed estonia that it had decided to initiate the procedure laid down in article 108(2) of the treaty in respect of the notified restructuring aid (the restructuring aid opening decision) (5). (12) estonia submitted comments on the restructuring aid opening decision by letter dated 19 march 2014. a meeting with the estonian authorities and estonian air took place on 7 may 2014, followed by a telephone conference on 30 june 2014. in addition, a meeting with the estonian authorities and their legal representative took place on 28 august 2014, after which estonia provided additional information by e-mail on 10 september 2014. (13) on 31 october 2014, the estonian authorities submitted a modified restructuring plan. following that, meetings with the estonian authorities were held on 23 november, 11 december and 19 december 2014 and additional information was submitted by the estonian authorities on 3, 10 and 19 december 2014. (14) additional information was submitted by the estonian authorities on 14, 27 and 28 january, 13 february, 11 march, 8 and 30 april, 27 may, 17 july and 26 august 2015. in addition, meetings with the estonian authorities were held on 14 and 15 january, 27 march, 21 april (telephone conference), 7 may (telephone conference), 28 may and 15 september 2015. (15) the restructuring aid opening decision was published in the official journal of the european union on 9 may 2014 (6). the commission invited interested parties to submit their comments on the measures. the commission received comments from two interested parties, namely ryanair and an interested party who does not wish its identity to be disclosed. the commission forwarded them to estonia, which was given the opportunity to react; estonias observations were received on 15 august 2014. (16) by letter dated 8 october 2015, estonia informed the commission that they exceptionally accept that this decision be adopted and notified in english, thereby waiving its rights deriving from article 342 of the treaty in conjunction with article 3 of regulation 1 (7). 2. the estonian air transport market (17) the main airport of estonia is tallinn airport, which in 2013 served 1,96 million passengers down from 2,21 million passengers in 2012, that is to say, a decrease of 11,2 %. in 2013, 13 different airlines performed scheduled flights to and from tallinn and a total of 20 routes were operated all year round (8). in 2014, tallinn airport served 2,02 million passengers, an increase of 3 % compared to 2013. in total 15 different airlines operated 20 routes on a year-round basis (9). (18) estonian air carried 27,6 % of the passengers flying via tallinn in 2013, down from 40,2 % in 2012, although it maintained its leader position. also in 2013, ryanair and lufthansa carried 15,1 % and 10,5 %, respectively, of passengers travelling to/from tallinn, closely followed by finnair and airbaltic (10). in 2014, estonian airs share of total passengers further decreased to 26,6 %, followed by lufthansa with 13,4 % and ryanair with 11,5 % of the total passengers (11). (19) due to the stability of the estonian economy in 2013, passenger demand for air transport remained high, which presented other airlines an opportunity to increase their supply and market share (12). in 2013, turkish airlines started to operate flights to/from istanbul and ryanair added seven new routes, while lufthansa and airbaltic increased their frequencies. in 2014, new airlines started operating scheduled routes from tallinn, such as for example tap portugal (to/from lisbon) and vueling (to/from barcelona) (13). (20) according to the manager of tallinn airport, the whole of estonia can be deemed the catchment area of this airport. at the same time, most of estonia is also located within the catchment area of other international airports such as helsinki, riga and saint petersburg (14). 3. the beneficiary (21) estonian air, a stock company under estonian law, is the flag carrier airline of estonia, based in tallinn airport. currently, the airline has around 160 employees and operates a fleet of seven aircraft. (22) estonian air was formed as a state-owned company after the independence of estonia in 1991 from a division of the russian airline aeroflot. after privatisation efforts and subsequent changes in the airlines shareholding structure, estonian air is currently owned by estonia (97,34 %) and the sas group (sas) (2,66 %). (23) estonian air participates in one joint venture: eesti aviok tuse teenuste as (51 % share), which provides refuelling service to aircrafts at tallinn airport. estonian air also participated in the joint venture as amadeus eesti (60 % share), which provides estonian travel agencies with booking systems and support, but in early 2014 it sold its stake to amadeus it group, sa (15). estonian air also had a 100 %-owned subsidiary, as estonian air regional, which operated commercial flights to neighbouring destinations in cooperation with estonian air. this subsidiary was sold in june 2013 to fort aero bbaa o , a private jet operator (16). (24) estonian air has made heavy losses since 2006. more than half of the airlines equity disappeared between 2010 and 2011. in that period, the airline lost more than one quarter of its capital. (25) despite capital injections in 2011 and 2012, the airlines financial situation continued to deteriorate in 2012. in may 2012, a monthly loss of eur 3,7 million was incurred, above the budgeted loss of eur 0,9 million. by the first half of 2012, the losses of estonian air had reached eur 14,9 million (17). in june 2012, estonian air revised its forecast for 2012 and estimated eur 25 million in operational losses for the year (the original budget forecasted an annual loss of eur 8,8 million). by the end of july 2012, estonian air had reached a state of technical bankruptcy under estonian law. in the financial year 2012, the airline made a loss of eur 49,2 million. (26) the net loss of estonian air in 2013 amounted to eur 8,1 million (18). in 2014, its net loss reached eur 10,4 million (19). 4. description of the measures and the restructuring plan (27) this section provides a description of the measures under assessment both as regards the rescue case (sa.35956), that is to say, measures 1 to 5, and the restructuring plan notified under the restructuring case (sa.36868). 4.1. the 2009 capital increase (measure 1) (28) tallinn airport and the airline were a single company until 1993, when the airline became an independent entity. in 1996, estonia privatised 66 % of the shares of the airline. after privatisation, the shares were held as follows: 49 % by maersk air, 34 % by the ministry of economic affairs and communications of estonia, and 17 % by cresco investment bank (cresco), a local investment bank. in 2003, sas bought the 49 % stake of maersk air, while the other shareholdings remained the same. (29) according to the information provided by estonia, the airline sought new capital from its shareholders in 2009 for two main reasons. first, at the beginning of 2008, estonian air made a down payment in cash of eur [ ] (*) million to acquire three new bombardier regional jets in order to upgrade the fleet to more efficient aircraft. secondly, the business model did not work under the stress of the financial crisis and the airline faced liquidity problems at the end of the year. (30) in february 2009 all the shareholders increased the airlines capital by eur 7,28 million in proportion to their shareholdings. estonia injected in cash eur 2,48 million, while cresco provided eur 1,23 million also in cash. sas injected a total of eur 3,57 million, of which eur 1,21 million in cash and eur 2,36 million in the form of a loan-to-equity conversion. the shareholding structure of estonian air did not change as a result of measure 1. 4.2. the sale of the ground handling section in 2009 (measure 2) (31) in june 2009, estonian air sold its ground handling business to the state-owned tallinn airport at a price of eur 2,4 million. at the time of the sale, tallinn airport was 100 % owned by estonia. (32) the estonian authorities explained that no open, transparent and unconditional tender took place. also, the sale price was not based on an expert opinion but it was based on the book value of the assets for sale. depreciated assets were taken into account by adding value. according to the estonian authorities, the price was established in direct negotiations between tallinn airport and estonian air. 4.3. the 2010 capital injection (measure 3) (33) on 10 november 2010, estonia injected eur 17,9 million (eek 280 million) in cash into the capital of estonian air while sas carried out a loan-to-equity conversion for an amount of eur 2 million. at the same time, sas acquired crescos 17 % stake in the airline in exchange for a eur [ ] loan write-off that cresco held with sas and thus cresco ceased to be a shareholder. (34) the decision to acquire the majority ownership of the airline was based on a business plan dating from 2010 (the 2010 business plan). at the same time, estonia wanted to ensure long-term flight connections between tallinn and the most important business destinations and saw gaining control of the airline through a capital injection as the best way to reach this objective. (35) the capital was apparently used for pre-payments of usd [ ] million for three bombardier crj900 aircraft which were delivered in 2011, as well as to cover part of the net loss in 2011 amounting to eur 17,3 million. (36) as a result of the 2010 capital injection, estonia became majority owner with 90 % of the shares of estonian air, while sass participation was diluted to 10 %. as indicated in recital 33, cresco which held 17 % of the shares of estonian air since the airlines privatisation in 1996 ceased to be a shareholder and decided not to inject more money into the airline (20). 4.4. the 2011/2012 capital increase (measure 4) (37) in november 2011, estonia decided to inject eur 30 million in capital into estonian air and to increase its stake to 97,34 %. the capital injection was carried out in two tranches of eur 15 million each, one on 20 december 2011 and the other on 6 march 2012. sas did not participate to this capital injection and its shareholding was diluted from 10 % to 2,66 %. since then, the shareholding structure of estonian air has not changed. (38) the capital injection was apparently carried out on the basis of a business plan dated october 2011 (the 2011 business plan). the 2011 business plan was based on the assumption that a bigger network and more frequencies would improve the airlines competitiveness. it was considered that a good hub structure (hub-and-spoke network) would attract passengers and allow flexibility to reallocate traffic through a hub to counter seasonality or sudden changes in demand. in addition, the hub volumes were considered to allow the lowering of seat cost by utilising bigger aircraft. the regional network model was considered to allow the airline to grow in size and reduce risks. the 2011 business plan also implied an increase of connections to and from estonia, of the fleet and consequently an increase of staff to handle more round trips. (39) according to the 2011 business plan, estonian air would require eur 30 million from its shareholders and loan from the private bank [ ]. although the estonian branch of the bank allegedly approved the loan through its credit committee, the loan was in the end refused by the highest credit committee of [ ] in november 2011. notwithstanding this refusal, estonia decided to provide eur 30 million to estonian air. 4.5. rescue loan facility (measure 5) (40) in view of the bad mid-2012 results of estonian air (losses of eur 14,9 million), it became clear to the management of the airline that the hub-and-spoke strategy of the 2011 business plan had not succeeded. in this context, estonia decided to provide additional support to the airline in the form of rescue aid. (41) the rescue measure consisted of a loan amounting to eur 8,3 million provided by the ministry of finance of estonia with an annual interest rate of 15 %. a first instalment of the loan of eur 793 000 was already disbursed on 20 december 2012, the second instalment of eur 3 000 000 on 18 january 2013 and the remaining eur 4 507 000 on 11 february 2013 (21). estonia committed to communicate to the commission a restructuring plan or a liquidation plan or proof that the loan had been reimbursed in full not later than six months after the first implementation of the rescue aid measure, namely by 20 june 2013. (42) on 4 march 2013, the estonian authorities informed the commission of their decision dated 28 february 2013 to increase the rescue loan facility by eur 28,7 million on the basis of a request of estonian air setting out its liquidity needs. of that amount, eur 16,6 million were granted to the airline on 5 march 2013 after signing an amendment to the previous loan agreement, while the remaining eur 12,1 million of the rescue aid facility were provided to estonian air on 28 november 2014 (22). the terms of the additional rescue loan were the same as those of the original rescue loan, namely the loan had to be originally reimbursed at the latest by 20 june 2013 (reimbursement was then postponed following the notification of the restructuring case) and an interest of 15 % p.a. would be charged. (43) the total amount of the rescue loan facility was thus of eur 37 million and it has been all discharged to estonian air in several tranches as described in recitals 40 and 41. (44) on 5 december 2013, at the request of estonian air, estonia decided to lower the interest rate of the rescue loan from the initial 15 % to 7,06 % as from july 2013. according to the estonian authorities, the reason for this decision was that the airlines risk profile had changed since the rate was set in december 2012. 4.6. the notified restructuring aid and the restructuring plan (measure 6) (45) on 20 june 2013, estonia notified restructuring aid of eur 40,7 million to estonian air in the form of an equity injection, on the basis of a restructuring plan (the restructuring plan) covering a five-year restructuring period from 2013 to 2017. 4.6.1. return to viability by 2016 (46) the restructuring plan aims at restoring estonian airs long-term viability by 2016. the restructuring plan assumes that it will be possible to turn around the existing level of losses from earnings before taxes (ebt) of eur 49,2 million in 2012 to break-even level by 2015 and to profitability by 2016. according to the restructuring plans assumptions, estonian air will generate ebt of eur 1,3 million by 2016. table 1 profit and loss 2009-2017 (in eur million) 2009 2010 2011 2012 2013(f) 2014(f) 2015(f) 2016(f) 2017(f) revenues 62,759 68,583 76,514 91,508 71,884 73,587 76,584 78,790 80,490 ebitda (23) 2,722 3,181 (6,830) (10,037) 6,510 8,454 9,918 10,000 10,813 ebt (4,434) (2,617) (17,325) (49,218) (7,052) (1,577) (0,002) 1,296 2,031 ebt margin (7 %) (4 %) (23 %) (54 %) (10 %) (2 %) (0 %) 2 % 3 % total equity 7,931 (24) 23,958 36,838 (14,683) 18,964 17,387 17,385 18,681 20,712 (47) concerning profitability, the restructuring plan aims at achieving a return on capital employed (roce) of 6,2 % and a return on equity (roe) of 6,9 % by 2016, and of 9,8 % and 8,9 % respectively by 2017. table 2 forecasted roe and roce 2013-2017 (%) 2013 2014 2015 2016 2017 roe (37,2) (9,1) (0,0) 6,9 9,8 roce (6,6) 0,8 7,1 6,2 8,9 4.6.2. restructuring measures (48) to achieve those results, the restructuring plan envisages a number of key actions. for instance, estonian air decreases the size of its fleet, passing from 11 aircraft in december 2012 to 7 planes as of august 2013. the airline also rationalises the fleet: from the initial aircraft mix (including four embraer e170, three bombardier crj900, three saab 340 and one boeing 737), estonian air aims at having a single- type fleet of seven crj900 by the end of 2015. of these seven aircraft, five would be used to serve the airlines route network and the remaining two would be wet-leased or chartered. (49) estonian air has downsized its route network, passing from 24 routes available in 2012 to 12 routes, of which two are seasonal (25). the airline thus discontinued 12 routes, which are designated as compensatory measures (see table 4). the downsizing of the route network entails a capacity reduction of 37 % in terms of ask (26) and 35 % in terms of seats offered (in 2013 figures compared to 2012). furthermore, estonian air reduced by 23 % the ask in those routes maintained as core. (50) estonian air has already reduced its headcount from 337 employees in april 2012 to 197 in march 2013 and around 160 at present, beyond the original plan to reduce staff down to 164 employees. furthermore, estonian air sold to tallinn airport an office building and a hangar. (51) according to the restructuring plan, estonian air also plans to implement a new pricing model (fewer booking classes/price groups and fare regulations, as well as product disaggregation aimed at generating higher levels of ancillary income) and a number of measures to improve the quality of its services, including the channels through which they are sold. in particular, estonian air intends to increase the revenues resulting from marketing campaigns mainly through digital channels from eur [200-500 thousand] in 2013 to eur [1,5-2,5] million in 2017. also, the new online service fee will increase revenues from eur [200-500 thousand] in 2013 to eur [1-2] million in 2017. those measures should increase revenues by eur [10-20] million in the next five years. (52) in addition, according to the restructuring plan, estonian air plans to implement a number of measures to reduce costs, including the signing of a collective agreement regarding pay scale increases, vacation and pilot utilisation; the introduction of a multifunctional employee concept, especially in back office staff; increased fuel efficiency via improved flight operations, including reduced take off power and fine tuning, reduced distribution and commission costs; efficiencies from the single type fleet; and contractual renegotiations such as ground handling, catering and airport charges. those measures should yield eur [20-30] million in the next five years. (53) furthermore, the restructuring plan envisages the reorganisation of the airlines senior management team. 4.6.3. compensatory measures (54) as part of its restructuring, estonian air discontinued a total of 12 routes, which are designated as compensatory measures. the restructuring plan also highlights that the slots given up in london gatwick (lgw), helsinki (hel) and vienna (vie) should be counted as compensatory measures since these are coordinated (capacity constrained) airports. table 3 routes designated as compensatory measures (%) destination load factor (2012) level 1 contribution (27) (2012) doc contribution (28) (2012) profitability margin (2012) capacity given up in ask (% compared to total capacity pre-restructuring) hannover (haj) 66 82 18 67 2 helsinki (hel) 54 60 64 126 1 joensuu (joe) 60 77 35 111 0 jyv skyl (jyv) 53 76 40 117 0 kajaani (kaj) 42 75 82 168 0 riga (rix) 45 59 143 310 1 london gatwick (lgw) 80 85 1 36 5 tartu (tay) 42 62 100 183 1 tbilisi (tbs) 76 84 27 89 4 kuressaare (ure) 33 86 8 36 0 venice (vce) 87 84 10 35 1 vienna (vie) 71 84 13 59 3 4.6.4. own contribution (55) according to the restructuring plan the own contribution would consist of eur 27,8 million from the planned sale of three aircraft in 2015, eur 7,5 million from the sale of property, eur 2 million from the sale of other non-core assets, and eur 0,7 million from a new loan to be provided by [ ]. given the total restructuring costs of eur 78,7 million, the own contribution (totalling eur 38 million) would correspond to 48,3 % of the restructuring costs. the remaining part of the restructuring costs would be funded by restructuring aid granted by estonia in the amount of eur 40,7 million in the form of equity, part of which would be used to repay the rescue loan. 4.6.5. risk and scenario analysis (56) the restructuring plan provides a scenario analysis including, beside the base case on which the restructuring plan is based, a best case (high case) and a worst case (low case) scenario. on the one hand, the high case assumes an annual gdp growth in europe of 5 %, a growth in ancillary revenues of eur 7 million resulting from improved product positioning and a 5 % average passenger increase. according to the restructuring plan, the high case would result in positive ebt already in 2014. on the other hand, the low case is based on the assumption that gdp growth in europe will continue to be low until 2017 which will lead to a 12 % decrease in the number of passengers. the negative consequences of the fall in the number of passengers would however be mitigated by a number of management actions, namely a 10 % roundtrip frequency reduction, a 1 % increase in the price of tickets, an increase in the number of ancillary revenues from eur 4,5 per passenger in 2015 to eur 6,5 per passenger in 2017, a 10 % reduction in consulting costs and other department costs, and further reduction of crew (5 pilots and 5 cabin crew members between 2014 and 2016). taking into consideration the mitigating management actions, the low case would result in slightly positive ebt in 2017 but still lead to negative net cash before financing. the restructuring plan claims that in none of the cases additional funding would be needed. table 4 scenario analysis 2013-2017 (in eur million) 2013 2014 2015 2016 2017 high case ebt [(8)-(7)] [0-1] [3-4] [6-7] [9-10] net cash before financing [(10)-(9)] [7-8] [6-7] [5-6] [8-9] low case ebt [(8)-(7)] [(4)-(3)] [(3)-(2)] [(1)-0] [0-1] net cash before financing [(10)-(9)] [2-3] [1-2] [(1)-0] [(1)-0] (57) the restructuring plan also provides a sensitivity analysis upon the base case which covers selected factors: 5 % or 10 % decrease in yield targets, 5 % decrease in the number of passengers, 5 % or 10 % increase in fuel costs, 5 % or 10 % decrease in the target sale price for the aircraft to be sold in 2015 (see recital 55 above) and 5 % appreciation and depreciation in the usd/eur exchange rate. the restructuring plan considers the impact that each factor individually considered would have on the recovery of the airline and concludes that additional funding between eur [1-10] million and eur [30-40] million would be needed in all cases (except in case there is a 5 % usd/eur exchange rate appreciation). in addition, in most of the cases, break-even would not be reached by the end of the planned restructuring period, namely 2017. 4.7. the modified restructuring plan of 31 october 2014 (58) on 31 october 2014, the estonian authorities submitted a substantially modified restructuring plan. the modifications of the plan relate in particular to the following: (1) planned acquisition of estonian air by a private investor, the estonian investment group infortar (29), which is envisaged to acquire [ ] % shares from estonia by [ ] 2015; (2) extension of the restructuring period from five to more than six years, with the start date moved backwards from 2013 to november 2010 and the end date moved from end 2017 to november 2016; (3) a modified business plan, taking into account privatisation and envisaged synergies with the ferry operator tallink, partly owned by infortar, as well as additional adjustments due to recent developments (ukraine crisis, lower than expected passenger numbers on some lines due to competition, etc.). (59) by moving backwards the start date of the restructuring period to november 2010, the modified restructuring plan also captures as restructuring aid the capital injections of 2010 (measure 3) and 2011/2012 (measure 4). the total restructuring aid amount would thus increase from eur 40,7 million as per the original restructuring plan to eur 84,7 million. (60) as a result of the extension of the restructuring period and the planned entry of a private investor in 2015, the modified restructuring plan covers three distinct business strategies based on separate contemporaneous business plans: (1) 2011-april 2012: strategy to expand and develop a regional hub-and-spoke operator (financed to a large part by the two state capital injections under measures 3 and 4 and based on a business plan prepared by the new management appointed after the state had acquired 90 % of estonian air shares in november 2010), involving among others: (a) expansion of the fleet from 8 to 11 aircraft (plus 2 additional on order); (b) developing tallinn into a regional hub with significantly increased number of routes operated (from 13 in march 2011 to 24 in september 2012); (c) increased number of staff from 255 to 337. (2) april 2012-2014: strategy to reduce capacity and change business model to a point-to-point regional network carrier, focusing on a limited number of core routes. the measures included among others: (a) reduction of the fleet from 11 to 7 aircraft; (b) reduction of routes operated from 24 to 12 routes; (c) reduction of the number of staff from 337 to 164; (d) replacement of the previous ceo and the management team. (3) 2015-2016: strategy providing for the entry of a private investor, synergies with the ferry operator tallink and additional adjustments taking into account weaker performance in 2014: (a) continue focusing on [5-15] core routes but increase the number of seasonal routes from [1-5] to [5-10] by 2016; (b) supplement the current 7 aircraft with [ ] small regional aircraft atr42s (wet-leased) to service the additional seasonal routes; (c) utilise revenue and cost synergies with the private investor and its subsidiaries (tallink ferry, hotels, taxi services, etc.). (61) the estonian authorities argue that despite changing strategies, the restructuring period from november 2010 to november 2016, namely from the acquisition by the state of 90 % of the shares of estonian air until the airline returns to profitability according to the modified restructuring plan, can be considered as part of one restructuring continuum with the single goal of making the airline profitable and economically sustainable. they claim that it is one long-term process with changing tactics of how to achieve the desired outcome once it was found that the hub-and-spoke strategy did not function, it was abandoned and replaced by a different strategy but with the same desired goal of profitability and sustainability. (62) the modified restructuring plan envisages return to viability by 2016, at the end of the 6-year restructuring period as shown in table 5. table 5 profit and loss 2011-2016 (in eur million) 2011 2012 2013 2014(f) 2015(f) 2016(f) revenues 76,514 91,508 72,123 68,463 81,244 97,098 ebitda (6,830) (10,037) 6,943 5,735 11,907 21,715 ebt (17,325) (49,218) (8,124) (11,417) (3,316) 3,874 ebt margin (23 %) (54 %) (11 %) (17 %) (4 %) 4 % total equity 36,838 (14,683) (22,808) (32,406) 6,548 10,423 (63) compared to the original restructuring plan, the airline should increase its focus on non-core routes and businesses (for example, adding further seasonal routes or expanding its wet-lease business). further, the airline should take advantage of a number of synergies that it can develop both on revenue and costs side with tallink. therefore, the modified restructuring plan envisages much stronger revenue growth in 2015 and 2016 than the original restructuring plan. (64) as regards own contribution, the modified restructuring plan envisages a total own contribution of eur [100-150] million, representing [50-60] % of the restructuring costs. that amount includes apart from the revenues from asset sales and a new [loan, already accounted for in the originally notified restructuring plan financing provided in 2010 in equity and loans by sas (eur [ ] million), financing for the purchase of aircraft obtained in 2011 from export development canada (edc) and [ ] (eur [ ] million), a planned equity contribution by infortar in 2015 (eur [ ] million) and an intra-group credit line to be provided by infortar in 2015 (eur [ ] million). (65) the compensatory measures proposed in the modified restructuring plan include fleet downsizing, discontinuation of routes and resulting market share reduction. between 2010 and 2016, the airline would have reduced its permanent fleet by one aircraft (from eight to seven). compared to 2012, the reduction in 2016 would be down to four aircraft. further, between 2010 and 2016, the modified restructuring plan envisages an overall reduction of routes from [20-25] to [15-20]. while the airline has given up eight routes (athens, barcelona, dublin, rome, hamburg, london, berlin and kuressaare), three routes would be added (gothenburg, split and trondheim). overall, the capacity flown would remain stable with [1 000-1 200] million asks in 2016 compared to [1 000-1 200] million asks in 2011. as regards market share, the estonian authorities argue that estonian airs market share dropped from 40,2 % in 2012 to 26,3 % in 2014. (66) as regards the entry of a private investor, the modified restructuring plan envisages that infortar would not pay anything to the state for its stake in estonian air. instead, it would provide a capital injection of eur [ ] million into estonian air (thereby acquiring by april 2015 between [ ] of its shares) plus an additional intra-group credit line of eur [ ] million. estonia would provide the remaining part of the rescue loan (up to eur [ ] million) and then write-off a majority of its loans (up to eur [ ] million [ ]) and give up its shareholding by agreeing to a reduction of the share capital to zero and then waiving its right to subscribe for the new capital increase, while possibly retaining up to [ ] % of estonian air shares. (67) infortar was not chosen on the basis of an open, transparent and unconditional tender but rather through direct negotiations with estonia. the estonian authorities argue that there was no time to organise a long tender process and that it actively approached a number of potential investors while others also had an opportunity to express their interests. infortar was the only one to express a real interest backed by a contribution to the modified restructuring plan. in addition, the estonian authorities argue that the value of estonian air was determined by an independent and reputed expert which concluded that the total equity value of estonian air as of 31 march 2015 from the perspective of a potential private investor would fall within a range of eur [ ] million. 5. the opening decisions 5.1. the rescue aid opening decisions (68) on 20 february 2013, the commission decided to initiate the formal investigation procedure in respect of the measures granted in the past (measures 1 to 4) and the rescue loan facility. on 4 march 2013, the commission extended the formal investigation procedure to the increase of the rescue loan facility. (69) in the rescue aid opening decisions, the commission highlighted that estonian air has continuously registered significant losses since 2006. in addition, the commission noted that the airline showed some of the usual signs of a firm being in difficulty in the sense of the community guidelines on state aid for rescuing and restructuring firms in difficulty (30) (the 2004 r&r guidelines) and that more than half of the airlines equity disappeared between 2010 and 2011. also, by the end of july 2012, estonian air had reached a state of technical bankruptcy under estonian law. on this basis, the commissions preliminary view was that estonian air qualified as a firm in difficulty between 2009 and 2012. (70) the commission also expressed doubts as regards the measures under assessment and came to the preliminary conclusion that they entailed incompatible state aid. in relation to measure 1, although it appeared that it had been carried out on pari passu terms by the three shareholders of the airline at the time, the commission observed that the new shares were paid in cash and through loan-to-equity conversion. since the commission had no detailed information on which shareholders had injected fresh money and which had accepted a loan-to-equity conversion, the commission could not exclude the presence of an undue advantage to estonian air and thus took the preliminary view that measure 1 entailed unlawful state aid. as regards its compatibility with the internal market, the commission noted that given the difficulties of the airline, only article 107(3)(c) of the treaty seemed applicable. however, the commission came to the preliminary view that this was not the case since measure 1 did not meet several of the criteria of the 2004 r&r guidelines. (71) as regards measure 2, the commission observed that, at the time of the sale, tallinn airport was 100 % owned by estonia and that it lied within the jurisdiction of the ministry of economic affairs and communications, which seemed to indicate that the actions of tallinn airport could be deemed imputable to the state. in addition, since no open, transparent and unconditional tender had taken place, the commission could not automatically exclude the presence of an undue advantage to estonian air and came to the preliminary view that measure 2 entailed unlawful state aid. it also preliminarily concluded that that aid was incompatible since the criteria of the 2004 r&r guidelines were not met, including a possible breach of the one time, last time principle. (72) in relation to measure 3, the commission first noted that it was not carried out on pari passu terms. it also highlighted that as was the case for measure 2 the contributions of the state and sas had a different nature (fresh money from the state v conversion of debt from sas) and were not of comparable amounts. as regards the 2010 business plan, the commission doubted whether it could be regarded as sufficiently sound to conclude that a prudent private investor would have entered into the transaction in question on the same terms and also noted that cresco had apparently disagreed with the plan and refused to inject additional money in the airline. also, the commission observed that estonia had stated that the decision to increase capital in 2010 was taken in order to ensure the long-term flight connections to the most important business destinations and to gain control of the airline. on that basis, the commission preliminarily concluded that measure 3 entailed unlawful state aid, which would be not be compatible with the internal market since it did not seem to respect the legal requirements of the 2004 r&r guidelines, including a possible breach of the one time, last time principle. (73) the commission also assessed whether measure 4 would be in accordance with the market economy investor principle (meip). it first raised doubts as to whether the 2011 business plan was reliable and whether it was realistic to consider that only a bigger network and more frequencies, implying a capacity increase in terms of connections, fleet and staff, would improve the airlines competitiveness. the commission also observed that the forecast growth prospect of the 2011 business plan seemed overoptimistic and the proposed hub-and-spoke strategy appeared extremely risky, something which appeared to be confirmed by the fact that neither the remaining private shareholder (sas) nor any private creditor ([ ]) was willing to participate in the transaction. in view of those considerations, the commission came to the preliminary view that measure 4 entailed unlawful state aid and that it did not meet the criteria set out for rescue or restructuring aid under the 2004 r&r guidelines. (74) finally, as regards the rescue loan facility (measure 5), the presence of aid was not disputed by estonia. the commission preliminarily noted that the aid seemed to fulfil most of the criteria of section 3.1 of the 2004 r&r guidelines concerning rescue aid. however, the commission had doubts as to whether the one time, last time principle had been respected in view of the fact that measures 1 to 4 could have entailed unlawful and incompatible aid. since the estonian authorities did not provide any justification allowing for an exception to the one time, last time principle, the commission came to the preliminary view that measure 5 could be regarded as unlawful and incompatible aid. (75) for the part of the rescue loan not been disbursed at the time, namely eur 12,1 million (see recitals 42 and 43 above), the commission reminded estonia of the suspensory effect of article 108(3) of the treaty. it added that estonia should refrain from providing that amount to estonian air until the commission had reached a final decision. 5.2. the restructuring aid opening decision (76) on 20 june 2013, estonia notified restructuring aid to estonian air of eur 40,7 million in the form of equity on the basis of the restructuring plan (measure 6). the state-aid character of the measure was not disputed by estonia, inter alia, given that the planned capital injection would come directly from the state budget and would exclusively benefit estonian air at conditions that a prudent market economy investor would normally not accept. (77) the commission then assessed the compatibility of measure 6 on the basis of the restructuring aid provisions of the 2004 r&r guidelines. the commission came to the preliminary opinion that estonian air would be eligible for restructuring aid since it would qualify as a firm in difficulty (see recital 69). (78) the commission then looked at whether the restructuring plan would allow estonian air to restore its long-term viability. the commission observed that the scenario analysis and the sensitivity analysis of the restructuring plan showed significant weaknesses. in particular, it noted that in the low case scenario, estonian air would reach a slightly positive ebt in 2017. however, the net cash before financing would remain negative even after additional restructuring measures are adopted by the management of the airline (see table 4). moreover, the sensitivity analysis showed that relative minor changes in the assumptions would result, on a stand-alone basis, in the need for additional funding except in one case. on that basis, the commission doubted whether the original restructuring plan provided a sound basis for restoring the long-term viability of estonian air. (79) as regards compensatory measures, the commission expressed doubts concerning the acceptability of the release of slots in a number of coordinated airports. additional information on the capacity-constrained nature of the airports and economic value of the slots was necessary in order to assess whether these slots could be accepted as compensatory measures. as regards the discontinuation of 12 routes considered as compensatory measures (see recital 54 above), it was unclear to the commission how the level 1 contribution, doc contribution and the profitability margin of those routes had been calculated. the commission noted that the difference between those profitability indicators was very pronounced and that it was unclear whether estonian air would have had to give up the routes in any event in order to return to viability. in particular, the commission noted that all routes had a negative profitability margin. also, if the commission were to use the doc contribution level to assess route profitability, only two routes corresponding to a capacity decrease of around 1 % in terms of ask would have a doc contribution level above 0 and would be acceptable. (80) in relation to the proposed own contribution of estonian air of eur 38 million (or 48,3 % of the total restructuring costs of eur 78,7 million), the commission noted that it appeared in principle acceptable. however, the commission expressed doubts on the sale of three aircraft crj900 in 2015, the sale of as estonian air regional and the sale of estonian airs 51 % stake in eesti aviok tuse teenuste as. the commission nonetheless considered that the sale of property, a new loan from [ ] and the sale of estonian airs 60 % stake in as amadeus eesti could be accepted as own contribution. (81) finally, the commission recalled its doubts in the rescue aid opening decisions as regards the compatibility of measures 1 to 5, which could lead to a breach of the one time, last time principle. (82) on that basis, the commission doubted whether the notified restructuring measure complied with the 2004 r&r guidelines and would be compatible with the internal market. it requested estonia to submit comments and to provide all information as may help to assess the capital injection notified as restructuring aid. (83) as regards the complaint received on 23 may 2013 regarding a sale-and-lease-back agreement between estonian air and tallinn airport (see recital 10 above), the commission concluded that it did not entail an undue advantage to estonian air and thus excluded the presence of state aid. 6. comments on the opening decisions 6.1. comments from estonia (84) estonia provided comments on the commissions rescue aid opening decisions by letters of 9 april and 17 may 2013. as regards measure 1, estonia is of the view that the investment was completed on the basis of a credible business plan and a positive valuation of the airline. estonia indicates that sass contribution (which partly took the form of a loan-to-equity conversion) is to be seen in a broader context in which sas had provided loans to estonian air of usd [ ] million in 2008 and of eur [ ] million in 2009. as regards the states participation, estonia explains that it based its decision on a valuation report produced by the ministry of economic affairs and communications according to which the value of the airline post-investment would exceed its pre-investment value. in addition, estonia highlights that each shareholder carried out its own analysis of the operation and that they all decided to inject capital in proportion to their shareholdings, which would render measure 1 pari passu. (85) estonia first notes in relation to measure 2 that the absence of a tender is in no way conclusive that state aid is present and that in any event the sale was based on a transaction value that reflected the true market price of the ground handling business of estonian air, which was moreover profit-making. according to estonia, measure 2 consisted of the sale of the ground handling assets of the airline without employees or liabilities and the book value of the assets represented a floor price. in addition, estonia is of the opinion that the transaction was comparable to similar ones. estonia moreover emphasises that tallinn airport is an independent entity with no state interference and that all members of the management and supervisory boards are independent business people and not representatives or appointees of the state. (86) moreover, estonia provides clarifications as regards the exact structure of measure 3, which it also considers aid-free. estonia also claims that the participation of sas amounts to eur [ ] million, namely the eur 2 million injected in cash plus the acquisition of crescos stake for eur [ ] million. as regards the 2010 business plan, estonia is of the opinion that that plan was based on sustainable growth and was based on positive expectations for the recovery and growth of the estonian economy and of the international air transport associations (iata) expectations at the time for international traffic growth. according to estonia, the 2010 business plan included all the drivers necessary for a prudent and credible investment decision. as regards the fact that the state took into account macroeconomic considerations, estonia argues that these considerations were not the sole drivers of the states investment decision. estonia also provides a valuation of the airline by a senior economics analyst of the ministry of economic affairs and communications indicating the total value of equity of estonian air after the additional investment (on the basis of discounted forecasted cash flows) as eur [0-10] million. (87) as regards the states decision to invest eur 30 million in 2011/2012 (measure 4), estonia first observes that in 2011 the eastern european market was relatively stable in its growth prospects and that in the summer of 2011 the european aviation market was not yet in turmoil. estonia moreover argues that sas did not participate to measure 4 because it was facing severe financial difficulties at the time. as regards [ ] loan, which was supposed to be granted to the airline but which was not in the end, estonia considers that it has to be seen separately from its equity investment. estonia also highlights that the 2011 business plan was robust and credible, and that it included an expansionary strategy based on a solid and elaborate economic analysis of the aviation market of the region and the envisaged economic development of the surrounding countries. estonia also claims that in 2011 the airlines equity was valuable both pre and post the capital injection. although estonia acknowledges that the 2011 business plan was not viable and was abandoned in mid-2012, it claims that at the time of deciding whether to carry out measure 4 the state believed that the airline would be able to restore its viability. (88) in relation to the rescue loan facility (measure 5), estonia is of the view that all the conditions of rescue aid of the 2004 r&r guidelines were met. estonia however considers that estonian air could be considered to be in difficulty only as of june/july 2012. since it concludes that measures 1 to 4 did not entail state aid, the one time, last time principle of the 2004 r&r guidelines is not breached. estonia nonetheless adds that if the commission were to find a breach of the one time, last time principle, it should take into account that estonian air serves only 0,17 % of the intra-european traffic and that there are no adverse spill-over effects on other member states or any undue distortions of competition as a result of the aid. (89) in its comments of 19 march 2014 on the restructuring aid opening decision (measure 6), estonia reiterates the arguments in relation to the one time, last time principle. as regards the restoration of estonian airs long-term viability, estonia considers that the commission should allow for the inclusion of mitigation actions by the management in the sensitivity analysis, since this is how normal businesses work. (90) estonia also provides some clarifications on how the level 1 and doc contributions and the profitability margin of the routes offered as compensatory measures were calculated (see recital 79). according to estonia, level 1 contribution defines the marginal revenue each passenger brings, not counting flying costs, while the doc contribution defines the contribution a passenger brings including all the variable costs of flying but not aircraft-related costs or any other overheads. estonia moreover claims that the routes are to be considered acceptable compensatory measures because they all had a positive contribution at level 1 and refuses the commissions argument that the abandoned routes would not be profitable under the new business model. (91) in relation to own contribution, estonia explains that the valuation report for the sale of the aircraft is realistic and provides details on the sale price of as estonian air regional and of estonian airs stake in as amadeus eesti. 6.2. comments from interested parties (92) as regards the rescue aid opening decisions, the commission received comments from iag and ryanair. (93) iag claims to be affected by the rescue aid to estonian air through its investment in flybe and its relationship with finnair. iag also notes that, in its view, the connectivity of estonia would not be hampered if estonian air were to exit the market. iag expressed concerns regarding the alleged breach of the one tine, last time principle. (94) ryanair welcomes the commissions formal investigation into the recue aid for estonian air, in particular in view of estonian airs inefficiency when compared to ryanair. in relation to measures 1 to 5, ryanair first notes that cresco decided to give up its stake which is to be seen as a strong indication that the capital injections were not meip-compliant. ryanair notes that low-cost carriers are a better alternative to national flag carriers such as estonian air and that eu law does not recognize the right of each member state to have a flag carrier. finally, ryanair claims that its market position is directly and substantially affected by the state aid to estonian air and that this aid strongly distorts competition. (95) regarding the restructuring aid opening decision, two interested parties provided comments: an interested party who does not wish its identity to be disclosed and ryanair. (96) the interested party who does not wish its identity to be disclosed considers that estonian airs restructuring plan is neither credible nor achievable in view of the fact that its losses in 2012 were extraordinarily high, leading to a net margin below 50 %. as regards the restructuring of the fleet and the operations, the interested party is of the view that estonian airs plans to use two aircraft for charter flights are not viable in view of the very competitive nature of that market and criticises the mix of aircraft of the new fleet. the interested party also notes that the calculation of the profitability of the routes offered as compensatory measures shows that they are not acceptable and comes to the view that, overall, the restructuring aid should not be authorised. finally, the interested party provides a case study of hungarys connectivity after the collapse of mal v and comes to the conclusion that the market can compensate adequately for the loss of a flag carrier. (97) ryanair first notes that the commission should assess whether estonia had other options available (such as liquidation) rather than providing state aid. ryanair also claims that the assumptions of the restructuring plan are extremely optimistic and that the plan is doomed to fail. for instance, ryanair believes that it is unrealistic that estonian air will be able to sell some of its aircraft to raise capital. ryanair also considers that the 12 routes cancelled by estonian air are non-profitable and cannot be deemed compensatory measures. moreover, it notes that the conditions of the 2004 r&r guidelines are not met, in particular the one time, last time principle. finally, ryanair reiterates that the aid to estonia air harms its market position substantially. 6.3. observations from estonia on the comments of interested third parties (98) estonia addressed in detail the arguments raised by the interested parties. as regards the comments of iag on the rescue aid opening decisions, estonia notes that estonian air and flybe do not fly to the same airports and thus are not competing. as regards the connectivity of the country, estonia considers that it would be affected if estonian air exits the market and argues that low-cost carriers do not provide the type of connectivity that is important to estonia. (99) in relation to ryanairs comments on the rescue aid opening decisions, estonia observes that the efficiency of low-cost carriers cannot be compared to that of regional carriers. as regards the rationale of the state to invest into the airline, estonia observes that a profitable and sustainable airline is highly important as it provides estonia with regular and dependable links to a number of countries that constitute estonias key economic trading partners, a role that is not fulfilled by the airlines main competitors. finally, estonia claims that low-cost carriers have failed in estonia because of the small size of the market, not because of estonian airs presence and excludes competition between ryanair and estonian air since they target different customer segments. (100) estonia also addressed the comments received in the context of the restructuring aid opening decision. as regards the comments of the interested party who does not wish its identity to be disclosed, estonia does not provide observations on some of them arguing that it would submit a new restructuring plan and therefore that those comments were no longer relevant. estonia nonetheless indicates that there is no overcapacity on the routes to and from estonia and that there is no risk of undermining the internal market by shifting an unfair share of structural adjustments to other member states. as regards the comparison with the case study of hungarys connectivity, estonia argues that estonia is a small and isolated market and that the demise of estonian air would mean a loss on the quantity and quality of air connections, and claims its case to be more similar to that of lithuania after the bankruptcy of its flag carrier flylal, which according to estonia lost 26 % of its mobility factor (31) compared to 4 % for hungary. (101) in relation to ryanairs comments, estonia reiterates that ryanairs position would not be affected by the state aid granted to estonian air. in addition, estonia considers that ryanairs claim that estonian air should be liquidated is not supported by data. finally, estonia reiterates that there is no breach of the one time, last time principle in relation to measures 1 to 3. 7. assessment of the measures and the restructuring plan (102) by virtue of article 107(1) of the treaty, any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market. the concept of state aid thus applies to any advantage granted directly or indirectly, financed out of state resources, granted by the state itself or by any intermediary body acting by virtue of powers conferred on it. (103) to be state aid, a measure must stem from state resources and be imputable to the state. in principle, state resources are the resources of a member state and of its public authorities as well as the resources of public undertakings on which the public authorities can exercise, directly or indirectly, a controlling influence. (104) in order to determine whether the different measures assessed conferred an economic advantage to estonian air and therefore whether the measures involve state aid, the commission will assess whether the airline received an economic advantage which it would not have obtained under normal market conditions. (105) the commission applies the meip test in its assessment. according to the meip test, no state aid would be involved where, in similar circumstances, a private investor of a comparable size to that of the bodies concerned in the public sector, operating in normal market conditions in a market economy, could have been prompted to provide to the beneficiary the measures in question. the commission therefore has to assess whether a private investor would have entered into the transactions under assessment on the same terms. the attitude of the hypothetical private investor is that of a prudent investor whose goal of profit maximisation is tempered with caution about the level of risk acceptable for a given rate of return. in principle, a contribution from public funds does not involve state aid if it is pari passu, namely if it takes place at the same time as a significant capital contribution on the part of a private investor made in comparable circumstances and on comparable terms. (106) finally, the measures in question must distort or threaten to distort competition and be liable to affect trade between member states. (107) inasmuch as the measures under assessment entail state aid within the meaning of article 107(1) of the treaty, their compatibility must be assessed in the light of the exceptions laid down in paragraphs 2 and 3 of that article. 7.1. existence of state aid 7.1.1. measure 1 (108) the commission will first assess the presence of aid in respect of the eur 2,48 million capital injection of 2009 (measure 1). as explained in recital 105, it is considered that a contribution from public funds does not entail an undue advantage and does not constitute aid if it is carried out in pari passu terms. (109) in that respect, the commission notes that measure 1 was carried out by the shareholders of estonian air at the time in proportion to their stakes, namely 34 % by estonia (eur 2,48 million), 49 % by sas (eur 3,57 million) and 17 % by cresco (eur 1,23 million). estonia was confirmed that the state and cresco injected cash only while sas provided eur 1,21 million in cash and eur 2,36 million in the form of a loan-to-equity conversion. in addition, estonia explained that sas provided loans to estonian air of usd [ ] million in 2008 and of eur [ ] million in 2009 (see recital 84). (110) in the rescue aid opening decisions the commission noted that the different nature of the contributions (fresh money increase v conversion of debt by sas) was sufficient to create reasonable doubts about whether measure 1 was pari passu. however, the information provided by estonia has allayed the doubts of the commission, given that the capital contribution was carried out on clear pari passu terms at least with cresco. both the state and cresco contributed rather significant amount of fresh money in cash in proportion to their shareholding. in addition, the overall contributions of cresco and sas in cash are significant and comparable to that of the state. moreover, the loan-to-equity conversion of sas is to be seen in the broader context of its previous loans to estonian air in 2008 and 2009, which demonstrate that sas believed in the viability of the airline. (111) a private participation of 66 % is clearly not negligible by comparison to the public intervention according to settled case-law (32). moreover, nothing suggests that the decision of sas and cresco to invest into estonian air could have been influenced by the conduct of the state. (112) in addition, the commission observes that according to the 1994 aviation guidelines (33)[c]apital injections do not involve state aid when the public holding in a company is to be increased, provided the capital injected is proportionated to the number of shares held by the authorities and goes together with the injection of capital by a private shareholder; the private investors holding must have real economic significance. therefore, it results that this is the case for measure 1. (113) on that basis, the commission considers that the decision cresco to invest in estonian air was made pari passu with that of the state and that the investment of both cresco and sas was significant. in addition, the commission has no reasons to doubt that sas and cresco decided to invest in estonian air for profit-seeking motives. the commission therefore concludes that financing of estonian air through the eur 2,48 million capital injection (measure 1) did not entail an undue advantage to estonian air and therefore excludes the presence of state aid, without it being necessary to assess further whether the rest of the cumulative conditions of article 107(1) of the treaty would be met. 7.1.2. measure 2 (114) in june 2009, estonian air sold its ground handling business to the 100 % state-owned tallinn airport for eur 2,4 million (measure 2). in order to determine the price, no open, transparent and unconditional tender took place and no valuation was carried out by independent valuators. instead, the price was fixed through direct negotiations between tallinn airport and estonian air. (115) the commission observes that in the absence of a tender or an independent valuation it cannot exclude the presence of aid. therefore, the commission needs to assess the transaction and its context in detail to determine whether it provided estonian air with any undue advantage. (116) estonia clarified in the course of the formal investigation procedure that the ground handling business was profitable between 2005 and 2008, namely the years preceding the sale. in addition, the transaction took the form of an asset sale excluding liabilities and employees and other legacy costs. in order to determine the price, the book value of the assets was established as a floor price. furthermore, the estonian authorities submitted their internal analysis demonstrating that the enterprise value-to-sales multiple (ev/sales) (34) for the transaction corresponds to multiples observed in several other transactions where a target company was a ground handling business. that would seem to suggest that the transaction took place on market terms. (117) moreover, estonia claims that tallinn airport, despite being 100 % state-owned, is independent from the state and that the members of the management and supervisory boards are independent business people and not representatives of the state. in the rescue aid opening decisions, the commission raised doubts as to whether the actions of tallinn airport could be deemed imputable to the state in view of the fact that the ministry of economic affairs and communications was the only shareholder of tallinn airport and that it came within the ministrys jurisdiction. (118) however, the court of justice of the european union has consistently held that measures taken by public undertakings under state control are not per se attributable to the state. indeed, the court of justice explained in stardust marine and subsequent case-law that in order to conclude on imputability it is necessary to examine whether the public authorities must be regarded as having been involved, in one way or another, in the adoption of [the] measures (35). in relation to measure 2, the commission cannot conclude that the decision of tallinn airport to invest in estonian air was imputable to the state. also, the commission did not find either any indirect evidence in this respect in the sense of the stardust marine case-law. for those reasons, the commission considers that tallinn airports decision to participate to measure 2 is not imputable to estonia. (119) since tallinn airports decision to participate to measure 2 was not imputable to the state and since the transaction seemingly took place on market terms, the commission excludes the presence of state aid in relation to measure 2, without it being necessary to assess further whether the rest of the cumulative conditions of article 107(1) of the treaty are met. 7.1.3. measure 3 (120) in relation to the 2010 capital injection (measure 3), estonia explained in the course of the formal investigation procedure that the state injected eur 17,9 million in cash while sas converted into equity a eur 2 million loan. at the same time, sas acquired crescos stake in estonian air for eur [ ] million (in exchange for a eur [ ] million loan write-off that cresco held with sas). as a result, cresco ceased to be a shareholder, the states participation increased to 90 % and sass participation was diluted to 10 %. estonia argues that its decision to invest again in estonian air was based on the 2010 business plan. (121) the commission first notes that the injections of the state and sas took place under different forms and in amounts not in proportion to the shareholdings. an injection of eur 17,9 million of fresh money by the state is not comparable to sas debt-to-equity swap of eur 2 million, in particular since estonia has not provided evidence that the loan was fully collateralised and thus that sas would have assumed new risk by converting the loan into equity. as regards the debt write-off by sas of a eur [ ] million that cresco held with sas in exchange for crescos shares in estonian air, the commission observes that this operation did not entail fresh money for estonian air. moreover, it is uncertain whether sas run new risk by accepting the debt write-off in exchange for crescos shares in estonian air. these elements are sufficient to allow the commission to conclude that measure 3 was not carried out on pari passu terms. (122) the estonian authorities argue that measure 3 was meip-conform since it was adopted on the basis of the 2010 business plan, which they consider robust and credible. according to the plan, estonian air would break even already in 2013 if it changed the fleet in accordance with the plan, and would remain significantly profitable thereafter until at least 2020. (123) the commission acknowledges that the 2010 business plan analyses the situation of the airline, but it nonetheless has shortcomings that do not make it a reliable basis for a market-oriented investment decision. for instance, the financial forecasts are based on overly ambitious passenger growth numbers (average annual growth above 6 % for the period 2010-2020). such growth prospects seem very much optimistic in view of the 2009 global economic and financial crisis. the 2010 business plan refers to iata estimations of more than 5 % average growth for the next four years. however, iata also indicates that this recovery will be very unevenly divided geographically and that a rapid recovery is not to be expected in europe (36). (124) another shortcoming is that the sensitivity analysis of the 2010 business plan appears insufficient. as regards the risk of lower passenger numbers, the plan states that a 10 % decrease in the number of passengers would reduce by approximately eur 6,4 million the net result for the first two years, which would more than double the negative net results expected for those two years. however, the 2010 business plan does not indicate the consequences for the overall period analysed and specific corrective actions to be taken. (125) the commission also highlights that cresco decided not to invest further in estonian air and instead decided to sell its stake to sas. while cresco may have had various reasons for doing so, it appears logical to consider that the 2010 business plan was not sufficient to reassure the private investor about its return on investment. a similar argument can be applied to sas, who decided to participate in the 2010 capital injection but not in proportion to its stake and therefore was diluted to just 10 % from its previous 49 % stake. (126) the estonian authorities also argue that a valuation undertaken by the state in 2010 came to the conclusion that the airline would have positive value following the investment. this valuation calculated the value of equity based on discounted cash flow analysis taking into account expected cash flows in the years 2010-2019 plus a terminal value after 2019 of eur [0-10] million (discounted) and deducting net debt of eur [0-10] million. on this basis, the resulting total value of equity in a post-investment scenario would amount to eur [0-10] million. based on an alternative valuation method, it valued the airline by comparison with financial indicators for five smaller publicly-traded companies, resulting in a value of estonian air of around eur [5-15] million. (127) however, the commission cannot consider this valuation as a valid basis for accepting the investment by a hypothetical private investor. first, the valuation itself points out substantial risks, uncertainties and sensitivity to the assumptions used and states that its forecasts should be regarded with caution (37). further, some crucial assumptions underlying the valuation are not substantiated. in particular, the basis for establishing the substantial terminal value (representing more than 60 % of the resulting total discounted cash flow) is not indicated. choosing a lower terminal value could even lead to a negative total value of equity. secondly, the valuation states that the measures of the 2010 business plan may not be sufficient to solve some of the sustainability problems of estonian air (e.g. the loss-making operation of the turboprop aircraft saab 340). therefore, the cash-flow-based calculation assumes additional changes and thus deviates from the 2010 business plan which represents the basis for the investment. thirdly, the valuation based on comparison with other airlines is extremely fragile. it compares estonian air with only five airlines, of which three have capacities several times bigger than estonian airs. further, due to the bad financial situation of estonian air, the only reference basis that could realistically be used is the price-to-sales-revenue ratio whereas ratios based on other indicators give very different results. fourthly, even accepting its results, the valuation does not explain why a private investor would have agreed to inject eur 17,9 million in fresh capital to hold 90 % of the shares of a company whose total value of equity is estimated at only eur [0-10] million (or as a maximum eur [5-15] million). finally, the estonian authorities did not analyse any counterfactual situation to the capital increase in order to compare the expected return on their investment with results of possible alternative scenarios. while it might make economic sense for an existing shareholder to invest additional capital into an ailing company to safeguard its investment, such an investor would normally compare such investment to the costs/revenues of possible alternative scenarios, possibly including the liquidation of the company. (128) in addition, the submission of the estonian authorities of 9 april 2014 suggests that the capital increase was not motivated solely by the economic attractiveness of the investment. estonia acknowledges that the objective of the 2010 business plan to secure long-term flight connections to important business destinations coincided with the states own macroeconomic policy goals. although estonia argues that these considerations were not the sole drivers of the states investment decision, this suggests that the state was not solely taking into consideration profit-seeking motives. in this respect, it appears that members of the estonian government at the time of measure 3 stated that [the governments] stance has been that estonian air is a strategic company for the country and we are prepared to take a majority stake (38) and that its very important to have flights from [ ] tallinn to some other important cities (39), which do not appear to be concerns that a prudent market investor would take into consideration at the time of making an investment decision. in this respect, the commission recalls that in the boch judgement the court indicated that the test is, in particular, whether in similar circumstances a private shareholder, having regard to the foreseeability of obtaining a return and leaving aside all social, regional policy and sectoral consideration would have subscribed the capital in question (40). (129) overall, taking into account the absence of any private investor willing to invest fresh money into estonian air in a way similar to the state, the weaknesses of the 2010 business plan and the existence of macroeconomic objectives not relevant for any private investor, the commission concludes that measure 3 was not meip-conform. (130) in addition, for a measure to constitute state aid, it must stem from state resources and be imputable to the state. this criterion is not disputed in relation to the 2010 capital injection, given that it was the ministry of economic affairs and communication of estonia, as shareholder of the airline, who injected the cash from the state budget. (131) finally, the commission observes that the measure affects trade and threatens to distort competition between member states as estonian air is in competition with other airlines of the european union, in particular since the entry into force of the third stage of liberalisation of air transport (third package) on 1 january 1993 (41). measure 3 thus enabled estonian air to continue operating so that it would not have to face, as other competitors, the consequences normally deriving from its poor financial results. (132) the commission therefore concludes that measure 3 entailed state aid in favour of estonian air. 7.1.4. measure 4 (133) as regards the eur 30 million cash injection decided by estonia in december 2011 (measure 4), estonia is of the opinion that it did not entail state aid. no other investor participated in this capital injection, as a result of which sass stake was diluted from 10 % to 2,66 %, while the states stake increased from 90 % to 97,34 %. (134) the commission remains unconvinced by the arguments provided by the estonian authorities in the course of the formal investigation procedure. in the first place, the decision to invest was made by the state alone without any private intervention: sas decided not to participate in this capital injection and the private bank [ ], who initially considered granting a loan to estonian air, refused to provide it in the end. therefore, the investment cannot be deemed pari passu. (135) in addition, the 2011 business plan, on the basis of which the investment decision was taken, foresees an expansionary strategy and a radical change of business model from point-to-point to hub-and-spoke on the basis of a regional network. estonia has provided a presentation of the plan according to which the airline would acquire new aircraft (passing from seven planes in 2011 to 13 in 2013 and 2014) and make tallinn a hub for europe-asia flights. according to this presentation, estonian air would require eur 30 million from its shareholder and eur [ ] million from a [ ] loan. despite the fact that [ ] decided not to provide the loan in the end, the commission highlights that estonia granted eur 30 million, without giving any kind of consideration to the impact that [ ] decision would have for the outcome of the 2011 business plan. this cannot be seen as the rational behaviour of an informed market operator. (136) it also appears unrealistic to consider that estonian air would be able to almost triple its revenue in just 4 years and pass from ebt of eur 15,45 million in 2011 to eur 4,2 million in 2014, in particular in a context of economic and financial crisis. in this respect, the commission recalls that according to the december 2011 financial forecast of iata (42), profit margins in the airline industry in 2011 were squeezed as oil and fuel prices surged. for 2012, iata foresaw that the european airline industry would face pressure due to the economic turmoil that would result from a failure of governments to resolve the euro area sovereign debt crisis. considering that the european airlines were likely to be hit badly by recession in their home markets, iatas 2012 forecast for european airlines was an earnings before interest and taxes (ebit) margin of 0,3 %, with net losses after tax of usd 0,6 billion (namely eur 0,46 billion). (137) it also appears unrealistic to consider that estonian air would increase the number of seats from 1 million in 2011 to 2,45 million in 2014 while substantially increasing the load factor from 59,2 % to 72,3 % in the same period. the key risks also appear undervalued and the mitigation measures do not seem sufficiently assessed. the hub-and-spoke model was abandoned very rapidly by mid-2012 in view of the extremely negative results of the airline. (138) in addition, the 2011 business plan explicitly takes into account various macroeconomic and political benefits to the state which are irrelevant from the perspective of a private investor. for instance, the plan indicates that the benefits of the investment for estonia are significant and explicitly states that the chosen network model is preferred taking into account current needs of business people and government directives. in addition, the plan indicates that as a result of the investment, 2 000 jobs would be created and that estonia would improve its position in global competitiveness rankings. moreover, the estonian authorities state that the proposed strategy fed into the government action plan for 2011-2015 to develop direct air links to all major european business centres and to turn tallinn airport into a hub for asia-europe flights. for the reasons explained in recital 128, such considerations would not have been taken into account by a prudent market investor. (139) therefore, the commission considers that measure 4 entailed a selective undue advantage to estonian air. for the same reasons stated in recitals 130 and 131, the commission considers that measure 4 stems from state resources and is imputable to the state and that it affects trade and threatens to distort competition between member states. (140) the commission therefore concludes that measure 4 entailed state aid in favour of estonian air. 7.1.5. measure 5 (141) the commission comes to the conclusion that the rescue loan facility should be considered state aid within the meaning of article 107(1) of the treaty since the loan, stemming from state resources, entails a selective advantage for estonian air which affects trade between the member states and threatens to distort competition (see recital 131). in view of the financial situation of estonian air (it had been loss-making since 2006 and, by the end of july 2012, it had reached a state of technical bankruptcy under estonian law see details in section 7.4.1), it was highly unlikely that a private creditor would be willing to provide any additional loans to cover the severe liquidity problems of estonian air. the estonian authorities themselves regard this measure as state aid within the meaning of article 107(1) of the treaty since they claimed the fulfilment of rescue aid conditions of the 2004 r&r guidelines. 7.1.6. measure 6 (142) the decision of the estonian authorities to inject eur 40,7 million into estonian air in the form of equity should be considered state aid. the capital injection comes directly from the state budget and thus from state resources. moreover, since it exclusively benefits one undertaking (namely estonian air) and is provided subject to conditions that a prudent market economy investor would normally not accept (financial difficulties of estonian air, investment not based on an appropriate analysis of return on the investment but on public interest considerations such as connectivity of estonia and strategic importance of estonian air for the estonian economy), the planned capital injection entails a selective advantage to estonian air. moreover, the measure affects trade between member states and threatens to distort competition (see recital 131). the measure in question thus enables estonian air to continue operating so that it does not have to face, as other competitors, the consequences normally deriving from its poor financial results. the estonian authorities themselves regard this measure as state aid within the meaning of article 107(1) of the treaty since they claimed the fulfilment of restructuring aid conditions of the 2004 r&r guidelines. (143) the commission therefore concludes that the notified restructuring measure constitutes state aid within the meaning of article 107(1) of the treaty. this is not disputed by the estonian authorities. 7.1.7. conclusion as regards the existence of aid (144) for the reasons stated in recitals 108-119, the commission concludes that measures 1 and 2 did not entail state aid to estonian air within the meaning of article 107(1) of the treaty. (145) however, for the reasons stated in recitals 120-143 the commission considers that measures 3, 4, 5 and 6 constitute state aid within the meaning of article 107(1) of the treaty and will therefore assess their lawfulness and compatibility with the internal market. 7.2. legality of the aid (146) article 108(3) of the treaty states that a member state shall not put an aid measure into effect before the commission has adopted a decision authorising the measure. (147) the commission first observes that estonia implemented measures 3, 4 and 5 without notifying them previously to the commission for approval. the commission regrets that estonia did not comply with the stand-still obligation and has therefore violated its obligation according to article 108(3) of the treaty. (148) as regards measure 6, the commission understands that the eur 40,7 million capital injection has not yet been carried out. thus, article 108(3) of the treaty has been respected in relation to the notified restructuring measure. 7.3. acceptability of the modified restructuring plan of 31 october 2014 (149) before analysing the compatibility of the aid measures identified described in section 7.1, the commission needs to establish on which of the submitted restructuring plans such analysis should be conducted. since the modified restructuring plan of october 2014 significantly extends the restructuring period from 5 years to 6 years and one month, moves backwards its start date by more than two years and includes additional aid measures, it cannot be considered as a simple development of the notified restructuring plan of june 2013. (150) as described in section 4.7, the extension of the restructuring period effectively means that three distinct and opposing business strategies would be combined into a single restructuring plan. the strategy of estonian air in 2011 and at the beginning of 2012 was to expand operations (additional aircraft, routes, staff, etc.) with the aim of becoming a regional hub-and-spoke operator, while the strategy in 2012-2014 (developed by a newly appointed management team) was exactly the opposite reduction of capacities and focus on point-to-point operations on a limited number of core routes. further, the last part of the restructuring plan for 2015-2016, taking into account the entry of infortar, envisages again a limited expansion. the restructuring plan would thus combine several radically different business strategies based on different business plans and prepared by different management teams with totally different business objectives. (151) it is evident that originally (in november 2010 when the third measure was granted) the strategies described in section 4.7 were not considered as one continuous restructuring plan. further, their differences are such that they cannot be considered as mere adaptations to the original plan notified in june 2013 reacting to developments during its implementation. their combination into one plan is made ex post with the sole apparent aim of including within restructuring aid the measures of the state in the period 2010-2012 (namely measures 3 and 4), in an attempt to avoid a breach of the one time, last time principle for the originally notified restructuring aid. in addition, accepting the modified restructuring plan would lead to an absurd situation where part of the assessed restructuring aid was used in 2011/2012 to expand estonian airs capacity and operations while another part of the restructuring aid was subsequently used to reduce its capacities and operations as of 2013. no single restructuring plan would have included both of these mutually incompatible strategies. (152) moreover, the commission notes that if estonia had notified and the commission had authorised measures 3 and 4 as restructuring aid, the fact that new aid in 2013 would have been in breach of the one time, last time principle would be undisputable. thus, if the commission accepted the modified restructuring plan, which due to the backward extension of the restructuring period includes measures 3 and 4, estonia would be better off by not notifying the aid than if it had notified it. (153) in the past, the commission has accepted the existence of restructuring continuums based on a single restructuring strategy, with some amendments and developments over time but never with totally opposing business strategies as in this case. for instance in the varvaressos case (43), the commission considered that the measures granted to this firm between 2006 and 2009 were to be assessed as part of a restructuring continuum on the basis of a restructuring plan dated 2009 (covering the period 2006-2011). the 2009 restructuring plan of varvaressos was considered as an evolution of a strategic and business plan dating from 2006 and was based on the same business strategy with basically the same restructuring measures which started as of 2006 and continued to be implemented till 2009 and beyond. the facts in the varvaressos case were thus significantly different from the current case where the business model has radically changed twice throughout the extended restructuring period. (154) for those reasons, the commission considers that the modified restructuring plan of october 2014 cannot be accepted as a basis for assessing the notified restructuring aid. the assessment of the aid will thus be based on the originally notified restructuring plan of june 2013. (155) the commission also notes that even if, hypothetically, it were to accept the modified restructuring plan as a basis for assessment of the restructuring aid (quid non), significant compatibility issues would remain (such as the unusually long restructuring period of more than six years (44), the apparent lack of adequate compensatory measures which, despite an increase in the total amount of aid, are even less significant than in the june 2013 restructuring plan). (156) finally, the privatisation of estonian air through the sale by the state of [ ] % of its shares to infortar for a negative price without any tendering procedure could lead to additional concerns about possible aid to infortar. despite an independent expert study provided by the estonian authorities indicating the total equity value of estonian air at the time of infortars acquisition of those shares within a range of eur [ ] million, infortar would not actually pay anything to the state for that shareholding. 7.4. compatibility of the aid (157) insofar as measures 3, 4, 5 and 6 constitute state aid within the meaning of article 107(1) of the treaty, their compatibility must be assessed in the light of the exceptions laid down in paragraphs 2 and 3 of that article. according to the case-law of the court of justice, it is up to the member state to invoke possible grounds of compatibility and to demonstrate that the conditions for such compatibility are met (45). (158) the estonian authorities are of the view that measures 5 and 6 entail state aid and have therefore provided arguments for assessing their compatibility article 107(3)(c) of the treaty, and in particular with the 2004 r&r guidelines. (159) however, on the basis of the originally notified restructuring plan, the estonian authorities consider that measures 3 and 4 do not entail state aid and have not provided any possible grounds for compatibility. the commission has nonetheless assessed whether any of the possible compatibility grounds laid down in the treaty would be applicable to those measures. (160) as stated in the rescue aid opening decisions, the commission considers that the exceptions laid down in article 107(2) of the treaty are not applicable in view of the nature of measures 3 and 4. the same conclusion would apply to the exceptions provided for in article 107(3), points (d) and (e), of the treaty. (161) in view of the difficult financial situation of estonian air at the time when measures 3 and 4 were provided (see recitals 24 to 26 above), it does not appear that the exception relating to the development of certain areas or of certain sectors laid down in article 107(3)(a) of the treaty could be applicable. this is so despite the fact that estonian air is located in an assisted area and could be eligible for regional aid. also, as regards the crisis rules laid down in the temporary framework (46), the commission notes that measures 3 and 4 do not fulfil the conditions for its applicability. (162) therefore, it appears that the compatibility of measures 3 and 4 can only be assessed under article 107(3)(c) of the treaty, which states that aid can be authorised where it is granted to promote the development of certain economic sectors and where this aid does not adversely affect trading conditions to an extent contrary to the common interest. in particular, the compatibility of measures 3 and 4 should be assessed in the light of the 2004 r&r guidelines (47), also bearing in mind the provisions of the 1994 aviation guidelines. in view of the disbursement of the remaining part of the rescue loan facility on 28 november 2014, measure 5 needs to be assessed under guidelines on state aid for rescuing and restructuring non-financial undertakings in difficulty (2014 r&r guidelines) (48). (163) the commission will in turn assess whether at the time of measures 3, 4, 5 and 6 estonian air was eligible for rescue and/or restructuring aid under the 2004 r&r guidelines (measures 3,4, and 6) and 2014 r&r guidelines (measure 5). 7.4.1. difficulties of estonian air (164) recital 9 of the 2004 r&r guidelines states that the commission regards a firm as being in difficulty when it is unable, whether through its own resources or with the funds it is able to obtain from its owners/shareholders or creditors, to stem losses which without outside intervention by the public authorities, will almost certainly condemn it to going out of business in the short or medium term. (165) recital 10 of the 2004 r&r guidelines clarifies that a limited liability company is regarded as being in difficulty where more than half of its registered capital has disappeared and more than one quarter of that capital has been lost over the preceding 12 months, or where it fulfils the criteria under its domestic law for being the subject of collective insolvency proceedings. (166) recital 11 of the 2004 r&r guidelines adds that, even if the conditions in recital 10 are not satisfied, a firm may be considered to be in difficulty in particular where the usual signs of a firm being in difficulty are present, such as increasing losses, diminishing turnover, growing stock inventories, excess capacity, declining cash flow, mounting debt, rising interest charges and falling or nil net asset value. (167) the commission first notes that estonian air has continuously registered significant losses since 2006: table 6 net results of estonian air since 2006 (in eur thousands) 2006 3 767 2007 3 324 2008 10 895 2009 4 744 2010 3 856 2011 17 120 2012 51 521 2013 8 124 2014 10 405 source: annual reports of estonian air, available at http://estonian-air.ee/en/info/about-the-company/financial-reports/. from 2006 to 2010 the annual reports of estonian air are expressed eek. the conversion rate used is eur 1 = eek 15,65. (168) the significant losses of estonian air constitute a first indication of the airlines difficulties. in addition, it appears that some of the usual signs of a firm being in difficulty were also present. for instance, it appears that estonian airs interest expenses have been constantly increasing since 2008: table 7 interest expenses of estonian air since 2006 (in eur) 2006 94 523 2007 99 764 2008 94 842 2009 212 309 2010 337 325 2011 2 010 000 2012 2 436 000 2013 4 212 000 2014 3 474 000 source: annual reports of estonian air, available at http://estonian-air.ee/en/info/about-the-company/financial-reports/. from 2006 to 2010 the annual reports of estonian air are expressed eek. the conversion rate used is eur 1 = eek 15,65. (169) estonian airs return on assets and return on equity have consistently been negative since 2006, while the debt-to-equity ratio constantly increased between 2006 and 2008, when it reached [80-90] %. the reason why this ratio went down in 2009 and 2010 is due to the capital increases that took place in those years and not because estonian airs debt was reduced. in addition, between 2010 and 2011, the net debt of estonian air exploded, passing from eur [5-10] million to eur [40-50] million. the net debt continued to grow further in 2012 (eur [50-60] million), 2013 (eur [50-60] million) and 2014 (eur [60-70] million). (170) in addition, the estonian authorities explained that at the end of november 2011, the airline had only eur 3,1 million in cash, and was set to breach a cash covenant to [ ] at the end of the year, meaning the airline would have been in default of its loans to [ ]. also, estonian air stopped paying some major suppliers in november 2011 and by the end of that month the working capital was not in balance: the accounts receivable were eur 5,5 million, while the accounts payable were eur 10,6 million. without measure 4, the airline would have been in default of its loans to [ ]. default of payment is a typical sign of a firm in difficulty. (171) the commission also notes that more than half of the airlines equity disappeared between 2010 and 2011. in that period, the airline lost more than one quarter of its capital. therefore, the criterion of recital 10(a) of the 2004 r&r guidelines also seems to be fulfilled. (172) despite the capital injections in december 2011 and march 2012 (measure 4), the airlines financial situation deteriorated in 2012 and by the end of july 2012, estonian air had reached a state of technical bankruptcy under estonian law (see recital 25 above). therefore, as from this point in time, estonian air could also be considered a firm in difficulty on the basis of recital 10(c) of the 2004 r&r guidelines. (173) therefore, the commission concludes that estonian air would qualify as a firm in difficulty under recital 11 of the 2004 r&r guidelines since at least 2009. in addition, estonian air would also fulfil the requirements of recitals 10(a) and 10(c) of the 2004 r&r guidelines at later points in time. (174) in addition, estonian air would be regarded as a firm in difficulty under the 2014 r&r guidelines since its total equity in 2014 was significantly negative amounting to eur 31,393 million. therefore, estonian air fulfils the requirements of recital 20(a) of the 2014 r&r guidelines. (175) recital 12 of the 2004 r&r guidelines as well as recital 21 of the 2014 r&r guidelines states that a newly created firm is not eligible for rescue or restructuring aid even if its initial financial position is unsecure. a firm is in principle considered as newly created for the first three years following the start of operations in the relevant field of activity. estonian air was founded in 1991 and cannot be regarded as a newly created firm. in addition, estonian air does not belong to a business group in the sense of recital 13 of the 2004 r&r guidelines and recital 22 of the 2014 r&r guidelines. (176) the commission therefore concludes that estonian air was a firm in difficulty at the time when measures 3, 4, 5 and 6 were provided and that it meets the rest of requirements of the 2004 and 2014 r&r guidelines to be eligible for rescue and/or restructuring aid. 7.4.2. compatibility of measure 3 (177) the commission first observes that the cumulative conditions for rescue aid laid down in point 25 of the 2004 r&r guidelines are not met: (a) measure 3 is a capital injection in the form of cash (eur 17,9 million) and therefore does not consist of liquidity support in the form of loan guarantees or loans; (b) estonia has provided no justification allowing the commission to consider that measure 3 was provided on the grounds of serious social difficulties; (c) estonia did not communicate to the commission a restructuring plan or a liquidation plan six months after the first implementation of the measure; (d) measure 3 was not restricted to the amount needed to keep the estonian air in business for the period during which the aid is authorised. (178) the commission also assessed whether the compatibility criteria for restructuring aid are met. recital 34 of the 2004 r&r guidelines requires that the granting of the aid is conditional on implementation of a restructuring plan, which must be endorsed by the commission in all cases of individual aid, and which must aim at restoring the long-term viability of the firm within a reasonable timescale and on the basis of realistic assumptions as to future operating conditions. however, the commission observes that estonia granted measure 3 to estonian air in the absence of a credible restructuring plan satisfying the conditions laid down in the 2004 r&r guidelines. even though the 2010 business plan contained some elements of a restructuring plan under the 2004 r&r guidelines (analysis of the market, restructuring measures, financial forecasts etc.), it cannot be considered as sufficiently robust and credible, ensuring a long-term viability of the company. as explained in recitals 123 and 124, the 2010 business plan was based on overly ambitious passenger growth forecasts and its sensitivity analysis was insufficient. that circumstance would in itself be sufficient to exclude the measures compatibility with the internal market (49). (179) moreover, the estonian authorities have not put forward any possible measures to avoid undue distortions of competition (compensatory measures) and have not provided any contribution from estonian air to its own restructuring. those are essential elements for finding a measure compatible with the internal market as restructuring aid on the basis of the 2004 r&r guidelines. (180) measure 3 therefore amounts to state aid incompatible with the internal market. 7.4.3. compatibility of measure 4 (181) in relation to measure 4, the same conclusions as regards measure 3, described in recitals 177 to 180, apply mutatis mutandis. (182) in particular, the capital increase of eur 30 million does not meet the requirements of point 15 of 2004 r&r guidelines for a rescue aid since (a) it does not consist of liquidity support in the form of loan guarantees or loans; (b) estonia has provided no justification allowing the commission to consider that measure 3 was provided on the grounds of serious social difficulties; (c) estonia did not communicate to the commission a restructuring plan or a liquidation plan six months after the first implementation of the measure; and (d) measure 3 was not restricted to the amount needed to keep the estonian air in business for the period during which the aid is authorised. (183) further, the capital increase of eur 30 million does not meet the compatibility conditions for restructuring aid under 2004 r&r guidelines. the 2011 business plan cannot be considered as a credible restructuring plan since its forecasts were not realistic (see recitals 135 to 137) and it was in fact abandoned very rapidly by mid-2012 in view of the extremely negative results of the airline. in addition, the estonian authorities have proposed neither appropriate own contribution by estonian air nor adequate compensatory measures. on the contrary, the capital increase was used to expand estonian airs operations and enter new routes. (184) in addition, the commission observes that according to the one time, last time principle of section 3.3 of the 2004 r&r guidelines, where less than 10 years have elapsed since the rescue aid was granted or the restructuring period came to an end or implementation of the restructuring plan has been halted (whichever is the latest), the commission will not allow further rescue or restructuring aid. insofar as measure 3 (unlawful and incompatible rescue aid) was granted to estonian air in november 2010, granting of capital injection (measure 4) would breach the one time, last time principle. of the possible exceptions to this principle according to point 73 of the 2004 r&r guidelines, only exception (c) (exceptional and unforeseeable circumstances for which the company is not responsible) could be applicable. however, estonia has not put forward any argument that would allow the commission to conclude that measure 4 was provided to estonian air on the basis of exceptional and unforeseeable circumstances. (185) therefore, the commission concludes that measure 4 also amounts to state aid incompatible with the internal market. 7.4.4. compatibility of measure 5 (186) in the rescue aid opening decisions, the commission stated that measure 5 fulfilled most of the criteria in section 3.1 of the 2004 r&r guidelines concerning rescue aid but expressed doubts on whether the one time, last time principle was met. (187) the commission notes that the one time, last time principle of the 2014 r&r guidelines essentially corresponds to the requirements of the previous 2004 r&r guidelines. given that estonian air received the rescue aid in november 2010 (capital injection of eur 17,9 million measure 3) and in december 2011 and march 2012 (capital injections of 15 million eur each measure 4), the commission concludes that the one time, last time principle has not been observed. in view of the fact that measures 3 and 4 amount to incompatible and unlawful rescue aid, the commission concludes that the one time, last time principle as set out in recital 70 of the 2014 r&r guidelines has also been breached in relation to measure 5. therefore, it is not necessary to examine whether other criteria of the 2014 r&r guidelines would also have been met. (188) on this basis, the commission concludes that measure 5 also amounts to rescue aid incompatible with the internal market. 7.4.5. compatibility of measure 6 (189) as regards the planned restructuring aid of eur 40,7 million (measure 6), the commissions doubts in relation to the restructuring aid opening decision have not been dispelled in the course of the formal investigation procedure. (190) according to point 34 of the 2004 r&r guidelines, the grant of restructuring aid must be conditional on implementation of a restructuring plan which must be endorsed by the commission in all cases of individual aid. point 35 explains that the restructuring plan, the duration of which must be as short as possible, must restore the long-term viability of the firm within a reasonable timescale and on the basis of realistic assumptions as to future operating conditions. (191) pursuant to point 36 of the 2004 r&r guidelines, the restructuring plan must describe the circumstances that led to the companys difficulties and take account of the present state and future market prospects with best-case, worst-case and base-case scenarios. (192) the restructuring plan must provide for a turnaround that will enable the company, after completing its restructuring, to cover all its costs including depreciation and financial charges. the expected return on capital must be high enough to enable the restructured firm to compete in the marketplace on its own merits (point 37 of the 2004 r&r guidelines). (193) as indicated in the opening decision, the commission had doubts as to whether the restructuring plan of june 2013 was sufficiently solid in order to restore the long-term viability of estonian air. estonia has provided few additional arguments to clarify the doubts of the commission. indeed, the commission reiterates that the scenarios and sensitivity analysis of the restructuring plan may lead, under certain circumstances, to additional funding needs. the low (pessimistic) case assumes a 12 % decrease of passengers due to the assumption that gdp growth in europe will continue to be low until 2017. in this pessimistic case, estonian air would reach slightly positive earnings before taxes in 2017 but still have a negative net cash position. moreover, the sensitivity analysis shows that relatively minor changes in the assumptions would result, on a stand-alone basis, in the need for additional funding. this seriously questions the main aim of the plan to restore the long-term viability of estonian air. the fact that estonian airs performance in 2013 was broadly in line with the forecasts is irrelevant for the ex ante assessment of the restructuring plan. in addition, this was no longer the case in 2014 with revenues as well as profits below the forecasts in the restructuring plan. (194) as regards the measures to limit undue distortions of competition (compensatory measures), the restructuring plan foresees the release of slots at three coordinated airports (london gatwick, helsinki and vienna) and the discontinuation of 12 routes, which would account for 18 % of estonian airs capacity before restructuring. in order for those routes to be counted as compensatory measures, they must be profitable because otherwise they would have been cancelled in any event for viability reasons. (195) the estonian authorities have provided profitability figures for the 12 routes cancelled based on three different indicators, namely doc contribution level, contribution margin level 1 and profitability margin. according to estonias submissions, the doc contribution level covers all variable costs (passenger-related, roundtrip-related and fuel costs) but not payroll, fleet, maintenance and department costs. the contribution margin level 1 is defined as the total revenue less the passenger-related variable costs over total revenue, while the profitability margin includes fixed costs (fixed maintenance costs, crew costs and fleet-related costs) but not overheads. (196) according to the commissions practice in a number of restructuring aid cases in the aviation sector, routes are considered profitable if they had a positive c1 contribution margin in the year preceding their surrender (50). the c1 contribution takes account of flight, passenger and distribution costs (namely variable costs) attributable to each individual route. the c1 contribution is the appropriate figure since it takes into account all costs which are directly linked to the route in question. routes with a positive c1 contribution not only cover the variable costs of a route, but also contribute to covering the fixed costs of the company. (197) the commissions observes that the doc contribution level is largely equivalent to the c1 contribution. on this basis, the commission notes that only two routes (venice and kuressaare) representing together only around 1 % of the companys capacity in terms of ask would actually be profitable and could be counted as proper compensatory measures. (198) estonia argues that given the increase in yields under the new strategy foreseen in the restructuring plan, these routes could have been profitable in the new network and that these routes would be beneficial to other airlines to the extent they would get the marginal return from passengers who formerly flew with estonian air. however, estonia does not provide any specific calculations as to the possible level of profitability under the new business model. on the contrary, the restructuring plan clearly indicates that these routes cannot be operated at a profit at this point in time, nor can they contribute to the cost of the aircraft. therefore, in line with the commissions established case practice, 10 out of the 12 proposed routes cannot be accepted as compensatory measures. (199) the commission concludes that in order to outweigh the adverse effect of the restructuring aid for estonian air, it is not sufficient to release slots in three coordinated airports and to cancel two profitable routes representing around 1 % of the airlines capacity. (200) the proposed own contribution of estonian air according to the restructuring plan consists of eur 27,8 million from the planned sale of three aircraft in 2015; eur 7,5 million from the sale of an office building to tallinn airport; eur 2 million from the sale of other non-core assets; and eur 0,7 million from a new loan provided by [ ]. the main part of the own contribution (the planned sale of three aircraft) should take place in 2015 and there is no binding agreement to sell the aircraft. however, estonia provided a prima facie credible valuation by a consultancy company estimating a possible sale price for the type of the aircraft concerned. further, estonia has indicated that the airline is now holding discussions with potential partners for a sale-and-lease-back transaction. on this basis, and bearing in mind previous airline cases, the commission considers that the proposed own contribution reaching eur 36,44 million out of the total restructuring costs of eur 78,7 million (see recital 55) or 46,3 % of the restructuring costs is acceptable in view of the fact that estonia is an assisted area. (201) although the own contribution appears acceptable, the commissions doubts on the return to long-term viability and compensatory measures have not been dispelled. (202) finally, as in case of measures 4 and 5, the commission concludes that for the same reasons the one time, last time principle has also been breached in relation to measure 6. several aid measures (measures 3, 4 and 5) had been granted to estonian air in difficulty over the years 2010-2014. in addition, the exceptions in point 73 of the 2004 r&r guidelines are not applicable. given the non-acceptability of the modified restructuring plan of 31 october 2014, the restructuring aid cannot be considered as following the rescue aid as part of a single restructuring operation (condition (a) of point 73). in addition, the estonian authorities have not put forward any exceptional or unforeseeable circumstances under condition (c) of point 73. (203) therefore, the restructuring aid (measure 6) foreseen in the restructuring plan of june 2013 does not fulfil the criteria of the 2004 r&r guidelines and amounts to incompatible state aid. 8. recovery (204) according to the treaty and the court of justices established case law, the commission is competent to decide that the member state concerned must abolish or alter aid (51) when it has found that it is incompatible with the internal market. the court has also consistently held that the obligation of a member state to abolish aid regarded by the commission as being incompatible with the internal market is designed to re-establish the previously existing situation (52). in this context, the court has established that that objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation prior to the payment of the aid is restored (53). (205) following that case-law, article 16 of council regulation (eu) 2015/1589 (54) states that where negative decisions are taken in respect of unlawful aid, the commission shall decide that the member state concerned shall take all necessary measures to recover the aid from the beneficiary. given that the measures at hand are to be considered incompatible aid, the aid has to be recovered in order to re-establish the situation that existed on the market prior to the granting of the aid. recovery shall take effect from the time when the advantage occurred to the beneficiary, namely when the aid was put at the disposal of the beneficiary and shall bear recovery interest until effective recovery. (206) with regard to the 2010 capital increase (measure 3), the commission considers that, given the lack of any realistic possibility for the state to recover its investment, the totality of the eur 17,9 million injected by the state in cash is the aid element. the same conclusion applies to the 2011/2012 capital increase (measure 4), for which the aid element amounts to the totality of the eur 30 million injected by the state in cash. (207) in relation to measure 5, the commission considers that in view of the financial situation of estonian air at the moment of the granting the rescue loan facility loans, the state had no valid reason to expect repayment. since the commission considers that the conditions for rescue aid of the 2015 r&r guidelines are not met, estonia must ensure that estonian air reimburses the rescue loan provided to estonian air for the total amount of eur 37 million. in case there is due and not paid interest, it should be included in the aid element. (208) finally, as regards the notified restructuring aid (measure 6), it has not been yet provided to estonian air and there is therefore no need to order recovery. 9. conclusion (209) the commission finds that estonia has unlawfully implemented measures 3, 4 and 5 in breach of article 108(3) of the treaty. in addition, those measures are incompatible with the internal market. (210) the incompatible aid should be recovered from estonian air as set out in section 8. in order to re-establish the situation that existed on the market prior to the granting of the aid. (211) in addition, the commission finds that the notified restructuring aid of eur 40,7 million (measure 6) constitutes incompatible aid. therefore, that measure should not be implemented, has adopted this decision article 1 1. the financing of as estonian air through the eur 2,48 million capital injection which estonia implemented in february 2009 does not constitute aid within the meaning of article 107(1) of the treaty. 2. the sale of the ground handling section of as estonian air to tallinn airport for eur 2,4 million in june 2009 does not constitute aid within the meaning of article 107(1) of the treaty. article 2 1. the state aid amounting to eur 17,9 million unlawfully granted in favour of as estonian air by estonia on 10 november 2010, in breach of article 108(3) of the treaty, is incompatible with the internal market. 2. the state aid amounting to eur 30 million unlawfully granted in favour of as estonian air by estonia on 20 december 2011 and 6 march 2012, in breach of article 108(3) of the treaty, is incompatible with the internal market. 3. the state aid for rescue purposes amounting to eur 37 million unlawfully granted in favour of as estonian air by estonia between 2012 and 2014, in breach of article 108(3) of the treaty, is incompatible with the internal market. article 3 1. estonia shall recover the aid referred to in article 2 from the beneficiary. 2. the sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiary until their actual recovery. 3. the interest shall be calculated on a compound basis in accordance with chapter v of commission regulation (ec) no 794/2004 (55). article 4 1. recovery of the aid referred to in article 2 shall be immediate and effective. 2. estonia shall ensure that this decision is implemented within four months following the date of notification of this decision. article 5 1. the state aid for restructuring purposes which estonia is planning to implement for as estonian air, amounting to eur 40,7 million, is incompatible with the internal market. 2. the aid shall accordingly not be implemented. article 6 1. within two months following notification of this decision, estonia shall submit the following information to the commission: (a) the total amount (principal and recovery interests) to be recovered from the beneficiary; (b) a detailed description of the measures already taken and planned to comply with this decision; (c) documents demonstrating that the beneficiary has been ordered to repay the aid. 2. estonia shall keep the commission informed of the progress of the national measures taken to implement this decision until recovery of the aid referred to in article 2 has been completed. it shall immediately submit, on simple request by the commission, information on the measures already taken and planned to comply with this decision. it shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiary. article 7 this decision is addressed to the republic of estonia. done at brussels, 6 november 2015. for the commission margrethe vestager member of the commission (1) oj c 150, 29.5.2013, p. 3 and 14. (2) oj c 141, 9.5.2014, p. 47. (3) see footnote 1. (4) given that the complaint was submitted on 23 may 2013, before estonia notified estonian airs restructuring plan on 20 june 2013, the complaint was registered under the rescue case, i.e. sa.35956. however, given that the complaint partly related to the plans of the estonian authorities to recapitalise the airline, it was assessed in the context of the opening decision on the restructuring case, i.e. sa.36868. (5) the restructuring aid opening decision was corrected by commission decision c(2014) 2316 final of 2 april 2014. (6) see footnote 2. (7) regulation 1 determining the languages to be used by the european economic community (oj 17, 6.10.1958, p. 385/58). (8) the other airports in estonia (tartu, p rnu, kuressaare and k rdla regional airports and kihnu and ruhnu airfields) carried 44 288 passengers in 2013. in 2013, tartu was the only regional airport in estonia with a scheduled international flight to helsinki. source: 2013 annual report of as tallinna lennujaam, manager of tallinn airport, available at http://www.tallinn-airport.ee/upload/editor/aastaaruanded/lennujaama%20aastaraamat_2013_eng.pdf (9) source: 2014 annual report of as tallinna lennujaam, manager of tallinn airport, available at http://www.tallinn-airport.ee/upload/editor/ettevote/lennujaama%20aastaraamat_eng_2014_23.5.15.pdf (10) source: estonian airs consolidated annual report for 2013, available at http://estonian-air.ee/wp-content/uploads/2014/06/estonian-air-annual-report-2013.pdf (11) source: estonian airs consolidated annual report for 2014, available at https://estonian-air.ee/wp-content/uploads/2014/04/estonian-air-annual-report-2014-final-webpage.pdf (12) source: 2013 annual report of as tallinna lennujaam, see footnote 8. (13) source: web page of tallinn airport (http://www.tallinn-airport.ee/eng/). (14) see footnote 12. (15) see http://www.baltic-course.com/eng/transport/?doc=86191 (16) see http://www.aviator.aero/press_releases/13003. at the time of the sale, as estonian air regional was dormant and had no aircraft, no employees, and no assets. (17) source: estonian airs review of performance for the first half of 2012, available at http://estonian-air.ee/wp-content/uploads/2014/04/eng-1h-2012.pdf (18) see footnote 10. (19) see footnote 11. (*) business secret (20) see baltic reports of 7 june 2010, government sets bailout deal for estonian air, http://balticreports.com/?p=19116 (21) see also http://www.e24.ee/1106240/estonian-airile-makstakse-valja-kolm-miljonit-eurot/ (22) see estonian airs consolidated annual report for 2014, available at https://estonian-air.ee/wp-content/uploads/2014/04/estonian-air-annual-report-2014-final-webpage.pdf as well as press article estonian government approves of last loan payment to estonian air of 20 november 2014: http://www.baltic-course.com/eng/transport/?doc=99082 (23) earnings before interest, taxes, depreciation and amortisation. (24) exchange rate eur 1 = eek 15,65. (25) the restructuring plan maintains the following 10 core routes: amsterdam (ams), stockholm (arn), brussels (bru), copenhagen (cph), kiev (kbp), saint petersburg (led), oslo (osl), moscow sheremetyevo (svo), trondheim (trd) and vilnius (vno). the seasonal routes are paris charles de gaulle (cdg) and nice (nce). however, it appears from press articles and public statements of estonian air that estonian air has operated and intends to operate in the future seasonal routes beyond the ones contained in the restructuring plan, namely munich (muc), split (spu) and berlin (txl). it also appears that as from 2015, estonian air intends to add milan (mxp) to its offers of seasonal routes. (26) ask stands for available seat kilometre (seats flown multiplied by the number of kilometres flown). ask is the most important capacity indicator of an airline as employed by the air transport industry and by the commission itself in previous restructuring cases in the air transport sector. (27) level 1 contribution margin is defined as total revenue less passenger-related variable costs over total revenue. (28) the plan defines doc contribution as total revenue less passenger, round trip and fuel-related costs over total revenue. (29) infortar is one of the largest private investment groups in estonia with interests in shipping (including a 36 % stake in tallink, a large passenger and cargo shipping company active in the baltic sea region), real estate, financial services, etc. in 2013, the infortar group made a net profit of eur 20 million and held assets worth eur 432 million. (30) oj c 244, 1.10.2004, p. 2. (31) mobility factor is the number of air transport passengers divided by the countrys population. (32) judgment of 12 december 1996, air france v commission, t-358/94, ecr, eu:t:1996:194, paragraphs 148 and 149. (33) guidelines on the application of articles 92 and 93 of the ec treaty and article 61 of the eea agreement to state aids in the aviation sector (oj c 350, 10.12.1994, p. 5). (34) ev/sales multiple is valuation measure that compares the enterprise value of a company to the companys sales, giving investors an idea of how much it costs to purchase the companys sales. (35) judgment in france v commission (stardust marine), c-482/99, eu:c:2002:294, paragraph 52. (36) see 2010 business plan, pages 16 and 17. (37) see internal valuation of estonian air prepared by the estonian authorities value assessment of as estonian air, page 2. (38) see http://www.bloomberg.com/news/2010-04-22/estonia-government-nears-accord-on-buying-control-of-estonian-air-from-sas.html (39) see http://news.err.ee/v/economy/fe650a96-9daa-43e4-91eb-ab4396445593 (40) judgment belgium v commission (boch), c-40/85, eu:c:1986:305, paragraph 13. see also judgment of 21 january 1999, neue maxh tte stahlwerke gmbh v commission, t-129/95, t-2/96 and t-97/96, ecr, eu:t:1999:7, paragraph 132. (41) the third package included three legislative measures: (i) council regulation (eec) no 2407/92 of 23 july 1992 on licensing of air carriers (oj l 240, 24.8.1992, p. 1); (ii) council regulation (eec) no 2408/92 of 23 july 1992 on access for community air carriers to intra-community air routes (oj l 240, 24.8.1992, p. 8); and (iii) council regulation (eec) no 2409/92 of 23 july 1992 on fares and rates for air services (oj l 240, 24.8.1992, p. 15). (42) see http://www.iata.org/whatwedo/documents/economics/industry-outlook-december2011.pdf (43) commission decision 2011/414/eu of 14 december 2010 on the state aid c-8/10 (ex n21/09 and nn 15/10) implemented by greece in favour of varvaressos s.a. (oj l 184, 14.7.2011, p. 9). see as well commission decision (eu) 2015/1091 of 9 july 2014 on the measures sa.34191 (2012/c) (ex 2012/nn) (ex 2012/cp) implemented by latvia for a/s air baltic corporation (airbaltic) (oj l 183, 10.7.2015, p. 1). (44) a restructuring period of 5 years and 6 months was considered as unreasonably long in case of restructuring aid to cyprus airways see commission decision (eu) 2015/1073 of 9 january 2015 on the state aid sa.35888 (2013/c) (ex 2013/nn) sa.37220 (2014/c) (ex 2013/nn) sa.38225 (2014/c) (ex 2013/nn) implemented by cyprus for cyprus airways (public) ltd (oj l 179, 8.7.2015, p. 83, recitals 144 and 157). the restructuring period in previous positive decisions concerning restructuring aid to airlines normally did not exceed 5 years, see decision (eu) 2015/1091, recital 179; commission decision (eu) 2015/494 of 9 july 2014 on the measures sa.32715 (2012/c) (ex 2012/nn) (ex 2011/cp) implemented by slovenia for adria airways d.d. (oj l 78, 24.3.2015, p. 18, recital 131); commission decision 2013/151/eu of 19 september 2012 on the state aid sa.30908 (11/c, ex n 176/10) implemented by the czech republic for esk aerolinie, a.s. ( sa czech airlines restructuring plan) (oj l 92, 3.4.2013, p. 16, recital 107) and commission decision 2012/661/eu of 27 june 2012 on the state aid no sa.33015 (2012/c) which malta is planning to implement for air malta plc. (oj l 301, 30.10.2012, p. 29, recital 93); commission decision (eu) 2015/119 of 29 july 2014 on the state aid sa.36874 (2013/n) which poland is planning to implement for lot polish airlines sa and on the measure sa.36752 (2014/nn) (ex 2013/cp) implemented by poland for lot polish airlines sa (oj l 25, 30.1.2015, p. 1, recital 241). (45) judgment in italy v commission, c-364/90, eu:c:1993:157, paragraph 20. (46) commission communication temporary community framework for state aid measures to support access to finance in the current financial and economic crisis (oj c 16, 22.1.2009, p. 1), as modified by the communication from the commission amending the temporary community framework for state aid measures to support access to finance in the current financial and economic crisis (oj c 303, 15.12.2009, p. 6). the temporary framework expired in december 2011. (47) on 1 august 2014, the 2004 r&r guidelines were replaced by the guidelines on state aid for rescuing and restructuring non-financial undertakings in difficulty (oj c 249, 31.7.2014, p. 1, 2014 r&r guidelines). according to recital 136 of the 2014 r&r guidelines, notifications registered by the commission prior to 1 august 2014 will be examined in the light of the criteria in force at the time of notification. since measure 6 was notified on 20 june 2013, that measure will be assessed under the 2004 r&r guidelines. also, in line with recitals 137 and 138 of the 2014 r&r guidelines, the commission will assess the compatibility of measures 3 and 4 on the basis of the 2004 r&r guidelines. (48) oj c 249, 31.7.2014, p. 1. (49) see in this sense the judgment of the efta court in joined cases e-10/11 and e-11/11 hurtigruten asa, norway v efta surveillance authority, efta ct. rep [2012], p. 758, paragraphs 228 and 234-240. (50) see decision 2013/151/eu, recitals 130 and 131; decision (eu) 2015/1091, recital 194; and decision (eu) 2015/494, recital 143. (51) judgment commission v germany, c-70/72, eu:c:1973:87, paragraph 13. (52) judgment spain v commission, c-278/92, c-279/92 and c-280/92, eu:c:1994:325, paragraph 75. (53) case belgium v commission, c-75/97, eu:c:1999:311, paragraphs 64-65. (54) council regulation (eu) 2015/1589 of 13 july 2015 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 248, 24.9.2015, p. 9). (55) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 140, 30.4.2004, p. 1)

name: decision (eu) 2016/1041 of the european central bank of 22 june 2016 on the eligibility of marketable debt instruments issued or fully guaranteed by the hellenic republic and repealing decision (eu) 2015/300 (ecb/2016/18) type: decision subject matter: monetary economics; europe; financial institutions and credit; free movement of capital; public finance and budget policy; monetary relations date published: 2016-06-28 28.6.2016 en official journal of the european union l 169/14 decision (eu) 2016/1041 of the european central bank of 22 june 2016 on the eligibility of marketable debt instruments issued or fully guaranteed by the hellenic republic and repealing decision (eu) 2015/300 (ecb/2016/18) the governing council of the european central bank, having regard to the treaty on the functioning of the european union, and in particular the first indent of article 127(2) thereof, having regard to the statute of the european system of central banks and of the european central bank, and in particular the first indent of article 3.1, article 12.1, article 18 and the second indent of article 34.1 thereof, having regard to guideline (eu) 2015/510 of the european central bank of 19 december 2014 on the implementation of the eurosystem monetary policy framework (ecb/2014/60) (1) (general documentation guideline), and in particular article 1(4), titles i, ii, iv, v, vi and viii of part four, and part six thereof, having regard to guideline ecb/2014/31 of 9 july 2014 on additional temporary measures relating to eurosystem refinancing operations and eligibility of collateral and amending guideline ecb/2007/9 (2), and in particular article 1(3) and article 8 thereof, having regard to decision (eu) 2015/774 of the european central bank of 4 march 2015 on a secondary markets public sector asset purchase programme (ecb/2015/10) (3), and in particular article 3(2) thereof, whereas: (1) pursuant to article 18.1 of the statute of the european system of central banks and of the european central bank, the european central bank (ecb) and the national central banks of member states whose currency is the euro may conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral. (2) the standard criteria and minimum requirements for credit quality thresholds determining the eligibility of marketable assets as collateral for the purposes of eurosystem monetary policy operations are laid down in guideline (eu) 2015/510 (ecb/2014/60) and in particular in article 59 and in part four, title ii thereof. (3) pursuant to article 1(4) of guideline (eu) 2015/510 (ecb/2014/60), the governing council may, at any time, change the tools, instruments, requirements, criteria and procedures for the implementation of eurosystem monetary policy operations. pursuant to article 59(6) of guideline (eu) 2015/510 (ecb/2014/60), the eurosystem reserves the right to determine whether an issue, issuer, debtor or guarantor fulfils the eurosystem's credit quality requirements on the basis of any information that the eurosystem may consider relevant for ensuring adequate risk protection of the eurosystem. (4) article 8(2) of guideline ecb/2014/31 provides that the eurosystem's credit quality thresholds do not apply to marketable debt instruments issued or fully guaranteed by the central governments of member states whose currency is the euro under a european union/international monetary fund programme, unless the governing council decides that the respective member state does not comply with the conditionality of the financial support and/or the macroeconomic programme. (5) in february 2015, the governing council concluded that it was not possible to assume a successful conclusion of the review of the european union/international monetary fund financial assistance programme for the hellenic republic that was ongoing at the time. consequently, decision (eu) 2015/300 of the european central bank (ecb/2015/6) (4) provided that the hellenic republic should no longer be considered to be in compliance with a european union/international monetary fund programme for the purposes of article 6(1) and article 8 of guideline ecb/2014/31 and that the eurosystem's credit quality thresholds should apply in respect of marketable debt instruments issued or fully guaranteed by the hellenic republic. on 19 august 2015, following the expiry of the european financial stability facility (efsf) programme of financial support for greece, the board of governors of the european stability mechanism (esm) approved a new three-year financial assistance programme for greece. (6) the first tranche under the new esm programme was disbursed once all required measures were taken and milestones met which supported the gradual stabilisation of the greek economy and allowed for the recapitalisation of the greek banking system at the end of 2015. upon completion of the prior actions agreed under the programme for the first review, the board of directors of the esm approved on 17 june 2016 the disbursement of the first part of the second tranche of the programme. the first review of the esm programme has thus been successfully concluded. (7) the governing council has assessed the effects of the new esm programme for greece, the continued implementation thereof and the commitment demonstrated by the greek authorities to fully implement the programme. (8) on the basis of the abovementioned assessment, the governing council considers the hellenic republic to be in compliance with the conditionality of the programme and has decided to restore the eligibility of marketable debt instruments issued or fully guaranteed by the hellenic republic for eurosystem's monetary policy operations. therefore, decision (eu) 2015/300 (ecb/2015/6) should be repealed. (9) in view of the specific market and credit risk conditions for marketable debt instruments issued or fully guaranteed by the hellenic republic, the governing council has decided to revise the haircut schedule applicable to those instruments pursuant to article 8(3) of guideline ecb/2014/31. (10) in line with past governing council deliberations, potential purchases of marketable debt instruments issued or guaranteed by the hellenic republic in the secondary markets public sector asset purchase programme (pspp) will be examined at a later stage, taking into account the progress in the analysis and reinforcement of the sustainability of greece's public debt and other risk management considerations, has adopted this decision: article 1 eligibility of marketable debt instruments issued or fully guaranteed by the hellenic republic 1. the hellenic republic shall be considered to be in compliance with a european union/international monetary fund programme. 2. the eurosystem's minimum requirements for credit quality thresholds, as laid down in guideline (eu) 2015/510 (ecb/2014/60) and in particular in article 59 and in part four thereof, shall not apply to marketable debt instruments issued or fully guaranteed by the hellenic republic. article 2 haircut schedule applying to marketable debt instruments issued or fully guaranteed by the hellenic republic marketable debt instruments issued or fully guaranteed by the hellenic republic shall be subject to the specific haircuts set out in the annex to this decision. article 3 pspp purchases purchases of marketable debt securities issued or fully guaranteed by the central government of the hellenic republic pursuant to decision (eu) 2015/774 (ecb/2015/10) shall be conducted in line with article 5(3) of that decision and within the limits to be set by the governing council in accordance therewith following a positive assessment by the governing council of the progress made in the analysis and reinforcement of the sustainability of greece's public debt and other risk management considerations. article 4 repeal decision (eu) 2015/300 (ecb/2015/6) is hereby repealed. article 5 final provisions 1. this decision shall enter into force on 29 june 2016. 2. in the event of any discrepancy between this decision, decision (eu) 2015/774 (ecb/2015/10) and any of guideline (eu) 2015/510 (ecb/2014/60) and guideline ecb/2014/31, as implemented at national level by the national central banks of member states whose currency is the euro, this decision shall prevail. done at frankfurt am main, 22 june 2016. the president of the ecb mario draghi (1) oj l 91, 2.4.2015, p. 3. (2) oj l 240, 13.8.2014, p. 28. (3) oj l 121, 14.5.2015, p. 20. (4) decision (eu) 2015/300 of the european central bank of 10 february 2015 on the eligibility of marketable debt instruments issued or fully guaranteed by the hellenic republic (ecb/2015/6) (oj l 53, 25.2.2015, p. 29) annex haircut schedule applying to marketable debt instruments issued or fully guaranteed by the hellenic republic government bonds residual maturity (years) haircuts for fixed coupons and floaters haircuts for zero coupon 0-1 15,0 15,0 1-3 33,0 35,5 3-5 45,0 48,5 5-7 54,0 58,5 7-10 56,0 62,0 > 10 57,0 71,0 government-guaranteed bank bonds and government-guaranteed non-financial corporate bonds residual maturity (years) haircuts for fixed coupons and floaters haircuts for zero coupon 0-1 23,0 23,0 1-3 42,5 45,0 3-5 55,5 59,0 5-7 64,5 69,5 7-10 67,0 72,5 > 10 67,5 81,0

name: council decision (eu) 2016/1039 of 16 june 2016 establishing the position to be taken on behalf of the european union within the general council of the world trade organization on the european union request for an extension of the wto waiver relating to the autonomous preferential regime for the western balkans type: decision subject matter: international trade; tariff policy; world organisations; trade; trade policy; economic geography date published: 2016-06-28 28.6.2016 en official journal of the european union l 169/4 council decision (eu) 2016/1039 of 16 june 2016 establishing the position to be taken on behalf of the european union within the general council of the world trade organization on the european union request for an extension of the wto waiver relating to the autonomous preferential regime for the western balkans the council of the european union, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 207(4), in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) paragraphs 3 and 4 of article ix of the marrakesh agreement establishing the world trade organization (wto agreement) set out the procedures for waiving an obligation imposed on a member by the wto agreement or by any of the multilateral trade agreements. (2) council regulation (ec) no 2007/2000 (1) introducing duty-free or preferential treatment to products originating in the western balkans (albania, bosnia and herzegovina, croatia, the former yugoslav republic of macedonia, kosovo (*), montenegro and serbia) was substantially amended several times and codified by council regulation (ec) no 1215/2009 (2). regulation (eu) no 1336/2011 of the european parliament and of the council (3) extended the granting of the autonomous trade preferences until 31 december 2015. council regulation (eu) no 517/2013 (4) removed croatia from the scope of regulation (ec) no 1215/2009, following its accession to the european union. regulation (eu) 2015/2423 of the european parliament and of the council (5) extends the granting of the autonomous trade preferences until 31 december 2020. regulation (ec) no 1215/2009, as most recently amended, provides for free access to the union market for products originating in the western balkan countries and territories, except for certain agricultural products, which benefit from limited concessions in the form of duty free tariff quotas. (3) in the absence of a waiver from the obligations of the union under paragraph 1 of article i of the general agreement on tariffs and trade (gatt) 1994 and article xiii gatt 1994, to the extent necessary, the treatment provided by the autonomous trade preferences would need to be extended to all other members of the world trade organization (wto). (4) it is in the interest of the union to request an extension of the wto waiver on autonomous trade preferences granted by the union to the western balkans pursuant to paragraph 3 of article ix of the wto agreement. (5) the union is required to submit such a request to the wto. (6) it is appropriate, therefore, to establish the position to be taken by the union within the general council of the wto concerning this request, has adopted this decision: article 1 the position to be taken on behalf of the european union within the general council of the world trade organization shall be to request an extension of the existing wto waiver on the autonomous trade preferences granted by the union to the western balkans until 31 december 2021, and to support the adoption of that request. that position shall be expressed by the commission. article 2 this decision shall enter into force on the date of its adoption. done at luxembourg, 16 june 2016. for the council the president l.f. asscher (1) council regulation (ec) no 2007/2000 of 18 september 2000 introducing exceptional trade measures for countries and territories participating in or linked to the european union's stabilisation and association process, amending regulation (ec) no 2820/98, and repealing regulations (ec) no 1763/1999 and (ec) no 6/2000 (oj l 240, 23.9.2000, p. 1). (*) this designation is without prejudice to positions on status, and is in line with unscr 1244/1999 and the icj opinion on the kosovo declaration of independence. (2) council regulation (ec) no 1215/2009 of 30 november 2009 introducing exceptional trade measures for countries and territories participating in or linked to the european union's stabilisation and association process (oj l 328, 15.12.2009, p. 1). (3) regulation (eu) no 1336/2011 of the european parliament and of the council of 13 december 2011 amending council regulation (ec) no 1215/2009 introducing exceptional trade measures for countries and territories participating in or linked to the european union's stabilisation and association process (oj l 347, 30.12.2011, p. 1). (4) council regulation (eu) no 517/2013 of 13 may 2013 adapting certain regulations and decisions in the fields of free movement of goods, freedom of movement for persons, company law, competition policy, agriculture, food safety, veterinary and phytosanitary policy, transport policy, energy, taxation, statistics, trans-european networks, judiciary and fundamental rights, justice, freedom and security, environment, customs union, external relations, foreign, security and defence policy and institutions, by reason of the accession of the republic of croatia (oj l 158, 10.6.2013, p. 1). (5) regulation (eu) 2015/2423 of the european parliament and of the council of 16 december 2015 amending council regulation (ec) no 1215/2009 introducing exceptional trade measures for countries and territories participating in or linked to the european union's stabilisation and association process and suspending its application with regard to bosnia and herzegovina (oj l 341, 24.12.2015, p. 18).

name: commission implementing decision (eu) 2016/1030 of 23 june 2016 amending annex i to decision 2004/211/ec as regards the entry for lebanon in the list of third countries and parts of territory thereof from which member states authorise imports of live equidae and semen, ova and embryos of the equine species (notified under document c(2016) 3778) (text with eea relevance) type: decision_impl subject matter: asia and oceania; agricultural activity; trade policy; means of agricultural production; agricultural policy; trade; tariff policy date published: 2016-06-25 25.6.2016 en official journal of the european union l 168/17 commission implementing decision (eu) 2016/1030 of 23 june 2016 amending annex i to decision 2004/211/ec as regards the entry for lebanon in the list of third countries and parts of territory thereof from which member states authorise imports of live equidae and semen, ova and embryos of the equine species (notified under document c(2016) 3778) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 92/65/eec of 13 july 1992 laying down animal health requirements governing trade in and imports into the community of animals, semen, ova and embryos not subject to animal health requirements laid down in specific community rules referred to in annex a(i) to directive 90/425/eec (1), and in particular article 17(3)(a) thereof, having regard to council directive 2009/156/ec of 30 november 2009 on animal health conditions governing the movement and importation from third countries of equidae (2), and in particular article 12(1) and (4), and the introductory phrase and points (a) and (b) of article 19 thereof, whereas: (1) directive 2009/156/ec lays down animal health conditions for the importation into the union of live equidae. it provides, amongst others, that imports of equidae into the union are only authorised from third countries which have been free from glanders for a period of six months. (2) commission decision 2004/211/ec (3) establishes a list of third countries, or parts thereof where regionalisation applies, from which member states are to authorise, amongst others, the temporary admission, the re-entry after temporary export and the import of registered horses. (3) following the detection of glanders in lebanon in 2011 the commission, by adopting commission implementing decision 2011/512/eu (4), suspended amongst others the importation of registered horses from lebanon. in may 2016, lebanon has submitted information demonstrating that the disease was successfully eradicated and that since the last case was confirmed on 23 august 2011 ongoing surveillance in the entire equine population has not revealed new cases. (4) because more than six months have elapsed after the last case of glanders in lebanon, it is appropriate to authorise the temporary admission, re-entry after temporary export and imports of registered horses from that country. therefore, the entry for lebanon in annex i to decision 2004/211/ec should be amended accordingly. (5) decision 2004/211/ec should therefore be amended accordingly. (6) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 in annex i to decision 2004/211/ec, the entry for lebanon is replaced by the following: lb lebanon lb-0 whole country e x x x article 2 this decision is addressed to the member states. done at brussels, 23 june 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 268, 14.9.1992, p. 54. (2) oj l 192, 23.7.2010, p. 1. (3) commission decision 2004/211/ec of 6 january 2004 establishing the list of third countries and parts of territory thereof from which member states authorise imports of live equidae and semen, ova and embryos of the equine species, and amending decisions 93/195/eec and 94/63/ec (oj l 73, 11.3.2004, p. 1). (4) commission implementing decision 2011/512/eu of 18 august 2011 amending annex i to decision 2004/211/ec as regards the entries for bahrain and lebanon in the list of third countries and parts thereof from which the introduction into the union of live equidae and semen, ova and embryos of the equine species are authorised (oj l 214, 19.8.2011, p. 22).

name: decision (eu) 2016/1021 of the european parliament of 8 june 2016 on setting up a committee of inquiry to investigate alleged contraventions and maladministration in the application of union law in relation to money laundering, tax avoidance and tax evasion, its powers, numerical strength and term of office type: decision subject matter: parliament; criminal law; free movement of capital; taxation; eu institutions and european civil service; european union law date published: 2016-06-24 24.6.2016 en official journal of the european union l 166/10 decision (eu) 2016/1021 of the european parliament of 8 june 2016 on setting up a committee of inquiry to investigate alleged contraventions and maladministration in the application of union law in relation to money laundering, tax avoidance and tax evasion, its powers, numerical strength and term of office the european parliament, having regard to the request presented by 337 members for a committee of inquiry to be set up to investigate alleged contraventions and maladministration in the application of union law in relation to money laundering, tax avoidance and tax evasion, having regard to the proposal by the conference of presidents, having regard to article 226 of the treaty on the functioning of the european union, having regard to decision 95/167/ec, euratom, ecsc of the european parliament, the council and the commission of 19 april 1995 on the detailed provisions governing the exercise of the european parliament's right of inquiry (1), having regard to article 4(3) of the treaty on european union, having regard to articles 107 and 108 of the treaty on the functioning of the european union, having regard to article 325 of the treaty on the functioning of the european union, having regard to directive 2005/60/ec of the european parliament and of the council of 26 october 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (2), having regard to directive (eu) 2015/849 of the european parliament and of the council of 20 may 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending regulation (eu) no 648/2012 of the european parliament and of the council, and repealing directive 2005/60/ec of the european parliament and of the council and commission directive 2006/70/ec (3), having regard to directive 2013/36/eu of the european parliament and of the council of 26 june 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending directive 2002/87/ec and repealing directives 2006/48/ec and 2006/49/ec (4), having regard to council directive 2011/16/eu of 15 february 2011 on administrative cooperation in the field of taxation and repealing directive 77/799/eec (5), having regard to council directive 2014/107/eu of 9 december 2014 amending directive 2011/16/eu as regards mandatory automatic exchange of information in the field of taxation (6), having regard to directive 2014/91/eu of the european parliament and of the council of 23 july 2014 amending directive 2009/65/ec on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (ucits) as regards depositary functions, remuneration policies and sanctions (7), having regard to directive 2011/61/eu of the european parliament and of the council of 8 june 2011 on alternative investment fund managers and amending directives 2003/41/ec and 2009/65/ec and regulations (ec) no 1060/2009 and (eu) no 1095/2010 (8), having regard to commission delegated regulation (eu) no 231/2013 of 19 december 2012 supplementing directive 2011/61/eu of the european parliament and of the council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (9), having regard to directive 2009/138/ec of the european parliament and of the council of 25 november 2009 on the taking-up and pursuit of the business of insurance and reinsurance (solvency ii) (10), having regard to directive 2006/43/ec of the european parliament and of the council of 17 may 2006 on statutory audits of annual accounts and consolidated accounts, amending council directives 78/660/eec and 83/349/eec and repealing council directive 84/253/eec (11), having regard to regulation (eu) no 537/2014 of the european parliament and of the council of 16 april 2014 on specific requirements regarding statutory audit of public-interest entities and repealing commission decision 2005/909/ec (12), having regard to directive 2014/56/eu of the european parliament and of the council of 16 april 2014 amending directive 2006/43/ec on statutory audits of annual accounts and consolidated accounts (13), having regard to directive 2013/34/eu of the european parliament and of the council of 26 june 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending directive 2006/43/ec of the european parliament and of the council and repealing council directives 78/660/eec and 83/349/eec (14), having regard to directive 2012/17/eu of the european parliament and of the council of 13 june 2012 amending council directive 89/666/eec and directives 2005/56/ec and 2009/101/ec of the european parliament and of the council as regards the interconnection of central, commercial and companies registers (15), having regard to commission recommendation 2012/771/eu of 6 december 2012 regarding measures intended to encourage third countries to apply minimum standards of good governance in tax matters (16) and commission recommendation 2012/772/eu of 6 december 2012 on aggressive tax planning (17), having regard to the commission communication of 28 january 2016 to the european parliament and the council on an external strategy for effective taxation (com(2016) 24), having regard to rule 198 of its rules of procedure, 1. decides to set up a committee of inquiry to investigate alleged contraventions, and maladministration in the application, of union law in relation to money laundering, tax avoidance and tax evasion; 2. decides that the committee of inquiry shall: investigate the alleged failure of the commission to enforce and of member states to implement and to enforce effectively directive 2005/60/ec, taking into account the obligation of timely and effective implementation of directive (eu) 2015/849, investigate the alleged failure of member states authorities to apply administrative penalties and other administrative measures to institutions found liable of serious breach of the national provisions adopted pursuant to directive 2005/60/ec, as required by the directive 2013/36/eu, investigate the alleged failure of the commission to enforce and of member states authorities to implement effectively directive 2011/16/eu especially article 9(1) thereof on spontaneous communication of tax information to another member state in cases where there are grounds for supposing that there may be a loss of tax, taking into account the obligation of timely and effective implementation and enforcement of directive 2014/107/eu; for this purpose and for investigations on other legal bases regarding alleged contraventions or maladministration mentioned, make use of access to all relevant documents, including to all relevant documents of the code of conduct group which have been obtained by the taxe 1 and taxe 2 special committees, investigate the alleged failure of the member states to enforce articles 107 and 108 of the treaty on the functioning of the european union, relevant to the scope of the inquiry provided for in this decision, investigate the alleged failure of the commission to enforce and of member states to implement and to enforce directive 2014/91/eu, investigate the alleged failure of the commission to enforce and of member states to implement and to enforce directive 2011/61/eu and commission delegated regulation (eu) no 231/2013, investigate the alleged failure of the commission to enforce and of member states to implement and to enforce directive 2009/138/ec, investigate the alleged failure of the commission to enforce and of member states to implement and to enforce effectively directive 2006/43/ec, taking into account the obligation of timely and effective implementation of regulation (eu) no 537/2014 and directive 2014/56/eu, investigate the alleged failure of member states to transpose directive 2013/34/eu, investigate the alleged failure of the commission to enforce and of member states to implement and to enforce effectively directive 2012/17/eu, investigate potential breach of the duty of sincere cooperation enshrined in article 4(3) of the treaty on european union by any member state and their associate and dependent territories in so far as it is relevant to the scope of the inquiry provided for in this decision; to that end, assess in particular whether any such breach may arise from the alleged failure to take the appropriate measures to prevent the operation of vehicles that allow their ultimate beneficial owners to be hidden from financial institutions and other intermediaries, lawyers, trust and company service providers or the operation of any other vehicles and intermediaries that allow the facilitation of money laundering, as well as tax evasion and tax avoidance in other member states (including looking at the role of trusts, single-member private limited liability companies and virtual currencies), while also taking into account current ongoing work programmes that are taking place at member state level which seek to address these issues and mitigate their effect, make any recommendations that it deems necessary in this matter, including on the implementation by member states of the abovementioned commission recommendations of 6 december 2012 regarding measures intended to encourage third countries to apply minimum standards of good governance in tax matters and aggressive tax planning, as well as assess latest developments of the commission's external strategy for effective taxation and assess the links between the legal framework of the union and member states and the tax systems of third countries (e.g. double taxation agreements and information exchange agreements, free trade agreements) as well as efforts made to promote, at international level (organisation for economic cooperation and development, g20, financial action task force and united nations), the transparency of beneficial ownership information; 3. decides that the committee of inquiry shall submit its final report within 12 months of the adoption of this decision; 4. decides that the committee of inquiry should take account in its work of any relevant developments within the remit of the committee that emerge during its term; 5. decides that any recommendations drawn up by the committee of inquiry and by the taxe 2 special committee should be dealt with by the relevant standing committees; 6. decides that the committee of inquiry shall have 65 members; 7. instructs its president to arrange for publication of this decision in the official journal of the european union. (1) oj l 113, 19.5.1995, p. 1. (2) oj l 309, 25.11.2005, p. 15. (3) oj l 141, 5.6.2015, p. 73. (4) oj l 176, 27.6.2013, p. 338. (5) oj l 64, 11.3.2011, p. 1. (6) oj l 359, 16.12.2014, p. 1. (7) oj l 257, 28.8.2014, p. 186. (8) oj l 174, 1.7.2011, p. 1. (9) oj l 83, 22.3.2013, p. 1. (10) oj l 335, 17.12.2009, p. 1. (11) oj l 157, 9.6.2006, p. 87. (12) oj l 158, 27.5.2014, p. 77. (13) oj l 158, 27.5.2014, p. 196. (14) oj l 182, 29.6.2013, p. 19. (15) oj l 156, 16.6.2012, p. 1. (16) oj l 338, 12.12.2012, p. 37. (17) oj l 338, 12.12.2012, p. 41.

name: council decision (eu) 2016/1001 of 20 june 2016 on the position to be adopted on behalf of the european union within the eu-central america association council regarding explanatory notes to article 15 of annex ii to the agreement establishing an association between the european union and its member states, on the one hand, and central america on the other type: decision subject matter: executive power and public service; european construction; america; international trade; tariff policy date published: 2016-06-22 22.6.2016 en official journal of the european union l 164/15 council decision (eu) 2016/1001 of 20 june 2016 on the position to be adopted on behalf of the european union within the eu-central america association council regarding explanatory notes to article 15 of annex ii to the agreement establishing an association between the european union and its member states, on the one hand, and central america on the other the council of the european union, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 207(4) in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) the agreement establishing an association between the european union and its member states, on the one hand, and central america on the other (1) (the agreement), was initialled on 22 march 2011 and signed on 29 june 2012. pursuant to article 353(4) of the agreement, part iv thereof has been applied provisionally since 1 august 2013 between the union, nicaragua, honduras and panama, since 1 october 2013 between those parties and el salvador and costa rica, and since 1 december 2013 between the union, nicaragua, honduras, panama, el salvador and costa rica on the one side and guatemala on the other. (2) article 37 of annex ii to the agreement provides that the parties to the agreement shall agree within the sub-committee on customs, trade facilitation and rules of origin, established in accordance with article 123 of the agreement (the sub-committee), on explanatory notes regarding the interpretation, application and administration of annex ii and recommend their approval by the association council. (3) the sub-committee met on 1 and 2 june 2015 and agreement was reached on explanatory notes to article 15 of annex ii to the agreement on the filling-in and printing of a movement certificate eur.1 (the explanatory notes). (4) as the movement certificate eur.1. set out in appendix 3 to annex ii to the agreement is only a specimen, minor differences might occur in the forms printed by the different authorities. in order to ensure that such differences do not cause difficulties in relation to the acceptance of movement certificates eur.1. and in order to ensure a harmonised interpretation by the competent public authorities of the parties, guidance should be provided on the required content and printing of the movement certificate eur.1. the position to be adopted on the union's behalf within the association council should be based on the attached draft decision, has adopted this decision: article 1 1. the position to be adopted on the union's behalf within the association council regarding explanatory notes to article 15 to annex ii to the agreement, on eur.1 movement certificates, shall be based on the draft decision of the association council attached to this decision. 2. minor technical corrections to the draft decision of the association council may be agreed to by the representatives of the union in the association council without further decision of the council. article 2 the decision of the association council shall be published in the official journal of the european union. article 3 this decision shall enter into force on the date of its adoption. done at luxembourg, 20 june 2016. for the council the president f. mogherini (1) oj l 346, 15.12.2012, p. 3. draft decision no xx/2016 of the eu-central america association council of introducing explanatory notes to article 15 of annex ii (concerning definition of the concept of originating products and methods of administrative cooperation) to the agreement, regarding the movement certificate eur.1 the eu-central america association council, having regard to the agreement establishing an association between the european union and its member states, on the one hand, and central america on the other (the agreement), and in particular article 37 of annex ii thereof, whereas: (1) annex ii to the agreement concerns the definition of the concept of originating products and methods of administrative cooperation. (2) according to article 37 of annex ii to the agreement, the parties shall agree explanatory notes regarding the interpretation, application and administration of annex ii within the sub-committee on customs, trade facilitation and rules of origin and recommend their approval by the association council. (3) as the movement certificate eur.1. set out in appendix 3 to annex ii to the agreement is only a specimen, minor differences might occur in the forms printed by the different authorities. it should be clarified that such differences should not have as a consequence that certificates are rejected. (4) furthermore, in order to ensure that such minor differences do not cause difficulties in relation to the acceptance of movement certificates eur.1. and in order to ensure a harmonised interpretation by the competent public authorities of the parties, guidance should be provided on the required content of the movement certificate eur.1, has adopted this decision: sole article the explanatory notes regarding the movement certificate eur.1 to annex ii (concerning the definition of the concept of originating products and methods of administrative cooperation) to the agreement contained in the annex to this decision are approved. this decision shall enter into force on the day following that of its adoption. done at , for the association council, for the ca party, for the eu party, annex explanatory notes article 15 movement certificate eur.1: forms and filling-in instructions eur.1 serial number the movement certificate eur.1 must bear a serial number to facilitate identification. the serial number is usually composed of letter(s) and numbers. movement certificate eur.1 forms movement certificate eur.1 which vary in wording, depending on the issuing competent public authority, with respect to the specimen contained in appendix 3 (specimens of movement certificate eur.1 and application for a movement certificate eur.1) to annex ii (concerning definition of the concept of originating products and methods of administrative cooperation) to the agreement, may be accepted as proof of origin, if: (a) the variations do not modify the information required in each box; and (b) the competent public authorities of the parties have provided each other the varied specimen of the certificate, through the european commission and notified to the coordinators of part iv of this agreement. box 1: exporter the full details of the exporter of the goods (name, full current address and country in which the export originates) shall be provided. box 2: certificate used in preferential trade between to this end, specify: central america; european union or eu (1); ceuta; melilla; andorra or ad; san marino or sm. box 3: consignee filling in this box is optional. if this box is filled in, the details of the consignee must be provided: name, full current address and country of destination of the goods. box 4: country, group of countries or territory in which the products are considered as originating specify the country, group of countries or territory of origin of the goods: central america; european union or eu (1); ceuta; melilla; andorra or ad; san marino or sm. box 5: country, group of countries or territory of destination specify the country, group of countries or territory of the importing party to which the products are to be delivered: central america; european union or eu (1); ceuta; melilla; andorra or ad; san marino or sm. box 6: transport details filling in this box is optional. if this box is filled in, the means of transport and airway bill or bill of lading numbers, with the names of the respective transport companies are to be indicated. box 7: remarks this box should be filled in: 1. in the case of a certificate issued after export of the goods pursuant to article 16 of annex ii to the agreement, the following is indicated, in one of the languages established in the agreement, in this box: issued retrospectively. additionally, in the case established under article 16.1 (b) of annex ii the number of movement certificate euri that was not accepted at importation for technical reasons, is indicated in this box: eur.1 no . 2. in the case of a duplicate certificate issued pursuant to article 17 of annex ii, the following must be indicated, in one of the languages established in the agreement, in this box: duplicate and the date of issue of the original movement certificate eur.1. 3. in the case of cumulation of origin with bolivia, colombia, ecuador, peru or venezuela, the following must be indicated in this box: cumulation with (name of the country) in accordance with article 3 of annex ii. 4. in the case a product is covered by a rule of origin that is subject to quotas, the following must be indicated in this box: product originating in accordance with appendix 2a of annex ii (concerning definition of the concept of originating products and methods of administrative cooperation). 5. in other cases that may be considered useful to clarify information of the movement certificate eur.1. box 8: item number; marks and numbers; number and kind of packages; description of the goods provide a description of the goods, in accordance with the description provided in the invoice (order or item number; marks and numbering; number and kind of packages pallets, boxes, bags, rolls, barrels, sacks, etc.) a general description of the goods may be provided as long as it is related to the specific description found in the invoice and there is an unambiguous link between the import document and the movement certificate eur.1. in this case, the number of the invoice shall be indicated in this box. in any case, the tariff classification should be indicated at least at a heading level (four digit code) under the harmonized system. if the goods are not packaged, indicate the number of articles or state in bulk as appropriate. the description of the goods must be preceded by an order or item number, without leaving any blank lines or spaces and there should be no blank spaces between the products specified in the certificate. if the box is not completely filled in, a horizontal line must be drawn below the last line of the description and the empty space must be crossed through in such a way that any later additions are impossible. box 9: gross mass (kg) or other measure (litres, m3, etc.) specify the gross mass (kg) or other measure (litres, m3, etc.) of all the goods listed in box 8 or separately for each item (hs heading). box 10: invoices filling in this box is optional. if this box is filled in, indicate the date and invoice number(s). box 11: customs or competent public authority endorsement this box is for the exclusive use of the competent public or customs authority, as appropriate in each country, which issues the certificate. box 12: declaration by the exporter this box is for the exclusive use of the exporter or his authorised representative. it must record the place and date when the certificate was drawn up and it must be signed by the exporter or his authorised representative. the exporter or his authorised representative can sign physically or a party may allow them to sign digitally the eur.1 certificate. box 13: request for verification and box 14: result of verification: these boxes are for the exclusive use of the customs authority or competent public authority in each country, as appropriate, for the purposes of verification. (1) see annex to the movement certificate eur.1 filling in instructions. annex to the movement certificate eur.1 filling in instructions terms referring unequivocally to the union language eu european union (eu) bg ec ( ) cs eu evropsk unie da eu den europ iske union de eu europ ische union el ee en eu european union es ue uni n europea et el euroopa liit fi eu euroopan unioni fr ue union europ enne hr eu europska unija hu eu eur pai uni it ue unione europea lt es europos s junga lv es eiropas savien ba mt ue unjoni ewropea nl eu europese unie pl ue unia europejska pt ue uni o europeia ro ue uniunea european sk e eur pska nia sl eu evropska unija sv eu europeiska unionen

name: council decision (eu) 2016/980 of 14 june 2016 appointing five members and six alternate members proposed by the republic of bulgaria of the committee of the regions type: decision subject matter: europe; eu institutions and european civil service date published: 2016-06-18 18.6.2016 en official journal of the european union l 161/37 council decision (eu) 2016/980 of 14 june 2016 appointing five members and six alternate members proposed by the republic of bulgaria of the committee of the regions the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 305 thereof, having regard to the proposal of the bulgarian government, whereas: (1) on 26 january 2015, 5 february 2015 and 23 june 2015, the council adopted decisions (eu) 2015/116 (1), (eu) 2015/190 (2) and (eu) 2015/994 (3) appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020. (2) five members' seats on the committee of the regions have become vacant following the end of the terms of office of mr vladimir kissiov, mr krassimir kostov, mr madzhid mandadzha, mr krasimir mirev and ms detelina nikolova. (3) five alternate members' seats on the committee of the regions have become vacant following the end of the terms of office of mr stanislav blagov, mr nikolay ivanov, ms dimitranka kamenova, ms anastasiya mladenova and mr emil naidenov. (4) an alternate member's seat has become vacant following the appointment of ms malina edreva audoin as a member of the committee of the regions, has adopted this decision: article 1 the following are hereby appointed to the committee of the regions for the remainder of the current term of office, which runs until 25 january 2020: (a) as members: ms malina edreva audoin, councillor, sofia municipal council, mr rumen iliev guninski, mayor of pravets municipality, ms diana dimitrova ovcharova, mayor of ivaylovgrad municipality, mr stefan nikolov radev, mayor of sliven municipality, mr nikolay jordanov zaychev, mayor of peshtera municipality; and (b) as alternate members: ms lyubka veselinova aleksandrova, mayor of levski municipality, mr georgi aleksandrov chakarov, mayor of polski trambesh municipality, mr dobromir stoykov dobrev, mayor of gorna oryahovitsa municipality, mr emil stanev kabaivanov, mayor of karlovo municipality, ms korneliya dobreva marinova, mayor of lovech municipality, mr georg leonidov spartanski, mayor of pleven municipality. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 14 june 2016. for the council the president a.g. koenders (1) council decision (eu) 2015/116 of 26 january 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 20, 27.1.2015, p. 42). (2) council decision (eu) 2015/190 of 5 february 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 31, 7.2.2015, p. 25). (3) council decision (eu) 2015/994 of 23 june 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 159, 25.6.2015, p. 70).

name: council decision (cfsp) 2016/947 of 14 june 2016 amending joint action 2008/124/cfsp on the european union rule of law mission in kosovo (this designation is without prejudice to positions on status, and is in line with unscr 1244(1999) and the icj opinion on the kosovo declaration of independence.) (eulex kosovo) type: decision subject matter: political framework; eu finance; european construction; organisation of the legal system; europe; politics and public safety date published: 2016-06-15 15.6.2016 en official journal of the european union l 157/26 council decision (cfsp) 2016/947 of 14 june 2016 amending joint action 2008/124/cfsp on the european union rule of law mission in kosovo (*) (eulex kosovo) the council of the european union, having regard to the treaty on european union, and in particular article 28, article 42(4) and article 43(2) thereof, having regard to the proposal from the high representative of the union for foreign affairs and security policy, whereas: (1) on 4 february 2008, the council adopted joint action 2008/124/cfsp (1). (2) on 12 june 2014, the council adopted decision 2014/349/cfsp (2) which amended joint action 2008/124/cfsp and extended it until 14 june 2016. (3) on 11 june 2015, the council adopted decision 2015/901/cfsp (3) amending joint action 2008/124/cfsp, providing a financial reference amount for the period from 15 june 2015 until 14 june 2016. (4) joint action 2008/124/cfsp should be amended to extend the mandate of eulex kosovo until 14 june 2018 and provide a new financial reference amount intended to cover the period from 15 june 2016 until 14 june 2017. (5) nothing in this decision should be understood as prejudicing the independence and the autonomy of the judges and prosecutors. (6) due to the special character of the activities of eulex kosovo in support of the relocated judicial proceedings within a member state, it is appropriate to identify in this decision the amount envisaged to cover the support to the relocated judicial proceedings within a member state and to provide for the implementation of that part of the budget through a grant. (7) eulex kosovo will be conducted in the context of a situation which may deteriorate and could impede the achievement of the objectives of the union's external action as set out in article 21 of the treaty. (8) joint action 2008/124/cfsp should therefore be amended accordingly, has adopted this decision: article 1 joint action 2008/124/cfsp is hereby amended as follows: (1) article 16 is amended as follows: (a) in paragraph 1, the following subparagraphs are added: the financial reference amount intended to cover the expenditure of eulex kosovo from 15 june 2016 until 14 june 2017 shall be eur 63 600 000. out of the amount referred to in the ninth subparagraph, eur 34 500 000 shall cover the expenditure of eulex kosovo for the implementation of its mandate in kosovo from 15 june until 14 december 2016, and eur 29 100 000 shall cover the support to the relocated judicial proceedings within a member state from 15 june 2016 to 14 june 2017. the latter amount shall also retroactively cover expenditure arising from the support to the relocated judicial proceedings as of 1 april 2016. the commission shall sign a grant agreement with a registrar acting on behalf of a registry in charge of the administration of the relocated judicial proceedings for that amount. the rules on grants provided for in regulation (eu, euratom) no 966/2012 of the european parliament and of the council (**) shall apply to this grant agreement. the financial reference amount for the subsequent period for eulex kosovo shall be decided by the council. (**) regulation (eu, euratom) no 966/2012 of the european parliament and of the council of 25 october 2012 on the financial rules applicable to the general budget of the union and repealing council regulation (ec, euratom) no 1605/2002 (oj l 298, 26.10.2012, p. 1).;" (b) paragraph 4 is replaced by the following: 4. except for the amount referred to in the 10th subparagraph of paragraph 1 related to the support to the relocated judicial proceedings within a member state, eulex kosovo shall be responsible for the financial implementation of the mission's budget. for this purpose, eulex kosovo shall sign an agreement with the commission. (2) the second paragraph of article 20 is replaced by the following: it shall expire on 14 june 2018. the council, acting on a proposal from the high representative, and considering complementary sources of funding as well as contributions from other partners, shall take the necessary decisions in order to ensure that eulex kosovo's mandate in support of the relocated judicial proceedings referred to in article 3a and the related necessary financial means shall remain in effect until such time as these judicial proceedings have been concluded. article 2 this decision shall enter into force on the date of its adoption. done at luxembourg, 14 june 2016. for the council the president a.g. koenders (*) this designation is without prejudice to positions on status, and is in line with unscr 1244(1999) and the icj opinion on the kosovo declaration of independence. (1) council joint action 2008/124/cfsp of 4 february 2008 on the european union rules of law mission in kosovo, eulex kosovo (oj l 42, 16.2.2008, p. 92). (2) council decision 2014/349/cfsp of 12 june 2014 amending joint action 2008/124/cfsp on the european union rule of law mission in kosovo, eulex kosovo (oj l 174, 13.6.2014, p. 42). (3) council decision (cfsp) 2015/901 of 11 june 2015 amending joint action 2008/124/cfsp on the european union rule of law mission in kosovo, eulex kosovo (oj l 147, 12.6.2015, p. 21).

name: council decision (eu) 2016/946 of 9 june 2016 establishing provisional measures in the area of international protection for the benefit of sweden in accordance with article 9 of decision (eu) 2015/1523 and article 9 of decision (eu) 2015/1601 establishing provisional measures in the area of international protection for the benefit of italy and greece type: decision subject matter: europe; cooperation policy; migration; international law date published: 2016-06-15 15.6.2016 en official journal of the european union l 157/23 council decision (eu) 2016/946 of 9 june 2016 establishing provisional measures in the area of international protection for the benefit of sweden in accordance with article 9 of decision (eu) 2015/1523 and article 9 of decision (eu) 2015/1601 establishing provisional measures in the area of international protection for the benefit of italy and greece the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 78(3) thereof, having regard to the proposal from the european commission, having regard to the opinion of the european parliament (1), whereas: (1) according to article 78(3) of the treaty on the functioning of the european union (tfeu), in the event of one or more member states being confronted by an emergency situation characterised by a sudden inflow of nationals of third countries, the council, on a proposal from the commission and after consulting the european parliament, may adopt provisional measures for the benefit of the member state(s) concerned. (2) according to article 80 tfeu, the policies of the union in the area of border checks, asylum and immigration and their implementation are to be governed by the principle of solidarity and fair sharing of responsibility between the member states, and union acts adopted in this area are to contain appropriate measures to give effect to this principle. (3) on the basis of article 78(3) tfeu, the council adopted two decisions establishing provisional measures in the area of international protection for the benefit of italy and greece. under council decision (eu) 2015/1523 (2), 40 000 applicants for international protection are to be relocated from italy and from greece to the other member states. under council decision (eu) 2015/1601 (3), 120 000 applicants for international protection are to be relocated from italy and from greece to the other member states. (4) article 9 of decision (eu) 2015/1523 and article 9 of decision (eu) 2015/1601 provide that, in the event of an emergency situation characterised by a sudden inflow of nationals of third countries into a member state, the council, on a proposal from the commission and after consulting the european parliament, may adopt provisional measures for the benefit of the member state concerned, pursuant to article 78(3) tfeu. such measures may include, where appropriate, a suspension of the participation of that member state in the relocation as provided for in those decisions, as well as possible compensatory measures for italy and for greece. (5) sweden faces an emergency situation characterised by a sudden inflow of nationals of third countries into its territory because of a sharp shift in migratory flows. on 8 december 2015, sweden formally requested the suspension of its obligations under decisions (eu) 2015/1523 and (eu) 2015/1601. (6) the considerable increase in irregular border-crossing into the union and in secondary movements across the union has led to a sharp rise in sweden in the number of applications for international protection, mainly from individuals who entered the union via italy and greece. (7) eurostat figures confirm a sharp increase in sweden in the number of applicants for international protection. the number of applicants for international protection increased by more than 60 % from 68 245 applicants for the period from 1 january to 31 october 2014 to 112 040 applicants for the period from 1 january to 31 october 2015. (8) the monthly number of applicants for international protection has recently reached an even higher level: it doubled between august (11 735) and september (24 261), and reached 39 055 in october 2015 (an increase of 61 % from september). (9) sweden had by far the highest number of applicants for international protection per capita in the union in 2015, with 11 503 applicants per million inhabitants. (10) sweden is also facing a difficult situation because of the recent significant increase in the number of unaccompanied minors, with one out of four applicants claiming to be an unaccompanied minor. (11) the current situation has put a very significant strain on the swedish asylum and migration system, with serious practical consequences on the ground as regards reception conditions and the ability of the asylum and migration system to deal with applications. in order to help alleviate the significant pressure with which sweden is confronted, the obligations of sweden as a member state of relocation under decisions (eu) 2015/1523 and (eu) 2015/1601 should be suspended for 1 year. (12) the suspension of sweden's obligations should be complemented, where appropriate, by operational support measures coordinated by the european asylum support office (easo) and by other relevant agencies. (13) sweden should present to the council and to the commission a roadmap setting out the measures that it will take in order to ensure the effectiveness of its asylum and migration system and to resume its obligations under decisions (eu) 2015/1523 and (eu) 2015/1601 once the suspension of its obligations ceases to have effect. (14) since the objectives of this decision cannot be sufficiently achieved by the member states but can rather, by reason of the scale and effects of the action, be better achieved at union level, the union may adopt measures, in accordance with the principle of subsidiarity as set out in article 5 of the treaty on european union (teu). in accordance with the principle of proportionality, as set out in that article, this decision does not go beyond what is necessary in order to achieve those objectives. (15) this decision respects the fundamental rights and observes the principles recognised by the charter of fundamental rights of the european union. (16) in accordance with articles 1 and 2 of protocol no 21 on the position of the united kingdom and ireland in respect of the area of freedom, security and justice, annexed to the teu and to the tfeu, and without prejudice to article 4 of that protocol, those member states are not taking part in the adoption of this decision and are not bound by it or subject to its application. (17) in accordance with articles 1 and 2 of protocol no 22 on the position of denmark, annexed to the teu and to the tfeu, denmark is not taking part in the adoption of this decision and is not bound by it or subject to its application. (18) in view of the urgency of the situation, this decision should enter into force on the day following that of its publication in the official journal of the european union, has adopted this decision: article 1 subject matter this decision establishes provisional measures in the area of international protection for the benefit of sweden, in order to support it in better coping with an emergency situation characterised by a sudden inflow of nationals of third countries. article 2 suspension of obligations under decisions (eu) 2015/1523 and (eu) 2015/1601 the obligations of sweden as a member state of relocation under decisions (eu) 2015/1523 and (eu) 2015/1601 shall be suspended until 16 june 2017. article 3 operational support to sweden in order to enable sweden to better cope with the exceptional pressure on its asylum and migration system, operational support shall be provided to sweden, where appropriate, through relevant activities coordinated by easo and by other relevant agencies. article 4 complementary measures to be taken by sweden by 16 july 2016, sweden shall present to the council and to the commission a roadmap setting out the measures that it will take in order to ensure the effectiveness of its asylum and migration system and to resume its obligations under decisions (eu) 2015/1523 and (eu) 2015/1601 once the suspension referred to in article 2 ceases to have effect. article 5 entry into force this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at luxembourg, 9 june 2016. for the council the president g.a. van der steur (1) opinion of 26 may 2016 (not yet published in the official journal). (2) council decision (eu) 2015/1523 of 14 september 2015 establishing provisional measures in the area of international protection for the benefit of italy and of greece (oj l 239, 15.9.2015, p. 146). (3) council decision (eu) 2015/1601 of 22 september 2015 establishing provisional measures in the area of international protection for the benefit of italy and greece (oj l 248, 24.9.2015, p. 80).

name: council decision (eu) 2016/944 of 6 june 2016 on the conclusion of the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states of the one part, and the republic of korea, of the other part type: decision subject matter: international affairs; organisation of transport; asia and oceania; european construction date published: 2016-06-15 15.6.2016 en official journal of the european union l 157/19 council decision (eu) 2016/944 of 6 june 2016 on the conclusion of the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states of the one part, and the republic of korea, of the other part the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 172, in conjunction with article 218(6)(a) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) in accordance with council decision 2006/700/ec (2), the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states, of the one part, and the republic of korea, of the other part (3) (the agreement), was signed on 9 september 2006 subject to its conclusion at a later date. (2) the agreement is to encourage, facilitate and enhance cooperation between the parties in civil global satellite navigation. (3) the position of the union within the committee established in acoordance with article 14 of the agreement (the committee) is to be adopted by the council, on a proposal from the commission, insofar as the committee is called upon to adopt acts having legal effects or decisions suspending the application of the agreement. (4) in addition, for matters which do not have legal effects to be dealt with by the committee, the commission should coordinate the position of the union with the member states. (5) the agreement should be approved on behalf of the european union, has adopted this decision: article 1 the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states, of the one part, and the republic of korea, of the other part is hereby approved on behalf of the european union. (4) article 2 the president of the council shall designate the person empowered, on behalf of the european union to send the notification, provided for in article 18(1) of the agreement, in order to express the consent of the european union to be bound by the agreement (5) and shall make the following notification: as a consequence of the entry into force of the treaty of lisbon on 1 december 2009, the european union has replaced and succeeded the european community and from that date exercises all rights and assumes all obligations of the european community. therefore, references to the european community in the text of the agreement are to be read as to the european union. article 3 this decision shall enter into force on the date of its adoption. done at luxembourg, 6 june 2016. for the council the president h.g.j. kamp (1) consent of 10 may 2016 (not yet published in the official journal). (2) council decision 2006/700/ec of 1 september 2006 on the signing, on behalf of the community, of the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states, of the one part, and the republic of korea, of the other part (oj l 288, 19.10.2006, p. 30). (3) cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states, of the one part, and the republic of korea, of the other part (oj l 288, 19.10.2006, p. 31). (4) the text has been published in oj l 288, 19.10.2006, p. 31 together with the decision on signature. (5) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: political and security committee decision (cfsp) 2016/938 of 31 may 2016 extending the mandate of the head of mission of the european union csdp mission in mali (eucap sahel mali) (eucap sahel mali/1/2016) type: decision subject matter: africa; international security; european construction; eu institutions and european civil service date published: 2016-06-14 14.6.2016 en official journal of the european union l 155/23 political and security committee decision (cfsp) 2016/938 of 31 may 2016 extending the mandate of the head of mission of the european union csdp mission in mali (eucap sahel mali) (eucap sahel mali/1/2016) the political and security committee, having regard to the treaty on european union, and in particular the third paragraph of article 38 thereof, having regard to council decision 2014/219/cfsp of 15 april 2014 on the european union csdp mission in mali (eucap sahel mali) (1), and in particular article 7(1) thereof, having regard to council decision (cfsp) 2015/76 of 19 january 2015 launching the european union csdp mission in mali (eucap sahel mali) and amending decision 2014/219/cfsp (2), whereas: (1) pursuant to decision 2014/219/cfsp, the political and security committee (psc) is authorised, in accordance with article 38 of the treaty, to take the relevant decisions for the purpose of exercising the political control and strategic direction of the eucap sahel mali mission, including the decision to appoint a head of mission. (2) on 26 may 2014, the psc adopted decision eucap sahel mali/1/2014 (3), appointing mr albrecht conze as head of mission of eucap sahel mali from 26 may 2014 to 14 january 2015. (3) on 14 january 2015, the psc adopted decision (cfsp) 2015/67 (4), extending the mandate of mr albrecht conze as head of mission of eucap sahel mali until 14 june 2015. (4) on 15 april 2015, the psc adopted decision (cfsp) 2015/610 (5), extending the mandate of mr albrecht conze as head of mission of eucap sahel mali until 14 june 2016. (5) the high representative of the union for foreign affairs and security policy has proposed to extend the mandate of mr albrecht conze as head of mission of eucap sahel mali from 15 june 2016 to 14 january 2017, has adopted this decision: article 1 the mandate of mr albrecht conze as head of mission of eucap sahel mali is hereby extended until 14 january 2017. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 31 may 2016. for the political and security committee the chairperson w. stevens (1) oj l 113, 16.4.2014, p. 21. (2) oj l 13, 20.1.2015, p. 5. (3) political and security committee decision eucap sahel mali/1/2014 of 26 may 2014 on the appointment of the head of mission of the european union csdp mission in mali (eucap sahel mali) (oj l 164, 3.6.2014, p. 43). (4) political and security committee decision (cfsp) 2015/67 of 14 january 2015 extending the mandate of the head of mission of the european union csdp mission in mali (eucap sahel mali) (eucap sahel mali/1/2015) (oj l 11, 17.1.2015, p. 72). (5) political and security committee decision (cfsp) 2015/610 of 15 april 2015 extending the mandate of the head of mission of the european union csdp mission in mali (eucap sahel mali) (eucap sahel mali/2/2015) (oj l 101, 18.4.2015, p. 60).

name: council decision (cfsp) 2016/917 of 9 june 2016 repealing decision 2010/656/cfsp renewing the restrictive measures against c 'te d'ivoire type: decision subject matter: criminal law; international security; international affairs; africa; international trade date published: 2016-06-10 10.6.2016 en official journal of the european union l 153/38 council decision (cfsp) 2016/917 of 9 june 2016 repealing decision 2010/656/cfsp renewing the restrictive measures against c 'te d'ivoire the council of the european union, having regard to the treaty on european union, and in particular article 29 thereof, having regard to the proposal from the high representative of the union for foreign affairs and security policy, whereas: (1) on 15 october 2010, the united nations security council adopted united nations security council resolution (unscr) 1946 (2010) which renewed the measures imposed against c 'te d'ivoire. (2) on 29 october 2010, the council adopted decision 2010/656/cfsp (1) renewing the restrictive measures against c 'te d'ivoire. (3) on 28 april 2016, the united nations security council adopted unscr 2283 (2016), terminating, with immediate effect, all un sanctions against c 'te d'ivoire. (4) in the light of unscr 2283 (2016) as well as recent developments in c 'te d'ivoire, the council has decided to lift also the entirety of the union's own, additional restrictive measures against that country. (5) decision 2010/656/cfsp should therefore be repealed, has adopted this decision: article 1 decision 2010/656/cfsp is repealed. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at luxembourg, 9 june 2016. for the council the president g.a. van der steur (1) council decision 2010/656/cfsp of 29 october 2010 renewing the restrictive measures against c 'te d'ivoire (oj l 285, 30.10.2010, p. 28).

name: commission implementing decision (eu) 2016/887 of 2 june 2016 amending annex ii to decision 2007/777/ec as regards the list of third countries or parts thereof from which the introduction into the union of meat products and treated stomachs, bladders and intestines is authorised (notified under document c(2016) 3215) (text with eea relevance) type: decision_impl subject matter: america; foodstuff; means of agricultural production; tariff policy; trade; international trade; agricultural policy; agricultural activity date published: 2016-06-04 4.6.2016 en official journal of the european union l 148/6 commission implementing decision (eu) 2016/887 of 2 june 2016 amending annex ii to decision 2007/777/ec as regards the list of third countries or parts thereof from which the introduction into the union of meat products and treated stomachs, bladders and intestines is authorised (notified under document c(2016) 3215) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 2002/99/ec of 16 december 2002 laying down the animal health rules governing the production, processing, distribution and introduction of products of animal origin for human consumption (1), and in particular the introductory phrase of article 8, the first subparagraph of point 1 of article 8, point (4) of article 8 and article 9(4)(c) thereof, whereas: (1) commission decision 2007/777/ec (2) lays down, inter alia, the conditions for the introduction into the union of consignments of certain meat products and of treated stomachs, bladders and intestines which have undergone one of the treatments laid down in part 4 of annex ii thereto (the commodities), including a list of third countries or parts thereof from which the introduction into the union of the commodities is authorised. (2) where third countries are regionalised for the purpose of being listed in decision 2007/777/ec the regionalised parts of their territory are listed in part 1 of annex ii thereto. (3) part 2 of annex ii to decision 2007/777/ec sets out the list of third countries or parts thereof which are authorised for the introduction into the union of the commodities, provided that they have undergone a relevant treatment referred to in that part of annex ii. those treatments are aimed at eliminating certain animal health risks linked to the specific commodities. part 4 of that annex sets out a non-specific treatment a and specific treatments b to f listed in descending order of severity of the animal health risk linked to the specific commodity. (4) argentina and brazil have requested to be listed in part 2 of annex ii to decision 2007/777/ec as authorised for the introduction of commodities of domestic bovine animals from all parts of their territory that are already authorised for introduction into the union of fresh meat of the same species of animals as described in part 1 of annex ii to commission regulation (eu) no 206/2010 (3). (5) as the commodities to be introduced into the union must undergo a treatment set out in part 4 of annex ii to decision 2007/777/ec, the description of the regionalised territories of argentina and brazil for the commodities referred to as ar-1, ar-2 and br-2 in part 1 of annex ii to decision 2007/777/ec, should be amended in order to be aligned with the regionalisation applied to argentina and brazil for the introduction into the union of fresh meat of domestic bovine animals as described in part 1 of annex ii to regulation (eu) no 206/2010. (6) in addition, brazil has requested a new area of brazil to be authorised for the introduction into the union of commodities which have been obtained from domestic bovine animals and subjected to the specific treatment b set out in part 4 of annex ii to decision 2007/777/ec. considering that that area is part of the territory of brazil which is recognised as free of foot-and-mouth disease (fmd) (4) without vaccination by the world organisation for animal health (the oie) and the application of the specific treatment b to the commodities concerned, that area should be authorised for the introduction of the commodities into the union. (7) therefore that part of the territory of brazil should be listed in part 1 of annex ii to decision 2007/777/ec as br-4. consignments of commodities obtained from domestic bovine animals from the part of brazil described as br-4, should be authorised for introduction into the union, subject to the specific treatment b as set out in part 4 of that annex and therefore br-4 should be listed in part 2 of that annex. (8) parts 1 and 2 of annex ii to decision 2007/777/ec should therefore be amended accordingly. (9) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 annex ii to decision 2007/777/ec is amended in accordance with the annex to this decision. article 2 this decision is addressed to the member states. done at brussels, 2 june 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 18, 23.1.2003, p. 11. (2) commission decision 2007/777/ec of 29 november 2007 laying down the animal and public health conditions and model certificates for imports of certain meat products and treated stomachs, bladders and intestines for human consumption from third countries and repealing decision 2005/432/ec (oj l 312, 30.11.2007, p. 49). (3) commission regulation (eu) no 206/2010 of 12 march 2010 laying down lists of third countries, territories or parts thereof authorised for the introduction into the european union of certain animals and fresh meat and the veterinary certification requirements (oj l 73, 20.3.2010, p. 1). (4) http://www.oie.int/en/animal-health-in-the-world/official-disease-status/fmd/list-of-fmd-free-members/ annex annex ii to decision 2007/777/ec is amended as follows: (1) in part 1, the entries for argentina and brazil are replaced by the following: argentina ar 01/2004 whole country. ar-1 02/2016 the territories defined in ar-1 and ar-3 in part 1 of annex ii to regulation (eu) no 206/2010. ar-2 02/2016 the territories defined in ar-2 in part 1 of annex ii to regulation (eu) no 206/2010. brazil br 01/2004 whole country. br-1 01/2005 states of rio grande do sul, santa catarina, paran , s o paulo and mato grosso do sul. br-2 02/2016 the territories defined in br-1, br-2, br-3 and br-4 in part 1 of annex ii to regulation (eu) no 206/2010. br-3 01/2005 states of goi s, minas gerais, mato grosso, mato grosso do sul, paran , rio grande do sul, santa catarina and s o paulo. br-4 01/2016 distrito federal, states of acre, rond 'nia, par , tocantins, maranh o, piau , bahia, cear , rio grande do norte, para ba, pernambuco, alagoas and sergipe. (2) in part 2, the following row is added to the entry for brazil: brazil br-4 b xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

name: commission decision (eu, euratom) 2016/883 of 31 may 2016 on implementing rules for standard security measures, alert states and management of crisis situations in the commission pursuant to article 21 of decision (eu, euratom) 2015/443 on security in the commission type: decision subject matter: economic policy; eu institutions and european civil service; politics and public safety; international security; organisation of work and working conditions date published: 2016-06-03 3.6.2016 en official journal of the european union l 146/25 commission decision (eu, euratom) 2016/883 of 31 may 2016 on implementing rules for standard security measures, alert states and management of crisis situations in the commission pursuant to article 21 of decision (eu, euratom) 2015/443 on security in the commission the european commission, having regard to the treaty on the functioning of the european union, having regard to the treaty establishing the european atomic energy community, having regard to commission decision (eu, euratom) 2015/443 of 13 march 2015 on security in the commission (1), and in particular article 21 thereof, whereas: (1) the objective of implementing rules for standard security measures, alert states and management of crisis situations is to provide appropriate levels of protection for physical integrity of persons, premises or other assets commensurate with identified risks, and ensuring efficient and timely delivery of security. (2) the security alert state system for the commission introduced by commission decision 2007/65/ec (2) needs to be reviewed and simplified in order to render it more flexible and effective as a response to threats to security. (3) the establishment of the european external action service (eeas) as a functionally autonomous body of the union requires an amendment of the current rules on alert states with regard to the duty of care towards commission staff. the eeas is responsible for the security and safety in european union delegation premises and the staff working there. (4) this decision is subject to an empowerment decision of the commission in favour of the member of the commission responsible for security matters, in full compliance with the internal rules of procedure as referred to in article 21 of decision (eu, euratom) 2015/443. (5) decision 2007/65/ec should therefore be repealed, has adopted this decision: chapter 1 general provisions article 1 definition in addition to the definitions set out in article 1 of (eu, euratom) 2015/443 the following definition applies: alert state means a set of security measures intended to provide a specific level of protection of the physical integrity of persons, premises or other assets in the commission commensurate with the threats to security. article 2 subject matter and scope 1. this decision sets out alert state measures in compliance with decision (eu, euratom) 2015/443 in anticipation of or in response to threats and incidents affecting security in the commission and measures required for managing crisis situations. 2. a security system comprising standard security measures and three alert states shall apply in the premises of the commission. the standard security measures and the alert states shall be identified by colour codes: white corresponds to the standard security measures; yellow, orange and red correspond to increased threat levels. 3. this decision shall apply to all commission departments and in all premises of the commission situated inside and outside the european union subject to responsibilities referred to in article 4. article 3 alert state levels 1. when no particular threat or incident affecting the physical integrity of persons, premises or other assets has been identified in the commission, standard white security measures shall apply. they shall be used on a daily basis and are designed to ensure an appropriate level of security. 2. when threats are made or an incident affecting the physical integrity of persons, premises or other assets occurs that may have an adverse effect on the commission or its functioning, the yellow alert state shall apply. 3. when threats are made affecting the physical integrity of persons, premises or other assets aimed specifically at the commission or its functioning, even though no definite target or time of attack has been identified, the orange alert state shall apply. 4. when threats of an imminent attack are made, affecting the physical integrity of persons, premises or other assets, aimed specifically at the commission or its functioning, the red alert state shall apply. article 4 responsibilities 1. the member of the commission responsible for security: (a) shall decide in consultation with other european institutions and other relevant european entities on changing of the alert state level; (b) shall decide upon advice from the directorate-general for human resources and security which of the specific measures of the alert state are to be implemented in light of the current security situation and which additional measures need to be taken; (c) shall inform the president and the other members of the commission of any decision taken pursuant to this article. 2. the directorate-general for human resources and security: (a) shall be responsible for the implementation of this decision in commission premises situated in the member states of the european union; (b) shall ensure external liaison as set out in article 18(2) of (eu, euratom) 2015/443 in case of threats or incidents affecting physical integrity of persons, premises or other assets in the commission; (c) in case of urgency shall take the decisions set out in paragraph 1(a) and (b). the directorate-general for human resources and security shall, as soon as possible after having taken those measures, inform the member of the commission responsible for security of the measures and the reasons for them; (d) shall continuously monitor threats and risks to security. 3. the directorate-general for humanitarian aid and civil protection shall be responsible for the implementation of this decision in all its offices located in third countries. 4. the directorate-general for communication shall be responsible for the implementation of this decision in the commission representations and regional representations. 5. the directorate-general for the joint research centre shall be responsible for the implementation of this decision in the commission joint research centre's premises. 6. the above listed directorates-general may take additional security measures in case of urgency in compliance with the present decision and (eu, euratom) 2015/443. the directorate-general for human resources and security shall be informed of these measures without delay. article 5 measures 1. the directorate-general for human resources and security shall take and implement security measures in accordance with (eu, euratom) 2015/443. a non-exhaustive list of measures shall be prepared and implemented by the directorate-general for human resources and security. 2. the alert state measures shall be in strict compliance with decision (eu, euratom) 2015/443. the alert states levels shall be defined in close cooperation with the competent services of other european institutions and other relevant european entities and with member states hosting commission premises. 3. the alert state levels shall be expressed in the public areas through a colour-coded signalling system and the colour varies according to the alert state level. 4. security measures white shall be detailed in a security notice in full compliance with article 21(2) of (eu, euratom) 2015/443. chapter 2 miscellaneous and final provisions article 6 transparency this decision shall be brought to the attention of commission staff and of all individuals to whom it applies. article 7 repeal decision 2007/65/ec is repealed. article 8 entry into force this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 31 may 2016. for the commission, on behalf of the president, kristalina georgieva vice-president (1) oj l 72, 17.3.2015, p. 41. (2) commission decision 2007/65/ec of 15 december 2006, establishing the commission's standard security measures and alert states and amending its rules of procedure as regards operational procedures for management of crisis situations (oj l 32, 6.2.2007, p. 144).

name: council decision (eu) 2016/870 of 24 may 2016 on the conclusion, on behalf of the european union, of the protocol setting out the fishing opportunities and financial contribution provided for in the fisheries partnership agreement between the european community and the islamic republic of mauritania for a period of four years type: decision subject matter: africa; international affairs; fisheries; european construction date published: 2016-06-02 2.6.2016 en official journal of the european union l 145/1 council decision (eu) 2016/870 of 24 may 2016 on the conclusion, on behalf of the european union, of the protocol setting out the fishing opportunities and financial contribution provided for in the fisheries partnership agreement between the european community and the islamic republic of mauritania for a period of four years the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 43, in conjunction with article 218(6), second subparagraph, point (a) and article 218(7) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) on 30 november 2006, the council adopted regulation (ec) no 1801/2006 on the conclusion of the fisheries partnership agreement between the european community and the islamic republic of mauritania (2) (the partnership agreement). (2) the protocol setting out the fishing opportunities and financial contribution provided for in the partnership agreement expired on 16 december 2014. (3) the union and the islamic republic of mauritania negotiated a new protocol (3) to the partnership agreement (the protocol). (4) the protocol was signed in accordance with decision (eu) 2015/2191 (4) and is to be provisionally applied from 16 november 2015. (5) article 10 of the partnership agreement establishes a joint committee which is responsible for monitoring the application of the partnership agreement and ensuring that it is implemented. furthermore, in accordance with the protocol, the joint committee may approve certain modifications to the protocol. in order to facilitate the approval of such modifications, the commission should be empowered, subject to specific conditions, to approve these modifications under a simplified procedure. (6) the protocol should be approved, has adopted this decision: article 1 the protocol setting out the fishing opportunities and financial contribution provided for in the fisheries partnership agreement between the european community and the islamic republic of mauritania for a period of four years is hereby approved on behalf of the union (5). article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 17 of the protocol. article 3 subject to the provisions and conditions laid down in the annex to this decision, the commission shall be empowered, on behalf of the union, to approve, within the joint committee, modifications to the protocol. article 4 this decision shall enter into force on the date of its adoption. done at brussels, 24 may 2016. for the council the president a.g. koenders (1) consent of 10 may 2016 (not yet published in the official journal). (2) council regulation (ec) no 1801/2006 of 30 november 2006 on the conclusion of the fisheries partnership agreement between the european community and the islamic republic of mauritania (oj l 343, 8.12.2006, p. 1). (3) protocol setting out the fishing opportunities and financial contribution provided for in the fisheries partnership agreement between the european community and the islamic republic of mauritania for a period of four years (oj l 315, 1.12.2015, p. 3). (4) council decision (eu) 2015/2191 of 10 november 2015 on the signing, on behalf of the european union, and provisional application of the protocol setting out the fishing opportunities and financial contribution provided for in the fisheries partnership agreement between the european community and the islamic republic of mauritania for a period of four years (oj l 315, 1.12.2015, p. 1). (5) the protocol has been published in oj l 315 of 1.12.2015 together with the decision on its signature. annex scope of the empowerment and procedure for the establishment of the union position in the joint committee 1. the commission shall be authorised to negotiate with the islamic republic of mauritania and, where appropriate and subject to complying with point 3 of this annex, agree on modifications to the protocol in respect of the following issues: (a) review of fishing opportunities in accordance with articles 5 and 6 of the protocol; (b) decision on the modalities of the sectoral support in accordance with article 3 and annex 2 of the protocol; (c) conditions governing fishing activities in accordance with articles 5 and 6 of the protocol. 2. in the joint committee, the union shall: (a) act in accordance with the objectives pursued by the union within the framework of the common fisheries policy; (b) follow the council conclusions of 19 march 2012 on a communication on the external dimension of the common fisheries policy; (c) promote positions that are consistent with the relevant rules adopted by regional fisheries management organisations. 3. when a decision on modifications to the protocol referred to in point 1 is intended to be adopted during a joint committee meeting, the necessary steps shall be taken so as to ensure that the position to be expressed on behalf of the union takes account of the latest statistical, biological and other relevant information transmitted to the commission. to this effect and based on that information, a document setting out the particulars of the proposed union position shall be transmitted by the commission services, in sufficient time before the relevant joint committee meeting, to the council or to its preparatory bodies for consideration and approval. in respect of the issues referred to in point 1(a), the approval of the envisaged union position by the council shall require a qualified majority of votes. in the other cases, the union position envisaged in the preparatory document shall be deemed to be agreed, unless a number of member states equivalent to a blocking minority objects during a meeting of the council's preparatory body or within 20 days from receipt of the preparatory document, whichever occurs earlier. in the case of such objection, the matter shall be referred to the council. if, in the course of further meetings, including on the spot, it is impossible to reach an agreement in order for the union position to take account of new elements, the matter shall be referred to the council or its preparatory bodies. 4. the commission is invited to take, in due time, all steps necessary as a follow up to the decision of the joint committee, including, where appropriate, publication of the relevant decision in the official journal of the european union and the submission of any proposal necessary for the implementation of that decision.

name: council decision (eu) 2016/878 of 30 may 2016 appointing a member, proposed by malta of the committee of the regions type: decision subject matter: europe; eu institutions and european civil service date published: 2016-06-02 2.6.2016 en official journal of the european union l 145/48 council decision (eu) 2016/878 of 30 may 2016 appointing a member, proposed by malta of the committee of the regions the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 305 thereof, having regard to the proposal of the maltese government, whereas: (1) on 26 january 2015, 5 february 2015 and 23 june 2015, the council adopted decisions (eu) 2015/116 (1), (eu) 2015/190 (2) and (eu) 2015/994 (3) appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020. (2) a member's seat on the committee of the regions has become vacant following the end of the mandate on the basis of which mr samuel azzopardi (mayor of rabat, gozo) was proposed, has adopted this decision: article 1 the following is hereby appointed as a member of the committee of the regions for the remainder of the current term of office, which runs until 25 january 2020: dr samuel azzopardi, councillor, rabat citta victoria, local council, gozo (change of mandate). article 2 this decision shall enter into force on the date of its adoption. done at brussels, 30 may 2016. for the council the president j. van rijn (1) council decision (eu) 2015/116 of 26 january 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 20, 27.1.2015, p. 42). (2) council decision (eu) 2015/190 of 5 february 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 31, 7.2.2015, p. 25). (3) council decision (eu) 2015/994 of 23 june 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 159, 25.6.2015, p. 70).

name: council decision (eu) 2016/838 of 23 may 2016 on the conclusion, on behalf of the european union, of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and georgia, of the other part type: decision subject matter: european construction; international affairs; europe date published: 2016-05-28 28.5.2016 en official journal of the european union l 141/26 council decision (eu) 2016/838 of 23 may 2016 on the conclusion, on behalf of the european union, of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and georgia, of the other part the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 217, in conjunction with article 218(6)(a) and the second subparagraph of article 218(8) thereof, as well as article 218(7) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) on 10 may 2010 the council authorised the commission to open negotiations with georgia for the conclusion of a new agreement between the union and georgia to replace the partnership and cooperation agreement (2). (2) those negotiations were successfully finalised, and the association agreement between the european union and the european atomic energy community and their member states, of the one part, and georgia, of the other part (the agreement) was initialled on 29 november 2013. (3) in accordance with council decision 2014/494/eu (3), the agreement was signed on 27 june 2014, subject to its conclusion at a later date. (4) pursuant to article 218(7) of the treaty on the functioning of the european union, it is appropriate for the council to authorise the commission to approve modifications to the agreement to be adopted by the association committee in trade configuration, as set out in article 408(4) of the agreement, as proposed by the geographical indications sub-committee pursuant to article 179 of the agreement. (5) it is appropriate to set out the relevant procedures for the protection of geographical indications which are given protection pursuant to the agreement. (6) the agreement should not be construed as conferring rights or imposing obligations which can be directly invoked before union or member state courts and tribunals. (7) the agreement should be approved, has adopted this decision: article 1 the association agreement between the european union and the european atomic energy community and their member states, of the one part, and georgia, of the other part (the agreement), is hereby approved on behalf of the union (4). article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 431(1) of the agreement (5). article 3 for the purposes of article 179 of the agreement, modifications to the agreement through decisions of the geographical indications sub-committee shall be approved by the commission on behalf of the union. where interested parties cannot reach agreement following objections relating to a geographical indication, the commission shall adopt a position on the basis of the procedure laid down in article 57(2) of regulation (eu) no 1151/2012 of the european parliament and of the council (6). article 4 1. a name protected under sub-section 3 geographical indications of chapter 9 of title iv of the agreement may be used by any operator marketing agricultural products, foodstuffs, wines, aromatised wines or spirits conforming to the corresponding specification. 2. in accordance with article 175 of the agreement, the member states and the institutions of the union shall enforce the protection provided for in articles 170 to 174 of the agreement, including at the request of an interested party. article 5 the agreement shall not be construed as conferring rights or imposing obligations which can be directly invoked before union or member state courts and tribunals. article 6 this decision shall enter into force on the day of its adoption. done at brussels, 23 may 2016. for the council the president f. mogherini (1) consent given on the 18 december 2014 (not yet published in the official journal). (2) partnership and cooperation agreement between the european communities and their member states, of the one part, and georgia, of the other part (oj l 205, 4.8.1999, p. 3). (3) council decision 2014/494/eu of 16 june 2014 on the signing, on behalf of the european union, and provisional application of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and georgia, of the other part (oj l 261, 30.8.2014, p. 1). (4) the agreement has been published in the official journal of the european union (oj l 261, 30.8.2014, p. 4) together with the decision on its signature. (5) the date of the entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council. (6) regulation (eu) no 1151/2012 of the european parliament and of the council of 21 november 2012 on quality schemes for agricultural products and foodstuffs (oj l 343, 14.12.2012, p. 1).

name: council decision (eu) 2016/839 of 23 may 2016 on the conclusion, on behalf of the european union, of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part type: decision subject matter: european construction; international affairs; europe date published: 2016-05-28 28.5.2016 en official journal of the european union l 141/28 council decision (eu) 2016/839 of 23 may 2016 on the conclusion, on behalf of the european union, of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 217, in conjunction with article 218(6)(a) and the second subparagraph of article 218(8) thereof, as well as article 218(7) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) on 15 june 2009, the council authorised the commission to open negotiations with the republic of moldova for the conclusion of a new agreement between the union and the republic of moldova to replace the partnership and cooperation agreement (2). (2) those negotiations were successfully finalised and the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part (the agreement), was initialled on 29 november 2013. (3) in accordance with council decision 2014/492/eu (3), the agreement was signed on 27 june 2014, subject to its conclusion at a later date. (4) pursuant to article 218(7) of the treaty on the functioning of the european union, it is appropriate for the council to authorise the commission to approve modifications to the agreement to be adopted by the association committee in trade configuration, as set out in article 438(4) of the agreement, as proposed by the geographical indications sub-committee pursuant to article 306 of the agreement. (5) it is appropriate to set out the relevant procedures for the protection of geographical indications which are given protection pursuant to the agreement. (6) the agreement should not be construed as conferring rights or imposing obligations which can be directly invoked before union or member state courts and tribunals. (7) the agreement should be approved, has adopted this decision: article 1 the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part (the agreement), is hereby approved on behalf of the union (4). article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 464(1) of the agreement (5). article 3 for the purposes of article 306 of the agreement, modifications to the agreement through decisions of the geographical indications sub-committee shall be approved by the commission on behalf of the union. where interested parties cannot reach agreement following objections relating to a geographical indication, the commission shall adopt a position on the basis of the procedure laid down in article 57(2) of regulation (eu) no 1151/2012 of the european parliament and of the council (6). article 4 1. a name protected under sub-section 3 geographical indications of chapter 9 of title v of the agreement may be used by any operator marketing agricultural products, foodstuffs, wines, aromatised wines or spirits conforming to the corresponding specification. 2. in accordance with article 301 of the agreement, the member states and the institutions of the union shall enforce the protection provided for in articles 297 to 300 of the agreement, including at the request of an interested party. article 5 the agreement shall not be construed as conferring rights or imposing obligations which can be directly invoked before union or member state courts and tribunals. article 6 this decision shall enter into force on the day of its adoption. done at brussels, 23 may 2016. for the council the president f. mogherini (1) consent given on the 13 november 2014 (not yet published in the official journal). (2) partnership and cooperation agreement between the european communities and their member states and the republic of moldova (oj l 181, 24.6.1998, p. 3). (3) council decision 2014/492/eu of 16 june 2014 on the signing, on behalf of the european union, and provisional application of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part (oj l 260, 30.8.2014, p. 1). (4) the agreement has been published in the official journal of the european union (oj l 260, 30.8.2014, p. 3) together with the decision on its signature. (5) the date of the entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council. (6) regulation (eu) no 1151/2012 of the european parliament and of the council of 21 november 2012 on quality schemes for agricultural products and foodstuffs (oj l 343, 14.12.2012, p. 1).

name: decision (eu, euratom) 2016/847 of the representatives of the governments of the member states of 24 may 2016 appointing a judge to the general court type: decision subject matter: eu institutions and european civil service date published: 2016-05-28 28.5.2016 en official journal of the european union l 141/77 decision (eu, euratom) 2016/847 of the representatives of the governments of the member states of 24 may 2016 appointing a judge to the general court the representatives of the governments of the member states of the european union, having regard to the treaty on european union, and in particular article 19 thereof, having regard to the treaty on the functioning of the european union, and in particular articles 254 and 255 thereof, having regard to the treaty establishing the european atomic energy community, and in particular article 106a(1) thereof, whereas: (1) the terms of office of 14 judges of the general court are due to expire on 31 august 2016. appointments should therefore be made for the period from 1 september 2016 to 31 august 2022. (2) it has been proposed that the term of office of mr lauri madise should be renewed. (3) the panel set up by article 255 of the treaty on the functioning of the european union has given an opinion on the suitability of mr lauri madise to perform the duties of judge of the general court, have adopted this decision: article 1 mr lauri madise is hereby appointed judge of the general court for the period from 1 september 2016 to 31 august 2022. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 24 may 2016. the president p. de gooijer

name: council decision (eu) 2016/845 of 23 may 2016 on the position to be adopted on behalf of the european union within the joint committee established by the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part, in relation to the adoption of the rules of procedure of the joint committee, and the establishment of specialised working groups and the adoption of their terms of reference type: decision subject matter: politics and public safety; international affairs; european construction; asia and oceania; eu institutions and european civil service date published: 2016-05-28 28.5.2016 en official journal of the european union l 141/66 council decision (eu) 2016/845 of 23 may 2016 on the position to be adopted on behalf of the european union within the joint committee established by the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part, in relation to the adoption of the rules of procedure of the joint committee, and the establishment of specialised working groups and the adoption of their terms of reference the council of the european union, having regard to the treaty on the functioning of the european union, and in particular articles 207 and 212 in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part (1) (the agreement) entered into force on 1 june 2014. (2) in order to contribute to the effective implementation of the agreement, its institutional framework should be completed as soon as possible through the adoption by the joint committee of its own rules of procedure. (3) in accordance with article 44 of the agreement, a joint committee was established, in order to ensure, inter alia, the proper functioning and implementation of the agreement (the joint committee). (4) in order to contribute to the effective implementation of the agreement, the rules of procedure of the joint committee should be adopted. (5) in order to allow for expert level discussions on the key areas falling within the scope of the agreement, specialised working groups may be established. (6) therefore, the position of the union within the joint committee as regards the adoption of the rules of procedure of the joint committee and the establishment of specialised working groups should be based on the attached draft decisions of the joint committee, has adopted this decision: article 1 1. the position to be adopted on behalf of the european union within the joint committee set up under article 44 of the agreement in relation to: (a) the adoption of the rules of procedure of the joint committee; and (b) the establishment of specialised working groups and the adoption of their terms of reference; shall be based on the draft decisions of the joint committee attached to this decision. 2. minor changes to the draft decisions may be agreed to by the representatives of the union in the joint committee without further decision of the council. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 23 may 2016. for the council the president f. mogherini (1) council decision 2014/278/eu of 12 may 2014 on the conclusion of the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part, with the exception of matters related to readmission (oj l 145, 16.5.2014, p. 1). draft decision no 1/2016 of the eu-republic of korea joint committee of adopting its rules of procedure the eu-republic of korea joint committee, having regard to the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part (the agreement), and in particular article 44 thereof, whereas: (1) the agreement entered into force on 1 june 2014. (2) in order to contribute to the effective implementation of the agreement, the rules of procedure of the joint committee should be adopted, has adopted this decision: sole article the rules of procedure of the joint committee, as set out in the annex to this decision, are hereby adopted. done at , for the eu-republic of korea joint committee the chair annex rules of procedure of the joint committee article 1 composition and chair 1. the joint committee, established in accordance with article 44 of the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part (the agreement), shall perform its tasks as provided for in article 44 of the agreement. 2. the joint committee shall be composed of representatives of both parties at the appropriate level. 3. the joint committee shall be chaired alternately by each of the parties, for a period of one calendar year. the high representative of the union for foreign affairs and security policy or the minister of foreign affairs of the republic of korea shall chair the joint committee. the chair can delegate her or his authority. 4. the first period shall begin on the date of the first joint committee meeting and end on 31 december of the same year. article 2 meetings 1. the joint committee shall normally meet once every year. the meetings of the joint committee shall be convened by the chair and shall be held alternately in brussels and seoul, on a date fixed by mutual agreement. extraordinary meetings of the joint committee may be held at the request of either party, if the parties so agree. 2. the joint committee shall normally meet at the level of senior official, unless otherwise agreed by the parties. article 3 publicity unless otherwise decided, meetings of the joint committee shall not be public. article 4 participants 1. before each meeting, the chair shall be informed, through the secretariat, of the intended composition of the delegation of each party. 2. where appropriate and by mutual agreement between the parties, experts or representatives of other bodies may be invited to attend the meetings of the joint committee as observers or in order to provide information on a particular subject. article 5 secretariat a representative of the european external action service and a representative of the ministry of foreign affairs of the republic of korea shall act jointly as secretaries of the joint committee. all communications to and from the chair of the joint committee shall be forwarded to the secretaries. correspondence to and from the chair of the joint committee may be by any written means, including electronic mail. article 6 agendas for meetings 1. the chair shall draw up a provisional agenda for each meeting. the provisional agenda shall be forwarded, together with the relevant documents, to the other party no later than 15 days before the start of the meeting. 2. the provisional agenda shall include items submitted to the chair no later than 21 days before the beginning of the meeting. 3. the agenda shall be adopted by the joint committee at the beginning of each meeting. items other than those on the provisional agenda may be placed on the agenda if the two parties so agree. 4. the chair may, in agreement with the two parties, shorten the time limits referred to in paragraph 1 in order to take account of the requirements of a particular case. article 7 minutes 1. draft minutes of each meeting shall be drawn up jointly by the two secretaries, normally within 30 calendar days from the date of the meeting. the draft minutes shall be based on a summing up by the chair of the conclusions arrived at by the joint committee. 2. the minutes shall be approved by both parties within 45 calendar days of the date of the meeting or by any date agreed by the parties. once there is agreement on the draft minutes, two original copies shall be signed by the chair and by the secretaries. each party shall receive one original copy. article 8 deliberations 1. when the joint committee adopts decisions or recommendations, such acts shall be entitled decision or recommendation respectively, followed by a serial number, the date of their adoption and a description of the subject matter. each decision shall state the date of its entry into force. decisions and recommendations of the joint committee shall be made by mutual agreement of the parties. 2. the joint committee may take decisions or make recommendations by written procedure if both parties so agree. by mutual agreement of the parties, a deadline may be foreseen for the completion of the written procedure, at the end of which the chair of the joint committee may declare, unless any of the parties communicates the contrary, that a mutual agreement of the parties has been reached. 3. decisions and recommendations adopted by the joint committee shall be authenticated by two original copies signed by the chair of the joint committee. 4. each party may decide on the publication of the decisions and recommendations of the joint committee in its respective official publication. article 9 correspondence 1. correspondence addressed to the joint committee shall be directed to one of the secretaries, who will in turn inform the other secretary. 2. the secretariat shall ensure that correspondence addressed to the joint committee is forwarded to the chair and circulated, where appropriate, as documents referred to in article 10 of these rules of procedure. 3. correspondence from the chair shall be sent to the parties by the secretariat and circulated, where appropriate, as documents referred to in article 10 of these rules of procedure. article 10 documents 1. where the deliberations of the joint committee are based on written supporting documents, such documents shall be numbered and circulated by the secretariat to the members. 2. each secretary shall be responsible for circulating the documents to the appropriate members of her or his side in the joint committee and systematically copying the other secretary. article 11 expenses 1. each party shall meet any expenses it incurs as a result of participating in the meetings of the joint committee with regard to staff, travel, and subsistence expenditure as well as postal and telecommunications expenditure. 2. expenditure in connection with the organisation of meetings and reproduction of documents shall be borne by the party hosting the meeting. article 12 amendment of rules of procedure these rules of procedure may be amended by mutual agreement of the parties, in accordance with article 8. article 13 specialised working groups 1. the joint committee may decide to set up further specialised working groups to assist it in carrying out its duties. 2. the joint committee may decide to abolish any existing specialised working group, to define or amend its terms of reference or to set up further specialised working groups. 3. the specialised working groups shall report to the joint committee after each of their meetings. 4. the specialised working groups shall not have any decision-making power but may submit recommendations to the joint committee. draft decision no 2/2016 of the eu-republic of korea joint committee of on the establishment of specialised working groups and the adoption of their terms of reference the eu-republic of korea joint committee, having regard to the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part (the agreement), and in particular articles 44 thereof, and to article 13 of the rules of procedure of the joint committee, whereas: (1) in order to allow for expert level discussions on the key areas falling within the scope of the agreement, specialised working groups should be established. upon further agreement of the parties both the list of specialised working groups and the scope of the individual specialised working groups can be modified. (2) pursuant to article 13 of the rules of procedure of the joint committee, the joint committee may set up specialised working groups in order to assist it in the performance of its tasks, has adopted this decision: sole article the specialised working groups listed in annex i to this decision are hereby established. the terms of reference of the specialised working groups shall be as set out in annex ii to this decision. done at , for the eu-republic of korea joint committee the chair annex i eu-republic of korea joint committee specialised working groups (1) specialised working group on energy, environment, climate change. (2) specialised working group on counter-terrorism. annex ii terms of reference of specialised working groups established under the framework agreement between the european union and its member states, on the one part, and the republic of korea, on the other part article 1 1. at its meetings, each specialised working group may deal with the implementation of the agreement in the areas it covers. 2. the specialised working groups may also discuss subjects or specific projects related to the relevant area of bilateral cooperation. 3. individual cases may also be raised when either party requires. article 2 the specialised working groups shall work under the authority of the joint committee. they shall report and transmit their minutes and conclusions to the chair of the joint committee within 30 calendar days after each meeting. article 3 the specialised working groups shall be composed of representatives of the parties. upon agreement of the parties, the specialised working groups may invite experts to their meetings and may hear from them regarding specific points on the agenda, as appropriate. article 4 the specialised working groups shall be chaired by the parties alternately, according to the rules of procedure of the joint committee. article 5 a representative of the european external action service and a representative of the ministry of foreign affairs of the republic of korea shall act jointly as secretaries of the specialised working groups. all communications concerning the specific specialised working groups shall be forwarded to the two secretaries. article 6 1. the specialised working groups shall meet whenever circumstances require upon agreement of the parties, on the basis of a written request from either party. each meeting shall be held at a place and date agreed by the parties. 2. upon receipt of a request by one of the parties for a meeting of a specialised working group, the secretary of the other party shall reply within 15 working days. 3. in cases of particular urgency, specialised working groups meetings may be convened at shorter notice, subject to the agreement of both parties. 4. before each meeting, the chair shall be informed of the intended composition of the delegation of both parties. 5. meetings of the specialised working groups are convened jointly by the two secretaries. article 7 items for inclusion on the agenda shall be submitted to the secretaries at least 15 working days prior to the date of the specialised working group meeting in question. any supporting documentation shall be provided to the secretaries at least 10 working days before the meeting. the secretaries will communicate the draft agenda no later than 5 working days before the meeting. the agenda shall be finalised upon the agreement of both parties. in exceptional circumstances, upon agreement of the parties, items may be added to the agenda at short notice. article 8 minutes shall be taken for each meeting. unless otherwise decided, specialised working groups' meetings shall not be public.

name: council decision (eu) 2016/833 of 17 may 2016 establishing the position to be adopted, on behalf of the european union, at the 54th session of the committee of experts for the carriage of dangerous goods set up by the intergovernmental organisation for international carriage by rail (otif) as regards certain amendments to appendix c to the convention concerning international carriage by rail type: decision subject matter: european construction; organisation of transport; international affairs; land transport; technology and technical regulations date published: 2016-05-27 27.5.2016 en official journal of the european union l 140/12 council decision (eu) 2016/833 of 17 may 2016 establishing the position to be adopted, on behalf of the european union, at the 54th session of the committee of experts for the carriage of dangerous goods set up by the intergovernmental organisation for international carriage by rail (otif) as regards certain amendments to appendix c to the convention concerning international carriage by rail the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 91, in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) the union acceded to the convention concerning international carriage by rail of 9 may 1980, as amended by the vilnius protocol of 3 june 1999 (cotif convention), by virtue of council decision 2013/103/eu (1). (2) all member states, with the exception of cyprus and malta, are contracting parties to and apply the cotif convention. (3) directive 2008/68/ec of the european parliament and of the council (2) lays down requirements for the transport of dangerous goods by road, by rail or by inland waterway within or between member states. it does so, inter alia, by referring to the regulations concerning the international carriage of dangerous goods by rail, which appear as appendix c to the cotif convention (rid). in addition, article 4 of directive 2008/68/ec provides that the transport of dangerous goods between member states and third countries is to be authorised in so far as it complies with the requirements of the rid, unless otherwise indicated in the annexes. (4) at its 54th session, due to take place on 25 may 2016, the committee of experts for the carriage of dangerous goods (rid expert committee) set up in accordance with point (d) of article 13 1 of the cotif convention is expected to decide upon certain amendments to the rid. the objective of those amendments, which concern technical standards or uniform technical prescriptions, is to ensure safe and efficient transport of dangerous goods whilst taking into account scientific and technical progress in the sector as well as the development of new substances and articles that pose a danger during the transport of those goods. (5) the committee on the transport of dangerous goods established by directive 2008/68/ec has carried out preliminary discussions on the proposed amendments. (6) all of the proposed amendments are justified and beneficial, and should therefore be supported by the union. (7) the position of the union at the 54th session of the rid expert committee should therefore be based on the annex to this decision, has adopted this decision: article 1 1. the position to be adopted on behalf of the european union at the 54th session of the rid expert committee in the framework of the cotif convention shall be in accordance with the annex to this decision. 2. minor changes to the documents mentioned in the annex to this decision may be agreed upon by the representatives of the union in the rid expert committee without further decision of the council. article 2 the decisions of the rid expert committee, once adopted, shall be published in the official journal of the european union, indicating the date of their entry into force. article 3 this decision shall enter into force on the date of its adoption. done at brussels, 17 may 2016. for the council the president m.h.p. van dam (1) council decision 2013/103/eu of 16 june 2011 on the signing and conclusion of the agreement between the european union and the intergovernmental organisation for international carriage by rail on the accession of the european union to the convention concerning international carriage by rail (cotif) of 9 may 1980, as amended by the vilnius protocol of 3 june 1999 (oj l 51, 23.2.2013, p. 1). (2) directive 2008/68/ec of the european parliament and of the council of 24 september 2008 on the inland transport of dangerous goods (oj l 260, 30.9.2008, p. 13). annex proposal reference document issue comments union position 1 otif/rid/ce/gtp/2015/2 otif/rid/ce/gtp/inf.14 otif/rid/ce/gtp/inf.15 inclusion of obligations for entities in charge of maintenance (ecm) in rid technical consensus at the otif standing working group to adopt a text as amended agree with the amendments as revised in the standing working group 2 otif/rid/ce/gtp/2015/3 amendment of special provision tu 16 in rid/adr/adn chapter 4.3 technical consensus at the otif standing working group agree with the amendments as revised in the standing working group 3 otif/rid/ce/gtp/2015/5 carrier's duty to inform the train driver of the position of dangerous goods in the train technical consensus at the otif standing working group agree with the amendments as revised in the standing working group 4 otif/rid/ce/gtp/2015/6 flexible bulk containers technical consensus at the otif standing working group agree with the text for flexible bulk containers in otif/rid/ce/gtp/2015/12 5 otif/rid/ce/gtp/2015/7 definitions of full load/wagon load technical consensus at the otif standing working group agree with the amendments 6 otif/rid/ce/gtp/2015/12 otif/rid/ce/gtp/2015/inf.2 otif/rid/ce/gtp/2015/inf.3 various consolidated amendments agreed by the standing working group technical consensus at the otif standing working group agree with the amendments 7 idem amendments left for further examination by the standing working group 8 idem those calling for a common view from the un-ece otif joint meeting efficient multimodal transport needs to be facilitated agree with the amendments as recommended by the joint meeting 9 otif/rid/ce/gtp/2015/14 notifications of occurrences involving dangerous goods in accordance with rid 1.8.5; hamburg-billwerder, 3 july 2013 technical consensus at the otif standing working group agree with the amendments as revised in the standing working group 10 otif/rid/ce/gtp/2015/inf.4 protective distance for road vehicles technical consensus at the otif standing working group agree with the amendments

name: council decision (euratom) 2016/829 of 12 may 2016 approving the conclusion, by the european commission, on behalf of the european atomic energy community, of a protocol to the partnership and cooperation agreement establishing a partnership between the european communities and their member states, of the one part, and the republic of tajikistan, of the other part, to take account of the accession of the republic of croatia to the european union type: decision subject matter: european construction; international affairs; europe; asia and oceania date published: 2016-05-27 27.5.2016 en official journal of the european union l 140/3 council decision (euratom) 2016/829 of 12 may 2016 approving the conclusion, by the european commission, on behalf of the european atomic energy community, of a protocol to the partnership and cooperation agreement establishing a partnership between the european communities and their member states, of the one part, and the republic of tajikistan, of the other part, to take account of the accession of the republic of croatia to the european union the council of the european union, having regard to the treaty establishing the european atomic energy community, and in particular the second paragraph of article 101 thereof, having regard to the recommendation from the european commission, whereas: (1) in accordance with article 6(2) of the 2011 act of accession, the accession of the republic of croatia to an agreement signed or concluded by the member states and the union with third countries or international organisations is to be agreed by means of a protocol to that agreement. in accordance with that article, a simplified procedure is to apply to such accession, whereby a protocol is to be concluded by the council, acting unanimously on behalf of the member states, and by the third country concerned. (2) on 14 september 2012, the council authorised the commission to open negotiations for the adaptation of agreements signed or concluded between the union, or the union and its member states, and one or more third countries or international organisations, in view of the accession of the republic of croatia to the union. (3) the negotiations were successfully concluded with the republic of tajikistan by the initialling of a protocol to the partnership and cooperation agreement establishing a partnership between the european communities and their member states, of the one part, and the republic of tajikistan, of the other part (1), to take account of the accession of the republic of croatia to the union (the protocol). (4) the signature and conclusion of the protocol are subject to a separate procedure as regards matters falling within the competence of the union and its member states. (5) the conclusion, by the commission, of the protocol should be approved as regards matters falling within the competence of the european atomic energy community, has adopted this decision: article 1 the conclusion, by the european commission, on behalf of the european atomic energy community, of the protocol to the partnership and cooperation agreement establishing a partnership between the european communities and their member states, of the one part, and the republic of tajikistan, of the other part, to take account of the accession of the republic of croatia to the european union, is hereby approved (2). article 2 this decision shall enter into force on the date of its adoption. done at brussels, 12 may 2016. for the council the president f. mogherini (1) oj l 350, 29.12.2009, p. 3. (2) the text of the protocol is attached to the decision on the conclusion, on behalf of the european union and its member states, of a protocol to the partnership and cooperation agreement establishing a partnership between the european communities and their member states, of the one part, and the republic of tajikistan, of the other part, to take account of the accession of the republic of croatia to the european union.

name: commission decision (eu) 2016/827 of 20 may 2016 on the renewal of the mandate of the european group on ethics in science and new technologies type: decision subject matter: research and intellectual property; eu institutions and european civil service; humanities; social affairs; miscellaneous industries; technology and technical regulations date published: 2016-05-26 26.5.2016 en official journal of the european union l 137/22 commission decision (eu) 2016/827 of 20 may 2016 on the renewal of the mandate of the european group on ethics in science and new technologies the european commission, having regard to the treaty on european union and the treaty on the functioning of the european union, whereas: (1) article 2 of the treaty on european union enshrines the values on which the union is founded and article 6 accords the charter of fundamental rights the same legal value as the treaties and establishes that fundamental rights shall constitute general principles of union law. (2) on 20 november 1991, the european commission decided to incorporate ethics into the decision-making process for community research and technological development policies by setting up the group of advisers on the ethical implications of biotechnology (gaeib). (3) the commission decided on 16 december 1997 to replace the gaeib by the european group on ethics in science and new technologies (ege) extending the group's mandate to cover all areas of the application of science and technology. the ege's mandate was subsequently renewed, most recently by the commission decision 2010/1/eu (1). it is now appropriate to renew the mandate for a period of 5 years and subsequently to appoint the new members. (4) the ege is tasked with providing ethical guidance to the european commission either at the request of the commission or on its own initiative and upon agreement with the commission. the commission may draw the ege's attention to issues considered by the european parliament and the council to be of major ethical importance. (5) rules on disclosure of information by members of the group should be laid down. (6) personal data should be processed in accordance with regulation (ec) no 45/2001 of the european parliament and of the council (2). (7) decision 2010/1/eu should be repealed, has adopted this decision: article 1 mandate the mandate of the european group on ethics in science and new technologies, hereafter referred to as ege, is renewed for a period of 5 years. article 2 task the task of the ege shall be to advise the commission on ethical questions relating to sciences and new technologies and the wider societal implications of advances in these fields, either at the request of the commission or on request by its chair with the agreement of the commission services. the group therefore shall: (a) identify, define and examine ethical questions raised by developments in science and technologies; (b) provide guidance in the form of analyses and recommendations that shall be oriented towards the promotion of ethical eu policymaking, with due regard to the charter of fundamental rights of the european union. article 3 consultation the commission may consult the group on any matter in the remit referred to in article 2. in that context, the commission may draw the group's attention to issues considered by the parliament and the council to be of major ethical importance. article 4 membership appointment 1. the ege shall have up to 15 members. members shall have competence in the remit referred to in article 2. 2. members shall serve in a personal capacity. they shall advise the commission in the public interest and independently from any outside influence. members shall inform the commission in due time of any conflict of interest which might undermine their independence. 3. members shall be appointed by the president of the commission on the basis of a proposal from the commissioner in charge of research, science and innovation, following the submission of their candidacy to a call for expression of interest for membership of the ege and a selection process overseen by an identification committee, based on the criteria set out in paragraphs 4 and 6 of this article. 4. when proposing the composition of the ege, the identification committee shall aim at ensuring, as far as possible, a high level of expertise and pluralism, a geographical balance, as well as a balanced representation of relevant know-how and areas of interest, taking into account the specific tasks of the ege, the type of expertise required and the response to the call for expression of interest. the ege shall be independent, pluralist and multidisciplinary. 5. each member of the ege shall be appointed for a term of 2 years. at the end of a term, his or her appointment may be renewed. membership of the ege shall be limited to a maximum of three terms. 6. the following factors and criteria will be taken into account for the selection of candidates for membership of the group: (a) the composition of the group shall ensure that independent advice of the highest quality can be provided, combining wisdom and foresight. the credibility of the group shall be built on the balance of qualities amongst the women and men who make it up, and they shall collectively reflect the breadth of perspectives across europe. gender balance shall be strictly taken into account, and due consideration accorded to age balance and geographical distribution. (b) the members of the group shall be internationally recognised experts, with a track record of excellence and experience at the european and global level. (c) the members shall reflect the broad cross-disciplinary scope of the group's mandate, embracing philosophy and ethics; natural and social sciences; and the law. however, they shall not perceive themselves as representatives of a particular discipline, worldview, or line of research; they shall have a broad vision which collectively reflects an understanding of important ongoing and emerging developments, including inter-, trans-, and multi-disciplinary perspectives, and the need for ethical advice at the european level. (d) beyond their proven reputation, the membership shall collectively bring experience in providing ethical advice to policymakers, acquired across a broad range of member states, and at european and international levels. (e) the group shall include members with experience in bodies such as advisory councils and committees, government advisors, national ethics councils, universities and research institutes. it may be valuable to the group to include members who have gained experience in more than one country and members from outside the european union. 7. the selection of the ege members will be made on the basis of an open call for expression of interest, specifying the modalities for submitting a complete application. the commission shall publish the call on the europa website. a link from the register of commission expert groups and other similar entities (the register of expert groups) to the europa website will also be ensured. 8. nominations may be submitted, provided the nominee follows the modalities for submitting a complete application. 9. the list of ege members shall be published by the commission in the register of expert groups. 10. suitable candidates who are not appointed pursuant to paragraph 2 of this article, shall be placed on a reserve list. the president of the commission may appoint members from the reserve list. 11. where a member is no longer capable of contributing effectively to the work of the ege, or resigns or does not comply with the conditions set out in article 339 of the treaty on the functioning of the european union, the president of the commission may appoint a replacement member from the reserve list, for the remaining duration of the original member's term of office. article 5 operation 1. the directorate-general for research and innovation, acting in close cooperation with the ege's chairperson, shall be responsible for coordinating and organising the work of the ege and for providing its secretariat. 2. the ege shall elect a chairperson and a deputy-chairperson from among its members for the duration of their term by a simple majority. 3. members of the ege, as well as invited experts, shall comply with the obligations of professional secrecy laid down by the treaties and their implementing rules, as well as with the commission's rules on security regarding the protection of eu classified information, laid down in commission decisions (eu, euratom) 2015/443 (3) and (eu, euratom) 2015/444 (4). should they fail to respect these obligations, the commission may take all appropriate measures. 4. the ege work programme, including such ethical analyses suggested on the own initiative of the ege, shall be agreed by the commission. each request for an ethical analysis shall include the parameters of the requested analysis. the commission shall, when seeking the advice of the ege, set a time limit within which such advice shall be given. 5. ege opinions shall include a set of recommendations. they shall be based on an overview of the state of the art of the sciences and technologies concerned and a thorough analysis of the ethical issues at stake. relevant services of the commission shall be informed of the recommendations produced by the ege. 6. the ege shall operate in a collegial way, seeking consensus among its members. the ege shall adopt its rules of procedure on the basis of the standard rules of procedure for expert groups with the agreement of the commission's representative. the working procedures shall seek to ensure that all members take an active role in the activities of the group. 7. the meetings of the ege shall normally be held on commission premises according to the modalities and the calendar fixed by the commission. the ege should meet at least six times during a 12-month period involving around 12 working days a year. further meetings may be organised when necessary, in agreement with the commission's representative. for the purpose of the preparation of ege analyses and within the limits of the available resources, the commission's representative may: invite experts and representatives of relevant ngos or representative organisations when appropriate for an exchange of views on an ad hoc basis. the commission may also enlist external experts to participate in the work of the ege on an ad hoc and temporary basis should it be deemed necessary to cover the wide spectrum of ethical questions related to advances in science and new technologies. initiate studies in order to collect all necessary scientific and technical information. allow for working groups to be set up to consider specific issues. establish close links with representatives of the various ethics bodies in the member states and in third countries. moreover, the commission shall organise a public round table in order to promote dialogue and improve transparency for each opinion that the ege produces. the ege shall establish close links with commission departments concerned by issues the group is working on. 8. the group shall endeavour to reach consensus. however, where an opinion is not adopted unanimously, it shall include any dissenting point of view (as a minority opinion) together with the name(s) of the dissenting member(s). the opinion shall be transmitted to the president of the commission or to a representative designated by the president. each opinion shall be forthwith published and transmitted to the european parliament and to the council of the european union after its adoption. 9. if operational circumstances require that advice on a particular subject be given more quickly than the adoption of an opinion would allow, short statements or other forms of analyses can be produced, to be followed if necessary by a fuller analysis in the form of an opinion, while ensuring that transparency is respected as for any other opinion. statements will be published and made available on the ege website. as part of its work programme, in agreement with the commission's representative, the ege may update an opinion if it deems it necessary. 10. the ege's discussions shall be confidential. in agreement with the commission's representative, the ege may, by a simple majority of its members, decide to open its deliberations to the public. 11. all relevant documents related to the activities of the ege (such as agendas, minutes, opinions and participants' submissions) shall be made available either in the register of expert groups or via a link from the register to a dedicated website. exceptions to publication are possible where disclosure of a document is deemed to undermine the protection of a public or private interest as defined in article 4 of regulation (ec) no 1049/2001 of the european parliament and of the council (5). 12. a report on the activities of the ege shall be produced under the responsibility of the chairperson before the end of its mandate. the report shall be published and transmitted according to the modalities set out in paragraph 11. article 6 meeting expenses 1. participants in the activities of the ege shall not be remunerated for the services they render. 2. travel and subsistence expenses for the meetings of the ege shall be reimbursed by the commission in accordance with the provisions in force. 3. those expenses shall be reimbursed within the limits of the available appropriations allocated under the annual procedure for the allocation of resources. article 7 final provisions the present decision will be published in the official journal of the european union and shall enter into force on the day following that of its publication in the official journal of the european union. decision 2010/1/eu is hereby repealed. done at brussels, 20 may 2016. for the commission the president jean-claude juncker (1) commission decision 2010/1/eu of 23 december 2009 on the renewal of the mandate of the european group on ethics in science and new technologies (oj l 1, 5.1.2010, p. 8). (2) regulation (ec) no 45/2001 of the european parliament and of the council of 18 december 2000 on the protection of individuals with regard to the processing of personal data by the community institutions and bodies and on the free movement of such data (oj l 8, 12.1.2001, p. 1). (3) commission decision (eu, euratom) 2015/443 of 13 march 2015 on security in the commission (oj l 72, 17.3.2015, p. 41). (4) commission decision (eu, euratom) 2015/444 of 13 march 2015 on the security rules for protecting eu classified information (oj l 72, 17.3.2015, p. 53). (5) regulation (ec) no 1049/2001 of the european parliament and of the council of 30 may 2001 regarding public access to european parliament, council and commission documents (oj l 145, 31.5.2001, p. 43).

name: commission decision (eu) 2016/789 of 1 october 2014 on the state aid sa.21121 (c29/08) (ex nn 54/07) implemented by germany concerning the financing of frankfurt hahn airport and the financial relations between the airport and ryanair (notified under document c(2014) 6853) (text with eea relevance) type: decision subject matter: air and space transport; business organisation; europe; competition; cooperation policy; economic policy; regions of eu member states; transport policy date published: 2016-05-24 24.5.2016 en official journal of the european union l 134/46 commission decision (eu) 2016/789 of 1 october 2014 on the state aid sa.21121 (c29/08) (ex nn 54/07) implemented by germany concerning the financing of frankfurt hahn airport and the financial relations between the airport and ryanair (notified under document c(2014) 6853) (only the english text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) (1) thereof, having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having called on interested parties to submit their comments pursuant to the provisions cited above (2) and having regard to their comments, whereas: 1. procedure (1) between 2003 and 2006, the commission received complaints from various parties alleging that ryanair plc (ryanair (3)) as well as the frankfurt hahn airport operator flughafen frankfurt-hahn gmbh (hereinafter: ffhg) had been granted unlawful state aid by the company fraport ag and the l nder (federal states) of rhineland-palatinate and hesse. the complainant provided further information on 22 september 2003 and 1 june 2006. (2) by letters dated 25 september 2006 and 9 february 2007, the commission requested information from germany. germany responded by letters dated 20 december 2006 and 29 june 2007 respectively. (3) by letter dated 17 june 2008, the commission informed germany of its decision to initiate the procedure provided for in article 108(2) of the treaty with regard to the financing of ffhg and its financial relations with ryanair (the 2008 opening decision). germany transmitted its comments on 27 october 2008. (4) the 2008 opening decision was registered under case number sa.21121 (c29/08). the 2008 opening decision was published in the official journal of the european union (4) on 17 january 2009. the commission invited interested parties to submit their comments on the measures in question within 1 month of the date of publication. (5) the commission received comments from deutsche lufthansa ag (lufthansa), the federal association of german air carriers (bundesverband der deutschen fluggesellschaften, bdf), ryanair, soci t air france sa (air france) and the association of european airlines (aea). it forwarded the comments to germany by letter dated 16 april 2009. germany was given the opportunity to respond to them within 1 month and transmitted its comments and more information on 1 july 2009. (6) by letter of 4 march 2011, lufthansa provided further information with regard to the 2008 opening decision addressing new alleged state aid measures. (7) by letter dated 18 march 2011 the commission forwarded the complaint to germany and requested further information on the new allegations concerning state aid measures. germany replied by letters dated 19 may 2011 and 23 may 2011. (8) however, those replies were incomplete. therefore, by letter dated 6 june 2011 the commission sent a reminder pursuant to article 10(3) of council regulation (ec) no 659/1999 (5). germany responded by letters dated 14 june 2011 and 16 june 2011. (9) by letter dated 13 july 2011 the commission informed germany of its decision to initiate the procedure provided for in article 108(2) of the treaty with respect to the credit line provided to ffhg by the cash pooling facility of land rhineland-palatinate, the loan provided to ffhg by investitions-und strukturbank of land rhineland-palatinate (isb) and the guarantee for the isb loan provided to ffhg by land rhineland-palatinate (the 2011 opening decision). the 2011 opening decision was registered under case number sa.32833 (2011/c). the 2011 opening decision was published in the official journal of the european union on 21 july 2012 (6). (10) by letter dated 20 february 2012 the commission requested further information regarding the 2008 opening decision. germany responded by letter dated 16 april 2012. by letter of 27 july 2012, the commission again requested further information. germany replied by letter dated 4 september 2012. (11) by a letter dated 25 february 2014 the commission informed germany of the adoption of the commission guidelines on state aid to airports and airlines (7) (the 2014 aviation guidelines) on 20 february 2014. the commission informed germany that those guidelines would become applicable from the date of their publication in the official journal of the european union. it gave germany the opportunity to comment on those guidelines and their possible application to the present case within 20 working days. by letter dated 17 march 2014 the commission reminded germany that, in case it would not receive any comments within the deadline of 20 working days, the commission would consider that germany had no comments. (12) by letters dated 23 march 2014 and 4 april 2014 the commission requested further information from germany. germany replied by letters dated 17 april 2014, 24 april 2014 and 9 may 2014. (13) the 2014 aviation guidelines were published in the official journal of the european union on 4 april 2014. they replaced the 1994 aviation guidelines (8) as well as the 2005 aviation guidelines (9). (14) on 15 april 2014 a notice was published in the official journal of the european union inviting member states and interested parties to submit comments on the application of the 2014 aviation guidelines in this case within 1 month of their publication date (10). lufthansa and transport & environment submitted observations. by letter dated 26 august 2014, the commission forwarded those observations to germany. by letter dated 3 september 2014, germany informed the commission that it had no observations. (15) by letter dated 17 june 2014, germany agreed exceptionally to have this decision adopted and notified in english only. 2. context of the measures 2.1. conversion of the airport and its ownership structure (16) frankfurt hahn airport is located in land rhineland-palatinate, approximately 120 km west of the city of frankfurt/main. frankfurt hahn airport was a us military airbase until 1992. subsequently, it was converted into a civil airport. it holds a 24-hour operating licence. (17) holding unternehmen hahn gmbh & co. kg (holding hahn), a public private partnership between wayss & freytag and land rhineland-palatinate, acquired ownership of the infrastructure of frankfurt hahn airport from germany on 1 april 1995. between 1995 and 1998, this public private partnership developed the airport with the goal of developing there an industrial and commercial area. according to germany, when the partnership between wayss & freytag and land rhineland-palatinate did not turn out to be successful, on 1 january 1998, flughafen frankfurt/main gmbh (fraport) (11) started getting involved in the project and eventually took over the operation of the airport. (18) according to germany, fraport, who was already operating and managing the international frankfurt main airport, located approximately 115 km from frankfurt hahn airport, got involved for several strategic reasons. firstly, germany stated that frankfurt hahn airport was the only airport in the proximity of frankfurt main airport which had the potential of becoming a fully-fledged international airport. as frankfurt main airport was already at its full capacity at that moment, there was the potential for a second profitable airport in the region. secondly, frankfurt hahn airport was then the only german airport with a 24 hour operation licence, especially useful for cargo and freight flights. thirdly, the runway was fully equipped and could be used in all weather conditions. furthermore, germany submitted that the owners of schiphol airport were also thinking about acquiring frankfurt hahn airport, and hence by taking over the operation of frankfurt hahn airport it was possible for fraport to keep out an unwanted competitor. (19) fraport purchased 64,90 % of the shares in the operator flughafen hahn gmbh & co. kg lautzenhausen (ffhg & co kg) for the price of [ ] (*). payment of part of the purchase price (eur [ ]) was due on 31 december 2007, under certain conditions (12). in august 1999, fraport acquired 73,37 % of the shares of holding hahn and 74,90 % of the shares of its general partner holding unternehmen hahn verwaltungs gmbh for the price of eur [ ]. thereby fraport effectively became the new partner of land rhineland-palatinate. (20) fraport's focus at frankfurt hahn airport was to systematically develop the airport's passenger and cargo business. in that respect, fraport was one of the first undertakings to apply a business model which aimed especially at attracting low-cost airlines. on that basis, fraport concluded a new profit and loss transfer agreement with holding hahn upon conversion of the latter into a german limited liability company (gesellschaft mit beschr nkter haftung,gmbh). the conversion and the conclusion of that agreement took place on 24 november 2000. (21) subsequently, holding hahn and ffhg & co kg merged to form flughafen hahn gmbh. land rhineland-palatinate held 26,93 % and fraport 73,07 % of the shares in the new company. later, the business name of the company was again changed to flughafen frankfurt-hahn gmbh (ffhg). in 2001, the two shareholders, fraport and land rhineland-palatinate, injected fresh capital into ffhg (see detailed description in section 3). (22) until 11 june 2001, 100 % of the shares in fraport were held by public shareholders (13). on 11 june, fraport was floated on the stock exchange and 29,71 % of its shares were sold to private shareholders, with 70,29 % of shares remaining with the public shareholders. (23) in november 2002, land rhineland-palatinate, land hesse, fraport and ffhg concluded an agreement on the further development of frankfurt hahn airport. that agreement provided for a second increase of the authorised capital. on that occasion, and land hesse acceded to ffhg as a third shareholder. fraport then owned 65 % of the shares, land hesse and land rhineland-palatinate held 17,5 % each. that ownership structure remained unchanged until 2009, when fraport sold all of its shares to land rhineland-palatinate, which has, since then, held a 82,5 % majority share. the remaining 17,5 % are still held by land hesse. 2.2. passenger and freight traffic development and airports in the vicinity (24) the passenger traffic at the airport increased from 29 289 in 1998 to 4 million in 2007 and decreased to approximately 2,7 million in 2013 (see table 1). the airport is currently served by ryanair, wizz air (14) and other airlines. ryanair's passenger share amounted to approximately [80-100 %] in 2013. table 1 passenger development at frankfurt hahn airport in 1998 to 2013 year number of passengers number of ryanair passengers 1998 29 289 0 1999 140 706 89 129 2000 380 284 318 664 2001 447 142 397 593 2002 1 457 527 1 231 790 2003 2 431 783 2 341 784 2004 2 760 379 2 668 713 2005 3 079 528 2 856 109 2006 3 705 088 3 319 772 2007 4 015 155 3 808 062 2008 3 940 585 3 821 850 2009 3 793 958 3 682 050 2010 3 457 540 [2 766 032 -3 457 540 ] 2011 2 894 363 [2 315 490 -2 894 363 ] 2012 2 791 185 [2 232 948 -2 791 185 ] 2013 2 667 529 [2 134 023 -2 667 529 ] (25) frankfurt hahn airport has also experienced growth in air freight. the air freight at the airport increased from approximately 16 000 tonnes in 1998 to approximately 286 000 tonnes at its peak in 2011, with a subsequent decrease to approximately 151 000 tonnes in 2013 (see table 2). the total freight, including freight forwarders, handled at the airport amounted to approximately 447 000 tonnes in 2013. table 2 cargo development at frankfurt hahn airport in 1998 to 2013 year total air freight in tonnes total freight including freight forwarder in tonnes 1998 16 020 134 920 1999 43 676 168 437 2000 75 547 191 001 2001 25 053 133 743 2002 23 736 138 131 2003 37 065 158 873 2004 66 097 191 117 2005 107 305 228 921 2006 123 165 266 174 2007 125 049 289 404 2008 179 375 338 490 2009 174 664 322 170 2010 228 547 466 429 2011 286 416 565 344 2012 207 520 503 995 2013 152 503 446 608 (26) the following airports are located in the proximity of frankfurt hahn airport: (i) frankfurt main airport (~ 115 kilometres from frankfurt hahn airport, ~ 1 hour 15 minutes travelling time by car) is an international hub airport with a wide variety of destinations, ranging from short to long-haul. it is predominantly served by network carriers offering connecting traffic, although it also provides point-to-point connections and charter flights. besides passenger traffic (approximately 58 million in 2013), frankfurt main airport also handles air freight (approximately 2 million tonnes in 2013). figure 1 shows the development of traffic at frankfurt main and frankfurt hahn airports in 2000-2012. (ii) luxembourg airport (~ 111 kilometres from frankfurt hahn airport, ~ 1 hour 30 minutes travelling time by car) is an international airport providing a wide variety of destinations. in addition to passenger traffic (approximately 2,2 million in 2013), it also served 673 500 tonnes of air freight. (iii) zweibr cken airport (~ 128 kilometres from frankfurt hahn airport, ~ 1 hour 35 minutes travelling time by car). (iv) saarbr cken airport (~ 128 kilometres from frankfurt hahn airport, ~ 1 hour 35 minutes travelling time by car). (v) k ln-bonn airport (~ 175 kilometres from frankfurt hahn airport, ~ 1 hour 44 minutes travelling time by car). figure 1 passenger traffic development at frankfurt main and frankfurt hahn airports in 2000-2012 2.3. overview of investments undertaken by ffhg and its financial results (27) table 3 provides an overview of investments undertaken by ffhg from 2001 to 2012, amounting in total to approximately eur 216 million. table 3 overview of investments undertaken from 2001 to 2012 in 1 000 eur 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 total 2001-2012 investments into infrastructure and equipment anlagenzug nge inkl. umbuchungen land 3 174,00 6 488 2 994 4 284 3 086 8 613 593 [ ] terminal 2 519 3 310 251 cargo hangar 3 850 3 222 office building 2 428 [ ] other infrastructure investments 10 194 1 152 13 275 [ ] [ ] [ ] apron 1 008,30 5 684 3 394 10 224 2 848 [ ] [ ] other infrastructure 1 502,20 3 848 2 071 2 692 3 911 1 761 1 558 2 608 384 [ ] [ ] [ ] immaterial assets (e.g. it) 6,1 14,50 28 219 487 45 170 121 20 [ ] [ ] [ ] 7 108 equipment 8 208,89 1 097,09 12 308,42 1 814,00 2 294,54 20 232 7 550 3 823 359 [ ] [ ] [ ] 75 550 total 13 899 19 650 31 761 8 871 17 592 25 123 41 390 12 673 763 17 289 19 346 7 930 216 287 (28) table 4 provides an overview of the annual financial results of ffhg from 2001 to 2012. table 4 annual financial results of ffhg in 2001 to 2012 in 1 000 eur 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 profit and loss statement revenues 10 077,61 14 908,11 22 574,22 29 564,18 36 859,08 43 479,85 41 296,34 45 383,60 42 036,70 43 281,58 43 658,38 40 983,45 other revenues (including compensation for public policy remit) 7 771,31 5 514,63 3 686,87 3 039,35 3 618,93 6 097,29 5 436,58 4 858,16 11 540,36 14 554,55 9 313,99 21 390,92 total revenue 17 848,92 20 422,75 26 261,09 32 603,53 40 478,01 49 577,14 46 732,92 50 241,76 53 577,06 57 836,14 52 972,37 62 374,37 costs of material 7 092,39 10 211,13 12 560,46 14 601,17 17 895,97 24 062,81 22 491,85 25 133,61 24 979,59 27 650,17 20 017,99 21 871,65 costs of personnel 9 185,12 9 672,37 10 734,62 11 217,21 12 101,84 13 337,28 14 433,17 15 758,34 15 883,08 17 893,60 18 228,23 18 349,10 other costs (including marketing) 5 692,81 11 434,31 10 521,27 11 454,36 14 058,15 12 885,28 9 897,46 9 630,21 7 796,81 8 029,40 6 760,92 6 643,00 ebitda 4 121,41 10 895,06 7 555,27 4 669,21 3 577,94 708,22 89,56 280,39 4 917,58 4 262,96 7 965,23 15 510,62 ebitda (excl other revenues) 11 892,72 16 409,69 11 242,13 7 708,56 7 196,87 6 805,51 5 526,13 5 138,56 6 622,78 10 291,59 1 348,76 5 880,30 depreciation 5 325,63 5 674,68 6 045,39 7 699,33 7 973,46 10 527,90 10 191,89 11 855,19 12 482,28 11 827,19 13 297,31 12 733,48 financial results (interest received interest paid) 2 896,64 3 013,42 4 006,57 4 105,53 4 548,42 4 588,16 5 235,30 5 693,02 4 915,39 2 778,06 5 063,04 8 177,54 extraordinary revenues and costs 431,54 206,00 10,46 0,00 0,00 0,00 0,00 0,00 0,00 272,55 0,00 0,00 taxes 580,13 204,74 215,18 323,82 228,44 242,33 245,00 238,66 257,45 240,85 231,03 277,52 coverage of losses by fraport trough the profit and loss transfer 13 355,35 19 993,90 17 832,87 16 797,89 16 328,26 16 066,61 15 761,75 18 067,26 5 621,37 0,00 0,00 0,00 annual result (profit/loss) 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 7 114,17 10 855,69 10 626,14 5 677,92 3. description of the measures 3.1. possible state aid granted to ffhg 3.1.1. measure 1: 2001 profit and loss transfer agreement (29) ffhg and fraport concluded an agreement according to which fraport was entitled to all profits generated by ffhg. in return, fraport was obliged to assume all the losses of ffhg. land rhineland-palatinate and fraport concluded an agreement on 31 august 1999 in which fraport committed to conclude a profit and loss transfer agreement (plta). the corresponding notarial agreement was concluded on 24 november 2000 and the 2001 plta took effect on 1 january 2001 (2001 plta) (15). (30) fraport had the right to terminate the 2001 plta by giving six months' notice, but only from 31 december 2005. if not terminated, the agreement was tacitly prolonged at the end of each calendar year for another year, but no longer than until 31 december 2010. (31) the conclusion of the 2001 plta was approved by fraport's supervisory board and shareholders (16). the duration of the 2001 plta was later extended until 2014 by an agreement of 5 april 2004 (plta 2004). by the time the 2001 plta was replaced by the 2004 plta (2004 plta, see recital 45), fraport had assumed losses of eur [ ] million. 3.1.2. measure 2: 2001 capital increase (32) a report for the holding committee of fraport (17) noted on 19 january 2001 that the losses accumulated by ffhg between 1998 and 2005 would presumably amount to eur [ ] million, and therefore be more than twice as high as forecasted in 1997. in addition, two of ffhg's major freight clients shifted or reduced their business from frankfurt hahn airport at the same time, which resulted in a substantial decrease of freight traffic volume, namely by 45 % in the first semester of 2001. (33) following that report, fraport mandated a consultant, the boston consulting group (bcg), as well as its own strategic department acquisitions and holdings (sd) in the beginning of 2001 to develop a strategy for ffhg. both bcg and sd concluded that a positive long-term development of ffhg was only possible with a substantial improvement of the infrastructure, as a prerequisite to further increase traffic volume. sd also pointed out that such a substantial extension of ffhg would be financially risky, and that even in case of the most positive scenario, a positive annual result (net annual profit after tax) would presumably be reached at the earliest in 2013. (34) based on the bcg study and its own analysis, sd drafted a development programme for ffhg, which envisaged investments of eur 172 million until 2007. those investments consisted of an emergency programme, valued at eur 27 million, covering the extension of the runway to 3 400 meters and the planning costs for the plan approval procedure (planfeststellungsverfahren) to extend the runway to 3 800 meters, as well as the additional costs of the commenced construction of the new passenger terminal. (35) however, in 2001 ffhg had an equity-to-debt ratio of only 4 % (18). in addition, as of 31 december 2005 fraport had a right to terminate the 2001 plta. under those conditions, ffhg could not finance the emergency programme through further debt, but needed fresh capital. (36) the capital increase was decided by a resolution of fraport's supervisory board on 14 december 2001 and subsequently by a resolution of ffhg's shareholders on 9 january 2002. any increase of the authorised capital of a limited liability company, such as ffhg, requires the approval of all participating shareholders. (37) following that approval, fraport and land rhineland-palatinate increased the authorised capital by eur 27 million from eur 3,5 million to eur 30,5 million. on 9 january 2002 fraport contributed eur 19,7 million and land rhineland-palatinate eur 7,3 million. the capital increase was intended to finance the extension of the runway and investments into other infrastructure to increase the profitability of the airport. 3.1.3. measure 3: 2004 capital increase (38) on 27 november 2002, it was agreed by fraport, land rhineland-palatinate, land hesse and ffhg that land hesse would become the third shareholder of ffhg and would as such contribute eur [ ] million at the time when additional capital will be required to finance the investments. it was also agreed to create a close cooperation between frankfurt main airport and frankfurt hahn airport. (39) it was agreed that further investments were necessary to increase the profitability of frankfurt hahn airport. those investments concern for example the extension of the runway to 3 800 meters. a draft shareholder agreement between fraport, land rhineland-palatinate, and land hesse was prepared on 22 march 2004. the final shareholder agreement regarding the decision to realise this 2004 capital increase was signed by fraport, land rhineland-palatinate, and land hesse on 30 march 2005 and registered in the commercial registry on 19 may 2005 (40) the three parties agreed on a capital increase of eur 19,5 million for ffhg's authorised capital, thereby continuing the investment programme proposed in 2001 by sd (see recitals 33-34). land rhineland-palatinate and land hesse agreed to this capital increase subject to the condition that a new plta between ffhg and fraport would be concluded, covering the period until 31 december 2014. the shareholders also agreed that any further debt ffhg was going to incur had to be secured by fraport, land rhineland-palatinate and land hesse at a ratio corresponding to the distribution of capital in ffhg. on that basis fraport, land rhineland-palatinate and land hessen committed to re-finance the infrastructure investments of ffhg. (41) between 2004 and 2009, fresh capital of eur 19,5 million was injected into ffhg in several instalments. fraport's share in the capital increase amounted to eur 10,21 million, land rhineland-palatinate's to eur 0,54 million, and land hesse contributed eur 8,75 million. (42) in addition, both land hesse and land rhineland-palatinate committed and injected according to the payment schedule (see table 5 below) another eur 11,25 million as capital reserve, to be paid by the former between 2007 and 2009, and by the latter between 2005 and 2009. (43) therefore, the total amount of capital increase decided in 2005 was eur 42 million. (44) the payments were due according to the following schedule in table 5 (in thousand eur): table 5 payment schedule of capital injections fraport 2005 2006 2007 2008 2009 total payments on capital contributions 2 554 1 915 1 915 1 915 1 915 10 214 capital reserve 0 0 0 0 0 0 total equity 10 214 land hesse 2005 2006 2007 2008 2009 total payments on capital contributions 4 000 4 000 750 0 0 8 750 capital reserve 0 0 3 250 4 000 4 000 11 250 total equity 20 000 land rhineland-palatinate 2005 2006 2007 2008 2009 total payments on capital contributions 537 0 0 0 0 537 capital reserve 1 821 2 357 2 357 2 357 2 357 11 249 total equity 11 786 3.1.4. measure 4: 2004 plta (45) as it had been a condition for approval of the capital increase, ffhg and fraport extended the duration of the 2001 plta until 2014 by an agreement of 5 april 2004. the new plta agreement became however only effective after the approval of fraport's shareholder assembly. as agreed by the shareholders of ffhg with respect to the capital increase, it was laid down in this 2004 plta stated that any further debt accrued by ffhg had to be compensated by fraport, land rhineland-palatinate and land hesse at a ratio which corresponded to their equity. (46) under the 2004 plta, fraport took over approximately eur [ ] million worth of losses until 2009. therefore, under the two successive plta's together, a total of eur [ ] million of losses, accrued between 2001 and 2009, were compensated by fraport. out of this sum, eur [ ] million concern depreciation of assets and eur [ ] million the interest payments on loans to finance infrastructure. (47) in 2009, fraport sold its entire share in ffhg to land rhineland-palatinate and thereby also terminated the plta. 3.1.5. measure 5: compensation of ffhg for security checks (48) land rhineland-palatinate collects an airport security tax from all departing passengers at frankfurt hahn airport. the land does not carry out the security checks itself, but has subcontracted that task to the airport, which in turn has subcontracted that task by agreement on to a security company. as consideration for carrying out the security checks, the land transfers the entire revenue from the security tax to the airport. 3.1.6. measure 6: direct grants by land rhineland-palatinate (49) according to the financial reports for land rhineland-palatinate holding companies (19), the land subsidised ffhg in the following amounts as summarised in table 6. table 6 direct grants by land rhineland-palatinate year direct grants (eur) 1997 [ ] 1998 [ ] 1999 [ ] 2000 [ ] total 1997-2000 [ ] 2001 [ ] 2002 [ ] 2003 [ ] 2004 [ ] total 2001-2004 [ ] (50) the direct grants before 12 december 2000 by land rhineland-palatinate to ffhg amount to [ ] million, whereas the direct grants by land rhineland-palatinate to ffhg between 2001 and 2004 amount to eur [ ] million. 3.2. possible state aid granted by ffhg to ryanair and all other airlines transporting passengers (51) in 1999, ffhg attracted its first low-cost carrier, ryanair. ffhg concluded three agreements with ryanair in 1999, 2002 and 2005. furthermore, ffhg introduced new airport charges in 2001 and 2006. 3.2.1. measure 7: 1999 ryanair agreement (52) the first agreement with ryanair entered into force with retroactive effect as of 1 april 1999, and had a duration of 5 years (the 1999 ryanair agreement). ryanair commenced operating from frankfurt hahn airport into london stansted on 22 april 1999, when all essential conditions of the agreements had already been agreed upon. (53) a deckungsbeitragsrechnung (break-even analysis) for the 1999 ryanair agreement had been submitted by the management board of ffhg to the supervisory board in its meeting of 5 may 1999. according to germany, ffhg's supervisory board did not vote on the 1999 ryanair agreement or the break-even analysis, since the conclusion of the agreement was deemed to be operational day-to-day business being within the sole competence of ffhg's management board. (54) table 7 summarises the charges to be paid by ryanair under annex 1 of the 1999 ryanair agreement. table 7 charges to be paid by ryanair under annex 1 of the 1999 ryanair agreement charge/fee/tax type eur turnaround fee (per flight comprising landing charge, ramp handling and passenger clearance) (20) [ ] passenger fee (per arriving passenger) [ ] air security tax (per departing passenger) [ ] de-icing fluid including hot water (per litre) [ ] (55) under annex 3 of the 1999 ryanair agreement, ffhg additionally received a [ ] % commission on each ticket sold (cash or credit card) or issued by ffhg's ticket counters, a [ ] % commission on excess baggage charges collected by ffhg, eur [ ] for each prepaid ticket processed by ryanair and a [ ] % commission for each car rental booked through ffhg. (56) ryanair was entitled to marketing support amounting to an annual maximum of eur [ ], which was to be paid by ffhg in quarterly instalments and only for the first 3 years of operation. the marketing support had to be used exclusively for advertisements concerning routes departing from frankfurt hahn airport. ryanair had to provide supporting invoices and detailed proof of how the money was spent. 3.2.2. measure 8: 2001 schedule of airport charges (57) on 16 october 2001, frankfurt hahn airport's 2001 schedule of airport charges was approved and published by the land rhineland-palatinate's transport department. it entered retroactively into force on 1 october 2001 (21). (58) as frankfurt hahn airport's business strategy was focused on low cost carriers, which typically operate boeing 737 or airbus a 319/320 aircraft with a maximum take-off weight (mtow) of approximately 50 to 80 tonnes, it introduced a zero landing and take-off charge for aircraft between 5,7 and 90 tonnes mtow. (59) table 8 summarises the charges per aircraft for central ground handling infrastructure services to be paid by airlines under the 2001 schedule of airport charges. table 8 charges for central ground handling infrastructure services to be paid by airlines under the 2001 schedule of airport charges charge per aircraft in eur mtow up to 90 tonnes included in the take-off and landing charge mtow of more than 90 tonnes 50,00 (60) the passenger charge was set at eur 4,35 per arriving passenger. the passenger security fee based on the number of passengers aboard the aircraft when departing is eur 4,35 per passenger, payable to land rhineland-palatinate's highways and transport department air transport section. (61) for each approach of an aircraft under instrument flight rules, an air traffic control approach charge has to be paid to the airport operator. that charge for commercial or non-commercial flights is included in the landing and take-off charge if the flight is operated for purposes other than training and instruction. it hence is zero for aircraft to which the zero landing and take-off charge applies. 3.2.3. measure 9: 2002 ryanair agreement (62) the second agreement with ryanair is dated 14 february 2002 (the 2002 ryanair agreement) and was submitted to ffhg's supervisory board held on 16 november 2001. the minutes of that meeting report that the majority of the members of the supervisory board approved it. (63) the copy of the 2002 ryanair agreement that was transmitted to the commission is not signed. according to germany, although that agreement was never signed, it has nevertheless been applied by the parties since 14 february 2002. (64) according to germany, the 2002 ryanair agreement replaced the 1999 ryanair agreement, and it was concluded for a period of [ ] years (until [ ]). the passenger fee however remained identical as in the initial agreement of 1999. ryanair has the option to prolong the agreement on similar terms and conditions until [ ]. (65) the 2002 ryanair agreement is based upon the standard ground handling agreement of the international air transport association, which has been adapted to the needs of the parties. it consists of the following elements: (i) the main agreement (ii) annex a description of ground handling services; (iii) annex b 1.0 location, agreed services and charges for frankfurt hahn airport; (iv) second annex b 1.0 location, agreed services and charges for frankfurt hahn airport; (v) annex 3 and appendixes 1-3 (22) to the second annex b 1.0; (vi) annex c airport charges; (vii) annex d description of the ground handling service package hahn-smart (viii) third annex b location, agreed services and charges for frankfurt hahn airport hub agreement (ix) annex e marketing agreement (66) the main agreement, annex a and annex b 1.0 are simply copies of the standard form. the parties have not filled in any of the fields, as this part of the standard form was not considered applicable. (67) the second annex b 1.0 has been filled in by the parties, in so far as names of the parties, bank accounts and the price for de-icing fluid (eur [ ] per litre) and hot water (eur [ ] per litre) are concerned. (68) annex 3 and its annexes 1-3 concern further strategic agreements between the parties. they relate to the technical arrangements for ground handling, ticketing and branding space at the airport. (69) annex d stipulates that for ground-handling the charges summarised in table 9 apply, under the condition of a turnaround-time not exceeding 30 minutes. table 9 charges for ground-handling if maximal 30 minutes turnaround aircraft with a mtow unit eur up to 5,7 tonnes handling [ ] up to 14 tonnes handling [ ] up to 20 tonnes handling [ ] up to 90 tonnes handling [ ] more than 90 tonnes handling [ ] (70) the blank fields for aircraft of up to and more than [ ] tonnes appear to indicate that [ ] charged for aircrafts between [ ] and [ ] tonnes (23). (71) annex e (i.e. hahn smart agreement) confirms that analysis. it stipulates in point 1: [ ] (72) the airport fee level was frozen until 30 april 2004 and thereafter was to be adjusted corresponding to the german consumer price index, if the latter increased by more than [ ] % compared to the previous year. (73) annex e also foresees the payment of marketing support. ryanair is entitled to the following marketing support: (i) one-off payments of eur [ ] for each new route departing from frankfurt hahn airport and established after 13 february 2002, and (ii) rebates on the airport charges dependent on the number of aircrafts based at frankfurt hahn airport and on the number of landing passengers as summarised in table 10. table 10 rebates on airport charges number of aircraft based at frankfurt hahn airport marketing support per passenger (eur) up to 2 [ ] 3 to 4 [ ] 5-8 [ ] (24) (74) annex e also provides that vat will be added to every payment or price in the agreement, in so far as turnover tax law is applicable. (75) [ ]. (76) in conclusion, according to the 2002 ryanair agreement the airline pays the charges summarised in table 11. table 11 overview of airport charges to be paid by ryanair charge/fee/tax type eur passenger fee (per arriving passenger) [ ] air security tax (per departing passenger) [ ] de-icing fluid (per litre) [ ] hot water (per litre) [ ] revenue for prepaid tickets processed by ryanair [ ] 3.2.4. measure 10: 2005 ryanair agreement (77) on 4 november 2005, an amendment to the agreement of 2002 was agreed, the agreement ryanair/flughafen frankfurt-hahn gmbh delivery of aircraft 6 to 18 year 2005 to year 2012 (the 2005 ryanair agreement). on 18 november 2005, the conclusion of the 2005 ryanair agreement was approved by the supervisory board of ffhg. (78) the relevant parts of the 2005 ryanair agreement are: (i) [ ]; (ii) [ ]; (iii) [ ]; (iv) [ ]. (79) the 2005 ryanair agreement is valid until [ ]. the other elements of the 2002 ryanair agreement, in particular the main agreement and annex e (i.e. hahn smart-agreement), were also prolonged until [ ]. (80) table 12 shows the number of ryanair aircraft to be based at frankfurt hahn airport and the envisaged passenger volume under the 2005 ryanair agreement: table 12 ryanair aircrafts and passenger growth foreseen under the 2005 ryanair agreement year 2006 2007 2008 2009 2010 2011 2012 no of aircraft [ ] [ ] [ ] [ ] [ ] [ ] [ ] passengers (mio) [ ] [ ] [ ] [ ] [ ] [ ] [ ] (81) table 13 provides an overview of the rebate system on airport charges introduced by the 2005 ryanair agreement. table 13 amended airport rebates introduced by the 2005 ryanair agreement in eur total average rebate per passenger average passenger fee rebate on all inbound passengers [ ] [ ] [ ] additional rebate on all departing passengers above [ ] mio and up to [ ] mio per year [ ] [ ] [ ] additional rebate on all departing passengers above [ ] mio per year [ ] [ ] [ ] (82) [ ]. 3.2.5. measure 11: 2006 schedule of airport charges (83) the 2006 schedule of airport charges was approved for frankfurt hahn airport by the land rhineland-palatinate's transport department on 26 april 2006 (25) and entered into force on 1 june 2006. it follows the same basic principles as the 2001 schedule of airport charges (see above recital 57 and following). (84) the changes compared to the previous schedule concern the take-off and landing charges, the passenger fee and the marketing support. the 2006 schedule of airport charges maintains the two fundamental principles of the 2001 schedule of airport charges: (i) air traffic control charges and ground handling charges are included in the take-off and landing charges; (ii) aircraft with a mtow of more than 5,7 tonnes do not have to pay take-off and landing charges (or air traffic control charges or ground handling charges) at all. (85) the 2006 schedule introduces, however, two limitations to those principles. first of all, only passenger aircraft can claim those advantages. secondly, the advantages are limited to aircraft with a turn-around time of less than 30 minutes. (86) furthermore, the passenger charges are set per departing passenger, and as a function of the total number of passengers transported by the airline (departing and arriving) to which the airplane belongs. table 14 provides an overview of the passenger charges to be paid under the 2006 schedule of airport charges depending on the total number of departing and arriving passengers. table 14 passenger charges under the 2006 schedule of airport charges total number of departing and arriving passengers passenger charge per departing passenger in eur minimum amount of overall airport charges to be paid in eur less than 100 000 5,35 100 001 -250 000 4,40 267 500,00 250 001 -500 000 3,85 550 000,00 500 001 -750 000 3,45 962 500,00 750 001 -1 000 000 3,15 1 293 750,00 1 000 001 -1 500 000 2,90 1 575 000,00 1 500 001 -2 000 000 2,68 2 175 000,00 2 000 001 -3 000 000 2,48 2 680 000,00 3 000 001 -5 400 000 2,48 per passenger 1 to 3 000 000 2,24 per passenger 3 000 001 to 5 400 000 not applicable. 5 400 001 -10 000 000 2,48 per passenger 1 to 3 000 000 2,24 per passenger 3 000 001 to 5 400 000 2,21 per passenger 5 400 001 to 10 000 000 not applicable. more than 10 000 000 2,48 per passenger 1 to 3 000 000 2,24 per passenger 3 000 001 to 5 400 000 2,21 per passenger 5 400 001 to 10 000 000 2,19 per passenger not applicable (87) table 15 shows the amount of marketing support that can be granted to airlines using the airport. table 15 marketing support total number of departing passengers minimum number of destinations and frequency from frankfurt hahn airport marketing support in eur 5 000 -100 000 [ ] [ ] 100 001 -250 000 [ ] [ ] 250 001 -500 000 [ ] [ ] 500 001 -750 000 [ ] [ ] 750 001 -1 000 000 [ ] [ ] (88) moreover, marketing support is regulated in a separate document available on the web site of frankfurt hahn airport. one-time marketing support is granted under the following conditions: (i) eligible are flights to destinations which have not been served from frankfurt hahn airport in the last 24 months; (ii) the maximum support is 33,3 % of the proven marketing costs for a new destination; (iii) the airline has to demonstrate the medium-term profitability of the new destination through appropriate supporting documents; (iv) ffhg can request the reimbursement of the marketing support in the event that the airline does not fulfil its obligations with respect to the new destination. 3.3. measures outside the scope of the 2008 opening decision (measure 12) (89) germany committed to inject into ffhg's equity eur [ ] million to refinance ffhg's loans. (90) those funds refinance infrastructure measures irrevocably decided by the public authorities prior to 31 december 2012, but which were not covered through the pltas, capital increases or other grants. 4. grounds for opening the procedure and initial assessment 4.1. possible state aid granted to ffhg 4.1.1. measure 1: 2001 plta (91) with regard to the 2001 plta, the commission found in the 2008 opening decision that the annual losses were assumed by fraport, a company which is predominantly publicly owned. the commission therefore established that it needed to examine whether germany could be regarded as having been involved in the conclusion of the 2001 plta. (92) the court of justice held in stardust marine (26) that the resources of an undertaking incorporated under private law, whose shares are in majority publicly owned, constitute state resources. the commission considered that the conclusion of the agreement was also to be considered as imputable to the state as it would have been impossible to do so without taking into account the requirements of the public authorities. (93) furthermore, in contrast to the arguments raised by germany, the commission expressed doubts that a market economy investor would have concluded such an agreement as the agreement clearly seemed to constitute an advantage for ffhg in relieving it from a financial burden which otherwise it would have had to shoulder. (94) the commission also considered that the measure was selective as only ffhg's losses were covered and that the measure concerned distorted or threatened to distort competition within the market of airport operators and affected trade between member states. (95) the commission thus took the preliminary view that the measure at issue might constitute state aid in the form of operating aid. (96) since germany did not provide any evidence or argue that such operating aid could be considered compatible with the internal market pursuant to article 107(3)(c) of the treaty, and in the light of the 2005 aviation guidelines, the commission raised serious doubts that that aid could be deemed compatible. 4.1.2. measure 2: 2001 capital increase (97) in the 2008 opening decision, the commission found that fraport and land rhineland-palatinate had increased ffhg's capital by eur 27 million, contributing eur 19,7 million and eur 7,3 million respectively. concerning the existence of aid, the commission pointed out that fraport's as well as land rhineland-palatinate's resources constitute state resources, according to the criteria established in the case stardust marine (27). furthermore, the commission took the preliminary view that fraport's decisions are also likely to be imputable to the state. (98) moreover, the commission indicated that it was not convinced that the market economy operator test (meot) for the capital increase was fulfilled. the commission has accepted in principle that an assessment carried out by one or more independent audit companies can serve as proof that a transaction has taken place at market value (28). however, the commission had doubts whether the report handed in by pwc on account of fraport sufficed to exclude the presence of an advantage. (99) the doubts were due to the content of the meot carried out by pwc as it was purely qualitative and did not assess the cost of disengagement by fraport. the report also did not quantify or explain in detail the high risks identified by bcg and fraport's sd, and generally limited the assessment to fraport, without considering whether land rhineland-palatinate acted like a market economy investor. for those reasons, the commission could not exclude that the capital increase provided an advantage to ffhg. (100) the commission also concluded that the measure was selective as only ffhg was granted the 2001 capital increase and that it distorted or threatened to distort competition within the market of airport operators and affected trade between member states. (101) the commission therefore took the preliminary view that the measure at issue might constitute state aid in the form of investment aid and raised doubts as to its compatibility with the internal market, notably in view of article 107(3)(c) of the treaty and the 2005 aviation guidelines. 4.1.3. measure 3: 2004 capital increase (102) with regard to the second capital increase, the commission noted that in 2004, ffhg's existing shareholders increased its authorised capital by eur 10,75 million, fraport contributing a share of eur 10,21 million and land rhineland-palatinate a share of eur 0,54 million. in addition, land hesse entered as new shareholder, contributing another eur 8,75 million. furthermore, both land rhineland-palatinate and land hesse committed to contribute each eur 11,25 million as capital reserve. (103) the commission adopted mutatis mutandis the same reasoning for this capital increase as for the one in 2001 (see section 4.1.2) for the existence of aid and raised the same doubts as to its compatibility with the internal market. 4.1.4. measure 4: 2004 plta (104) according to the 2008 opening decision, fraport took over losses of ffhg amounting to at least eur [ ] million under the 2004 plta. the commission applied mutatis mutandis the same reasoning as the one advanced in relation to the 2001 plta, see recital 91 and following. in relation to the meot submitted by pwc, the commission doubted its reliability given that the assessment was largely qualitative. hence, the commission considered that the 2004 plta constitutes operating aid and expressed doubts as regards its compatibility with the internal market, in particular in light of the 2005 aviation guidelines. 4.1.5. measure 5: compensation of ffhg for security checks (105) the commission indicated in the 2008 opening decision that airport security services are not of an economic nature and do not fall within the scope of the rules on state aid (29). (106) the commission then observed that the economic analysis of pwc seemed to indicate that land rhineland-palatinate over-compensated ffhg for carrying out security checks. in that regard the commission pointed out that that advantage was financed through state resources and had the potential to distort competition and affect trade between member states. hence, the commission considered that the overcompensation constituted state aid within the meaning of article 107(1) of the treaty. (107) with regard to the compatibility assessment of that operating aid, the commission applied mutatis mutandis the same reasoning as the one advanced in relation to the 2001 plta, see recital 95 and following. another possible legal basis assessed for compatibility with the internal market was article 106(2) of the treaty. however, germany did not provide any indication that a public service obligation had been imposed on ffhg. therefore, the commission did not find a legal basis to declare the overcompensation arising from the security charge compatible with the internal market. 4.1.6. measure 6: direct grants by land rhineland-palatinate (108) the commission noted in its 2008 opening decision that the direct grants granted in the years 2001 to 2004 appear to have been granted without consideration, from state resources (namely the general budget of land rhineland-palatinate) and in a selective manner (only to ffhg). the commission considered that those grants have the potential to distort competition and affect trade between member states. hence, the commission took the preliminary view that they constituted state aid within the meaning of article 107(1) of the treaty in the form of investment aid. (109) the commission also raised doubts as to the compatibility of the aid with the internal market, notably in view of article 107(3)(c) of the treaty and the 2005 aviation guidelines. 4.2. possible state aid granted by ffhg to ryanair and all other airlines transporting passengers 4.2.1. measure 7: 1999 ryanair agreement (110) concerning the 1999 ryanair agreement, the commission generally pointed out in the 2008 opening decision that a reduction or system of reductions granting preferential treatment to a specific business was likely to fall within the scope of article 107 of the treaty. (111) the commission considered that, as ffhg is a predominantly publicly owned undertaking, its resources constitute state resources. the commission pointed out in relation to the 1999 ryanair agreement that although the supervisory board did not vote on that agreement, neither did it pass any motion or take any action suggesting that it was opposed to it. therefore, the commission noted that it had no indications allowing it to conclude that the 1999 ryanair agreement was not imputable to the state. (112) furthermore, the commission raised doubts as to whether a private market investor would have concluded the 1999 ryanair agreement. the commission noted in this respect that the charges imposed by ffhg on ryanair did not cover ffhg's full costs and therefore appeared to confer an advantage to ryanair. (113) the commission also pointed out that the costs of the new terminal of approximately eur [ ] million had not been taken into account in the meot submitted by germany. as a preliminary observation, the commission rejected germany's argument that in 1999 hhn was anyway in need of a new passenger terminal, and that the capacity of 1,25 million passengers per year was far above the expected passenger volume to be generated by ryanair, since ryanair was the only major passenger air carrier at frankfurt hahn airport in 1999. for those reasons, the commission raised doubts as to the meot handed in by germany. (114) the commission also considered that the 1999 ryanair agreement is a selective and specific measure as only ryanair received such conditions in the negotiations with ffhg, and that the measure concerned distorts or threatens to distort competition within the market of airlines and affects trade between the member states. (115) therefore, the commission took the preliminary view that, since it appeared that it did not fulfil the meot and was imputable to the state, the 1999 ryanair agreement would constitute state aid within the meaning of article 107(1) of the treaty. furthermore, the commission did see not legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market. 4.2.2. measure 8: 2001 schedule of airport charges (116) in the 2008 opening decision, the commission also analysed whether the 2001 schedule of airport charges possibly constituted state aid to ryanair. it considered in that respect that, as companies in which the public authorities have a predominant share, ffhg's and fraport's resources constitute state resources and that their conduct would also be imputable to the state. (117) the commission expressed doubts as to whether the fee structure of the 2001 schedule of airport charges was set in a manner which would allow the airport to run profitably as germany had not provided a meot for this schedule. as ryanair seemed to have been the only passenger airline using the airport between 2001 and 2003, and retained more than 95 % of the passenger volume until 2006, the results of the meot for the 2002 ryanair agreement, which was based on the 2001 schedule of airport charges and introduced an additional marketing support, served as a benchmark. based on the information provided, the commission doubted whether the meot for the 2001 schedule of airport charges was fulfilled. (118) the commission considered that the measure was selective as only airlines that use frankfurt hahn airport benefited from the 2001 schedule of airport charges and that it distorted or threatened to distort competition and affected trade between the member states. (119) therefore, concerning the 2001 schedule of airport charges, the commission took the preliminary view that it might constitute state aid within the meaning of article 107(1) of the treaty. furthermore, the commission did not find legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market. 4.2.3. measure 9: 2002 ryanair agreement (120) regarding the question of state resources, the commission applied the same reasoning mutatis mutandis as for the 1999 ryanair agreement, discussed in section 4.2.1 (recital 110 and following). concerning imputability of the measure, the 2002 ryanair agreement was formally approved by the supervisory board of ffhg, which is dominated by members nominated by the public authorities. hence, the commission took the preliminary view that the 2002 ryanair agreement was imputable to germany. (121) furthermore, the commission expressed doubts as to whether a market economy investor would have concluded the 2002 ryanair agreement. in this respect, the commission doubted the calculation presented by germany. furthermore, the commission raised doubts regarding the calculation of costs since the costs for general airport infrastructure and general airport administration handed in by germany were based on marginal, rather than average costs. also, the level of airport charges was frozen until 30 april 2004, and thereafter was to be adjusted corresponding to the german consumer price index only if this index increased by more than [ ] % compared to the previous year. (122) concerning selectivity, distortion of competition and effect on trade, the commission applied the same reasoning mutatis mutandis as for the 1999 ryanair agreement, see section 4.2.1 (recital 110 and following). (123) the commission therefore took the preliminary view that the 2002 ryanair agreement might constitute state aid within the meaning of article 107(1) of the treaty. furthermore, the commission did not see any legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market. 4.2.4. measure 10: 2005 ryanair agreement (124) regarding the question of state resources, the commission applied the same reasoning mutatis mutandis as for the 1999 ryanair agreement discussed in section 4.2.1 (recital 110 and following). on the question of whether there was an economic advantage, the commission expressed doubts with regard to the meot presented by germany since there was insufficient information for verifying the calculations and because the investments induced by increasing passenger numbers were not in any way taken into account or allocated to ryanair. (125) the commission furthermore indicated that although the 2005 ryanair agreement, differed from the 1999 and 2002 ryanair agreements, by introducing a kind of contractual penalty system if ryanair did not generate the contractually determined passenger volume, it doubted whether those sanctions were effective. (126) concerning selectivity, distortion of competition and effects on trade, the commission applied the same reasoning mutatis mutandis as for the 1999 ryanair agreement, see section 4.2.1 (recital 110 and following). (127) the commission concluded that the 2005 ryanair agreement would also constitute state aid within the meaning of article 107(1) of the treaty. the commission did not find any legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market. 4.2.5. measure 11: 2006 schedule of airport charges (128) with regard to the 2006 schedule of airport charges, germany had only partially provided an economic justification in the form of a meot to the commission. the commission indicated in its 2008 opening decision that with the incomplete information it was unable to verify whether, as germany argued, economies of scale justified the differentiation in passenger charges. furthermore, the economic justifications given for the 2006 schedule of airport charges left several questions open, such as which costs are included in the cost coverage and why the marketing support was not included in the economic justification of the schedule. (129) the commission considered that the measure was selective as only airlines using frankfurt hahn airport benefited from the 2006 schedule of airport charges and that the measure concerned distorted or threatened to distort competition and affected trade between the member states. (130) therefore, concerning the 2006 schedule of airport charges, the commission took the preliminary view that it might constitute state aid within the meaning of article 107(1) of the treaty. furthermore, the commission did not see any legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market. 5. comments from germany (131) germany submitted extensive observations and economic analysis in the course of this procedure. 5.1. general remarks (132) in its comments, germany first of all provided some general background considerations concerning frankfurt hahn airport. germany insisted that the frankfurt hahn airport project was meant to become a profitable private company from the moment of its conversion. therefore, fraport strategically got involved with a view to the airport's long-term profitability. with its low-cost carrier business model, considerably simplified infrastructure and low capital costs, frankfurt hahn airport has been a pioneer in europe, according to germany. however, germany argued that the necessary time framework for reaching positive operative results in that kind of infrastructure project would be approximately 20 years. germany pointed out that frankfurt hahn airport has had a positive result in ebitda for the first time in 2006, so already 8 years after its market entry, which would prove its economic viability. according to germany, frankfurt hahn airport was the fastest growing airport in germany. (133) furthermore, germany is of the opinion that the measures concerning frankfurt hahn airport were taken exclusively according to the market economy investor principle. according to germany, if a private undertaking of the same size and in a comparable situation would also have undertaken the financing based on a commercial logic, this would exclude any advantage. germany argued that the commission should only assess whether the respective measure is commercially defendable and not whether it will without reasonable doubt be successful. also, germany referred to the principle of equality of public and private undertakings under which funds that the state is offering to an undertaking in accordance with market conditions will not be considered state aid. all in all, according to germany, the measures for frankfurt hahn airport had all been granted in line with market conditions; the meots which germany presented would prove this. germany then elaborated on those general remarks with regard to the respective measures assessed in the 2008 opening decision. 5.2. alleged state aid granted to ffhg 5.2.1. measure 1: 2001 plta (134) germany argued that the state aid rules are not applicable to the 2001 plta since it was concluded in august 1999, i.e. before the judgment by the court of justice in the case a roports de paris (30) on 24 october 2002. according to germany, the judgment at first instance by the general court became definitive only after the judgment of the court of justice was delivered and only when it was clarified that airports were considered as undertakings and therefore fell within the scope of application of the state aid rules. that approach would have been confirmed later on in the leipzig-halle judgment (31). (135) germany stated furthermore that no state resources had been employed. in that regard, germany elaborated that the losses taken over by fraport did not burden the budget of the state. furthermore, germany argued that the decisions taken by fraport were not imputable to germany since the public shareholders were not able to exercise a determining influence. in this regard, germany emphasised that it would have to be verified in each individual case whether resources of a company were actually controlled by the state. according to germany, the fact that a majority of shareholders was public is not sufficient to assume that the 2001 plta involves state resources. (136) according to germany, the shareholders cannot determine the behaviour of the management board in the case of a german stock company, an aktiengesellschaft, such as fraport. in germany's view, fraport is an independent incorporated company listed at the stock exchange and the public regional bodies do not exercise continuing control over its funds. germany explained that according to section 76 of the aktiengesetz (the german stock corporation act, aktg), the management board has a far-reaching decision-making powers independently of the shareholders. germany argued that in the cases stadtwerke brixen ag (32) and carbotermo (33) cases, the court of justice already recognised the nature of the german listed company and the considerable independence enjoyed by their management board vis-a-vis its shareholders. in that respect, the public authorities could not control fraport's day-to-day business. (137) in that regard, germany explained that fraport was not in any way incorporated into the structures of public administration, that fraport was not accountable to germany for its actions and was in no way subordinated to the public administration. even though germany recognised that the public shareholders were involved in the decision-making at the general meeting of shareholders during which the 2001 plta was decided, germany argued that this did not mean that the public shareholders had done anything more than exercise their lawful rights and obligations as shareholders. (138) in addition, germany stated that the 2001 plta did not confer any advantage on ffhg. it referred to the meot undertaken by pwc in that regard, which considered that any market economy investor would also have concluded that agreement. furthermore, germany stated that the risks and benefits of the 2001 plta were evenly distributed and that it also made sense from a tax law point of view. overall, germany depicted the 2001 plta as a perfectly normal measure in a corporate group to apply global or sectorial structural policy. 5.2.2. measure 2: 2001 capital increase (139) germany explained that the 2001 capital increase was necessary since an external financing of the investments into its infrastructure would have strained the annual results of ffhg too much in the short-term. (140) germany stated that the 2001 capital increase was decided by the supervisory board of ffhg on 14 december 2001 and led to a change in the articles of association of ffhg on 9 january 2002. therefore, germany disputed that the rules of state aid are applicable to that measure and referred here also to its reasoning concerning the 2001 plta (see recital 134). (141) germany furthermore argued that the funds invested by fraport (eur 19,7 million out of eur 27 million) were not state resources since the state had no control over fraport. in that respect germany referred to its argumentation on state resources concerning the 2001 plta (see recital 136). in addition, germany stated that the capital increase could also not be imputable to germany and referred to its explanations on imputability concerning the 2001 plta (see recital 134). germany added that the approval by ffhg's shareholders of the 2001 capital increase could not be a determining factor for its imputability to the state. in germany's opinion, the actions of the undertaking who handed out the possible aid must be imputable, not those of the undertaking benefitting from the aid. since ffhg was the undertaking benefitting from the aid, its approval of the capital increase would not make the granting of aid imputable to germany. according to germany, nor could the approval of fraport's supervisory board be taken as an indication for imputability since at that time the supervisory board was already constituted on par of representatives of the employees and the shareholders with a right of codetermination, meaning that there were 10 representatives of the employees and 10 representatives of the shareholders. (142) germany also argued that no advantage was conferred on ffhg by the 2001 capital increase. fraport as well as the land rhineland-palatinate had acted like any market economy investor would have in this matter. (143) germany disagreed with the doubts raised by the commission in relation to the meot regarding fraport's 2001 capital increase decision. germany submitted all additionally demanded internal documents to the commission. according to germany, the decision taken by fraport in 2001 for a capital increase was based furthermore on an assessment of the measure by the bcg and two general studies ordered by fraport on the development of air traffic. germany emphasised that fraport had increased the capital since the assessment of bcg stated that reaching profitability would not be possible at frankfurt hahn airport without further construction and infrastructure measures. the meot had taken into account all those documents. (144) following the doubts raised by the commission in relation to the meot carried out by pwc, germany submitted a second, supplementary assessment from pwc to complement and refine the first meot. that refined assessment comes to the same conclusion as the first one, namely that the meot is fulfilled. germany rejected commission's doubts that pwc had not assessed a disengagement of fraport and that therefore, without knowing the cost of disengagement, it would be impossible to verify whether fraport had acted like a market economy investor. germany argued that the cost of disengagement did not make a difference in the assessment. moreover, germany pointed out that fraport had considered disengagement, but that it would not have been possible during the next 5 years due to the 2001 plta. furthermore, the pwc's assessment showed that the investment would have positive results for fraport in the long run. (145) following the 2008 opening decision germany also submitted a meot also in relation to the behaviour of land rhineland-palatinate and its decision to contribute to the capital increase of ffhg with eur 7,3 million. according to the assessment, also carried out by pwc, land rhineland-palatinate had acted like a market economy operator since the investment measures decided in 2001 were necessary and therefore the capital increase was commercially defendable. 5.2.3. measure 3: 2004 capital increase (146) germany argued that also after the a roports de paris judgment the state aid rules would not be applicable to the 2004 capital increase. according to germany, the 1994 aviation guidelines were in force at that moment and under those guidelines infrastructure measures at airports were not relevant to the application of state aid rules. (147) germany argued that, in contrast to the commission's description in the 2008 opening decision, the 2004 capital increase was agreed on 30 march 2005 and has been registered with the commercial registry on 19 may 2005. furthermore, the basic agreement on this capital increase goes back to an agreement in the year 2002. germany explained that this agreement foresaw the establishment of an airport system between frankfurt-main airport and frankfurt hahn airport under council regulation (eec) no 2408/92 (34). according to germany, the assessment of the 2004 capital increase would have to be assessed against this background. (148) germany pointed out that according to the meot submitted by pwc, supported by supplementary assessments after the 2008 opening decision, fraport, land rhineland-palatinate and land hesse have all acted like market economy investors concerning the 2004 capital increase. concerning the argumentation for fraport, germany referred to its arguments made in relation to the 2001 capital increase (see recital 140 and following). in the first as well as in the supplementary meot pwc concluded, according to germany, that the 2004 capital increase, as well as the conclusion of a new plta were to be seen as advantageous for fraport at the time, qualitatively as well as quantitatively. this was according to germany justified by the finding of pwc that fraport's return on invested capital (hereinafter: roic) when investing into ffhg was above an alternative return of an equivalent capital investment. (149) in respect to land rhineland-palatinate, germany pointed to pwc's conclusion that also the land acted like a market economy investor since the roic for the land was, similarly as for fraport, above a comparable alternative investment. (150) in relation to the behaviour of land hesse, germany argued that the restricted growth possibilities for frankfurt main airport deriving, inter alia, from the night flight curfew made further development of frankfurt hahn airport necessary in the eyes of land hesse. otherwise frankfurt main airport would have faced severe economic consequences. germany pointed out that this development was necessary in order to comprehensively exploit the existing growth opportunities in the framework of the 24 hours-flight permission for frankfurt hahn airport together with the envisaged introduction of the airport system frankfurt main airport frankfurt hahn airport. hence, the involvement of land hesse in the capital increase was unavoidable, according to germany. 5.2.4. measure 4: 2004 plta (151) germany stated that the 2004 plta could only be seen in the light of the capital increase and the changes in the shareholder structure in 2004, especially since land rhineland-palatinate and land hesse made the redistribution of ffhg shares subject to the conclusion of the 2004 plta between fraport and ffhg until 2014. (152) germany referred to its arguments made in relation to the 2004 capital increase and argued that the state aid rules were also not applicable to the 2004 plta (see recital 146 and the following). (153) concerning the involvement of state resources, germany referred to its explanations for the 2001 plta (see recital 134 and the following). hence, in germany's opinion the resources of fraport were not state resources since fraport was not subject to state control. (154) germany also argued that for the decision of the 2004 plta to be approved, a majority of 75 % was needed, whereas the public shareholders only held approximately 70 % of the shares and were therefore in fact not able to control the decisions of fraport. moreover, the remaining 30 % of fraport's shares were dispersed shareholdings. the vote was taken with 99,992 % positive votes, so also the market economy investors did vote for the 2004 plta. (155) as regards the existence of an economic advantage, germany referred again to the explanations for the 2001 plta (see recital 137), according to which a distribution of profits and losses is an absolutely normal measure within a group of companies. furthermore, according to pwc, any market economy investor would have taken the same decision of concluding the 2004 plta since at that moment a profit was to be expected from the year 2008/2009 onwards. germany submitted further that on the basis of the doubts expressed by the commission, pwc tested those measures again in the supplementary assessment according to qualitative calculations and came to the same conclusion. (156) germany asserted further that the 2004 plta was a condition for the 2004 capital increase and, given the expectation of a positive development as from 2008/2009, it was in the interest of fraport to conclude the 2004 plta for at least 5 years. also, germany explained that fraport would have been allowed to take all profits of ffhg until at least 31 december 2024 while being able, in the opposite scenario, to cancel the agreement by 31 december 2010. therefore, germany submitted that fraport would have been able to benefit 100 % from the agreement and to steer ffhg's day-to-day business, while holding only 65 % of its shares. germany also took the view that the meot is supported by the fact that the private investors, making up 30 % of the shareholders of fraport at that moment, also approved the decision. 5.2.5. measure 5: compensation of ffhg for security checks (157) in this regard, germany declared that no state resources were involved in the measure. germany referred to the preussen-elektra (35) judgment of the court of justice and stated that there can only be state aid where payments are being made by a public or private body designated or established by the state. germany explained further that in the case of the fees for security checks, those were paid by the airlines to the land rhineland-palatinate and only forwarded to ffhg by the land as compensation for the security checks which ffhg conducted on behalf of the land. hence, according to germany, in this sense, the fees never became part of the funds of the land. (158) germany explained that according to 5 luftsicherheitsgesetz (air security law), it is the state that checks passengers and their luggage in order to protect the security of air traffic against terroristic attacks. germany asserted further that the authorities charge fees per passenger for this activity to the airlines. germany stated that the level of the security charge depends on the individual circumstances of the airport and range from eur 2 up to eur 10 per passenger. at frankfurt hahn, the fee amounts to eur 4,35 and is therefore appropriate in comparison to other airports. (159) this security task can also be transferred by the authorities to an airport operator, which is what happened in this case where the security checks are being performed by ffhg who in turn entrusted an external security company. (160) in addition, germany stated that the security checks fall within the scope of the public policy remit and do not constitute an economic activity. (161) germany shares the opinion of the commission in this regard, that there should be no overcompensation for the services performed by ffhg. however, germany emphasised that ffhg was not overcompensated since it has to bear all the costs for the security checks. 5.2.6. measure 6: direct grants by land rhineland-palatinate (162) germany clarified that land rhineland-palatinate has made the following payments to ffhg between 2001 and 2004. first, land rhineland-palatinate supported ffhg in some of its infrastructure investments and granted eur [ ] to ffhg for this purpose in 2001. according to germany, those grants were based on decisions taken already in the years 1999 and 2000. germany argued that at the moment those decisions were taken, state aid rules did not apply to airports as undertakings within the meaning of article 107(1) of the treaty. (163) second, germany stated that the financing of personnel costs for security checks was partially taken over by land rhineland-palatinate for the years 2001 (60 % of total costs), 2002 (50 %), 2003 (40 %) and 2004 (30 %). (164) third, germany admitted that land rhineland-palatinate had co-financed two scientific studies which had been ordered by ffhg, but which were mainly in the general public interest according to germany. germany stated that land rhineland-palatinate had subsidised the first study on the regional economic effects of frankfurt hahn airport at 90 % of total costs, and the second study on the development potentials of the freight carrier business at 70 % of the total costs. germany argued that land rhineland-palatinate had given those subsidies only because of its own interest in the studies and could just as well have ordered the studies itself. germany did not see how any advantage was conferred on ffhg through this partial financing since the studies are in the public general interest, neither how this financing might distort competition. as far as those studies were of interest to ffhg, ffhg had also contributed to them financially. 5.3. possible state aid granted by ffhg to ryanair and all other airlines transporting passengers 5.3.1. measure 7: 1999 ryanair agreement (165) concerning the 1999 ryanair agreement, germany generally remarked that from the beginning frankfurt hahn airport built only very basic infrastructure so that this airport could be a cost-efficient and innovative partner for low-cost airlines. according to germany, also at other european airports the so-called anchor clients are the natural drivers of the initial development of the airport. for frankfurt hahn, the anchor client, i.e. the client through whom a foothold in the market could be obtained, was ryanair. (166) germany argued that when the first agreement with ryanair was concluded, the concept of a low-cost carrier airport was still in its infancy. therefore, through this agreement an incentive was given to ryanair to start flying to the rarely frequented frankfurt hahn airport. germany stated that committing such a big airline to frankfurt hahn airport led to the acquisition of more airline agreements for the airport (follow-on principle). through the so-called domino-effect, this ultimately also led to an increase in the profits for the non-aviation sector. (167) germany argued that, given these dynamics, airlines such as ryanair had a great bargaining power, since many other small regional airports tried to conclude agreements with ryanair at that time. (168) furthermore, germany stated that no state resources were granted through the 1999 ryanair agreement. moreover, germany argued that the contractual relationship between the operator of the airport and the airline was conferring no advantage unto the airline. in germany's view, the responsibility for the conclusion of this agreement must be attributed exclusively to the management board since the conclusion of the 1999 ryanair agreement represented day-to-day business and the supervisory board had taken no decision in this matter. in germany's view, the commission cannot consider the conclusion of the 1999 ryanair agreement as imputable to germany because the supervisory board did not do anything to prevent it. such actions do not lie within the responsibilities and tasks of the supervisory board, according to germany. also, the criteria mentioned by the court of justice in stardust marine would be led ad absurdum if the fact that a supervisory body of a publicly held company did not act would be enough to conclude on the imputability of the measure to the state. therefore, according to germany the agreement was not imputable in any way to the state. (169) moreover, germany argued that the 1999 ryanair agreement did not confer any advantage on ryanair since any market economy investor would have also concluded such agreement. germany especially emphasised that this agreement did not induce any losses, contrary to what the commission argued in its 2008 opening decision, but produced an enormous amount of revenues which by far surpassed the costs incurred. (170) in this regard, germany emphasised that frankfurt hahn airport used the single-till-approach, according to which the revenues of aviation and non-aviation flow into a single pool (single till). therefore, according to germany aeronautical and non-aeronautical revenues generated by the airlines and its passengers at the airport have to be taken into account. as germany stated before, pwc concluded that a market economy investor with a long-term strategy would have signed the 1999 ryanair agreement, in particular if one considered frankfurt hahn airport's situation in 1999. according to germany, at that time frankfurt hahn airport was facing high fixed costs for maintenance of the air and ground infrastructure, whereas the capacity utilisation of the airport was low. thus, germany argued, the possibility to generate additional passenger volume was an opportunity to limit losses and acquire clients with growth potential. (171) germany is of the opinion that costs which were decided on before the conclusion of the agreement, such as the costs for the general airport infrastructure and general airport administration (in other words costs that arose irrespective of the 1999 ryanair agreement), should not be included in the profitability analysis of the 1999 ryanair agreement, and pwc supports germany in this opinion. germany argued especially that it would only be possible for an airport with an existing network of clients to have his clients partially bear the costs of infrastructure measures and that frankfurt hahn airport was not in such a position. (172) furthermore, germany argued that if one were to consider the actual costs for building the new terminal, at most the envisaged passenger volume to be generated by ryanair could be taken into account. germany took the view that a depreciation period of 25 years would then be appropriate, which would mean a depreciation of eur [ ] per year. even in case of a depreciation period of 15 years, as suggested by the commission, germany argued that this would mean a depreciation of eur [ ] per year, so that the overall break-even analysis would still be positive. therefore, taking into account the time for initiation of frankfurt hahn airport, germany took the view that this would have sufficed for a market economy investor to conclude the agreement. 5.3.2. measure 8: 2001 schedule of airport charges (173) the 2001 schedule of airport charges could not be seen as state aid according to germany. germany argued that there was no granting of state resources and refers in this regard to its explanations concerning the 1999 ryanair agreement (see section 5.3.1 and especially recital 167). germany stated that the 2001 schedule of airport charges had generated revenues for ffhg and it was not necessary or possible that the schedule of airport charges would lead to coverage of all costs incurred by ffhg. for such a result, according to germany, the revenues from the non-aviation sector needed be taken into account as well under the single-till-approach (see recital 169). (174) germany furthermore disputed that the measure was imputable to the state because of the approval of the airport charges by the rhineland-palatinate transport department. this approval did not mean any economic or political dependence, but was simply a regulatory formality requested under german law which every airport, whether publicly owned or not, has to fulfil according to the law. the reason for this law is to protect the airlines from any possible abuse of the monopolistic power of the airport to set prices for its use. (175) moreover, germany argued that no advantage was granted to frankfurt hahn airport through the 2001 schedule of airport charges. it agreed with the commission that the results of the private market investor test for the 2002 ryanair agreement, which is based on the 2001 schedule of airport charges and introduces an additional marketing support, can serve as a benchmark. on this basis, since the meot is positive for the 2002 ryanair agreement, germany argued that no other result can apply to the 2001 schedule of airport charges. concerning the doubts raised by the commission in relation to the meot, germany referred to its argumentation in relation to meot for the 2002 ryanair agreement (see recital 178 and following). (176) furthermore, germany expressly disagreed with the commission as to the assessment concerning the selectivity of the 2001 schedule of airport charges. germany argued that the 2001 schedule of airport charges was of a general nature and applied to all airlines using the airport, and that hence it could not be selective or specific. according to germany, the 2001 schedule of airport charges included no differentiations which would give an advantage to one airline over the other and they did not contain any kind of rebate system either. therefore, germany took the view that no airline was granted a selective advantage. (177) finally, germany argued in relation to the 2001 schedule of airport charges that this schedule was in accordance with market conform behaviour and as such would not be able to distort competition between airports or the competition on the internal market. 5.3.3. measure 9: 2002 ryanair agreement (178) germany considered, in contrast to the 2008 opening decision, that the 2002 ryanair agreement did not generate any losses, but instead provided a source of income for ffhg. concerning the question of imputability of the 2002 ryanair agreement and the use of state resources, germany referred to its explanations concerning the 1999 ryanair agreement (see recital 167 and following). furthermore, germany added that in 2002, at the time of conclusion of the agreement, ffhg's shares were already being held mainly by fraport, whose resources are not state resources and whose actions are not imputable to the state, as germany already pointed out in relation to the 2001 plta (see recital 134 and following). (179) according to germany, the supervisory board of ffhg, who approved the conclusion of the 2002 ryanair agreement, was not dominated by the state. in this regard, germany contended that the presentation of ffhg's supervisory board members in recital 18 of the 2008 opening decision was erroneous. germany stated that according to ffhg's articles of association, fraport had six representatives and land rhineland-palatinate had eight, out of which three were representatives of local authorities. according to germany, the members had however different numbers of votes and the majority of votes was always with the private company fraport. this was due to the fact that fraport's representatives had 12 votes each, while the representatives of the land only had 5 votes each and those of the local authorities even had only one vote. therefore, according to germany, fraport had 72 votes while the representatives of the land and local authorities only had 28 votes. since the supervisory board decides by simple majority, germany took the view that it would not have been possible to conclude the 2002 ryanair agreement without the votes of fraport and therefore the conclusion of the agreement is not imputable to the state. (180) furthermore, germany rejected the doubts of the commission concerning the conferral of an advantage and the meot submitted by pwc on this matter. germany argued that the figure of [ ] passengers per flight was not overestimated since already in 2002 [ ] % of ryanair flights were carried out by a boeing 737-800 and the average load factor of those flights was [ ] %, meaning that the number of passengers per plane was in fact on average [ ] per ryanair flight. therefore, germany took the view that the estimation of the number of passengers of [ ] was reasonable and not too high, especially since ffhg had taken into account that the change by ryanair from boeing 737-200 to boeing 737-800 would come very quickly. (181) as regards the commission's doubts relating to the cost for general airport infrastructure and general airport administration, germany referred to its argumentation in relation to the 1999 ryanair agreement (see recital 171 and following). it also referred to its statements for the 2001 schedule of airport charges (see recital 176) as regards the selectivity of the measure. 5.3.4. measure 10: 2005 ryanair agreement (182) in relation to the question of state resources and imputability, germany referred to its statements for the 1999 and 2002 ryanair agreements (see recitals 167 and following, and recitals 178 and following). furthermore, germany stated that, at the moment of conclusion of the 2005 ryanair agreement, the supervisory board of ffhg was constituted in a way that the public authorities were not able to exercise a determining influence on the decision. at that moment fraport held 156 votes while land rhineland-palatinate and land hesse held 42 votes each. therefore, germany argued that the state could not have a determining influence as it only possessed 84 out of 240 votes. (183) furthermore, germany took the view that no advantage was conferred on ryanair through this agreement. germany stated that in contrast to the commission's suggestion in the 2008 opening decision, pwc had been provided with all relevant figures since it could otherwise not have conducted this comprehensive, neutral and independent meot. germany moreover rejected the doubts of the commission that the investments induced by ryanair were not allocated appropriately. germany stated that pwc had made a second evaluation in its supplementary assessment where it explained that a major part of the costs related to investments of a general nature which the airport made independently of the services provided to ryanair. as far as costs are induced by the handling of ryanair passengers, these are according to germany allocated to ryanair. (184) germany also rejected the doubts of the commission concerning the effectiveness of the penalty system which was introduced in the 2005 ryanair agreement. germany stated that this penalty system reflects market conform behaviour. germany argued that additional sanctions to the ones agreed upon would have been unnecessary and inappropriate since ryanair had no exclusive rights to use the airport and was also assuming a risk. (185) moreover, germany stated that the agreement was not a selective measure since the agreed airport charges were based on the general 2006 schedule of airport charges. germany also argued that any losses incurred by ffhg were not generated by the 2005 ryanair agreement but by the necessary investments for frankfurt hahn airport, whereas the investments induced by ryanair had been covered by the revenue generated by the 2005 ryanair agreement. 5.3.5. measure 11: 2006 schedule of airport charges (186) in relation to the 2006 schedule of airport charges, germany argued generally that these airport charges had been developed exclusively based on economic considerations taking into account the business model of frankfurt hahn airport as a low cost carrier airport, i.e. with the expectation that the costs of operation would be covered in the short term and in the long term a sustainable profit would be generated. (187) concerning the questions of state resources and imputability, germany referred to its argumentation made in relation to the 1999, 2002 and 2005 ryanair agreements (see recitals 167 and following, 178 and following and 182 and following) and in relation to the 2001 schedule of airport charges (see recital 173 and following). (188) germany argued that no advantage was conferred upon ryanair through the 2006 schedule of airport charges. firstly, germany justified the different passenger charges which were created in order to provide an incentive to low cost carriers while covering the operational costs of the airport. a reduction of charges according to the volume of passengers, germany argued, is a common approach at national and international airports, as was already accepted by the court of justice. when such volume based reductions are granted, these must be justified on the basis of objective and non-discriminatory criteria and this was the case at frankfurt hahn airport, according to germany. since the threshold for acquiring rebates was very low, namely 100 000 passengers per year, these rebates were also supporting smaller airlines. (189) secondly, germany argued that the economic justification of the airport charges relied on the single-till-approach, referring to its statements concerning the 1999 ryanair agreement (see recital 169). germany also justified the differentiation according to turn-around-times (hereinafter: trt) of under or over 30 minutes by explaining that trt of more than 30 minutes are in fact more cost-intensive. germany also stated that even though the airport charges were not covering 100 % of the costs, a meo would still have chosen this schedule of charges since cost-coverage of an infrastructure such as an airport could not be achieved in such a short time. however, ffhg was expecting that through the 2006 schedule of airport charges more passengers would be generated and that by 2008 full cost coverage would be achieved. according to the assessment made by pwc for this schedule of airport charges, this was economically realistic at the moment of introduction of the airport charges, as was also confirmed by pwc's supplementary assessment. (190) in relation to the marketing support granted under the 2006 schedule of airport charges, germany argued that this is in fact not an integral part of the schedule. germany also argued that any market economy investor would have made the same marketing support available for airlines since there are high economic risks attached to the opening of a new route. this support is exclusively given for newly offered routes, meaning routes which have not been served at all or within the last 24 months. the amount of the support is based on the number of departing passengers served within 1 year. on the basis of criteria such as the temporary routes offered at frankfurt hahn airport, the weekly connections and the duration of continuous flight operation, it is ensured that support is in fact leading to an expansion of the network of flights offered by the airlines. (191) germany argued that the marketing support cannot be seen as a one-sided performance by the airport. according to germany, the promotion of new routes led to a higher profit for the airport since higher passenger numbers would create higher non-aeronautical revenues. furthermore, germany explained that the fixing of the amounts of support was based on reasonable considerations. (192) germany also rejected the doubts of the commission that the risk of marketing was higher for airlines which are not yet active at frankfurt hahn airport. for airlines with high passenger numbers servicing an attractive network, germany argued, requires higher marketing costs which in turn justifies a higher marketing support from the airport, also given that higher passenger numbers increase the profits for the airport. in any case, the amount of support would be no more than one third of the real marketing costs, thereby ruling out any discrimination between airlines already serving frankfurt hahn airport and other airlines. moreover, germany reasoned that bigger airlines will generally have a larger marketing budget, so the support given will actually be lower in relation to the whole budget than in case of a smaller airline. (193) finally, germany submitted that the meot carried out by pwc established that this marketing support was given in a way that was conforming to the market. (194) as regards selectivity of the measure and distortion of competition on the internal market, germany referred to its statements concerning the 2001 schedule of airport charges (see recitals 176 and following). (195) germany thus argued that the 2006 schedule of airport charges did not involve state aid. should the commission establish that the airport charges did constitute state aid, germany argued in the alternative that the aid was compatible with the internal market. 5.4. compatibility of the measures with the internal market 5.4.1. compatibility of investment aid to finance airport infrastructure (196) according to germany, if it would be considered that measures 1 to 6 involved state aid within the meaning of article 107(1) of the treaty, insofar as they were aimed at financing airport infrastructure at frankfurt hahn airport this aid could be deemed compatible on the basis of article 107(3) of the treaty and the 2005 aviation guidelines. 5.4.1.1. contribution to a well-defined objective of common interest (197) concerning the well-defined objective of common interest, germany submitted that the financing of airport infrastructure at frankfurt hahn airport was always aimed at the objective of improving the regional economic structure of the economically underdeveloped and scarcely populated hunsr ck region. (198) in this regard, germany stated that, firstly, the objective of supporting ffhg was to help overcome the weak structural economy of the hunsr ck region. germany asserted that frankfurt hahn airport is surrounded by a number of areas considered as regions in need of support within the framework of the gemeinschaftsaufgabeverbesserung der regionalen wirtschaftsstruktur (36), a task shared by the federal and local governments. in this regard, germany submitted that the four regions around the airport, namely landkreis bernkastel-wittlich, birkenfeld, cochem-zell and rhein-hunsr ck-kreis, are on average only half as densely populated as the rest of land rhineland-palatinate. germany pointed out that for those districts whose economy is shaped by small and medium sized enterprises, employment is the main anchor against a further decrease of the regional economy and frankfurt hahn airport plays an important role as an employer and client. (199) secondly, germany argued that frankfurt hahn airport plays an important role in the strategic development of incoming (~ 33 % of passengers corresponding to approximately 1 million passengers in 2005) and outgoing tourism (~ 67 % of passengers) for the land rhineland-palatinate. germany stated that 88 % of the incoming passengers are staying several nights in the region. germany submitted that the frankfurt hahn airport's incoming tourists generated approximately 5,7 million overnight stays in 2005 (37). according to germany the number of overnight stays further increased, with land rhineland-palatinate welcoming 8,2 million guests in 2011 which generated 21,5 million overnight stays. germany pointed out that the number of guests from eastern and southern european countries, in particular, has increased and that a large number of flights are operated from those countries to frankfurt-hahn. this has resulted in about 198 000 jobs being generated by tourism in rhineland-palatinate, according to germany. the catalysed income and employment effects stem especially from incoming tourism, in which frankfurt hahn airport plays a central role as the gateway for tourists into the hunsr ck region, but also into rhineland-palatinate more generally, as germany explained. germany stated that between 1990 and 2001 the number of tourists has increased by 70 % for the hunsr ck region and by 35 % for rhineland-palatinate. according to germany, during the same period, the number of tourists coming from abroad has increased by 163 % in the hunsr ck region. since 88 % of incoming tourists from frankfurt hahn stay at least one night and more than 80 % of those even stay two to 10 days, they generate a total benefit of about eur 133,7 million per year. furthermore, germany argued that outgoing tourism (67 %) also generates income for frankfurt hahn airport through non-aeronautical revenues. (200) thirdly, germany stated that, taking into account all parts of the airport activities, frankfurt hahn airport created 3 063 jobs in the region hunsr ck in 2012 out of which 74 % were full-time positions. according to germany, 90 % of those employees also live in this region. germany argued furthermore that through frankfurt hahn airport, a movement of young, qualified employees towards other regions is being prevented as well as an economic and social decline of the regional communities and their infrastructure. furthermore, germany pointed out that the presence of frankfurt hahn airport does not only produce the mentioned direct effects for the labour market, but also substantial indirect effects through an increasing number of economic and touristic activities. in this respect, germany referred to the positive secondary effects for the region, namely less unemployment and more tax payers, helps to ensure that the municipalities in the region have the financial means to support the local economy. in total, this generated around 11 000 jobs through incoming tourism for all of rhineland-palatinate. (201) germany argued that the financing of infrastructure at frankfurt hahn airport has also helped reaching the well-defined objective of common interest of combatting air traffic congestion at major eu hubs. in this regard, germany pointed to the fact that in the past the capacity limits of frankfurt main airport have constantly been exceeded. germany submitted that frankfurt hahn airport, especially in the light of its 24 hours operating licence, was therefore serving the goal to provide additional capacities in order to relieve the congestion at frankfurt main airport. (202) furthermore, germany submitted that supporting frankfurt hahn airport also serves the objective of common interest to increase the mobility of union citizens. in this regard, germany pointed out that frankfurt hahn airport is the only german airport offering direct flights to kaunas (latvia), kerry (ireland), kos (greece), montpellier (france), nador (morocco), plovdiv (bulgaria), pula (croatia), rhodes (greece), santiago de compostela (spain) and volos (greece). also, according to germany, frankfurt hahn airport contributes to the job mobility of young people, who can reach the region hunsr ck and rhineland-palatinate at low prices. similarly, germany pointed out that the high-quality universities and institutions of higher education in koblenz, mainz, kaiserslautern, trier, wiesbaden, mannheim, bonn, etc., where for the most part no tuition fees are demanded, are now easily accessible to students from all over europe. (203) germany argued, moreover, that it is also of common interest that the hunsr ck and the surrounding regions of rhineland-palatinate are connected to other peripheral regions, for example limerick, which has already manifested itself through city partnerships. germany stated that, as the fourth biggest national economy in the world, it is focussing not only on connecting to the major european hubs, but also on connecting the regions with each other. according to germany, becoming more independent from the major hubs such as heathrow, charles de gaulle, schiphol or frankfurt/main is important for europe since it will mean not only more direct connections, but also more security especially for the freight business as regional airports are less prone to cancellations due to weather, strikes, terrorism or other cancellation risks. (204) lastly, germany generally emphasised that the proximity of zweibr cken airport does not lead to a duplication of airports for the same catchment area, due to the distance of 127 km between frankfurt hahn airport and zweibr cken airport. according to germany, this distance translates into a travelling time of 1 hour and 27 minutes by car or around 4 hours by train. therefore, germany argued that no reasonable worker, freight carrier or tourist whose point of departure lies in the hunsr ck region would go to zweibr cken airport instead of frankfurt hahn airport in order to reach his final destination. furthermore, germany submitted that, looking at passenger and air freight traffic between 2005 and 2012, no relationship of substitution between the airports can be deduced. according to germany, the largest share of passengers of frankfurt hahn airport comes from the hunsr ck-mosel-nahe region (see figure 5). figure 2 market shares in passenger air transport of frankfurt hahn airport in 2013 (38) 5.4.1.2. the infrastructure is necessary and proportionate to the objective (205) germany emphasised that the financed investments were necessary and proportionate to the objective of common interest (see recital 197 and the following). according to germany, the investments were undertaken according to the needs and the constructed infrastructure was necessary for the airport in order to guarantee the connectivity and serve the development of the region and to decongest frankfurt main airport. germany pointed out that the infrastructure was not disproportionate or too large for the needs of users of the airport. hence, germany considered that this compatibility condition was met. 5.4.1.3. the infrastructure has satisfactory medium-term prospects for use (206) germany submitted that before the decision to extend the airport infrastructure was taken, fraport commissioned traffic forecast studies in order to identify the traffic potential for frankfurt hahn airport. germany provided these studies conducted by aviation experts on behalf of fraport. figures 3, 4 and 5 summarise the results of one of these studies regarding the expected passenger and freight traffic development at frankfurt hahn airport between 2000 and 2011. figure 3 total potential passengers at frankfurt hahn airport in 2000-2010 figure 4 potential low-cost passenger traffic (under the assumption that ryanair sets a base) at frankfurt hahn airport in 2001-2011 figure 5 total potential freight traffic at frankfurt hahn airport in 2001-2010 5.4.1.4. access to the infrastructure in an equal and non-discriminatory manner (207) according to the information provided by germany, all potential users of the infrastructure have access to the airport on equal and non-discriminatory terms. germany submitted that the airport charges paid for the use of the infrastructure were based on commercially justified differentiation and that the schedule of airport charges is available to all potential users in a transparent and non-discriminatory manner. 5.4.1.5. trade is not affected contrary to common interest (208) firstly, germany stated that there are no substitution effects between frankfurt hahn airport and other airports in the catchment area, such as zweibr cken airport and frankfurt main airport. according to germany, undue negative effects on competition with these airports because of the aid granted to ffhg cannot be shown, be it in passenger or in freight traffic. indeed, germany argued that in recent years, low cost carriers increasingly had to offer flights to the major hubs since traditional airlines have lowered their prices and started to enter the market of low cost flights. in this regard, germany stated that regional airports, such as frankfurt hahn, are now under a bigger pressure to compete with the hub airports for leisure passengers. therefore, germany concluded that the financial support provided has not led to any undue negative effects on competition, but has on the contrary proven appropriate in helping the adaption process towards a stable business model in the future. (209) secondly, germany argued that the fact that fraport, before getting involved in frankfurt hahn airport, was already the operator of frankfurt main airport, shows that no substitution movements from frankfurt main towards frankfurt hahn airport were to be expected. instead, fraport was investing into the possibility to de-congest frankfurt main airport and to use the additional, complimentary function of frankfurt hahn airport, as a future capacity overload was foreseeable for frankfurt main hub. according to germany, the ban on night flights at frankfurt main airport was one of the main factors in this reasoning as frankfurt hahn airport had a 24 hours operating license. (210) in conclusion, germany argued that the effects of any aid in favour of ffhg have been limited to positive regional effects for the hunsr ck region, whilst creating no undue negative effects in the relationship to other airports given that frankfurt hahn airport is simply used to de-congest frankfurt main. furthermore, germany stated that, apart from luxembourg airport, which is already 1 hour and 30 travelling time (111 km) from frankfurt hahn airport, there are no other foreign competing airports in the same catchment area. even in relation to luxembourg, no negative distortive effect on competition due to the aid granted can be observed according to germany. 5.4.1.6. incentive effect, necessity and proportionality (211) germany stated that in the absence of investment aid, the level of economic activity of the airport would be significantly reduced. germany submitted that the aid was necessary as it compensated only the costs of financing and a lower amount would lead to lower levels of investment. 5.4.2. compatibility of operating aid to finance the airport's operation (212) the 2014 aviation guidelines provide conditions under which operating and investment aids to airports may be declared compatible with the internal market within the meaning of article 107(3)(c) of the treaty. on 17 april 2014, germany provided its views on the compatibility of the measures under the 2014 aviation guidelines. germany argued that, even if the measures under investigation would constitute operating aid to ffhg, they would be compatible with the internal market according to article 107(3)(c) of the treaty and section 5.1.2 of the 2014 aviation guidelines. 5.4.2.1. contribution to a well-defined objective of common interest (213) concerning the well-defined objective of common interest, germany submitted that the coverage of operating costs of ffhg was always aimed at the objective of improving the regional economic structure of the economically underdeveloped and scarcely populated hunsr ck region. in this regard the germany presented the same reasoning as for the compatibility assessed of investment aid to finance the airport infrastructure (see section 5.4.1.1). 5.4.2.2. need for state intervention (214) as regards the need for state intervention, germany explained why frankfurt hahn is making operational losses which need to be covered. in its view, it is a rather ambitious objective for an airport such as frankfurt hahn airport with 1-3 million passengers to become profitable and be able to cover its operating costs. according to germany, it was not possible to realise this ambitious objective in the start-up years since the airport was burdened by very high infrastructure investments which it financed itself on the capital market and for which it had to pay high interest. in addition, germany stated that since the beginning of the world economic and financial crisis, a stagnation of passenger and especially of freight traffic could be registered. (215) germany submitted that in light of these circumstances, there was a need for state invention to cover the operating losses since ffhg would otherwise have gone insolvent. this would also have resulted, according to germany, in the withdrawal of the 24 hours operating licence, meaning that during the insolvency ffhg would have had to stop operating all flights, which in turn would have resulted in the loss of clients such as airlines and freight carriers. germany pointed out that it would then also have become very difficult to find a new operator for the airport. 5.4.2.3. appropriateness of the aid measures as policy instruments (216) germany submitted that covering the operating costs was an appropriate measure to achieve the intended objective. germany argued in this respect that, if frankfurt hahn airport would have had to stop operating and would have disappeared from the relevant markets, it would no longer have been possible to achieve the objectives of common interest pursued by the conversion of a former us air base into a full functioning civil aviation airport and developing the hunsr ck region. in this regard, germany emphasised that in contrast to a market economy investor, a public investor will have to take into account these objectives when considering the alternative of a closure of the airport. 5.4.2.4. existence of an incentive effect (217) germany argued that in order to maintain frankfurt hahn airport in operation, it was a necessary conditio sine qua non to cover its operating costs as ffhg would otherwise have gone insolvent. a successful operation of the airport was in turn the basis for realising the objectives of common interest as stated in recitals 213 and following. furthermore, germany argued that without operating aid, the financial consolidation of the airport would have been unthinkable, given that the airport would have accrued more and more debt instead of making it out of its debts as foreseen in the current austerity programme. 5.4.2.5. proportionality of the aid amount (aid limited to the minimum) (218) germany argued that any aid element contained in the loans was limited to the operating losses of and represented the absolute minimum necessary in order to maintain frankfurt hahn airport in operation and prevent it from becoming insolvent. 5.4.2.6. avoidance of undue negative effects on competition and trade between member states (219) firstly, germany stated that there are no substitution effects between frankfurt hahn airport and other airports in the catchment area, such as zweibr cken airport and frankfurt main airport. undue negative effects on competition with these airports because of the operating aid granted to ffhg cannot be shown according to germany, be it in passenger or in freight traffic. germany submitted that, on the contrary, frankfurt hahn has experienced significant substitution effects of passengers choosing the hubs, such as k ln/bonn or frankfurt main, for flying with low cost carriers rather than from frankfurt hahn airport. indeed, germany argued that in recent years low cost carriers increasingly had to provide flights to the major hubs since traditional airlines have lowered their prices and started to enter the market of low cost flights. in this regard, germany stated that regional airports, such as frankfurt hahn, are now under a bigger pressure to compete with the hub airports for leisure passengers. therefore, germany concluded that the coverage of operating costs has not led to any undue negative effects on competition, but has on the contrary proven appropriate in supporting the adaption process towards a stable business model in the future. (220) secondly, germany argued that the fact that fraport, before getting involved in frankfurt hahn airport, was already the operator of frankfurt main airport, shows that no substitution movements from frankfurt main towards frankfurt hahn airport were to be expected. instead, fraport was investing into the possibility to de-congest frankfurt main airport and to use the additional, complimentary function of frankfurt hahn airport, given that a future capacity overload was foreseeable for the frankfurt main hub. according to germany, the ban on night flights at frankfurt main airport was one of the main factors in this reasoning as frankfurt hahn airport had a 24 hours operating license. (221) in conclusion, germany argued that the effects of any in favour of ffhg were limited to the positive regional effects for the hunsr ck region, while creating no undue negative effects in the relationship to other airports as frankfurt hahn airport is used to de-congest frankfurt main. furthermore, germany stated that apart from luxembourg airport, which is already 1 hour and 30 travelling time (111 km) from frankfurt hahn airport, there are no other foreign competing airports in the same catchment area. even in relation to luxembourg, no negative distortive effect on competition due to the aid granted can be observed according to germany. 6. comments from interested parties 6.1. ryanair (222) ryanair objects against the decision of the commission to initiate the formal investigation procedure as regards the 1999, 2002 and 2005 ryanair agreements with frankfurt hahn airport. ryanair stated that these agreements complied with the market economy investor principle, and hence did not involve state aid. (223) ryanair essentially argues that no advantage has been conferred to it since the agreements reflect normal market conditions. in this respect, ryanair claimed that the contractual conditions must not be compared to those at other german airports, but those which ryanair was agreeing with other airports hosting low-cost carriers, such as blackpool airport and charleroi airport. (224) concerning the issue of marketing support, ryanair argued that the charge for new destinations rewards flight frequencies and that the discounts granted by frankfurt hahn airport were in line with industry practice as many privately or publicly held airports applied the same or greater level of discounts for new destinations. (225) concerning the application of airport charges, ryanair argued that normal market charges, i.e. charges which were not abnormally low, satisfy the market economy investor principle. according to ryanair, the prospect of an immediate profitability was not needed in order to fulfil this principle. the prospect of achieving profitability in the medium- to long-term would be sufficient in ryanair's opinion. furthermore, ryanair contests the commission's argument that frankfurt hahn airport had taken into account only the specific costs of the ryanair contract as regards the coverage of its costs from the charges paid to ryanair, and not the costs of the common airport infrastructure and general administration. as concerns the coverage of costs, ryanair stated that there was never a plan to reserve the use of frankfurt hahn airport exclusively to ryanair. in this regard, ryanair pointed to the fact that frankfurt hahn airport was also used to a significant extent as a freight airport. furthermore, ryanair was pointing out that it should pay a lower level of charges compared to other airlines, given that its handling requirements and operations minimise the costs for the airport. (226) ryanair furthermore argued that the conduct of frankfurt hahn airport was guided by foreseeable prospects of profitability. according to ryanair, frankfurt hahn airport had performed a financial and strategic analysis prior to concluding the agreements, consistent with what is expected of a market economy investor. ryanair stated that its commitment to deliver a high passenger volume was since 2005 also secured by a contractual penalty, and that this contract was allocating the bulk of the risk to ryanair, thus providing for an exceptionally generous deal for frankfurt hahn airport. furthermore, the agreements have allowed frankfurt hahn airport to improve its financial situation. at the conclusion of the contract, frankfurt hahn airport was aware that similar agreements of ryanair with airports throughout europe had proven to be profitable. (227) lastly, ryanair points out that its agreements with frankfurt hahn did not contain any exclusivity clause, so other airlines could and do avail of the same terms and conditions as ryanair, provided they were ready to offer the same commitment to the airport as ryanair. (228) furthermore, ryanair submitted a series of notes prepared by oxera, and an analysis prepared by professor damien p. mcloughlin. oxera note 1 identifying the market benchmark in comparator analysis for meots. ryanair state aid cases, prepared for ryanair by oxera, 9 april 2013 (229) oxera considers that the commission's approach of only accepting comparator airports in the same catchment area as the airport under investigation is flawed. (230) oxera also argues that market benchmark prices obtained from comparator airports are not tainted by state aid given to surrounding airports. therefore, it is possible to robustly estimate a market benchmark for the meots. (231) this is because: (a) comparator analyses are widely used for meots outside of the field of state aid; (b) companies affect each other's pricing decisions only to the extent that their products are substitutes or complements; (c) airports in the same catchment area do not necessarily compete with each other, and the comparator airports used in the submitted reports face only limited competition from state-owned airports within their respective catchment areas (less than 1/3 of commercial airports within the catchment areas of the comparator airports are fully state owned, and none of them were subject to state aid investigations (as of april 2013)); (d) even where comparator airports face competition from state-owned airports within the same catchment area, there may be reasons to believe their behaviour is in line with the meo principle (for example, where there is a large private ownership stake or where the airport is privately managed); (e) meo airports will not set prices below incremental cost. oxera note 2 principles underlying profitability analysis for meots. ryanair state aid cases, prepared for ryanair by oxera, 9 april 2013 (232) oxera argues that the profitability analysis undertaken by oxera in its reports submitted to the commission follows the principles that would be adopted by a rational private sector investor and reflects the approach apparent from commission precedents. (233) the principles underlying the profitability analysis are: (a) the assessment is undertaken on an incremental basis; (b) an ex ante business plan is not necessarily required; (c) for an uncongested airport, the single till approach is the appropriate pricing methodology; (d) only those revenues associated with the economic activity of the operating airport should be considered; (e) the entire duration of the agreement, including any extensions, should be considered; (f) future financial flows should be discounted in order to assess profitability of the agreements; (g) incremental profitability of ryanair agreements to the airports should be assessed on the basis of estimates of the internal rate of return or net present value (npv) measures. analysis of professor damien p. mcloughlin brand building: why and how small brands should invest in marketing, prepared for ryanair, 10 april 2013 (234) the paper aims to set out the commercial logic underlying regional airports' decisions to buy advertising on ryanair.com from ams. (235) the paper argues that there are a large number of very strong, well known, and habitually used airports. weaker competitors must overcome static buying behaviour of consumers to expand their business. smaller regional airports need to find a way to consistently communicate their brand message to as wide an audience as possible. traditional forms of marketing communication require expenditure beyond their resources. oxera notes 3 and 4 how should ams agreements be treated within the profitability analysis as part of the market operator test?, 17 and 31 january 2014 (236) ryanair submitted further reports by its consultant oxera. in these reports, oxera discusses the principles which, according to the airline, should be taken into account as part of the meot in the profitability analysis of, on the one hand, airport services agreements between ryanair and airports and, on the other hand, the marketing agreements between ams and the same airports. ryanair emphasised that those reports do not in any way change its position presented earlier that the airport service agreements and the marketing agreements should be analysed under separate meots. (237) the reports indicate that the profits generated by ams should be included as revenues in a joint analysis regarding profitability while the expenses of ams would have to be incorporated in the costs. to do this, the reports suggest the application of a cash-flow-based methodology to the joint profitability analysis, meaning that the expenditure by airports on ams could be treated as incremental operating expenses. (238) the reports emphasise that marketing activities contribute to the creation and support of the brand's value, which helps to generate effects and benefits not only for the duration of the contract, but also after its termination. this would especially be the case if, due to the fact that ryanair has concluded an agreement with an airport, other airlines establish themselves at the airport, which will in turn attract more shops to install themselves there and therefore bring in more non aeronautical revenues for the airport. according to ryanair, if the commission proceeds to undertake a joint analysis of profitability, those benefits have to be taken into account by treating the expenses of ams as incremental operating costs, net of ams payments. (239) furthermore, ryanair considers that a terminal value (reflecting the value generated after the termination of the agreement) would have to be included in the projected incremental profits at the end of the airport services agreement. the terminal value could be adapted on the basis of a renewal-probability, measuring the expectation that profits will persist after the termination of the agreement with ryanair or if similar conditions are agreed with other airlines. ryanair considers that it would then be possible to calculate a lower limit for benefits generated jointly by the agreement with ams and the airport service agreement, reflecting the uncertainties of incremental profits after the termination of the airport services agreement. (240) to supplement this approach, the reports present a synthesis of the results of studies on the effects of marketing on the value of a brand. those studies consider that marketing can support the value of a brand and can help to build a customer base. according to the reports, in the case of an airport, marketing on ryanair.com significantly increases the visibility of the brand. the reports moreover state that smaller regional airports wishing to increase their air traffic can therefore especially increase the value of their brand by concluding marketing agreements with ams. (241) the reports lastly indicate that a cash-flow-based approach is to be preferred over a capitalisation approach in which the costs of marketing services provided by ams would be treated as capital expenditure on an intangible asset (that is, the value of the brand) (39). the capitalisation approach would only take into account the proportion of marketing expenditure that is attributable to the intangible assets of an airport. the marketing expenses would be treated as capital expenditure in an intangible asset, and then depreciated for the duration of the contract, taking into consideration a residual value at the foreseen termination of the airport services agreement. this approach would not take into account the incremental profits which the conclusion of the airport services agreement with ryanair would bring about and it is also difficult to calculate the value of the intangible asset due to the expenses of the brand and the time period of use of the asset. according to the reports, the cash-flow method is also more appropriate than a capitalisation approach since the latter would not capture the positive benefits to the airport that are expected to arise as a result of signing the airport services agreement with ryanair. oxera economic meop assessment: frankfurt hahn airport, 11 august 2014: (242) ryanair submitted a further report prepared by oxera regarding the agreements between frankfurt hahn airport and ryanair of 1999, 2002, 2005. the assessment of the 2005 ryanair agreement takes also into account the marketing agreement concluded directly with land rhineland-palatinate. oxera's assessment of the ryanair agreements is based on the information available to the airport around the time of signing the agreement. the 1999 ryanair agreement: (243) according to the report, the analysis of the 1999 ryanair agreement has been based on the business plan document produced by ffhg on 25 may 1999, a document which has been drawn up before signing the agreement. the report states that the aeronautical revenues have been calculated based on the charges specified in the 1999 ryanair agreement. the estimates of incremental operating costs have been based on ffhg's own estimates. the report points out that the costs of fire fighting, which are usually considered as falling within the public policy remit, were not taken into account. the same applies to infrastructure investments. table 16 oxera's incremental profitability assessment of the 1999 ryanair agreement (40) [ ] the 2002 ryanair agreement: (244) the report explains that the forecasts of total passenger numbers have been obtained from ffhg's business plan drawn up in november 2002, as it is the only document available that contains traffic forecasts over the relevant period. according to the report, the aeronautical revenues have been calculated based on the charges specified in the 2002 ryanair agreement. non-aeronautical revenues have been obtained from ffhg's business plan drawn up in november 2002, as it is the only document that contains projections of non-aeronautical revenues that was drawn up around the time of the 2002 ryanair agreement. (245) the estimates of operating costs per passenger have been based on ffhg's own analysis of incremental operating costs per ryanair departing passenger. the schedule of investments has been drawn up in november 2000. table 17 oxera's incremental profitability assessment of the 2002 ryanair agreement (41) [ ] 6.2. lufthansa and bdf (246) lufthansa and the bundesverband der deutschen fluggesellschaften e.v. (federal association of german air carriers, hereinafter: bdf) have submitted comprehensive information and comments on the 2008 opening decision which shall be summarised below. (247) lufthansa and bdf stated that the losses of ffhg and its predecessors since 1998 and until 2009 amount to eur 161 million and that ffhg did not, contrary to what it claims, reach a positive ebitda in 2006 either. in this respect, lufthansa and bdf claim that the slightly positive ebitda was only possible after the release of legacy liabilities, which reduced the operational losses. hence, lufthansa and bdf suggest that the commission should seek to get access to all of ffhg's annual balance sheets. in this regard lufthansa argued, that in contrast to what germany has stated, the depreciation of investments did not increase much during the years and cannot be considered very high in comparison to the costs related to marketing support for ryanair, which are included in other operating costs, as table 18 shows. lufthansa and bdf also suggest that the commission should request the full, non-publicised annual balance sheets of ffhg. table 18 relationship of depreciation and other operating costs in eur 2000 2001 2002 2003 2004 depreciations 4 477 257 5 325 627 5 423 627 6 045 387 7 699 330 losses 8 217 199 13 355 347 19 993 895 17 832 868 16 797 889 other operational costs [ ] 5 692 808 11 434 306 10 521 273 11 454 363 (248) lufthansa and bdf also claimed that a study submitted by germany containing statistics on the effects of ffhg on tourism in hunsr ck and land rhineland-palatinate should not be taken into account as the numbers on passenger growth and job growth around the airport were provided by ffhg and remained unchecked by the authors of the study. lufthansa and bdf claimed furthermore that it was known, even when the study was conducted, that the numbers given were not realistic. (249) furthermore, lufthansa and bdf submitted that ffhg did not have a clear business model, which could be shown by the changing plans for additions to the airport, such as malls or places for excursions, which did not have anything to do with the operation of the airport. furthermore, according to lufthansa and bdf, the conflicting declarations by ffhg that frankfurt hahn airport should have been profitable first by 2005, then by 2008 and then 2013, point in the same direction that no consistent business plan was being followed. the last prognosis made, namely that frankfurt hahn airport should become profitable from 2016 onwards, would therefore also seem doubtful and this prognosis was apparently even based on the assumption that further, substantial investments would be made. the origin of such investments was, however, completely unclear according to lufthansa and bdf. (250) moreover, lufthansa and bdf stated that, in contrast to what germany is claiming, pwc has not provided a proper meot since its assessment does not take into account the case law of the court of justice on at least two points. (251) firstly, lufthansa and bdf referred to the argumentation of germany that the accumulated losses of ffhg could be compensated by fraport as its shareholder. in this regard, lufthansa and bdf argued that it is not important whether losses can be compensated within a group of companies, but whether the individual measures taken as such are measures which a market economy investor would have taken as well (or not) and that this argumentation was therefore unacceptable. (252) secondly, lufthansa and bdf submitted that the argumentation in the assessment by pwc was not sufficient to prove that a market economy investor would have taken the same decision since pwc argued, for example concerning the 1999 ryanair contract, that a reduction of losses by increasing the passenger volume could be achieved. lufthansa and bdf referred to the case westlb, according to which a market economy investor would normally seek to achieve the maximum reasonable return on his investment, according to the particular circumstances and the satisfaction of his short-, medium- and long-term interests, even where he is investing in an undertaking of which he is already a shareholder (42). hence a reduction of losses would not suffice for a measure to pass the meot and therefore pwc already disregarded the case law of the court of justice in this respect, lufthansa and bdf argued. also, lufthansa and bdg pointed out that the assessment submitted on behalf of ffhg did not include any own meot as it only referred to the test made by pwc. (253) in addition, lufthansa and bdf contested the argument made by pwc in relation to the capital increases that long planning horizons of more than 30 years and amortisation of investments over 20 years are normal business practice for infrastructure investments (see recital 103 of the 2008 opening decision). in this respect, lufthansa and bdf claimed that the comparisons made by pwc to concession contracts at budapest airport, da vinci and campiano airports, sparta airport and belfast city airport were completely indefensible since the situation of none of these airports is even remotely comparable to the situation of ffhg and frankfurt hahn airport. lufthansa and bdf argued that unlike all of the airports mentioned by pwc, frankfurt hahn was a military airport at which the major part of the civil use started only in 1999 and was then supported by infrastructure developments exactly matching ryanair's needs. this is why, according to lufthansa and bdf, the break-even analysis is not accurate since the costs for the terminal were not taken into account. (254) lufthansa and bdf also argued on the basis of the 2008 opening decision that the overcompensation of security fees clearly constituted state aid. in this regard lufthansa and bdf advanced the argument, firstly, that the security checks had not been publicly procured. in the opinion of lufthansa and bdf, the rules of public procurement have not been followed and therefore, by default, the service has not been procured at the most advantageous price. secondly, lufthansa and bdf argued that, according to german law, these security fees must be oriented towards the actual and necessary costs. however, lufthansa and bdf pointed out that the fees at frankfurt hahn airport have remained at the same level between 2003 and 2008, whereas at other airports traffic fluctuations could be observed. (255) in contrast to the comments from germany concerning the legal assessment, lufthansa and bdf were of the opinion that the aid granted by fraport to ffhg originated from state resources. according to lufthansa and bdf, fraport had expressly admitted in all of its annual balance sheets between 2001 and 2006 that because of a consortium agreement between the public shareholders, it is a dependent, publicly held undertaking. in this regard, lufthansa and bdf point to a number of indications that the funds of fraport were state resources according to the judgment in case stardust marine (43) and article 2(1)(b) of commission directive 2006/111/ec (44). (256) furthermore, lufthansa and bdf considered that the actions of fraport are also imputable to the state. in this regard, lufthansa and bdf referred to indications for imputability such as the fact that ffhg's meeting of shareholders, meaning land rhineland-palatinate and fraport, agreed to the conclusion of the ryanair agreements. furthermore, lufthansa and bdg claimed that there is a remarkable temporal relationship between the second capital increase and the application for recognition of a common airport system in 2005. according to lufthansa and bdf, within two weeks the shareholders of ffhg decided on the capital increase, which resolved ffhg's financial difficulties, and subsequently the application for a common airport was made by germany. lufthansa and bdf therefore claimed that the public shareholders made this application possible through the new capital increase. (257) lufthansa and bdf moreover claimed that no market economy investor would have undertaken to finance and invest into ffhg, since according to the case law of the court of justice, a market economy investor is always profit oriented. a mere reduction of losses would not be enough to convince a market economy investor and he would not take social or local political considerations into account. (258) lastly, lufthansa and bdf claimed that the aid granted to ffhg for new infrastructure, as well as the aid granted to ryanair are incompatible with the internal market under the 2005 aviation guidelines as well as under the 2014 aviation guidelines. in this regard, lufthansa and bdf claimed that in this case there was no conversion of a military airport, given that the airport had been built 6 years after the end of military use. furthermore, they argued that frankfurt hahn airport did not decongest frankfurt main airport and especially that it was doubtful whether the airport helped the development in the region and created jobs there. according to lufthansa and bdf, this argument could in any case not justify the aid since the job generation started only in 1999, six years after the military use of the airport had ended. even if one would accept this as a justification, the numbers given by ffhg in its studies would be completely overestimating the effects on the economy and job creation. (259) furthermore, lufthansa and bdf claimed that the rebates granted through the airport charges for passenger numbers of 1 to 3 million or more were discriminatory. lufthansa and bdf argued that only ryanair was eligible for these rebates as it was the only airline generating that many passengers and frankfurt hahn airport did not even have the capacity to host another airline which could have provided such passenger numbers. the granting of marketing support was also discriminatory in the opinion of lufthansa and bdf as the proportion of the marketing support is dependent on the number of passengers the airline has already brought to the airport and the number of destinations already offered by the airline at the airport. since these factors do not have any relation to the amount of marketing support for new destinations, this system will provide ryanair with a much higher amount of marketing support, which according to lufthansa and bdf is unjustifiable. (260) as far as operating aid for the airport is concerned, according to lufthansa and bdf emphasised it is obvious that the single-till-approach applied at frankfurt hahn airport does not work since overall the revenues are not able to cover the losses. therefore, the compensation of these losses through the financing of ffhg constitutes operating aid. (261) as concerns aid to ryanair, lufthansa and bdf stated that ryanair has received advantages through the airport charges and the agreements with frankfurt hahn airport. lufthansa and bdf claimed that no market economy investor would have taken these measures since frankfurt hahn airport is obviously unable to operate profitably on this basis. lufthansa and bdf claimed that through the 2001 and 2006 schedule of airport charges, ryanair had been given an additional advantage in form of the additional reductions granted in relation to the total volume of passengers departing with the airline. (262) lufthansa and bdf argued that, as fraport has to be considered as a publicly held undertaking, ffhg is a publicly owned undertaking and therefore its resources have to be considered as state resources. the advantages granted by ffhg to ryanair are also imputable to the state, according to lufthansa and bdf, since the plta also comprises a control agreement (beherrschungsvertrag) and the public shareholders can steer the behaviour of ffhg. in this regard, lufthansa and bdf argued that it should also be taken into account that the manager of ffhg is always an employee of fraport. (263) lufthansa and bdf argued that none of the aid to ryanair is compatible with the internal market. the ryanair agreements and the 2001 schedule of airport charges should be assessed directly under article 107(3)(c) of the treaty. in this regard, the commission decision in chareloi (45) should also be taken into account. on this basis lufthansa and bdf stated that the aid to ryanair could not be justified since it constituted partly operating aid, which could not be justified at all, and partly start-up aid, which pursued no legitimate goal and was not granted in a transparent and non-discriminatory manner. lufthansa and bdf furthermore stated that the 2006 schedule of airport charges is not compatible with the 2005 aviation guidelines, since the conditions for compatibility in point 79 of the guidelines are not fulfilled in relation to the marketing support and the operating aid granted through the passenger fees. this is due to the fact that the marketing support is discriminatory, lufthansa and bdf explained, and that the passenger fees do not have a limited duration and have no incentive effect. furthermore, in lufthansa's and bdf's opinion all of the aid granted to ryanair is of a cumulative nature and hence is not in line with the compatibility conditions. therefore, in their view, it should be considered incompatible with the internal market. 6.3. association of european airlines (aea) (264) the aea stated that the fact that ffhg has been loss making since its opening and that the announced date for break-even has been constantly postponed shows that the business model is at best questionable and that there is a blatant disrespect of the market economy investor principle. (265) concerning the possible aid to ryanair, aea was of the opinion that this aid has had negative effects for competing airlines and that the agreements with ryanair constituted discriminatory measures. according to aea, these agreements are discriminatory as their conclusion coincides with the beginning of any commercial use of the airport, meaning that the airport was tailor-made for ryanair's needs. 6.4. air france (266) air france remarked generally that it strongly supported the commission's action in state aid matters in the aviation sector. more specifically in relation to the situation at frankfurt hahn airport, air france concurred with the commission's preliminary assessment that the measures in favour of ffhg and ryanair constituted state aid. air france believes in particular that the three commercial agreements with ryanair constitute a clear-cut discriminatory measure as no other airlines operating in the same airport system have ever been offered the same conditions. therefore, air france concluded that such measures have inevitably been contributing to a significant distortion of competition between intra-eu carriers within the internal market. 6.5. comments submitted on the implementation of the 2014 aviation guidelines to the pending case 6.5.1.1. lufthansa (267) lufthansa stated that the 1999, 2002 and 2005 ryanair agreements constitute incompatible state aid and provides further comments on the respective agreements. (268) with regard to the 1999 ryanair agreement, lufthansa submitted that the costs for terminal 1 at the airport are to be fully taken into account when applying the meot. to support this, lufthansa refers to the statement of ryanair in a parliamentary hearing. according to lufthansa, ryanair stated that the airport was built for them. lufthansa disputed that a proportion of the cost of the terminal could be attributed also to other airlines. (269) in the opinion of lufthansa, the meot carried out by pwc for the 2002 ryanair agreement underestimates the marketing costs for the opening of new routes in 2002. according to lufthansa it was publicly known that at least 7 new routes would be opened in 2002. hence, lufthansa stated that the marketing support was underestimated by at least eur [ ] in 2002. (270) with regard to the 2005 ryanair agreement, lufthansa stated that the passenger volume forecasts underlying the meot of the 2005 ryanair agreement appear to be overestimated. lufthansa stated that in the worst case the airport expected that ryanair would bring 3 million passengers between 2006 to 2012. however, according to lufthansa this expectations were not based on a real commitment by ryanair. (271) moreover lufthansa stated that the land rheinland-palatinate and ryanair concluded a marketing agreement in 2005, which is not part of the 2008 opening decision (46). according to lufthansa, the agreement grants ryanair marketing support of least eur [ ] million per year. (272) with regard to aid to the airport for the financing of infrastructure, lufthansa is of the opinion that the infrastructure is dedicated to ryanair and hence the compatibility criteria in the guidelines do not apply. 6.5.1.2. transport & environment (273) this non-governmental organization made comments criticizing the 2014 aviation guidelines and decisions of the commission regarding the aviation industry so far, for their allegedly negative effects on the environment. 7. comments from germany on third party submission 7.1. on the comments from ryanair (274) concerning the comments from ryanair, germany stated that these comprehensively supported its observations and supplemented these from the side of the airline. ryanair's comments especially underline, according to germany, that the contracts with ryanair are such as any market economy investor would have concluded and that in fact many other european airports have concluded similar agreements with ryanair. (275) furthermore, germany emphasised that the airport charges as established by ffhg were according to ryanair absolutely normal in the low-cost carrier sector and were not especially advantageous for ryanair. 7.2. on the comments from lufthansa and bdf (276) concerning the comments from lufthansa, germany rejected the argument that the results of the study submitted on the effects of frankfurt hahn airport on the regional economy and the number of jobs created would be questionable and emphasised instead that the study is based on the well-founded economic research conducted by the expert authors. germany submitted that of course the numbers in the study are a forecast and would not necessarily always correspond to the numbers actually realised, especially in the context of the world economic crisis. according to germany, the forecast was realistic at the moment of publication and led to the conclusion by pwc, from an ex ante perspective, that ffhg has acted as a market economy investor. (277) germany also rejected the doubts of lufthansa and bdf that profitability will not be reached at frankfurt hahn airport. germany stated that the forecast when profitability will be achieved may have to be adapted with time due to multiple factors, such as the investment and expansion decisions of the undertaking. in any case, pwc has put forward reliable evaluations that all the measures under investigation were economically reasonable. (278) the claim by lufthansa and bdf that no real meot justification exists are therefore unfounded according to germany, especially since lufthansa did not have access to the meot of pwc. (279) concerning the capital increases, germany stated that there was no closure of frankfurt hahn airport; rather, the airport was has been used for civil aviation since 1993 and up until the moment that fraport got involved. germany explains that frankfurt hahn airport was therefore not a project to provide an airport for ryanair, as lufthansa claimed, but was designed as a low-cost airport to be used according to equal, non-discriminatory conditions by any airline. that some airports are being used more by certain airlines than by others is normal, germany claimed. in fact, lufthansa itself has for example an exclusive terminal at munich airport. (280) furthermore, germany stated that there was no discrimination concerning the marketing support scheme. the levels of marketing support granted have been set up in a reasonable, non-discriminatory manner. the payment of marketing support in instalments, as criticised by lufthansa and bdf, only served the purpose of minimising the risks in case a route would be closed again soon after its opening. this danger, germany argued, was not present to the same extent if an airline was already present at frankfurt hahn airport and already served more than 1 million passengers. according to germany, ryanair has furthermore not received any secret or unjustified marketing support from ffhg. (281) in relation to the question of whether there was any aid coming from state resources, germany argued that in contrast to what lufthansa and bdf claimed, no conclusions could be drawn from the annual balance sheets of fraport in which the undertaking stated that it is a dependent, publicly held undertaking. this statement was only included in the annual financial report in order to present the relationship to undertakings and persons close to fraport, but does not have any implications for the state aid assessment. in any case, no imputability of the capital increases to the state could be derived from this application. (282) concerning the question whether the aid granted to ffhg would be compatible with the internal market, germany stated that lufthansa's and bdf's argument that civil use began only six years after the termination of military use would be incorrect as well as irrelevant. civil use had started directly in 1993 and the infrastructure for civil use was already there. the expansion of the infrastructure in order to make the airport ready for commercial passenger traffic was inevitable. (283) germany rejected lufthansa's and bdf's argument that frankfurt hahn airport did not help to decongest frankfurt main airport and pointed out that lufthansa and bdf had not substantiated their claim with any evidence. (284) germany especially opposed the argument of lufthansa and bdf that it was doubtful whether frankfurt hahn airport generated a great number of jobs. in this regard germany argued that it could not be doubted that frankfurt hahn airport had had considerable influence on the economic and social development of the structurally weak region around it. (285) furthermore, germany dismissed the discriminatory effects which lufthansa and bdf claimed the passenger fees and marketing support to have. germany ensured that these had been established on the basis of economic considerations and calculations and were available to airlines in a uniform and non-discriminatory way. (286) germany lastly rejected the doubts raised by lufthansa and bdf with regard to the single-till-approach at frankfurt hahn airport. germany stated that this approach was economically justified, as the meot by pwc had shown, and that it would not have been possible to attract airlines to frankfurt hahn airport if the passenger fees would have been so high as to guarantee a profitable operation of the airport from the beginning. (287) concerning the claims that lufthansa and bdf advance in relation to aid granted to ryanair through the 1999, 2002 and 2005 ryanair agreements, germany referred to the detailed meots carried out by pwc and stated that these agreements cannot constitute state aid as they are complying with the market economy investor principle. according to germany, the calculations presented by lufthansa and bdf are implausible and based on wrong passenger numbers. germany again pointed out that it was not possible to operate an airport like frankfurt hahn profitably from the very beginning, but only on a medium- to long-term basis. (288) germany also stated that the doubts which lufthansa and bdf raised in relation to the question whether the aid to ryanair could be justified were unfounded. germany moreover argued that even if the marketing support would constitute an advantage to ryanair, which it did not, according to germany, even in that case such aid would be compatible with the internal market on the basis of the criteria set out in recital 79 of the 2005 aviation guidelines. 7.3. on the comments from air france and the aea (289) germany pointed out in relation to the comments from aea that these were not substantiated with any evidence. furthermore, germany argued that even if, as aea stated, there were negative effects for competing airports, then these airports had not complained about this and had not even commented on the 2008 opening decision. 8. assessment existence of aid (290) by virtue of article 107(1) of the treaty any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market. (291) the criteria in article 107(1) of the treaty are cumulative. therefore, in order to determine whether the measure in question constitutes aid within the meaning of article 107(1) of the treaty all of the following conditions need to be fulfilled. namely, the financial support should: (a) be granted by the state or through state resources; (b) favour certain undertakings or the production of certain goods; (c) distort or threaten to distort competition; and (d) affect trade between member states. 8.1. aid nature of the measures granted to the airport 8.1.1. measure 1: 2001 plta applicability of state aid rules to airports (292) germany submits that the 2001 plta was put into place before the public funding of airports was considered to constitute state aid and was not altered until it was replaced by the 2004 plta. (293) hence, the commission must first establish whether the state aid rules were applicable to the 2001 plta at the time it was concluded. in that context, the commission recalls that an aid measure constitutes existing aid pursuant to article 1(b)(v) of regulation (ec) no 659/1999 where it can be established that at the time the aid measure was put into effect, it did not constitute state aid, and subsequently became aid due to the evolution of the common market and without having been altered by the member state. (294) indeed, in the past, the development of airports was often determined by purely territorial considerations or, in some cases, military requirements. the operation of airports was organised as part of the administration rather than as a commercial undertaking. competition between airports and airport operators was also limited and developed gradually. taking into account those conditions, the financing of airports and airport infrastructure by the state was for some time considered by the commission as a general measure of economic policy which could not be controlled under the state aid rules of the treaty. (295) however, the market environment has changed. in the a roports de paris judgment, the general court stated that the operation of an airport, including the provision of airport services to airlines and to the various service providers within airports, is an economic activity (47). consequently, since the adoption of that judgment (12 december 2000) it is no longer possible to consider the operation and construction of airports as a task carried out by the administration within the public policy remit, outside the ambit of state aid control. (296) in its leipzig/halle airport judgment, the general court confirmed that it is a priori not possible to exclude the application of state aid rules to airports as the operation of an airport and the construction of airport infrastructure is an economic activity (48). once an airport operator engages in economic activities, regardless of its legal status or the way in which it is financed, it constitutes an undertaking within the meaning of article 107(1) of the treaty, and the treaty rules on state aid therefore apply (49). (297) ffhg has been engaged in constructing, maintaining and operating frankfurt hahn airport. in this context, it has offered airport services and charged users commercial aviation operators as well as non-commercial general aviation users for the use of the airport infrastructure, thereby commercially exploiting the infrastructure. therefore, it must be concluded that ffhg has been engaged in an economic activity as from the date of the a roports de paris judgment (that is to say 12 december 2000) onward. (298) however, in the light of the developments (as set out in recitals 294 to 296) the commission considers that, prior to the judgment of the general court in a roports de paris, public authorities could legitimately consider that financing measures with regard to airports did not constitute state aid and accordingly did not need to be notified to the commission. hence, the commission cannot put into question individual financing measures (not awarded on the basis of an aid scheme (50)) which were definitively adopted before judgment in a roports de paris under state aid rules. (299) accordingly, the commission has to assess first, whether the 2001 plta was put into place before the judgment in a roports de paris (12 december 2000) and second whether that measure was later amended. (300) the 2001 plta was irrevocably agreed on 31 august 1999 and confirmed in a notarial deed of 24 november 2000. therefore, the commission considers that the 2001 plta was irrevocably put in place before the a roports de paris judgment. moreover, the 2001 plta was not amended until it was replaced by the 2004 plta. (301) hence, at that time the public authorities could legitimately consider that a plta to cover annual losses of ffhg did not constitute state aid. conclusion (302) in the light of the considerations in recitals 292 and following, the commission concludes that, at the time the 2001 plta, was put into place public authorities could legitimately consider that a plta to cover annual losses of ffhg did not constitute state aid. 8.1.2. measure 2: 2001 capital increase (303) in 2001, fraport and land rhineland-palatinate increased ffhg's capital by eur 27 million. fraport contributed eur 19,7 million; land rhineland-palatinate contributed eur 7,3 million. the capital increase was approved first by the supervisory board of fraport (as regards its contribution) on 14 december 2001 and subsequently by a resolution of the shareholders of ffhg dated 9 january 2002 (51). the capital increase by fraport and the land became effective on 9 january 2002. 8.1.2.1. notion of undertaking and economic activity (304) as was analysed in recitals 293 and following, since 12 december 2000 ffhg has to be considered as an undertaking exercising an economic activity for the purposes of article 107(1) of the treaty. 8.1.2.2. state resources and imputability (305) in order to constitute state aid, the measures in question have to be financed from state resources and the decision to grant the measure must be imputable to the state. (306) the concept of state aid applies to any advantage granted through state resources by the state itself or by any intermediary body acting by virtue of powers conferred on it (52). resources of local authorities are, for the application of article 107(1) of the treaty, state resources (53). in that respect, it is constant commission practice to consider that irrespective of whether a public undertaking is loss-making or profit-making, all its resources are to be considered as state resources (54). land rhineland-palatinate's share in the 2001 capital increase (307) land rhineland-palatinate has financed its share of the 2001 capital increase directly from its general budget. thus, it can be concluded that that measure is financed through state resources and also imputable to the state. fraport's share in the 2001 capital increase state resources (308) in germany's opinion, fraport's share in the 2001 capital increase does not qualify as funding from state resources as at the time fraport was an independent incorporated company under private law noted at the stock exchange and the public authorities were exercising no continuing control over its funds. (309) according to the case law, resources of an undertaking are to be considered state resources if the state is capable, by exercising control over such undertakings, to direct the use of their resources (55). (310) the commission considers that in the present case, the state at all material times exercised direct or indirect control over the resources under consideration. the commission notes that, at the moment the 2001 capital increase was irrevocably decided, fraport was a company that was in majority publicly owned. before 11 june 2001, public shareholders held 100 % of fraport's shares (56). on 11 june 2001, fraport was listed on the stock exchange and 29,71 % of its shares were sold to private shareholders. afterwards, land hesse held 32,04 % of the shares, stadtwerke frankfurt am main gmbh (100 % owned by the municipality frankfurt am main) held 20,47 % of the shares and the federal republic of germany held 18,32 % of the shares. (311) hence, between 11 june 2001 and 26 october 2005, 70,29 % of fraport's shares were held by public shareholders and as such would qualify as a public undertaking within the meaning of article 2(b) of directive 2006/111/ec. also, the majority of fraport shares held by public bodies meant that these were in a position to exercise a dominant influence over fraport. (312) thus, the commission considers that any capital injection granted from fraport's resources would signify a loss of state resources, thus constituting a transfer of state resources. imputability to the state (313) however, the court has also ruled that, even if the state is in a position to exercise control over a public undertaking and its operations, actual exercise of that control in a particular case cannot be automatically presumed. a public undertaking may act with more or less independence, according to the degree of autonomy left to it by the state. (314) therefore, the mere fact that a public undertaking is under state control is not sufficient for measures taken by that undertaking, such as the funding provided to ffhg through the 2001 capital increase, to be considered as imputable to the state. it is also necessary to examine whether the public authorities must be regarded as having been involved, in one way or another, in the adoption of this measure. on that point, the court indicated that the imputability to the state of a measure taken by a public undertaking might be inferred from a set of indicators arising from the circumstances of the case and the context in which that measure was taken (57). (315) such indicators can be the integration of the undertaking into the structures of the public administration, the nature of its activities and the exercise of the latter on the market in normal conditions of competition with private operators, the legal status of the undertaking (in the sense of it being subject to public law or ordinary company law), the intensity of the supervision exercised by the public authorities over the management of the undertaking, or any other indicator showing, in the particular case, an involvement by the public authorities in the adoption of a measure or the unlikelihood of their not being involved, having regard also to the compass of the measure, its content or the conditions which it contains (58). (316) as stated in recital 135 and the following, germany submitted that the measures taken by fraport in relation to frankfurt hahn airport were not imputable to the state. in this regard, germany referred especially to 76 of the aktg and to judgments under german law according to which the management board of an aktiengesellschaft has a large discretion to act with regard to the day-to-day business of the company and insofar acts independently of its shareholders. (317) germany also referred to a judgment of the german federal court, the bundesgerichtshof, in which that court noted that the public shareholders were not able to have an influence on individual decisions taken in day-to-day business, but could only provide the general framework and guiding supervision of fraport. according to germany, this special nature of the aktiengesellschaft was also recognised in relation to eu public procurement law in the court's judgment in case stadtwerke brixen ag (59). (318) therefore, as regards the involvement of the public shareholders in the decision-making at the general meeting of shareholders, germany argued that a vote by the meeting of shareholders did not constitute anything more than a mere exercise of their lawful rights and obligations as shareholders. germany also rejected the notion that any of the other indications from the stardust marine judgment, mentioned in recital 315, were present. (319) as a preliminary remark, the commission points out that the fact that a state owned company is a company incorporated under private law alone cannot having regard to the autonomy which that legal form is capable of conferring upon it be regarded as sufficient to exclude imputability of its actions to the state (60). no distinction should be drawn between cases where aid is granted directly by the state and cases where it is granted by public or private bodies established or appointed by the state to administer the aid (61). (320) in addition, the commission notes that the judgment rendered by the german bundesgerichtshof in 1999 (62) concerns criminal proceedings. in those proceedings, the question at last instance was whether a former employee of fraport could be charged with the offence of corruption of an employee or corruption of a public official, so the question arose whether fraport was to be viewed as an other administration according to the german criminal code (63). therefore, the case is in no way connected to the question whether an action of fraport can be seen as imputable to the state under state aid rules, but only clarifies that an employee by fraport is not a public official and fraport cannot be considered as part of the public administration in the meaning of the german criminal code. (321) also as concerns the other judgment of the bundesgerichtshof presented by germany (64), the commission notes that that judgment, as the case of parking brixen (65), concerned the criterion of public control over an undertaking in the sense of union public procurement rules. it does not concern the question of imputability under state aid law. (322) furthermore, while it may be that the management board of an aktiengesellschaft can act independently of its public shareholders when day-to-day business decisions are taken, because of its shareholder structure (with 70 % of its shareholders being public) and the consortium agreement between its public shareholders fraport nevertheless considers itself as a dependent, publicly held undertaking (66) (as reported in each annual financial report between 2001 and 2006). (323) moreover, several factors indicate that the 2001 capital increase is in fact imputable to the state. (324) first of all, the commission considers that the 2001 capital increase cannot be considered out of context, but must be viewed in the light of the political and legal situation of fraport at that time. those circumstances and facts clearly indicate that the measure would not have been adopted but for the involvement of the state. (325) according to the minutes of fraport's supervisory board meeting on 26 september 1997, the authorities of land rhineland-palatinate offered fraport to become involved in frankfurt hahn airport, since land rhineland-palatinate wished, through the involvement of [fraport] in [ffhg] to strengthen the development of employment opportunities, and since it expected an increase in air traffic. after fraport had become a shareholder in ffhg with a share of 64 % on 1 january 1998, according to the minutes of the supervisory board meeting of 10 may 1999, the government of land rhineland-palatinate [has] turned to the prime minister of land hesse with the request for a stronger commitment of [fraport] at hahn [airport]. for this purpose, fraport was to take over the shares which holding hahn and weiss and freytag still held in the airport (see recital 17). the minutes state furthermore that fraport should not be penalised if it does not reach regional political goals, e.g. number of employment opportunities and that the negotiations between fraport and the land about points of discussion have begun. finally, the minutes express that public funds should be used as much as possible for the development of the airport and that, in order to speed up the process of collecting these funds, land rhineland-palatinate has already established a working group in the ministry of economy, of which fraport is also a member. (326) those minutes show that fraport was being used as a vehicle by land rhineland-palatinate and land hessen in order to pursue regional and structural political goals, such as creating more jobs in the region. (327) since fraport was still a publicly held undertaking at that time, its supervisory board, whose members were nominated to a large extent (at least half of the supervisory board) by the public shareholders, had the power to approve the basic agreement of 31 august 1999 (grundlagenvereinbarung) (67) and to authorise the management board to conclude the 2001 plta (68). furthermore, fraport's shareholder meeting then adopted a resolution dated 3 may 2000 authorising the management board to conclude the 2001 plta with ffhg and therefore to bind fraport to the ffhg project until at least 2005. since that resolution required a majority of votes representing at least three quarters of the authorised capital taking part in the vote, and the public authorities held 100 % of the shares at the time (see recital 305), that resolution was effectively taken by the public authorities. (328) land rhineland-palatinate also made its support and public funding conditional upon the conclusion of the 2001 plta, as can be seen from the basic agreement of 31 august 1999 (69). (329) therefore, through the political involvement of the two l nder, directly on a political level and indirectly through the supervisory board and as the public shareholders of fraport, fraport was involved with ffhg and signed the 2001 plta for taking over the losses of ffhg until at least 2005. (330) furthermore, 13 of ffhg's articles of association (70) stated that until 31 december 2027 any sale of shares by one of the shareholders would have to be authorised in writing by the other shareholders. since ffhg only had two shareholders at that time, fraport and land rhineland-palatinate, this meant that fraport needed the agreement in writing from land rhineland-palatinate in order to sell its shares. this effectively meant that the land could hinder fraport from leaving the ffhg project. (331) already in 2001, when the 2001 capital increase was discussed, it appeared that the management of ffhg was in direct negotiations with land hesse and land rhineland-palatinate (71). it should be noted that land hesse was at that point in time not yet ffhg's shareholder, but a shareholder of fraport (with a 45,2 % shareholding). (332) against that political and legal background, it then became evident in january 2001 (72) that further investments into ffhg were urgently needed in order to allow ffhg to become profitable. (333) moreover, land rhineland-palatinate directly induced fraport to adopt the 2001 capital increase. in a proposal for the supervisory board's meeting from 20 june 2001, it is noted that, in view of the capital increase of eur 27 million in connection with the development of frankfurt hahn airport, the shareholder land rhineland-palatinate had insisted that the investments to be financed by the 2001 capital increase were the condition for the continuation of the public infrastructure investments, such as for the construction of the road leading towards frankfurt hahn airport amounting to approximately eur [ ] million. (334) in that regard, the committee on the acquisitions of fraport's supervisory board noted in a meeting on the 2001 capital increase, dating from 23 november 2001, so less than a month before the supervisory board approved the 2001 capital increase, that fraport could not disengage itself from ffhg at that time, since it was not to be expected that land rhineland-palatinate would agree to that (73). (335) consequently, the commission considers that the 2001 capital increase is imputable to the state. 8.1.2.3. economic advantage (336) an advantage within the meaning of article 107(1) of the treaty is any economic benefit which an undertaking would not have obtained under normal market conditions, that is to say, in the absence of state intervention (74). only the effect of the measure on the undertaking is relevant, not the cause nor the objective of the state intervention (75). whenever the financial situation of the undertaking is improved as a result of state intervention, an advantage is present. (337) furthermore, capital placed directly or indirectly at the disposal of an undertaking by the state in circumstances which correspond to normal market conditions cannot be regarded as state aid (76). in this case, in order to determine whether the 2001 capital increase grants an advantage to ffhg that it would not have received under normal market conditions, the commission has to compare the conduct of the public authorities providing the direct investment grants and capital injections to that of a meo who is guided by prospects of profitability in the long-term (77). (338) the assessment should leave aside any positive repercussions on the economy of the region in which the airport is located, since the court has clarified that the relevant question for applying the market economy operator ('meo') principle is whether in similar circumstances a private shareholder, having regard to the foreseeability of obtaining a return and leaving aside all social, regional-policy and sectoral considerations, would have subscribed the capital in question (78). (339) in stardust marine the court stated that, [ ] in order to examine whether or not the state has adopted the conduct of a prudent investor operating in a market economy, it is necessary to place oneself in the context of the period during which the financial support measures were taken in order to assess the economic rationality of the state's conduct, and thus to refrain from any assessment based on a later situation. (79). (340) furthermore, the court declared in the edf case that, [ ] for the purposes of showing that, before or at the same time as conferring the advantage, the member state took that decision as a shareholder, it is not enough to rely on economic evaluations made after the advantage was conferred, on a retrospective finding that the investment made by the member state concerned was actually profitable, or on subsequent justifications of the course of action actually chosen. (80). (341) in order to be able to apply the meo principle, the commission has to place itself at the time when the decision to increase the capital of ffhg was taken. also, the commission must in principle base its assessment on the information and assumptions which were at the disposal of ffhg's public shareholders at the time when the decision regarding the financial arrangements at stake was taken. (342) the commission recognises that it may be difficult for the relevant member state and for the operators concerned to provide full contemporaneous evidence in respect of financial arrangements concluded many years ago and will take that into account when applying the criterion at stake in the present case. (343) germany argues that ffhg's shareholders based their decision to inject additional capital on several documents drawn up by ffhg, fraport and external advisers, showing that the decision was justified. (344) while it is true that a long-term plan 2001-2015 for investments into ffhg was drawn up, at the time of the 2001 capital increase the investment was considered by fraport's consultants bcg and sd as involving high risks, because ffhg would reach an annual profit of eur [ ] under disproportionately high growth assumptions only in 2015. in that context, several observations can be made concerning the timing of the 2001 capital increase and the available information at the time this measure was decided by land rhineland-palatinate and fraport. (345) the decision to inject additional capital into ffhg was taken against the background of the worsening financial situation of the airport in 2001. in january 2001, a report on the economic situation of ffhg was presented. this report concluded that, even though the preliminary goals which fraport had set itself for ffhg had been reached swiftly and the passenger numbers were increasing, the overall economic situation was declining dramatically since two of ffhg's major clients (malaysian airlines cargo and mng airlines) shifted their activities from, or reduced their activities at, frankfurt hahn airport. against this background, fraport mandated bcg and sd to develop a strategy for ffhg. bcg's report shows that even in the event of disproportionate growth no profitability of the investments into ffhg could be expected until 2015. such growth assumptions were also confirmed as unrealistic by interplan (81) (82). moreover, bcg stated in its report that under realistic growth assumptions no profitability of the investments undertaken could be expected. to support this, bcg calculated the net present value (npv) of the investment as summarised in table 19. table 19 bcg's profitability calculation of investments into ffhg (83) assumptions (84) npv (85) (in eur) 20 % growth as from 2005 [ ] 10 % growth as from 2005 [ ] 7 % growth as from 2005 [ ] (346) moreover, according to the traffic projections of fraport's external expert further growth would be subject to additional infrastructure investments (86). the overall amount of the necessary investments was estimated to be up to eur [ ] million and would have involved the extension of the runway, taxiways, aprons and other infrastructure measures. however, as stated by bcg, no detailed assessment underpinning this considerable investment plan was conducted. for these reasons, bcg considered that the investment involved high risks and recommended to share these risks with an additional investor or to consider selling fraport's share in ffhg. (347) germany submitted a meot conducted by pwc to justify the market conformity of the 2001 capital increase. that document does, however, not support germany's argument that ffhg's shareholders acted like prudent investors as assessed in recital 348 and following. (348) the commission takes note of the long-term business plan drawn up by fraport's sd in 2001, which served as the basis for the meot conducted by pwc in 2006 and 2008, respectively. in that business plan, the following three scenarios were identified: (i) status quo: no further investments to be undertaken by fraport; (ii) alternative scenario 1: limited investments into the extension of the runway under very pessimistic traffic forecasts; and (iii) alternative scenario 2: with identical investments, but best case traffic forecasts. (349) however, pwc did not calculate the npv of the different scenarios in order to allow for a comparison. the npv established in table 20 shows that in all scenarios the npv2001-2015 would be negative. also, the projections underlying pwc's profitability assessment show that the alternative scenarios would only under very optimistic traffic forecasts, assuming a disproportionately high growth, result in losses that are smaller (by eur [ ] million) than in the status quo scenario (without taking into account that an additional investment of eur [ ] million would be required). in the worst case scenario, the npv of the alternative scenario would even be higher (by eur [ ] million) than in the status quo scenario. table 20 profitability assessment of the 2001 capital increase (87) [ ] source: pwc report, 24 october 2008, p. 39 and commission's assessment (88). (350) germany further argued that an exit of fraport had been considered, but was not possible until at least 2005, therefore this was not considered as an option. however, even though fraport was bound by the 2001 plta, the npv of the losses expected to be incurred from 2001 to 2005 amounted to eur [ ] million. hence, the commission considers that a coverage of losses of ffhg until 2005 without any further investments would have been less costly than investing further into the airport. (351) moreover, it has to be also recalled that the profitability forecast of fraport's investment into ffhg deteriorated substantially after the decision to conclude the 2001 plta was taken (namely after august 1999). (352) table 21 compares the expected annual results in 2001 to 2010 under the business plan of ffhg drawn up to support the 2001 plta decision and the business plan of ffhg supporting the 2001 capital increase. accordingly, the npv of ffhg's annual results for the same period decreased by approximately eur [ ] million. table 21 comparative assessment of the annual results of ffhg under the business plan for the 2001 plta versus the 2001 capital increase (89) [ ] source: pwc report, 24 october 2008, p. 32 and 39 and commission's assessment (90). (353) the commission further observes that according to the minutes of the supervisory board meeting on 16 november 2001 the profitability of the 2001 capital increase was discussed. according to those minutes, the investments even the intermediate investments of eur 27 million into ffhg were not expected to be profitable. moreover, it was stated that nevertheless fraport would provide the risk capital in order to open up opportunities for the future. in addition, the representative of the land rheinland-palatinate (landrat of the rhein-hunsr ck district) noted that according to the minutes of the supervisory board meeting of ffhg in may 2001, fraport's decision to investment into ffhg will not depend on the profitability prospect, but on the agreement of fraport's supervisory board acquisition committee, which has given its agreement. (354) in the light of the above, the commission concludes that the 2001 capital increase of fraport was not granted in conformity with the meop and conferred an advantage to ffgh. (355) with regard to the capital increase of land rhineland-palatinate, the commission notes that germany's justification of its market conformity is based on the same grounds as for fraport, which was already discussed in recital 344 and following. the arguments put forward in this regard also apply here. (356) in that regard, the commission first observes that, since 1994, the land had already invested several times into ffhg without any success. second, the land participated in the capital increase under different conditions as fraport (no remuneration of its investment during the duration of the 2001 plta could have been expected). third, according to the 2003 investment report for rhineland-palatinate, the reason for the land's investment into frankfurt hahn airport were important social and structural policy objectives, such as the creation of jobs and the fulfilment of transport policy objectives, rather than profitability considerations. (357) therefore, the commission also concludes that the 2001 capital increase of land rhineland-palatinate was not granted in conformity with the meop and conferred an advantage to ffgh. 8.1.2.4. selectivity (358) for it to fall within the scope of article 107(1) of the treaty, a state measure must favour certain undertakings or the production of certain goods. hence, only those measures favouring undertakings which grant an advantage in a selective way fall under the notion of state aid. (359) in the case at hand, the 2001 capital increases by fraport and land rhineland-palatinate only benefitted ffhg. both capital increases were thus by definition selective within the meaning of article 107(1) of the treaty. 8.1.2.5. distortion of competition and effect on trade (360) when aid granted by a member state strengthens the position of an undertaking compared with other undertakings competing in intra-union trade, the latter must be regarded as affected by that aid. in accordance with settled case law (91), for a measure to distort competition it is sufficient that the recipient of the aid competes with other undertakings on markets open to competition. (361) as assessed in recital 304, the operation of an airport is an economic activity. competition takes place, on the one hand, between airports to attract airlines and the corresponding air traffic (passengers and freight), and, on the other hand, between airport managers, which may compete between themselves to be entrusted with the management of a given airport. moreover, in particular with respect to low cost carriers and charter operators, airports that are not located in the same catchment areas and even in different member states can also be in competition with each other to attract those airlines. (362) given the size of frankfurt hahn airport (see table 1) and its proximity to other union airports, notably frankfurt main airport, luxembourg airport, zweibr cken airport, saarbr cken airport and k ln-bonn airport (92). the commission considers that the measures concerned were liable to affect trade between member states. there are international flights from frankfurt hahn airport to a number of international destinations as set out in recital 202. the runway at frankfurt hahn airport is of sufficient length and allows airlines to serve international destinations. (363) in addition, frankfurt hahn airport serves as a freight airport (see table 2). with regard to competition for air freight, the commission notes that freight is usually more mobile than passenger transport (93). in general, a catchment area for freight airports is considered to have a radius of at least around 200 kilometres and 2 hours travelling time. with regard to competition for air freight, the commission notes that freight is usually more mobile than passenger transport (94). in general, the catchment area for freight airports is considered to have a radius of at least around 200 kilometres and 2 hours travelling time. based on the commission's information, industry players generally consider that the catchment area of a freight airport may be even larger as up to a half a day of trucking time (that is to say, up to 12 hours driving time by trucks) would in general be acceptable for freight forwarders to use the airport in order to transport freight (95). against that background, the commission considers that, since freight airports are more fungible then passenger airports given that it is sufficient for air freight to be delivered into a certain area and then forwarded by road and rail freight forwarders to its final destination, inter alia, there is a higher likelihood of distortions of competition and effect on trade between member states. (364) on the basis of the arguments presented in recitals 360 to 364, the economic advantage which ffhg received has strengthened its position vis- -vis its competitors on the union market for the provision of airport services. against that background, the advantage provided to ffhg though the 2001 capital increase must be considered as being liable to distort competition and have an effect on trade between member states. 8.1.2.6. conclusion (365) the 2001 capital increase of eur 27 million by fraport and land rhineland-palatinate constitutes state aid within the meaning of article 107(1) of the treaty. 8.1.3. measure 3: 2004 capital increase and measure 4: 2004 plta (366) in 2004, the capital of ffhg was increased by a further eur 42 million (fraport invested eur 10,21 million, land hesse invested eur 20 million and land rhineland-palatinate invested eur 11,79 million). land rhineland-palatinate and land hesse agreed to that capital increase in 2002 subject to the condition that a new plta (namely the 2004 plta) between ffhg and fraport would be concluded, covering the period until 31 december 2014. (367) on 5 april 2004, fraport and ffhg concluded the 2004 plta. that agreement was approved by the shareholders of fraport on 2 june 2004. 8.1.3.1. notion of undertaking and economic activity (368) as analysed in recitals 293 and following, since 12 december 2000 ffhg has to be considered as an undertaking exercising an economic activity for the purposes of article 107(1) of the treaty. 8.1.3.2. state resources and imputability 2004 capital increase and the 2004 plta fraport (369) the commission considers that due to the fact that the 2004 plta was a pre-condition for the 2004 capital increase to become effective and because both measures were subject to the agreement of fraport's shareholders at the same shareholder meeting, the imputability of both measures needs to be assessed together (as regards fraport's contribution). (370) the 2004 capital increase and the 2004 plta were confirmed by fraport's shareholders assembly on 2 june 2004 with 99,992 % of the votes of the shareholders present at the meeting. (371) furthermore, germany argued that for the decision of the 2004 plta to be approved, a majority of 74,994 % of the votes at the shareholders assembly was needed, whereas the public shareholders only held approximately 70 % of the shares in fraport and were therefore in fact not able to control the decisions of fraport. in this regard it needs to be recalled that the 2004 capital increase would not become effective without the endorsement of the 2004 plta by fraport's shareholders. (372) the commission considers that as a majority shareholder the state had an important share in the vote on the 2004 capital increase and 2004 plta. nevertheless, according to the german aktiengesetz (aktg) a plta becomes effective only upon its approval by the shareholder's meeting with majority of votes representing at least three quarters of the authorised capital taking part in the vote (96). hence, the public authorities could not without the substantial participation of the private shareholders control the decision to implement the 2004 plta and to carry out the 2004 capital increase by fraport. (373) therefore, in light of the considerations in recital 369 and the following, the commission considers that the 2004 capital increase by fraport and the 2004 plta are not imputable to the state. even if imputability were to be confirmed and the measure considered to be aid, such aid would be compatible with the internal market. in this respect, the considerations below in sections 10.3 and 10.4 equally apply. 2004 capital increase land rhineland-palatinate and land hesse (374) land rhineland-palatinate and land hesse financed their shares of the 2004 capital increase from their general budget. hence, those parts of the 2004 capital increase were clearly financed from state resources and are imputable to the state. 8.1.3.3. economic advantage (375) as was stated in recitals 336 and following, the commission applies the meo principle to test whether there is an economic advantage conferred on an undertaking. the principles regarding the application of the meo principle set out in recitals 336 and following apply equally. application of the meot land rhineland-palatinate (376) in relation to the 2004 capital increase of land rhineland-palatinate, germany submitted that it acted in line with the meo principle. to support this, following the 2008 opening decision germany provided a meot conducted by pwc in 2008. (377) the commission first of all notes that land rhineland-palatinate did not draw up its own ex ante profitability calculation or calculated its own return on investment. on the contrary, land rhineland-palatinate was relying on the business plan prepared by ffgh and fraport. (378) second, the commission considers however that the from the situation of the land was not the same as the situation of fraport's shareholders. table 22 shows land rhineland-palatinate was supposed to inject eur [ ] million in 2005 to 2009 (in total eur [ ] million), but expected receiving dividend payments or any other remuneration for its participation only as of 2025. however, fraport's shareholders were supposed to inject eur [ ] million and expected after the negative results during the first four years, to receive dividend payments. the npv of the expected dividends for the period up to 2025 amounted to eur [ ] million with an internal rate of return (irr) of [ ] %. (379) third, in view of this long planning horizon and given the fact that land rhineland-palatinate had already invested several times without any success into ffhg, the commission considers that no prudent private investor in the position of the land would have decided to inject further capital into ffhg without also conducting an ex ante sensitivity assessment. table 22 profitability assessment of the 2004 capital increase by land rhineland-palatinate [ ] source: pwc report: rheinland-pfalz, 24 october 2008, p. 21. (380) furthermore, the meot for the 2004 capital increase and the 2004 plta are based on significant growth expectations as regards ffhg's annual financial results (see table 23). these growth assumptions underlying the meot are substantially higher than those underpinning the meot for the 2001 capital increase. in addition, they are subject to high fluctuations and for example in 2009 amounted to more than 300 %. table 23 comparison of the forecasted annual results of ffhg in the business plans used by pwc for the meot for the 2001 capital increase and for the 2004 capital increase in 1 000 eur 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 capital increase [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2004 capital increase annual changes in % [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2001 capital increase [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2001 capital increase annual changes in % [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] in 1 000 eur 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2004 capital increase [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2004 capital increase annual changes in % [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2001 capital increase [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2001 capital increase annual changes in % [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] source: pwc report, 24 october 2008, p. 45 and commission's assessment (97) (381) furthermore, according to the investment reports for land rhineland-palatinate, the reason for the land's investment into frankfurt hahn airport was the achievement of important social and structural policy considerations, such as the creation of jobs and the fulfilment of transport policy objectives, rather than profitability considerations. however, social and regional considerations cannot be taken into account when conducting the meot. (382) in view of these specific factors concerning land rhineland-palatinate's decision to inject further capital into ffhg (recitals 376 to 380) the commission considers that the 2004 capital increase by land rhineland-palatinate was not in line with the meo principle and conferred an advantage on ffhg. application of the meot land hesse (383) in relation to the behaviour of land hesse, germany argued that the restricted growth possibilities for frankfurt main airport deriving, inter alia, from the night flight curfew made further development of frankfurt hahn airport necessary in the eyes of land hesse. germany pointed out that this development allowed to comprehensively exploit the existing growth opportunities in the framework of the 24 hours-flight permission for frankfurt hahn airport together with the envisaged introduction of the airport system frankfurt main airport frankfurt hahn airport. moreover, with the participation in the 2004 capital increase, land hesse could further support the development of air traffic in the rhine-main area. (384) first of all, the commission notes that no specific ex ante profitability calculation was drawn up by land hesse. second, similarly as for land rhineland-palatinate, also land hesse was expecting to start receiving dividend payments only after 2025. third, despite the long planning horizon no sensitivity assessment of the assumptions was conducted. moreover, the reason for the land's investment into frankfurt hahn airport, such as development of air traffic in the rhine-main area or other important social and structural policy considerations, cannot be taken into account when conducting the meot. (385) in view of these specific factors concerning land hesse's decision to become a shareholder of ffhg (recitals 383 to 384), the commission considers that the 2004 capital increase by land hesse was not in line with the meo principle and conferred an advantage on ffhg. conclusion (386) in the light of those considerations, the commission concludes that the 2004 capital increases by land rhineland-palatinate and land hesse confer an advantage to ffhg. 8.1.3.4. selectivity (387) as the 2004 capital increases by land rhineland-palatinate and land hesse were put in to place only for the benefit of ffhg, those measures are thus by definition selective within the meaning of article 107(1) of the treaty. 8.1.3.5. distortion of competition and effect on trade (388) for the same reasons as outlined in recitals 360 and following, the commission considers that any selective economic advantage granted to ffhg was liable to distort competition and affect trade between member states. 8.1.3.6. conclusion (389) the 2004 capital increase, granted by the l nder rhineland-palatinate and hesse in favour of ffhg constitutes state aid within the meaning of article 107(1) of the treaty. (390) the 2004 plta under which fraport took over all losses incurred by ffhg between 2004 and 2009 and the 2004 capital increase by fraport are not imputable to the state. as one of the cumulative criteria pursuant to article 107(1) of the treaty is not fulfilled, the commission considers that the 2004 plta and the 2004 capital increase by fraport do not constitute state aid within the meaning of article 107(1) of the treaty. (391) even if, the 2004 plta and the 2004 capital increase would constitute state aid, this aid would be compatible on the basis of the considerations set out in section 10. 8.1.4. measure 5: compensation of ffhg for security checks 8.1.4.1. notion of undertaking and economic activity (392) as stated in recital 293, while ffhg must be considered to constitute an undertaking for the purposes of article 107(1) of the treaty, it must be recalled that not all activities of an airport owner and operator are necessarily of an economic nature (98). (393) the court of justice (99) has held that activities which normally fall under a state's responsibility in the exercise of its official powers as a public authority are not of an economic nature and do not fall within the scope of the rules on state aid. such activities may include, for example, security, air traffic control, police, customs, etc. the financing has to be strictly limited to compensation of the costs to which they give rise and may not be used instead to fund other economic activities (100). (394) therefore, the financing of activities falling within the public policy remit or of infrastructure directly related to those activities in general does not constitute state aid (101). at an airport, activities such as air traffic control, police, customs, firefighting, activities necessary to safeguard civil aviation against acts of unlawful interference and the investments relating to the infrastructure and equipment necessary to perform those activities are considered in general to be of a non-economic nature (102). (395) however, public financing of non-economic activities necessarily linked to the carrying out of an economic activity must not lead to undue discrimination between airlines and airport managers. indeed, it is established case law that there is an advantage when public authorities relieve undertakings of the costs inherent to their economic activities (103). therefore, if in a given legal system it is normal that airlines or airport managers bear the costs of certain services, whereas some airlines or airport managers providing the same services on behalf of the same public authorities do not have to bear those costs, the latter may enjoy an advantage, even if those services are considered in themselves as non-economic. therefore, an analysis of the legal framework applicable to the airport operator is necessary in order to assess whether under that legal framework airport managers or airlines are required to bear the costs of the provision of some activities that might be non-economic in themselves but are inherent to the deployment of their economic activities. (396) germany submitted that the costs arising from the security checks pursuant to 8 luftsicherheitsgesetz (air security law, luftsig)are to be considered as falling within the public policy remit. (397) the commission agrees that measures pursuant to 8 luftsig can, in principle, be considered to constitute activities falling within the public policy remit. (398) as regards the costs for carrying out such measures, germany appears to consider that all of them will be borne by the relevant public authorities. the commission notes, however, that pursuant to 8(3) luftsig only the costs related to the provision and maintenance of spaces and premises necessary for the performance of the listed activities pursuant to 5 luftsig may be reimbursed. all other costs, including in particular those for security checks, must be borne by the airport operator. hence, to the extent that public financing granted to ffhg relieved this undertaking of costs they normally had to bear given the limits prescribed in 8(3) luftsig, that public financing is not exempted from scrutiny under eu state aid rules. 8.1.4.2. state resources and imputability to the state (399) in this case, insofar as the land has not only transferred the revenues collected from the airlines for the security checks to ffhg, the funds provided were granted from the budget of the land rhineland-palatinate. (400) thus, the commission considers that they are financed through state resources and are also imputable to the state. 8.1.4.3. economic advantage (401) the commission notes that the measures at stake covered a portion of costs incurred by ffhg in the context of its economic activity. the operator of an airport normally has to bear all the costs related to the construction and operation of the airport (with the exception of those costs that fall within the public policy remit and do not generally have to be borne by the airport operator under the applicable legal framework). hence, covering a part of those costs relieves ffhg of a burden it would normally have to bear and therefore provides to ffhg an economic. 8.1.4.4. selectivity (402) as the measures at stake were granted only to ffhg, those measures have to be qualified as being selective in nature. 8.1.4.5. distortion of competition (403) for the same reasons as outlined in recitals 360 and following, the commission considers that any selective economic advantage granted to ffhg is liable to distort competition and affect trade between member states. 8.1.4.6. conclusion in the light of the considerations in recital 392 and following, the commission considers that the public funding granted to ffhg, to the extent that the payments of the land rhineland-palatinate for the security checks exceeded the revenue collected from the airlines, constitutes state aid within the meeting of article 107(1) of the treaty. 8.1.5. measure 6: direct grants from land rhineland-palatinate 8.1.5.1. applicability of state aid rules to public grants decided before 2000 and notion of an undertaking (404) for the reasons outlined in recital 293 and following, as of 12 december 2000 ffhg must be considered to constitute an undertaking for the purposes of article 107(1) of the treaty. (405) germany clarified that in 2001 land rhineland-palatinate granted to ffhg eur [ ] to support some of its infrastructure investments. according to germany, however, those grants were based on a decision taken already in 1999. (406) for the same reasons as outlined in recital 293 and following, the commission considers that for grants (like the one described in recital 405) decided prior to the court judgment in a roports de paris, public authorities could legitimately consider that the financing did not constitute state aid and accordingly did not need to be notified to the commission. it follows that the commission can not put into question such grants under state aid rules. (407) moreover, germany stated that land rhineland-palatinate partially financed personnel costs for security checks in the years 2001 ([ ] % of total costs), 2002 ([ ] %), 2003 ([ ] %) and 2004 ([ ] %). (408) as assessed in recital 397 and following, the carrying out of security checks (pursuant to 8 luftsig) can, in principle, be considered to constitute an activity falling within the public policy remit. however, pursuant to 8(3) luftsig only the costs related to the provision and maintenance of spaces and premises necessary for the performance of the listed activities pursuant to 5 luftsig may be reimbursed. however, in the present case the land rhineland-palatinate has taken over costs for security checks, which must be borne by the airport operator. hence, the public support granted to ffhg through the financing of personnel costs for security checks is not exempted from scrutiny under eu state aid rules. 8.1.5.2. state resources and imputability to the state (409) the commission considers that the direct grants are financed through state resources and are also imputable to the state. 8.1.5.3. economic advantage (410) the commission notes that the measures at stake covered a portion of costs incurred by ffhg in the context of its economic activity. the operator of an airport normally has to bear all the costs related to the construction and operation of the airport, including those for security checks, so that covering a part of those costs relieves ffhg of a burden it would normally have to bear and provides to ffhg an economic advantage it would normally not receive under normal market conditions. (411) moreover, the measures at stake were non-repayable in nature and did not yield a return on investment. germany has not presented any evidence that the direct grants were put at the disposal of ffhg on market terms. furthermore, germany does not rely on the meo principle. the commission therefore finds that the measures at stake by the land in favour of ffhg granted after 12 december 2000 conferred an economic advantage on ffhg. 8.1.5.4. selectivity (412) as the measures at stake were granted only to ffhg, those measures have to be qualified as being selective in nature. 8.1.5.5. distortion of competition and effect on trade (413) for the same reasons as outlined in recitals 360 and following, the commission considers that any selective economic advantage granted to ffhg is liable to distort competition and affect trade between member states. 8.1.5.6. conclusion (414) in the light of the considerations in recital 392 and following, the commission concludes that, as the direct grants amounting to eur [ ] million (years 1997-2000) and eur [ ] million (paid in 2001) were irrevocably decided by the public authorities before the a roports de paris judgment, they could legitimately consider that those grants did not constitute state aid. (415) the commission considers that the public funding granted to ffhg amounting to eur 1,93 million (years 2001-2004) constitutes state aid within the meeting of article 107(1) of the treaty. 8.1.6. measure 12: equity increase amounting to eur [ ] million 8.1.6.1. relation between the capital increase and the financial arrangements already put in place in favour of ffhg (416) before assessing whether the capital increase amounting to eur [ ] million in favour of ffhg constitutes state aid, it is necessary to determine whether this capital increase and the financial arrangements previously put in place in favour of ffhg should be considered as separate measures or as a single measure. (417) germany submitted that the capital increase is intended to refinance the loans covering investments into of infrastructure which were irrevocably committed to be financed or refinanced by the public shareholder between 1997 and 2012, but not been yet been paid. (418) in view of the evidence presented by germany, the commission considers that the equity injection is aimed to refinance loans which financed the infrastructure improvements at frankfurt hahn airport between 1997 and 2012. as according to germany by the decision to undertake these investments, ffhg was entitled to receive this funding. hence, the commission considers that the capital injection of eur [ ] million has to be assessed in the context of the previous commitments by the public shareholders when these investments were decided. 8.1.6.2. conclusion (419) in that regard, and in the light of the considerations in section 8.1.1, the commission concludes that ffhg has been engaged in an economic activity as from the date of the a roports de paris judgment (12 december 2000) onward and constitutes an undertaking within the meaning of article 107(1) of the treaty. (420) moreover, in line with the considerations in sections 8.1.1, 8.1.3 and 8.1.4, which apply equally to that measure, the commission considers that the equity injection constitutes state aid within the meaning of article 107(1) of the treaty, as it involves state resources, it is imputable to the state and confers an selective economic advantage on ffhg that distorts or threatens to distort competition and trade between member states. 8.2. aid nature of the measures relating to ryanair and other airlines using the airport 8.2.1. general considerations regarding the application of the meo principle (421) in order to assess whether an agreement between a publicly-owned airport and an airline confers an economic advantage on the latter, it is necessary to analyse whether that agreement complied with the meo principle. in applying the meot to an agreement between an airport and an airline, it must be assessed whether, at the date when the agreement was concluded, a prudent market economy operator would have expected the agreement to lead to a higher profit than would have been achieved otherwise. that higher profit is to be measured by the difference between the incremental revenues expected to be generated by the agreement (that is, the difference between the revenues that would be achieved in case the agreement is concluded and the revenues that would be achieved in the absence of the agreement) and the incremental costs expected to be incurred as a result of the agreement (that is, the difference between the costs that would be incurred in case the agreement is concluded and the costs that would be incurred in the absence of the agreement), the resulting cash flows being discounted with an appropriate discount rate. (422) in that analysis, all the relevant incremental revenues and costs associated with the agreement must be taken into account. the various elements (discounts to airport charges, marketing grants, other financial incentives) should not be assessed separately. indeed, as stated in the charleroi judgment: it is ( ) necessary, when applying the private investor test, to envisage the commercial transaction as a whole in order to determine whether the public entity and the entity which is controlled by it, taken together, have acted as rational operators in a market economy. the commission must, when assessing the measures at issue, examine all the relevant features of the measures and their context [ ]. (104). (423) the expected incremental revenues must include in particular the revenues from airport charges, taking into account the discounts as well as the additional traffic expected to be generated by the agreement and the non-aeronautical revenues expected to be generated by the traffic. the expected incremental costs must include in particular all the incremental operating and investment costs that would not be incurred in the absence of the agreement as well as the costs of the marketing grants and other financial incentives. (424) the commission also notes in that context that price differentiation (including marketing support and other incentives) is a standard business practice. such differentiated pricing policies should, however, be commercially justified (105). (425) the court held in the stardust marine judgment that, [ ] in order to examine whether or not the state has adopted the conduct of a prudent investor operating in a market economy, it is necessary to place oneself in the context of the period during which the financial support measures were taken in order to assess the economic rationality of the state's conduct, and thus to refrain from any assessment based on a later situation. (106). (426) hence, in order to be able to apply the meot the commission has to place itself at the time when the respective agreements between ffhg and ryanair were concluded. also, the commission in principle must base its assessment on the information at the disposal of the airport manager when the respective agreements were signed or put in place, as well as any reasonable assumptions that it could entertain at such time. (427) point 63 of the 2014 aviation guidelines provides that arrangements concluded between airlines and an airport can be deemed to satisfy the meo test when they incrementally contribute, from an ex ante perspective, to the profitability of the airport. while this criterion reflects the logic of the meo test, it has been spelt out only recently and refers to individual arrangements rather than to the overall business, as is more often the case when applying the meo test. therefore, the commission recognises that it may be difficult for the relevant member state and for the operators concerned to provide full contemporaneous evidence in respect of arrangements concluded many years ago and will take that into account when applying the criterion at stake in the present case. 8.2.1.1. the feasibility of comparing frankfurt hahn airport to other european airports (428) under the 2014 aviation guidelines, the existence of aid to an airline using a particular airport can, in principle, be excluded if the price charged for the airport services corresponds to the market price, or if it can be demonstrated that from an ex ante analysis , i.e. one founded on information available when the aid was granted and on developments foreseeable at the time the airport/airline arrangement could be expected to lead to a positive incremental profit contribution for the airport (107). (429) in that respect, the commission considers an ex ante incremental profitability analysis to be the most relevant criterion for the assessment of arrangements concluded by airports with individual airlines (108). the reason is that, at the present time, it is doubtful that an appropriate benchmark can be identified to establish a true market price for services provided by airports. in general, the application of the meo principle based on an average price on other, similar markets may prove helpful if such a price can be reasonably identified or deduced from other market indicators. however, this method is not as relevant in the case of airport services, as the structure of costs and revenues tends to differ greatly from one airport to another. this is because costs and revenues depend on how developed an airport is, the number of airlines which use the airport, its capacity in terms of passenger traffic, the state of the infrastructure and related investments, the regulatory framework which can vary from one member state to another and any debts or obligations entered into by the airport in the past (109). (430) moreover, the liberalisation of the air transport market complicates any purely comparative analysis. as can be seen in the present case, commercial practices between airports and airlines are not always based exclusively on a published schedule of charges. rather, these commercial relations are very varied. they include sharing risks with regard to passenger traffic and any related commercial and financial liability, standard incentive schemes and changing the spread of risks over the term of the agreements. consequently, one transaction cannot really be compared with another based on a turnaround price or price per passenger. (431) finally, assuming that it could be established, based on a valid comparative analysis, that the prices involved in the various transactions that are the subject of that assessment are equivalent to or higher than the market prices established through a comparative sample of transactions, the commission would, nevertheless, not be able to conclude from this that these transactions comply with the meo test if it emerges that, when they were concluded, the airport operator had expected them to generate incremental costs higher than the incremental revenues. this is because an meo will have no incentive to offer goods or services at market price if doing so would result in an incremental loss. (432) in such conditions, the commission considers that, taking into account all the information available to it, there are no grounds for diverging from the approach recommended in the 2014 aviation guidelines for applying the meo principle to relations between airports and airlines, i.e. an ex ante analysis of incremental profitability. 8.2.1.2. assessment of incremental costs and revenues (433) the commission considers that price differentiation is a standard business practice, as long as it complies with all relevant competition and sectoral legislation. nevertheless, such differentiated pricing policies should be commercially justified to satisfy the meo test. (434) in the view of the commission, arrangements concluded between airlines and an airport can be deemed to satisfy the meo test when they incrementally contribute, from an ex ante perspective, to the profitability of the airport. the airport should demonstrate that, when setting up an arrangement with an airline (for example, an individual contract or an overall scheme of airport charges), it is capable of covering all costs stemming from the arrangement, over the duration of the arrangement, with a reasonable profit margin on the basis of sound prospects. (435) in order to assess whether an arrangement concluded by an airport with an airline satisfies the meo test, expected non-aeronautical revenues stemming from the airline's activity must be taken into consideration together with airport charges, net of any rebates, marketing support or incentive scheme). similarly, all expected costs incrementally incurred by the airport in relation to the airline's activity at the airport must be taken into account. such incremental costs may encompass all categories of expenses or investments, such as incremental personnel, equipment and investment costs induced by the presence of the airline at the airport. for instance, if the airport needs to expand or build a new terminal or other facilities mainly to accommodate the needs of a specific airline, such costs should be taken into consideration when calculating the incremental costs. in contrast, costs which the airport would have to incur anyway independently from the arrangement with the airline should not be taken into account in the meot. (436) moreover, when deciding on whether or not to enter into an airport service agreement and/or a marketing service agreement, a meo will choose a time frame for its assessment based on the duration of the agreements in question. in other words, it will assess the incremental costs and revenues for the term of application of the agreements. (437) there does not seem to be any justification for choosing a longer period. on the date of signature of the agreements, a prudent meo will not count on the agreements being renewed once they have expired, whether under the same or new terms. moreover, a prudent operator would be aware that low-cost airlines such as ryanair have always been and are known for being very responsive to market developments, both when starting up or shutting down routes and when increasing or decreasing the number of flights. 8.2.2. measure 7: 1999 ryanair agreement (438) germany submitted that ffhg prepared an ex ante incremental profitability assessment of the agreement before concluding any individual agreement with ryanair. hence, germany argued that ffhg acted as a rational investor when concluding the 1999 ryanair agreement. (439) the commission notes that ffhg had indeed drawn up several business plans and calculations around the time it entered into its commercial relation with ryanair. ffhg's profitability calculations took into account all revenues (aeronautical and non aeronautical) expected to be generated by ryanair at the airport and all costs induced by the presence of the airline. ffhg's first profitability assessment of the 1999 ryanair agreement (440) table 24 summarises the incremental profitability calculation of the 1999 ryanair agreement conducted by ffhg for the year 1999, which was conducted by ffhg on the basis of the expected revenue to be generated by the agreement, expected non-aeronautical revenue generated by duty free and sales in shops at the airport and the expected incremental costs related to the agreement. table 24 ex ante incremental profitability of the 1999 ryanair agreement (year 1999) [ ] source: ffhg incremental profitability calculation, 4 march 1999. (441) while the ex ante-analysis of 4 march 1999 undertaken by ffhg and submitted by germany did not include a projection for the whole period covered by the agreement, it was clear that the contract was expected to be profitable from the first year of ryanair's operation. even though a meo would normally draw up a business plan for the whole duration of the agreement, the agreement was expected to generate as from the beginning a positive incremental contribution for the airport. this is in particular because the first year of starting-up airline operations at an untested airport is the most risky period of time. in the present case, the traffic forecasts appear to be based on prudent assumptions and were also confirmed by the actual traffic development at the airport (see table 1). hence, even if what was however very unlikely the passenger traffic would remain at the same level over the duration of the agreement, the airport could still reasonable expect the agreement would generate a positive contribution to the overall profitability of ffhg. (442) the incremental revenue taken into account in that incremental profitability calculation includes the aeronautical revenue and other non-aeronautical revenue (such as ticketing revenue) as agreed in the 1999 ryanair agreement, as well as duty free and shopping revenue. the key value driver of the forecasted revenues was the expected passenger traffic. with regard to the passenger forecast, ffhg expected to handle approximately [ ] ryanair passengers in 1999 (110). that traffic forecast was confirmed by the actual passenger development at the airport (see table 1). (443) the incremental costs taken into account include the costs of groundhandling, carried out by an external groundhandling company, the costs of fuel, the costs for additional staff to be hired (additional 8 employees), as well as the costs for marketing, the call centre and security checks. in addition, also depreciation and costs of financing for investments directly induced by ryanair were taken into account. those investments were estimated to amount to approximately dm [ ] million and mainly concerned general airport equipment. (444) germany submitted that the investment costs for the new passenger terminal amounting to dm [ ] million were not induced by ryanair. in that context, germany explained that until the new terminal was built, the airport did not dispose of a proper passenger terminal. therefore, according to germany, the construction of a new terminal was a pre-condition for the airport's expansion strategy into scheduled passenger traffic. moreover, also in the context of ffhg's freight expansion strategy several investments were undertaken by the airport that were not induced by a specific airline. as those costs would have been incurred irrespective of the presence of ryanair at the airport, according to germany those costs did not need to be taken into account in the incremental profitability calculation. (445) first, the commission notes that indeed, according to ffhg's business plan of 16 november 1998 for the year 1999, the construction of a new passenger terminal had already commenced (i.e. before any agreement with ryanair was negotiated). (446) second, the authentic ex ante business plans submitted by germany show that the construction of the terminal and other infrastructure measures was part of the conversion of a former us military base into a full functioning civil aviation airport (with a broader objective to develop the airport as a means to better connect the region) and was not limited to the 1999 ryanair agreement. (447) in view of the above considerations, the commission considers that the ex ante calculation conducted by ffhg was based on realistic assumptions and correctly did not take into account the costs for infrastructure. moreover, even though the ex ante profitability calculation did not cover the overall period, it established that as from the first year the 1999 ryanair agreement would provide a positive profit contribution to the airport. ffhg's second profitability assessment of the 1999 ryanair agreement (448) a second ex ante profitability assessment of the 1999 ryanair agreement covering the period 1999 2003 was conducted in the context of the discussions in ffhg's supervisory board regarding the acquisition of new clients (ryanair) (111), as summarised in table 25. the commission observes that also that assessment is based on an incremental profitability calculation and the principles described in recitals 442 to 444. while that assessment is based on higher passenger forecasts then the previous calculation, also those forecasts were confirmed by the actual passenger development at the airport (see table 1). table 25 incremental profitability assessment of the 1999 ryanair agreement 1999-2003 [ ] source: report on airport charges frankfurt hahn airport, 1999 and commission assessment. (449) while the ex ante-analysis undertaken by ffhg and submitted by germany did not discount the future payments to the date on which the agreement was concluded, it is clear that the agreement was expected to be profitable. the commission considers that that assumption was realistic taking into account the prevailing market conditions at the time when the 1999 ryanair agreement was concluded. the traffic forecasts which are a main driver for the aeronautical revenue were based on prudent assumptions, and confirmed by the actual passenger development at the airport. moreover, it was expected that the induced incremental costs will remain stable in 2000 to 2003, as only a marginal increase in the frequencies offered by ryanair was expected. also the forecasts for the non-aeronautical revenue were based on realistic assumptions, as it was expected that each passenger will spend around eur [ ] at the airport. (450) the commission notes that the management of ffhg, taking into account all incremental costs and revenues stemming from the activity of ryanair at the airport, expected that the 1999 ryanair agreement would not just cover all incremental costs but over its duration generate a positive contribution to the profitability of frankfurt hahn airport with a npv which amounts to dm [ ] million (discount rate = [ ] %). given that expected positive contribution also the overall business of frankfurt hahn airport was expected to become more profitable over the duration of the 1999 ryanair agreement. (451) even though in order to comply with the meot, it is sufficient to demonstrate that the expected revenue generated by the agreement with an airport was capable of covering its expected incremental costs, the commission also conducted a sensitivity analysis including the costs of depreciation of the new passenger terminal in the profitability calculation (see table 26). table 26 incremental profitability assessment of the 1999 ryanair agreement 1999-2003 (incl. annual depreciation for the new passenger terminal of dm [ ] (112) ) [ ] source: report on airport charges frankfurt hahn airport, 1999 and commission assessment. (452) even after taking into account the full costs of depreciation of the new passenger terminal, the 1999 ryanair agreement could reasonably have been expected to generate a positive npv of around dm [ ] million (discount rate = [ ] %). oxera's profitability assessment of the 1999 ryanair agreement (453) in addition, also ryanair submitted a profitability assessment conducted by oxera on the basis of information available at the time the 1999 ryanair agreement was concluded, which was provided by the airport and ryanair. the results of that calculation are summarised in table 16. oxera's assessment equally shows that the 1999 ryanair agreement could be expected to result in a positive npv for the airport. (454) moreover, based on the information available the commission considers as convincing germany's argument that the ability to generate additional traffic through agreements with ryanair offered ffhg the possibility to attract customers with growth potential, to improve the overall utilisation of the airport and overall to reduce its losses. conclusion (455) having analysed the agreement and the expectations of ffhg at the time of the conclusion of the 1999 ryanair agreement, the commission is satisfied that the agreement contributed to the profitability of frankfurt hahn airport, in that the expected incremental revenues were higher than the expected incremental costs. as the contract thus complied with the meo principle, it did not confer an advantage on ryanair. (456) as one of the cumulative criteria pursuant to article 107(1) of the treaty is not fulfilled, the commission considers that the 1999 ryanair agreement between frankfurt hahn airport and ryanair does not constitute state aid within the meaning of article 107(1) of the treaty. 8.2.3. measure 8: 2001 schedule of airport charges (457) the commission notes that the 2001 schedule of airport charges entered into force on 1 october 2001. at that point in time, ryanair was the main passenger airline operating at frankfurt hahn airport, as volare and air polonia started operating at the airport only in 2003 and wizzair and iceland express only in 2005. (458) the 2001 schedule of airport charges applied to all airlines using frankfurt hahn airport and offered variable and fixed marketing support for new airlines, new destinations and increased passenger numbers. (459) the 2001 schedule of airport charges was introduced to enhance the competitiveness of frankfurt hahn airport and to support the growth strategy of the airport at that time. (460) against that background, germany argued that no advantage was granted through the 2001 schedule of airport charges and agreed with the commission that the results of the meot for the 2002 ryanair agreement, which is based on the 2001 schedule of airport charges and introduced an additional marketing support, can serve as a benchmark (see section 8.2.4). (461) the commission agrees that the 2002 ryanair agreement can serve as a benchmark for the 2001 schedule of airport charges, in particular, given the fact that the main airline at the airport at the time the 2001 schedule of airport charges was introduced was ryanair and that the charges agreed in the 2002 ryanair agreement correspond to charges set in the 2001 schedule. conclusion (462) in view of the incremental profitability calculation conducted in the context of the 2002 ryanair agreement, which was based on the 2001 schedule of airport charges, the commission concludes that also the introduction of the 2001 schedule of airport charges was in line with the meo principle, as it incrementally contributed, from an ex ante point of view, to the profitability of the airport. (463) as at least one of the cumulative criteria pursuant to article 107(1) of the treaty is not fulfilled, the commission considers that the 2001 schedule of airport charges does not constitute state aid within the meaning of article 107(1) of the treaty. 8.2.4. measure 9: 2002 ryanair agreement (464) the 1999 ryanair agreement was replaced by the 2002 ryanair agreement, which came into effect on 14 february 2002. the 2002 ryanair agreement was concluded for a period of [ ] years (that is until [ ]). ryanair has the option to prolong the agreement on similar terms and conditions until [ ]. (465) before a decision on the 2002 ryanair agreement was taken, a rough profitability assessment was carried out by ffhg on 21 may 2001 (see table 27). table 27 profitability assessment of the 2002 ryanair agreement turnover revenues per flight (132,30 passengers per flight) unit amount per flight costs/turnover per flight in dm ticketing revenue flight [ ] [ ] passenger charge (less dm 3,52 marketing support) (113) pass. [ ] [ ] security tax pass. [ ] [ ] fuel m3 [ ] [ ] non-aviation turnover (basis year 2000) pass. [ ] [ ] parking pass. [ ] [ ] total turnover per flight [ ] variable costs per flight wages ops hours [ ] [ ] ramp handling hours [ ] [ ] clearance devices (114) overall operating supply costs flight [ ] [ ] 1 follow me vehicle flight [ ] [ ] 1 luggage transport vehicle flight [ ] [ ] 1 sewage vehicle flight [ ] [ ] 1 water vehicle flight [ ] [ ] 1 ground power unit flight [ ] [ ] 1 push back flight [ ] [ ] passenger and luggage clearance passenger clearance (check-in lump sum) flight [ ] [ ] luggage clearance (lump sum) flight [ ] [ ] passenger control pass. [ ] [ ] total variable costs per flight [ ] deckungsbeitrag i per flight [ ] deckungsbeitrag i per year (115) [ ] new route support (116) [ ] depreciations of investments induced by ryanair (117) [ ] financing costs of the aforementioned investments (interest rate: 5 %) [ ] incremental profit contribution per annum [ ] (466) while ffhg's profitability assessment submitted by germany did not include a projection for the whole period covered by the 2002 ryanair agreement, it was clear that the 2002 ryanair agreement was expected to be profitable from the first year of ryanair's operation. even though a meo would normally conduct a calculation for the overall duration of an agreement, in the present case, due to the fact that the agreement was expected to generate positive contribution as from the first year even if the number of passengers and the expected revenue would remain stable (while in fact they were expected to increase) ffhg could reasonably expect that the agreement would provide an overall positive contribution to its profitability (see recital 471). (467) the incremental revenue taken into account in that profitability assessment includes aeronautical revenue and other non-aeronautical revenue as set out in the 2002 ryanair agreement, as well as duty free and shopping revenue. the key value driver of the forecasted revenues was the expected passenger traffic. with regard to the latter, ffhg expected to handle approximately 392 137 ryanair passengers in 2002 (118). that traffic forecast was even exceeded by the actual passenger development at the airport (see table 1). (468) even if, as stated by lufthansa, the new route support would have been underestimated in the profitability assessment ffhg, the higher marketing support would have been balanced by the higher revenue from aeronautical and non aeronautical revenue due to a larger volume of passengers. (469) the incremental costs taken into account include costs of groundhandling, carried out by an external groundhandling company, costs for additional staff to be hired, costs for marketing and new route development and security checks. in addition, also depreciation and costs of financing for investments directly induced by ryanair were taken into account. those investments were estimated to amount to approximately dm [ ] million and concern the extension of the passenger terminal. even though the terminal was considered not to be induced by ryanair, ffhg's calculation took into account the expected additional investment costs for the terminal. (470) while ffhg's profitability assessment as submitted by germany did not discount future payments to the date on which the 2002 ryanair agreement was concluded, it is clear that the agreement was expected to be profitable. the commission notes that the assumption underlying the ex ante calculation, taking into account the prevailing market conditions at the time when that calculation was conducted, were reasonable. in particular, the expected passenger volume was even exceeded by the actual passenger development at the airport (see table 1) and resulted in higher aeronautical and non aeronautical revenues. (471) the commission notes that the management of ffhg, taking into account all incremental costs and revenues stemming from the activity of ryanair at the airport, expected that the 2002 ryanair agreement would generate over its duration a positive contribution to the profitability of frankfurt hahn airport with a npv amounting to at least dm [ ] million (discount rate = [ ] %) (119). the commission notes that, given the actual passenger development at frankfurt hahn airport, the npv calculated on the basis of the 2002 ryanair agreement appears to underestimate the actual incremental profitability of that agreement. (472) moreover, given that the 2002 ryanair agreement was expected (not only to cover all incremental costs but) to positively contribute to ffhg's profitability, also the overall business of frankfurt hahn airport was expected to become more profitable during the duration of the 2002 ryanair agreement. oxera's profitability assessment of the 2002 ryanair agreement (473) in addition, ryanair also submitted a profitability assessment conducted by oxera on the basis of information available at the time the 2002 ryanair agreement was concluded (which was provided by the airport and ryanair). the results of that calculation are summarised in table 17. on the basis of oxera's meit of the 2002 ryanair agreement, the commission conducted a sensitivity analysis with regard to the non-aeronautical revenue taken into account in the assessment. (474) even if the non-aeronautical revenue had been reduced by 20 % on average in order to carry out a sensitivity assessment of the assumed non-aeronautical revenues the npv of the 2002 ryanair agreement would have amounted to eur [ ] million, while leaving all other assumptions constant (see table 28). table 28 adjusted oxera's profitability assessment of the 2002 ryanair agreement (reduction of the non-aeronautical revenue by 20 %) [ ] conclusion (475) having analysed oxera's profitability assessment of the 2002 ryanair agreement and the expectations of ffhg at the time of the conclusion of that agreement, the commission is satisfied that the agreement could reasonably be considered as contributing to the profitability of frankfurt hahn airport (taking into account the prevailing market conditions at that time), in that the expected incremental revenues were higher than the expected incremental costs. as the 2002 ryanair agreement thus complied with the meo principle, it did not confer an advantage to ryanair. (476) as one of the cumulative criteria pursuant to article 107(1) of the treaty is not fulfilled, the commission considers that the 2002 ryanair agreement does not constitute state aid within the meaning of article 107(1) tfeu. 8.2.5. measure 10: 2005 ryanair agreement (477) on 4 november 2005, an amendment to the 2002 ryanair agreement was agreed, the agreement ryanair/flughafen frankfurt-hahn gmbh delivery of aircraft 6 to 18 year 2005 to year 2012. on 18 november 2005, the conclusion of the 2005 ryanair agreement was approved by the supervisory board of ffhg. the 2005 ryanair agreement is valid until [ ]. (478) germany also submitted that the 2005 ryanair agreement is in line with the meo principle. to support that, germany provided a meot conducted by pwc. the meot of pwc compares two scenarios in order to determine the incremental impact of the 2005 ryanair agreement: (i) an ex ante business plan of ffhg with ryanair's engagement and (ii) an alternative scenario with an ex ante business plan of ffhg without ryanair's engagement. the incremental cash flow is calculated as the difference between the two scenarios (as summarised in table 29). table 29 meot of the 2005 ryanair agreement [ ] source: pwc report 2006, page 88 and 89. (479) the commission considers that the incremental cash flow identified as the difference between the two scenarios takes into account all incremental costs and revenues induced by the presence of ryanair at the airport. in addition, that profitability calculation takes into account also the investments induced by the presence of ryanair at the airport. according to the supplementary meot conducted by pwc following the 2008 opening decision, a total amount of eur [ ] million of investments can be attributed to ryanair, whereas the remaining eur [ ] million concern the development of the airport's freight infrastructure (namely. eur [ ] million in total). (480) the commission notes that the management of ffhg, taking into account all incremental costs and revenues stemming from the activity of ryanair at the airport, expected that the 2005 ryanair agreement would generate over its duration a positive contribution to the profitability of frankfurt hahn airport with a npv amounting to at least eur [ ] million (discount rate = [ ] %) (120). (481) in that context, the commission notes that taking into account the prevailing market conditions and the significant growth of low cost carriers since 2000, the assumptions underpinning the ex ante business plan appear to be realistic. at the same time, given the long planning horizon of the actual passenger development at frankfurt hahn airport the npv calculated on the basis a [ ] % discount rate might not appropriately take into account the risks potentially affecting the underlying assumptions. (482) hence, the commission has conducted a sensitivity assessment of the discount rate (see table 30). when applying a [ ] % discount rate the npv still amounts to eur [ ] million. moreover, even if one were to consider that a [ ] % discount rate would still not allow to remedy any uncertainty regarding long-term passenger forecasts, it needs to be taken into account that the agreement was expected to generate positive contribution to the profitability of ffhg as from the first year onwards and that there appeared to be no compelling reason, given the overall market development, for ffhg to expect a decrease in subsequent years. table 30 meot of the 2005 ryanair agreement sensitivity assessment of the discount rate [ ] conclusion (483) in view of the conducted incremental profitability analysis, the commission concludes that the 2005 ryanair agreement was in line with the meo principle, as it incrementally contributed, from an ex ante perspective and taking into account the prevailing market conditions, to the profitability of the airport manager. thus, the commission concludes that ffhg's decision to enter into the 2005 ryanair agreement did not confer any economic advantage to the airline that it would not have obtained under normal market conditions. (484) as one of the cumulative criteria pursuant to article 107(1) of the treaty is not fulfilled, the commission considers that the 2005 ryanair agreement between frankfurt hahn airport and ryanair does not constitute state aid within the meaning of article 107(1) of the treaty (121). 8.2.6. measure 11: 2006 schedule of airport charges (485) the 2006 schedule of airport charges entered into force on 1 june 2006 and replaced the 2001 schedule of airport charges. it follows however the same basic principles as the 2001 schedule of airport charges. the changes compared to the 2001 schedule concern the take-off and landing charges, the passenger fee, and marketing support for the starting-up of a new route and the generated traffic volume depending on the number of total passengers (departing and arriving passengers transported by the airline). (486) germany argued that no advantage was conferred on ryanair through the 2006 schedule of airport charges. firstly, germany justified the different passenger charges, on the ground that those were created in order to give an incentive to other low cost carriers while covering the operational costs of the airport. a reduction of charges according to the volume of passengers, germany argued, is a common behaviour at national and international airports. since the threshold for acquiring rebates was very low, namely 100 000 passengers per year, those rebates were also open to smaller airlines. (487) to support that, germany submitted an ex ante profitability assessment comparing a scenario with the introduction of the 2006 schedule of airport charges with a scenario without the introduction of that schedule, as summarised in table 31. the commission considers, that taking into account the prevailing market conditions and the actual operating results of ffhg at the time, the profitability calculation was based on realistic assumptions. table 31 profitability assessment of the 2006 schedule of airport charges in 1 000 eur 2006 2007 2008 2009 2010 2011 ebitda with the 2006 schedule of airport charges [ ] [ ] [ ] [ ] [ ] [ ] ebitda without the 2006 schedule of airport charges [ ] [ ] [ ] [ ] [ ] [ ] incremental impact of the 2006 schedule of airport charges [ ] [ ] [ ] [ ] [ ] [ ] source: pwc report, 2006, page 57. (488) as stated in section 8.2.1, arrangements concluded between airlines and an airport can be deemed to satisfy the meot when they incrementally contribute, from an ex ante point of view, to the profitability of the airport. the airport should demonstrate that, when setting up an arrangement with an airline (for example, an individual contract or an overall scheme of airport charges), it is capable of covering all costs stemming from the arrangement, over the duration of the arrangement, with a reasonable profit margin on the basis of sound medium-term prospects. (489) moreover, in order to assess whether an arrangement concluded by an airport with an airline satisfies the meot, expected non-aeronautical revenues stemming from the airline's activity must be taken into consideration together with airport charges, net of any rebates, marketing support or incentive scheme). similarly, all expected costs incrementally incurred by the airport in relation to the airline's activity at the airport must be taken into account. such incremental costs may encompass all categories of expenses or investments, such as incremental personnel, equipment and investment costs induced by the presence of the airline at the airport. for instance, if the airport needs to expand or build a new terminal or other facilities mainly to accommodate the needs of a specific airline, such costs should be taken into consideration when calculating the incremental costs. by contrast, costs which the airport would have to incur anyway independently from the arrangement with the airline should not be taken into account in the meot. (490) as regards the profitability assessment carried out by ffhg prior the introduction of the 2006 schedule of airport charges, the commission considers that all incremental costs and revenues induced by the introduction of this schedule were taken into consideration and were based on reasonable assumptions taking into account the prevailing market conditions and the actual results of ffhg. the 2006 schedule of airport charges was not limited in time, hence it was sufficient for the airport operator to calculate the overall profitability of the 2006 schedule of airport charges for several consecutive years. moreover, ffhg could any time modify the schedule of airport charges, in the even it was proven that the revenue generated was insufficient to cover the incremental costs induced by the airlines using that schedule. in addition, as ryanair has concluded an individual agreement, the schedule did not apply to the main airline (with a passenger share of around 90 %), but was applied to the remaining airlines with a passenger share of around 10 %. hence, the incremental costs of the 2006 schedule of airport charges were very limited and the ffhg expected to be able to better use its resources. (491) while the ex ante-analysis undertaken by ffhg and submitted by germany did not discount the future payments to the date on which the 2006 schedule of airport charges was put into effect, it is clear that the schedule was expected to be profitable from the first year onwards. (492) moreover, given the high fixed costs and very limited incremental costs relating to the provision of services under the 2006 schedule of airport charges, those forecasts were not sensitive to the assumptions regarding the overall traffic development. conclusion (493) in view of the conducted incremental profitability calculation, the commission concludes that the introduction of 2006 schedule of airport charges was in line with the meo principle, as it incrementally contributed, from an ex ante point of view, to the profitability of the airport. in particular, all costs of the airport stemming from the introduction of the 2006 schedule of airport charges were covered by the revenues (both aeronautical and non-aeronautical activities) stemming from the introduction of that schedule, with a reasonable profit margin. moreover, the costs directly attributable to individual agreements with specific airlines were reasonably expected to be exceeded by the revenues attributable to the presence of those airlines (see section 8.2.5). hence, the 2006 schedule of airport charges could reasonably be expected (taking into account the prevailing market conditions at the time of its introduction) to contribute to the overall profitability of the airport in the long term. (494) thus, the commission concludes that the 2006 schedule of airport charges does not confer an economic advantage on the airlines that they would not have obtained under normal market conditions. moreover, it was open to all potential users of the airport on transparent and non-discriminatory terms. therefore, the 2006 schedule of airport charges does not constitute state aid within the meaning of article 107(1) of the treaty. 9. lawfulness of the aid (495) pursuant to article 108(3) of the treaty, member states must notify any plans to grant or alter aid, and must not put the proposed measures into effect until the notification procedure has resulted in a final decision. (496) as the measures number 1, 2, 3, 4, 5, 6 and 12 have already been put at the disposal of ffhg or irrevocably granted with an entitlement for ffhg to receive the respective funds, the commission considers that germany has not respected the prohibition of article 108(3) of the treaty (122). 10. legal assessment compatibility of aid 10.1. the applicability of the 2014 and 2005 aviation guidelines (497) article 107(3) of the treaty provides for certain exemptions to the general rule set out in article 107(1) of the treaty that state aid is not compatible with the internal market. in particular, article 107(3)(c) of the treaty stipulates that: aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest, may be considered to be compatible with the internal market. (498) in that regard, the 2014 aviation guidelines provide a framework for assessing whether aid to airports may be declared compatible pursuant to article 107(3)(c) of the treaty. (499) according to the 2014 aviation guidelines, the commission considers that the commission notice on the determination of the applicable rules for the assessment of unlawful state aid (123) applies to unlawful investment aid to airports. in that respect, if the unlawful investment aid was granted before 4 april 2014, the commission will apply the compatibility rules in force at the time when the unlawful investment aid was granted. accordingly, the commission will apply the principles set out in the 2005 aviation guidelines in the case of unlawful investment aid to airports granted before 4 april 2014 (124). (500) according to the 2014 aviation guidelines, the commission also considers that the provisions of the commission notice on the determination of the applicable rules for the assessment of unlawful state aid should not apply to cases of illegal operating aid to airports granted prior to 4 april 2014. instead, the commission will apply the principles set out in the 2014 aviation guidelines to all cases concerning operating aid to airports (pending notifications and unlawful non-notified aid) even if the aid was granted before 4 april 2014 and the beginning of the transitional period (125). (501) the commission has already concluded in recital 496 that the measures under assessment constitute unlawful state aid granted before 4 april 2014. 10.2. distinction between investment and operating aid (502) in view of the provisions of the 2014 aviation guidelines referred to in recitals 499 and 500, the commission has to determine whether the measures in question constitute unlawful investment or operating aid. (503) according to point 25(18) of the 2014 aviation guidelines, investment aid is defined as aid to finance fixed capital assets; specifically, to cover the capital costs funding gap . moreover, according to that provision investment aid can relate both to an upfront payment (that is to say cover upfront investment costs) and to aid paid out in the form of periodic instalments (to cover capital costs, in terms of annual depreciation and costs of financing). (504) operating aid, on the other hand, means aid covering all or part of the operating costs of an airport, defined as the underlying costs of the provision of airport services, including categories such as costs of personnel, contracted services, communications, waste, energy, maintenance, rent, administration, etc., but excluding the capital costs, marketing support or any other incentives granted to airlines by the airport, and costs falling within a public policy remit (126). (505) in the light of those definitions, it can be considered that the capital increases and direct grants which were linked to investment projects constitute investment aid in favour of ffhg. (506) in contrast, the part of the annual loss transfers used to cover ffhg's annual operating losses (127) of ffhg, net of the costs included in the ebitda that fall within the public policy remit as established in section 8.1.4.1 constitute operating aid in favour of ffhg. (507) finally, the part of the annual loss transfers covering losses of ffhg that were not already included in the ebitda (that is the annual depreciation of assets, costs of financing, etc.), minus costs falling within the public policy remit as established in section 8.1.4.1, constitute investment aid. (508) as explained earlier, it all cases only support granted after the a roports de paris judgment on 12 december 2000 will be considered. 10.3. compatibility of the investment aid pursuant to the 2005 aviation guidelines (509) according to point 61 of the 2005 aviation guidelines, the commission must examine whether the following cumulative conditions are met: (a) the construction and operation of the infrastructure meets a clearly defined objective of common interest (regional development, accessibility, etc.); (b) the infrastructure is necessary and proportional to the objective which has been set; (c) the infrastructure has satisfactory medium-term prospects for use, in particular as regards the use of existing infrastructure; (d) all potential users of the infrastructure have access to it in an equal and non-discriminatory manner; and (e) the development of trade is not affected to an extent contrary to the union interest. (510) in addition, state aid to airports as any other state aid measure must have an incentive effect and be necessary and proportional in relation to the aimed legitimate objective in order to be compatible. (511) germany submitted that the investment aid in favour of ffhg complies with all the compatibility criteria contained in the 2005 aviation guidelines. (a) the aid contributes to a clearly defined objective of common interest (512) the investment aid in favour of ffhg aimed at financing the further conversion of the former us military base into a civilian airport and substantially developing the infrastructure of the airport. those measures provided a significant contribution to the regional development and connectivity of the hunsr ck region, and the creation of new jobs in an area economically hit by the closure of the us military base as well as the decongestion of frankfurt main airport. (513) the hunsr ck region, as pointed out by germany, is surrounded by a number of areas (such as landkreis birkenfeld), which were marked as regions in need of support in the framework of the gemeinschaftsaufgabe verbesserung der regionalen wirtschaftsstruktur. indeed, in the period under consideration, landkreis birkenfeld was at least partly considered to be a region with a gross domestic product (gdp) below the union average (128). (514) the commission considers that the development of frankfurt hahn airport also contributed significantly to the creation of new jobs in the hunsr ck region. as shown by germany, taking into account all parts of the airport activities, frankfurt hahn airport created 3 063 jobs in the hunsr ck region in 2012 out of which 74 % were full-time positions and 90 % of those employees also live in that region. (515) moreover, the development of frankfurt hahn airport had also positive indirect, induced and catalysing effects on the creation of jobs in the region as well as regional development in general through an increasing number of economic and touristic activities. according to the information provided by germany, frankfurt hahn airport contributes significantly to the development of incoming (~ 33 % of passengers corresponding to approximately 1 million passengers in 2005) and outgoing tourism (~ 67 % of passengers) in the land rhineland-palatinate. as pointed out by germany, 88 % of the incoming passengers stay at least one night in the region and generated approximately 5,7 million overnight stays in 2005. since 88 % of incoming tourists from frankfurt hahn stay at least one night and more than 80 % of those even stay two to 10 days, they generate a total turnover of about eur 133,7 million per year. moreover, incoming tourism generated around 11 000 jobs in rhineland-palatinate. (516) the aided investments at issue also helped to improve the accessibility of the area. nevertheless, the duplication of unprofitable airports (or the creation of additional unused capacity) does not contribute to an objective of common interest. in this case, the commission takes the view that the investment aid does not lead to such a duplication which would diminish the medium-term prospects for the use of existing infrastructure at other, neighbouring airports. indeed, there are no other airports within 100 kilometres or 60 minutes travelling time from frankfurt hahn airport. the closest airports to frankfurt hahn are frankfurt main airport, which is located at 115 kilometres distance or 1 hour 15 minutes traveling time by car, and luxembourg airport, which is located 1 hour and 30 minutes travelling time (111 kilometres) away. (517) frankfurt main airport is an international hub airport with a wide variety of destinations and is predominantly served by network carriers offering connecting traffic, whereas frankfurt hahn airport serves low-cost point-to-point flights. traffic at frankfurt main airport has continuously increased since 2000, from 49,4 million passengers in 2000 to approximately 58 million in 2012. however, during that period growth has been affected by congestion problems and capacity constraints. as pointed out by germany, the capacity limits of frankfurt main airport were constantly exceeded. therefore, according to germany, especially in the light of its 24 hour operating licence, frankfurt hahn airport played an important role in providing additional capacity in order to relieve the congestion at frankfurt main airport. in fact, until 2009 fraport was the majority shareholder of ffhg, the operator of frankfurt hahn airport (2,7 million passengers in 2013, around 4 million passengers in 2007 at its peak) and the operator of frankfurt-main airport (58 million passengers and 2,1 million freight), and was as such pursuing a diversification strategy. (518) luxembourg airport, which is the nearest airport to frankfurt hahn but still around 111 kilometres or 1 hour 30 minutes traveling time by car away, had around 1,7 million passengers in 2008 and experienced a rapid growth to 2,2 million in 2013. even though luxembourg airport is slightly smaller than frankfurt hahn airport in terms of passenger traffic, its freight activity is substantially larger with 674 000 tonnes in 2013. it offers a variety of scheduled flights to european capitals and charter flights to leisure destinations. that selection of destinations to a large extent meets the needs of the employees of the financial and international institutions located in luxembourg. (519) saarbr cken airport is located around 128 kilometres away from frankfurt hahn airport which amounts to over 2 hours traveling time by car. in addition, frankfurt hahn is served mainly by low-cost carriers (ryanair) and freight constitutes a rather important element in its business model whereas saarbr cken airport offers mainly scheduled flights to national destinations and has only limited air freight transport. (520) with regard to zweibr cken airport, germany emphasised that the distance of 127 km to frankfurt hahn airport translates into a travelling time of 1 hour and 27 minutes by car or around 4 hours by train. moreover, germany submitted that, looking at passenger and air freight traffic between 2005 and 2012, no relationship of substitution between the airports can be deduced. (521) the commission observes that there is a certain overlap in the activities of both frankfurt hahn and zweibr cken airports, as zweibr cken airport also engaged in handling air freight and the destinations served by zweibr cken airport are predominantly for charter traffic. in that regard, the commission notes that freight is usually more mobile than passenger transport (129). in general, a catchment area for freight airports is considered to have a radius of at least around 200 kilometres and 2 hours travelling time. comments from the industry suggest that up to a half-day of trucking time (that is to say, up to 12 hours driving time by trucks) would in general be acceptable for freight forwarders to transport their goods (130). moreover, charter traffic is also, in general, less time sensitive and may accept traveling times of up to 2 hours by car. (522) at the same time it should be noted that, before zweibr cken entered the market in 2006, frankfurt hahn airport was already a well-established airport with more than 3 million passengers and channelling 123 000 tonnes of freight. in view of the historical development of the two airports, their geographical location and the free capacity available at frankfurt hahn airport at the time when zweibr cken airport entered the commercial aviation market in 2006, the commission concludes that it is rather the opening of zweibr cken airport which constituted an unnecessary duplication of infrastructure. (523) therefore, the commission concludes that the investments into frankfurt hahn airport do not constitute a duplication of existing non-profitable infrastructure. on the contrary, frankfurt hahn airport has played an important role in decongesting frankfurt main airport without limiting the latter's plans to expand. without the investments into frankfurt hahn airport there was in fact a risk that the region would be underserved in terms of its transport needs. (524) in the light of the considerations in recitals 512 to 523, the commission therefore concludes that the investment aid directed at the construction and operation of infrastructure at frankfurt hahn airport meets a clearly defined objective of common interest, namely regional economic development, creation of jobs and improvement of the accessibility of the region. (b) the infrastructure is necessary and proportionate to the objective (525) according to germany, the investments were undertaken according to the needs (and were thus proportionate) and the constructed infrastructure was necessary for the airport in order to serve the connectivity and the development of the region and to decongest frankfurt main airport. (526) based on the information provided by germany, the commission agrees that the financed investments were necessary and proportionate to the objective of common interest. indeed, without those investments the conversion of the former u.s. base into a fully functioning civil aviation airport could not have been completed. the construction of passenger and freight facilities, aprons and modernisation of taxiways had to be carried out in order to further develop civil flight operations. hence, the constructed infrastructure was necessary for the airport in order to serve the connectivity and the development of the region. (527) also, the infrastructure project was undertaken only to the extent it was necessary to attain the goals set: while the infrastructure was built for a maximum passenger traffic of around 4 to 5 million passengers and 500 000 tonnes of freight, the traffic statistics displayed in tables 1 and 2 show that the passenger traffic steadily increased until 2007 to reach a record of 4 million passengers (following by a decline to 2,7 million in 2013 for the reasons set out in recital 532) and that the freight volume increased to more than 500 000 tonnes of freight in 2011. this means that the expected traffic demand largely corresponded to the actual demand and that the investments were not disproportionately large. (528) while it is important to avoid that the investment constitutes a duplication of an existing unprofitable infrastructure, that is not the case here. as already explained in recitals 516 to 523, there are no other airports within 100 kilometres distance and 60 minutes travelling time, and even if a wider catchment area was to be considered there are no duplications effects. the closest airport is frankfurt main airport, which frankfurt hahn airport was intended to decongest. (529) in the light of those considerations, the commission considers that this compatibility condition is met. (c) the infrastructure has satisfactory medium-term prospects for use (530) germany submitted that before the decision to further develop the airport infrastructure was taken, traffic forecast studies were conducted by external experts in order to identify the traffic potential for frankfurt hahn airport. (531) the information submitted shows that at that time the external experts forecasted significant growth from 0,3 million passengers in 2000 to up to 3,8 million passengers by 2010 (see figures 2, 3 and 4). with regard to freight development, the experts projected a development from 151 000 tonnes in 2001 to up to 386 000 tonnes in 2010 (see figure 5), with the growth in the freight business between 2006 and 2010 coming from the freight flights diverted from frankfurt main airport due to curfew. however, those projections could only be fulfilled if the investments were undertaken to the planned extent. (532) the commission notes that those traffic forecasts (see recital 531) were confirmed by the actual traffic development at frankfurt hahn airport (see tables 1 and 2). in 2007 frankfurt hahn airport served around 4 million passengers. following a period of significant growth, air traffic in germany and the union in recent years has been negatively affected by the economic and financial crisis in 2008/09, which resulted in a decrease in passenger air transport in germany in 2009. the passenger development at frankfurt hahn airport was further impacted by the introduction of an air passenger tax in germany in 2011. currently frankfurt hahn airport serves around 2,7 million passengers p.a. with regard to freight, frankfurt hahn airport handled 565 000 tonnes of freight in 2011. due to the bankruptcy of one of its clients, the airport processed only 447 000 tonnes in 2013. (533) in the light of those considerations, it can therefore be concluded that frankfurt hahn airport is already using most of its capacity and that the medium-term prospects for the use of the capacity were satisfactory. (d) access to the infrastructure in an equal and non-discriminatory manner (534) all potential users of the infrastructure have access to the airport on equal and non-discriminatory terms. indeed, the schedule of airport charges applicable at frankfurt hahn airport is publicly available and open to all potential and current users of the airport in a transparent and non-discriminatory manner. any differences in airport charges actually paid for the use of the infrastructure were based on commercially justified differentiation (131). (535) hence, the commission considers that this condition is satisfied. (e) trade is not affected contrary to common interest (536) according to point 39 of the 2005 aviation guidelines the category of an airport can provide an indication of the extent to which airports are competing with one another and therefore also the extent to which public funding granted to an airport may distort competition. (537) within the standard catchment area of frankfurt hahn airport (1 hour travelling time by car or 100 kilometres distance) there are no other commercially exploited airports. even if one were to extend the catchment area, the commission considers that the aid does not create undue negative effects on competition and trade between the member states. (538) as far as frankfurt main airport (the closest airport at around 115 kilometres distance and 1 hour 15 minutes travelling time) is concerned, the investments at frankfurt hahn airport did not result in negative substitution effects. in fact, before getting involved in frankfurt hahn airport, fraport was already the operator of frankfurt main airport, but was nevertheless investing into frankfurt hahn airport with a view to de-congesting frankfurt main airport as a future capacity overload was foreseeable for that hub. in particular, the ban on night flights at frankfurt main airport was one of the main factors to be taken into consideration as frankfurt hahn airport had a 24 hour operating license. (539) even though frankfurt hahn experienced significant growth in the period from 2000 until 2007 (tables 1 and 2) shows that in comparison to frankfurt main the traffic share remained very limited. from 2000 to 2003 frankfurt main airport experienced steady passenger growth from 48 million in 2000 to 54,2 million in 2007. due to the economic crisis, frankfurt main experienced a slight decrease to 50,9 million in 2009, followed by a rapid increase to 58 million. with regard to the freight activities, frankfurt main airport experienced steady growth from 1,6 million to 2,2 million tonnes in 2013. (540) as for other airports, the commission has already explained that the investments at frankfurt hahn airport had no significant impact on competition and trade between the member states (132). that also applies to zweibr cken airport, given that it is rather the latter that constitutes an unnecessary duplication of infrastructure (and would thus be responsible for any distortive effect on competition). (541) in addition, contrary to frankfurt main and luxembourg airports frankfurt hahn airport is not served by a train connection. overall, no substitution effect on rail transport can be expected. (542) in view of the considerations in recitals 536 to 541, the commission considers that any undue negative effects on competition and trade between member states are limited to the minimum. (f) incentive effect, necessity and proportionality (543) the commission must establish whether the state aid granted to frankfurt hahn airport has changed the behaviour of the beneficiary in such a way that it engaged in activity contributing to the achievement of the objective of common interest that (i) it would not have carried out without the aid, or (ii) it would have carried out in a more restricted or different manner. in addition, the aid is considered to be proportionate only if the same result could not be reached with less aid and less distortion. that means that the amount and intensity of the aid must be limited to the minimum needed for the aided activity to take place. (544) according to the information submitted by germany, without the aid the investment could not have been realised. germany submitted that the aid was necessary as it compensated only the costs of financing and a lower amount would have led to lower levels of investment. (545) indeed, according to the financial results summarised in tables 3 and 4 the airport is still loss-making and not able to finance its investment costs. therefore, it can be concluded that the aid was necessary to make investments in order to decongest the airport infrastructure and to meet the current requirements for modern airport infrastructure. without the aid, frankfurt hahn airport would not have been able to meet the expected demand of airlines, passengers and freight forwarders and the level of the economic activity of the airport would have been reduced. (546) it should also be noted that the public support was granted in a period when ffhg realised very significant investments into the infrastructure (more than eur 220 million in 2001-2012). it follows that the investment aid covers only a fraction of the overall investment costs. (547) the commission therefore considers that the aid measure at stake had an incentive effect, that the amount of aid was limited to the minimum necessary for the aided activity to take place, and was thus proportionate. conclusion (548) on the basis of the above, the commission concludes that the investment aid granted to frankfurt hahn airport is compatible with the internal market pursuant to article 107(3)(c) of the treaty as it complies with the compatibility conditions laid down in point 61 of the 2005 aviation guidelines. 10.4. compatibility of operating aid pursuant to the 2014 aviation guidelines (549) section 5.1 of the 2014 aviation guidelines sets out the criteria that the commission will apply in assessing the compatibility of operating aid with the internal market pursuant to article 107(3)(c) of the treaty. according to point 172 of the 2014 aviation guidelines, the commission will apply those criteria to all cases concerning operating aid, including pending notifications and unlawful non-notified aid cases. (550) according to point 137 of the 2014 aviation guidelines, unlawful operating aid granted before the date of the publication of the 2014 aviation guidelines may be declared compatible with the internal market to the full extent of uncovered operating costs provided that the following cumulative conditions are met: (a) contribution to a well-defined objective of common interest: that condition is fulfilled, inter alia, if the aid increases the mobility of citizens of the union and connectivity of the regions or facilitates regional development (133); (b) need for state intervention: the aid must be targeted towards situations where such aid can bring about a material improvement that the market itself cannot deliver (134); (c) existence of incentive effect: that condition is fulfilled if it is likely that, in the absence of operating aid, and taking into account the possible presence of investment aid and the level of traffic, the level of economic activity of the airport concerned would be significantly reduced (135); (d) proportionality of the aid amount (aid limited to the minimum necessary): in order to be proportionate, operating aid to airports must be limited to the minimum necessary for the aided activity to take place (136); (e) avoidance of undue negative effects on competition and trade (137). (a) contribution to a well-defined objective of common interest (551) according to section 5.1.2(a) of the 2014 aviation guidelines, in order to give airports time to adjust to new market realities and to avoid any disruptions in the air traffic and connectivity of the regions, operating aid to airports will be considered to contribute to the achievement of an objective of common interest, if it: (i) increases the mobility of union citizens and connectivity of regions by establishing access points for intra-union flights; (ii) combats air traffic congestion at major union hub airports; or (iii) facilitates regional development. (552) in the light of the considerations in recitals 512 to 519, the commission considers that the continued operation of frankfurt-hahn airport increased the mobility of union citizens and connectivity of regions by establishing an access point for intra-union flights in the hunsr ck region. in addition, the continued operation of the airport facilitated the regional development of the hunsr ck region and the creation of new jobs. moreover, the operation and development of frankfurt-hahn airport also served to decongest frankfurt main airport. (553) the commission therefore concludes that the measure at stake meets a clearly defined objective of common interest. (b) need for state intervention (554) according to section 5.1.2(b) of the 2014 aviation guidelines, in order to assess whether state aid is effective in achieving an objective of common interest, it is necessary to identify the problem to be addressed. in that respect, any state aid to an airport must be targeted towards a situation where aid can bring about a material improvement that the market cannot deliver itself. (555) the commission notes that frankfurt hahn airport is a regional airport with approximately 2,7 million passengers p.a. which experience in the period under investigation a significant growth in passengers (see table 1). it has high fixed operating costs and under present market conditions it is not able to cover its own operating costs. therefore, there is a need for state intervention (see point 89 of the 2014 aviation guidelines). (c) appropriateness of the aid measures (556) according to section 5.1.2(c) of the 2014 aviation guidelines, any aid measure to an airport must be an appropriate policy instrument to address the objective of common interest. the member state must, therefore, demonstrate that no other less distortive policy instruments or aid instruments could have allowed the same objective to be reached. (557) according to germany, the aid measures at stake are appropriate to address the intended objective of common interest that could not have been achieved by another less distortive policy instrument. (558) in this case the aid amount corresponded to the uncovered operating losses (see table 4) actually incurred and was limited to the minimum necessary as it was granted only as to the extent of actually incurred operating losses. no other policy measure would allow the airport to continue its operation. hence, the compensation of losses is limited to the minimum and does not provide for any profits. (559) in view of recitals 557 and 558, the commission considers that the measures at stake were appropriate to reach the desired objective of common interest. (d) existence of incentive effect (560) according to section 5.1.2(d) of the 2014 aviation guidelines, the operating aid has an incentive effect if it is likely that, in the absence of operating aid, the level of economic activity of the airport would be significantly reduced. that assessment needs to take into account the presence of investment aid and the level of traffic at the airport. (561) without the aid the scale of the operations at frankfurt-hahn airport would be severely impacted and reduced, leading eventually to the market exit of the airport due to uncovered operating losses. (562) therefore, the commission considers that the aid measures at stake had an incentive effect. (e) proportionality of the aid amount (aid limited to a minimum) (563) according to section 5.1.2(e) of the 2014 aviation guidelines, in order to be proportionate, operating aid to airports must be limited to the minimum necessary for the aided activity to take place. (564) in this case, the aid amount was limited to the extent of uncovered operating losses, as it compensated only the costs actually incurred. (565) therefore, the commission considers that the operating aid amount in this case was proportionate and limited to the minimum necessary for the aided activity to take place. (f) avoidance of undue negative effects on competition and trade between member states (566) according to section 5.1.2(f) of the 2014 aviation guidelines, when assessing the compatibility of operating aid account will be taken of the distortions of competition and the effects on trade. (567) within the standard catchment area of frankfurt hahn airport (1 hour travelling time by car or 100 kilometres distance) there are no commercially exploited airports. even if this standard catchment area was to be further extended to other airports in the proximity of frankfurt hahn airport, as demonstrated in recitals 537 and 541 there are no undue negative effects on competition between the airports located in the proximity of frankfurt hahn airport (that is frankfurt main, luxembourg and saarbr cken airports). (568) in view of the above, the commission considers that any undue negative effects on competition and trade between member states due to the operating aid granted in favour of ffhg are limited to the minimum. conclusion (569) in light of the considerations in recitals 551 to 568, the commission concludes that the measures are compatible with the internal market on the basis of article 107(3)(c) of the treaty. 11. conclusion 11.1. financing of the airport (570) measure 1: 2001 plta: in the light of the considerations in recitals 291 to (302), the commission concludes that at the time the 2001 plta was put into place the public authorities could legitimately consider that a plta to cover annual losses of ffhg did not constitute state aid. (571) measure 2: 2001 capital increase: the 2001 capital increase of eur 27 million by fraport and land rhineland-palatinate constitutes state aid within the meaning of article 107(1) of the treaty. (572) measure 3: 2004 capital increase and measure 4: 2004 plta: the 2004 capital increase granted by fraport and the 2004 plta do not constitute state aid within the meaning of article 107(1) of the treaty. even if they would constitute state aid, that aid can be deemed compatible on the basis of article 107(3)(c) of the treaty. (573) the 2004 capital increase by the l nder rhineland-palatinate and hesse in favour of ffhg constitutes state aid within the meaning of article 107(1) of the treaty. (574) measure 5: compensation of ffhg for tasks falling within the public policy remit (security checks) and measure 6: direct grants from land rhineland-palatinate: the commission considers that the public funding granted to ffhg in the form of direct grants granted after 12 december 2000 constitutes state aid within the meaning of article 107(1) of the treaty. (575) measure 12: equity increase: as the equity increase is intended to finance infrastructure measures which according to germany by the decision to undertake those investments by the public shareholders, ffhg was entitled to received that funding, the commission considers that the equity increase has to be assessed in the context of ffhg's public support in that regard, and in the light of the considerations in section 8.1.1, the commission concludes that ffhg has been engaged in an economic activity as from the date of the a roports de paris judgment (12 december 2000) onward and constitutes an undertaking within the meaning of article 107(1) of the treaty. (576) moreover, in line with the considerations in sections 8.1.1, 8.1.3 and 8.1.4, which apply equally to that measure, the commission considers that the equity injection constitutes state aid within the meaning of article 107(1) of the treaty, as it involves state resources, it is imputable to the state and confers an selective economic advantage on ffhg that distorts or threatens to distort competition and trade between member states. (577) as the measures have already been put at the disposal of ffhg or irrevocably granted with an entitlement for ffhg to receive those funds, the commission considers that germany has not respected the prohibition of article 108(3) of the treaty. (578) in view of recitals 512 to 545, the commission concludes that the investment aid granted to frankfurt hahn airport is compatible with the internal market pursuant to article 107(3)(c) of the treaty as it complies with the compatibility conditions laid down in point 61 of the 2005 aviation guidelines. (579) in light of the considerations in recitals 551 to 568, the commission concludes that the measures are compatible with the internal market on the basis of article 107(3)(c) of the treaty. 11.2. agreements with ryanair and the schedule of airport charges (580) measures 7, 9 and 10: 1999, 2002 and 2005 ryanair agreement: having analysed the agreements and the information available to ffhg at the time of the conclusion of those agreements, the commission is satisfied that ffhg could reasonably expect the agreements to contribute to the profitability of frankfurt hahn airport, in that the expected incremental revenues were higher than the expected incremental costs. as the agreements thus complied with the meo principle, they did not confer an advantage to ryanair. (581) measures 8 and 11: 2001 and 2006 schedule of airport charges: in view of the ex ante profitability analysis conducted by ffhg the commission considers that the 2001 and 2006 schedules of airport charges do not confer an economic advantage on the airlines which they would not have obtained under normal market conditions. (582) as one of the cumulative criteria pursuant to article 107(1) of the treaty is not fulfilled, the commission considers that the 1999, 2002 and 2005 ryanair agreements between frankfurt hahn airport and ryanair and the 2001 and 2006 schedules of airport charges do not constitute state aid within the meaning of article 107(1) of the treaty. (583) the commission notes that germany accepts the adoption of the decision in english only, has adopted this decision: article 1 1. the state aid, unlawfully put into effect by germany in breach of article 108(3) of the treaty in favour of flughafen frankfurt hahn gmbh between 2001 and 2012 by means of capital increases in 2001 amounting to eur 27 million, capital increases in 2004 amounting to eur 22 million and direct grants by land rhineland-palatinate (to the extent that those grants were not purely related to public policy remit activities and did not to cover investments irrevocably decided prior 12 december 2000) is compatible with the internal market. 2. the capital increase in 2004 by fraport ag and the profit and loss transfer agreement of 2004 do not constitute aid within the meaning of article 107(1) of the treaty. article 2 1. the agreement between ryanair and flughafen frankfurt hahn gmbh, which entered into force on 1 april 1999, does not constitute aid within the meaning of article 107(1) of the treaty. 2. the agreement between ryanair and flughafen frankfurt hahn gmbh dated 14 february 2002 does not constitute aid within the meaning of article 107(1) of the treaty. 3. the agreement ryanair/flughafen frankfurt-hahn gmbh delivery of aircraft 6 to 18 year 2005 to year 2012 of 4 november 2005 does not constitute aid within the meaning of the article 107(1) of the treaty. article 3 the schedules of airport charges, which entered into force on 1 october 2001 and on 1 june 2006, do not constitute aid within the meaning of the article 107(1) of the treaty. article 4 this decision is addressed to the federal republic of germany. done at brussels, 1 october 2014. for the commission joaqu n almunia vice-president (1) with effect from 1 december 2009, articles 87, and 88 of the ec treaty have become articles 107 and 108, respectively, of the treaty on the functioning of the european union (hereinafter: the treaty). the two sets of provisions are, in substance, identical. for the purposes of this decision, references to articles 107 and 108 of the treaty should be understood as references to articles 87 and 88, respectively, of the ec treaty when appropriate. the treaty also introduced certain changes in terminology, such as the replacement of community by union and common market by internal market. the terminology of the treaty will be used throughout this decision. (2) oj c 12, 17.1.2009, p. 6. (3) ryanair is an irish airline and member of the european low fares airlines association. the business of the airline is linked with secondary, regional airports. the airline operates currently approximately 160 european destinations. ryanair has a homogenous fleet consisting of 272 boeing 737-800 aircraft with 189 seats. (4) see footnote 2. (5) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1). (6) oj c 216, 21.7.2012, p. 1. (7) communication from the commission guidelines on state aid to airports and airlines (c(2014) 963) (oj c 99, 4.4.2014, p. 3). (8) application of article 92 and 93 of the ec treaty and article 61 of the eea agreement to state aids in the aviation sector (oj c 350, 10.12.1994, p. 5). (9) community guidelines on financing of airports and start-up aid to airlines departing from regional airports (oj c 312, 9.12.2005, p. 1). (10) oj c 113, 15.4.2014, p. 30. (11) hereafter in this decision the term fraport is used to mean both fag prior to the change of the business name and fraport ag thereafter. (*) confidential information (12) pursuant to section 7(3) of the purchase agreement part of the purchase price can be reduced for instance if the costs incurred by ffhg for noise protection were to exceed a certain ceiling. (13) land hesse held 45,24 % of fraport's shares, stadtwerke frankfurt am main holding gmbh (owned for 100 % by the municipality frankfurt am main) held 28,89 % and the federal republic of germany held 25,87 %. (14) wizz air is a hungarian airline and member of the european low fares airlines association. wizz air group consists of three operating companies, namely wizz air hungary, wizz air bulgaria and wizz air ukraine. the business model of the airlines is linked with secondary, regional airports. the airline operates currently approximately 150 european destinations. wizz air has a homogenous fleet with an average age of less than 3 years, which consist of 34 airbus a 320 aircrafts with 180 seats. (15) notarial deed of notary j rgen scherzer (roll of deeds no 268/2000) dated 24 november 2000. (16) resolution by the meeting of shareholders of 3 may 2000. (17) the holding committee of fraport is a committee created by the supervisory board which follows the economic development of fraport's holdings. (18) or, in other words, a debt-to-equity ratio of 96 %. (19) land rhineland-palatinate holding companies annual reports of 1999, 2001, 2003, 2004. (20) the annual turnaround fee to be paid by ryanair in case of up to 6 flight frequencies per day was capped at a ceiling of eur [ ]. (21) file no v/21-1011/1. (22) annex 3: ffhg received a [ ] % commission on each ticket sold (cash or credit card) or issued by ffhg's ticket counters, a [ ] % commission on excess baggage issued by ffhg, eur [ ] for each prepaid ticket processed by ryanair and a [ ] % commission to ffhg for each car rental booked through ffhg. (23) this also results from point 68 of the market economy operator test submitted by pwc on behalf of land rhineland-palatinate. (24) [ ]. (25) file number v/20-1011/1. (26) case c-482/99 france v commission (stardust marine) [2002] ecr i-4397, paragraph 51 and following. (27) stardust marine judgment, paragraph 51 and following. (28) see commission communication on state aid elements in sales of land and buildings by public authorities, point ii.2. (29) point 33 of the 2005 aviation guidelines. (30) case t-128/89 a roports de paris v commission [2000] ecr ii-3929, confirmed by the judgment in case c-82/01p a roports de paris v commission [2002] ecr i-9297. (31) joined cases t-443/08 and t-455/08 mitteldeutsche flughafen ag and flughafen leipzig-halle gmbh v commission (hereinafter: leipzig/halle judgment) [2011] ecr ii-1311, in particular paragraphs 93-94; confirmed by the judgment in case c-288/11 p mitteldeutsche flughafen and flughafen leipzig/halle v commission [2012] not yet reported. (32) case c-458/03 stadtwerke brixen ag [2005] ecr i-08585, paragraph 67. (33) case c-340/04 carbotermo [2006] ecr i-04137, paragraph 36 and following. (34) council regulation (eec) no 2408/92 of 23 july 1992 on access for community air carriers to intra-community air routes (oj l 240, 24.8.1992, p. 8). (35) case c-379/98 preussen-elektra [2001] ecr i-02099, paragraph 58. (36) gemeinschaftsaufgabe verbesserung der regionalen wirtschaftsstruktur (grw) gesetz of 6 october 1969 (bgbl. i s. 1861), which was last amended by article 8 of the act of 7 september 2007 (bgbl. i, p. 2,246). (37) flughafen frankfurt hahn regionaloekonomische effekte, zfl studie, 03/2007. (38) submission of germany, september 2014. (39) oxera, how should ams agreements be treated within the profitability analysis as part of the market economy operator test? practical application, 31 january 2014, prepared for ryanair. (40) according to oxera, depreciation charges are not incorporated as the 1999 ryanair agreement was signed prior to the aeroports de paris judgment of 12 december 2000. oxera also stated that the data is presented in nominal terms. oxera clarified that the estimates presented for 1999 and 2004 have been adjusted to reflect the start and end dates of the 1999 agreement in april 1999 and march 2004, respectively. (41) oxera clarified that deprecation is modelled in an npv-neutral manner. according to oxera, this approach ensured that the sum of the discounted present value of depreciation over the asset's life equates the original amount of capital expenditures. oxera stated that the data is presented in normal terms. oxera clarified that the estimates presented for 2002 and 2017 have been adjusted to reflect the start and end dates of the 2002 ryanair agreement in february 2002 and february 2017, respectively. (42) case t-228 and 233/99 dep westdeutsche landesbank girozentrale v commission [2003] ecr ii-00435, paragraph 314. (43) stardust marine judgment, paragraph 33-34. (44) commission directive 2006/111/ec of 16 november 2006 on the transparency of financial relations between member states and public undertakings as well as on financial transparency within certain undertakings (oj l 318, 17.11.2006, p. 17). (45) case t-196/04 ryanair v commission (hereinafter: charleroi judgment) [2008] ecr ii-3643. (46) neither was the 2005 marketing agreement subject of the 2011 opening decision. (47) case t-128/89 a roports de paris v commission [2000] ecr ii-3929 (confirmed by court of justice in case c-82/01 p [2002] ecr i-9297, paragraph 75 with further references). (48) case t-455/08 flughafen leipzig-halle gmbh and mitteldeutsche flughafen ag v commission, [2011] ecr ii-01311, in particular paragraphs 105 and 106. (49) see in particular commission decision of 17 june 2008 in case c-29/08 frankfurt-hahn airport alleged state aid to the airport and the agreement with ryanair (oj c 12, 17.1.2009, p. 6), paragraphs 204 208; commission decision of 21 march 2012 in case c76/02 charleroi airport alleged state aid to the airport and ryanair (oj c 248, 17.8.2012, p. 1). (50) article 1(d) of regulation (ec) no 659/1999 stipulates that 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. (51) status report of ffhg of 2002, page 5. (52) case c-482/99 france v commission (stardust marine) [2002] ecr i-4397. (53) joined cases t-267/08 and t-279/08, nord-pas-de-calais [2011], not yet published, paragraph 108. (54) see for example commission decision c41/05, hungarian stranded costs (oj c 324, 21.12.2005, p. 12), with further references. (55) stardust marine, paragraphs 52 and 57. (56) land hesse held 45,24 % of fraport's shares, stadtwerke frankfurt am main holding gmbh (owned for 100 % by the municipality frankfurt am main) held 28,89 % and the federal republic germany held 25,87 %. (57) stardust marine, paragraphs 52 and 57. (58) stardust marine, paragraph 55-56. (59) case c-458/03 stadtwerke brixen ag [2005] ecr i-08585, paragraph 67. (60) case t-442/03 sic sociedade independente de comunica o v commission [2008] ecr ii-01161, paragraph 100. (61) commission decision 2014/273/eu of 19 september 2012 on the measures in favour of elan d.o.o. sa.26379 (c 13/10) (ex nn 17/10) implemented by slovenia (oj l 144, 15.5.2014, p. 1), recital 99. (62) urteil vom 3.3.1999, az. 2str 437-98, njw 1999, 2378. (63) according to 11 i no 2 lit. c strafgesetzbuch. (64) urteil vom 3.7.2008, az. i zr 145/05, wrp 2008, 1182, 1186. (65) case c-458/03 stadtwerke brixen ag [2005] ecr i-08585, paragraph 67. (66) see annual financial reports (gesch ftsbericht) of fraport of 2001-2006, published at http://www.fraport.de/de/investor-relations/termine-und-publikationen/publikationen.html see in particular gesch ftsbericht 2001, p. 46; gesch ftsbericht 2002, p. 66; gesch ftsbericht 2003, p. 54; gesch ftsbericht 2004, p. 80; gesch ftsbericht 2005, p. 64; gesch ftsbericht 2006, p. 72. (67) basic agreement between fraport and land rhineland-palatinate of 31 august 1999. (68) approval for the conclusion of the basic agreement was given by the supervisory board in its meeting on 1 october 1999. (69) basic agreement between fraport and land rhineland-palatinate of 31 august 1999, see points 4 and 5. (70) 13 of the articles of association of ffhg of 29 november 2001, termed verf gung ber gesch ftsanteile (i.e. disposition of shares). (71) minutes of the meeting of the committee for acquisitions of the supervisory board on 30 may 2001. (72) documents submitted to the management board (vorstandsvorlage) on the economic developments of ffhg of 14 may 2001; see also minutes of the meeting of the committee for acquisitions of the supervisory board of 30 may 2001; see also bcg analysis of the potential of ffhg of 14 february 2001, p. 10. (73) proposed resolution to the supervisory board of fraport from 23 november 2001, (74) case c-39/94 syndicat fran ais de l'express international (sfei) and others v la poste and others [1996] ecr i-3547, paragraph 60 and case c-342/96 kingdom of spain v commission of the european communities [1999] ecr i-2459, paragraph 41. (75) case 173/73 italian republic v commission of the european communities [1974] ecr 709, paragraph 13. (76) case c-482/99 france v commission (stardust marine) [2002] ecr i-4397, paragraph 69. (77) case c-305/89 italy v commission (alfa romeo) [1991] ecr i-1603, paragraph 23; case t-296/97 alitalia v commission [2000] ecr ii-03871, paragraph 84. (78) case 40/85 belgium v commission [1986] ecr i-2321. (79) stardust marine, paragraph 71. (80) case c-124/10p european commission v lectricit de france (edf) [2012], not yet reported, paragraph 85. (81) interplan was a consultant hired by fraport to analyse the traffic potential of frankfurt hahn airport. (82) minutes of the committee for acquisitions of ffgh's supervisory board of 30 may 2001. (83) profitability assessment, bcg, 14 february 2001. (84) the discount rate for the calculation of the npv was assumed to be [ ] %. (85) the net present value (npv) indicates whether the income from a given project exceeds the (opportunity) costs of capital. the project is considered as an economically profitable investment when it generates a positive npv. investments producing lower income as the (opportunity) costs of capital are not economically profitable. the (opportunity) costs of capital are reflected in the discount rate. (86) sh&e: study of traffic potential of frankfurt-hahn airport, 18 july 2001. (87) the scenarios status quo, alternative 1 and alternative 2 are based on the data provided in the pwc report of 24 october 2008, p. 39; the discount rate was identified in the bcg's potential assessment of 14 february 2010. (88) the commission calculated the npv using the discount rate of [ ] %, which was established in bcg's profitability assessment. moreover, the commission identified another option, i.e. the status quo (coverage of losses until 2005). (89) discount rate as identified in the pwc report, 24 october 2008, p. 33. (90) the commission calculated the npv by using the discount rate indicated in the pwc report. (91) case t-214/95 het vlaamse gewest v commission [1998] ecr ii-717. (92) see section 2.2 further above. (93) for example, leipzig/halle airport was in competition with vatry airport (france) for the establishment of the dhl european hub. see leipzig/halle judgment, paragraph 93. (94) see footnote 88. (95) response of li ge airport to the public consultation on the 2014 aviation guidelines. (96) 293(1) of the aktg. (97) commission has calculated the growth rates on the basis of the forecasted annual results. (98) case c-364/92 sat fluggesellschaft v eurocontrol [1994] ecr i-43. (99) case c-118/85 commission v italy [1987] ecr 2599, paragraphs 7 and 8, and case c-30/87 bodson/pompes fun bres des r gions lib r es [1988] ecr 2479, paragraph 18. (100) case c-343/95 cali & figli v servizi ecologici porto di genova [1997] ecr i-1547; commission decision n309/2002 of 19 march 2003; commission decision n438/2002 of 16 october 2002, aid in support of the public authority functions in the belgian port sector. (101) commission decision n309/2002 of 19 march 2003. (102) see, in particular, case c-364/92 sat fluggesellschaft v eurocontrol [1994] ecr i-43, paragraph 30 and case c-113/07 p selex sistemi integrati v commission [2009] ecr i-2207, paragraph 71. (103) see, inter alia, case c-172/03 wolfgang heiser v finanzamt innsbruck [2005] ecr i-01627, paragraph 36, and case-law cited. (104) case t-196/04 ryanair v commission [2008] ecr ii-3643, paragraph 59. (105) see commission decision 2011/60/eu of 27 january 2010 on state aid c 12/08 (ex nn 74/07) slovakia agreement between bratislava airport and ryanair (oj l 27, 1.2.2011, p. 24). (106) case c-482/99 france v commission [2002] ecr i-04397, paragraph 71 (stardust marine judgement). (107) see point 53 of the 2014 aviation guidelines. (108) see points 59 and 61 of the 2014 aviation guidelines. (109) decision 2011/60/eu. (110) this is based on the following calculation: [ ] flights in 1999 * [ ] passengers per flight = [ ] ryanair passengers. (111) report on airport charges frankfurt hahn airport, 1999. (112) investment costs of the new terminal of dm [ ] million/expected economic utilization of the terminal of 20 years = depreciation of dm [ ] p. a. (113) ffhg based its expectations for passenger charge revenue on the assumption that ryanair would base 3 aircrafts at hhn which is why the passenger fee was reduced by the marketing support of eur [ ] per passenger. (114) costs correspond to the rent charged for the use of the clearance devices plus operating costs of material ('operating supply costs'). (115) on the basis of [ ] annual flights. (116) ffhg presumed ryanair would open 3 new routes, for which it would pay dm [ ]. (117) the depreciation concerns the extension of the passenger terminal requiring an investment in the amount of eur [ ] (eur [ ] plus eur [ ] for the expected additional demand) plus financing costs. these investment costs have been broken down to ryanair according to its share in the passenger volume of hhn amounting to [ ] %. depreciation period: [ ] years. even though the original investment costs of the terminal were considered not to be induced by ryanair, ffhg's calculation took into account the expected additional investment costs for the terminal. source: pwc report 2006, p. 34 and ffhg's profitability assessment of the 2002 ryanair agreement 21 may 2001. (118) this was based on the following calculation: [ ] flights in 2002 * [ ] passengers per flight = 392 137 ryanair passengers. this assumption was based on approximately [ ] daily flight operated by ryanair. (119) profitability assessment based on the 2002 profit contribution of the 2002 ryanair agreement: [ ] (120) the commission has learned that the land rhineland-palatinate also concluded marketing agreements with ryanair. these agreements, however, were not included in the measures in respect of which the commission initiated the formal investigation procedure in 2008 and are therefore not included in the analysis in this decision, which is without prejudice to any future action that the commission might wish to take with respect to these agreements. (121) the commission has learned that the land rhineland-palatinate concluded marketing agreements with ryanair. those agreements, however, were not included in the measures in respect of which the commission initiated the formal investigation procedure in 2008 and are therefore not included in the analysis in this decision, which is without prejudice to any future action that the commission might wish to take with respect to these agreements. (122) case t-109/01 fleuren compost v commission [2004] ecr ii-127. (123) oj c 119, 22.5.2002, p. 22. (124) point 173 of the 2014 aviation guidelines. (125) point 172 of the 2014 aviation guidelines. (126) point 25(22) of the 2014 aviation guidelines. (127) expressed as earnings before interest, taxes, depreciation and amortisation (ebitda). (128) commission decision of 8 november 2006 in state aid case n459/2006 germany guidelines on national regional aid for 2007-2013 national regional state aid map: germany (oj c 295, 5.12.2006, p. 6). (129) for example, leipzig/halle airport was in competition with vatry airport (france) for the establishment of the dhl european hub. see leipzig/halle judgment, paragraph 93. (130) response of li ge airport to the public consultation on the 2014 aviation guidelines. (131) commission decision of 1 october 2014 in state aid case sa.21211 germany frankfurt hahn airport and ryanair, not yet published in the official journal. (132) as regards frankfurt main and luxembourg airport, the commission further notes that the business travel segment occupies a significant market share at these airports, while it only represents a comparatively limited share at frankfurt hahn airport. (133) points 137, 113 and 114 of the 2014 aviation guidelines. (134) points 137 and 116 of the 2014 aviation guidelines. (135) points 137 and 124 of the 2014 aviation guidelines. (136) points 137 and 125 of the 2014 aviation guidelines. (137) points 137 and 131 of the 2014 aviation guidelines.

name: council decision (eu) 2016/814 of 13 may 2016 appointing an alternate member, proposed by the republic of austria, of the committee of the regions type: decision subject matter: eu institutions and european civil service; europe date published: 2016-05-24 24.5.2016 en official journal of the european union l 133/8 council decision (eu) 2016/814 of 13 may 2016 appointing an alternate member, proposed by the republic of austria, of the committee of the regions the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 305 thereof, having regard to the proposal of the austrian government, whereas: (1) on 26 january 2015, 5 february 2015 and 23 june 2015, the council adopted decisions (eu) 2015/116 (1), (eu) 2015/190 (2) and (eu) 2015/994 (3) appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020. (2) an alternate member's seat on the committee of the regions has become vacant following the end of the term of office of ms elisabeth vitouch, has adopted this decision: article 1 the following is hereby appointed as an alternate member of the committee of the regions for the remainder of the current term of office, which runs until 25 january 2020: mag. muna duzdar, abgeordnete zum wiener landtag und mitglied des gemeinderats der stadt wien. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 13 may 2016. for the council the president e.m.j. ploumen (1) council decision (eu) 2015/116 of 26 january 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 20, 27.1.2015, p. 42). (2) council decision (eu) 2015/190 of 5 february 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 31, 7.2.2015, p. 25). (3) council decision (eu) 2015/994 of 23 june 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 159, 25.6.2015, p. 70).

name: council decision (cfsp) 2016/785 of 19 may 2016 amending decision 2013/183/cfsp concerning restrictive measures against the democratic people's republic of korea type: decision subject matter: asia and oceania; civil law; international affairs date published: 2016-05-20 20.5.2016 en official journal of the european union l 131/73 council decision (cfsp) 2016/785 of 19 may 2016 amending decision 2013/183/cfsp concerning restrictive measures against the democratic people's republic of korea the council of the european union, having regard to the treaty on european union, having regard to council decision 2013/183/cfsp of 22 april 2013 concerning restrictive measures against the democratic people's republic of korea and repealing decision 2010/800/cfsp (1), and in particular article 19(2) thereof, having regard to the proposal of the high representative of the union for foreign affairs and security policy, whereas: (1) on 22 april 2013, the council adopted decision 2013/183/cfsp. (2) in view of the gravity of the situation in the democratic people's republic of korea, eighteen persons and one entity should be added to the list of natural and legal persons, entities and bodies subject to restrictive measures in annex ii to decision 2013/183/cfsp. entries concerning two persons included in that annex should also be updated. (3) annex ii to decision 2013/183/cfsp should therefore be amended accordingly, has adopted this decision: article 1 annex ii to decision 2013/183/cfsp is amended as set out in the annex to this decision. article 2 this decision shall enter into force on the day of its publication in the official journal of the european union. done at brussels, 19 may 2016. for the council the president a.g. koenders (1) oj l 111, 23.4.2013, p. 52. annex (1) in part i (a) of annex ii to decision 2013/183/cfsp, the persons listed below are added to the list of persons and entities responsible for the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes or persons or entities acting on their behalf or at their direction, or entities owned or controlled by them, subject to restrictive measures: name (and possible aliases) identifying information reasons 15. choe kyong-song colonel general in the army of the dprk. former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 16. choe yong-ho colonel general in the army of the dprk. former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. commander of the air forces. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 17. hong sung-mu (alias hung sung mu) dob: 1.1.1942 deputy-director of the munitions industry department (mid). in charge of the development of programmes concerning conventional arms and missiles, including ballistic missiles. one of the main persons responsible for the industrial development programmes for nuclear arms. as such, responsible for dprk nuclear-related, ballistic-missile-related, or other weapons of mass destruction-related programmes. 18. jo chun ryong (aliases cho chun ryo'ng, jo chun-ryong, jo cho ryong) dob: 4.4.1960 chairman of the second economic committee (sec) since 2014 and responsible for managing the dprk's munitions factories and production sites. the sec was designated under unscr 2270 (2016) for its involvement in key aspects of the dprk's missile programme, its responsibility for overseeing the production of the dprk's ballistic missiles, and for directing the activities of komid dprk's primary arms trading entity. member of the national defence commission. has participated in several ballistic-missile-related programmes. one of the key principals in the arms industry of the dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 19. jo kyongchol general in the army of the dprk. former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. director of the military security command. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 20. kim chun-sam lieutenant general, former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. director of the operations department of the military headquarters of the army of the dprk and first vice chief of the military headquarters. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 21. kim chun-sop member of the national defence commission, which is a key body for national defence matters in dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 22. kim jong-gak dob: 20.7.1941 pob: pyongyang vice marshal in the army of the dprk, former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 23. kim rak kyom (alias kim rak-gyom) four star general, commander of the strategic forces (aka strategic rocket forces) which now reportedly command 4 strategic and tactical missile units, including the kn08 (icbm) brigade. the united states has designated the strategic forces for engaging in activities that have materially contributed to the proliferation of weapons of mass destruction or their means of delivery. former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. media reports identified kim as attending the april 2016 icbm engine test with kim jung un. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 24. kim won-hong dob: 7.1.1945 pob: pyongyang passport no: 745310010 general, director of the state security department. minister of state security. member of the central military commission of the workers party of korea and national defence commission, which are the key bodies for national defence matters in dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 25. pak jong-chon colonel general in the army of the dprk, chief of the korean people's armed forces, deputy chief of staff and director of the firepower command department. chief of the military headquarters and director of the artillery command department. former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 26. ri jong-su vice admiral. former member of the central military commission of the workers party of korea, which is a key body for national defence matters in dprk. commander in chief of the korean navy, which is involved in the development of ballistic missile programmes and in the development of the nuclear capacities of the dprk naval forces. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 27. son chol-ju colonel general of the korean people's armed forces and political director of the air and anti-air forces, which oversees the development of modernised anti-aircraft rockets. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 28. yun jong-rin general, former member of the central military commission of the workers party of korea and member of the national defence commission, which are the key bodies for national defence matters in dprk. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 29. pak yong-sik four star general, member of the state security department, minister of defence. member of the central military commission of the workers party of korea and of the national defence commission, which are the key bodies for national defence matters in dprk. was present at the testing of ballistic missiles in march 2016. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 30. hong yong chil deputy director of the munitions industry department (mid). the munitions industry department designated by the unsc on 2 march 2016 is involved in key aspects of the dprk's missile program. mid is responsible for overseeing the development of the dprk's ballistic missiles, including the taepo dong-2, weapons production and r & d programmes. the second economic committee and the second academy of natural sciences also designated in august 2010 are subordinate to the mid. the mid in recent years has worked to develop the kn08 road-mobile icbm. hong has accompanied kim jong un to a number of events related to the development of the dprk's nuclear and ballistic missile programmes and is thought to have played a significant role in the dprk's nuclear test on 6 january 2016. vice director of the workers party of korea central committee. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 31. ri hak chol (aliases ri hak chul, ri hak cheol) dob: 19.1.1963 or 8.5.1966 passport nos: 381320634, ps- 563410163 president of green pine associated corporation (green pine). according to the un sanctions committee, green pine has taken over many of the activities of the korea mining development trading corporation (komid). komid was designated by the committee in april 2009 and is the dprk's primary arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons. green pine is also responsible for approximately half of the arms and related materiel exported by the dprk. green pine has been identified for sanctions for exporting arms or related material from north korea. green pine specializes in the production of maritime military craft and armaments, such as submarines, military boats and missile systems, and has exported torpedoes and technical assistance to iranian defence-related firms. green pine has been designated by the united nations security council. 32. yun chang hyok dob: 9.8.1965 deputy director of the satellite control centre, national aerospace development administration (nada). nada is subject to sanctions under unscr 2270 (2016) for involvement in the dprk's development of space science and technology, including satellite launches and carrier rockets. unscr 2270 (2016) condemned the dprk's satellite launch of 7 february 2016 for using ballistic missile technology and being in serious violation of resolutions 1718 (2006), 1874 (2009), 2087 (2013), and 2094 (2013). as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. (2) in part i (b) of annex ii to decision 2013/183/cfsp, the entity listed below is added to the list of entities responsible for the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes subject to restrictive measures: name (and possible aliases) identifying information reasons 13. strategic rocket forces within the dprk national armed forces, this entity is involved in the development and operational implementation of ballistic-missile-related or other weapons of mass destruction-related programmes. (3) in part i (a) of annex ii to decision 2013/183/cfsp, the entries for the following persons are replaced in the list of persons and entities responsible for the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes or persons or entities acting on their behalf or at their direction, or entities owned or controlled by them, subject to restrictive measures: name (and possible aliases) identifying information reasons 3. chu kyu-chang (alias ju kyu-chang) dob: 25.11.1928 pob: south hamgyo'ng province member of the national defence commission, which is a key body for national defence matters in dprk. former director of the department of munitions of the central committee of the korean workers' party. as such, responsible for supporting or promoting the dprk's nuclear-related, ballistic-missile-related or other weapons of mass destruction-related programmes. 8. paek se-bong year of birth: 1946 former chairman of the second economic committee (responsible for the ballistics programme) of the central committee of the korean workers' party. member of the national defence commission.

name: commission implementing decision (eu) 2016/786 of 18 may 2016 laying down the procedure for the establishment and operation of an independent advisory panel assisting member states and the commission in determining whether tobacco products have a characterising flavour (notified under document c(2016) 2921) (text with eea relevance) type: decision_impl subject matter: food technology; eu institutions and european civil service; agri-foodstuffs; consumption; plant product date published: 2016-05-20 20.5.2016 en official journal of the european union l 131/79 commission implementing decision (eu) 2016/786 of 18 may 2016 laying down the procedure for the establishment and operation of an independent advisory panel assisting member states and the commission in determining whether tobacco products have a characterising flavour (notified under document c(2016) 2921) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to directive 2014/40/eu of the european parliament and of the council of 3 april 2014 on the approximation of the laws, regulations and administrative provisions of the member states concerning the manufacture, presentation and sale of tobacco and related products and repealing directive 2001/37/ec (1), and in particular article 7(4) thereof, whereas: (1) article 7 of directive 2014/40/eu prohibits the placing on the market of tobacco products with a characterising flavour. uniform rules for the procedures for determining whether a tobacco product has a characterising flavour are laid down in commission implementing regulation (eu) 2016/779 (2). (2) article 7(4) of directive 2014/40/eu provides that, when determining whether a tobacco product has a characterising flavour, member states and the commission may consult an independent advisory panel (the panel). it further empowers the commission to adopt implementing acts laying down the procedure for the establishment and operation of that panel. (3) the panel should be composed of highly qualified, specialised and independent experts with relevant expertise in the fields of sensory, statistical and chemical analysis. they should perform their functions impartially and in the public interest. they should be selected on the basis of objective criteria through a public call for applications and be appointed in a personal capacity. they should have the range of skills and expertise necessary for the panel to be able to perform its functions. (4) the panel should be assisted by a technical group recruited by means of a public procurement procedure. the technical group should carry out sensory and chemical assessments based on a comparison of the smelling properties of the test product with those of reference products. sensory, including smelling, analysis is an established scientific discipline that applies principles of experimental design and statistical analysis to assess and describe perceptions of the human senses, including smell, for the purpose of evaluating consumer products. it has been found to be a suitable method for producing valid, robust, reliable and reproducible results when assessing whether a tobacco product has a characterising flavour. such analysis should be conducted on the basis of an established methodology and produce results using statistical tools. where it is considered appropriate, sensory analysis should be complemented by chemical analysis of the products. (5) in carrying out its advisory functions, the panel should examine, as applicable, data provided by the technical group, as well as any other information at its disposal that it may consider relevant, including information obtained as a result of the reporting obligations laid down in article 5 of directive 2014/40/eu. it should advise the member states and the commission in a timely manner as to whether it considers that the tested products have a characterising flavour within the meaning of article 7(1) of directive 2014/40/eu. (6) as scientific methods and techniques for determining the existence of a characterising flavour may evolve with time and experience gained, it is appropriate for the commission to monitor developments in the field with a view to assessing whether the methodologies used to carry out such a determination should be revised. (7) the panel and the process by which it assesses the existence of a characterising flavour should be protected against external interference from any entities or associations with an interest in the outcome of its assessment. confidential information should be protected against inadvertent and deliberate disclosure. members of the panel and the technical group who can no longer perform their duties or cease to comply with the requirements of this decision should be replaced. (8) the work of the panel should be based on the principles of a high level of expertise, independence and transparency. it should be organised and conducted in conformity with best practice and high scientific standards. (9) the panel should contribute effectively to improving the functioning of the internal market while ensuring a high level of public health, in particular by helping the member states and the commission to assess tobacco products that potentially have a characterising flavour. the panel's activities are necessary to ensure the effective and uniform implementation of directive 2014/40/eu and the advice provided by the members of the panel is essential to reach the relevant union policy objectives. therefore, it is appropriate to provide the panel with adequate financial support in the form of a special allowance for its members, beyond the reimbursement of their expenses. (10) personal data should be collected, processed and published in accordance with regulation (ec) no 45/2001 of the european parliament and the council (3). (11) the measures provided for in this decision are in accordance with the opinion of the committee referred to in article 25 of directive 2014/40/eu, has adopted this decision: chapter i general provisions article 1 subject matter this decision lays down the procedure for the establishment and operation of an independent advisory panel (the panel) assisting member states and the commission in determining whether or not a tobacco product has a characterising flavour. article 2 definition for the purposes of this decision, test product means a product referred to the panel by a member state or the commission for an opinion as to whether or not it has a characterising flavour within the meaning of article 7(1) of directive 2014/40/eu. article 3 tasks the panel shall provide opinions as to whether test products have a characterising flavour within the meaning of article 7(1) of directive 2014/40/eu. chapter ii establishment of the independent advisory panel article 4 appointment 1. the panel shall consist of six members. 2. the director-general for health and food safety acting on behalf of the commission (the director-general) shall appoint the members of the panel from a list of suitable candidates established following publication of a call for applications on the commission's website and in the register of commission expert groups and other similar entities (register of expert groups). the members shall be selected on the basis of their expertise and experience in the fields of sensory, statistical and chemical analysis, and with due regard to the need to ensure independence and absence of conflicts of interests. 3. persons on the list of suitable candidates who are not appointed to the panel shall be included in a reserve list of suitable candidates to replace members whose membership has ceased in accordance with article 5(3). the director-general shall ask applicants for their consent before including their names on the reserve list. 4. the list of panel members shall be published in the register of expert groups and be made available on the relevant commission website. article 5 terms of office 1. the members of the panel shall be appointed for a renewable term of five years. 2. if, at the end of a term, the renewal or replacement of the panel has not been confirmed, the existing members shall remain in office. 3. an individual shall cease to be a member of the panel if: (a) he or she dies or becomes incapacitated to such an extent that he or she is incapable of performing his or her functions under this decision; (b) he or she resigns; (c) the director-general suspends his or her membership pursuant to paragraph 5, in which case he or she shall cease to be a member for the duration of the suspension; or (d) the director-general terminates his or her membership pursuant to paragraph 5. 4. a member wishing to resign shall notify the director-general by e-mail or registered post, giving at least six months' notice. where he or she is in a position to execute his or her tasks and a replacement process is ongoing, he or she may, at the request of the director-general, remain in office until the replacement is confirmed. 5. the director-general may temporarily suspend or permanently terminate the membership of a member where it has been found, or there are reasonable grounds to consider, that: (a) the member no longer complies with, or has acted in breach of, the conditions set out in this decision or in article 339 of the treaty on the functioning of the european union; (b) the member no longer complies with one or more essential conditions set out in the call for applications, or with the principles of independence, impartiality and confidentiality referred to in article 16, or that the member's conduct or position is incompatible with declarations made in accordance with articles 16, 17 and 18; (c) the member is incapable of performing his or her tasks under this decision; (d) other significant factors are putting the functioning of the panel into question. 6. where the membership of a member has ceased in accordance with paragraph 3, the director-general shall appoint a replacement for the remainder of the term or for the period of the temporary suspension. the commission shall launch a new call for applications once the reserve list is exhausted. chapter iii operation of the panel article 6 election of the chair and vice-chair 1. at the beginning of each term, the panel shall elect a chair and a vice-chair from among its members. the election shall take place by a simple majority of its total membership. in the event of parity, the director-general shall select the chair from the members with most votes, on the basis of an assessment of their qualifications and experience. 2. the term of office of the chair and vice-chair shall coincide with the term of the panel and shall be renewable. any replacement of the chair or vice-chair shall be for the remainder of the term of the panel. article 7 voting rules 1. for votes in cases other than referred to in article 6 and article 8(3)(a), the panel shall only take decisions when at least four members are participating in the vote, one of whom must be either the chair or the vice-chair. decisions shall be taken by a simple majority. 2. in the event of parity, the person chairing the vote shall have the casting vote. 3. persons who have ceased to be members or whose membership is temporarily suspended pursuant to article 5(5) shall not be taken into account for the calculation of the majority referred to in paragraph 1. article 8 rules of procedure 1. the panel shall adopt, and update as appropriate, its rules of procedure on a proposal by and in agreement with the director-general. 2. the rules of procedure shall ensure that the panel performs its tasks in compliance with the principles of scientific excellence, independence and transparency. 3. in particular, the rules of procedure shall provide for: (a) the procedure for the election of the chair and vice-chair of the panel, in accordance with article 6; (b) application of the principles laid down in chapter iv; (c) procedures for the adoption of an opinion; (d) relations with third parties, including scientific bodies; (e) other detailed rules on the functioning of the panel. article 9 methodology 1. the panel shall specify and, as appropriate, update the methodology for the technical assessment of test products. the methodology for sensory analysis shall be based on a comparison of the smelling properties of the test product with those of reference products. in developing the methodology, the panel shall take into consideration, as appropriate, input from the technical group referred to in article 12. 2. the draft methodology, and any subsequent draft update, shall be submitted to the director-general for approval and shall only become applicable after such approval has been given. article 10 advice on test products 1. where the panel is asked to provide an opinion on a test product, the chair of the panel shall inform all members. he or she may appoint a rapporteur from among the members to coordinate the examination of a particular product. the chair shall submit a final report to the commission and, where applicable, the requesting member state. 2. where the panel considers it necessary for the purposes of providing an opinion, it shall request input from the technical group established in accordance with article 12. in forming its opinion, the panel shall have regard to the information and data obtained from the technical group. it may also have regard to any other information at its disposal that it considers authoritative and relevant, including information resulting from reporting obligations pursuant to article 5 of directive 2014/40/eu. 3. with respect to the data and information provided by the technical group, the panel shall, in particular: (a) verify whether the technical group respected applicable rules and scientific standards; (b) assess the data and information, in particular to determine whether they are sufficient to reach a conclusion or whether additional data and information are needed; (c) request such clarifications from the technical group as may be necessary to reach a conclusion. 4. if the panel considers the data or information to be insufficient or has doubts as to whether the applicable rules and standards were respected, it shall consult the commission and, where applicable, the requesting member state. where it is considered necessary, the panel may ask the technical group to repeat certain tests taking into account the panel's comments. 5. where the panel is satisfied that applicable rules and standards were respected, including, where applicable, following the procedure laid down in paragraph 4, and that the data and information are sufficient to reach a conclusion, it shall proceed to deliver an opinion in accordance with paragraph 2. 6. the panel shall submit its opinion to the commission and any referring member states within three months of the date of receipt of the request or by a date agreed with the commission or the requesting member state. article 11 consultation on other matters 1. the commission may consult the panel on other matters relating to the determination of a characterising flavour in accordance with article 7 of directive 2014/40/eu. in such cases, it shall decide, in consultation with the chair, whether to convene a meeting or proceed by means of a written procedure. 2. the chair may appoint a rapporteur from among the panel members to coordinate the task and shall submit a final report to the commission. 3. in its deliberations, the panel shall consider, as appropriate, data and information provided to it by the technical group and other relevant information at its disposal. article 12 technical group of sensory and chemical assessors 1. a technical group of sensory and chemical assessors (the technical group) shall be set up to provide the panel with an assessment of the sensory and, where appropriate, chemical properties of the test product as part of the procedure laid down in article 10. the technical group shall be composed of: (a) two qualified persons selected on the basis of their knowledge, skills and experience in sensory analysis who shall be responsible for recruitment, training and supervision of the sensory assessors; (b) sensory assessors recruited on the basis of their olfactory discrimination ability and their capacity to perceive, analyse and interpret smells, and who have reached the age of majority as laid down in applicable national legislation; and (c) two persons selected on the basis of their knowledge and skills in chemical and laboratory analysis who shall be responsible for the chemical analysis of test products. 2. a public procurement procedure shall be established for the selection of a contractor with responsibility for setting up the technical group. the contractor shall have at its disposal the minimum technical expertise and equipment as specified in the call for tender and include the persons referred to in paragraph 1(a) and (c). the call for tender and associated contractual documentation shall specify that the technical group is under an obligation to act independently and protect confidential information and personal data. it shall further contain a requirement that each group member return a duly completed declaration of interest before engaging in any work for the technical group. in addition, the call for tender and associated contractual documentation shall contain, at least, the following elements: (a) a description of the technical group's main functions; (b) specifications relating to the establishment, management and operation of the technical group, including technical specifications applicable to the performance of the group's functions; (c) specifications concerning the technical expertise and equipment that must be available to the contractor; (d) specifications relating to the recruitment of sensory assessors. such specifications shall include a requirement that sensory assessors may only be recruited following approval by the commission of the candidates proposed. 3. the technical group's sensory analysis shall be based on the methodology established pursuant to article 9. 4. the sensory analysis shall be complemented, where appropriate, by a chemical assessment of the product composition through chemical analyses. this assessment shall be carried out in a manner that produces accurate, consistent and reproducible results. the process and results of the chemical assessment shall be documented. 5. the technical group shall deliver the results of the product testing to the panel by a date agreed by the panel. 6. the work of the technical group shall be subject to the limits of the annual budget allocated to it by the commission. article 13 secretariat 1. the commission shall provide a secretariat for the panel and for all other activities relating to the application of this decision. 2. the secretariat shall be responsible for providing administrative support to facilitate the efficient functioning of the panel and to monitor compliance with the rules of procedure. article 14 special allowance 1. the members of the panel shall be entitled to a special allowance compensating them for their preparatory work and participation, in person or remotely by electronic means, in the meetings of the panel and other activities relating to the application of this decision and organised by the commission, and for serving as rapporteur on a specific question. 2. the special allowance shall consist of a maximum of eur 450 in the form of a daily unit cost for each full working day. the total allowance shall be calculated and rounded up to the amount corresponding to the nearest half working day. 3. the commission shall reimburse travel and, where appropriate, subsistence expenses incurred by members and external experts in connection with the panel's activities in accordance with internal commission provisions. 4. all allowances and reimbursements shall be subject to the annual budget allocated to the panel by the commission. chapter iv independence, confidentiality and transparency article 15 communication 1. the chair of the panel shall act as the contact person for the member states and the commission. 2. the chair shall immediately report to the commission any circumstances that could jeopardise the functioning of the panel. article 16 independence 1. the members of the panel shall be appointed in a personal capacity. they shall not delegate their responsibilities to any other person. in performing their functions, they shall respect the principles of independence, impartiality and confidentiality and act in the public interest. 2. experts applying to be appointed as members of the panel shall be required to submit a declaration indicating any interest that may compromise or reasonably be perceived to compromise their independence, including any relevant circumstances relating to their close family members or partners. submission of a duly completed declaration of interests shall be necessary in order for an expert to be eligible to be appointed as a member of the panel. if the commission concludes that no conflict of interest exists, the applicant shall be eligible for appointment, provided he or she is considered to possess the required expertise. 3. panel members shall promptly inform the commission if there is any change in the information provided in their declaration, in which case they must immediately submit a new declaration showing relevant changes. 4. at each meeting, panel members shall declare any specific interest that may compromise or reasonably be perceived to compromise their independence in relation to any item on the agenda. in such cases, the chair may request that the member concerned withdraw from the meeting or from parts of the meeting. the chair shall inform the commission of such declaration and actions taken. 5. the panel members shall refrain from having any direct or indirect contact with the tobacco industry or its representatives. article 17 confidentiality and protection of personal data 1. the panel members shall not divulge information, including commercially sensitive or personal data, acquired as a result of the panel's work or of other activities relating to the application of this decision, even after they have ceased to be members. they shall sign a declaration of confidentiality to this effect. 2. the panel members shall comply with the commission's security rules on the protection of eu classified and sensitive non-classified information, as set out in commission decisions (eu, euratom) 2015/443 (4) and (eu, euratom) 2015/444 (5). should they fail to respect these obligations, the commission may take all appropriate measures. article 18 commitment the panel members shall undertake to contribute actively to the work of the panel. they shall sign a declaration of commitment to this effect. article 19 transparency 1. the activities of the panel shall be carried out with a high level of transparency. the commission shall publish all relevant documents on a dedicated website and provide a link to this website from the register of expert groups. in particular, it shall make available to the public, without undue delay: (a) the members' names; (b) the members' declarations of interests, confidentiality and commitment; (c) the panel's rules of procedure; (d) the opinions adopted by the panel pursuant to article 10; (e) the agendas and minutes of the panel's meetings; (f) the methodology established in accordance with article 9. 2. by way of derogation from paragraph 1, publication shall not be required where disclosure of a document would undermine the protection of a public or private interest as defined in article 4 of regulation (ec) no 1049/2001 of the european parliament and of the council (6). chapter v final provisions article 20 addressees this decision is addressed to the member states. done at brussels, 18 may 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 127, 29.4.2014, p. 1. (2) commission implementing regulation (eu) 2016/779 of 18 may 2016 laying down uniform rules as regards the procedures for determining whether a tobacco product has a characterising flavour (see page 48 of this official journal). (3) regulation (ec) no 45/2001 of the european parliament and of the council of 18 december 2000 on the protection of individuals with regard to the processing of personal data by the community institutions and bodies and on the free movement of such data (oj l 8, 12.1.2001, p. 1). (4) commission decision (eu, euratom) 2015/443 of 13 march 2015 on security in the commission (oj l 72, 17.3.2015, p. 41). (5) commission decision (eu, euratom) 2015/444 of 13 march 2015 on the security rules for protecting eu classified information (oj l 72, 17.3.2015, p. 53). (6) regulation (ec) no 1049/2001 of the european parliament and of the council of 30 may 2001 regarding public access to european parliament, council and commission documents (oj l 145, 31.5.2001, p. 43).

name: council decision (eu) 2016/768 of 21 april 2016 on the acceptance of the amendments to the 1998 protocol to the 1979 convention on long-range transboundary air pollution on heavy metals type: decision subject matter: deterioration of the environment; international affairs; iron, steel and other metal industries date published: 2016-05-18 18.5.2016 en official journal of the european union l 127/8 council decision (eu) 2016/768 of 21 april 2016 on the acceptance of the amendments to the 1998 protocol to the 1979 convention on long-range transboundary air pollution on heavy metals the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 192(1), in conjunction with article 218(6)(a), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament, whereas: (1) the union is a party to the united nations economic commission for europe (unece) 1979 convention on long-range transboundary air pollution (the convention), following its approval in 1981 (1). (2) the union is a party to the 1998 protocol to the 1979 convention on long-range transboundary air pollution on heavy metals (the protocol), following its approval on 4 april 2001 (2). (3) the parties to the protocol opened negotiations in 2009, the scope of which was extended in 2010, with a view to further improving the protection of human health and the environment, including through the updating of emission limit values that addressed emissions of air pollutants at source. (4) in 2012, the parties present at the 31st session of the executive body of the convention adopted by consensus decisions 2012/5 and 2012/6 amending the protocol. (5) the amendments set out in decision 2012/6 entered into force and became effective on the basis of the expedited procedure provided for in article 13(4) of the protocol. (6) the amendments set out in decision 2012/5 require acceptance by the parties to the protocol in accordance with article 13(3) of the protocol. (7) the union has already adopted instruments on matters covered by the amendments to the protocol, including directive 2010/75/eu of the european parliament and of the council (3). (8) the amendments to the protocol set out in decision 2012/5 should therefore be accepted on behalf of the union, has adopted this decision: article 1 the amendments to the 1998 protocol to the 1979 convention on long-range transboundary air pollution on heavy metals (the protocol) are hereby accepted on behalf of the union. the text of the amendments to the protocol as set out in the annex to decision 2012/5/ec of the executive body of the convention is attached to this decision. article 2 the president of the council shall designate the person(s) empowered to deposit, on behalf of the union, as regards matters falling within the union's competence, the instrument of acceptance provided for in article 13(3) of the protocol (4). article 3 this decision shall enter into force on the date of its adoption. done at luxembourg, 21 april 2016. for the council the president g.a. van der steur (1) oj l 171, 27.6.1981, p. 11. (2) oj l 134, 17.5.2001, p. 40. (3) directive 2010/75/eu of the european parliament and of the council of 24 november 2010 on industrial emissions (integrated pollution prevention and control) (oj l 334, 17.12.2010, p. 17). (4) the date of entry into force of the amendments to the protocol will be published in the official journal of the european union by the general secretariat of the council. amendments to the protocol as set out in the annex to decision 2012/5 of the executive body of the convention (a) article 1 1. in paragraph 10 the words of: (i) this protocol; or (ii) an amendment to annex i or ii, where the stationary source becomes subject to the provisions of this protocol only by virtue of that amendment are replaced by the words for a party of the present protocol. a party may decide not to treat as a new stationary source any stationary source for which approval has already been given by the appropriate competent national authority at the time of entry into force of the protocol for that party and provided that the construction or substantial modification is commenced within five years of that date. 2. a new paragraph 12 is added after paragraph 11 as follows: 12. the terms this protocol , the protocol and the present protocol mean the 1998 protocol on heavy metals, as amended from time to time. (b) article 3 3. in paragraph 2, the word each is replaced by the words subject to paragraphs 2 bis and 2 ter, each. 4. in paragraph 2 (a) the words for which annex iii identifies best available techniques are replaced by the words for which guidance adopted by the parties at a session of the executive body identifies best available techniques. 5. in paragraph 2 (c) the words for which annex iii identifies best available techniques are replaced by the words for which guidance adopted by the parties at a session of the executive body identifies best available techniques. 6. new paragraphs 2 bis and 2 ter are inserted after paragraph 2 as follows: 2 bis. a party that was already a party to the present protocol prior to the entry into force of an amendment that introduces new source categories may apply the limit values applicable to an existing stationary source to any source in such a new category the construction or substantial modification of which is commenced before the expiry of two years from the date of entry into force of that amendment for that party, unless and until that source later undergoes substantial modification. 2 ter. a party that was already a party to the present protocol prior to the entry into force of an amendment that introduces new limit values applicable to a new stationary source may continue to apply the previously applicable limit values to any source the construction or substantial modification of which is commenced before the expiry of two years from the date of entry into force of that amendment for that party, unless and until that source later undergoes substantial modification. 7. in paragraph 5: (a) the words , for those parties within geographical scope of emep, using as a minimum the methodologies specified by the steering body of emep, and, for those parties outside the geographical scope of emep, using as guidance the methodologies developed through the work plan of the executive body are deleted and replaced by a full stop . (b) the following text is added after the first sentence: parties within the geographic scope of emep shall use the methodologies specified in guidelines prepared by the steering body of emep and adopted by the parties at a session of the executive body. parties in areas outside the geographic scope of emep shall use as guidance the methodologies developed through the workplan of the executive body. 8. a new paragraph 8 is added at the end of article 3, as follows: 8. each party should actively participate in programmes under the convention on the effects of air pollution on human health and the environment and programmes on atmospheric monitoring and modelling. (c) article 3 bis 9. a new article 3 bis is added as follows: article 3 bis flexible transitional arrangements 1. notwithstanding article 3, paragraphs 2 (c) and 2 (d), a party to the convention that becomes a party to the present protocol between 1 january 2014 and 31 december 2019 may apply flexible transitional arrangements for the implementation of best available techniques and limit values to existing stationary sources in specific stationary source categories under the conditions specified in this article. 2. any party electing to apply the flexible transitional arrangements under this article shall indicate in its instrument of ratification, acceptance, approval or accession to the present protocol the following: (a) the specific stationary source categories listed in annex ii for which the party is electing to apply flexible transitional arrangements, provided that no more than four such categories may be listed; (b) stationary sources for which construction or the last substantial modification commenced prior to 1990 or an alternative year of the period 1985 1995 inclusive, specified by a party upon ratification, acceptance, approval or accession, which are eligible for flexible transitional arrangements as set out in paragraph 5; and (c) an implementation plan consistent with paragraphs 3 and 4 identifying a timetable for full implementation of the specified provisions. 3. a party shall, as a minimum, apply best available techniques for existing stationary sources in categories 1, 2, 5 and 7 of annex ii no later than eight years after the entry into force of the present protocol for the party, or 31 december 2022, whichever is sooner, except as provided in paragraph 5. 4. in no case may a party's application of best available techniques or limit values for any existing stationary sources be postponed past 31 december 2030. 5. with respect to any source or sources indicated pursuant to paragraph 2 (b), a party may decide, no later than eight years after entry into force of the present protocol for the party, or 31 december 2022, whichever is sooner, that such source or sources will be closed down. a list of such sources shall be provided as part of the party's next report pursuant to paragraph 6. requirements for application of best available techniques and limit values will not apply to any such source or sources, provided the source or sources are closed down no later than 31 december 2030. for any such source or sources not closed down as of that date, a party must thereafter apply the best available techniques and limit values applicable to new sources in the applicable source category. 6. a party electing to apply the flexible transitional arrangements under this article shall provide the executive secretary of the commission with triennial reports of its progress towards implementation of best available techniques and limit values to the stationary sources in the stationary source categories identified pursuant to this article. the executive secretary of the commission will make such triennial reports available to the executive body. (d) article 7 10. in paragraph 1 (a): (a) the semi-colon at the end of the paragraph ; is replaced by . moreover:; and (b) new subparagraphs (i) and (ii) are inserted as follows: (i) where a party applies different emission reduction strategies under article 3 paragraphs 2 (b), (c) or (d), it shall document the strategies applied and its compliance with the requirements of those paragraphs; (ii) where a party judges the application of certain limit values, as specified in accordance with article 3, paragraph 2 (d), not to be technically and economically feasible, it shall report and justify this; 11. for paragraph 1 (b) there is substituted the following: (b) each party within the geographical scope of emep shall report to emep, through the executive secretary of the commission, information on the levels of emissions of heavy metals listed in annex i, using the methodologies specified in guidelines prepared by the steering body of emep and adopted by the parties at a session of the executive body. parties in areas outside the geographical scope of emep shall report available information on levels of emissions of the heavy metals listed in annex i. each party shall also provide information on the levels of emissions of the substances listed in annex i for the reference year specified in that annex; 12. new paragraphs are added after paragraph 1 (b) as follows: (c) each party within the geographical scope of emep should report available information to the executive body, through the executive secretary of the commission, on its air pollution effects programmes on human health and the environment and atmospheric monitoring and modelling programmes under the convention using guidelines adopted by the executive body; (d) parties in areas outside the geographical scope of emep should make available information similar to that specified in subparagraph (c), if requested to do so by the executive body. 13. in paragraph 3: (a) the words in good time before each annual session of are replaced by upon the request of and in accordance with timescales decided by; (b) the words and other subsidiary bodies are inserted after the word emep; (c) the word relevant is inserted after the word provide. (e) article 8 14. the words emep shall, using appropriate models and measurements and in good time before each annual session of the executive body are replaced by upon the request of and in accordance with timescales decided by the executive body, emep and its technical bodies and centres shall, using appropriate models and measurements,. (f) article 10 15. in paragraph 4: (a) the word consider is inserted after the word shall; (b) the word develop is replaced by the word developing; (c) the words to reduce emissions into the atmosphere of the heavy metals listed in annex i are deleted. (g) article 13 16. in paragraph 3: (a) the words and to annexes i, ii, iv, v and vi are replaced by the words other than to annexes iii and vii; (b) the words on which two thirds of the parties are replaced by the words on which two thirds of those that were parties at the time of their adoption 17. in paragraph 4 the word ninety is replaced by the figure 180. 18. in paragraph 5 the word ninety is replaced by the figure 180. 19. new paragraphs 5 bis and 5 ter are inserted after paragraph 5 as follows: 5 bis. for those parties having accepted it, the procedure set out in paragraph 5 ter supersedes the procedure set out in paragraph 3 in respect of amendments to annexes ii, iv, v and vi. 5 ter. amendments to annexes ii, iv, v and vi shall be adopted by consensus of the parties present at a session of the executive body. on the expiry of one year from the date of its communication to all parties by the executive secretary of the commission, an amendment to any such annex shall become effective for those parties which have not submitted to the depositary a notification in accordance with the provisions of subparagraph (a): (a) any party that is unable to approve an amendment to annexes ii, iv, v and vi shall so notify the depositary in writing within one year from the date of the communication of its adoption. the depositary shall without delay notify all parties of any such notification received. a party may at any time substitute an acceptance for its previous notification and, upon deposit of an instrument of acceptance with the depositary, the amendment to such an annex shall become effective for that party; (b) any amendment to annexes ii, iv, v and vi shall not enter into force if an aggregate number of 16 or more parties have either: (i) submitted a notification in accordance with the provisions of subparagraph (a); or (ii) not accepted the procedure set out in this paragraph and not yet deposited an instrument of acceptance in accordance with the provisions of paragraph 3. (h) article 15 20. a new paragraph 3 is added after paragraph 2 as follows: 3. a state or regional economic integration organization shall declare in its instrument of ratification, acceptance, approval or accession if it does not intend to be bound by the procedures set out in article 13, paragraph 5 ter, as regards the amendment of annexes ii, iv, v and vi. (i) annex ii 21. in the table under subheading ii, the words lead and zinc in the first line under the description of category 5 are replaced with the words lead, zinc and silico- and ferro-manganese alloys. (j) annex iv 22. the number 1. is added in front of the first paragraph. 23. in subparagraph (a), the words for a party are inserted after the word protocol. 24. in subparagraph (b): (a) in the first sentence the word eight is replaced by the word two. (b) at the end of the first sentence, the words for a party or 31 december 2020, whichever is the later are inserted after the word protocol. (c) the last sentence is deleted. 25. at the end of the annex new paragraphs 2 and 3 are inserted as follows: 2. notwithstanding paragraph 1, but subject to paragraph 3, a party to the convention that becomes a party to the present protocol between 1 january 2014, and 31 december 2019, may declare upon ratification, acceptance, approval of, or accession to, the present protocol that it will extend the timescales for application of the limit values referred to in article 3, paragraph 2 (d) up to 15 years after the date of entry into force of the present protocol for the party in question. 3. a party that has made an election pursuant to article 3 bis of the present protocol with respect to a particular stationary source category may not also make a declaration pursuant to paragraph 2 applicable to the same source category. (k) annex v 26. for annex v the following text is substituted: annex v limit values for controlling emissions from major stationary sources 1. two types of limit value are important for heavy metal emission control: (a) values for specific heavy metals or groups of heavy metals; and (b) values for emissions of particulate matter in general. 2. in principle, limit values for particulate matter cannot replace specific limit values for cadmium, lead and mercury because the quantity of metals associated with particulate emissions differs from one process to another. however, compliance with these limits contributes significantly to reducing heavy metal emissions in general. moreover, monitoring particulate emissions is generally less expensive than monitoring individual species and continuous monitoring of individual heavy metals is in general not feasible. therefore, particulate matter limit values are of great practical importance and are also laid down in this annex in most cases to complement specific limit values for cadmium or lead or mercury. 3. section a applies to parties other than the united states of america. section b applies to the united states of america. a. parties other than the united states of america 4. in this section only, dust means the mass of particles, of any shape, structure or density, dispersed in the gas phase at the sampling point conditions which may be collected by filtration under specified conditions after representative sampling of the gas to be analysed, and which remain upstream of the filter and on the filter after drying under specified conditions. 5. for the purpose of this section, emission limit value (elv) or limit value means the quantity of dust and specific heavy metals under this protocol contained in the waste gases from an installation that is not to be exceeded. unless otherwise specified, it shall be calculated in terms of mass of pollutant per volume of the waste gases (expressed as mg/m3), assuming standard conditions for temperature and pressure for dry gas (volume at 273,15 k, 101,3 kpa). with regard to the oxygen content of the waste gas, the values given for selected major stationary source categories shall apply. dilution for the purpose of lowering concentrations of pollutants in waste gases is not permitted. start-up, shutdown and maintenance of equipment are excluded. 6. emissions shall be monitored in all cases via measurements or through calculations achieving at least the same accuracy. compliance with limit values shall be verified through continuous or discontinuous measurements, or any other technically sound method including verified calculation methods. measurements of relevant heavy metals shall be made at least once every three years for each industrial source. guidance documents on the methods for undertaking measurements and calculations adopted by the parties at the session of the executive body shall be taken into account. in case of continuous measurements, compliance with the limit value is achieved if the validated monthly emission average does not exceed the elv. in case of discontinuous measurements or other appropriate determination or calculation procedures, compliance with the elvs is achieved if the mean value based on an appropriate number of measurements under representative conditions does not exceed the value of the emission standard. the inaccuracy of the measurement methods may be taken into account for verification purposes. indirect monitoring of substances is also possible via sum parameters/cumulative parameters (e.g., dust as a sum parameter for heavy metals). in some cases using a certain technique to treat emissions can assure a value/limit value is maintained or met. 7. monitoring of relevant polluting substances and measurements of process parameters, as well as the quality assurance of automated measuring systems and the reference measurements to calibrate those systems, shall be carried out in accordance with cen standards. if cen standards are not available, iso standards, national standards or international standards which will ensure the provisions of data of an equivalent scientific quality shall apply. combustion plants (boilers and process heaters) with a rated thermal input exceeding 50 mwth (1) (annex ii, category 1) 8. limit values for dust emissions for combustion of solid and liquid fuels, other than biomass and peat: (2) table 1 fuel type thermal input (mwth) elv for dust (mg/m3) (1) solid fuels 50 100 new plants: 20 (coal, lignite and other solid fuels) existing plants: 30 (coal, lignite and other solid fuels) 100 300 new plants: 20 (coal, lignite and other solid fuels) existing plants: 25 (coal, lignite and other solid fuels) > 300 new plants: 10 (coal, lignite and other solid fuels) existing plants: 20 (coal, lignite and other solid fuels) liquid fuels 50 100 new plants: 20 existing plants: 30 (in general) 50 for the firing of distillation and conversion residues within refineries from the refining of crude oil for own consumption in combustion plants liquid fuels 100 300 new plants: 20 existing plants: 25 (in general) 50 for the firing of distillation and conversion residues within refineries from the refining of crude oil for own consumption in combustion plants > 300 new plants: 10 existing plants: 20 (in general) 50 for the firing of distillation and conversion residues within refineries from the refining of crude oil for own consumption in combustion plants 9. special provisions for combustion plants referred to in paragraph 8: (a) a party may derogate from the obligation to comply with the elvs provided for in paragraph 8 in the following cases: (i) for combustion plants normally using gaseous fuel which have to resort exceptionally to the use of other fuels because of a sudden interruption in the supply of gas and for this reason would need to be equipped with a waste gas purification facility; (ii) for existing combustion plants not operated more than 17 500 operating hours, starting from 1 january 2016 and ending no later than 31 december 2023; (b) where a combustion plant is extended by at least 50 mwth, the elv specified in paragraph 8 for new installations shall apply to the extensional part affected by the change. the elv is calculated as an average weighted by the actual thermal input for both the existing and the new part of the plant; (c) parties shall ensure that provisions are made for procedures relating to malfunction or breakdown of the abatement equipment; (d) in the case of a multi-fuel firing combustion plant involving the simultaneous use of two or more fuels, the elv shall be determined as the weighted average of the elvs for the individual fuels, on the basis of the thermal input delivered by each fuel. primary and secondary iron and steel industry (annex ii, category 2 and 3) 10. limit values for dust emissions: table 2 activity elv for dust (mg/m3) sinter plant 50 pelletization plant 20 for crushing, grinding and drying 15 for all other process steps blast furnace: hot stoves 10 basic oxygen steelmaking and casting 30 electric steelmaking and casting 15 (existing) 5 (new) iron foundries (annex ii, category 4) 11. limit values for dust emissions for iron foundries: table 3 activity elv for dust (mg/m3) iron foundries: all furnaces (cupola, induction, rotary); all mouldings (lost, permanent) 20 hot rolling 20 50 where a bag filter cannot be applied due to the presence of wet fumes production and processing of copper, zinc and silico- and ferro- manganese alloys, including imperial smelting furnaces (annex ii, categories 5 and 6) 12. limit value for dust emissions for copper, zinc and silico- and ferro-manganese alloys production and processing: table 4 elv for dust (mg/m3) non-ferrous metal production and processing 20 production and processing of lead (annex ii, categories 5 and 6) 13. limit value for dust emissions for lead production and processing: table 5 elv for dust (mg/m3) lead production and processing 5 cement industry (annex ii, category 7) 14. limit values for dust emissions for cement production: table 6 elv for dust (mg/m3) (2) cement installations, kilns, mills and clinker coolers 20 cement installations, kilns, mills and clinker coolers using co-incineration of waste 20 glass industry (annex ii, category 8) 15. limit values for dust emissions for glass manufacturing: table 7 elv for dust (mg/m3) (3) new installations 20 existing installations 30 16. limit value for lead emissions for glass manufacturing: 5 mg/m3. chlor-alkali industry (annex ii, category 9) 17. existing chlor-alkali plants using the mercury cell process shall convert to use of mercury free technology or close by 31 december 2020; during the period up until conversion the levels of mercury released by a plant into the air of 1 g per mg (3) chlorine production capacity apply. 18. new chlor-alkali plants are to be operated mercury free. waste incineration (annex ii, categories 10 and 11) 19. limit value for dust emissions for waste incineration: table 8 elv for dust (mg/m3) (4) municipal, non-hazardous, hazardous and medical waste incineration 10 20. limit value for mercury emissions for waste incineration: 0,05 mg/m3. 21. limit value for mercury emissions for co-incineration of waste in source categories 1 and 7: 0,05 mg/m3. b. united states of america 22. limit values for controlling emissions of particulate matter and/or specific heavy metals from stationary sources in the following stationary source categories, and the sources to which they apply, are specified in the following documents: (a) steel plants: electric arc furnaces 40 c.f.r. part 60, subpart aa and subpart aaa; (b) small municipal waste combustors 40 c.f.r. part 60, subpart aaaa; (c) glass manufacturing 40 c.f.r. part 60, subpart cc; (d) electric utility steam generating units 40 c.f.r. part 60, subpart d and subpart da; (e) industrial-commercial-institutional steam generating units 40 c.f.r. part 60, subpart db and subpart dc; (f) municipal waste incinerators 40 c.f.r. part 60, subpart e, subpart ea and subpart eb; (g) hospital/medical/infectious waste incinerators 40 c.f.r. part 60, subpart ec; (h) portland cement 40 c.f.r. part 60, subpart f; (i) secondary lead smelters 40 c.f.r. part 60, subpart l; (j) basic oxygen process furnaces 40 c.f.r. part 60, subpart n; (k) basic process steelmaking facilities (after 20 january 1983) 40 c.f.r. part 60, subpart na; (l) primary copper smelters 40 c.f.r. part 60, subpart p; (m) primary zinc smelters 40 c.f.r. part 60, subpart q; (n) primary lead smelters 40 c.f.r. part 60, subpart r; (o) ferroalloy production facilities 40 c.f.r. part 60, subpart z; (p) other solid waste incineration units (after 9 december 2004) 40 c.f.r. part 60, subpart eeee; (q) secondary lead smelters 40 c.f.r. part 63, subpart x; (r) hazardous waste combustors 40 c.f.r. part 63, subpart eee; (s) portland cement manufacturing 40 c.f.r. part 63, subpart lll; (t) primary copper 40 c.f.r. part 63, subpart qqq; (u) primary lead smelting 40 c.f.r. part 63, subpart ttt; (v) iron and steel foundries 40 c.f.r. part 63, subpart eeeee; (w) integrated iron and steel manufacturing 40 c.f.r. part 63, subpart fffff; (x) electric arc furnace steelmaking facilities 40 c.f.r. part 63, subpart yyyyy; (y) iron and steel foundries 40 c.f.r. part 63, subpart zzzzz; (z) primary copper smelting area sources 40 c.f.r. part 63, subpart eeeeee; (aa) secondary copper smelting area sources 40 c.f.r. part 63, subpart ffffff; (bb) primary nonferrous metals area sources: zinc, cadmium, and beryllium 40 c.f.r. part 63, subpart gggggg; (cc) glass manufacturing (area sources) 40 c.f.r. part 63, subpart ssssss; (dd) secondary nonferrous metal smelter (area sources) 40 c.f.r. part 63, subpart tttttt; (ee) ferroalloys production (area sources) 40 c.f.r. part 63, subpart yyyyyy; (ff) aluminum, copper, and nonferrous foundries (area sources) 40 c.f.r. part 63, subpart zzzzzz; (gg) standards of performance for coal preparation and processing plants 40 c.f.r. part 60, subpart y; (hh) industrial, commercial, institutional and process heaters 40 c.f.r. part 63, subpart ddddd; (ii) industrial, commercial and institutional boilers (area sources) 40 c.f.r. part 63, subpart jjjjjj; (jj) mercury cell chlor-alkali plants 40 c.f.r. part 63, subpart iiiii; and (kk) standards of performance commercial and industrial solid waste incineration units for which construction is commenced after november 30, 1999, or for which modification or reconstruction is commenced on or after 1 june 2001 40 c.f.r. part 60, subpart cccc. (l) annex vi 27. in paragraph 1: (a) the words except as otherwise provided in this annex, no are deleted and replaced by no; (b) the words six months after are deleted; (c) the words for a party are added after the word protocol. 28. paragraph 3 is deleted. 29. in paragraph 4, the word a is replaced by the words notwithstanding paragraph 1, a. 30. in paragraph 5, the following text is substituted for the chapeau prior to subparagraph (a): each party shall, no later than the date of entry into force of this protocol for that party, achieve concentration levels which do not exceed: (1) the rated thermal input of the combustion plant is calculated as the sum of the input of all units connected to a common stack. individual units below 15 mwth shall not be considered when calculating the total rated thermal input. (2) in particular, the elvs shall not apply to: plants using biomass and peat as their only fuel source plants in which the products of combustion are used for direct heating, drying, or any other treatment of objects or materials; post-combustion plants designed to purify the waste gases by combustion which are not operated as independent combustion plants; facilities for the regeneration of catalytic cracking catalysts; facilities for the conversion of hydrogen sulphide into sulphur; reactors used in the chemical industry; coke battery furnaces; cowpers; recovery boilers within installations for the production of pulp; waste incinerators; and plants powered by diesel, petrol or gas engines or by combustion turbines, irrespective of the fuel used. (1) limit values refer to an oxygen content of 6 % for solid fuels and 3 % for liquid fuels. (2) limit values refer to an oxygen content of 10 %. (3) limit values refer to an oxygen content of 8 % for continuous melting and 13 % for discontinuous melting. (3) 1 mg = 1 tonne. (4) limit value refers to an oxygen content of 11 %.

name: council decision (eu) 2016/763 of 13 may 2016 establishing the position to be taken on behalf of the european union within the committee on government procurement as regards the draft decision on arbitration procedures pursuant to article xix:8 of the revised agreement on government procurement type: decision subject matter: trade policy; international security; international affairs; justice; world organisations date published: 2016-05-14 14.5.2016 en official journal of the european union l 126/71 council decision (eu) 2016/763 of 13 may 2016 establishing the position to be taken on behalf of the european union within the committee on government procurement as regards the draft decision on arbitration procedures pursuant to article xix:8 of the revised agreement on government procurement the council of the european union, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 207(4), in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) the revised agreement on government procurement (the revised gpa), which entered into force on 6 april 2014, lays down a revamped legal framework applicable by the revised gpa parties to covered procurement. the revised gpa provides for the possibility of the revised gpa parties using arbitration procedures in cases where objections regarding proposed rectification, transfer of an entity from one annex to another, withdrawal of an entity or other modification of a party's annexes to appendix i were raised but could not be solved through consultations. (2) pursuant to article xix:8 of the revised gpa, the committee on government procurement is required to adopt arbitration procedures in order to facilitate the resolution of those objections. (3) the revised gpa parties have extensively discussed the possible content of such arbitration procedures as regards various options to be applied in case of objections to a proposed modification of a party's procurement coverage. the revised gpa parties have been able to find a consensus on that matter. (4) the agreed arbitration procedures are set out in a draft decision on arbitration procedures pursuant to article xix:8 of the revised gpa. (5) that draft decision on arbitration procedures provides for the conditions that need to be met in order to resort to the arbitration procedures and sets out rules governing the appointment of arbitrators, the participation of third parties in arbitration procedures, the conduct of the proceedings and the arbitrators' determination. (6) the adoption of the draft decision on arbitration procedures is expected to make a positive contribution to the existing legal framework of the revised gpa as it has the purpose of facilitating the resolution of objections raised regarding a proposed rectification, transfer of an entity from one annex to another, withdrawal of an entity or other modification of a party's annexes to appendix i to the revised gpa. (7) accordingly, it is appropriate to establish the position to be taken on behalf of the union within the committee on government procurement with regard to the draft decision on arbitration procedures, has adopted this decision: article 1 the position to be taken on behalf of the union within the committee on government procurement shall be to approve the adoption of the draft decision on arbitration procedures pursuant to article xix:8 of the revised agreement on government procurement. the text of the draft decision on arbitration procedures is attached to this decision. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 13 may 2016. for the council the president e.m.j. ploumen draft decision on arbitration procedures pursuant to article xix:8 of the revised gpa the committee on government procurement (the committee), noting that article xix:8 of the revised agreement on government procurement (the agreement) requires the committee to develop arbitration procedures to facilitate resolution of objections under article xix:2 of the agreement; and confirming the importance of article xix:8(b) and (c) of the agreement to these arbitration procedures and reiterating the parties' commitment to adopt decisions pursuant to article xix:8(b) and (c) of the agreement. hereby adopts the following arbitration procedures to facilitate the resolution of objections under article xix:2 of the agreement: invocation of arbitration procedures 1. pursuant to article xix:7 of the agreement, where the modifying party and an objecting party are unable to resolve an objection to a proposed modification under article xix:1 of the agreement, the modifying party or any objecting party may refer the proposed modification to arbitration, stating the reasons for its request, by notifying the committee no earlier than 45 days after the date of circulation of the notification of the proposed modification under article xix:1 of the agreement. 2. where two or more parties refer the same proposed modification to arbitration prior to the appointment of all the arbitrators, the modifying party and all objecting parties shall agree to a single arbitration addressing all objections to the same proposed modification. if additional referrals on the same proposed modification are made after the appointment of all the arbitrators, the modifying party and all objecting parties shall agree to a single arbitration whenever feasible. appointment of the arbitrators 3. arbitration shall be carried out by arbitrators. unless the parties to the arbitration otherwise agree, there shall be three arbitrators. arbitrators shall meet the requirements set out for panelists under articles 8(1), 8(2), and 8(9) of the understanding on rules and procedures governing the settlement of disputes. 4. the secretariat of the committee shall on request from a party to the arbitration, propose nominations for the arbitrators. the parties to the arbitration shall not oppose nominations except for compelling reasons. citizens of the parties to the arbitration and government officials of the third parties shall not be appointed as arbitrators, unless otherwise agreed by the parties to the arbitration. 5. where the parties to the arbitration cannot agree on who should be appointed as arbitrators within 20 days after referring the proposed modification to arbitration, at the request of a party to the arbitration, the director-general shall appoint the arbitrators within 10 days, after consulting parties to the arbitration and the chair of the committee. third party participation 6. any party to the agreement having a substantial interest in a proposed modification brought to arbitration and having notified its interest to the committee (referred to herein as third party) within 10 days after the proposed modification being referred to arbitration shall be invited to make a written submission, attend substantive meetings of the arbitrators with the parties to the arbitration, make oral statements, and be entitled to respond to questions from the arbitrators. procedures 7. in its proceedings, the arbitrators shall apply the relevant provisions of the agreement and be guided by the decision adopted by the committee in accordance with article xix:8(b) of the agreement, once it is adopted. in addition, the following working procedures shall apply: a. the secretariat of the committee shall promptly transmit to the arbitrators the applicable notification and objection under paragraph 1 or 2 of article xix of the agreement. within 10 days of the appointment of the arbitrators, and after consultations with the parties to the arbitration, the arbitrators shall adopt a timetable for the conduct of the arbitration proceedings. the timetable should be based on the timetable included in the annex to this decision. b. unless the parties to the arbitration agree that it is unnecessary, the arbitrators shall hold a substantive meeting with the parties to the arbitration. before the substantive meeting, the parties to the arbitration shall transmit to the arbitrators written submissions in which they present the facts of the case and their arguments. c. where a party to the arbitration submits information that it has designated as confidential to the arbitrators, the arbitrators, the other parties to the arbitration and third parties shall treat that information as confidential. upon request of a party to the arbitration, the arbitrators shall establish additional procedures necessary to preserve the confidentiality of such information. d. where a party to the arbitration designates information in its written submissions as confidential, the party shall, on request of another party to the arbitration or a third party, provide a non-confidential summary of the information contained in its submission that could be disclosed to the public. e. at the substantive meeting, the arbitrators shall ask the party that has requested arbitration to present its case by making an oral submission. the party against which the arbitration has been brought shall then be asked to present its point of view by making an oral submission. f. the substantive meetings of the arbitrators shall be open to the public, except where a party to the arbitration requests that the meeting be closed to protect information designated as confidential. g. the arbitrators may, at any time, put questions to the parties to the arbitration and third parties and ask them for explanations either in the course of the meeting or in writing. h. the written submissions of the parties to the arbitration, including any responses to questions put by the arbitrators, shall be made available to the other party or parties to the arbitration as well as to the third parties. the parties to the arbitration shall submit a written version of their oral statements made at the meeting with the arbitrators to the arbitrators, the other party or parties to the arbitration and to the third parties. i. the written submissions, responses to questions, and written versions of oral statements of the third parties shall be made available to the arbitrators, the parties to the arbitration and other third parties, and shall be reflected in the arbitrators' report. j. the deliberations of the arbitrators shall be kept confidential. k. the arbitrators may seek information from any relevant source and may consult experts. the arbitrators shall provide to the parties to the arbitration and third parties any information provided to or received from experts. the parties to the arbitration shall have an opportunity to comment on any input received from experts. l. any additional procedures specific to the arbitration shall be determined by the arbitrators in consultation with the parties to the arbitration. m. subject to paragraph 7.c., nothing in these procedures shall preclude a party to the arbitration or a third party from disclosing statements of its own positions to the public. 8. the rules of conduct for the understanding on rules and procedures governing the settlement of disputes shall apply to each person serving as an arbitrator under these procedures and, as specified in the rules of conduct and the relevant provisions of the staff regulations, to those members of the secretariat called upon to assist the arbitrators. 9. where parties to the arbitration reach a mutually agreed solution to objections to the proposed modification, they shall promptly notify the arbitrators. upon receipt of the notification, the arbitrators shall terminate the proceedings for those parties. the details of any mutually agreed solution shall be notified to the committee, where any party to the agreement may comment. arbitrators' determination 10. the terms of reference for the arbitrators shall require the arbitrators to determine: a. in the case of a proposed withdrawal under article xix:1(a) of the agreement, whether government control or influence over the covered procurement of the entity proposed to be withdrawn has been effectively eliminated; or b. in the case of any other proposed modification under article xix:1(b), whether the proposed modification maintains a balance of rights and obligations and a comparable level of mutually agreed coverage provided in the agreement and, where appropriate, the level of compensatory adjustment. 11. the arbitrators shall issue a report containing its reasoned determination to the parties to the arbitration within 90 days or, in the event that the timetable is modified by the arbitrators, no later than 120 days of: a. the appointment of the arbitrators where an arbitration is conducted pursuant to paragraph 1.; or b. the request where an arbitration is conducted pursuant to paragraph 12. the time period set out in this paragraph may be extended by mutual agreement of the parties to the arbitration. the secretariat of the committee shall promptly circulate the report to the parties to the agreement following translation. 12. where the arbitrators make a negative determination under paragraph 10.a., and where the arbitrators made no determination of compensatory adjustment under paragraph 10.b., any party to the arbitration may request after 30 days and no later than 60 days following the circulation of the arbitrators' report that the same arbitrators, where available, shall determine the level of compensatory adjustment that would result in a comparable level of coverage and maintain the balance of rights and obligations under the agreement. in doing so, the arbitrators shall be guided by the decision adopted by the committee in accordance with article xix:8(c) of the agreement, once it is adopted. where any of the original arbitrators are not available, a replacement shall be appointed in accordance with paragraphs 3. to 5. implementation 13. the parties to the arbitration shall accept the arbitrators' determination as final. 14. for the purposes of article xix:7(b)(i) of the agreement, the arbitration procedures are completed: a. when a report under paragraph 11. that does not give rise to the right to further proceedings under paragraph 12. is circulated to the parties to the agreement; or b. where parties to the arbitration do not exercise a right available to them under paragraph 12., upon the expiration of the time period set out in that paragraph. annex proposed timetable for arbitration the arbitrators shall base the timetable adopted under paragraph 7.a. on the following: a. receipt of written submissions of the parties to the arbitration: (1) requesting party: - - - - - - - - - - 2 weeks (2) responding party: - - - - - - - - - - 2 weeks b. receipt of third party submissions: - - - - - - - - - - 1 week c. substantive meeting with the arbitrators: - - - - - - - - - - 1-2 weeks d. responses to questions to parties and third parties to the arbitration: - - - - - - - - - - 1-2 weeks e. issuance and circulation of the arbitrators' report on its determination: - - - - - - - - - - 4 weeks consistent with the provisions of paragraph 11., the arbitrators may change the above timetable and may schedule additional meetings with the parties to the arbitration after consulting them.

name: commission implementing decision (eu) 2016/716 of 11 may 2016 repealing implementing decision 2012/733/eu implementing regulation (eu) no 492/2011 of the european parliament and of the council as regards the clearance of vacancies and applications for employment and the re-establishment of eures (notified under document c(2016) 2772) (text with eea relevance) type: decision_impl subject matter: eu institutions and european civil service; labour market date published: 2016-05-13 13.5.2016 en official journal of the european union l 125/24 commission implementing decision (eu) 2016/716 of 11 may 2016 repealing implementing decision 2012/733/eu implementing regulation (eu) no 492/2011 of the european parliament and of the council as regards the clearance of vacancies and applications for employment and the re-establishment of eures (notified under document c(2016) 2772) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) no 492/2011 of the european parliament and of the council of 5 april 2011 on freedom of movement for workers within the union (1), and in particular article 38 thereof, whereas: (1) regulation (eu) 2016/589 of the european parliament and of the council (2) replaces the regulatory framework on eures as set out in chapter ii of regulation (eu) no 492/2011. (2) commission implementing decision 2012/733/eu (3) lays down detailed rules on the functioning of the european network of employment services (eures network, in particular as regards the clearance of vacancies and applications for employment. (3) regulation (eu) 2016/589 lays down new rules on the clearance of vacancies and applications for employment and re-establishes the eures network by integrating all the aspects covered by implementing decision 2012/733/eu. (4) implementing decision 2012/733/eu should therefore, for reasons of legal certainty and clarity, be repealed at the latest at the date that regulation (eu) 2016/589 enters into force, has adopted this decision: article 1 implementing decision 2012/733/eu is repealed with effect from 12 may 2016, the date of entry into force of regulation (eu) 2016/589. article 2 this decision is addressed to the member states. done at brussels, 11 may 2016. for the commission marianne thyssen member of the commission (1) oj l 141, 27.5.2011, p. 1. (2) regulation (eu) 2016/589 of the european parliament and of the council of 13 april 2016 on a european network of employment services (eures), workers' access to mobility services and the further integration of labour markets, and amending regulations (eu) no 492/2011 and (eu) no 1296/2013 (oj l 107, 22.4.2016, p. 1). (3) commission implementing decision 2012/733/eu of 26 november 2012 implementing regulation (eu) no 492/2011 of the european parliament and of the council as regards the clearance of vacancies and applications for employment and the re-establishment of eures (oj l 328, 28.11.2012, p. 21).

name: commission implementing decision (eu) 2016/706 of 3 may 2016 establishing the list of union inspectors who may carry out inspections pursuant to council regulation (ec) no 1224/2009 (notified under document c(2016) 2606) type: decision_impl subject matter: fisheries; european union law date published: 2016-05-12 12.5.2016 en official journal of the european union l 122/26 commission implementing decision (eu) 2016/706 of 3 may 2016 establishing the list of union inspectors who may carry out inspections pursuant to council regulation (ec) no 1224/2009 (notified under document c(2016) 2606) the european commission, having regard to the treaty on the functioning of the european union, having regard to council regulation (ec) no 1224/2009 of 20 november 2009 establishing an union control system for ensuring compliance with the rules of the common fisheries policy, amending regulations (ec) no 847/96, (ec) no 2371/2002, (ec) no 811/2004, (ec) no 768/2005, (ec) no 2115/2005, (ec) no 2166/2005, (ec) no 388/2006, (ec) no 509/2007, (ec) no 676/2007, (ec) no 1098/2007, (ec) no 1300/2008, (ec) no 1342/2008 and repealing regulations (eec) no 2847/93, (ec) no 1627/94 and (ec) no 1966/2006 (1), and in particular article 79(1) thereof, whereas: (1) regulation (ec) no 1224/2009 establishes a system for control, inspection and enforcement to ensure compliance with the rules of the common fisheries policy in the union. that regulation provides that, without prejudice to the primary responsibility of the coastal member states, union inspectors may carry out inspections in accordance with its provisions in union waters and on union fishing vessels outside union waters. (2) commission implementing regulation (eu) no 404/2011 (2) lays down detailed rules for the application of the union control system as established by regulation (ec) no 1224/2009. (3) implementing regulation (eu) no 404/2011 provides that the list of union inspectors is to be adopted by the commission on the basis of the notifications of member states and of the european fisheries control agency (the agency). (4) a first list of union inspectors was established by commission implementing decision 2011/883/eu (3). that list was replaced three times by new lists of union inspectors established first by commission implementing decision 2013/174/eu (4) and later by commission implementing decision 2014/120/eu (5) and commission implementing decision (eu) 2015/645 (6). in accordance with implementing regulation (eu) no 404/2011, after the establishment of the initial list, member states and the agency are to notify to the commission by october each year any amendment to the list they wish to introduce for the following calendar year, and the commission is to amend the list accordingly by 31 december. (5) some member states and the agency have notified amendments to the current list of inspectors. the list established by implementing decision (eu) 2015/645 should therefore be replaced by a new list of union inspectors on the basis of those notifications. (6) the measures provided for in this decision are in accordance with the opinion of the committee for fisheries and aquaculture, has adopted this decision: article 1 the list of union inspectors is set out in the annex to this decision. article 2 implementing decision (eu) 2015/645 is repealed. article 3 this decision is addressed to the member states. done at brussels, 3 may 2016. for the commission karmenu vella member of the commission (1) oj l 343, 22.12.2009, p. 1. (2) commission implementing regulation (eu) no 404/2011 of 8 april 2011 laying down detailed rules for the implementation of council regulation (ec) no 1224/2009 establishing a community control system for ensuring compliance with the rules of the common fisheries policy (oj l 112, 30.4.2011, p. 1). (3) commission implementing decision 2011/883/eu of 21 december 2011 establishing the list of union inspectors pursuant to article 79(1) of council regulation (ec) no 1224/2009 (oj l 343, 23.12.2011, p. 123). (4) commission implementing decision 2013/174/eu of 8 april 2013 establishing the list of union inspectors pursuant to article 79(1) of council regulation (ec) no 1224/2009 (oj l 101, 10.4.2013, p. 31). (5) commission implementing decision 2014/120/eu of 4 march 2014 establishing the list of union inspectors pursuant to article 79(1) of council regulation (ec) no 1224/2009 (oj l 66, 6.3.2014, p. 31). (6) commission implementing decision (eu) 2015/645 of 20 april 2015 establishing the list of union inspectors who may carry out inspections pursuant to council regulation (ec) no 1224/2009 (oj l 106, 24.4.2015, p. 31). annex list of union inspectors referred to in article 79(1) of regulation (ec) no 1224/2009 country inspectors belgium coens, philippe de vleeschouwer, guy devogel, geert huygh, gerd lieben, richard monteyne, ian noet, werner steenssens, kurt timmerman, thierry vandenbrouck, frank van rompaey, tim van torre, mike verhaeghe, dirk bulgaria angelov, todor bakardzhiev, stefan cholakov, atanas damyanov, kostentin encheva, kremena hristov, martin ivanov, ivan ivanov, todor kerekov, nikolay kostadinov, ivan kyumyurdzhiev, kiril petkov, dimitar petrova, miroslava raev, jordan valkov, dimitar czech republic n/a denmark akselsen, ole andersen, dan s g rd andersen, hanne skj mt andersen, lars ole andersen, martin burgwaldt andersen, mogens godsk andersen, niels j rgen anton andersen, peter bunk anderson, jacob edward astrup, iben bache, ren bang, mai beck, bjarne baag bendtsen, lars kj rsgaard bernholm, kristian bjerre, casper carl, morten hansen christensen, jesper just christensen, peter grim christensen, thomas christiansen, michael koustrup damsgaard, kresten degn, jesper leon due-boje, thomas zinck d lling, robert ebert, thomas axel regaard eiersted, jesper bech elnef, frank godt fick, carsten frandsen, rene brian frederiksen, torben broe gotved, jesper hovby groth, niels grupe, poul gaarde, b rge handrup, jacob hansen, bruno ellek r hansen, gunnar beck hansen, ina kj rgaard hansen, jan duval hansen, john daugaard hansen, martin hansen, martin baldur hansen, ole hansen, thomas harrison, dorthe kronborg hestbek, flemming h gild, lars h jrup, torben jaeger, michael wassermann jensen, anker mark jensen, flemming bergtorp jensen, hanne juul jensen, jimmy langelund jensen, jonas kr yer jensen, lars henrik jensen, lone agathon jensen, ren sandholt jensen, s ren palle jespersen, ren johansen, allan juul, torben j rgensen, lasse elmgren j rgensen, ole holmberg karlsen, jesper herning knudsen, malene knudsen, niels christian knudsen, ole hvid kofoed, kim windahl kokholm, peder kristensen, henrik kristensen, jeanne marie kristensen, peter holmgaard larsen, michael s eballe larsen, peter hjort larsen, tim bonde lundb k, tommy oldenborg madsen, arne madsen, jens-erik madsen, johnny gravesen mortensen, erik mortensen, jan lindholdt m ller, gert nielsen, christian nielsen, dan randum nielsen, dion nielsen, hans henrik nielsen, henrik nielsen, henrik fr hst ck nielsen, henrik kruse nielsen, jeppe nielsen, mads grundvad nielsen, niels kristian nielsen, steen nielsen, s ren nielsen, s ren egelund nielsen, tage kim nielsen, trine fris n rgaard, max reno bang paulsen, kim thor pedersen, claus pedersen, knud jan petersen, christina holmer petersen, henning juul petersen, jimmy torben porsmose, tommy poulsen, bue poulsen, john ramm, heine risager, preben r mer, jan schjoldager, tim rasmussen schmidt, stefan g ttsche schou, kasper schultz, flemming siegumfeldt, jeanette simonsen, kjeld simonsen, morten skrivergaard, lennart s holt, finn s rensen, allan lindgaard thomsen, bjarne kondrup thomsen, klaus ringive solgaard thorsen, michael trab, jens ole vind, finn vistrup, annette klarlund wille, claus wind, bernt paul sterg rd, lars aasted, lars jerne germany abs, volker ahlmeyer, jens angermann, henry baumann, j rg bembenek, j rg bergmann, udo bernhagen, sven bieder, mathias birkholz, siegfried bloch, ralf borchardt, erwin bordolo, jan borowy, matthias b sherz, andreas brieger, martin brunnlieb, j rgen buchholz, matthias b ttner, harald cassens, enno christiansen, dirk cramer, arne d hnert, tilman drenkhahn, michael ehlers, klaus fiedler, sebastian fink, jens franke, hermann franz, martin frenz, sandro garbe, robert golz, ulrich gr fe, roland grawe, andr griemberg, lars haase, christian hannes, chistoph h nse, dirk hansen, hagen heidkamp, max heisler, lars herda, heinrich hickmann, michael homeister, alfred hoyer, oliver k ding, christian keidel, quirin kersten, mickel kinast, daniel klimeck, uwe k hn, thorsten kollath, mark kopec, reinhard kraack, s nke kr ger, torsten kupfer, christian kutschke, holger lange, michael lehmann, jan lorenzen, alexander l bke, torsten l hrs, carsten m hring, torsten m cher, martin mundt, mario nickel, j rg nitze, andreas n ckel, stefan pauls, werner perkuhn, martin p tzsch, frank raabe, karsten radzanowski, sven ramm, j rg reimers, andre remitz, lutz rutz, dietmar sauerwein, dirk schmidt, harald schmiedeberg, christian schuchardt, karsten schuler, claas sehne, dirk siebrecht, hannes skrey, erich springer, gunnar st ber, jan sturm, jochen sween, gorm taubert, christian teetzmann, julian thieme, stefan thomas, raik tiedemann, harald vetterick, arno wagner, ralf welz, henning welz, oliver wendt, ren wessels, heinz wichert, peter wolken, hans estonia grossmann, meit kutsar, andres lasn, margus nigu, silver niinemaa, endel pai, aare parts, erik soll, simon torn, kerdo ulla, indrek varblane, viljar ireland ahern christy allan, damien amrien, rudi ankers, brian ansbro, mark armstrong, stuart barber, kevin barcoe, michael barr, william barret, brendan barrett, elizabeth barrett, jamie beale, derek bones, anthony brannigan, steve breen, kieran brennan, colm brett, martin brophy, james brophy, paul browne, brendan brunicardi, michael bryant, william buckley, anthony buckley, david buckley, john bugler, andrew butler, david butler, john byrne, kenneth byrne, paul cagney, daniel cahalane, donnchadh campbell, aoife campbell, stephen carr, kieran casey, anthony chandler, frank chute, killian chute, richard claffey, seamus clarke, tadhg cleary, james clinton, andrew clinton, finbar cloake, niall cogan, jerry collins, damien connaghan, fintan connery, paul connolly, stephen cooper, thomas corish, cormac corrigan, kieran cosgrave, karl cosgrove, thomas cotter, colm cotter, james cotter, jamie coughlan, neville craven, cormac croke, jason cronin, martin cronin, philip crowley, brian cummins, alan cummins, paul cummins, william cunningham, diarmiad curran, donal curran, siubhan curtin, brendan daly, brendan daly, joe daly, john daly, mick darcy, enna de barra, ruairi dempsey, brian devaney, michael dicker, philip dohery, brian doherty, patrick donaldson, stuart donnachie, martin donnchadh, cahalane donovan, tom downes, eamon downing, erica downing, john doyle, billy doyle, cronan duane, paul ducker, nigel duggan, cian duignam, ray fanning, grace farrell, brian farrelly, emmett faulkner, damien fealy, gerard fennel, siobhan fenton, garry ferguson, kevin finegan, ultan finnegan, david fitzgerald, brian, fitzpatrick, gerry fleming, david flynn, alan foley, brendan foley, connor foley, kevin fowler, patrick fox, colm fox, dennis freeman, harry friel, aidan gallagher, damien gallagher, danny gallagher, neil gallagher, orlaith gallagher, patrick galvin, rory gannon, james geraghty, tony gernon, ross gleeson, marie goulding, donal grogan, susanne hamilton, alan hamilton, gillian hamilton, greg hamilton, martin hannon, gary hanrahan, michael harding, james harkin, patrick harrington, michael harty, paddy hastings, brian healy, conor healy, jef heffernan, bernard hegarthy, mark hegarty, paul hickey, adrian hickey, andrew hickey, declan hickey, michael hobbins, tom holland, ken hollingsworth, edward humphries, daniel irwin, richard ivory, sean kavanagh, ian kavanagh, paul kearney, brendan keating, debbie keeley, david keirse, gavin kenneally, jonathan kennedy, liam kennedy, tom keogh, mark kerr, charlie kickham, jon-lawrence kinsella, gordan kirwan, conor kirwan, darragh lacey-byrne, dillon laide, cathal landy, glen lane, brian lane, mary lawlor, collie leahy, brian lenihen, marc linehan, sean long emmett lynch, darren lynch, mark lynch, paul mackey, eoin mackey, john madden, brendan madine, stephen maguire, paul mallon, keith maloney, nessa manning, neil martin, jamie matthews, brian mccarthy, gavin mccarthy, michael mccarthy, niall mccarthy, paul mccarthy, robert mccoy, sean mcdermot, paul mcgarry, john mcgee, noel mcgee, paul mcgrath, owen mcgroarty, john mcgroarty, mark mcgroary, peter mchale, laura mckenna, david mcloughlin, john mcloughlin, ronan mcmahon, dean mcnamara, ken mcnamara, paul mcphilbin, dwain mcumfraidh, caoimhin meehan, robert melvin, david meredith, helen minehane, john molloy, darragh molloy, john paul moloney, kara mooney, gerry mooney, keith moore, conor morrissey, stephen mulcahy, john mulcahy, liam mulcahy, shane mullan, patrick mullane, paul mundy, brendan murphy, adam murphy, aidan murphy, barry murphy, caroline murphy, chris murphy, claire murphy, daniel murphy, enda murphy, honour murphy, john murran, sean murray, paul newstead, sean nic dhonnchadha, stephanie ni cionnach pic, dubheasa nolan, brian nolan, james northover, james o'beirnes, derek o'brien, jason o'brien, ken o'brien, paul o'brien, roberta o'callaghan, maria o'connell, paul o'connor, dermot o'connor, frank o'donovan, diarmuid o'donovan, michael o'driscoll, olan o'flynn, aisling o'grady, vivienne o'leary, david o'mahoney, kevin o'mahony, david o'mahony, denis o'mahony, karl o'meara, pat o'neill donal o'regan, alan o'regan, cliona o'regan, tony o'reilly, brendan o'seaghdha, ciaran o'sullivan, cormac o'sullivan, patricia neachtain, aonghus parke, declan patterson, adrienne patterson, john pender, darragh pentony, declan pierce, paul piper, david plante, thomas plunkett, thomas power, cathal power, gillian prendergast, kevin pyke, gavin quigg, james quinn, mikey raferty, damien reddin, tony reidy, patrick ridge, patrick robinson, niall russell, mark ryan, fergal ryan, marcus scalici, fabio scanlon, gordon shalloo, jim sheridan, glenn sills, barry sinnott, lee smith, brian smith, dean smith, gareth smyth, eoin snowdon, edward stack, stephen stapleton, alan sweeney, brian sweetnam, vincent swords, graham tarrant, martin tigh, declan timon, eric tobin, john troy, ivan tubridy, fergal turley, mark turnbull, michael twomey, tom valls senties, virginia verling, ronan von raesfeldt, mark wall, danny wallace, robert walsh, conleth walsh, dave walsh, karen walsh, richard weldon, james whelan, mark white, john whoriskey, david wickham, larry wilson, tony wise, james woodward, ciaran greece , , , , , , , , , , , , , , , , , , , , , , , - , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , - , , , , , - , , , , , , , , , , , , , , , , , , , , , , , , , , - , , , , , , , , spain acu a barros, jos antonio almagro carrobles, jorge alonso s nchez, beatriz lvarez g mez, marco antonio amun rriz emazabel, sebasti n arteaga s nchez, ana avedillo contreras, buenaventura barandalla hernando, eduardo boy carmona, esther bravo t llez, guillermo calder n g mez, jos gabriel carmona mazaira, manuel carro mart nez, pedro ceballos p rez-canales, alba cervantes de la torre, andr s chamizo catal n, carlos cort s fern ndez, natalia couce prieto, carlos criado bar , bernardo de la rosa cano, franscico javier del hierro suanzes, javier elices l pez, juan manuel fari a clavero, irene fern ndez costas, antonio ferre o mart nez, jos antonio font n alderegu a, manuel fontanet domenech, felipe garc a antoni, m nica garc a gonz lez, francisco javier genov s ferriols, jos carlos g mez delgado, raquel g mez cayuelas, carmen gonz lez fern ndez, manuel a. gonz lez fern ndez, marta guerrero claros, mar a guisado sancho, mar a jes s gund n payero, laura iglesias prada, juan antonio jimenez lvarez, ignacio lado codesido, beatriz lastra torre, ruth lest n leal, juan manuel l pez gonz lez, mar a lorenzo sentis, jos manuel marra-l pez porta, julio mart nez gonz lez, jes s mart nez velasco, carolina mayoral v zquez, fernando mayoral v zquez, gonzalo medina garc a, esteb n m ndez-villamil mata, mar a miranda alm n, fernando ochando ramos, ana mar a orgueira p rez vanessa ortigueira gil, adolfo ossorio gonz lez, carlos ovejero gonz lez, david p rez gonz lez, virgilio perujo d valos, florencio pi n lourido, jes s ponte fern ndez, gerardo prieto est vez, laura r os cidr s, manuel r os cidr s, xos rodr guez moreno, alberto rueda aguirre, luzdivina ruiz g mez, sonia rull del guila, laura saavedra espa a, jes s s enz arteche, idoia s nchez s nchez, esmeralda santalices l pez, marta santas barge, ver nica santos pinilla, beatriz sendra gamero, ma esther serrano s nchez, daniel sieira rodr guez, jos tenorio rodr guez, jos luis torre gonz lez, miguel a. tub o rodr guez, xos v quez p rez ivan vicente castro, jos yeregui velasco, pablo zamora de pedro, carlos france allanic, gilles baillet, bertrand belz, jean-pierre beyaert, fr d ric bigot, jean-paul boittelle, catherine bon, philippe bouniol, anthony bourbigot, jean-marc cacitti, raymond caillat, marc celton arnaud ceres, michel charbonnier, alexandre cluzel, st phane cras, renaud crochard, thierry croville, serge daden, nicolas dambron, fran ois darsu, philippe davies, philippe dechaine, fr d ric deric, william desforges, jean-luc desson, patrick dolou, claude donnart, christian ducrocq, philippe fernandez, gabriel fortier, eric fouchet, michel fournier, philippe garbe, steeve gauvain, beno t gehanne, laurent gloaguen, maurice gomez, s bastien goron, xavier guillemette, jean luc guittet-dupont, ga tan hitier, s bastien isore, pascal lacombe, thomas le berrigaud, thierry lebosquain, olivier le corre, joseph le cousin, jean-luc le dortz, edern le dreau, gilbert le mentec, arnaud lecul, mathieu legouedec, lo g lenormand, daniel lescroel, yann loarer, melaine maingraud, dominique malassigne, jean-paul masseaux, yanick menuge, gilles moussay, david ogor, bernard peron, olivier peron, pascal petit, fran ois potier, pauline radius, caroline raguet, jos reunavot, matthieu ricard, jean-fran ois richou, fabrice robin, yannick rondeau, arnold roue, andr rousselet, pascal schneider, fr d ric semelin, g rard sottiaux, david trividic, bernard urvoy, jonathan vesque arnaud vilbois, pierre villenave, patrick villenave, yorrick virlogeux, julian croatia a imov, dejan aunedi, jurica barbali , boris bartulovi , ivica bilobrk, stipe brati evi , nino brlek, neda brnadi , ivica budimir, miroslav doli , nedjeljko dvora ek, tomislav ercegovi , marin franceschi, jenko grlju i , frano hr enjak, jurica hr i , ivica ivkovi , hrvoje jeli , bo idar jeftimijades, ivor juki , ivica jur evi , marinko kalini , andrej kerum, jurica kri to, rino kusanovi , gordan kuzmani zupan, andrea le i , lidija mar ina, robert matkovi , mijo mileti , ivana novak, danijel ore kovi , lovro papari , neven perkovi , kristijan perovi , andrea prtenja a, silvija pupi -bakra , marko radov i , ivica rogi , ante rukavina, dubravko rumora, ivan alaj, damir estan, hrvoje sikirica, nenad skelin, stipe korjanec, mario skroza, nikica sobin, mijo strinovi , boris verzon, nikola vuleti , ivo italy abate, massimiliano abbate, marco affinita, enrico albani, emidio ambrosio, salvatore annicchiarico, dario antonioli, giacomo apollonio, cristian aprile, giulio aquilano, donato arena, enrico astelli, gabriele barraco, francesco basile, giuseppe basile, marco battaglia, daniele battista, filomena bavila, nicola benvenuto, salvatore giovanni bernadini, stefano biondo, fortunato bizzari, simona bizzarro, federico boccoli, fabrizio bongermino, onofrio bonsignore, antonino borghi, andrea bottiglieri, vincenzo bove, gian luigi buccioli, andrea burlando, michele caforio, cosimo caiazzo, luigia calandrino, salvatore cambareri, michelangelo camicia, ciro cappelli, salvatore carafa, simone carini, vito carta, sebastiano castellano, sergio cau, dario cesareo, michele chionchio, alessandro cianci, vincenzo cignini, innocenzo clemente, cosimo colarossi, mauro colazzo, massimiliano colucciello, roberto comuzzi, alberto conte, fabio conte, plinio corallo, domenico cormio, carlo cortese, raffaele costanzo, antonino criscuolo, enrico croce, aldo cuciniello, luigi cuscela, michele d'acunto, francesco d'agostino, gianluca d'amato, fabio dammicco, luigi d'arrigo, antonio de crescenzo, salvatore de pinto, giuseppe de quarto, enrico del monaco, ettore d'erchia, alessandro de santis, antonio di benedetto, luigi di domenico, marco di donato, eliana di matteo, michele di santo, giovanni doria, angelo d'orsi, francesco paolo errante, domenico esibini, daniele esposito, francesco esposito, robertino esposito, salvatore fanizzi, tommaso fava, antonello ferioli, debora ferrara, manfredo fiore, fabrizio fiorentino, giovanni fogliano, pasquale folliero, alessandro francolino, giuseppe fuggetta, pasquale gallo, antonio gangemi, roberto francesco genchi, paolo giannone, giuseppe claudio giovannone, vittorio golizia, pasquale graziani, walter greco, giuseppe guida, giuseppe guido, alessandro guzzi, davide iemma, oreste isaia, sergio l'abbate, giuseppe la porta, santi alessandro lambertucci, alessandro lanza, alfredo leto, antonio limetti, fabio lo pinto, nicola loggia, carlo lombardi, pasquale longo, pierino paolo luperto, giuseppe maggio, giuseppe magnolo, lorenzo giovanni maio, giuseppe malaponti, salvatore francesco maresca, emanuel mariotti, massimiliano marrello luigi martina, francesco martire, antonio mastrobattista, giovanni eligio matera, riccardo messina, gianluca min , alessandro monaco, paolo morciano, giuseppe morelli, alessio morra, tommaso mostacci, sergio massimo mugavero, amalia mugnaini, dany mule, vincenzo musella, stefano nacarlo, amadeo nardelli, giuseppe negro, mirco novaro, giovanni pagan, francesco palombella, fabio luigi panconi, federico pantaleo, cosimo paoletti, dario paolillo, francesco patalano, andrea pepe, angelo pino, filippo pipino, leonardo piroddi, paola pisano, paolo piscopello, luciano pisino, tommaso poli, mario porru, massimiliano postiglione, vito pratic , daniele puca, michele puddinu, fabrizio puleo, isidoro quinci, gianbattista rallo, tommaso randis, orazio roberto ravanelli, marco restuccia, marco romanazzi, francesco romanazzi, valentina ronca, gianluca rossano, michele russo, aniello sacco, giuseppe salce, paolo sarpi, stefano sassanelli, michele scanu, fabrizio scaramuzzino, paola schiattino, andrea scuccimarri, gianluca sebastio, luciano siano, gianluca signanini, claudio silvia, salvatore siniscalchi, francesco soccorso, alessandro solidoro, sergio antonio spagnuolo, matteo stramandino, rosario strazzulla, francesco sufr , emanuele tersigni, tonino tesauro, antonio tescione, francesco tesone, luca tordoni, maurizio torrisi, ivano trapani, salvatore triolo, alessandro troiano, primiano tumbarello, davide tumminello, salvatore turiano, giuseppe uopi, alessandro vangelo, pietro varone, stefano vellucci, alfredo verde, maurizio vero, pietro virdis, antonio vitali, daniele zaccaro, giuseppe saverio zippo, luigi cyprus apostolou, antri avgousti, antonis christodoulou, lakis christoforou, christiana christou, nikoletta flori, panayiota fylaktou, anthi georgiou, markella heracleous, andri ioannou, georgios ioannou, theodosis karayiannis, christos konnaris, kostas korovesis, christos kyriacou, kyriacos kyriacou, yiannos manitara, yiannis michael, michael nicolaou nicolas panagopoulos argyris pavlou george prodromou, pantelis savvides, andreas latvia bizjuks, maksims brants, j nis brente, elm rs gronska, ieva gudovannijs, vsevolods hol troms, art rs ivanovs, kaspars jaunzems, aldis junkurs, andris kal js, r dolfs kalni a, ing na kaptelija, liene naumova, daina priediens, ainars putni , raitis raginskis, j nis s pola, zane smane jolanta traubis, val rijs uidei is, aigars t eris, irts v rsbergs, janis veide, andris veinbergs, miks ziemelis, elvijs lithuania balnis, algirdas dambrauskis, tomas giedrius, vaitkus jonaitis, ar nas kairyt , lina kazlauskas, tomas lendzbergas, erlandas vitalij, zartun luxembourg n/a hungary n/a malta abela, claire attard, glen attard, godwin attard, omar azzopardi, joseph baldacchino, duncan balzan, gilbert borg, benjamin borg, jonathan borg, robert bugeja, stephanie cachia, pierre calleja, martin camilleri, aldo camilleri, christopher carabott, paul caruana, gary cassar, gaetano cassar jonathan cassar, kenneth cassar lucienne cauchi david cousin, christopher cuschieri, roderick farrugia, emanuel farrugia, joseph farrugia, omar fenech, melvin fenech, paul gatt, glen gatt, joseph gatt, mervin gatt, william grima, paul little, elaine lungaro, gordon mallia, ramzy micallef, rundolf muscat, christian muscat, simon musu, matthew pantalleresco, wayne piscopo, christine psaila, kevin psaila, mark anthony sammut, adem scerri, antoine sciberras, christopher sciberras, norman seguna, marvin tabone, mark theuma, johan vassallo, benjamin vella, anthony vella, charlie netherlands bastinaan, robert w. beij, willem h. boone, jan cees de boer, meindert de mol, gert dieke, richard f. duinstra, jacob fortuin, annelies freke, hans groeneveld, daan w. jonk, ing. jan kleczewski-schoon, anneke kleinen, tom h.j.t.t. koenen, gerard c.j. kraeyenoord, jaap kramer, willem meijer, cor meijer, willem miedema, anco parlevliet, koos j.d.l. ros, michel schneider, leendert van den berg, dirk van der laan, yvonne van der veer, siemen van doorn, joost r. van geenen, koen van westen, ing. jan velt, eddy vervoort, hans wijbenga, arjan j. wijkhuisen, eddy zevenbergen, jan austria n/a poland augustynowicz, mariusz bartczak, tomasz belej, konrad chrostowski, pawel dbski, jaros aw domachowski, marian g rski, marcin jeziorny, przemyslaw j wiak, marek kasperek, stanis aw ko odziejczak, micha konefa , szymon konkel, adam korthals, jakub ko cielny, jaros aw kowalska, justyna koz owski, piotr kucharski, tadeusz kunachowicz, tomasz letki, pawel lisiak, agnieszka litwin, ireneusz ukaszewicz, pawe uczkiewicz, tomasz maciejewski, maciej mystek, marcin niewiadomski, piotr nowak, w odzimierz pankowski, piotr patyk, konrad pra anowski, krystian sikora, marek simlat,tomasz skibior, s awomir s owinski, roman smolarski, ukasz soko owski, pawe stankiewicz, marcin szumicki, tomasz tomaszewski, tomasz trzepacz, micha wereszczy ski, leszek wili ski, adam zacharzewski, dawid ziba, marcin portugal albuquerque, jos brabo, rui cabe adas, paula carvalho, ricardo diogo, jo o escudeiro, jo o ferreira, carlos fonseca, lvaro matos, andr moura, nuno pedroso, rui quintans, miguel silva, ant nio miguel romania b rsan, marilena bucatos, radu chiriac, marian chiriazic, constentin con olencu, radu costianu, ion cre eanu, mihaela dinu, lucian epure, ruxandra ianuris, mihail iona cu, neculai larie, gabriel nicolae, marius liviu novac, vasile orac, otilia popescu, stere rusu, lauren iu sertiuc, mihai dorin ranu, sorin vasile, eduard slovenia smoje, robert smoje, vinko slovakia n/a finland aheristo, marko aho, jere-joonas arvilommi, markku gr nfors, niko heickell, carl-arthur heiskala, matti hiltunen, juha h gerstr m, matti ikola, jussi johansson, esko kaasinen, harry kajosmaa, jesse kontto, tommi koskinen, aki lejonqvist, mika leppikorpi, markus lepp korpi, juho linder, jukka luukkonen, tuomas l hde, jukka mattila, vesa-pekka niemel , teemu niittyl , pekka normia, pertti nousiainen, ky sti nousiainen, markku nurminen, joona purhonen, jere puustinen, ville pyyk nen, pekka p kki, sebastian rautavirta, miikka romanov, sami saarilehto, tuomas sahla, ilkka salmela, janne salmi, veera salovaara, tuomas savola, petri sj berg, joni sundqvist, lars suominen, ari suominen, paavo taattola, olli tammisto, tuomas tervakangas, ville tr skelin, otto uitti, mika ulenius, niklas vanninen, vesa v lim ki, juha v n nen, timo yl j ski, antti ri, mikko sweden berg, christian ahnlund, jenny almstr m, petter andersson, karin andersson, per-olof andersson, per-olof vidar andersson, roger antonsson, jan-eric b ckman, johan baltzer, martin bergman, daniel bjerner, martin borg, calle bryngelsson, tomas br nnstr m, lennart cannehag, niclas cardell, christina carlsson, christian englund, raymond erlandsson, bj rn falk, david frejd, maud fristedt, david gyn s, mattias g ransson, roger hagberg, elice hansson, erling hartman bergqvist, d sir e havh, johan hedman, elin hellberg, stefan hellqvist, johan holmer, johanna hortlund, david h glund, jan jakobsson, magnus jansson, anders jeppsson, tobias johansson, daniel johansson, klas johansson, thomas joxelius, paul karlsson, kent kempe, clas kj llgren, curt koivula, mikael kurtsson, morgan laine, sirpa larsson, mats lilja, filip lindstr m, jakob lindved, martin lundberg, johan lundh, emelie lundin, stig lundkvist, mats lundqvist, annica malmstr m, john martini, martin mattson, olof montan, anders mukkavaara, henrik nihl n, linus nilsson, pierre nilsson, stefan nord, iza nyberg, linda n sman, lars olson, magnus olsson, kenneth olsson, lars penson, lena persson, g ran persson, mats peterson, jan petterson, joel petterson, johan philipsson, gunnar piltonen, janne podsedkowski, zenek rase, dennis rendahl, malin reuterljung, thomas rinaldo, joakim r nnblom, agneta sj din, ronny sk lderud, svante sn ckerstr m, leif st lnacke, erik strandberg, magnus st hrenberg, bj rn sundberg, andreas sundberg, patrick sv rd, lars-erik svensson, rutger svensson, tony timan, hans toresson, martin turesson, andreas uppman, kerstin werner, lars westerlund, emma wilson, pierre sterlund, erik united kingdom adamson, gary alexander, stephen alston, colin anderson, reid arris, martin ashby, peter bailey roberta baker, edward barclay, michael barfoot, ltl cdr peter barrow, charlie bell, stuart bennett, neil billson, carol bland, darren bourne, adam bowers, claire boyce, sean broad, james brough, derek brown, katie bruce, john bugg, jennifer caldwell, mark campbell, jonathan campbell, murray clark, craig cook, david corner, nigel craig, ian craig, stephen critchlow, amy croucher, tim crowe, michael cunningham, george davis, danielle dawkins, matthew dawson, liam deadman, ross devine, warren dewing, will dixon-lack, emma douglas, sean draper, peter dunkerely, sabrina eccles, david ellison, peter elson, carley evans, david faulds, mike fenwick, peter ferguson, adam ferguson, simon ferrari, richard finnie, andrew fitzpatrick, deeann fletcher, norman flint, toby fordham, philip ford-keyte, graham foster, pam foy, jacqueline fraser, uilleam frew, clare fullerton, gareth furniss, sam gibson, philip gooding, colin goodwin, aaron gough, callum graham, chris grant, leigh gray, neil gray, patrick gregor, stuart griffin, stuart gwillam. slt ben hamilton, ian harris, william harsent, slt paul hay, david hay, john hazeldine, oliver henning, alan hepburn, ian hepples, stephen higgins, frank higby, louisa hill, julie hill, katie holbrook, joanna howarth, dan hudson, john hugues, gary hughes, greta imrie, peter irish, rachel irwin, gerry john, barrie johnson, matthew johnson, paul johnston, steve johnston, isobel johnstone, ann jones, carl kelly, kevin kemp, gareth kozlowski, stephen laird, iain lane, emma lardeur, beth law, garry legge, james lindsay, andrew lister, jane livingston, andrew lockwood, mark lowry, thomas lucas, david maceachan, iain macgregor, duncan maciver, roderick mackay, janice maclean, paula maclean, robin magill, slt michael marshall, phil martin david mason, liam mason, rachel mason, roger matheson, louise mayger, ltl martyn mcbain, billy mccaughan, mark mccomiskey, stephen mccowan, alisdair mccrindle, john mccubbin, stuart mccusker, simon mchardy, alex mckay, andrew mckenzie, gregor mckeown, nick mcmillan, robert mcquillan, david merrilees, kenny milligan, david mills, john mitchell,hugh mitchell, john moar, laurence moloughney, bernie morris, chris morrison, donald muir, james mustard, emma mynard, nick neilson, slt robert nelson, paul newell, philip newlands, andrew newlyn, lindsley o'regan, kyle owen, gary page, chris parr, jonathan pateman, jason paterson, craig perry, andrew phillips, michael pole mark poulding, daniel poulson, ltl chris pringle, geoff quinn, barry raine, katherine ray, daniel reeves, adam reid, ian reid, peter rendall, colin rhodes, glen richardson, david richens, scott riley, joanne roberts, joel roberts, julian robertson, tom robinson, neil rylah, joshua scarrf, david sharp, chris sheperd, ashley shepley, ben skillen, damien smith, david smith, barry smith, don smith, matthew smith, pam sooben, jeremy spencer, james steele, gordon stipetic, john strang, nicol stray, sloyan styles, mario sutton, andrew taylor, mark templeton, john thain, marc thompson, dan thompson, gerald thomson, dave turnbull, james turner, alun turner, patrick tyack, paul wardle, daniel ward, daniel ward, mark watson, stacey watt, barbara watt, james wellum, neil wensley, phil weychan, paul whelton, karen whitby, phil wilkinson, dave williams, carolyn williams, justin wilson, tom windebank, james wood, ben worsnop, mark wright, nicholas young, ally young, james yuille, derek zalewski, alex european commission al ez pons, ester casier, maarten griffin robert hederman, john janakakisz, marta janiak, katarzyna jury, justine kelterbaum, richard lansley, jon libioulle, jean-marc linkute, ula markovic, laurent mitrakis, nikolaos martins e amorim, sergio luis nordstrom saba peyronnet, arnaud rodriguez alfaro, sebastian scalco, silvia schutyser frederik serna, matthieu skountis vasileios skrey, hans spezzani, aronne stulgis, maris van den bossche, koen verborgh, jacques wolff, gunnar european fisheries control agency allen, patrick cederrand, stephen chapel, vincent de almeida pires, maria teresa del hierro, bel n del zompo, michele dias gar ao, jos fulton, grant lesueur, sylvain mueller, wolfgang papaioannou, themis pinto, pedro quelch, glenn roobrouck, christ sokolowski, pawel sorensen, svend spaniol, petra stewart, william tahon, sven

name: commission implementing decision (eu) 2016/678 of 29 april 2016 pursuant to article 3(3) of regulation (eu) no 528/2012 of the european parliament and of the council on a product consisting of dried lavender blossoms contained in a pad placed on the market to repel moths (text with eea relevance) type: decision_impl subject matter: means of agricultural production; natural environment; plant product; marketing; european union law date published: 2016-04-30 30.4.2016 en official journal of the european union l 116/37 commission implementing decision (eu) 2016/678 of 29 april 2016 pursuant to article 3(3) of regulation (eu) no 528/2012 of the european parliament and of the council on a product consisting of dried lavender blossoms contained in a pad placed on the market to repel moths (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) no 528/2012 of the european parliament and of the council of 22 may 2012 concerning the making available on the market and use of biocidal products (1), and in particular article 3(3) thereof, whereas: (1) on 28 may 2015, germany requested the commission to decide, pursuant to article 3(3) of regulation (eu) no 528/2012, whether a product consisting of dried lavender blossoms contained in a pad placed on the market to repel moths is a biocidal product or a treated article for the purposes of article 3(1)(a) or (l) of that regulation. (2) according to agreed union guidance (2), whole living or unprocessed dead organisms (e.g. yeast, freeze-dried bacteria) or parts thereof (e.g. body parts, blood, branches, leaves, flowers, etc.) are not considered as substances, mixtures or articles within the meaning of regulation (ec) no 1907/2006 of the european parliament and of the council (3). dried lavender blossoms should therefore not be considered as a substance, mixture or article within the meaning of that regulation and therefore they should not be considered either as a biocidal product or as a treated article in accordance with regulation (eu) no 528/2012. (3) the measures provided for in this decision are in accordance with the opinion of the standing committee on biocidal products, has adopted this decision: article 1 a product consisting of dried lavender blossoms in a pad is neither a biocidal product nor a treated article for the purposes of article 3(1)(a) and (l) of regulation (eu) no 528/2012. article 2 this decision shall enter into force on the twentieth day following that of its publication in the official journal of the european union. done at brussels, 29 april 2016. for the commission the president jean-claude juncker (1) oj l 167, 27.6.2012, p. 1. (2) guidance for annex v exemptions from the obligation to register (page 19), available at http://echa.europa.eu/documents/10162/13632/annex_v_en.pdf (3) regulation (ec) no 1907/2006 of the european parliament and of the council of 18 december 2006 concerning the registration, evaluation, authorisation and restriction of chemicals (reach), establishing a european chemicals agency, amending directive 1999/45/ec and repealing council regulation (eec) no 793/93 and commission regulation (ec) no 1488/94 as well as council directive 76/769/eec and commission directives 91/155/eec, 93/67/eec, 93/105/ec and 2000/21/ec (oj l 396, 30.12.2006, p. 1).

name: commission decision (eu) 2016/633 of 23 july 2014 on state aid sa.33961 (2012/c) (ex 2012/nn) implemented by france in favour of n mes-uz s-le vigan chamber of commerce and industry, veolia transport a roport de n mes, ryanair limited and airport marketing services limited (notified under document c(2014) 5078) (only the french text is authentic)text with eea relevance type: decision subject matter: air and space transport; transport policy; europe; economic policy; trade policy; competition; regions of eu member states date published: 2016-04-27 27.4.2016 en official journal of the european union l 113/32 commission decision (eu) 2016/633 of 23 july 2014 on state aid sa.33961 (2012/c) (ex 2012/nn) implemented by france in favour of n mes-uz s-le vigan chamber of commerce and industry, veolia transport a roport de n mes, ryanair limited and airport marketing services limited (notified under document c(2014) 5078) (only the french text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof (1), having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having regard to council regulation (eec) no 2408/92 of 23 july 1992 on access for community air carriers to intra-community air routes (2), having called on interested parties to submit their comments pursuant to those articles (3) and having regard to their comments, whereas: 1. procedure (1) by letter dated 26 january 2010, the commission received a complaint about advantages that the airline ryanair limited (ryanair) was allegedly enjoying at a number of regional and local french airports. in the case of n mes airport, the complaint also mentioned financial support allegedly received by the successive bodies operating the airport, n mes-uz s-le vigan chamber of commerce and industry (the cci) and veolia transport a roport de n mes (vtan). (2) by letter dated 16 march 2010, the commission sent france a non-confidential version of the complaint and asked it for explanations concerning the measures at issue. france sent answers by letters dated 31 may and 7 june 2010. (3) by letter dated 2 november 2011, the complainant sent additional information in support of its complaint. the commission forwarded this information to france and asked it for additional information by letter dated 5 december 2011. on 22 december 2011 france requested an extension of the deadline for replying, to which the commission agreed by letter dated 4 january 2012. france submitted its comments and answers by letter dated 27 february 2012. (4) by letter dated 26 april 2012, the commission informed france of its decision to initiate the procedure (the opening decision) under article 108(2) of the treaty on the functioning of the european union (tfeu) on the potential aid to the cci, vtan and ryanair. (5) by letters dated 29 may and 28 june 2012, france requested two extensions of the deadline for replying to the additional information requests made in the opening decision. on 31 july 2012 france submitted its comments together with the information and documents requested by the commission in the opening decision. (6) the commission decision was published in the official journal of the european union (4) on 10 august 2012. the commission invited interested parties to submit their comments on the measures in question within one month of the date of publication. (7) the commission received comments from interested parties. on 24 september 2012 the cci, vtan and the syndicat mixte pour lam nagement et le d veloppement de la roport de n mes-al s-camargue-c vennes (sman) jointly submitted their comments. airport marketing services limited (ams) submitted its comments on 3 october 2012. ryanair likewise submitted a series of comments on 3 october 2012. moreover, on 20 july 2012, 10 april 2013, 20 december 2013, 31 january 2014 and 7 february 2014, ryanair submitted general comments common to all the state aid cases initiated by the commission with regard to ryanair. (8) by letters dated 24 june 2012, 3 may 2013 and 9 january 2014, the commission sent france the comments made by interested parties. the commission gave france the opportunity to reply to these comments. france replied to these letters by its own letters dated 13 july 2012, 16 november 2012, 3 may 2013 and 3 february 2014. in its letter of 13 july 2012, it informed the commission that the comments received required no comment from france, apart from those already submitted on marseille airport. moreover, france informed the commission that it did not wish to reply to the comments made by third parties. (9) by letter dated 18 october 2012, the commission asked france to provide further information. france replied on 3 december 2012. (10) by letter dated 23 december 2013, the commission again asked france to provide further information. by letter dated 24 december 2013, france requested an extension of the deadline for replying. the commission agreed to this extension by letter dated 6 january 2014. france requested a further extension of the deadline by letter dated 5 february 2014. the commission agreed to this extension by letter dated 11 february 2014. by letter dated 19 february 2014, france submitted partial answers. in view of the missing information, the commission sent a reminder to france by letter dated 19 march 2014. france replied by letter dated 10 april 2014. (11) by letter dated 20 march 2014, the commission again asked for further information. france replied by letter dated 25 april 2014. in view of the missing information, the commission sent a reminder to france by letter dated 13 may 2014. france replied by letter dated 26 may 2014. finally, the commission requested further information by letter dated 23 june 2014. france replied by letter dated 1 july 2014. (12) the commission sent letters to france and the interested third parties that had submitted comments informing them of its intention to assess the compatibility of the aid measures in question with the internal market based on the guidelines on state aid to airports and airlines (5) (the new guidelines). the commission invited the recipients of these letters to comment in this respect, if they so wished. in addition, on 15 april 2014 a notice was published in the official journal of the european union (6) inviting france and interested third parties to submit their comments in this respect. (13) air france submitted its comments in this respect on 25 april 2014. ryanair did likewise on 27 march 2014 and vtan on 23 april 2014. in addition, the non-governmental organisation transport & environment submitted its comments on 12 may 2014. these various comments were forwarded to france, which did not comment on them. 2. facts 2.1. airport characteristics and traffic (14) n mes-garons airport (n mes airport) lies 12 km to the south of n mes, which is the main town in the department of gard, within the languedoc-roussillon region of france. this airport is open to national and international commercial traffic. n mes airport is approximately 60 km from the airports of montpellier and avignon, 90 km from marseille-provence airport and 120 km from b ziers-cap dagde airport. (15) according to france, the main runway, which measures 2 040 m 45 m, is capable of handling code c aircraft (a319, a320, a321, b737-800) without any restrictions for european legs. france puts the airports theoretical capacity at a maximum of 700 000 passengers. (16) until 2011 n mes airport was mainly a military aerodrome, with civil aviation forming only a secondary activity. it therefore had an airbase and a civilian base. the airbase was closed on 2 july 2011, since when n mes airport has been mainly a civilian airport, with its military use becoming secondary. (17) from 1965 to 2000, the only passenger traffic was on the n mes/paris route operated by air france. however, use of this route fell when a tgv high-speed rail service started operating. in november 2001 air france stopped operating the n mes/paris route. the airline air littoral took over this route, which it operated until july 2003. (18) since june 2000 n mes airport has been used by the airline ryanair, initially for one scheduled route to london stansted. in 2005 the london stansted route was replaced by a route to london luton, with a new route to liverpool being launched. in 2006 ryanair started operating two new routes: one to charleroi and the other to east midlands. from 2007 the number of flights to liverpool was drastically cut, and the route to east midlands was permanently withdrawn in 2009. ryanair currently operates international flights from n mes to liverpool, london luton, charleroi and fez. (19) ryanair became the main operator at n mes airport in 2001, and since 2003 has been the only operator offering scheduled services from this airport. (20) n mes airports passenger traffic in recent years is summarised in table 1 in this recital. table 1 traffic at n mes airport (1999-2012) by number of passengers 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 total passengers 297 150 277 521 319 378 231 122 134 444 156 581 206 128 226 887 225 701 224 458 180 027 176 521 192 474 184 850 195 319 2.2. successive airport operators and owners (21) operation of the civilian area of the airport was initially entrusted to the cci by order of 15 march 1965 (the 1965 order) in the form of a public equipment concession for a period of 60 years from 1 january following the concessions being granted, i.e. to 1 january 2026. the concession was supplemented by an order authorising temporary occupation (aot) of approximately 6 ha of additional land, granted on 12 november 1986 (7). the state terminated the concession on 31 january 2006 (8). (22) a schedule of conditions was annexed to the 1965 order. this schedule set out the conditions under which the cci was to establish, equip, maintain and operate the structures, buildings, facilities and equipment. according to the aot, the assets making up the aerodromes equipment belonged to the state. however, any alterations that needed to be made to the structures and facilities were the responsibility of the cci. the cci had to pay an annual fee of frf 2 000 (approximately eur 300). the aot also stipulated that the airport was assigned primarily to the french navy (airbase) and secondarily to the [cci]. (23) the cci is a member of the network of chambers of commerce and industry. in france, chambers of commerce and industry are public administrative bodies. in essence, they represent the general interests of trade, industry and services within their catchment area. their tasks and powers are laid down by law. these chambers are subject to the administrative and financial scrutiny of the state, through the minister for finance and infrastructure and the minister for planning and local administration, each acting within their area of responsibility. according to article r.712-2 of the commercial code, regional chambers of commerce and industry and local chambers of commerce and industry shall be supervised by the regional prefect, assisted by the regional public finance officer. the supervisory authority must therefore be informed of certain important decisions specified in the regulations (regarding, for example, budget, recourse to borrowing, granting of guarantees to third parties, transfers, acquisitions or extensions of financial holdings in civil or commercial companies, etc.). such acts may be implemented only after having been notified to the supervisory authority, which may object to them. chambers of commerce and industry are governed by an assembly elected from among industry representatives in their catchment area. (24) the cci kept separate accounts for the management of the civilian area of the airport, and the latters operating activity was recorded in a separate account throughout this period. in order to distinguish between the activities of the ccis general arm and the airport management activity, the part of the cci operating the civilian area of n mes airport will be referred to as the cci-airport in this decision. (25) from 1 february 2006 responsibility for the equipment, maintenance, operation and development of the civilian area of the aerodrome was entrusted to the sman through an agreement dated 31 january 2006. under this agreement, the civilian area of the airport was placed at the disposal of the sman, with the state retaining ownership of the assets. (26) the sman is a public body (9) created by order of the prefect of the gard department of 9 december 2005. it brings together (10) the departmental council of gard (the cgg), the communaut dagglom ration de n mes m tropole (the canm), and the communaut dagglom ration dal s c vennes (the caac). it is responsible for equipping, maintaining and managing, particularly including operating and developing, civilian airport infrastructure (11). (27) between 1 february 2006 and 31 december 2006, the sman temporarily entrusted the operation of the airport to the cci through a public service delegation (12). it therefore specified how the aerodrome was to be equipped, developed, maintained and managed. in coordination with the cci-airport, it also made the decisions and provided the financing needed to develop the aerodrome in line with the order creating the sman and the public service delegation agreement signed with the cci-airport. for its part, the cci-airport was to make the alterations resulting from the work that it had undertaken, even if those alterations affected structures or facilities situated outside the civilian area. under the delegation agreement, the cci was not due to pay any fees in exchange for using the infrastructure. (28) following an invitation to tender procedure, in which there were two competing tenders, the sman chose to subcontract the operation of the aerodrome to the company veolia transport under a public service delegation agreement (the cdsp) that took effect on 1 january 2007. this company created a wholly owned subsidiary, veolia transport a roport de n mes, which performed the cdsp in the place of its parent company. the cdsp exclusively entrusted to the delegatee, at its own risk, the operation, maintenance and servicing of the civilian area of the airport, its land, structures, buildings, infrastructure, equipment and systems, the development of traffic and the development of services for the handling of civilian aircraft for passenger and freight traffic, for civilian aircraft flight training and for those undertakings established at the site. the initial term of the veolia transport delegation agreement was five years, which was then extended to 31 december 2012 (13). (29) the sman organised a new public service delegation procedure, and a new operating agreement was signed on 14 december 2012 between the sman and the canadian group snc-lavalin. the new delegatee has been operating the airport since 1 january 2013. (30) following the decision to close the airbase, the airports management was transferred, without charge, to the sman from 1 july 2011 (14) for a term of 50 years. the sman is therefore the airport manager and concession authority for its operation, with the state remaining the owner. 3. description of the measures 3.1. measures subject to the formal investigation procedure (31) the measures subject to the formal investigation procedure involve various agreements signed over this same period by the successive airport managers with ryanair, both directly and through its subsidiary ams, and also financial contributions made by various public entities and authorities to the airport operators from the year 2000 to the opening of the formal investigation procedure. 3.2. financial support for the airport operators 3.2.1. financing of costs associated with tasks regarded as sovereign tasks within n mes airport national system for financing sovereign tasks in french airports (32) various tasks performed by the successive managers of n mes airport relating to air traffic safety, security or environmental protection were financed by the public authorities between 2000 and 2012. this funding falls within the scope of the formal investigation procedure. (33) in this connection, france has referred to the general system for financing sovereign tasks in french airports, laid down in national law and described in recital 36 et seq. (34) this system is based on a tax the airport tax and an additional financing instrument. the background to and rules governing these instruments, and the tasks financed by them, are described in recital 37 et seq. (35) in 1998 the council of state ruled in the scara judgment (15) that safety and security tasks within airports were sovereign tasks for which the state was responsible and that could not therefore be funded by airport users through fees. following this judgment, act no 98-1171 of 18 december 1998 on the organisation of certain air transport services and article 136 of act no 98-1266 of 30 december 1998 (finance act for 1999) (16) introduced the airport tax as from 1 july 1999. this is a specific tax in the sense that its proceeds can be used only to finance certain expenditure, in this case the costs of tasks that france regards as sovereign within airports. the above legal provisions also introduced an additional instrument to finance such tasks. the tasks financed by these instruments and the rules governing the airport tax and the additional financing instrument are set out below. (36) the french legislation, together with more detailed regulatory provisions, sets out precisely which tasks can be financed by the airport tax. they are aircraft rescue and firefighting, wildlife hazard prevention (17), screening of hold baggage, passengers and cabin baggage, control of public access points to the restricted area (18), environmental protection measures (19) and automatic border control using biometric identification. the reference to automatic border control using biometric identification was introduced into the legislation in 2008. otherwise, the tasks eligible for financing by the airport tax have remained the same since this scheme was introduced and correspond to the tasks identified by the scara judgment. various national and european regulations clarify the obligations of airport operators in terms of carrying out these tasks. for example, with regard to aircraft rescue and firefighting, the regulations precisely define the human and physical resources to be provided depending on the characteristics of the airport. (37) for a given airport, the airport tax is payable by any airline using the airport. it is based on the number of passengers and weight of freight and mail loaded by the airline. the rate of airport tax per passenger or tonne of freight or mail is set annually, airport by airport, according to the predicted costs of carrying out the tasks financed by the scheme. (38) every year airport operators draw up an annual statement of costs and traffic. these statements set out, for the previous year, the recorded levels of traffic and the costs of performing the safety and security tasks (20), as well as the amounts collected through the airport tax and the additional instrument for financing these tasks. they also contain predictions of traffic, costs and revenue in relation to the safety and security tasks for the current year and the next two years. these statements are checked by the administrative authorities, which can also carry out on-site inspections. the rate of the tax is then set on this basis by an interministerial order. (39) as the tax rate calculations are based on predicted cost and traffic data, an ex post adjustment mechanism has been introduced to ensure that the proceeds from the airport tax, plus the financing provided under the additional instrument described in recital 40, where applicable, do not exceed the costs actually incurred in carrying out the tasks concerned. the costs in question include the operating and staff costs incurred in carrying out these safety and security tasks, depreciation on investments made in connection with these tasks, and the share of the overheads related to these tasks (21). operators must keep multiannual accounts showing the revenue from the airport tax and the additional financing instrument, and the costs incurred in carrying out the tasks concerned. when a positive balance is reported, this is added to the cumulative accounts from previous years, which may result in a positive or negative balance. this balance is taken into account when setting the tax rate for the following year. in addition, any positive balance carries financial charges payable by the operator. (40) from the outset, the airport tax financing instrument has had to be supplemented by an additional financing instrument. this is because safety and security costs are not proportional to the volume of air traffic, unlike the airport tax revenue. it was therefore clear that, at airports with low traffic volumes, the airport tax rate would have needed to be set at a high level, deemed to be barely affordable for users, in order to meet the safety and security costs. for these airports, provision was therefore made for the airport tax to be set at a level below that required to cover the costs and for an additional financing instrument to be used, as necessary, to finance those tasks eligible for financing by the airport tax. (41) various additional financing instruments have been used. to start with, the french authorities used a specific fund, the fonds dintervention pour les a roports et le transport a rien (fiata) or intervention fund for airports and air transport, set up alongside the airport tax by the aforementioned act no 98-1266 of 30 december 1998. this fund, financed by a share of the civil aviation tax, succeeded the fonds de p r quation des transports a riens (fpta) or air transport adjustment fund, which had initially been reserved for financing routes supporting regional development. the fiata financing covered the same tasks as the fpta financing and was extended to those tasks covered by the airport tax in order to supplement the latter for small airports. in essence, the fiata tasks were split into two distinct parts: an airport part providing supplementary cover for safety and security tasks at small airports, and an air transport part providing subsidies for routes supporting regional development. decisions to pay the fiata subsidies providing additional financing for the safety and security tasks were taken following an opinion from the fiata committee managing the airport part. (42) in 2005 the fiata was abolished and, for two years, the corresponding financing was provided directly through the state budget according to the same operating principles, particularly an opinion from a management committee. in 2008 the state replaced this arrangement with an increase in airport tax, which means that this tax is set at a rate higher than what is necessary to cover the safety and security costs at certain airports. the surplus thus created is redistributed among the smallest airports in order to supplement their revenue from the airport tax. (43) as indicated above, the annual statements of airport operators, which are checked by the administrative authorities, give the predicted and recorded costs and the predicted and recorded revenue from both the airport tax and the additional financing instrument. likewise, the annual accounts kept by operators, based on which the balance of actual costs and revenue is calculated, which, if positive, results in a reduction in the airport tax and financial charges being payable by operators, include both the airport tax proceeds and the financing received through the additional financing instrument. the statement, checking and ex post adjustment mechanism intended to prevent the payment of public resources in excess of the costs actually incurred therefore applies to both the airport tax and the additional financing instrument. (44) this national system applies to n mes airport. however, when the airbase was operating, the tasks covered by the system described in the above recitals were partly carried out by the operator of that airbase. the costs therefore incurred were only partly rebilled to the civilian operator according to the terms of the agreement defining the distribution between the civilian operator and the military operator of the investment and operating costs for those facilities and services that were jointly used. this partial rebilling took account of the fact that most of the activity at the airport was military. the share of the costs paid by the civilian operator was then compensated under the sovereign tasks financing system described in this section. (45) following the closure of the airbase on 1 july 2011, vtan took over all the airport safety and security tasks for which civilian airport operators are responsible under french law, with the associated costs being compensated under the system set out above. (46) furthermore, the commission noted in the opening decision that, as n mes airport had mainly been a military aerodrome until july 2011, certain investments in joint infrastructure, notably the runway, had been made under the control of the ministry of defence. 3.2.2. financial support for the cci-airport (47) the cci-airport operated n mes airport until 31 december 2006. 3.2.2.1. contractual framework (48) under the 1986 temporary occupation authorisation (22), the cci had to pay a fee of frf 2 000 per year to the state, which owned the infrastructure. aside from this stipulation, no other financial transfer benefiting the cci-airport was included in this contractual framework, which remained in force until 1 february 2006. (49) on 1 february 2006 the state placed the airport infrastructure in the civilian area at the disposal of the sman and authorised the latter to organise the airports civilian activity, subject to the powers of the ministry of defence. the agreement signed on 31 january 2006 between the state and the sman requires the sman, or the third-party operator appointed by the latter, to develop and finance the movement areas, stands and equipment storage areas within the civilian area (23). (50) in this context, a public service delegation agreement was signed between the sman and the cci in order to entrust the latter with the operational management (24) of the airport between 1 february and 31 december 2006, which was the time needed to organise an invitation to tender procedure in order to select a new operator. article 6 of this agreement required the airport operating costs to be covered by the cci, whilst the investment expenditure was funded by the sman. to cover the airport operating costs, it was stipulated that the operator could have recourse to contributions from other relevant public bodies (25). an annual fee of one euro was to be paid to the sman by the cci (26). 3.2.2.2. investments in the civilian area of the airport (51) the french authorities have set out all the investments made in the civilian area of the airport by the cci-airport over the 1970-2006 period, which totalled eur 19 447 268. these investments increased the size of the passenger terminal. alterations were particularly made to the concourse, check-in area, departure lounge, passenger arrivals area and administrative area (27). the aim was to adapt the airport so that it could handle 600 000 to 800 000 passengers per year. this work was paid for in full by the cci-airport through self-financing and borrowing. (52) france has also stressed that, during the period of operation by the cci until 1 february 2006, the entire airport, except for the passenger terminal, was used for military activities. the runway and control tower, for example, were built and used for military aviation. these existing infrastructures were subsequently used for commercial aviation, but on a secondary basis to the military activity. the ministry of defence did make investments in these infrastructures. however, these investments were not intended to develop or maintain the airports commercial activities, but rather its military activities, and in this respect they were not made or assumed by the civilian operator. on the other hand, the cci-airport paid the military operator a contribution corresponding to its share of the costs associated with the joint infrastructure (mainly the runway and control tower) and the joint services provided (mainly air navigation and firefighting services) (28). 3.2.2.3. operating subsidies (53) the cci-airports main accounting and commercial data for the 1999-2005 period are summarised in table 2 in this recital. table 2 key figures for the cci-airport (thousand eur) (29) 1999 2000 2001 2002 2003 2004 2005 ryanair revenue [ ] (*) [ ] [ ] [ ] [ ] [ ] [ ] total revenue 2 664 2 943 3 328 3 522 2 747 2 665 4 314 payments to ryanair [ ] [ ] [ ] [ ] [ ] [ ] [ ] total expenditure 2 933 3 217 3 746 4 318 5 171 4 553 4 957 result - 269 - 274 - 419 - 796 -2 424 -1 887 - 643 assets 8 956 8 333 7 714 7 145 7 383 6 641 8 026 equity 3 844 3 357 2 729 1 805 -1 093 -3 491 -4 341 final balance 10 831 10 258 9 419 8 522 8 869 7 924 10 729 (54) the commission indicated in the opening decision having identified, in the cci-airport financial statements for the years 2000 to 2006, accounting entries relating to operating subsidies, for which the amounts are given in table 3 in this recital: table 3 amounts of the operating subsidies received by the cci between 2000 and 2006 (in eur), as identified in the opening decision state region cgg municipalities other total 2000 8 944 13 993 22 937 2001 28 314 15 299 43 613 2002 46 000 16 518 62 518 2003 12 603 400 331 412 934 2004 3 694 39 587 43 281 2005 500 000 850 000 13 758 1 363 758 2006 200 000 200 000 total 46 000 8 944 528 314 898 114 667 669 2 149 041 (55) france has given the following explanations for these various amounts. in 2005 the cci-airport received subsidies of eur 250 000 from the caac, eur 600 000 from the canm and eur 500 000 from the cgg to cover its operating deficit (30). in 2006 the cci-airport received a payment of eur 200 000 from the general arm of the cci to cover its operating deficit (31). on the other hand, according to france, none of the other amounts indicated in table 3 in the above recital correspond to financial support from public authorities for the cci-airports economic activities. according to france: the sums of eur 22 937 and eur 43 613 indicated respectively for the years 2000 and 2001 were allocated to the operation of the shuttle between the centre of n mes and the airport, the sum of eur 62 518 indicated for the year 2002 corresponds to financing for the shuttle (eur 16 518) and a fiata subsidy (eur 46 000) under the national system for financing sovereign tasks, as explained previously, the sum of eur 412 934 indicated for the year 2003 corresponds to financing for the shuttle (eur 12 603), a fiata subsidy (eur 14 218) and financing provided by the state (eur 386 103) to cover sovereign safety tasks falling within the scope of the airport tax and the fiata, the sum of eur 43 281 indicated for the year 2004 corresponds to financing for the shuttle (eur 3 694) and a fiata subsidy (eur 39 587), the sum of eur 13 758 indicated in the other column for the year 2005 corresponds to a fiata subsidy. (56) the shuttle is operated by an external service provider with financial assistance from various public authorities. it is not under the control of the cci-airport and does not fall within the scope of its activities. (57) france has also made clear that, except for the payment of eur 200 000 from 2006, referred to in recital 55, the cci did not make any transfer between the general arms accounts and the airport arms accounts during the term of the concession. however, it notes that repayable advances were made. the flows and reserves (32) of these advances are summarised in table 4 in this recital. table 4 advances from the ccis general arm to its airport arm (eur) (33) advance received advance reserve at year-end 1999 -13 157 2 740 804 2000 -43 669 2 697 135 2001 0 2 697 135 2002 420 074 3 117 210 2003 1 752 663 4 869 873 2004 1 429 624 6 299 497 2005 500 000 6 799 497 2006 2 938 660 9 738 157 (58) the reserve of advances from the ccis general arm was automatically converted to subsidy when the public equipment concession was terminated on 31 january 2006 (34). as allowed by the terms of the 1965 concession agreement (35), the state terminated this concession early in 2006. it then applied article 48 of the 1965 concession agreement, under which, at the end of the concession, the state shall reimburse to the chamber of commerce those advances made by the latter from its own resources etc. (59) finally, the commission noted in the opening decision that, for the 2000-2006 period, the cci-airport had not entered any costs under the contribution to the managers overheads heading in its accounts. in the opening decision, the commission assumed that the ccis general arm had not billed any overheads associated with the use of its resources for the management, for example administrative or accounting management, of the airport arm. however, in its reply to the opening decision, france indicated that all the services common to the ccis various arms, including the cci-airport, were rebilled, with the contribution of each arm being determined based on an allocation key that was itself based on the volume of services used by each arm of the cci. for example, with regard to the it overheads, each arm bore the relevant costs according to the number of computers connected and used by the arm concerned. france provided details of the airport arms contributions to the overheads between 2000 and 2006, item by item (management control, staff management, accounting, it, supplies, insurance, mail). 3.2.3. financial support for vtan 3.2.3.1. contractual framework and operating subsidies (60) the company veolia transport was entrusted with operating n mes airport from 1 january 2007. the extent of its responsibilities and the operating conditions were defined by the sman, as the delegating authority, in the cdsp. this agreement covered the operation, maintenance and servicing of the civilian area of the airport, the development of traffic and the development of services for the handling of civilian aircraft and for those undertakings established at the site. (61) subsequently, and in accordance with article 1a of the cdsp, veolia transport set up the company vtan to perform the cdsp. the parent company of vtan, veolia transport, was also authorised to engage in other commercial activities related (36) to the task of operating the airport. (62) in accordance with article 27 of the cdsp, a flat-rate contribution was paid by the sman to vtan every year to ensure that the airports operation was financially stable. this contribution was calculated as the difference between the delegatees commitment in terms of the predicted level of expenditure (total costs plus net margin before tax) and its commitment in terms of the predicted level of revenue. this contribution was fixed, except for annual indexation based on a formula set out in article 27.6 of the cdsp. under this agreement, the flat-rate contribution was set at eur [1,2-1,5] million per year net of vat (2005 euro value) in a reference scenario corresponding to the operating conditions prevailing in the second quarter of 2006. (63) however, the cdsp stipulated that the flat-rate contribution would change if vtan found itself in a downturn scenario, defined by specific criteria set out in the cdsp. this downturn scenario corresponded to a drop in activity resulting in a change to the rotation schedule for aircraft on scheduled routes, itself leading to the airports second staff team being axed and the predicted expenditure therefore falling. according to the cdsp, in this downturn scenario, the flat-rate contribution would be reduced to eur [1,0-1,3] million net per year. (64) moreover, the cdsp stipulated that, if, for a given year, the pre-tax margin of the airports operation was higher than the margin initially set, i.e. if the activitys finances were in better shape than predicted and undertaken, [30 %-45 %] of the difference in the margin would be deducted from the flat-rate contribution. taking into account the additional corporation tax of 10 % of the difference in the pre-tax margin, this reduction formula allowed the savings not initially predicted to be equally shared between the sman and vtan. (65) on 27 january 2010 an initial amendment was made to the cdsp (amendment no 1) due to vtan being unable to collect the fee associated with the temporary occupation authorisation for a factory situated in the airport zone (the sga factory), which was an unknown factor at the time when veolia drew up its tender. amendment no 1 to the cdsp increased the flat-rate contribution by eur [20 000-50 000]. (66) a second amendment (amendment no 2) was signed on 20 july 2010 with a view to committing vtan to renewing the airports air-conditioning system. this amendment stipulated that the sman would compensate vtan for the undepreciated value of the equipment at the end of the delegation. (67) a third amendment (amendment no 3) to the cdsp was signed on 23 march 2011. this introduced the possibility of the flat-rate contribution being increased in the amount of the subsidies received by the sman from other public authorities. it also stipulated that the sman would transfer to vtan the subsidy received from the languedoc-roussillon region under the agreement signed with that authority to support the development of tourist traffic through low-cost air travel. this subsidy amounted to eur [100 000-300 000] for 2009. the sman took the view that vtan had incurred expenditure in supporting the development of tourist traffic and therefore wanted to increase the flat-rate contribution by the amount of the subsidy received. (68) france has indicated that this subsidy was intended to cover the costs incurred by vtan in dealing with the reduction in traffic triggered by ryanairs decision in march 2009 to no longer operate flights from n mes airport to east midlands and to reduce the number of flights to liverpool and london luton. (69) according to vtan, the expenditure supported by this public relations subsidy did not in any way finance the additional advertising with ryanairs subsidiary (ams), but was targeted at the public service mission of developing tourist traffic and promoting the local economy. in particular vtan recruited a sales manager who was in charge of public relations development and marketing as well as efforts to develop air traffic through numerous b2b meetings at airline offices, several email campaigns and participation in air transport trade shows and forums (such as the bmt trade show in naples, italy, which enabled contact with five italian tour operators) directly aimed at foreign customers. (70) on 8 april 2011 an agreement was signed between the sman and vtan to define a coordinated approach to the commitment of the expenditure needed to maintain aviation activity after 1 july 2011, the date when the airbase closed, which required the governance of the entire airport to be reviewed. (71) on 2 july 2011 the state transferred to the sman part of the former military area as well as the tasks and responsibilities previously assumed by the ministry of defence. this transfer had the effect of altering the area and responsibilities entrusted to vtan under the cdsp. in this context, on 30 june 2011 the sman and vtan signed a new amendment to the cdsp (amendment no 4), which, on the one hand, extended the initial term of the cdsp by one year and, on the other hand, altered the obligations of the delegatee and the terms of its compensation. from that date, vtan became responsible for the activities previously carried out by the ministry of defence, except for control over aviation safety. it also had to purchase the equipment in the military area and make the investments in this infrastructure that were deemed necessary. (72) in view of these new operating costs and additional investments, a specific public contribution estimated at eur [300 000-600 000] for 2011 and equipment subsidies were granted to the delegatee. the equipment subsidies were estimated at eur [900 000-1 400 000] (eur [300 000-500 000] for 2011 and eur [600 000-900 000] for 2012). at the end of the delegation, a readjustment was to be made in order to bring the payments into line with the expenditure actually incurred by vtan and the taxes actually received by the sman. france asserts that the aforementioned subsidy was intended to cover investments in sovereign activities and certification work on the airport that was not anticipated at the time when the public service delegation was granted (37). 3.2.3.2. investments in the airport zone (73) the cdsp stipulated that the operator was responsible for only some of the investments (38). vtan therefore had to finance the investments involved in taking over the restaurant equipment, amounting to eur [150 000-350 000], developing the airports shops, and purchasing the equipment needed for entertainment in the terminal. these investments, totalling eur [200 000-400 000], were planned for the 2007 financial year and were to be depreciated over the term of the cdsp. in accordance with amendment no 2 (39), vtan financed the renewal of the airports air-conditioning system, which the delegating authority undertook to take over at the end of the delegation, in return for the delegatee being paid the undepreciated value of the asset. generally speaking, the operator financed the maintenance and renewal of the operating equipment. all other investments were the responsibility of the sman and its member authorities. (74) from 2 july 2011 the area covered by the cdsp included the military area. according to france, the transfer of management of the military area necessitated work and purchases that were vital in order to continue operating the airport, particularly in terms of its certification (i.e. to ensure the transfer of management of the former military area of n mes airport and the tasks carried out up to then by the airbase, which had the effect of altering the obligations of vtan and the terms of its compensation). this work was identified by working groups made up of the directorate-general for civil aviation, the ministry of defence, the sman and vtan. as indicated in recital 72, in return for these new obligations, vtan was to receive an equipment subsidy estimated at eur [300 000-500 000] for 2011 and eur [600 000-900 000] for 2012, i.e. a total of eur [900 000-1 400 000]. (75) according to france, the investments made by vtan over the entire term of the cdsp amounted to eur [600 000-900 000]. 3.3. agreements signed with ryanair/ams (76) the history of ryanairs activity at n mes airport is set out in recital 18. 3.3.1. agreements signed with the cci-airport (77) the french authorities point out that there was a general balance among the activities pursued at the airport, which was based on the coexistence of the army, industrial enterprises in the aviation field (fuel recycling) and passenger transport activity, with over 2 000 jobs being at stake. in this economic context, the cci, firstly on its own and subsequently with its partner local and regional authorities, sought to maintain the routes operated from n mes airport. in particular the cci strived to overcome the drop in traffic recorded following the announcement of the new tgv line, which finally came into operation in june 2001. (78) the french authorities have also confirmed that the agreements and amendments signed between ryanair and the cci were not the subject of any formal resolutions by the cci authorising the negotiations. in this respect, france makes clear that the signature of agreements with airlines is an everyday administrative act, for which the approval of the general meeting is not needed given that the president of the cci has broad power, including the right to sign agreements on behalf of the cci (40). 3.3.1.1. agreement of 11 april 2000 between the cci and ryanair (79) an initial agreement, signed on 11 april 2000 between the cci and ryanair for a term of 10 years, set the amount of the airport charges applicable to ryanair. the airline also undertook in that agreement to serve n mes airport daily. according to france, an oral commitment to a load factor of 70 % was made, which was seemingly exceeded by 10 percentage points. (80) under the agreement of 11 april 2000, ryanair benefited from discounts on the tariffs applicable at n mes airport. in view of the flight schedules and characteristics, parking and lighting charges were not applied to the airline. ryanair also benefited from [ ]. the passenger and landing charges applied to the airline were in line with the general rate card. france notes that any airline operating the same volume of flights as ryanair could have benefited from identical tariffs (41). (81) in return for the discounts granted to ryanair on the ground handling charge, this agreement provided for a financial penalty payable by ryanair if the annual passenger target was not met. in this case, ryanair was to pay a penalty of eur [ ] per missing passenger. a lower tariff of eur [ ] was granted to ryanair by vtan, given the large number of flights operated. (82) the agreement also provided for part of the proceeds from the landing charge set in the agreement signed with ryanair to be used to contribute towards the marketing costs. this contribution, which formed part of the proceeds from the landing charge, was calculated as the difference between the amount of the landing charge paid by ryanair and the sum of eur [ ], to which part of the passenger charge, set at eur [ ] per community passenger, was added. 3.3.1.2. amendments to the agreement of 11 april 2000 (83) the agreement of 11 april 2000 was amended following an exchange of correspondence, firstly at the end of 2001 (42) and secondly in march 2004 (43). these amendments provided for an increase in the payments made by the cci to ryanair with a view to the development of additional routes. (84) the 2001 amendments provided for an increase in the marketing contribution paid by the cci to ryanair, which rose to eur [ ] per passenger outbound from n mes airport on routes operated to london until 31 october 2002, provided that ryanair launched the second route to london for the summer service. (85) however, the 2004 amendments provided for an increase in the marketing contribution of eur [ ] per passenger, provided that a second route to london was launched during the summer season (from 29 april 2004). 3.3.1.3. agreement of 10 october 2005 between the cci and ryanair (86) on 10 october 2005 a new agreement was signed between ryanair and the cci, for an initial term of five years that was renewable for a further term of five years. with retroactive effect from 1 january 2005, it set the amount of the airport charges payable by ryanair, which corresponded to the general rate card applied at n mes airport, except for the parking, lighting and [ ] charges, which were waived. in addition, the airline was set traffic targets. (87) the new agreement also contained an incentive scheme for the development of traffic. this was based on the cci paying a contribution of eur [ ] per passenger outbound from n mes airport and eur [ ] per landing throughout the term of the agreement. a penalty clause was included in the event that ryanair failed to meet the traffic targets set in the agreement. under the terms of this clause, if the volume of passengers carried was between [ ] and [ ] % of the target traffic, the amount of the passenger payment would be reduced to eur [ ] throughout the year in question and until the traffic target was once again met. if the volume of passengers carried was less than [ ] % of the target traffic, [ ]. (88) under the terms of this agreement, ryanair undertook to operate: a daily service to london stansted for a volume of 40 000 passengers/year, an additional daily service to london stansted during the summer, for six consecutive months, for an additional volume of 22 000 passengers, a service to liverpool on four days out of seven, for a volume of 22 000 passengers, an additional service from april 2006 to a destination to be determined, for a volume of 22 000 passengers. (89) the agreement also provided for financial penalties in respect of the discounts granted to ryanair on the ground handling charges and a penalty of eur [ ] per passenger if the annual passenger target was not met. 3.3.1.4. agreement of 10 october 2005 between the cci and ams (90) on 10 october 2005 an agreement was also signed, for a period of five years renewable for the same period, between the cci and airport marketing services limited (ams), a wholly owned subsidiary of ryanair. this agreement also applied retroactively from 1 january 2005. the object of this agreement was the purchase by the cci of related marketing services, namely: five paragraphs of 150 words in the five things to do section on the n mes destination page of ryanairs website, five links to the websites designated by the cci in the status bar on the n mes destination page of ryanairs website, one link to the website designated by the cci in the five things to do section on the n mes destination page of ryanairs website, for seven days per year, one link to the website designated by the cci on the homepage of ryanairs british website, with all the above services, or package no 1, being provided for the sum of eur [ ] excluding tax per year, from the announcement of new routes from n mes airport in 2006, for 26 days per year, one link to the website designated by the cci on the homepage of ryanairs british website (package no 2) for the sum of eur [ ] per year, from the announcement of new routes from n mes airport in 2007, for an additional three days per year, one link to the website designated by the cci on the homepage of the website (package no 3) for the sum of eur [ ] per year, in 2005: an email offer promoting the destination of n mes for the sum of eur [ ], in 2006: an email offer promoting the destination of n mes for the sum of eur [ ], in 2007: an email offer promoting the destination of n mes for the sum of eur [ ]. (91) this agreement was amended twice: 1. amendment of 30 january 2006 (amendment no 1), which extended the term of the agreement between the cci and ams to the end of the ccis effective operation of the airport, i.e. 31 december 2006, despite the termination of the equipment concession. this amendment introduced a clause requiring the cci and ams to make their best efforts to ensure that an equivalent agreement was signed with the future operator. according to the french authorities, this amendment was the logical consequence of the airports operation by the cci being temporarily extended beyond the end of the concession agreement (44). 2. amendment of 17 october 2006 (amendment no 2), which reduced the cost of the marketing services provided to the cci given that the cci was allegedly unable to supply the marketing materials requested. the amendment stipulated that the marketing services provided from 2007 would comply with the base agreement. the provision of marketing services was suspended from april and july 2006 to 31 december 2006 due to the cci being unable to supply the marketing materials to be included on the ryanair website. in the end, the sums due by the cci for 2006 were as follows: eur [ ] instead of eur [ ], for package no 1, eur [ ] instead of eur [ ], for package no 2, eur [ ] instead of eur [ ], for package no 3, another service costing eur [ ] per invoiced file, which was not amended, was included in the amendment. 3.3.2. agreements signed with vtan (2007-2011) (92) france has explained that the decisions to sign the various agreements with ryanair were made by the sole director of vtan and its chairperson and were not therefore the subject of resolutions or meetings (45). 3.3.2.1. agreement of 2 january 2007 between vtan and ryanair (93) on 2 january 2007 an airport services agreement was signed between ryanair and the company vtan, which set the landing and passenger charges payable by the airline and which granted the airline a contribution per passenger under an incentive scheme for the development of traffic. this agreement applied from 1 january to 31 october 2007. 3.3.2.2. agreement of 2 january 2007 between vtan and ams (94) on the same day, the company vtan signed a marketing services agreement with the company ams for the purchase of marketing services costing eur [ ]. as with the previous agreement, this applied from 1 january to 31 october 2007. (95) on 1 august 2007 vtan and ams signed an amendment to this agreement in which they agreed on the payment of an additional contribution of eur [ ] for the period between 1 september 2007 and 28 february 2008. this amendment was a condition for the ryanair service to charleroi to be maintained for the 2007-2008 winter season. france takes the view that this additional contribution was imposed by ryanair on vtan, which, given its status as an entrant to the market, was not in a strong position to negotiate this contribution downwards. france has also confirmed that this amendment was not such as to alter the routes and frequencies stipulated in the agreement of 2 january 2007 or the expected traffic (46). 3.3.2.3. agreements of 1 november 2007 between vtan and ryanair/ams (96) on 7 november 2007 two new agreements were signed, for an initial term of one year that was renewable three times, in order to continue the airport services agreement and marketing services agreement that had expired. although the provisions were similar, the payments to ryanair and its subsidiary were increased to eur [ ]. 3.3.2.4. agreements of 27 august 2008 between vtan and ryanair/ams (97) on 27 august 2008 two new agreements, one for airport services and the other for marketing services, replaced the contractual framework described above as from 1 november 2008, for a term of one year renewable twice. (98) under the airport services agreement, ryanair undertook to operate (47): a daily service during the summer and a service on four days out of seven during the winter to london luton, for a volume of [ ] passengers/year, a service to charleroi on four days out of seven, for a volume of [ ] passengers. (99) the new agreement also contained an incentive scheme for the development of traffic. this was based on the cci paying a contribution of eur [ ] likewise, the agreement included a penalty to be paid by ryanair of eur [ ] per passenger if the traffic target was less than [ ] passengers. 3.3.2.5. amendments to the agreements of 27 august 2008 (100) two amendments of 25 august 2009 respectively extended the marketing services agreement and the airport services agreement to 31 december 2011. (101) amendment no 1 to the marketing services agreement of 18 august 2010 exceptionally increased vtans contribution by eur [20 000-50 000] in order to target new tourists, according to the contracting parties. france takes the view that this amendment was agreed in order to maintain good commercial relations between the airport operator and ryanair (48). (102) amendment no 2 to the marketing services agreement of 30 november 2010, which was connected with ryanair maintaining the route to liverpool, exceptionally increased vtans contribution by eur [35 000-65 000]. france has indicated that this amendment was agreed due to pressure being exerted by ryanair on vtan with regard to the liverpool route. traffic on the route had fallen considerably and ryanair had threatened to withdraw [ ] flights from this route. it made the continuation of these flights for [ ] conditional upon the purchase of additional marketing services to contribute to the promotion of this route (49). 4. grounds for initiating the formal investigation procedure (103) the commission considered it necessary to initiate the formal investigation procedure in order to examine all the financial contributions made by the various public authorities and bodies to the airport operators between 2000 and the date of the opening decision, including the financial contributions described in section 3.2, and to assess the possible aid to ryanair provided for in all the agreements between the airport operators and the airline and/or its subsidiaries between 2000 and the date of the opening decision (25 april 2012). (104) firstly, in its assessment of the financial contributions made to the airport operators, the commission expressed its doubts about the existence of an economic advantage under article 107(1) tfeu. (105) the airport operators and france asserted that the overall management of n mes airport constituted a service of general economic interest. the commission therefore assessed the financial support measures in favour of the airport operators in the light of the altmark judgment. the commission separately assessed the cci-airport operating period (2000 to 1 february 2006), the period covered by the delegation agreement between the cci and the sman (1 february 2006 to 31 december 2006) and the vtan period (2007 to 2012). with regard to the cci operating period, it considered that the first altmark criterion was not met during the 2000-2006 period and therefore that the measures granted to the cci and the cci-airport could not be regarded as compensation for a service of general economic interest during the 2000-2006 period. (106) as regards the vtan operating period, the commission considered that the french authorities had not proven that n mes airport was an exceptional case allowing the overall management of the airport to be defined as a service of general economic interest. in addition, the commission expressed doubts that the clauses of the cdsp met the requirements associated with the second, third and fourth altmark criteria. (107) with regard to the compatibility of the financial contributions with the market economy operator principle, the commission could not rule out that the contributions in question had given the successive operators of n mes airport a selective advantage over the entire period covered by the decision. it could not therefore rule out that these financial contributions constituted state aid. (108) in addition, the commission also assessed the compatibility with the internal market of the measures in favour of the airport operators in the light of the 2005 guidelines (50) and its decision-making practice. as regards the investment aid, the commission concluded that it did not have clear information on the investments financed by the public authorities for the benefit of the successive airport operators. as regards the compatibility of the operating aid with the internal market, the commission considered that these measures constituted operating aid for which the french authorities had not provided any justification as regards their possible compatibility with the internal market. (109) secondly, as regards the assessment of possible aid granted to ryanair, the commission considered that the airport services agreements and marketing services agreements signed at the same time had to be assessed together, as ryanair and ams formed a single beneficiary of the measures concerned. the commission considered that, in order to determine whether these various agreements constituted state aid, this principle needed to be taken into account and the private investor in a market economy test needed to be applied on the various dates when the agreements were signed, namely: on the date of signature of the airport services agreement with ryanair, i.e. 11 april 2000, on the dates of the letters from november 2001 to february 2002 and from march 2004, which amended the airport services agreement signed on 11 april 2000 with ryanair, on the date of signature of the new contractual framework consisting of the airport services agreement with ryanair and the marketing services agreement with ams, i.e. 10 october 2005, on the dates of the two amendments to the marketing services agreement signed with ams on 10 october 2005, namely amendment no 1 of 30 january 2006 and amendment no 2 of 17 october 2006, on the date of signature of the airport services agreement with ryanair and the marketing services agreement with ams, i.e. 2 january 2007, on the date of signature of the airport services agreement with ryanair and the marketing services agreement with ams, i.e. 1 november 2007, on the date of signature of the airport services agreement with ryanair and the marketing services agreement with ams, i.e. 1 november 2007, on the date of signature of the amendments of 25 august 2009, which extended the agreements of 27 august 2008 to 31 december 2011, on the dates of 1 august 2007, 18 august 2010 and 30 november 2010, which were the dates of the amendments making substantial changes to the marketing service agreements signed with ams. (110) in this context, first of all the commission particularly considered that, based on the information at its disposal, it could not rule out that ryanair/ams had benefited from state aid under the contractual and commercial framework with the successive airport operators. the commission considered that the measure in question was likely to constitute state aid, paid to ams by the operators, which was prohibited in principle under article 107(1) tfeu. this view was based on an analysis of the information submitted by france and the circumstances under which this agreement was signed. (111) in addition, the commission expressed doubts as to whether the airport operators, by signing the airport services agreements and marketing services agreements, had behaved as prudent market economy operators pursuing a global or sectoral structural policy, guided by prospects of profitability in the more or less long term. the commission observed that there were no market studies and/or business plans for the various agreements signed with ryanair/ams that economically supported the airports decision to make such undertakings to ryanair/ams. (112) in order to carry out this analysis, the commission proposed to apply the single till principle to the airports operation, by taking into account both the aeronautical revenue (airport and ground handling charges) and the revenue from the airports non-aeronautical activity (shops, car parks, etc.). (113) with regard to the cci operating period, the commission observed that it was difficult to establish how the discounts and rebates granted on the airport charges and the waiver of the ground handling charges had been determined in relation to the operating costs of the airport infrastructures, and therefore the costs of providing the airport services. in this context, the commission expressed doubts as to whether the cci-airport had acted as a prudent market economy investor in its relations with ryanair. (114) as regards the vtan operating period, the commission noted that the implementation of the new contractual framework defined from 2007 seemed to substantially degrade the operators financial situation, as a result of which the commission could not rule out that ryanair/ams had benefited from state aid due to the contractual and commercial framework in question. (115) lastly, the commission expressed doubts about the compatibility of these measures with the internal market under the 2005 guidelines. 5. comments made by interested parties (116) the commission received comments from the following interested third parties: the cci, vtan, the sman, ryanair, ams and transport & environment. 5.1. comments submitted by interested third parties following the opening of the formal investigation procedure 5.1.1. joint comments of the cci, vtan and the sman (117) the two airport operators during the period covered by the opening decision, namely the cci and vtan, submitted their comments jointly with the sman. the cci, vtan and the sman will hereinafter be referred to as the operators. (118) the operators stress that veolia transport and vtan are two separate entities. the first is the company selected to operate n mes airport, whilst vtan replaced veolia transport in the performance of the public service delegation agreement. 5.1.1.1. reminder of the public service mission of operating n mes-al s-camargue-c vennes airport (119) the operators note that the sman is a legal person governed by public law. the sman was assigned public service missions by the french state under the transfer of powers to the local and regional authorities. the operators assert that, in accordance with the case-law of the french council of state (51), when a syndicat mixte or joint association operates an aerodrome, there is a public service inherent in the nature of its activity. the sman subsequently decided to delegate the airports operation to the cci and then to vtan in accordance with french law and subject to monitoring of its legality by the prefect of the gard department, without the latter identifying any illegality. 5.1.1.2. measure 1: assessment of the financial contributions made to the airport operators 5.1.1.2.1. existence of aid 5.1.1.2.1.1. tasks falling within the powers of a public authority and infrastructure used to perform those tasks (120) the operators take the view that aircraft firefighting and wildlife hazard prevention services are not security services, but sovereign tasks associated with safety that are covered by the airport tax, such that these are non-economic activities falling outside the scope of the european rules on state aid. 5.1.1.2.1.2. financing of the operation (121) the operators stress that, during the cci operating period, neither the repayable advances paid by the ccis general arm for the benefit of the airports accounts nor the rebilling system for joint costs can be regarded as acts that may be assessed under the state aid rules. accordingly, in their view, in the first case the cci acted as a private investor ensuring that its business had the necessary resources and, in the case of the rebilling system for joint costs, these costs were decided based on objective criteria associated with the volume of services provided to each recipient. 5.1.1.2.1.3. compatibility of the flat-rate contribution with the altmark case-law (122) clearly defined public service obligations. the operators refute the commissions view that developing the airport, particularly for commercial flights, cannot be defined as a service of general interest. in fact, they consider that (i) the member states enjoy broad discretion in defining what they regard as a service of general economic interest (sgei); and that (ii) the development of air traffic has a wider objective, namely regional development, which is an objective that, according to the operators, has already been recognised by the commission as being a general interest objective. (123) in addition, the operators have submitted a study proving that the airports impact on the local economy is clearly greater than the flat-rate contribution, due to the airports importance as a focus of activity. (124) the operators also refer to the contents of the cdsp to prove that (i) the cdsp contains numerous obligations associated with the maintenance and accessibility of the airport; and that (ii) vtan was required to ensure the continuity of the public service under threat of penalties, by assuming obligations that a private investor, based on its own commercial interest, would not have assumed or would not have assumed to the same extent or under the same conditions. (125) the operators assert that the commission has misinterpreted the meaning of the expression development of air traffic. unlike the commission, which has taken the view that this task involves developing the airport, the operators have indicated that, in its broader sense, this task corresponds to regional development, which they claim to be a clearly defined general interest objective. in addition, in their view, this task also includes development of the industrial hub. (126) the operators also stress that, contrary to the commissions opinion, the compensation granted to vtan did not depend on how the aviation activity developed. in fact, the flat-rate contribution took the form of compensation fixed at eur [1 200 000 1 500 000] per year in the reference scenario, which could only go down subject to certain conditions defined in the cdsp. (127) lastly, the operators consider that the overall management of n mes airport, given its size and local role, should be regarded as an sgei, given that the commission has not proven that a private market economy operator would have been prepared to assume such obligations in the absence of public service compensation. (128) parameters established in advance for determining the amount of compensation. the operators maintain that the flat-rate contribution paid by the delegator to the delegatee was fixed, and was only indexed each year according to a clearly defined formula. furthermore, they clarify that the exceptional increases stipulated in the amendments were agreed as a result of the occurrence of events that were unforeseeable at the time when vtan drew up its tender. (129) fair compensation for costs arising from public service obligations. the operators rely on a quantitative analysis to prove that the airport operator was not overcompensated. as a result, given the size of n mes airport, all the operators economic costs (excluding sovereign tasks) must be taken into account to determine the existence of overcompensation. in this context, over the 2007-2011 period, there was allegedly a loss of nearly eur [1-3] million. only if the entire flat-rate contribution were allocated solely to the public service costs in the strict sense would the operator make a profit of eur [2-4] million. lastly, the operators stress that, if the ams expenditure is included in the public service missions, the compensation covers only [ ] % of the ams expenditure of eur [5-7] million over the 2007-2011 period, less the public service costs in the strict sense, which does not show any overcompensation. (130) selection of the service provider. the operators rely on an independent economic study to prove that the negotiated procedure allowed the most efficient operator to be selected (i) by improving the efficiency of the agreement; and (ii) by allowing the operators to submit more aggressive tenders. the procedure followed with veolia met the final altmark criterion, given that the predicted costs used to calculate the financial contribution reflected the costs of a well-run airport of the same size as n mes. 5.1.1.2.1.4. clarifications on the ams expenditure (131) vtan stresses that ryanair and ams are two separate entities and that their contractual relations must therefore be treated separately. in addition, the operators maintain that all the services contracted to ams fell within the public service missions assigned to vtan. as a reminder, the main objective of these public service missions was the economic and tourism development of the n mes region. 5.1.1.2.1.5. financing of the infrastructure (132) the operators confirm that the only work directly carried out by the cci during its operation of n mes airport involved the expansion and adaptation of the passenger terminal, with this work being financed from the ccis own resources or through loans taken out in its name. given that the vast majority of this work took place during the 1990s, the applicable legislation is the 1994 aviation guidelines, meaning that the financing of this work escapes the monitoring of state aid carried out by the commission. (133) the operators also note that, except for the passenger terminal, the investments were made in the airbase, as the commercial activity was secondary. (134) during the vtan operating period, the main investments, which were mainly military in nature, involved bringing the runway into compliance. these investments were made to meet the basic needs of the airbase. in addition, other investments were made between 2010 and 2011 to bring the terminal into compliance following an unfavourable opinion from the safety commission, which could not have been anticipated when the delegation was granted. (135) as regards the financing of certain investments by the sman, the operators assert that this was the only possible solution given the short term of the cdsp, which was much shorter than the investment depreciation period. in addition, they assert that, if these investments had been taken into account at the time of the invitation to tender, the interested parties would have requested higher compensation. to conclude, they assert that the infrastructure being placed at the operators disposal without charge did not confer any advantage on vtan because, in the absence of the smans support for certain investments, the associated costs would have been directly included in the amount of the flat-rate contribution. (136) as regards the equipment subsidy granted to vtan following closure of the airbase, the operators maintain that the investments in the aircraft rescue and firefighting service (service de sauvetage et de lutte contre lincendie des a ronefs sur les a rodromes sslia) and in the creation of an automatic parameter transmission system (syst me de transmission automatique des param tres stap) cannot be regarded as falling within the airports commercial activity rather than its sovereign activities. 5.1.1.2.1.6. effect on intra-eu trade and competition (137) the operators maintain that a regional airports catchment area is limited to those airports that can be reached by car within a maximum of 60 minutes. they also note that customers of low-cost airlines are much more sensitive to the costs of transport to the airport. (138) with regard to montpellier airport, the operators take the view that its potential passengers would not be interested in travelling to n mes, given the additional journey time and the additional cost incurred. furthermore, montpellier airport serves a tourist demand that is situated more to the west of the airport, whereas n mes airport covers a different catchment area. lastly, the existence of identical destinations served by the two airports (london and brussels) and the study of their traffic show that there is no competition between montpellier airport and n mes airport. (139) likewise, with regard to avignon airport, the operators take the view that its potential passengers would not be interested in travelling to n mes, given the additional journey time and the additional cost incurred. furthermore, the destinations served by the two airports are different (except for london, although the arrival airport is different and the avignon service is targeted at a different type of passenger, mainly business passengers). in addition, a 2011 passenger survey highlighted the low ranking of avignon airport among the other airports situated in the region. (140) with regard to marseille airport, the operators stress that, in accordance with the commissions decision-making practice, the activities of a category d airport such as n mes cannot really hinder those of an airport such as marseille, which sees annual traffic of over 7 million passengers, given that the two airports are not substitutes as far as users are concerned. in addition, an independent economic study shows that the drop in passenger numbers at n mes following the opening of the low-cost terminal at marseille in 2007 was less than the losses recorded during the period prior to that opening. (141) as regards the financing granted to the cci and vtan, the operators consider that this could not have affected the airport operating market given that the overlap between the catchment areas of montpellier, avignon and marseille airports is very limited. 5.1.1.2.1.7. compatibility of the measures with the internal market (142) the operators consider that all the measures examined are compatible with the internal market. given that their aim is the performance of general economic interest tasks, these measures de facto meet the sgei criteria and are therefore compatible with the 2005 guidelines. 5.1.1.2.1.8. compatibility of the operating aid with the sgei decision (52) (143) cci operating period to february 2006. the aid is compatible with the internal market given that (i) there was an act entrusting the public service missions (in particular the 1986 aot); (ii) the compensation was limited to the costs necessary to perform the public service (there were legal mechanisms, such as circular no 111 of 30 march 1993, to ensure fair compensation); and (iii) there were regular checks to ensure the absence of overcompensation (monthly reports verifying that the voted budget was being properly implemented). (144) cci operating period from 1 february 2006 to 31 december 2006. in this case, the sgei criteria were also met given that (i) the delegation agreement of 1 february 2006 imposed clearly defined public service obligations; (ii) the agreement also stipulated that the compensation must be limited to the costs necessary to perform the public service; and (iii) regular checks were also carried out. (145) vtan operating period. the cdsp also met the criteria, in particular (i) the existence of an act entrusting the public service missions; (ii) the limitation of the compensation to the necessary costs; and (iii) the absence of overcompensation given that there was an annual report to the delegating authority that set out the economic and financial results for the year. 5.1.1.2.1.9. compatibility of the infrastructure aid with the 2005 guidelines (146) clearly defined objective of general interest. the investment measures met a clearly defined objective of general interest, namely the economic and tourism development of the gard department because, according to the operators, the specific net impact of n mes airport on the local economy was approximately eur 71 million, based on both the jobs created by the airport and net tourism flows. (147) necessity and proportionality of the investments. the majority of the investments were made in the 1990s. the investments made during the cci operating period that are covered by the opening decision were minor and intended to bring the airport into compliance with the applicable safety standards. in addition, the investments made during the vtan operating period involved renovating the runway in 2007 and bringing the terminal into compliance between 2010 and 2011. (148) satisfactory medium-term prospects for use. the operators maintain that there were satisfactory prospects during both operating periods. accordingly, the cci underlines that, during its operating period, the prospects were positive given that traffic had increased by 3,5 times over the 20 years prior to the airports resizing. likewise, vtan asserts that, when the cdsp was signed, there were satisfactory medium-term prospects. (149) equal and non-discriminatory access to the infrastructure. the general rate card determined the charges to be paid by any airline operating from n mes airport. (150) absence of effect on the development of trade to an extent contrary to the community interest. given that the aid granted was unlikely to affect the airports situated within the catchment area of n mes airport. (151) proportionality and necessity of the aid incentive effect. in the absence of these measures, the airport would have been closed. in addition, the fact that an invitation to tender covering the operation of the airport was launched in 2007 shows that no economic operator would have agreed to assume these investments. 5.1.1.3. measure 2: assessment of the aid potentially granted to ryanair and ams 5.1.1.3.1. state resources and imputability to the state of the payments made by vtan to ryanair and ams (152) cci operating period. the operators maintain that the aid does not meet the stardust (53) criteria with regard to imputability to state resources. the operators claim that the only argument put forward by the commission to establish imputability is the supervision exercised over the cci in accordance with the french commercial code. in their opinion, the regions supervision is limited to certain categories of financial commitments, which do not in any way include services and marketing agreements signed with airlines. as a result, this criterion is insufficient to establish the imputability of state resources. as regards the other criteria in the aforementioned case-law, the operators take the view that (i) there are no links with a public body; (ii) the decisions under analysis were made by the cci in the context of activities carried out in competition with private operators; and (iii) the states involvement in the decisions under analysis has not been proven. (153) vtan operating period. the operators point out that there was no automatic link between the amount of the public contribution granted to vtan and the agreements negotiated by vtan with ryanair and ams. with regard to the imputability of the measures to the state, the measure was adopted by a private undertaking such that the criteria set out in the stardust case-law are not met. 5.1.1.3.1.1. selective advantage 5.1.1.3.1.1.1. joint analysis of the airport services agreements and marketing services agreements (154) the operators do not agree with the joint analysis of the agreements, as announced by the commission, because, in their opinion, the two types of agreement have different conditions and objects. 5.1.1.3.1.1.2. analysis of the marketing services agreements signed with ams (155) cci operating period. the operators consider that advertising on specialist websites is an essential service for the development of any regional airport. they believe that this activity is in line with commission practice and court of justice case-law, given that this is a service paid for at market price. (156) vtan operating period. the operators point out that all the payments made to ryanair were made in the context of the public service mission delegated to vtan, in particular to promote the region and its economic and tourism development. 5.1.1.3.1.1.3. analysis of the airport services agreements signed with ryanair (157) the operators consider that the commission cannot expect a small airport such as n mes to pass on all its costs to the airlines. as a result, they suggest that, in order to measure the profitability of the commercial relationship, only the variable costs exclusively attributable to the airline should be taken into account, with the fixed costs that would have to be borne in any event being excluded. (158) during the cci operating period. the operators stress that the conditions granted to ryanair could have been offered transparently and non-discriminatorily to any airline making a commitment in an identical manner to ryanair. (159) during the vtan operating period. the operators consider that the commission cannot include 100 % of the ams expenditure in the costs chargeable to the commercial operation of the airport in so far as this expenditure was fully or partly made in the context of vtans public service mission of promoting the region. in addition, the operators point out that n mes airport was the first airport operated by vtan and, as a result, it was vital for vtan to ensure ryanairs presence, if necessary through an initial loss, in order to allow the group to acquire the experience needed to develop its airport operation activity. lastly, the operators stress that, in this context, the public authorities (and particularly the sman) did not play any role in the commercial relationship established between ryanair and vtan. 5.1.2. ryanair 5.1.2.1. ryanairs comments on the opening decision (160) ryanair has submitted a report prepared by oxera, an independent economic consultancy firm, in order to prove that ryanairs agreements with n mes airport comply with the market economy operator principle. this report concludes that the average charges paid by ryanair at n mes airport are higher than the average charges applied at comparable airports acting as market economy investors (oxera examined [ ], [ ], [ ], [ ] and [ ] airports). 5.1.2.1.1. no aid from state resources, no imputability to the state 5.1.2.1.1.1. agreements with the cci (before 1 january 2007) (161) the commission claims that ryanair and ams were paid amounts owed under their respective agreements not by the cci but by state entities such as the languedoc-roussillon region. (162) ryanair takes the view that the commission cannot credibly support its claims regarding imputation to the state and use of state resources through its arguments regarding the cci. ryanair asserts that, under both european union case-law (54) and french law (55), the french state does not enjoy any influence in the decision-making processes of the chambers of commerce, with its role being limited to supervising certain decisions and its approval not being required for the signature of agreements such as the airport services agreement and the marketing services agreement. (163) ryanair indicates that not all the resources of the ccis come from taxes, given that they have their own resources generated, for example, by their commercial activities. in the specific case of airports, the ccis must finance their airport operations independently, under the french civil aviation code. 5.1.2.1.1.2. agreements with vtan (after 1 january 2007) (164) ryanair asserts that the fact that flat-rate contributions were involved clearly shows that these contributions did not correlate to specific payments by vtan to ryanair. it also maintains that the imputation of the measures to the state has not been established by the commission and that the analysis therefore fails to meet the criteria required for the imputation of a measure to the state. (165) in addition, ryanair concludes that the change of contractual partners (from the cci to vtan) entailed a change in the negotiating conditions, which allegedly proves that vtan was not simply a front for the french state. 5.1.2.1.2. the commissions incorrect application of the market economy operator principle (166) ryanair takes the view that the commission has failed to compare the ryanair agreements with other agreements signed with comparable private and public-private airports and indicates that, according to the chronopost (56) case-law, it is only in the absence of a reference private investor that a market-based analysis can be replaced by a cost-based analysis. according to ryanair, there are a number of airports that have similar characteristics to those of n mes airport, which are encouraged to operate as market economy investors (57) and which the commission could have used as benchmarks in its analysis. in addition, ryanair takes the view that the commissions cost-based analysis is limited to a simple mention of these costs. (167) moreover, ryanair explains that, in the present aviation context, certain factors can support the commercial logic of pricing at incremental (or even lower) cost. in particular it mentions the following factors: (i) degree of competition on the market concerned; (ii) interest in attracting airlines to a regional airport that has limited market power; (iii) existence of network externalities at airports; (iv) economic advantage resulting from commitments by airlines to guaranteed passenger numbers; (v) correct definition of incremental revenues; (vi) history and typical profile of european regional airports; and (vii) correct definition of incremental costs. (168) as regards the presence of network externalities at airports, ryanair maintains that these are both one-sided (as the number of established routes from a given airport increases, this airport is likely to become more attractive) and two-sided (airlines will be more willing to commence operations at airports with good surface access facilities and a minimum of shopping facilities since they will attract more passengers). (169) with regard to the economic advantage resulting from commitments by airlines to guaranteed passenger numbers, ryanair asserts that these guaranteed passenger numbers and the existence of penalties if targets are missed as stipulated in the airport services agreements signed with ryanair enable the airport not only to better plan its activities and adopt policies that minimise costs to a greater extent than if no commitments existed, but also to attract commercial operators (58). (170) as regards the need to adopt a consistent approach to the definition of incremental revenues in relation to the definition of incremental costs, ryanair proposes a single-till approach, which involves taking account of revenues generated from both aeronautical and non-aeronautical activities, and welcomes the approach adopted by the commission in this respect. in this context, ryanair has submitted some financial data for a number of small and medium-sized regional airports in the united kingdom, which show that there is a clear correlation between growth in passenger numbers and growth in non-aeronautical revenues. that being so, ryanair takes the view that it makes sound business sense to lower the airport charges for airlines that generate non-aeronautical revenues in order to maximise such revenues (the single-till approach therefore justifies lower airport charges). (171) as regards the profile of european regional airports, ryanair notes that none of them was originally conceived as a commercial market economy investor-type venture (most of them were created several decades ago as public infrastructure serving a variety of purposes, such as military uses, civil or leisure aviation, etc.). ryanair is therefore convinced that a market economy investor would have to consider both the airport infrastructure and the fixed operating costs, and that the decision as to whether or not an airline could operate at the airport would not in any way change the existence or amount of the initial sunk costs, which must therefore be ignored in the analysis of the decision. ryanair takes the view that the costs of closing the airport could be significant, given the need to compensate for breaching long-term commercial agreements with third parties and the existence of other costs such as redundancy costs, environmental costs associated with decontaminating the airport site, etc. (172) finally, ryanair stresses that it operates a different business model from most other airlines. as a result, the cost to an airport of serving ryanair is likely to be lower than the cost to an airport of serving other carriers that use a wider range of airport facilities. therefore, from the viewpoint of a market economy investor, any commercial offer will normally be an improvement on the existing situation, as long as the airports expected incremental revenues exceed its incremental costs. in addition, as already stated, ryanair considers that airport infrastructure already constructed is a sunk cost that should not affect the incremental choices made by the airport. moreover, fixed operating costs (such as the costs of maintaining terminal buildings) also should not be included in the assessment of compliance with the market economy operator principle, since this principle is not supposed to be based on an exceptionally successful investment result, but rather on the minimum investment standard sufficient to satisfy a private investor. ryanair highlights the need to charge investment costs appropriately so that they reflect the airlines use of the facilities offered by the airport. ryanair also indicates that, for the purposes of applying the market economy investor test, the net present value of the investment over the long term should be compared. ryanair has submitted an analysis produced by oxera that confirms that n mes airport has acted as a market economy investor under the conditions set out above. (173) furthermore, ryanair asserts that business plans are not systematically used by private investors, and that it itself does not use them. the commission is therefore seemingly wrong in suggesting that the lack of a business plan prevents a public body from acting as a private investor. (174) ryanair strongly objects to the opening decisions use of ryanair/ams to designate the single presumed beneficiary of the measures in question, and the conclusion that the marketing services agreements with ams and the airport services agreements with ryanair should be assessed together. ryanair stresses that, generally speaking, its operation of routes is not dependent on the conclusion of a marketing agreement with ams and that, based on their own perception of their marketing needs, many airports served by ryanair do not conclude agreements with ams. (175) ryanair refers to the agreements signed with the airport (59) to prove that these were not agreed on a non-exclusive basis and that the measures concerning ryanair were not therefore selective. in addition, ryanair points out that, since the market economy investor test is met, then any aid, if proven, must have been distributed in some other way (or retained by the airport), either to other users of the airport or to unproductive projects (60). (176) to conclude, ryanair makes a few general comments, namely (i) it takes the view that the safety and firefighting services are non-economic activities and should not therefore be included in any state aid assessment; (ii) ryanair did not request any investment in runway infrastructure or other equipment, meaning the investment costs are not chargeable to the agreements with ryanair; and (iii) none of the measures benefiting vtan, as described in section 3.1 of this decision, can be attributed to ryanair since it never requested any of the investment projects in question. 5.1.2.2. ryanairs comments of 10 april 2013 (177) ryanair submitted two notes prepared by oxera and an analysis prepared by professor damien p. mcloughlin. 5.1.2.2.1. first oxera note identifying the market benchmark in comparator analysis for meip tests. ryanair state aid cases, note prepared for ryanair by oxera, 9 april 2013 (178) oxera takes the view that the commissions approach of accepting only comparator airports in the same catchment area as the airport under investigation is flawed. (179) oxera argues that market benchmark prices obtained from comparator airports are not polluted by state aid given to surrounding airports. it is therefore possible to robustly estimate a market benchmark for the meip (market economy investor principle) tests. (180) in fact: comparator analyses are widely used for meip tests outside the field of state aid, companies influence each others decisions only to the extent that their products are substitutable or complementary, airports in the same catchment area do not necessarily compete with each other, and the comparator airports used in the reports submitted face limited competition from public airports in their catchment area (less than one-third of the commercial airports in the catchment area of the comparator airports are fully state-owned, and none of the airports in the same catchment area as the comparator airports was the subject of a state aid procedure (in april 2013)), even where the comparator airports face competition from public airports in the same catchment area, there are reasons to believe that their behaviour is in line with the meip (for example, where the private sector holds a large stake or where the airport is privately operated), airports that respect the meip will not set prices below incremental cost. 5.1.2.2.2. second oxera note principles underlying profitability analysis for meip tests. ryanair state aid cases, note prepared for ryanair by oxera, 9 april 2013 (181) oxera argues that the profitability analysis undertaken by oxera in its reports submitted to the commission follows the principles that would be adopted by a rational private sector investor and reflects the approach apparent from commission precedents. (182) the principles underlying the profitability analysis are as follows: the assessment is undertaken on an incremental basis. an ex ante business plan is not necessarily required. in the case of an uncongested airport, the single-till approach is the appropriate pricing methodology. only those revenues associated with the economic activity of the operating airport should be considered (charleroi decision) (61). the entire term of the agreement, including any extensions, should be taken into account. future financial flows should be discounted in order to assess the profitability of the agreements. (183) the incremental profitability resulting from ryanair agreements with airports should be assessed on the basis of internal rate of return estimates or net present value measures. 5.1.2.2.3. analysis by professor damien p. mcloughlin brand building: why and how small brands should invest in marketing, note prepared for ryanair, 10 april 2013 (184) this document aims to set out the commercial logic underlying regional airports decisions to purchase advertising space on the ryanair website from airport marketing services (ams). (185) there is a large number of very robust, well-known and regularly used airports. weaker competitors have to overcome the static purchasing behaviour of consumers to grow their business. smaller regional airports need to find a way to continuously communicate their brand message to as wide an audience as possible. traditional forms of marketing communication require expenditure beyond their means. (186) advertising via ams: offers an opportunity to reach a significant number of people already considering a travel purchase, entails relatively low costs (prices in line with commercial rates for online communication), allows communication at the point of purchase, offers the possibility of creative advertising. 5.1.2.3. ryanairs comments of 20 december 2013 (187) ryanair submitted comments on the payments made to ams. ryanair disagrees with the commissions preliminary assessment that the payments made to ams constitute costs for the airport, as this approach disregards the value of amss services to the airport. ryanair further believes that, for the purposes of the market economy operator analysis, the purchase of valuable marketing services at market rates should be considered separately from a related airport-airline agreement. (188) in support of its arguments, ryanair submits an analysis comparing the prices charged by ams with prices for comparable services offered by other travel websites (62). the analysis concludes that the prices charged by ams were either lower than the average or within the mid-range of the prices charged by comparator websites. (189) according to ryanair, this shows that amss prices are in line with market prices and that the decision by a public airport to purchase amss services satisfies the market economy operator test. ryanair also produces evidence of the services provided to airports under the ams agreements in order to prove the value of these services to the airports. (190) according to ryanair, if the commission insists on subjecting the ams agreements and the ryanair airport services agreements to one and the same market economy operator test (an approach with which ryanair disagrees), the value of amss services to the airports should not be underestimated. (191) in addition, ryanair refers to the conclusions of various reports confirming that ryanair has a strong pan-european brand capable of attracting a premium for its advertising services. 5.1.2.4. ryanairs comments of 17 january 2014 (192) ryanair submitted a report prepared by its economic adviser concerning the principles that it believes should apply to a market economy operator profitability test encompassing both the airport services agreements signed between ryanair and airports and the marketing agreements signed between ams and the same airports (63). ryanair emphasises that this does not in any way prejudice its position that ams agreements and airport services agreements should be subject to separate market economy operator tests. (193) the report states that ams-associated income should be included on the revenue side in a joint profitability analysis where ams expenditure is included on the cost side. in order to do this, the report proposes a cash-flow-based method in which ams expenditure is treated as additional operating expenditure. (194) the report argues that marketing activities contribute to creating and enhancing brand value, which is likely to generate business and profits not only during the term of the marketing agreement, but also after its expiry. this is particularly the case when, due to an agreement with ryanair, other airlines are attracted to the airport, in turn attracting commercial operators and thus increasing the airports non-aeronautical revenue. according to ryanair, were the commission to undertake a joint profitability analysis, these benefits should be taken into account by treating ams expenditure as additional operating expenditure, with the additional profits being calculated net of the ams payments. (195) ryanair also considers that a terminal value could be included in the projected additional profits at the end of the term of the airport services agreement in order to take account of the value accruing after the expiry of the agreement. the terminal value could be set based on a conservative assumption as to the probability of the agreement with ryanair being renewed or similar conditions being agreed with other airlines. ryanair considers that this would allow a lower bound for the profits generated jointly by the ams and airport services agreements to be estimated, taking into account the uncertainty of the additional profits beyond the expiry of the airport services agreement. (196) in support of this approach, the report summarises the results of studies on the effect of advertising on brand value. these studies recognise that advertising can build brand value and improve customer loyalty. in particular, according to the report, advertising on the ryanair website increases brand visibility in the case of an airport. the report adds that smaller regional airports aiming to increase their traffic can particularly build their brand value by entering into advertising agreements with ams. (197) the report indicates that the cash-flow-based approach is preferable to a capitalisation approach in which the ams expenditure would be treated as capital expenditure on an intangible asset (namely, the brand value of the airport). the marketing expenditure would be capitalised as an intangible asset and then amortised over the useful life of this asset, with a projected residual value on the planned expiry of the airport services agreement. this approach would not, however, take account of the additional benefits to the airport as a result of signing the airport services agreement with ryanair, and estimating intangible asset value due to brand expenditure and the length of useful asset life is difficult. 5.1.3. airport marketing services (ams) (198) ams states that it is a ryanair subsidiary with a real commercial purpose, which was created in order to develop an activity that does not form part of ryanairs core business. the bulk of its activity involves the provision of quality advertising space on the ryanair website. ams takes the view that it has not benefited from any state aid and that the airport operators acted in line with the meip towards ams. (199) ams notes that it is not the only marketing service provider to ryanair, since ryanair has engaged several other companies to advertise on overhead bins or in its in-flight magazine. in addition, ams asserts that other airlines also offer paid advertising on their websites. (200) ams maintains that, in principle, its marketing agreements with airports are negotiated and signed separately from ryanairs agreements with those same airports and that ryanair promotes itself. moreover, ams concludes marketing agreements with both public and private entities, such as public and private airports, tourism bodies, car rental companies, etc., and the advertising space provided by ams is offered on a non-discriminatory basis to public and private advertisers. ams highlights that these private customers, acting as market economy investors, clearly attach commercial value to amss services as they stand. in support of this assertion, ams provides a report prepared by the independent consultancy mindshare, in which the value is assessed based solely on the offer of web advertising, and not on the offer of air services by ryanair. (201) ams notes that space on the ryanair website is a scarce resource and that neither ryanair nor ams force airports to buy marketing services. ams asserts that no state aid can result from its agreements with public airports since ams could just as easily sell the website space to a private company at a comparable price. (202) ams disputes the commissions view that the marketing agreements do not have a distinct purpose or interest and believes that the commission has offered no legal or factual grounds calling into question the commercial justification for the airports decision to sign an agreement with ryanair. consequently, ams considers that it is unable to submit any relevant comments and exercise its rights of defence. (203) ams considers that, for regional airports, advertising is not a luxury but a must and that ryanairs website is a particularly cost-effective alternative since it allows a captive audience to be targeted to optimum effect. ams stresses that, when ryanair started to operate the n mes-london route, the british public were generally unaware of n mes. marketing was therefore important to maximise the number of inbound passengers. (204) ams considers that the agreement with n mes airport is similar to those signed by ams with other airports and it refers to the decision of the administrative court of marseille of 20 october 2009 in which the court found that the agreement between ams and the airport allowed the latter to receive a real quid pro quo consisting of marketing services. ams also notes that the commission recognised in the bratislava decision the value of its marketing services (64). (205) finally, ams considers that its prices are based on objective criteria that are transparently indicated on its website. ams confirms that the prices charged to n mes airport are consistent with its rate card. 5.2. comments submitted by interested third parties following the publication in the official journal of the european union of a notice inviting member states and interested third parties to submit their comments on the application of the new guidelines to ongoing cases 5.2.1. air france (206) air france questions the application of the new guidelines to cases involving operating aid for airports, even where this aid was paid prior to the publication of said guidelines, for a number of reasons: according to air france, this retroactive application of the new guidelines favours non-virtuous operators by legitimising conduct that did not comply with the rules applicable at the time. by contrast, this approach penalises operators who did comply with the previous guidelines by refraining from claiming public funds. air france also maintains that the retroactive application of the new guidelines to operating aid granted to airports before the new guidelines entered into force is contrary to general principles of law and european case-law. (207) air france claims that the new guidelines will have the effect of favouring new operators to the detriment of incumbent operators. by allowing a new airline to pay only the incremental cost associated with its activity, they will discriminate against incumbent operators at the airport, who will be subject to higher charges. (208) lastly, air france points out that, although the condition of non-discriminatory accessibility to the infrastructure of an airport may seem easy to fulfil in theory, the situation is quite different in practice, with certain operating models being consciously disadvantaged. 5.2.2. vtan 5.2.2.1. operating aid (209) vtan indicates that, if the commission were to find that the flat-rate contribution received by vtan over the 2007-2012 period under the cdsp for operating the civilian area of n mes airport did not satisfy either the four altmark criteria or the conditions of the sgei decision, vtan would maintain that this contribution was, however, compatible with the internal market based on the new guidelines. (210) vtan considers that this contribution meets all the criteria set out in section 5.1.2 of the new guidelines. in fact: n mes airport participates in the economic and tourism development of the gard department and therefore contributes to a well-defined objective of common interest, there was a need for state intervention, particularly as the new guidelines indicate that airports with up to 200 000 passengers per annum may not be able to cover their operating costs to a large extent, the measure was granted in the form of an ex ante flat-rate contribution based on a forward estimate and was therefore appropriate, in the absence of the contribution, the level of activity at n mes airport would have been significantly reduced, vtan proves that the proportionality of the aid criterion is met given that, over the 2007-2011 period, the aid amount was around the maximum of 80 % of the initial operating funding gap authorised in point 130 of the new guidelines, vtan explains that the airport is open to all potential users, which limits negative effects on competition and trade. 5.2.2.2. investment aid (211) if the commission finds that the equipment subsidies granted to vtan constitute state aid, vtan believes that, according to the new guidelines, their compatibility will be assessed in the light of the criteria set out in the 2005 guidelines. 5.2.3. transport & environment (t&e) (212) this non-governmental organisation has made comments criticising the new guidelines and the commission decisions in the aviation sector to date, due to their harmful consequences for the environment. 6. frances comments 6.1. comments submitted by france following the opening of the formal investigation procedure 6.1.1. general interest of the airport (213) france argues that all the activities of n mes airport (including the commercial aviation activities) constitute services of general interest, particularly the economic and tourism development of the region, such that no amount granted to the airports operators can be regarded as state aid. (214) furthermore, france maintains that, in its analysis of the contractual relations between the airports operators and ryanair/ams, the commission has not taken into account the part of the payments made in respect of the public service missions assigned to the operators, in particular the promotion of the region and its economic and tourism development. (215) france also indicates that the airbase promised economic growth for the region and that, after its closure in 2011, it was decided to create an industrial hub connected to the airport, which could generate a new industrial fabric in the languedoc-roussillon region. in this context, france notes that these activities in themselves justify the airport being kept operational. 6.1.2. measure 1: assessment of the financial contributions made to the airport operators (216) france considers that the 1994 guidelines should be applied to all the infrastructure aid received before the 2005 guidelines entered into force. in addition, in its view, the a roports de paris case-law is not applicable to the present case as that ruling concerned a large european hub and dealt with a legal issue unconnected with the problem of airport financing. (217) france takes the view that the commissions application of this doctrine resulted in legal uncertainty about the applicable rules, from the aforementioned judgment being delivered to the new guidelines being adopted. as a result, according to france, out of the eur [5-9] million paid by the public authorities between 2000 and 2010, eur [0,8-2] million should be excluded from the commission analysis, given that this financing was granted in line with the 1994 guidelines and before the 2005 guidelines were adopted. (218) with regard to the investments made during the cci operating period, france makes clear that the entire airport, except for the passenger terminal, was used for the airbases military activities, with the commercial activity being secondary. france states that, until 2004, the costs associated with the infrastructure and common services were partly rebilled to the cci by the ministry of defence according to the percentage of commercial traffic within the airports total traffic. the airbase subsequently rebilled in detail to the cci the part of the costs attributable to the civilian operation of the airport. france also makes clear that the only work directly carried out by the cci involved the expansion and adaptation of the passenger terminal and that this work was financed from the ccis own resources or through loans taken out in its name. (219) with regard to the investments made under the cdsp signed with vtan, france notes that the cdsp provided for only part of these investments to be covered by the operator. likewise, france notes that the short term of the delegation (six years) prevented an alternative solution and that no advantage was conferred on vtan by the sman assuming responsibility for the investments. finally, france explains that the equipment subsidy granted following closure of the airbase was intended to cover investments in sovereign activities and certification work on the airport that was not anticipated at the time when the cdsp was signed. 6.1.2.1. clarifications on the infrastructure used to exercise the powers of a public authority (220) france considers that aircraft firefighting and wildlife hazard prevention services are tasks falling within the powers of a public authority that are essential for airport safety. france confirms that these services are funded by a parafiscal charge: the airport tax. (221) france also stresses that the methods of financing sovereign tasks at n mes airport are not unique, but are similar to those used at other french airports. the only difference at n mes airport is that, when the airbase was operational, the tasks carried out by the ministry of defence were partly rebilled to the civilian operator, with the associated investment and operating costs then being financed by the airport tax. after the airbase closed, vtan took over all the airport safety and security tasks, which led to a significant increase in the expenditure covered by the airport tax. (222) france alleges that these transferred activities are in all cases safety/security tasks that do not, as a result, constitute economic activities and that therefore escape the application of the state aid rules. (223) france also notes that the model for financing french airports through the airport tax and the establishment of the passenger rate of the airport tax are governed in detail by its national legislation. this model takes account of the overlap between normal operating constraints and those constraints specific to safety or security. as a result, france states that the financing of airport sovereign tasks is strictly regulated, which, in its view, prevents any overcompensation. (224) as regards the investments in common infrastructure made between 2000 and 2011 by the ministry of defence and co-financed by the state and those local and regional authorities involved in managing the civilian area, france explains that the financing of the sovereign tasks of the airports civilian and military areas was split in proportion to the number of flights. france also indicates that the largest investments were made in the runway, and were therefore essential military investments. (225) as regards the costs of the aircraft rescue and firefighting service (service de sauvetage et de lutte contre lincendie des a ronefs sur les a rodromes sslia) and of creating an automatic parameter transmission system (syst me de transmission automatique des param tres stap), france indicates that these investments were not made in response to requests by ryanair. the first service was essential to attract any airline (and not just ryanair) to the airport, whereas the second service was necessary to transform the airport into a commercial base and integrate n mes within the montpellier tma (terminal manoeuvring area). 6.1.2.2. clarifications on the financing of the infrastructure and operation (excluding sovereign tasks) 6.1.2.2.1. existence of a selective advantage 6.1.2.2.1.1. examination of the private investor criterion (226) france stresses that the private investor criterion must be analysed based solely on the variable costs generated by the airports commercial activity, given that all the airports fixed costs are, in its view, included as part of the performance of the general interest tasks assigned to the airport. 6.1.2.2.1.2. examination with regard to the altmark criteria for the vtan operating period (227) france asserts that the sums paid by the sman to vtan under the cdsp did not confer any advantage on vtan because the flat-rate contribution payments were, in its view, solely intended to compensate for clearly defined public service obligations. (228) clearly defined public service obligations. france underlines the broad discretion that it enjoys in defining the activities that constitute an sgei. france asserts in this respect that, given that n mes airport is a category d airport, the entire airport constitutes an sgei in accordance with the 2005 guidelines. france underlines that the activities imposed on vtan could have been included under the special task heading as no economic operator would have been able to accept the concession under the proposed conditions. (229) france also states that vtan was not entrusted with developing the airport, but rather with the economic and tourism development of the region, and particularly with the development of the industrial hub situated nearby. finally, france notes that the compensation paid to vtan was not linked to the development of commercial routes, as indicated by the commission. it was simply a flat-rate contribution of a fixed amount that depended on the economic situation referred to in the reference scenario or in the downturn scenario. as a result, france considers that a private operator acting in a market economy would not have been prepared to assume the tasks assigned to vtan, under the same conditions, in the absence of compensation for the public service provided. (230) parameters established in advance for determining the amount of compensation. according to france, the rules governing the amount of compensation are clearly defined in the cdsp. france justifies the payment of additional amounts to the airport operator by the fact that a number of unexpected events, which could not have been envisaged at the time when the tender was submitted, occurred during the period of the delegation, in particular the dismantling of the airbase. (231) fair compensation for costs arising from public service obligations. france asserts that vtans accounts do not prove that the operator was overcompensated. the analysis conducted by france shows that, due to the small size of n mes airport, all the economic costs incurred by the operator (except for the activities covered by the airport tax, i.e. the costs of the sovereign tasks) should be taken into account when assessing the existence of overcompensation. as a result, france indicates that all the costs associated with the airports operation (including the costs generated by ryanair/ams) must be regarded as falling within a public service activity. on that basis, france concludes that there was no overcompensation. (232) selection of the service provider. france also stresses that the operator was selected in accordance with the principle of legality, given that an invitation to tender notice was published in the french official gazette of public procurement notices (bulletin officiel des annonces des march s publics boamp) and in the official journal of the european union. veolias tender was finally chosen because it was regarded as the most advantageous after its economic, service and financial aspects had been analysed. 6.1.2.2.1.3. examination of the effect on competition criterion (233) france considers that n mes airport has a specific catchment area that differs from those of montpellier, avignon and marseille airports. as a result, public financing granted to the n mes airport operator is unlikely to affect competition. in that regard, france underlines that the catchment area of regional airports is limited to those airports that can be reached by car within a maximum of 60 minutes. france also believes that the journey time between two airports is not the only variable to be considered when determining the catchment area, because account must also be taken of the cost of the journey, which is a very important variable for the low-cost traffic predominating at n mes airport (see the table prepared by france in this recital). montpellier avignon marseille distance (in kilometres) 63 68 115 journey time by car 0h 49 1h 00 1h 21 cost of return journey eur 19 eur 38 eur 36 (234) as regards marseille airport, france considers that the cost of a return journey to the airport and the journey time (in excess of 60 minutes) are sufficient reasons for marseille airport to be excluded from the catchment area of n mes airport or, at the very least, for the overlap between the activities of these two airports to be very limited, particularly with regard to the low-cost offer at n mes. furthermore, france asserts that n mes airport is a category d airport according to the 2005 guidelines and that, in accordance with the commissions decision-making practice, it cannot be regarded as a competitor to marseille airport, given that the latter sees annual traffic of over 7 million passengers. finally, france stresses that the type of traffic at marseille airport (high proportion of business passengers) is completely different from n mes airport (tourist and seasonal traffic focused on the appeal of n mes and the gard department) and that the brussels-charleroi destination is served by both airports, which, in its view, shows that these are not substitutes as far as users are concerned. (235) as regards avignon airport, france asserts that the return cost of eur 40 is regarded as a negative factor by low-cost passengers. in addition, there is no overlap between the activities of avignon airport and those of n mes airport because the destinations served from avignon are different. france maintains that this argument is supported by a 2011 passenger survey, which allegedly highlighted the low ranking of avignon airport among the other airports in the region (2,55 % of passengers from other airports in the region). (236) as regards montpellier airport, france considers that the two airports are not in the same catchment area given that (i) the ryanair routes from montpellier airport meet a tourist demand that is situated more to the west than to the east of the airport; and (ii) that n mes airport covers a different catchment area from part of montpellier airports catchment area (in particular the c vennes, uz ge and the northeast of gard/south of the ard che in the rh 'ne valley). furthermore, france takes the view that the lack of overlap between the activities is confirmed by two facts, namely (i) the brussels-charleroi route operated from both airports allegedly shows that these are not substitutes as far as their users are concerned; and (ii) the traffic at montpellier airport is clearly higher than that at n mes airport. (237) in conclusion, france asserts that n mes airport is a category d airport according to the 2005 guidelines and that it has a specific catchment area that differs from those of montpellier, avignon and marseille airports. as a result, public financing granted to the n mes airport operator is unlikely to affect competition. 6.1.2.2.1.4. compatibility with the internal market (238) in any event, france indicates that the measures were compatible with the internal market as all the financing was granted for infrastructure that was entirely used to provide a service of general economic interest, given the following: during the cci operating period to february 2006: france considers that its national legislation confers general interest tasks on the chambers of commerce, such as economic development and improvement of the regions attractiveness. the obligation to ensure the continued operation of n mes airport stems from this framework. in addition, france indicates that the criterion according to which compensation must not exceed the costs necessary to perform public service missions was met given that (i) in its view, the compensation was limited to the sgei costs stipulated in the circular laying down the financial rules applicable to the ccis operation (65); (ii) the cci had a separate account for the airports operation and (iii) its accounts were regularly checked by the competent authorities. during the cci operating period from 1 february 2006 to 31 december 2006: in frances view, the aid was compatible given that (i) the delegation conditions were clearly defined by the delegation agreement of 1 february 2006; (ii) the delegatee was only authorised to receive subsidies corresponding to the level of expenditure incurred in operating the airport; (iii) the accounts were managed separately; and (iv) checks existed as the competent authorities could request a financial audit at any time. during the veolia operating period: france refers to its previous analysis on the application of the altmark criteria. 6.1.2.2.1.5. compatibility of the infrastructure aid with the criteria of the 2005 guidelines (239) in any event, france considers that the financing of the investments complied with the 2005 guidelines for the reasons set out above, in particular, (i) the measures met a clearly defined objective of general interest; (ii) the investments made were proportional to ensure optimum use of the infrastructure; (iii) there was a satisfactory prospect of medium-term passenger flows; (iv) the rates agreed with ryanair could have been applied to any other airline making similar commitments to ryanair; (v) there was no effect on trade; and (vi) the investments were essential to ensure the airports survival. 6.1.2.3. clarifications on the operational financing (240) france makes clear that the granting of repayable advances without interest charges cannot be treated as subsidies for the purpose of analysing their compatibility with the state aid rules. in this regard, france states that these advances were initially intended to be repaid and that these sums were actually partly repaid. france notes that the amount not repaid on the date of the opening decision has been left pending delivery of the judgment. (241) france points out that certain advances cannot be analysed by the commission because, in its view, the investigation is time-barred. as regards the other advances, it states that these involved compensation for the costs associated with an sgei and were therefore compatible with the internal market. 6.1.3. measure 2: assessment of the aid potentially granted to ryanair (242) france takes the view that the commissions approach of jointly examining the financial flows involved in the airport services agreements and marketing services agreements is fair. (243) france has submitted the ccis draft development incentive plan drawn up in 2005 and stresses that this was not ultimately adopted because it was not sufficient to convince airlines to operate from the airport. france also indicates that no regional or local authority agreed to participate in financing the plan. (244) france considers that, although certain subsidies were granted towards the airports operation, no aid was granted to help finance the agreements with ryanair/ams. france also notes that the charges offered to ryanair were applied to all the airlines operating from the airport. (245) france believes that, when calculating the profitability of a contractual relationship between an airline and the operator of an airport of the size of n mes, given the general interest tasks to be performed, the commission should include only the variable costs attributable to that airline, thereby excluding the fixed costs and the costs associated with performing public service activities. on the income side, france indicates that the analysis should also include the non-aeronautical revenue generated. (246) france also underlines that the payments made to ams cannot be recorded as net losses in the income statement attributable to ryanair because part of this expenditure is closely associated with carrying out the activities covered by the cdsp, in particular the economic and tourism development of the region. france also makes clear that, at the time when the agreement was signed with ryanair, veolia was regarded as a new entrant to the market. as a result, veolia felt obliged to ensure ryanairs presence at the airport in order to develop its activities. this is the same analysis as made of the agreements signed with the cci. (247) finally, france considers that the marketing services agreements signed between the n mes airport operators and ryanair are a common practice at most regional airports, and therefore invites the commission to analyse these practices in a more global context. 6.2. comments from france on the comments submitted by interested third parties following the opening of the formal investigation procedure (248) france did not respond to the comments submitted by interested third parties following the opening of the formal investigation procedure. 6.3. comments from france on the application of the new guidelines to this case (249) france notes that the new guidelines are more flexible on operating aid than the previous guidelines. according to france, their retroactive application to all aid will therefore mean that previous situations at certain airports will be treated less punitively. (250) france notes, however, that investment aid will be assessed more harshly than before under the new guidelines as these lay down maximum aid intensities authorised according to the size of the airport. 6.4. comments from france on the comments submitted by interested third parties on the application of the new guidelines to this case (251) france did not respond to the comments submitted by interested third parties on the application of the new guidelines to this case. 7. assessment of the measures 7.1. measures granted to ryanair/ams (252) as a reminder, the various measures granted to airlines that are examined in this decision are the agreements (66) referred to in recitals 79 to 102 (67). 7.1.1. existence of aid within the meaning of article 107(1) tfeu (253) under article 107(1) tfeu, any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the treaty. (254) for a measure to constitute state aid, the following conditions must be met: (1) the measure in question is financed through state resources and is imputable to the state; (2) the measure confers an economic advantage; (3) the advantage conferred is selective; (4) the measure in question distorts or threatens to distort competition and may affect trade between member states. 7.1.1.1. state resources and imputability 7.1.1.1.1. cci operating period (2000-2006) (255) the various agreements with ryanair and ams that are subject to the formal investigation procedure and that were signed before 31 december 2006 were signed between the airlines, on the one hand, and the cci, on the other hand. (256) chambers of commerce and industry are public bodies under french law. under article l.710-1 of the commercial code, departmental bodies or chambers that are members of the network of chambers of commerce and industry shall each, in their capacity as intermediate state authorities, function as representatives of the interests of industry, commerce and services before public or foreign authorities. they shall act as the interface between the various stakeholders concerned and shall carry out their activities without prejudice to the representation tasks conferred on professional or interprofessional organisations by the laws and regulations in force or to the tasks carried out by local and regional authorities within the context of their administrative freedom. the network and each member departmental body or chamber shall contribute to the economic development, attractiveness and spatial planning of the regions, and shall also support businesses and their associations by fulfilling, under the conditions laid down by decree, any public service mission and any general interest task necessary for the fulfilment of such missions. (257) article l.170-1 of the commercial code also stipulates: to this end, each departmental body or chamber in the network may undertake, in accordance with the applicable sectoral plans, where appropriate: (1) general interest tasks conferred on it by laws and regulations; (2) support, mentoring, liaison and advisory tasks with those starting up or taking over businesses and with businesses in general, in accordance with the applicable laws and regulations on competition law; (3) a support and advisory task to encourage the international development of businesses and the export of their production, in partnership with the french agency for international business development; (4) a task to encourage initial or ongoing vocational training, in particular through public and private educational establishments that it sets up, manages or finances; (5) a task to set up and operate facilities, particularly port and airport facilities; (6) profit-making tasks conferred on it by a public entity or that may prove necessary for the fulfilment of its other tasks; (7) any expert assessment, consultation or research task requested by public authorities on an issue relating to industry, commerce, services, economic development, vocational training or spatial planning, without prejudice to any work that it may initiate. (258) article l.710-1 of the commercial code further stipulates: the assembly of french chambers of commerce and industry, regional chambers of commerce and industry, local chambers of commerce and industry and inter-chamber groups shall be public bodies supervised by the state and administered by elected managers. (259) this legislative provision has changed during the course of the period under review, i.e. from 2000 to 2010. however, its fundamental principles remain the same. throughout this period, chambers of commerce and industry such as the cci have remained public bodies set up by law, administered by elected managers and supervised by the state. furthermore, as intermediate state authorities, they are entrusted with general interest tasks consisting of representing the interests of industry, commerce and services before national and foreign public authorities, contributing to the attractiveness and spatial planning of the regions and supporting business. (260) moreover, the list of tasks of chambers of commerce and industry, given in article l.710-1 of the commercial code and cited in recital 257, shows that their raison d tre and primary objective is to undertake the general interest tasks conferred on them by law, i.e. mainly to represent the interests of industry, commerce and services before public authorities, support local business, and develop the attractiveness and spatial planning of their regions. the industrial and commercial activities of chambers of commerce and industry are ancillary to their general interest tasks and are designed to help undertake those tasks. (261) it should also be noted that national laws lay down specific financing arrangements for chambers of commerce and industry, in particular in article l.710-1 of the commercial code. the resources of chambers of commerce and industry therefore consist in particular of tax revenues (the tax to cover the costs of chambers of commerce and industry, established by article 1600 of the general tax code), subsidies or even resources arising out of training and transport infrastructure operation activities. as a result, chambers of commerce and industry do not have to rely solely on their commercial revenue to cover their costs. this tends to corroborate the conclusion that the industrial and commercial activities of chambers of commerce and industry are ancillary to their general interest tasks and are designed to help undertake those tasks. (262) france has confirmed this conclusion with regard to the cci as it has stated as follows: all the ccis therefore have the task of supporting businesses and citizens in their area. they offer them support in various respects: administration, development and information tools, training, establishment of common structures, infrastructure, etc. at a macroeconomic level, the role of the ccis is to anticipate the future, offer an overall assessment of an areas future and defend its interests before the public authorities in the context of these tasks, the operation of n mes garons airport was particularly important in order to position the latter as a tool for growing and developing economic activity in the area the signature of marketing services agreements with a low-cost airline therefore clearly falls within these tasks, firstly in terms of improving the regions attractiveness and secondly with regard to developing the aviation activities of n mes airport (68). (263) france has added that furthermore, ccis regularly conduct and finance lobbying actions to improve the attractiveness of their areas and promote new facilities. they also conduct specific actions to promote tourism through their participation in various regional and departmental structures in this area, particularly through the regional and departmental tourism committees provided for by articles l.131-4 and l.132-3 of the tourism code a policy of developing the attractiveness of an area requires a series of simultaneous actions to attract capital, markets, businesses, talent, students and tourists who will support local businesses and the region this attractiveness also has an international dimension. low-cost airlines with their websites can contribute to this policy lastly, the regions inhabitants are themselves demanding new routes, a diverse offer and, more specifically, low-cost services so that they can more easily travel to europe at the lowest cost (69). (264) these statements unequivocally confirm that the main raison d tre and objective of the cci are, as for all chambers of commerce and industry, to serve the interests of local businesses as a whole and to contribute to the economic development and attractiveness of the area. frances aforementioned statements also indicate that, for a chamber of commerce and industry such as the cci, a commercial activity such as the operation of n mes airport is not pursued in the interests of profitability, but as a necessary counterpart to the general interest tasks with which this body is invested by law. (265) in the light of all the above, chambers of commerce and industry such as the cci must be regarded as public authorities and all their decisions, just like those of the national government or local and regional authorities, must be regarded as imputable to the state, within the meaning of the case-law on state aid (70), with their resources constituting state resources (71). contrary to what the operators maintain in their comments, it is irrelevant in this respect that chambers of commerce and industry are managed by persons elected by traders and business leaders and representatives. chambers of commerce and industry are, in this respect, like local and regional authorities, which are managed by local elected officials independent of the state (in the strict sense), and not by officials appointed by other public authorities. moreover, national parliaments are also composed of elected representatives. however, these parliaments form one of the basic public authorities in a democratic state. the degree of control exercised by the state (in the strict sense) over the activities of chambers of commerce and industry is entirely irrelevant as these bodies are themselves public authorities. (266) the situation of chambers of commerce and industry is therefore different from that of traditional public undertakings, with regard to which the court of justice stated in the stardust marine judgment (72): even if the state is in a position to control a public undertaking and to exercise a dominant influence over its operations, actual exercise of that control in a particular case cannot be automatically presumed. a public undertaking may act with more or less independence, according to the degree of autonomy left to it by the state therefore, the mere fact that a public undertaking is under state control is not sufficient for measures taken by that undertaking, such as the financial support measures in question here, to be imputed to the state. it is also necessary to examine whether the public authorities must be regarded as having been involved, in one way or another, in the adoption of those measures. (267) in the case of a measure taken by a public undertaking that has the primary vocation of carrying out an economic activity, it must be determined whether the public authorities controlling that undertaking, for example due to the capital share that they hold in said undertaking, are involved in the measure in question. the situation of a chamber of commerce and industry is different in that such a body is itself part of the public administration, or an intermediate state authority, and therefore a public authority created by law to satisfy general interests. as a result, in order to determine whether a decision of a chamber of commerce and industry is imputable to the state (as broadly defined by the case-law on state aid), it is not necessary to determine whether another public authority (for example, the state in the strict sense or a local authority) has been involved in the decision in question. in reality, such a decision necessarily meets the imputability criterion. (268) this approach has previously been taken by the commission in its decision-making practice. accordingly, the commission stated with regard to the chamber of commerce and industry of var that, owing to its status as a public body under french law, it pursues its activity in a defined geographical area, is managed by elected members and has tax resources collected from undertakings registered in the register of trade and companies, and therefore falls within the category of public authorities within the meaning of commission directive 2000/52/ec (73). it is not therefore necessary to determine whether the measure is imputable to the state within the meaning of the stardust marine case-law (74). this analysis also applies to the cci in this case. (269) on the subject of the imputability to the state of the agreements covered by the formal investigation procedure and signed by the cci, the operators have maintained that the commission should prove in concreto the states involvement (in the strict sense) in the measures in question. moreover, according to the operators, the states supervision (in the strict sense) of the cci is insufficient for the decisions to sign the agreements in question to be imputable to the state. in the light of the above, this argument does not stand up as the cci is itself a public authority whose decisions are necessarily imputable to the state within the meaning of the case-law on state aid, regardless of the role played in its decisions by other public authorities, in particular the state in the strict sense. (270) ryanairs comments on this point are substantially similar to those of the cci. ryanair has disputed the imputability to the state of the various measures in question, by arguing that the state (in the strict sense) did not have any influence over the decisions of the chambers of commerce and industry, but simply had a supervisory role whereby measures such as the agreements in question did not require its approval. ryanair has also cited a council of state opinion that suggests that chambers of commerce and industry are independent from the state in the strict sense. according to this opinion, the fact that chambers of commerce and industry answer to the state, in so far as any public body must technically answer to a legal person, does not in itself imply any subordination. for all the reasons given in the above recitals, this argument is without merit as there is no need to ascertain whether any public authorities, other than the cci, are involved in the latters decisions, as it has been proven that the chamber of commerce is part of the public administration. (271) ryanair has also mentioned the fact that not all the resources of chambers of commerce and industry come from taxes, but that they partly come from revenue generated by their economic activities, such as the operation of airports. this argument also does not stand up. in fact, numerous public authorities are in the same situation, in that they pursue economic activities, either directly or through bodies that they control (for example, credit activities or the provision of postal or transport services) and use the revenue from those activities to finance themselves. the pursuit of economic activities by a body does not call into question its status as a public authority. on the contrary, as indicated in recital 261, the fact that a body is at least partly funded by taxes tends to indicate that this body should be regarded as a public authority. (272) likewise, the ccis argument that it operates n mes airport as a private investor within the meaning of the applicable case-law (75) is without merit, as the measures in question were adopted by a public authority and are therefore necessarily imputable to the state (76). (273) the operators have indicated in their comments that the decisions under analysis were taken by the cci in its capacity as operator of n mes airport and set out the conditions of the commercial relations with the airlines. these decisions were therefore clearly taken in the context of activities carried out in competition with private operators. it is sufficient to note in this regard that the current operator of n mes airport vtan is a private company. this argument is without merit because, as indicated above, the measures in question are imputable to the cci as a whole, and not just to the airport arm, and the cci is a public authority whose decisions are all imputable to the state within the meaning of the state aid case-law. (274) in conclusion, the various agreements signed by the cci and covered by this assessment are imputable to the state and involve the use of state resources. 7.1.1.1.2. vtan operating period (2007-2011) (275) the various agreements subject to the formal investigation procedure and signed from 2007 onwards were signed by vtan. in terms of its ownership, vtan is a subsidiary of a privately owned group. this point was particularly highlighted by certain third parties to dispute the involvement of state resources in the various agreements, as well as the imputability of these measures to the state. (276) this argument could possibly be accepted in a traditional concession arrangement in which the conceding owner places its assets at the disposal of a concession-holder in return for fair remuneration, without intervening in any way in the concession-holders commercial policy and without financing its operation. (277) however, this is not the arrangement applicable in this case. for a number of reasons detailed in the following recitals, vtans conduct towards ryanair and ams must not be considered in isolation from that of the sman, which is the group of public authorities acting as concession authority in terms of granting and implementing the public service delegation. on the one hand, vtans commercial policy towards ryanair and ams was largely influenced by a framework established by the sman, which framework led vtan to deviate from the normal conduct of an airport operator free to decide its commercial policy and motivated by the prospect of profits. on the other hand, state resources from the sman were used to finance the airports operation, and therefore the advantages granted to ryanair and ams, the existence of which will be proven further on. (278) with regard to the smans influence over vtans commercial policy towards ryanair and ams, it should firstly be noted that the cdsp entrusted vtan not only with the airports operation but also with the development of traffic (77). this provision is not an empty phrase. in fact, france and the operators have recognised that the cdsp entrusted vtan with the task of economic and tourism development of the area, which requires (i) an increase in passenger flows, generating income and jobs for the regional economy ; and (ii) the development of the enterprise zone situated adjacent to the airport (78). (279) the cdsp therefore constrained and influenced vtans commercial policy towards the airlines, particularly as the development of traffic is not in itself the ultimate goal of a private airport operator entirely free to decide its commercial policy. (280) the goal of such a private operator is in fact to maximise its profitability. however, maximising profitability is not compatible in all circumstances with the development of traffic. as a result, under certain conditions, the requirements of airlines likely to use the airport are such that signing an agreement with them may degrade the airport operators profitability. in such a case, a private operator entirely free to decide its commercial policy would prefer to refrain from such agreements, and give up the associated traffic, rather than degrade its profitability. conversely, an operator bound by a traffic development objective would be ready to conclude such agreements, particularly if it were to receive, from the conceding owner, a subsidy ensuring the operations financial stability with a reasonable profit margin. (281) it should be noted that, when vtan became the airport operator and throughout the period of the various agreements in question, ryanair was the only airline offering scheduled flights from n mes airport. if vtan had refused to sign some of these agreements for profitability reasons, it would have run the risk of ryanair withdrawing routes, reducing frequencies or even terminating all activity from n mes airport. such a choice by vtan would have clearly clashed with the traffic development objective imposed on it by the cdsp. as a result, through the cdsp, the sman influenced vtans conduct towards ryanair and ams. (282) it is not only the cdsp that should be taken into account in this respect, but also the invitation to tender process that led to the airports operation being awarded to veolia transport. accordingly, the smans invitation to tender notice indicated that one of the aims of the delegation was to promote the airport by developing traffic, services and the enterprise zone (79). it also stated that one of the tender selection criteria was the commercial development policy. interested undertakings were therefore clearly invited to commit, in their tenders, to implementing an active traffic development policy. they were particularly encouraged to do so as the sman offered a financial contribution ensuring the operations financial stability. this contribution was in fact intended to compensate for the incremental losses that might occur as a result of attractive commercial conditions being offered to airlines in order to maximise traffic. (283) in the various documents that it sent to the sman during the invitation to tender process, veolia transport was clearly trying to produce a tender that responded to the traffic development objective set by the sman. veolia transport indicated in particular that it share[d] with the authority the desire to increase use of its transport networks and platforms and the associated benefits, and it highlighted its performance in terms of increasing the use of other transport infrastructures that it operated. veolia transport added that it would play a key role in local development and that it would prioritise, in agreement with the authority, several objectives including showcasing the local heritage and the region (80). (284) in these documents, veolia transport also indicated a desire to attract a large number of additional aircraft and passengers and to make the airport into a leading player in the local and regional economy, aware that the dynamics of air traffic drive and support the regions economic activity, by creating around 100 direct and indirect jobs and by injecting approximately eur 70 million per year into the local economy, mainly the tourism sector. veolia transport therefore submitted a marketing plan aimed at confirming and reinforcing the airport as an economic hub by developing its traffic, which is an essential condition for maintaining and increasing jobs and for ensuring its contribution to the local economy, but also by developing associated activities that are vitally important to the region, such as tourism and property, industrial and tertiary development. this plan particularly involved the following main lines of action: (i) consolidation of ryanairs activity and its development by launching a fifth route; and (ii) attraction of other airlines by systematically targeting those airlines likely to serve the airport and by adopting a cost-neutral airline incentive policy. in this context, veolia transport provided traffic growth targets. it also stated: in conclusion, we reaffirm our desire to operate and promote the airport in partnership with the sman in order to develop its economic and tourism impact on the region (81). (285) it is therefore clear that veolia transports response to the invitation to tender was influenced by the traffic development objective set by the sman and, more generally, by the local economic development objectives pursued by the sman, which veolia transport could not ignore and even shared at the time of preparing its tender. the development of traffic and the consolidation and development of ryanairs activity were goals that veolia transport mentioned in its tender and that stemmed directly from the smans objectives. if the sman had been content to select an operator without setting a traffic development objective, veolia transport would have had no reason to commit to such an objective or to the consolidation and development of ryanairs activity. it would have simply proposed the lowest possible amount of the flat-rate contribution, within the bounds necessary to ensure a reasonable profit, in order to gain the concession. (286) in an invitation to tender process such as this one, the successful tenderers tender necessarily binds the latter for the whole term of the concession. this is true in both legal terms and in other respects. an undertaking that sets objectives and makes commitments in response to an invitation to tender organised by a local authority and that subsequently acts in a manner contrary to those objectives and commitments runs the risk of its reputation being compromised among local authorities. an undertaking such as veolia transport, which in 2007 was looking to establish itself in the airport operation market, would not have run such a risk. as a result, vtans conduct towards ryanair/ams from 2007 was fundamentally influenced by the traffic development objective set by the sman and by the fact that the latter had selected, to operate the airport, an undertaking that had submitted a tender clearly designed to respond to that objective. (287) this influence is evident from the fact that veolia transport knew, during the invitation to tender process, that the commercial relations with ryanair were likely to harm the profitability of the airports operation. the documents that veolia transport has submitted in this procedure indicate for example: moreover, in the long term, the replacement of ryanairs activity (company benefiting from particularly favourable conditions at the airport) could be positively offset by the arrival of companies likely to accept less economically burdensome conditions for the airport operator (82); the transfer of the risk, above [ ] %, by the delegating authority is justified by the strategic nature for the gard economy of the tourist traffic brought by ryanair; in fact, as we explained in our tender, the arrival of this company (under particularly advantageous conditions) has negative economic implications for the airports operation, but quite clearly positive implications for the local economy (83); ryanair typically chooses small or medium-sized airports, particularly in france, with which the company negotiates extremely advantageous material and/or financial conditions (84); all in all, adding together the main agreement and the airport marketing services agreement, the operations with ryanair result in a negative turnover (between eur [ ] thousand and eur [ ] thousand according to the bid and traffic configurations, i.e. an average cost to the airport per outbound passenger of around eur [ ] to eur [ ] excluding tax per head) (85). these various statements tend to confirm that, if vtan had been free to operate the airport with the sole aim of maximising its profits, it would not have been prepared to pursue with ryanair/ams a commercial relationship such as that established by the cci and that it regarded as a net cost to the airport. it may therefore be concluded that vtan was prepared to pursue this relationship under similar conditions only in the light of the smans traffic development objectives, vtans commitments made to the latter in this respect in order to win the airport operation concession, and the flat-rate contribution ensuring the concessions financial stability. (288) it should be recalled that the profitability of the concession for vtan relied on the flat-rate operating subsidy paid by the sman, which therefore participated directly in financing the airports operation. the existence of this subsidy, granted by the sman, demonstrates the latters influence over vtans commercial relations with ryanair/ams. without this subsidy, it is likely that no operator would have agreed to operate the airport under a concession for which the economic model was based on a traffic development objective and relations with an airline that were likely to result in a negative margin for the airports operation. the granting of this subsidy, which is imputable to the sman, was therefore one of the elements that allowed the various agreements covered by this investigation to be signed from 2007. (289) it should be noted in this respect that the amount of the contribution was calculated (and accepted by the sman) based on a provisional budget drawn up by veolia transport, which incorporated the costs and revenues associated with the agreements in force between the cci and ryanair/ams, and vtans best estimates as regards their renegotiation. the sman therefore granted vtan a contribution that was designed to allow ryanairs activity to continue under similar conditions to those under which this airline had offered its services from n mes airport when the cci was operating the airport. (290) furthermore, it should be noted that the cdsp provided for the flat-rate contribution to be adjusted to a certain extent according to ryanairs activity. as a result, the sum of eur 1,3 million per year envisaged in the reference scenario was to be reduced to eur 1,1 million in a downturn scenario corresponding to a reduction in ryanairs activity likely to allow the airports second staff team to be axed. two lessons can be drawn from this adjustment. firstly, this adjustment illustrates the fact that, in 2007 and in the light of the ccis experience, veolia transport and the sman expected that a reduction in ryanair traffic would result in an improvement in the airports profitability. otherwise they would have planned to increase the flat-rate contribution, and not reduce it, in the downturn scenario. this once again illustrates the fact that the smans objectives and the terms of the cdsp led vtan to adopt a commercial policy towards ryanair that it would have regarded as aberrant and would not have pursued if it had been entirely free to determine this policy. (291) the second lesson to be drawn from this adjustment is that, for the sman, this represented a further way of influencing vtans conduct towards ryanair, by reducing the incentives for vtan to adopt decisions likely to result in a reduction in ryanair traffic. (292) in the light of all the above, it is clear that, through the invitation to tender process, the objectives set in the cdsp and the flat-rate contribution established by the latter, the sman exerted a decisive influence over the decisions taken by vtan with regard to ryanair and ams. it cannot be disputed, as highlighted by france and the operators, that vtan enjoyed a certain freedom when negotiating its agreements with ryanair and ams (86). in fact, it cannot be clearly established, in the light of the facts on record, that the sman made specific decisions on the contents of the various agreements. moreover, as underlined in substance by france, the operators and ryanair, there was no automatic link between the amount of the flat-rate contribution and the parameters of the agreements negotiated with ryanair and ams, such that vtan was not deprived of any incentive to limit the net costs caused by the agreements signed with ryanair. (293) however, in view of the facts presented in this section, the framework laid down by the sman through the invitation to tender process, the objectives set in the cdsp and the flat-rate contribution had a sufficiently decisive influence on vtans conduct towards ryanair and ams that the agreements in question can be regarded, pursuant to the state aid case-law, as imputable to the state, even though, in terms of its ownership, vtan forms part of a privately owned group. (294) france and the operators have stated that n mes airport was the first regional airport operated by veolia transport. they consider that this position as a new entrant justified the need for vtan to ensure ryanairs presence and develop the airport, if necessary through an initial loss, in order to allow it to acquire the experience needed to develop its airport operation activity. however, this argument does not invalidate the conclusion that, without the flat-rate contribution or the traffic objective set by the sman and transcribed into commitments made by veolia transport in response to the invitation to tender, veolia transport would not have agreed to become the airport operator or, if it had agreed to do so, to sign the agreements in question with ryanair/ams. (295) neither france nor vtan have provided any analysis showing that, in such a scenario, the net cost caused by the agreements with ryanair/ams would have been offset by future benefits resulting for the veolia transport group from this initial airport operation experience. furthermore, neither france nor vtan have explained why, in such a scenario, vtan could not have chosen to acquire similar experience at other airports where the net cost would have been lower, or even negative. the argument put forward by france and the operators regarding veolia transports position as a new entrant at n mes airport does not therefore alter the fact that there is a clear link between, on the one hand, the objectives set by the sman in the invitation to tender and in the cdsp and the flat-rate contribution and, on the other hand, the agreements signed by vtan with ryanair and ams. (296) added to the above considerations are three more minor and non-essential elements that reinforce the merits of this conclusion. firstly, according to france, in its proposals submitted to the sman in the invitation to tender process, vtan indicated that, if it were delegated the public service, it would remain in close contact with the sman during the negotiation phase with ryanair in order to inform the sman about the progress of the discussions, and proposed that, if necessary and at the smans discretion, the latter could also participate directly in the negotiation (87). according to france, the sman never expressed a desire to become involved in these negotiations. however, the simple fact that it had the option to do so gave it a certain degree of influence over these negotiations. for example, it could have intervened if vtan had tried to impose conditions on ryanair that may have prompted the latter to reduce its traffic at n mes airport. (297) secondly, it was the sman that was responsible for setting the airport charges, pursuant to article 28 of the cdsp. as a result, even though vtan negotiated the other elements of its commercial relations with the airlines (prices of the ground handling services, marketing payment), the sman had an influence over the commercial relations between vtan and ryanair as the agreements signed with the latter referred, with regard to the airport charges, to the general airport charges set by the sman. (298) thirdly, it is clear from the cdsp that most of the investment to be made at n mes airport was the responsibility of the sman and its member authorities. in this way, the sman exerted a certain degree of influence over the airports operation, as it was in a position to improve the quality or capacity of the airport infrastructures in order to make them more attractive to the airlines and thus improve the profitability of this operation for vtan. (299) it is clear from all the above that there is a significant and undeniable link between, on the one hand, the terms of the cdsp, as agreed by the sman with veolia transport in accordance with the smans traffic development objectives, the invitation to tender process organised by the sman and the flat-rate contribution granted by the sman and, on the other hand, the agreements signed by vtan with ryanair and ams. although this causal link is not absolute and exclusive, in that the agreements in question also partly stem from a degree of commercial freedom enjoyed by vtan, it is strong enough to prove that the public authorities and the sman in particular were clearly involved in the measures in question. consequently, these measures must be regarded as imputable to the sman, and therefore to the state in the broad sense. (300) as indicated in recital 288, the financial stability of the airports operation relied on the flat-rate contribution granted by the sman, the amount of which was determined, among other aspects, according to the parameters of the commercial relationship between the cci and ryanair/ams in 2006 and therefore in order to allow ryanairs activity to continue under similar conditions to those under which this airline had offered its services from n mes airport when the cci was operating the airport. the advantages conferred by these agreements, the existence of which shall be proven in the following section, were therefore financed through this flat-rate contribution, and consequently through state resources. (301) in conclusion, the various agreements signed by vtan and covered by this assessment are imputable to the state and involve the use of state resources. 7.1.1.2. selective advantages granted to ryanair/ams (302) in order to determine whether a state measure constitutes aid, it is necessary to establish whether the recipient undertaking receives an economic advantage that it would not have obtained under normal market conditions (88). (303) in order to make this assessment, the market economy operator (meo) test should be applied to the measures in question. this involves determining whether a hypothetical meo acting in place of the operators and motivated by the prospect of profits would have entered into similar agreements. (304) in order to correctly apply this test, a number of questions should be answered first, particularly the following: should the conduct of the cci-airport be assessed in isolation, or should its conduct in fact be assessed together with that of the cci as a whole? likewise, should the conduct of vtan be assessed in isolation, or should its conduct in fact be assessed together with that of the sman? should a marketing services agreement and an airport services agreement that were signed at the same time be analysed separately or together? in applying the meo test to the marketing services agreements, should the cci and vtan be regarded as having respectively acted as operators of n mes airport or as entities purchasing marketing services in the context of a local economic development mission, regardless of their function as airport operator? what benefits could a hypothetical meo have expected from the marketing services agreements? what, for the purposes of applying the meo test, is the relevance of comparing the terms of the airport services agreements covered by the formal investigation procedure with the airport charges invoiced at other airports? (305) after answering these questions, the commission will apply the meo test to the various measures in question. 7.1.1.2.1. joint assessment of the conduct of the cci-airport and the cci as a whole (306) in applying the meo test, the conduct of the cci as a whole, and not just that of its arm operating the airport, should be taken into account. as explained above (see footnote 69), the cci-airport did not have its own legal personality distinct from that of the cci and the various agreements were signed by the cci president or under his control. the cci-airport was not a distinct entity with its own decision-making autonomy, other than with regard to the day-to-day operation of the airport. it therefore follows that the conduct of the cci-airport and the cci as a whole must be assessed together, in terms of their relations with the airlines and their subsidiaries, in order to apply the meo test. 7.1.1.2.2. joint assessment of the conduct of vtan and the sman (307) as explained in detail in the assessment of the imputability to the state of the agreements signed by vtan, through the invitation to tender process organised by the sman in 2006, the objectives set in the cdsp and the flat-rate contribution established by the latter and granted by the sman, the latter exerted a decisive influence over the decisions taken by vtan with regard to ryanair and ams. (308) as a result, the conduct of vtan and the sman must be assessed together, in terms of their relations with the airlines and their subsidiaries, in order to apply the meo test. (309) in this respect, it is clear from the judgment of the general court in the charleroi case that, when applying the meo test, the conduct of two distinct entities towards a third party may, in certain circumstances, have to be assessed jointly, as if these two entities were one entity, where there are close links between them (89). unlike in the charleroi case, in the present case there is no control relationship, in the sense of ownership, between the sman and vtan. however, as shown in paragraph 275 et seq., there are sufficiently close economic links between these two entities, likely to substantially influence vtans conduct towards ryanair/ams, for the measures in question to be regarded as the result of the conduct of both these two entities. 7.1.1.2.3. joint analysis of the airport services agreements and marketing services agreements (310) for the purposes of applying the meo test, the commission must determine whether the airport services agreements and marketing services agreements should be assessed together. (311) in the opening decision, the commission considered as a preliminary point that each marketing services agreement should be assessed jointly with the airport services agreement signed at the same time, for the purposes of applying the meo test. this approach particularly involves each of the following sets of agreements being treated as a single measure: 7.1.1.2.3.1. cci operating period (2000-2006): airport services agreement signed on 10 october 2005 with ryanair and marketing services agreement signed on the same date with ams (90), 7.1.1.2.3.2. vtan operating period (2007-2012): airport services agreement signed on 2 january 2007 with ryanair and marketing services agreement signed on the same date with ams, amendment of 1 august 2007 to the marketing services agreement of 2 january 2007 and implicit airport services agreement applying the terms of the airport services agreement of 2 january 2007 to the n mes-charleroi route, the operation of which during the 2007-2008 winter season constituted, according to france, the counterpart to the payment for the additional marketing services stipulated by this amendment, airport services agreement signed on 1 november 2007 with ryanair and marketing services agreement signed on the same date with ams, airport services agreement signed on 27 august 2008 with ryanair and marketing services agreement signed on the same date with ams, amendment of 25 august 2009 to the airport services agreement of 27 august 2008 and amendment of 25 august 2009 to the marketing services agreement of 27 august 2008, amendment of 30 november 2010 to the marketing services agreement of 27 august 2008 and implicit airport services agreement applying the terms of the airport services agreement of 27 january 2008 to the n mes-liverpool route, the operation of which constituted, according to france, the counterpart to the payment for the additional marketing services stipulated by this amendment (91). (312) france has stated that it agrees with the approach taken in the opening decision to analyse together the airport services agreements and marketing services agreements signed at the same time. on the other hand, certain interested third parties, particularly the operators and ryanair, question this approach as they consider that the marketing services agreements should be analysed separately. (313) however, the facts on record confirm that the approach taken in the opening decision, and approved by france, is well-founded. firstly, each marketing services agreement was signed on the same date as an airport services agreement, except in the case of certain amendments to existing marketing services agreements. however, the amendments in question amended marketing services agreements that were themselves signed at the same time as airport services agreements. furthermore, certain amendments to marketing services agreements were concluded in return for ryanairs operation of certain routes or frequencies. this was the case, for example, with the amendment of 30 november 2010, which provided for additional marketing payments that, according to france, were the counterpart to ryanairs operation of a route to liverpool. in the light of the general reasoning developed in this section, an implicit airport services agreement applying, to the routes or frequencies in question, the airport charges and ground handling charges resulting from the existing airport services agreement corresponding to the marketing services agreement amended by the amendment in question can be associated with this amendment. (314) moreover, the two types of agreement were signed by the same parties. ams is a wholly-owned subsidiary of ryanair and its managers are senior ryanair executives. ams acts in ryanairs interests and under its control, and amss profits go to ryanair in the form of dividends or increased company value. moreover, as will be detailed further on, the various marketing services agreements were connected with the operation of certain air routes by ryanair from n mes airport. the marketing services agreements in fact indicate that they are rooted in ryanairs commitment to operate these routes, and they were also signed at the same time as airport services agreements with ryanair for these same routes. consequently, the fact that the marketing services agreements were signed by the airports operators with ams and not ryanair cannot prevent a marketing services agreement and an airport services agreement that were signed at the same time from being regarded as forming a single transaction, particularly for the purpose of analysing these agreements in the light of the meo test, and in the context of this analysis, ryanair and ams from being regarded as forming a single economic entity. (315) lastly, a number of other facts, set out in recitals 313 to 314, reveal additional very close links between, on the one hand, each marketing services agreement and, on the other hand, the corresponding airport services agreement. firstly, france has itself highlighted the link between the marketing payments and the routes operated by ryanair: the marketing aid formed an integral part of the route development plan put in place by the cci and relevant authorities. for these authorities, this was a support tool aimed at attracting new passengers through new services. moreover, the airline made commitments in terms of both the number of aircraft made available and the number of passengers carried. the achievement of these load factor targets ensured a direct return on these sums for the local economy (92). it is clear from this statement that the marketing payments were an integral part of the commercial relationship between the cci and ryanair for the operation and development of routes. it is also clear that their purpose was not to generally promote travel to n mes and its region, but to specifically promote the use of ryanairs transport services, which was the only airline offering scheduled flights from n mes airport from 2003 onwards. this logic is also valid for vtan, which clearly pursued the same policy as the cci, spurred on by the sman. (316) moreover, the commission notes that the provisional operating accounts, based on which the flat-rate contribution granted to vtan from 1 january 2007 was calculated, take into account the payments made to ryanair and ams, with fixed amounts of around eur 1,6 million per year on average throughout the term of the cdsp, in the reference scenario. the commission therefore understands that the marketing payments made to ryanair/ams were regarded by vtan and the sman as an integral part of the commercial framework between the airport and ryanair. (317) an examination of each marketing services agreement signed by ams also reveals the extremely close link between each of these agreements and the airport services agreement signed in parallel by ryanair. (318) accordingly, the marketing services agreement signed between the cci and ams on 10 october 2005 was concluded for a term of five years, just like the airport services agreement signed on the same date. moreover, it stipulates, in relation to its object, that it is based on ryanairs commitment to operate certain routes (93), which are identical to those referred to in the airport services agreement. this wording unequivocally shows that the marketing services agreement would very likely not have existed if ryanair had not operated the routes covered by the airport services agreement. (319) the preamble to the marketing services agreement also states as follows: [airport marketing services] is the only company that has the potential and technical ability to target large numbers of potential ryanair passengers in order to promote the tourist and business attractions in the region (94). this wording tends to confirm that the primary objective of the marketing services agreement is not to promote n mes and its region in general, but, much more specifically, to maximise sales of ryanair tickets to n mes by promoting this region. (320) furthermore, according to the marketing services agreement, the services to be provided by ams consist in inserting messages and links on the n mes destination page of the ryanair website, and inserting a link to the website designated by the cci on the english homepage of the same website. however, the n mes destination page of the ryanair website is mainly targeted at people who have already decided to use or are likely to consider using ryanairs services to n mes. as for the website homepage, this is certainly targeted at a much wider audience, but only its english version is covered by the marketing services agreement. this further indicates that the marketing services are essentially designed to promote ryanairs services between n mes and london, and not equally passenger traffic to n mes and its region. if they were designed to promote n mes and its region to all tourists and business travellers likely to be interested in the region, the cci would in all likelihood have asked for the link to a website of its choosing to be placed on all, or at least several versions of, the ryanair website homepage, and not just the english version. (321) lastly, the marketing services agreement of 10 october 2005 stipulates about itself as follows: as it is rooted in ryanair presence in nimes airport, this agreement will be terminated if ryanair ceases to be present in nimes airport for any reason or if the airport services agreement between ryanair and [cci] dated 10 october 2005 is terminated (95). this provision clearly links the applicability of the two agreements and therefore highlights the link between them. (322) similar elements can be found in the marketing services agreements signed by vtan and ams on 2 january 2007, 1 november 2007 and 27 august 2008 (96). each of these agreements was in fact concluded for an identical term to that of the airport services agreement signed on the same date. moreover, each of these agreements explicitly stipulates that it is rooted in ryanairs commitment to operate certain routes, accompanied by certain frequencies, which are identical to those indicated in the corresponding airport services agreement. the preamble of each of these agreements also states as follows: [airport marketing services] is the only company that has the potential and technical ability to target large numbers of potential ryanair passengers in order to promote the tourist and business attractions in the region (97). (323) furthermore, according to these marketing services agreements, the services to be provided by ams consist in inserting messages and links on the n mes destination page of the ryanair website, inserting a link to the website designated by the cci on the english, belgian and dutch homepages of the same website (quite clearly reflecting the points of origin of the ryanair air routes to n mes airport) and, in certain cases, inserting a button on the discover europe page of the website. the discover europe page is easily accessible from all versions of the ryanair homepage. although it promotes the attractions of various destinations by means of buttons, it specifically promotes ryanair flights to those destinations. the marketing services are therefore, once again, primarily targeted at those people who are most likely to use ryanairs services to n mes. (324) on reading the amendment of 30 november 2010 and the email exchanges between ryanair and vtan that gave rise to this amendment, and in the light of the explanations provided by france, it appears that ryanair made the operation of three weekly services instead of two on the n mes-liverpool route during the 2011 summer season conditional upon the additional marketing payment of eur [35 000-65 000] stipulated in the amendment. an email from a ryanair representative to a vtan representative dated 29 november 2010 indicates in particular: yes the frequencies will be there for and in return you will give us the (98). this email illustrates the close link between ryanair and ams, by showing that ryanair was negotiating conditions with vtan that concerned both the airport services and the marketing services provided and billed by ams. once again, the existence of a close link between the amendment and certain routes operated by ryanair (in this case, n mes-liverpool) cannot be disputed. the same is true for the amendment of 1 august 2007, which, according to france, was a condition for the ryanair service to charleroi to be maintained for the 2007-2008 winter season. (325) these elements of the various marketing services agreements show that the marketing services stipulated in these agreements are, in terms of both their duration and their nature, closely linked to the air transport services offered by ryanair, as defined in the marketing services agreements and covered by the corresponding airport services agreements. the marketing services agreements even indicate that they are rooted in ryanairs commitment to operate the transport services in question. far from being designed to generally and equally increase travel to n mes and its region by tourists and business travellers, the marketing services specifically target those persons likely to use the ryanair transport services covered by the marketing services agreements, and therefore have the primary objective of promoting those services. (326) the marketing services agreements are therefore indissociable from the airport services agreements signed at the same time and from the air transport services that form their purpose. the facts presented in the above recitals also indicate that, in the absence of the air routes in question (and therefore the associated airport services agreements), the marketing services agreements would not have been signed. as stated in recital 321, the marketing services agreements explicitly indicate that they are rooted in ryanairs commitment to operate certain air routes. they also provide for marketing services that are essentially intended to promote those routes. (327) in this respect, the operators argument that these two types of agreement should be analysed separately because they have very different objects and the conditions of one do not in any way depend on the conditions of the other (99) is without merit. it is in fact clear from the above that the marketing services agreements form an integral part, together with the airport services agreements, of the commercial relations between ryanair and the operators with regard to the operation of those air routes covered by these two types of agreement. (328) furthermore, it seems that, before signing the marketing services agreements in question, the operators did not organise an invitation to tender nor did they consult various potential providers in order to compare their offers. more generally, they did not consider any providers other than ams for the services in question. this confirms the existence of the close link of dependency between the marketing services agreements and the air routes operated by ryanair from n mes airport. if the marketing services agreements had been truly independent of the airport services agreements, the operators would in all likelihood have consulted other providers in addition to ams. (329) in conclusion, given all the above, each marketing services agreement and the corresponding airport services agreement should be analysed as a single measure in order to determine whether this agreement constitutes state aid. 7.1.1.2.4. method of applying the meo test to the operators in order to assess the marketing services agreements (330) in order to apply the meo test to the marketing services agreements, the hypothetical meo to be used for analysing the conduct of the operators must be identified. (331) one approach would be to consider that the operators signed the marketing services agreements as airport operators (100), and therefore to compare their conduct with that of a hypothetical airport operator motivated by the prospect of profits. (332) another approach would be to consider that the operators acted as bodies entrusted with a general interest task, namely the economic development of n mes and its region, and that they purchased these marketing services in order to perform that task, regardless of their capacity as the operator of n mes airport. this second approach would be based in the fact that the cci is invested by law with such an economic development task, whilst, according to france, vtan was entrusted with this task by the sman through the cdsp. as indicated above, according to france and the operators, the cdsp entrusted vtan with the task of the economic and tourism development of the area. (333) in the context of this second approach, according to the case-law, it would need to be verified, firstly, that the services in question met the actual needs of the public purchaser (101) and, secondly, that they were purchased at a price equal to or below a market price (102), i.e. that an meo motivated by the prospect of profits and needing equivalent services (without necessarily being an airport operator) would have been prepared to accept similar conditions to those accepted by the operators. (334) the comments of certain interested third parties tend to favour the second approach, at least implicitly. in particular, notably in its study of 20 december 2013, ryanair has provided information intended to show that the price of the ams marketing services did not exceed what may be regarded as a market price for such services. further to this argument, it has noted that airport operators cannot be distinguished from other types of ams customer. (335) as regards the period after 31 december 2006, the operators have provided information along the same lines, in particular: it should be recalled that, during the vtan operating period, all or part of the ams expenditure was actually incurred within the context of vtans public service mission to promote the area and its economic and tourism development. (336) the commission considers that, out of the two approaches indicated in the above recitals, the second one must be rejected because it inherently ignores the indissociable nature of the airport services agreements and corresponding marketing services agreements, as found previously. this approach would essentially mean considering that the operators signed the marketing services agreements without any regard to the air routes offered by ryanair from the airport that they operated, and that they would have signed these agreements even in the absence of the air routes in question and the corresponding airport services agreements. for the reasons detailed above, such an assumption is highly unlikely. (337) moreover, even if this second approach were used, it would not lead to the conclusion that the marketing services agreements did not confer an economic advantage on ryanair and ams. (338) as noted in recital 333, in order for purchases made by a public entity not to confer an economic advantage on the seller, it is not enough for them to have been made at a price equal to or below market price. they must also meet an actual need of the public purchaser. (339) it cannot be categorically ruled out that, in performing its economic development task for n mes and its region, an entity such as the cci or vtan may feel the need to resort to commercial providers in order to promote the area. however, in the present case, this promotion targets the commercial activities of two clearly defined undertakings, namely ryanair and the n mes airport operator. (340) a public entity cannot consider that marketing services mainly promoting the activities of one or more clearly defined undertakings form part of this entitys specific task of promoting local economic development. it is logical for such an entity to start from the assumption that local undertakings must carry out or finance their own marketing operations, and that its own actions are limited to the general promotion of the area and local economic fabric, without targeting specific undertakings. (341) any other approach would mean considering that an entity responsible for local economic development could, without such measures constituting state aid, purchase marketing services that mainly promote the products or services of certain locally established undertakings, on the grounds that these services encourage local economic development and that they are purchased at market price. such an approach would circumvent article 107(1) tfeu. (342) as a result, it seems that the marketing services purchased by the operators from ams/ryanair cannot be regarded as meeting an actual need of the operators as entities invested with a local economic development task. this conclusion is confirmed by certain information provided by france, according to which, in particular, it is clearly not common practice for ccis that do not operate an airport to purchase marketing services from airlines (103). this statement also tends to confirm that, with regard to the agreements signed before 2007, the marketing services in question were actually purchased by the cci in its capacity as n mes airport operator, and not as an entity responsible for a local economic development task. (343) consequently, applying the second approach envisaged in recital 332 would lead to the conclusion that the marketing services agreements confer an economic advantage on the undertakings having provided these services and on the airlines having directly benefited from the marketing services. as a result, based on this approach, the marketing services agreements signed with ams would constitute aid to ams as the provider of the marketing services and aid to ryanair as the direct and main beneficiary of these services. (344) furthermore, when an entity makes purchases in the performance of its general interest tasks, it is normally expected to minimise its expenditure by organising an invitation to tender, or at the very least by consulting several providers and comparing their offers. this is particularly the case with highly individual goods or services for which there are no clear market price benchmarks, which is plainly the case with marketing services. however, it seems that the operators did not consider any providers other than ams for the marketing services in question. this finding confirms that the second approach is unsuitable. (345) furthermore, france has indicated that the french ccis conduct specific actions to promote tourism through their participation in various regional and departmental structures in this area, particularly through the regional and departmental tourism committees (104). however, the marketing services agreements signed by the cci, which particularly aimed, according to the operators, to promote the tourism and business attractions of n mes and its region, were signed directly by the cci, without any intervention by local structures responsible for tourism promotion. this is an additional factor that tends to confirm that the cci signed the marketing services agreements prior to 31 december 2006 as the airport operator. this conclusion is further unequivocally confirmed by the operators in the following passage of their comments: in this case, the decisions under analysis were taken by the cci in its capacity as operator of n mes airport and set out the conditions of the commercial relations with the airlines. (346) in order to apply the meo test, the conduct of the cci and vtan respectively should therefore be compared to a hypothetical meo, motivated by the prospect of profits and operating n mes airport in their place. 7.1.1.2.4.1. benefits that an meo could have expected from the marketing services agreements and price that it would have been willing to pay for those services (347) it is clear from all the above that, in order to apply the meo test to the marketing services agreements in question, these agreements must be analysed together with the corresponding airport services agreements, as they form a single transaction with the latter (105), and that the operators conduct must be assessed in relation to the conduct of a hypothetical meo operating n mes airport in their place. (348) in analysing each of the transactions in question, the benefits that this hypothetical meo, motivated by the prospect of profits, could expect from the marketing services should be determined. this analysis should not take into account the general impact of such services on the regions tourism and economic activity. only the effects of these services on the airports profitability may be considered, as it is these alone that would be taken into account by the hypothetical meo used in this analysis. (349) marketing services may boost passenger traffic on the air routes covered by the marketing services agreements and corresponding airport services agreements, as they are designed to promote these routes. although this effect primarily benefits the airline, it does also benefit the airport operator. an increase in passenger traffic may lead, for the airport operator, to an increase in revenue from certain airport charges and from non-aeronautical revenue from car parks, restaurants and other businesses. (350) there can therefore be no doubt that a hypothetical meo operating n mes airport would have taken this positive effect into account when considering entering into a marketing services agreement and the corresponding airport services agreement. the meo would have taken into account the impact of the air routes in question on its future revenues and costs by, in this context, forecasting a number of passengers using these routes that would have reflected the positive effect of the marketing services. this effect would have been assessed for the entire operating period of the routes in question, as set out in the airport services agreement and marketing services agreement. (351) the commission accepted this point during the procedure as, when it invited france to reconstruct the revenue and cost forecasts that an meo would have made before entering into marketing services agreements and airport services agreements, it proposed that france take into account the effects of the marketing services agreements on expected traffic. when an airport operator enters into an agreement for the promotion of certain air routes, it is normal to predict a fairly high load factor (106) for the air routes in question, which may be taken into account when assessing future revenues. in this respect, the commission notes ryanairs opinion that marketing services agreements do not generate only a cost for the airport operator, but also, potentially, a benefit. (352) it should be determined whether a hypothetical meo could reasonably expect and quantify benefits other than those resulting from the positive effect on passenger traffic for the air routes covered by the marketing services agreement for the operating period of those routes, as set out in the marketing services agreement or airport services agreement. (353) certain interested third parties support this argument, in particular ryanair in its study of 17 january 2014 (107). this study of 17 january 2014 is based on the premise that marketing services purchased by an airport operator may help to improve the airports brand image and, as a result, to sustainably increase the number of passengers using this airport, and not just the numbers on the air routes covered by the marketing services agreement and the airport services agreement over the operating period set out in these agreements. in particular, ryanair found in its study that these marketing services may have a lasting positive impact on passenger traffic at the airport, even after the marketing services agreement has expired. (354) it should first be noted that there is nothing in the records to suggest that, when the marketing services agreements covered by the formal investigation procedure were signed, the operators ever considered, and still less quantified, any positive effects of the marketing services agreements going beyond the air routes covered by these agreements or, in terms of time, extending beyond the expiry of these agreements. moreover, neither france nor the operators have proposed any method for estimating the possible value that a hypothetical meo operating n mes airport would have given to these effects when assessing whether to enter into the marketing services agreements and airport services agreements. (355) as stated above, the marketing services purchased from ams were mainly targeted at those people likely to use the air routes covered by the marketing services agreement, namely only those scheduled air routes offered to n mes. (356) furthermore, the sustainability of these effects also seems very doubtful. it is possible that advertising n mes and its region on the ryanair website may have encouraged people visiting this website to buy ryanair tickets to n mes when this advertising was first posted or just after. however, it is unlikely that the effect of this advertising on visitors lasted or had an influence on their ticket purchases for more than a few weeks after it was posted on the ryanair website. an advertising campaign is more likely to have a sustainable effect when the promotional activities involve one or more advertising media to which consumers are regularly exposed over a given period. for example, an advertising campaign on general television and radio stations, various websites and/or various billboards displayed outdoors or inside public places may have such a sustainable effect if consumers are passively and repeatedly exposed to these media. however, promotional activities limited to certain pages of ryanairs website alone are unlikely to have an effect that lasts much beyond the end of the promotion. (357) it is very likely that most people will not visit ryanairs website often enough to leave them with a lasting impression of the advertising for this region. this observation is well supported by two factors. (358) firstly, under the various marketing services agreements, the promotion of the n mes region on ryanairs homepage was limited to the presence of a single link to a website designated by the operators for limited and, in some cases, very brief periods, in particular: seven days per year for five years according to the 2005 agreement, increased by 26 and three days per year in line with the respective launch of the third and fourth routes stipulated by the agreement, 27 days on the english page and 60 days on the belgian and dutch pages according to the agreement of 2 january 2007, 33 days on the english page and 60 days on the belgian and dutch pages according to the agreement of 1 november 2007, and 32 days on the english page and 60 days on the belgian and dutch pages according to the agreement of 27 august 2008. (359) both the nature of these promotional activities (presence of a single link with limited promotional value) and their short lifespan would have significantly limited the effect of these activities beyond the end of the promotion, particularly as these activities were limited to ryanairs website alone and were not supported by any other media. in other words, these promotional activities were highly unlikely to leave those people exposed to these activities with a lasting impression of the advertising in question and a lasting interest in n mes and its region. (360) secondly, the other marketing activities included in the agreements signed with ams involved the n mes destination page of the website and the discover europe page, where it was only intended to insert a button, as well as email advertising. as a general rule, this last type of promotional activity is targeted only at an audience that is by definition limited, without recipients being frequently exposed to this advertising. furthermore, with regard to the n mes destination page of the ryanair website, this is likely to be even less visited by a given person than the websites homepage, since it is devoted to a specific ryanair destination and not to all its activities. it is therefore unlikely to leave those persons accessing this page with a lasting impression of the attractions of n mes and its region. moreover, the n mes page of the ryanair website is very likely to be accessed, most of the time, as a result of a potential interest in this destination or in ryanairs services to this destination. the advertising on this page is therefore unlikely to generate new interest in this destination among people unaware of or not having any interest in this destination. as regards the discover europe page, this promotes a large number of destinations by means of buttons. although it undoubtedly allows potential travellers to make a short-term choice between several travel destinations, it is unlikely to generate a lasting interest in a particular destination from among all those presented. (361) as a result, although the marketing services may have increased passenger traffic on the air routes covered by the marketing services agreements for the period of those services, it is very likely that this effect after this period was zero or negligible. (362) moreover, the ryanair studies of 17 and 31 january 2014 indicate that the likelihood of the benefits of the marketing services agreements going beyond the air routes covered by these agreements or lasting beyond the operating period of these routes, as set out in the marketing services and airport services agreements, was extremely small and could not be quantified with a degree of reliability that would be considered sufficient by a prudent meo. (363) accordingly, for example, the study of 17 january 2014 indicates as follows: however future incremental profits beyond the scheduled expiry of the airport service agreement are inherently uncertain (108). furthermore, this study proposes two methods for the ex ante assessment of the positive effects of marketing services agreements: a cash flow approach and a capitalisation approach. (364) the cash flow approach involves assessing the benefits of the marketing services agreements and airport services agreements in the form of future revenues generated for the airport operator by the marketing services and by the airport services agreement, minus corresponding costs. in the capitalisation approach, improvement of the airports brand image through the marketing services is treated as an intangible asset, acquired for the price set out in the marketing services agreement. (365) however, the study highlights the major difficulties presented by the capitalisation approach and shows that the results produced by this method are unreliable. it suggests that the cash flow approach would be better. in particular, the study states: the capitalisation approach should only take into account the proportion of marketing expenditure that is attributable to the intangible asset base of an airport. however, it may be difficult to identify the proportion of marketing expenditure that is targeted towards generating expected future revenues for the airport (i.e., an investment in the intangible asset base of the airport) as opposed to generating current revenues for the airport (109). it also stresses that in order to implement the capitalisation-based approach, it is necessary to estimate the average length of time that an airport would be able to retain a customer due to the ams marketing campaign. in practice, it would be very difficult to estimate the average period of customer retention following an ams campaign due to insufficient data (110). (366) the study of 31 january 2014 proposes a practical application of the cash flow approach. in this approach, the benefits of the marketing services agreements and airport services agreements that last even after the marketing services agreement has expired are expressed as a terminal value calculated on the agreements expiry date. this terminal value is calculated based on the incremental profits expected from the airport services and marketing services agreements in the final year of application of the airport services agreement. these profits are projected into the following period, the term of which is equal to the term of the airport services agreement, adjusted by the growth rate of the air transport market in europe. they are also adjusted by a probability factor designed to reflect the capacity of the airport services agreement and the marketing services agreement to contribute to the airports profits after they have expired. according to the study of 31 january 2014, this capacity to produce lasting benefits depends on various factors including greater prominence and a stronger brand, alongside network externalities and repeat passengers (111), although no details are given about these factors. moreover, this method takes into account a discount rate that reflects capital costs. (367) the study suggests a probability factor of 30 %, which it considers prudent. however, this highly theoretical study does not provide any serious quantitative or qualitative evidence for this factor. it does not base itself on any facts relating to ryanairs activities, air transport markets or airport services to substantiate this rate of 30 %. it does not establish any link between this rate and the factors that it mentions in passing (prominence, strong brand, network externalities and repeat passengers) and that are supposed to extend the benefits of the airport services and marketing services agreements beyond their expiry dates. finally, it does not in any way base itself on the specific content of the marketing services provided for in the various agreements with ams when analysing to what extent these services could influence the factors mentioned above. (368) moreover, it does not prove that there is any likelihood that, on the expiry of an airport services agreement and marketing services agreement, the profits generated by these agreements for the airport operator in the final year of their application will continue in the future. likewise, it provides no evidence that the growth rate of the air transport market in europe is a useful indicator for measuring the impact of an airport services agreement and a marketing services agreement for a given airport. (369) a terminal value calculated using the method suggested by ryanair would therefore be highly unlikely to be taken into account by a prudent meo when deciding whether or not to enter into an agreement. (370) the study of 31 january 2014 therefore shows that a cash flow method would lead to only very imprecise and unreliable results, as would the capitalisation method. (371) moreover, neither france nor any interested third party has provided any evidence that the method put forward by ryanair in this study, or any other method aiming to take into account and quantify the benefits extending beyond the expiry of the airport services agreements and marketing services agreements, has been successfully used by operators of regional airports comparable to n mes. france has not for that matter commented on the studies of 17 and 31 january 2014 and has not therefore approved their conclusions. (372) moreover, as stated above, the marketing services considered by the formal investigation procedure clearly target people likely to use the routes covered by the marketing services agreements. if these routes are not renewed on the expiry of the airport services agreement, it is unlikely that the marketing services will continue to have a positive effect on passenger traffic at the airport after the expiry date. it is very difficult for an airport operator to assess the likelihood of an airline continuing to operate a route on the expiry of the term to which it has committed itself in the airport services agreement. low-cost airlines, in particular, have shown that, when it comes to opening and closing routes, they are very responsive to market conditions which, more often than not, change very quickly. therefore, when entering into a transaction such as those being examined in this formal investigation procedure, a prudent meo could not rely on an airline being willing to extend the operation of the route in question on the expiry of the agreement. (373) furthermore, it should be noted that a terminal value calculated using the method proposed by ryanair in the study of 31 january 2014 will be positive (and therefore will have a positive effect on the projected return on the airport services agreement and marketing services agreement) only where the incremental profit expected from these agreements in the final year of application of the airport services agreement is positive. this method involves taking the incremental profit expected in the final year of application of the airport services agreement and projecting it into the future by applying two factors. the first factor is the overall growth of the european air transport market and reflects the expected traffic growth. the second is a factor of 30 % that approximately represents the probability of the agreements that are due to expire promoting the future signature of similar agreements likely to generate similar financial flows. as a result, if the future incremental profit expected in the final year of application of the airport services agreement is negative, the terminal value will also be negative (or at most will be zero), which indicates that the signature of agreements similar to those that have recently expired will, just like those agreements, each year erode the airports profitability. (374) the study of 31 january 2014 very briefly considers this scenario, by simply indicating in a footnote, without any comments or explanations, that no terminal value can be calculated if incremental profits net of ams payments are negative in the last year of the period under consideration (112). however, as will be shown further on, all the agreements in this case involve projected incremental flows that have a negative net present value each year, and not just overall. as a result, for these agreements, a terminal value calculated using the method proposed by ryanair would be zero or even negative. taking account of such a terminal value would not therefore call into question the finding that the various agreements involve an economic advantage. (375) in conclusion, it is clear from the above that the only benefit that a prudent meo would expect from a marketing services agreement, and that it would take into account and quantify when deciding whether or not to enter into such an agreement, together with an airport services agreement, would be that the marketing services would have a positive effect on the number of passengers using the routes covered by the agreements in question for the operating period of those routes, as set out in the agreements. any other benefits would be deemed too uncertain to be taken into account and quantified, and there is nothing to suggest that they were taken into account by the operators. 7.1.1.2.4.2. relevance of comparing the terms of the airport services agreements covered by the formal investigation procedure with the airport charges invoiced at other airports (376) under the new guidelines for applying the meo test, the existence of aid to an airline using a particular airport can, in principle, be excluded where the price charged for the airport services corresponds to the market price or it can be demonstrated through an ex ante analysis, that is to say one based on information available when the aid is granted and on developments foreseeable at that time, that the airport/airline arrangement will lead to a positive incremental profit contribution for the airport (113) and that it forms part of an overall strategy intended to lead the airport to profitability at least in the long term. (377) furthermore, according to the new guidelines, when assessing airport/airline arrangements, the commission will also take into account the extent to which the arrangements under assessment can be considered part of the implementation of an overall strategy of the airport expected to lead to profitability at least in the long term (114). (378) however, under the first approach (comparison with a market price), the commission seriously doubts that, at the present time, an appropriate benchmark can be identified to establish a true market price for services provided by airports and considers an ex ante incremental profitability analysis to be the most relevant criterion for the assessment of arrangements concluded by airports with individual airlines (115). (379) the commission considers it appropriate to reiterate in the context of this analysis that, following the adoption of the new guidelines, both france and the interested parties were invited to submit comments on the application of those guidelines to the present case. in the event, neither france nor the interested parties disputed the substance of the commissions approach according to which, where an appropriate benchmark cannot be identified to establish a true market price for the services provided by airports to airlines, the most relevant criterion for assessing the arrangements concluded between these two parties is an ex ante incremental profitability analysis. (380) it should be noted that, in general, the application of the meo test based on an average price observed in other similar markets may prove helpful where a market price can be reasonably identified or deduced from other market indicators. however, this method may not be as relevant in the case of airport services. this is because the costs and revenues structure tends to differ significantly from one airport to another. these costs and revenues depend on the airports state of development, number of airlines operating from/to the airport, available capacity in terms of passenger traffic, state of the infrastructure and related investments, regulatory framework, which may vary from one member state to another, and historical debts and obligations of the airport (116). (381) moreover, the liberalisation of the air transport market complicates any purely comparative analysis. as the present case amply demonstrates, commercial arrangements between airports and airlines are not necessarily based on a list of public prices for individual services. rather, these commercial relationships vary widely. they include sharing risks with regard to passenger traffic and any related commercial and financial liability, standard incentive schemes and changing the spread of risks over the term of the agreements. as a result, it is difficult to compare transactions based on a price per rotation or per passenger. (382) ryanair considers that the meo test can be applied using certain european airports as a benchmark. in this respect, it believes that certain european airports are substitutable for n mes airport due to their similarities and has provided a study (117) comparing the airport charges paid by ryanair at n mes airport with the airport charges paid at those airports regarded as comparable. it concludes that the charges paid at n mes are not significantly lower. (383) however, the method adopted by ryanair is ineffective in so far as it limits itself to the services and payments resulting from the airport services agreements without taking into account the marketing services agreements. as previously indicated, the two types of agreement are indissociable and must be considered together when applying the meo test. accordingly, the findings of the comparative analysis provided by ryanair cannot be accepted. (384) moreover, ryanair has not shown how the airports mentioned in the study are sufficiently comparable in terms of traffic volume and type of traffic, type and level of airport services, presence of a large city in the vicinity of the airport, number of inhabitants in the catchment area, prosperity in the surrounding area, and existence of other geographical areas likely to attract passengers (118). what is more, neither france nor any interested third party has proposed any comparison airports with evidence that they are sufficiently comparable to n mes airport in terms of these various criteria. (385) under these circumstances, the commission considers that the approach generally recommended in the new guidelines for applying the meo test to relationships between airports and airlines, namely the ex ante incremental profitability analysis, must be applied to the present case. (386) this approach is justified by the fact that an airport operator may have an objective interest in concluding a transaction with an airline where it may reasonably expect this transaction to improve its profits (or reduce its losses) compared with a counterfactual situation in which this transaction is not concluded (119), regardless of any comparison with the conditions offered to airlines by other airport operators, or even with the conditions offered by the same airport operator to other airlines. (387) on this last point, as the commission noted in the new guidelines, price differentiation is a standard business practice, as long as it complies with all relevant competition and sectoral legislation. nevertheless, such differentiated pricing policies should be commercially justified to satisfy the meo test (120) (footnotes omitted). (388) it should also be noted that france and the operators have stated that n mes airport was the first regional airport operated by veolia transport. they consider that this position as a new entrant justified the need for vtan to ensure ryanairs presence and develop the airport, if necessary through an initial loss, in order to allow it to acquire the experience needed to develop its airport operation activity. if this argument were taken into account, it would mean ignoring the incremental profitability approach recommended by the guidelines and accepting that vtan could have entered into agreements leading to negative incremental profitability, without this conduct implying any economic advantage for ryanair. (389) however, that argument must be rejected. firstly, as previously indicated, neither france nor vtan have provided any analysis showing that the net incremental cost caused for veolia transport by the agreements signed with ryanair/ams, as indicated further on, would have been offset by future benefits resulting for the veolia transport group from this initial airport operation experience. there is also nothing to say that veolia transport could not have acquired this initial experience at another airport where the net cost would have been lower. (390) moreover, it should be noted that vtans conduct towards ryanair/ams must not be assessed in isolation, but in conjunction with the smans conduct. this is all the more relevant as the net incremental cost of the agreements signed with ryanair and ams should not actually have been borne by vtan, but by the sman through the flat-rate contribution ensuring financial stability and a reasonable profit for vtan. however, in terms of its profitability, the sman did not have any interest in encouraging the signature of agreements allowing the veolia transport group to acquire some initial airport operation experience in order to develop its activity in this area. veolia transports interest in developing this activity cannot therefore lead to the conclusion that the sman behaved, in conjunction with vtan, in the way that an meo motivated by the prospect of profits would have done. (391) it should also be noted that, in their comments on the application of the meo test to the various agreements in question, certain interested third parties referred to the fact that the conditions offered to ryanair may or may not have been offered to other airlines likely to want to use n mes airport. this argument is without merit. for an airport operator motivated by the prospect of profits, objective factors can justify different conditions being offered to different airlines. these factors may include the expected volume of traffic, the number and type of routes and associated frequencies, or even the nature of the services requested by the airline. the extent to which the conditions offered to ryanair by the cci and vtan were or could have been offered to other airlines is therefore irrelevant in the context of the meo test. (392) in the light of all the above, the commission considers that the approach generally recommended in the new guidelines for applying the meo test to relationships between airports and airlines, namely the ex ante incremental profitability analysis, must be applied to the present case. this approach is justified by the fact that an airport operator may have an objective interest in concluding a transaction with an airline where it may reasonably expect this transaction to improve its profits (or reduce its losses) compared with a counterfactual situation in which this transaction is not concluded (121), regardless of any comparison with the conditions offered to other airlines or with the conditions offered by other airport operators. 7.1.1.2.4.3. conclusion on the terms for applying the market economy operator test (393) it is clear from all the above that, in order to apply the meo test to the agreements in question, the commission must analyse each marketing services agreement together with the corresponding airport services agreement, and must assess whether a hypothetical meo, motivated by the prospect of profits and operating n mes airport, would have signed these agreements. to this end, it is necessary to determine the incremental profitability of the agreements as it would have been assessed by the meo at the time of their signature, by estimating, for the entire period of application of the agreements: the future incremental traffic expected from the implementation of these agreements, possibly taking into account the effects of the marketing services on the load factors of the routes covered by the agreements, the future incremental revenues expected from the implementation of these agreements, including revenues from airport charges and ground handling services, generated by the routes covered by these agreements, as well as non-aeronautical revenue from the additional traffic generated by the implementation of these agreements, the future incremental costs expected from the implementation of these agreements, including operating costs and any incremental investment costs generated by the routes covered by these agreements, as well as the costs of marketing services. (394) these calculations should provide the future annual flows corresponding to the difference between incremental revenues and costs, to be discounted, if necessary, by a rate reflecting the cost of capital for the airport operator. a positive net present value indicates in principle that the agreements in question do not confer an economic advantage, whereas a negative net present value reveals the presence of such an advantage. (395) it should be noted that, in this assessment, the arguments of ryanair and the operators that the price of the marketing services purchased by the operators is equivalent to or less than what may be regarded as a market price for such services are without merit. a hypothetical meo motivated by the prospect of profits would not be prepared to purchase such services, even at a price at or below market price, if it were predicted that, despite the positive effect of such services on passenger traffic on the air routes concerned, the incremental costs generated by the agreements would exceed the incremental revenues at present value. in such a scenario, the market price would be higher than the hypothetical meo was prepared to pay, and the services in question would therefore logically be rejected. (396) for the same reasons, the fact that the prices set in the airport services agreement may be equivalent to or higher than the prices invoiced by even slightly comparable airport operators would be irrelevant in this assessment if these prices were not expected to generate sufficient incremental revenues to cover the incremental costs. 7.1.1.2.5. application of the market economy operator test (397) for the purpose of assessing the agreements in question and given the above considerations, it should be noted that both the existence and the amount of aid in these agreements fall to be assessed in the light of the situation prevailing at the time they were signed (122) and, more specifically, in the light of the information available and developments foreseeable at that time. (398) during the procedure, the commission invited france to submit incremental cost, revenue and profitability estimates for the various agreements, which may have been produced prior to the signature of these agreements. the only information provided by france in response to this invitation appears in a business plan prepared by veolia transport in september 2006 (the vtan business plan), a few months before it became the new airport operator, in order to assess the financial stability of the new public service delegation. this business plan was not linked to one or more specific agreements, but detailed the projected costs and revenues for the entire airport operation for the whole term of the new public service delegation (2007-2011). (399) france has also provided the contents of a study conducted for vtan by an economic adviser (the vtan study), which aims to estimate, based on the vtan business plan, the extent to which the additional traffic generated by a new agreement would influence the various cost and revenue items, except for the costs incurred by the marketing services agreements. (400) with regard to the airport operators revenues, it is clear from the vtan study that, due to its very nature, the aeronautical revenue, which stems from airport charges and ground handling services, varies according to the additional traffic, just like the commercial non-aeronautical revenue (associated with the activity of shops, restaurants and car parks situated within the airport zone). on the other hand, the property-related non-aeronautical revenue (typically, fixed rents received by the n mes airport operator from various businesses present at the airport site) is not influenced by traffic variations and should not therefore be taken into account in an incremental analysis. (401) as regards costs, the study indicates that certain items of expenditure, such as office and structural costs, are not influenced by traffic variations, whereas others, such as purchases, are directly linked to traffic. in terms of maintenance and repair expenditure, the study states that, with the infrastructure being used by both ryanair and other airport users (training school, businesses located at the site, civil security), most of the corresponding costs are fixed and do not therefore vary according to the traffic (123). however, according to the study, a limited part of this expenditure (estimated at 8 % of the total servicing and maintenance expenditure) can be imputed to ryanair. (402) with regard to staff costs, the study takes account of the fact that part of these costs was independent of traffic, as only those costs associated with aircraft and passenger handling staff and part of the costs associated with administrative staff were imputable to the ryanair traffic. the study therefore estimates that, over the entire period covered, the staff costs imputable to ryanair accounted for [40-50] % of the total staff costs. (403) the study also considers the taxes paid by the airport operator. it notes that property tax, which depends only on the extent of the property managed by the airport operator, is independent of traffic, whereas business tax depends in particular on turnover, and therefore on traffic, and payroll tax is directly linked to the staff costs mentioned above. finally, the study considers that [40-50] % of the marketing study costs, funded by the airport operator and covering commercial passenger traffic, development of the airport through new routes or new activities and development of the industrial hub, were imputable to the ryanair traffic. (404) for each revenue and cost item in the vtan business plan, the study therefore estimates a percentage to be applied in order to determine the part attributable to the ryanair traffic, which therefore varies according to the traffic. finally, the study uses the traffic forecasts contained in the vtan business plan to determine, item by item, the projected incremental costs and revenues per passenger for the entire period. (405) the commission takes the view that the vtan business plan and the vtan study provide reliable information that can be taken into account when applying the meo test. the facts on record actually show that the vtan business plan was the result of a very thorough analysis, which is all the more reliable because this business plan served as the basis for determining the flat-rate contribution ensuring the financial stability of the airports operation. moreover, this business plan is not likely to have been biased by the present procedure, given that the commission initiated its action on the basis of a complaint that was only received in january 2010. the examination of this business plan and associated documents has not revealed any rash or unrealistic assumptions among those used by veolia transport to produce this plan. the vtan study is also based on reasonable assumptions. it has therefore been taken into account by the commission in its analysis, as will be indicated below. (406) aside from the vtan business plan, the only economic assessment provided by france is a study of the economic impact of n mes airport, carried out in 2006. this study focuses on the economic impact of the airports activity, and particularly the routes operated by ryanair from this airport, on the regions economy. it is not therefore relevant for the purpose of applying the meo test, in relation to which only the airports profitability is important. (407) according to ryanair, the lack of a business plan when agreements such as those covered by the formal investigation procedure are signed cannot be used as evidence that the meo test is not satisfied. (408) the commission considers that the lack of a business plan, or more generally any profitability analysis carried out prior to the signature of an agreement, is a serious indication that the agreements signed by the cci with ryanair and ams do not satisfy the meo test, particularly as neither france nor the cci has been able to provide, in respect of these agreements, any profitability analysis, even incomplete, that was carried out before the agreements were signed. (409) this observation is also largely valid for vtan, which, although it produced a solid and detailed business plan for the entire airport operation, did not subsequently carry out, according to the facts on record, any specific profitability analysis of the various agreements signed with ryanair and ams prior to their signature, even though it could have used the aforementioned business plan for this purpose (124). (410) according to france, the operator in place initially made its decisions based on traffic growth prospects that allowed the launch of new services to be envisaged, not to mention a direct economic impact potentially resulting for the airport, in the light of the expected economic impact on the region (125). this further suggests that the agreements with ryanair and ams do not satisfy the meo test. (411) this is also clearly indicated by the fact that, just before becoming the airport operator, veolia transport took the view that the ryanair traffic was likely to erode the airports profitability. as stated previously, the documents that veolia transport submitted in the invitation to tender procedure thus indicate that: moreover, in the long term, the replacement of ryanairs activity (company benefiting from particularly favourable conditions at the airport) could have been positively offset by the arrival of companies likely to accept less economically burdensome conditions for the airport operator (126); the transfer of the risk, above [ ] %, by the delegating authority was justified by the strategic nature for the gard economy of the tourist traffic brought by ryanair; in fact, as we explained in our tender, the arrival of this company (under particularly advantageous conditions) had negative economic implications for the airports operation, but quite clearly positive implications for the local economy (127); ryanair typically chooses small or medium-sized airports, particularly in france, with which the company negotiates extremely advantageous material and/or financial conditions (128); all in all, adding together the main agreement and the airport marketing services agreement, the operations with ryanair resulted in a negative turnover (between eur [ ] thousand and eur [ ] thousand according to the bid and traffic configurations, i.e. an average cost to the airport per outbound passenger of around eur [ ] to eur [ ] excluding tax per head) (129). (412) as explained further on, these various indications are confirmed by the commissions assessment of the profitability analysis that a hypothetical meo would have carried out. (413) during the procedure, the commission invited france to reconstruct the profitability analysis that an meo would have carried out before signing the agreements with ryanair and ams, based on the objective information known to the operators when these agreements were signed and on the foreseeable developments. (414) in response to this invitation, france provided a reconstruction of the projected incremental costs and revenues associated with each agreement signed with ryanair and ams. with regard to the cci operating period, this analysis is mainly based on ex post data, i.e. data observed after the agreements were signed. as a result, the method used by france involved calculating the average unit costs and revenues per passenger based on the airports operating costs and revenues observed during the 2000-2006 period. in its analysis of each agreement, france multiplied these data by the projected incremental traffic for each agreement, i.e. the traffic that, on the signature of the agreement, this could be expected to generate. as this analysis is mainly based on cost and revenue data observed after the various agreements were signed, and not necessarily on information foreseeable at the time when the agreements were signed, this method cannot reflect the profitability analysis that an meo would have carried out before deciding whether to enter into these agreements. (415) moreover, as regards the costs, the method used by france is in fact based on the full unit costs, i.e. all the airports operating costs per passenger, instead of the incremental costs, i.e. the costs specifically generated by each agreement. however, the incremental costs may differ from the full unit costs and, as a general rule, are markedly lower, given the high proportion of fixed costs at an airport. the use of full unit costs is therefore a second weakness in the method proposed by france. it also clearly reduces the profitability of certain agreements, thus penalising the airlines concerned. (416) consequently, the commission has carried out its own analysis by reconstructing the incremental costs and revenues of the various agreements, as an meo would have calculated them ex ante, in order to apply the meo test. the assumptions made and the results of the analysis are presented below. 7.1.1.2.5.1. time frame (417) when assessing the value in entering into an airport services agreement and/or a marketing services agreement, an meo would have chosen the term of the agreement or agreements as the time frame of its assessment. (418) there does not seem to be any justification for choosing a longer period. on the dates when the agreements were signed, a prudent meo would not have relied on these agreements being renewed on their expiry, whether under the same terms or under different terms, particularly as low-cost airlines such as ryanair were and are known to be very dynamic in terms of launching and withdrawing routes, or even increasing and reducing frequencies. (419) furthermore, it should be noted that, for certain agreements, the effective start date of the activities covered by the agreement was not the date of signature of the agreement. in this case, it is the effective start date that has been used as the starting point, and not the date of signature. (420) it should also be noted that, in applying the meo test, the fact that ryanair did not operate certain routes throughout the entire period stipulated in certain agreements has not been taken into account as this factor was neither known nor foreseeable at the time when the agreements were signed. (421) the commission will now describe the assumptions used to analyse the agreements signed with ryanair/ams in terms of incremental traffic, costs and revenues, before presenting the results of this analysis. 7.1.1.2.5.2. incremental traffic and number of projected rotations (422) the analysis conducted by the commission is based on the incremental traffic (i.e. the number of additional passengers) that an meo operating n mes airport in place of the operators could have predicted when the agreements were signed. with regard to the 2000 agreement for example, this involves determining the number of passengers that the n mes airport operator could have expected, in 2000, to use the n mes-london route operated by ryanair, over the term of the agreement. (423) the projected incremental traffic has been determined based on the number of routes and frequencies stipulated in the various airport services agreements and marketing services agreements, and on the resulting number of annual rotations. (424) furthermore, the commission has taken into account the capacity of the aircraft used by ryanair, namely, according to the agreements, the boeing 737-200, the boeing 737-300 and the boeing 737-800. (425) with regard to the agreements signed from october 2005, which included marketing services provided by ams, the commission has assumed a load factor of 85 % per flight, which is favourable to ryanair because 85 % is a high load factor. this is also slightly above the average load factor for flights operated by ryanair on its network (130), and equal to or above the load factor proposed by france for the various agreements in its reconstruction of the profitability analyses. however, the commission takes the view that this high load factor can be used, even if it is a favourable assumption, in order to reflect a possible beneficial effect of the marketing services on passenger traffic on the air routes covered by the various agreements, and in the absence of other information quantifying the foreseeable impact of these services on the load factor. (426) on the other hand, for the agreements signed before october 2005, the commission has used lower load factors. the assumptions made in this regard are detailed below, in the analysis of each of the agreements in question. it should be noted in this respect that the april 2000 agreement and its various amendments did not provide for marketing services to be carried out by ryanair or its subsidiaries, but rather public relations activities with a limited scope (distribution of press releases, organisation of press conferences, etc.) that were the responsibility of the cci. (427) some agreements contained indications as to the number of passengers expected on the routes covered. however, as these indications were not binding, they would not necessarily have been taken into account by a prudent meo in its profitability analysis. the commission has therefore ignored them and used the assumption of an 85 % load factor for all the agreements signed from 2005 (which is higher than these indications). (428) furthermore, some agreements contained a commitment by the airline with regard to the minimum number of passengers to be carried on the routes concerned. however, an meo would have probably banked on a number of passengers higher than the minimum guaranteed by the airline. in fact, an meo would have probably assumed that the airline had allowed for a safety margin between the traffic level to which it had committed and the traffic that it was reasonable to expect. the commission has therefore decided to ignore these compulsory minima in its assessment. these minima are generally lower than the incremental traffic assumptions used by the commission. 7.1.1.2.5.3. incremental revenues (agreements signed with ryanair and ams) (429) for each transaction covered by its analysis, the commission has sought to determine the incremental revenues, i.e. the revenues generated by the transaction, as an meo would have predicted them. (430) applying the single-till principle, the commission takes the view that both aeronautical and non-aeronautical revenues should be taken into account. (431) aeronautical revenue consists of the proceeds from the various charges to be paid by the airline to the airport operator, namely: the landing charge, which is a fixed amount per rotation, the passenger charge, which is a fixed amount per outbound passenger, the charge paid for ground handling services, which takes the form of an amount per rotation set in the various airport services agreements. (432) the landing charge and passenger charge applied by the operators are in principle regulated charges for access to the airport infrastructure, which are set for all user airlines following a process of consultation and which are published. for these various agreements, the commission has used, as projected unit amounts of the landing charge and passenger charge, the public charges in force when the agreements were signed, taking into account the information in the agreements on the method for calculating the charges applicable to ryanair, plus indexation of 2 % per year in so far as it was reasonable to predict that the regulated charges would increase each year in line with inflation. the system of regulated airport charges does not provide for automatic indexation, but allows operators to adapt charges over time following a consultation process. when the various agreements in question were signed, it was not therefore possible to predict with any certainty the future development of these regulated charges. under these circumstances, the commission takes the view that an meo would have simply and logically assumed that the charges would increase each year in line with inflation, by using an inflation rate of 2 %, which is the target rate of the european central bank (ecb) for the euro area (131). (433) the charge for ground handling services is not regulated, but is negotiated bilaterally. in the various airport services agreements signed with ryanair, this charge takes the form of a fixed amount per rotation, without any indexation, except in those cases where this charge is not stipulated. the amount resulting from each agreement has therefore been used by the commission in its analysis. (434) in order to calculate the proceeds from the three airport charges, which an meo would have expected from each agreement, the commission has used the forecasts of the number of rotations (for the landing charge and for the charge for ground handling services) and additional traffic (for the passenger charge), determined for each agreement, and has multiplied these by the unit charge, as determined above. (435) for the non-aeronautical revenue, with regard to the agreements signed by vtan, the commission has used the approach proposed by france, which involves using the amount of the incremental non-aeronautical revenue per passenger (132) resulting from the aforementioned vtan study. as explained above, this study and the associated vtan business plan form acceptable bases for a projected profitability analysis. (436) as regards the agreements signed by the cci, the commission has had to use a different approach given that, to its knowledge, no projection of the non-aeronautical revenue was made by the cci prior to these agreements being signed. the commission has therefore used the figures provided by france on the commercial non-aeronautical revenue for the entire airport, observed during the 1999-2006 period. the commission takes the view that these figures offer the most reliable basis, bearing in mind that, unlike the property-related revenue, which is fixed, the commercial revenue varies according to the traffic, and in an almost proportional manner. the commission considers it likely that an meo could have determined an amount of incremental non-aeronautical revenue per passenger when the various agreements were signed, based on the airports total commercial non-aeronautical revenue per passenger over a long enough period to be representative, and immediately preceding the signature of the agreement in question. the commission has used a three-year period where the figures were available for this period (133). where the figures were only available for a shorter period (for example, one year in the case of the april 2000 agreement), the commission has accepted this shorter period. the commission has also taken account of inflation by applying an indexation rate of 2 % (134). (437) table 5 in this recital gives the airports total commercial non-aeronautical revenue observed during the 1999-2011 period, year by year, and, for each year, the average unit amount of non-aeronautical revenue per passenger over the previous three years, or over the previous longest period for which figures are available, if this is less than three years. table 5 total commercial non-aeronautical revenue and non-aeronautical revenue per passenger year total number of passengers total commercial non-aeronautical revenue running average over the previous three years (or over a shorter period depending on the available figures) 1999 297 150 [600 000 -800 000 ] 2000 277 521 [400 000 -600 000 ] [2-4] 2001 319 378 [800 000 -1 000 000 ] [2-4] 2002 231 122 [600 000 -800 000 ] [2-4] 2003 134 444 [400 000 -600 000 ] [2-4] 2004 156 581 [400 000 -600 000 ] [2-4] 2005 206 128 [1 000 000 -1 200 000 ] [2-4] 2006 226 887 [400 000 -600 000 ] [2-4] (438) the assumptions used are favourable to ryanair because it is clear that the amount of incremental non-aeronautical revenue per passenger resulting from this method is higher than the amount resulting from the vtan business plan. 7.1.1.2.5.4. incremental costs (agreements signed with ryanair and ams) (439) the incremental costs that could be expected ex ante from each transaction (consisting, where applicable, of an airport services agreement and a marketing services agreement) by an meo operating the airport in place of the operators may fall into the following three categories: costs of purchasing the marketing services, financial incentives involving the transfer by the airport operator to ryanair, under the airport services agreement, of part of the proceeds from the airport charges, according to criteria such as the traffic level, incremental investment costs, due to investments made as a result of the transaction, incremental operating costs, namely operating costs (staff, sundry purchases) that may be generated as a result of the transaction. (440) with regard to the costs of the marketing services agreements and financial incentives, the commission has taken into account the amounts stipulated in the various marketing services agreements and the financial incentive mechanisms provided for in the various airport services agreements. (441) as with the traffic forecasts, the projected marketing payments do not necessarily represent the amounts actually paid, given that certain events occurring after the agreements were signed may have resulted in deviations from these initial figures. this is particularly the case where the agreement was terminated early. however, these events should not be taken into account when applying the meo test because they postdate the signature of the agreements. (442) as regards the incremental investment costs, none have been accepted since there is nothing in the records to suggest that an meo would have expected to have to make certain investments due to one or more of the agreements covered by the formal investigation procedure. (443) in the absence of a business plan for each agreement, the incremental operating costs that were foreseeable when the various agreements were signed are the most difficult category to determine. in particular, the approach used for the non-aeronautical revenue, which, for the period prior to 2007, involved using the airports total commercial non-aeronautical revenue in order to determine the revenue per passenger, cannot be used for the operating costs. (444) such an approach would involve considering the airports total operating costs, reduced to the number of passengers, as incremental costs. however, a significant proportion of an airports operating costs is fixed, which means that the total operating costs per passenger are likely to be markedly higher, in most cases, than the incremental costs. (445) in order to estimate the incremental operating costs, the commission must use the airport operators analysis, as it is unable to estimate itself how a given agreement may influence the airports various cost items. (446) however, the only ex ante estimates that the commission can use are found in the vtan business plan, based on which the vtan study arrived at a total incremental operating cost per passenger of eur [2-4]. in the absence of anything better, the commission considers that this figure is an acceptable basis for determining the impact of additional traffic on the airports operating costs. this figure was established based on the vtan business plan, which, for the reasons already stated, constitutes a source of reliable ex ante figures, and on the vtan study. as explained previously, the vtan study contains a precise and plausible assessment of how the airports various operating cost items vary according to traffic. the commission has therefore used this figure in its assessment of the agreements signed with ryanair and ams. (447) the vtan agreements were signed between 2007 and 2010, i.e. within a relatively short period of time after the vtan business plan was produced. the use of the aforementioned estimate of the incremental operating cost per passenger is therefore particularly indicated for these agreements. (448) in the absence of anything better, it is also acceptable for the agreements signed by the cci, even if the vtan business plan was produced after those agreements. this is particularly the case with the october 2005 agreements, which were signed just a few months before the vtan business plan was produced. the commission considers that an meo would not have estimated very different incremental operating costs per passenger in october 2005 and september 2006, because it is highly unlikely that the cost structure of an airport operator would alter considerably over a period of less than a year. (449) as regards the agreements signed between 2000 and 2004, they are further away in terms of time from the vtan business plan. however, in the absence of a better alternative, the commission takes the view that the incremental operating cost per passenger of eur [2-4], adjusted to take account of inflation, estimated at 2 % per year on a forecast basis, is also appropriate for analysing these older agreements. (450) it should be noted that, for each agreement signed by the cci, the incremental operating cost proposed by france (eur [5-7] per passenger), calculated as the average of the operating costs per passenger observed over the 2000-2006 period, is markedly above the incremental cost per passenger used by the commission, which the latter deems to be more relevant given the above findings. (451) as a result, for each agreement, the incremental operating cost per passenger is multiplied by the projected incremental traffic in order to determine, year by year, the total incremental operating cost associated with the agreement. 7.1.1.2.5.4.1. details of the various agreements (452) the commission will now present the results of its analysis of the various agreements, produced using the method described above. the specific features of each agreement that are relevant to this analysis will also be indicated. 7.1.1.2.5.4.1.1 agreement of 11 april 2000 (453) this agreement concerned the operation of a daily route to london using a boeing 737-200 configured for 130 seats. according to france, ryanair made an oral commitment to the cci to achieve a load factor of 70 %. the commission takes the view that an meo might have expected a slightly higher rate, on the reasonable assumption that ryanair may have allowed a safety margin between this oral commitment and the rate actually expected. however, as ryanair had no previous experience of operating to n mes and the agreement did not provide for any marketing activities comparable to those subsequently provided by ams, the commission takes the view that it is not appropriate to use the load factor of 85 % accepted for the agreements signed from 2005. it has therefore opted for a load factor of 75 %. the commission notes that this factor is more or less equivalent to the factor observed in 2000-2002. (454) the commissions analysis includes the incremental traffic resulting from this 75 % rate, applied to one daily route operated using an aircraft with 130 seats, and the associated incremental revenues and incremental operating costs, according to the principles set out above. table 6 in this recital gives the results of this analysis. table 6 result of reconstructing the ex ante profitability analysis for the agreement of 11 april 2000 2000 agreement (london) forecasts of incremental traffic, revenues and costs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 total number of inbound and outbound passengers [0-50 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [0-50 000 ] number of rotations per year [200-250] [350-400] [350-400] [350-400] [350-400] [350-400] [350-400] [350-400] [350-400] [350-400] [150-200] landing charge [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] passenger charge [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] ground handling services total aeronautical revenue [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] non-aeronautical revenue [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] total revenues [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] operating costs (staff, sundry purchases, etc.) [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] marketing costs [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] total costs [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] incremental flows (revenues less costs) [50 000 -100 000 ] [100 000 -150 000 ] [100 000 -150 000 ] [150 000 -200 000 ] [150 000 -200 000 ] [150 000 -200 000 ] [150 000 -200 000 ] [150 000 -200 000 ] [150 000 -200 000 ] [150 000 -200 000 ] [50 000 -100 000 ] (455) table 6 in the above recital shows that an meo would have expected positive annual incremental flows each year until the 2000 agreement expired, and consequently a positive incremental profitability. (456) furthermore, in 2000 air france was still operating scheduled services from n mes airport. according to france, the cci was trying at that time to diversify the airports commercial activity and, in that context, it initiated discussions with several low-cost airlines, after having also analysed the freight and charter activities. the commission takes the view, in this context, that the signature of the agreement of 11 april 2000 can be regarded as forming part of an overall strategy of the cci expected to lead the airport to profitability, at least in the long term (135). (457) it is clear from the above that the agreement of 11 april 2000 did not confer any economic advantage on ryanair and, consequently, does not constitute state aid in its favour. 7.1.1.2.5.4.1.2 correspondence exchanged between the end of 2001 and the beginning of 2002 (458) the agreement of 11 april 2000 was amended by correspondence exchanged between the cci and ryanair, dated 28 november 2001, 11, 18, 21 and 24 december 2001, and 2, 5 and 15 february 2002 (correspondence exchanged between the end of 2001 and the beginning of 2002). (459) it is apparent from this correspondence and from the explanations provided by france in this respect that this correspondence constitutes a transaction that amended the agreement of 11 april 2000 by increasing the marketing payments by frf [ ] (i.e. eur [ ]) per outbound passenger from 1 january 2002 until the agreement expired, and by further increasing these payments by an additional amount of frf [ ] (i.e. eur [ ]) per outbound passenger during the period between 29 april and 31 october 2002 (the 2002 summer season), provided that ryanair added an additional daily flight to its london route during this period. (460) according to france, this second flight meant a possible 185 additional flights during the 2002 summer season, which, based on an aircraft configured for 148 passengers and a load factor of 75 % more or less corresponding to the traffic carried previously, could have led to additional traffic totalling 41 070 passengers. the assumption of a 75 % load factor seems reasonable as it corresponds to the traffic carried during the previous period and as the correspondence exchanged between the end of 2001 and the beginning of 2002 did not provide for any additional marketing activities, on the part of ryanair or the cci, that were likely to significantly increase traffic. (461) this additional traffic as a result of the second daily flight during the 2002 summer season is the only incremental traffic associated with the correspondence exchanged between the end of 2001 and the beginning of 2002, since this correspondence did not amend, except for the 2002 summer season, the daily flight frequency stipulated in the agreement of 11 april 2000 for the n mes-london route. the commission has therefore included this incremental traffic in its analysis, together with the associated incremental revenues and incremental operating costs, according to the principles set out above. as regards the incremental aeronautical revenue, it has taken into account the airport charges applicable in 2001. with regard to the incremental marketing costs, the commission has included, in its analysis, the general increase of eur [ ] per outbound passenger until the 2000 agreement expired, together with the additional increase stipulated for the 2002 summer season for all passengers (and not just those corresponding to the additional daily flight). table 7 in this recital gives the results of this analysis. table 7 result of reconstructing the ex ante profitability analysis for the correspondence exchanged between the end of 2001 and the beginning of 2002 2002 2003 2004 2005 2006 2007 2008 2009 2010 total number of inbound and outbound passengers [0-50 000 ] number of rotations per year [150-200] landing charge [ ] passenger charge [ ] ground handling services total aeronautical revenue [ ] non-aeronautical revenue [ ] total revenues [ ] operating costs (staff, sundry purchases, etc.) [ ] marketing costs [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] total costs [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] incremental flows (revenues less costs) - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] - [0-50 000 ] (462) this table shows that an meo would have expected negative annual incremental flows until the 2000 agreement expired, as amended by the correspondence exchanged between the end of 2001 and the beginning of 2002. consequently, the transaction consisting of the correspondence exchanged between the end of 2001 and the beginning of 2002 conferred an economic advantage on ryanair. 7.1.1.2.5.4.1.3 correspondence exchanged in 2004 (463) the terms of the agreement of 11 april 2000 were amended once again, but this time for a more limited period, by the exchanges of letters and emails of 10 and 16 march 2004 (the correspondence exchanged in 2004). (464) it is apparent from this correspondence and from the explanations provided by france in this respect that this correspondence amended the agreement of 11 april 2000 by increasing the marketing payments by eur [ ] per outbound passenger during the period from 29 april to 31 october 2004 (the 2004 summer season), provided that ryanair added an additional daily flight to its london route during this period. (465) according to france, this second flight meant a possible 185 additional flights during the 2004 summer season, which, based on an aircraft configured for 148 passengers and a load factor of 75 %, could have led to additional traffic totalling 41 070 passengers. the assumption of a 75 % load factor proposed by france seems reasonable as the correspondence exchanged in 2004 did not provide for any additional marketing activities, on the part of ryanair or the cci, that were likely to significantly increase traffic in relation to the traffic carried previously. (466) this additional traffic as a result of the second daily flight during the 2004 summer season is the only incremental traffic associated with the correspondence exchanged in 2004. the commission has therefore included this incremental traffic in its analysis, together with the associated incremental revenues and incremental operating costs, according to the principles set out above. with regard to the incremental marketing costs, the commission has included, in its analysis, the exceptional increase stipulated for the 2004 summer season for all passengers (and not just those corresponding to the additional daily flight). table 8 in this recital gives the results of this analysis. table 8 result of reconstructing the ex ante profitability analysis for the correspondence exchanged in 2004 2004 total number of inbound and outbound passengers [0-50 000 ] number of rotations per year [150-200] landing charge [ ] passenger charge [ ] ground handling services total aeronautical revenue [ ] non-aeronautical revenue [ ] total revenues [ ] operating costs (staff, sundry purchases, etc.) [ ] marketing costs [ ] total costs [ ] incremental flows (revenues less costs) - [100 000 -150 000 ] (467) this table shows that an meo would have expected a negative incremental flow in 2004. consequently, the transaction consisting of the correspondence exchanged in 2004 conferred an economic advantage on ryanair. 7.1.1.2.5.4.1.4 2005 agreements (468) through the airport services agreement of 10 october 2005 and the marketing services agreement signed on the same date (the 2005 agreements), ryanair undertook to operate: a daily route to london, to which a second daily service was to be added for six months during the 2005 summer season, a route to liverpool four times a week, from the end of march 2006, a third route, whose launch was to be announced before the end of 2005, accounting for at least [0-50 000] outbound passengers per year, from the end of april 2006, a fourth route, whose launch was to be announced before the end of 2005, accounting for at least [0-50 000] outbound passengers per year. (469) these agreements replaced the agreement of 11 april 2000, which was therefore terminated before the end of its initial term, with totally different contractual conditions being established. the preamble to the 2005 airport services agreement stated that ryanair, after having conducted a prudent experimental operation (136) of a daily route to london, planned to permanently establish itself at n mes and increase the number of routes from that airport provided that both technical and financial conditions proposed by fni were acceptable, so as to make the operation of the routes viable (137) (bold added). (470) this passage suggests that, if the cci had not accepted the terms of the 2005 agreements, ryanair would have threatened to cease all its operations at n mes airport, on the grounds that operating the route to london was not economically viable. a prudent meo would undoubtedly have taken this threat seriously, particularly as the april 2000 agreement did not contain any clear and irrevocable undertaking on the part of ryanair to operate the route to london for the 10 years provided for by the agreement. as a result, a prudent meo acting in place of the cci would have in all likelihood considered that, if it did not sign the agreements in question, ryanair would cease all its operations at n mes airport. (471) the incremental traffic associated with the 2005 agreements therefore corresponds to the traffic expected for all the routes and frequencies mentioned in these agreements. for each of these routes and for the reasons set out above, particularly in the light of the marketing services offered by ryanair, an 85 % load factor has been used. as the frequencies of the third and fourth routes were not known at the time when the agreements were signed, the commission has determined these from the minimum passenger numbers to which ryanair committed in the 2005 agreements (138), in order to reconstruct the assumptions that would have been used by a prudent meo. (472) the commission has therefore included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. it has also included the cost of the financial incentives provided for in article 8 of the airport services agreement of 10 october 2005, namely a payment by the cci to ryanair of eur [ ] per outbound passenger and eur [ ] per rotation. table 9 result of reconstructing the ex ante profitability analysis for the agreements of 10 october 2005 2005 2006 2007 2008 2009 total number of inbound and outbound passengers [200 000 -250 000 ] [250 000 -300 000 ] [250 000 -300 000 ] [300 000 -350 000 ] [300 000 -350 000 ] number of rotations per year [750-800] [800-850] [850-900] [900-950] [900-950] landing charge [ ] [ ] [ ] [ ] [ ] passenger charge [ ] [ ] [ ] [ ] [ ] ground handling services [ ] [ ] [ ] [ ] [ ] total aeronautical revenue [ ] [ ] [ ] [ ] [ ] non-aeronautical revenue [ ] [ ] [ ] [ ] [ ] total revenues [ ] [ ] [ ] [ ] [ ] operating costs (staff, sundry purchases, etc.) [ ] [ ] [ ] [ ] [ ] marketing costs [ ] [ ] [ ] [ ] [ ] financial incentives [ ] [ ] [ ] [ ] [ ] total costs [ ] [ ] [ ] [ ] [ ] incremental flows (revenues less costs) - [150 000 -200 000 ] - [250 000 -300 000 ] - [200 000 -250 000 ] - [100 000 -150 000 ] - [50 000 -100 000 ] (473) this table shows that an meo would have expected negative annual incremental flows until the 2005 agreements expired. consequently, the transaction consisting of the 2005 agreements conferred an economic advantage on ryanair/ams. 7.1.1.2.5.4.1.5 amendment of 30 january 2006 (474) it is clear from reading the amendment of 30 january 2006 and from frances explanations that this amendment simply confirmed that the 2005 agreements (which were not due to expire until the end of 2009) would remain in force until the cci stopped operating n mes airport. this amendment did not therefore confer any additional advantage on ryanair/ams over and above that resulting from the 2005 agreements. the amendment of 30 january 2006 does not therefore constitute state aid. 7.1.1.2.5.4.1.6 amendment of 17 october 2006 (475) it is clear from reading the amendment of 17 october 2006 and from frances explanations that this amendment reduced the volume of marketing services provided for 2006 due to the cci being unable to supply the marketing materials to be included on the ryanair website and due to the provision of the marketing services being suspended for nearly six months. this situation was due to the fact that the cci was unable to supply the texts to be included on the ryanair website. these marketing services were therefore delayed and were provided during the second half of 2006, which led to the cost of the services for 2006 being reduced. (476) in so far as the delay in question was attributable to the cci and as it nevertheless obtained from ams a reduction in the marketing payments resulting from their 2005 agreement, the cci acted on this occasion as a prudent meo. the amendment of 17 october 2006 did not therefore confer any economic advantage on ryanair and does not therefore constitute state aid. 7.1.1.2.5.4.1.7 agreements of 2 january 2007 (477) the airport services agreement of 2 january 2007 and the marketing services agreement signed on the same date (the agreements of 2 january 2007) were the first agreements to be signed between vtan and ryanair/ams. in the absence of these agreements, ryanair would have been free to cease all its operations at n mes. the incremental traffic associated with the agreements of 2 january 2007 therefore corresponds to the traffic expected for all the routes and frequencies mentioned in these agreements, namely for the period from 2 january to 31 october 2007: a daily route to london, a route to liverpool four times a week, a route to charleroi four times a week, a route to east midlands three times a week. (478) using a load factor of 85 % for the reasons given previously, the commission has included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. it has also included the cost of the financial incentives provided for in article 8 of the airport services agreement of 2 january 2007, namely a payment by vtan to ryanair per outbound passenger, which increased in stages according to the number of passengers. table 10 result of reconstructing the ex ante profitability analysis for the agreements of 2 january 2007 2007 total number of inbound and outbound passengers [250 000 -300 000 ] number of rotations per year [750-800] landing charge [ ] passenger charge [ ] ground handling services [ ] total aeronautical revenue [ ] non-aeronautical revenue [ ] total revenues [ ] operating costs (staff, sundry purchases, etc.) [ ] marketing costs [ ] financial incentives [ ] total costs [ ] incremental flows (revenues less costs) - [700 000 -750 000 ] (479) table 10 in the above recital shows that an meo would have expected a negative incremental flow of eur [ ] over the period from 2 january to 31 october 2007. consequently, the transaction consisting of the agreements of 2 january 2007 conferred an economic advantage on ryanair/ams. 7.1.1.2.5.4.1.8 amendment of 1 august 2007 (480) the amendment of 1 august 2007 to the marketing services agreement of 2 january 2007 (the amendment of 1 august 2007) provided for the payment of an additional marketing contribution by vtan to ams of eur [ ] for the period between 1 september 2007 and 28 february 2008. according to france, this amendment was a condition for the ryanair service to charleroi to be maintained for the 2007-2008 winter season. it was particularly important for vtan to maintain this service as (i) ryanair was its main operator/customer; and (ii) the n mes airport concession was the first to have been awarded to the veolia group. the amount of the additional contribution of eur [ ] was imposed by ryanair on vtan, which, given its status as an entrant to the market, was not in a strong position to negotiate this contribution downwards. (481) it is clear from these explanations that an meo operating n mes airport would have expected ryanair to stop operating its four flights a week to charleroi during the 2007-2008 winter season if this amendment had not been made. this assumption would have been all the more plausible as the agreements of 2 january 2007 were due to expire on 31 october 2007 and vtan therefore had no guarantee that ryanair would continue to operate its service to charleroi after that date. (482) the incremental traffic associated with the amendment of 1 august 2007 therefore corresponds to the traffic on these four flights a week during the period in question, which would have been lost in the counterfactual situation. using a load factor of 85 % for the reasons given previously, the commission has included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. it has also included the cost of the financial incentives provided for in article 8 of the airport services agreement of 2 january 2007, namely a payment by vtan to ryanair per outbound passenger, which increased in stages according to the number of passengers. table 11 result of reconstructing the ex ante profitability analysis for the amendment of 1 august 2007 2007-2008 winter season total number of inbound and outbound passengers [0-50 000 ] number of rotations per year [100-150] landing charge [ ] passenger charge [ ] ground handling services [ ] total aeronautical revenue [ ] non-aeronautical revenue [ ] total revenues [ ] operating costs (staff, sundry purchases, etc.) [ ] marketing costs [ ] financial incentives [ ] total costs [ ] incremental flows (revenues less costs) - [150 000 -200 000 ] (483) table 11 in the above recital shows that an meo would have expected a negative incremental flow of eur - [150 000-200 000] over the 2007-2008 winter season. consequently, the amendment of 1 august 2007 conferred an economic advantage on ryanair/ams. 7.1.1.2.5.4.1.9 agreements of 1 november 2007 (484) the airport services agreement and the marketing services agreement signed for one year on 1 november 2007 (the agreements of 1 november 2007) replaced the agreements of 2 january 2007 that were due to expire. in the absence of these agreements, ryanair could have ceased all its operations at n mes. as a result, the incremental traffic associated with these agreements corresponds to all the routes and frequencies mentioned in these agreements, namely: a daily route to london during the summer season and four times a week during the winter season, a route to liverpool four times a week during the summer season and twice a week during the winter season, a route to charleroi four times a week throughout the year (139), a route to east midlands twice a week during the summer season. (485) using a load factor of 85 % for the reasons given previously, the commission has included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. it has also included the cost of the aforementioned financial incentives provided for in article 8 of the airport services agreement of 1 november 2007, namely a payment by vtan to ryanair per outbound passenger, which increased in stages according to the number of passengers. table 12 result of reconstructing the ex ante profitability analysis for the agreements of 1 november 2007 winter 2007-2008 summer 2008 total number of inbound and outbound passengers [50 000 -100 000 ] [100 000 -150 000 ] number of rotations per year [250-300] [400-450] landing charge [ ] [ ] passenger charge [ ] [ ] ground handling services [ ] [ ] total aeronautical revenue [ ] [ ] non-aeronautical revenue [ ] [ ] total revenues [ ] [ ] operating costs (staff, sundry purchases, etc.) [ ] [ ] marketing costs [ ] [ ] financial incentives [ ] [ ] total costs [ ] [ ] incremental flows (revenues less costs) - [700 000 -750 000 ] - [800 000 -850 000 ] (486) table 12 in the above recital shows that an meo would have expected negative incremental flows. consequently, the agreements of 1 november 2007 conferred an economic advantage on ryanair/ams. 7.1.1.2.5.4.1.10 agreements of 27 august 2008 (487) the airport services agreement and the marketing services agreement signed for one year on 27 august 2008 and applicable from 1 november 2008 (the agreements of 27 august 2008) replaced the agreements of 1 november 2007 that were due to expire. in the absence of these agreements, ryanair could have ceased all its operations at n mes. as a result, the incremental traffic associated with these agreements corresponds to all the routes and frequencies mentioned in these agreements, namely: a daily route to london during the summer season and four times a week during the winter season, a route to charleroi four times a week throughout the year. (488) using a load factor of 85 % for the reasons given previously, the commission has included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. it has also included the cost of the financial incentives provided for in article 8 of the airport services agreement of 27 august 2008, namely a payment by vtan to ryanair per outbound passenger, which increased in stages according to the number of passengers. table 13 result of reconstructing the ex ante profitability analysis for the agreements of 27 august 2008 winter 2008-2009 summer 2009 total number of inbound and outbound passengers [50 000 -100 000 ] [50 000 -100 000 ] number of rotations per year [200-250] [250-300] landing charge [ ] [ ] passenger charge [ ] [ ] ground handling services [ ] [ ] total aeronautical revenue [ ] [ ] non-aeronautical revenue [ ] [ ] total revenues [ ] [ ] operating costs (staff, sundry purchases, etc.) [ ] [ ] marketing costs [ ] [ ] financial incentives [ ] [ ] total costs [ ] [ ] incremental flows (revenues less costs) - [450 000 -500 000 ] - [500 000 -550 000 ] (489) table 13 in the above recital shows that an meo would have expected negative incremental flows. consequently, the agreements of 27 august 2008 conferred an economic advantage on ryanair/ams. 7.1.1.2.5.4.1.11 agreements of 25 august 2009 (490) on 25 august 2009 vtan signed two agreements (the agreements of 25 august 2009) with ryanair and ams, in the form of amendments extending until 31 december 2011 the application of the agreements of 27 august 2008, which were due to expire on 1 november 2009. in the absence of the agreements of 25 august 2009, ryanair could have ceased all its operations at n mes. as a result, the incremental traffic associated with these agreements corresponds to all the routes and frequencies mentioned in the agreements of 27 august 2008. (491) using a load factor of 85 % for the reasons given previously, the commission has included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. it has also included the cost of the aforementioned financial incentives provided for in article 8 of the airport services agreement of 27 august 2008. table 14 result of reconstructing the ex ante profitability analysis for the agreements of 25 august 2009 winter 2009-2010 summer 2010 winter 2010-2011 summer 2011 winter 2011-2012 (up to 31.12.2011) total number of inbound and outbound passengers [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [50 000 -100 000 ] [0-50 000 ] number of rotations per year [200-250] [250-300] [200-250] [250-300] [50-100] landing charge [ ] [ ] [ ] [ ] [ ] passenger charge [ ] [ ] [ ] [ ] [ ] ground handling services [ ] [ ] [ ] [ ] [ ] total aeronautical revenue [ ] [ ] [ ] [ ] [ ] non-aeronautical revenue [ ] [ ] [ ] [ ] [ ] total revenues [ ] [ ] [ ] [ ] [ ] operating costs (staff, sundry purchases, etc.) [ ] [ ] [ ] [ ] [ ] marketing costs [ ] [ ] [ ] [ ] [ ] financial incentives [ ] [ ] [ ] [ ] [ ] total costs [ ] [ ] [ ] [ ] [ ] incremental flows (revenues less costs) - [450 000 -500 000 ] - [500 000 -550 000 ] - [450 000 -500 000 ] - [450 000 -500 000 ] - [150 000 -200 000 ] (492) table 14 in the above recital shows that an meo would have expected negative incremental flows. consequently, the agreements of 25 august 2009 conferred an economic advantage on ryanair/ams. 7.1.1.2.5.4.1.12 amendment of 18 august 2010 (493) the amendment of 18 august 2010 to the marketing services agreement of 27 august 2008 (the amendment of 18 august 2010) provided for an exceptional increase of eur [20 000-50 000] in the marketing payments made by vtan under the terms of the marketing services agreement of 27 august 2008, extended by the amendment of 25 august 2009. this increase was not a condition for any undertaking by ryanair in terms of opening new routes, increasing frequencies, not closing routes or not reducing frequencies. (494) according to france, the amendment of 18 august 2010 made limited changes (additional payment for exceptional marketing services) involving a very small amount, which were not such as to alter the routes and frequencies stipulated in the initial agreement (agreement of 27 august 2008) or the expected traffic its signature must be viewed in the context of maintaining good commercial relations between the airport operator and ryanair, which were very important for vtan as (i) ryanair was its main operator/customer; and (ii) the n mes airport concession was the first to have been awarded to the veolia group. the amendment can therefore be likened to a gesture of goodwill that did not alter the general balance of the concession. (495) the exceptional marketing services provided for in this amendment were not such as to increase traffic on the routes in question. france has not in fact made this argument, but simply describes this amendment as a gesture of goodwill on the part of vtan. the increase in the marketing payments therefore represented a net incremental cost for vtan, without any incremental revenue being expected in return. it therefore represents a negative net incremental flow of - eur [50 000] for the year 2010. consequently, the amendment of 18 august 2010 conferred an economic advantage on ryanair/ams. table 15 result of reconstructing the ex ante profitability analysis for the amendment of 18 august 2010 2010 2011 total number of inbound and outbound passengers number of rotations per year landing charge passenger charge ground handling services total aeronautical revenue non-aeronautical revenue other (financial income) total revenues operating costs (staff, sundry purchases, etc.) marketing costs [0-50 000 ] financial incentives total costs [0-50 000 ] incremental flows (revenues less costs) - [0-50 000 ] 7.1.1.2.5.4.1.13 amendment of 30 november 2010 (496) the amendment of 30 november 2010 to the marketing services agreement of 27 august 2008 (the amendment of 30 november 2010) provided for an exceptional increase of eur 50 000 in the marketing payments made by vtan under the terms of the marketing services agreement of 27 august 2008, extended by the amendment of 25 august 2009. on reading the amendment of 30 november 2010, the email exchanges between ryanair and vtan that gave rise to this amendment, and the explanations provided by france, it appears that ryanair made the operation of three weekly services instead of two on the n mes-liverpool route during the 2011 summer season conditional upon the additional marketing payment of eur [35 000-65 000]. an email from a ryanair representative to a vtan representative dated 29 november 2010 indicates in particular: yes the [ ] frequencies will be there for [ ] and in return you will give us the [ ] (140). (497) the incremental traffic associated with the amendment of 30 november 2010 therefore corresponds to one weekly service only. using a load factor of 85 % for the reasons given previously, the commission has included this incremental traffic in its analysis, together with the associated incremental costs and revenues, according to the principles set out above. table 16 result of reconstructing the ex ante profitability analysis for the amendment of 30 november 2010 summer 2011 total number of inbound and outbound passengers [0-50 000 ] number of rotations [0-50] landing charge [ ] passenger charge [ ] ground handling services [ ] total aeronautical revenue [ ] non-aeronautical revenue [ ] total revenues [ ] operating costs (staff, sundry purchases, etc.) [ ] marketing costs [ ] total costs [ ] incremental flows (revenues less costs) - [0-50 000 ] (498) table 16 in the above recital shows that an meo would have expected a negative incremental flow of eur - [0-50 000]. consequently, the amendment of 30 november 2010 conferred an economic advantage on ryanair/ams. 7.1.1.3. distortions of competition and effect on trade between member states (499) when financial aid granted by a member state strengthens the position of undertakings compared with other undertakings competing in intra-community trade, that trade must be regarded as affected by that aid. in accordance with settled case-law (141), for a measure to distort competition it is sufficient that the recipient of the aid competes with other undertakings in markets open to competition. (500) since the entry into force of the third air transport liberalisation package on 1 january 1993 (142), nothing prevents eu air carriers from operating flights on routes within the eu and benefiting from unlimited cabotage authorisation. (501) the advantages received by ryanair/ams through the various agreements covered by this investigation, for which the existence of such an advantage has been established above, have therefore strengthened their position with regard to all other eu air carriers that are actually competing or may compete with ryanair for the routes that they operate. as a result, they have distorted or threatened to distort competition and have affected intra-community trade. 7.1.1.4. conclusion on the existence of state aid in favour of ryanair/ams (502) the following agreements meet the cumulative conditions set out in article 107(1) tfeu and constitute state aid in favour of ryanair/ams: the correspondence exchanged between the end of 2001 and the beginning of 2002 and in march 2004, which substantially amended the contents of the agreement signed by the cci with ryanair on 11 april 2000, the airport services and marketing services agreements of 10 october 2005 signed by the cci with ryanair/ams, the airport services and marketing services agreements of 2 january 2007 signed by vtan with ryanair/ams, the amendment of 1 august 2007 to the marketing services agreement of 2 january 2007, the airport services and marketing services agreements of 1 november 2007 signed by vtan with ryanair/ams, the airport services and marketing services agreements of 27 august 2008 signed by vtan with ryanair/ams, the amendments to the agreements of 27 august 2008, dated 25 august 2009, 18 august 2010 and 30 november 2010. (503) the other agreements covered by this investigation do not constitute state aid. 7.1.2. unlawful nature of the state aid (504) as the state aid identified above was implemented without having been authorised by the commission, it constitutes unlawful aid. 7.1.3. compatibility with the internal market (505) the aid in question constitutes operating aid. such aid can be declared compatible only under exceptional and duly justified circumstances. (506) moreover, it is settled case-law (143) that france should have indicated on what legal basis the aid in question could have been regarded as compatible with the internal market and should have proven that the conditions of compatibility were met. the commission therefore invited france, in the opening decision and in a request for further information, to indicate the potential legal bases for compatibility and to establish whether the applicable conditions of compatibility were met, particularly if the aid in question were to be regarded as start-up aid for the launch of new routes. however, france has never argued that the measures in question constituted start-up aid compatible with the internal market, and has never proposed any other bases for their possible compatibility or any grounds allowing this aid to be declared compatible with the internal market. in addition, no interested third party has attempted to prove that these measures are compatible with the internal market. (507) nevertheless, the commission considers it useful to assess to what extent this aid could be declared compatible in terms of its possible contribution to the launch of new routes or new frequencies. however, it should be stressed that this assessment is superfluous given that, in the absence of evidence provided by the member state or interested third parties that proves the compatibility of the aid, this should be declared incompatible. (508) the new guidelines state as follows with regard to such aid: as regards start-up aid to airlines, the commission will apply the principles set out in these guidelines to all notified start-up aid measures in respect of which it is called upon to take a decision from 4 april 2014, even where the measures were notified prior to that date. in accordance with the commission notice on the determination of the applicable rules for the assessment of unlawful state aid, the commission will apply to unlawful start-up aid to airlines the rules in force at the time when the aid was granted. accordingly, it will not apply the principles set out in these guidelines in the case of unlawful start-up aid to airlines granted before 4 april 2014 (144). (509) the 2005 guidelines stipulate that the commission will assess the compatibility of all aid to finance airport infrastructure, or start-up aid granted without its authorisation and which therefore infringes article 88(3) of the treaty, on the basis of these guidelines if payment of the aid started after the guidelines were published in the official journal of the european union. in other cases, the commission will carry out an assessment based on the rules applicable when the aid started to be paid (145). (510) the commission points out that the aid in question was partly granted to encourage the launch of new air routes, increase the frequency on existing routes or maintain routes that might otherwise have been withdrawn. it is therefore operating aid, which aims to promote outbound air traffic from a regional airport. in this respect, it should be pointed out that operating aid is rarely likely to be declared compatible with the internal market as it usually distorts conditions of competition in the sectors in which it is granted. 7.1.3.1. measures predating the entry into force of the 2005 guidelines (511) some of the measures in question were granted before the 2005 guidelines were published on 9 december 2005 (146). with regard to the compatibility of aid granted before this date, point 85 of the 2005 guidelines and point 173 of the new guidelines refer to the rules applicable at the time when the aid was granted. (512) before the 2005 guidelines were adopted, the commission had adopted the 1994 guidelines (147). however, these guidelines did not specifically deal with the issue of operating aid aimed at promoting outbound air traffic from regional airports. this issue in fact gradually appeared as a result of a build-up of congestion at certain large european airports and the development of low-cost operators, which did not yet exist in 1994. consequently, the commission takes the view that the 1994 guidelines also cannot be applied to this case. the commission must therefore in principle assess the compatibility of the aid in question directly on the basis of article 107(3)(c) tfeu. (513) in this respect, it should be noted that the commissions assessment of this type of state aid has been refined over time, although some points have remained unchanged. these points stem from the general principles governing the compatibility of aid in accordance with the aforementioned provision of the treaty. (514) accordingly, in the decision on manchester airport of june 1999 (148), the commission found that reductions in airport charges granted in a non-discriminatory and time-limited manner as measures aimed at promoting new routes were compatible with the rules on state aid. (515) subsequently, in its decision of february 2004 on charleroi airport (149), the commission explained that operational aid measures intended to help the launch of new airlines or strengthen certain frequencies may be a necessary tool for the development of small regional airports. the measures may indeed persuade the interested companies to take the risk of investing in new routes. however, in order to declare such aid compatible on the basis of article 87(3)(c) of the treaty, it should be determined whether this aid is necessary and in proportion to the objective sought, and whether it affects trade to an extent that is contrary to the common interest (150). the commission therefore identified certain conditions to be met in order for this operating aid to be declared compatible, in particular the following: the aid must contribute to the objective of community interest of developing a regional airport through a net increase in traffic on new routes (151). the aid must be necessary in the sense that it is not granted for a route already operated by the same or another airline or a similar route (152). the aid must have an incentive effect in the sense that it must help to develop an activity that, after a certain period, is likely to become profitable, which implies that the aid is limited in time (153). the aid must be proportional, i.e. the amount must be linked to the net development of traffic (154). the aid must have been granted transparently and without discrimination and must not be combined with other types of aid. (516) the 2005 guidelines and the new guidelines precisely define these compatibility principles, but it remains the case that operating aid granted to airlines may be declared compatible by the commission where it contributes to the development of smaller airports through a net increase in traffic on new routes, where the aid is necessary in the sense that it is not granted for a route already operated by the same or another airline or a similar route (155), where it is limited in time and where the route for which the aid is granted is likely to become profitable (156), where the amount is linked to the net development of traffic and where the aid is granted transparently and without discrimination, and where it is not combined with any other type of aid (157). (517) furthermore, in paragraph 301 of the opening decision, the commission indicated that it proposed to examine the compatibility of this aid in the light of article 107(3)(c) tfeu, with neither france nor any interested third party having objected to this approach. (518) in conclusion, the commission takes the view that, in this case, the compatibility of the following measures should be assessed in the light of the aforementioned general principles: the correspondence exchanged between the end of 2001 and the beginning of 2002 and in march 2004, which substantially amended the contents of the agreement signed by the cci with ryanair on 11 april 2000, the airport services and marketing services agreements of 10 october 2005 signed by the cci with ryanair/ams (158). (519) the commission will therefore assess the compatibility of these measures in the light of the aforementioned conditions. (520) contribution to the development of smaller airports through a net increase in traffic on new route. as explained previously, the correspondence exchanged between the end of 2001 and the beginning of 2002, on the one hand, and the correspondence exchanged in 2004, on the other hand, concerned the limited operation of one additional flight to london during a summer season. this correspondence therefore resulted in an increase in traffic from n mes airport. (521) the airport services agreement and the marketing services agreement signed respectively with ryanair and ams on 10 october 2005, which entered into force on 1 january 2005, concerned the launch of three new routes, as well as the continued operation of the existing route to london. these agreements therefore contributed to a net increase in traffic from n mes airport, while also having the objective of contributing to the continued operation of the existing route to london. (522) the measures are not granted for a route already operated by the same or another airline or a similar route. the correspondence exchanged between the end of 2001 and the beginning of 2002 and the correspondence exchanged in 2004 concerned a route that was already being operated, namely london-n mes. however, this correspondence specifically aimed to allow the launch of a second flight on this same route. the 2005 agreements did not just concern the launch of new routes, but the continued operation of the existing route to london. they do not therefore meet the condition that the measure must not be granted for a route that is already operated or a similar route. (523) the measures are limited in time and concern routes likely to become profitable. the correspondence exchanged between the end of 2001 and the beginning of 2002, on the one hand, and the correspondence exchanged in 2004, on the other hand, aimed to allow the limited operation of a second flight to london, respectively during the 2002 summer season and during the 2004 summer season. the facts on record do not suggest that the operation of a second daily flight to london during a summer season was, between the end of 2001 and the beginning of 2002 or in 2004, likely to become profitable without aid. in fact it appears that the aid in question was granted so that this second flight could be operated on a limited basis for a single season, and not with a view to its operation continuing during subsequent summer seasons. neither the correspondence exchanged between the end of 2001 and the beginning of 2002 nor the correspondence exchanged in 2004 therefore meets the condition that the aid must be granted for routes likely to become profitable. (524) in addition, the commission notes that, despite its invitation in this respect, france has not provided any viability study for the various routes and frequencies covered by the correspondence exchanged between the end of 2001 and the beginning of 2002, the correspondence exchanged in 2004 and the 2005 agreements, which ryanair submitted with a view to proving that the aid in question was justified. accordingly, based on the facts on record, it seems that, for the authorities that granted the aid in question, there was no clear prospect of these routes and frequencies becoming viable without aid in the more or less short term. it should also be noted that the 2005 agreements concerned a number of different routes, some of which were not even identified at the time when the agreements were signed, which confirms that the authorities concerned did not have any information likely to reassure them that these routes and frequencies were viable. the commission further stresses that the studies submitted by the french authorities on the economic impact of the air routes operated by ryanair analyse the characteristics of ryanair customers and the impact that they may have on the regions development, but do not include projections of the future viability of these routes or other routes likely to be operated by ryanair in the future. on the contrary, an analysis of the agreements signed with ryanair proves that the aid granted to the latter for these routes was set to increase over time, even after the agreements signed between 2001 and 2005 were terminated, precisely to ensure that these routes were profitable enough for ryanair to continue operating them. (525) given the above, the commission concludes that the correspondence exchanged between the end of 2001 and the beginning of 2002, the correspondence exchanged in 2004 and the 2005 agreements do not meet the condition that the measures must be limited in time and involve routes likely to become profitable. (526) the amount of the measures must be linked to the net development of traffic. the aid amounts resulting from the correspondence exchanged between the end of 2001 and the beginning of 2002 are linked to the development of traffic as these measures aimed to allow the operation of a second daily flight to london. however, this is not the case with the 2005 agreements, which concerned both the launch of new routes and the continued operation of the existing route to london. (527) the aid must have been granted transparently and without discrimination and must not be combined with other types of aid. according to france, when questioned by the commission on the meeting of this condition, the cci wanted to stress that it made considerable efforts to attract airlines other than ryanair under the same conditions. in 1997 the cci apparently started to look for airlines to mitigate the loss of traffic caused by the arrival of the tgv high-speed rail service. according to the cci, scheduled airlines were not interested and it was therefore forced to negotiate with low-cost airlines. (528) according to france, the cci stresses that its first contacts with ryanair were made in 1997, which resulted in an initial route n mes-london stansted being launched in june 2000. after the tgvs arrival in n mes in mid-2001, and after the withdrawal of the paris-n mes route operated by air france, the cci apparently sought to continue this route and made contact with air littoral, which took over the service until july 2003. (529) in 2001 and the following years, the cci also met with the airlines easyjet, buzz, volare, my travel and flybe but, despite the encouraging presence of ryanair at the airport, none of these airlines ultimately wanted to establish an operation there. according to france, the cci stresses that discussions were conducted on the same bases as those with ryanair and that these conditions were offered to all airlines likely to be interested. (530) it is clear from these explanations and from the other facts on record that the aid resulting from the correspondence exchanged between the end of 2001 and the beginning of 2002, the correspondence exchanged in 2004 and the 2005 agreements was negotiated bilaterally, without any transparency, and without a process guaranteeing the absence of discrimination, such as a public invitation to tender. this aid does not therefore meet the condition of transparency and non-discrimination. (531) in the light of the above, the commission considers that the state aid resulting from the correspondence of february 2002 and march 2004, which substantially amended the contents of the agreement signed by the cci with ryanair on 11 april 2000, and from the airport services and marketing services agreements of 10 october 2005 signed by the cci with ryanair/ams is incompatible with the internal market. 7.1.3.2. measures postdating the entry into force of the 2005 guidelines (532) ryanair considers that the 2005 guidelines do not provide a reliable reference framework for assessing the state aid allegedly granted to ryanair (159). however, as these guidelines provide the reference framework that was applied from their entry into force until the adoption of the new guidelines, the commission takes the view that this framework should in fact be applied to the measures in question. the commission is bound to observe the guidelines that it adopts, even if these are contrary to the treaty, which neither france nor ryanair has maintained or proven. (533) the 2005 guidelines stipulate that operating aid granted to airlines (such as start-up aid for new routes) can be declared compatible with the internal market only under exceptional circumstances and under strict conditions in underprivileged regions of europe, i.e. regions covered by the derogation set out in article 107(3)(a) tfeu, the most remote regions and sparsely populated areas (160). as n mes airport is not situated in this type of region, this derogation does not apply. (534) n mes airport is a category d airport (small regional airport) according to the 2005 guidelines (161). small airports often do not have the passenger volumes necessary for them to reach critical mass and the break-even point. consequently, the commission notes that airlines are not always prepared, without appropriate incentives, to run the risk of opening routes from unknown and untested airports. (535) this is why, under the 2005 guidelines, the commission can accept that public aid be paid temporarily to airlines under certain conditions, if this provides them with the necessary incentive to create new routes or new schedules from regional airports and to attract the passenger numbers which will enable them to break even within a limited period. the commission will ensure that such aid does not give any advantage to large airports already largely open to international traffic and competition (162). (536) the specific compatibility criteria are set out in point 79 of the 2005 guidelines. (537) the commission takes the view that the compatibility of the following state aid should be assessed in the light of the 2005 guidelines: the airport services and marketing services agreements of 2 january 2007 signed by vtan with ryanair/ams, the amendments of 1 august 2007 to the agreements of 2 january 2007, the airport services and marketing services agreements of 1 november 2007 signed by vtan with ryanair/ams, the airport services and marketing services agreements of 27 august 2008 signed by vtan with ryanair/ams, the amendments of 25 august 2009, 18 august 2010 and 30 november 2010 to the agreements of 27 august 2008. (538) the commission does not consider that the measures granted can be declared compatible with the treaty. in fact, the commission takes the view that several compatibility criteria are not met, in particular: (539) long-term viability and degressiveness (criterion (d)), absence of a business plan (criterion (i)) and intensity and duration of the measure (criterion (f)) (163). none of the measures in question was structured to guarantee a degressive aid amount limited to a certain percentage of the eligible costs, which are not mentioned in the agreements in question or, to the commissions knowledge, in any other document that vtan or the sman may have had at the time when the agreements were signed. the degressiveness and maximum intensity criterion is not therefore met by any of the measures. (540) in addition, france has indicated that ryanair did not provide vtan with a business plan proving the viability of the route for a substantial period after the expiry of the financial incentives/marketing payments (164). given this fact, and in the absence of any other information supporting the opposite view, the commission concludes that the aid in question was not granted for routes likely to become viable without aid. furthermore, the succession of aid measures for the routes to london (from the end of 2001 to the beginning of 2002), liverpool (from 2005), charleroi and east midlands (from 2006) suggests that ryanair would not have operated these routes if they had stopped being subsidised. (541) given the above, the commission concludes that the aforementioned criteria are not met by any of the measures in question. (542) link with new routes or additional rotations (frequencies) on existing routes (criterion (c)). the commission notes that the agreements in question were not signed solely with a view to opening new routes or additional frequencies. (543) accordingly, the agreements of 2 january 2007 did not provide for the opening of new routes or new frequencies on existing routes over and above those provided for by the 2005 agreements. (544) as regards the amendment of 1 august 2007, france has confirmed that this was a condition for the ryanair service to charleroi to be maintained for the 2007-2008 winter season. it was not therefore linked with the opening of a new route or new frequencies. (545) the agreements of 1 november 2007 also did not provide for the opening of new routes, but rather frequencies that were equal to or less than those provided for in the agreements of 2 january 2007, depending on the season, except for the route to london, for which an additional daily flight was introduced for the summer season. likewise, the agreements of 27 august 2008 concerned only two routes out of the four covered by the previous agreements (london and charleroi), with identical frequencies to those provided for in the agreements of 1 november 2007. the 2009 amendments, which simply extended those agreements, also did not provide for the opening of new routes or additional frequencies. (546) as regards amendment no 1 of 18 august 2010, france has confirmed that the very small amount of the service was not such as to alter the routes and frequencies stipulated in the initial agreement or the expected traffic. according to france, this amendment was signed in order to maintain good commercial relations between the airport operator and ryanair, and can be likened to a gesture of goodwill that did not alter the general balance of the concession (165). (547) as regards amendment no 2 of 30 november 2010, france has confirmed that this amendment was agreed due to pressure being exerted by ryanair on vtan with regard to the liverpool route (166). france has provided emails of 23 and 29 november 2010, exchanged between ryanair and vtan, which prove that ryanair was threatening to withdraw two flights from this route (reducing the number of flights from four to two) and was making the continued operation of these flights for summer 2011 (period from march 2011 to october 2011) conditional upon the purchase of additional marketing services to help promote this route, in an amount of eur [35 000-65 000]. in the absence of this exceptional increase in the contribution, ryanair might have ceased operating the route to liverpool. this amendment was not therefore linked with the opening of new routes or additional frequencies, but only with saving an existing route. (548) as a result, none of the measures in question was granted with a view to opening new routes or additional frequencies on existing routes. (549) compensation for additional start-up costs (criterion (e)) (167). the commission considers that, for each of the measures in question, this criterion was not met. the amounts paid by the operators were not intended to represent a portion of the additional start-up costs, for which, to the commissions knowledge, estimates were never produced by ryanair/ams and provided to the operators. this also shows that the condition relating to the maximum aid intensity was not met. (550) link with the development of the route (criterion (g)) (168). the incentive scheme provided for in the agreements signed with ryanair from 10 october 2005 onwards was not linked to the development of routes, but to the traffic levels achieved by ryanair in terms of the number of passengers. for example, the airport services agreement of 1 january 2007 concerned four routes from n mes airport, namely london, liverpool, charleroi and east midlands. however, the incentive scheme provided for discounts to be granted according to the number of outbound passengers (169), without the passengers actual destination being specified (170). the same analysis of this point can be made for the other agreements. more generally, as explained above, none of the agreements in question was signed exclusively with a view to opening new routes or new frequencies. the resulting aid amounts are not therefore linked with the development of certain routes. accordingly, the commission considers that this criterion is not met by any of the measures in question. (551) non-discriminatory allocation (criterion (h)). according to france, vtan states that its intention to grant financial incentives and/or make marketing payments to ryanair was not made public knowledge before the various agreements were signed. however, vtan made the same proposals to all airlines, which therefore enabled all interested airlines to offer their services as ryanair did (171). as a result, the non-discrimination condition, as set out in the 2005 guidelines, was not met by any of the measures in question. proposals made privately to certain airlines chosen at the discretion of the airport operator are not enough to meet this condition. (552) given all the above, the commission considers that none of the unlawful aid granted to ryanair/ams through the agreements covered by this investigation meets all the criteria established by the 2005 guidelines. accordingly, the aid resulting from the following measures is incompatible with the internal market: the airport services and marketing services agreements of 2 january 2007 signed by vtan with ryanair/ams, the amendments of 1 august 2007 to the agreements of 2 january 2007, the airport services and marketing services agreements of 1 november 2007 signed by vtan with ryanair/ams, the airport services and marketing services agreements of 27 august 2008 signed by vtan with ryanair/ams, the amendments of 25 august 2009, 18 august 2010 and 30 november 2010 to the agreements of 27 august 2008. 7.2. assessment of the financial support for the cci-airport and vtan (553) in this part the commission will assess the various financial support measures granted to the cci-airport and vtan, as described in section 3.2. 7.2.1. existence of state aid within the meaning of article 107(1) tfeu (554) under article 107(1) tfeu, any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the treaty. (555) for a measure to be classed as state aid the following cumulative criteria therefore have to be met: the beneficiary must be an undertaking within the meaning of article 107(1) tfeu, which presupposes that it carries on an economic activity, the measure in question must be granted through state resources and be imputable to the state, the measure must confer a selective advantage on its beneficiary or beneficiaries, the measure in question must distort or threaten to distort competition and be likely to affect trade between member states. (556) in order to determine whether the aforementioned subsidies constitute state aid, it should firstly be ascertained whether their successive beneficiaries, namely the cci-airport and vtan, were undertakings, i.e. carried on economic activities at the time when those measures were granted. in connection with this question, the commission will then assess the subsidies received by the cci-airport and vtan under the national system for financing sovereign tasks in french airports, as described in recital 32 et seq. lastly, the commission will examine whether or not the operation of n mes airport may have constituted a service of general economic interest during the period in question. after having made these three preliminary assessments and using their results, the commission will assess each of the measures covered by this investigation in order to determine whether it constitutes state aid. 7.2.1.1. concepts of undertaking and economic activity (557) as the commission has explained in the new guidelines (172), from the date of the judgment in a roports de paris (12 december 2000), the operation and construction of airport infrastructure must be considered as falling within the ambit of state aid control. conversely, due to the uncertainty that existed prior to this judgment, public authorities could legitimately consider that the financing of airport infrastructure did not constitute state aid and, accordingly, that such measures did not need to be notified to the commission. it follows that the commission cannot now bring into question, on the basis of state aid rules, financing measures granted before 12 december 2000. (558) furthermore, as also indicated in the new guidelines (173), not all the activities of an airport are necessarily of an economic nature. activities that normally fall under the responsibility of the state in the exercise of its official powers as a public authority are not of an economic nature and in general do not fall within the scope of the rules on state aid. (559) with regard to the cci-airport, the measures covered by the opening decision are subsidies received under the national system for financing sovereign tasks in french airports (sovereign task subsidies), various exceptional operating subsidies received from various public authorities and from the ccis general arm between 2000 and 2006, repayable advances granted to the cci-airport by the ccis general arm between 2002 and 2006 (repayable advances), and the alleged non-billing of overheads incurred by the ccis general arm specified in the new guidelines with regard to the compatibility of the operating aid granted to the ccis general arm in connection with the operation of the airport during the 2000-2006 period. (560) it is clear from the explanations provided by france, summarised in recitals 55 to 57, that, except for certain subsidies from the fiata, which formed part of the sovereign task subsidies and which will be examined further on, only the subsidies of eur 250 000, eur 600 000 and eur 500 000 received in 2005 and the subsidy of eur 200 000 received from the ccis general arm in 2006 (the exceptional operating subsidies) were used to finance the airports economic activity. these subsidies were intended to cover the operating deficit resulting from the imbalance between operating costs and revenues generated from making the airport infrastructure available to passengers and airlines. as these subsidies were granted after 12 december 2000 and were used to finance the airports economic activity, they may, with regard to the concepts of undertaking and economic activity, fall within the scope of the rules on state aid. the same is true for the repayable advances, which were also granted after 12 december 2000 and used to ensure the financial stability of the airports operating account. (561) as regards the alleged non-billing of overheads incurred by the ccis general arm in connection with the operation of the airport during the 2000-2006 period, this was an assumption made by the commission in the opening decision. however, as indicated in recital 59, france has provided information showing that, in actual fact, the ccis general arm rebilled the cci-airport for the part of its overheads attributable to the airports activity, based on an objective cost allocation key. this conduct is in line with that of an meo motivated by the prospect of profits in its relations with a subsidiary or division using its general services. consequently, the assumption made in the opening decision concerning the alleged non-billing of certain overheads of the ccis general arm is factually incorrect, and the overheads billing system applied by the cci did not grant any advantage to the cci-airport. this measure does not therefore need to be considered any further in this decision. likewise, the information provided by france on the investments made within n mes airport when it was being managed by the cci, which are the subject of recital 51, shows that the cci-airport bore the cost of these investments on its own and was responsible for making and financing these investments. there are therefore no investment subsidies to the cci-airport to be examined in this assessment. (562) as regards the measures granted to vtan, the main measure is the flat-rate contribution, as established by the cdsp and subsequently amended. this flat-rate contribution was intended to cover the operating deficit resulting from the imbalance between operating costs and revenues generated from making the airport infrastructure available to passengers and airlines, taking into account the costs of certain investments for which vtan was responsible according to the cdsp and its amendments. as the flat-rate contribution was established and amended after 12 december 2000 and was used to finance the airports economic activity, it falls within the scope of the rules on state aid. (563) the other measures granted to vtan that are covered by the formal investigation procedure involve a specific public contribution paid for 2011 in order to take account of the new operating costs incurred by vtan following the closure of the airbase (the specific public contribution) and equipment subsidies for 2011 and 2012 (the equipment subsidies). these various measures, granted after 12 december 2000, were used, at least in part, to finance the airports operation (including its commercial activity of making available the airport infrastructure) as well as investments inherent in the airports commercial activity. with regard to the concepts of undertaking and economic activity, these measures may therefore fall within the scope of the rules on state aid. (564) as a result, the commission will now examine the sovereign task subsidies and: for the cci operating period, the exceptional operating subsidies and the repayable advances, for the vtan operating period, the flat-rate contribution, the specific public contribution and the equipment subsidies. 7.2.1.2. sovereign task subsidies (565) as pointed out by the commission in the new guidelines, the court of justice has held that activities that normally fall under the responsibility of the state in the exercise of its official powers as a public authority are not of an economic nature and in general do not fall within the scope of the rules on state aid (174). according to the new guidelines (175), activities such as air traffic control, police, customs, aircraft firefighting, measures designed to protect civil aviation from acts of unlawful interference, and investment in the infrastructure and equipment needed for such activities are regarded, as a general rule, as not being economic in nature. (566) the new guidelines also stipulate that, so as not to constitute state aid, the public financing of such non-economic activities must be strictly limited to compensating the costs to which they give rise and must not lead to undue discrimination between airports. the guidelines clarify with regard to this second condition that, when it is normal under a given legal order that civil airports have to bear certain costs inherent in their operation, whereas other civil airports do not, the latter might be granted an advantage, regardless of whether or not those costs relate to an activity which in general is considered to be of a non-economic nature (176). (567) the activities financed by the general system for financing sovereign tasks in french airports, as described in recital 32 et seq., relate to safeguarding civil aviation against acts of unlawful interference (177), police tasks (178), aircraft rescue and firefighting (179), air traffic safety (180) and the protection of the natural and human environment (181). these activities can legitimately be regarded as falling under the responsibility of the state in the exercise of its official powers as a public authority. consequently, france may legitimately regard these tasks as sovereign in nature, in other words non-economic, under the rules on state aid. it may therefore provide for public financing to compensate the costs incurred by airport operators in carrying out these tasks in so far as these are entrusted to the latter by national law and provided that this financing does not give rise to overcompensation or discrimination between airports. (568) it is clear from the description in recital 32 et seq. that the system laid down by french law is based on strict cost control mechanisms, both ex ante and ex post, ensuring that airport operators receive, through the airport tax and additional financing instrument, only those amounts strictly needed to cover the costs. (569) moreover, this system applies to all french civil airports in terms of both the types of task giving rise to compensation and the financing mechanisms. the non-discrimination condition is therefore met. although french law entrusts airport operators with sovereign tasks, it does not require them to finance those tasks, but rather the state. accordingly, the compensation of the costs arising from those tasks by public funds does not reduce the costs that airport operators should normally bear under french law. (570) this national system has been applied to n mes airport since 2000. as a result, the financing received by the cci-airport and vtan under this system does not constitute state aid. this conclusion applies, inter alia, to the subsidies received by the cci-airport from the fiata, as mentioned in recital 55. 7.2.1.3. state resources and imputability to the state (571) the various measures still to be examined were granted by local authorities (the cgg, the caac and the canm), the sman (which is a group of local authorities) and the cci. (572) the resources of local authorities are state resources within the meaning of article 107(1) tfeu (182). furthermore, the conduct of such authorities falls within the scope of that article, in the same way as measures taken by the central authority, if the conditions of that provision are met (183). accordingly, decisions of local authorities such as the cgg, the caac and the canm must be regarded as imputable to the state (in the broad sense) within the meaning of the case-law on state aid. (573) this conclusion is valid, by extension, for a group of local authorities such as the sman. moreover, as indicated in section 2.2, the smans budget is funded by contributions from the constituent local authorities. in fact, the smans resources mainly consist of: (i) contributions from its members; (ii) subsidies; (iii) income from gifts and legacies; (iv) income from loans; (v) income from charges paid by operators; and (vi) more generally, all direct and indirect income associated with exercising the power defined by the smans articles of association. moreover, the sman is managed by a board consisting solely of representatives of its member local authorities. as a result, the smans resources are state resources and all its decisions are imputable to the state within the meaning of the case-law on state aid. (574) as regards the measures granted by the ccis general arm to the cci-airport, as established previously in the section on state resources and imputability (section 7.1.1.1), the cci is a public authority and therefore all its resources must be regarded as state resources and all its decisions are imputable to the state within the meaning of the case-law on state aid. (575) as a result, all the measures covered by this assessment are imputable to the state and financed through state resources. 7.2.1.4. selective economic advantage (576) in order to ascertain whether a state measure grants an advantage to an undertaking pursuant to article 107(1) tfeu, it must be determined whether the undertaking in question received an economic advantage enabling it to avoid having to bear costs that would normally have had to be met out of its own financial resources, whether it received an advantage that it would not have received under normal market conditions (184), or whether the measure in question can be regarded as public service compensation satisfying the conditions of the altmark judgment. 7.2.1.4.1. concept of service of general economic interest and application of the altmark judgment 7.2.1.4.1.1. application of the concept of service of general economic interest (577) it must be ascertained whether the various measures still to be examined can be regarded as public service compensation granted in order to provide a genuine service of general economic interest (sgei). (578) in this regard, it should be recalled that the court of justice ruled in the altmark judgment that public service compensation does not constitute state aid within the meaning of article 107(1) tfeu when four cumulative conditions are met. first, the recipient undertaking must actually have public service obligations to discharge, and the obligations must be clearly defined. second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner. third, the compensation must not exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit. finally, where the undertaking that is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs that a typical undertaking, well-run and adequately provided with the relevant means, would have incurred. in order to apply these conditions, the first point to be examined is the existence of a genuine sgei. (579) france takes the view, which is shared by the operators, that the overall management of n mes airport, given its size and local role, should be regarded as an sgei. according to france: even if it is considered that languedoc-roussillon is not an isolated region and that its accessibility is not dependent upon the air routes offered by n mes airport, which is debatable as shown in point 2 below, the fact remains, in the light of all the above, that the operation of n mes airport involves a series of public service obligations and that the commission has not proven that a private market economy operator would have been prepared to assume such obligations, to the same extent or under the same conditions, in the absence of public service compensation. in this respect, it is irrelevant whether or not the airport is situated in an isolated region. both the commissions guidelines and settled case-law recognise that member states have a margin of discretion when defining public service obligations. the determining factor for establishing the existence of an sgei is whether an operator considering its own commercial interest would assume the service in question to the same extent or under the same conditions (185). (580) this reasoning is vitiated by a manifest error of assessment. in actual fact, in order to assess the extent to which the operation of an airport is an sgei, the need in the general interest met by that activity must be considered. in this regard, the airports size is also not a relevant criterion. (581) as the commission has already indicated in its decision-making practice: economic development is not sufficient to justify a service being defined as an [sgei]. such a definition must be based on public service reasons going beyond the general interest of developing economic activities (186). the treaty already contains a specific compatibility clause for aid to facilitate the development of economic activities (article 107(3)(c)), whilst, according to the case-law of the court of justice, sgeis are services that exhibit special characteristics as compared with the general economic interest of other economic activities (187) and undertakings entrusted with sgei tasks are undertakings entrusted with a particular task (188). generally speaking, the entrustment of a particular public service task implies the supply of services which, if it were considering its own commercial interest, an undertaking would not assume or would not assume to the same extent or under the same conditions (189). applying a general interest criterion, member states or the union may attach specific obligations to such services. (582) the commission has also indicated in the new guidelines: as far as airports are concerned, the commission considers that it is possible for the overall management of an airport, in well-justified cases, to be considered an sgei the commission considers that this can only be the case if part of the area potentially served by the airport would, without the airport, be isolated from the rest of the union to an extent that would prejudice its social and economic development. such an assessment should take due account of other modes of transport, and in particular of high-speed rail services or maritime links served by ferries (190). (583) as a result, the contribution of n mes airport to local economic development, which is the main factor highlighted by france in support of its theory regarding the existence of a genuine sgei, is not in itself a relevant factor as it must be considered separately from the contribution of that airport to the regions accessibility. it is not disputed that, by improving a regions accessibility, particularly when it breaks its isolation, an airport can have positive effects on local economic development. however, the simple fact that the presence and activity of an airport generate direct and indirect jobs and stimulate the activity of local undertakings cannot be regarded as a relevant criterion for establishing the existence of a genuine sgei. (584) as regards the contribution of n mes airport to the regions accessibility, france has recognised in particular that montpellier airport is situated just 63 km from n mes airport, which represents a journey time of only 49 minutes by road. it has also recognised that n mes has been served by a high-speed rail service (tgv) since 2001. this town is therefore connected, for example, to paris and lyon by regular train services with journey times of around 3 hours and 1 hour 30 minutes respectively. france has omitted to take account of this rail service in its arguments on the existence of an sgei. as regards the road network, the town of n mes is situated right next to the a9 and a54 motorways, which directly connect it to the main cities in the south-eastern quarter of france, notably lyon, marseille and montpellier. in the light of this information, it cannot be argued that part of the area potentially served by n mes airport would, without the airport, be isolated from the rest of the union to an extent that would prejudice its social and economic development. (585) as regards montpellier airport, france has indicated as follows: although the above information tends to place it in the same catchment area as n mes airport due to the journey time of less than 60 minutes and the cost of the return journey not exceeding eur 20, it should, however, be stressed that the ryanair routes from montpellier airport, which currently number four, meet a tourist demand that is situated more to the west than to the east of the airport (the route to hahn is an example of this, even though ryanair has withdrawn its routes to germany from marseille) and that n mes airport covers a different catchment area from part of montpellier airports catchment area (in particular the c vennes, uz ge and the northeast of gard/south of the ard che in the rh 'ne valley). it therefore has a particular catchment area. it should also be noted that 51 % of low-cost passengers travel less than 50 km from their airport. (586) france has therefore recognised that there are factors suggesting that n mes airport is situated within the same catchment area as montpellier airport. under these circumstances, it cannot be argued that the presence of n mes airport may prevent an isolation that could prejudice the social and economic development of part of the area served by that airport, particularly as n mes airport is served by the tgv, as indicated above. france has also not provided any information allowing the extent of such a hypothetical prejudice to be assessed. the fact that the catchment areas of n mes and montpellier airports are not exactly the same is not a sufficient argument. in fact, the catchment areas of two separate airports, however close they may be, never exactly coincide. lastly, the fact that 51 % of low-cost passengers travel less than 50 km from their airport does not prove that, without n mes airport, travellers wanting to travel to or from the catchment area of that airport would not be prepared, to a large extent, to use flights that start or end at montpellier airport. (587) france has also argued that the development of the air traffic task entrusted to vtan through the cdsp can be regarded as a public service obligation within the meaning of the altmark case-law. according to france, this task concerns the economic and tourism development of the area, which requires, in its opinion, (i) an increase in passenger flows, generating income and jobs for the regional economy ; and (ii) the development of the enterprise zone situated adjacent to the airport. as regards this enterprise zone, france refers to several undertakings established there and indicates that within this industrial hub, vtan has the task of developing aviation-related activities and building the industrial or commercial activity that can generate jobs for the area (191). (588) this argument cannot be accepted given that, as recalled above, the simple contribution of an activity to local economic development is not in itself sufficient to justify that activity being defined as an sgei. moreover, the commercial development of an airport by introducing new air routes or expanding non-aeronautical activities cannot as such satisfy the general interest criterion for definition as an sgei. in particular, the commission takes the view that the compensation by public authorities of the net costs incurred in the provision of an sgei should not affect the economic incentive for an airport operator to enter into commercial relations with airlines. (589) as a result, in the light of all the above and the arguments submitted by france, and particularly given the proximity of montpellier airport and the tgv service from which n mes benefits, the commission takes the view that france has committed a manifest error of assessment in claiming that the overall management of n mes airport was an sgei. in particular, the activity of the n mes airport operator consisting of handling commercial passenger transport flights at that airport cannot be regarded as a genuine sgei. it therefore follows that, in so far as the various financial support measures covered by this assessment were intended to finance the operation of the airports activity as a whole, they cannot be regarded as financial compensation granted with a view to the management of a genuine sgei. as a result, they do not satisfy the cumulative conditions of the altmark judgment. (590) furthermore, even if all or part of the management of n mes airport could validly be defined as an sgei, the measures in question would still not satisfy the cumulative conditions of the altmark judgment. in fact, they do not satisfy the first, second and fourth conditions of that judgment, as will be proven further on in the light of the communication on the application of the state aid rules to compensation granted for the provision of an sgei (192) (the sgei communication). the commission considers that, in the case of n mes airport, these conditions of the altmark judgment should be assessed by distinguishing between the entities that effectively carried on this economic activity during the 2000-2012 period. 7.2.1.4.1.2. clearly defined public service obligations discharged by the undertaking (first condition) (591) as france has committed a manifest error of assessment by defining the overall management of the airport as an sgei and as the measures covered by the present assessment were used to finance the airports operation as a whole, the first altmark condition is not satisfied. (592) in addition, according to the sgei communication (193), in order for the first altmark condition to be satisfied, the public service task must be assigned by way of one or more acts that, depending on the legislation in member states, may take the form of legislative or regulatory instruments or contracts. moreover, the act or series of acts must at least specify the content and duration of the public service obligations, the undertaking and, where applicable, the territory concerned, the nature of any exclusive or special rights assigned to the undertaking by the authority in question, the parameters for calculating, controlling and reviewing the compensation, and the arrangements for avoiding and recovering any overcompensation. the only acts produced by france that could possibly fulfil this function are the 1965 order, the concession agreement, the cdsp and their subsequent amendments, in so far as they impose various obligations on the cci in terms of operation (including on points such as opening times or equal treatment of users), servicing, maintenance and development, for a specified period. however, aside from the cdsp and its amendments, which apply only to vtan, none of these acts lays down arrangements for calculating and reviewing any financial compensation mechanism. as a result, the acts having assigned obligations to the cci-airport do not meet the requirements of the first altmark condition, even regardless of the fact that the obligations imposed on the cci-airport do not form a genuine sgei. 7.2.1.4.1.3. compensation parameters established in advance in an objective and transparent manner (second condition) 7.2.1.4.1.3.1. cci-airport operating period (2000-2006) (593) the exceptional subsidies and repayable advances received by the cci-airport were all exceptional measures granted on an ad hoc basis to finance the airports operating deficit. they did not therefore stem from calculation parameters that were established in advance. (594) it should be noted that the cci-airports tasks for the period from 2000 to february 2006 were specified in the 1965 order and its annexed schedule of conditions and in the 1986 aot. however, these acts did not provide for any financial compensation mechanism for the cci, based on parameters established in advance in an objective and transparent manner. (595) likewise, the concession agreement, which defined the cci-airports obligations for the period from february to december 2006, also did not provide for any financial compensation mechanism for the operator. (596) as a result, the financial support measures granted to the cci-airport do not satisfy the second altmark condition. 7.2.1.4.1.3.2. vtan operating period (2007-2012) (597) the compensation paid to vtan by the sman was granted under the cdsp and its annexes, which stipulated the obligations of both parties within the airport operation task and which defined the arrangements for calculating the flat-rate contribution paid to vtan by the sman. (598) however, the arrangements for calculating this contribution were subsequently altered by four amendments. in particular, amendment no 3 to the cdsp provided for the sman to grant vtan a subsidy of eur [100 000-300 000] for 2009 and specifically altered the wording of clause 27-4 of the cdsp, which from that date stipulated that the flat-rate contribution may be increased by the amount of subsidies received by the delegating authority from other authorities. amendment no 3 therefore introduced new calculation parameters, which were not objective because they were unconnected with vtans costs and revenues. (599) as a result, the flat-rate contribution does not satisfy the second altmark condition. the specific public contribution and equipment subsidies referred to in recital 565 also do not satisfy this condition because they involved exceptional financial support that was not established at the start. 7.2.1.4.1.4. arrangements for selecting the service provider (fourth condition) 7.2.1.4.1.4.1. cci-airport operating period (2000-2006) (600) the cci was not chosen to operate the airport following an invitation to tender procedure and the commission does not have any information indicating that the amounts of the financial support measures that it received may have been determined on the basis of an analysis of the costs which a typical undertaking, well-run and adequately provided with the relevant means, would have incurred. (601) as a result, the financial support measures granted to the cci-airport do not satisfy the fourth altmark condition. 7.2.1.4.1.4.2. vtan operating period (2007-2012) (602) veolia transport was selected following a negotiated procedure, which was preceded by a notice of a competitive public tender published in the official journal of the european union. under eu law, the french authorities therefore had recourse to a negotiated procedure with prior publication of a contract notice (194). (603) the commission generally takes the view that a negotiated procedure with prior publication can be deemed to satisfy the fourth altmark condition only in exceptional cases (195). it notes, in this respect, that, once the two tenderers having responded to the invitation to tender had submitted their tenders, the sman initiated negotiations with each one (196). contacts were made in particular between veolia transport and the sman in order to clarify, and even amend, certain important aspects of veolia transports tender. france has indicated, for example, that on 20 september 2006 veolia transport made further proposals over and above its initial tender, in the light of information contained in the smans letter of 6 september 2006. moreover, on 4 october 2006 veolia transport submitted a series of clarifications amending essential elements of its tender, such as (i) introducing a downturn scenario leading to a change in the flat-rate contribution if the airports activity were to be reduced; (ii) changing the formulas stipulated for updating the general balance of the delegation; or even (iii) amending the undertakings made with regard to staff costs (197). (604) moreover, in the decision awarding the contract (198) at the end of the procedure, the sman stated that veolia transports tender was the most advantageous with regard to the criteria laid down by the consultation rules, in particular: (i) commercial development policy; (ii) financial control; (iii) security; and (iv) quality undertaking (199). however, the criteria in question left the sman with plenty of room for manoeuvre in the choice of service provider, as these criteria were worded very generally and went beyond the quality of the service provided and the cost to the community. this was particularly the case with the criterion entitled commercial development policy, which cannot be likened in any way to a quality criterion for an sgei. (605) for all these reasons, the procedure followed by the sman was unlikely to ensure that the tenderer capable of providing the services concerned at the least cost to the community was selected. furthermore, there is no evidence that the cost forecasts produced by vtan, based on which the flat-rate contribution was established, corresponded to the costs that a typical undertaking, well-run and adequately equipped, would have incurred in operating the airport. in this respect, it seems that vtan mainly used the cci-airports operating figures to establish its forecasts. however, there is nothing to confirm that the cci-airport acted as a typical undertaking, well-run and adequately equipped. (606) as a result, the financial support measures granted to vtan do not satisfy the fourth altmark condition. (607) as established above, none of the measures in question satisfies the cumulative conditions of the altmark judgment. it therefore remains to determine whether the various measures in question were likely to enable the cci-airport or vtan to avoid having to bear costs that would normally have had to be met out of their own financial resources or whether these corresponded to normal market conditions. 7.2.1.4.2. analysis of the existence of an economic advantage measures likely to enable the cci-airport and vtan to avoid costs that they would normally have had to bear 7.2.1.4.2.1. cci-airport operating period (2000-2006) (608) the exceptional subsidies totalling eur 1,35 million received in 2005 from the caac, the canm and the cgg were non-repayable subsidies granted without any prospect of a return on their investment for the authorities concerned. the same was true of the subsidy of eur 200 000 granted to the cci-airport by the ccis general arm in 2006. this non-repayable subsidy was in fact granted in order to finance the operating deficit that the cci-airport was facing in the final year of the period during which it operated the airport, and there was consequently no prospect of profitability for the ccis general arm. (609) with regard to the repayable advances, it should firstly be noted that these were equivalent to interest-free loans granted by the ccis general arm to the cci-airport. according to france, the fact that the advances were made available without applying an interest rate is not moreover sufficient for the commission to conclude that they constituted state aid. in accordance with general court case-law, it must be accepted that lenders, due to their prior capacity as shareholders, can agree to grant interest-free loans or guarantees not remunerated by premiums. likewise, it should be accepted that it was normal for the cci, as the airport concession-holder, to make sufficient resources available to its airport arm so that the latter could ensure the continued operation of n mes airport (200) (footnotes omitted). such an argument might be relevant only if, by granting these advances to allow the continued operation of n mes airport, the cci expected the airport to become profitable in the more or less long term, allowing the cci not only to see these advances repaid, but also to receive a return on its investment remunerating the capital committed, through any profits made by the airport. (610) the commission therefore questioned france on the profits that the cci might have expected from granting these repayable advances. however, in its reply (201), france did not mention any hypothetical profit expected from granting these subsidies. it simply referred to the concessions schedule of conditions, annexed to the 1965 order, according to which, at the end of the concession, the state undertook to repay to the cci the balance of the advances granted to its airport arm. in its reply, france did not mention any prospect of a return on the repayable advances, aside from the assurance of this repayment by the state at the end of the concession. (611) quite clearly, at the time when it granted the various repayable advances, the cci could not have expected the airports operation to become profitable, allowing the cci-airport to repay the advances granted while leaving a profit margin that could remunerate the capital committed by the ccis general arm. in fact, the repayable advances were granted from 2002. at that stage, air france had already withdrawn from n mes airport and the town was already being served by the tgv. furthermore, as shown by table 2, the airports losses since 1999 steadily became worse from that date, increasing from eur 269 000 to eur 796 000. its losses continued to worsen after that date, reaching eur 2,4 million in 2003 (the year when air littoral terminated its services to paris), before falling to eur 643 000 in 2005. lastly, as shown by the analysis of the agreements between the cci-airport and ryanair/ams, in 2002 the cci-airport had already started to sign agreements with ryanair that would erode the airports profitability, which it did until 2005 inclusive. finally, in the absence of the exceptional subsidies, the cci-airports results would have been even worse, thus ruling out any prospect of a return on the capital invested. (612) in the light of all these factors, the cci could not have considered that there was any likelihood of it receiving any return, in the more or less short term, on the capital that it had committed through the advances granted to the cci-airport. the cci could even have legitimately harboured serious doubts that the cci-airport would one day be able to repay the cci. very significant repayable advances therefore had to be granted every year from 2002 to 2006, totalling around eur 7 million, which was in addition to eur 2,7 million of repayable advances granted up to the end of 2001. (613) in this respect, france has stated that no precise deadline was set for repayment of the advances by the cci-airport and that these advances were determined each year in order to balance the cci-airports budget. (614) furthermore, although it was stipulated that the state would repay the balance of the repayable advances at the end of the concession, it was not planned for it to pay any interest rate correctly remunerating the credit granted by the cci to its airport arm. (615) given all the above, it seems that the cci did not act towards its airport arm as an meo motivated by the prospect of profits would have done. (616) in conclusion, the exceptional subsidies and repayable advances each conferred an economic advantage on the cci-airport. in addition, as these advantages each benefited a single undertaking, they were selective. 7.2.1.4.2.2. vtan operating period (2007-2012) (617) under the cdsp, the sman undertook to pay a flat-rate contribution to vtan throughout the term of the public service delegation, amounting to eur [1,2-1,5] million in the reference scenario and eur [1,0-1,3] million in the downturn scenario. vtan undertook to pay an annual fee of one euro for the occupation of the land, structures and infrastructure. as this agreement represented a significant net cost for the sman, which could not have expected any tangible financial return on the amounts committed under this agreement, it did not correspond to normal market conditions and conferred an economic advantage on vtan. (618) amendment no 1 to the cdsp increased the flat-rate contribution by eur [20 000-50 000], without any prospect of a return for the sman. this was intended to compensate for the loss of revenue that vtan could have expected on becoming the airport operator, but which it was forced to relinquish subsequently. like the cdsp itself, amendment no 1 represented a net cost for the sman without any prospect of a return, and did not correspond to normal market conditions. it therefore conferred an economic advantage on vtan. (619) the same reasoning applies to amendment no 3, which again increased the amount of the flat-rate contribution without any prospect of a return for the sman, and therefore conferred an economic advantage on vtan. (620) however, the situation is different for amendment no 2. this stipulated that vtan would renew the terminals air-conditioning system and that the sman would compensate vtan for the undepreciated value of the equipment at the end of the delegation. however, prior to the signature of amendment no 2, article 25.2 of the cdsp stipulated that all the necessary investments were the responsibility of the sman, except for a limited list of investments that were vtans responsibility under article 25.1 of the cdsp. as a result, without amendment no 2, it would have been the sman, and not vtan, that would have had to finance the renewal of the air-conditioning system, which had become unusable. amendment no 2 did not therefore reduce the costs that would normally have had to be met out of vtans financial resources. on the contrary, it represented a financially advantageous solution for the sman, which would have had to cover the investment in question, but which, thanks to amendment no 2, did not have to commit the necessary sums and only had to finance the undepreciated value of the equipment at the end of the delegation. amendment no 2 did not therefore confer any economic advantage on vtan and is not therefore state aid. (621) likewise, amendment no 4 made vtan responsible for investments that were not its responsibility under the terms of the cdsp, by providing for equipment subsidies in order to finance them. it was stipulated that the equipment subsidies would be readjusted at the end of the delegation in order to bring the payments into line with the expenditure actually incurred by vtan. without amendment no 4, the corresponding investment costs, which became necessary due to the closure of the airbase, would have had to be met by the sman. the equipment subsidies did not therefore reduce the costs that would normally have had to be met out of vtans financial resources. (622) on the other hand, from the smans point of view, it was economically rational to ask vtan, as the airport operator, to make the necessary investments identified by working groups composed of various stakeholders, by granting it financial compensation limited to the costs incurred, through the readjustment mechanism at the end of the delegation. in operational terms, it was in fact efficient for the airport operator to make these investments. the equipment subsidies did not therefore confer any economic advantage on vtan and are not state aid. (623) as regards the specific public contribution, also established by amendment no 4, this was a subsidy granted by the sman without any prospect of a return, just like the flat-rate contribution established by the initial version of the cdsp. it did not correspond to normal market conditions. it therefore conferred an economic advantage on vtan. (624) in conclusion, the flat-rate contribution, as established by the initial version of the cdsp and increased by amendments nos 1 and 3, conferred an economic advantage on vtan. in addition, as these advantages benefited a single undertaking, they were selective. the same is true for the specific public contribution. on the other hand, neither amendment no 2 nor the equipment subsidies conferred any economic advantage on vtan. these measures do not therefore constitute state aid. 7.2.1.5. effect on intra-eu trade and competition (625) n mes airport is in particular in competition with other airport platforms, and especially those serving all or part of the same catchment area, such as montpellier and avignon airports. aid granted to the operator of n mes airport (the cci-airport or vtan) therefore risks distorting competition. in this respect, the commission notes that montpellier airport is only 63 km from n mes airport. as the airport service market and air transport market are open to competition within the eu, aid also risks affecting trade between member states. (626) more generally it should be noted that eu airport operators are in competition with each other to attract airlines. airlines decide on which routes to operate and their corresponding frequencies based on a range of criteria. these criteria not only include the potential customers that they can expect on these routes, but also the characteristics of the airports situated at either end of these routes. (627) airlines particularly look at criteria such as type of airport services provided, population or economic activity around the airport, congestion, whether there is access by land, or even the level of charges and overall commercial conditions for use of airport infrastructure and services. the charge level is a key factor, since public funding granted to an airport could be used to maintain airport charges at an artificially low level in order to attract airlines and may thus significantly distort competition (202). (628) consequently, airlines allocate their resources, particularly aircraft and crew, to the various routes by looking at the services offered by airport operators and the prices charged for those services, among other criteria. (629) it is clear from the above that the various measures granted to the cci-airport and vtan and covered by this assessment were likely, in so far as they conferred an economic advantage on one of these two undertakings, to have reinforced the respective positions of these two undertakings compared with other european airport operators. consequently, these measures may have distorted competition and affected trade between member states. 7.2.1.6. conclusion on the existence of state aid (630) the sovereign task subsidies do not constitute state aid. the exceptional operating subsidies and repayable advances received by the cci-airport constitute state aid to the latter. the flat-rate contribution, as established by the initial version of the cdsp and increased by amendments nos 1 and 3, constitutes state aid to vtan, as does the specific public contribution. amendment no 2 and the equipment subsidies are not state aid. 7.2.2. unlawfulness of the aid (631) the exceptional operating subsidies, repayable advances, flat-rate contribution and their various amendments, as also the specific public contribution, were implemented without being notified. (632) the commission decision of 28 november 2005 on the application of article 106(2) tfeu to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (the 2005 sgei decision) lays down the conditions under which certain aid granted as public service compensation may be exempt from the requirement of notification laid down in article 108(3) tfeu. according to france, the measures granted to the cci-airport or vtan after 19 december 2005 meet these conditions. (633) the commission considers that this is not the case. firstly, the overall management of n mes airport cannot be regarded as a genuine sgei, as proven above. consequently, as the various aforementioned measures were granted to finance the overall management of the airport, they do not meet the criteria laid down by the 2005 sgei decision. (634) secondly, as indicated previously, even if the overall management of the airport could be defined as an sgei, none of the measures in question stemmed from the application of a compensation mechanism for which the parameters were established in advance in an objective and transparent manner. in fact, as indicated previously, the measures in question do not satisfy the second altmark condition. accordingly, these measures do not satisfy the conditions laid down in article 4(d) and (e) of the 2005 sgei decision, according to which the act or acts entrusting the operation of a service of general economic interest must specify the description of the compensation mechanism and the parameters for calculating, controlling and reviewing the compensation as well as the arrangements for avoiding and repaying any overcompensation. this is the second reason why the aforementioned measures could not have been exempted, under the 2005 sgei decision, from the requirement of notification laid down by article 108(3) tfeu. (635) in the light of the above, the exceptional operating subsidies, repayable advances, flat-rate contribution, as established by the initial version of the cdsp and increased by amendments nos 1 and 3, and specific public contribution constitute unlawful aid. 7.2.3. compatibility with the internal market (636) as proven above, france has committed a manifest error of assessment in claiming that the overall management of n mes airport was an sgei. in particular, the activity of the n mes airport operator consisting in handling commercial passenger transport flights at that airport cannot be regarded as a genuine sgei. these conclusions apply both to the cci-airport operating period and the vtan operating period. in so far as the various financial support measures covered by this assessment were intended to finance the operation of the airports activity as a whole, they cannot be regarded as financial compensation granted with a view to the management of a genuine sgei. (637) moreover, as proven above, even if all or part of the management of n mes airport could have been validly defined as an sgei, none of the financial support measures covered by this assessment stemmed from a financial compensation mechanism for which the parameters were established in advance in an objective and transparent manner, accompanied by parameters for calculating, controlling and reviewing the compensation and arrangements for avoiding and repaying any overcompensation. as a result, the measures in question do not satisfy the cumulative conditions established by the european union framework for state aid in the form of public service compensation, which is applicable to this case ratione temporis (203). moreover, for the same reasons and as proven in recitals 633 to 635, the measures in question also do not satisfy the cumulative conditions established by the 2005 sgei decision. consequently, these measures cannot be declared compatible with the internal market on the basis of article 106(2) tfeu. (638) the commission will now analyse the measures covered by this assessment in the light of the various criteria laid down in article 107(3)(c) tfeu. (639) all the state aid identified in this assessment is operating aid in so far as it was intended to finance the operation of n mes airport, and not specific investments made within that airport. all this operating aid was granted unlawfully before 4 april 2014, which was the date of entry into force of the new guidelines, in which the commission declared that it would apply the principles set out in those guidelines to all ongoing cases concerning operating aid to airports, even if that aid was granted before 4 april 2014 (204). (640) according to the new guidelines, operating aid granted to airports before 4 april 2014 may be declared compatible to the full extent of uncovered operating costs provided that a series of conditions is met (205). these conditions may be summarised as follows: the aid contributes to a well-defined objective of common interest (it increases the mobility of union citizens and the connectivity of the regions, it combats air traffic congestion at major union hub airports, or it facilitates regional development), state intervention is needed, the aid is an appropriate policy instrument, the aid has an incentive effect, in the sense that, in its absence, the level of economic activity of the airport concerned would be significantly reduced, the aid is proportionate, in the sense that it is limited to the minimum necessary for the aided activity to take place, distortions of competition caused by the aid and its effects on trade must be taken into account in the assessment. (641) the commission will apply these criteria to the aid in question. 7.2.3.1. contribution to a well-defined objective of common interest (642) in so far as this aid financed n mes airports operating deficit, it allowed the airport to continue operating. as underlined by france, this airports activity has a positive impact on the economic development of the gard department, particularly in the tourism sector. local economic development is recognised by the new guidelines as an objective of common interest that could have justified operating aid being granted to an airport before 4 april 2014, if certain conditions were met. (643) with regard to the tourism sector, it is undeniable that n mes airport serves a tourist region and that the scheduled flights offered by ryanair to this airport since 2000 have brought significant flows of tourists into the n mes region. for example, the aforementioned 2006 study on the economic impact of n mes airport (206) states that, for 2006 alone, the tourists carried to n mes airport spent eur 100 million in the local economy (207), including eur 21 million on accommodation, eur 26 million on meals, eur 20 million on other food purchases, eur 9 million on transport (excluding air transport), eur 4 million on visits and eur 6 million on souvenirs. the economic impact indirectly resulting from the airports activities (i.e. the effect on the rest of the local economy) is estimated in that study at eur 2,38 billion, taking account of the investment effect. (644) furthermore, this 2006 study indicates that 2 200 jobs were directly linked to the airports activities (208). accordingly, until the closure of the airbase in july 2011, this brought numerous families into the n mes area (over 800 children of military personnel attended school in the gard department). (645) the presence of both the airbase and civilian aviation activity also allowed an aviation-related industrial hub to develop at the airport site. this hub encompasses activities such as: ghsc (groupement dh licopt res de la s curit civile), which is simultaneously the command centre for the 22 permanent and operational civil security bases spread throughout the mainland and the overseas departments, a maintenance centre for the ministry of the interiors helicopter fleet, and a staff training and continuous pilot training centre (number of staff at the site: 140), sabena technics (tat group): a civil and military aviation maintenance services company (number of staff at the site: 336), avdef: aviation d fense service (eads group), which is active in on-demand public transport and medical evacuation services, aerial work for the armed forces and forest firefighting (number of staff at the site: 51), airways formation: pilot school, with an air transport arm that covers all the training needed to join an airline, and an instructors arm preparing for all the instructor qualifications laid down by law (number of staff at the site: 11). (646) in total, according to france, the industrial hub generated 680 civilian jobs in 2012, to which over 3 000 indirect jobs generated by the airports activity can be added. (647) france also indicates that, in order to compensate for the closure of the airbase, it was decided to create a business zone of over 140 ha right next to n mes airport, at the heart of an economic area of over 500 ha. apparently, 85 ha were made available for a business cluster focusing on risk management and ecoconstruction, to complement the existing aviation maintenance and service activities. this business cluster, adjacent to n mes airports industrial hub, was seemingly the first one in languedoc-roussillons second largest town and forms one of its main regional hubs. it apparently plays host to 100 undertakings providing 2 000 jobs. (648) the aid in question therefore made a significant contribution to local economic development. (649) however, according to the new guidelines, where an airport is located in the same catchment area as another airport with spare capacity, the business plan, based on sound passenger and freight traffic forecasts, must identify the likely effect on the traffic of the other airport located in that catchment area (209). it is clear from the comments made by france in this regard that the cci-airport and vtan expected that the n mes traffic would not have a significant impact on the traffic observed at marseille, avignon and montpellier airports. in particular, the cci took the view that these three airports were not located in the n mes catchment area. it can therefore be concluded that the likely effect of the n mes traffic on the neighbouring airports was taken into account. (650) although the commission does not agree with the operators about the presence of different catchment areas, it considers that the impact of the aid in question on the neighbouring airports was not such as to offset the contribution of the aid to the objective of common interest in question, or to substantially compromise the operating conditions of the neighbouring airports. 7.2.3.2. need for state intervention and appropriateness of the aid as a policy instrument (651) the aid paid in the form of repayable advances and operating subsidies was necessary to ensure the economic equilibrium of n mes airports operation, and consequently its continued operation. (652) furthermore, according to the new guidelines, therefore, under present market conditions, smaller airports may have difficulties in ensuring the financing of their operation without public funding (210). the new guidelines also indicate that airports with up to 700 000 passengers per annum may not be able to cover their operating costs to a large extent. n mes airport is indeed a small airport as its traffic did not exceed 320 000 passengers during the 1999-2011 period. (653) as a result, state intervention to ensure the economic equilibrium of n mes airport, and consequently its continued operation, was necessary during the 2000-2011 period. (654) according to the new guidelines, it should be examined whether other policy instruments or aid instruments could have been used and would have been less distortive of competition (211). as already indicated, the airport recorded a very large operating deficit every year during the 2002-2011 period. in order to keep it operating, it was therefore difficult, in this context, to envisage any instruments other than non-repayable operating subsidies, such as the exceptional operating subsidies, flat-rate contribution and specific public contribution, and interest-free repayable advances without a specific repayment deadline. 7.2.3.3. incentive effect and proportionality of the aid (655) according to the new guidelines, it should be ascertained whether, in the absence of the operating aid, the level of economic activity of the airport would have been significantly reduced and whether, in addition, the aid was limited to the minimum necessary for the aided activity to take place (212). (656) as explained previously, the arrival of the tgv as well as the departure of air france in 2001, followed two years later by the withdrawal of air littoral, caused the number of flights to n mes airport to fall dramatically. combined with the conditions of the agreements signed with ryanair/ams from 2002, these factors also seriously eroded the airports financial situation. as a result, in the absence of support measures intended to finance the airports operating deficit, its activity would have significantly reduced, if not completely halted. (657) furthermore, as explained below, the aid amounts were limited to the minimum necessary. 7.2.3.3.1. cci-airport operating period (2000-2006) (658) the operating aid granted to the cci-airport was limited to the amounts needed to ensure the airports financial stability, without going beyond what was necessary. in so far as, without this aid, the cci-airport would have recorded a significant operating deficit every year, the airports activity would have needed to have been considerably reduced, if not completely halted, in order to ensure its financial stability. the aid therefore had an incentive effect within the meaning of point 124 of the new guidelines. (659) as a result, with regard to the exceptional operating subsidies received in 2005, france has explained that the ccis 2005 budget was established on the basis of revenue and cost forecasts taking account of the traffic forecasts and that, given the airports programme, the 2005 forecasts apparently revealed a financing need of eur [1-3] million. this need corresponded to the difference between the forecast costs (eur [4-6] million) and the forecast revenue (eur [2-4] million). (660) however, the exceptional operating subsidies received by the cci-airport in 2005 totalled only eur 1,35 million, well below the financing need of eur [1-3] million. the shortfall of approximately eur [600 000-800 000] was made up by the cci, partly in the form of repayable advances. (661) likewise, the exceptional operating subsidy of eur 200 000 received from the ccis general arm in 2006 covered only part of the operating deficit. the decision of the ccis general meeting of 14 december 2005 in fact shows that this exceptional operating subsidy stemmed from an agreement between the sman and the cci, under which the latter undertook to cover only part of the airports operating deficit, limited to eur 200 000 (213), with the rest being covered by the sman, as the new owner. (662) the repayable advances granted by the ccis general arm stemmed from the obligation to present a balanced budget for the airport, which was imposed on the cci by the concession agreement. the amount of the advances was defined each year when the budget was prepared, in order to ensure its balance. the preparation of budgets for airports managed by chambers of commerce and industry is subject to strict procedures intended to ensure that public contributions used to balance the budget are limited to the minimum necessary. (663) accordingly, circular no 111 of 30 march 1992 laying down the accounting and financial budget rules applicable to chambers of commerce and industry provides for a precise procedure that particularly governs how the general arm of a chamber of commerce and industry must determine the budget for an airports operation. this circular in particular stipulates that the chamber of commerce and industry must determine, for the purposes of preparing the budget: (i) the state of operating transactions; (ii) the state of self-financing capacity; and (iii) the state of capital transactions. in addition, a number of documents have to be annexed to the budget proposal for approval (schedule of services provided and inter-organisation contributions, and schedule of employees and wage bills, etc.). the aim of this procedure is particularly to ensure that the budget balances without overcompensation. (664) consequently, the amounts of the repayable advances did not exceed what was necessary to finance the cci-airports operating deficit, bearing in mind the exceptional operating subsidies. (665) as a result, the operating aid received by the cci-airport had an incentive effect and was limited to the minimum necessary. 7.2.3.3.2. vtan operating period (2007-2011) (666) the operating aid granted to vtan, which involved large amounts, was also necessary to ensure the airports financial stability. without this aid, vtan would have recorded a significant operating deficit and the airports activity would have needed to have been considerably reduced, if not completely halted. (667) the flat-rate contribution, as originally determined, was calculated based on a provisional budget drawn up by veolia transport. according to this budget, in the reference scenario the flat-rate contribution of eur [1,2-1,5] million would allow vtan to achieve net margins [of 0-5 % on average] throughout the term of the public service delegation. at the smans invitation, veolia transport also included a downturn scenario corresponding to a reduction in activity, whereby the flat-rate contribution would drop to eur [1,0-1,3] million. in this scenario, vtan would achieve net margins [of 0-5 % on average] throughout the term of the public service delegation (214). (668) in the light of this information, the net margins expected by veolia transport seem reasonable, and the downturn scenario was included so that these margins would not unduly increase if there were a reduction in activity. (669) the flat-rate contribution was therefore initially designed to be limited to the minimum necessary to ensure the financial stability of the airport and a reasonable profit for vtan. its subsequent amendments followed this logic. as a result, the increase in the flat-rate contribution made by amendment no 1 corresponded to the unforeseen loss of revenue that had initially been taken into account by veolia transport in its previous estimates, whilst the increase resulting from amendment no 3 corresponded to additional marketing expenditure incurred by vtan that was not anticipated at the start. (670) moreover, vtans profit and loss accounts observed ex post show that the flat-rate contribution did not exceed the minimum necessary, in that it did not lead to vtan recording excessive profits. in fact, according to table 6 in the opening decision, vtans net margin was actually negative throughout the 2007-2010 period. (671) the specific public contribution implemented by amendment no 4 to the cdsp was calculated based on a provisional budget reflecting vtans new operating costs following the closure of the airbase. it was also stipulated that its amount would be readjusted ex post according to the results achieved, in order to avoid overpayments. (672) as a result, the operating aid received by vtan had an incentive effect and was limited to the minimum necessary. 7.2.3.4. assessment of distortions of competition and effects on trade (673) according to the new guidelines, when assessing the compatibility of operating aid granted before 4 april 2014, the commission will take account of the distortions of competition and the effects on trade (215). (674) aid granted to a union airport can potentially have a negative effect on all union airports. in fact, all union airports are in competition with each other to attract airlines, in the context of the intra-union internal air transport market. in the case of operating aid allowing the airport to remain economically viable, the intensity of this general effect on other airports depends on the volume of activity of the aided airport, which can be expressed in particular by number of passengers, routes and frequencies. (675) it should be noted in this regard that, during the period in question (2002-2011), n mes airport remained a small airport. its traffic peaked at 320 000 passengers in 2001, with between 130 000 and 300 000 passengers per year in all the other years. during this same period, the scheduled services offered from this airport were limited to air littorals paris route, which was only operated until 2003, and those routes operated by ryanair (a maximum of four at the same time), with one flight per day or less, except potentially in the summer when two flights per day may have been available on certain routes, depending on the year. n mes airports volume of activity therefore remained modest. the general effect of the aid granted to this airport on all the other airports was therefore relatively limited. (676) however, the effects of operating aid granted to a given airport on another airport increase if the two airports are close to each other. in particular, when one of the airports is located within the catchment area of the other, the competition between them to attract airlines wanting to serve the region in question is especially intense. moreover, when there are routes from each of these two airports to the same destination, these airports are in competition to attract passengers wanting to travel to this destination, who have a choice between the two airports for this journey. (677) avignon airport lies 68 km from n mes airport, but its runway constraints mean that it can only handle private and business flights. it is not therefore in competition with n mes airport for scheduled flights. as regards marseille airport, this is 115 km away, which is 1 hour and 15 minutes journey by road. it is therefore too far away to suffer too much impact from the aid in question. as indicated previously, montpellier airport is situated just 63 km from n mes airport, which represents a journey time of only 49 minutes by road. in so far as the commission considers that a distance of less than 100 km and a journey time of less than one hour are criteria allowing the catchment area of an airport to be defined as a first approximation, montpellier airport is a priori situated within the catchment area of n mes airport. moreover, certain routes operated from montpellier have the same destination as certain routes from n mes airport. this is particularly the case with the routes to brussels and london, which are offered from both airports. (678) in this respect, france considers that the catchment area of an airport is defined using two criteria, namely: (i) length of the journey; and (ii) cost of the journey for airports dominated by low-cost traffic, such as n mes airport. as a result, france considers that a regional airports catchment area is limited to those airports that can be reached by car within a maximum of 60 minutes (216). according to france, lastly, as regards montpellier airport, although the above information tends to place it in the same catchment area as n mes airport due to the journey time of less than 60 minutes and the cost of the return journey not exceeding eur 20, it should, however, be stressed that the ryanair routes from montpellier airport, which currently number four, meet a tourist demand that is situated more to the west than to the east of the airport (the route to hahn is an example of this, even though ryanair has withdrawn its routes to germany from marseille) and that n mes airport covers a different catchment area from part of montpellier airports catchment area (in particular the c vennes, uz ge and the northeast of gard/south of the ard che in the rh 'ne valley). it therefore has a particular catchment area. it should also be noted that 51 % of low-cost passengers travel less than 50 km from their airport. (679) these factors are indeed likely to mitigate the impact on montpellier airport of the operating aid received by n mes airport. added to this is the fact that, throughout the period in question, montpellier airport handled much more traffic than n mes airport. in fact, its traffic fluctuated between 1,2 million and 1,6 million passengers per year. the aid received by n mes airport, which is around six times smaller, could have had, at most, only a limited impact on montpellier airport. lastly, the journey time between the two airports, which is less than one hour but almost 50 minutes, is also a factor likely to mitigate the impact of the aid in question on montpellier airport. (680) as a result, the operating aid in question had a limited impact on the airports neighbouring n mes airport. (681) taking into account all these positive and negative effects of the aid in question, the commission takes the view that this aid did not affect trade to an extent contrary to the common interest. (682) in the light of the information set out above regarding the impact of the aid in question on competition and trade, and given the important contribution of this aid to the economic development of the area in which n mes airport is located, particularly due to its beneficial impact on local tourism and the industrial hub present at the airport site, the commission considers that the aid in question did not affect competition and trade to an extent contrary to the common interest. 7.2.3.5. conclusion on the compatibility of the aid granted to the cci-airport and vtan (683) in the light of the above, the exceptional operating subsidies, repayable advances, flat-rate contribution, as established by the initial version of the cdsp and increased by amendments nos 1 and 3, and specific public contribution constitute aid compatible with the internal market within the meaning of article 107(3)(c) tfeu. (684) this conclusion is based on the specific criteria set out in the new guidelines for assessing the compatibility of operating aid granted to airports before 4 april 2014. it is without prejudice to any assessment of any future aid to n mes airport that the commission may be required to make in the future based on the rules laid down by the new guidelines for aid granted after 4 april 2014. 8. recovery (685) the commission has found that ryanair/ams benefited from unlawful aid that was incompatible with the internal market. according to settled case-law of the court of justice, when the commission has found that aid is incompatible with the internal market, it is competent to decide that the member state concerned must abolish or alter it (217). according to article 14 of regulation (ec) no 659/1999 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. (686) according to settled case-law of the court of justice, where unlawful aid is regarded by the commission as incompatible with the internal market, the purpose of the obligation imposed on the state is to re-establish the previously existing situation (218). in this respect, the court of justice considers that the purpose is achieved when beneficiaries have repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage that they enjoyed over competitors. in this way, the situation prior to payment of the aid is restored (219). (687) in the present case, it appears that no general principle of union law prevents recovery of the unlawful aid identified in this decision. in particular, neither france nor the interested third parties have presented any arguments to that effect. (688) france must therefore take all necessary measures to recover from ryanair/ams the unlawful aid granted through the agreements in question. (689) the aid amounts resulting from the agreements signed with the cci must be repaid to the latter. the aid amounts resulting from the agreements signed with vtan must be repaid to the sman given that, as previously shown, the state resources used to finance the advantages resulting from the agreements in question came from the sman via the operating subsidies paid to vtan. (690) the aid amounts to be recovered for each agreement must be determined as follows. each transaction under review (consisting, where applicable, of an airport services agreement and a marketing services agreement) must be regarded as having given rise to aid amounts calculated for each year that the agreements forming the transaction applied, or for each period for which the projected incremental flows were calculated (220). each of these amounts is calculated using the negative part of the projected incremental flow (revenues less costs) at the time when the transaction was concluded, as shown in tables 7 to 16. these amounts in fact correspond to the sums that should be deducted each year from the amount for the marketing services (or that should be added to the airport charges and ground handling charges invoiced to the airlines) so that the net present value of the agreement is positive, in other words so that this complies with the meo principle. (691) in order to take account of the effective advantage received by ryanair/ams under the agreements, the amounts referred to in the above recital may be adjusted, using evidence provided by france, according to (i) the difference between, on the one hand, the actual payments, as determined ex post, that were made by ryanair for the landing charge, passenger charge and ground handling services under the airport services agreement (221) and, on the other hand, the (ex ante) projected flows corresponding to these income items, as indicated in tables 7 to 16; (ii) the difference between, on the one hand, the actual marketing payments, as determined ex post, that were made to ryanair or ams under the marketing services agreement and, on the other hand, the corresponding (ex ante) projected marketing costs, as indicated in tables 7 to 16. (692) in addition, the commission considers that the effective advantage received by ryanair/ams is limited to the effective term of the agreement in question. in effect, after the termination of each agreement, ryanair/ams did not receive any payments under these agreements and did not benefit from access to the airport infrastructure and ground handling services under these agreements. consequently, the aid amounts calculated as indicated above and associated with a given agreement are reduced to zero for the periods during which the agreement effectively ceased to apply (particularly due to early termination by mutual agreement between the parties). (693) as a result, the aid amount to be recovered from ryanair/ams for certain agreements that did not run to term must be reduced to zero for the period from the effective expiry date of the agreement to the expiry date stipulated when the agreement was signed. (694) table 17 below gives information on the amounts to be used to calculate the amounts to be recovered. these amounts consist of the negative parts of the incremental flows (revenues less costs) established by applying the meo test, with reductions for the ryanair/ams agreements for the years that these agreements did not run to term. table 17 information on the amounts to be recovered (222) indicative amounts (in eur) period during which the aid amount was received 2002 2003 2004 2004 (summer season) 2005 2006 2007 (january to october) 2007-2008 (winter season) 2008 (summer season) 2008-2009 (winter season) 2009 (summer season) 2009-2010 (winter season) 2010 2010 (summer season) 2010-2011 (winter season) 2011 (summer season) 2011 (winter season up to 31.12) cci period: correspondence exchanged between the end of 2001 and the beginning of 2002 [0-50 000 ] [0-50 000 ] [0-50 000 ] correspondence exchanged in 2004 [100 000 -150 000 ] 2005 agreements [150 000 -200 000 ] [250 000 -300 000 ] vtan period: agreements of 2 january 2007 [700 000 -750 000 ] amendment of 1 august 2007 [150 000 -200 000 ] agreements of 1 november 2007 [700 000 -750 000 ] [800 000 -850 000 ] agreements of 27 august 2008 [450 000 -500 000 ] [500 000 -550 000 ] agreements of 25 august 2009 [450 000 -500 000 ] [500 000 -550 000 ] [450 000 -500 000 ] [450 000 -500 000 ] [150 000 -200 000 ] amendment of 18 august 2010 [0-50 000 ] amendment of 30 november 2010 [0-50 000 ] total [0-50 000 ] [0-50 000 ] [0-50 000 ] [100 000 -150 000 ] [150 000 -200 000 ] [250 000 -300 000 ] [700 000 -750 000 ] [850 000 -900 000 ] [800 000 -850 000 ] [450 000 -500 000 ] [500 000 -550 000 ] [450 000 -500 000 ] [0-50 000 ] [500 000 -550 000 ] [450 000 -500 000 ] [500 000 -550 000 ] [150 000 -200 000 ] (695) as explained in section 7.1.1.2.3, the commission considers that ryanair and ams form a single economic entity, and that the marketing services agreements and airport services agreements that were signed at the same time must be regarded as forming a single transaction between this entity and, as applicable, the cci or vtan. consequently, the commission considers that ryanair and ams are jointly and severally responsible for repaying all the aid received through the agreements signed from 2005 to 2010, with an indicative principal amount of eur [5 000 000-7 000 000]. with regard to the agreements signed before 2005, as these were signed by the cci with ryanair alone, the latter is solely responsible for repaying the aid resulting from these agreements, with an indicative principal amount of eur [150 000-300 000]. (696) the french authorities must recover the amounts indicated above within four months of the date of notification of this decision. (697) in this regard, the french authorities must also add the amount of recovery interest to the aid amount to be recovered, which shall be calculated from the date on which the aid in question was put at the disposal of the undertaking, namely on each effective date of granting of the aid, until the date of its effective recovery (223), in accordance with chapter v of commission regulation (ec) no 794/2004 (224). given that, in the present case, the flows making up this aid are complex and stem from several dates during the year, and are even continuous for certain categories of revenue, the commission takes the view that it is acceptable, in calculating the recovery interest, to consider that the moment of payment of the aid amounts concerned is the final day of the period for which the amount has been calculated (for example, 31 december if the period in question is a calendar year, or 31 october if the period in question extends from 1 january to 31 october of a given year). in this regard, by choosing the final day of the period in question, the commission is taking the approach that is most favourable for the beneficiaries. (698) in accordance with settled case-law of the court of justice, if a member state encounters unforeseen and unforeseeable difficulties or perceives consequences overlooked by the commission, it may submit those problems for consideration by the commission, together with proposals for suitable amendments. in such a case, the commission and the member state concerned must work together in good faith with a view to overcoming the difficulties whilst fully observing the provisions (225) of the tfeu. (699) the commission therefore asks france to submit to it any problem that it may encounter in implementing this decision, has adopted this decision: article 1 1. the following measures, which contain state aid unlawfully granted by france to ryanair in breach of article 108(3) of the treaty on the functioning of the european union, are incompatible with the internal market: (a) the transaction amending the agreement signed on 11 april 2000 between the n mes-uz s-le vigan chamber of commerce and industry and ryanair, consisting of the correspondence exchanged between the n mes-uz s-le vigan chamber of commerce and industry and ryanair dated 28 november 2001, 11, 18, 21 and 24 december 2001, and 2, 5 and 15 february 2002; (b) the transaction amending the agreement signed on 11 april 2000 between the n mes-uz s-le vigan chamber of commerce and industry and ryanair, consisting of the correspondence exchanged between the n mes-uz s-le vigan chamber of commerce and industry and ryanair dated 10 and 16 march 2004. 2. the following measures, which contain state aid unlawfully granted by france jointly to ryanair and airport marketing services in breach of article 108(3) of the treaty on the functioning of the european union, are incompatible with the internal market: (a) the airport services agreement signed on 10 october 2005 between the n mes-uz s-le vigan chamber of commerce and industry and ryanair and the marketing services agreement signed on the same date between the n mes-uz s-le vigan chamber of commerce and industry and airport marketing services; (b) the airport services agreement signed on 2 january 2007 between veolia transport a roport de n mes and ryanair and the marketing services agreement signed on the same date between veolia transport a roport de n mes and airport marketing services; (c) the amendment of 1 august 2007 to the marketing services agreement signed on 2 january 2007 between veolia transport a roport de n mes and airport marketing services; (d) the airport services agreement signed on 1 november 2007 between veolia transport a roport de n mes and ryanair and the marketing services agreement signed on the same date between veolia transport a roport de n mes and airport marketing services; (e) the airport services agreement signed on 27 august 2008 between veolia transport a roport de n mes and ryanair and the marketing services agreement signed on the same date between veolia transport a roport de n mes and airport marketing services; (f) the amendment of 25 august 2009 to the airport services agreement signed on 27 august 2008 between veolia transport a roport de n mes and ryanair and the amendment of 25 august 2009 to the marketing services agreement signed on 27 august 2008 between veolia transport a roport de n mes and airport marketing services; (g) the amendment of 18 august 2010 to the marketing services agreement signed on 27 august 2008 between veolia transport a roport de n mes and airport marketing services; (h) the amendment of 30 november 2010 to the marketing services agreement signed on 27 august 2008 between veolia transport a roport de n mes and airport marketing services. article 2 1. the agreement signed on 11 april 2000 between ryanair and the n mes-uz s-le vigan chamber of commerce and industry does not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. 2. the amendment of 30 january 2006 to the marketing services agreement signed on 10 october 2005 between the n mes-uz s-le vigan chamber of commerce and industry and airport marketing services does not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. 3. the amendment of 17 october 2006 to the marketing services agreement signed on 10 october 2005 between the n mes-uz s-le vigan chamber of commerce and industry and airport marketing services does not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. article 3 1. the repayable advances granted by the general arm of the n mes-uz s-le vigan chamber of commerce and industry to its airport arm from 2002 to 2006 constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. this state aid was unlawfully granted by france in breach of article 108(3) of the treaty on the functioning of the european union. 2. the exceptional operating subsidies granted by various local authorities and the general arm of the n mes-uz s-le vigan chamber of commerce and industry to the airport arm of the n mes-uz s-le vigan chamber of commerce and industry from 2005 to 2006 constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. this state aid was unlawfully granted by france in breach of article 108(3) of the treaty on the functioning of the european union. 3. the flat-rate contribution, as established for the benefit of veolia transport a roport de n mes by the public service delegation agreement signed on 8 december 2006 by the syndicat mixte pour lam nagement et le d veloppement de la roport de n mes-al s-camargue-c vennes and veolia transport and as increased by amendments nos 1 and 3 to this agreement, constitutes state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. this state aid was unlawfully granted by france in breach of article 108(3) of the treaty on the functioning of the european union. 4. the specific public contribution, as established for the benefit of veolia transport a roport de n mes by amendment no 4 to the agreement referred to in paragraph 3, constitutes state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. this state aid was unlawfully granted by france in breach of article 108(3) of the treaty on the functioning of the european union. 5. amendment no 2 to the agreement referred to in paragraph 3 does not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. 6. the equipment subsidies established by amendment no 4 to the agreement referred to in paragraph 3 do not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. 7. the subsidies granted to the n mes-uz s-le vigan chamber of commerce and industry and to veolia transport a roport de n mes under the national system for financing sovereign tasks in french airports do not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. 8. the state aid referred to in paragraphs 1 to 4 of this article is compatible with the internal market on the basis of article 107(3)(c) of the treaty on the functioning of the european union. article 4 1. france shall recover the state aid referred to in article 1 from the beneficiaries. ryanair and airport marketing services are jointly and severally responsible for repaying the aid referred to in article 1(2). 2. the amounts to be recovered shall bear interest from the date on which they were placed at the disposal of the beneficiaries to the date of their effective recovery. 3. the interest shall be calculated on a compound basis in accordance with chapter v of regulation (ec) no 794/2004 and commission regulation (ec) no 271/2008 (226) amending regulation (ec) no 794/2004. 4. france shall cancel all outstanding payments of the aid referred to in article 1 with effect from the date of adoption of this decision. article 5 1. recovery of the aid referred to in article 1 shall be immediate and effective. 2. france shall ensure that this decision is implemented within four months of the date of its notification. article 6 1. within two months of notification of this decision, france shall communicate the following information to the commission: (a) aid amounts to be recovered under article 4; (b) calculation of recovery interest; (c) a detailed description of the measures already taken and planned for the purpose of complying with this decision; (d) documents proving that the beneficiaries have been ordered to repay the aid. 2. france shall keep the commission regularly informed of the progress of the national measures taken to implement this decision until recovery of the aid referred to in article 1 has been completed. at the commissions request, it shall immediately submit information on the measures already taken and planned for the purpose of complying with this decision. it shall also provide detailed information concerning the aid amounts and interest already recovered from the beneficiaries. article 7 this decision is addressed to the french republic. done at brussels, 23 july 2014. for the commission joaqu n almunia vice-president (1) with effect from 1 december 2009, articles 87 and 88 of the ec treaty have become articles 107 and 108, respectively, of the treaty on the functioning of the european union (tfeu). the two sets of provisions are, in substance, identical. for the purposes of this decision, references to articles 107 and 108 of the tfeu should be understood as references to articles 87 and 88, respectively, of the ec treaty, where appropriate. the tfeu also introduced certain changes in terminology, such as the replacement of community by union, common market by internal market and court of first instance by general court. the terminology of the tfeu will be used throughout this decision. (2) oj l 240, 24.8.1992, p. 8. (3) oj c 241, 10.8.2012, p. 11. (4) see footnote 3. (5) communication from the commission guidelines on state aid to airports and airlines (oj c 99, 4.4.2014, p. 3). (6) oj c 113, 15.4.2014, p. 30. (7) order authorising temporary occupation of 12 november 1986. (8) interministerial order of 31 january 2006. (9) the french authorities have explained that the legal form of the sman, as laid down by articles l.5721-1 et seq. and r.5721-1 et seq. of the general local and regional authorities code, in particular allows local authorities and other public bodies to come together to operate public services that are important to each of them. (10) the sman is managed by a board consisting of representatives of its members. the cgg has five representatives, the canm has seven representatives and the caac has three representatives. (11) order creating the sman of 9 december 2005. (12) public service delegation agreement of 31 january 2006. (13) decision of the sman board of 30 june 2011. (14) order of the minister for defence of 30 june 2011 on the transfer of management. furthermore, an agreement of 30 june 2011 signed between the state and the sman lists the assets placed at the disposal of the sman and details those assets for which temporary occupation authorisations have been granted to third parties, with or without real rights. (15) judgment of the council of state of 20 may 1998syndicat des compagnies a riennes autonomes (scara). (16) now codified in article 1609 quatervicies of the general tax code. (17) wildlife hazards particularly include bird hazards, which involve collisions between aircraft and birds that may threaten the safety of persons and goods on board aircraft. (18) performance of this task may include, for example, installing and maintaining barriers delimiting the public and restricted areas or installing a video surveillance system around the restricted area. (19) this task includes noise measures, in correlation with flight paths if appropriate, and air and water quality control in the areas surrounding airports. (20) tasks eligible for financing by the airport tax, as described above. (21) the overheads mainly stem from support functions such as human resources management, financial affairs, financial audit, purchases, non-exclusive it systems, legal office, general services, general management, accounting functions and management control. (22) article 31 of the 1965 concession agreement. (23) article 8 of the state-sman delegation agreement of 1 february 2006. (24) preamble to the state-sman delegation agreement of 1 february 2006. (25) article 27 of the state-sman delegation agreement of 1 february 2006. (26) article 29 of the state-sman delegation agreement of 1 february 2006. (27) frances comments on the opening decision, pp. 8 and 13. (28) frances comments on the opening decision, p. 8. (29) according to the letter from france of 27 february 2012. the ryanair revenue row corresponds to payments made by the airline to the operator, whilst the payments to ryanair row corresponds to payments made by the cci-airport to ryanair and its subsidiary ams. (*) business secret. (30) the first two amounts are combined in the municipalities and groupings of municipalities column. (31) this amount appears in the other column of the above table. (32) as recorded on the liabilities side of the cci-airport balance sheet under inter-establishment advances. (33) according to the letter from the french authorities of 27 february 2012. (34) on 8 august 2006 the cci claimed for reimbursement of the advances, totalling over eur 9 million. (35) article 46 of the 1965 concession agreement. (36) articles 1 and 1a of the cdsp. (37) frances comments on the opening decision, p. 15. (38) article 25 of the cdsp of 12 december 2006. (39) amendment no 2 of 20 july 2010. (40) letter from france of 20 march 2014. (41) frances comments on the opening decision, p. 56. (42) letters of 28 november 2001, 11 december and 18 december 2002, 21 and 24 december 2001, 2 and 5 february 2002, and 15 february 2002. (43) letters of 10 march and 16 march 2004. (44) letter from france of 25 april 2014. (45) ibid. (46) ibid. (47) the liverpool route was also being operated at this time. france has explained that this service did not stop between 2005 and 2012, but was always a seasonal service. france underlines that this service was not included in the marketing agreement of 27 august 2008 because its status was in doubt (its suspension was envisaged at that time), although it continued operating between 2008 and 2011 at a reduced frequency. as a result, the 2008 marketing agreement did not provide for any services on the ryanair website to be purchased for this route. this route was operated between 2008 and 2010 without any marketing counterpart. (48) see footnote 42. (49) letter from france of 26 may 2014. (50) community guidelines on financing of airports and start-up aid to airlines departing from regional airports (oj c 312, 9.12.2005, p. 1). (51) council of state, 21 february 2011, soci t ophrys v ca clermont communaut , application no 337349. (52) commission decision 2012/21/eu of 20 december 2011 on the application of article 106(2) of the treaty on the functioning of the european union to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (oj l 7, 11.1.2012, p. 3). (53) judgment in france v commission, c-482/99, eu:c:2002:294. (54) judgment in france v commission, c-482/99, eu:c:2002:294, paragraphs 52 and 58. (55) council of state, opinion no 351.654 of 16 june 1992. (56) judgment in chronopost v ufex, c-83/01 p and c-93/01 p, eu:c:2003:388, paragraphs 38 and 40. (57) ryanair indicates that n mes airport can be validly compared to [ ], [ ], [ ], [ ] and [ ] airports. (58) this would mean that a given airport could lower the business cycle risk that it faces and improve cash flow and so reduce the rate of return required by a normal private investor. (59) article 3 of the agreements of 10 october 2005, 1 november 2007 and 27 august 2008. (60) ryanair points out the possibility that the aid was used to cover losses arising from past dealings with air libert and air littoral, which became insolvent while owing substantial amounts to the airport, or that it benefited the former manager of the airports car parks. (61) commission decision 2004/393/ec of 12 february 2004 concerning advantages granted by the walloon region and brussels south charleroi airport to the airline ryanair in connection with its establishment at charleroi (oj l 137, 30.4.2004, p. 1). (62) oxera, are prices set by ams in line with the market rate?, prepared for ryanair, 20 december 2013. (63) oxera, how should ams agreements be treated within the profitability analysis as part of the market economy operator test?, prepared for ryanair, 17 january 2014. (64) commission decision 2011/60/eu of 27 january 2010 on state aid c-12/08 (ex nn 74/07) slovakia agreement between bratislava airport and ryanair (oj l 27, 1.2.2011, p. 24), recital 114. (65) circular no 111 of 30 march 1992 laying down the budget, accounting and financial rules applicable to the acfci (assembly of french chambers of commerce and industry), crcis (regional chambers of commerce and industry), ccis (chambers of commerce and industry) and gics (inter-chamber groups). (66) for the purposes of this decision, agreements shall mean the various agreements concerned, whatever their legal form (including amendments, side letters, etc.). (67) the commission notes that the first of these agreements is dated 11 april 2000 (first ryanair/cci agreement) whereas the commissions investigation started with the letter of 16 march 2010, which covered this measure among others. as a result, the limitation period laid down by article 15 of council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1) was interrupted before it expired. (68) reply to the request for information of 23 december 2013. (69) ibid. (70) for example, judgments in italian republic v commission, c-303/88, eu:c:1991:136, paragraph 11, and of 12 december 1996, compagnie nationale air france v commission, t-358/94, eu:t:1996:194, paragraphs 58 to 61. (71) see, in this respect, the commission decision of 14 july 2004 in case c-25/2004 germany dvb-t in berlin-brandenburg, paragraph 20. (72) judgment in france v commission, c-482/99, eu:c:2002:294, paragraph 52. (73) commission directive 2000/52/ec of 26 july 2000 amending directive 80/723/eec on the transparency of financial relations between member states and public undertakings (oj l 193, 29.7.2000, p. 75). (74) see the commission decision of 22 june 2006 in case n 563/2005 france aide la compagnie ryanair pour la ligne a rienne desservant toulon et londres, paragraph 16. (75) operators comments on the opening decision, p. 5. (76) moreover, the commission stresses that, for the purpose of applying the rules on state aid, a distinction should not be made between the cci and the specific arm of the cci that operates the airport, given that the arm operating n mes airport does not have its own legal personality distinct from that of the cci and is simply a link in the chain of services within the cci that has no decision-making autonomy other than in relation to the day-to-day operation of the airport. accordingly, the agreement of 11 april 2000, the airport services agreements and marketing service agreements of 10 october 2005 and the amendment of 30 january 2006 were all signed by the president of the cci. with regard to the correspondence exchanged between the end of 2001 and the beginning of 2002 and in 2004, which made amendments to the agreement of 11 april 2000, this did not bear the signature of the cci president. however, france has indicated that we can therefore conclude that the agreements and amendments with ryanair come under the industrial and commercial services management powers entrusted to the president (reply to the request for information of 20 march 2014). furthermore, neither france nor the third parties have argued that the measures subject to the formal investigation procedure should be imputed solely to this arm of the cci. (77) article 1 of the cdsp. (78) frances comments of 27 july 2012 on the opening decision, pp. 27-28. operators comments of 24 september 2012 on the opening decision, paragraphs 39-40. (79) annex 6.2 to frances letter of 27 july 2012. (80) annex 8 to the cdsp, page 15, whose evocative title (the constant pursuit of increased use) should be highlighted in this assessment. (81) frances letter of 19 february 2014 (body of the text and annexes 2014-1-3 and 2014-1-4 a and b). (82) annex 2014-1-1 to frances letter of 19 february 2013, p. 9. (83) annex 2014-1-1 to frances letter of 19 february 2014, p. 15. (84) annex 2014-1-4 b to frances letter of 19 february 2014, p. 13. (85) annex 2014-1-4 b to frances letter of 19 february 2014, p. 16. (86) under article 11 of the cdsp, the delegatee shall enjoy total freedom in negotiating the agreements that it signs with aviation users and shall assume the consequences, particularly financial, of those agreements on the [cdsp]. however, it was implicit, but evident, in that provision that this total freedom could be exercised only within the general framework laid down by the cdsp and the commitments made by veolia transport in response to the invitation to tender, which, as explained above, were such as to constrain and influence vtans conduct to a considerable extent. (87) frances letter of 19 february 2014. (88) see, in particular, judgment in spain v commission, c-342/96, eu:c:1999:210, paragraph 41. (89) judgment of 17 december 2008, ryanair ltd v commission, t-196/04, eu:t:2008:585, paragraph 88 and paragraphs 57 to 60. (90) the latter was the first marketing services agreement signed with ryanair or ams from among those covered by this assessment. (91) it should be noted that the amendment of 18 august 2010 may be difficult to tie to an implicit or explicit airport services agreement and will be assessed separately. (92) frances letter of 27 february 2012. (93) article 1 of the marketing services agreement, relating to its object, stipulates that this agreement is based on ryanairs commitment to operate a weekly air service between n mes airport and london, as well as an additional service during the summer and a service between n mes and liverpool on four days out of seven, and on ryanairs commitment to announce another service from n mes at the end of 2005 (94) original english. (95) ibid. (96) the other marketing services agreements signed by vtan and covered by the formal investigation procedure are simply amendments to these main agreements and are therefore, just like the latter, indissociably linked to certain routes operated by ryanair and to the airport services agreements governing those routes. (97) see footnote 92. (98) ibid. (99) operators comments on the opening decision, p. 34. (100) without prejudice to any public policy objectives of local economic development that the operators might pursue in signing the agreements in question. (101) in this analysis, vtan can be regarded as a public purchaser given that, according to france, the cdsp entrusted it with a general interest task of economic and tourism development. (102) see, for example, judgment of 28 january 1999, bai v commission, t-14/96, eu:t:1999:12, paragraphs 75-76, and judgment of 5 august 2003, p & o european ferries (vizcaya), sa and diputaci n foral de vizcaya v commission, t-116/01 and t-118/01, eu:t:2003:217, paragraph 117. (103) see footnote 85. (104) ibid. (105) a given marketing services agreement must be analysed together with the corresponding airport services agreement as they form a single transaction. nevertheless, there are as many separate transactions as there are pairs of marketing services agreements and airport services agreements. (106) the load factor is defined as the proportion of seats filled on aircraft used to operate the air route in question. (107) how should ams agreements be treated within the profitability analysis as part of the market economy operator test? oxera, 17 january 2014. (108) see footnote 92. (109) ibid. (110) ibid. (111) ibid. (112) study of 31 january 2014, footnote 17, original english. (113) new guidelines, point 53. (114) new guidelines, point 66. (115) new guidelines, points 59, 61 and 66. (116) decision 2011/60/eu, recitals 88 and 89. (117) study of 25 june 2012 carried out by oxera. (118) new guidelines, point 60. (119) in other words, if the incremental profitability expected from this transaction is positive. (120) new guidelines, point 62. (121) in other words, if the incremental profitability expected from this transaction is positive. (122) see, for example, judgment of 19 october 2005, freistaat th ringen (germany) v commission, t-318/00, eu:t:2005:363, paragraph 125, and judgment in european commission v lectricit de france (edf), c-124/10 p, eu:c:2012:318, paragraphs 85, 104 and 105. (123) as a result, in the absence of one or more of the agreements covered by this investigation, the costs in question would have still been incurred in order to keep the infrastructure in working order. the commission considers that, in the extreme scenario of ryanair deciding to stop operating from the airport entirely, due to the commercial conditions proposed by the airport operator during the negotiation of an agreement, the airport operator would have continued operating the airport, at least for a certain amount of time, in order to continue serving its other customers (civil security, training school, businesses located at the site) and to try and find new airlines prepared to operate scheduled services. consequently, in terms of applying the meo test to the various agreements in question, the commission takes the view that an meo operating the airport in place of the cci or vtan would have excluded, from its assessment of the incremental costs, most of the infrastructure servicing and maintenance expenditure on the basis that, in the absence of the agreement, these costs would have still been incurred. this same logic applies to all the costs incurred in order to keep the airport in working order even in the absence of any scheduled air traffic, such as, for example, part of the management and administrative staff costs. (124) the business plan sets out projected costs and revenues for the airports entire activity and provides projected results for this activity. as it covers the airports entire activity, it does not analyse the projected profitability of specific agreements. in order to analyse the profitability of specific agreements, vtan could have determined the projected incremental costs and revenues of these agreements based on certain information in the business plan, such as, for example, the non-aeronautical revenue indicated for the entire airport. (125) see footnote 85. (126) annex 2014-1-1 to frances letter of 19 february 2014, p. 9. (127) annex 2014-1-1 to frances letter of 19 february 2014, p. 15. (128) annex 2014-1-4 b to frances letter of 19 february 2014, p. 13. (129) annex 2014-1-4 b to frances reply of 19 february 2014 to the request for information of 23 december 2013, p. 16. (130) see http://corporate.ryanair.com/investors/traffic-figures/ (131) in the pursuit of price stability, the ecb aims at maintaining inflation rates below, but close to, 2 % over the medium term. original english. see: http://www.ecb.europa.eu/mopo/intro/html/index.en.html (132) the vtan study arrived at an amount of incremental non-aeronautical revenue per passenger of eur [2-4]. (133) an meo would have chosen the period in question by taking account of several factors: firstly, the smoothing effect afforded by a relatively long period and, secondly, the disadvantages of a long period, such as possible changes in passenger spending preferences and methods over a long period. as a result, using the average of the non-aeronautical revenue per passenger over a single year would make the amount obtained overly dependent on the specific circumstances in that year, which justifies the choice of a longer period. a five-year period seems too long because the behaviour of passengers in terms of non-aeronautical spending may substantially change over such a period. consequently, a three-year period seems to be a reasonable choice. (134) see recital 432 on the justification for this rate of 2 %. (135) new guidelines, point 66. (136) see footnote 92. (137) original english. fni is the iata code for n mes airport. (138) for the fourth route, the minimum number of passengers specified in the agreement ([0-50 000] outbound passengers) is identical to the number stipulated for the liverpool route. a frequency identical to that of the liverpool route (four flights a week) has therefore been used for the fourth route. as regards the third route, for which a minimum of [0-50 000] outbound passengers was specified in the agreement, the same reasoning has led to the assumption of three flights a week. (139) with regard to the charleroi route, it should be noted that, although, under the amendment of 1 august 2007, vtan agreed to additional marketing payments of eur [ ] in return for the continued operation of this route during the 2007-2008 winter season, it seems from the facts on record that ryanair did not formally undertake to vtan to continue operating the route in august 2007. accordingly, in november 2007, ryanair was free to stop operating this route. (140) see footnote 92. (141) judgment of 30 april 1998, het vlaamse gewest (flemish region) v commission, t-214/95, eu:t:1998:77. (142) council regulations (eec) no 2407/92 (oj l 240, 24.8.1992, p. 1), (eec) no 2408/92 (oj l 240, 24.8.1992, p. 8) and (eec) no 2409/92 (oj l 240, 24.8.1992, p. 15). (143) see judgment in italy v commission, c-364/90, eu:c:1993:157, paragraph 20. (144) new guidelines, point 174. (145) point 85 of the 2005 guidelines. (146) see section 3.2.2.1. (147) community guidelines on the application of articles 92 and 93 of the ec treaty and article 61 of the eea agreement to state aids in the aviation sector (oj c 350, 10.12.1994, p. 5). (148) decision on state aid nn 109/98 united kingdom (manchester airport). (149) decision 2004/393/ec. this decision was annulled by the judgment in case t-196/04 ryanair ltd v commission of the european communities (charleroi judgment), eu:t:2008:585. however, it shows how the commissions assessment of the aid in question has developed. (150) charleroi decision, paragraph 279. (151) see recitals 283 to 297. (152) see recitals 288 to 309. (153) see recitals 311 to 317. (154) see recitals 318 to 325. (155) see points 71 to 75 and 79(b) and (c) of the 2005 guidelines, and points 139, 140, 141 and 151 of the new guidelines. (156) see point 79(b), (d) and (i) of the 2005 guidelines, and point 147 of the new guidelines. (157) see points 79(g) and (h) and 80 of the 2005 guidelines, and points 150, 152 and 153 of the new guidelines. (158) these agreements provided for retroactive application from 1 january 2005. (159) ryanairs comments on the opening decision. (160) 2005 guidelines, point 27. (161) 2005 guidelines, point 15. (162) 2005 guidelines, points 71 and 74. (163) degressive aid may be granted for a maximum period of three years. the amount of aid in any one year may not exceed 50 % of total eligible costs for that year and total aid may not exceed an average of 30 % of eligible costs. (164) letter from france of 25 april 2014, paragraph 103. (165) see footnote 38. (166) letter from france of 20 march 2014, p. 8. (167) the amount of aid must be strictly linked to the additional start-up costs incurred in launching the new route or frequency and which the air operator will not have to bear once it is up and running. (168) aid payments must be linked to the net development of the number of passengers transported. (169) article 8 of the airport services agreement of 1 january 2007. (170) the only destinations for which the number of passengers was taken into account were charleroi and east midlands (article 8.2 of the airport services agreement of 1 january 2007). (171) letter from france of 25 april 2014, paragraph 102. (172) new guidelines, points 28 and 29. (173) new guidelines, points 34 and 35. (174) judgments in commission v italy, c-118/85, eu:c:1987:283, paragraphs 7 and 8, and in bodson v pompes fun bres des r gions lib r es, c-30/87, eu:c:1988:225, paragraph 18. (175) new guidelines, point 35. (176) new guidelines, points 36 and 37. (177) this category includes screening of hold baggage, screening of passengers and cabin baggage, and access control to the restricted area. (178) this category includes automated border controls through biometric identification. (179) as indicated above, these three categories are explicitly referred to in the new guidelines as examples of non-economic activities. (180) this category includes wildlife hazard prevention. (181) this category includes environmental control measures. (182) judgment in r gion nord-pas-de-calais, t-267/08 and t-279/08, eu:t:2011:209, paragraph 108. (183) judgment in territorio hist rico de lava diputaci n foral de lava, t-127/99, t-129/99 and t-140/99, eu:t:2002:59, paragraph 142. (184) judgment in france v commission, c-301/87, eu:c:1990:67, paragraph 41. (185) frances comments on the opening decision. (186) see decision n 381/04 france, project for a high capacity telecommunications network in the pyr n es-atlantiques (dorsal) (oj c 162, 2.7.2005, p. 5), paragraph 53. (187) see judgment in merci convenzionali porto di genova, c-179/90, eu:c:1991:464, paragraph 27; judgment in gt-link a/s, c-242/95, eu:c:1997:376, paragraph 53 and judgment in corsica ferries france sa, c-266/96, eu:c:1998:306, paragraph 45. (188) see in particular judgment in brt v sabam, c-127/73, eu:c:1974:25. (189) see communication from the commission on the application of the european union state aid rules to compensation granted for the provision of services of general economic interest (oj c 8, 11.1.2012, p. 4), paragraphs 46 and 47. (190) new guidelines, point 72. (191) frances comments on the opening decision. (192) communication from the commission on the application of the european union state aid rules to compensation granted for the provision of services of general economic interest (oj c 8, 11.1.2012, p. 4). (193) oj c 8, 11.1.2012, p. 4, paragraph 52. (194) article 30 of directive 2004/18/ec of the european parliament and of the council of 31 march 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (oj l 134, 30.4.2004, p. 114). (195) aforementioned communication, paragraph 65. (196) see footnote 85. (197) veolia transport document of 4 october 2006: pr cisions concernant notre offre selon les demandes du syndicat mixte au 29.9.2006 (clarifications on our tender according to the requests of the syndicat mixte of 29.9.2006). (198) decision of 30 november 2006. (199) report summarising the tender analysis with a view to awarding the public service delegation for the operation of the civilian area of n mes-garons airport of 23 november 2006. (200) frances letter of 27 july 2012. (201) see footnote 47. (202) new guidelines, point 43. (203) communication from the commission european union framework for state aid in the form of public service compensation (2011) (oj c 8, 11.1.2012, p. 15) paragraphs 16(d) and (e) and 69. (204) new guidelines, point 172. (205) new guidelines, point 137. (206) annex 11.0.5 to frances letter of 27 february 2012. (207) excluding investments, such as property purchases. (208) 1 400 jobs at the airbase and 800 jobs created by 20 undertakings present at the airport site. (209) new guidelines, points 114 and 131. (210) new guidelines, point 117. (211) new guidelines, point 120. (212) new guidelines, points 124 and 125. (213) annex 2014-ii-32 to frances letter of 25 april 2014. (214) annex 2014-1-1 to frances letter of 19 february 2014. (215) new guidelines, points 131 and 137. (216) frances comments on the opening decision, p. 35. (217) judgment in commission v germany, 70/72, eu:c:1973:87, paragraph 13. (218) judgment in spain v commission, c-278/92, c-279/92 and c-280/92, eu:c:1994:325, paragraph 75. (219) judgment in belgium v commission, c-75/97, eu:c:1999:311, paragraphs 64-65. (220) as explained when assessing the existence of an economic advantage in the various agreements, the aid stems from bidirectional flows between the airport operator and ryanair or ryanair/ams. these flows have different frequencies, with some being continuous flows or having payment frequencies that cannot be precisely predicted when the agreements are signed. the same is true for payment of the airport charges. however, when assessing the existence of an economic advantage, it is the projected incremental flows that count. it is clear from the vtan business plan and from the proposed reconstructions of the incremental business plans provided by france that the practice of a reasonable meo would be, as a general rule, to establish the projected incremental flows associated with the various agreements on an annual basis. it is therefore logical for the aid amounts resulting from the various agreements also to be established, as a general rule, on an annual basis. these aid amounts in fact correspond to the sums that, during negotiation of the various agreements, an meo would have asked ryanair/ams to pay it each year in addition to the airport charges and ground handling charges, all else being equal (particularly the marketing payments), in order to make the agreement profitable. however, for certain agreements, it is more logical to calculate the projected incremental flows by iata season (winter/summer) or for periods other than calendar years, due to certain particular features of these agreements such as, for example, variations in frequencies during summer seasons. that is why, for certain agreements, the amounts are calculated on an annual basis, whereas for others they are calculated for periods other than full calendar years. (221) by taking into account, where applicable, any financial incentives stipulated in the airport services agreements, which involved repaying to ryanair part of the payments made by the latter under these agreements when certain traffic targets were met. (222) in this table, when reference is made to a year without any further clarification (for example 2002), this means the full calendar year. with regard to the calculation of recovery interest, the aid is regarded as having been granted on the final day of each of the periods mentioned in the various columns. see recital 699. (223) see article 14(2) of regulation (ec) no 659/1999 (op. cit.). (224) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (eu) 2015/1589 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 140, 30.4.2004, p. 1). (225) see judgment in commission v germany, c-94/87, eu:c:1989:46, paragraph 9 and judgment in commission v italy, c-348/93, eu:c:1995:95, paragraph 17. (226) commission regulation (ec) no 271/2008 of 30 january 2008 amending regulation (ec) no 794/2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 82, 25.3.2008, p. 1).

name: commission implementing decision (eu) 2016/645 of 22 april 2016 concerning certain protective measures against lumpy skin disease in bulgaria (notified under document c(2016) 3261) (text with eea relevance) type: decision_impl subject matter: regions of eu member states; agricultural activity; health; means of agricultural production; marketing; europe; agricultural policy date published: 2016-04-23 23.4.2016 en official journal of the european union l 108/61 commission implementing decision (eu) 2016/645 of 22 april 2016 concerning certain protective measures against lumpy skin disease in bulgaria (notified under document c(2016) 3261) (only the bulgarian text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 89/662/eec of 11 december 1989 concerning veterinary checks in intra-community trade with a view to the completion of the internal market (1), and in particular article 9(4) thereof, having regard to council directive 90/425/eec of 26 june 1990 concerning veterinary and zootechnical checks applicable in intra-community trade in certain live animals and products with a view to the completion of the internal market (2), and in particular article 10(4) thereof, having regard to council directive 92/119/eec of 17 december 1992 introducing general community measures for the control of certain animal diseases and specific measures relating to swine vesicular disease (3), and in particular article 14(2) thereof, having regard to council directive 2002/99/ec of 16 december 2002 laying down the animal health rules governing the production, processing, distribution and introduction of products of animal origin for human consumption (4), and in particular article 4(3) thereof, whereas: (1) lumpy skin disease (lsd) is a primarily vector-transmitted viral disease of bovine animals characterised by severe losses in susceptible animals and with the potential for the disease to spread very quickly, notably through movements of and trade in susceptible live animals and products thereof. lsd is not a disease of public health importance, as the virus is not transmissible to humans. (2) directive 92/119/eec lays down general measures for the control of certain animal diseases, including lsd. these include measures to be taken in the event of the suspicion and the confirmation of lsd in a holding. the measures to be taken include the establishment of protection and surveillance zones around outbreaks and other additional measures to control the spread of the disease. those measures also provide for emergency vaccination in the event of an outbreak of lsd. (3) article 14(2) of directive 92/119/eec requires that where in a given region, the epizootic in question is exceptionally serious, all the additional measures to be taken by the member states concerned shall be adopted under the comitology procedure. (4) on 12 april 2016, bulgaria informed the commission of the suspicion of lsd in two bovine holdings situated respectively in the voden and chernogorovo villages in the municipality of dimitrovgrad, in the region of haskovo in the central-southern part of bulgaria, about 80 km from the borders with neighbouring countries. on 13 april 2016, bulgaria notified the confirmation of the two lsd outbreaks and a further suspicion of lsd in the neighbouring municipality of vodenicharovo in the region of stara zagora. on 15 april 2016 bulgaria confirmed further outbreaks in the village bialo pole, in the region of stara zagora, and the villages radievo and marijno in the region of haskovo. (5) bulgaria has taken measures provided for by directive 92/119/eec, and in particular the establishment of protection and surveillance zones around the outbreaks as provided for by article 10 of that directive and it has in addition restricted the movement of susceptible animals within the two affected regions and, as a matter of precaution, in neighbouring regions burgas, yambol, sliven, kardzhali, plovdiv, pazardjik, smolyan, blagoevgrad, kjustendil, pernik, sofia district and sofia town. surveillance is intensified in the entire country. (6) due to the risk of the spread of the lsd virus to other areas of bulgaria and to other member states, particularly through trade in live bovine animals and their germinal products, the movement of certain wild ruminants and the placing on the market of certain products derived from bovine animals, should be controlled. (7) this decision should use definitions laid down in article 2 of directive 92/119/eec, article 2 of council directive 64/432/eec (5) and article 2 of council directive 92/65/eec (6). however, it is also necessary to -lay down some specific definitions in this decision. (8) it is necessary to describe the part of the territory of bulgaria which is considered to be free of lsd and not subject to the restrictions provided for in directive 92/119/eec and in this decision. it is therefore necessary to describe the restricted zone in the annex to this decision, taking into account the level of risk for the spread of lsd. the geographical boundaries of that restricted zone should be based on the risk and the outcome of the tracing of possible contacts to the infected holding, the possible role of vectors and the possibility to implement sufficient controls on the movement of animals of susceptible species and products derived from those animals. the restricted zone should include any protection and surveillance zones established in accordance with directive 92/119/eec. based on information provided by bulgaria, the whole territory of the regions of haskovo and stara zagora in bulgaria should be the restricted zone described in the annex to this decision. (9) it is also necessary to provide for certain restrictions on the dispatch of animals of susceptible species and their germinal products from the restricted zone to be set out in the annex to this decision, as well as restrictions for the placing on the market of certain products of animal origin and animal by-products from that restricted zone. (10) in terms of the risk of the spread of lsd, different commodities pose different levels of risk. as indicated in the scientific opinion of the european food safety authority (the efsa) on lumpy skin disease (7) the movement of live bovine animals, bovine semen and raw hides and skins from infected bovine animals pose a higher risk in terms of exposure and consequences than other products, such as milk and dairy products, treated hides and skins or fresh meat, meat preparations and meat products originating from bovine animals, where scientific or experimental evidence is lacking on their role of transmission of the disease. therefore, the measures to be laid down in this decision should be balanced and proportionate to the risks. (11) the movements of live bovine animals from the restricted zone in bulgaria to be set out in the annex to this decision should be prohibited in order to prevent the spread of lsd. according to the scientific opinion of the efsa on lumpy skin disease and the word organisation for animal health (oie) wild fauna, that is to say, certain exotic wild ruminants may play a potential role in the transmission of lsd, in particular in africa where that disease is endemic. therefore some preventive measures should also apply to wild ruminants. in the absence of more precise rules in the union legislation, the appropriate international standards for such movements provided for in the terrestrial animal health code of the oie (oie terrestrial animal health code) (8) should be used for this purpose. (12) as bulgaria has requested for an exemption from the prohibition on the dispatch of bovine animals for direct slaughter from holdings situated in the restricted zone outside protection and surveillance zones and such an exemption is provided for in article 11.11.5 of the oie terrestrial animal health code, it is appropriate to allow the dispatch of such consignments under certain conditions. (13) similarly, the transmission of lsd through semen and embryos of animals of the bovine species cannot be excluded. therefore, certain protective measures should be provided for in relation to those commodities. in the absence of union standards, the scientific opinion of the efsa on lsd and the appropriate oie animal health terrestrial code recommendations should be used for this purpose. (14) according to the scientific opinion of the efsa on lumpy skin disease, the transmission of the lsd virus through semen, natural mating or artificial insemination, has been experimentally demonstrated, and the lsd virus has been isolated from semen of experimentally infected bulls. the collection and use of semen of animals of the bovine species originating in the restricted zone should therefore be prohibited. (15) in accordance with article 4.7.14 of the oie terrestrial animal health code, lsd is assigned in accordance with the manual of the international embryo transfer society to category 4 diseases or pathogenic agents, which are those for which studies have been done, or are in progress, that indicate that no conclusions are yet possible with regard to the level of transmission risk or that the risk of transmission via embryo transfer might not be negligible even if the embryos are properly handled in accordance with that manual between collection and transfer. the collection and use of embryos of animals of the bovine species originating in the restricted zone should therefore be prohibited. (16) there is no scientific or experimental evidence suggesting that there is transmission of the lsd virus to animals of susceptible species through fresh meat, meat preparations or meat products. although the scientific opinion of the efsa on lsd indicates that the lsd virus may survive in meat for a non-indicated period of time, the existing union ban on the feeding of ruminant proteins to ruminants would exclude the possibility of an unlikely oral transmission of the lsd virus. to avoid any risk of the spread of lsd, the placing on the market of fresh meat, meat preparations and meat products produced from bovine animals originating in the restricted zone to be set out in the annex to this decision should only be allowed where the fresh meat was produced from bovine animals kept on disease-free holdings situated in the restricted zone outside established protection and surveillance zones. such meat should only be placed on the market in the territory of bulgaria. (17) in addition, the dispatch of consignments of fresh meat obtained from animals kept and slaughtered outside the restricted zone, as well as meat preparations and meat products, as defined in point 7.1 of annex i to regulation (ec) no 853/2004 of the european parliament and of the council (9) and treated stomachs, bladders and intestines, as defined in point 7.9 of annex i to regulation (ec) no 853/2004, which have undergone one of the treatments laid down in part 4 of annex ii to commission decision 2007/777/ec (10) produced from such fresh meat and processed in establishments situated in the restricted zone, outside protection and surveillance zones, should be permitted under certain conditions. (18) colostrum, milk and dairy products used as animal feed may play an important role in the spread of lsd, in particular, where the colostrum, milk and dairy products have not been sufficiently heat-treated or acidified to inactivate the lsd virus. (19) in its scientific opinion on the animal health risks of feeding animals with ready-to-use dairy products without further treatment (11) the efsa specifies more precisely some methods that can mitigate the risks of the spread of lsd through milk and dairy products. therefore, the placing on the market and the dispatch of consignments of milk and dairy products for human consumption produced from animals kept in the restricted zone, should be permitted under certain conditions. (20) commission regulation (eu) no 142/2011 (12), lays down implementing rules for regulation (ec) no 1069/2009 of the european parliament and of the council (13), including requirements for the safe processing of animal by-products and derived products. in order to prevent the spread of lsd, the placing on the market of unprocessed animal by-products should be prohibited. a reference to processed animal by-products in this decision should be considered as a reference to the animal health standards set out in regulation (eu) no 142/2011. (21) in the event of an outbreak of lsd, article 19 of directive 92/119/eec provides for the possibility to carry out vaccination against that disease. bulgaria has not excluded a recourse to emergency vaccination against lsd. the risk of the spread of that disease from vaccinated animals and their products is different from the risks arising from non-vaccinated and possibly incubating animals. therefore, it is necessary to lay down conditions for the movement of vaccinated bovine animals and for the placing on the market of products derived from such animals. (22) scientific knowledge about lsd is incomplete. vaccinated bovine animals are protected from clinical signs of that disease but are not necessarily protected from infection and not all vaccinated animals respond with a protective immunity. therefore, such animals after the period of at least 28 days following the vaccination should be allowed to be sent directly for immediate slaughter to slaughterhouses situated on the territory of bulgaria. (23) consequently, fresh meat and meat preparations thereof, as well as meat products subjected to a non-specific treatment may constitute a non-negligible risk for the spread of lsd. therefore, it is justified to limit the placing on the market of the fresh meat of bovine animals and susceptible wild ungulates, and meat preparations and meat products thereof to the territory of bulgaria, provided that such commodities are subjected to special marking which is not oval and cannot be confused with the health mark for fresh meat as set out in chapter iii of section i of annex i to regulation (ec) no 854/2004 of the european parliament and of the council (14) and the identification mark for meat preparations and meat products consisting of or containing meat of bovine animals, as set out in section i of annex ii to regulation (ec) no 853/2004. (24) a specific treatment of meat products in hermetically sealed containers to a fo value of three or more and a treatment described in points 1.1 to 1.5 of part a of annex ix to council directive 2003/85/ec (15) of milk and dairy products sufficiently inactivate lsd virus in such products destined for human consumption and therefore such meat products and such milk and dairy products should be allowed to be placed on the market on the whole of the territory of bulgaria and in other member states and to be dispatched to third countries. (25) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 subject matter and scope this decision lays down protective measures in relation to the outbreak of lumpy skin disease in bulgaria and the additional measures to be taken by the member states concerned in accordance with directive 92/119/eec. article 2 definitions for the purposes of this directive, the definitions laid down in article 2 of directives 64/432/eec, 92/65/eec and 92/119/eec respectively apply. in addition, the following definitions shall apply: (a) bovine animal means ungulates of the species bos taurus, bos indicus, bison bison and bubalus bubalis; (b) restricted zone means the part of the territory of a member state listed in the annex to this decision which includes the area where lumpy skin disease was confirmed and any protection and surveillance zones established in accordance with article 10 of directive 92/119/eec; (c) captive wild ruminant means an animal of the suborder ruminantia within the order artiodactyla that has a phenotype not significantly affected by human selection but that lives under direct human supervision or control, including zoo animals; (d) wild ruminant means an animal of the suborder ruminantia within the order artiodactyla that has a phenotype unaffected by human selection and lives independent of direct human supervision or control; (e) meat products means meat products, as defined in point 7.1 of annex i to regulation (ec) no 853/2004, and treated stomachs, bladders and intestines, as defined in point 7.9 of that annex, which have undergone one of the treatments laid down in part 4 of annex ii to decision 2007/777/ec. article 3 prohibition on the movement and dispatch of certain animals and semen and embryos thereof, and placing on the market of certain products of animal origin and animal by-products 1. bulgaria shall prohibit the dispatch of the following commodities from the restricted zone to other parts of bulgaria, to other member states and to third countries: (a) bovine animals and captive wild ruminants; (b) semen, ova and embryos of bovine animals. 2. bulgaria shall prohibit the placing on the market outside the restricted zone and the dispatch to other member states and to third countries of the following commodities produced from bovine animals and wild ruminants kept in or hunted in the restricted zone: (a) fresh meat and meat preparations and meat products produced from such fresh meat; (b) colostrum, milk and dairy products of bovine animals; (c) fresh hides and skins other than those falling within the definitions in points 28 and 29 of annex i to regulation (eu) no 142/2011; (d) unprocessed animal by-products, unless destined and channelled under official supervision of the competent authority for disposal or processing in an approved plant in accordance with regulation (ec) no 1069/2009 within the territory of bulgaria. article 4 derogation from the prohibition on the dispatch of bovine animals and captive wild ruminants for direct slaughter and the dispatch of fresh meat, meat preparations and meat products obtained from such animals 1. by way of derogation from the prohibition provided for in article 3(1)(a), the competent authority may authorise the dispatch of bovine animals and captive wild ruminants from holdings situated in the restricted zone to a slaughterhouse located in other parts of bulgaria provided that: (a) the animals have been resident since birth, or for the past 28 days, on a holding where no case of lumpy skin disease was officially reported during that period; (b) the animals were clinically checked at loading and did not present any clinical signs of lumpy skin disease; (c) the animals are transported for immediate slaughter directly, without stopping or unloading; (d) the slaughterhouse is designated for this purpose by the competent authority; (e) the competent authority of the slaughterhouse must be informed in advance by the dispatching competent authority of the intention to send animals and notifies the dispatching competent authority of their arrival; (f) on arrival at the slaughterhouse, the animals are kept and slaughtered separately from other animals within a period of less than 36 hours; (g) the animals intended to be moved: (i) were not vaccinated against lumpy skin disease and have been kept on holdings: where vaccination was not carried out and which are situated outside protection and surveillance zones, or where vaccination was carried out and which are situated outside protection and surveillance zones, and a waiting period of at least 7 days after vaccination in the herd has elapsed, or which are situated in a surveillance zone maintained beyond 30 days because of the occurrence of further cases of the disease, as referred to in article 13 of directive 92/119/eec; or (ii) were vaccinated against lumpy skin disease at least 28 days prior to the date of movement and come from a holding on which all susceptible animals had been vaccinated at least 28 days prior to date of the intended movement. 2. any dispatch of bovine animals and captive wild ruminants in accordance with paragraph 1 shall only take place if the following conditions are fulfilled: (a) the means of transport has been properly cleansed and disinfected before and after the loading of such animals in accordance with article 9; (b) before and during the transport, the animals are protected against the attacks of vector insects. 3. the competent authority shall ensure that fresh meat, meat preparations and meat products obtained from the animals referred to in paragraph 1 of this article are placed on the market in accordance with the requirements provided for in articles 5 and 6. article 5 derogation from the prohibition on the placing on the market of fresh meat and meat preparations of bovine animals and wild ruminants 1. by way of derogation from the prohibitions provided for in article 3(2)(a) and (c), the competent authority may authorise the placing on the market in bulgaria outside the restricted zone of fresh meat, excluding offal other than liver, and meat preparations thereof, as well as fresh hides and skins obtained from bovine animals and wild ruminants: (a) kept on holdings in the restricted zone that were not under restrictions in accordance with directive 92/119/eec; or (b) slaughtered or hunted before 13 april 2016; or (c) referred to in article 4(1). 2. the competent authority shall only authorise the dispatch to other member states or third countries of consignments of fresh meat obtained from bovine animals kept and slaughtered outside the restricted zone, and meat preparations produced from such fresh meat, provided that such meat and meat preparations were produced, stored and handled without coming into contact with meat and meat preparations not authorised for dispatch to other member states in accordance with article 3(2)(a), and the consignments to other member states are accompanied by an official health certificate in accordance with the model set out in the annex to commission regulation (ec) no 599/2004 (16), of which part ii has been completed with the following attestation: fresh meat or meat preparations complying with commission implementing decision (eu) 2016/645 of 22 april 2016 concerning certain protective measures against lumpy skin disease in bulgaria. article 6 derogation from the prohibition on the placing on the market of meat products consisting of or containing meat of bovine animals or wild ruminants 1. by way of derogation from the prohibition provided for in article 3(2)(a), the competent authority may authorise the placing on the market of meat products produced in the restricted zone from fresh meat of bovine animals and wild ruminants: (a) kept on holdings in the restricted zone which are not subject to restrictions in accordance with directive 92/119/eec; (b) slaughtered or hunted before 13 april 2016; or (c) referred to in article 4(1); or (d) kept and slaughtered outside the restricted zone. 2. the competent authority shall authorise the placing on the market of meat products referred to in paragraph 1, that comply with the conditions of points (a), (b) or (c) of that paragraph, only on the territory of bulgaria, provided that the meat products have been subjected to a non-specific treatment which ensures that the cut surface of the meat products shows no longer the characteristics of fresh meat. the competent authority shall ensure that the meat products referred to in the first subparagraph are not dispatched to other member states or to third countries. 3. the competent authority shall only authorise the dispatch of consignments of meat products produced from fresh meat obtained from the animals referred to in paragraph 1(a), (b) and (c) to other member states or to third countries, provided that the meat products have been subjected to a specific treatment, as set out in point b of part 4 of annex ii to decision 2007/777/ec, in hermetically sealed containers to an fo value of three or more, and the consignments to other member states are accompanied by an official health certificate in accordance with the model set out in the annex to regulation (ec) no 599/2004, of which part ii has been completed with the following attestation: meat products complying with commission implementing decision (eu) 2016/645 of 22 april 2016 concerning certain protective measures against lumpy skin disease in bulgaria. 4. the competent authority shall only authorise the dispatch to other member states or third countries of consignments of meat products produced from fresh meat obtained from the animals referred to in paragraph 1(d), provided that the meat products have been subjected at least to a non-specific treatment, as set out in point a of part 4 of annex ii to decision 2007/777/ec, which ensures that the cut surface of the meat products shows no longer the characteristics of fresh meat and the consignments to other member states are accompanied by an official health certificate in accordance with the model set out in the annex to regulation (ec) no 599/2004, of which part ii has been completed with the following attestation: meat products complying with commission implementing decision (eu) 2016/645 of 22 april 2016 concerning certain protective measures against lumpy skin disease in bulgaria. article 7 derogation from the prohibition on the dispatch and placing on the market of milk and dairy products 1. by way of derogation from the prohibition provided for in article 3(2)(b), the competent authority may authorise the placing on the market of milk for human consumption obtained from bovine animals kept on holdings situated in the restricted zone, and dairy products thereof, provided that the milk and dairy products have been subjected to a treatment described in points 1.1 to 1.5 of part a of annex ix to directive 2003/85/ec. 2. the competent authority shall only authorise the dispatch to other member states or to third countries of consignments of milk obtained from bovine animals kept on holdings situated in the restricted zone, and dairy products thereof, provided that the milk and dairy products are intended for human consumption, have undergone the treatment referred to in paragraph 1 of this article and the consignments to other member states are accompanied by an official health certificate in accordance with the model set out in the annex to regulation (ec) no 599/2004, of which part ii has been completed with the following attestation: milk or dairy products complying with commission implementing decision (eu) 2016/645 of 22 april 2016 concerning certain protective measures against lumpy skin disease in bulgaria. article 8 special marking of fresh meat, meat preparations and meat products referred to in articles 5(1) and 6(2) respectively bulgaria shall ensure that the fresh meat, meat preparations and meat products referred to in article 5(1) and article 6(2) are marked with a special health mark or identification mark that is not oval and cannot be confused with: (a) the health mark for fresh meat as set out in chapter iii of section i of annex i to regulation (ec) no 854/2004; (b) the identification mark for meat preparations and meat products consisting of, or containing meat of bovine animals, as set out in section i of annex ii to regulation (ec) no 853/2004. article 9 requirements concerning transport vehicles, cleansing and disinfection 1. the competent authority shall ensure that, for any vehicle which has been in contact with animals of susceptible species in the restricted zone and intends to leave this same zone, the operator or driver of this vehicle provides evidence showing that, since the last contact with those animals, the vehicle has been cleansed and disinfected in a manner to inactivate the lumpy skin disease virus. 2. the competent authority shall specify the information to be submitted by the operator or driver of the livestock vehicle in order to demonstrate the required cleansing and disinfection has taken place. article 10 information requirements bulgaria shall inform the commission and the other member states, within the framework of the standing committee on plants, animals, food and feed, of the results of the surveillance for lumpy skin disease carried out in the restricted zone. article 11 application this decision shall apply until 31 december 2016. article 12 this decision is addressed to the republic of bulgaria. done at brussels, 22 april 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 395, 30.12.1989, p. 13. (2) oj l 224, 18.8.1990, p. 29. (3) oj l 62, 15.3.1993, p. 69. (4) oj l 18, 23.1.2003, p. 11. (5) council directive 64/432/eec of 26 june 1964 on animal health problems affecting intra-community trade in bovine animals and swine (oj 121, 29.7.1964, p. 1977/64). (6) council directive 92/65/eec of 13 july 1992 laying down animal health requirements governing trade in and imports into the community of animals, semen, ova and embryos not subject to animal health requirements laid down in specific community rules referred to in annex a (i) to directive 90/425/eec (oj l 268, 14.9.1992, p. 54). (7) efsa journal 2015;13(1):3986 [73 pp.]. (8) 24th edition, 2015. (9) regulation (ec) no 853/2004 of the european parliament and of the council of 29 april 2004 laying down specific hygiene rules for food of animal origin (oj l 139, 30.4.2004, p. 55). (10) commission decision 2007/777/ec of 29 november 2007 laying down the animal and public health conditions and model certificates for imports of certain meat products and treated stomachs, bladders and intestines for human consumption from third countries and repealing decision 2005/432/ec (oj l 312, 30.11.2007, p. 49). (11) efsa journal (2006) 347, p. 1. (12) commission regulation (eu) no 142/2011 of 25 february 2011 implementing regulation (ec) no 1069/2009 of the european parliament and of the council laying down health rules as regards animal by-products and derived products not intended for human consumption and implementing council directive 97/78/ec as regards certain samples and items exempt from veterinary checks at the border under that directive (oj l 54, 26.2.2011, p. 1). (13) regulation (ec) no 1069/2009 of the european parliament and of the council of 21 october 2009 laying down health rules as regards animal by-products and derived products not intended for human consumption and repealing regulation (ec) no 1774/2002 (animal by-products regulation) (oj l 300, 14.11.2009, p. 1). (14) regulation (ec) no 854/2004 of the european parliament and of the council of 29 april 2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption (oj l 139, 30.4.2004, p. 206). (15) council directive 2003/85/ec of 29 september 2003 on community measures for the control of foot-and-mouth disease repealing directive 85/511/eec and decisions 89/531/eec and 91/665/eec and amending directive 92/46/eec (oj l 306, 22.11.2003, p. 1). (16) commission regulation (ec) no 599/2004 of 30 march 2004 concerning the adoption of a harmonised model certificate and inspection report linked to intra-community trade in animals and products of animal origin (oj l 94, 31.3.2004, p. 44). annex restricted zone referred to in point (b) of the second subparagraph of article 2 the following regions in bulgaria: haskovo region stara zagora region

name: commission implementing decision (eu) 2016/601 of 15 april 2016 amending decision 2011/163/eu on the approval of plans submitted by third countries in accordance with article 29 of council directive 96/23/ec (notified under document c(2016) 2187) (text with eea relevance) type: decision_impl subject matter: natural environment; animal product; cooperation policy; fisheries; agricultural activity; agricultural policy; trade; health date published: 2016-04-19 19.4.2016 en official journal of the european union l 103/43 commission implementing decision (eu) 2016/601 of 15 april 2016 amending decision 2011/163/eu on the approval of plans submitted by third countries in accordance with article 29 of council directive 96/23/ec (notified under document c(2016) 2187) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 96/23/ec of 29 april 1996 on measures to monitor certain substances and residues thereof in live animals and animal products and repealing directives 85/358/eec and 86/469/eec and decisions 89/187/eec and 91/664/eec (1), and in particular the fourth subparagraph of article 29(1) and (2) thereof, whereas: (1) directive 96/23/ec lays down measures to monitor the substances and groups of residues listed in annex i thereto. that directive requires that third countries from which member states are authorised to import animals and animal products covered by that directive submit a residue monitoring plan providing required guarantees. that plan should at least include the groups of residues and substances listed in that annex i. (2) commission decision 2011/163/eu (2) approves the plans provided for in article 29 of directive 96/23/ec (the plans) submitted by certain third countries listed in the annex to that decision for the animals and animal products indicated in the list in annex i to the directive. (3) in the light of the recent plans submitted by certain third countries and additional information obtained by the commission from those third countries, it is necessary to update the list of third countries from which member states are authorised to import certain animals and animal products, as provided for in directive 96/23/ec and currently listed in the annex to decision 2011/163/eu (the list). (4) the dominican republic has submitted a plan for honey to the commission. that plan provides sufficient guarantees and should be approved. an entry for the dominican republic for honey should therefore be included in the list. (5) the falkland islands have submitted a plan for aquaculture to the commission. that plan provides sufficient guarantees and should be approved. an entry for the falkland islands for aquaculture should therefore be included in the list. (6) the commission requested that french polynesia provide information on the implementation of its plan for honey. in their reply, the competent authorities of french polynesia stated that the residue monitoring programme for honey has not been elaborated as french polynesia does not project to export honey to the eu. the entry for that third country concerning honey should be deleted from the list. french polynesia has been informed accordingly. (7) the commission requested that namibia provide information on the implementation of its plans for wild game. in their reply, the competent authorities of namibia stated that the residue monitoring programme for wild game has not been elaborated as namibia does not project to export wild game to the eu. the entry for that third country concerning wild game products should be deleted from the list. namibia has been informed accordingly. (8) the republic of korea has submitted a plan for poultry to the commission. that plan provides sufficient guarantees and should be approved. an entry for the republic of korea for poultry products should therefore be included in the list. (9) saint pierre and miquelon has submitted a plan for poultry to the commission. that plan provides sufficient guarantees and should be approved. an entry for saint pierre and miquelon poultry products should therefore be included in the list. (10) commission regulation (eu) no 206/2010 (3) authorises singapore for the introduction into the union of consignments of fresh meat of new zealand origin, eligible for introduction into the union and destined to the union. in order to permit that activity, the entry for singapore in the list should include equine, wild game and farmed game but it should be restricted to commodities of fresh meat originating from new zealand, destined to the union and being unloaded, reloaded and transited with or without storage through singapore. singapore and new zealand have been informed accordingly. a footnote setting out this limitation should be included in the list for singapore. (11) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 the annex to decision 2011/163/eu is replaced by the text set out in the annex to this decision. article 2 for a transitional period until 15 may 2016, member states shall accept consignments from namibia of wild game and consignments from french polynesia of honey provided that the importer can demonstrate that such consignments were certified and dispatched to the union prior to 31 march 2016 in accordance with decision 2011/163/eu. article 3 this decision is addressed to the member states. done at brussels, 15 april 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 125, 23.5.1996, p. 10. (2) commission decision 2011/163/eu of 16 march 2011 on the approval of plans submitted by third countries in accordance with article 29 of council directive 96/23/ec (oj l 70, 17.3.2011, p. 40). (3) commission regulation (eu) no 206/2010 of 12 march 2010 laying down lists of third countries, territories or parts thereof authorised for the introduction into the european union of certain animals and fresh meat and the veterinary certification requirements (oj l 73, 20.3.2010, p. 1). annex annex code iso2 country bovine ovine/caprine porcine equine poultry aqua-culture milk eggs rabbit wild game farmed game honey ad andorra x x x x ae united arab emirates x (1) al albania x x x am armenia x x ar argentina x x x x x x x x x x x au australia x x x x x x x x ba bosnia and herzegovina x x x x x bd bangladesh x bn brunei x br brazil x x x x x bw botswana x x x by belarus x (2) x x x bz belize x ca canada x x x x x x x x x x x x ch switzerland x x x x x x x x x x x x cl chile x x x x x x x x cm cameroon x cn china x x x x x co colombia x cr costa rica x cu cuba x x do dominican republic x ec ecuador x et ethiopia x fk falklands islands x x x fo faroe islands x gh ghana x gm gambia x gl greenland x x x gt guatemala x x hn honduras x id indonesia x il israel (7) x x x x x x in india x x x ir iran x jm jamaica x jp japan x x ke kenya x x (1) kg kyrgyzstan x kr south korea x x lb lebanon x lk sri lanka x ma morocco x x md moldova x x x x me montenegro x x x x x x x mg madagascar x x mk former yugoslav republic of macedonia (4) x x x x x x x x x mm republic of the union of myanmar x mu mauritius x mx mexico x x x my malaysia x (3) x mz mozambique x na namibia x x nc new caledonia x (3) x x x x ni nicaragua x x nz new zealand x x x x x x x x pa panama x pe peru x ph philippines x pm saint pierre and miquelon x pn pitcairn islands x py paraguay x rs serbia (5) x x x x (2) x x x x x x ru russia x x x x x x x (6) x rw rwanda x sa saudi arabia x sg singapore x (3) x (3) x (3) x (8) x (3) x x (3) x (8) x (8) sm san marino x x (3) x sr suriname x sv el salvador x sz swaziland x th thailand x x x tn tunisia x x x tr turkey x x x x x tw taiwan x x tz tanzania x x ua ukraine x x x x x x x ug uganda x x us united states x x x x x x x x x x x uy uruguay x x x x x x x ve venezuela x vn vietnam x x za south africa x x zm zambia x zw zimbabwe x x (1) camel milk only. (2) export to the union of live equidae for slaughter (food producing animals only). (3) third countries using only raw material either from member states or from other third countries approved for imports of such raw material to the union, in accordance with article 2. (4) the former yugoslav republic of macedonia; the definitive nomenclature for this country will be agreed following current negotiations at un level. (5) not including kosovo (this designation is without prejudice to positions on status, and is in line with unscr 1244 and the icj opinion on the kosovo declaration of independence). (6) only for reindeer from the murmansk and yamalo-nenets regions. (7) hereafter understood as the state of israel, excluding the territories under israeli administration since june 1967, namely the golan heights, the gaza strip, east jerusalem and the rest of the west bank. (8) only for commodities of fresh meat originating from new zealand, destined to the union and being unloaded, reloaded and transited with or without storage through singapore.

name: commission implementing decision (eu) 2016/587 of 14 april 2016 on the approval of the technology used in efficient vehicle exterior lighting using light emitting diodes as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (text with eea relevance) type: decision_impl subject matter: technology and technical regulations; research and intellectual property; environmental policy; deterioration of the environment; organisation of transport date published: 2016-04-16 16.4.2016 en official journal of the european union l 101/17 commission implementing decision (eu) 2016/587 of 14 april 2016 on the approval of the technology used in efficient vehicle exterior lighting using light emitting diodes as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (ec) no 443/2009 of the european parliament and of the council of 23 april 2009 setting emissions performance standards for new passenger cars as part of the community's integrated approach to reduce co2 emissions from light-duty vehicles (1), and in particular article 12(4) thereof, whereas: (1) the application submitted by the manufacturer mazda motor europe gmbh on 7 july 2015 for the approval of light emitting diodes (led) lighting, and the application submitted by honda on 8 january 2016 for the approval of efficient exterior led lighting have been assessed in accordance with article 12 of regulation (ec) no 443/2009, commission implementing regulation (eu) no 725/2011 (2) and the technical guidelines for the preparation of applications for the approval of innovative technologies pursuant to regulation (ec) no 443/2009. (2) the information provided in the mazda and honda applications demonstrates that the conditions and the criteria referred to in article 12 of regulation (ec) no 443/2009 and in articles 2 and 4 of implementing regulation (eu) no 725/2011 have been met. as a consequence, the mazda and honda efficient exterior led lighting should be approved as innovative technologies. (3) by implementing decisions 2014/128/eu (3), (eu) 2015/206 (4) and (eu) 2016/160 (5) the commission has approved three applications concerning technologies that contribute to improving the efficiency of exterior lighting systems. based on the experience gained from the assessment of those applications as well as the mazdaand honda applications, it has been satisfactorily and conclusively demonstrated that efficient exterior led lighting including one or appropriate combinations of efficient exterior led lights such as the low beam headlamp, high beam headlamp, front position, front fog, rear fog, front turn signal, rear turn signal, licence plate and reversing lamps meet the eligibility criteria referred to in article 12 of regulation (ec) no 443/2009 and implementing regulation (eu) no 725/2011 and provide a reduction in co2 emissions of at least 1 g co2/km as compared to a baseline exterior lighting package including the same combination of vehicle lights. (4) it is therefore appropriate to provide manufacturers with the possibility to certify the co2 savings from efficient exterior led lighting that satisfy those conditions. in order to ensure that only exterior led lighting that are compliant with those conditions are proposed for certification, the manufacturer should provide a verification report from an independent verification body confirming the compliance together with the application for certification submitted to the type approval authority. (5) if the type approval authority finds that the led lighting does not satisfy the conditions for certification the application for certification of the savings should be rejected. (6) it is appropriate to approve the testing methodology for determining the co2 savings from exterior led lighting. (7) in order to determine the co2 savings from an exterior led lighting, it is necessary to establish the baseline technology against which the efficiency of the led lighting should be assessed. on the basis of the experience gained, it is appropriate to consider halogen lighting as a baseline technology. (8) the savings from an exterior led lighting may be partially demonstrated by the test referred to in annex xii to commission regulation (ec) no 692/2008 (6). it is therefore necessary to ensure that this partial coverage is taken into account in the testing methodology for co2 savings from exterior led lighting. (9) in order to facilitate a wider deployment of efficient exterior led lighting in new vehicles, a manufacturer should also have the possibility to apply for the certification of the co2 savings from several exterior led lighting by a single certification application. it is however appropriate to ensure that where this possibility is used a mechanism is applied that incentivises the deployment of only those exterior led lighting that offer the highest efficiency. (10) for the purposes of determining the general eco-innovation code to be used in the relevant type approval documents in accordance with annexes i, viii and ix to directive 2007/46/ec of the european parliament and of the council (7), the individual code to be used for the innovative technology for exterior led lighting should be specified, has adopted this decision: article 1 approval the technology used in the mazda light emitting diodes (led) lighting and in the honda led lighting is approved as an innovative technology within the meaning of article 12 of regulation (ec) no 443/2009. article 2 application for certification of co2 savings 1. the manufacturer may apply for the certification of co2 savings from one or several exterior led lighting intended for use in m1 vehicles that include one or a combination of the following led lights, (a) low beam headlamp; (b) high beam headlamp; (c) front position lamp; (d) front fog lamp; (e) rear fog lamp; (f) front turn signal lamp; (g) rear turn signal lamp; (h) licence plate lamp; (i) reversing lamp. the led light or the combination of led lights forming the efficient exterior led lighting shall as a minimum provide the co2 reduction specified in article 9(1) of regulation (eu) no 725/2011. 2. an application for the certification of the savings from one or several efficient exterior led lighting shall be accompanied by an independent verification report certifying that that or those led lighting complies with the conditions set out in paragraph 1. 3. the type approval authority shall reject the application for certification if it finds that one or several exterior led lighting do not comply with the conditions set out in paragraph 1. article 3 certification of co2 savings 1. the reduction in co2 emissions from the use of efficient exterior led lighting referred to in article 2(1) shall be determined using the methodology set out in the annex. 2. where a manufacturer applies for the certification of the co2 savings from more than one efficient exterior led lighting referred to in article 2(1) in relation to one vehicle version, the type approval authority shall determine which of the efficient exterior led lighting tested delivers the lowest co2 savings, and record the lowest value in the relevant type approval documentation. that value shall be indicated in the certificate of conformity in accordance with article 11(2) of implementing regulation (eu) no 725/2011. article 4 eco-innovation code the eco-innovation code no 19 shall be entered into the type approval documentation where reference is made to this decision in accordance with article 11(1) of implementing regulation (eu) no 725/2011. article 5 entry into force this decision shall enter into force on the twentieth day following that of its publication in the official journal of the european union. done at brussels, 14 april 2016. for the commission the president jean-claude juncker (1) oj l 140, 5.6.2009, p. 1. (2) commission implementing regulation (eu) no 725/2011 of 25 july 2011 establishing a procedure for the approval and certification of innovative technologies for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (oj l 194, 26.7.2011, p. 19). (3) commission implementing decision 2014/128/eu of 10 march 2014 on the approval of the light emitting diodes low beam module e-light as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (oj l 70, 11.3.2014, p. 30). (4) commission implementing decision (eu) 2015/206 of 9 february 2015 on the approval of the daimler ag efficient exterior lighting using light emitting diodes as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (oj l 33, 10.2.2015, p. 52). (5) commission implementing decision (eu) 2016/160 of 5 february 2016 on the approval of the toyota motor europe efficient exterior lighting using light emitting diodes as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (oj l 31, 6.2.2016, p. 70). (6) commission regulation (ec) no 692/2008 of 18 july 2008 implementing and amending regulation (ec) no 715/2007 of the european parliament and of the council on type-approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (euro 5 and euro 6) and on access to vehicle repair and maintenance information (oj l 199, 28.7.2008, p. 1). (7) directive 2007/46/ec of the european parliament and the council of 5 september 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles (framework directive) (oj l 263, 9.10.2007, p. 1). annex methodology to determine the co2 savings of exterior vehicle lighting using light emitting diodes (led). 1. introduction in order to determine the co2 emission reductions that can be attributed to a package of efficient exterior led lights consisting of an appropriate combination of vehicle lights referred to in article 2 for the use in an m1 vehicle, it is necessary to establish the following: (1) testing conditions; (2) test equipment; (3) determination of the power savings; (4) calculation of the co2 savings; (5) calculation of the statistical error. 2. symbols, parameters and units latin symbols co2 savings [g co2/km] co2 carbon dioxide cf conversion factor (l/100 km) (g co2/km) [gco2/l] as defined in table 3 m number of efficient exterior led lights composing the package n number of measurements of the sample p power consumption of the vehicle light [w] standard deviation of the led light power consumption [w] standard deviation of the led light power consumption mean [w] standard deviation of the total co2 savings [g co2/km] uf usage factor [-] as defined in table 4 v mean driving speed of the new european driving cycle (nedc) [km/h] vpe consumption of effective power [l/kwh] as defined in table 2 sensitivity of calculated co2 savings related to the led light power consumption greek symbols difference a alternator efficiency [%] subscripts index (i) refers to vehicle lights index (j) refers to measurement of the sample ei eco-innovative rw real-world conditions ta type approval conditions b baseline 3. testing conditions the testing conditions shall fulfil the requirements of regulation un/ece no 112 (1) on uniform provisions concerning the approval of motor vehicle headlamps emitting an asymmetrical passing beam or a driving beam or both and equipped with filament lamps and/or light-emitting diode (led) modules. the power consumption shall be determined in accordance with point 6.1.4 of regulation un/ece no 112 and points 3.2.1 and 3.2.2 of annex 10 to that regulation. 4. test equipment the following equipment is to be used, as shown in the figure: a power supply unit (i.e. variable voltage supplier); two digital multimeters, one for measuring the dc-current, and the other for measuring the dc-voltage. in the figure, a possible test set-up is shown, when the dc-voltage meter is integrated in the power supply unit. 5. measurements and determination of the power savings for each efficient exterior led light included in the package the measurement of the current shall be performed as shown in the figure at a voltage of 13,2 v. led module(s) operated by an electronic light source control gear, shall be measured as specified by the applicant. the manufacturer may request that other measurements of the current shall be done at other additional voltages. in that case, the manufacturer must hand over verified documentation on the necessity to perform these other measurements to the type-approval authority. the measurements of the currents at each of those additional voltages are to be performed consecutively at least five (5) times. the exact installed voltages and the measured current is to be recorded in four decimals. the power consumption has to be determined by multiplying the installed voltage with the measured current. the average of the power consumption for each efficient exterior led light () has to be calculated. each value must be expressed in 4 decimals. when a stepper motor or electronic controller is used for the supply of the electricity to the led lamps, then the electric load of this component part is to be excluded from the measurement. the resulting power savings of each efficient exterior led light ( pi) are to be calculated with the following formula: formula 1 where the power consumption of the corresponding baseline vehicle light is defined by table 1. table 1 power requirements for different baseline vehicle lights vehicle light total electric power (pb) [w] low beam headlamp 137 high beam headlamp 150 front position 12 license plate 12 front fog lamp 124 rear fog lamp 26 front turn signal lamp 13 rear turn signal lamp 13 reversing lamp 52 6. calculation of the co2 savings the total co2 savings of the lighting package are to be calculated by formula 2. formula 2 where v : mean driving speed of the nedc [km/h], which is 33,58 km/h a : alternator efficiency [%], which is 67 % vpe : consumption of effective power [l/kwh] as defined in table 2 table 2 consumption of effective power type of engine consumption of effective power (vpe) [l/kwh] petrol 0,264 petrol turbo 0,280 diesel 0,220 cf : conversion factor (l/100 km) (g co2/km) [gco2/l] as defined in table 3 table 3 fuel conversion factor type of fuel conversion factor (l/100 km) (g co2/km) (cf) [gco2/l] petrol 2 330 diesel 2 640 uf : usage factor of the vehicle light [-] as defined in table 4 table 4 usage factor for different vehicle lights vehicle light usage factor (uf) [-] low beam headlamp 0,33 high beam headlamp 0,03 front position 0,36 license plate 0,36 front fog lamp 0,01 rear fog lamp 0,01 front turn signal lamp 0,15 rear turn signal lamp 0,15 reversing lamp 0,01 7. calculation of the statistical error the statistical errors in the outcomes of the testing methodology caused by the measurements are to be quantified. for each efficient exterior led light included in the package the standard deviation is calculated as defined by formula 3. formula 3 where: n : number of measurements of the sample, which is at least 5 the standard deviation of the power consumption of each efficient exterior led light () leads to an error in the co2 savings (). this error is to be calculated by means of formula 4 formula 4 8. statistical significance it has to be demonstrated for each type, variant and version of a vehicle fitted with the combination of the efficient exterior led lights that the error in the co2 savings calculated with formula 4 is not greater than the difference between the total co2 savings and the minimum savings threshold specified in article 9(1) of implementing regulation (eu) no 725/2011 (see formula 5). formula 5 where: mt : minimum threshold [gco2/km], which is 1 gco2/km where the total co2 emission savings of the of the package of the efficient exterior led lights, as a result of the calculation using formula 5, are below the threshold specified in article 9(1) of implementing regulation (eu) no 725/2011, the second subparagraph of article 11(2) of that regulation shall apply. (1) e/ece/324/rev.2/add.111/rev.3 e/ece/trans/505/rev.2/add.111/rev.3, 9 january 2013

name: commission implementing decision (eu) 2016/575 of 29 march 2016 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (notified under document c(2016) 1702) (text with eea relevance) type: decision_impl subject matter: demography and population; economic geography; technology and technical regulations; consumption; industrial structures and policy; marketing date published: 2016-04-14 14.4.2016 en official journal of the european union l 98/4 commission implementing decision (eu) 2016/575 of 29 march 2016 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (notified under document c(2016) 1702) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to directive 2001/95/ec of the european parliament and of the council of 3 december 2001 on general product safety (1), and in particular article 13 thereof, whereas: (1) commission decision 2006/502/ec (2) requires member states to take measures to ensure that only lighters that are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters. (2) decision 2006/502/ec was adopted in accordance with the provisions set out in article 13 of directive 2001/95/ec, which restrict the validity of such decisions to a period of maximum 1 year, and allow it to be extended for additional periods not exceeding 1 year. (3) the validity of decision 2006/502/ec was extended by 1-year periods, by (in chronological order): commission decision 2007/231/ec (3) until 11 may 2008, commission decision 2008/322/ec (4) until 11 may 2009, commission decision 2009/298/ec (5) until 11 may 2010, commission decision 2010/157/eu (6) until 11 may 2011, commission decision 2011/176/eu (7) until 11 may 2012, commission implementing decision 2012/53/eu (8) until 11 may 2013, commission implementing decision 2013/113/eu (9) until 11 may 2014, commission implementing decision 2014/61/eu (10) until 11 may 2015 and commission implementing decision (eu) 2015/249 (11) until 11 may 2016. (4) lighters that are not child-resistant are still being placed on the market. reinforced market surveillance activities should further reduce the numbers of such products present on the market. (5) in the absence of other satisfactory measures addressing the child-safety of lighters, it is necessary to extend the validity of decision 2006/502/ec for a further 12 months. (6) decision 2006/502/ec should therefore be amended accordingly. (7) the measures provided for in this decision are in accordance with the opinion of the committee established by directive 2001/95/ec, has adopted this decision: article 1 article 6(2) of decision 2006/502/ec is replaced by the following: 2. this decision shall apply until 11 may 2017. article 2 member states shall take the necessary measures to comply with this decision by 11 may 2016 at the latest and shall publish details of these measures. they shall inform the commission of the measures taken without delay. article 3 this decision is addressed to the member states. done at brussels, 29 march 2016. for the commission v ra jourov member of the commission (1) oj l 11, 15.1.2002, p. 4. (2) commission decision 2006/502/ec of 11 may 2006 requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 198, 20.7.2006, p. 41). (3) commission decision 2007/231/ec of 12 april 2007 amending decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 99, 14.4.2007, p. 16). (4) commission decision 2008/322/ec of 18 april 2008 prolonging the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 109, 19.4.2008, p. 40). (5) commission decision 2009/298/ec of 26 march 2009 prolonging the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 81, 27.3.2009, p. 23). (6) commission decision 2010/157/eu of 12 march 2010 prolonging the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 67, 17.3.2010, p. 9). (7) commission decision 2011/176/eu of 21 march 2011 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 76, 22.3.2011, p. 99). (8) commission implementing decision 2012/53/eu of 27 january 2012 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 27, 31.1.2012, p. 24). (9) commission implementing decision 2013/113/eu of 1 march 2013 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 61, 5.3.2013, p. 11). (10) commission implementing decision 2014/61/eu of 5 february 2014 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 38, 7.2.2014, p. 43). (11) commission implementing decision (eu) 2015/249 of 10 february 2015 extending the validity of decision 2006/502/ec requiring member states to take measures to ensure that only lighters which are child-resistant are placed on the market and to prohibit the placing on the market of novelty lighters (oj l 41, 17.2.2015, p. 41).

name: council decision (eu) 2016/572 of 11 april 2016 appointing an alternate member, proposed by the kingdom of spain of the committee of the regions type: decision subject matter: eu institutions and european civil service; europe date published: 2016-04-13 13.4.2016 en official journal of the european union l 97/11 council decision (eu) 2016/572 of 11 april 2016 appointing an alternate member, proposed by the kingdom of spain of the committee of the regions the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 305 thereof, having regard to the proposal of the spanish government, whereas: (1) on 26 january 2015, 5 february 2015 and 23 june 2015, the council adopted decisions (eu) 2015/116 (1), (eu) 2015/190 (2) and (eu) 2015/994 (3) appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020. (2) an alternate member's seat on the committee of the regions has become vacant following the end of the term of office of ms mar a sol calzado garc a, has adopted this decision: article 1 the following is hereby appointed as an alternate member of the committee of the regions for the remainder of the current term of office, which runs until 25 january 2020: sr. d. ngel luis s nchez mu oz, secretario general de acci n exterior, junta de andaluc a. article 2 this decision shall enter into force on the date of its adoption. done at luxembourg, 11 april 2016. for the council the president m.h.p. van dam (1) council decision (eu) 2015/116 of 26 january 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 20, 27.1.2015, p. 42). (2) council decision (eu) 2015/190 of 5 february 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 31, 7.2.2015, p. 25). (3) council decision (eu) 2015/994 of 23 june 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 159, 25.6.2015, p. 70).

name: commission decision (eu) 2016/566 of 11 april 2016 on establishing the high-level steering group for governance of the digital maritime system and services and repealing decision 2009/584/ec type: decision subject matter: information and information processing; international law; maritime and inland waterway transport; transport policy date published: 2016-04-12 12.4.2016 en official journal of the european union l 96/46 commission decision (eu) 2016/566 of 11 april 2016 on establishing the high-level steering group for governance of the digital maritime system and services and repealing decision 2009/584/ec the european commission, having regard to the treaty on the functioning of the european union, whereas: (1) the commission is responsible for the management and development at policy level of the union maritime information and exchange system including the central safeseanet system, the cleanseanet system and the relevant parts of the long-range identification and tracking system (lrit), their integration and interoperability and for the oversight of the safeseanet system, in cooperation with member states. (2) annex iii, point 2.2, of directive 2002/59/ec of the european parliament and of the council (1) provides for the establishment of a high-level steering group, in respect of matters referred to therein. that steering group has been set up by decision 2009/584/ec (2). (3) following the amendment of annex iii, point 2.2, of directive 2002/59/ec by commission directive 2014/100/eu (3) this rule provides for a number of new tasks to assist in the management and governance of the system and integrated services, compared to the previous situation. in practice this also allows for the further streamlining of the existing governance and groups, in view of reducing administrative burdens and simplifying reporting obligations. (4) it is therefore necessary, as regards the commission decision establishing the high-level steering group, to provide for an updated set of tasks. (5) it is also expedient to confer upon the high-level steering group certain other tasks, closely related to those set out in directive 2002/59/ec, and corresponding to the expertise of the group. hence, the group should assist the commission in the fulfilment of its task set out in article 3(2) of directive 2010/65/eu of the european parliament and of the council (4), in establishing and maintaining cooperation with expert group(s) and in enhancing the established cooperation between all relevant authorities involved in the member states, in monitoring the interconnection and interoperability of the system and, it should also bring about an exchange of experience and good practice with all parties, including industry stakeholders, involved. (6) it appears also necessary to address technological developments and advancements as well as strategic issues related to the future developments of the system, taking into account in particular the support and facilitation of the european maritime transport space without barriers and other relevant union policies and legislation. this may also be useful for the development of the voluntary process of a common information and sharing environment (cise). (7) in conformity with annex iii, point 2.2, of directive 2002/59/ec, the high-level steering group should be made up by representatives of the member states and of the commission. it shall be chaired by a representative of the commission. for reasons of continuity it is desirable that the current members appointed in accordance with decision 2009/584/ec remain appointed until the end of their current term. (8) the european maritime safety agency (emsa) is responsible for the technical implementation of the union maritime information and exchange system, in cooperation with the member states and the commission, in accordance with directive 2002/59/ec and with regard to supporting member states in the implementation of directive 2010/65/eu, in particular by facilitating the electronic transmission of data through the safeseanet system, in accordance with regulation (ec) no 1406/2002 of the european parliament and of the council (5); it should therefore be permanently involved in the work of the high-level steering group. (9) rules on disclosure of information by members of the group should be laid down. (10) personal data should be processed in accordance with regulation (ec) no 45/2001 of the european parliament and of the council (6). (11) decision 2009/584/ec should be repealed, has adopted this decision: article 1 subject matter the high-level steering group for governance of the digital maritime system and services is hereby set up (hereinafter referred to as the hlsg). article 2 tasks the hlsg's tasks, without prejudice to the ownership of data by member states, shall be: (a) as stipulated in point 2.2 of annex iii of directive 2002/59/ec; (b) to assist the commission in the fulfilment of its tasks set out in article 3(2) of directive 2010/65/eu, in particular assist in developing technical mechanisms for the harmonisation and coordination of reporting formalities within the union enhancing integration, re-use and sharing of information reported into the system, enabling reporting once and thereby supporting the facilitation of the european maritime transport space without barriers; (c) to establish and maintain cooperation with expert group(s) for specific tasks related to the operation, use and functioning of the union maritime information and exchange system, the national single window, the national safeseanet or other electronic systems and their interoperability, under terms of reference established by the hlsg; (d) to establish the cooperation between the member states bodies and the commission regarding: article 23 of directive 2002/59/ec, questions related to conditions for use of the system and the integrated maritime services; (e) to monitor the interconnection and interoperability of the national single window and the union maritime information and exchange system as well as other relevant european systems used for managing the information; (f) to bring about an exchange of experience and good practice for the purposes of article 20(3) of directive 2002/59/ec. article 3 consultation the commission may consult the hlsg on any matter relating to the tasks set out in article 2 and the technical operation of current and future developments of the single window, the union maritime information and exchange system, both at centralised and de-centralised level, including its contribution to the maritime monitoring and surveillance from a holistic perspective for the aims and purposes laid down in directive 2002/59/ec and directive 2010/65/eu. article 4 membership-appointment 1. the hlsg shall be composed of representatives of the member states and of the commission. 2. the members of the hlsg to be appointed by the commission shall be senior officials. 3. each member states shall designate no more than two members and a corresponding number of alternates. alternates shall be appointed in accordance with the same conditions as members; alternates automatically replace any members who are absent or indisposed. members and alternates shall be senior officials. 4. current members of the high-level steering group on safeseanet shall remain appointed until the end of their term under article 3(2) of decision 2009/584/ec. 5. members designated in accordance with paragraph 3 are appointed for three years. they shall remain in office until such time as they are replaced or their term of office ends. their term of office may be renewed. 6. members who are no longer capable of contributing effectively to the group's deliberations, who resign or who do not comply with the conditions set out in paragraph 3 of this article, or article 339 of the treaty, may be replaced for the remainder of their term of office. 7. a representative of the european maritime safety agency (emsa) shall attend the hlsg meetings as permanent observer. the emsa shall be represented at a high level. 8. representatives of the efta states that are parties to the agreement on the european economic area may attend hlsg meetings as observers. 9. personal data shall be collected, processed and published in accordance with regulation (ec) no 45/2001. article 5 operation 1. the hlsg shall be chaired by a representative of the commission. 2. the commission's representative chairing the hlsg may ask experts with specific competence on a subject on the agenda to participate in the hlsg or sub-group's discussion if this is useful or necessary. in addition, the commission's representative may give observer status to individuals, organisations as defined in rule 8(3) of the horizontal rules on expert groups and candidate countries. 3. members and their representatives, as well as invited experts and observers, shall comply with the obligations of professional secrecy laid down by the treaties and their implementing rules, as well as with the commission's rules on security regarding the protection of eu classified information, laid down in the annex to commission decisions (eu, euratom) 2015/443 (7) and 2015/444 (8). should they fail to respect these obligations, the commission may take all appropriate measures. 4. the hlsg shall normally meet on commission premises. the commission shall provide the secretariat of the hlsg. other commission officials with an interest in the proceedings may attend meetings of the group. 5. the hlsg shall adopt its rules of procedure on the basis of the standard rules of procedure for expert groups adopted by the commission. 6. all relevant documents (such as agendas, minutes and participants' submissions) shall be made available either in the register of expert groups or via a link from the register to a dedicated website, where information can be found. exceptions to publication shall be made in accordance with regulation (ec) no 1049/2001 of the european parliament and of the council (9). article 6 meeting expenses 1. participants in the activities of the hlsg shall not be remunerated for the services they render. 2. travel and subsistence expenses incurred by participants in the activities of the hlsg shall be reimbursed by the commission in accordance with the provisions in force within the commission. 3. those expenses shall be reimbursed within the limits of the available appropriations allocated under the annual procedure for the allocation of resources. article 7 repeal decision 2009/584/ec is repealed. article 8 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 11 april 2016. for the commission the president jean-claude juncker (1) directive 2002/59/ec of the european parliament and of the council of 27 june 2002 establishing a community vessel traffic monitoring and information system and repealing council directive 93/75/eec (oj l 208, 5.8.2002, p. 10). (2) commission decision 2009/584/ec of 31 july 2009 establishing the high level steering group on safeseanet (oj l 201, 1.8.2009, p. 63). (3) commission directive 2014/100/eu of 28 october 2014 amending directive 2002/59/ec of the european parliament and of the council establishing a community vessel traffic monitoring and information system (oj l 308, 29.10.2014, p. 82). (4) directive 2010/65/eu of the european parliament and of the council of 20 october 2010 on reporting formalities for ships arriving in and/or departing from ports of the member states and repealing directive 2002/6/ec (oj l 283, 29.10.2010, p. 1). (5) regulation (ec) no 1406/2002 of the european parliament and of the council of 27 june 2002 establishing a european maritime safety agency (oj l 208, 5.8.2002, p. 1). (6) regulation (ec) no 45/2001 of the european parliament and of the council of 18 december 2000 on the protection of individuals with regard to the processing of personal data by the community institutions and bodies and on the free movement of such data (oj l 8, 12.1.2001, p. 1). (7) commission decision (eu, euratom) 2015/443 of 13 march 2015 on security in the commission (oj l 72, 17.3.2015, p. 41). (8) commission decision (eu, euratom) 2015/444 of 13 march 2015 on the security rules for protecting eu classified information (oj l 72, 17.3.2015, p. 53). (9) regulation (ec) no 1049/2001 of the european parliament and of the council of 30 may 2001 regarding public access to european parliament, council and commission documents (oj l 145, 31.5.2001, p. 43).

name: political and security committee decision (cfsp) 2016/563 of 15 march 2016 on the acceptance of turkey's contribution to the european union advisory mission for civilian security sector reform ukraine (euam ukraine) (euam ukraine/2/2016) type: decision subject matter: cooperation policy; europe; politics and public safety; european construction date published: 2016-04-12 12.4.2016 en official journal of the european union l 96/37 political and security committee decision (cfsp) 2016/563 of 15 march 2016 on the acceptance of turkey's contribution to the european union advisory mission for civilian security sector reform ukraine (euam ukraine) (euam ukraine/2/2016) the political and security committee, having regard to the treaty on european union, and in particular the third paragraph of article 38 thereof, having regard to council decision 2014/486/cfsp of 22 july 2014 on the european union advisory mission for civilian security sector reform ukraine (euam ukraine) (1), whereas: (1) pursuant to article 10(3) of decision 2014/486/cfsp, the council authorised the political and security committee (psc) to take relevant decisions on the acceptance of contributions to euam ukraine by third states. (2) the civilian operations commander recommended that the psc accept the proposed contribution from turkey to euam ukraine and to consider the contribution as significant. (3) turkey should be exempted from financial contributions to the budget of euam ukraine, has adopted this decision: article 1 third states' contributions 1. the contribution from turkey to euam ukraine is accepted and considered to be significant. 2. turkey is exempted from financial contributions to the budget of euam ukraine. article 2 entry into force this decision shall enter into force on the date of its adoption. it shall apply from 3 november 2015. done at brussels, 15 march 2016. for the political and security committee the chairperson w. stevens (1) oj l 217, 23.7.2014, p. 42.

name: council decision (eu) 2016/554 of 5 april 2016 appointing nine members, proposed by the republic of france of the committee of the regions type: decision subject matter: eu institutions and european civil service; europe date published: 2016-04-09 9.4.2016 en official journal of the european union l 95/15 council decision (eu) 2016/554 of 5 april 2016 appointing nine members, proposed by the republic of france of the committee of the regions the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 305 thereof, having regard to the proposal of the french government, whereas: (1) on 26 january 2015, 5 february 2015 and 23 june 2015, the council adopted decisions (eu) 2015/116 (1), (eu) 2015/190 (2) and (eu) 2015/994 (3) appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020. (2) six members' seats on the committee of the regions have become vacant following the end of the terms of office of mr claude gewerc, ms annabelle jaeger, mr charles marziani, mr pierrick massiot, mr ren souchon and mr bernard soulage. (3) three members' seats on the committee of the regions have become vacant following the end of the mandates on the basis of which mr fran ois decoster (conseiller r gional du nord-pas-de-calais), mr pascal mangin (conseiller r gional d'alsace) and mr st phan rossignol (conseiller r gional du languedoc-roussilon) were proposed, has adopted this decision: article 1 the following are hereby appointed as members to the committee of the regions for the remainder of the current term of office, which runs until 25 january 2020: mme isabelle boudineau, vice-pr sidente du conseil r gional aquitaine-poitou-charente-limousin, mme martine calderoli-lotz, conseill re r gionale du conseil r gional alsace-champagne-ardenne-lorraine, m. christophe clergeau, conseiller r gional du conseil r gional pays-de-la-loire, m. fran ois decoster, vice-pr sident du conseil r gional nord-pas-de-calais-picardie (change of mandate), mme m lanie fortier, conseill re r gionale du conseil r gional centre-val-de-loire, m. pascal mangin, conseiller r gional du conseil r gional alsace-champagne-ardenne-lorraine (change of mandate), mme marie-antoinette maupertuis, conseill re ex cutive de la collectivit territoriale de corse, m. st phan rossignol, conseiller r gional du conseil r gional languedoc-roussillon-midi-pyr n es (change of mandate), m. thierry solere, conseiller r gional du conseil r gional ile-de-france. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 5 april 2016. for the council the president a.g. koenders (1) council decision (eu) 2015/116 of 26 january 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 20, 27.1.2015, p. 42). (2) council decision (eu) 2015/190 of 5 february 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 31, 7.2.2015, p. 25). (3) council decision (eu) 2015/994 of 23 june 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 159, 25.6.2015, p. 70).

name: council implementing decision (eu) 2016/544 of 19 august 2015 approving the macroeconomic adjustment programme of greece (2015/1411) type: decision_impl subject matter: europe; monetary relations; budget; health; economic analysis; economic conditions; economic policy; civil law date published: 2016-04-07 7.4.2016 en official journal of the european union l 91/27 council implementing decision (eu) 2016/544 of 19 august 2015 approving the macroeconomic adjustment programme of greece (2015/1411) (1) the council of the european union, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) no 472/2013 of the european parliament and of the council of 21 may 2013 on the strengthening of economic and budgetary surveillance of member states in the euro area experiencing or threatened with serious difficulties with respect to their financial stability (2), and in particular article 7(2) thereof, having regard to the proposal from the european commission, whereas: (1) article 136(1) of the treaty on the functioning of the european union (tfeu) foresees the possibility of adopting measures specific to member states whose currency is the euro in order to ensure the proper functioning of economic and monetary union. (2) since 2010, greece has been granted financial assistance by the member states and the international monetary fund (imf). a first economic adjustment programme for greece was been agreed on 2 may 2010: the euro area member states agreed to provide bilateral loans, pooled by the european commission, for a total amount of eur 80 000 million to be disbursed over the period may 2010 through june 2013 and the imf committing additional eur 30 000 million under a stand-by arrangement. the second economic adjustment programme for greece was approved on 14 march 2012. the euro area member states and the imf committed the undisbursed amounts of the first programme plus an additional eur 130 000 million for the years 2012-2014. whereas the financing of the first programme was based on bilateral loans, it was agreed that on the side of euro area member states the second programme would be financed by the european financial stability facility (efsf), which had been fully operational since august 2010. in total, the second programme foresaw financial assistance of eur 164 500 million until the end of 2014 (the period was later extended until the end of june 2015). of that sum, the euro area commitment amounts to eur 144 700 million to be provided via the efsf, while the imf contributed eur 19 800 million, as part of a four-year eur 28 000 million arrangement under the extended fund facility for greece that the imf approved in march 2012. (3) on 8 july 2015, in view of the ongoing severe economic and financial disturbance, the greek authorities requested financial assistance from the european stability mechanism (esm) in order to ensure a properly-functioning greek banking system, to meet greece's debt obligations, to support the return of greece's economy to sustainable growth and safeguard financial stability of the euro area and of its member states. (4) pursuant to article 13(1) of the esm treaty, and to form the basis for a decision of the esm board of governors, in line with article 13(2) thereof, whether to grant, in principle, stability support to greece in the form of a loan, on 8 july 2015 the chairperson of the esm board of governors entrusted the european commission, in liaison with the european central bank (ecb), with assessing the existence of a risk to the financial stability of the euro area as a whole or its member states; assessing, together with the imf, whether public debt is sustainable; and estimating the actual or potential financing needs of greece. (5) in compliance with article 13 of the esm treaty, the european commission, in liaison with the ecb, and with input from imf staff, completed those assessments on 10 july 2015, concluding that conditions for the financial support for greece, to be provided in the form of an esm loan, are in place. the financing needs were estimated to be up to eur 86 000 million. (6) on 17 july 2015, greece was granted eur 7 160 million short-term financial assistance under the european financial stabilisation mechanism (efsm), by council implementing decision (eu) 2016/542 (3), for facing july 2015 repayment obligations and settling its arrears to the imf. the assistance was disbursed in one instalment on 20 july 2015, and was linked to economic policy conditionality. the esm assistance will be used, inter alia, to repay that short-term efsm bridge loan. (7) on 16 july 2015, the esm board of governors invited the commission, in liaison with the ecb, the esm, the greek authorities, and, where appropriate, the imf, to agree on a macroeconomic adjustment programme for greece. the programme was prepared in accordance with the procedure provided for under article 7(1) of regulation (eu) no 472/2013. on 11 august 2015, those institutions reached an agreement at technical level on a macroeconomic adjustment programme (the programme) with the greek government. the programme submitted by greece to the commission and the council aims at ensuring the adoption of a set of reforms needed to improve the sustainability of public finances, as well as to ensure financial stability and to promote growth, employment, and social fairness. (8) following that agreement, greece should adopt a comprehensive policy package, to be implemented in a three-year macroeconomic adjustment programme which would span from the third quarter of 2015 to the third quarter of 2018. (9) the comprehensive policy package, to be laid down in an esm memorandum of understanding on specific economic policy conditionality (the memorandum of understanding), should aim at restoring financial market confidence, re-establishing sound macroeconomic balances and enabling the economy to return to sustainable growth. it should be structured on four pillars: restoring fiscal sustainability, safeguarding financial stability, enhancing competitiveness and growth, and modernising the state and the public administration. (10) the commission services updated their forecast for nominal gdp growth in august 2015, as needed to underpin the negotiations for the esm programme. under this forecast, which centres around a nominal gdp growth rate of 3,2 % in 2015, 0,7 % in 2016, 3,4 % in 2017, 4,1 % in 2018 and 4,2 % in 2019, the debt-to-gdp ratio would amount to 196,3 % in 2015, 200,9 % in 2016, 198,6 % in 2017, 190,7 % in 2018 and 182,3 % in 2019. the debt-to-gdp ratio would therefore increase until 2016 and move to a declining path thereafter, reaching an estimated 174,5 % in 2020, with debt dynamics affected by several below-the-line operations. under the commission services' update of the forecast for nominal gdp growth, the primary general government balance is projected to attain a deficit of eur 7 631 million (4,4 % of gdp) in 2015, a deficit of eur 6 166 million (3,6 % of gdp) in 2016, a deficit of eur 4 089 million (2,3 % of gdp) in 2017 and a deficit of eur 753 million (0,4 % of gdp) in 2018. (11) the authorities will pursue a new fiscal path premised on primary surplus targets of 0,25, 0,5, 1,75, and 3,5 % of gdp in 2015, 2016, 2017 and 2018 and beyond, respectively. the trajectory of the fiscal targets is consistent with expected growth rates of the greek economy as it recovers from its deepest recorded recession. (12) enhancing the long-term resilience of the greek banking sector is critical to restoring financial stability in greece and to preserving financial stability in the euro area as a whole. to preserve the liquidity of the greek banking sector, temporary administrative measures were imposed, including capital controls. (13) the implementation of comprehensive and ambitious reforms in financial, fiscal and structural areas should safeguard the medium-term sustainability of the greek public debt. (14) the commission, in liaison with the ecb and, where appropriate, the imf, should verify at regular intervals the rigorous implementation of greece's programme through missions and regular reporting, on a quarterly basis, by the greek authorities. (15) throughout the implementation of greece's comprehensive policy package, the commission should provide additional policy advice and technical assistance in specific areas. (16) the greek authorities should involve, in accordance with current national rules and practices, the social partners and civil society organisations in the preparation, implementation, monitoring and evaluation of the programme. (17) any form of financial assistance received by greece to help it implement the policies under its programme should be in line with the legal requirements and policies of the union, in particular the union's economic governance framework. any intervention in support of financial institutions should be carried out in accordance with the union's rules on competition. the commission should ensure that any measures laid down in a memorandum of understanding in the context of requested esm financial assistance are fully consistent with this decision, has adopted this decision: article 1 1. in order to facilitate the return of the greek economy to a path of sustainable growth and to fiscal and financial stability, greece shall rigorously implement the programme, the main elements of which are laid down in article 2 of this decision. the programme shall address the specific risks emanating from greece for the financial stability of the euro area and shall aim to rapidly re-establish a sound and sustainable economic and financial situation in greece and restore its capacity to finance itself fully on the international financial markets. the programme shall take due account of the council recommendations addressed to greece under articles 121, 126, 136 and 148 tfeu as well as greece's actions to comply with them, while aiming to broaden, strengthen and deepen the policy measures required. 2. the commission, in liaison with the ecb and, where appropriate, the imf, shall monitor greece's progress in implementing its programme. greece shall give the commission and the ecb its full cooperation. it shall, in particular, provide them with all the information that they deem necessary for the monitoring of the programme. 3. the commission, in liaison with the ecb and, where appropriate, the imf, shall examine with the greek authorities any changes and updates to the programme that may be needed in order to take proper account of, inter alia, any significant gap between macroeconomic and fiscal forecasts and realised figures, negative spillover effects, as well as macroeconomic and financial shocks. in order to ensure the smooth implementation of the programme and to help the correction of imbalances in a sustainable way, the commission shall provide continued advice and guidance on fiscal, financial market and structural reforms. the commission shall at regular intervals assess the economic impact of the programme and shall recommend necessary corrections with a view to enhancing growth and job creation, securing the necessary fiscal consolidation, and minimising harmful social impacts. article 2 1. the key objectives of the programme shall be: restoring fiscal sustainability, safeguarding financial stability, enhancing competitiveness and growth, and modernising the state and the public administration. 2. greece shall pursue fiscal consolidation by means of high-quality permanent measures while minimising the impact on disadvantaged people. the greek authorities commit to ensuring sustainable public finances and achieve sizeable and sustainable primary surpluses over the medium-term that will reduce the debt-to-gdp ratio steadily. the authorities shall accordingly pursue a new fiscal path premised on primary surplus targets of 0,25, 0,5, 1,75, and 3,5 per cent of gdp in 2015, 2016, 2017 and 2018 and beyond, respectively. greece shall target a medium-term primary surplus of 3,5 % of gdp to be achieved through a combination of upfront parametric fiscal reforms, including to its vat and pension system, supported by an ambitious programme to strengthen tax compliance and public financial management, and fight tax evasion, while ensuring adequate protection of vulnerable groups. in addition to the measures above, the authorities commit to legislate in october 2015 credible structural measures yielding at least 0,75 % of gdp coming into effect in 2017 and 0,25 % of gdp coming into effect in 2018 to support the achievement of the medium-term primary balance target of 3,5 % of gdp. the authorities commit to take further structural measures in october 2016, if needed to secure the 2017 and 2018 targets. those would include containing defence expenditure, the planned personal income tax reform and freezing statutory spending. parametric fiscal measures shall be bolstered by a wide range of administrative actions to address shortfalls in tax collection and enforcement. the greek government shall monitor fiscal risks, including court rulings, and shall take offsetting measures as needed to meet the fiscal targets. the authorities intend to transfer at least 30 % of any over-performance to the segregated account earmarked for debt reduction. in addition, another 30 % of the over-performance would be used for clearing unpaid government obligations linked to the past. 3. greece shall adopt the measures specified below: (i) take measures in the short term to raise revenues and to target and contain expenditure. among the measures to raise revenue, greece shall gradually abolish the refund of excise tax on diesel oil for farmers and increase the tonnage tax. the authorities shall take actions to launch the 2015 property tax (enfia) exercise in order to issue bills in october 2015 with the final instalment due in february 2016. they shall also correct identified issues with the revenue measures recently implemented. the authorities also committed to target and contain expenditure by reducing the cost of healthcare and launching the comprehensive social welfare review. the package includes further measures with budgetary impact, such as public administration reforms, reforms addressing shortfalls in tax collection enforcement, and other parametric measures; (ii) to demonstrate its commitment to credible fiscal policies, adopt in october 2015, a supplementary 2015 budget as needed, the draft 2016 budget and a 2016-2019 medium-term fiscal strategy, supported by a sizable and credible package of parametric measures and structural fiscal reforms; (iii) enact reforms of both direct and indirect taxation to improve efficiency, collectability and boost labour supply. to break from past practice and improve the tax and social security payment culture, the government shall take strong action to improve collection, and neither introduce new instalment or other amnesty or settlement schemes nor extend existing schemes; (iv) continue reforms that aim at improving the budget process and expenditure controls, clearing arrears, and strengthening budget reporting and cash management. the government is committed to making the fiscal council operational; (v) take further action in the area of public procurement to increase efficiency and transparency of the greek public procurement system, prevent misconduct, and ensure more accountability and control. policies will be agreed with the european commission, which shall assist with the implementation of an action plan; (vi) implement fully the existing reforms and also proceed with further reforms to strengthen long-term sustainability, targeting savings of around 0,25 % of gdp in 2015 and around 1 % of gdp by 2016. the package inter alia aims to create strong disincentives for early retirement through increasing early retirement penalties and by the gradual elimination of the grandfathering of rights to retire before the statutory retirement age; (vii) continue reforming the healthcare sector, controlling public expenditure, managing prices of pharmaceuticals, improve hospital management, increase centralised procurement of hospital supplies, manage demand for pharmaceuticals and health care through evidence-based e-prescription protocols, commission private sector healthcare providers in a cost-effective manner, modernise it systems, developing a new electronic referral system for primary and secondary care that allows the formulation of care pathways for patients; (viii) adopt by march 2016 a further series of guaranteed employment support schemes with individualised active labour market measures for participants, using local partnerships, involving the private and social economy sectors and ensuring the efficient and effective use of the resources available. achieving a fairer society will require that greece improve the design of its welfare system, so that there is a genuine social safety net which targets scarce resources at those in most need. the authorities plan to benefit from available technical assistance from international organisations for the social welfare review and for the guaranteed minimum income implementation. 4. to safeguard financial stability, greece shall immediately take steps to tackle non-performing loans (npls) and restore liquidity and capital in the banking system. a recapitalisation process of banks should be completed before the end of 2015, which shall be accompanied by concomitant measures to strengthen the governance of the hellenic financial stability fund (hfsf) and of banks. further measures involve the resolution of non-performing loans (npls) and the governance of the hfsf and of banks. 5. to promote growth, competitiveness and investment, greece shall design and implement a wide range of reforms in labour markets and product markets (including energy) that not only ensure full compliance with european union requirements, but also aim at achieving european best practices. more open markets are essential to create economic opportunities and improve social fairness, by curtailing rent-seeking and monopolistic behaviour, which has translated into higher prices and lower living standards. in line with their growth strategy, the authorities shall intensify their efforts to bring key initiatives and reform proposals to fruition as well as enrich the agenda with further ambitious reforms that shall support the country's return to sustainable growth, attract investments and create jobs. 6. the greek energy markets need wide-ranging reforms to bring them in line with union legislation and policies, make them more modern and competitive, reduce monopolistic rents and inefficiencies, promote innovation, favour the wider adoption of renewables and gas, and ensure the transfer of benefits of all these changes to consumers. the authorities shall adopt the reform of the gas market and its specific roadmap, leading inter alia to full eligibility to switch supplier for all customers by 2018, and notify the reformed capacity payments system (including a temporary and a permanent mechanism) and new organisation of markets in electricity products to the commission. in any case, by 2020 no undertaking shall be permitted to produce or import, directly or indirectly, more than 50 % of total electricity produced and imported in greece. 7. there shall be an ambitious privatisation programme and policies which support investment. the government commits to facilitate the privatisation process and complete all needed government actions to allow tenders to be executed successfully. in this respect the government shall complete all actions needed as agreed on a quarterly basis between the hellenic republic asset development fund (hradf), the institutions and the government. the list of government pending actions has been approved by the board of directors of the hradf. in line with the statement of the euro summit of 12 july 2015, a new independent fund (the fund) shall be established and have in its possession valuable greek assets. the overarching objective of the fund is to manage valuable greek assets; and to protect, create and ultimately maximise their value which it shall monetise through privatisations and other means. 8. a modern state and public administration shall be a key priority of the programme. particular attention shall be paid to increasing the efficiency of the public sector in the delivery of essential public goods and services. measures shall be taken to enhance the efficiency of the judicial system and to upgrade the fight against corruption. reforms shall strengthen the institutional and operational independence of key institutions such as the revenue administration and the statistics institute (elstat). article 3 this decision is addressed to the hellenic republic. done at brussels, 19 august 2015. for the council the president j. asselborn (1) this act has originally been adopted in english only and published in oj l 219, 20.8.2015, p. 12. (2) oj l 140, 27.5.2013, p. 1. (3) see page 22 of this official journal.

name: council decision (eu) 2016/541 of 19 august 2015 giving notice to greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2015/1410) type: decision subject matter: europe; monetary relations; economic conditions; budget; economic policy; taxation date published: 2016-04-07 7.4.2016 en official journal of the european union l 91/18 council decision (eu) 2016/541 of 19 august 2015 giving notice to greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (2015/1410) (1) the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 126(9) thereof, having regard to the recommendation from the european commission, whereas: (1) article 126 of the treaty on the functioning of the european union (tfeu) establishes that member states are to avoid excessive government deficits and sets out the excessive deficit procedure to that effect. the stability and growth pact, which in its corrective arm implements the excessive deficit procedure, provides the framework supporting government policies for a prompt return to sound budgetary positions taking account of the economic situation. (2) on 27 april 2009, the council decided, in accordance with article 104(6) of the treaty establishing the european community that an excessive deficit existed in greece. (3) on 10 may 2010, the council adopted decision 2010/320/eu (2) addressed to greece under article 126(9) and article 136 tfeu with a view to reinforcing and deepening the fiscal surveillance and giving notice to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit at the latest by the deadline of 2014. the council established 2014 as the deadline for correcting the situation of excessive deficit, and annual targets for the government deficit. (4) council decision no 2010/320/eu was substantially amended several times. since further amendments were to be made, it was recast, on 12 july 2011, by council decision 2011/734/eu of 12 july 2011 addressed to greece with a view to reinforcing and deepening fiscal surveillance and giving notice to greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (3) in the interest of clarity. subsequently, that decision was significantly amended several times between 8 july 2011 and december 2012 (4). (5) the very severe deterioration of the financial situation of greece has led euro area member states to decide to provide it stability support, with a view to safeguarding the financial stability of the euro area as a whole, in conjunction with multilateral assistance provided by the international monetary fund. from may 2010 to june 2015, support provided by the euro area member states took the form of both a bilateral greek loan facility and a loan from the european financial stability facility (efsf). the lenders' support was accompanied by extensive policy conditionality, including the respect by greece of council decision 2011/734/eu and subsequent amendments thereto. (6) on 8 july 2015, greece requested financial assistance from the european stability mechanism (esm) in the form of a three-year loan, and on 12 july 2015 an agreement in principle was reached on the provision of a loan of the amount of up to eur 86 000 million to greece. on 17 july, the esm board of governors entrusted the european commission, in liaison with the european central bank, and with the international monetary fund, with the task of negotiating a memorandum of understanding (mou) detailing the policy conditionality for a financial assistance facility covering the period 2015-2018 in accordance with article 13(3) of the esm treaty. (7) in accordance with regulation (eu) no 472/2013 of the european parliament and of the council of 21 may 2013 on the strengthening of economic and budgetary surveillance of member states in the euro area experiencing or threatened with serious difficulties with respect to their financial stability (5), and in particular article 7 thereof, a member state requesting financial assistance from the esm must prepare a macroeconomic adjustment programme (the programme) for approval by the council. such a programme should ensure the adoption of a set of reforms needed to improve the sustainability of public finances and the regulatory environment. (8) the programme prepared by greece was approved by council implementing decision (eu) 2016/544 (6). (9) article 10(2)(b) of regulation (eu) no 472/2013 also establishes that, in case a member state subject to a macroeconomic adjustment programme under article 7 of that regulation is also subject to a decision under 126(9) tfeu for the correction of its excessive deficit, the annual budgetary targets in its macroeconomic adjustment programme shall be integrated into the decision to give notice under article 5(1) of regulation (ec) no 1467/97 of 7 july 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (7); in addition, the measures conducive to those targets in the macroeconomic adjustment programme shall also be integrated into the decision to give notice in accordance with article 5(1) of regulation (ec) no 1467/97. article 10(2)(a) of regulation (eu) no 472/2013 further establishes that the member state shall be exempt from submitting reports under article 5(1) of regulation (ec) no 1467/97. finally, article 10(2)(c) of regulation (eu) no 472/2013 establishes that the monitoring shall be undertaken as provided for by article 7(4) of that regulation and the member state shall be exempt from monitoring under article 10(1) and article 10a of regulation (ec) no 1467/97 and from monitoring underlying any decision under article 6(2) of that regulation. (10) economic activity in greece is currently projected to be much weaker than was expected when the latest amendment to council decision 2011/734/eu was adopted in december 2012. both real and nominal gdp are expected to be at much lower levels in 2015 and 2016 than was expected in the 2015 spring forecast of the commission, due to policy uncertainty, lack of implementation of reforms, a shortfall in government revenues, bank holidays, and the imposition of capital controls. the commission updated its forecast for gdp growth in august 2015, as needed to underpin the negotiations for the mou required for an esm programme. according to this forecast, real gdp in 2015-2016 is projected to contract by 2,3 % and 1,3 % respectively, (against a positive growth of 0,5 % and 2,9 % in the 2015 spring forecast for the corresponding years), before growing by 2,7 % in 2017 and 3,1 % in 2018. this marked worsening of the economic scenario in 2015-2016 implies a corresponding deterioration of the outlook for public finances given unchanged policies. (11) greece is estimated to have improved its structural deficit by 16 percentage points of gdp from a 15,2 % deficit in 2009 to an estimated 1 % surplus in 2014, thus ensuring an improvement in the structural balance in 2009-2014, which is significantly larger than the requirement of at least 10 percentage points of gdp over the period recommended by the council. in 2014, the general government deficit reached 3,5 % of gdp, clearly within the 4,5 % of gdp government deficit (esa2010 basis) ceiling for 2014 established by the council decision. however, the primary balance outturn of 0,4 % of gdp was substantially weaker than expected and undershot the target set at 1,5 % of gdp due to a combination of factors including the reversal in the economic cycle and the related negative impact on budget revenues, the relaxation of fiscal policy and increased economic uncertainty. the weakening macroeconomic environment accompanied with expiring temporary fiscal measures in 2015 have, however, made it impossible to achieve the primary balance target of 3 % of gdp in 2015 envisaged in the latest amendment to decision 2011/734/eu adopted in december 2012. the fiscal targets have, therefore, been revised down substantially, taking into account the macroeconomic circumstances and the current fiscal situation, to avoid overtightening fiscal policy in the short term. (12) greece will accordingly pursue a new fiscal path, premised on primary surplus targets of 0,25, 0,5, 1,75, and 3,5 % of gdp in 2015, 2016, 2017 and 2018 and beyond, respectively. the trajectory of the fiscal targets is consistent with the expected growth rates of the greek economy as it recovers from its deepest recorded recession. the revised path means that the general government budget deficit will fall below 3 % of gdp in 2017. (13) under the commission services' update of the forecast for nominal gdp growth, the primary general government balance is projected to attain a deficit of eur 7 631 million (4,4 % of gdp) in 2015, a deficit of eur 6 166 million (3,6 % of gdp) in 2016, a deficit of eur 4 089 million (2,3 % of gdp) in 2017 and a deficit of eur 753 million (0,4 % of gdp) in 2018. (14) the budget for 2016 to be adopted by the greek parliament forms part of the medium-term fiscal strategy (mtfs) 2016-2019, with the aim to deliver a sizeable and front-loaded fiscal consolidation bringing savings of more than eur 6 900 million, close to 4 % of gdp. (15) the failure to complete the final efsf programme review, the missed debt service payments, the expiration of the efsf programme and the introduction of capital controls have created new circumstances that have led to a further strong deterioration in debt sustainability. this is due to lower growth estimates, a downward revision of the primary surplus targets, a downward revision of privatisation receipts, a strong deterioration in the financing needs of the banking sector following the imposition of capital controls, the need for a higher clearance of arrears following the liquidity shortage experienced by the sovereign and valuation effects due to the depreciation of the euro with respect to the sdr. as a result of these developments debt-to-gdp is expected to reach 198,3 % in 2016, before decreasing to 169,3 % in 2020, 154,5 % in 2022 and 115,9 % in 2030 in the baseline scenario. (16) taking into account those developments, the adjustment path towards the correction of the excessive deficit needs to be updated. the commitment undertaken by greece concerns not only the fiscal consolidation measures, but also those measures needed to enhance the growth-friendly nature and to minimise any negative social impact. (17) each measure required by council implementing decision (eu) 2016/544 is instrumental in achieving the required budgetary adjustment. some measures have a direct impact on the budgetary situation of greece while the others are structural measures that will result in improved fiscal governance and a sounder budgetary situation in the medium term. (18) in light of the above considerations, it appears necessary to revise the previous annual budgetary targets and the measures conducive to those targets. the new annual budgetary targets and measures conducive to those targets are those contained in council implementing decision (eu) 2016/544, has adopted this decision: article 1 1. greece shall put an end to the present excessive deficit situation as rapidly as possible, and at the latest, by 2017. 2. the adjustment path towards the correction of the excessive deficit shall aim to meet the annual general-government-deficit targets, as laid down in council implementing decision (eu) 2016/544 and will be based on primary surplus targets of 0,25, 0,5, 1,75, and 3,5 % of gdp in 2015, 2016, 2017 and 2018 and beyond, respectively. the trajectory of the fiscal targets is consistent with expected growth rates of the greek economy as it recovers from its deepest recorded recession. the revised path means that the general government budget deficit will fall below 3 % of gdp in 2017. 3. greece shall adopt and fully implement all fiscal, economic and structural adjustment measures incorporated in the economic and financial adjustment programme as approved by council implementing decision (eu) 2016/544. 4. greece shall stand ready to adopt further measures if risks to the budgetary plans materialise. budgetary consolidation measures shall secure a lasting improvement in the general government structural balance in a growth-friendly manner. article 2 this decision shall take effect on the day of its notification. article 3 this decision is addressed to the hellenic republic. done at brussels, 19 august 2015. for the council the president j. asselborn (1) this act has originally been adopted in english only and published in oj l 219, 20.8.2015, p. 8. (2) oj l 145, 11.6.2010, p. 6. (3) oj l 296, 15.11.2011, p. 38. (4) council decision 2011/791/eu of 8 november 2011 (oj l 320, 3.12.2011, p. 28), council decision 2012/211/eu of 13 march 2012 (oj l 113, 25.4.2012, p. 8), council decision 2013/6/eu of 4 december 2012 (oj l 4, 9.1.2013, p. 40). (5) oj l 140, 27.5.2013, p. 1. (6) see page 27 of this official journal. (7) oj l 209, 2.8.1997, p. 6.

name: commission implementing decision (eu) 2016/529 of 31 march 2016 establishing the financial contribution from the union for expenditure incurred by germany in 2007 for the financing of the emergency measures to combat bluetongue (notified under document c(2016) 1758) type: decision_impl subject matter: budget; eu finance; cooperation policy; means of agricultural production; agricultural policy; agricultural activity date published: 2016-04-05 5.4.2016 en official journal of the european union l 88/30 commission implementing decision (eu) 2016/529 of 31 march 2016 establishing the financial contribution from the union for expenditure incurred by germany in 2007 for the financing of the emergency measures to combat bluetongue (notified under document c(2016) 1758) (only the german text is authentic) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) no 652/2014 of the european parliament and of the council of 15 may 2014 laying down provisions for the management of expenditure relating to the food chain, animal health and animal welfare, and relating to plant health and plant reproductive material, amending council directives 98/56/ec, 2000/29/ec and 2008/90/ec, regulations (ec) no 178/2002, (ec) no 882/2004 and (ec) no 396/2005 of the european parliament and of the council, directive 2009/128/ec of the european parliament and of the council and regulation (ec) no 1107/2009 of the european parliament and of the council and repealing council decisions 66/399/eec, 76/894/eec and 2009/470/ec (1), and in particular article 36(4) thereof, whereas: (1) commission regulation (ec) no 349/2005 (2) lays down the rules for the payment of a financial contribution from the union towards emergency and of the campaign to combat certain animal diseases under council decision 90/424/eec (3). article 7 of that regulation lays down the documents to be submitted by the member state requesting the financial contribution from the union and the deadlines for submitting such documents. (2) commission decision 2008/444/ec (4) provides for a financial contribution from the union to be granted to germany towards the costs incurred by that member state in taking measures to combat bluetongue in 2007 pursuant to council decision 2009/470/ec (5). accordingly, a first tranche of eur 950 000,00 was paid to germany as part of the union financial contribution. (3) under commission implementing decision 2011/800/eu (6) a second tranche of eur 1 950 000,00 was paid as part of the union financial contribution and under commission implementing decision 2014/131/eu (7) a third tranche of eur 1 000 000,00 was paid as part of the union financial contribution. (4) through decision 2008/444/ec, the requirements of regulation (eu, euratom) no 966/2012 of the european parliament and of the council (8), in particular article 84 thereof, have been complied with. (5) on 6 june 2008, germany submitted an official request for reimbursement to the commission accompanied by a financial report, supporting documents and an epidemiological report on each holding where the animals have been slaugthered and destroyed. the request for reimbursement amounts to eur 4 201 179,00. however, following the checks and controls made during the on-the-spot audit managed by the competent audit service, the amount of eur 239 629,65 was considered to be ineligible for reimbursement in accordance with article 5 of regulation (ec) no 349/2005. (6) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 1. the financial contribution from the union towards the expenditure incurred by germany in 2007 for the financing of emergency measures to combat bluetongue is hereby fixed at eur 3 961 549,35. 2. the balance of the financial contribution from the union remaining to be paid to germany is hereby fixed at eur 61 549,35. article 2 this decision is addressed to the federal republic of germany. done at brussels, 31 march 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 189, 27.6.2014, p. 1. (2) commission regulation (ec) no 349/2005 of 28 february 2005 laying down rules on the community financing of emergency measures and of the campaign to combat certain animal diseases under council decision 90/424/eec (oj l 55, 1.3.2005, p. 12). (3) council decision 90/424/eec of 26 june 1990 on expenditure in the veterinary field (oj l 224, 18.8.1990, p. 19). (4) commission decision 2008/444/ec of 5 june 2008 on a financial contribution from the community towards emergency measures to combat bluetongue in germany in 2007 (oj l 156, 14.6.2008, p. 18). (5) council decision 2009/470/ec of 25 may 2009 on expenditure in the veterinary field (oj l 155, 18.6.2009, p. 30). (6) commission implementing decision 2011/800/eu of 30 november 2011 on a financial contribution from the union towards emergency measures to combat bluetongue in germany in 2007 (oj l 320, 3.12.2011, p. 49). (7) commission implementing decision 2014/131/eu of 10 march 2014 on a financial contribution by the union towards emergency measures to combat bluetongue in germany in 2007 (oj l 71, 12.3.2014, p. 18). (8) regulation (eu, euratom) no 966/2012 of the european parliament and of the council of 25 october 2012 on the financial rules applicable to the general budget of the union and repealing council regulation (ec, euratom) no 1605/2002 (oj l 298, 26.10.2012, p. 1).

name: decision (eu, euratom) 2016/484 of the representatives of the governments of the member states of 23 march 2016 appointing judges to the general court type: decision subject matter: eu institutions and european civil service date published: 2016-04-02 2.4.2016 en official journal of the european union l 87/31 decision (eu, euratom) 2016/484 of the representatives of the governments of the member states of 23 march 2016 appointing judges to the general court the representatives of the governments of the member states of the european union, having regard to the treaty on european union, and in particular article 19 thereof, having regard to the treaty on the functioning of the european union, and in particular articles 254 and 255 thereof, having regard to the treaty establishing the european atomic energy community, and in particular article 106a(1) thereof, whereas: (1) article 48 of protocol no 3 on the statute of the court of justice of the european union, as amended by regulation (eu, euratom) 2015/2422 of the european parliament and of the council (1), provides that the general court consists of 40 judges as from 25 december 2015. article 2(a) of that regulation determines the term of office of the 12 additional judges in such a way that the end of their term of office corresponds to the partial replacements of the general court which will take place on 1 september 2016 and 1 september 2019. (2) mr leopoldo calvo-sotelo ib ez-mart n, mr zolt n csehi, mr constantinos iliopoulos, ms anna marcoulli, ms nina p torak, mr dean spielmann and mr virgilijus valan ius have been nominated for the posts of additional judges at the general court. (3) the panel set up by article 255 of the treaty on the functioning of the european union has given an opinion on the suitability of mr leopoldo calvo-sotelo ib ez-mart n, mr zolt n csehi, mr constantinos iliopoulos, ms anna marcoulli, ms nina p torak, mr dean spielmann and mr virgilijus valan ius to perform the duties of judges of the general court, have adopted this decision: article 1 the following are hereby appointed judges of the general court for the period from the date of entry into force of this decision to 31 august 2016: mr zolt n csehi, mr constantinos iliopoulos, ms anna marcoulli, ms nina p torak, mr dean spielmann. article 2 the following are hereby appointed judges of the general court for the period from the date of entry into force of this decision to 31 august 2019: mr leopoldo calvo-sotelo ib ez-mart n, mr virgilijus valan ius. article 3 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 23 march 2016. the president p. de gooijer (1) regulation (eu, euratom) 2015/2422 of the european parliament and of the council of 16 december 2015 amending protocol no 3 on the statute of the court of justice of the european union, (oj l 341, 24.12.2015, p. 14).

name: decision (eu, euratom) 2016/485 of the representatives of the governments of the member states of 23 march 2016 appointing judges to the general court type: decision subject matter: eu institutions and european civil service date published: 2016-04-02 2.4.2016 en official journal of the european union l 87/33 decision (eu, euratom) 2016/485 of the representatives of the governments of the member states of 23 march 2016 appointing judges to the general court the representatives of the governments of the member states of the european union, having regard to the treaty on european union, and in particular article 19 thereof, having regard to the treaty on the functioning of the european union, and in particular articles 254 and 255 thereof, having regard to the treaty establishing the european atomic energy community, and in particular article 106a(1) thereof, whereas: (1) the terms of office of 14 judges of the general court are due to expire on 31 august 2016. appointments should therefore be made for the period from 1 september 2016 to 31 august 2022. (2) it has been proposed that the terms of office of mr sten frimodt nielsen, mr dimitrios gratsias, mr marc jaeger, mr viktor kreuschitz, mr savvas s. papasavvas and mr marc van der woude should be renewed. (3) furthermore, ms krystyna kowalik-ba czyk and mr paul nihoul have been nominated for the posts of judges of the general court. (4) the panel set up by article 255 of the treaty on the functioning of the european union has given an opinion on the suitability of mr sten frimodt nielsen, mr dimitrios gratsias, mr marc jaeger, ms krystyna kowalik-ba czyk, mr viktor kreuschitz, mr paul nihoul, mr savvas s. papasavvas and mr marc van der woude to perform the duties of judges of the general court, have adopted this decision: article 1 the following are hereby appointed judges of the general court for the period from 1 september 2016 to 31 august 2022: mr sten frimodt nielsen, mr dimitrios gratsias, mr marc jaeger, ms krystyna kowalik-ba czyk, mr viktor kreuschitz, mr paul nihoul, mr savvas s. papasavvas, mr marc van der woude. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 23 march 2016. the president p. de gooijer

name: council decision (cfsp) 2016/476 of 31 march 2016 amending decision 2013/183/cfsp concerning restrictive measures against the democratic people's republic of korea type: decision subject matter: international affairs; international security; technology and technical regulations; asia and oceania; international trade date published: 2016-04-01 1.4.2016 en official journal of the european union l 85/38 council decision (cfsp) 2016/476 of 31 march 2016 amending decision 2013/183/cfsp concerning restrictive measures against the democratic people's republic of korea the council of the european union, having regard to the treaty on european union, and in particular article 29 thereof, having regard to the proposal from the high representative of the union for foreign affairs and security policy, whereas: (1) on 22 april 2013, the council adopted decision 2013/183/cfsp (1) which, inter alia, implemented united nations security council resolutions (unscr) 1718 (2006), 1874 (2009), 2087 (2013) and 2094 (2013). (2) on 2 march 2016, the un security council adopted unscr 2270 (2016), expressing its gravest concern at the nuclear test conducted by the democratic people's republic of korea (the dprk) on 6 january 2016 in violation of the relevant unsc resolutions, further condemning the dprk's launch of 7 february 2016, which used ballistic missile technology and was in serious violation of the relevant unsc resolutions, and determining that there continues to exist a clear threat to international peace and security in the region and beyond. (3) unscr 2270 (2016), expressing great concern that the dprk's arms sales have generated revenues that are diverted to the pursuit of nuclear weapons and ballistic missiles, decides that the restrictions on arms should cover all arms and related materiel, including small arms and light weapons and their related materiel. unscr 2270 (2016) further extends prohibitions on the transfer and procurement of any items that could contribute to the development of the dprk's operational capabilities of its armed forces, or to exports that support or enhance the operational capabilities of armed forces of another member state outside the dprk. (4) unscr 2270 (2016) specifies that the prohibition on the procurement of technical assistance related to arms prohibits member states from engaging in the hosting of trainers, advisors, or other officials for the purpose of military-, paramilitary- or police-related training. (5) unscr 2270 (2016) affirms that the prohibitions on the transfer, procurement and provision of related technical assistance related to certain goods also apply with respect to the shipment of items to or from the dprk for repair, servicing, refurbishing, testing, reverse-engineering and marketing, regardless of whether ownership or control is transferred, and underscores that the visa ban measures shall also apply to any individual travelling for the abovementioned purposes. (6) unscr 2270 (2016) extends the list of individuals and entities subject to asset freeze and visa ban measures and decides that the asset freeze shall apply with respect to entities of the government of the dprk or the worker's party of korea, where the member state determines that they are associated with the dprk's nuclear or ballistic missile programmes or other activities prohibited by the relevant unsc resolutions. (7) unscr 2270 (2016), expressing concern that the dprk is abusing the privileges and immunities accorded under the vienna conventions on diplomatic and consular relations, further decides on additional measures aimed at preventing dprk diplomats or governmental representatives or individuals from third states from acting on behalf or at the direction of designated individuals or entities or from engaging in prohibited activities. (8) unscr 2270 (2016) further clarifies the scope of the obligation for member states to prevent specialised training of dprk nationals of certain sensitive disciplines. (9) unscr 2270 (2016) also expands the scope of the measures applicable to the transportation sector and financial sector. (10) unscr 2270 (2016) prohibits the procurement of certain minerals and the export of aviation fuel. (11) unscr 2270 (2016) further extends the prohibitions on the provision of financial support for trade with the dprk. (12) unscr 2270 (2016) recalls that the financial action task force (fatf) has called upon countries to apply enhanced due diligence and effective countermeasures to protect their jurisdictions from the dprk's illicit financial activity, and calls upon member states to apply the fatf recommendation 7, its interpretative note and related guidance to effectively implement targeted financial sanctions related to proliferation. (13) unscr 2270 (2016) also underlines that measures imposed thereby are not intended to have adverse humanitarian consequences for the civilian population of the dprk or to affect negatively activities that are not prohibited by the relevant unsc resolutions, and the work of international organisations and non-governmental organisations carrying out assistance and relief activities in the dprk for the benefit of the civilian population of the dprk. (14) unscr 2270 (2016) expresses its commitment to a peaceful, diplomatic and political solution to the situation and reaffirms its support to the six party talks and calls for their resumption. (15) unscr 2270 (2016) affirms that the dprk's actions shall be kept under continuous review and that the unsc is prepared to strengthen, modify, suspend or lift the measures as may be needed in light of the dprk's compliance and it is determined to take further significant measures in the event of a further dprk nuclear test or launch. (16) further action by the union is needed in order to implement certain measures provided for in this decision. (17) decision 2013/183/cfsp should therefore be amended accordingly, has adopted this decision: article 1 decision 2013/183/cfsp is amended as follows: (1) in article 1(1), point (e) is replaced by the following: (e) any other item that could contribute to the dprk's nuclear or ballistic missile programmes or other weapons of mass destruction programmes, activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or by this decision, or to the evasion of measures imposed by those unsc resolutions or by this decision. the union shall take the necessary measures in order to determine the relevant items to be covered by this provision.; (2) in article 1(1), the following point is added: (f) any other item, except food or medicine, if the member state determines that it could directly contribute to the development of the dprk's operational capabilities of its armed forces, or to exports that support or enhance the operational capabilities of armed forces of another state outside the dprk.; (3) the following article is inserted: article 1a 1. the measures imposed by point (f) of article 1(1) shall not apply to the supply, sale or transfer of an item, or its procurement, where: (a) the member state determines that such activity is exclusively for humanitarian purposes or exclusively for livelihood purposes which will not be used by dprk persons or entities to generate revenue, and also not related to any activity prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), 2270 (2016) or this decision, provided that the member state notifies the sanctions committee in advance of such determination and also informs the sanctions committee of measures taken to prevent the diversion of the item for such other purposes; or (b) the sanctions committee has determined on a case-by-case basis that a particular supply, sale or transfer would not be contrary to the objectives of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016).; (4) the following article is inserted: article 2a the procurement from the dprk by nationals of member states, or using the flag vessels or aircraft of member states, of gold, titanium ore, vanadium ore, and rare earth minerals, shall be prohibited, whether or not originating in the territory of the dprk. the union shall take the necessary measures in order to determine the relevant items to be covered by this provision.; (5) the following articles are inserted: article 4a 1. the procurement from the dprk by nationals of member states, or using the flag vessels or aircraft of member states, of coal, iron, and iron ore, shall be prohibited, whether or not originating in the territory of the dprk. the union shall take the necessary measures in order to determine the relevant items to be covered by this provision. 2. paragraph 1 shall not apply with respect to coal that the procuring member state confirms on the basis of credible information has originated outside the dprk and was transported through the dprk solely for export from the port of rajin (rason), provided that the member state notifies the sanctions committee in advance and such transactions are unrelated to generating revenue for the dprk's nuclear or ballistic missile programmes or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or this decision. 3. paragraph 1 shall not apply with respect to transactions that are determined to be exclusively for livelihood purposes and unrelated to generating revenue for the dprk's nuclear or ballistic missile programmes or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or this decision. article 4b 1. the sale or supply of aviation fuel, including aviation gasoline, naptha-type jet fuel, kerosene-type jet fuel, and kerosene-type rocket fuel to the dprk by nationals of member states or from the territories of member states or using the flag vessels or aircraft of member states, shall be prohibited whether or not originating in the territories of member states. 2. paragraph 1 shall not apply if the sanctions committee has approved in advance on an exceptional case-by-case basis the transfer to the dprk of such products for verified essential humanitarian needs and subject to specified arrangements for effective monitoring of delivery and use. 3. paragraph 1 shall not apply with respect to the sale or supply of aviation fuel to civilian passenger aircraft outside the dprk exclusively for consumption during its flight to the dprk and its return flight.; (6) article 5 is replaced by the following: article 5 member states shall not provide public and private financial support for trade with the dprk, including the granting of export credits, guarantees or insurance, to their nationals or entities involved in such trade, where such financial support could contribute to the dprk's nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes or activities, or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or by this decision, or to the evasion of measures imposed by those unsc resolutions or by this decision.; (7) in article 7, paragraph 1 is replaced by the following: 1. in order to prevent the provision of financial services or the transfer to, through, or from the territory of member states, or to or by nationals of member states or entities organised under their laws, or persons or financial institutions within their jurisdiction, of any financial or other assets or resources, including bulk cash, that could contribute to the dprk's nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes or activities, or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or by this decision, or to the evasion of measures imposed by those unsc resolutions or by this decision, member states shall exercise enhanced monitoring, in accordance with their national authorities and legislation, of the activities of financial institutions within their jurisdiction with: (a) banks domiciled in the dprk; (b) branches and subsidiaries within the jurisdiction of the member states of banks domiciled in the dprk, as listed in annex iv; (c) branches and subsidiaries outside the jurisdiction of the member states of banks domiciled in the dprk, as listed in annex v; and (d) financial entities that are neither domiciled in the dprk nor within the jurisdiction of the member states but are controlled by persons and entities domiciled in the dprk, as listed in annex v; in order to avoid such activities contributing to the dprk's nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes or activities.; (8) article 8 is replaced by the following: article 8 1. the opening of branches, subsidiaries, or representative offices of dprk banks, including the central bank of dprk, its branches and subsidiaries, and of other financial entities referred to in article 7(1), in the territories of member states shall be prohibited. 2. existing branches, subsidiaries and representative offices shall be closed within 90 days from the adoption of unscr 2270 (2016). 3. it shall be prohibited for dprk banks, including the central bank of dprk, its branches and subsidiaries, and for other financial entities referred to in article 7(1): (a) to establish new joint ventures with banks under the jurisdiction of member states; (b) to take an ownership interest in banks under the jurisdiction of member states; (c) to establish or maintain correspondent banking relationships with banks under the jurisdiction of member states; unless the transactions mentioned in paragraphs (a), (b) and (c) above have been approved by the sanctions committee in advance. 4. existing joint ventures, ownership interests and correspondent banking relationships with dprk banks shall be terminated within 90 days from the adoption of unscr 2270 (2016). 5. financial institutions within the territories of member states or under their jurisdiction shall be prohibited from opening representative offices, subsidiaries, branches or banking accounts in the dprk. 6. existing representative offices, subsidiaries or banking accounts in the dprk shall be closed within 90 days from the adoption of unscr 2270 (2016), if the relevant member state has credible information that provides reasonable grounds to believe that such financial services could contribute to the dprk's nuclear or ballistic missile programmes, or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016). 7. paragraph 6 shall not apply if the sanctions committee determines on a case-by-case basis that such offices, subsidiaries or accounts are required for the delivery of humanitarian assistance or the activities of diplomatic missions in the dprk pursuant to the vienna convention on diplomatic relations or the activities of the united nations or its specialised agencies or related organisations, or for any other purposes consistent with unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016).; (9) in article 10, paragraph 1 is replaced by the following: 1. member states shall inspect, in accordance with their national authorities and legislation and consistent with international law, including the vienna conventions on diplomatic and consular relations, all cargo to and from the dprk in their territory, or transiting through their territory, including at their airports, seaports and free trade zones, or cargo brokered or facilitated by the dprk or dprk nationals, or persons or entities acting on their behalf or at their direction, or entities owned or controlled by them, or by persons or entities listed in annex i, or cargo that is being transported on dprk-flagged aircraft or maritime vessels, for the purposes of ensuring that no items are transferred in violation of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) and 2270 (2016).; (10) in article 10, the following paragraph is inserted: 1a. member states shall inspect, in accordance with their national authorities and legislation and consistent with international law, including the vienna conventions on diplomatic and consular relations, all cargo to and from the dprk in their territory, or transiting through their territory, or cargo brokered or facilitated by the dprk or dprk nationals, or persons or entities acting on their behalf, including at their airports and seaports, if they have information that provides reasonable grounds to believe that the cargo contains items whose supply, sale, transfer or export is prohibited under this decision.; (11) article 11 is replaced by the following: article 11 1. member states shall deny permission to land in, take off from or overfly their territory to any aircraft, if they have information that provides reasonable grounds to believe that the cargo contains items whose supply, sale, transfer or export is prohibited under unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or under this decision. 2. paragraph 1 shall not apply in the case of an emergency landing or under the condition of landing for inspection.; (12) the following article is inserted: article 11a 1. member states shall prohibit the entry into their ports of any vessel, if they have information that provides reasonable grounds to believe that the vessel is owned or controlled, directly or indirectly, by a person or entity listed in annex i, or contains cargo whose supply, sale, transfer or export is prohibited under unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016). 2. paragraph 1 shall not apply in the case of emergency or in the case of return to its port of origination, or for inspection or if the sanctions committee determines in advance that such entry is required for humanitarian purposes or any other purposes consistent with the objectives of unscr 2270 (2016).; (13) the following articles are inserted: article 12a 1. it shall be prohibited to lease or charter flagged vessels or aircraft or provide crew services to the dprk, any persons or entities listed in annex i, any other dprk entities, any other persons or entities whom the member state determines to have assisted in the evasion of sanctions or in violating the provisions of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016), any persons or entities acting on behalf or at the direction of any of the aforementioned, and any entities owned or controlled by any of the aforementioned. 2. paragraph 1 shall not apply to the leasing, chartering or provision of crew services provided that the relevant member state has notified the sanctions committee in advance on a case-by-case basis and has provided the sanctions committee with the information demonstrating that such activities are exclusively for livelihood purposes which will not be used by dprk persons or entities to generate revenue, and information on measures taken to prevent such activities from contributing to violations of the provisions of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016). article 12b member states shall de-register any vessel that is owned, operated or crewed by the dprk and shall not register any such vessel that is de-registered by another state pursuant to paragraph 19 of unscr 2270 (2016). article 12c 1. it shall be prohibited to register vessels in the dprk, obtain authorisation for a vessel to use the dprk flag, or to own, lease, operate, or provide any vessel classification, certification or associated service, or insure any vessel flagged by the dprk. 2. paragraph 1 shall not apply to activities notified in advance to the sanctions committee on a case-by-case basis, provided that the relevant member state has provided the sanctions committee with detailed information on the activities, including the names of persons and entities involved in them, information demonstrating that such activities are exclusively for livelihood purposes which will not be used by dprk persons or entities to generate revenue and information on measures taken to prevent such activities from contributing to violations of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016).; (14) in article 13, paragraphs 1 and 2 are replaced by the following: 1. member states shall take the necessary measures to prevent the entry into, or transit through, their territories of: (a) the persons designated by the sanctions committee or by the security council as being responsible for, including through supporting or promoting, the dprk's policies in relation to its nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes, together with their family members, or persons acting on their behalf or at their direction, as listed in annex i; (b) the persons not covered by annex i, as listed in annex ii: (i) who are responsible for, including through supporting or promoting, the dprk's nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes or persons acting on their behalf, or at their direction; (ii) who provide financial services or the transfer to, through, or from the territory of member states, or involving nationals of member states or entities organised under their laws, or persons or financial institutions in their territory, of any financial or other assets or resources that could contribute to the dprk's nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes; (iii) who are involved in, including through the provision of financial services, the supply to or from the dprk of arms and related material of all types, or the supply to the dprk of items, materials, equipment, goods and technology which could contribute to the dprk's nuclear-related, ballistic-missile-related or other weapons-of-mass-destruction-related programmes; (c) the persons not covered by annex i or annex ii working on behalf or at the direction of a person or entity listed in annex i or annex ii or persons assisting the evasion of sanctions or violating the provisions of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or of this decision, as listed in annex iii to this decision. 2. point (a) of paragraph 1 shall not apply where the sanctions committee determines on a case-by-case basis that such travel is justified on the grounds of humanitarian need, including religious obligations, or where the sanctions committee concludes that an exemption would otherwise further the objectives of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016).; (15) the following articles are inserted: article 14a 1. member states shall expel dprk diplomats, government representatives or other dprk nationals acting in a governmental capacity whom they determine are working on behalf of, or at the direction of, a person or entity listed in annex i, or of an individual or entities assisting in the evasion of sanctions or violating the provisions of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), or 2270 (2016), from their territories for the purpose of repatriation to the dprk, consistent with applicable national and international law. 2. paragraph 1 shall not apply in case of transit of representatives of the government of the dprk to the united nations headquarters or other un facilities to conduct united nations business. 3. paragraph 1 shall not apply where the presence of a person is required for fulfilment of a judicial process or exclusively for medical, safety or other humanitarian purposes, or the sanctions committee has determined on a case-by-case basis that the expulsion of the individual would be contrary to the objectives of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) and 2270 (2016). article 14b 1. member states shall expel nationals of third countries whom they determine are working on behalf of, or at the direction of a person or entity listed in annex i, or assisting the evasion of sanctions or violating the provisions of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), or 2270 (2016), from their territories for the purpose of repatriation to the individual's state of nationality, consistent with applicable national and international law. 2. paragraph 1 shall not apply where the presence of a person is required for fulfilment of a judicial process or exclusively for medical, safety or other humanitarian purposes, or the sanctions committee has determined on a case-by-case basis that the expulsion of the individual would be contrary to the objectives of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) and 2270 (2016). 3. paragraph 1 shall not apply in case of transit of representatives of the government of the dprk to the united nations headquarters or other un facilities to conduct united nations business.; (16) in article 15(1), point (c) is replaced by the following: (c) the persons and entities not covered by annex i or annex ii working on behalf or at the direction of a person or entity listed in annex i or annex ii or persons assisting the evasion of sanctions or violating the provisions of unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) or of this decision, as listed in annex iii to this decision.; (17) in article 15(1), the following point is inserted: (d) the entities of the government of the dprk or the worker's party of korea, or by persons or entities acting on their behalf or at their direction, or by entities owned or controlled by them, that the member state determines are associated with the dprk's nuclear or ballistic missile programmes or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) or 2270 (2016) shall be frozen.; (18) the following articles are inserted: article 15a point (d) of article 15(1) shall not apply with respect to funds, other financial assets and economic resources that are required to carry out activities of the dprk's missions to the united nations and its specialised agencies and related organisations or other diplomatic and consular missions of the dprk, and to any funds, other financial assets and economic resources that the sanctions committee determines in advance on a case-by-case basis are required for the delivery of humanitarian assistance, denuclearisation or any other purpose consistent with the objectives of unscr 2270 (2016). article 15b 1. representative offices of entities listed in annex i shall be closed. 2. the direct or indirect participation in joint ventures or any other business arrangements by entities listed in annex i, as well as persons or entities acting for or on their behalf, is prohibited.; (19) article 16 is replaced by the following: article 16 member states shall take the necessary measures to exercise vigilance and prevent specialised teaching or training of dprk nationals, within their territories or by their nationals, of disciplines which would contribute to the dprk's proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems, including teaching or training in advanced physics, advanced computer simulation and related computer sciences, geospatial navigation, nuclear engineering, aerospace engineering, aeronautical engineering and related disciplines.; (20) article 17 is replaced by the following: article 17 member states shall, in accordance with international law, exercise enhanced vigilance over dprk diplomatic personnel so as to prevent such individuals from contributing to the dprk's nuclear or ballistic missile programmes, or other activities prohibited by unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) and 2270 (2016) or by this decision, or to the evasion of measures imposed by those unsc resolutions or by this decision.; (21) article 18 is replaced by the following: article 18 no claims, including for compensation or indemnification or any other claim of this kind, such as a claim of set-off, fines or a claim under a guarantee, claims for extension or payment of a bond, financial guarantee, including claims arising from letters of credit and similar instruments, in connection with any contract or transaction the performance of which was affected, directly or indirectly, wholly or in part, by reason of measures decided on pursuant to unscr 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013) and 2270 (2016), including measures of the union or any member state in accordance with, as required by or in any connection with, the implementation of the relevant decisions of the security council or measures covered by this decision, shall be granted to the designated persons or entities listed in annexes i, ii or iii, or any other person or entity in the dprk, including the government of the dprk, its public bodies, corporations and agencies, or any person or entity claiming through or for the benefit of any such person or entity. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 31 march 2016. for the council the president a.g. koenders (1) council decision 2013/183/cfsp of 22 april 2013 concerning restrictive measures against the democratic people's republic of korea and repealing decision 2010/800/cfsp (oj l 111, 23.4.2013, p. 52).

name: council decision (cfsp) 2016/478 of 31 march 2016 amending decision (cfsp) 2015/1333 concerning restrictive measures in view of the situation in libya type: decision subject matter: international affairs; africa; civil law date published: 2016-04-01 1.4.2016 en official journal of the european union l 85/48 council decision (cfsp) 2016/478 of 31 march 2016 amending decision (cfsp) 2015/1333 concerning restrictive measures in view of the situation in libya the council of the european union, having regard to the treaty on european union, and in particular article 29 thereof, having regard to the proposal of the high representative of the union for foreign affairs and security policy, whereas: (1) on 31 july 2015, the council adopted decision (cfsp) 2015/1333 (1). (2) on 16 march 2015, the council recalled that only a political solution can provide a sustainable way forward and contribute to peace and stability in libya and it referred inter alia to the importance of refraining from actions that could exacerbate current divisions. (3) the council remains gravely concerned about the situation in libya and in particular about acts that threaten the peace, security or stability of libya, and that obstruct or undermine the successful completion of libya's political transition, such as acts that obstruct the implementation of the libyan political agreement of 17 december 2015 and the formation of a government of national accord, including through a repeated failure to take action by persons with political influence in libya. (4) in view of the gravity of the situation in libya, three additional persons should be added for a period of 6 months to the list of persons subject to restrictive measures as set out in annexes ii and iv to decision (cfsp) 2015/1333. (5) decision (cfsp) 2015/1333 should therefore be amended accordingly, has adopted this decision: article 1 decision (cfsp) 2015/1333 is amended as follows: (1) the persons listed in the annex to this decision are added to the list set out in annexes ii and iv; (2) in article 17, the following paragraphs are added: 3. the measures referred to in article 8(2) shall apply with regard to entry numbers 16, 17 and 18 in annex ii until 2 october 2016. 4. the measures referred to in article 9(2) shall apply with regard to entry numbers 21, 22 and 23 in annex iv until 2 october 2016. article 2 this decision shall enter into force on the day of its publication in the official journal of the european union. done at brussels, 31 march 2016. for the council the president a.g. koenders (1) council decision (cfsp) 2015/1333 of 31 july 2015 concerning restrictive measures in view of the situation in libya, and repealing decision 2011/137/cfsp (oj l 206, 1.8.2015, p. 34). annex annex ii list of persons and entities referred to in article 8(2) a. persons name identifying information reasons date of listing 16. saleh issa gwaider, agila d.o.b. 1944 (unconfirmed) agila saleh has been president of the libyan council of deputies in the house of representatives since 5 august 2014. on 17 december 2015 saleh stated his opposition to the libya political agreement signed on 17 december 2015. as president of the council of deputies saleh has obstructed and undermined the libyan political transition, including by refusing to hold a vote in the house of representatives on 23 february 2016 on the government of national accord ( gna ). on 23 february 2016 saleh decided to create a committee which is expected to meet other members of the libyan-libyan process which is opposed to the libya political agreement. 17. ghwell, khalifa a.k.a. al ghweil, khalifa al-ghawail, khalifa d.o.b. 1964 misratah khalifa ghwell is the so-called prime minister and defence minister of the internationally unrecognised general national congress ( gnc ) (also known as the national salvation government ), and as such is responsible for their activities. on 7 july 2015 khalifa ghwell showed his support for the steadfastness front (alsomood), a new military force of 7 brigades to prevent a unity government from forming in tripoli, by attending the signing ceremony to inaugurate the force with gnc president nuri abu sahmain. as gnc prime minister ghwell has played a central role in obstructing the establishment of the gna established under the libya political agreement. on 15 january 2016, in his capacity as the tripoli gnc's prime minister and minister of defence , ghwell ordered the arrest of any members of the new security team, appointed by the prime minister designate of the government of national accord, who set foot in tripoli. 18. abu sahmain, nuri a.k.a. bosamin, nori bo samin, nuri badi, salahdin d.o.b. 16.5.1956 zouara/zuwara libya nuri abu sahmain is the so-called president of the internationally unrecognised general national congress ( gnc ) (also known as the national salvation government ), and as such is responsible for their activities. as gnc president , nuri abu sahmain has played a central role in obstructing and opposing the libyan political agreement and the establishment of the government of national accord ( gna ). on 15 december 2015 sahmain called for the postponement of the libya political agreement scheduled to be agreed at a meeting on 17 december. on 16 december 2015 sahmain issued a statement that the gnc did not authorise any of its members to participate in the meeting or sign the libya political agreement. on 1 january 2016 sahmain rejected the libyan political agreement in talks with the united nations special representative. annex iv list of persons and entities referred to in article 9(2) a. persons name identifying information reasons date of listing 21. saleh issa gwaider, agila d.o.b. 1944 (unconfirmed) agila saleh has been president of the libyan council of deputies in the house of representatives since 5 august 2014. on 17 december 2015 saleh stated his opposition to the libya political agreement signed on 17 december 2015. as president of the council of deputies saleh has obstructed and undermined the libyan political transition, including by refusing to hold a vote in the house of representatives on 23 february 2016 on the government of national accord. on 23 february 2016 saleh decided to create a committee which is expected to meet other members of the libyan-libyan process which is opposed to the libya political agreement. 22. ghwell, khalifa a.k.a. al ghweil, khalifa al-ghawail, khalifa d.o.b. 1964 misratah khalifa ghwell is the so-called prime minister and defence minister of the internationally unrecognised general national congress ( gnc ) (also known as the national salvation government ), and as such is responsible for their activities. on 7 july 2015 khalifa ghwell showed his support for the steadfastness front (alsomood), a new military force of 7 brigades to prevent a unity government from forming in tripoli, by attending the signing ceremony to inaugurate the force with gnc president nuri abu sahmain. as gnc prime minister ghwell has played a central role in obstructing the establishment of the government of national accord ( gna ) established under the libya political agreement. on 15 january 2016, in his capacity as the tripoli gnc's prime minister and minister of defence , ghwell ordered the arrest of any members of the new security team, appointed by the prime minister designate of the government of national accord, who set foot in tripoli. 23. abu sahmain, nuri a.k.a. bosamin, nori bo samin, nuri badi, salahdin d.o.b. 16.5.1956 zouara/zuwara libya nuri abu sahmain is the so-called president of the internationally unrecognised general national congress ( gnc ) (also known as the national salvation government ), and as such is responsible for their activities. as gnc president, nuri abu sahmain has played a central role in obstructing and opposing the libyan political agreement and the establishment of the government of national accord ( gna ). on 15 december 2015 sahmain called for the postponement of the libya political agreement scheduled to be agreed at a meeting on 17 december. on 16 december 2015 sahmain issued a statement that the gnc did not authorise any of its members to participate in the meeting or sign the libya political agreement. on 1 january 2016 sahmain rejected the libyan political agreement in talks with the united nations special representative.

name: decision (eu) 2016/457 of the european central bank of 16 march 2016 on the eligibility of marketable debt instruments issued or fully guaranteed by the republic of cyprus (ecb/2016/5) type: decision subject matter: monetary economics; europe; financial institutions and credit; free movement of capital; public finance and budget policy; monetary relations date published: 2016-03-30 30.3.2016 en official journal of the european union l 79/41 decision (eu) 2016/457 of the european central bank of 16 march 2016 on the eligibility of marketable debt instruments issued or fully guaranteed by the republic of cyprus (ecb/2016/5) the governing council of the european central bank, having regard to the treaty on the functioning of the european union, and in particular the first indent of article 127(2) thereof, having regard to the statute of the european system of central banks and of the european central bank, and in particular the first indent of article 3.1, article 12.1, article 18 and the second indent of article 34.1 thereof, having regard to guideline (eu) 2015/510 of the european central bank of 19 december 2014 on the implementation of the eurosystem monetary policy framework (general documentation guideline) (ecb/2014/60) (1), and in particular article 1(4), titles i, ii, iv, v, vi and viii of part four, and part six thereof, having regard to guideline ecb/2014/31 of 9 july 2014 on additional temporary measures relating to eurosystem refinancing operations and eligibility of collateral and amending guideline ecb/2007/9 (2), and in particular article 1(3) and article 8 thereof, whereas: (1) pursuant to article 18.1 of the statute of the european system of central banks and of the european central bank, the european central bank (ecb) and the national central banks of member states whose currency is the euro may conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral. the standard criteria and minimum credit quality requirements determining the eligibility of marketable assets as collateral for the purposes of eurosystem monetary policy operations are laid down in guideline (eu) 2015/510 (ecb/2014/60) and in particular in article 59 and in part four, title ii thereof. (2) pursuant to article 1(4) of guideline (eu) 2015/510 (ecb/2014/60), the governing council may, at any time, change the tools, instruments, requirements, criteria and procedures for the implementation of eurosystem monetary policy operations. pursuant to article 59(6) of guideline (eu) 2015/510 (ecb/2014/60), the eurosystem reserves the right to determine whether an issue, issuer, debtor or guarantor fulfils the eurosystem's credit quality requirements on the basis of any information that the eurosystem may consider relevant for ensuring adequate risk protection of the eurosystem. (3) by way of derogation from the eurosystem's credit quality requirements for marketable assets, article 8 of guideline ecb/2014/31 provides that the eurosystem's credit quality thresholds do not apply to marketable debt instruments issued or fully guaranteed by the central governments of euro area member states under an european union/international monetary fund programme, unless the governing council decides that the respective member state does not comply with the conditionality of the financial support and/or the macroeconomic programme. (4) as an exceptional measure, decision ecb/2013/13 (3) temporarily suspended the eurosystem's minimum requirements for credit quality thresholds applicable to marketable debt instruments issued or fully guaranteed by the republic of cyprus. after the republic of cyprus completed a debt management exercise and there was confirmation that it was complying with the conditionality of the economic and financial adjustment programme it had entered into, decision ecb/2013/22 (4) once again restored the eligibility of marketable debt instruments issued or fully guaranteed by the republic of cyprus for eurosystem monetary policy operations, subject to applying specific haircuts to such instruments, and provided that the republic of cyprus should be considered a euro area member state compliant with a european union/international monetary fund programme. (5) currently, article 1(3) of guideline ecb/2014/31 provides that, for the purposes of article 8 of that guideline, the republic of cyprus should be considered a euro area member state compliant with a european union/international monetary fund programme. moreover, article 8(3) of that guideline provides that marketable debt instruments issued or fully guaranteed by the republic of cyprus are subject to the specific haircuts set out in annex ii to that guideline. (6) pursuant to a request made by the republic of cyprus, its international monetary fund programme was cancelled with effect from 7 march 2016 (5). pursuant to article 1 of the financial assistance facility agreement between the european stability mechanism (esm), the republic of cyprus and the central bank of cyprus (6), the termination date of the esm programme is 31 march 2016. consequently, from 1 april 2016 the republic of cyprus can no longer be considered a member state under a european union/international monetary fund programme. from that date, the conditions for the temporary suspension of the eurosystem's credit quality thresholds in respect of marketable debt instruments issued or fully guaranteed by the republic of cyprus, as set out in article 8(2) of guideline ecb/2014/31, will no longer be fulfilled. (7) therefore, the governing council has decided that from 1 april 2016 the eurosystem's standard criteria and credit quality thresholds should apply in respect of marketable debt instruments issued or fully guaranteed by the republic of cyprus and that such debt instruments will be subject to the standard haircuts set out in guideline (eu) 2016/65 of the european central bank (ecb/2015/35) (7), has adopted this decision: article 1 eligibility of marketable debt instruments issued or fully guaranteed by the republic of cyprus 1. for the purposes of article 8 of guideline ecb/2014/31, the republic of cyprus shall no longer be considered a member state under a european union/international monetary fund programme. 2. the eurosystem's minimum requirements for credit quality thresholds, as laid down in guideline (eu) 2015/510 (ecb/2014/60) and in particular in article 59 and in part four, title ii thereof, shall apply to marketable debt instruments issued or fully guaranteed by the republic of cyprus. 3. marketable debt instruments issued or fully guaranteed by the republic of cyprus shall no longer be subject to the specific haircuts set out in annex ii to guideline ecb/2014/31. 4. in the event of any discrepancy between this decision and any of guideline (eu) 2015/510 (ecb/2014/60) and guideline ecb/2014/31, as implemented at national level by the national central banks of member states whose currency is the euro, this decision shall prevail. article 2 entry into force this decision shall enter into force on 1 april 2016. done at frankfurt am main, 16 march 2016. the president of the ecb mario draghi (1) oj l 91, 2.4.2015, p. 3. (2) oj l 240, 13.8.2014, p. 28. (3) decision ecb/2013/13 of 2 may 2013 on temporary measures relating to the eligibility of marketable debt instruments issued or fully guaranteed by the republic of cyprus (oj l 133, 17.5.2013, p. 26). (4) decision ecb/2013/22 of 5 july 2013 on temporary measures relating to the eligibility of marketable debt instruments issued or fully guaranteed by the republic of cyprus (oj l 195, 18.7.2013, p. 27). (5) statement by christine lagarde, managing director of the international monetary fund, on cyprus, 7 march 2016, press release no 16/94. (6) available on the esm's website at www.esm.europa.eu (7) guideline (eu) 2016/65 of the european central bank of 18 november 2015 on the valuation haircuts applied in the implementation of the eurosystem monetary policy framework (ecb/2015/35) (oj l 14, 21.1.2016, p. 30).

name: council decision (eu) 2016/437 of 10 march 2016 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and the republic of peru on the short-stay visa waiver type: decision subject matter: european construction; international law; international affairs; america date published: 2016-03-24 24.3.2016 en official journal of the european union l 78/2 council decision (eu) 2016/437 of 10 march 2016 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and the republic of peru on the short-stay visa waiver the council of the european union, having regard to the treaty on the functioning of the european union, and in particular point (a) of article 77(2), in conjunction with article 218(5), thereof, having regard to the proposal from the european commission, whereas: (1) regulation (eu) no 509/2014 of the european parliament and of the council (1) transferred the reference to the republic of peru from annex i to annex ii to council regulation (ec) no 539/2001 (2). (2) that reference to the republic of peru is accompanied by a footnote indicating that the exemption from the visa requirement shall apply from the date of entry into force of an agreement on visa exemption to be concluded with the european union. (3) pursuant to regulation (eu) no 509/2014, the commission assessed the situation of the republic of peru with regard to the criteria set out in that regulation. on 29 october 2014, the commission adopted a report concluding that the significant improvement of the peruvian economic and social situation in recent years provided justification for exempting peruvian nationals from the visa requirement when travelling to the european union. (4) on 19 may 2015, the council adopted a decision authorising the commission to open negotiations with the republic of peru for the conclusion of an agreement between the european union and the republic of peru on the short-stay visa waiver (the agreement). (5) negotiations on the agreement were opened on 20 may 2015 and were successfully finalised by the initialling thereof on 9 june 2015. (6) the agreement should be signed, and the declarations attached to the agreement should be approved, on behalf of the union. the agreement should be applied on a provisional basis as from the day following the date of signature thereof, pending the completion of the procedures for its formal conclusion. (7) this decision constitutes a development of the provisions of the schengen acquis in which the united kingdom does not take part, in accordance with council decision 2000/365/ec (3); the united kingdom is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (8) this decision constitutes a development of the provisions of the schengen acquis in which ireland does not take part, in accordance with council decision 2002/192/ec (4); ireland is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application, has adopted this decision: article 1 the signing on behalf of the union of the agreement between the european union and the republic of peru on the short-stay visa waiver (the agreement) is hereby authorised, subject to the conclusion of the said agreement. the text of the agreement is attached to this decision. article 2 the declarations attached to this decision shall be approved on behalf of the union. article 3 the president of the council is hereby authorised to designate the person(s) empowered to sign the agreement on behalf of the union. article 4 the agreement shall be applied on a provisional basis as from the day following the date of signature thereof (5), pending the completion of the procedures for its conclusion. article 5 this decision shall enter into force on the day of its adoption. done at brussels, 10 march 2016. for the council the president k.h.d.m. dijkhoff (1) regulation (eu) no 509/2014 of the european parliament and of the council of 15 may 2014 amending council regulation (ec) no 539/2001 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement (oj l 149, 20.5.2014, p. 67). (2) council regulation (ec) no 539/2001 of 15 march 2001 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement (oj l 81, 21.3.2001, p. 1). (3) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (4) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (5) the date of signature of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/430 of 10 february 2015 on the conclusion of the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states and the kingdom of morocco type: decision subject matter: organisation of transport; africa; european construction; international affairs date published: 2016-03-23 23.3.2016 en official journal of the european union l 76/1 council decision (eu) 2016/430 of 10 february 2015 on the conclusion of the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states and the kingdom of morocco the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 172 in conjunction with article 218(6)(a) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) on 21 april 2005, the council authorised the commission to open negotiations with morocco for the conclusion of a cooperation agreement on a civil global navigation satellite system (gnss). (2) in accordance with the council decision of 27 november 2006, the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states and the kingdom of morocco (the agreement) was signed on 12 december 2006. (3) the agreement allows for closer cooperation with morocco in the area of satellite navigation. it will implement a number of elements of the european satellite navigation programmes. (4) the agreement should be approved, has adopted this decision: article 1 the cooperation agreement on a civil global navigation satellite system (gnss) between the european community and its member states and the kingdom of morocco is hereby approved on behalf of the union. the text of the agreement is attached to this decision. article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 18(1) of the agreement, in order to express the consent of the union to be bound by the agreement (2), and shall make the following notification: as a consequence of the entry into force of the treaty of lisbon on 1 december 2009, the european union has replaced and succeeded the european community and from that date exercises all rights and assumes all obligations of the european community. therefore, references to the european community in the text of the agreement are to be read as to the european union . article 3 this decision shall enter into force on the day of its adoption. done at brussels, 10 february 2015. for the council the president e. rink vi s (1) consent given on 16 december 2014. (2) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/436 of 15 march 2016 on the position to be adopted, on behalf of the european union, within the customs sub-committee established by the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part, as regards the replacement of protocol ii to that agreement, concerning the definition of the concept of originating products and methods of administrative cooperation type: decision subject matter: international affairs; tariff policy; europe; european construction; international trade; cooperation policy; executive power and public service date published: 2016-03-23 23.3.2016 en official journal of the european union l 76/35 council decision (eu) 2016/436 of 15 march 2016 on the position to be adopted, on behalf of the european union, within the customs sub-committee established by the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part, as regards the replacement of protocol ii to that agreement, concerning the definition of the concept of originating products and methods of administrative cooperation the council of the european union, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 207(4), in conjunction with article 218(9) thereof, having regard to the proposal from the european commission, whereas: (1) protocol ii to the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part (1) (the agreement), concerns the definition of the concept of originating products and methods of administrative cooperation (protocol ii). (2) most of the provisions on trade and trade-related matters of the agreement, including protocol ii, have been applied provisionally since 1 september 2014. (3) the regional convention on pan-euro-mediterranean preferential rules of origin (2) (the convention) lays down provisions on the origin of goods traded under relevant agreements concluded between the contracting parties to that convention. (4) the union signed the convention on 15 june 2011. the joint committee of the convention decided, by decision no 2 of 21 may 2014 (3), that the republic of moldova should be invited to accede to the convention. (5) the union and the republic of moldova deposited their instruments of acceptance with the depositary of the convention on 26 march 2012 and 31 july 2015, respectively. consequently, pursuant to article 10(3) of the convention, the convention entered into force in relation to the union and the republic of moldova on 1 may 2012 and 1 september 2015, respectively. (6) article 6 of the convention provides that each contracting party is to take appropriate measures to ensure that the convention is effectively applied. to that effect, the customs sub-committee established by the agreement (the customs sub-committee) should adopt a decision replacing protocol ii by a new protocol which, with regard to the rules of origin, refers to the convention. (7) the position of the union within the customs sub-committee should therefore be based on the attached draft decision, has adopted this decision: article 1 the position to be adopted, on behalf of the european union, within the customs sub-committee established by the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part, as regards the replacement of protocol ii to that agreement, concerning the definition of the concept of originating products and methods of administrative cooperation, by a new protocol which, as regards the rules of origin, refers to the regional convention on pan-euro-mediterranean preferential rules of origin, shall be based on the draft decision of the customs sub-committee attached to this decision. minor technical amendments to the draft decision of the customs sub-committee may be agreed to by the representatives of the union in the customs sub-committee without further decision of the council. article 2 the decision of the customs sub-committee shall be published in the official journal of the european union. article 3 this decision shall enter into force on the date of its adoption. done at brussels, 15 march 2016. for the council the president a.g. koenders (1) oj l 260, 30.8.2014, p. 4. (2) oj l 54, 26.2.2013, p. 4. (3) oj l 217, 23.7.2014, p. 88. draft decision no /2016 of the eu-republic of moldova customs sub-committee of replacing protocol ii to the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part, concerning the definition of the concept of originating products and methods of administrative cooperation the eu-republic of moldova customs sub-committee, having regard to the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part (1), and in particular article 38 of protocol ii to that agreement concerning the definition of the concept of originating products and methods of administrative cooperation, whereas: (1) article 144(2) of the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part (the agreement), refers to protocol ii to the agreement (protocol ii) which lays down the rules of origin and provides for cumulation of origin between the union and the republic of moldova. (2) most of the provisions on trade and trade-related matters of the agreement, including protocol ii, have been applied provisionally since 1 september 2014. (3) article 38 of protocol ii provides that the customs sub-committee provided for in article 200 of the agreement may decide to amend the provisions of that protocol. (4) the regional convention on pan-euro-mediterranean preferential rules of origin (2) (the convention) aims to replace the protocols on rules of origin currently in force among the countries of the pan-euro-mediterranean area with a single legal act. (5) the union signed the convention on 15 june 2011. the joint committee of the convention decided, by decision no 2 of 21 may 2014 (3), that the republic of moldova should be invited to accede to the convention. (6) the union and the republic of moldova deposited their instruments of acceptance with the depositary of the convention on 26 march 2012 and 31 july 2015, respectively. consequently, pursuant to article 10(3) of the convention, the convention entered into force in relation to the union and the republic of moldova on 1 may 2012 and 1 september 2015, respectively. (7) protocol ii should therefore be replaced by a new protocol making reference to the convention, has adopted this decision: article 1 protocol ii to the association agreement between the european union and the european atomic energy community and their member states, of the one part, and the republic of moldova, of the other part, concerning the definition of the concept of originating products and methods of administrative cooperation, shall be replaced by the text set out in the annex to this decision. article 2 this decision shall enter into force on the date of its adoption. it shall apply from done at , for the customs sub-committee the chairman (1) oj l 260, 30.8.2014, p. 4. (2) oj l 54, 26.2.2013, p. 4. (3) oj l 217, 23.7.2014, p. 88. annex protocol ii concerning the definition of the concept of originating products and methods of administrative cooperation article 1 applicable rules of origin 1. for the purpose of implementing this agreement, appendix i and the relevant provisions of appendix ii to the regional convention on pan-euro-mediterranean preferential rules of origin (1) (the convention) shall apply. 2. all references to the relevant agreement in appendix i and in the relevant provisions of appendix ii to the convention shall be construed so as to mean this agreement. article 2 dispute settlement 1. where disputes arise in relation to the verification procedures of article 32 of appendix i to the convention that cannot be settled between the customs authorities requesting the verification and the customs authorities responsible for carrying out that verification, they shall be submitted to the customs sub-committee. the provisions on the dispute settlement mechanism in chapter 14 (dispute settlement) of title v (trade and trade-related matters) of this agreement shall not apply. 2. in all cases the settlement of disputes between the importer and the customs authorities of the importing country shall take place under the legislation of that country. article 3 amendments to the protocol the customs sub-committee may decide to amend the provisions of this protocol. article 4 withdrawal from the convention 1. should either the european union or the republic of moldova give notice in writing to the depositary of the convention of their intention to withdraw from the convention in accordance with article 9 thereof, the european union and the republic of moldova shall immediately enter into negotiations on rules of origin for the purpose of implementing this agreement. 2. until the entry into force of such newly negotiated rules of origin, the rules of origin contained in appendix i and, where appropriate, the relevant provisions of appendix ii to the convention, applicable at the moment of withdrawal, shall continue to apply to this agreement. however, as of the moment of withdrawal, the rules of origin contained in appendix i and, where appropriate, the relevant provisions of appendix ii to the convention shall be construed so as to allow bilateral cumulation between the european union and the republic of moldova only. article 5 transitional provisions cumulation notwithstanding articles 16(5) and 21(3) of appendix i to the convention, where cumulation involves only efta states, the faroe islands, the european union, turkey, the participants in the stabilisation and association process and the republic of moldova, the proof of origin may be a movement certificate eur.1 or an origin declaration. (1) oj l 54, 26.2.2013, p. 4.

name: council decision (eu) 2016/414 of 10 march 2016 authorising the republic of austria to sign and ratify, and malta to accede to, the hague convention of 15 november 1965 on the service abroad of judicial and extrajudicial documents in civil or commercial matters, in the interest of the european union type: decision subject matter: international affairs; civil law; europe; european construction; trade policy; documentation; cooperation policy date published: 2016-03-22 22.3.2016 en official journal of the european union l 75/1 council decision (eu) 2016/414 of 10 march 2016 authorising the republic of austria to sign and ratify, and malta to accede to, the hague convention of 15 november 1965 on the service abroad of judicial and extrajudicial documents in civil or commercial matters, in the interest of the european union the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 81(2), in conjunction with point (a) of article 218(6) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the hague convention of 15 november 1965 on the service abroad of judicial and extrajudicial documents in civil or commercial matters (the convention) simplifies the methods of transmission of judicial and extrajudicial documents between the contracting states. it thus facilitates judicial cooperation in cross-border civil and commercial litigation. (2) many countries, including the member states except the republic of austria and malta, are parties to the convention. the republic of austria and malta have expressed their interest in becoming parties to the convention. it is in the interest of the union that all member states are parties to the convention. in addition, in the framework of union external policy in the area of civil justice, the union promotes accession to, and ratification of, the convention by third states. (3) the union has external competence with regard to the convention in so far as its provisions affect the rules laid down in certain provisions of union legislation or in so far as the accession of additional member states to the convention alters the scope of certain provisions of union legislation, such as article 28(4) of regulation (eu) no 1215/2012 of the european parliament and of the council (2). (4) the convention does not allow for participation by regional economic integration organisations such as the union. as a result, the union is not in a position to accede to the convention. (5) the council should therefore authorise the republic of austria to sign and ratify, and malta to accede to, the convention, in the interest of the union. the member states retain their competence in those areas of the convention which do not affect union rules or alter their scope, in accordance with article 3(2) of the treaty on the functioning of the european union. (6) the united kingdom and ireland are bound by regulation (ec) no 1393/2007 of the european parliament and of the council (3) and are therefore taking part in the adoption and application of this decision. (7) in accordance with articles 1 and 2 of protocol no 22 on the position of denmark, annexed to the treaty on european union and to the treaty on the functioning of the european union, denmark is not taking part in the adoption of this decision and is not bound by it or subject to its application, has adopted this decision: article 1 the council hereby authorises the republic of austria to sign and ratify, and malta to accede to, the hague convention of 15 november 1965 on the service abroad of judicial and extrajudicial documents in civil or commercial matters, in the interest of the union. the text of the convention is attached to this decision. article 2 1. the republic of austria shall take the necessary steps to deposit its instrument of ratification of the convention with the ministry of foreign affairs of the kingdom of the netherlands within a reasonable time and at the latest by 31 december 2017. 2. the republic of austria shall inform the council and the commission of the date of its deposit of the instrument of ratification. article 3 1. after this decision takes effect malta shall notify the ministry of foreign affairs of the kingdom of the netherlands of the date on which the convention will become applicable to malta. 2. malta shall likewise inform the council and the commission of the date referred to in paragraph 1. article 4 this decision shall take effect on the day following that of its publication in the official journal of the european union. article 5 this decision is addressed to malta and the republic of austria. done at brussels, 10 march 2016. for the council the president k.h.d.m. dijkhoff (1) not yet published in the official journal. (2) regulation (eu) no 1215/2012 of the european parliament and of the council of 12 december 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (oj l 351, 20.12.2012, p. 1). (3) regulation (ec) no 1393/2007 of the european parliament and of the council of 13 november 2007 on the service in the member states of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing council regulation (ec) no 1348/2000 (oj l 324, 10.12.2007, p. 79).

name: commission implementing decision (eu) 2016/421 of 18 march 2016 on the non-compliance of unit rates for the charging zone of switzerland for 2015 and 2016 under article 17 of implementing regulation (eu) no 391/2013 (notified under document c(2016) 1594) (text with eea relevance) type: decision_impl subject matter: prices; transport policy; economic geography; marketing; air and space transport date published: 2016-03-22 22.3.2016 en official journal of the european union l 75/66 commission implementing decision (eu) 2016/421 of 18 march 2016 on the non-compliance of unit rates for the charging zone of switzerland for 2015 and 2016 under article 17 of implementing regulation (eu) no 391/2013 (notified under document c(2016) 1594) (only the french, german and italian texts are authentic) (text with eea relevance) the european commission, having regard to the agreement between the european community and the swiss confederation on air transport (the agreement) (1), having regard to regulation (ec) no 550/2004 of the european parliament and of the council of 10 march 2004 on the provision of air navigation services in the single european sky (the service provision regulation) (2), and in particular article 16(1) thereof, having regard to commission implementing regulation (eu) no 391/2013 of 3 may 2013 laying down a common charging scheme for air navigation services (3), and in particular article 17(1)(e) thereof, whereas: (1) implementing regulation (eu) no 391/2013 lays down a common charging scheme for air navigation services. the common charging scheme is an integral element in reaching the objectives of the performance scheme as established under article 11 of regulation (ec) no 549/2004 of the european parliament and of the council (4) and commission implementing regulation (eu) no 390/2013 (5). (2) commission implementing decision 2014/132/eu (6) sets the union-wide performance targets, including a cost-efficiency target for en route air navigation services expressed in determined unit costs for the provision of those services, for the second reference period, which covers the years 2015 to 2019 inclusive. (3) pursuant to article 17(1)(c) and 17(2) of implementing regulation (eu) no 391/2013, the commission is to assess the unit rates for charging zones for 2015 and 2016 submitted by the member states to the commission following the revision of performance targets as a result of commission implementing decision (eu) 2015/347 (7). the assessment concerns the compliance of those unit rates with implementing regulations (eu) no 390/2013 and (eu) no 391/2013. (4) the commission has carried out its assessment of the unit rates with the support of the performance review body, which is charged with assisting the commission in the implementation of the performance scheme pursuant to article 3 of implementing regulation (eu) no 390/2013, and eurocontrol's central route charges office, using the data and additional information provided by switzerland by 1 june 2015 as well as relevant information submitted as part of the revised performance plan. the assessment of the unit rates for 2015 and 2016 took into account the report by the performance review body on the revised performance plans for the second reference period, which was submitted to the commission on 15 october 2015. (5) on the basis of that assessment, the commission has found, in accordance with article 17(1)(e) of implementing regulation (eu) no 391/2013, that the unit rates for charging zones for 2015 and 2016 submitted by switzerland are not in compliance with implementing regulations (eu) no 390/2013 and (eu) no 391/2013. (6) article 11(1) of implementing regulation (eu) no 390/2013 provides that the national supervisory authorities of the member states are to draw up performance plans containing targets consistent with the union-wide performance targets. pursuant to article 11(2) and annex iv to implementing regulation (eu) no 391/2013, unit rates are calculated on the basis of the en route determined costs and the forecast service units specified in the performance plan of a member state, i.e. the en route determined unit costs. until the performance targets of switzerland are considered consistent with union-wide targets, the unit rates calculated on their basis cannot be considered to be compliant with implementing regulations (eu) no 390/2013 and (eu) no 391/2013. (7) pursuant to article 17(1)(e) of implementing regulation (eu) no 391/2013, the member states concerned should be notified of the commission's findings. (8) given that the revised performance plans for the second reference period were not adopted before 1 november of the year preceding the second reference period, it is recalled that, in accordance with article 17(2) of implementing regulation (eu) no 391/2013, the member states are required to recalculate the unit rates for charging zones where necessary on the basis of the final adopted performance plans and to carry over any difference due to the temporary application of the unit rates set out in this decision in the calculation of the unit rates of the following year. (9) in accordance with the last paragraph of article 17(1), unit rates are set in national currency. the unit rates contained in this decision are therefore presented in swiss franc, has adopted this decision: article 1 the 2015 unit rate of 118,97 and the 2016 unit rate of 113,69 for the charging zone of switzerland are not in compliance with implementing regulations (eu) no 390/2013 and (eu) no 391/2013. article 2 this decision is addressed to the swiss confederation. done at brussels, 18 march 2016. for the commission violeta bulc member of the commission (1) oj l 114, 30.4.2002, p. 73. (2) oj l 96, 31.3.2004, p. 10. (3) oj l 128, 9.5.2013, p. 31. (4) regulation (ec) no 549/2004 of the european parliament and of the council of 10 march 2004 laying down the framework for the creation of the single european sky (the framework regulation) (oj l 96, 31.3.2004, p. 1). (5) commission implementing regulation (eu) no 390/2013 of 3 may 2013 laying down a performance scheme for air navigation services and network functions (oj l 128, 9.5.2013, p. 1). (6) commission implementing decision 2014/132/eu of 11 march 2014 setting the union-wide performance targets for the air traffic management network and alert thresholds for the second reference period 2015-19 (oj l 71, 12.3.2014, p. 20). (7) commission implementing decision (eu) 2015/347 of 2 march 2015 concerning the inconsistency of certain targets included in the national or functional airspace block plans submitted pursuant to regulation (ec) no 549/2004 of the european parliament and of the council with the union-wide performance targets for the second reference period and setting out recommendations for the revision of those targets (oj l 60, 4.3.2015, p. 48).

name: commission implementing decision (eu) 2016/412 of 17 march 2016 authorising member states to provide for a temporary derogation from certain provisions of council directive 2000/29/ec in respect of ash wood originating or processed in canada (notified under document c(2016) 1635) type: decision_impl subject matter: america; trade; european union law; trade policy; agricultural activity; international trade; agricultural policy; wood industry date published: 2016-03-19 19.3.2016 en official journal of the european union l 74/41 commission implementing decision (eu) 2016/412 of 17 march 2016 authorising member states to provide for a temporary derogation from certain provisions of council directive 2000/29/ec in respect of ash wood originating or processed in canada (notified under document c(2016) 1635) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 2000/29/ec of 8 may 2000 on protective measures against the introduction into the community of organisms harmful to plants or plant products and against their spread within the community (1), and in particular the first indent of article 15(1) thereof, whereas: (1) article 5(1) of directive 2000/29/ec, in conjunction with point 2.3 of section i of part a of annex iv to that directive, provides for special requirements concerning the introduction into the union of ash (fraxinus l.) wood originating in canada. (2) canada has requested the recognition of a combination of procedures that together attain the same phytosanitary robustness as that ensured pursuant to point 2.3 of section i of part a of annex iv of directive 2000/29/ec. (3) it appears from the official information submitted by canada that, through an integrated systems approach applied during wood processing the risk of infestation from agrilus planipennis fairmaire is eliminated. (4) that approach should be complemented by certain requirements for facilities, pre-export inspections and labelling to ensure the elimination of such risk. (5) those procedures should therefore be recognized as an alternative option to point 2.3 of section i of part a of annex iv of directive 2000/29/ec for imports from canada. (6) in order to ensure effective controls, as well as an overview of imports of ash wood and of non-compliances related to those imports, requirements should be set out concerning phytosanitary certificates, reporting of importation and notification of non-compliances. (7) taking into account the spread of the harmful organism agrilus planipennis fairmaire in north america, it is appropriate to limit the duration of the derogation to 31 december 2017. (8) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 authorisation to provide for derogation by way of derogation from article 5(1) of directive 2000/29/ec in conjunction with point 2.3 of section i of part a of annex iv to that directive, member states may authorise the introduction into their territory of wood of fraxinus l. originating or processed in canada (hereinafter: specified wood) which, prior to its movement out of canada, satisfies the conditions set out in the annex to this decision. article 2 phytosanitary certificate 1. the specified wood shall be accompanied by a phytosanitary certificate issued in canada, in accordance with article 13a(3) and (4) of directive 2000/29/ec, certifying freedom from harmful organisms after inspection. 2. the phytosanitary certificate shall include under the heading additional declaration the following elements: (a) the statement in accordance with european union requirements laid down in commission implementing decision (eu) 2016/412; (b) the bundle number(s); (c) the name of the approved facility(ies) in canada. article 3 reporting of importation the member state of importation shall provide the commission and the other member states, by 31 december of each year, with information on the amounts of consignments of specified wood imported during the previous 12 months pursuant to this decision. article 4 notification of non-compliance member states shall notify the commission and the other member states of each consignment not complying with this decision. that notification shall take place no later than three working days after the date of the interception of such a consignment. article 5 date of expiry this decision shall expire on 31 december 2017. article 6 addressees this decision is addressed to the member states. done at brussels, 17 march 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 169, 10.7.2000, p. 1. annex 1. processing requirements the processing of the specified wood, as referred to in article 1 must fulfil all the following requirements: (a) debarking the specified wood is debarked, with the exception of any number of visually separate and clearly distinct small pieces of bark which comply with one of the following requirements: (a) they are less than 3 cm in width (regardless of length) or (b) if they are greater than 3 cm in width, the total surface area of each individual piece of bark is less than 50 cm2. (b) sawing the specified sawn wood is produced from debarked round wood. (c) heat treatment the specified wood is heated through its profile to at least 71 c for 1 200 minutes in a heat chamber approved by the canadian food inspection agency (cfia), or an agency approved by cfia. (d) drying the specified wood is dried following industrial drying schedules of at least two-week duration, recognised by cfia. the final moisture content of the wood shall not exceed 10 % expressed as a percentage of dry matter. 2. requirements for facilities the specified wood must be produced, handled or stored in a facility which fulfils all the following requirements: (a) it is officially approved by cfia pursuant to its certification programme concerning the harmful organism agrilus planipennis fairmaire; (b) it is registered in a database published on the cfia website; (c) it is audited by cfia, or an agency approved by cfia, at least once per month and it has been concluded that it complies with the requirements of this annex; (d) it uses equipment for the treatment of wood which has been calibrated consistently with the equipment's manual of operation; (e) it keeps records of its procedures for verification by cfia or an agency approved by cfia, including the duration of treatment, temperatures during treatment and the final moisture content for each specific bundle to be exported. 3. labelling each bundle of the specified wood must visibly display both a bundle number and a label with the words ht-kd or heat treated-kiln dried. that label must be issued by, or under the supervision of, a designated officer of the approved facility after verifying that the processing requirements set out in point 1 and the requirements for facilities set out in point 2 have been complied with. 4. pre-export inspections the specified wood destined for the union must be inspected by cfia, or an agency officially approved by cfia, to verify that it has undergone, before export, all phytosanitary procedures and measures allowing to conclude that it is free from the harmful organism agrilus planipennis fairmaire.

name: council decision (cfsp) 2016/411 of 18 march 2016 amending decision 2011/172/cfsp concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in egypt type: decision subject matter: international affairs; africa; civil law date published: 2016-03-19 19.3.2016 en official journal of the european union l 74/40 council decision (cfsp) 2016/411 of 18 march 2016 amending decision 2011/172/cfsp concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in egypt the council of the european union, having regard to the treaty on european union, and in particular article 29 thereof, having regard to the proposal from the high representative of the union for foreign affairs and security policy, whereas: (1) on 21 march 2011, the council adopted decision 2011/172/cfsp (1) concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in egypt. (2) on the basis of a review of decision 2011/172/cfsp, the restrictive measures should be renewed until 22 march 2017. (3) decision 2011/172/cfsp should therefore be amended accordingly, has adopted this decision: article 1 in article 5 of decision 2011/172/cfsp, the second paragraph is replaced by the following: this decision shall apply until 22 march 2017. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 18 march 2016. for the council the president a.g. koenders (1) council decision 2011/172/cfsp of 21 march 2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in egypt (oj l 76, 22.3.2011, p. 63).

name: commission implementing decision (eu) 2016/398 of 16 march 2016 authorising the placing on the market of uv-treated bread as a novel food under regulation (ec) no 258/97 of the european parliament and of the council (notified under document c(2016) 1527) type: decision_impl subject matter: foodstuff; health; marketing; deterioration of the environment date published: 2016-03-18 18.3.2016 en official journal of the european union l 73/107 commission implementing decision (eu) 2016/398 of 16 march 2016 authorising the placing on the market of uv-treated bread as a novel food under regulation (ec) no 258/97 of the european parliament and of the council (notified under document c(2016) 1527) (only the swedish text is authentic) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (ec) no 258/97 of the european parliament and of the council of 27 january 1997 concerning novel foods and novel food ingredients (1), and in particular article 7 thereof, whereas: (1) on 12 february 2014, the company viasolde ab which makes the equipment for uv-treatment made a request to the competent authorities of finland to place ultraviolet (uv) treated bread on the market as a novel food within the meaning of point (f) of article 1(2) of regulation (ec) no 258/97. the aim of the uv treatment is to enhance the vitamin d content of the bread, which means that the nutritional value of the bread would significantly differ from the nutritional value of traditionally baked bread. (2) on 14 march 2014, the competent food assessment body of finland issued its initial assessment report. in that report it came to the conclusion that uv-treated bread meets the criteria for novel food set out in article 3(1) of regulation (ec) no 258/97. (3) on 19 march 2014, the commission forwarded the initial assessment report to the other member states. (4) reasoned objections were raised within the 60-day period laid down in the first subparagraph of article 6(4) of regulation (ec) no 258/97. (5) on 13 november 2014, the commission consulted the european food safety authority (efsa) asking it to carry out an additional assessment for uv-treated bread as novel food in accordance with regulation (ec) no 258/97. (6) on 11 june 2015, efsa concluded in its scientific opinion on the safety of uv-treated bread as a novel food (2), that bread enriched with vitamin d2 through uv treatment is safe under the proposed conditions of use. (7) therefore, the opinion gives sufficient grounds to establish that uv-treated bread as a novel food complies with the criteria laid down in article 3(1) of regulation (ec) no 258/97. (8) regulation (ec) no 1925/2006 of the european parliament and of the council (3) lays down requirements on the addition of vitamins and minerals and of certain other substances to foods. the use of uv-treated bread should be authorised without prejudice to the requirements of this legislation. (9) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 uv-treated bread as specified in annex i may be placed on the market as a novel food at the maximum level of 3 g vitamin d2 per 100 g without prejudice to the specific provisions of regulation (ec) no 1925/2006. article 2 the following shall be added to the designation for the labelling of the foodstuffs: contains vitamin d produced by uv-treatment. article 3 this decision is addressed to viasolde ab, dalstigen 4, 262 63, ngelholm, sweden. done at brussels, 16 march 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 43, 14.2.1997, p. 1. (2) efsa journal 2015; 13(7):4148. (3) regulation (ec) no 1925/2006 of the european parliament and of the council of 20 december 2006 on the addition of vitamins and minerals and of certain other substances to foods (oj l 404, 30.12.2006, p. 26). annex specification of uv-treated bread definition: uv-treated bread is yeast leavened bread and rolls (without toppings) to which a treatment with ultraviolet radiation is applied after baking in order to convert ergosterol to vitamin d2 (ergocalciferol). uv radiation: a process of radiation in ultraviolet light within the wavelength of 240-315 nm for maximum of 5 seconds with energy input of 10-50 mj/cm2. vitamin d2: chemical name (5z,7e,22e)-3s-9,10-secoergosta-5,7,10(19),22-tetraen-3-ol synonym ergocalciferol cas no 50-14-6 molecular weight 396,65 g/mol contents: vitamin d2 (ergocalciferol) in the final product 0,75-3 g/100 g (1) yeast in dough 1-5 g/100 g (2) (1) en 12821, 2009, european standard. (2) recipe calculation.

name: political and security committee decision (cfsp) 2016/396 of 15 march 2016 on the appointment of the eu mission commander for the european union military mission to contribute to the training of somali security forces (eutm somalia) and repealing decision (cfsp) 2015/173 (eutm somalia/1/2016) type: decision subject matter: africa; eu institutions and european civil service; defence; cooperation policy; european construction date published: 2016-03-18 18.3.2016 en official journal of the european union l 73/99 political and security committee decision (cfsp) 2016/396 of 15 march 2016 on the appointment of the eu mission commander for the european union military mission to contribute to the training of somali security forces (eutm somalia) and repealing decision (cfsp) 2015/173 (eutm somalia/1/2016) the political and security committee, having regard to the treaty on european union, and in particular article 38 thereof, having regard to council decision 2010/96/cfsp of 15 february 2010 on a european union military mission to contribute to the training of somali security forces (1), and in particular article 5 thereof, whereas: (1) pursuant to decision 2010/96/cfsp, the political and security committee (psc) is authorised, in accordance with article 38 of the treaty on european union, to take the relevant decisions concerning the political control and strategic direction of eutm somalia, including decisions on the appointment of the eu mission commander. (2) on 3 february 2015, the psc adopted decision (cfsp) 2015/173 (2) appointing brigadier general antonio maggi as eu mission commander for eutm somalia. (3) on 9 february 2016, italy proposed the appointment of brigadier general maurizio morena as the new eu mission commander for eutm somalia to succeed brigadier general antonio maggi. (4) on 24 february 2016, the eu military committee recommended that the psc appoint brigadier general maurizio morena as eu mission commander for eutm somalia to succeed brigadier general antonio maggi from 21 march 2016. (5) decision (cfsp) 2015/173 should be repealed. (6) in accordance with article 5 of protocol no 22 on the position of denmark, annexed to the treaty on european union and to the treaty on the functioning of the european union, denmark does not participate in the elaboration and the implementation of decisions and actions of the union which have defence implications, has adopted this decision: article 1 brigadier general maurizio morena is hereby appointed as eu mission commander for the european union military mission to contribute to the training of somali security forces (eutm somalia) from 21 march 2016. article 2 decision (cfsp) 2015/173 is repealed. article 3 this decision shall enter into force on the day of its adoption. done at brussels, 15 march 2016. for the political and security committee the chairperson w. stevens (1) oj l 44, 19.2.2010, p. 16. (2) political and security committee decision (cfsp) 2015/173 of 3 february 2015 on the appointment of the eu mission commander for the european union military mission to contribute to the training of somali security forces (eutm somalia) and repealing decision eutm somalia/1/2013 (eutm somalia/1/2015) (oj l 29, 5.2.2015, p. 14).

name: council decision (eu) 2016/342 of 12 february 2016 on the conclusion, on behalf of the union, of the stabilisation and association agreement between the european union and the european atomic energy community, of the one part, and kosovo *, of the other part type: decision subject matter: cooperation policy; european construction; international affairs; europe date published: 2016-03-16 16.3.2016 en official journal of the european union l 71/1 council decision (eu) 2016/342 of 12 february 2016 on the conclusion, on behalf of the union, of the stabilisation and association agreement between the european union and the european atomic energy community, of the one part, and kosovo (*), of the other part the council of the european union, having regard to the treaty on european union, and in particular article 37 in conjunction with article 31(1) thereof, having regard to the treaty on the functioning of the european union, and in particular article 217, in conjunction with articles 218(7), 218(6)(a)(i) and the second subparagraph of article 218(8) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament, whereas: (1) in accordance with council decision (eu) 2015/1988 (1), the stabilisation and association agreement between the european union and the european atomic energy community, and kosovo (the agreement), was signed on behalf of the union on 22 october 2015 subject to its conclusion at a later date. (2) the union and kosovo have strong links and share values and a desire to strengthen those links and establish a close and lasting relationship based on reciprocity and mutual interest, which should allow kosovo to further strengthen and extend its relations with the union. (3) the first agreement on principles governing the normalisation of relations was reached on 19 april 2013 in the framework of the eu-facilitated dialogue. (4) the agreement provides for the establishment of an association between the union and kosovo involving reciprocal rights and obligations, common actions and special procedure. it also contains provisions falling within the scope of chapter 2 of title v of the treaty on european union (teu) concerning the common foreign and security policy of the union. the decision to conclude the agreement should therefore be based on the legal basis providing for the establishment of an association allowing the union to enter into commitments in all areas covered by the treaties and on the legal basis for agreements in areas covered by chapter 2 of title v of the teu. (5) this is an eu-only agreement. the commitments and cooperation to be entered into by the union under this agreement relate only to the areas covered by the eu acquis or existing union policies. the signing and conclusion of this agreement as an eu-only agreement is without prejudice to the nature and scope of any similar agreements to be negotiated in the future. it is also without prejudice to the powers of the eu institutions conferred on them in the treaties and the positions of eu institutions and member states on competences. the agreement provides for wide-ranging cooperation in various policy areas, including in justice and home affairs. (6) the conclusion of the agreement is without prejudice to member states position on the status of kosovo, which will be decided in accordance with their national practice and international law. (7) in addition, none of the terms, wording or definitions used in this decision and the attached text of the agreement, nor any recourse to all the necessary legal bases for the conclusion of the agreement, constitute recognition of kosovo by the union as an independent state nor does it constitute recognition by individual member states of kosovo in that capacity where they have not previously taken such a step. (8) the conclusion of the agreement as regards matters falling under the competence of the european atomic energy community is subject to a separate procedure. (9) the agreement should be approved, has adopted this decision: article 1 the stabilisation and association agreement between the european union and the european atomic energy community, and kosovo is hereby approved on behalf of the union for the parts falling under the teu and the treaty on the functioning of the european union. the text of the agreement is attached to this decision. article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 144 of the agreement (2) article 3 1. the stabilisation and association council shall be chaired on the union side by the high representative of the union for foreign affairs and security policy, in accordance with his/her responsibilities pursuant to the treaties and his/her capacity as president of the foreign affairs council. the stabilisation and association committee shall be chaired by a representative of the commission. 2. the commission shall be authorised to approve on behalf of the union modifications to the agreement where it provides for them to be adopted by the stabilisation and association committee. article 4 this decision is without prejudice to member states and the unions position on the status of kosovo. article 5 this decision shall enter into force on the date of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (*) this designation is without prejudice to positions on status, and is in line with unscr 1244/1999 and the icj opinion on the kosovo declaration of independence. (1) oj l 290, 6.11.2015, p. 4. (2) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/367 of 4 march 2016 on the conclusion of the cooperation agreement on satellite navigation between the european union and its member states and the kingdom of norway type: decision subject matter: europe; international affairs; european construction; organisation of transport date published: 2016-03-15 15.3.2016 en official journal of the european union l 68/16 council decision (eu) 2016/367 of 4 march 2016 on the conclusion of the cooperation agreement on satellite navigation between the european union and its member states and the kingdom of norway the council of the european union, having regard to the treaty on the functioning of the european union, and in particular articles 171 and 172, in conjunction with article 218(6)(a) and the first subparagraph of article 218(8) thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the commission has negotiated the cooperation agreement on satellite navigation between the european union and its member states and the kingdom of norway (2) (the agreement) which was signed on 22 september 2010. (2) the agreement covers matters falling within the competence of the union as well as member states. (3) in accordance with article 12(4) of the agreement and the decision on its signature (3), the agreement is applied on a provisional basis by the union, as regards elements falling within its competence, and by the kingdom of norway, pending the completion of the procedures for its conclusion. (4) the agreement, which will also have to be ratified by member states, should be approved on behalf of the union for matters falling within its competence, has adopted this decision: article 1 the cooperation agreement on satellite navigation between the european union and its member states and the kingdom of norway is hereby approved on behalf of the union (4). article 2 this decision shall enter into force on the day of its adoption. done at brussels, 4 march 2016. for the council the president s.a.m. dijksma (1) oj c 131 e, 8.5.2013, p. 155. (2) oj l 283, 29.10.2010, p. 12. (3) oj l 283, 29.10.2010, p. 11. (4) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: commission implementing decision (eu) 2016/362 of 11 march 2016 on the approval of the mahle behr gmbh & co. kg enthalpy storage tank as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (text with eea relevance) type: decision_impl subject matter: research and intellectual property; technology and technical regulations; organisation of transport; deterioration of the environment; mechanical engineering; marketing; environmental policy date published: 2016-03-12 12.3.2016 en official journal of the european union l 67/59 commission implementing decision (eu) 2016/362 of 11 march 2016 on the approval of the mahle behr gmbh & co. kg enthalpy storage tank as an innovative technology for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (ec) no 443/2009 of the european parliament and of the council of 23 april 2009 setting emissions performance standards for new passenger cars as part of the community's integrated approach to reduce co2 emissions from light-duty vehicles (1), and in particular article 12(4) thereof, whereas: (1) the supplier mahle behr gmbh & co. kg (the applicant) submitted an application for the approval of an enthalpy storage tank as an innovative technology on 29 april 2015. the completeness of that application was assessed in accordance with article 4 of commission implementing regulation (eu) no 725/2011 (2). the commission identified certain relevant information as missing in the original application and requested the applicant to complete it. the applicant provided the required information on 27 may 2015. the application was found to be complete and the period for the commission's assessment of the application started on the day following the date of official receipt of the complete information, i.e. 28 may 2015. (2) the application has been assessed in accordance with article 12 of regulation (ec) no 443/2009, implementing regulation (eu) no 725/2011 and the technical guidelines for the preparation of applications for the approval of innovative technologies pursuant to regulation (ec) no 443/2009 (the technical guidelines, version february 2013) (3). (3) the application refers to an enthalpy storage tank that reduces the co2 emissions and fuel consumption after a cold start of an internal combustion engine due to a faster engine warm-up. (4) the commission finds that the information provided in the application demonstrates that the conditions and criteria referred to in article 12 of regulation (ec) no 443/2009 and in articles 2 and 4 of implementing regulation (eu) no 725/2011 have been met. (5) the applicant has demonstrated that enthalpy storage tanks were not fitted in 3 % or more of the new passenger cars registered in the reference year 2009 in accordance with article 2(2)(a) of implementing regulation (eu) no 725/2011. (6) the applicant has used a comprehensive testing procedure in accordance with the technical guidelines, and defined the baseline vehicle as the vehicle fitted with a deactivated enthalpy storage tank. (7) the applicant has provided a methodology for testing the co2 reductions. the commission considers that the testing methodology will provide testing results that are verifiable, repeatable and comparable and that it is capable of demonstrating in a realistic manner the co2 emissions benefits of the innovative technology with strong statistical significance in accordance with article 6 of implementing regulation (eu) no 725/2011. (8) against that background the applicant has demonstrated satisfactorily that the emission reduction achieved by the enthalpy storage tank is at least 1 g co2/km. (9) since the enthalpy storage tank is not activated during the co2 emissions type approval test referred to in regulation (ec) no 715/2007 of the european parliament and of the council (4) and commission regulation (ec) no 692/2008 (5), the commission is satisfied that the technology in question is not covered by the standard test cycle. (10) the activation of the enthalpy storage tank is not dependant on the choice of the driver. on that basis the commission finds that the manufacturer should be considered accountable for the co2 emission reduction due to the use of the innovative technology. (11) the commission finds that the verification report has been prepared by t v s d auto service gmbh which is an independent and certified body and that the report supports the findings set out in the application. (12) against that background, the commission finds that no objections should be raised as regards the approval of the innovative technology in question. (13) for the purposes of determining the general eco-innovation code to be used in the relevant type approval documents in accordance with annexes i, viii and ix to directive 2007/46/ec of the european parliament and of the council (6), the individual code to be used for the innovative technology approved through this decision should be specified, has adopted this decision: article 1 1. the enthalpy storage tank described in the application of mahle behr gmbh & co. kg is approved as an innovative technology within the meaning of article 12 of regulation (ec) no 443/2009. 2. the co2 emissions reduction from the use of the enthalpy storage tank shall be determined using the methodology set out in the annex. 3. the individual eco-innovation code to be entered into type approval documentation to be used for the innovative technology approved through this implementing decision shall be 18. article 2 this decision shall enter into force on the twentieth day following that of its publication in the official journal of the european union. done at brussels, 11 march 2016. for the commission the president jean-claude juncker (1) oj l 140, 5.6.2009, p. 1. (2) commission implementing regulation (eu) no 725/2011 of 25 july 2011 establishing a procedure for the approval and certification of innovative technologies for reducing co2 emissions from passenger cars pursuant to regulation (ec) no 443/2009 of the european parliament and of the council (oj l 194, 26.7.2011, p. 19). (3) https://circabc.europa.eu/w/browse/42c4a33e-6fd7-44aa-adac-f28620bd436f (4) regulation (ec) no 715/2007 of the european parliament and of the council of 20 june 2007 on type approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (euro 5 and euro 6) and on access to vehicle repair and maintenance information (oj l 171, 29.6.2007, p. 1). (5) commission regulation (ec) no 692/2008 of 18 july 2008 implementing and amending regulation (ec) no 715/2007 of the european parliament and of the council on type-approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (euro 5 and euro 6) and on access to vehicle repair and maintenance information (oj l 199, 28.7.2008, p. 1). (6) directive 2007/46/ec of the european parliament ad of the council of 5 september 2007 establishing a framework for the approval of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles (framework directive (oj l 263, 9.10.2007, p. 1). annex methodology to determine the co2 savings of the enthalpy storage tank technology 1. introduction in order to determine the co2 reduction that can be attributed to the use of the enthalpy storage tank technology (est system), it is necessary to establish the following: (a) the testing procedure to be followed for determining the cool-down curves of the baseline vehicle (the vehicle fitted with a deactivated enthalpy storage tank) and the eco-innovation vehicle; (b) the testing procedure to be followed for determining the co2 emission at different engine coolant start temperature; (c) the testing procedure to be followed for determining the theoretical temperature of the engine after discharging the est system; (d) the testing procedure to be followed for determining the hot start benefit; (e) the formulae to be used for determining the co2 savings; (f) the formulae to be used for determining the statistical error and significance of the results. 2. symbols and abbreviations latin symbols bta co2 emission of the vehicle under type approval conditions [g co2/km] co2 savings [g co2/km] co2 carbon dioxide co2 (tk) arithmetic mean of the co2 emissions of the vehicle measured using nedc cycle, ambient temperature of 14 c and engine coolant start temperatures tk [g co2/km] deng temperature decay factor of the engine coolant cool down curve [1/h] dest temperature decay factor of the est cool down curve [1/h] est enthalpy storage tank k effective ratio of thermal inertias [-] m number of measurements of the sample nedc new european driving cycle normalised fuel consumption potential at the engine coolant start temperature for the selected parking times ti [-] pt parking time [h] teng temperature of the engine coolant during parking time [ c] tengmod theoretical engine coolant temperature after discharging the est system [ c] test temperature of the est coolant during parking time [ c] tcold cold start temperature [ c] which is 14 c thot hot start temperature [ c] which is the coolant temperature reached at the end of the nedc cycle soc state of charge svspt share of parking time distribution [%] as defined in table 6 wfti weighting factor for the parking time ti [%] as defined in table 3 subscripts index ti refers to the selected parking times as defined in table 1 index j refers to measurements of the sample index k refers to engine coolant start temperatures 3. determining the cool-down curves and temperatures the cool-down curves shall be determined experimentally for the baseline vehicle engine coolant and the eco-innovation vehicle coolant. the same curves shall be applicable for vehicle variants with the same heat capacities, engine bay packaging, engine heat insulation and est system. the experimental tests shall include continuous measurements of the representative coolant temperatures of the engine coolant and the coolant stored in the est system by means of thermocouples at a constant ambient temperature of at least 14 c for 24 h. the engine shall be heated up to the maximum coolant temperature before cut-off by a sufficient number of consecutive nedc tests. after preconditioning, the ignition shall be switched off and the dash key pulled out. the car's bonnet shall be closed completely. any artificial ventilation system inside the test cell shall be switched off. the resulting measured cool-down curves shall be converged by the mathematical approach described by formula 1 and formula 2 for the engine and the est system respectively. formula 1 formula 2 the least squares method shall be used for the fitting of the curves. to do that, at least the temperature measurement data of the first 30 minutes after engine cut-off are not to be considered because of the untypical behaviour of the coolant temperature after switching off the coolant system. using formula 1, the engine temperature at specific parking time conditions () should be calculated and given in table 1. table 1 engine temperature at selected parking time conditions selected parking time (ti) t1 t2 t3 pt [h] 2,5 4,5 16,5 [ c] 4. determining the co2 emission at different coolant start temperatures the emission of co2 and fuel consumptions of the vehicle have to be measured in accordance with annex 6 to un/ece regulation no 101 (method of measuring emission of carbon dioxide and fuel consumption of vehicles powered by an internal combustion engine only). the procedure should be modified accordingly to the following: 1. the ambient temperature in the test cell shall be below 14 c; 2. the 5 engine coolant start temperatures shall be the followings: tcold, thot, , and . the tests can be performed at any order. it is possible to perform one or two preconditioning nedc tests between the tests. it shall be ensured and documented that the state of charge (soc) of the starter battery (for example, using its controller area network signal) after each test is within 5 %. the complete tests procedure shall be repeated at least three times (i.e. m 3). arithmetic means of the co2 results at each engine coolant start temperatures (tk) shall be calculated using formula 3 and given in table 2. formula 3 where k = 1, 2, , 5 t1 = tcold t2 = thot table 2 co2 emission at different engine coolant start temperatures engine coolant starting temperature tk tcold thot co2(tk) [g co2/km] 5. determining the theoretical temperature of the engine after discharging the est system using the test results defined in paragraph 4 and reported in table 2, the normalised fuel consumption potential np() at the selected parking time conditions reported in table 1, shall be calculated using formula 4. formula 4 then, the theoretical engine coolant temperature after discharging the est system for the selected parking time conditions , shall be calculated using formula 5. formula 5 the relative ratio of thermal inertias kti at the selected parking time conditions shall be defined using formula 6. formula 6 the resulting effective ratio of thermal inertias k is calculated weighting the three results kti by the share of vehicle stops, as defined by formula 7. formula 7 where wfti weighting factor for the parking time ti [-] as defined in table 3 table 3 weighting parameter for k factor calculation wft1 [%] 63,4 wft2 [%] 14,0 wft3 [%] 22,6 the theoretical temperature of the engine after discharging the est system for the parking time condition pt shall be calculated using formula 8. formula 8 the calculation results shall be given in table 4 table 4 theoretical temperature of the engine after discharging the est system for different parking times pt [h] 0,5 1,5 2,5 3,5 4,5 5,5 6,5 7,5 8,5 9,5 10,5 11,5 [ c] pt [h] 12,5 13,5 14,5 15,5 16,5 17,5 18,5 19,5 20,5 21,5 22,5 23,5 [ c] 6. determining the hot start benefit the hot start benefit (hsb) of the vehicle fitted with the technology shall be determined experimentally with formula 9. this value describes the difference of co2 emissions between a cold start and a hot start nedc test in relation to the cold start result. formula 9 7. determining the co2 savings prior to the launch of the official type i test to be performed in accordance with regulation (ec) no 692/2008, the type approval authority shall verify that the coolant temperature, including inside the enthalpy storage tank, is within 2 k of the temperature of the room. where this temperature is not achieved, the methodology for determining the co2 savings for the est may not be applied. the verification may be performed either by a measurement inside the enthalpy storage tank (e.g. by means of a thermocouple), or by turning off the est system before the conditioning procedure in order not to store heated coolant inside the tank. the temperature inside the enthalpy storage tank shall be recorded in the test report. the relative co2 reduction potential at different parking times shall be calculated using formula 10. formula 10 the calculation results shall be given in table 5 table 5 relative co2 reduction potential for different parking times pt [h] 0,5 1,5 2,5 3,5 4,5 5,5 6,5 7,5 8,5 9,5 10,5 11,5 co2(pt) [%] pt [h] 12,5 13,5 14,5 15,5 16,5 17,5 18,5 19,5 20,5 21,5 22,5 23,5 co2(pt) [%] the co2 savings weighted by the parking times (pt) shall be calculated using formula 11. formula 11 where: svspt share of parking time distribution [%] as defined in table 6 table 6 parking time distribution (share of vehicle stops) pt [h] 0,5 1,5 2,5 3,5 4,5 5,5 6,5 7,5 8,5 9,5 10,5 11,5 svspt [%] 36 13 6 4 2 2 1 1 3 4 3 1 pt [h] 12,5 13,5 14,5 15,5 16,5 17,5 18,5 19,5 20,5 21,5 22,5 23,5 svspt [%] 1 3 3 2 1 1 1 1 1 1 1 1 8. calculation of the statistical error the statistical errors in the outcomes of the testing methodology caused by the measurements are to be quantified. for each test performed at the different engine coolant start temperatures, the standard deviation of the arithmetic mean is calculated as defined by formula 12. formula 12 where k = 1, 2, , 5 t1 = tcold t2 = thot the standard deviation of the co2 savings is to be calculated by means of formula 13. formula 13 where 9. statistical significance it has to be demonstrated for each type, variant and version of a vehicle fitted with the est system that the error in the co2 savings calculated with formula 13 is not greater than the difference between the total co2 savings and the minimum savings threshold specified in article 9(1) of regulation (eu) no 725/2011 (see formula 14). formula 14 where: mt : minimum threshold [gco2/km], which is 1 gco2/km : co2 correction coefficient due to the mass increase due to the installation of the est system. for the data in table 7 is to be used. table 7 co2 correction coefficient due to the extra mass type of fuel co2 correction coefficient due to the extra mass () [g co2/km] petrol 0,0277 m diesel 0,0383 m in table 7 m is the extra mass due to the installation of the est system. it is the mass of the est system fully charged with the coolant. 10. the est system to be fitted in vehicles the type approval authority is to certify the co2 savings based on measurements of the est system using the test methodology set out in this annex. where the co2 emission savings are below the threshold specified in article 9(1), the second subparagraph of article 11(2) of regulation (eu) no 725/2011 shall apply.

name: council decision (eu) 2016/350 of 25 february 2016 on the conclusion of the arrangement between the european union and the swiss confederation on the modalities of its participation in the european asylum support office type: decision subject matter: european construction; eu institutions and european civil service; international affairs; europe date published: 2016-03-11 11.3.2016 en official journal of the european union l 65/61 council decision (eu) 2016/350 of 25 february 2016 on the conclusion of the arrangement between the european union and the swiss confederation on the modalities of its participation in the european asylum support office the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 74 and article 78(1) and (2), in conjunction with point (a) of article 218(6), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament, whereas: (1) in accordance with council decision 185/2014/eu (1), the arrangement between the european union and the swiss confederation on the modalities of its participation in the european asylum support office (the arrangement) was signed on 11 february 2014, subject to its conclusion. (2) the arrangement should be approved. (3) as specified in recital 21 of regulation (eu) no 439/2010 of the european parliament and of the council (2), the united kingdom and ireland are taking part in and are bound by that regulation. they should therefore give effect to article 49(1) of regulation (eu) no 439/2010 by taking part in this decision. the united kingdom and ireland are therefore taking part in this decision. (4) as specified in recital 22 of regulation (eu) no 439/2010, denmark is not taking part in and is not bound by that regulation. denmark is therefore not taking part in this decision, has adopted this decision: article 1 the arrangement between the european union and the swiss confederation on the modalities of its participation in the european asylum support office is hereby approved on behalf of the union. the text of the arrangement is attached to this decision. article 2 the president of the council shall, on behalf of the union, give the notification provided for in article 13(1) of the arrangement (3). article 3 this decision shall enter into force on the date of its adoption. done at brussels, 25 february 2016. for the council the president k.h.d.m. dijkhoff (1) council decision 185/2014/eu of 11 february 2014 on the signing, on behalf of the union, of the arrangement between the european union and the swiss confederation on the modalities of its participation in the european asylum support office (oj l 102, 5.4.2014, p. 1). (2) regulation (eu) no 439/2010 of the european parliament and of the council of 19 may 2010 establishing a european asylum support office (oj l 132, 29.5.2010, p. 11). (3) the date of entry into force of the arrangement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/333 of 4 march 2016 appointing a member, proposed by the federal republic of germany, of the committee of the regions type: decision subject matter: eu institutions and european civil service; europe date published: 2016-03-09 9.3.2016 en official journal of the european union l 62/16 council decision (eu) 2016/333 of 4 march 2016 appointing a member, proposed by the federal republic of germany, of the committee of the regions the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 305 thereof, having regard to the proposal of the german government, whereas: (1) on 26 january 2015, 5 february 2015 and 23 june 2015, the council adopted decisions (eu) 2015/116 (1), (eu) 2015/190 (2) and (eu) 2015/994 (3) appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020. (2) a member's seat on the committee of the regions has become vacant following the end of the term of office of ms dagmar m hlenfeld, has adopted this decision: article 1 the following is hereby appointed as a member of the committee of the regions for the remainder of the current term of office, which runs until 25 january 2020: herr joachim wolbergs, oberb rgermeister der stadt regensburg. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 4 march 2016. for the council the president s.a.m. dijksma (1) council decision (eu) 2015/116 of 26 january 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 20, 27.1.2015, p. 42). (2) council decision (eu) 2015/190 of 5 february 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 31, 7.2.2015, p. 25). (3) council decision (eu) 2015/994 of 23 june 2015 appointing the members and alternate members of the committee of the regions for the period from 26 january 2015 to 25 january 2020 (oj l 159, 25.6.2015, p. 70).

name: commission implementing decision (eu) 2016/320 of 3 march 2016 amending decision 2004/842/ec concerning implementing rules whereby member states may authorise the placing on the market of seed belonging to varieties for which an application for entry in the national catalogues of varieties of agricultural plant species or vegetable species has been submitted (notified under document c(2016) 1221) (text with eea relevance) type: decision_impl subject matter: marketing; technology and technical regulations; means of agricultural production; agricultural activity date published: 2016-03-05 5.3.2016 en official journal of the european union l 60/88 commission implementing decision (eu) 2016/320 of 3 march 2016 amending decision 2004/842/ec concerning implementing rules whereby member states may authorise the placing on the market of seed belonging to varieties for which an application for entry in the national catalogues of varieties of agricultural plant species or vegetable species has been submitted (notified under document c(2016) 1221) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 66/401/eec of 14 june 1966 on the marketing of fodder plant seed (1), and in particular article 4a(2) thereof, having regard to council directive 66/402/eec of 14 june 1966 on the marketing of cereal seed (2), and in particular article 4a(2) thereof, having regard to council directive 2002/54/ec of 13 june 2002 on the marketing of beet seed (3), and in particular article 6(2) thereof, having regard to council directive 2002/55/ec of 13 june 2002 on the marketing of vegetable seed (4), and in particular article 23(2) thereof, having regard to council directive 2002/56/ec of 13 june 2002 on the marketing of seed potatoes (5), and in particular article 6(2) thereof, having regard to council directive 2002/57/ec of 13 june 2002 on the marketing of seed of oil and fibre plants (6), and in particular article 6(2) thereof, whereas: (1) commission decision 2004/842/ec (7) lays down rules as regards the official label of packages of seed of varieties for which an application for entry in the national catalogue of varieties of agricultural plant species or vegetable species has been submitted. (2) in recent years some cases of fraudulent use of official labels have been detected. the security of the official labels should therefore be improved, in line with the currently available technical knowledge, to ensure that such fraudulent practices are avoided. in this view, and in order to allow the competent authorities to better record and control the printing, distribution and use of individual official labels by operators, and to track seed lots, the security of the official labels should be improved by introducing an officially assigned serial number in those official labels. (3) this decision and commission implementing directive (eu) 2016/317 (8) should start to apply from the same date in order to ensure equal treatment as regards requirements for all users of the relevant labels. consequently this decision should apply from 1 april 2017. (4) decision 2004/842/ec should therefore be amended accordingly. (5) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 amendment to decision 2004/842/ec in article 9(2) of decision 2004/842/ec, the following point (aa) is inserted: (aa) the officially assigned serial number;. article 2 addressees this decision is addressed to the member states. article 3 date of application this decision shall apply from 1 april 2017. done at brussels, 3 march 2016. for the commission vytenis andriukaitis member of the commission (1) oj 125, 11.7.1966, p. 2298/66. (2) oj 125, 11.7.1966, p. 2309/66. (3) oj l 193, 20.7.2002, p. 12. (4) oj l 193, 20.7.2002, p. 33. (5) oj l 193, 20.7.2002, p. 60. (6) oj l 193, 20.7.2002, p. 74. (7) commission decision 2004/842/ec of 1 december 2004 concerning implementing rules whereby member states may authorise the placing on the market of seed belonging to varieties for which an application for entry in the national catalogue of varieties of agricultural plant species or vegetable species has been submitted (oj l 362, 9.12.2004, p. 21). (8) commission implementing directive (eu) 2016/317 of 3 march 2016 amending council directives 66/401/eec, 66/402/eec, 2002/54/ec, 2002/55/ec, 2002/56/ec and 2002/57/ec as regards the official label of seed packages (see page 72 of this official journal).

name: commission decision (eu) 2016/288 of 27 march 2015 on the aid scheme sa.34775 (13/c) (ex 12/nn) implemented by the united kingdom aggregates levy (notified under document number c(2015) 2141) (text with eea relevance) type: decision subject matter: european union law; europe; economic policy; taxation; regions of eu member states; natural environment; competition; environmental policy date published: 2016-03-04 4.3.2016 en official journal of the european union l 59/87 commission decision (eu) 2016/288 of 27 march 2015 on the aid scheme sa.34775 (13/c) (ex 12/nn) implemented by the united kingdom aggregates levy (notified under document number c(2015) 2141) (only the english text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof, having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having called on interested parties to submit their comments pursuant to those provisions (1), and having regard to their comments, whereas: 1. procedure (1) by letter dated 20 december 2001 (registered on 28 december 2001), the united kingdom authorities (uk authorities) notified to the commission an aid scheme with the title phased introduction of the aggregates levy in northern ireland. in their notification, the uk authorities informed the commission that they intended to introduce a levy on aggregates with effect from 1 april 2002. this levy was to be introduced by the finance act 2001, part 2, sections 16 to 49 and schedules 4 to 10. the aid scheme itself (phased introduction of the aggregates levy in northern ireland) was described as consisting of the introduction of the levy in several stages in northern ireland so as to preserve the international competitiveness of companies in northern ireland that manufacture processed products such as concrete and asphalt from aggregates. this staged introduction of the levy for northern ireland was to be introduced by the finance act 2002. (2) in addition to the notification, the commission received on 27 september 2001 a complaint from two companies engaged in the extraction and processing of aggregates and, on 15 april 2002, an additional complaint, submitted by the british aggregates association (the baa). the complainants considered that the finance act 2001 entailed state aid for the products and processes exempted from the aggregates levy (the agl) and considered that the derogations relating to northern ireland were aid incompatible with the internal market. (3) after the submission of additional information on 21 february 2002, the commission adopted, on 24 april 2002, a no objections decision with respect to the agl (2). it considered that the different exemptions provided for in the finance act 2001 were justified by the logic of the tax and that the finance act 2001 did not entail any state aid. the commission further considered that the staged introduction of the agl in northern ireland constituted aid that was compatible with the internal market. (4) on 12 july 2002, the baa brought an action for annulment of the commission's decision of 24 april 2002, registered as case t-210/02. on 13 september 2006, the general court dismissed the action in its entirety. on 27 november 2006, the baa appealed the judgment of the general court. by judgment of 22 december 2008 in case c-487/06 p, the court of justice set aside the appealed judgment and referred the case back to the general court. (5) on 7 march 2012, in its judgment in case t-210/02 renv, the general court annulled the commission decision mentioned in recital 3 above. the general court found that the commission failed to demonstrate that the tax differentiation associated with the exemption is justified on the basis of the normal taxation principle underpinning the agl or on the basis of the environmental objective of the agl. the general court found in particular that the commission had failed to take account of the normal taxation principle in determining the selective nature of any advantage generated by the agl. in this connection, the general court pointed to the inconsistencies in terminology used by the commission in its decision, namely as regards the terms virgin, primary and secondary' aggregates, which did not correspond to the terms used in the finance act 2001 as amended. also, the commission had failed to explain in its decision why certain exempt materials (used as aggregates, like clay aggregates) were not in the same legal and factual situation as taxed material. (6) following the annulment of the commission decision of 24 april 2002, the commission was required to reassess whether the exemptions, exclusions and tax reliefs provided for in the 2001 finance act, as amended by the finance act 2002 and finance act 2007, constituted state aid. the commission registered the file under an nn reference, since the agl has been in force since 1 april 2002. the issue of the compatibility of the staged introduction of the agl in northern ireland has been examined in the context of another procedure (see sa.18859 (11/c) united kingdom relief from aggregates levy in northern ireland). (7) in addition to the observations and submissions made during the proceedings before the union courts, the complainant submitted further comments and information to the commission on 13 june 2012 and 26 october 2012. those comments were transmitted to the united kingdom on 15 may 2013. on 27 september 2012 and 27 may 2013, the uk authorities provided further information on the agl. (8) by letter dated 31 july 2013, the commission informed the united kingdom that it had decided to initiate the procedure laid down in article 108(2) of the treaty in respect of the tax exemptions, tax exclusions and tax reliefs established in sections 17(3)(e), 17(3)(f)(i) and (ii), section 17(4)(a) (in so far as the exempted material consists wholly of coal, lignite, shale, slate that is used as aggregate or consists mainly of coal, lignite, shale and slate), section 17(4)(c)(i) and (ii) (when it consists mainly of the spoil), 17(4)(f) (as far as clay is concerned), 18(2)(b) (in so far as it relates to an exempt process that provides for materials that are used as aggregates) and 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2)(b) that provides for materials that are used as aggregates) of the finance act 2001, as amended by the finance act 2002 and the finance act 2007. the commission raised no objections to the tax exemptions, tax exclusions and tax reliefs established in sections 17(2)(b), 17(2)(c), 17(2)(d), 17(3)(b), 17(3)(c), 17(3)(d) and 17(3)(da), 17(4)(d)) and 17(4)(e), section 17(4)(a) (in so far as the exempted material consists wholly of coal, lignite, shale, slate that is used for other purposes than as aggregate), section 17(4)(c) (when it consists wholly of the spoil), section 17(4)(f) (except for clay), section 18(2)(a), section 18(2)(b) (in so far as it relates to materials that are not used as aggregates), section 18(2)(c), section 30(1)(a), section 30(1)(b) (in so far as it relates to exempt processes within the meaning of section 18(2) (a) and (c)), section 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2)(b) that provides for materials that are not used as aggregates) and section 30(1)(c) of the finance act 2001, as amended by the finance act 2002 and finance act 2007, on the ground that they do not constitute state aid within the meaning of article 107(1) of the treaty on the functioning of the european union. (9) the commission decision to initiate the procedure was published in the official journal of the european union (3) (the opening decision). the commission invited interested parties to submit their comments on the aid. (10) the commission received extensive comments from 16 interested parties between 20 december 2013 and 17 january 2014, supplementary information from a british aggregates association member on 10 february 2014 and from the british aggregates association on 5 march 2014. they were forwarded on 27 may 2014 and 13 june 2014 to the united kingdom, which was then given the opportunity to reply. the united kingdom submitted its reply by letter dated 30 june 2014. in addition, it submitted observations on the opening decision on 1 october 2013, 31 october 2013 and 28 february 2014. (11) the commission requested further information from the united kingdom on 14 july 2014, 1 september 2014, 8 september 2014, and 28 november 2014. the united kingdom provided such information on 29 august 2014, 9 september 2014, 18 september 2014 and 8 and 9 december 2014. (12) following a tripartite meeting on 15 july 2014, the commission requested further information to be submitted jointly by the united kingdom and the baa on 18 july 2014. such information was submitted to the commission on 8 september 2014. the baa submitted additional information in response to the questions of the commission on 15 september 2014. the information submitted was subsequently forwarded to the united kingdom authorities on 17 october 2014, who responded on 12 november 2014, 14 november 2014 and 17 november 2014. (13) the commission requested further information from the baa on 10 july 2014 and 16 october 2014. the baa provided such information on 6 november 2014 and 21 november 2014. the information was forwarded to the united kingdom authorities on 2 december 2014 who responded on 18 december 2014. 2. detailed description of the measure 2.1. notion of aggregates (14) aggregates are used in the construction sector. they can generally (4) be described as corresponding to granular or particulate material which because of its physical and chemically inert properties is suitable for use on its own or with the addition of cement, lime or bituminous material in construction as concrete (5), roadstone, asphalt or drainage courses (6), or for use as construction fill (7). aggregate may be natural, manufactured or recycled (8). the opening decision describes in detail the notion of aggregates and aggregates use in recitals 8 to 13. (15) the definition of aggregates is intrinsically linked to the possible uses of certain granular or particulate quarried materials in construction sector, as explained above in recital 14, as this is what primarily differentiates the notion of aggregates from the notion of minerals. (16) natural aggregates are aggregates that occur naturally and that can be used without industrial processing. these are sand, gravel and crushed rock (9) and are extracted from quarries and gravel pits or from sea dredging. (17) recycled aggregates derive from reprocessing materials previously used in construction, including construction and demolition residues (10). (18) manufactured aggregates are generally lightweight and high density aggregates manufactured for specialist purposes. they are produced after application of an industrial process (usually a thermal process). examples are: blast furnace slag aggregate, expanded clay aggregate, expanded perlite aggregate, expanded polystyrene bead aggregate (11). (19) materials that are suitable for use as aggregates can also be used to manufacture other products. in that sense, the industry distinguishes between aggregate uses of sand, gravel and crushed rock materials and non-aggregate uses (12) of sand, gravel and crushed rock materials. non-aggregate uses of rock, sand and gravel are, for instance, the production of cement, glass, and other industrial (13) or agricultural uses (14). 2.2. background to the agl and its objective (20) aggregate is a constrained natural resource, in terms of the sites at which it can be acceptably extracted (15). the quarrying of aggregate takes up land in the medium to long-term and causes environmental damage and pollution. (21) following a series of actions aimed at tackling the environmental concerns of the quarrying of aggregates that are described in recitals 15 to 18 of the opening decision, the agl was introduced in april 2002 with the aim of encouraging the more efficient use of aggregates in the construction industry by: internalising in the price of aggregates some of the environmental costs of the extraction of aggregates, such as noise, dust, visual intrusion and biodiversity loss. in that sense, the agl should encourage efficient extraction of aggregates and encourage economy of use and less waste at the construction site. encouraging a shift in demand away from deliberately extracted aggregates towards alternatives like: recycled aggregates, wastes and by-products from other processes, including the extraction of other minerals (clay and coal extraction wastes, glass and tyre wastes) (16). (22) in this connection, the uk authorities had explained on the occasion of the opening decision that aggregates for construction uses are a relatively low value product, especially compared with the total costs of building projects for which aggregates are an input. aggregates can be extracted from the ground relatively easily. therefore without additional price signals, such as the one given by the agl, there is no particular incentive to use aggregates efficiently. (23) also, without additional price signals, recycling of aggregates would not be economically viable. the uk authorities considered that incentivising the use of recycled aggregates, while not without its own environmental costs such as use of energy and creation of noise, is an important aspect of reducing the environmental costs associated with the extraction of materials from the ground (such as long-term biodiversity impacts). indeed, the use of recycled materials does not require the disturbance of new land or the sea-bed. (24) in addition to encouraging the use of recycled aggregates as an alternative to newly-quarried material, the agl's structure also seeks to reduce the extraction of sand, gravel and rock specifically for use as aggregates, by incentivising the use of other materials that would otherwise be discarded. by-products, spoil and waste of other extraction processes or of industrial processes are usually considered to be of lower quality and specification than materials specifically extracted and exploited for use as aggregates. they may have slightly different uses and applications. for example, due to their lower density or uneven size they may not be safe to use in the construction of certain road surfaces or in other situations where the aggregates need to withstand high pressure and wear and tear. however, by-products, waste and spoil can still present a viable alternative to the highest quality aggregates in many situations. the by-products, waste and spoil from processes specified in the finance act 2001 would be discarded without the existence of the agl. as they are, however, an unavoidable by-product of a number of processes which deliver important materials for the construction industry (such as roof tiles from slate) or other industries (such as feldspar for the glass-making industry), the uk authorities considered it environmentally more efficient to encourage a use as aggregates for these materials, instead of depositing them as waste. this avoids additional environmental costs by using an already quarried product that would otherwise be left as waste, as opposed to the (additional) extraction of fresh aggregates with unnecessary additional environmental costs (disturbance of new land). in addition, this assists in the rehabilitation of land already defaced by large waste and spoil tips. the uk authorities had added that the application of the agl to such materials could have the undesired effect of discouraging what little use for those materials already exists, thus increasing rather than reducing tipping. recital 23 of the opening decision contains a detailed account of the estimates of available amounts of alternatives. (25) initial projections suggested that the agl would reduce demand for virgin aggregates by an average of 20 mt/annum. (26) the uk authorities had indicated that given the aim of inducing a more efficient extraction and a more efficient use of virgin aggregates, the levy falls on those who undertake quarrying for the purposes of commercially exploiting aggregate (17). in this connection, the uk authorities had explained that while quarrying of high-specification materials to be used in the construction sector also produces materials of lesser quality and hence price, it is not in practice possible to relieve these materials in a similar manner as by-products of industrial processes or other extraction activities. first, the proportion of high quality and low quality aggregates will vary from quarry to quarry because of geological factors, but is not an immutable figure for any given quarry as more efficient practices can help reduce the proportion of low quality aggregates. in addition, the term low quality aggregate is, to some extent, a subjective term. what one quarry operator would consider as low quality could be part of another's primary product range. exempting low quality aggregates could thus lead to unequal treatment of operators and lead to tax avoidance or evasion. extensive public consultation with the industry on this issue around the time of the introduction of the agl did not yield a workable definition of how to distinguish between high quality materials which should be taxed and lower quality by-products of the process of extracting high value aggregates. the uk authorities had further noted that taxing low quality aggregates also reflects the desire to address the environmental costs of aggregate extraction, regardless of whether the extracted product is ultimately deemed to be of high or low quality. (27) finally, the uk authorities had noted that the agl is not conceived as a general tax on mineral extraction, but as a tax on the extraction of rock, sand and gravel used as aggregates in the construction sector and subject to commercial exploitation in the united kingdom. the uk authorities have explained that while the extraction of other materials may have similar environmental impact, not all have suitable options for lessening the intensity of extraction through the use of alternative materials such as recycled materials and spoil. in addition, aggregates' extraction was the largest mineral extraction activity in the united kingdom (in 2002, it accounted for around 70 %, by tonnage, of all mineral extraction) and therefore constituted the main source of environmental damage arising from mineral extraction across the united kingdom as a whole. the scope of the tax was defined in order to achieve the greatest environmental benefit in the form of a reduction in the extraction of aggregates and in terms of the preservation of strategic resources, while at the same time not imposing a dead-weight tax burden on materials for which an alternative does not exist. 2.3. finance act 2001, entry into force, amendments and duration (28) the primary legislation governing the agl is set out in the finance act 2001, sections 16 to 49 and schedules 4 to 10. the finance act 2001 was adopted on 11 may 2001 and has been subject to several amendments as described in recitals 28 and 29 of the opening decision. this decision references the finance act 2001 as subsequently amended. the agl came into effect on 1 april 2002 and remains applicable. the law does not limit the application of the agl in time. (29) following the opening decision, the uk authorities amended the finance act 2001 by suspending the exemptions for the materials as regards to which the commission had expressed doubts as of 1 april 2014. (30) the uk authorities explained that in preparing the necessary legislation for the suspension, they concluded on the basis of comments received from industry that determining whether certain materials had been extracted for use as aggregates would be impractical. accordingly, they devised a new criterion, for construction purposes which is consistent with the definitions used by the existing legislation. in order, however, to achieve the same result as envisaged by the opening decision with the application of the latter criterion, the suspension legislation additionally provides that: (i) clay (including ball clay, china clay and fireclay) and shale used to make ceramic construction products; and (ii) gypsum used to make plaster and plasterboard; are to be considered exempt processes. this is due to the fact that they could be included in material extracted for construction purposes, but they do not represent uses as aggregates of the respective materials. 2.4. structure of the agl and events triggering the tax (31) section 16(1) of the finance act 2001 states that a levy, to be known as aggregates levy, shall be charged in accordance with this part on aggregate subjected to commercial exploitation. section 16(2) reads the charge to the levy shall arise whenever a quantity of taxable aggregate is subjected on or after the commencement date, to commercial exploitation in the united kingdom. (32) according to section 17(1) aggregatemeans (subject to section 18 below) any rock, gravel or sand, together with whatever substances are for the time being incorporated in the rock, gravel or sand or naturally occur mixed with it. (33) section 18(1) provides that: in this part references to aggregate: (a) include references to the spoil, waste, off-cuts and other by-products resulting from the application of any exempt process to any aggregate; (b) but do not include references to anything else resulting from the application of any such process to any aggregate. (34) according to section 18(2) exempt processes are: (a) the cutting of any rock to produce stone with one or more flat surfaces; (b) any process by which a relevant substance is extracted or otherwise separated (whether as part of the process of winning it from any land or otherwise) from any aggregate; (c) any process for the production of lime or cement from limestone or from limestone and anything else. (35) section 18(3) lists the relevant substances as being (a) anhydrite; (b) ball clay; (c) barytes; (e) china clay; (f) feldspar; (g) fireclay; (i) fluorspar; (j) fuller's earth; (k) gems and semi-precious stones; (l) gypsum; (m) any metal or the ore of any metal; (n) muscovite; (o) perlite; (p) potash; (q) pumice; (r) rock phosphates; (s) sodium chloride; (t) talc; (u) vermiculite. subsections (3)(d) and (h) of section 18 were omitted retroactively as of 1 april 2002 by changes introduced by the finance act 2002. (36) section 16(2) of the finance act 2001 read in conjunction with section 19(1) and section 19(2) determines that the agl is triggered by any of the following four types of commercial exploitation within the united kingdom that would occur first: (a) it is removed from its originating site, or any site registered under the name of a person who is the operator of the originating site (18), or any other site to which the quantity of aggregate had been removed for the purpose of having an exempt process applied to it on that site but at which no such process has been applied to it. (b) it becomes subject to an agreement to supply it to any person (19); (c) it is used for construction purposes (20); or (d) it is mixed, otherwise than in permitted circumstances (21), with any material or substance other than water. (37) for the purpose of the agl, the finance act 2001 distinguishes essentially between three types of originating sites: (a) the port or other landing site at which aggregate won from the united kingdom seabed is first landed (section 20(1)(a)); (b) the site where an exempt process took place (section 20(1)(b)). this relates to situations where an exempt process has been applied, the exempt substance has been extracted and some aggregate is left over and exploited. the site where the extraction of the exempt substance took place becomes the originating site of the aggregate; (c) the site where the aggregate is obtained from the ground (section 20(1)(d)). (38) as a result of the concept of commercial exploitation, the agl applies to both aggregates extracted in the united kingdom and imported aggregates. imported aggregates will be subjected to the agl not when they are landed in the united kingdom (22) but when they are the subject matter of an agreement (and the aggregate is already located in the united kingdom) or are used for constructions purposes (in the uk) or are mixed (in the united kingdom) with any material or substance other than water, unless in permitted circumstances (23). (39) section 19(3) of the finance act 2001 contains further details on the concept of commercial exploitation. it provides in letter (e) that there is no commercial exploitation taking place when without its being subjected to any process involving its being mixed with any other substance or material (apart from water) it again becomes part of the land at the site from which it was won (24). (40) sections 21 and 22 define who is the operator of a site and whether it is the operator of a site or some other person who is responsible for exploitation (and therefore liable to account for the agl) in a given situation. 2.5. notion of taxable aggregate exemptions from the agl and tax credits (41) section 17(2) of the finance act 2001 provides that an aggregate is not a taxable aggregate in four cases: (a) if it is expressly exempted; (b) if it has previously been used for construction purposes (whether before or after the commencement date); (c) if it is, or derives from, any aggregate that has already been subjected to the agl; (d) if it is aggregate that was removed from its originating site before the commencement date. (42) an aggregate is regarded as being used for construction purposes when it is used as a material or support in the construction or improvement of any structure (including roads, paths, the way on which any railway is or is to be laid, embankments, buildings and bridges) or when it is mixed with anything as part of the process of producing mortar, concrete, tarmacadam, coated road stone or any similar construction material (25). (43) section 17(3) specifies that the aggregate is exempt from the agl if: (b) it consists wholly of aggregate won by being removed from the ground on the site of any building or proposed building in the course of excavations lawfully carried out: (i) in connection with the modification or erection of the building; and (ii) exclusively for the purpose of laying foundations or of laying any pipe or cable; (c) it consists wholly of aggregate won: (i) by being removed from the bed of any river, canal or watercourse (whether natural or artificial) or of any channel in or approach to any port or harbour (whether natural or artificial); and (ii) in the course of the carrying out of any dredging undertaken exclusively for the purpose of creating, restoring, improving or maintaining that river, canal, watercourse, channel or approach; (d) it consists wholly of aggregate won by being removed from the ground along the line or proposed line of any highway or proposed highway and in the course of excavations carried out: (i) for the purpose of improving or maintaining the highway or of constructing the proposed highway; and (ii) not for the purpose of extracting that aggregate; (da) it consists wholly of aggregate won by being removed from the ground along the line or proposed line of any railway, tramway or monorail or proposed railway, tramway or monorail and in the course of excavations carried out: (i) for the purpose of improving or maintaining the railway, tramway or monorail or of constructing the proposed railway, tramway or monorail; and (ii) not for the purpose of extracting that aggregate; (e) it consists wholly of the spoil, waste or other by-products, not including the overburden, resulting from the extraction or other separation from any quantity of aggregate of any china clay or ball clay; or (f) it consists wholly of the spoil from any process by which: (i) coal, lignite, slate or shale; or (ii) a substance listed in section 18(3) below; has been separated from other rock after being extracted or won with that other rock. (44) subsection (3)(da) of section 17 was inserted by section 22(3) of the finance act 2007, applies from 1 august 2007. (45) in addition, subsection (4) of section 17 exempts aggregates consisting wholly or mainly of any one or more of the following, or is part of anything so consisting, namely: (a) coal, lignite, slate or shale; (c) the spoil or waste from, or other by-products of: (i) any industrial combustion process; or (ii) the smelting or refining of metal; (d) the drill-cuttings resulting from any operations carried out in accordance with a licence granted under the petroleum act 1998 or the petroleum (production) act (northern ireland) 1964; (e) anything resulting from works carried out in exercise of powers which are required to be exercised in accordance with, or are conferred by, provision made by or under the new roads and street works act 1991, the roads (northern ireland) order 1993 or the street works (northern ireland) order 1995; (f) clay, soil or vegetable or other organic matter. (46) according to the notice agl 1, wholly means that 100 % of the material in question is one of the exempt materials. mainly means that more than 50 % of the material is one of the exempt materials. artificially mixing aggregate with a larger amount of exempt material will not produce an exempt mixture but will mean that the agl is due on the aggregate at the time of mixing. (47) section 30(1) of the finance act 2001 provides for regulations to be made establishing a person's right to a credit of tax if: (a) the aggregate that has been subject to the agl is exported from the united kingdom in the form of aggregate; (b) an exempt process is applied to the aggregate that has been subject to the agl; (c) the aggregate that has been subject to the agl is used in a prescribed industrial or agricultural process; (d) the aggregate that has been subject to the agl is disposed of in such manner not constituting its use for construction purposes as may be prescribed (26); or (e) the whole or any part of a debt due to a person responsible for subjecting the aggregate to commercial exploitation is written off in his accounts as a bad debt. (48) section 30(1)(b) of the finance act 2001 provides for tax relief in case an exempt process within the meaning of section 18(2)(a), (b) and (c) of the financial act 2001 has been applied to the material when the material has already been subject to the agl. it thus mirrors the exemptions provided for in section 18(2). (49) the industrial and agricultural processes that can benefit from tax relief under section 30(1)(c) are listed in the schedule industrial and agricultural processes to regulation 13 of the aggregates levy (general) regulations 2002. notice agl 2 (27) describes in more detail the type of processes that are concerned. they are the following: industrial processes code 001: iron, steel and non-ferrous metal manufacture and smelting processing including foundry processes, investment casting, sinter plants and wire drawing code 002: alloying code 003: emission abatement for air, land and water code 004: drinking water, air and oil filtration and purification code 005: sewage treatment code 006: production of energy code 007: ceramic processes code 008: refractory processes code 009: manufacture of glass and glass products code 010: manufacture of fibre glass code 011: man-made fibres code 012: production and processing of food and drink code 013: manufacture of plastics, rubber and pvc code 014: chemical manufacturing for example soda ash, sea water magnesia, alumina, silica code 015: manufacture of precipitated calcium carbonate code 016: manufacture of pharmaceuticals, bleaches, toiletries and detergents code 017: aerating processes code 018: manufacture of fillers for coating, sealants, adhesives, paints, grouts, mastics, putties and other binding or modifying media code 019: manufacture of pigments, varnishes and inks code 020: production of growing media and line markings for sports pitches and other leisure facilities code 021: incineration code 022: manufacture of desiccant code 023: manufacture of carpet backing, underlay and foam code 024: resin processes code 025: manufacture of lubricant additives code 026: leather tanning code 027: paper manufacture code 028: production of art materials code 029: production of play sand, e.g. for children's sandpits code 030: clay pigeon manufacture code 031: abrasive processes: specialist sandblasting, iron free grinding (pebble mills) and sandpaper manufacture code 032: use as propping agent in oil exploration (or production), for example, fracture sands and drilling fluids code 033: flue gas desulphurisation and flue gas scrubbing code 034: manufacture of mine suppressant code 035: manufacture of fire extinguishers code 036: manufacture of materials used for fireproofing code 037: acid neutralisation code 038: manufacture of friction materials, for example automotive parts agricultural processes code 039: manufacture of additives to soil code 040: manufacture of animal feeds code 041: production of animal bedding material code 042: production of fertiliser code 043: manufacture of pesticides and herbicides code 044: production of growing media, including compost, for agricultural and horticultural use only code 045: soil treatment, including mineral enrichment and reduction of acidity. 2.6. rate (50) originally, the agl was levied at the rate of gbp 1,60 per tonne. the rate was increased to gbp 1,95 per tonne for aggregates subject to commercial exploitation on or after 1 april 2008. the rate currently applied is gbp 2 per tonne (since 1 april 2009). 2.7. grounds for initiating the formal investigation procedure (51) as explained in recital 170 of the opening decision, the commission doubted whether the exemptions and exclusions mentioned in recital 139 of the opening decision (28) (the exemptions under investigation) were justified by the general principles and logic of the agl. the exemptions and exclusions concerned seemed to relieve the beneficiaries from a tax that they would normally have had to pay and constituted operating aid. as it did not have enough elements to conclude whether the measure fulfils the conditions of the community guidelines on state aid for environmental protection (29) (2001 eag) and the 2008 community guidelines on state aid for environmental protection (30) (2008 eag), the commission had doubts as to the compatibility of the exemptions under investigation and exclusions with the internal market. 3. comments from interested parties (52) as mentioned in recital 10 above, the commission received extensive comments from interested parties following the publication of the opening decision. (53) the comments from interested parties concerned: (i) the opening decision itself; (ii) the logic of the agl; (iii) the exemptions which had previously been found not to constitute state aid already in the opening decision; and (iv) the exemptions under investigation. (54) for ease of reference, this section will outline the comments received in relation to the opening decision. the remaining categories of comments received are presented in the relevant sections of this decision. 3.1. comments regarding the content of the opening decision (a) comments received from richard bird, baa, received on 20 and 23 december 2013. (55) mr bird has provided the commission with his contribution to the uk authorities' public consultation on the approach to suspending the exemptions from the agl in respect of which the commission expressed doubts in the opening decision. (56) mr bird further claims there are a number of inaccuracies in the opening decision, such as: (i) various quarrying sites have been identified showing that there is no risk the united kingdom will run out of aggregates; (ii) slag aggregate, crushed slate aggregate and the silica sand from china clay production have always been a major source of aggregate; (iii) exempted aggregates and recycled aggregates could not replace quality aggregates required in construction, which are extracted together with lesser quality aggregates (1 tonne good quality with 1 tonne of lower quality aggregates). new waste heaps have been created due to this material; (iv) a series of abuses of the agl are taking place; (v) quarries have opened simply to produce aggregates that are exempt (31). mr bird claims there are slate quarries that produce simply slate rock and not any roofing slate. mr bird provides as example the names of two quarries; (vi) shale aggregates quarries are producing and selling untaxed aggregates. one million tonnes of shale were used for constructing a road near edinburgh; (vii) the opening decision allegedly fails to recognise what aggregate is: smaller sizes of rocks, crushed or uncrushed, including natural sand and gravel. armour rock for sea defences, stone for river protection, walling stone, fireplace stone, ditching stone, cobbles for roads and hearting stone for marine breakwaters are all taxed as aggregates if they are not geologically slate or shale; (viii) the agl is nonsensical, as sorted walling stone that is not cut is taxed; (ix) only slate from north wales may be used as roofing slate. slate from other slate areas in the united kingdom is not used as roofing slate, but as walling stone or paving stone. sandstone, walling and paving stone is taxed. shale is not used for roofing. slate and shale quarries have been opened because the materials are exempt from the levy (32); (x) allegedly, the agl has in fact had a negative environmental impact as recycled aggregate operations are environmentally damaging also due to the additional transportation distances of exempted materials; (xi) silica sand from china clay workings has always been a source of aggregate. there is little sand in cornwall, thus the sand from china clay quarries does not reduce extraction of natural sand. it is actually an important source of sand in the area. this sand distorts the market for crushed rock fines which are a by-product of local hard rock aggregate quarries whose prime objective is to produce aggregate chippings for concrete, asphalt and construction work; (xii) china clay by-products are exempted while limestone by-products are taxed even when the limestone is used for agriculture or for industrial processing. they produce 20 % waste by-products; (xiii) allegedly, a number of old worked-out china clay quarries have been reopened solely for the exploitation of the exempted aggregates as the kaolin had been worked out. on the other hand, someone wanting to exploit an old granite tip would have to pay the tax; (xiv) the by-products of the refining and smelting of metal are indeed not the same as natural aggregates, but they were never waste and have a very good market. mr bird claims the agl should apply to by-products that are not waste; (xv) mr bird considers that it is impossible to replace quality aggregates with aggregates from most slate, shale or china clay operations. (57) mr bird supplemented this information with a submission on 10 february 2014 regarding the uses of slag aggregate, a by-product of the steel manufacturing industry. the submission aims at showing that slag is not a waste, but a first class aggregate that can be used as an alternative to cement. (b) comments received from the baa on 10 january 2014 (58) the baa considers that the concept of aggregate should not be used to determine whether or not the agl results in state aid as there is no clear definition of aggregate which corresponds to the scope of the tax. the commission defines aggregates in the opening decision as rock, gravel and sand extracted for the purpose of providing bulk in construction. however, allegedly, the agl taxes many materials that are used for different purposes than providing bulk in construction, such as uncut building stone used to construct walls, armour rock, rail track ballast, high polished stone value (psv) stone for skid-resistant asphalt, etc. the baa mentions that the british competition authorities have assessed the aggregates market on a number of occasions and generally concluded that specialist materials such as rail track ballast and high psv stone are in different markets from each other and from construction aggregate because they are used for different applications and there is neither demand-side substitution nor supply-side substitution (33). (59) the baa maintains that three of the exemptions on which the commission concluded positively in the opening decision are selective, i.e. the exemption for recycled building waste, aggregate excavated in the course of construction of roads, railways, buildings, etc., and industrial waste/by-product. the baa claims that from the perspective of the shift in demand objective these three categories of exempted materials are in the same position as the waste/by-product of, inter alia, china clay, slate and coal as regards which the commission expressed doubts in the opening decision. (c) comments received from lantoom quarry on 16 january 2014 (60) the lantoom quarry claims that the opening decision has created uncertainty and has impacted investment and employment. 4. comments from the united kingdom (61) the uk authorities provided extensive comments to the doubts raised in the opening decision and additional information as well as compatibility grounds for the exemptions under investigation. (62) no comments were received from the uk authorities regarding the content of the opening decision itself. for ease of reference, the comments and information received are presented in the relevant sections of this decision. 5. assessment of the measure (63) the commission has already decided with the adoption of the opening decision to raise no objections in respect of the exemptions, exclusions and tax reliefs laid down in sections 17(2)(b), 17(2)(c), 17(2)(d), 17(3)(b), 17(3)(c), 17(3)(d), 17(3)(da), 17(4)(d) and 17(4)(e), section 17(4)(a) (in so far as the exempted material consist wholly of coal, lignite, shale, slate that is used for other purposes than as aggregate), section 17(4)(c) (when it consists wholly of the spoil), section 17(4)(f) (except for clay), section 18(2)(a), section 18(2)(b) (in so far as it relates to materials that are not used as aggregates), section 18(2)(c), section 30(1)(a), section 30(1)(b) (in so far as it relates to exempt processes within the meaning of section 18(2) (a) and (c)), section 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2) (b) that provides for materials that are not used as aggregates), and 30(1)(c) of the finance act 2001, as amended by the finance act 2002 and the finance act 2007, in relation to the agl, since the commission considered that they do not entail state aid within the meaning of article 107(1) of the treaty. the commission will therefore not assess these exemptions, exclusions and tax reliefs provided by the finance act 2001, as amended by the finance act 2002 and the finance act 2007 in relation to the agl and will confine its assessment to the exemptions under investigation. 5.1. assessment of the comments received regarding the content of the opening decision (64) the baa, as mentioned above in recital 59, maintains that the exemptions for recycled building waste, aggregate excavated in the course of construction of roads, railways, buildings etc., and industrial waste/by-product are not within the logic of the agl from the perspective of the shift in demand objective. (65) the commission concluded in the opening decision that recycled aggregates and freshly extracted aggregates are not in a comparable situation in the light of the objective of the agl and the distinction made between recycled and freshly extracted aggregates results from the nature and logic of the agl. it is clear that using recycled aggregate, even though the recycling process is less environmentally friendly than the excavation of fresh aggregate process, prevents the excavation of the same quantity of fresh aggregate. moreover, incentivising the use of materials that are the unavoidable result of certain activities that would take place in any event clearly helps to reduce build-up of waste and prevents the excavation of the same quantity of fresh aggregate. (66) therefore, these three exemptions contribute to achieving a greater environmental benefit by preventing additional quarrying. (67) several interested parties mentioned in this regard that there have been cases of additional excavation solely with the purpose of obtaining aggregates for sale. however, these are cases of clear abuses that should be reported and dealt with under the national law of the united kingdom and do not constitute a matter for state aid law. (68) the reasons underlying the doubts expressed by the commission in the opening decision as regards the waste/by-product of, inter alia, china clay, slate and coal do not affect the assessment of the three exemptions mentioned above, primarily the doubts raised by the commission do not preclude the final results of the formal investigation procedure and the materials subject to the exemptions are different and result in different circumstances. (69) mr bird points to the use as aggregates of a series of materials exempted from the agl which proves that the exemptions from the agl help to achieve its environmental purpose as they successfully replace freshly quarried aggregates. (70) the data provided by the uk authorities, as we will show below in recital 143 shows that the number of quarries producing exempt materials has not increased following the introduction of the agl, but has, in fact, decreased. (71) one of the quarries that mr bird has listed as allegedly producing only slate rock and not roofing slate is in fact, according to its own website, producing roofing slate. as regards the other quarry, the uk authorities have committed to investigate what material it actually produces and will commence enforcement under the national legislation depending on the results of the investigation. (72) both the uk authorities and the baa maintained that they have no information that former worked-out china clay quarries had been recently reopened. the uk authorities are not aware of any permission granted in this respect and the two china clay and ball clay producers are not aware of such openings. 5.2. state aid within the meaning of article 107(1) of the treaty (ex article 87(1) ec) (73) a measure constitutes state aid within the meaning of article 107(1) tfeu if it fulfils four conditions. first, the measure confers an advantage to the beneficiaries. second, the measure favours certain undertakings or economic activities (selectivity). third, the measure is funded by the state or through state resources. and fourth, the measure has the potential to affect the trade between member states and to distort competition in the internal market. (74) according to settled case-law, the definition of aid is more general than that of a subsidy because it includes not only positive benefits, such as subsidies themselves, but also state measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect (34). (75) as regards the criterion of the selectivity of the advantage, it is necessary to consider whether, under a particular statutory scheme or specific tax system, a state measure is such as to favour certain undertakings or the production of certain goods within the meaning of article 107(1) tfeu in comparison with other undertakings in a comparable legal and factual situation in the light of the objective pursued by the scheme or tax system concerned (35). (76) however, a measure which, although conferring an advantage on its recipient, is justified by the nature or general scheme of the tax system of which it is part does not satisfy that condition of selectivity (36). a member state can thus show that a measure results directly from the basic or guiding principles of its tax system. (77) for the purpose of assessing the selective nature of the advantage conferred by the measure in question, it is important to determine what constitutes the reference framework, since the existence of an advantage may be established only when compared with this reference framework (37). (78) in summary, selectivity can be assessed following a three-step approach: (i) determination of the reference system (or normal taxation system) where the normal taxation principle of the agl and the (environmental) objective are identified; (ii) the establishment whether the tax differentiation constitutes a derogation from the normal taxation regime inasmuch as it differentiates between economic operators who are in a comparable legal and factual situation; and (iii) in case of comparability of legal and factual situation the tax differentiation does not constitute a derogation if it can be justified by the objective of the tax system. in absence of such justification the measure is to be considered de facto selective. when justifying the tax differentiation only the intrinsic mechanisms of the tax system necessary for the achievement of the objective pursued can be invoked. objectives unrelated to the tax system cannot be considered in this regard. (79) as the general court has confirmed (38), the reference framework on the basis of which normal taxation and the existence of any selective advantages are to be determined consists of the agl itself since it established a specific tax system applicable to the aggregates sector in the united kingdom. it is thus by reference to the normal taxation and objective of the agl that it is necessary to examine whether tax differentiations are justified. (80) the commission has examined the finance act 2001 as amended retroactively by the finance act 2002. as the agl is an on-going scheme, the commission has also examined the exemption laid down in section 17(3) (da), which was introduced by the finance act 2007. 5.3. normal taxation under the agl and objective of the agl (81) the agl is a levy on aggregates. subsections (1) and (2) of section 16 of the finance act 2001 establish a levy on taxable aggregates that are subjected to commercial exploitation in the united kingdom on or after its commencement date. (82) the agl was introduced on 1 april 2002. what constitutes commercial exploitation is defined in section 19. four types of commercial exploitation are envisaged: (a) the removal of aggregate from its originating site; (b) the conclusion of an agreement to supply; (c) the use for construction purposes; or (d) the mixing with any material or substance other than water. (83) as to the concept of aggregates, the uk authorities have confirmed on many occasions that the agl is not conceived as a levy on all extracted minerals or even on all rock, gravel or sand, but only on rock, gravel and sand extracted for the purpose of providing bulk in construction. (84) this is further confirmed by the preparatory works of the agl (39). those works confirm that from the outset, the agl was intended to be a tax on aggregates and not on any particular extracted mineral. this has also been recognised by the general court (40). (85) as indicated in recital 14 above, aggregates can generally be described as corresponding to granular or particulate materials which because of their physical and chemically inert properties are suitable for use on their own or with the addition of cement, lime or bituminous material in construction as concrete, roadstone, asphalt or drainage courses, or for use as construction fill. natural aggregates are sand, rock and gravel. however, materials that are used as aggregates can also serve other purposes. in other terms, for the purposes of the agl whether a material has to be considered as an aggregate or not will depend on its use rather than its geological composition. (86) in the course of drafting the agl legislation, the uk authorities realised that a use-based definition of the scope of the tax would prove problematic, as the intended use for the product could change after the tax point had passed (41). in order to solve that difficulty, the uk authorities opted for another technique. instead of using a precise definition of the term aggregate or general taxation criteria, the finance act 2001 starts by subjecting sand, gravel or rock to the tax but then narrows down the application and scope of the tax through exclusions, exemptions and tax reliefs of rock, sand or gravel that have been used for certain purposes or have been subjected to certain processes. (87) the objective assigned to the agl is to ensure that the environmental impact of aggregates extraction (in particular damage to biodiversity and to visual amenity) is more fully reflected in prices so as to induce a more efficient extraction and use of aggregates. it also aims at encouraging a shift in demand away from freshly extracted aggregates towards alternative aggregates such as recycled aggregates and aggregates which are the by-products of or waste from certain extraction or industrial processes. the shift in demand on its turn will reduce the need for freshly extracted aggregates and will thus limit the damage to the environment associated with the extraction activity. (88) the commission considered in the opening decision that it was necessary to determine the objective assigned to the tax system of the agl without referring to the terminology of virgin or primary aggregates, but by reference to its content. the terminology is described in detail in recitals 64 and 65 of the opening decision. (89) irrespective of the terminology used, the uk authorities oppose aggregates that were (freshly) extracted for their use as aggregates to various materials that were either not freshly extracted as aggregates or that were inevitably obtained as a result of other activities that were not aimed at the extraction of aggregates, but which nonetheless could serve as alternatives to freshly and specifically extracted aggregates. (90) taking into account the explanations provided by the uk authorities the commission concluded in the opening decision that the normal taxation principle of the agl is the taxation of rock, gravel and sand (freshly) extracted for being used as aggregates and subjected to commercial exploitation within the united kingdom on or after 1 april 2002. (91) as regards its objective, the commission noted that the agl aims at making the extraction of aggregates more efficient by internalising the environmental costs of that activity. in addition, it aims at shifting demand: from deliberate extraction of rock, gravel and sand for aggregates use in the construction industry towards the use of aggregates which are the by-products of or waste from certain processes or of recycled aggregates. (92) the commission has received extensive comments from interested parties as regards the normal taxation principle and the objective of the agl. 5.4. comments received on normal taxation principle and objective of the agl (a) comments received from the baa on 15 september 2014 (93) the baa reiterated its statements from previous submissions that the agl is inherently illogical. the baa claims that there is no clear definition for aggregates that can explain the scope of the agl. the baa maintains that, the agl taxes many materials that are outside the scope of the definition laid down in the opening decision i.e. materials that are used for different purposes than providing bulk in construction or use in concrete, roadstone, asphalt, drainage courses or as construction fill. they claim that, armour rock for sea defences, which is taxed, is not used to add bulk in construction and is much larger and heavier than aggregates that are used for concrete or the other uses listed. in addition, uncut building stone is taxed by the agl while it is used to construct walls of buildings and traditional hedges (i.e. walls separating fields) rather than any of the uses listed. the baa argues that it cannot be claimed that these materials are aggregate and that roofing slate, cut building stone or clay for the manufacturing of bricks is not aggregate. all the materials are rock extracted from the ground, but used for different purposes and are not interchangeable. furthermore, there would be, supposedly, no environmental basis to label some of these materials as aggregate and others not. (94) the baa claims that the fact that the exemptions are based on the geology of the material is problematic as the geological terms of clay, shale and slate cover a very wide geological range of rocks that are extracted from quarries that could not produce roofing slate tiles or ceramic products. this material however still qualifies as exempt clay, shale and slate from a geological perspective. the baa provides some statements from dr rachel hardie, a specialist geologist, as regards the poor choice of geological terms for differentiating rocks. moreover, the exemptions for material mainly consisting of certain geological groups add even more difficulties. the baa has provided in this respect a report prepared in 2003 by the british geological society for the united kingdom tax authorities to assist tax officers with the application of the exemptions for slate, shale and clay in a geologically correct manner (the report). the report seeks to define shale, slate and clay, in terms of their characteristics and geological origin so as to assist the united kingdom tax authorities. however it also mentions that the original choice of these terms for the purpose of the act is believed to have been based on their use as economic mineral commodities rather than geological entities. it also provides that [c]lay, shale, mudstone and slate occur extensively in the united kingdom, with shale often being interbedded with sandstones. (95) the baa claims that the uk authorities have treated shale and mudstone as synonyms and that consequently the entire family of rocks has been treated as exempt. furthermore, the baa argues that the definitions for the three materials determined by the report are very restrictive and that other materials could still have been categorised as shale, slate or clay. for example slate rock with the required slaty cleavage to produce roofing tiles is relatively rare and rocks exhibiting a weak slaty cleavage that would be unsuitable for cleaving may be much more extensive, but still be classified as slate. the baa further argues, partially quoting from the report, that slate is also extracted for decorative architectural uses, i.e. dimension stone, wall cladding, paving, sills, fireplaces, table-tops and ornaments for home and garden, for which a slaty cleavage would be less important than cutting and polishing. the baa presents the example of a slate quarry that produces slate that is different from roofing slate and in regard to which it is, allegedly, unclear whether the material should be classified as slate at all. (96) the baa argues that, in their experience, an expert geologist's opinion is commonly sought to ascertain which rock is present at a quarry for the purposes of the agl and whether an exemption is available for its extraction. (97) the baa maintains that while they have no information about the evolution of slate and shale spoil heaps since the introduction of the agl, heaps of taxed aggregates by-product have increased. the baa puts forward examples of three quarries where heaps of by-products accumulated. one quarry had to send in excess of 1 million tonnes of by-products while another had to invest gbp 2 million in a new installation to further process their by-product so that it could be sold. (b) comments received from the baa on 17 january 2014 (98) the baa argues that when the uk authorities suspended the exemptions from the agl regarding which the commission raised doubts in the opening decision, those authorities have, in fact, introduced two new exemptions, i.e. for clay and shale used in ceramic construction products and gypsum used in plaster and plasterboard. they consider that these materials cannot be considered to be in a different situation from materials taxed under the agl in light of its environmental logic. the baa maintains that, these materials are in the same situation as rock, sand and gravel as they have been extracted for construction purposes. they claim that these additional exemptions constitute state aid that could not be found by the commission to be compatible aid as the relevant conditions are not met. (99) the baa maintains that the extraction of clay and shale used for the production of ceramic construction products could be reduced by using concrete construction products that can be produced with quarry waste/by-product (which is often taxed). (100) the baa claims that it does not matter that clay undergoes a chemical change when used in the manufacture of bricks and other ceramic products used in construction as this is irrelevant from an environmental perspective. (c) comments received from cloburn quarry company ltd on 17 january 2014 (101) cloburn quarry maintains that it extracts granite and greywacke. the latter is used for polished stone value anti-skid aggregates with a psv in excess of 70. as there is no exemption for by-products for such material, large stockpiles of greywacke dust are accumulating and will become a major problem in time. (102) cloburn quarry maintains that, sales volumes of the quarry have recently decreased from 1,3 million tonnes in 2007/2008 to 0,5 million tonnes. this is allegedly due, less to the recession and more to the exempt sales from competing quarries. (103) according to cloburn quarry, the agl diminishes the chances of the quarry competing with imported aggregates, as their by-products are sold without tax somewhere else, and, externally, with quarries that do not have to pay a similar levy. (104) cloburn quarry maintains that the agl has led to a depressed market, i.e. low price for aggregates, and exempted quarries can transport their materials farther. (105) according to cloburn quarry, in 2013, 50 000 tonnes of aggregates sales were lost due to the exempted quarries. there is a particular problem with shale deposits that are being used on large construction sites, especially along the glasgow-edinburgh corridor. around 1 million tonnes of shale was used for roads construction. this has affected competition as other quarries could not sell their low-value by-products. moreover, the quarry's bright red aggregates compete with the plum red decorative slate which is exempted. (106) the quarry submits that it has faced competition and lost tenders for projects to quarries it suspects of benefiting from an exemption from the agl. according to the quarry, one of the contracts was lost to a quarry which received planning consent to work an exempt shale deposit for aggregates' extraction. according to the quarry, at least 800 000 tonnes of shale were available that could have been forward-sold to the main contractor. (107) the quarry also submitted a series of general comments regarding the lack of environmental scope of the agl. (d) comments received from blinkbonny quarry (borders) ltd (blinkbonny quarry) on 8 january 2014 (108) blinkbonny quarry reports that it has been facing competition from another quarry that, possibly, sells exempt material included in ready mix concrete and would therefore be able to offer lower prices. it considers that, had it not been for the exemption, the competing quarry would not have opened and would not have been able to compete on the market. the quarry alleges that the exemption enables their competitor to transport its material for longer distances which creates environmental damage. (109) blinkbonny quarry further provided a series of comments in response to the opening decision. it claims that the measure favours those with exemptions by allowing them to sell products onto an open market without the same costs as those who do not benefit from this advantage. (110) blinkbonny quarry considers that the agl has failed in its environmental objective as it has resulted in the creation of a cheaper material which is transported further and which encourages the quarrying of exempt aggregate for the sake of producing cheaper materials which are not by-products or waste. moreover, the quarry claims that exempt shale and slate are being sold as aggregates for construction purposes and, due to the exemption, more shale and slate are being extracted for use as aggregates. (e) comments received from kinegar quarries ltd (kinegar quarries) on 15 january 2014 (111) kinegar quarries claims that all quarries produce lower grade aggregates. in its view, it makes no difference whether the product is slate that is exported all over the world or the everyday aggregates used within 15 miles of the quarry. kinegar quarries maintains that as aggregates are secondary products they can be used in a variety of ways and have always been cheap. kinegar quarries further considers that the cost of aggregates is low because they are a by-product of a higher grade product, and in order to maintain a balance of stock, will be priced according to supply and demand. nevertheless, it maintains that aggregates always brought in some revenue until the agl was introduced. thereafter, secondary aggregates were required to compete with aggregates benefiting from the exemption and in certain circumstances they could not. however, production of secondary aggregates has not diminished as there is demand for the higher quality product. they just cannot be sold to the same extent. this, allegedly, leads to increased stockpiles of secondary aggregates. moreover, kinegar quarries claims that there are no environmental benefits due to the additional transportation of aggregates. (112) kinegar quarries claim that the united kingdom government had sought to ensure that non-aggregate producers can sell their by-products as levy exempt aggregates minimising their stocks of by-products. they consider that this goal has been achieved by the exemptions granted to non-aggregate producers (and a growing number of aggregate producers) for products which should in fact be called aggregates, because they are sold for the same purpose as material from an aggregate producer. however, the stockpiles of by-products have moved from non-aggregate producers to aggregate producers who pay levy. (113) kinegar quarries mention that following the introduction of the agl their sales of secondary aggregates dropped from over 50 000 tonnes in 2007 to 9 000 tonnes in 2013 and this could not be attributed entirely to economic recession. it maintains that it is no longer able to compete with exempted aggregates as its quotations are gbp 1,5-gbp 2,0 higher than those of its competitors. (f) comments received from torrington stone ltd (beam quarry & vyse quarry) (torrington stone) on 17 january 2014 (114) torrington stone submits that if its two quarries were not under the same ownership they would not have been viable today due to the introduction of the agl. it maintains that clients make their purchasing choice based on the descriptions of the materials, such as quality and size, and not the geology of the materials. clients do not know if a material is taxed or not. (115) one of the quarries produces primarily shale with mudstone by-products while the other produces primarily gritstone with shale spoil. all are sold as aggregates. the mudstone by-product cannot be sold for any profit and is therefore tipped. (g) comments received from mineral products association ltd (the mineral products association) received on 2 january 2014 (116) the mineral products association submits that the ability of some operators to extract exempt materials such as shale and slate for the purpose of supplying aggregates markets is contrary to the original principles of the design of the agl. the association considers that extracted materials which are used for aggregates purposes should be subject to the agl and that the exemptions should be limited to non-aggregate uses of the materials. (117) the association submits that materials which arise as a result of individual combustion processes or smelting and refining of metal are genuine by-products of these processes and should be exempted as they meet the underlying objective of the agl to encourage the use of recycled material and resource efficiency. by comparison, exemptions for shale, slate and other extracted materials lead to local market distortions as they lead to the substitution of taxed materials by untaxed materials. (h) comments received from the baa on 10 january 2014 (118) the baa claims that the environmental objective of the agl is to shift demand in favour of waste/by-product material as opposed to the implementation of the polluter pays principle, as the commissions allegedly states in the opening decision. this suggested primary objective, of polluter pays principle, if in fact applicable, would entail a selective approach to materials (to the aggregates sector but not to other mineral-extraction activity), which inevitably results in state aid. rather, the environmental objective of the agl is intended to promote the use of aggregates which are by-products of waste from certain processes or of recycled aggregates, thereby reducing the use of quarried aggregates (shift in demand logic). (119) the baa submits that the effect of a would be shift in demand logic of the tax would mean, in practice, that the agl would be limited to rock, sand or gravel used to add bulk to construction and, that in view of this objective, only by-products or waste that could replace extracted minerals should benefit from the exemption. however, baa points out that this limitation is not the guiding principle of agl taxation which allows for materials that cannot be replaced to be taxed. (120) the baa considers that even if the exemptions under investigation were removed, the scope of agl would be not consistent with its environmental logic, i.e. the shift in demand logic. according to baa, the removal of exemptions for by-product/waste materials would make the agl less aligned with its environmental objective. by contrast, they claim that the removal of exemptions for material extracted for use as aggregate, such as slate and shale, would be in line with the environmental objective of the agl. (121) the baa considers that the fact that the scope of the agl does not correspond to the environmental objective of shift in demand is supported by the fact that the by-product/waste of lime or cut building stone and materials such as rail track ballast and high psv stone, for which there is no substitute, are taxed. (122) the baa considers that the scope of the agl is too far removed from its environmental logic. this would be due to the fact that some of the material that is not-taxed could be replaced with by-product or waste. they provide as example clay used for bricks and ball clay used for tiles. (i) comments received from the baa on 17 january 2014 (123) the baa submitted a copy of the cornish building stone and slate guide 2007 and observed that in that publication, several granite and slate quarries advertise themselves as producing similar types of products and building stone. the baa argues that the guide reveals that the exemptions from the agl are not consistent with its logic, i.e. to achieve a shift in demand between materials quarried for use as aggregate and waste being capable of being used as aggregate. (124) the baa claims that there is evidence that the availability of exemptions for the by-product/waste of china clay quarries has encouraged the extraction of more material than required, purely to benefit from the exemptions for the alleged by-products i.e. high quality granite (42). the baa further maintains that there is also evidence that some china clay quarry operators concentrate their efforts on the extraction of these alleged by-products rather than the original china clay material (43). the baa refers to an e-mail from a quarry operator to the baa (44) alleging that since the introduction of the agl they have experienced severe difficulty competing with aggregates from china clay quarries as they the aggregate they produce are cheaper and have taken over the market. as per the e-mail, the aggregates sold by china clay quarries are high grade stone and not a secondary product or a by-product. the production of the respective quarry operator has halved and they have not achieved a profit in over nine years. their waste materials cannot be sold. (125) the baa maintains that the way the agl is applied in the context of lime extraction is problematic. the extraction of lime itself is not taxed, but its waste or by-products are taxed. moreover, the agl applies to fines, by-product or waste of certain quarries, which can be used in the manufacturing of concrete building blocks that could be used to replace bricks manufacture with untaxed clay. (j) comments received from quarry products association northern ireland limited (qpani) on 8 january 2014 (126) qpani maintains that it represents approximately 95 % of companies involved in the supply of quarry products to the construction industry in northern ireland. qpani considers that the agl had a flawed design from the beginning as materials should have been taxed based on their use, rather than on their geology. (127) qpani believes that there should not be an aggregates levy exemption for shale and slate if used for aggregates purposes. slate and shale are used as aggregates in the united kingdom construction markets and can have significant local market impact where they are supplied into aggregates markets. this is particularly true in northern ireland. while the supply of slate and shale for aggregates purposes can be materials which are, in effect, the by-products of extraction for non-aggregates purposes (e.g. the extraction of slate for the production of roofing slate), these materials are also extracted primarily for supply into aggregates markets. (128) qpani also questions the exemption for materials which consist mainly of coal, lignite, slate or shale. according to qpani it would be more simple and consistent if a simple distinction were made between materials used for aggregates purposes, on the one hand, and those used for non-aggregates purposes, on the other. materials used for aggregates purposes should be subject to the agl and materials used for non-aggregates purposes should not be subject to it. (129) qpani maintains that the agl has led to environmental damage due to the possibility to transport farther exempt materials. (130) qpani submits that in northern ireland there have been hundreds of thousands of tonnes of shale imported from donegal, in ireland. shale from ireland is sold in construction markets across the whole of northern ireland. construction projects along the border with the ireland have used exempt aggregates from ireland classified as shale. (131) qpani further makes reference to stone that is described as shale and, thus, unduly benefits from the exemption. (k) comments from the uk authorities (132) the uk authorities maintain their position that the exemptions and reliefs under investigation do not give rise to state aid. in particular, they submit that the distinctions made by the levy are justified by the nature or general scheme of the tax system and therefore do not satisfy the condition of selectivity. (133) the uk authorities acknowledge the description of aggregates as included in recital 8 of the opening decision. furthermore, they agree with the logic of the agl as described in recital 67 of the opening decision. (134) the uk authorities mention that the general court observed in paragraph 55 of its judgment of 7 march 2012: the normal taxation principle underlying the aggregates levy is based solely on the notion of the commercial exploitation in the united kingdom of a material that is taxable as an aggregate . the uk authorities maintain that since the agl is not intended to tax rock, sand, or gravel exploited for use in industrial or agricultural processes, any levy paid on materials used for such non-aggregate purposes is recoverable as a tax credit. following the same logic, rock, sand or gravel which is extracted, but not commercially exploited (as defined in the legislation) falls outside the scope of the levy. (135) the united kingdom, quoting the general court's judgment, explained that the agl's objective: essentially entails the promotion in the construction industry of the use of aggregates which are the by-products of or waste from certain processes (also known as secondary aggregates), or of recycled aggregates, thereby reducing the use of quarried aggregates (also known as primary aggregates), which are non-renewable natural resources, and thereby limiting the damage to the environment associated with that process of extraction ( the aim of shifting demand or the environmental objective of the agl ). (136) the uk authorities maintain that the logic of the tax was set out clearly from the beginning in the regulatory impact assessment: the main objective of the government's chosen option would be to reduce the environmental costs of quarrying that are imposed on individuals and firms in society more generally, and to encourage recycling. (137) the uk authorities claim that the agl seeks to achieve its environmental objective in two distinct, but interconnected ways. first, the imposition of the levy helps to internalise some of the damage caused by the extraction and transportation of aggregate. the levy thus leads to a decrease in demand for freshly extracted aggregate as costs increase. secondly, exemptions and reliefs are granted for waste and recycled materials in order to encourage a shift in demand from freshly extracted aggregate to such materials, while not discouraging the production of non-aggregate material. for the achievement of the environmental objective of the agl, it was designed to ensure that there are economically attractive alternatives to freshly extracted, taxable aggregate. (138) the uk authorities maintain that, through its exemptions, the agl aims to encourage the use of recycled or by-product material (which arises during a process not intended to produce aggregate), so as to reduce the demand for virgin aggregate and thereby reduce the environmental damage associated with aggregates quarrying. the derogations from the scope of the tax may fall into two categories: recycled aggregate and unavoidable waste by-products. the latter can be defined as material which is commercially exploited in the united kingdom and used as construction aggregate, but which arises as an unavoidable consequence of a process which is not carried out deliberately to produce aggregate. at their turn such products fall into two categories: (a) those materials which arise unavoidably from the extraction of a non-aggregate mineral; or (b) those which arise unavoidably from a digging or dredging process not intended to extract any material for commercial exploitation. (139) the uk authorities maintain that those materials which are extracted for commercial exploitation as aggregate, or which arise as by-products from a process which is intended to produce aggregate for commercial exploitation, are in a different factual situation to the exempted materials. (140) the uk authorities maintain that, in accordance with the derogations described above, the exemptions from the levy distinguish between waste materials that arise as the by-product of the extraction of a non-aggregate mineral, which are exempt, and waste materials that are the by-product of the extraction of aggregate (such as waste from limestone), which remain subject to the tax. the distinction, in their view, stems from the objective of discouraging the extraction of limestone for aggregate whilst not discouraging the production of non- aggregate material. the agl discourages the extraction of aggregate from natural rock while encouraging the use of alternative supplies of aggregate. (141) the uk authorities submit that the exemptions from the tax are crucial for achieving the environmental purpose of the agl as they reduce the damage created by fresh quarrying. they maintain it is the price difference between exempt and taxed materials which shifts demand from fresh quarrying. the exemptions are consistent with the environmental objective of the agl in so far as the use of exempt materials ultimately reduces demand for the extraction of fresh aggregate and the environmental harm associated with it. (142) the uk authorities maintain that there are many examples of exempted materials replacing premium quality aggregates. for example, the construction of the 2012 olympic park required over a million tonnes of aggregate fill materials. by-products of china clay production from cornwall were used alongside recycled aggregates in place of premium aggregates such as freshly quarried limestone or granite. slate waste from a [ ] (45) slate quarry was used as pipe bedding in the [ ]. this crushed slate was used in place of other crushed rock aggregate. slate by-product from the same quarry was also used in construction at [ ] in place of premium quality aggregate. (143) the uk authorities show that the number of exempt quarries has not increased after the introduction of the agl as shown in the table below which contains the number of active quarries at a certain point in time: 2001 2002 2003 2004 2005 2006 ball clay 20 20 22 18 18 18 china clay 17 17 17 17 15 15 limestone 348 348 359 336 340 319 igneous & metamorphic rock 211 211 210 204 213 199 slate 43 43 44 43 40 35 clay & shale 177 177 180 172 169 172 2007 2008 2009 2010 2011 2012 ball clay 18 18 18 18 18 18 china clay 13 12 16 17 16 15 limestone 338 335 324 331 317 322 igneous & metamorphic rock 208 203 207 195 204 191 slate 36 37 32 33 33 32 clay & shale 175 165 156 159 155 155 (144) in 2009, crushed rock accounted for 59,4 % of primary aggregate sales in the united kingdom. the remainder of such sales concerned sand and gravel. limestone was by far the most important source of crushed rock aggregate, accounting for 66 % of the total, followed by igneous rock such as granite (24 %) and sandstone (9 %). limestone, igneous rock and sandstone all have other uses, e.g. as building stones, or in the case of limestone, as industrial lime. (145) in 2012, 1 tonne of limestone aggregate would sell for gbp 7,16 to gbp 11,70 per tonne. 1 tonne of granite would sell for gbp 6,12 to gbp 12,82 per tonne. 1 tonne of slate aggregate would sell for between gbp 2 and gbp 8 per tonne. (146) as regards decorative aggregates, the uk authorities jointly with the baa submitted information that they are an atypical use of aggregates. those used in landscaping are used in small quantities and chosen based on their visual properties, e.g. colour and shape, with construction properties such as strength being a minor consideration, unlike for other aggregate uses. given the small quantities involved, decorative aggregates form a small part of the market demand for aggregates in the united kingdom. 5.5. assessment of comments received (147) the commission already concluded in the opening decision that the normal taxation principle of the agl can be summarised as being the taxation of rock, gravel and sand freshly/deliberately extracted for being used as aggregates and subjected to commercial exploitation within the united kingdom on or after 1 april 2002. (148) in addition to the comments made by the uk authorities above as regards the tax principle underpinning the agl, the commission makes the following observations. (149) several third parties commented that the agl does not treat materials in a consistent manner because by-products from other exempted materials (rock used to produce stone with one or more flat surfaces (hereafter referred to as cut stone), lime), high psv rock, armour rock for sea defences, walling rock and by-products/waste from extraction of primary high quality aggregates are not exempted. they would allegedly be in the same legal and factual situation as currently exempted by-products of non-aggregate materials or as materials having specialised uses that are not taxed. (150) the commission itself raised the question in the opening decision as to why it is considered justified to grant exemptions for by-products of ball clay, china clay, coal, lignite, shale and slate but not for by-products of lime for agricultural use and cut stone. 5.5.1. taxation of by-products of cut-stone and lime extraction (151) following receipt of extensive information from third parties and from the uk authorities, the commission notes that waste or by-products from the extraction of cut stone and lime consists of the same type of rock as the cut-stone and lime: (i) waste from the extraction of limestone used for producing lime is likely to consist also of limestone, and (ii) waste arising from the extraction of rock to produce cut stone is likely to consist largely of the chippings of the same type of rock which is being cut. (152) the exemptions from the agl distinguish between waste materials that arise as the by-product of the material extracted not for aggregate use (such as waste from china and ball clay, coal, lignite and slate extraction), which are exempt, and waste materials that are the by-product of the deliberate extraction of material for an aggregate use (such as waste from limestone), which remain subject to the tax. (153) this tax distinction stems from the objective of discouraging the fresh extraction of limestone, granite, sandstone, etc., for aggregate use while not affecting the production of non-aggregate material. (154) as described by the uk authorities, limestone, sandstone and granite are the most common materials extracted for aggregates use. an agl exemption of by-products of cut stone or of limestone used to produce lime would in fact at least maintain the level if not encourage the fresh extraction of these materials. (155) moreover, there is no additional (processing) costs for obtaining cut stone and lime from the main extracted materials. this is unlike, for example, ball clay and china clay extraction where the separation of these materials from the waste is very costly. (156) the uk authorities explained that both the stone to be cut and the limestone used for obtaining lime are deliberately extracted for use as aggregates. also, their by-products and waste may be sold on their own even without the main material as they make good quality material for aggregates use. as proof of this, the uk authorities submitted pricing information showing that, indeed, the prices of the lime and cut-stone are in the majority of cases not much higher than the prices of their respective by-products. the cost of limestone for lime is around gbp 12,50 to gbp 19,50 per tonne, whereas the price of its by-product is gbp 7,16 to gbp 11,70 per tonne. igneous rock (including granite), which is also used to produce cut stone, costs around gbp 5,51 to gbp 12,91 per tonne, whereas its by-product sells for around gbp 6,12 to gbp 12,82 per tonne. this would mean that if there is no demand for the high quality specialised product, the quarry would still proceed with the fresh extraction as it makes economic sense to sell the freshly extracted product and its by product for aggregate use. it cannot be excluded that the exemption of by-products would thus encourage additional fresh quarrying and thus would undermine the agl's environmental logic. (157) moreover, there is no objective way to distinguish between limestone as a by-product of agricultural lime production and limestone quarried specifically for use as aggregate. the same is applicable to granite and sandstone and to by-products of cut stone. thus these freshly extracted materials and their by-products are interchangeable and thus the quarry operator can decide depending on the demand to sell both for the same aggregates use. (158) on the basis of the considerations set out in recitals 151 to 157 above, the commission notes that the by-products of the extraction of lime and cut stone are not in a different factual and legal situations as the freshly extracted products. in addition, any possible exemption for the spoil arising from extraction of limestone/rock used for cut stone or for other purposes than aggregates would only serve to encourage increased extraction of fresh rock and limestone, and would not contribute to the shift of demand. 5.5.2. high psv rock, armour rock for sea defences, walling rock, primary high quality aggregates and their by-products/waste (159) materials used for high psv rock, armour rock, walling stone and primary high quality aggregates represent indeed either specialised uses of the respective materials, or uses where they cannot be replaced by recycled aggregates or by waste from materials that are not subject to the tax. (160) however all the materials used for high psv rock, armour rock, walling stone and primary high quality aggregates and their by-products are of the same rock. for example armour rock is produced from the same rock as the smaller aggregates chippings that result as by-products. (161) these rocks are in general suitable for aggregates use and the quarry operators have a choice as to how to sell or exploit the given rock in accordance with demand. (162) for the reasons explained in recitals 151 to 157 above as regards by-products of cut stone and of lime, the commission cannot exclude that an exemption for high psv rock, armour rock for sea defences, walling rock, primary high quality aggregates and their by-products/waste, would encourage the extraction of these materials for aggregates purposes. (163) as regards the fact that several interested parties questioned the logic of the agl in view of the fact that high psv and armour rock are taxed whereas clay for flood defences or materials for other specialist uses are not taxed, the uk authorities jointly with the baa submitted information that psv (is a measure of the resistance of an aggregate to polishing; aggregates with a high psv are used in a bituminous mixture laid on the surface of roads to give a high level of skid resistance. aggregates with the highest psv are used in locations such as bends and braking zones, and are specified for their psv and aggregate abrasion value (aav). these are properties that are inherent in the rock deposits and enhanced by the manufacturing process. the materials are still aggregate and this use is classified as an aggregate use for the purpose of the agl. (164) armour rock is used to protect the united kingdom shorelines from erosion. the requirements of the specification depend of the specific severity of the marine environments. qualities that are specified include density and aggregate abrasion value. it is classified as an aggregate use for the purpose of the agl as it is used for strength and bulk. (165) moreover, whether a material used for a certain purpose is interchangeable or not does not affect the logic of the agl and the exemptions granted for other materials. indeed, the commission notes that there the agl applies to a variety of different uses that are not interchangeable. however, as long as such materials can and are widely used as aggregates and their use as aggregates makes economic sense, an exemption for such materials even for certain uses would undermine the objective of the agl. (166) numerous interested parties point to the fact that exempted aggregates replace secondary aggregate products and not the higher grade products. the commission notes, firstly, that this consideration does not cast any doubt over the fact that the agl is achieving its environmental scope as the exempted materials which are unavoidable by-products of material extracted for a non-aggregate use are replacing freshly extracted aggregates. it does not matter if they replace higher grade or lower grade aggregates as long as fresh extraction is diminished. moreover, the commission notes that on occasion exempted materials could even replace higher grade aggregates as described by the uk authorities in recital 142. (167) the commission acknowledges the problems with implementing the agl and its exemptions based on the geology of the materials. however, the commission also notes that it would have been more difficult to base the exemptions on the uses of the materials as this might lead to difficulties in enforcement and leave more room for abuse. moreover, it appears that the uk authorities have obtained the report as support for the implementation of the agl and follow the definitions and tests for the material provided therein. the baa themselves acknowledged that the uk authorities use an expert geologist to determine the materials produced by quarries. (168) as regards the exclusion of clay and shale used for ceramic products from the suspension of the agl, the commission notes that this is an exempt industrial process which has already been considered in the opening decision and found not to constitute state aid. (169) as regards the content of the cornish building stone and slate guide 2007, submitted by the baa, the commission notes that it cannot be relied upon as an accurate source of information for a comprehensive overview of all products of a quarry. it is a guide made for promotional purposes where quarries advertise their products addressed to the construction industry. the commission, thus, considers that the quarries appearing in the cornish building stone and slate guide 2007 would have presented products in line with their marketing strategy towards the construction industry. the uk authorities mentioned that they allow quarries to advertise their products as they wish regardless of the geological composition of the respective materials and do not consider such promotional descriptions as relevant for the qualification of materials for the purposes of the agl. (170) it follows that the taxation of high psv rock, armour rock for sea defences, walling rock, primary high quality aggregates and their by-products/waste falls within the normal taxation principle of agl and is justified by the objective pursued. 5.5.3. conclusion on the normal taxation under the agl and objective of the agl (171) the commission considers that the comments received by all interested parties do not provide reasons to depart from its findings in the opening decision as regards normal taxation principle under the agl and the objective of the agl. (172) the normal taxation principle of the agl is that rock, gravel and sand defined as aggregates pursuant to section 17(1) are to be taxed when they are subjected to commercial exploitation as defined in section 19 within the united kingdom on or after 1 april 2002 (46). (173) in accordance with the description that had been provided by the uk authorities prior to the opening decision and as confirmed by the preparatory works of the agl (47), the commission found in the opening decision (48) that aggregates can generally be described as corresponding to granular or particulate materials which because of their physical and chemically inert properties are suitable for use on their own or with the addition of cement, lime or bituminous material in construction as concrete, roadstone, asphalt or drainage courses, or for use as construction fill (aggregates use). (174) all interested parties and the uk authorities acknowledged the term of aggregates use in their submissions and presented their comments accordingly. the baa has actually submitted comments aiming to show that the agl lacks logic as certain materials that do not fulfil this definition are taxed. the commission has addressed in detail these comments above in recitals 151-158 and 159-165. (175) thus, in other words, the normal taxation principle of agl is the taxation of rock, gravel or sand when extracted for aggregates use/extracted for commercial exploitation as aggregate as described above. (176) the above description is also consistent with the objective of the agl which is to make the extraction of aggregates more efficient by internalising the environmental costs of that activity. as also confirmed by the general court (49), the objective of the agl is to promote in the construction industry the use of aggregates which are the by-products of or waste from certain processes (also known as secondary aggregates), or of recycled aggregates, thereby reducing the use of quarried aggregates (also known as primary aggregates), which are non-renewables natural resources, and thereby limiting the damage to the environment associated with that process of extraction (the aim of shifting demand). 5.6. tax differentiations (177) the finance act 2001 initially establishes a broad basis for the imposition of the agl. the scope of this imposition is then narrowed down through exclusions and exemptions. in addition, the finance act 2001 also provides for a certain number of tax reliefs. the commission will examine again whether the exclusions, exemptions and tax reliefs as regards to which it raised doubts in the opening decision are in line with the normal taxation principles in the light of the objective of the agl. (178) for the purpose of assessing the tax differentiations under the agl, the reference framework/normal taxation principle used by the commission is the imposition of the agl on materials that are commercially exploited in the united kingdom as aggregates (50). as described above in recital 173, the use as aggregates is intrinsically linked to the commercial exploitation of rock, gravel and sand for construction purposes, that is their use as material or support in the construction or improvement of any structure (including roads and paths, the way on which any railway track is or is to be laid and embankments) or mixing them as part of the process of producing mortar, concrete, tarmacadam, coasted roadstone or any similar construction material (51). (179) in addition, the notion of aggregates use, as defined above, is used by the finance act 2001 in section 30(1)(d) of the finance act 2001 which provide a right for a person to ask for a tax credit if the aggregate that has been subject to the agl is disposed of in such manner not constituting its use for construction purposes as may be prescribed. (180) if an exempted material is extracted for aggregates use or is subjected to the commercial exploitation for construction purposes as described above it should fall within normal taxation under the agl as it is in a comparable factual and legal situation as the taxed materials and its exemption could be justified only in light of the inherent objective pursued by the agl. (181) as regards the exemptions under investigation concerning by-products, waste, or spoil of other materials or processes, the commission will maintain the assessment criteria used in the opening decision. the commission will take into account in its assessment whether the respective waste, spoil or by-product unavoidably results from an activity that is unrelated to deliberate extraction of materials for aggregates use, i.e. either from the extraction of a material that is not deliberately extracted for aggregates use or from a process that is not related to the extraction of aggregates. the extraction of the main material not for aggregates use provides an indication as to whether the exemption of respective waste, spoil or by-product can contribute to the objective underlying the agl. (182) for by products, waste or spoils resulting from the extraction of material for aggregates use, the commission will assess whether their exemption may lead to a decrease of the fresh extraction of materials for aggregates use and thus contribute to the objective of agl. (183) the abovementioned assessment criteria are consistent with the normal taxation principles of the agl in determining whether the exempted materials are in the same factual and legal situation as the taxed materials and take into account the considerations made by the uk authorities that the agl should not affect processes unrelated to the extraction for aggregates use. 5.6.1. exclusion of and tax relief for certain minerals (section 18(2)(b) (52) and section 30(1)(b) (53) in so far as it relates to an exempt process that provides for materials that are used as aggregates (184) in the context of their submissions prior to the opening decision, the uk authorities had indicated that neither of the substances exempted under section 18 (54) are quarried or mined for use as aggregates. (185) as long as those minerals are not used to provide bulk in the construction sector, the commission considered that the exclusion of those minerals from the scope of the agl was in line with its normal taxation principles (55). (186) the commission concluded in recital 74 of the opening decision that in so far as the minerals concerned are not used as aggregates, their exemption/exclusion from the agl does not lead to a selective advantage within the meaning of article 107(1) tfeu. (187) however, it found that some of those minerals are sometimes also extracted to serve as aggregates. for instance, vermiculite and perlite serve to produce lightweight manufactured aggregates (56). the exclusion of these minerals, in so far as they are extracted to produce lightweight aggregates and are used as such, was considered not to be in line with the normal taxation principles of the agl. it was therefore not clear to the commission why the extraction of those minerals would not be in a comparable situation as the extraction of other taxed aggregates. (188) as the commission was lacking relevant information necessary for its assessment, it expressed doubts as to whether a general exemption of those materials, which does not seem to take into account their use as aggregates, is in line with the normal taxation principles underpinning the agl. (189) the uk authorities provided a list of uses of each of the materials listed in section 18(3) of the finance act 2001 mentioning whether they are or could be used as aggregates. in accordance with such list the only materials that are susceptible for use as aggregate of the materials listed in section 18(3) of the finance act 2001 are perlite, pumice and vermiculite. (190) as the rest of the materials listed in section 18(3) of the finance act 2001 are not used as aggregates or are not susceptible for use as aggregates they are not in the same legal and factual situation as taxable aggregates. (191) according to the uk authorities, perlite may be found in northern ireland, but extraction ceased before the aggregates levy was introduced. there continue to be imports into the united kingdom of this material, which is useful for its insulating properties and its light weight after processing. (192) the uk authorities maintain that perlite may be used in the production of lightweight construction materials (plasters, mortars, insulation, ceiling tiles) and as a soil conditioner. it expands greatly when heated and is not, therefore, a natural aggregate. perlite can be used as a lightweight aggregate, e.g. in concrete or portland cement. however, before it can be used as such, it must be subjected to a physical transformation that goes beyond simple crushing and screening. its particular properties would also preclude its substitution by recycled material or by-product from non-aggregate production. (193) according to the uk authorities, pumice is not known to occur naturally in the united kingdom, but is imported. its cellular nature gives it a low density that enables it to float on water. it can be used as an abrasive and in the production of lightweight construction materials. it is much lighter than taxable aggregate material. (194) the uk authorities maintain that there is some evidence that pumice is used in the united kingdom as a lightweight aggregate in construction, lightweight concrete, precast concrete and concrete block manufacture. its use in these circumstances results from its particularly low density. as with perlite and vermiculite, its particular properties and uses would preclude substitution by other recycled material or by-product from non-aggregate production. (195) the commission has considered whether pumice should be compared to high psv rock or armour rock, which are also specialised products that cannot be substituted with exempt material. however, pumice appears different from high psv rock and armour rock as, when it is used as aggregate, it can only be used in this specialised scope, as lightweight aggregate. on the other hand, the materials used to produce high spv stone and armour rock can and are widely used as aggregates when they are not used in these particular specialised circumstances. (196) vermiculite is, according to the uk authorities, a form of mica that, like perlite, has the unusual property that it expands greatly when heated. it is not known to occur in the united kingdom, although there are imports. (197) the uk authorities maintain that like perlite, vermiculite may be used for insulation, as a lightweight aggregate for plaster and concrete, and as a soil conditioner. however, before it can be used as such it must be subjected to a physical transformation that goes beyond simple crushing and screening. its particular properties would also preclude its substitution by recycled material or by-product from non-aggregate production. (198) according to the uk authorities, imported quantities of such products are as follows, with data for perlite and vermiculite recorded together in import statistics since 2010: 2008 2009 2010 2011 2012 perlite (tonnes) 45 064 36 315 58 456 98 437 66 298 vermiculite (tonnes) 29 200 25 515 pumice (tonnes) 2 259 1 668 2 062 2 067 1 255 (199) the uk authorities claim that imported pumice costs on average gbp 408/tonne in 2012, and vermiculite and perlite cost on average gbp 128/tonne. these high prices reflect the specialist applications of these minerals, and indicate that they would not be used as a substitute for aggregate extracted in the united kingdom. (200) the uk authorities maintain that perlite, pumice and vermiculite are not exploited commercially as aggregate in the united kingdom and are not in the same legal and factual situation as taxable aggregate, in the light of the environmental objective pursued by the agl. (201) the commission considers that since perlite and vermiculite undergo a physical transformation that goes beyond simple crushing and screening for them to be used as aggregates, they are not comparable to taxable materials which are not subject to such transformations. (202) the natural properties of perlite, pumice and vermiculite differentiate them from the rest of the aggregates. moreover, all three materials are not natural aggregates, but serve as specialised lightweight aggregates that can neither be replaced, nor replace other materials. their price reflects their specialist use as well as the fact that they could not possibly substitute aggregates extracted in the united kingdom. (203) in addition, none of these materials is currently extracted in the united kingdom as extraction of perlite ceased before the introduction of the agl. (204) the commission has not received any comments from interested parties as regards to these materials. (205) the commission concludes that perlite, pumice and vermiculite are not in the same legal and factual situation as taxable aggregate in light of the objective of the agl. (206) the commission thus finds that the exclusion of and tax relief for certain minerals as provided by section 18(2)(b) and section 30(1)(b) of the finance act 2001 does not entail a selective advantage to these materials. 5.6.2. exemption of material consisting wholly or mainly of, or being part of anything consisting of coal, lignite, slate or shale (section 17(4)(a)) in so far as the exempted material consist wholly of coal, lignite, shale, slate that is used as aggregate or consist mainly of coal, lignite, shale and slate (207) the commission noted that all those materials qualify as rock and thus are aggregates within the meaning of section 17(1) of the act 2001. (208) as far as slate and shale are concerned, they are often cut with one or more flat surfaces. in such case, they would also benefit from a relief from the agl by virtue of section 18(2)(a) (exempt process of cutting stone). the tax credit for materials to which an exempt process applied is in line with the normal taxation principles underpinning the agl. (209) in the context of their submissions prior to the opening decision, the uk authorities had explained, that coal, lignite, slate or shale are not primarily quarried for use as aggregates. slate is traditionally extracted for use as a specialist building material (e.g. as roofing or flooring). in some regions its use is encouraged for heritage reasons. shale is a fissile mineral with a high clay content. as natural clay deposits become depleted, shale is increasingly used in the manufacture of bricks and tiles. it can also be an ingredient in the production of cement. coal is a sedimentary rock composed primarily of carbon. lignite has a much lower carbon content than coal and a very high moisture content. both are used as energy products. (210) the commission concluded that excluding those materials when they are used for other purposes than as aggregates was in line with the normal taxation principle underpinning the agl. (211) the commission noted (57) that, according to evidence produced by the baa and attached to its reply submitted to the general court in case t-210/02, slate and shale are used as aggregates (58). the same did not apply for coal and lignite. (212) the commission concluded in recital 84 of the opening decision that a general exemption of shale and slate, even when they are used as aggregates or bulk for construction purposes, did not appear to be in line with the normal taxation principles underpinning the agl and did not seem to result from the nature and logic of the agl. (213) the commission also considered in recital 85 of the opening decision that the argument that shale and slate would not in most instances be used as aggregates did not justify their general exemption from agl. it is precisely because it was difficult to determine in advance to what use the materials would serve that the united kingdom chose to grant a tax credit in case some of the materials subject to tax would be used for industrial and agricultural purposes. the commission considered that, rather than granting an outright exemption, it would have been more appropriate to extend tax relief also to shale and slate. (214) the commission also expressed doubts as regards the justification for extending the exemption to material that is mainly (i.e. in excess of 50 %) made of coal, lignite, shale or slate. (215) the commission concluded that a general exemption of those materials, in particular slate and shale, even when they are used as aggregates, i.e. bulk for construction purposes, would not be in line with the normal taxation principles underpinning the agl. (216) following the publication of the opening decision the commission received numerous submissions from interested parties in this regard. 5.6.2.1. slate (a) comments received by the baa on 15 september 2014 (217) the baa is in agreement with the uk authorities as regards the uses of slate by-products as aggregate, including that it is an alternative to freshly extracted aggregate in the manufacture of concrete and medium-strength engineering applications. (218) the baa claims that slate, shale (and clay) have always (and, therefore, even before the introduction of the agl) been used as aggregate when suitable for the specific purpose and the material was available at the right price. for example, some 230 000 tonnes of slate aggregate was used to construct the a55 bangor bypass road in 1980/1981 and 1990/1991. (219) the baa, referring to a statement of specialist geologist dr rachel hardie, maintains that there are quarries of mixed geology where deposits of rock qualifying as clay or slate are interbedded with other rock. according to that statement, there are quarries in scotland and in other parts of the united kingdom where the bulk of the aggregates produced is subject to the agl, but where rock strata contain a proportion of exempt rock types. the products of these quarries have included stockpiles of, wholly or mainly, exempt rock types such as shale or slate (59). (220) the baa maintains that there are a number of slate quarries where the material does not have enough slaty cleavage for construction tiles, but where the material still qualifies as slate. the baa has provided a list of seven slate quarries extracted from the british geological survey (bgs) directory of mines and quarries 2010 that are mentioned as extracting stone for aggregates use only, such as construction aggregate, hedging stone, uncut building stone and quarries which produce only a small amount of cut building stone. the baa claims that these quarries are not different than granite or sandstone quarries which also produce building stone. the products of both types of quarries are of the same nature; however the slate quarries are exempt while the others are not. (221) as regards the nature of quarries exploiting taxed rock, such as granite, the baa maintains that rock quarries sell varying amounts of uncut block stone. they claim that, if the quarry has a stone which is naturally blocky and easy to trim, such a quarry will likely sell a quantity of this product, subject to local market demands (e.g. residential, garden centres) and the colour of the block stone extracted. (222) the baa provided information as regards the sales of slate and the proportion in the sales of roofing tiles versus fill for other uses, i.e. aggregates uses. the baa also provided information regarding limestone quarries. they show that sales of agricultural lime greatly outweigh sales of the by-product aggregates. in 2013, the ratio was 4,2:1. the baa maintains that this ratio may be explained by the fact that the agl has made the sale of by-product limestone uncompetitive. the baa provided selling prices for agricultural lime from one quarry (the ex-works price for export varies between gbp 5,02 and gbp 5,95 per tonne) and for by-product aggregate (gbp 5 to gbp 8,5 per tonne which includes the agl). the baa also provided prices from another quarry for high-purity calcium carbonate powders (gbp 25 to gbp 55 per tonne ex-works and up to gbp 1 000 per tonne for certain specialised products), for class grade limestone used for glass manufacture (gbp 23 per tonne ex-works), for agricultural lime (gbp 11 per tonne) and for the waste/by-product materials (gbp 2 to gbp 7,5 per tonne excluding the agl). (223) the baa maintains that the slate prices initially submitted by the uk authorities are too high and do not reflect the market value. they claim that slate by-products prices are of gbp 3 having fallen from gbp 6. the price for imported roofing slate in 2010 would have been of gbp 390 per tonne and for exported roofing slate of gbp 618 per tonne. (b) comments received from welsh slate ltd (welsh slate) on 20 december 2013 (224) currently, united kingdom produces less than 10 % roofing slate of the united kingdom demand for natural slate. (225) the principal activity of welsh slate is the manufacture and sale of roofing slate. they claim that, roofing slate represents some 65 % of their revenues while crushed slate only 30 % and the rest being made of architectural products and other products. quarrying of crushed slate is required to access the material for roofing slate. the resulting by-products from roofing slate extraction represent a considerable per cent of the production (currently 95 % of all extracted material). (226) according to welsh slate, crushed slate is produced from the following sources: quarry waste (31 %), splitters waste (12 %), historic tips (31 %) and drill and blast (27 %). they maintain that the cost of production of slate aggregates is higher than the costs of a typical aggregate quarry. the cost of production of standard aggregate products, which exclude additional costs specific for this company, amount to gbp [ ] to gbp [ ] per tonne, meaning that the levy would [ ] cost. the aggregates are currently sold with prices between gbp [ ] and gbp [ ] per tonne. roofing slate is sold at an average of gbp [ ] per tonne, while the upper value of roofing slate amounts to more than gbp [ ] per tonne. (c) comments received from the baa on 10 january 2014 (227) the baa submitted the cornish building stone and slate guide 2007 put together by the cornwall county council. it contains information about a series of quarries producing building material including slate quarries. (d) comments received from mineral products association on 2 january 2014 (228) according to the mineral products association, slate and shale are used as aggregates in the united kingdom. while slate and shale supplied for aggregates purposes can be materials which are by-products of extraction for non-aggregates purposes, for example the extraction of slate for the production of roofing slate, these materials are also extracted primarily for supply into aggregates markets. (e) comments received from lantoom quarry on 16 january 2014 (229) the lantoom quarry submits that cornwall county has large quantities of aggregate by-products arising from the slate and china clay industries. currently there is a large surplus of these materials even though they are exempted from agl. the markets are very price sensitive and no increase in price could be passed on to customers. (230) according to their submission, the type of aggregates for which the lantoom quarry would have to pay the levy in case the exemption is found to be incompatible state aid is currently priced at approximately gbp 2 per tonne (the ex-works price varies between gbp 1,5 and gbp 3). this means that the levy would double the price. (231) the quarry submits that the agl exemption has been helpful in stimulating the market for aggregates made of the exempted materials. they claim that, waste can make up to 75 % of the mineral extracted. the slate aggregates by-products of the quarry are sold only with a 30-mile radius of the quarry. (232) according to the lantoom quarry, slate is not a very good material for aggregate use as it is softer and cannot be used to make concrete or bitmac. (f) comments received from burlington slate limited (bsl) on 10 january 2014 (233) the main business of bsl is the manufacture of dimensional slate products such as roofing, cladding, flooring, paving and architectural products. (234) bsl considers that the exemptions for slate do not constitute state aid because they are justified by and are entirely consistent with the nature and logic of the environmental objectives of the agl. slate is not traditionally extracted for use as aggregate; rather, it is extracted for use as a building material in roofing, cladding, flooring, paving and is often used for heritage reasons in the conservation of historic buildings in the united kingdom. (235) bsl claims that spoil of slate is in a different factual situation compared with freshly extracted aggregates quarried specifically for their use as aggregates because aggregates resulting from the extraction of slate are a necessary and inevitable by-product of the processes by which dimensional slate products are produced. (236) bsl considers that the exemptions act as an incentive for slate quarries to recycle waste material as aggregates. if slate quarries ceased re-cycling waste as aggregates, more waste and spoil from slate extraction would be discarded into landfill or tipped as spoil. (237) according to bsl, the process of slate extraction is extremely costly given the physical depths which must be quarried, the adverse geological formations which are sometimes encountered and the engineering and geotechnical aspects of quarry design needed to ensure face stability in order to maintain a safe working environment. slate is removed from the quarry in slabs ranging in size from approximately 1 metre 0,5 metres to 3,5 metres 1,5 metres with typical weights in the range of 500 kg to 12 tonnes per piece. the processing that takes place will depend on the nature of the product that is being made: roofing tiles, cladding, flooring or architectural products. processing will typically involve initial cutting followed by splitting, application of a finish, further cutting or shaping. around 50 % of bsl's sales of architectural slate products are exported from the united kingdom. (238) bsl shows that at each stage of the process, waste and scrap slate is an unavoidable by-product. bsl estimates that only around 4 % of extracted material is processed into finished dimensional products (which are typically used for roofing, paving or flooring tiles) which means that 96 % is waste. the re-cycling of waste and scrap slate into aggregates reduces the amount of waste material that bsl would have to send to landfill or to tip at the quarry. re-cycling of part of the waste and scrap slate helps to off-set some of the costs of slate extraction, but such sales are no more than ancillary to the main activity of slate extraction for the production and sale of dimensional stone slate products. (239) according to bsl, a slate quarry has no incentive to quarry just for aggregates as the cost of extraction is far greater and far more challenging (in an engineering sense) than at a typical aggregates quarry (which is a surface quarry) and it would not make sense commercially to quarry if the only material extracted was to be used as an aggregate. (240) as per their submission, bsl obtained planning consent on the basis that it extracts stone as a source of local vernacular building materials. an application to extract aggregate alone from its quarries would be very unlikely to be approved given their location within or close to the lake district national park. (241) according to bsl the exemption for aggregates for slate quarrying has not let them extract more slate aggregates. (242) bsl also operates two limestone quarries. it submits that the spoil from the extraction of slate can be distinguished from the material resulting from the extraction of limestone to produce lime because unlike slate, limestone is primarily quarried as a raw material for use as a construction aggregate and it is not economic to do anything other than quarry limestone from the surface whereas slate is a sedimentary rock which requires deeper quarrying. limestone is more analogous to the types of non-exempted aggregate quarried purely for use as aggregates than slate. according to bsl, there are only a very limited number of mines where the quality of limestone might be such that it is worth quarrying for dimensional stones (i.e. paving stones). (g) comments received from eunomia research and consulting ltd (eunomia) on 17 january 2014 (243) the comments of eunomia have been sent on behalf of a consortium of united kingdom secondary aggregates producers (slate, colliery spoil and incinerator bottom ash). (244) the generation of material suitable only for use as aggregate is an unavoidable part of the process of extracting slate intended for roofing or other high value processes. the price obtained when used as aggregate is much lower and would not, by itself, be sufficient incentive to undertake extraction. welsh slate indicates that roofing slate sells at an average of gbp [ ]/tonne, with an upper value of gbp [ ] per tonne. by contrast, secondary aggregates sell for between gbp [ ] per tonne and gbp [ ] per tonne. accordingly, the exemption has not led to any increase in the amount of primary extraction being undertaken, nor is extraction being encouraged by the existence of the exemption. (245) the existence of waste slate tips created before the introduction of the agl, would preclude the need for any additional slate quarrying for aggregate. (246) eunomia considers that if the exemption for slate were cancelled, the agl would [ ] the post-extraction production costs of slate aggregates which amount to [ ] gbp to [ ] gbp. (h) comments received from wincilate ltd (wincilate) received on 7 january 2014 (247) wincilate is a slate quarry that supports the exemption of slate from agl. the quarry specifies that, in addition to their regular business, they crush slate from slate tips that have formed over 100 years ago. they consider the exemption remains necessary for the diminishing of waste tips and for replacing quarrying of primary aggregates. (i) comments received from torrington stone on 17 january 2014 (248) according to torrington stone, one of its quarries, having as primary product taxed gritstone, offers natural stone products such as walling stone, hedging stone, gambion stone. this taxed gritstone competes directly with slate quarries which offer exactly the same products. the walling stone is hand-picked and is uncut at the quarry, hence cannot benefit from an exemption from the agl. the stone is cut on site by the stonemason, but the agl would have already been paid. (249) torrington stone maintain that, on the other hand, slate is naturally irregular in shape and has to be cut (sawn) to make good if only for bed width. (j) comments received from berwyn slate on 9 january 2014 (250) berwyn stale quarry produces finished slate slabs which create waste material as a by-product. historically, since slate quarrying began 200 to 300 years ago, this waste was tipped near the quarry. according to its submission, the quarry is planning to process the waste into saleable aggregates. a cancellation of the agl would prevent such plans from being put into practice. (k) mineral products association ltd received on 2 january 2014 (251) the association claims that the exemption should not apply to materials which consist mainly of coal, lignite, slate and shale in such materials are used in aggregates markets or for aggregates purposes. (l) comments from the uk authorities (252) the uk authorities pointed to the fact that the general court held in its judgment of 7 march 2012 in t-210/02 renv that materials such as clay, slate, and shale satisfy, in principle, the normal taxation principle of the levy in that they constitute aggregates within the meaning of the finance act 2001 (section 71) and in so far as they are used and exploited commercially as such, are in a situation comparable to other taxed alternative aggregates (section 72). according to the uk authorities, the general court made it clear that the potential inclusion of those materials within the scope of the levy depends only on their actual and established exploitation as aggregates. (253) the uk authorities maintain that there is no clear evidence, including the submissions of the baa during the court proceedings, which shows that slate, shale, coal or lignite are being deliberately extracted for use as aggregate in the united kingdom. (254) as regards slate, the uk authorities submit that slate is a rock that can be split into thin sheets. it is used mainly for roofing, but also for decorative cladding and as monumental stone. it is produced in north wales, the lake district, devon and cornwall. (255) according to the uk authorities, slate is exempt from agl because high quality slate is quarried for use as roofing and flooring and for its decorative properties rather than for use as aggregate. these can include roofing slate, furnishings, architectural products (window sills and copings, kitchen and bathroom worktops, counters, fire surrounds, hearths, cladding, house signs, memorials and floor tiles) and ornaments (hereinafter referred to also collectively as specialised architectural products). however, the slate chippings and trimmings that result from the extraction and shaping of high quality slate can be substituted for freshly extracted aggregates. the exemptions therefore also encourage the use of waste slate chippings, and any other associated by-product, providing a net environmental gain by reducing the environmental harms which would have resulted from additional aggregate quarrying. (256) according to the uk authorities, the quarries offering slate aggregates, slate chippings, for sale for use as aggregate emphasize in their advertising their high quality slate products, such as roofing slate, worktops, hearths, flooring and memorial plaques, which are plainly the focus of the extraction activities (60). (257) the uk authorities claim that slate is not well suited for aggregate use because it tends to form flat slabby and uneven shapes rather than the cuboid shapes which are preferred in most aggregate applications. high quality slate is not used as aggregate because its physical and/or chemical properties make it unsuitable and it is sold for higher value purposes. (258) the uk authorities estimated that each tonne of slate quarried produces 95 % waste chippings and about 5 % of slate suitable for high quality uses such as roofing tiles or cladding (61). much of the rock in which high quality slate occurs possesses less perfect cleavage, making it unsuitable for cleaving into thin slates. the production of identical cut and cleaved slates from the higher quality material also generates large amounts of trimmings. as a result, large tips of slate waste made up of slate chippings are historically associated with sites where slate working has occurred. the uk authorities provide information from studies in this regard. they point to the fact that, the production of slate waste still exceeds the market for the mineral as aggregate and slate waste heaps are still formed. the production of slate has decreased since 2000 as roofing slate production has declined. since the suspension of the agl in april 2014, slate producers observed a decrease in demand for slate waste and more material was added to waste heaps. (259) according to the uk authorities, slate by-product can be used as a low-grade aggregate for engineering fill and as decorative aggregates, and with careful selection and crushing can comply with the base requirements for road construction (62). although slate waste is not as strong as other aggregates it has been found to perform adequately in this basic role and is therefore suitable as an alternative to freshly extracted aggregate in the manufacture of concrete and medium-strength engineering applications. some slate waste is also crushed into powder and granules for industrial use in the manufacture of roofing felt and bituminous paints. through the exemption for slate, the levy encourages the use of these waste slate chippings, thereby reducing the damage to natural habitats and the visual damage caused by the spoil heaps. this would encourage projects such as the a55 bangor bypass which the baa cited. (260) according to the uk authorities, since the suspension of certain levy exemptions in april 2014, [ ] have been forced to sell their waste slate at a loss of 3 % showing that without the exemption there would not be a market for slate waste. (261) the uk authorities claim that, although only 5 % of the material extracted from slate quarrying is high-quality material, the relative value of suitably sized sheets of slate to be sold as roofing or floor tiles, or for cladding and other decorative purposes, justifies its extraction. high quality slate is sold for between gbp 727 and gbp 1 076 per tonne. the uk authorities have provided price of products from one slate producer which are as follows (gbp/tonne): year 2007 2008 2009 2010 2011 2012 2013 2014 [ ] roofing [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] architectural [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] the uk authorities claim that another slate producer sold roofing slate with around gbp 700 per tonne. and their architectural slate products sell as follows: year 2008 2009 2010 2011 2012 2013 gbp per square metre [ ] [ ] [ ] [ ] [ ] [ ] (262) according to the uk authorities the cost of producing slate by-products amounts to gbp 5,7 to gbp 6,5 per tonne (63). however the selling prices have varied over the years from up to gbp 7,36 per tonne to, the lowest price of gbp 4,10 per tonne. another slate producer sold slate construction aggregates in a range of gbp 4,40 to gbp 6,42. the high value of good quality slate makes it the focus of activity at those sites where slate deposits exist. it would be economically irrational for any operator to quarry slate with the intention of selling it to be used as aggregate, rather than as a means to extract high quality slate. (263) the uk authorities provided data extracted from the financial information of slate producers showing that the revenue from architectural products makes them the companies' primary product. the ratio of roofing slate to aggregate in terms of revenue varied over the years between 2,54 to 3,52. (264) as regards the slate pricing information submitted by the baa where pricing data for imports were used, the uk authorities show that uk architectural slate products and imported architectural slate products are different and compete on different markets than the imported products. therefore, import pricing data would not be accurate for a price comparison. (265) the uk authorities claim that decorative slate is produced as a by-product of quarrying high quality slate. it sells for around gbp 15 per tonne. whilst higher than the sale price for construction fill, as shown above, it is still far lower than the price for roofing slate (in excess of gbp 200 per tonne). the price of decorative slate is comparable to that for other decorative aggregates available through retailers in the united kingdom. the environmental logic of the exemption for slate still holds as the decorative slate is an unavoidable by-product of high quality slate production, whereas the decorative market is a premium market for those producing limestone or granite. (266) the uk authorities maintain that it is consistent with the environmental objective of the agl that slate and slate by-products are exempt from the levy in order to encourage the use of that alternative waste by-product as a substitute for freshly extracted aggregates. (267) the uk authorities claim that, in the same manner as shale, it appears that, slate can be found in association with a variety of other rock types. they are frequently found interbedded with sandstone and/or limestone. the term mainly is intended to allow for compounds which mostly, but not entirely, comprise the exempt material as this is how they naturally occur. when compounds consist mainly of shale or slate, their physical properties make them less suitable for use as aggregate than if they were mostly formed of materials more likely to be used as aggregate. (268) the united kingdom estimated that around 6,33 million tonnes of slate waste chippings were produced annually and that historic, usable stockpiles amounted to around 277 million tonnes. of this, only 0,66 million tonnes were sold for use as aggregate before the introduction of the agl. (64) the remainder was either used as back-fill or left to form waste heaps. (269) the uk authorities submit that the existence of the exemption for slate by-products does not encourage further slate extraction as slate quarry operators already struggle to find a market for the exempt waste product which arises from their existing quarrying activity. they claim that, the overall number of slate quarries/workings has remained largely unchanged since the introduction of the aggregates levy, standing at 50 in 2000 and 49 in 2010. (270) the united kingdom considers that waste slate chippings are correctly treated as the unavoidable by-product of an extraction process which is not carried out to produce aggregate, but which is carried out to obtain high quality slate for use as roofing tiles, cladding and other valuable products. (271) the uk authorities claim that by-products from cut slate production are unable to be distinguished from slate deliberately produced as aggregate. (272) the uk authorities contest allegations advanced by the baa during the court proceedings in t-210/02 renv and in its submissions to the commission according to which there would be slate quarries exploiting slate solely for aggregates purposes. having investigated all the quarry names provided by the baa throughout the procedures, the uk authorities maintained this conclusion. furthermore, the uk authorities have expressed doubts concerning the evidence provided, as some quarries are mentioned both as producing roofing slate and as exploiting slate primarily for aggregates purposes. (273) as regards the bgs, the uk authorities claim that the data relies on self-description of materials produced by quarries and their end uses. they note that that quarries may describe a material in a different way than it would be categorised for the purposes of the agl, and the materials produced by a quarry may change over time. the data is, therefore, the most accurate list of quarries in the united kingdom and end uses of materials in existence, but it is not possible to say that it contains a completely accurate list of quarries in the united kingdom and the definite uses of the materials extracted. the uk authorities maintain that the data is also out of date and that they are aware that some listed quarries have ceased to be active. the uk authorities also claim that the list contains companies that may have a valid quarrying planning permission, but that in fact do not and have never acted as quarries. (274) the uk authorities showed that out of the total list of quarries put forward by the baa as producing slate, shale and clay solely for aggregates use, eight quarries have been found to either never having exploited aggregates, performing other activities not subject to the agl or as inactive since before the introduction of the agl. some of these quarries have been used as landfill sites. (275) moreover, the uk authorities show that they have used the definitions provided by the report that was drafted in 2003 specifically for assisting the tax authorities in enforcing the agl. the objective criterion that is used by the uk authorities to distinguish between closely related rock types requires material categorised as slate to split only with a chisel into sharp flakes and tiles. where material does not have this slaty cleavage, it is not treated as slate for the purposes of the agl, i.e. it is not exempted. material such as that to which baa refers would be categorised as mudstone and subject to the levy. (276) the uk authorities took note of the submissions from various interested parties as regard to the possible misrepresentation as slate of the products of one particular quarry. the uk authorities maintain that if the material meets the criterion they use for determining the existence of slate, splitting with a chisel, then the material has been correctly labelled as slate for the purposes of the agl. however, the uk authorities note that products usually obtained from slate that splits with a chisel appear as imported on the quarry's website. the geology of the material at this site has not yet been verified by the united kingdom revenue authorities (her majesty's revenue and customs or hmrc). (277) given that hmrc's enforcement regime applies a risk-based approach and acts on information that a quarry may not be complying correctly with the tax regime, the uk authorities committed to investigate this and any other cases where research undertaken as a result of obtaining evidence for the commission causes concerns about mis-classification of materials. hmrc undertook to request or take geological samples from these sites. if the material proves not to be slate, the levy will be charged on the material extracted and a penalty may be charged as well for mis-description of material. (278) the uk authorities further show that in marketing rock for sale purposes, quarries may choose to use a description which does not match the objective test used by hmrc for the purposes of the levy. (279) the uk authorities have reviewed confidential tax records and public information relating to each of the quarries which the baa claimed were producing slate solely for aggregates purposes or which had allegedly mislabelled their products as slate so as to benefit from the exemptions. the results of the review were presented to the commission and showed that there may be certain enforcement issues as regards one quarry. the uk authorities undertook to investigate what materials they actually produce and whether it has been labelled correctly as slate. however, as regards the rest of the quarries that were found to be or that have been active, no indication was found that they would be deliberately extracting slate for aggregates use. (280) mention should be made that in its review of the information presented by the uk authorities, the commission took into consideration the fact that slate specialist architectural products are cut to dimension. therefore, the commission considered that slate quarries where cut stone appears as the main product produce specialised architectural products (and thus not aggregates), primarily because slate aggregates are a result of crushing. (281) the uk authorities have provided statistics in support of their view that slate has not been displacing sales of secondary aggregates and that while demand for high quality crushed rock and high quality sand and gravel have both decreased over the period that the aggregates levy has been in place, sales of slate, clay and shale for construction have not risen by the same order of magnitude. apparently, the proportion of the sales of the former is in line with the decrease in demand. the uk authorities conclude that slate, clay and shale have not substituted on a large scale high quality crushed rock, sand or gravel. 5.6.2.2. shale (a) comments received from the baa on 15 september 2014 (282) the baa claims that shale can be used as aggregates, i.e. low-grade aggregates purposes, as also shown by the report (65). shale, clay and mudstones may occur as overburden to crushed rock deposits and they can be sold as low-grade fill. (283) according to the baa, shale and clay can be used for specific aggregates uses for which other rocks are not or less available, such as lining and capping of landfill sites and lining of ponds and canals. they claim that, these represent uses of clay and shale as aggregates in the same way as the use of materials for drainage and sea defences represents an aggregates use. the baa argues that while shale is extracted as a by-product of clay and coal, there are also very large areas in the united kingdom where harder, more mature shale, is interbedded with sandstone. (284) the baa claims that, the harder variety of shale, similar to hard rock, has always been used as aggregate even before the introduction of the agl. the baa provided the example of a shale quarry that has been in operation since 1981 that produces building and walling stone, rockery and crazy paving stone together with some fill material. (285) the baa submitted a list of 20 clay and shale quarries extracted from the bgs directory of mines and quarries 2010 that allegedly exploit material only for purposes of aggregate. (286) they claim that some quarries classified as sandstone quarries in the bgs directory of mines and quarries actually benefit from an exemption from the agl on the basis that they are in fact shale quarries forming part of the caithness shale beds in scotland. (287) the baa maintains that there are many quarries of mixed geology including shale that benefit from the exemption for the material which consists mainly of shale, as shale occurs extensively within the united kingdom and is often interbedded with other rock. the baa provides the example of a purely aggregate quarry that benefits from the exemption in this manner. (288) the baa claims that the uk authorities hold information as regards the names of quarries which were exempt from the agl on the basis that they were wholly or mainly slate or shale. however such information could not be provided to the baa for confidentiality reasons. (b) comments received from robert durward of the baa on 17 january 2014 (289) the baa alleges that clay and shale for ceramic products and gypsum cannot be considered to be in a different situation from material taxed under the agl in light of its environmental purpose. they claim that these materials are comparable to rock, sand or gravel extracted for use in construction as they have been extracted for construction purposes, and clay and shale are rock. supposedly, large volumes of clay and shale are used to manufacture ceramic construction products. the extraction of clay used for production of bricks could be reduced by using concrete construction products that can be produced with quarry waste/by-product which is often taxed. according to the baa, the non-taxation of clay and shale used in ceramic construction products undermines the agl. (c) comments received from torrington stone on 17 january 2014 (290) according to torrington stone one of its quarries produces shale as a by-product of gritstone. it has a good quality and can be used for bulk-fills. another of its quarries produces shale as a main product and sandstone as a secondary product, which is subject to the tax. torrington stone seem to imply that the products they sell are chippings, sub-base, scalpings, or fill and can be obtained from all their materials. (291) following the introduction of the agl shale prices were increased due to market forces. (292) torrington stone also provided information in regard to the quarry venn which produced shale as a by-product that is ideal for embankment fill which competed with a taxed by-product from one of torrington stone's quarries. the delivered price of the shale as by-product was about gbp 3,50 including the transportation estimated at gbp 3,00. (d) comments received from eunomia received on 17 january 2014 (293) the comments received from eunomia were sent on behalf of a consortium of united kingdom secondary aggregates producers (slate, colliery spoil and incinerator bottom ash). (294) according to eunomia, colliery spoil (typically composed of shale) is available for re-use from either operational deep mines or closed/moth-balled deep mines. colliery spoil is derived from the extraction of coal using deep mining methods. the qualitative properties of colliery spoil vary greatly between different mines and at different extraction phases, relating to the geology of the strata at the time of mining. due to the inconsistent properties of colliery spoil, the material is very low grade and has very little reuse value. (295) eunomia maintains that the colliery spoil does not typically command a positive price. however, having an outlet enables the respective mine to operate, through preserving spoil tip void landholdings. eunomia claims that without the opportunity of supplying colliery spoil at no cost or at a competitive price, reflecting its inferior quality, there are no other financially viable options available to move colliery shale to facilitate built development. eunomia maintains that for colliery spoil, the post-extraction production cost, assuming delivery within 5 km of the source site typically gbp [ ] per tonne for operational deep mines, and gbp [ ] per tonne for closed/mothballed deep mines. therefore, imposition of the agl at gbp 2 per tonne would [ ] costs. it would then be cheaper for the colliery shale to be sent for disposal in the tip. (e) comments from the uk authorities (296) the uk authorities maintain that the logic for exempting shale is that the vast majority of shale is not used as aggregate. indeed, most shale is generally unsuitable for use as aggregate. the high-quality use of shale is for brick-making which is ceramic process and, thus, exempt from the agl. any by-products from shale extracted for use in brick-making would therefore be a by-product of a material extracted for non-aggregate use. (297) the uk authorities claim that shale is part of the same family of rocks as clay. clays range from soft and plastic to hard mudstones. their physical and chemical properties and mineralogical composition determine their most appropriate use. depending on the degree of fissility (66) it can be difficult to distinguish between shale and clay, at one end of the spectrum, and between shale and slate, at the other. (298) the uk authorities maintain that shale is closely associated with clay extraction and also arises in coal mining. like clay, shale can be used in the manufacture of facing, paving and engineering bricks (90 % of demand for brick clay is for use in the manufacture of facing bricks for the domestic housing market), tiles for roofing and cladding, and vitrified pipes for drainage and sewerage. large tonnages are used in the manufacture of cement. other uses include lining and capping landfill sites, lining ponds and canals, as landscaping material, in the manufacture of lightweight aggregate for block making and for general construction fill. (299) the uk authorities maintain that shale can be used as low quality aggregate, most commonly to fill space and provide bulk underneath the surface of roads. some shale is also suitable for the manufacture of lightweight aggregate, but only after it has undergone a manufacturing process which involves subjecting the materials to high temperatures. in some circumstances, geological conditions (pressure and heat) have resulted in the formation of harder shales which when crushed form more blocky granules which can be suitable for some low-grade aggregate applications such as construction fill. (300) according to the uk authorities, as shale and clay are geologically similar, they are grouped together in united kingdom national statistics. in 2000, of 10 838 000 tonnes of clay and shale sold in the united kingdom, 7 880 000 tonnes were used for bricks, pipes and tiles, with 2 958 000 tonnes of clay and shale sold for other uses. in 2012, of 5 497 000 tonnes of clay and shale sold in great britain, 3 569 000 tonnes were used for bricks, pipes and tiles. the uk authorities contend that since the extraction of clay and shale halved between 2000 and 2012 and that the sales of clay and shale for other purposes than for bricks, pipes and tiles were 35 % lower in 2012 than in 2002, it is unlikely that the introduction of the levy increased the extraction of shale specifically for use as aggregate. (301) the uk authorities maintain that waste shale which arises during coal extraction is an unintended and undesirable by-product. it is generally only suitable as a basic fill in road construction or for flood embankments and is sold for a negligible price as a result. the waste-product is generally tipped in consolidated waste piles or used as additional fill material if there is an adjacent surface mine. while the coal itself sells for approximately gbp 50 per tonne, the shale is usually sold for a very low price, on average no more than gbp 1 to 2 per tonne, if demand arises close to the extraction site. the production costs are estimated to amount to between gbp 0,50 and gbp 2 per tonne. on occasion, the shale will even be given away for free so long as the purchasers transport it away themselves. (302) the same is true of other colliery spoil, which is generally only used as a low-grade aggregate where demand arises close to its extraction site. (303) the uk authorities maintain that, some of the shale by-product of other extraction activities is sold as aggregate but it is generally only economical to put shale to use as aggregate where demand arises close to its extraction site, because of the costs of transport. they claim that, since such shale has not been extracted for the purposes of commercially exploiting it as aggregate, and reduces demand for freshly extracted aggregate, its exemption would be in line with the environmental objective and the nature and logic of the agl. (304) the uk authorities maintain that clay and shale are treated as one category by the bgs and by the united kingdom minerals yearbook, the united kingdom's annual collection of data. their average selling price, according to the office for national statistics, ranges between gbp 2,52 and gbp 2,88 per tonne. in 2012 the prices ranged between gbp 3,34 to 4,44 per tonne. (305) the uk authorities provided information as regards a quarry that produces gritstone used in the production of asphalts for road surfacing. it also produces and sells shale which is interbedded within the layers of gritstone. the quarry estimated that the production cost for its shale products to be gbp 6,31 per tonne. (306) as regards shale used for ceramic processes the uk authorities provided information supplied by the british ceramic confederation (bcc), the trade association for the uk ceramic manufacturing industry. they note that there is considerable variability in the production costs for shale, depending on a number of factors. they estimate a general range of gbp [ ]-[ ] per tonne for the cost of extraction. (307) the bcc estimate that the sale price of shale for use as aggregates would be gbp [ ] to gbp [ ] per tonne. they observe that shale may be sold at a loss to expose good quality brick-making materials from beneath the shale deposit in question. (308) the bcc further note that most brick production occurs at sites associated with quarries, hence the material is not priced. however, they estimate a cost if sold to a third party of gbp [ ] to gbp [ ] per tonne, plus delivery costs. they observe that the sale price of shale would be lower than for high quality clays. (309) as regards the exemption for materials consisting mainly of coal, lignite, slate and shale, the uk authorities show that as naturally occurring minerals do not have 100 % purity the exemption is necessary. (310) the uk authorities consider that shale is not being quarried exclusively for use as aggregate and had investigated the initial claims made by the baa in this regard with the occasion of the proceedings in front of union courts. the uk authorities maintain that they found that shale continues to be produced as a by-product of other extraction activities, in particular clay, coal and limestone. the uk authorities contend that none of the documents put forward by the baa before the union courts or the commission, prior to the adoption of the opening decision, showed that there would be quarries exploiting shale and clay primarily for use as aggregate. (311) the uk authorities were asked by the commission to provide information as regards the products of four quarries mentioned in an interested party submission as being exempt quarries that won contracts solely because of such exemption and that provide the same type of products as their taxed quarry could have. one of the quarries is mentioned to have received permission to exploit shale. the uk authorities found that all four quarries had been registered for the payment of the agl and have been doing so since its introduction in 2002. the quarries appear to sell (67) quarried stone, sand, gravel, aggregate including recycled products and concrete products, hard stone aggregate, aggregates and filler, building products, decorative aggregates and sandstone flags, and, respectively, sand, gravel and other aggregates. no indication was found that any of the quarries benefited from an exemption for shale. (312) the uk authorities have also considered eight quarries mentioned in the bgs database as quarries deliberately extracting shale for aggregates use. they claim that at least some of these quarries extract other products in addition to shale. they thus, were apparently, unable to conclusively identify any shale quarries extracting shale solely for aggregates use. (313) the uk authorities explain that shale should also benefit from an exemption when it is a by-product of taxed aggregates. for example shale can be extracted as an unavoidable by-product of quarrying limestone or gritstone. the uk authorities claim that shale is a lower value material than limestone, and is unsuitable for a broad range of aggregate purposes. the uk authorities claim that shale produced as a by-product in this way was exempted in line with the environmental objective of the tax to enable quarries producing it as a by-product to sell it as a substitute for other freshly quarried aggregate for the limited range of applications for which it is suitable. if the material had originally been taxed in line with the limestone, quarries would have been unable to sell the waste shale. (314) according to the uk authorities, given that shale is generally only suitable for limited and specific aggregates applications, and that it is generally only economic to use shale as aggregate where demand arises close to the extraction site, it is very unlikely that there would be sufficient demand for shale near any one quarry primarily extracting other aggregates (e.g. gritstone) to incentivise extraction of additional taxed aggregate in order to access the un-taxed shale by-product. the uk authorities claim that they are not aware of any such instance where this has occurred or where it would be likely to occur in the future. (315) in response to an interested party submission to the commission alleging that the primary material of vyse quarry (belonging to torrington stone) in north devon is mudstone and shale used as aggregate, with a secondary material of dirty sandstone, the uk authorities question whether shale is the primary material of this quarry as their website details their high quality sandstone products, and notes that universally acknowledged for its outstanding durability and quality, braunton aggregates supply a variety of sandstone from feature stone, hedging stone, garden chippings, rockery stones to screen fills and bulk aggregates. in the 2010 directory of mines and quarries produced by the british geological survey, beam quarry is listed as producing sandstone, carboniferous, bude formation. they do not accept that the vyse quarry is therefore evidence of shale being deliberately extracted for aggregates purposes. (316) according to the uk authorities, with regard to shale, the hmrc uses the criterion as described in the report setting out that this material must split easily (with pen knife) into mm-thick flakes. material which breaks into small centimetre-sized blocks (and is therefore more suitable for aggregate applications) is classified as mudstone and is subject to the tax. the baa claims in their submission that a number of quarries are solely extracting material classified as shale for the purposes of the tax and selling this material for aggregate. the uk authorities show that if there were to be any substantive evidence that there was such mis-description of rock as shale for the purpose of exemption from the agl, hmrc would investigate this as potential tax fraud. (317) according to the uk authorities, all tax activity carried out by hmrc is risk-based. this means that not all businesses registered with hmrc are checked unless there is reason to query the returns that they make to hmrc. the uk authorities are aware of the risk of quarries benefiting from exemptions from the agl by mis-describing the materials that they produce. hmrc carry out checks to ensure that the agl is being applied accurately, and investigate where there is evidence of mis-description of materials. (318) the uk authorities have reviewed confidential tax records and public information in regard to the quarries the baa mentioned that were producing clay and shale solely for aggregates purposes or have mislabelled their products as shale so that they benefit from the exemptions. the results of the review as regards each quarry have been presented to the commission. the review showed that there may be certain enforcement issues as regards one quarry and the uk authorities undertook to investigate. as regards, the majority of the quarries that were found to be or have been active, no indication was found that they would be exploiting shale or clay solely for aggregates use. however, the information provided to the commission show that at least four or five (68) quarries are benefiting from the exemption although their main product is cut stone and shale is extracted in addition to it. 5.6.2.3. coal (a) comments from the uk authorities (319) according to the uk authorities, coal is a combustible, sedimentary rock. british-produced coal has a high sulphur content and is used almost exclusively in coal-fired electricity generating stations fitted for flue gas desulphurisation, although there is also some domestic consumption. all coking coal (which is used in blast furnaces making steel) is currently imported. coal is not suitable for use as aggregate. (320) according to the uk authorities, where coal is extracted by surface mining, the overburden (69) and the strata from between the coal seams are lifted separately from the coal seams and the fireclays which lie immediately below some of the seams. fireclay, which is a by-product of coal extraction, is extracted separately and sold at about 10 % of the price of coal, primarily as a colorant in the brick-making process. in all cases, the overburden, inter-seam dirt and any residue left after mineral processing (for example, to remove high ash content or other impurities) is replaced in the void after mining. (321) the uk authorities claim that all underground mines process their coal in a density separation plant. the waste from the process is generally tipped and consolidated. historic waste tips have generally been landscaped and covered with vegetation to reduce their visual impact. if there is adjacent surface mining of coal and/or other minerals the waste is sometimes used as an additional fill material for the restoration of those voids. (322) according to the uk authorities, some spoil or waste from the production of coal can be used as low-grade aggregate, for example for bulk engineering fill or for flood embankments. the waste is fine grained and does not have the engineering capability to support, for example, a building development. (323) the uk authorities maintain that there is no evidence that any quarry in the uk would be extracting coal solely for obtaining aggregate. they claim that, the agl is designed to ensure that material consisting wholly of the spoil resulting from the mining of coal is not taxed. clean seams of aggregate which are extracted when digging down to the coal are subject to the agl. 5.6.2.4. lignite (a) comments from the uk authorities (324) according to the uk authorities, lignite is an intermediate material between peat and coal. the only significant deposit of lignite in great britain is in devon, where it is a by-product of ball clay extraction. small amounts are sold for horticultural use. large deposits also exist in northern ireland, but there has been no commercial production of lignite there due to significant local opposition production. lignite is not suitable for use as aggregate, in particular because of its high moisture and volatile matter content. 5.6.2.5. assessment by the commission 5.6.2.5.1. slate (325) although slate is an aggregate within the meaning of section 17(1) of the act 2001 it follows from the uk authorities and the interested party submissions that slate is extracted for obtaining architectural and dimensional products that sell for much higher prices than what is sold for aggregates use. it would not make economic sense to exploit the quarries solely to extract slate for aggregate use which due to their properties are, in most cases, not suitable for high end aggregates uses, but are used as low-grade aggregate. moreover, extraction methods are far more expensive than standard aggregate extraction methods it would be economically illogical to deliberately produce aggregate in such an expensive way. for example the cost of production of slate aggregates amounts to gbp 5,7 to gbp 6,5 per tonne, while the sell with up to gbp 6,42 per tonne. (326) the material used for high quality slate purposes has a cut face due to the way in which it is extracted; heavy slate slabs are cut across the grain into set sizes using a saw, and then also usually have at least one face which is cleaved along a natural plane within the rock by riving (splitting with a mallet and chisel). in such case, the slate would undergo an exempt process in accordance with section 18(2)(a) of the finance act 2001 and benefit from tax credit pursuant to section 30. (327) the baa and several interested parties claimed that table tops, walling stone and hedging stone are aggregates uses and that the quarries producing such products as primary products should be taxed. the main argument for this is that the products structure of the respective quarries is not different from that of rock quarries (such as granite or sandstone) that would also produce walling stone with priority and afterwards the secondary low-grade aggregates. (328) unlike other aggregates such as limestone, slate appears to require deep quarrying, making its extraction expensive compared to the costs of an usual quarry. the uk authorities and interested parties have shown that there is an important difference between normal aggregates quarries (such as granite, sandstone and limestone) and slate quarries and that their different tax treatment is fully justified. (329) the baa and several interested parties claim that there would be slate quarries that do not produce specialised architectural products, but exploit slate deliberately for aggregates use. moreover, there would be quarries that claim they should be exempted because they produce slate, but, in fact the material they produce does not have the appropriate slaty cleavage or has been mislabelled. (330) in this regard the commission notes, firstly, that according to the uk authorities there is no indication that any quarries would be deliberately extracting slate for aggregates uses. indeed, in lack of clear evidence to the contrary, the uk authorities could not have been expected to prove a negative fact, i.e. that there are no quarries deliberately extracting slate for aggregates purposes. when provided with examples of quarries that allegedly exploited slate deliberately for aggregates use, the commission has requested that the uk authorities provide information in respect of such quarries. the information shows that none of these quarries exploit slate deliberately and primarily for aggregates purposes. the information solely shed doubts as regards the qualification as slate of the products of one particular quarry which the uk authorities committed to investigate. a misrepresentation of the materials would constitute an abuse of the agl and not a state aid issue. (331) secondly, as described above in recital 169 the commission considers that advertisements in which quarries describe their products for the purposes of attracting clients are not entirely relevant for the assessment of the use of the materials for the purposes of the agl. the uk authorities themselves do not take such descriptions into consideration for tax enforcement purposes. (332) the criterion used by the uk authorities to check whether the material extracted by a particular quarry is slate is, in accordance with the report (70), whether it splits only with a chisel into sharp flakes and tiles. therefore, if there would be quarries claiming they produce slate and thus benefiting from the exemption, which in fact produce material that does not have sufficient slaty cleavage as the baa claims, these quarries would have abusively not declared themselves for the payment of the agl. this would represent an enforcement issue and would be investigated as fraud by the hmrc. the uk authorities committed to investigate the quarry mentioned above and any other cases where research undertaken as a result of obtaining evidence for the commission causes concerns about mis-classification of materials. if the material proves not to be slate, the levy as well as a penalty will be charged. (333) in accordance with the findings of the general court (71) the inclusion of certain materials in the scope of the levy under the normal taxation rule applicable depends only on their actual and established exploitation as aggregates. for freshly extracted slate, this can be interpreted so that, if there is no evidence of quarries deliberately extracting slate for aggregate use, slate is not comparable with the taxable materials and, thus, the exemption related to slate falls within the general principles of the agl. (334) it has been demonstrated to the commission that slate is not deliberately extracted for aggregates purposes, but quarried for obtaining dimensional and decorative products. (335) the commission therefore concludes that freshly extracted slate is in a different factual and legal situation than the taxed materials and thus does not fall within the normal taxation principle of the agl. (336) while it follows from the submissions that only a small part (around 5 %) of the material extracted from slate quarrying is high-quality slate which in suitably sized sheets can be sold as dimensional, architectural products and thus not for aggregates use, the remaining part of the quarry extraction is slate as by-product or waste which then can be used as aggregate (the exemption of spoil of slate extraction is assessed below in section 5.6.4). (337) however given that the extraction of the slate by-product is unavoidable phenomenon when quarrying the high quality slate for decorative and dimension material used in the construction and it cannot occur when quarrying other materials its exemption contributes to the objective of the agl. it can, indeed, help to shift the demand from freshly extracted materials for aggregates use towards slate as by-product. moreover, there is no risk that this exemption could encourage the fresh extraction of the slate given the high costs of the extraction of slate which can be covered only when slate for decorative and dimension is obtained. this has been confirmed also by the decreasing number of active slate quarries since the introduction of agl (from 43 to 32) as informed by the uk authorities (72). (338) the commission notes that there might be naturally occurring slate that does not have a purity of 100 % purity, but that still meets the requirement to split only with a chisel into sharp flakes and tiles. in such cases, the uk authorities considered that the exemption should cover also material consisting mainly of slate. (339) the commission therefore considers that since no evidence was provided that such material mainly consisting of slate was deliberately extracted for the use as aggregates the same reasoning that applies to material wholly consisting of slate, should apply also to material consisting mainly of slate which covers the situation described in recital 338. (340) thus the exemption under section 17(4)(a) of the finance act 2001 granted for material wholly or mainly of, or being part of anything consisting of slate does not derogate from the normal taxation of the agl. 5.6.2.5.2. shale (341) as shale is a rock and, thus, an aggregate within the meaning of section 17(1) of the finance act 2001, its exemption from the agl does not constitute a derogation from the normal taxation principle under the agl, if shale is not deliberately extracted for aggregates use. in case of such extraction its exemption could only be justified if it contributes to the environmental objective of the agl, i.e. to achieve a shift in demand. (342) interested party submissions and the uk authorities pointed to a series of uses of shale as aggregate, mainly as low-grade aggregate to fill and provide bulk underneath the surface of roads or as embankment fill. (343) moreover, the commission notes that shale is often interbedded with sandstone or with other taxed materials. in such cases, it can be considered that the shale is deliberately extracted together with such materials for commercial exploitation as aggregate. (344) the uk authorities themselves have claimed that those materials which are extracted for use as aggregate, or which arise as by-products from a process which is intended to produce aggregate for commercial exploitation, are in a different factual situation to the exempted materials. thus, the shale that is deliberately extracted for commercial exploitation as aggregate is also in a different factual situation to the exempted materials in the same way as all other freshly quarried taxed materials. therefore, there would be no justification for a material to benefit from an exemption from the agl when it is deliberately extracted for use as aggregate. (345) the uk authorities showed that the vast majority of shale is not used as aggregate as most shale is generally unsuitable for use as aggregate. the high-quality use of shale is for brick-making which is a ceramic process. (346) on the basis of information received from interested parties the commission notes that freshly extracted shale can be used as aggregate, albeit not in widespread situations and, unlike the extraction of slate, there are no high-end specialised products being produced out of shale that would entail an exemption. in addition, shale itself is a material that can have very different characteristics from one exploitation point to another. (347) the commission takes note of the submission of the uk authorities, detailed in recital 297 that shale is in the same family of rocks as clay, however harder shale can be considered in the same family as slate. (348) moreover, in contrast to clay, some shale can be and is used for providing bulk in construction and it does not require physical transformations in this regard (recital 299). (349) firstly, interested party comments received by the commission show that shale can and is deliberately extracted for commercial exploitation as aggregate. shale achieves a price ranging between gbp [ ] and gbp 4,44 (see recitals 292, 304 and 307). out of this price in some cases gbp 3 is only the price of the transportation of shale. the commission notes however that it has not received pricing information for shale extracted as a main product of a quarry, but solely for shale extracted as a by-product of another material. (350) concerning the fresh quarrying of shale, the commission has received evidence as regards at least four or five (73) quarries supporting that they are primarily extracting shale for aggregates use. as described in recital 318, in response to the list of quarries that appeared in the bgs directory of mines and quarries 2010 to be primarily extracting shale for commercial exploitation of shale aggregates submitted by the baa, the commission asked the uk authorities to provide information regarding these quarries from confidential tax records. this revealed that four or five (73) quarries were registered as benefiting from the exemption from shale while producing cut stone and shale for aggregates use. the uk authorities explained that as the quarries produce cut stone, the shale should be viewed as by-products of cut stone and hence duly benefit from the exemption. however, this explanation cannot be accepted by the commission. as described in recitals 151 to 158, by-products of cut stone are not exempted from taxation under the agl. moreover, all aggregates quarries would produce some cut stone if there is demand for it and if the rock is suitable for cutting. this does not mean however, that, if there is demand and it makes economic sense, they will not primarily produce aggregates when there is no demand for cut stone. therefore, these quarries must be considered quarries that are deliberately extracting shale for aggregates use. (351) the commission notes the existence of a contradiction arising from a submission it has received. the comment received from torrington stone refers to their extraction and sale of shale aggregates obtained as a primary product from one of their quarries (vyse). however, the uk authorities claim the quarry does not produce shale at all on the basis of how the quarries products are presented on its website. nevertheless, the commission notes that shale is mentioned on the website of vyse quarry, not in the description of their products, but in the technical specifications of the different products they extract (74). (352) moreover, since this is a submission from the quarry itself, the commission has to take it into account. it may be the case that the material they produce has been wrongly labelled as shale, but the quarry itself claims it has benefited from the exemption for shale. moreover, the uk authorities have stated on different occasions that they disregard, for the purposes of the agl, the manner in which a quarry presents its products to the public. no mention was made of any geological test having been conducted at the quarry. (353) on the basis of the information and evidence available the commission considers that the freshly quarried shale is in a factual and legal situation comparable to that of others taxed materials. (354) the uk authorities have not established that the exemption of freshly quarried shale for aggregates can be justified by the shift of demand objective of the agl. indeed such exemption allows at least maintaining the fresh extraction of the shale for aggregates use and thus presents a derogation from the normal taxation principle of the agl which is contrary to the objective of the agl. (355) the exemption for spoil from shale extraction is assessed below in section 5.6.4. (356) the commission notes, however, that shale which occurs as a by-product of coal extraction benefits, in addition to the exemption under section 17(4)(a), also from the exemption under section of the 17(3)(f) of the finance act 2001. as will be established below in recital 367 of this decision, coal is not and cannot be used as aggregate. (357) shale that is an unavoidable by-product of coal extraction is suitable for aggregates use and thus it falls under the scope of normal taxation under the agl. however its exemption can be justified by the shift of demand objective of the agl. in addition, due to its value, it is highly unlikely that the exempted shale as by-product could provoke an increase in fresh coal extraction, as it would not make economic sense. (358) moreover, since shale is, like clay, mostly used in pipes, tiles and brick-making, which are ceramic products, it benefits from the tax credit granted for ceramic processes under section 30(1)(c) of the finance act 2001. as this is not an aggregates use and as materials used for ceramic processes undergo extensive physical transformations, i.e. fusing to form a hard, durable and weather-resistant product, shale used for ceramic processes would duly benefit from the relief from the agl. the commission has already found in the opening decision the relief for industrial and agricultural processes (section 30(1)(c)) to be in line with the normal taxation principles underpinning the agl (recital 137). (359) the commission notes that the baa and other interested parties commented that materials used for bricks should not benefit from an exemption. the uk authorities showed, however, that bricks and other ceramics processes are not aggregate uses. bricks undergo an extensive manufacturing process. they are formed by heating shale or clay to a high temperature (more than 1 000 c) in a kiln, changing the structure of the shale or clay to make a solid, durable brick. other ceramic products are fired in a similar way in a kiln, but made into different shaped products, e.g. pipes or tiles. (360) bricks are not made to be used as bulk fill in a manner analogous to crushed rock. they are made to be stacked, in an orderly way, to form walls. (361) on the basis of the above, the commission concludes that the use of shale in ceramic processes may benefit from a relief from the agl as this does not represent an aggregate use of shale. (362) in addition, shale can be used in place of clay, slag or other materials as a source of aluminosilicate in the manufacture of cement. it is mixed with limestone, a process which is exempted from the agl. the use of limestone, or limestone and other materials in cement, is exempted from the levy in accordance with section 18(2)(c) of the finance act 2001 as in this use, the chemical properties of the material are important (with limestone providing calcium silicate, and clay or shale providing aluminosilicate). therefore, shale used for the manufacture of cement together with limestone would duly benefit from an exemption under this section of the finance act 2001. the commission has already found in the opening decision that the exemption for this process is in line with the normal taxation principles of the agl (recital 90). (363) shale producers would have to show what uses the material wholly or mainly consisting of shale they produced had in order to claim an exemption from the agl. (364) for example, shale also occurs as an unavoidable by-product of clay extraction. where this is the case and the shale is not already benefiting from another exemption or relief, it could be assessed whether the respective shale could not qualify for an exemption under the agl as it has not been deliberately extracted for aggregates use. the exemption would be in line with the principles of the agl as this regards shale that is obtained as an unavoidable by-product of a material that is neither an aggregate, nor used as aggregate and that could be used to replace freshly extracted aggregates. (365) with regard to shale occurring as by-product of fresh quarrying of other taxed materials, such as gritstone or limestone, the commission notes that the exemption does differentiate the shale compared to other taxed materials. however, it has to be considered whether such tax differentiation can be justified by the objective of agl. even if the exemption could lead to an increase in the deployment of shale as by-product for aggregates use at the expense of other not exempted by-products, the commission has not received any evidence from the uk authorities or from interested parties showing that this exemption contributes to the achievement of the agl objective which aims at reducing the fresh quarrying of material for aggregates purposes. (366) the commission therefore considers that material wholly or mainly consisting of shale that is deliberately extracted for aggregates use, including here shale occurring as by-product of fresh quarrying of other taxed materials, is in the same factual and legal situation as other aggregates that are taxed in light of the normal taxation principle of the agl and of its environmental objective. hence, the exemption is de facto selective. 5.6.2.5.3. coal (367) the joint submission received from the uk authorities and the baa as well as information received on other occasions from the uk authorities confirms that coal is not and cannot be used as an aggregate. therefore, coal is not in the same legal and factual situation as material taxed under the agl in line with the objective of the agl. the same applies to material that is mainly consisting of coal which covers the situation in which the coal extracted does not have a pure geological composition. 5.6.2.5.4. lignite (368) the joint submission received from the uk authorities and the baa as well as information received on other occasions from the uk authorities confirms that lignite is not and cannot be used as an aggregate. therefore, lignite is not in the same legal and factual situation as material taxed under the agl in line with the objective of the agl. the same applies to material that is mainly consisting of lignite which covers the situation in which the lignite extracted does not have a pure geological composition. 5.6.3. exemption of aggregates consisting wholly of the spoil, waste or other by-products, not including the overburden, resulting from the extraction or other separation from any quantity of aggregate of any china clay or ball clay (section 17(3)(e) and section 17(3)(f)(ii)) (369) in their submissions to the commission prior to the opening decision, the uk authorities had explained that china clay (also known as kaolin) (75) and ball clay (76) are valuable minerals. they are normally not quarried in order to serve as aggregates. spoil consisting of waste rock and sand is an inevitable by-product of this extraction. china clay waste can be used in the construction of embankments and as general fill, in the production of bitumen bound materials for highway construction, and may be substituted for other fine aggregate in the manufacture of concrete. ball clay waste can also be sold as aggregate into the construction market. (370) the uk authorities had highlighted that since the spoil resulting from ball clay and china clay extraction is available as soon as ball clay and china clay has been extracted and given that this spoil can provide an alternative to various sand, gravel and rock specifically extracted for use as aggregate, the exemption helps reduce the extraction of sand, gravel and rock that were specifically extracted for their use as aggregate and, on balance, the exemption helps reduce the environmental impact of aggregates extraction. the uk authorities had provided information regarding the waste resulting from china clay and ball clay extraction and the waste heaps created. (371) the commission questioned in recital 106 of the opening decision whether such material would not be in a comparable situation to non-exempted aggregates, but observed that there may be a difference between the exempted material and non-exempted material in that the exempted materials constitute the spoil of china clay and ball clay extraction. it is an inevitable by-product of this extraction, which will occur not necessarily for the sake of aggregate extraction but in general for china clay and ball clay extraction. indeed, both china clay and ball clay have specific properties that cannot always be replicated. (372) the commission questioned in recital 107 of the opening decision whether this difference was sufficient to demonstrate that the tax exemption is justified by the nature and logic of the agl and mentioned it required more information. (373) following the publication of the opening decision the commission received numerous submissions from interested parties in this regard. 5.6.3.1. comments received by the commission (a) comments received from sibelco europe on 16 january 2014 (374) according to its submission, sibelco is a company involved in the extraction, processing and sales of china clay (kaolin) and ball clay. the majority, 80 % to 90 %, of ball clay and china clay production is exported. sibelco submits that the primary purpose for the exploitation of its quarries is the extraction of ball clay and china clay. other materials necessarily extracted can be regarded as secondary materials that may or may not be suitable for aggregate end use depending upon its constituents and possible processing. (375) sibelco maintains that china clay and ball clay as well as the products derived from them cannot be used as aggregates. they are specialist industrial minerals with only non-aggregate applications and end uses. china clay and ball clay are distinguished by their unique physical and chemical characteristics and rarity and are, thus, highly valuable. (376) according to sibelco, the spoil from these mineral extraction activities does not constitute material that is specifically extracted in order for it to be used as aggregate. the spoil is extracted as a necessary consequence of obtaining china clay and ball clay. the by-products are entirely different from the ball clay and china clay minerals and their uses are not the same or in any way interchangeable. moreover, sibelco maintains that, without the extraction of ball clay and china clay at these quarries, no potential aggregate materials would be available to the market since the quarries could not be economically operated other than for ball clay and china clay. the sales value of china clay and ball clay is significantly higher than site derived secondary aggregate. indeed, the selling value is around [ ] to [ ] times higher for china clay and some [ ] to [ ] times higher for ball clay. according to sibelco, 8 to 10 times more volume of inevitable spoil is extracted alongside china clay and up to twice as much volume of other materials is extracted alongside ball clay. (377) sibelco submits that given the location and distribution of china clay and ball clay sites, the specific geological conditions and the significant capital investment required to set up quarrying operations in these areas, without the china clay and ball clay extraction, no extraction activity of spoil would take place in any of these locations. (378) according to sibelco, all sales of aggregate derived from by-products of china clay and ball clay extraction result in a direct reduction in the volume of this material being placed in heaps and mounds at the extraction site. (379) in accordance with the information provided by sibelco, in china clay deposits, the clay mineral (kaolin) is formed by the decomposition and partial decomposition of feldspar minerals in granite. this process is known as kaolinisation and while the proportion and characteristics of the kaolin varies within the deposits, the overall yield of kaolin to the whole rock mass is typically around 10 %. while some element of selective extraction is possible, for the most part the whole rock mass (interburden) must be extracted before the kaolin can be separated. the process of separating out the kaolin by water separation, gravity methods and several stages of screening and sizing results in by-product material constituting weathered and un-weathered granite, stent (rock), quartz and mica. this by-product material is not, in its extracted form, suitable for aggregate use. processing is required to make some part of it suitable for aggregate end uses. (380) according to sibelco, in ball clay deposits, the clay is essentially also a kaolin mineral but deposited by sedimentary geological processes producing an often distinct layering of strata. the layering interposes ball clays, lignitic ball clays and sand seams. these interburden seams must be extracted to reveal successive ball clay seams. the ball clay seams and indeed the interburden seams must be carefully selected to ensure no contamination of the ball clay with other material and no unplanned cross mixing of different quality ball clay seams. the interburden typically represents more than 50 % of the whole extracted volume. following extraction of the ball clay seams, these are mixed in precise blends depending on the specific end use. (381) according to sibelco, the main difference between china clay and ball clay quarries and aggregates quarries is that in aggregate quarries the waste or by-products are essentially the same material. in ball clay and china clay quarries the by-products arising are distinctly different material than the clays which are being sought as the primary mineral. (382) according to sibelco, the current exemption for aggregate material sold from appropriate processing of material derived as an inevitable by-product of china clay and ball clay extraction will not result in an increase in china clay and ball clay extraction activities. china clay and ball clay demand and sales drive the quarry development. even though some by-products of both china clay and ball clay extraction are subsequently processed and made suitable for aggregate end uses, the majority of the resulting by-products are still placed in heaps and mounds. this is because there is no further demand for the aggregates (notwithstanding the current exemption from the levy), but extraction in the quarries must continue to produce the market demand volume of china clay and ball clay. currently there is around five times more spoil, waste and by-products handled in sibelco's china clay and ball quarries than aggregate sales. this demonstrates that even the current levy exemption cannot further incentivise the extraction of material for aggregate use. in addition, it appears that sales of clays and sales of aggregates have a completely different pattern. in aggregates production a supply contract regards one specific project and lasts a relatively short period of time. however, the ball and china clay industry has to supply ceramic manufacturers with a consistent blend of material for a period of many years. (383) in addition to its submission, sibelco has also provided the commission with an overview of the geology, extraction and processing of ball clay and china clay. (b) comments received from imerys minerals limited (iml) received on 17 january 2014 (384) iml has china clay and ball clay operations covering over 5 000 hectares of land in cornwall, devon and dorset in the south-west of england. (385) iml claims that the united kingdom is a leading world producer and exporter of high-quality ball clay with more than 80 % of production exported. ball clay is mainly used as a raw material in the manufacture of ceramics (particularly, sanitaryware, wall and floor tiles, and tableware). other uses include in enamels and glazes, building bricks, refractory applications and as fillers and sealants. the material characteristics of ball clay render it unsuitable for use as aggregate. aggregates generally need to be hard, granular materials. in contrast, ball clay is soft and fine-grained. the relative value of ball clay would also preclude its use as aggregate. it is a relatively rare and important material, with an ex-works value of up to gbp [ ] per tonne, depending on its quality and the level of demand in the marketplace. (386) according to iml, the united kingdom is one of the largest producers and exporters of china clay in the world with over 90 % of production exported. (387) iml claims that china clay is valued for its whiteness, fine particle size and flat particle shape, soft non-abrasive texture and chemical inertness. its main uses are in the manufacture of paper as a filler and coating pigment, sanitaryware and tableware. more specialist applications include as a filler in paint, adhesives, plastics, rubber and sealants; and in the manufacture of glass fibre and pharmaceuticals. (388) according to iml, the material characteristics of china clay render it unsuitable for use as aggregate. the relative value of china clay would also preclude its use as aggregate. china clay is a very rare product, both nationally and internationally. given its rarity and importance due to the demand for its use in a number of industries, it commands a relatively high price. a lower quality product in a basic application will sell for around gbp [ ] ex-works whereas a highly refined specialist product for use in a technical application will command more than gbp [ ] per tonne. (389) according to iml, they receive a modest royalty averaging at approximately gbp [ ] per tonne for the material sold as secondary aggregates. according to iml, the extraction of ball clay and china clay would take place irrespective of any other factor, and the generation of waste product is inevitable. its use as aggregate is far more beneficial for the environment than primary aggregate quarrying. without a stable market for the waste more material will have to be surface tipped. (390) according to iml, of the 8,47 million tonnes that are mined in total, approximately 6,5 million fall into the category of potential aggregates feed material. breccia, crushed stone, gravel, interburden, rock and stent can be processed to form crushed aggregates of one type or another ranging from single size chipping to sub-base/fill material. the crushing process will also yield gravel and sand products. in addition, sand is generated during the bucket wheel separation process of china clay. not all of the 6,5 million tonnes of feed can be processed into marketable secondary aggregates, and waste volume varies depending on the nature of the china clay area being worked. an existing processor of china clay waste calculates that a yield of 65 % is typical meaning of the 6,5 million tonnes of annual run of mine aggregate feed, over 4 million tonnes of saleable product can be made. (391) according to iml, on average dry-screened concrete sand sells for gbp [ ] ex-works and a crushed product (aggregates) for gbp [ ] ex-works. the sales are not made by the iml itself, but by a processor of china clay waste. (392) iml claims that there is no way the agl exemption could lead to more extraction of ball/china clay for the purposes of deriving more levy-exempt material. iml already tips more waste than it supplies for aggregates processing proving that the level of extraction depends entirely on the market demand for the primary mineral; china/ball clay. (393) iml claims that, the extraction process already produces more waste than is currently sold and it would be illogical to mine more china/ball clay to derive the secondary aggregate by-product. (394) according to iml, for the production of tradable aggregates additional processing is required. they claim that, a dry screening plant for sand production costs in the region of gbp 0,75 million, a crushing plant costs in the region of gbp 2 million and a washing plant for processing mortar sand would cost up to gbp 1,5 million. using the average selling prices of sand at gbp [ ] per tonne and crushed aggregates at gbp [ ] per tonne, production costs would typically make up 35 % for sand and 50 % for crushed aggregates. (395) according to iml, without the china clay content having been removed first, it would not be cost effective to quarry the sites for their aggregates potential. the potential aggregate materials are only available to the market because of the extraction of china and ball clay, as without this, the quarries would not be economically viable. given the very high cost of extracting the minerals, and the relatively low quality of the by-product derived from that process when compared with primary aggregates, the sites would not generate any aggregates at all were it not for their mineral content. (396) according to iml, the exemptions from the agl distinguish between waste materials that arise as the by-product of the extraction of a non-aggregates mineral (such as waste from china/ball clay extraction) which are exempt, and waste materials that are the by-product of extraction of aggregates (such as waste from limestone), which remain subject to the agl. (397) iml claims that by-products from limestone and cut stone quarries are deliberately extracted for and used as aggregates, whereas by-products from china or ball clay extraction are unavoidable consequences of the extraction of those minerals. (398) iml has also provided the commission with a case study published in construction news concerning the use of recycled and secondary aggregates from the extraction of china clay in concrete in a major london site. (c) comments received from kaolin and ball clay association received on 17 january 2014 (399) according to the kaolin and ball clay association, as part of the exploitation of china and ball clay quarries other materials which are unavoidably extracted can be considered as secondary materials, which may or may not be suitable for use as aggregates. the current agl exemptions for these secondary materials were introduced in order to incentivise their use and to reduce the quantity of such materials being surface-tipped. the kaolin and ball clay association claims that china clay and ball clay cannot be used as an aggregate, and they are never extracted for such use. (400) according to the kaolin and ball clay association, without the extraction of china and ball clay, the aggregate materials derived from them would never be available to the market. quite simply the cost of separating the china clay and ball clay from the aggregates, and the value of the aggregates themselves, would make this totally unviable. selling prices of china clay and ball clay are substantially higher than the aggregates, which is why it is cost effective to mine them in their own right. (401) the kaolin and ball clay association maintains that further evidence of this is in the fact that currently, even with the aggregates levy exemption, only approximately one third of the material that could be processed into aggregates is processed. (402) according to the kaolin and ball clay association, it is certain that sales of by-product material will fall if the levy is imposed on these currently exempt minerals, in fact there is already evidence of this happening for projects starting in april 2014. (d) comments received from the bcc on 17 january 2014 (403) the bcc claims that the primary purpose of the development of china and ball clay quarries is the extraction and processing of these materials which are specialist products differentiated by their rarity and unique physical and chemical characteristics. according to the bcc, china clay and ball clay and the products derived from them cannot be used as aggregate and are never extracted for such purposes. other materials which are unavoidably extracted can be considered as secondary materials, which may or may not be suitable for use as aggregates. according to the bcc, they would not be extracted in isolation for use as aggregate and they become available only when china clay or ball clay are extracted, otherwise the quarry would not be economically viable. (404) the bcc maintains that ball clay has a selling price at least 5 to 6 times higher and china clay at least 10 to 12 times higher than the by-product which can potentially be sold as secondary aggregate. economics and site constraints would not result in a situation where more china clay and ball clay was extracted than could be sold in order to derive additional by-product material for aggregate production. even with the exemption the majority (five times more) of china clay and ball clay by-products are still not being sold, but are placed in heaps on site. (405) according to the bcc, exempt and non-exempt quarries are significantly different. non-exempt aggregates quarries mainly extract the same material as their primary products and waste or by-products. however, in china clay and ball clay quarries the waste is different from the main materials. the latter are feldspar minerals while the former are mostly silica-based sands. (406) the bcc maintains that the sales of the by-product material from china clay and ball clay quarries will fall if the levy is imposed on them. to meet demand additional virgin aggregates will have to be extracted. (e) comments received from the baa on 15 september 2014 (407) the baa has provided information from its members located in cornwall as regards the fact that china clay prices can vary dramatically between gbp 50 to gbp 5 000 per tonne depending on its grade and quality. (f) comments from the uk authorities (408) the uk authorities maintain that not only do the material characteristics of china clay and ball clay preclude their use as aggregates, the relative value of ball clay and china clay would also preclude such use. the uk authorities claim that, in fact, there is no actual and established exploitation of ball clay and china clay as aggregates. accordingly, the commission's summary of the difference between the position of the spoil, waste or by-product of the extraction of these materials is entirely correct. the exemption of the inevitable by-products of materials which cannot and are not used as aggregate is entirely consistent with the environmental objective of the agl. (409) the uk authorities provided a detailed description of ball clay and china clay and explained why they are not and cannot be used as aggregate. moreover, both materials attract a high price. according to the uk authorities, ball clay is a relatively rare material, with a value of up to gbp 100 per tonne, depending on the particular grade of ball clay required and the level of demand in the marketplace. china clay is a very rare material, which commands a very high price on the market of between gbp 70 and gbp 400 per tonne. according to the uk authorities, the cost of producing of china clay and ball clay are also very high by comparison with the costs of production of other types of aggregates. the uk authorities provided information collected from companies active in the field. one company provided the average figure of gbp [ ] per tonne of china clay, with a range of gbp [ ] to gbp [ ] for different china clay products. another company mentioned gbp [ ] per tonne. for a tonne of ball clay the average production cost is of gbp [ ] in dorset and gbp [ ] in devon. another company mentioned gbp [ ] per tonne. (410) according to the uk authorities, there are two companies currently supplying ball clay and china clay in the united kingdom. the uk authorities provide the example of one supply contract for china clay and ball clay by-products where the price in 2012 was of gbp [ ] per tonne. in the case of another contract the price was of gbp [ ] per tonne of china clay waste sold. ball clay waste had a price of gbp [ ]. neither of these two companies sells the spoil or inevitable by-products generated by their activities directly to the construction end-users of such aggregates. instead, both companies have entered into agreements with third parties (that specialise in the sale of aggregates) under which they agree to provide up to a certain amount of aggregate for a fixed price, irrespective of the amount which is actually supplied. accordingly, as the price is not determined directly for each tonne of aggregate they produce, the ball clay and china clay quarries have no incentive to increase the amount of spoil which they remove beyond the level which has been agreed. the third parties then sell the aggregate on to end users. according to the uk authorities, owing to the economic downturn not even the entire amount of aggregates can be sold. (411) the uk authorities claim that, the production of china clay cannot be separated from the production china clay waste. the nature of the wet extraction process is such that the pumps necessarily separate the desired kaolin material and waste products. traditionally, the first stage in the extraction or quarrying of china clay was to remove the overburden and expose the rock bearing clays. the second stage of the process was that the quarry operator would subject the exposed clay or pit face to jets of water at high pressure. according to the uk authorities, this would remove the china clay, together with other products it was mixed with (sand and mica). (412) according to the uk authorities, the overburden resulting from the extraction is subject to the agl. the rest of the material which is unavoidable in the china clay extraction process is covered by the exemption. (413) the uk authorities claim that ball clay is extracted entirely by open pit methods. open pit extraction involves using hydraulic excavators and dump trucks to selectively dig, load and deliver individual production clays to storage and blending facilities. the overall clay to waste ratio for the industry is about 1 to 1,5. (414) according to the uk authorities, where an operator would be unable to obtain the high value china clay or ball clay product, there would be no incentive to extract the by-products by themselves, in particular due to their low economic value. the presence of kaolinite or any other type of clay in a rock reduces the material's strength and therefore has a negative effect on its possible performance as aggregate. even if the operator did not want to obtain the high value material, it would still incur the high costs of removing and disposing of the fine material i.e. the kaolinite, other clay and mica. accordingly, it would be illogical to remove high value products and dispose of them in order to obtain the low-value by-products which can be used as aggregates. according to the uk authorities, even with the exemption from the levy it would, allegedly, not be economically rational for extraction activities to be undertaken at the sites in order to obtain exempt spoil unless the higher value china clay and ball clay was also being extracted. (415) according to the uk authorities, the inevitable by-products generated by the extraction of ball clay and china clay are suitable for some aggregate uses. (416) the uk authorities commented on the distinction between the extraction of limestone for lime production and cut stone and the inevitable by-products generated by the extraction of ball clay and china clay. they contend that cut stone and limestone are extracted for use as aggregate, as well as for those non-aggregate purposes. cut stone is produced from sandstone or granite both of which are extracted for use as aggregate. the spoil, waste or by-products derived from the production of cut stone and limestone can also be used as aggregate. (417) according to the uk authorities, the fact that both limestone and its by-products can be used as aggregate is in part explained by their material characteristics. waste arising from the extraction of limestone, which is used in the production of lime, is likely to consist not of a different waste material, but rather, additional limestone. the uk authorities claim that, in a small number of instances, the limestone waste which arises from the quarrying of limestone for lime production may be chemically unsuitable for lime production. however, in the majority of instances, it would be perfectly suitable for either use as aggregate or the production of lime. the end-use of limestone will be determined more by local demand than chemical composition. (418) moreover, according to the uk authorities, waste arising from the extraction of rock to produce cut stone is likely to consist largely of the chippings of the same rock which is being extracted. unlike ball clay and china clay, there are no additional costs in relation to the separation of the higher and lower quality grades of the same material. (419) the uk authorities maintain, quoting the bgs, that both the freshly extracted material and their by-products are deliberately extracted for, and used as, aggregate (77). the quarrying of limestone and rock for cut stone generates high quality aggregates which would be extracted for sale on their own, even if there was no local demand for limestone or cut stone. the cost of limestone for lime is around gbp 12,50 to gbp 19,50 per tonne, whereas the price of its by-product is gbp 7,16 to gbp 11,70 per tonne. the price per tonne of sandstone and quartzite used for producing cut stone is around gbp 45,76 to gbp 82,42, whereas the cost of its by-product aggregate is around gbp 6,58 to gbp 10,04. (420) according to the uk authorities, a granite quarry would produce varying proportions of cut stone for flooring, office buildings, domestic kitchens etc. and aggregate. igneous rock (including granite), which is also used to produce cut stone, costs around gbp 5,51 to gbp 12,91 per tonne, whereas its aggregate by-product sells for around gbp 6,12 to gbp 12,82 per tonne. (421) according to the uk authorities, the proximity in price of limestone/cut stone and its spoil (which in any event is the same substance) means that there are incentives to extract both, depending upon local demand. the uk authorities contend that the difference between the unavoidable by-products of china clay and ball clay and the by-products of limestone and cut stone is justifiable and any other tax treatment would lead to uncontrollable abuses and could not be enforced. (422) the uk authorities further show that it is entirely consistent with the objective of the levy to encourage the use of the inevitable by-products of the extraction of china clay and ball clay, as they can be used as aggregate. as both limestone/cut stone and the by-products generated from their production can be used as aggregate, and are extracted for that purpose, the exemption of the spoil arising from extraction of limestone/rock used for cut stone would only serve to encourage increased extraction of fresh aggregate, and would not shift demand from freshly extracted aggregates to recycled aggregates and waste by-products. (423) the uk authorities allege that limestone is a high quality aggregate, for which there is also market demand. there is a market in limestone quarried solely for aggregate (88 quarries in the uk, as shown in the joint submission of the baa with the uk authorities), and as such there is an environmental rationale to substitute this material for by-products of other quarrying. there is allegedly no objective way to distinguish between limestone produced as a by-product of agricultural lime production and limestone quarried specifically for use as aggregate. (424) one interested party mentioned that there are china clay and ball clay pits that have been reopened due to the introduction of the levy solely for extracting exempt aggregates. the uk authorities obtained confirmation from the two national producers of ball clay and china clay that this is not the case and maintained that they are not aware of any authorisations having been granted for such reopening purposes. (425) as regards the comment from an interested party that silica sand that is a by-product of china clay extraction has always been used as a source of aggregate in cornwall and the exemption does not reduce the extraction of freshly quarries sand, the uk authorities verified and provided partial sand sales for devon and cornwall and showed that they could not attribute any of the production to by-products of china clay extraction. 5.6.3.2. assessment by the commission (426) the submissions from ball clay and china clay producers, their respective trade associations, and the uk authorities clearly show that the by-products arise both unintentionally and unavoidably. the costly and complicated extraction process of ball clay and china clay and the fact that more waste is produced than china clay and ball clay producers are able to find a market for, shows that ball clay and china clay are not intentionally extracted to produce exempt by-product materials for aggregate use. (427) in addition, ball clay and china clay commercially operate their businesses differently than quarries that supply aggregates for construction purposes, as they have to honour long term contracts to ensure a constant production of the respective end products. this means that they can neither quarry more, nor less than what they need to obtain the quantity of ball clay and china clay provided in their contracts, thus the amount of extraction by-products would remain the same. the introduction of the agl for ball clay and china clay by-products would only affect the financial situation of the respective businesses without achieving any environmental benefits. (428) unlike the by-products from limestone and cut-stone, by-products of ball clay and china clay would never be quarried for their own sake in order to produce more exempted aggregates. the exemption for by-products of ball clay and china clay are does not lead to more extraction of the freshly quarried ball clay and china clay and their selling value is much lower. there is no proximity in price like in the case of limestone and cut stone. in fact, the price difference is much greater. thus, there is no risk that the exemption might lead to a deliberate increase of fresh quarrying. the exemption for by-products from the extraction of ball clay and china clay encourages their use instead of freshly extracting new aggregates and is in line with the principles underpinning the agl. 5.6.4. exemption of aggregates consisting wholly of the spoil from any process by which coal, lignite, slate or shale has been separated from other rock after being extracted or won with that other rock or of the spoil from any process where the substances in section 18(3) of the finance act 2001 have been separated from other rock after extraction or won with that other rock (section 17(3)(f)(i) and (ii)) (429) coal, lignite, slate and shale and the substances listed in section 18(3) of the finance act 2001 are normally not quarried for their use as aggregates, but are quarried for other purposes. prior to the adoption of the opening decision, the uk authorities had explained that the exemption is meant to encourage use rather than disposal in waste tips of the spoils. this both improves the visual landscape and reduces the need to extract other materials for aggregates use. (430) in the opening decision, the commission observed, first, that there may be a difference between the exempted material and non-exempted material in that the exempted materials constitute the spoil of the extraction of coal, lignite, slate, shale and the substances listed under section 18(3). they are an inevitable by-product of this extraction, which will normally occur not for the sake of the extraction for aggregates use but for the sake of extracting the concerned materials and substances which are (normally) not used as aggregates. on this basis, the spoil of the extraction of coal, lignite, slate, shale and the substances listed under section 18(3) does not seem to be in a comparable situation with taxed aggregates in the light of the objective of the agl. (431) the commission doubted, however, whether this difference is sufficient to demonstrate that the tax exemption is justified by principles underpinning the agl. it considered the difference from taxed aggregates is justified only if the exemption is limited to the inevitable spoil of the extraction of those substances. the commission considered this to be the case as the exemption is limited to material that constitutes at 100 % the spoil of the separation process. (432) the commission doubted the difference in situation with exempted materials as compared with non-exempted materials that occur as the spoil of limestone extraction when the limestone is extracted to produce lime or when compared with the spoil of the extraction of rock to produce cut stone with one or more flat surfaces. in addition, the commission wondered whether the exemption can be justified in the light of the objective assigned to the agl if, for instance, slate and shale or any of the other substances listed in section 18(3) would be extracted to be used as aggregates. (433) the commission received extensive comments from interested parties which are presented in the relevant sections in relation to the exemptions for coal, lignite, slate or shale. 5.6.4.1. comments received by the commission (a) comments from the uk authorities (434) the uk authorities maintain that the exemptions from the agl distinguish between waste materials that arise as the by-product of the extraction of a non-aggregate mineral (such as waste from china and ball clay extraction), which are exempt, and waste materials that are the by-product of the extraction of aggregate (such as waste from limestone), which remain subject to the tax. (435) as regards spoil from coal extraction, the uk authorities maintain that the negligible price of shale and colliery spoil show that there is little to incentivise extracting additional coal in order to obtain extra by-product, whether or not that by-product is exempt from the levy. (436) according to the uk authorities, the exemption for waste arising from slate quarrying does not lead to more slate extraction for the purpose of obtaining slate chippings, in particular because slate production already produces large quantities of waste slate chippings, only about 10 % of which is currently used as aggregate and because it would not be economically feasible to operate the quarry for such purposes. (437) the uk authorities maintain that the distinction between slate waste on the one hand and cut stone and limestone waste on the other hand stems from the objective of discouraging the additional fresh extraction of limestone for aggregate use while not discouraging the production of non-aggregate material. even where limestone is being extracted for non-aggregate purposes or rock is being extracted to produce cut stone, the spoil which is created is at the same time deliberately being extracted for use as aggregate and is well-suited for that use. the quarrying generates high quality aggregates which would still be extracted for sale on their own, even if there were no local demand for lime or cut stone. the same is apparently not true as regards to spoil from slate, shale, coal, lignite, clay and the substance mentioned in section 18(3). the uk authorities maintain that, there is no evidence that any quarry deliberately extracts slate, shale, coal, lignite, clay or the section 18(3) substances specifically in order to obtain the spoil for use as aggregate. also, according to the uk authorities, the exemption does not encourage additional quarrying in order to obtain spoil for use as exempt aggregates. (438) however, according to the uk authorities, exempting spoil from the extraction of limestone (whether or not it is to be used for a non-aggregate purpose such as lime) and of rock for cut stone would be likely to encourage additional quarrying in order to obtain spoil for use as an exempt aggregate. that is because the spoil consists of the same substance as the principal quarried material, is relatively close in value to the price of the principal material, and is suitable for use as a high quality aggregate material. to exempt such materials from the tax would be likely to encourage additional quarrying and would defy the agl's environmental logic. (439) the uk authorities maintain that they considered at some point introducing an exemption for waste from primary aggregates production or from the production of the higher quality aggregates. however, the consultation with the industry showed that this would not be feasible as the range of quarries' products varies significantly and what some quarries consider high grade aggregates would be the waste produced by other quarries. the uk authorities maintain that apart from the significant risk of tax avoidance, providing an exemption for waste arising from aggregate quarrying would therefore also be contrary to the logic and overarching environmental goal of the agl. it would, in effect, serve to reduce the relative price of lower grade aggregates, thereby increasing demand and potentially leading to an increase in aggregate quarrying (and associated environmental damage) at the sites concerned. (440) according to the uk authorities, a slate quarry would produce high quality architectural products selling for in excess of gbp 200 per tonne. around 5 % of the slate extracted is suitable for this purpose due to the geological formation of the slate, and so a large amount of waste slate is produced. this waste slate is suitable for sale for some aggregate purposes, and a small proportion of the waste created is sold for between gbp 2 and gbp 8 per tonne, with the remainder piled in heaps. the uk authorities maintain that the cost of producing any tonne of product for use as an aggregate is higher than a typical drill and blast aggregates operation which the limestone or granite quarries could operate since slate is being taken from various processes and handled many times before being crushed. the marketing strategy is to maximise the value of the resource at its disposal, increasing the yield of high value material. 5.6.4.2. assessment by the commission (441) the commission already concluded in recital 366 above that since it has been evidenced that shale has been deliberately extracted for use as aggregate at least by one quarry, its exemption under section 17(4)(a) of the finance act 2001 is not justified by the principles underpinning the agl. (442) the commission has also already established above in recitals 205, 333, 367 and 368 that coal, lignite, slate and the substances listed in section 18(3) cannot or are not freshly extracted for use of aggregate and thus are not in the same legal and factual situation as taxed materials. (443) in addition, the commission assessed the difference between these exemptions and spoil of limestone extraction when the limestone is extracted to produce lime or when compared with the spoil of the extraction of rock to produce cut stone with one or more flat surfaces in the context of establishing the underpinning principles of the agl as detailed in recitals 149 to 158. (444) as regards spoil of slate extraction, which could be used as aggregate and also consist of slate, the commission notes that no fresh slate quarrying would take place deliberately for obtaining these products due to their low value (see recitals 226 and 237-240). spoil from slate extraction achieves a selling price between gbp [ ] and gbp [ ] per tonne. high quality architectural slate products appear to have a selling price starting from gbp 200 per tonne and rising to above gbp 1 000 per tonne. only a small part of the spoil from slate extraction can actually find a market and is sold even with the exemption from the agl. moreover, slate extraction is an extremely costly process for which more costs are incurred than in the case of regular quarrying. according to the uk authorities the cost of producing slate spoil amounts to gbp 5,7 to gbp 6,5 per tonne (recital 263). this demonstrates that it does not make economic sense to deliberately extract slate solely to benefit from the exempted spoil of its extraction. thus this exemption is unlikely to increase the fresh extraction. (445) in accordance with the typical revenue of slate quarries, the specialised architectural products, although only 5 % of production, bring revenues to the quarries that are 2,54 to 3,52 times higher than the revenues brought by slate spoil (see recital 263). (446) given that spoil from slate extraction can and is used as aggregates it could be considered in a comparable factual and legal situation as other taxed materials. (447) the commission therefore concludes that the exemption from the agl for spoil from slate extraction represents, first, an exemption for spoil from extraction of a material which is not freshly extracted for aggregates use, and, second, does not lead to any additional fresh quarrying of materials, but can increase the use as aggregates of a material that would otherwise be discarded or tipped as waste. thus this exemption is justified by the shift of demand objective of the agl. (448) the same applies for spoil of coal, lignite and of the substances in section 18(3) of the finance act 2001 which are either not aggregates or not extracted for aggregates use. (449) firstly, the extraction of lignite does generate spoil. in accordance with the information from the uk authorities, lignite is itself a by-product of ball clay extraction in devon. lignite deposits in northern ireland are not exploited. (450) secondly, as submitted by interested parties and by the uk authorities, spoil from coal extraction, which can include shale, are either not suitable for aggregates use, for example, fireclay, or are generally tipped and consolidated. some spoil or waste from coal extraction is suitable for use as aggregates and it can, thus, replace freshly extracted aggregates. (451) pricing information as regards the price of coal (gbp 50) versus the price for which coal spoil sells (gbp 1 to 2), when there is demand for such products, shows that the exemption for spoil of coal cannot lead to more extraction of coal just for obtaining the exempted materials. (452) the exemption from the agl for spoil of coal extraction helps achieve the environmental scope of the agl. (453) thirdly, as explained in section 5.6.2, the substances listed in section 18(3) of the finance act 2001 are not deliberately extracted for aggregates use as the majority of them are not aggregates or are not suitable for use as aggregates. the only substances suitable for lightweight aggregates are perlite, pumice and vermiculite which are not extracted in the united kingdom. moreover, the uk authorities have shown that the substances listed in section 18(3) of the finance act 2001 either do not generate spoil that could be used as aggregates, are themselves a spoil of the extraction of something else, or are no longer extracted. therefore, the exemption for the spoil of the substances listed in section 18(3) of the finance act 2001, if any, cannot lead to more extraction of the main material so that the exempted aggregate product is obtained. (454) therefore, the commission can now conclude that the exemption of aggregates consisting wholly of the spoil from any process by which coal, lignite or slate has been separated from other rock after being extracted or won with that other rock or of the spoil from any process where the substances in section 18(3) have been separated from other rock after extraction or won with that other rock is in a different factual and legal situation than materials taxed under the agl in light of the objective of the agl. (455) spoil of shale extraction when the shale is deliberately extracted for aggregates use is comparable with spoil from the extraction of any other taxed material (for instance limestone, granite and gritstone). the commission notes that it has received very little information as regards the cost of shale extraction and the price which shale achieves when it is extracted as a primary product of a quarry. it has received some pricing information for shale that is used for brick-making, shale as by-product of another material or shale together with clay. however, the fact that a deliberate extraction of shale for aggregates use takes place (see recitals 350 and 351) sheds doubt on the achievement of the environmental purpose of the agl by such exemption as also found by the general court (78). (456) the spoil of any process by which the shale has been separated from other rock can be still used as aggregates. the possibility to sell spoil from the extraction of shale for aggregates use exempted from agl gives an extra leverage to shale producers and can, potentially, encourage fresh extraction of the shale as pointed by the general court (79). as the main product, shale appears in some instances to be deliberately extracted for aggregates use. spoil from the process of obtaining shale could also potentially be sold as aggregates. therefore, there is no guarantee that the exemption for spoil of shale that is deliberately extracted for commercial exploitation as aggregate does not lead to more fresh extraction of shale, thus undermining the environmental objective of the agl. (457) the spoil of shale extraction, when the shale is deliberately extracted for commercial exploitation as aggregate, falls into the scope of the normal taxation rule of the agl and are not in a different factual and legal situation than materials taxed under the agl in light of the environmental objective of the agl. in addition, the exemption for such spoil cannot be justified under the nature and logic of the agl as shown above in recital 456. (458) with regard to shale as spoil occurred with the quarrying of shale for non-aggregates use (for instance for brick-making) the commission considers on the basis of the available information that albeit being in the comparable legal and factual situation as other taxed materials, it could not be demonstrated that the exemption of such spoil can lead to an increase of fresh quarrying of the shale for non-aggregates use. given the relatively low price of shale as by-product when sold for aggregates use (gbp [ ] to gbp 4,4 per tonne including transportation costs), it is highly unlikely that the exemption for the spoil from shale extraction might lead to an increase of shale quarrying. in any event such increase of fresh quarrying of shale for non-aggregate use would not be contrary to the objective of the agl. (459) shale producers would have to show what uses the shale they produced had in order to claim an exemption from the agl for the spoil, i.e. if it was commercially exploited for aggregates use. 5.6.5. aggregates consisting mainly of, or being part of anything consisting mainly of, the spoil or waste from, or by-products of any industrial combustion process or from the smelting or refining of metal (section 17(4)(c)(i) and (ii)) (460) prior to the adoption of the opening decision, the uk authorities had indicated that the primary purpose of the concerned industrial process (e.g. coal-fired generation of electricity, smelting iron ore to produce steel) is to produce a product which is not used as aggregates. the spoil, waste and by-products concerned are for instance industrial slag (blast furnace slag, basic oxygen furnace steel slag, electric arc furnace steel slag and combustion ash). (461) the purpose of the exemption is to encourage use rather than disposal in waste tips (shift in demand). this both improves the visual landscape and reduces the need to quarry virgin aggregate. (462) the commission doubted that the application of the exemption to materials that are mainly (i.e. as of 50 %) composed of the spoil or waste from, or by-products of any industrial combustion process or the smelting or refining of metal would still be in line with the nature and logic of the agl. (463) the commission has received several comments from interested parties in this regard. 5.6.5.1. comments received by the commission (a) comments received from mineral products association on 2 january 2014 (464) the mineral products association supports the conclusions of the commission in the opening decision that these materials are not in the same legal and factual situation as taxed material. the justification is clear for materials consisting wholly of spoil or waste. but for materials consisting mainly of spoil or waste an exemption would be justified only if there is a small amount of residue of other material mixed with the exempt material. (b) comments received from qpani on 8 january 2014 (465) according to qpani, there is a significant supply of materials used in aggregates markets which are the by-product of industrial combustion processes or the smelting or refining of metal such as iron and steel slags and incinerator bottom ash. the association supports the conclusion in recital 124 that these materials are not in the same legal and factual situation as taxed material in the light of the objective assigned to the agl. there is a clear justification for materials which are wholly the spoil or waste from, or by-products of these processes at the point of commercial exploitation to be exempt from the agl. (c) comments received from the baa on 17 january 2014 (466) the baa submitted a letter by the hart quarry, an agricultural lime quarry, showing the difficulties that quarry has encountered in having their secondary products compete with slag aggregates from nearby steel works. the aggregates produced by the quarry are exempt although the environmental impact of the steel works is much higher than that of the hart quarry. the agl has allegedly prevented the hart quarry from competing on the aggregates market. according to the baa, the quarry sells all the lime it produces and the amount of aggregates produced as a by-product in proportion to the total output has remained constant, they cannot be decreased or increased. therefore, there are not large heaps of unsold aggregates that have built up during the agl. the quarry, allegedly, cannot increase its lime production to meet export demand due to the unsold by-products. (d) supplementary information received from mr bird of the baa on 10 february 2014 (467) mr bird claims that slag aggregate is not a waste product from the steel manufacturing industry, but a by-product that can be used as aggregate. mr bird enclosed information referring to slag from the final report by the uk competition commission into the aggregates and cement markets in the uk. according to mr bird, slag can be ground into an additive or an alternative to ordinary portland cement making it an important product making a first class aggregate. (e) comments of the uk authorities (468) the uk authorities maintain that the exemption regards chemicals added to the materials resulting from any industrial combustion process or the smelting or refining of metal so that they can be used as aggregates. (469) according to the uk authorities, for a variety of reasons, the by-product of the industrial combustion processes is not always of suitable quality or sufficient on its own to be used as aggregate. however, if an extra material is added this can improve its suitability for such use. for example, the production of stainless steel produces di-calcium silicate on cooling. that substance turns the slag (called aod (80) slag) into a powder, which raises dusting issues that render it unsuitable for use as construction aggregate or otherwise. if the steel producer adds the chemical anhydrous sodium tetra borate (borax) to the molten slag after it has been melted in the furnace, the chemical will stabilise the slag. the addition of the chemical removes the dusting problem and results in the stabilised slag forming a crystalline rock-type material that can then undergo a metal recovery process, crushing and screening and weathering and is then suitable for certain aggregate uses, e.g. in the preparation of asphalt materials. (470) the uk authorities maintain, the addition of a chemical to the by-product of an industrial combustion process does not render the exemption inconsistent with the objective of the levy, since the resultant material is not a taxable aggregate. 5.6.5.2. assessment of the commission (471) the commission has already concluded in recital 124 of the opening decision that aggregates consisting wholly of, or being part of anything consisting mainly of, the spoil or waste from, or by-products of any industrial combustion process or from the smelting or refining of metal (by-products of industrial combustion processes or from the smelting or refining of metal) are not in the same legal and factual situation as taxed material in the light of the objective assigned to the agl. (472) both the uk authorities and the mineral products association have demonstrated that aggregates consisting mainly of by-products of industrial combustion processes or from the smelting or refining of metal are not in the same legal and factual situation as taxed material in the light of the objective assigned to the agl. (473) indeed the commission received submissions showing that by-products of industrial combustion processes or from the smelting or refining of metal have a high value as aggregates and have various uses. the baa submitted the example of a limestone quarry that produces primarily agricultural lime, but that competes with by-products of industrial combustion processes or from the smelting or refining of metal on the market of their secondary products, i.e. limestone aggregates. this shows that the exemption for by-products of industrial combustion processes or from the smelting or refining of metal is even more justified, as an unavoidable by-product such as this, is actually replacing other freshly extracted aggregates such as limestone aggregates. (474) the commission has already addressed the difference between by-products from the extraction of limestone for the production of agricultural lime and exempted by-products of non-aggregate processes in recitals 151 to 158. (475) the baa claims that by-products of industrial combustion processes or from the smelting or refining of metal should not benefit from an exemption under the agl as the environmental impact from steel works is much higher than that of aggregates' extraction. this may be the case. however, steel works are a process that is unrelated to the agl. the exemption for by-products of industrial combustion processes or from the smelting or refining of metal merely serves the selling of these as aggregates so that they can replace fresh extraction for aggregates use. (476) therefore, the commission considers that the comments received do not constitute a reason to cause it to depart from its initial assessment from the opening decision (recital 124). (477) in relation to the exemption which extends to material which is mainly, but not wholly, the by-product of industrial combustion process or metal smelting/refining, the uk authorities explained that additional chemicals are sometimes required to stabilise the material to render it suitable for aggregate use. (478) the commission notes that the extractive waste directive (directive 2006/21/ec of the european parliament and of the council) (81) describes in article 3.3 inert waste as waste that does not undergo any significant physical, chemical or biological transformations and therefore should not entail pollution risks. the example provided by the uk authorities (in recital 469) involving the use of borax could be interpreted to relate to an example of an additional chemical that could increase the risk of pollution, depending on the amounts used, its concentration and the areas (soil, water body, etc.) affected. nevertheless, the use of borax does not fall in the scope of the present decision. (479) the mineral products association proposed that where materials are mixed with materials which are subject to the levy, the tax liability should be in proportion to the amount of taxable material in the mixture. as the agl is structured, this is already the case. the aggregate material which has been mixed with another material other than water is deemed to have been commercially exploited, and as such, would already be liable for the levy (section 19(1)(d) of the act). (480) the commission therefore concludes that the exemption under section 17(4)(c)(i) and (ii) of the act falls within the principles underpinning the agl and does not constitute a selective advantage. 5.6.6. exemption for material wholly or mainly consisting of clay (section 17(4)(f)) (481) concerning clay, the uk authorities had explained, prior to the adoption of the opening decision, that because of its plastic properties, clay is not usually considered a rock. the exemption clarifies this and avoids the need to identify and charge the agl on any sand or stone naturally occurring together with the clay. (482) the commission, however, noted that, in geological terms, clay is considered a rock and that it can be used as aggregate (82). in so far as a material wholly or mainly consisting of clay was extracted to be used as aggregate, it did not consider clear how the exemption could be justified on the basis of the normal taxation principles or to what extent it may be deemed in a different situation from taxed materials in the light of the objective of the agl. (483) the commission has received the following comments from the baa. 5.6.6.1. comments received by the commission (a) comments received from the baa by on 15 september 2014 (484) the baa maintains that clay can be used as aggregate without being chemically or physically altered. they claim that clay falls under the definition of aggregate provided by the opening decision. it can be used for a number of aggregate uses including construction fill. the baa provides a chapter of a book as regards the uses of clay in civil engineering and construction. according to the baa, clay is also used in large quantities by the uk highways agency for highway works. baa maintains this is a use for aggregates purposes. clay falls into one of the categories of acceptable materials provided by the specification for highway works in the united kingdom. it can be used as cohesive fill for highway works. the baa has provided examples of quarries that allegedly extract clay suitable for highway works. moreover, clay is suitable for specific aggregates uses for which other rocks are not suitable, i.e. lining and capping of landfill sites and lining ponds and canals. (485) the baa has provided a list of eight quarries that, allegedly, extract clay for use as aggregates. the list is extracted from the bgs directory of mines and quarries 2010. moreover, the baa provided examples of two quarries extracting clay suitable for sea wall/flood defence, engineering projects, landfill capping, pond lining, fill material and land reclamation, all, supposedly, aggregate uses. the material extracted also falls into the category of cohesive material that is suitable for highway works. the baa further provides an example of the use of clay from one of the quarries for the construction of a road. (486) the baa maintains therefore that there are numerous quarries that produce and sell clay for aggregates use and not only for ceramic processes. according to the baa, there are also a number of quarries where clay is interbedded with other materials from which material consisting mainly of clay would be exempted. (b) comments from the uk authorities (487) the uk authorities maintain that clay is readily distinguished from other types of very fine-grained sedimentary rock by its plasticity and ability to be cut and shaped with a knife or trowel (definition in the report (83)). these plastic properties of clay make it unsuitable for most aggregate purposes because it swells as it absorbs water and cracks when it dries out. (488) according to the uk authorities, most clay is soft and non-granular and without chemical or physical transformation is suitable only for use as fill in earthworks, e.g. landfill linings and flood defences. clay is generally not used for foundation fill beneath buildings because its low-strength, compressibility and susceptibility to shrinking and swelling is highly likely to cause the building to move beyond its permissible limits, causing it to crack and fail. hard, granular aggregate is preferred for this purpose because it will form a much more stable platform for the building. thus, untreated clays are generally considered unsuitable for typical aggregate use (such as building foundation fill, concrete manufacture, road metal or mortar). these uses account for the vast proportion of production in the united kingdom. typical aggregate use almost always requires a hard granular material usually sand, gravel and/or a crushed hard rock such as limestone, igneous rock or sandstone, or granular material recycled from demolition waste or road planning. the only circumstances in which clay can be utilised for typical aggregate use is where the clay has been pelletised and heated to over 1 000 c in an industrial process to form a lightweight hard pellet which can be used as a granular aggregate in concrete for some specialised but minor applications. the uk authorities state that they have been unable to identify any quarry where it can be said that clay is being extracted specifically for use as aggregate. (489) however, according to the uk authorities, the properties of clay make it suitable for non-aggregate applications where the clay remains hydrated and its impermeability to water is a key requirement. the uk authorities do not consider that lining and capping landfill sites uses material as an aggregate it is not the bulk of the material that is required, but impermeability to water and leachates. specialist uses of clay include lining landfill sites, lining watercourses and lakes or ponds and flood defences. clay used for these purposes is not an aggregate use; rather than being used as bulk fill where the hard, granular properties of the material are required, the clay which is neither hard, nor granular is used to create a barrier through which liquid has restricted passage. (490) in response to the baa's observation that clay may be used for road works, the uk authorities note that the highways agency has informed the uk authorities of the uses of clay. the uk authorities maintain that clay excavated from the site of a road construction project may be used, due to its permeability for bulk earthworks such as fill and embankment construction where it does not need to be transported (i.e. clay is not specifically quarried, it is a by-product of the construction of the road). clay may be treated with lime or cement to improve its road-bearing capacity. it may be used in lining drainage channels (where its permeability is important) or as backfill for minor structures where it is not required to hold large weights. the uk authorities note that excess clay excavated from roadwork sites may be sent to landfill as a waste material and occasionally commercial bodies may heat-treat clay to produce lightweight aggregates for road construction. (491) the uk authorities, quoting the highways agency, explain that earthworks materials are divided into granular (class 1) and cohesive (class 2) categories. granular categories are aggregates materials used to provide stable, bulk fill. cohesive materials are not aggregates, but comprise materials with a smaller particle size, such that they behave cohesively, i.e. they are sticky and have limited permeability to water. (492) according to the uk authorities, clay can only be used as a granular material if it is heat-treated and pelletised. it can, however, be used as a cohesive material without heat-treatment. in these uses, the clay cannot be substituted by aggregate materials, e.g. crushed granite or limestone, as these are granular materials. clay can be substituted by pulverised fuel ash (e.g. from coal-fired power stations) as this too has cohesive properties. (493) according to the uk authorities, unlike clay, armour rock for sea defences is formed of aggregate. this is a bulk role where the hard, granular properties of uncut, irregular pieces of rock form a stable material which protects softer land from erosion by the sea. rock armour sea defences are very different to the use of clay in flood defences; rock armour resists erosion caused by water rather than containing water by being impermeable to it. the requirements of the specification depend on the severity of the marine environment, but density and aggregate abrasion value are key properties. (494) the uk authorities claim that there is no clear evidence, including in the material identified by the commission or in the material baa submitted to the general court, which shows that clay is being extracted for use as an aggregate in the united kingdom. the general court's view was expressly qualified as being subject to evidence to the contrary (see paragraphs 86-91 of its judgment in t-210/02 renv). the uk authorities have investigated the suggestions submitted by the baa as regards quarries that would be exploiting clay solely for aggregates use and concluded this is not the case. the information extracted from confidential tax records have been provided to the commission. (495) the uk authorities have contacted a quarry which baa had claimed used their clay for building a road. according to the uk authorities, the quarry explained that clay is used for road building as a stable non-permeable layer to raise the road out of the flood plain on which the stone aggregate and tarmac are placed. it is not used to replace stone aggregate as it would not be suitable without treatment (496) the uk authorities maintain that the material characteristics and value of clay makes its extraction for use as aggregates inherently unlikely. (497) according to the uk authorities, naturally occurring clay, soil or organic matter does not have 100 % purity. in defining the materials clay, soil, vegetable or other organic matter as exempt from the aggregates levy, it was therefore necessary to allow for materials which mainly comprise these materials. 5.6.6.2. assessment by the commission (498) the interested parties and the uk authorities disagree as to the use of clay as aggregate. only if such a use can be established would clay be in a factual and legal situation comparable with such of taxed materials. (499) clay is distinguished from other materials by its properties of plasticity, ability to be cut and shaped with a knife or trowel and non-permeability, which make it unsuitable for most aggregate purposes because it swells as it absorbs water and cracks when it dries out. (500) the baa claimed that uses of clay for landfill lining, flood defences and as cohesive material for road works are aggregates uses. the uk authorities, however, mention that these are not aggregate uses of clay. given that all these uses are based on the specific qualities of non-permeability and plasticity of clay and not on the bulk of the material, the commission considers that the uk authorities are entitled to view clay used for landfill lining, flood defences and as cohesive material for road works as a non-aggregate use. (501) the commission asked the uk authorities to access confidential tax records in regard to the eight clay quarries the baa submitted as extracting clay for aggregates use. the information received by the commission from the uk authorities show that none of these quarries are exploiting clay for aggregates use. some of the sites were not even quarries, but landfills. (502) following the information received the commission notes that clay is not extracted for use as aggregate. it is not used for aggregate purposes and cannot be used for aggregates purposes unless it is subjected to physical transformations, i.e. it is pelletised and heated to over 1 000 c in an industrial process to form a lightweight hard pellet. (503) the commission therefore concludes that clay cannot be used and is not extracted for use as aggregate and is, thus, in a different legal and factual situation than taxable materials in view of normal taxation rule of the agl (504) moreover, as clay does not have 100 % purity, material consisting mainly of clay is also in a different legal and factual situation than taxable materials in view of the normal taxation rule of the agl. 5.7. conclusion on selectivity (505) on the basis of the above, the commission concludes that: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including shale occurring as by-product of fresh quarrying of other taxed materials: and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; are in the same legal and factual situation as taxed aggregates in view of the normal taxation rule and objective of the agl and the exemptions for such materials cannot be explained under the nature and logic of the agl. therefore, these exemptions are selective. (506) the commission further concludes that the tax exemptions, tax exclusions and tax reliefs established in sections 17(3)(e), 17(3)(f)(i) and (ii) (except for spoil of shale that is deliberately extracted for commercial exploitation as aggregate), section 17(4)(a) (except for material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials), section 17(4)(c)(i) and (ii), 17(4)(f) (as far as clay is concerned), 18(2)(b) and 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2)(b)) of the finance act 2001, as amended by the finance act 2002 and the finance act 2007 concern materials that are not in the same factual and legal situation as taxable material in view of the objective of the agl and are, thus, not selective. 5.8. advantage (507) by granting the exemptions for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; instead of taxing them, the united kingdom is foregoing resources and relieves the beneficiaries of these exemptions from a charge they should normally pay. therefore, the measure entails a selective advantage to the beneficiaries of the exemptions for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate. 5.9. state resources and imputability (508) the measure is financed from state resources as the state is forgoing resources. the measure is also imputable to the state as it was established by way of legislation. 5.10. distortion of competition and effect of trade (509) there is trade between member states in the aggregates sector and producers of the exempted aggregates are in competition with other aggregate producers. the commission has also received extensive submission as to the distortions of competition caused by the exemptions from the agl. moreover, the united kingdom has a natural land border with the republic of ireland and aggregates trade across this border is extensive (84). (510) therefore, the exemptions from the agl for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; might distort competition and have an effect on trade. 5.11. conclusion on the existence of aid (511) the commission concludes that the exemptions from the agl for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; constitute state aid. (512) the commission concludes that the tax exemptions, tax exclusions and tax reliefs established in sections 17(3)(e), 17(3)(f)(i) and (ii) (except for spoil of shale that is deliberately extracted for commercial exploitation as aggregate), section 17(4)(a) (except for material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials), section 17(4)(c)(i) and (ii), 17(4)(f) (as far as clay is concerned), 18(2)(b) and 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2)(b)) of the finance act 2001, as amended by the finance act 2002 and the finance act 2007, do not constitute state aid. 6. legality of the aid (513) although the agl was notified by the uk authorities before being put into effect, the uk did not observe the standstill clause of article 108(3) since the agl entered into force on 1 april 2002 before the commission adopted its decision on 24 april 2002 to not raise objections. the commission decision was timely challenged and eventually annulled by the general court on 7 march 2012 (t-210/02 renv). thus that decision must be considered void with regard to all persons as from the date of its adoption. since the annulment of the commission decision put a stop, retroactively, to the presumption of its lawfulness, the implementation of the aid in question since 1 april 2002 must be thus regarded as unlawful (85). according to the case-law the recipients of the aid cannot entertain legitimate expectations as to the lawfulness of the implementation of the aid, since the commission decision not to raise objections to the measure was challenged in due time before the general court (86). 7. assessment of the compatibility of the state aid 7.1. legal basis (514) given the environmental purpose of the agl, the commission had examined in the opening decision the compatibility with the internal market of exemptions and reliefs from the agl in accordance with article 107(3)(c) tfeu and in the light of guidelines on state aid for environmental protection. (515) as mentioned in recital 513 above, the result of the annulment of the commission decision is that the aid must be deemed unlawful. in accordance with the commission notice on determination of the applicable rules for the assessment of unlawful state aid (87), paragraph 82 of the 2001 eag and paragraph 205 of the 2008 eag the commission had assessed the compatibility of the tax exemptions and reliefs under the 2001 eag in so far as they were applied between 1 april 2002 and 31 march 2008 and under the 2008 eag as far as they were applied as from 2 april 2008 and until 31 march 2014, the date of the suspension of the exemptions. (516) the commission has received comments from the baa and argumentation from the uk authorities as regards the compatibility of the exemptions from the agl. the commission will only present and address the comments relating to the exemptions from the agl for shale and products consisting mainly of shale when used as aggregate and shale spoil when extracted together with shale that is used as aggregate. (517) mention should be made that both the comments from the baa and the argumentation submitted by the uk authorities relates mostly to all or some of the exemptions as regards to which the commission raised doubts in the opening decision and there are few specific arguments relating exclusively to shale. (518) moreover, the submission from the uk authorities is based on the assumption that shale is not deliberately extracted for commercial exploitation as aggregates and they provided no compatibility grounds specific for the situation at hand in which the commission found that there are instances when shale is deliberately extracted for commercial exploitation as aggregates. 7.1.1. comments received by the commission (a) comments received from the baa on 17 january 2014 (519) the baa considers that the tax exemptions, exclusions and tax reliefs from the agl cannot be found compatible with the internal market in accordance with article 107(3)(c) tfeu and the environmental aid guidelines and provide extensive comments in this regard. they claim that, the application of these exemptions undermines the environmental objective pursued by the agl, namely, the shifting of demand towards alternative sources of aggregates. (520) the uk authorities maintain that none of the exemptions under investigation relate to material which is deliberately extracted for use as aggregate. they claim that, the exemptions as regards to which the commission expressed doubts in the opening decision only extend to materials that arise unintentionally and unavoidably during non-aggregate extraction. in accordance with the uk authorities, they have not found any evidence that the exempted materials are being deliberately extracted for use as aggregate. (521) in the uk authorities' view the use of unintentional by-product or waste as aggregate is environmentally preferable to the undertaking of additional aggregate quarrying. they claim that the exemptions do not amount to state aid. each exemption under investigation leads to an improvement in environmental protection in at least one of the following two ways: (i) the exemption helps to shift demand away from further aggregate quarrying; and/or (ii) the exemption helps to reduce the build-up of waste. (522) the united kingdom contends that if any of the exemptions under investigation give rise to state aid, that aid is in any event compatible with the internal market in accordance with article 107(3)(c), including in the light of the 2001 guidelines and the 2008 environmental aid guidelines and/or on the basis of the direct application of articles 107(3)(b) or (c) tfeu. (523) the uk authorities maintain that the exemptions to the agl fall outside the strict scope of state aid guidelines and that their compatibility should be assessed directly under articles 107(3)(b) or (c) tfeu. the uk authorities quote the case n 629/2008 in relation to the united kingdom's carbon reduction commitment scheme. the commission considered that since the respective scheme and its modalities were designed at protecting the environment through the re-distribution of resources in favour of undertakings which protect the environment the most, the guidelines were not applicable and proceeded to an assessment directly under the treaty. (524) the uk authorities claim that the 2008 eag, in the chapter regarding tax exemptions, regard situations in which an undertaking is exempted from the scope of environmental tax because of: (a) concerns over the impact of the tax on the competitiveness of certain undertakings; (b) other economic concerns; and (c) the inability of the member state to impose the tax at a higher rate without granting some exemptions to certain undertakings. they claim that, the guidelines are designed to ensure that exemptions from environmental taxes do at least contribute indirectly to the environmental aim of the tax to be introduced and that the exemptions do not undermine the general environmental objective being pursued. (525) the uk authorities submit that the objective of the agl as a whole is the protection of the environment and the exemptions granted from the scope of the agl are deliberately designed to achieve the twin objectives of: (a) shifting demand from freshly extracted aggregate to waste and other by-products; and (b) reducing the build-up of waste tips. therefore, the exemptions contribute to and ensure that the objective of the agl is fulfilled. they are one of the key ways in which the environmental objective of the agl is achieved. therefore the uk authorities contend that, it may be the case that, neither the 2001, nor the 2008 eag are applicable to the measure. (526) relying directly on article 107(3) tfeu, therefore, the united kingdom submits that the purpose of any aid arising from the exemptions under investigation can be categorised as either: (i) aid to promote the execution of an important project of common european interest i.e. the protection of the environment (article 107(3)(b) tfeu); or (ii) aid to facilitate the development of certain economic activities (the use of recycled aggregate or waste products as aggregate) where such aid does not adversely affect trading conditions to an extent contrary to the common interest (article 107(3)(c)). (527) the uk authorities maintain that, the exemptions are a necessary and proportionate means of achieving the environmental objective of the agl and any aid arising from the exemptions would lead to very little or no distortion of competition. the exemptions therefore do not adversely affect trading conditions to an extent contrary to the common interest. (528) the commission will assess the measure under the 2001 eag, the 2008 eag and conduct an alternative assessment directly under article 107(3)(c) tfeu. as explained below, the commission considers that article 107(3)(b) tfeu cannot be applied to the measure at hand. 7.2. assessment under the 2001 eag (529) paragraph 47 of the 2001 eagh provides that: when adopting taxes that are to be levied on certain activities for reasons of environmental protection, member states may deem it necessary to make provision for temporary exemptions for certain firms notably because of the absence of harmonisation at european level or because of the temporary risks of a loss of international competitiveness. in general, such exemptions constitute operating aid caught by article 87 of the ec treaty. in analysing these measures, it has to be ascertained among other things whether the tax is to be levied as the result of a community decision or an autonomous decision on the part of a member state. (530) paragraph 48 further provides that: if the tax is to be levied as the result of an autonomous decision on the part of a member state, the firms affected may have some difficulty in adapting rapidly to the new tax burden. in such circumstances there may be justification for a temporary exemption enabling certain firms to adapt to the new situation. (531) in this connection, the commission noted in the recital 149 of the opening decision that the agl is a tax to be levied on the extraction of aggregates for reasons of environmental protection. the commission further noted that the agl is to be levied as a result of an autonomous decision by the uk authorities. (532) the complainant had (88) contended that some of the exemptions have been granted in order to protect the international competitiveness of the producers of exempted materials. this would suggest that certain firms may have some difficulty in adapting rapidly to the new tax burden and, in that case, the exemptions from the agl could be assessed under paragraphs 47 and 48 of the 2001 eag. (533) at the time of the opening decision, the uk authorities had not provided any compatibility grounds for the measure and the commission did not have sufficient elements to conclude whether the conditions laid down in paragraphs 47 and 48 of the 2001 eag were met. nor did the commission have sufficient elements to conclude whether the exemptions could be regarded as compatible with the internal market based on provisions other than paragraphs 47 and 48 of the 2001 eag. (534) the baa contends that the exemptions from the agl could not be found compatible in accordance with the 2001 eag. according to the baa, the exemptions for shale, slate and clay do not make a significant contribution to protecting the environment (paragraphs 50 and 51(2)(a)). the exemptions, by their very nature, undermine the general objectives pursued and do not have an appreciable positive impact in terms of environmental protection. (535) the baa maintains that the exemptions for shale, slate and clay do not constitute temporary exemptions justifiable under paragraphs 47 and 48. they claim that the agl intends to make a material such as shale quarried for use as aggregate competitive. (536) the baa maintains that the exemptions do not constitute operating aid which may be authorised under paragraph 51. no agreements have been concluded under which the recipient firms undertake to achieve environmental protection objectives during the period of the exemptions. further, according to the baa, the alternative condition under paragraph 51(1)(b) has not been met, as the firms eligible for the reduction have not paid a significant proportion of the agl. (537) the uk authorities contend that the result of applying the agl to the exempted materials would be to increase production costs for operators in the specific market sectors which could not be passed on to their customers. this would lead to a marked decrease in the amount of waste and by-products being sold for use as aggregate, and a corresponding increase in the quarrying of fresh aggregate. (538) the uk authorities claim that, the effect of applying the agl to the exempted materials would be to undermine its environmental objective as it would no longer operate to shift demand to unavoidable waste and by-products generated by the extraction of these materials. 7.2.1. assessment by the commission (539) the uk authorities rely exclusively on paragraphs 47 and 48 of the 2001 eag to justify the compatibility of the measures at issue. (540) they seem to argue that the quarries exploiting the exempted aggregates will encounter serious difficulties in dealing with the tax burden, as summarised in recital 537 above. (541) the commission, however, notes that the 2001 eag only permit temporary exemptions enabling firms to adapt to the new situation which is not the case for the exemptions under the agl. the exemptions at hand are not limited in time and have applied already for 12 years. the application of the exemptions has been temporarily suspended due to the formal investigation procedure of the commission, however, the suspension legislation mentions expressly that all exemptions will be reinstated once the commission's investigations is complete if the results are positive. (542) the commission therefore concludes that paragraphs 47 and 48 of the 2001 eag could not serve as basis for declaring the exemptions from the agl for shale and products consisting mainly of shale when used as aggregate and shale spoil when extracted together with shale that is used as aggregate compatible with the internal market. (543) the commission further notes that no other provisions of the 2001 eag could serve as a basis for determining the compatibility of the agl as shale producers do not pay a significant portion of the tax (paragraph 51(1)(b)) and no agreements have been concluded between the uk authorities and the shale producers (paragraph 51(1)(a)). (544) on the basis of the above the commission concludes that the exemptions from the agl for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate cannot be found compatible with the internal market on the basis of the 2001 eag. 7.3. assessment under the 2008 eag (545) given the environmental purpose of the agl, with the occasion of the opening decision, the commission had also examined the tax exemptions and exclusions under chapter 4 of the 2008 eag that concerns operating aid in the form of reductions of environmental taxes. (546) environmental taxes are defined in paragraph 70(14) of the 2008 eag as taxes whose specific tax base has a clear negative effect on the environment or which seek to tax certain activities, goods or services so that the environmental costs may be included in their price and/or so that producers and consumers are oriented towards activities which better respect the environment. (547) the commission acknowledged that it is not contested that the extraction of aggregates has a negative impact on the environment, in particular in the form of damage to biodiversity, dust, noise, and visual amenity. this is further substantiated by the studies commissioned by the uk authorities referred to in recital 17 of the opening decision. the agl thus constitutes an environmental tax within the meaning of point 70(14) of the 2008 eag and the tax exemptions could be assessed under chapter 4 of the 2008 eag in so far as they applied as of 2 april 2008. 7.3.1 environmental benefit (548) in accordance with paragraph 151 of the 2008 eag, aid in the form of reductions from environmental taxes will be considered compatible with the internal market provided that it contributes at least indirectly to an improvement of the level of environmental protection and that the tax reductions do not undermine the general objective pursued. as explained in paragraph 57 of the 2008 eag, reductions from environmental taxes concerning certain sectors or categories of undertakings are accepted under chapter 4 of the 2008 eag if they make it feasible to adopt higher taxes for other undertakings, thus resulting in an overall improvement of cost internalisation, and to create further incentives to improve on environmental protection. the commission considered that this type of aid may be necessary to target negative externalities indirectly by facilitating the introduction or maintenance of relatively high national environmental taxation. (549) the commission considered that, in this case, the possibility to grant exemptions for certain materials might have enabled the united kingdom to introduce the agl. (550) the baa maintains that the exemptions do not fulfil the criteria enshrined by the 2008 eag and could not be found compatible on this basis. (551) the baa claims that, the exemptions do not contribute to an improvement of the level of environmental protection and, in fact, undermine the general objective pursued (paragraph 151 of 2008 eag). (552) the baa refers to a quarry mentioned in the cornish building stone and slate guide 2007 as a slate and shale quarry producing walling stone to illustrate that quarries are exempted just because they produce shale and slate, thus undermining the objective of the tax as it creates even greater demand in the construction industry for such materials. as per their submission, the baa is aware (89) of a number of instances where quarry operators have opened slate and shale quarries, simply as a result of and in order to benefit from the advantages deriving from the agl exemptions. moreover, quarries subject to the agl have experienced a significant reduction in sales of low-value by-product or waste such as scalpings and quarry fines. stockpiles of these materials have increased by over 500 %. according to the baa, this demonstrates that the agl has completely failed to achieve its environmental objective as some piles are replaced with others. (553) the baa submits examples of lime quarries the primary product of which is un-taxed agricultural lime, and which have accumulated such high heaps of waste and unsold by-product, that the production of agricultural lime is impeded even with increased demand. (554) the baa claims that points 158(b) and 158(c) of 2008 eag aim at preventing the placing of a business at a competitive disadvantage on the basis that it is subject to taxation whereas its direct competitors are not. however, according to the baa, in this instance, it is clear that competitors of the producers which benefit from the exemption are in fact subject to taxation and are unable to sell their products due to the disadvantages caused by the agl exemptions. (555) the baa claims that the exemption for shale is not necessary and proportionate (paragraphs 155 to 159). the baa alleges that the exemptions for slate, clay and shale are not based on objective criteria and that operators producing the same products are treated very differently, based on the geology of their area. moreover, none of the criteria for proportionality are met and the exemptions go beyond a period of 10 years. (556) the baa have provided to the commission a separate letter from a quarry regarding the effects of the agl on their sales of low value products (secondary aggregates), i.e. sub-bases, scalpings, crusher-run, quarry fines which have fallen by two thirds. (557) the baa has provided to the commission a study of the effects on aggregates production since the introduction of the agl in 2002 drafted by bds marketing research ltd in february 2014 for the baa. (558) the findings of the study are as follows: (559) an aggregates levy of gbp 2 per tonne can represent a half or a third of the total cost of lower value aggregates to the customer. (560) the conclusion of the study is that the main effect of the agl has been an increase in the use of exempted aggregates (primary and by-product) at the expense of taxed by-products of taxed high value materials. quarrying companies have found it difficult often impossible to find markets for these remaining lower value materials. as a result, quarrying companies have had to landfill these materials. the net change has therefore been a wider use of untaxed aggregates (primary and by-product) at the expense of taxed by-product aggregates which previously were sold, but are now a waste material. one waste material has simply been replaced by another waste material. on occasions, this has involved sterilising good quality reserves. (561) the report mentions that since 2001 sales of primary (high value) aggregates fell by 24,9 %, due to the recession. sales of taxed by-product aggregates have fallen by 60 %, i.e. 31,5 million tonnes, since introduction of the agl in 2002. sales of taxed by-products amounted in 2001 to 52 190 and in 2011 to 20 648 and sales of taxed primary (high value) aggregates fell from 188 843 in 2001 to 141 754 in 2011. the sales decrease is also presented in a graph: (562) three detailed graphs are included as regards the evolution of sales of taxed by products in the following categories: hardstone, sandstone, limestone and sand and gravel. while for sand and gravel the sales appear to have maintained at a constant level with a recent slight increase, the sales of the former three materials appear to have declined. (563) volumes of exempt aggregates sold appear to have increased from less than 5 million tonnes to nearly 30 million tonnes since the introduction of the agl. these figures exclude quarries that produce only exempt aggregates as these sites are not required to produce returns. thus, according to the study, the total increase in exempt volumes would be even higher than the six fold increase suggested by the figures. the study shows that there has been a steady increase in volumes of sales of exempt aggregates every year. it concludes that an increasing number of quarries are gaining full or partial exemptions, i.e. taxable sales are being converted into exempt sales. (564) demand for recycled aggregates has increased only slightly since the introduction of the agl in 2002. it was the introduction of the landfill tax in 1996 that resulted in an increase in demand for recycled aggregates. according to bds, the place of the low value taxed aggregates has been taken by the low value aggregates benefiting from the exemption as illustrated in the table below: bds estimates of the low-value aggregates market, by type of aggregate 2001 2012 change (%) mt % mt % quarries (taxed low value materials only) 52,2 51,1 19 19,8 (63,6) recycled aggregates 45 44,0 47 49,0 4,4 exempt aggregates 5 4,9 30 31,2 500,0 total 102,2 100,0 96 100,0 (6,1) (565) the united kingdom claims that if the exemptions were considered to give rise to state aid they would be compatible with the 2008 eag because they: (i) contribute, at least indirectly, to an improvement in the level of environmental protection; and/or (ii) enabled the united kingdom to introduce the agl as the exemptions made it feasible to adopt higher environmental taxes for other undertakings engaged in the production of aggregate, which further incentivises the achievement of the agl's environmental objective and results in an overall improvement of cost internalisation. (566) the uk authorities maintain that through the exemptions, the agl aims to encourage the use of recycled or by-product material (which arises during a process not intended to produce aggregate), so as to reduce the demand for virgin aggregate and thereby reduce the environmental damage associated with aggregates quarrying. (567) the uk authorities submit that each exemption under investigation leads to an improvement in environmental protection in at least one of the following ways: (i) helps to shift demand away from further aggregate quarrying; and/or (ii) helps to reduce the build-up of waste. (568) the exemption for shale meets criteria laid down in chapter 4 of the 2008 eag. shale is suitable for use as aggregate in some instances, but its physical composition and the slabby shapes which it forms render it unsuitable for more-high end applications. the uk authorities claim that since shale is not known to be extracted for the specific purposes of commercial exploitation as aggregate, it is only obtained as an unavoidable by-product. the use of shale reduces the demand for freshly extracted aggregate, and thus, its exemption from the agl reduces the environmental damage that is associated with aggregate extraction. its exemption from the levy also helps to reduce the build-up of waste heaps of material and reduces the visual damage associated with that. (569) moreover, as regards spoil of shale extraction, the uk authorities claim that through incentivising the use of spoil which arises unintentionally and unavoidably, the exemption shifts demand away from quarried aggregate, thereby reducing the environmental damage caused by it. (570) the uk authorities argue that even if the commission were to find that there is evidence that any of the exempted materials are deliberately extracted for use as aggregate, the exemptions afforded to these materials would still directly contribute to the achievement of the agl's environmental objective. they claim that, if there is any evidence that any exempted materials are in fact being deliberately extracted for use as aggregate, this would at most be on a very small scale at a strictly limited number of quarries. according to the uk authorities, if it were the case that a very limited amount of deliberate quarrying of the exempted materials for use as aggregate took place, that would not alter the fact that there is an objective justification for exempting the relevant materials. the justification would be that (a) the materials are not normally extracted for use as aggregate; and (b) the quarrying of these materials generates a large amount of unavoidable by-product and waste which can be used as aggregate when the right commercial incentives are present. (571) the uk authorities contend that even if a small number of quarries were to be deliberately extracting exempt material for use as aggregate, the exemptions remain justified if they make it feasible to adopt higher taxes for other undertakings, thus resulting in an overall improvement of cost internalisation and providing further incentives to achieve the agl's environmental objective. (572) the uk authorities provided argumentation in this regard for colliery spoil shale. 7.3.1.1. assessment by the commission (573) the commission has already established that the agl is a tax pursuing an environmental objective. (574) however, a general exemption for shale appears to undermine the environmental objective of the agl as it has the potential to encourage the extraction of shale and shale spoil, as also found by the general court (90). (575) shale is a material which can be used as aggregate, albeit in somewhat limited occasions as low-grade aggregate, and which is being used as aggregate and extracted specifically for use as aggregate, as the interested parties submissions and evidence received by the commission show. shale extracted specifically for use as aggregate is, in fact, a freshly extracted material and an exemption simply incentivises further extraction. (576) therefore, given that the commission has found cases where shale is deliberately extracted for commercial exploitation as aggregate, a general exemption for shale only makes its extraction more competitive and encourages further extraction. (577) in addition, shale is currently exempted when it is extracted as a by-product of material which is taxed (such as gritstone, sandstone and limestone). the commission noted above in recital 365 that the exemption does differentiate between shale and other taxed materials, such as other by-products of the main extraction of gritstone, sandstone and limestone. the commission also considered whether such tax differentiation could be justified by the objective of the agl. however, the commission has not received any evidence from the uk authorities or from interested parties showing that this exemption contributes to the achievement of the agl's objective which is to reduce the fresh quarrying of material for aggregates purposes. (578) moreover, the exemption does not help reduce the build-up of waste in general as it simply replaces the build-up of heaps of shale with the build-up of heaps of taxed low quality aggregates which can no longer find a buyer. (579) the uk authorities claim that the exemption for shale made it feasible to adopt higher taxes for other undertakings; however they did not provide arguments for such claim as to allow the commission to consider this justification in its assessment. the only argumentation provided by the uk authorities in this regard relates to colliery spoil, the exemption for which was already considered by the commission not to constitute state aid. (580) the uk authorities claim that even if the commission found evidence that shale is extracted for commercial exploitation as aggregate, the exemption would still serve an environmental purpose due to the limited amount of deliberate quarrying. however, the commission has found that only the exemptions from the agl granted for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; constitute state aid, and not in general the exemption for shale and spoil from the extraction of shale. therefore, the assessment of the commission already differentiates shale in view of its deliberate quarrying for commercial exploitation as aggregate and does not regard the large amount of shale and unavoidable spoil of shale when it is not deliberately quarried for commercial exploitation as aggregate. therefore, the justification of the uk authorities based on the limited exploitation as aggregate cannot serve as a basis for a common assessment of all shale and all shale spoil. (581) in line with the findings of the general court (91), where there are quarries deliberately extracting shale for commercial exploitation as aggregates, there is no longer any guarantee that the exemption does not lead to more fresh extraction of the exempted material. (582) the commission therefore concludes that a general exemption for shale and shale spoil undermines the general environmental objective pursued by the agl as it may encourage fresh quarrying of such material. 7.3.2. proportionality (583) taxation of aggregates has not been harmonised at union level and the commission has therefore analysed proportionality of the proposed measure in the light of paragraph 159 of the 2008 eag. (584) with respect to proportionality, each beneficiary of a reduction or exemption must in accordance with paragraph 159 of the 2008 eag fulfil one of the following criteria: (a) it must pay a proportion of the national tax which is broadly equivalent to the environmental performance of each individual beneficiary compared to the performance related to the best performing technique within the eea. the beneficiaries can benefit at most from a reduction corresponding to the increase in production costs from the tax, using the best performing technique and which cannot be passed on to customers. (b) it must pay at least 20 % of the national tax unless a lower rate can be justified. (c) it can enter into agreements with the member state whereby they commit themselves to achieve environmental objectives with the same effect as what would be achieved under points (a) or (b) above, or if the community minima were applied. (585) the uk authorities claim that whilst the exemptions do not ensure that the beneficiary pays at least 20 % of the national tax, a complete exemption can be justified by the limited distortion of competition. (586) according to the uk authorities, even combined, the exempt materials under investigation make up only a very small proportion of the aggregates market in the united kingdom. the uk authorities submit, using data available from the office for national statistics, the department for local communities and government and the department for business, innovation and skills, that of the total of 205 million tonnes of aggregate sold in great britain each year, only 6 million are derived from the materials subject to the commission investigation, of which 3 million are derived from china clay and ball clay waste. according to the mineral products association, the largest trade body for aggregate producers in the united kingdom, the exemptions under investigation would account for only around 3 % of the uk aggregate market. (587) the uk authorities submit that the impact on competition of the exempted materials is limited by the costs of transporting the aggregate. they maintain that the transport cost amounts to 8,55 pence per tonne. on average then, the exemption from the gbp 2 per tonne levy will only give the producer of the exempt material a competitive advantage within a 23-mile radius. according to the uk authorities, in case of a round trip the exempt material will only be able to be transported for an extra 11,6 miles. moreover, the uk authorities claim that, the quantities supplied are generally very small as the exempt materials are only suitable for low-grade aggregates. if more traditional aggregates are required for a project, no distortion of competition will occur. 7.3.2.1. assessment by the commission (588) information received by the commission discloses the exemption for shale significantly distorts competition. (589) numerous interested parties claimed that shale is used as aggregates and has a significant impact on local markets, especially in northern ireland. apparently, in northern ireland there have been hundreds of thousands of tonnes of shale imported from donegal, in ireland. shale from ireland is sold in construction markets across the whole of northern ireland. construction projects along the border with ireland have used exempt aggregates from ireland classified as shale. (590) interested parties also pointed to a particular problem with shale deposits that are being used on large construction sites, especially along the glasgow-edinburgh corridor. around 1 million tonnes of shale was used for roads construction. this has affected competition between different quarries and prevented other quarries from selling their low value by-products. (591) moreover, the commission notes that the market for shale aggregates is rather local and that the national market for aggregates in the united kingdom does not offer a good assessment base. due to the low prices of the shale aggregates and the high transportation costs, as also pointed out by the uk authorities, they can only travel for a limited distance in order to supply customers and be able to compete with other low-grade aggregates producers. therefore, an assessment of this type would be more relevant on a local level. the information received by the commission from interested parties point to the fact that the exemption for shale displaces sales of low-grade aggregates that are taxed with which they compete on a local level. (592) the commission therefore concludes that a general exemption for shale and shale spoil distorts competition on local aggregates markets. the arguments of the uk authorities as regards the limited distortion of competition of the exemption for shale cannot be accepted. therefore, such justification cannot serve the exclusion of the payment of 20 % of the agl. (593) the measure is therefore not proportional as required by paragraph 159 of 2008 eag. (594) the commission concludes, without considering it is required to assess also the necessity of the measure, that the exemptions from the agl granted for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate are not compatible with the internal market on the basis of the 2008 eag. 7.4. alternative assessment under article 107(3)(b) tfeu aid promoting the execution of an important project of common european interest (595) as mentioned above, the uk authorities contend that the exemption for products consisting wholly or mainly of shale and shale spoil could be found compatible with the internal market on the basis of article 107(3)(b) tfeu as promoting environmental protection as a project of common european interest. the uk authorities did not provide any arguments for the assessment of the compatibility of the measures on such basis. (596) the commission has set out in paragraph 147 of the 2008 eag conditions in which it would consider that aid may be considered compatible with the common market according to article 107(3)(b) tfeu. (597) those conditions are the following: (a) the aid proposal concerns a project which is specific and clearly defined in respect of the terms of its implementation including its participants, its objectives and effects and the means to achieve the objectives. the commission may also consider a group of projects as together constituting a project; (b) the project must be in the common european interest: it must contribute in a concrete, exemplary and identifiable manner to the community interest in the field of environmental protection, such as by being of great importance for the environmental strategy of the european union. the advantage achieved by the objective of the project must not be limited to the member state or the member states implementing it, but must extend to the community as a whole. the project must present a substantive contribution to the community objectives. the fact that the project is carried out by undertakings in different member states is not sufficient; (c) the aid is necessary and presents an incentive for the execution of the project, which must involve a high level of risk; (d) the project is of great importance with regard to its volume: it must be substantial in size and produce substantial environmental effects. (598) furthermore, in order to allow the commission to properly assess such projects, the common european interest must be demonstrated in practical terms: for example, it must be demonstrated that the project enables significant progress to be made towards achieving specific environmental objectives of the community (paragraph 148 eag 2008). (599) the commission notes that while the agl serves a certain policy of a particular member state it does not seem to relate to a project and a fortiori not a project which would be specific and clearly defined in respect of the terms of its implementation. (600) furthermore, it does not appear possible for the measure to qualify as a project of common european interest as it remains a policy that is national in scope. (601) in addition, since the exemptions from the agl granted for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; do not seem to have themselves any environmental benefit as they simply encourage the extraction of such material, it cannot be said how such exemptions contribute to an increase in environmental protection. (602) more importantly, as the general court made clear in joined cases t-254/00, t-270/00 and t-277/00, hotel cipriani, an aid measure can benefit from the derogation provided for in [article 107(3)(b) of the treaty] only if it does not benefit mostly the economic operators of one member state rather than the community as a whole (92). that criterion is not fulfilled where the national aid scheme merely seeks to improve the competitiveness of the undertakings concerned, in the case at hand to incentivise the use of one type of aggregate. (603) consequently, the commission considers that the exemptions from the agl granted for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; cannot be found compatible with the internal market on the basis of article 107(3)(b) tfeu as promoting environmental protection as a project of common european interest. 7.5. alternative assessment under article 107(3)(c) tfeu development of certain economic activities or of certain economic areas (604) for an assessment of the aid measure under article 107(3)(c) of the treaty, it should be examined if the aid in question: (a) meets a clearly-defined objective of common interest; (b) is necessary, appropriate and proportionate for achieving this objective; (c) does not affect competition and trade between member states to an extent contrary to the common interest. (605) as a preliminary remark, the commission notes that measures involving operating aid are in principle incompatible under article 107(3)(c). (606) the agl contributes to environmental protection as already established above in recital 87 in line with the findings of the general court. environmental protection could be regarded as an objective of common eu interest. (607) according to the uk authorities, the exemptions from the agl granted for products consisting wholly or mainly of shale and shale spoil, also pursue the objective of environmental protection by seeking to shift demand from freshly extracted aggregates to shale (wholly or mainly) and to shale spoil. the uk authorities claim that these materials are not traditionally extracted for use as aggregates, and that they have no indication that they are intentionally extracted for use as aggregates. (608) the uk authorities provided information as to the state of the aggregates sector before the introduction of the agl and the necessity to introduce a tax that would diminish the fresh extraction for aggregates use while providing suitable alternatives. (609) the commission notes that, in principle, the exemptions from the agl served as further means to fulfil its environmental purpose. (610) there are also indications that the same decrease in the extraction of fresh aggregates could not have been achieved without the agl and its exemptions. in this regard, numerous comments from interested parties point to the fact that materials exempted under the agl have successfully replaced freshly extracted aggregates products. both high quality primary products aggregates, but, particularly, lower quality secondary aggregates have been replaced by exempted materials. this does not include: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate. (611) shale appears to have various uses as aggregate and to also be specifically extracted for aggregates use as detailed in recital 341. (612) therefore, an exemption for shale and spoil of deliberately quarried shale only makes its extraction more competitive and risks encouraging further shale extraction as explained in recitals 575 to 580, shale that is deliberately extracted for commercial exploitation as aggregate is similar to taxed materials freshly extracted for aggregates use, the same is applicable to shale extracted as a by-product of taxable materials which is the same as other by-products of taxable materials which are taxed. the exemptions only make one category of freshly extracted material (shale) less expensive than the others. this can encourage shale's fresh extraction. this conclusion is supported by the findings of the general court (93). (613) shale is a rock and its quarrying has similar environmental effects to other minerals' quarrying. there have been no claims made by the uk authorities aiming to show that shale is a more environmentally friendly alternative to other sources of aggregates even if it is specifically obtained for commercial exploitation as aggregate. interested parties have also argued that the exemption from the agl damages the environment even more than the extraction process itself as the exemption allows the shale to be transported farther and still compete with other taxed materials. transportation is ensured by lorries which pollute the air and damage the roads due to their weight. the commission notes that the cost of transportation represents a very high part of the cost of selling shale (see recital 292) meaning that shale producers use the margin offered by the agl to transport the material farther than they usually would and compete on a wider area with other quarries. (614) in addition, although arguing in general that the exemptions under investigation aim at helping to reduce the build-up of waste, the uk authorities have not demonstrated that the exemptions considered as state aid with regard to shale indeed can contribute to such reductions. the commission considers that these exemptions rather simply replace the build-up of heaps of spoil from shale fresh extraction for aggregates use and shale as by-products from extraction of taxed materials with the build-up of heaps of taxed low quality aggregates which can no longer find a buyer. (615) the commission therefore concludes that even if environmental protection is an objective of common interest, a general exemption for shale and spoil of shale when freshly extracted, as currently in place, actually risks to undermine this interest and does not represent an appropriate instrument for achieving it. (616) the commission further notes, as also described in recitals 589 and 590, the highly distortive nature of the operating aid granted to shale producers which, in accordance with interested party submissions, has driven other aggregates producers off the market or has displaced other low-grade aggregates that normally compete with shale as they cannot compete with the low prices shale producers can offer. (617) since the commission found that the factual and legal situation of: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; is comparable to that of taxed aggregates under agl, the tax exemption of these materials may be justified only in accordance with the environmental objectives of the agl if it could be demonstrated that the environmental objectives of the agl can be nevertheless pursued by these materials. (618) however, as explained above in recitals 611 to 615 and in line with the findings of the general court (94), the commission considers that since shale is specifically extracted for commercial exploitation as aggregate and that since there are no indications that it would be more environmentally friendly than other aggregates, the environmental objectives of the agl cannot be pursued by exemptions for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate. (619) the commission has not received any compatibility grounds from the uk authorities as regards shale or spoil of shale that are deliberately extracted for commercial exploitation as aggregate that it could take into account in its assessment on the compatibility of the said agl exemptions with the internal market. (620) therefore, the commission concludes that the exemptions from the agl granted for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; cannot be regarded as compatible with the internal market on the basis of article 107(3)(c) tfeu. 8. conclusion and recovery (621) the commission concludes that the exemptions from the agl granted for: (i) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (ii) spoil of shale that is deliberately extracted for commercial exploitation as aggregate; which have been unlawfully implemented, represent state aid that is incompatible with the internal market. (622) according to the treaty and established case-law, the commission is competent to decide that the member state concerned must abolish or alter aid when it has found that it is incompatible with the internal market (95). the court has also consistently held that the obligation on a member state to abolish aid regarded by the commission as being incompatible with the internal market is designed to re-establish the previously existing situation (96). (623) in this context, the court has established that this objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation prior to the payment of the aid is restored (97). (624) in line with the case-law, article 14(1) of council regulation (ec) no 659/1999 (98) states that 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 [ ]. (625) thus, given that the exemptions from the agl granted for the material specified in recital 620 of this decision were implemented in violation of article 108 of the treaty, and are to be considered as unlawful and incompatible aid, they must be recovered in order to re-establish the situation that existed on the market prior to their granting. recovery should cover the time from when the aid was put at the disposal of the beneficiary (i.e. the day from which the beneficiary would have been obliged to pay the agl if the unlawful and incompatible exemptions from the agl had not existed) until the day when the advantage of the beneficiary ceased to exist. the sums to be recovered should bear interest until effective recovery. (626) as the exemptions constitute forgone revenues by the uk authorities, the recovery of the aid entails that the beneficiaries of the exemptions should pay the agl, for the period of its application, together with interest until effective recovery. (627) the commission acknowledges that shale material which: (i) is extracted as by-product of coal extraction; or (ii) is used in ceramic processes; or (iii) is used in place of clay, slag or other materials as a source of aluminosilicate in the manufacture of cement; or (iv) is otherwise demonstrably used for other than aggregate purposes; should not be considered commercially exploited as aggregate and should therefore be excluded from recovery. (628) there should be no obligation to recover aid that had been granted under the scheme which fulfils all the conditions set out in a de minimis regulation or in a block exemption regulation adopted on the basis of articles 1 and 2 of council regulation (ec) no 994/98 (99) but applicable at the time the aid was granted. (629) as cumulation is excluded for the same eligible costs, where the total amount of aid received by a beneficiary is more than eur 200 000, the uk authorities should recover it in its entirety, as the de minimis regulations enacted on the basis of article 2 of regulation (ec) no 994/98 which were applicable at the time the aid was granted cannot be made use of. (630) in order to define the beneficiaries of the unlawful and incompatible aid and the respective aid amounts, the uk authorities should first determine all companies which produced shale and products consisting mainly of shale during the period between 1 april 2002 and the present (shale producers). the uk authorities should then, by means of all available sources of information, including public information and confidential tax records, establish the amounts of shale material specified in recital 621 of this decision commercially exploited by these shale producers. should it not be possible to establish these amounts on the basis of the available information, the uk authorities should request the shale producers to demonstrate to what extent the shale material they produce is (and to what extent it is not) the material specified in recital 621 of this decision, has adopted this decision: article 1 1. the aid scheme consisting of the exemptions from the aggregates levy established for in section 17(4)(a) and 17(3)(f)(i) of the finance act 2001 as amended by the finance act 2002 and the finance act 2007 granted for: (a) material wholly or mainly consisting of shale that is deliberately extracted for commercial exploitation as aggregate, including here shale occurring as by-product of fresh quarrying of other taxed materials; and (b) aggregates consisting wholly of the spoil from any process by which shale that is deliberately extracted for commercial exploitation as aggregate has been separated from other rock after being extracted or won with that other rock; put into effect by the united kingdom in breach of article 108(3) tfeu are incompatible with the internal market. 2. the tax exemptions, tax exclusions and tax reliefs established in the following provisions of the finance act 2001, as amended by the finance act 2002 and the finance act 2007: section 17(3)(e), 17(3)(f)(i) and (ii) (except for the materials listed in article 1(1) of this decision), section 17(4)(a) (except for the materials listed in article 1(1) of this decision), section 17(4)(c)(i) and (ii), section 17(4)(f) (as far as clay is concerned), section 18(2)(b), and section 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2)(b)), do not constitute state aid. article 2 the united kingdom of great britain and northern ireland shall abolish the aid scheme in so far it concerns the materials referred to in article 1(1). article 3 individual aid granted under the scheme referred to in article 1(1) does not constitute aid if it fulfils the material conditions laid down by the regulation adopted pursuant to article 2 of regulation (ec) no 994/98 and applicable at the time the aid was granted. article 4 individual aid granted under the scheme referred to in article 1(1) which fulfils the conditions laid down by a regulation adopted pursuant to article 1 of regulation (ec) no 994/98 and applicable at the time the aid was granted or by any other approved aid scheme is compatible with the internal market. article 5 1. the united kingdom shall recover the incompatible aid granted under the scheme referred to in article 1(1) from the beneficiaries. 2. the aid to be recovered shall include interest from the date on which it was put at the disposal of the beneficiaries until their actual recovery. 3. the interest shall be calculated on a compound basis in accordance with chapter v of commission regulation (ec) no 794/2004 (100). article 6 1. recovery of the aid granted under the scheme referred to in article 1(1) shall be immediate and effective. 2. the united kingdom shall ensure that this decision is implemented within four months following the date of notification of this decision. article 7 1. within two months following notification of this decision, the united kingdom shall submit the following information to the commission: (a) a list of all entities producing the material referred to in article 1(1) between 1 april 2002 and the date of submission of the list; (b) for each of the entities referred to at (a) above: (i) the total amount of material referred to in article 1(1) commercially exploited since 1 april 2002; (ii) the total amount (principal and recovery interests) to be recovered from each beneficiary; (c) a detailed description of the measures already taken and planned in order to comply with this decision; (d) documents demonstrating that the beneficiaries have been ordered to repay the aid. 2. the united kingdom shall use all possible sources of information for compiling the list of shale producers and the total amount of material referred to in article 1(1) commercially exploited by them since 1 april 2002, from public sources and confidential tax information, such as: tax, sales and other records held by the companies themselves, tax records including profit tax records, the companies' register, the land registries, statistical data, planning permits/consents, data held by the local authorities and the county councils, including, without limitation, her majesty's revenues and customs registration data for the purposes of the aggregates levy before and after 1 april 2014, data from the mineral planning authorities, the annual minerals raised inquiry, the database britpits and british geological survey data, the uk minerals yearbook and the cornish building stone and slate guide 2007. 3. the united kingdom shall keep the commission informed of the progress of the national measures taken to implement this decision until recovery of the aid granted under the scheme referred to in article 1(1) has been completed. it shall immediately submit to the commission, upon the commission's request, any information on the measures already taken and planned to be taken in compliance with this decision. it shall also provide detailed information concerning the amounts of aid and recovery interest recovered from the beneficiaries. article 8 this decision is addressed to the united kingdom of great britain and northern ireland. done at brussels, 27 march 2015. for the commission margrethe vestager member of the commission (1) oj c 348, 28.11.2013, p. 162. (2) oj c 133, 5.6.2002, p. 11. (3) idem 1. (4) wikipedia: https://en.wikipedia.org/wiki/construction_aggregate (29 may 2013); fao term: http://termportal.fao.org/faoterm/search/pages/termurl.do?id=204 (29 may 2013); european standard bsen 12620:2002; dictionary of building, james h. maclean and john s. scott, penguin books, fourth edition; oxford dictionary of construction, surveying & civil engineering, christopher gorse, david johnston and martin pritchard, oxford university press 2012; glossary of building and civil engineering terms, british standards institution, blackwell scientific publications, 1993, 100-4403; http://www.uepg.eu/what-are-aggregates see also case t-210/02 renv of 7 march 2012, british aggregates association v commission, ecli:eu:t:2012:110, paragraph 1. (5) concrete is a mixture of aggregates, cement and water. the purpose of the aggregates within this mixture is to provide a rigid skeletal structure and to reduce the space occupied by the cement paste. (6) aggregates are widely used in drainage application due to their high hydraulic conductivity value. (7) aggregates are used as base material under foundations, roads, and railroads. in that case, they help in filling voids and protecting pipes (pipes laid to convey treated water, or as conduits for cables, need to be protected from sharp objects in the ground and are therefore laid on, and surrounded by, fine aggregate before trenches are backfilled). aggregates also help in providing hard surfaces (they prevent differential settling under the road or building or railway unpaved roads and parking areas are covered in a surface layer of aggregate to provide a more solid surface for vehicles, from cycles to lorries. this prevents the vehicles from sinking into the soil, particularly during wet weather. wikipedia: https://en.wikipedia.org/wiki/construction_aggregate (29 may 2013); http://sustainableaggregates.com/overview/uses.htm (29 may 2013). (8) european standard bsen 12620:2002. (9) uepg, http://www.uepg.eu/what-are-aggregates, visited on 28 march 2013. see also, http://www.bgs.ac.uk/planning4minerals/assets/downloads/86210_p4m_a_guide_on_aggregates.pdf p. 6. (10) http://www.bgs.ac.uk/planning4minerals/resources_1.htm (29 may 2013); http://sustainableaggregates.com/sourcesofaggregates/recycled/rib_introduction.htm (29 may 2013); http://www.uepg.eu/what-are-aggregates (29 may 2013). (11) glossary of building and civil engineering terms, british standard institutions, blackwell scientific publications, 1993, 630- 3. (12) http://sustainableaggregates.com/overview/uses.htm (29 may 2013); hm customs & excises consultation on a potential aggregates tax summary of replies, april 1999, paragraph 18. (13) for instance, sand, usually silica sand, is used to make moulds in a foundry. another example is limestone, or calcium carbonate. ground to a fine powder it is used as a whitening agent or filler in paper, adhesives, paint, plastics, pvc, toothpaste, medical tablets and cleaning products. it is also used to provide additional calcium in vitamin and mineral supplements, flour and animal feed. silica sand is also the principal filtration medium used by the water industry to extract solids from waste water. (14) lime is absorbed by plants (either crops or grass) and trees but is also naturally lost from soils through leaching by rainwater and the use of fertilisers. this can result in an increase in acidity, loss of fertility in the soil and sometimes an adverse effect on soil structure. to redress the balance, agricultural lime is applied to fields to maintain the necessary growing conditions for crops or grassland. lime can be simply ground limestone or dolomite (which also contains magnesium), or burnt limestone (or burnt dolomite) where the rock is heated in a kiln. (15) mpg6 guidelines for aggregates provision in england 1994, paragraph 6-123 (23). (16) budget announcement march 2000 prudent for a purpose: working for a stronger and fairer britain chapter 6: protecting the environment regenerating our cities/protecting our countryside waste; aggregates, paragraph 6.91; pre-budget report november 2001 chapter 7: protecting the environment protecting britain's countryside aggregates quarrying the aggregates levy, paragraph 7.71; budget announcement march 2001 chapter 6: protecting the environment, paragraph 6.91. (17) letter dated 19 february 2002, registered on 21 february 2002 under a/31371, paragraph 4.10. (18) this provision is meant to cover the case where the aggregate is transferred from one site to the other belonging to the same operator. the transfer from site to site is normally not subjected to the agl, see section 19(3)(b) of finance act 2001. (19) the uk authorities indicated that aggregate is subject to an agreement to supply when a contract is made or when the goods change hands and a document is raised. section 19(6) of the finance act 2001 indicates that an aggregate will be subjected to the agreement at the moment it is separately identifiable. also it provides that for the purpose of the levy, the transfer of ownership of land on which aggregates are located does not automatically amount to a supply of the aggregate too. (20) see section 48(2) of the finance act 2001: the construction purposes mean using the aggregates as material or support in the construction or improvement of any structure (including roads and paths, the way on which any railway track is, or is to be, laid and embankments) or mixing them as part of the process of producing mortar, concrete, tarmacadam, coasted roadstone or any similar construction material. (21) permitted circumstances are defined at subsection (7) of section 19. it concerns the situation where the aggregate is mixed with taxable aggregates that have not previously borne the agl and all the mixing takes place at a site which is the originating site, a site registered under the same name as the originating site or a site to which aggregate has been removed for an exempt process to be applied to it but which has not been applied to it. (22) the landing site of aggregates corresponds to an originating site only for aggregates extracted from the uk seabed/waters. (23) see also notice agl 1: aggregates levy, april 2011, point 8.1. (24) this latter provision relates to the situation where the aggregate is returned to the land where it was won and is still in the same state as it was won. in such situation there is no taxable supply of aggregates. (25) see notice agl 1. (26) the aggregates levy (general) regulations 2002 (si 2002/761) prescribe in which cases the disposal of aggregates may lead to a tax relief. according to regulation 13a person is entitled to a tax credit in respect of any agl accounted for where the taxable aggregate in question is disposed of (by dumping or otherwise) in any of the following ways: (i) it is returned without further processing to its originating site or any site which is not its originating site but is registered under the same name; (ii) it is disposed of to landfill; (iii) it is gravel or sand and is used for beach restoration purposes at a site which is not its originating site. (27) notice agl2 industrial and agricultural processes relief, available on the website of hm revenue & customs. (28) the exemptions and exclusions provided for in sections 17(3)(e), 17(3)(f)(i) and (ii), section 17(4)(a) (in so far as the exempted material consist wholly of coal, lignite, shale, slate that is used as aggregate or consist mainly of coal, lignite, shale and slate), section 17(4)(c)(i) and (ii) (when it consists mainly of the spoil), 17(4)(f) (as far as clay is concerned), 18(2)(b) (in so far as it relates to an exempt process that provides for materials that are used as aggregates) and 30(1)(b) (in so far as it relates to an exempt process within the meaning of section 18(2)(b) that provides for materials that are used as aggregates) of the finance act 2001, as amended by the finance act 2002 and finance act 2007. (29) community guidelines on state aid for environmental protection (oj c 37, 3.2.2001, p. 3). (30) community guidelines on state aid for environmental protection (oj c 82, 1.4.2008, p. 1). (31) mr bird did not provide any example or evidence in this regard. (32) see footnote 31. (33) see, for example, competition commission: aggregates, cement and ready-mix concrete market investigation, market definition working paper of 1 november 2011, paragraph 19 and provisional findings report of 21 may 2013, paragraphs 5.5(b), 5.6(b) and 5.24; oft decision of 2 november 2011, proposed jv between anglo american plc and lafarge sa, me/5007/11, paragraph 72. (34) see joined cases c-328/99 and c-399/00 italy and sim 2 multimedia v commission [2003] ecr i-4035, paragraph 35; case c-222/04 cassa di risparmio di firenze and others [2006] ecr i-289, paragraph 131; and joined cases c-393/04 and c-41/05 air liquide industries belgium [2006] ecr i-5293, paragraph 29 and the case-law cited. (35) case c-143/99 adria-wien pipeline [2001] ecr i-8365, paragraph 41; see also case c-172/03 heiser [2005] ecr i-1627, paragraph 40; joined cases c-182/03 and c-217/03 belgium and forum 187 v commission [2006] ecr i-5479, paragraph 119; case c-88/03 portugal v commission [2006] ecr i-7115, paragraph 54; and joined cases c-428/06 to c-434/06 ugt-rioja and others [2008] ecr i-6747, paragraph 46; case t-210/02 renv, british aggregates association v commission, ecli:eu:t:2012:110, paragraph 47; case c-487/06 p, british aggregates association v commission [2008] ecr i-10515, paragraph 82. (36) adria-wien pipeline, cited above in footnote 35, paragraph 42, and portugal v commission, cited in footnote 35, paragraph 52; case c-487/06 p, british aggregates association v commission [2008] ecr i-10515, paragraph 83. (37) portugal v commission, cited in footnote 35, paragraph 56, and case t-308/00 salzgitter v commission [2004] ecr ii-1933, paragraph 81; case t-210/02 renv, british aggregates association, ecli:eu:t:2012:110, paragraph 49. (38) case t-210/02 renv, british aggregates association, ecli:eu:t:2012:110, paragraph 51. (39) see economic and fiscal strategy report and financial statement and budget report 1999 chapter 5: building a fairer society tackling tax abuse; protecting the environment, p. 27 the government will shortly publish draft legislation for a tax on the extraction of hard rock, sand and gravel used as aggregates. see also budget announcement march 2000 prudent for a purpose: working for a stronger and fairer britain chapter 6: protecting the environment regenerating our cities/protecting our countryside waste; aggregates, paragraph 6.91; pre-budget report november 2001 chapter 7: protecting the environment protecting britain's countryside aggregates quarrying the aggregates levy, paragraph 7.71; budget announcement march 2001 chapter 6: protecting the environment, paragraph 6.91; showing that the uk authorities envisaged specifically a tax on aggregates only. (40) case t-210/02 renv, british aggregates association, ecli:eu:t:2012:110, paragraph 66. (41) hm customs & excises consultation on a potential aggregates tax summary of replies, april 1999, paragraph 13. (42) no such evidence has been submitted to the commission. (43) see footnote 42. (44) a copy of the e-mail has been submitted to the commission. (45) business secret (46) the gc in its judgment t-210/12 renv has ruled that the normal taxation principle underlying the agl is based solely on the notion of the commercial exploitation in the united kingdom of a material that is taxable as an aggregate . the commission considers that so defined normal taxation principle requires further establishment of when the material is taxable as an aggregate. given that section 17(2) of act 2001 does not provide a genuine definition of taxable aggregates but defines them as aggregates which are not exempted and the aggregates described in points (b)-(d), the normal taxation principle under the agl also as defined by the gc must inevitably depend on the determination when a material is used as aggregate. (47) see footnote 39. (48) recital 58 and 59 of the opening decision. (49) see t-210/02 renv british aggregates v commission, ecli:eu:t:2012:110, paragraph 64. (50) see t-210/02 renv british aggregates v commission, ecli:eu:t:2012:110, paragraph 55. (51) see section 48 (2) of the finance act 2001. (52) section 18(2)(b): any process by which a relevant substance is extracted or otherwise separated (whether as part of the process of winning it from any land or otherwise) from any aggregate. section 18(3) lists the relevant substances as being (a) anhydrite; (b) ball clay; (c) barytes; (e) china clay; (f) feldspar; (g) fireclay; (i) fluorspar; (j) fuller's earth; (k) gems and semi-precious stones; (l) gypsum; (m) any metal or the ore of any metal; (n) muscovite; (o) perlite; (p) potash; (q) pumice; (r) rock phosphates; (s) sodium chloride; (t) talc; (u) vermiculite. subsections (3)(d) and (h) of section 18 were omitted retroactively as of 1 april 2002 by changes introduced by the finance act 2002. (53) section 30(1)(b) of the finance act 2001 provides for a tax relief in the case an exempt process within the meaning of section 18(2)(a), (b) and (c) of the financial act 2001 has been applied to the material when the material has already been subject to the agl. it thus mirrors the exemptions provided for in section 18(2). (54) those substances also benefit from a tax relief when the tax was paid and the exempt process took place afterwards (section 30(1)(b)). the assessment of the exclusion applies mutatis mutandis to the tax relief. (55) recital 73 of the opening decision. (56) see glossary of building and civil engineering terms, british standards institution, blackwell scientific publications, 1993, 630-3007 and 630-3013. (57) recital 83 of the opening decision. (58) extracts (dated 30 october 2002) from the website of alfred mcalpine published at: http://www.amslate.com/applications/ima/ima.sbtml; extracts from construction raw materials policy and supply practices in northwestern europe facts and figures england, scotland and wales (great britain), british geological survey commissioned report cr/02/082n commissioned by the road and hydraulic engineering institute of the ministry of public works and water management of the netherlands, p. 50; document by geoff topham of aggregate industries concerning quarrying at holme park quarry, 19 june 2002. (59) no examples of quarries were provided. (60) see, for example, http://www.honister.com/; http://www.callywithquarry.co.uk/quarry (61) survey of arisings and use of secondary materials as aggregates in england and wales in 2001 symonds group, november 2002 (62) slate aggregate was used in place of premium quality aggregate on the a55 bangor bypass road (using 150 000 tonnes of waste slate), and is widely used in north wales for general fill and embankments. (63) [ ] estimates that the cost of producing slate aggregate is gbp 6,50 per tonne, out of which crushing cost is of approximately gbp 5 per tonne. [ ] estimated a cost of producing a tonne of slate aggregate of gbp 5,69. (64) see footnote 60. (65) report prepared in 2003 by the british geological society for the united kingdom tax authorities to assist tax officers with the application of the exemptions for slate, shale and clay in a geologically correct manner. (66) the extent to which the material can easily be split along close parallel planes. (67) the information was taken from open sources such as the internet. (68) from the information provided it is unclear what material one quarry actually produces although it appears in the list of quarries producing shale. (69) overburden is the material which lies above the mineral which the quarry operator wants to extract (70) see footnote 64. (71) case t-210/02 renv, british aggregates association, ecli:eu:t:2012:110, paragraph 72 (72) see table in recital 143. (73) see footnote 67. (74) information available here: http://www.brauntonaggregates.co.uk/technical-details.html accessed on 11 march 2015. (75) according to the information provided by the uk, china clays are fine-grained sedimentary clays consisting of kaolinite. they are used in the production of porcelain and gloss paper, and medical and cosmetic products. (76) ball clays are fine-grained kaolinitic sedimentary clays, that commonly consist of 20-80 % kaolinite, 10-25 % mica, 6-65 % quartz. they are used in the production of ceramics to impart plasticity and unfired strength. (77) british geological survey, mineral planning factsheet: construction aggregates, page 3. (78) case t-210/02 renv, british aggregates association, ecli:eu:t:2012:110, paragraphs 89-90. (79) see footnote 77. (80) argon oxygen decarburisation. (81) directive 2006/21/ec of the european parliament and of the council of 15 march 2006 on the management of waste from extractive industries and amending directive 2004/35/ec statement by the european parliament, the council and the commission (oj l 102, 11.4.2006, p. 15). (82) see glossary of building and civil engineering terms, british standards institution, blackwell scientific publications, 1993, 630-3006; see also evidence submitted by the british aggregates association in its reply to the court in case t-210/02; construction raw materials policy and supply practices in northwestern europe: facts and figures england, scotland and wales (great britain), british geological survey, commissioned report cr/02/082n commissioned by the road and hydraulic engineering institute of the ministry of public works and water management of the netherlands, p. 50. (83) see footnote 64. (84) see decision in sa. 18859 relief from aggregates levy in northern ireland (ex n 2/04), http://ec.europa.eu/competition/state_aid/cases/241379/241379_1594138_163_2.pdf (85) see case c-199/06 celf [2008] ecr i-469, paragraphs 61 and 64. (86) see case c-199/06 celf [2008] ecr i-469, paragraphs 63 and 66 to 68. (87) commission notice on determination of the applicable rules for the assessment of unlawful state aid (oj c 119, 22.5.2002, p. 22). (88) recital 150 of the opening decision (89) no evidence has been provided. (90) see footnote 77. (91) see footnote 77. (92) joined cases t-254/00, t-270/00 and t-277/00, hotel cipriani et al., ecli:eu:t:2008:537, paragraph 337. (93) case t-210/02 renv, british aggregates association, ecli:eu:t:2012:110, paragraph 89. (94) see footnote 77. (95) see case c-70/72 commission v germany [1973] ecr 813, paragraph 13. (96) see joined cases c-278/92, c-279/92 and c-280/92 spain v commission [1994] ecr i-4103, paragraph 75. (97) see case c-75/97 belgium v commission [1999] ecr i-3671 paragraphs 64 and 65. (98) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 83, 27.3.1999, p. 1). (99) council regulation (ec) no 994/98 of 7 may 1998 on the application of articles 92 and 93 of the treaty establishing the european community to certain categories of horizontal state aid (oj l 142, 14.5.1998, p. 1). (100) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 140, 30.4.2004, p. 1).

name: commission decision (eu) 2016/286 of 1 october 2014 on state aid no sa.20867 (12/c) (ex 12/nn) implemented by italy in favour of carbosulcis s.p.a. (notified under document number c(2014) 6836) (text with eea relevance) type: decision subject matter: europe; coal and mining industries; electrical and nuclear industries; competition; economic policy; energy policy; regions of eu member states; european union law date published: 2016-03-04 4.3.2016 en official journal of the european union l 59/1 commission decision (eu) 2016/286 of 1 october 2014 on state aid no sa.20867 (12/c) (ex 12/nn) implemented by italy in favour of carbosulcis s.p.a. (notified under document number c(2014) 6836) (only the english text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof, having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having regard to article 107(3)(e) of the treaty on the functioning of the european union, having regard to the council decision 2010/787/eu of 10 december 2010 on state aid to facilitate the closure of uncompetitive coal mines (1), having called on interested parties to submit their comments pursuant to the provisions cited above (2) and having regard to their comments, whereas: 1. procedure (1) following receipt of a complaint, the commission learned that italy granted state aid to subsidise a mining operator, carbosulcis s.p.a. (carbosulcis), on the basis of article 11(14) of law 80/2005 on urgent measures in the framework of the action plan for economic, social and territorial development (3). by letter dated 6 september 2006 (and reminder of 22 december 2006), the commission requested additional information, which was provided by letter dated 25 january 2007. by letters dated 22 june and 27 july 2007 the commission requested further information which was provided in two letters dated 15 october 2007. italy also submitted information on 28 november 2007. (2) by letters dated 8 september 2008 and 17 june 2009 (with reminders sent on 6 october 2009 and on 21 january 2010), the commission requested further clarification which was provided respectively by letters of 3 november 2008 and of 6 may 2010. (3) meetings took place with the italian authorities on 19 september 2010 and 30 march 2011. (4) by e-mail of 21 october 2010, the commission requested additional information, which was provided by letters of 18 and 23 november 2010 and of 10 may 2011. (5) by letter dated 20 november 2012, the commission informed italy that it had decided to initiate the procedure laid down in article 108(2) of the treaty on the functioning of the european union in respect of the aid granted to carbosulcis. (6) the commission decision to initiate the procedure was published in the official journal of the european union (4). the commission invited interested parties to submit their comments on the aid measure. (7) italy submitted its observations by letter dated 21 december 2012. the only third party comments received by the commission were those submitted by the employees of carbosulcis. by letter dated 18 march 2013, the commission forwarded the third parties' comments to italy, which was given the opportunity to respond; no comments were received. (8) several meetings and exchanges of information took place in 2013 between the commission and the italian authorities and finally by letter dated 9 april 2014, italy submitted a final plan for the closure of the mine (the closure plan or the plan) in accordance with the council decision. the plan was amended on 17 july 2014. (9) the italian authorities have stressed the urgency of a decision concerning aid intended to finance the irrevocable orderly winding down of activities of the nuraxi figus mine operated by carbosulcis (the aid measure or the measure). indeed, the closure plan needs to be implemented as a matter of urgency due to the need to ensure a controlled and safe closure, while limiting the social tensions which have been emerging in the region. therefore, the present decision is confined to assessing the aid measure described in paragraph 8 above. (10) on 2 september 2014, italy waived its rights under article 342 tfeu in conjunction with article 3 of regulation no 1 (5) to have the decision adopted in italian and agreed that the decision be adopted in english. 2. detailed description of the closure plan (11) carbosulcis is the only company in italy that exploits the hard coal extracted from the nuraxi figus mine in the sulcis-iglesiente area in sardinia. nuraxi figus is the only operational coal mine and the only coal basin in italy. it consists of a single production unit. the products obtained by the company can only be sold in the domestic market for the purpose of producing electricity (6). the total output of carbosulcis is purchased by the nearby portovesme thermal power plant. sulcis coal has an average ncv of 5 100 kcal/kg, an average sulphur content of 6,5 % and an average ash content of 15 %. therefore it is of low quality and has a low calorific value. (12) whilst the mine was initially conceived to be part of an integrated project to extract coal and produce electricity in a new coal-fired power plant to be built, the project suffered from delay. since 1996, the mine was exploited on a temporary basis pending the award by the region of sardinia of an integrated concession, which was never ultimately granted. (13) according to the italian authorities, italy decided to definitively abandon the initial integrated project and to close the mine in accordance with the closure plan.]. since 1 january 2011, activity in the mine has been limited essentially to maintaining minimum production and to carrying out maintenance works necessary to ensure the plant's safety. such activities are preparatory to the implementation of the closure plan. the closure plan provides for the cessation of subsidised coalmining by the end of 2018 and the completion of safety measures for the decommissioning of the mine by the end of 2027. (14) italy emphasised the particular disadvantaged economic and social situation in the sulcis-iglesiente area where the unemployment rate is higher than in the rest of the country. alleged prospects of a potential abrupt closure of the mine have already caused serious social tensions culminating in [protests and] demonstrations. 2.1. legal basis and granting authority (15) the legal basis for the aid measure was law 99/2009 and resolution of the council of autonomous region of sardinia no 53/75 of 20 december 2013. the region of sardinia and the minister of economic development are the granting authorities of the aid measure. 2.2. the closure plan (16) pursuant to the closure plan the decommissioning of the mine is to take place in three phases: (1) completion of the extraction of coal from panel w3 in accordance with the longwall method; securing of galleries and carrying out of additional works to ensure the ongoing safety of underground worksites; (2) provision of incentives to retire and the cultivation of panels in accordance with the shortwall method; (3) completion of the cultivation of the panels and reduction in levels of production, adoption of further incentives to retire and additional measures to help staff find new jobs. (17) the production of merchant coal in 2011 amounted to 63 059 tons, whereas in 2018 it is expected that only 30 000 tons will be extracted. (18) the objective of the aid measure is to facilitate the closure of the mine by the end of 2018, to cover current production losses in the period 2011-2018 arising from the operation of the mine in accordance with the rules set out in the council decision. the measure is further intended to cover exceptional costs arising from the definitive closure of the mine. (19) the plan is designed to implement a gradual phasing-out process in a socially sustainable manner. italy contends that on the basis of such an approach, 2018 is the earliest date at which the mine can be closed. the number of staff will be gradually reduced from 467 in 2011 to 119 in 2018. older workers will benefit from incentives to take retirement. additional measures will be necessary to help younger staff find new jobs. (20) at the end of 2018, the remaining workers will be needed to carry out safety and environmental remediation works that will begin upon completion of the regional environmental impact study and is expected to continue until 2027. once the mining ends; the underground mining equipment will be recovered and the abandoned tunnels filled with ash from the nearby portovesme thermal power plant. (21) the workers who in the course of the implementation of the closure plan will lose their jobs in the coal mining industry will require new employment. to this end, the plan provides for the adoption of labour policies intended to assist re-training of workers and facilitating their transfer to other industries. (22) following the closure of the mine, the time needed for the completion of the plan will depend on the time it takes to recover the equipment from underground, which is estimated to take over two years. (23) the duration of the works will also depend on the time needed to seal the tunnels, by filling them with ash-based sludge from the thermal plant in portovesme. the duration of such works is estimated at about six years. (24) the environmental remediation of the above-ground areas will also be performed. such remediation shall include the sealing of the tailing ponds, construction of water drainage systems and the planting of native plant species. 2.3. eligible costs, form of the aid and aid amount (25) the measure provides for the granting of aid to cover the positive difference between current production costs and revenues from the coal mine to be closed (production losses). the aid is also intended to cover costs arising from the closure of the mine that are not related to current production (exceptional costs). the aid granted in respect of production losses is intended to cover costs arising between 2011 and 2018 and will end with the cessation of production in 2018. (26) it is proposed that the aid take the form of a direct grant and can be split as follows: (a) euro 213 126 607 million of aid already granted and to be granted in the period 2011-2018 to cover production losses. the costs that are eligible to be taken into account are production costs: material expenses (including energy, depreciation and transport costs) and personnel expenses as further detailed in annex 1, including the financial-economic forecasts (of costs). table 1 2011 2012 2013 2014 2015 2016 2017 2018 production costs 61 761 625 62 253 732 40 516 662 36 714 704 27 313 944 24 753 204 17 686 600 15 207 600 revenues 4 582 000 12 912 702 6 251 329 4 709 016 3 474 216 2 898 428 3 951 360 1 481 760 difference between production costs and revenues 57 179 625 49 341 030 34 265 333 32 005 689 23 839 729 21 854 776 13 735 240 13 725 840 aid pursuant to article 3 of the council decision 55 000 000 18 700 000 34 265 333 32 005 689 23 839 729 21 854 776 13 735 240 13 725 840 (b) according to the aid measure, the aid intended to cover the exceptional costs will continue to be required after 2018 until 2027. the aid measure proposes the payment of direct grants with respect to the following categories of exceptional costs: i. exceptional expenditure on workers who have lost or who lose their jobs: (27) the costs under point 1(b) of the annex to the council decision include the provision of resignation incentives: under the plan, two years' salary is to be granted to workers who retire in circumstances where they could still remain in service, and to those who opt to start their own business or otherwise leave the company, after participating in re-training and employment schemes. (28) pursuant to the aid measure/the maximum amount of this type of aid proposed to be granted in the period 2013-2027 will be eur 45,5 million. this maximum amount would be reached in the event that all excess personnel who could not remain in their position until retirement, were to commence a self-employed activity or otherwise leave the company. the aid would amount to eur 30 million in the event that all excess personnel are employed in alternative activities. ii. costs for the readaptation of workers in order to help them find new jobs outside the coal industry: (29) the costs under point 1(d) of the annex to the council decision include the costs of re-training the personnel who have lost or will lose their job in the coal industry. (30) under the one-year re-training scheme, such personnel will be re-employable primarily in alternative activities to be implemented at the carbosulcis site and/or in environmental operations for the clean-up of former mining and industrial areas. alternatively, they may start their own businesses, or otherwise leave the company and receive a termination bonus equivalent to two years of salary. the training courses will be delivered in: (a) 2016 (with capacity for 62 workers); (b) 2019 (with capacity for 54 workers); (c) 2028 (with capacity for 35 workers). (31) it is anticipated that the total cost of training personnel who will lose their jobs in the coal industry will be approximately eur 11,5 million. (32) these costs include the workers' salaries during their year in training (for a total of some eur 8,1 million) and the cost of training (approximately eur 3,4 million). iii. residual costs resulting from administrative, legal and tax provisions which are specific to the coal industry (33) the costs under point 1(f) of the annex to the council decision include payment of the concession fee for exploiting the mine for the years from 2019 to 2026, totalling approximately eur 800 000. iv. additional underground safety work resulting from the closure of coal production units: (34) after the production at the mine ceases, safety works such as the closure of the face of the mine or transportation of the machines earlier used for the mining will be performed. according to the italian authorities, the following detailed safety requirements are essential within the abandonment works: the recovery of the underground machinery, equipment and safety devices; the mine ventilation should be carried out in order to dilute and remove noxious gases; the drainage pumping should be maintained; and the filling of the abandoned tunnels with ash from the portovesme power plant. (35) italy indicates that in the period 2014-2026 a further eur 28 million will be necessary to cover the non-recurring costs linked to the additional safety works required for closure of the mine. (36) over the years in which equipment is being recovered and the abandoned tunnels are being filled with ash, in addition to personnel costs, other costs will be incurred, such as the use of electricity for ventilation and pumping equipment as well as the procurement of services and materials needed to carry out the works. (37) according to the italian authorities, the work of recovering the equipment from underground sites and sealing the tunnels by filling them with ash cannot begin before 2018 because the staff and equipment are currently engaged in coal mining activities. the use of ash to seal the tunnels will also be subject to prior authorisation. (38) once the mine has closed, the time needed for the completion of the plan will depend on the time it takes to recover the equipment from underground, which is estimated at over two years. such equipment may, for example, include: (a) conveyor belts: about five kilometres to be dismantled and taken to the surface; (b) pipework: more than 30 km to be dismantled and taken to the surface; (c) electric power and telephone lines running tens of kilometres, electrical substations, transformers, circuit breakers, etc.; (d) old equipment, still stored in the tunnels. (39) the duration of the plan will also depend on the time needed to seal the tunnels by filling them with ash-based sludge from the thermal power plant at portovesme. the process of filling the tunnels will be divided into several stages, summarised below: (a) removing old equipment no longer needed, such as discarded machinery, power lines, pipework, etc.; (b) installing the equipment needed to pump the ash and water grout underground (pipework, valves, de-pressurisation systems, sound system and pressure monitoring system); (c) constructing walls to retain sludge and delimit sections to be filled; (d) preparing a ventilation circuit to ensure pressurised ventilation once normal ventilation is interrupted by the filling of the tunnel; (e) preparing the plant for mixing and pumping the grout to be pumped underground; (f) filling each section of tunnel once it has been prepared; (g) after the sludge has dried, preparing the next section for filling. (40) by way of indication it is estimated that it will be possible to fill about 7 000 m of tunnel with a section of about 20 m2, which will thus be able to hold about 140 000 m3 of sludge consisting of ash from the portovesme thermal plant mixed with a proportion of water to form a mixture fluid enough to be pumped. the material will be pumped underground at a rate of one section of about 500 m3 a week. the plant can handle a maximum of about 80 m3/h, so that in one shift it will be possible to pump no more than the volume that will fill one section. the following four working days will be used to move back the piping to change the discharge point, perform maintenance on surface equipment, and screen the sludge needed to fill the next section of tunnel. this means that for each working day an average of about 100 m3 of sludge can be transferred underground. it is therefore estimated that sealing the tunnels by filling them with ash will take about six years: 140 000 m3/100 m3 per working day = 1 400 working days = 6 years. (41) sealing the tunnels by filling them with ash from the thermal plant will have the following environmental advantages: (a) reducing the open-air area needed for dumping special non-hazardous waste; (b) preventing spontaneous combustion in the tunnels; (c) correcting the acidity of any mine water with which the ash comes into contact (the ash has an average cao content of over 35 %); (d) reducing the probability of subsidence. (42) filling the tunnels with ash will also generate revenue that will help to reduce the aid necessary. the revenue from the disposal of the waste has already been taken into account and subtracted from the volume of aid needed pursuant to article 4 of the council decision, as shown by annex 2. (43) the actual costs under this heading are estimated to come to approximately eur 40 million. (44) the filling of the tunnels with the ash from the thermal power plan, should generate revenue in the amount of approximately eur 12 million, thereby reducing the amount of aid necessary under letter (g), paragraph 1 of the annex to the council decision to approximately eur 28 million. v. mining damage, provided it has been caused by the coal production units which have been closed or which are being closed: (45) the environmental remediation of the above-ground areas consists in the sealing of the tailings ponds, and the environmental remediation of the waste rock dumps and of all the other land areas affected by mining operations. (46) for the covering and remodelling of sites, inert materials from coal processing will be used, topped by a layer of topsoil. (47) once the morphological remediation of the sites has been completed, water drainage systems will be constructed. (48) the reclaimed sites will be put partly to industrial use, such as a photovoltaic installation and will be partly re-naturalised by the planting of native plant species. (49) other above-ground works at the former mine site will be the refurbishment and securing of the existing built heritage. (50) in the period 2014-2026, the aid under letter (h), paragraph 1 of the annex to the council decision will amount to approximately eur 8,7 million. vi. exceptional intrinsic depreciation, provided it results from the closure of coal production units (51) the costs under point 1(l) of the annex to the council decision include the share of asset depreciation which could not be depreciated under normal accountancy rules due to the closure of the mine, and are estimated at eur 25,8 million. 2.4. plan of measures to mitigate the environmental impact of coal production (52) italy has drawn up a plan to take measures aimed at mitigating the environmental impact of the production of coal by the production unit to which closure aid is granted. (53) the measures aimed at mitigating the environmental impact of coal will be in the field of renewable energy and coal desulphurisation. (54) the plan provides for two renewable energy projects. the first renewable energy system will comprise four windmills for a total power capacity of 12mw. the second system will consist of a photovoltaic power station covering about 10 ha with a total power capacity of some 4 mwp. these will be located in the mining site. (55) carbosulcis holds a patent for sulphur removal from coal by leaching. the by-product of this process is humic acids, which can be used in agriculture. (56) accordingly, italy intends to take measures for the development, on a pilot scale first and on an industrial scale at a later date, of a process to remove sulphur from coal, which produces humic acids. if the process produces the expected results, producing a positive operating margin already during the mine's gradual decommissioning period, it will be possible to reduce the sulphur content of the coal feeding the nearby portovesme thermal power plant. (57) according to italy, as the project is still at a preliminary stage, the environmental benefits of sulphur removal can currently be estimated only in qualitative terms, and not yet in quantitative terms, as they are linked to two factors which will need to be assessed during the pilot phase of the process. the environmental benefits are mainly linked to the following factors applicable to high sulphur coals: (a) the leaching process should reduce the coal's sulphur content by about 30 %, which will in turn reduce atmospheric sox emissions when the coal is burnt in the thermal power plant; (b) the sulphur removal process produces as by-products humic acids which can be used in agriculture as fertilisers and soil improvers. carbon sequestration through the application of soil organic matter (som) is one of the possible measures to mitigate the effects of climate change by reducing the emission of greenhouse gases into the atmosphere listed by the intergovernmental panel on climate change, ipcc 2007. (58) according to the italian authorities, the quantitative contribution of this activity to the mitigation of the environmental impact of coal production at the nuraxi figus mine can be assessed once the pilot implementation stage has been concluded. 3. assessment of the measure 3.1. presence of state aid pursuant to article 107(1) of the tfeu (59) a measure constitutes state aid within the meaning of article 107(1) of the tfeu if the following conditions are cumulatively fulfilled: the measure (a) confers an economic advantage to the beneficiary; (b) is granted by the state or through state resources; (c) is selective; (d) has an impact on intra-union trade and is liable to distort competition within the eu. (60) undertakings are favoured within the meaning of article 107(1) of the tfeu if they obtain an economic advantage which they would not otherwise obtain under market conditions. carbosulcis is the sole beneficiary of the measure and will receive (and has already received) aid by means of state resources transferred directly from the state and the sardinian region's budget to offset its operating losses and to cover social and safety costs which constitutes an economic advantage. the market for coal is fully open to competition. consequently, the financial aid from the state strengthens the position of the beneficiary in relation to its competitors in the eu and has potentially distortive effects on competition and is liable to affect intra-eu trade. (61) consequently, the commission concludes that the measure in favour of the company constitutes state aid within the meaning of article 107(1) tfeu. 3.2. lawfulness of the aid (62) italy implemented part of the measure without prior notification and therefore in breach of article 108(3) tfeu. 3.3. compatibility of the aid (63) the commission has assessed the compatibility of the measure according to the council decision, which sets out the criteria for compatibility of the state aid under examination pursuant to article 107(3)(e) tfeu. (64) the coal produced at the mine nuraxi figus falls within the definition of coal set out in article 1(a) of the council decision according to which coal means high-grade, medium-grade and low-grade category a and b coal within the meaning of the international codification system for coal laid down by the united nations economic commission for europe. (65) according to article 2(2) of the council decision, aid shall cover only costs in connection with coal for the production of electricity, the combined production of heat and electricity, the production of coke and the fuelling of blast furnaces in the steel industry, where such use takes place in the union. carbosulcis produces coal used for the local production of electricity. therefore this criterion is complied with. (66) italy intends to grant closure aid in the context of a closure plan of the mine. as defined in article 1(c) of the council decision, the closure plan drawn up by the member state must provide for measures culminating in the definitive closure of coal production units. the closure plan submitted by italy includes the legislative and other measures adopted by italy described in recitals 11 to 61, including the financial measures planned to accompany the definitive and irrevocable closure of the units concerned, thus leading to an orderly winding down of activities of such units at the planned dates. (67) italy has submitted all relevant data required for the assessment of the closure plan pursuant to article 7(2) of the council decision, notably the identification of the coal production unit, the real or estimated production costs for each coal production unit per coal year, the estimated coal production, per coal year, of coal production unit forming the subject of a closure plan and the estimated amount of closure aid per coal year. 3.3.1. state aid to cover the production costs (68) pursuant to article 3(1) of the council decision aid to an undertaking intended specifically to cover the current production losses of coal production units may be considered compatible with the internal market only if it satisfies the following conditions: the operation of the coal production unit concerned must form part of a closure plan the deadline of which does not extend beyond 31 december 2018 (69) the italian authorities committed to permanently close the nuraxi figus mine, which comprises only one production unit, by 31 december 2018. the mine is operated by carbosulcis, fully owned by the region of sardinia which issued and approved the closure plan. the coal production units concerned must be closed definitively in accordance with the closure plan (70) the closure plan includes the legislative and other measures adopted by italy and the region of sardinia and described in recitals 11 to 61 put in place to accompany the orderly winding down of the activities of such unit within the planned dates. the aid notified must not exceed the difference between the (foreseeable) production costs and the foreseeable revenue for a coal year. the aid actually paid must be subject to annual correction, based on the actual costs and revenue, at the latest by the end of the coal production year following the year for which the aid is granted (71) as shown above in table 1, the annual aid for coal production in the closing production unit does not exceed the difference between the (foreseeable) costs and (foreseeable) revenues. the amount of aid per tonne coal equivalent must not cause prices for union coal at utilisation point to be lower than those for coal of a similar quality from third countries (72) italy considers that it is not possible to relate payments for sulcis coal to a commercial reference price, similarly to the commission's findings in the case of hungary (sa.33861(12/n)). (73) italy submits that sulcis' low grade coal cannot be procured from third countries and there is no market for coal of such low quality. the selling price paid by portovesme thermal power plant to carbosulcis takes account of the fluctuation of the price of the coal that is regularly traded on the world market and the quotation of standard grades of coal are reduced to take account of the particular grade being bought. according to italy, this makes it impossible to determine a reference price for coal of a similar quality coming from third countries. (74) article 3 of law no 351 of 27 june 1985 laying down rules for the reopening of the sulcis coalfield reads as follows: coal from the sulcis coalfield may be used in thermal power stations and plants for the production of electric power and steam in combination or otherwise, provided they are located solely in sardinia, or in industrial plants, likewise located in sardinia, in which during the production or combustion process the sulphur is fixed, or fixed and combined, or combined with the product obtained. thus sulcis coal can, in theory, only compete with other coals within sardinia and most importantly cannot be sold on the world market. (75) the commission cannot exclude that it is in fact possible to calculate a reference price for coal of similar quality. consequently, italy has committed itself to monitoring annually the price of sulcis coal as calculated in the context of its sale to portovesme thermal power plant using the relevant formula provided in the purchase contract to check if the price of sulcis coal falls below the price of coal of a similar quality from third countries. the amount of aid per ton equivalent will be updated according to the actual sale price for each coal year. (76) in line with commission's precedents (7), the commission therefore considers that this condition is fulfilled in the present case. the coal production unit concerned must have been in activity on 31 december 2009 (77) the nuraxi figus mine was in activity in 2009. the overall amount of closing aid granted by a member state must follow a downward trend: by the end of 2013 the reduction must not be less that 25 %, by the end of 2015 not less than 40 %, by the end of 2016 not less than 60 % and by the end of 2017 not less than 75 % of the aid granted in 2011 (78) the commission concludes from table 1 above that state aid to be granted follows the downward trend and complies with the the minimum level of reduction stipulated in the council decision. the degressivity criterion prescribed by the council decision is therefore complied with. the overall amount of closure aid to the coal industry of a member state must not exceed, for any year after 2010, the amount of aid granted by that member state and authorised by the commission in accordance with articles 3 and 5 of regulation (ec) no 1407/2002 for the year 2010 (79) no aid was authorised by the commission in accordance with articles 3 and 5 of regulation (ec) no 1407/2002 for 2010. in any event since regulation (ec) no 1407/2002 expired on 31 december 2010, the specific rules of that regulation cannot be applied to the present measure (8). therefore there is no amount of aid for 2010 that could be taken as the benchmark for the purpose of article 3(g) of the council decision and this condition is not applicable to the case at issue. the member state must establish a plan to take measures aimed at mitigating the environmental impact of the production of coal by production units to which aid is granted pursuant to this article, for example in the field of energy efficiency, renewable energy or carbon capture and storage (80) the italian authorities have provided an environmental protection plan to mitigate the environmental impact of coal production which includes renewable energy installations, and coal desulphurisation. (81) article 3(1)(h) of the council decision explicitly mentioned initiatives involving renewable energies as examples of measures which can be included in a mitigation plan. the commission notes that those italian measures are directly related to the mine still active in coal production to be closed down. (82) as to the coal desulphurisation project, in view of the fact that the viability of the project is uncertain and conditional at the outcome of the pilot to be launched, the commission cannot establish that this measure will result in a substantial improvement of environmental conditions that can be related to coal production in the same region pursuant to article 3(1)(h) of the council decision. (83) in light of the considerations set out in recitals 80 to 81 above, the commission considers that the renewable energy installations included in the environmental protection plan submitted by the italian authorities alone already meet the conditions laid down in article 3(1)(h) of the council decision. (84) it should be noted that some of the measures referred to by italy may involve the granting of state aid. the acceptance of these measures as part of the environmental mitigation plan for the purpose of authorising aid to coalmining in application of the council decision cannot be construed as a clearance of such measures under articles 107 and 108 of tfeu. it remains italy's responsibility to ensure that measures liable to constitute state aid are duly notified to the commission pursuant to article 108(3) tfeu. (85) this decision is without prejudice to italy's obligations under eu environmental legislation. (86) the assessment above demonstrates that all substantive criteria of article 3 of the council decision regarding production aid to be granted under the closure plan are complied with. 3.3.2. state aid to cover exceptional costs (87) according to article 4(1) of the council decision, state aid granted to coal mines to cover the costs arising from the closure of coal production units and which are not related to current production may be considered compatible with the internal market provided the amount paid does not exceed such costs. (88) the exceptional costs notified by the italian authorities cover: the costs arising from the closure of the mine, defined in points 1(f), (g), (h), and (l) of the annex to the council decision, the social costs and the costs generated by the occupational retraining programs of personnel following the closure of the mine defined in point 1(b) and (d) of the annex to the decision. (89) the commission notes that italy does not plan grand aid that would exceed the costs arising from the closure of coal production. moreover, the planned exceptional costs and the categories of costs planned to be covered correspond to eligible categories defined in the annex to the council decision, for the purposes of article 4. pursuant to the closure plan, the granting of the aid is subject to the presentation of supporting documentation. (90) aid to cover exceptional costs will continue to be required also after the cessation of production in 2018. in any event, aid will be granted until 2027 so prior to the expiry of the council decision. (91) theoretically, revenues can accrue from the sale of plants and machinery. however according to italy this is unlikely given the age of those items at the end of 2018. furthermore, even if the plants and machineries were still to have some small residual value, it would not be possible to sell them, because of an agreement between carbosulcis and the municipality of gonnessa dated 15 february 1990. article 16 of the agreement provides that carbosulcis undertakes that upon the cessation of mining activity all the immovable and movable property (offices, services, coal-working plant and machinery etc.) will be conserved in compliance with the original architecture, so that the mine and its plants can be kept as a historical local monument. (92) the plants and machineries will therefore all be taken out of service and used to create a museum and industrial archaeology site, and preserved as a historic local monument. (93) the italian authorities contend that the sealing of the mine and the environmental clean-up cannot be expected to lead to an increase in the value of the land, because apart from the areas used for the renewable energy plants, the site will constitute abandoned industrial land and no further use can be foreseen. (94) apart from the areas used for the renewable energy plants, once the land has been cleaned up it will be maintained in its current state, in order to preserve the historical memory of the mining industry, as provided in the agreement between carbosulcis and the municipality of gonnessa. in any event, as regards the costs referred to in point 1(h) of the annex to the council decision, carbosulcis is not the owner of the land, and does not benefit from any increase in the value of the land (9). (95) the italian authorities confirm that the costs covered by the aid are not related to the financing of costs resulting from non-compliance with environmental regulations, such as: directive 2006/21/ec of the european parliament and of the council (10), directive 2004/35/ec of the european parliament and of the council (11), directive 2000/60/ec of the european parliament and of the council (12), council directive 92/43/eec (13), council 85/337/eec (14). (96) the aid will not be combined with other state aid within the meaning of article 107(1) tfeu or with other forms of european union financing for the same eligible costs (article 5 of the council decision). the commission would like, in addition, to remind the italian authorities that in case of co-financing through structural funds of the union, the rules applicable to those funds must be respected. (97) moreover, pursuant to article 5 of the council decision all aids received by the nuraxi figus mine are required to be shown in the profit-and-loss accounts as a separate item of revenue distinct from turnover. carbosulcis is also required to keep separate accounts for production and closing works (article 6). it follows that the aid meets the conditions laid down in the council decision as to cumulation and separation of accounts of the beneficiary, in case of any other economic activities which are not related to coal mining. (98) italy has submitted very detailed information in the context of the notification of the closure plan. in particular, italy has provided detailed costs estimates for the mine, broken down by individual items, for each year covered by the closure plan. the commission takes the view that the information provided by italy (including the one contained in annex 1 and annex 2 of the present decision) satisfies also the requirements of article 7(4) of the council decision for the entire period covered by the measure. (99) moreover, pursuant to article 7(5) of the council decision, the italian authorities have committed to ensuring that the accounts of the mine will be communicated to the european commission within six months after the end of each reporting period. (100) it follows that the aid complies with the relevant conditions laid down in the council decision. (101) the commission has therefore concluded that both the closure plan and the aid which has already been granted and which is proposed to be granted can be authorised. 4. conclusion (102) the commission regrets that italy put part of the aid into effect, in breach of article 108(3) of the treaty on the functioning of the european union. (103) however, the commission has decided that the aid granted to carbosulcis from 1 january 2011 until 31 december 2027 can be considered compatible with the internal market pursuant to council decision. (104) the commission reminds the italian authorities that, in accordance with article 108(3) of the tfeu, any plan to refinance, alter or change this measure is required to be notified to the commission pursuant to commission regulation (ec) no 794/2004 (15). moreover, notifications pursuant to article 7(3) of the council decision must be submitted if the closure plan is amended. pursuant to article 7(4), notifications must also be submitted if the aid italy plans to grant to the coal industry during a coal year exceeds the amounts authorised in the present decision or if the details relevant to the calculation of the foreseeable production costs planned to be aided in the closure plan differ from those indicated in the present notification. italy will need to submit separate annual notifications where there is a discrepancy between the annual measures and the approved closure plan. it shall duly inform the commission of the amount and of the calculation of the aid actually paid each year until the end of the closure plan, as laid down in article 7(5) of the council decision. (105) the commission also reminds the italian authorities that, in accordance with article 7(5) of the council decision, they shall inform the commission of the amount and of the calculation of the aid actually paid during a coal year no later than six months after the end of that year. where any corrections are made to the amounts originally paid during a given coal year, the italian authorities shall inform the commission before the end of the following coal year. (106) according to article 3(3) of the council decision, if the mine to which aid is granted is not closed at the date fixed in the closure plan as authorised by the commission, italy shall recover all aid granted in respect of the whole period covered by the closure plan, has adopted this decision: article 1 the state aid granted by italy to carbosulcis s.p.a. in accordance with the closure plan submitted 9 april 2014, as amended on 17 july 2014, is compatible with the internal market pursuant to decision 2010/787/eu. article 2 this decision is addressed to the italian republic. done at brussels, 1 october 2014. for the commission joaqu n almunia vice-president (1) oj l 336 of 21.12.2010, p. 24 (the council decision). with effect from 1 december 2009, articles 87 and 88 of the ec treaty have become articles 107 and 108, respectively, of the treaty on the functioning of the european union (tfeu). the two sets of provisions are, in substance, identical. for the purposes of this decision, references to articles 107 and 108 of the tfeu should be understood as references to articles 87 and 88, respectively, of the ec treaty where appropriate. the tfeu also introduced certain changes in terminology, such as the replacement of community by union and common market by internal market. the terminology of the tfeu will be used throughout this decision. (2) oj c 20 of 23.1.2013, p. 1. (3) published in supplemento ordinario to gazzetta ufficiale, no 111, 14 may 2005. (4) cf. footnote 2. (5) council regulation no 1 of 15 april 1958 determining the languages to be used by the european economic community (oj 17, 6.10.1958, p. 385/58). (6) article 3 of law no 351 of 27 june 1985 laying down rules for the reopening of the sulcis coalfield norme per la riattivazione del bacino carbonifero del sulcis: consentito impiegare il carbone del bacino carbonifero del sulcis nelle centrali termoelettriche e negli impianti di produzione combinata e non di energia elettrica e vapore esclusivamente ubicati in sardegna, nonch negli impianti industriali, pure ubicati in sardegna nei quali durante il processo produttivo o di combustione lo zolfo viene fissato, fissato e combinato ovvero combinato con il prodotto che si ottiene. (7) case sa. 18869 (n 92/05) state aid to the coal industry hungary, case sa.33033 national hard coal company petrosani romania, and case sa.33861 (12/n) aid to facilitate the closure of coal mines hungary. (8) commission notice on the determination of the applicable rules for the assessment of unlawful state aid (oj c 119, 22.5.2002, p. 22). (9) at present, carbosulcis is the owner of 200 ha where offices and plants are located, whereas the mine extends onto 5940 ha. (10) directive 2006/21/ec of the european parliament and of the council of 15 march 2006 on the management of waste from extractive industries and amending directive 2004/35/ec statement by the european parliament, the council and the commission (oj l 102, 11.4.2006, p. 15). (11) directive 2004/35/ce of the european parliament and of the council of 21 april 2004 on environmental liability with regard to the prevention and remedying of environmental damage (oj l 143, 30.4.2004, p. 56). (12) directive 2000/60/ec of the european parliament and of the council of 23 october 2000 establishing a framework for community action in the field of water policy (oj l 327, 22.12.2000, p. 1). (13) council directive 92/43/eec of 21 may 1992 on the conservation of natural habitats and of wild fauna and flora (oj l 206, 22.7.1992, p. 7). (14) council directive 85/337/eec of 27 june 1985 on the assessment of the effects of certain public and private projects on the environment (oj l 175, 5.7.1985, p. 40). (15) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (eu) 2015/1589 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 140, 30.4.2004, p. 1). annex 1 country: italy coalfield sulcis company carbosulcis spa underground production unit: nuraxi figus monte sinni mine data 2011 data 2012 estimated data 2013 estimated data 2014 estimated data 2015 estimated data 2016 estimated data 2017 estimated data 2018 1. general information (a) underground production [tce] '000 [ ] (1) [ ] [ ] [ ] [ ] [ ] [ ] [ ] (b) yield (tce/year/work unit) [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (c) average net calorific value [kcal] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (d) average registered staff [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2. cost of production (a) labour costs [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (b) cost of materials [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (c) direct depreciation according to normal accounting rules [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (d) return on capital [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (e) costs of transport to the place of delivery [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (f) company's overheads [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (g) other expenditure [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (h) increase fixed assets [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (i) waste disposal costs [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (h) costs connected with current production (per tce produced) [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 3. deliveries and receipts information specific to deliveries to thermal power plants: production in the coal reference year [tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] stock variation [tce] [ ] [ ] [ ] (a) total [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] yield: production in the coal reference year [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] stock variation [eur/tce] [ ] (b) average sales price [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 4. proposed aid (a) loss of current production [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (b) loss of curent production [eur] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (c) proposed aid [eur/tce] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (d) [eur] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] n.b. the data given in red are those resulting from the reclassification of the profit and loss accounts for 2011 and 2012 (1) business secret annex 2 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 total (b) other exceptional expenditure on workers who have lost or who lose their jobs; 7 804 000 3 852 000 2 180 000 9 080 000 692 000 9 920 000 6 212 000 960 000 404 000 96 000 212 000 308 000 96 000 96 000 3 660 000 45 572 000 (b1) retirement incentive (managers) 160 000 160 000 160 000 0 0 0 0 0 0 0 0 0 0 0 0 480 000 (b2) retirement incentive (technicians) 3 132 000 812 000 580 000 696 000 116 000 4 640 000 232 000 0 116 000 0 116 000 116 000 0 0 0 10 556 000 (b3) retirement incentive (workers) 4 512 000 2 880 000 1 440 000 1 632 000 576 000 5 280 000 576 000 960 000 288 000 96 000 96 000 192 000 96 000 96 000 96 000 18 816 000 (b4) incentive to set up own business (technicians) 0 0 0 4 640 000 0 0 1 276 000 0 0 0 0 0 0 0 1 740 000 7 656 000 (b5) incentive to set up own business (workers) 0 0 0 2 112 000 0 0 4 128 000 0 0 0 0 0 0 0 1 824 000 8 064 000 (d) the costs covered by the undertakings for the reskilling of workers in order to help them find new jobs outside the coal industry, especially training costs; 0 0 0 4 764 800 0 0 3 911 600 0 0 0 0 0 0 0 2 793 600 11 470 000 (d1) remuneration of technicians during the training course 0 0 0 2 320 000 0 0 638 000 0 0 0 0 0 0 0 995 000 3 953 000 (d2) remuneration of workmen during the training course 0 0 0 1 056 000 0 0 2 064 000 0 0 0 0 0 0 0 1 037 000 4 157 000 (d3) cost of the training (compatible with the esf vademecum on costs) 0 0 0 1 388 800 0 0 1 209 600 0 0 0 0 0 0 0 761 600 3 360 000 (f) residual costs resulting from administrative, legal or tax provisions which are specific to the coal industry; 100 000 100 000 100 000 100 000 100 000 100 000 100 000 100 000 0 800 000 (f1) mining royalty 100 000 100 000 100 000 100 000 100 000 100 000 100 000 100 000 0 800 000 (g) additional underground safety work resulting from the closure of coal production units; 0 0 200 000 0 0 0 4 480 800 3 836 800 3 495 800 3 370 800 3 363 800 3 237 800 3 127 800 3 086 800 0 28 200 400 (g1) project and environmental impact assessment of filling galleries with ash 0 0 200 000 0 0 0 0 0 0 0 0 0 0 0 0 200 000 (g2) making secondary shafts safe 0 0 0 0 0 0 0 0 0 0 70 000 74 000 0 0 0 144 000 (g3) making main shafts safe 0 0 0 0 0 0 0 0 0 0 0 0 65 000 72 000 0 137 000 (g4) cost of work technicians 0 0 0 0 0 0 1 160 000 1 044 000 1 015 000 986 000 957 000 899 000 870 000 870 000 0 7 801 000 (g5) cost of work workmen 0 0 0 0 0 0 2 160 000 1 632 000 1 320 000 1 224 000 1 176 000 1 104 000 1 032 000 984 000 0 10 632 000 (g6) costs of mine structure materials and services 0 0 0 0 0 0 950 000 950 000 950 000 950 000 950 000 950 000 950 000 950 000 0 7 600 000 (g7) cost of materials and services for filling galleries with ash 0 0 0 0 0 0 500 000 500 000 500 000 500 000 500 000 500 000 500 000 500 000 0 4 000 000 (g8) cost of electricity (ventilation, drainage etc.) 0 0 0 0 0 0 1 250 000 1 250 000 1 250 000 1 250 000 1 250 000 1 250 000 1 250 000 1 250 000 0 10 000 000 (g9) potential revenues from ash disposal 0 0 0 0 0 0 1 539 200 1 539 200 1 539 200 1 539 200 1 539 200 1 539 200 1 539 200 1 539 200 0 12 313 600 (h) mining damage, provided that it has been caused by the coal production units which have been closed or which are being closed; 998 931 1 198 931 1 198 931 798 931 798 931 738 648 738 648 738 648 738 648 738 648 8 687 898 (h1) making safe area and buildings and environmental restoration of the seruci site 0 798 931 798 931 798 931 798 931 798 931 0 0 0 0 0 0 0 0 0 3 994 656 (h2) environmental characterisation of the nuraxi figus site 0 200 000 400 000 400 000 0 0 0 0 0 0 0 0 0 0 0 1 000 000 (h3) making safe area and buildings and environmental restoration of the nuraxi figus site 0 0 0 0 0 0 738 648 738 648 738 648 738 648 738 648 0 0 0 0 3 693 242 (l) exceptional intrinsic depreciation provided that it results from the closure of coal production units; 5 169 143 5 169 143 5 169 143 5 169 143 5 169 143 0 0 0 0 0 0 0 0 0 25 845 714 (l1) special amortisation rate for tangible fixed assets 0 4 071 036 4 071 036 4 071 036 4 071 036 4 071 036 0 0 0 0 0 0 0 0 0 20 355 179 (l2) special amortisation rate for intangible fixed assets 0 1 098 107 1 098 107 1 098 107 1 098 107 1 098 107 0 0 0 0 0 0 0 0 0 5 490 535 grand total 7 804 000 10 020 074 8 748 074 20 212 874 6 660 074 15 888 074 15 443 048 5 635 448 4 738 448 4 305 448 4 414 448 3 645 800 3 323 800 3 282 800 6 453 600 120 576 012

name: council decision (eu) 2016/298 of 29 february 2016 on the position to be adopted by the european union within the acp-eu committee of ambassadors regarding approval of derogations to the financial regulation of the centre for the development of the enterprise (cde) type: decision subject matter: non-governmental organisations; public finance and budget policy; european construction date published: 2016-03-03 3.3.2016 en official journal of the european union l 57/4 council decision (eu) 2016/298 of 29 february 2016 on the position to be adopted by the european union within the acp-eu committee of ambassadors regarding approval of derogations to the financial regulation of the centre for the development of the enterprise (cde) the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 209(2) in conjunction with article 218(9) thereof, having regard to annex iii to the partnership agreement between the members of the african, caribbean and pacific group of states of the one part, and the european community and its member states, of the other part (1), and in particular article 2(6) thereof, having regard to decision no 5/2004 of the acp-ec committee of ambassadors of 17 december 2004 concerning the financial regulation of the centre for the development of enterprise (2), having regard to the proposal from the european commission, whereas: (1) at its 39th session from 19 to 20 june 2014 in nairobi, kenya, the acp-eu council of ministers agreed, in a joint declaration, to proceed with the orderly closing of the centre for the development of enterprise (cde), and to the amendment of annex iii to the partnership agreement between the members of the african, caribbean and pacific group of states of the one part, and the european community and its member states, of the other part (acp-eu partnership agreement) and to that end, to delegate powers to the acp-eu committee of ambassadors to take the matter forward with a view to the adoption of the necessary decisions. (2) in its decision no 4/2014 (3), the acp-eu committee of ambassadors recalls that the closure of the cde is to respect the competences of the cde's supervisory authorities set out in annex iii to the acp-eu partnership agreement and the detailed arrangements laid down by the acp-eu council of ministers in its joint declaration. (3) annex iii to the acp-eu partnership agreement requires the acp-eu committee of ambassadors to monitor the overall strategy of the cde and supervise the work of the executive board. (4) annex iii to the acp-eu partnership agreement requires the cde executive board to lay down the financial and staff regulations and the rules of operations. (5) the request from the cde executive board to the acp-eu committee of ambassadors by letter dated 19 october 2015 explains that, in the context of the closing down of the cde, the cde executive board wishes to derogate from article 27(1) and (5) of decision no 5/2004 of the acp-ec committee of ambassadors of 17 december 2004 concerning the financial regulation of the centre for the development of enterprise (cde financial regulation) and seeks prior approval from the supervisory authorities. (6) the modification of, or derogations to, the cde financial regulation and cde staff regulations (4), depending on the needs that may arise from the implementation of the orderly closure process of the cde, necessitates a flexible procedure. (7) the requirement of the appointment of a firm of auditors for a period of three years, as set out in article 27(1) of the cde financial regulation, and the requirement for this firm to draw up each year a statutory audit report, in accordance with article 27(5) of that regulation, need to be adapted in order to ensure a more efficient procedure in the context of the closing-down of the organisation, has adopted this decision: article 1 1. the position to be adopted by the union in the acp-eu committee of ambassadors regarding the approval of the derogations to the cde financial regulation shall be based on the draft decision of the acp-eu committee of ambassadors attached to this decision. 2. minor changes to the draft decision may be agreed by the representatives of the union in the acp-eu committee of ambassadors without further decision of the council. article 2 after its adoption, the decision of the acp-eu committee of ambassadors shall be published in the official journal of the european union. article 3 this decision shall enter into force on the date of its adoption. done at brussels, 29 february 2016. for the council the president h.g.j. kamp (1) agreement signed in cotonou on 23 june 2000 (oj l 317, 15.12.2000, p. 3), as amended by the agreement signed in luxembourg on 25 june 2005 (oj l 209, 11.8.2005, p. 27) and by the agreement signed in ouagadougou on 22 june 2010 (oj l 287, 4.11.2010, p. 3). (2) oj l 70, 9.3.2006, p. 52. (3) decision no 4/2014 of the acp-eu committee of ambassadors of 23 october 2014 regarding the mandate to be given to the executive board of the centre for the development of enterprise (cde) (oj l 330, 15.11.2014, p. 61). (4) decision no 9/2005 of the acp-ec committee of ambassadors of 27 july 2005 concerning the staff regulations of the centre for the development of enterprise (cde) (oj l 348, 30.12.2005, p. 54). draft decision of the acp-eu committee of ambassadors of on the approval of derogations to the financial regulation of the centre for the development of the enterprise (cde) the acp-eu committee of ambassadors, having regard to annex iii to the partnership agreement between the members of the african, caribbean and pacific group of states of the one part, and the european community and its member states, of the other part (1), and in particular article 2(6) thereof, having regard to decision no 5/2004 of the acp-ec committee of ambassadors of 17 december 2004 concerning the financial regulation of the centre for the development of enterprise (2), whereas: (1) annex iii to the acp-eu partnership agreement between the members of the african, caribbean and pacific group of states of the one part, and the european community and its member states, of the other part, (acp eu partnership agreement) requires the acp-eu committee of ambassadors to monitor the overall strategy of the cde and supervise the work of the executive board. (2) annex iii to the acp-eu partnership agreement requires the cde executive board to lay down the financial and staff regulations and the rules of operations. (3) the statutes and rules of procedure of the centre for the development of enterprise adopted by decision no 8/2005 of the acp-eu committee of ambassadors (3) (the cde statutes) and decision no 5/2004 of the acp-ec committee of ambassadors (cde financial regulation) (4) provide the safeguards in terms of information of and supervision by the acp-eu committee of ambassadors. (4) at its 39th session held from 19 to 20 june in nairobi, the acp-eu council of ministers agreed, in a joint declaration, to proceed with the orderly closing of the cde and to the amendment of annex iii to the acp-eu partnership agreement and, to that end, to delegate powers to the acp-eu committee of ambassadors to take the matter forward with a view to the adoption of the necessary decisions. (5) in its decision no 4/2014 (5), the acp-eu committee of ambassadors recalls that the closure of the cde is to respect the competences of the cde's supervisory authorities set out in annex iii to the acp-eu partnership agreement and the detailed arrangements laid down by the acp-eu council of ministers in its joint declaration. (6) the request from the cde executive board to the acp-eu committee of ambassadors by letter dated 19 october 2015 explains that in the context of the closing down of the cde, the cde executive board wishes to derogate from article 27(1) and (5) of the cde financial regulation, and seeks prior approval from the supervisory authorities. (7) the modification of or derogations to the cde financial regulation and cde staff regulations (6), depending on the needs that may arise from the implementation of the orderly closure process of the cde, necessitates a flexible procedure. (8) the requirements of the appointment of a firm of auditors for a period of three years, as set out in article 27(1) of the cde financial regulation, and the requirement for this firm to draw up each year a statutory audit report, in accordance with article 27(5) of that regulation, need to be adapted in order to ensure a more efficient procedure in the context of the closing-down of the organisation, has adopted this decision: article 1 1. the acp-eu committee of ambassadors gives its favourable opinion regarding the derogation from article 27(1) and (5) of the cde financial regulation, with immediate effect. 2. by derogation from article 27(1) of the cde financial regulation, the cde shall be able to appoint a firm of auditors for a period of four years covering the financial years 2013 to 2016. this firm of auditors shall be selected in accordance with the procurement procedures foreseen in the cde financial regulation. by derogation from article 27(5) of the cde financial regulation, a multiannual audit will be launched for the years not yet audited and a single final report will be presented to the cde executive board. article 2 the acp-eu committee of ambassadors authorises the cde executive board to derogate from and/or to modify the cde financial regulation and cde staff regulation depending on the needs that may arise from the implementation of the orderly closure process of the cde. the cde executive board shall inform the acp-eu committee of ambassadors of any such decision of derogation and /or modification of the cde regulations immediately. article 3 this decision shall enter into force on the day of its adoption. done at , for the acp-eu committee of ambassadors the president (1) agreement signed in cotonou on 23 june 2000 (oj l 317, 15.12.2000, p. 3), as amended by the agreement signed in luxembourg on 25 june 2005 (oj l 209, 11.8.2005, p. 27) and by the agreement signed in ouagadougou on 22 june 2010 (oj l 287, 4.11.2010, p. 3). (2) oj l 70, 9.3.2006, p. 52. (3) oj eu l 66, 8.3.2006, p. 16. (4) decision no 5/2004 of the acp-ec committee of ambassadors of 17 december 2004 concerning the financial regulation of the centre for the development of enterprise (oj l 70, 9.3.2006, p. 52). (5) oj l 330, 15.11.2014, p. 61. (6) oj l 348, 30.12.2005, p. 54.

name: council decision (eu) 2016/272 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and the republic of vanuatu on the short-stay visa waiver type: decision subject matter: international law; european construction; asia and oceania; international affairs date published: 2016-02-27 27.2.2016 en official journal of the european union l 52/11 council decision (eu) 2016/272 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and the republic of vanuatu on the short-stay visa waiver the council of the european union, having regard to the treaty on the functioning of the european union, and in particular point (a) of article 77(2), in conjunction with point (a)(v) of the second subparagraph of article 218(6), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the commission has negotiated on behalf of the european union an agreement with the republic of vanuatu on the short-stay visa waiver (the agreement). (2) in accordance with council decision (eu) 2015/1035 (2), the agreement has been signed and is applied on a provisional basis as from 28 may 2015. (3) the agreement sets up a joint committee of experts for the management of the agreement. the union is to be represented within that joint committee by the commission, which should be assisted by the representatives of the member states. (4) this decision constitutes a development of the provisions of the schengen acquis in which the united kingdom does not take part, in accordance with council decision 2000/365/ec (3); the united kingdom is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (5) this decision constitutes a development of the provisions of the schengen acquis in which ireland does not take part, in accordance with council decision 2002/192/ec (4); ireland is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (6) the agreement should be approved, has adopted this decision: article 1 the agreement between the european union and the republic of vanuatu on the short-stay visa waiver is hereby approved on behalf of the union. article 2 the president of the council shall give, on behalf of the union, the notification provided for in article 8(1) of the agreement (5). article 3 the commission, assisted by the representatives of the member states, shall represent the union within the joint committee of experts set up pursuant to article 6 of the agreement. article 4 this decision shall enter into force on the day of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) consent given on 15 december 2015 (not yet published in the official journal). (2) council decision (eu) 2015/1035 of 7 may 2015 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and the republic of vanuatu on the short-stay visa waiver (oj l 173, 3.7.2015, p. 46). (3) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (4) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (5) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/269 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and the commonwealth of dominica on the short-stay visa waiver type: decision subject matter: america; european construction; international law; international affairs date published: 2016-02-27 27.2.2016 en official journal of the european union l 52/5 council decision (eu) 2016/269 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and the commonwealth of dominica on the short-stay visa waiver the council of the european union, having regard to the treaty on the functioning of the european union, and in particular point (a) of article 77(2), in conjunction with point (a)(v) of the second subparagraph of article 218(6), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the commission has negotiated on behalf of the european union an agreement with the commonwealth of dominica on the short-stay visa waiver (the agreement). (2) in accordance with council decision (eu) 2015/1032 (2), the agreement has been signed and is applied on a provisional basis as from 28 may 2015. (3) the agreement sets up a joint committee of experts for the management of the agreement. the union is to be represented within that joint committee by the commission, which should be assisted by the representatives of the member states. (4) this decision constitutes a development of the provisions of the schengen acquis in which the united kingdom does not take part, in accordance with council decision 2000/365/ec (3); the united kingdom is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (5) this decision constitutes a development of the provisions of the schengen acquis in which ireland does not take part, in accordance with council decision 2002/192/ec (4); ireland is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (6) the agreement should be approved, has adopted this decision: article 1 the agreement between the european union and the commonwealth of dominica on the short-stay visa waiver is hereby approved on behalf of the union. article 2 the president of the council shall give, on behalf of the union, the notification provided for in article 8(1) of the agreement (5). article 3 the commission, assisted by the representatives of the member states, shall represent the union within the joint committee of experts set up pursuant to article 6 of the agreement. article 4 this decision shall enter into force on the day of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) consent given on 15 december 2015 (not yet published in the official journal). (2) council decision (eu) 2015/1032 of 7 may 2015 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and the commonwealth of dominica on the short-stay visa waiver (oj l 173, 3.7.2015, p. 19). (3) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (4) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (5) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/268 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and saint lucia on the short-stay visa waiver type: decision subject matter: international affairs; international law; european construction; america date published: 2016-02-27 27.2.2016 en official journal of the european union l 52/3 council decision (eu) 2016/268 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and saint lucia on the short-stay visa waiver the council of the european union, having regard to the treaty on the functioning of the european union, and in particular point (a) of article 77(2), in conjunction with point (a)(v) of the second subparagraph of article 218(6), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the commission has negotiated on behalf of the european union an agreement with saint lucia on the short-stay visa waiver (the agreement). (2) in accordance with council decision (eu) 2015/1031 (2), the agreement has been signed and is applied on a provisional basis as from 28 may 2015. (3) the agreement sets up a joint committee of experts for the management of the agreement. the union is to be represented within that joint committee by the commission, which should be assisted by the representatives of the member states. (4) this decision constitutes a development of the provisions of the schengen acquis in which the united kingdom does not take part, in accordance with council decision 2000/365/ec (3); the united kingdom is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (5) this decision constitutes a development of the provisions of the schengen acquis in which ireland does not take part, in accordance with council decision 2002/192/ec (4); ireland is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (6) the agreement should be approved, has adopted this decision: article 1 the agreement between the european union and saint lucia on the short-stay visa waiver is hereby approved on behalf of the union. article 2 the president of the council shall give, on behalf of the union, the notification provided for in article 8(1) of the agreement (5). article 3 the commission, assisted by the representatives of the member states, shall represent the union within the joint committee of experts set up pursuant to article 6 of the agreement. article 4 this decision shall enter into force on the day of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) consent given on 15 december 2015 (not yet published in the official journal). (2) council decision (eu) 2015/1031 of 7 may 2015 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and saint lucia on the short-stay visa waiver (oj l 173, 3.7.2015, p. 10). (3) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (4) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (5) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/270 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and grenada on the short-stay visa waiver type: decision subject matter: international law; european construction; america; international affairs date published: 2016-02-27 27.2.2016 en official journal of the european union l 52/7 council decision (eu) 2016/270 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and grenada on the short-stay visa waiver the council of the european union, having regard to the treaty on the functioning of the european union, and in particular point (a) of article 77(2), in conjunction with point (a)(v) of the second subparagraph of article 218(6), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the commission has negotiated on behalf of the european union an agreement with grenada on the short-stay visa waiver (the agreement). (2) in accordance with council decision (eu) 2015/1033 (2), the agreement has been signed and is applied on a provisional basis as from 28 may 2015. (3) the agreement sets up a joint committee of experts for the management of the agreement. the union is to be represented within that joint committee by the commission, which should be assisted by the representatives of the member states. (4) this decision constitutes a development of the provisions of the schengen acquis in which the united kingdom does not take part, in accordance with council decision 2000/365/ec (3); the united kingdom is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (5) this decision constitutes a development of the provisions of the schengen acquis in which ireland does not take part, in accordance with council decision 2002/192/ec (4); ireland is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (6) the agreement should be approved, has adopted this decision: article 1 the agreement between the european union and grenada on the short-stay visa waiver is hereby approved on behalf of the union. article 2 the president of the council shall give, on behalf of the union, the notification provided for in article 8(1) of the agreement (5). article 3 the european commission, assisted by the representatives of the member states, shall represent the union within the joint committee of experts set up pursuant to article 6 of the agreement. article 4 this decision shall enter into force on the day of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) consent given on 15 december 2015 (not yet published in the official journal). (2) council decision (eu) 2015/1033 of 7 may 2015 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and grenada on the short-stay visa waiver (oj l 173, 3.7.2015, p. 28). (3) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (4) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (5) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: council decision (eu) 2016/267 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and the united arab emirates on the short-stay visa waiver type: decision subject matter: international law; asia and oceania; international affairs; european construction date published: 2016-02-27 27.2.2016 en official journal of the european union l 52/1 council decision (eu) 2016/267 of 12 february 2016 on the conclusion, on behalf of the european union, of the agreement between the european union and the united arab emirates on the short-stay visa waiver the council of the european union, having regard to the treaty on the functioning of the european union, and in particular point (a) of article 77(2), in conjunction with point (a)(v) of the second subparagraph of article 218(6), thereof, having regard to the proposal from the european commission, having regard to the consent of the european parliament (1), whereas: (1) the commission has negotiated on behalf of the european union an agreement with the united arab emirates on the short-stay visa waiver (the agreement). (2) in accordance with council decision (eu) 2015/785 (2), the agreement has been signed and is applied on a provisional basis as from 6 may 2015. (3) the agreement sets up a joint committee of experts for the management of the agreement.the union is to be represented within that joint committee by the commission, which should be assisted by the representatives of the member states. (4) this decision constitutes a development of the provisions of the schengen acquis in which the united kingdom does not take part, in accordance with council decision 2000/365/ec (3); the united kingdom is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (5) this decision constitutes a development of the provisions of the schengen acquis in which ireland does not take part, in accordance with council decision 2002/192/ec (4); ireland is therefore not taking part in the adoption of this decision and is not bound by it or subject to its application. (6) the agreement should be approved, has adopted this decision: article 1 the agreement between the european union and the united arab emirates on the short-stay visa waiver is hereby approved on behalf of the union. article 2 the president of the council shall give, on behalf of the union, the notification provided for in article 8(1) of the agreement (5). article 3 the commission, assisted by the representatives of the member states, shall represent the union within the joint committee of experts set up pursuant to article 6 of the agreement. article 4 this decision shall enter into force on the day of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) consent given on 15 december 2015 (not yet published in the official journal) (2) council decision (eu) 2015/785 of 20 april 2015 on the signing, on behalf of the european union, and provisional application of the agreement between the european union and the united arab emirates on the short-stay visa waiver (oj l 125, 21.5.2015, p. 1). (3) council decision 2000/365/ec of 29 may 2000 concerning the request of the united kingdom of great britain and northern ireland to take part in some of the provisions of the schengen acquis (oj l 131, 1.6.2000, p. 43). (4) council decision 2002/192/ec of 28 february 2002 concerning ireland's request to take part in some of the provisions of the schengen acquis (oj l 64, 7.3.2002, p. 20). (5) the date of entry into force of the agreement will be published in the official journal of the european union by the general secretariat of the council.

name: commission implementing decision (eu) 2016/230 of 17 february 2016 amending implementing decision 2014/908/eu as regards the lists of third countries and territories whose supervisory and regulatory requirements are considered equivalent for the purposes of the treatment of exposures according to regulation (eu) no 575/2013 of the european parliament and of the council (text with eea relevance) type: decision_impl subject matter: trade policy; cooperation policy; free movement of capital; financial institutions and credit date published: 2016-02-18 18.2.2016 en official journal of the european union l 41/23 commission implementing decision (eu) 2016/230 of 17 february 2016 amending implementing decision 2014/908/eu as regards the lists of third countries and territories whose supervisory and regulatory requirements are considered equivalent for the purposes of the treatment of exposures according to regulation (eu) no 575/2013 of the european parliament and of the council (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to regulation (eu) no 575/2013 of the european parliament and of the council of 26 june 2013 on prudential requirements for credit institutions and investment firms and amending regulation (eu) no 648/2012 (1), and in particular articles 107(4) and 142(2) thereof, whereas: (1) commission implementing decision 2014/908/eu (2) lays down lists of third countries and territories whose supervisory and regulatory arrangements are found equivalent to the corresponding supervisory and regulatory arrangements applied in the union in accordance with regulation (eu) no 575/2013. (2) the commission has conducted further assessments of the supervisory and regulatory arrangements applicable to investment firms and exchanges using the same methodology as for the equivalence assessments that led to the adoption of implementing decision 2014/908/eu. (3) in its assessments, the commission has considered relevant developments in the supervisory and regulatory framework since the adoption of implementing decision 2014/908/eu and took into account available sources of information, including independent assessments carried out by international organisations, such as the international monetary fund and the international organization of securities commissions. (4) the commission has concluded that in japan only the supervisory and regulatory arrangements applied to a subset of the japanese investment firms comply with a series of operational, organisational and supervisory standards reflecting the essential elements of the union's supervisory and regulatory arrangements applicable to investment firms. that subset of japanese investment firms, as defined in article 28 of the financial instrument and exchange act of japan, engages in defined business and is referred to in japan's legal framework as type i financial instruments business operators (type i fibos). type i fibos are subject to specific rules related to registration capital requirements, as well as to ongoing risk-based capital requirements. based on the analysis carried out, it is appropriate to consider the supervisory and regulatory requirements applied to type i fibos located in japan as at least equivalent to those applied in the union for the purposes of article 107(4) and article 142(1)(4)(b) of regulation (eu) no 575/2013. (5) the commission has concluded that hong kong, indonesia and south korea have in place supervisory and regulatory arrangements which comply with a series of operational, organisational and supervisory standards reflecting the essential elements of the union's supervisory and regulatory arrangements applicable to investment firms. therefore, it is appropriate to consider the supervisory and regulatory requirements applied to investment firms located in those third countries and territories as at least equivalent to those applied in the union for the purposes of article 107(4) and article 142(1)(4)(b) of regulation (eu) no 575/2013. (6) the commission has concluded that australia, indonesia and south korea have in place supervisory and regulatory arrangements which comply with a series of operational standards reflecting the essential elements of the union's supervisory and regulatory arrangements applicable to exchanges. therefore, it is appropriate to consider the supervisory and regulatory arrangements applied to exchanges located in those third countries as at least equivalent to those applied in the union for the purposes of article 107(4) of regulation (eu) no 575/2013. (7) implementing decision 2014/908/eu should therefore be amended to include those third countries and territories in the appropriate list of third countries and territories whose supervisory and regulatory requirements are considered equivalent to the union's regime for the purposes of the treatment of exposures according to regulation (eu) no 575/2013. (8) the measures provided for in this decision are in accordance with the opinion of the european banking committee, has adopted this decision: article 1 implementing decision 2014/908/eu is amended as follows: (1) annex ii is replaced by the text set out in annex i to this decision; (2) annex iii is replaced by the text set out in annex ii to this decision; (3) annex v is replaced by the text set out in annex iii to this decision. article 2 this decision shall enter into force on the twentieth day following that of its publication in the official journal of the european union. done at brussels, 17 february 2016. for the commission the president jean-claude juncker (1) oj l 176, 27.6.2013, p. 1. (2) commission implementing decision 2014/908/eu of 12 december 2014 on the equivalence of the supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures according to regulation (eu) no 575/2013 of the european parliament and of the council (oj l 359, 16.12.2014, p. 155). annex i annex ii list of third countries and territories for the purposes of article 2 (investment firms) (1) australia (2) brazil (3) canada (4) china (5) hong kong (6) indonesia (7) japan (limited to type i financial instruments business operators) (8) mexico (9) south korea (10) saudi arabia (11) singapore (12) south africa (13) usa annex ii annex iii list of third countries for the purposes of article 3 (exchanges) (1) australia (2) brazil (3) canada (4) china (5) india (6) indonesia (7) japan (8) mexico (9) south korea (10) saudi arabia (11) singapore (12) south africa (13) usa annex iii annex v list of third countries and territories for the purposes of article 5 (credit institutions and investment firms) credit institutions: (1) australia (2) brazil (3) canada (4) china (5) guernsey (6) hong kong (7) india (8) isle of man (9) japan (10) jersey (11) mexico (12) monaco (13) saudi arabia (14) singapore (15) south africa (16) switzerland (17) usa investment firms: (1) australia (2) brazil (3) canada (4) china (5) hong kong (6) indonesia (7) japan (limited to type i financial instruments business operators) (8) mexico (9) south korea (10) saudi arabia (11) singapore (12) south africa (13) usa

name: council decision (cfsp) 2016/220 of 15 february 2016 amending decision 2011/101/cfsp concerning restrictive measures against zimbabwe type: decision subject matter: africa; international affairs; civil law date published: 2016-02-17 17.2.2016 en official journal of the european union l 40/11 council decision (cfsp) 2016/220 of 15 february 2016 amending decision 2011/101/cfsp concerning restrictive measures against zimbabwe the council of the european union, having regard to the treaty on european union, and in particular article 29 thereof, having regard to the proposal of the high representative of the union for foreign affairs and security policy, whereas: (1) on 15 february 2011, the council adopted decision 2011/101/cfsp (1). (2) the council has carried out a review of decision 2011/101/cfsp, taking into account political developments in zimbabwe. (3) the restrictive measures should be extended until 20 february 2017. (4) the restrictive measures should be maintained for seven persons and one entity set out in annex i to decision 2011/101/cfsp. the suspension of the restrictive measures should be renewed for the five persons listed in annex ii to decision 2011/101/cfsp. (5) decision 2011/101/cfsp should be amended accordingly, has adopted this decision: article 1 decision 2011/101/cfsp is amended as follows: (1) article 10 is replaced by the following: article 10 1. this decision shall enter into force on the date of its adoption. 2. this decision shall apply until 20 february 2017. 3. the measures referred to in article 4(1) and article 5(1) and (2), in so far as they apply to persons listed in annex ii, shall be suspended until 20 february 2017. the suspension shall be reviewed every three months. 4. this decision shall be kept under constant review and shall be renewed, or amended as appropriate, if the council deems that its objectives have not been met. (2) annex i is replaced by the text appearing in annex i to this decision. (3) annex ii is replaced by the text appearing in annex ii to this decision. article 2 this decision shall enter into force on the day following that of its publication in the official journal of the european union. done at brussels, 15 february 2016. for the council the president f. mogherini (1) council decision 2011/101/cfsp of 15 february 2011 concerning restrictive measures against zimbabwe (oj l 42, 16.2.2011, p. 6). annex i annex i persons and entities referred to in articles 4 and 5 i. persons name (and any aliases) identifying information grounds for designation 1. mugabe, robert gabriel president, born 21.2.1924 passport ad001095 head of government and responsible for activities that seriously undermine democracy, respect for human rights and the rule of law. 2. mugabe, grace born 23.7.1965 passport ad001159 id 63-646650q70 associated with the zanu-pf (zimbabwe african national union patriotic front) faction of the government. took over the iron mask estate in 2002; alleged to illicitly derive large profits from diamond mining. 3. bonyongwe, happyton mabhuya director-general central intelligence organisation, born 6.11.1960 passport: ad002214 id: 63-374707a13 senior security figure with a close association with the zanu-pf faction of the government and complicit in forming or directing repressive state policy. accused of being responsible for kidnapping, torturing and killing mdc activists in june 2008. 4. chihuri, augustine police commissioner, born 10.3.1953 passport ad000206 id 68-034196m68 senior police officer and member of the joint operational command, closely associated with the repressive policies of zanu-pf. publicly confessed to support zanu-pf in contravention of the police act. in june 2009 ordered the police to drop all cases related to murders committed to the run-up to the june 2008 presidential election. 5. chiwenga, constantine commander zimbabwe defence forces, general (former army commander, lieutenant general), born 25.8.1956 passport ad000263 id 63-327568m80 member of joint operational command and complicit in forming or directing repressive state policy. used army for farm takeovers. during 2008 elections was a prime architect of the violence associated with the process of the presidential run-off. 6. shiri, perence (a.k.a. bigboy) samson chikerema air marshal (air force), born 1.11.1955 id 29-098876m18 senior military officer and member of zanu-pf joint operational command and complicit in forming or directing oppressive state policy. involved in political violence, including during the 2008 election in mashonaland west and in chiadzwa. 7. sibanda, phillip valerio (a.k.a. valentine) commander zimbabwe national army, lieutenant general, born 25.8.1956 or 24.12.1954 id 63-357671h26 senior army figure with ties to the government and complicit in forming or directing oppressive state policy. ii. entities name identifying information grounds for designation 1. zimbabwe defence industries 10th floor, trustee house, 55 samora machel avenue, po box 6597, harare, zimbabwe. associated with the ministry of defence and the zanu-pf faction of government. annex ii annex ii persons referred to in article 10(3) persons name (and any aliases) 1. bonyongwe, happyton mabhuya 2. chihuri, augustine 3. chiwenga, constantine 4. shiri, perence (a.k.a. bigboy) samson chikerema 5. sibanda, phillip valerio (a.k.a. valentine).

name: council decision (eu) 2016/204 of 12 february 2016 on the position to be adopted, on behalf of the european union, within the eea joint committee concerning an amendment to annex xi (electronic communication, audiovisual services and information society) to the eea agreement (ultra-wide band) type: decision subject matter: europe; communications; air and space transport; international affairs; european construction date published: 2016-02-16 16.2.2016 en official journal of the european union l 39/39 council decision (eu) 2016/204 of 12 february 2016 on the position to be adopted, on behalf of the european union, within the eea joint committee concerning an amendment to annex xi (electronic communication, audiovisual services and information society) to the eea agreement (ultra-wide band) the council of the european union, having regard to the treaty on the functioning of the european union, and in particular article 114, in conjunction with article 218(9) thereof, having regard to council regulation (ec) no 2894/94 of 28 november 1994 concerning arrangements for implementing the agreement on the european economic area (1), and in particular article 1(3) thereof, having regard to the proposal from the european commission, whereas: (1) the agreement on the european economic area (2) (the eea agreement) entered into force on 1 january 1994. (2) pursuant to article 98 of the eea agreement, the eea joint committee may decide to amend, inter alia, annex xi (electronic communication, audiovisual services and information society) to the eea agreement. (3) commission implementing decision 2014/702/eu (3) is to be incorporated into the eea agreement. the density of radio links close to airports in iceland and in norway, and the intensity of their use are higher than in the eu. in order to avoid the occurrence of harmful interference to mobile operators' radio links, iceland and norway should be exempted from allowing the use of the 6,0 to 8.5 ghz band by equipment using ultra-wideband technology onboard aircraft. (4) annex xi (electronic communication, audiovisual services and information society) to the eea agreement should therefore be amended accordingly. (5) the position of the union within the eea joint committee should therefore be based on the attached draft decision, has adopted this decision: article 1 the position to be adopted, on the union's behalf, within the eea joint committee on the proposed amendment to annex xi (electronic communication, audiovisual services and information society) to the eea agreement shall be based on the draft decision of the eea joint committee attached to this decision. article 2 this decision shall enter into force on the date of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) oj l 305, 30.11.1994, p. 6. (2) oj l 1, 3.1.1994, p. 3. (3) commission implementing decision 2014/702/eu of 7 october 2014 amending decision 2007/131/ec on allowing the use of the radio spectrum for equipment using ultra-wideband technology in a harmonised manner in the community (oj l 293, 9.10.2014, p. 48). draft decision of the eea joint committee no /2016 of amending annex xi (electronic communication, audiovisual services and information society) to the eea agreement the eea joint committee, having regard to the agreement on the european economic area (the eea agreement), and in particular article 98 thereof, whereas: (1) commission implementing decision 2014/702/eu of 7 october 2014 amending decision 2007/131/ec on allowing the use of the radio spectrum for equipment using ultra-wideband technology in a harmonised manner in the community (1) is to be incorporated into the eea agreement. (2) annex xi to the eea agreement should therefore be amended accordingly, has adopted this decision: article 1 point 5cw (commission decision 2007/131/ec) of annex xi to the eea agreement shall be amended as follows: 1. the following text is added: the provisions of the decision shall, for the purposes of this agreement, be read with the following adaptation: iceland and norway shall be exempted from allowing the use of the 6.0 to 8.5 ghz band by equipment using ultra-wideband technology on-board aircraft. 2. the following indent is added: 32014 d 0702: commission implementing decision 2014/702/eu of 7 october 2014 (oj l 293, 9.10.2014, p. 48). article 2 the texts of implementing decision 2014/702/eu in the icelandic and norwegian languages, to be published in the eea supplement to the official journal of the european union, shall be authentic. article 3 this decision shall enter into force on [ ], provided that all the notifications under article 103(1) of the eea agreement have been made (2). article 4 this decision shall be published in the eea section of, and in the eea supplement to, the official journal of the european union. done at brussels, for the eea joint committee the president [ ] the secretaries to the eea joint committee [ ] (1) oj l 293, 9.10.2014, p. 48. (2) [no constitutional requirements indicated.] [constitutional requirements indicated.]

name: council decision (eu) 2016/202 of 12 february 2016 establishing the position to be taken on behalf of the european union within the epa committee set up by the interim agreement with a view to an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part, regarding the adoption of its rules of procedure type: decision subject matter: politics and public safety; cooperation policy; africa; european construction date published: 2016-02-16 16.2.2016 en official journal of the european union l 39/28 council decision (eu) 2016/202 of 12 february 2016 establishing the position to be taken on behalf of the european union within the epa committee set up by the interim agreement with a view to an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part, regarding the adoption of its rules of procedure the council of the european union, having regard to the treaty on european union, having regard to the treaty on the functioning of the european union, in particular articles 207 and 209, in conjunction with article 218(9) thereof, having regard to council decision 2009/152/ec on the signature and provisional application of the interim agreement with a view to an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part (1), having regard to the proposal from the european commission, whereas: (1) the interim agreement with a view to an economic partnership agreement (epa) between the european community and its member states, of the one part, and the central africa party, of the other part, (hereinafter referred to as the agreement) was signed on 15 january 2009 and has been provisionally applied since 4 august 2014. (2) article 92 of the agreement establishes an epa committee, which is to be responsible for the administration of the agreement and for the completion of all tasks referred to therein. (3) article 92 of the agreement specifies that the parties are to agree on the composition, organisation and functioning of the epa committee. (4) the european union should determine the position to be taken with regard to the adoption of the rules of procedure of the epa committee, has adopted this decision: article 1 the position to be taken on behalf of the european union within the epa committee set up by the interim agreement for an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part, regarding the adoption of its rules of procedure, shall be based on the draft decision of the epa committee annexed to this decision. minor amendments to the draft decision, which involve no change of substance, shall be authorised without a new decision by the council. article 2 after its adoption, the decision of the epa committee shall be published in the official journal of the european union. article 3 this decision shall enter into force on the date of its adoption. done at brussels, 12 february 2016. for the council the president j.r.v.a. dijsselbloem (1) oj l 57, 28.2.2009, p. 1. draft decision no /2015 of the epa committee set up by the interim agreement with a view to an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part, of regarding the adoption of the rules of procedure of the epa committee the epa committee, having regard to the interim agreement with a view to an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part, (the agreement), signed in brussels on 15 january 2009, and provisionally applied since 4 august 2014, in particular article 92 thereof, whereas: (1) under the terms of the agreement and this decision, the central africa party is composed of the republic of cameroon, (2) the agreement lays down that the parties are to agree on the composition, organisation and functioning of the epa committee, has adopted this decision: article 1 the rules of procedure of the epa committee are established as set out in the annex. those rules of procedure are established without prejudice to any special rules provided for in the agreement or which may be decided by the epa committee. article 2 this decision shall enter into force upon its signature. done at , for the republic of cameroon for the european union annex rules of procedure of the epa committee set up by the interim agreement with a view to an economic partnership agreement between the european community and its member states, of the one part, and the central africa party, of the other part chapter i general provisions article 1 tasks of the epa committee the epa committee shall be responsible for the administration of all the areas covered by the agreement and for the completion of all tasks referred to in the agreement. the epa committee shall in particular: (1) in the area of trade: (a) monitor and ensure the implementation and appropriate application of the agreement; to this end it shall examine and recommend the priority areas for cooperation; (b) assess the results achieved under the agreement and make any necessary improvements to the agreement; (c) carry out any measure aimed at avoiding disputes and/or resolving disputes resulting from an interpretation or application of the agreement; (d) monitor the development of regional integration and economic and trade relations between the parties; (e) monitor and assess the impact of the implementation of the agreement on the sustainable development of the parties; (f) discuss and undertake any measures which may promote trade, investment and business opportunities between the parties; (g) discuss all subjects arising from the agreement and any other subject likely to compromise the pursuit of its objectives. (2) in the area of development cooperation: (a) ensure application of the development cooperation provisions falling within the scope of the agreement; (b) monitor and coordinate with the other partners the implementation of the development cooperation provisions laid down in the agreement; (c) keep under periodic review the development priorities set out in the agreement and make recommendations on the inclusion of new priorities, as appropriate; (d) ensure implementation of the joint guidance document annexed to the agreement. chapter ii organisation article 2 composition and chair 1. the epa committee shall be composed of representatives of the members of the council of the european union and of the european commission and representatives of the republic of cameroon, at ministerial or senior official level. 2. reference to the parties in these rules of procedure shall be in accordance with the definition provided for under article 95 of the agreement. 3. the epa committee shall be chaired alternately for periods of 12 months by a representative of the european union and by a representative of the republic of cameroon. the mandate corresponding to the first period shall begin on the date of the first meeting of the epa committee and end on 31 december of the following year. the chair shall be held first by a representative of the republic of cameroon. article 3 observers 1. representatives of the commission of the economic and monetary community of central africa (cemac) and the general secretariat of the economic community of central african states (eccas) shall be invited to attend all meetings of the epa committee as observers. 2. the parties may decide to invite representatives of civil society and the private sector and experts or any other person of their choice to meetings of the epa committee as observers. 3. the epa committee may decide to close meetings to observers during the discussion of sensitive matters and the taking of decisions by the committee. article 4 secretariat the european commission, on behalf of the european union, and the republic of cameroon shall act as secretary of the epa committee alternately for periods of 12 months. these periods shall coincide with the alternate holding of the chair of the epa committee. article 5 sub-committees for the effective performance of its tasks the epa committee may set up under its authority sub-committees responsible for dealing with specific subjects under the agreement. to this end the epa committee shall determine the composition and tasks of such sub-committees. chapter iii functioning article 6 decisions and recommendations 1. the epa committee shall adopt its decisions and recommendations by consensus. 2. the epa committee may decide to submit any general matter, which is of mutual interest to the acp states and the european union, arising under the agreement to the acp-eu council of ministers, as defined under article 15 of the partnership agreement between the members of the african, caribbean and pacific group of states, of the one part, and the european community and its member states, of the other part (the cotonou agreement). 3. in the period between meetings, the epa committee may adopt decisions or recommendations by written procedure if both parties so agree. a written procedure shall consist of an exchange of notes between the parties. 4. the decisions or recommendations of the epa committee shall bear the title decision or recommendation followed by a serial number, the date of their adoption and an indication of their content. each decision shall indicate the date of its entry into force. 5. decisions and recommendations adopted by the epa committee shall be authenticated by a representative of the european commission on behalf of the european union and by a representative of the republic of cameroon. 6. decisions and recommendations shall be forwarded to the parties as documents of the epa committee. article 7 correspondence 1. all correspondence addressed to the epa committee shall be directed to its secretary. 2. the secretary shall ensure that correspondence addressed to the epa committee is forwarded to the chair of the committee and, where appropriate, circulated as documents referred to under article 10 of these rules of procedure to the focal point of each party, as defined under article 92 of the agreement. 3. correspondence from the chair of the epa committee shall be sent to the focal point of each party by the secretary and, where appropriate, circulated as documents referred to under article 10 of these rules of procedure to the other members of the epa committee. article 8 meetings 1. the epa committee shall meet at regular intervals, not exceeding a period of one year, and shall hold extraordinary meetings whenever circumstances so require, if the parties so agree. 2. each meeting of the epa committee shall be held at a place and on a date agreed by the parties. 3. meetings of the epa committee shall be convened by the party holding the chair, after consulting the other party. 4. invitations shall be sent to participants at the latest 15 days before each meeting. article 9 delegations before each meeting, the chair of the epa committee shall be informed of the intended composition of the delegations of the european union and the republic of cameroon, and of any observers. article 10 documentation where the deliberations of the epa committee are based on written supporting documents, such documents shall be numbered and circulated as documents of the epa committee by the secretary at least 14 days before the beginning of the meeting. article 11 agendas for meetings 1. a provisional agenda for each meeting shall be drawn up by the secretary of the epa committee on the basis of proposals made by the parties. it shall be forwarded by the secretary of the epa committee to each party's focal point no later than 15 days before the beginning of the meeting. 2. the provisional agenda shall include the items for which a request for inclusion on the agenda has been received by the secretary no later than 21 days before the beginning of the meeting, although such items will not be included on the provisional agenda unless the relevant supporting documents have been received by the secretary no later than the date of dispatch of that provisional agenda. 3. the agenda shall be adopted by the epa committee at the beginning of each meeting. items other than those appearing on the provisional agenda may be placed on the agenda if the parties so agree. 4. the chair of the epa committee, in agreement with the parties, may invite experts to attend the epa committee's meetings in order to provide information on specific subjects. 5. with the agreement of the parties, the secretary may shorten the time limits specified in paragraphs 1 and 2, in order to take account of the requirements of a particular case. article 12 minutes 1. at the end of each meeting, a summary of the conclusions shall be drawn up and signed by the epa committee members. 2. draft minutes of each meeting shall be drawn up by the secretary at the latest within one month. 3. the minutes shall, as a general rule, summarise each item on the agenda, specifying where applicable: (a) all the documents submitted to the epa committee; (b) any statement that a member of the epa committee has asked to be entered; (c) the decisions adopted, recommendations made, statements agreed upon and conclusions adopted on specific items. 4. the minutes shall also include a list of participants from the epa committee, a list of the members of the delegations accompanying them and a list of any observers at the meeting. 5. the minutes shall be approved in writing by both parties within two months of the date of the meeting. once approved, two copies of the minutes shall be signed by the secretary and each of the parties shall receive one original of these authentic documents. article 13 public access 1. unless otherwise decided by the parties, the meetings of the epa committee shall not be public. 2. each party may decide to publish the decisions of the epa committee in its respective official publication. chapter iv final provisions article 14 linguistic regime 1. the working languages of the epa committee shall be the official languages common to the parties. 2. the epa committee shall base its deliberations and adopt decisions and recommendations on documents and proposals prepared in one of the languages referred to in paragraph 1. article 15 expenditure 1. each party shall meet any expenses it incurs as a result of attending the meetings of the epa committee, both with regard to staff, travel and subsistence expenditure as well as with regard to postal and telecommunications expenditure. 2. expenditure in connection with the organisation of meetings and reproduction of documents shall be borne by the party hosting the meeting. 3. expenditure in connection with the provision of interpretation services at meetings and translation of decisions and recommendations into the working languages of the epa committee shall be borne by the party hosting the meeting. expenditure in connection with the provision of interpretation services and the translation of decisions and recommendations into the other official languages of the european union shall be borne by the european union. article 16 amendment of rules of procedure these rules of procedure may be amended by a decision of the epa committee in accordance with article 6(1).

name: decision (eu) 2016/188 of the european central bank of 11 december 2015 on the access and use of ssm electronic applications, systems, platforms and services by the european central bank and the national competent authorities of the single supervisory mechanism (ecb/2015/47) type: decision subject matter: cooperation policy; financial institutions and credit; monetary economics; documentation; information technology and data processing; budget; information and information processing date published: 2016-02-12 12.2.2016 en official journal of the european union l 37/104 decision (eu) 2016/188 of the european central bank of 11 december 2015 on the access and use of ssm electronic applications, systems, platforms and services by the european central bank and the national competent authorities of the single supervisory mechanism (ecb/2015/47) the governing council of the european central bank, having regard to the treaty on the functioning of the european union, and in particular article 127(6) and article 132 thereof, having regard to the statute of the european system of central banks and of the european central bank, and in particular article 34 thereof, having regard to council regulation (eu) no 1024/2013 of 15 october 2013 conferring specific tasks on the european central bank concerning policies relating to the prudential supervision of credit institutions (1), and in particular article 6(1) in conjunction with article 6(7) thereof, having regard to the proposal from the supervisory board and in consultation with the national competent authorities, whereas: (1) for the performance of the specific tasks concerning policies relating to the prudential supervision of credit institutions, as conferred on the european central bank (ecb) by regulation (eu) no 1024/2013, the ecb uses the european system of central banks (escb) and eurosystem electronic applications, systems, platforms and services, as well as the new electronic applications, systems, platforms and services specific for carrying out the tasks entrusted to the ecb pursuant to regulation (eu) no 1024/2013 on the basis of article 127(6) of the treaty and article 25.2 of the statute of the european system of central banks and of the european central bank. (2) it is necessary for the smooth, effective and consistent functioning of the single supervisory mechanism (ssm) that practical arrangements for the cooperation between the ecb and the national competent authorities (ncas) within the ssm include arrangements for the use of such electronic applications, systems, platforms and services that are necessary for the fulfilment of their responsibilities under regulation (eu) no 1024/2013. (3) the public key infrastructure for the european system of central banks (hereinafter the escb-pki) was established in decision ecb/2013/1 (2). pursuant to article 3(1) of decision ecb/2013/1, escb and eurosystem electronic applications, systems, platforms and services with medium or above medium criticality should only be accessed and used if a user has been authenticated by means of an electronic certificate issued and managed by a certification authority accepted by the escb in accordance with the escb/ssm certificate acceptance framework, or by the escb-pki certification authority or by certification authorities accepted by the escb for target2 and target2 securities for those two applications. (4) the governing council has identified a need for advanced information security services, such as strong authentication, electronic signatures and encryption, through the use of electronic certificates for the electronic applications, systems, platforms and services that are necessary for the fulfilment of the ecb's and ncas' responsibilities, as competent authorities within the ssm, under regulation (eu) no 1024/2013. hence, certificates issued by the escb-pki may be used to access and use electronic applications, systems, platforms and services used for the functioning of the ssm. (5) the ecb and the ncas of the ssm may decide to use certificates and services provided by the escb-pki to access and use ssm electronic applications, systems, platforms and services, has adopted this decision: article 1 definitions for the purposes of this decision: 1. national competent authority (nca) means a national competent authority designated by a participating member state in accordance with article 2(2) of regulation (eu) no 1024/2013. this meaning is without prejudice to arrangements under national law that assign certain supervisory tasks to a national central bank (ncb) that is not designated as an nca. with regard to such arrangements, a reference to an nca in this decision shall also refer to the ncb in respect of the supervisory tasks assigned to it by national law; 2. competent authority means either an nca or the ecb; 3. escb and eurosystem electronic applications, systems, platforms and services, certificate or electronic certificate, escb-pki certification authority, registration authority, user, eurosystem central bank, and relying party have the meanings defined in article 1 of decision ecb/2013/1; 4. ssm electronic applications, systems, platforms and services means electronic applications, systems, platforms and services that are used for the fulfilment of the ecb's and ncas' responsibilities under regulation (eu) no 1024/2013; 5. escb/ssm certificate acceptance framework means the criteria established by the escb information technology committee to identify the certification authorities, both internal and external to the escb, which can be trusted in relation to escb and eurosystem electronic applications, systems, platforms and services and in relation to ssm electronic applications, systems, platforms and services. article 2 use of and access to ssm electronic applications, systems, platforms and services 1. ssm electronic applications, systems, platforms and services with medium or above medium criticality shall only be accessed and used if a user has been authenticated by means of an electronic certificate issued and managed by a certification authority accepted in accordance with the escb/ssm certificate acceptance framework, including by the escb-pki certification authority. 2. the escb-pki certification authority shall issue electronic certificates and provide other certification services to the competent authorities participating in the escb-pki pursuant to article 3 for their certificate subscribers and for the certificate subscribers of third parties working with them to enable them to securely access and use ssm electronic applications, systems, platforms and services. 3. a relying party may rely upon such certificates under the conditions laid down in article 8 of decision ecb/2013/1. article 3 participation of the competent authorities in relation to the escb-pki 1. a competent authority may decide to use escb-pki services in order to access and use ssm electronic applications, systems, platforms and services and/or may act for that purpose as registration authority for its internal users as well as for third party users, under the same conditions as those applying to eurosystem central banks. 2. the participating competent authority shall be subject to the obligations set out in articles 6, 7 and 12 of decision ecb/2013/1 and shall submit a declaration to the governing council by which it confirms its participation and compliance with the obligations laid down in the level 2 level 3 agreement referred to in article 4(2) of that decision. article 4 entry into force this decision shall enter into force on the third day following that of its publication in the official journal of the european union. done at frankfurt am main, 11 december 2015. the president of the ecb mario draghi (1) oj l 287, 29.10.2013, p. 63. (2) decision ecb/2013/1 of the european central bank of 11 january 2013 laying down the framework for a public key infrastructure for the european system of central banks (oj l 74, 16.3.2013, p. 30).

name: commission implementing decision (eu) 2016/180 of 9 february 2016 amending the annex to implementing decision 2014/709/eu concerning animal health control measures relating to african swine fever in certain member states, as regards the entries for estonia, lithuania and poland (notified under document c(2016) 686) (text with eea relevance) type: decision_impl subject matter: regions of eu member states; agricultural activity; agricultural policy; health; international trade; means of agricultural production date published: 2016-02-11 11.2.2016 en official journal of the european union l 35/12 commission implementing decision (eu) 2016/180 of 9 february 2016 amending the annex to implementing decision 2014/709/eu concerning animal health control measures relating to african swine fever in certain member states, as regards the entries for estonia, lithuania and poland (notified under document c(2016) 686) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to council directive 89/662/eec of 11 december 1989 concerning veterinary checks in intra-community trade with a view to the completion of the internal market (1), and in particular article 9(4) thereof, having regard to council directive 90/425/eec of 26 june 1990 concerning veterinary and zootechnical checks applicable in intra-community trade in certain live animals and products with a view to the completion of the internal market (2), and in particular article 10(4) thereof, having regard to council directive 2002/99/ec of 16 december 2002 laying down the animal health rules governing the production, processing, distribution and introduction of products of animal origin for human consumption (3), and in particular article 4(3) thereof, whereas: (1) commission implementing decision 2014/709/eu (4) lays down animal health control measures in relation to african swine fever in certain member states. the annex to that implementing decision demarcates and lists certain areas of those member states in parts i, ii, iii and iv of that annex differentiated by the level of risk based on the epidemiological situation. that list includes certain areas of estonia, italy, latvia, lithuania and poland. (2) since september 2014, no outbreaks of african swine fever in domestic pigs have been notified in the rajono savivaldyb of ignalina, mol tai, roki kis, ven ionys, utena, zarasai and the savivaldyb of visaginas in lithuania. in addition, supervision of biosecurity measures has been implemented in holdings in a satisfactory manner and results of surveillance show the absence of african swine fever virus in holdings in those areas of lithuania. this indicates an improvement in the epidemiological situation. accordingly, those areas of that member state should now be listed in part ii, instead of part iii, of the annex to implementing decision 2014/709/eu. (3) in december 2015, few cases of african swine fever in wild boar occurred in estonia, lithuania and poland, in the areas listed in part ii of the annex to implementing decision 2014/709/eu, in close proximity to the areas listed in part i of that annex. in the same period, one case of african swine fever in wild boar in estonia occurred in the area listed in part i of that annex. (4) the evolution of the current epidemiological situation in the union as regards african swine fever should be considered in the assessment of the risk represented by the animal health situation as regards that disease in estonia, lithuania and poland. in order to focus animal health control measures and to prevent the further spread of african swine fever, as well as to prevent any unnecessary disturbance to trade within the union and to avoid unjustified barriers to trade by third countries, the union list of areas subject to the animal health control measures set out in the annex to implementing decision 2014/709/eu should be amended to take into account the changes in the current epidemiological situation as regards that disease in estonia, lithuania and in poland. (5) implementing decision 2014/709/eu should therefore be amended to modify the areas listed in parts i and ii of estonia and poland and in parts i, ii and iii of lithuania. (6) the measures provided for in this decision are in accordance with the opinion of the standing committee on plants, animals, food and feed, has adopted this decision: article 1 the annex to implementing decision 2014/709/eu is replaced by the text in the annex to this decision. article 2 this decision is addressed to the member states. done at brussels, 9 february 2016. for the commission vytenis andriukaitis member of the commission (1) oj l 395, 30.12.1989, p. 13. (2) oj l 224, 18.8.1990, p. 29. (3) oj l 18, 23.1.2003, p. 11. (4) commission implementing decision 2014/709/eu of 9 october 2014 concerning animal health control measures relating to african swine fever in certain member states and repealing implementing decision 2014/178/eu (oj l 295, 11.10.2014, p. 63). annex annex part i 1. estonia the following areas in estonia: the linn of keila, the linn of kunda, the linn of loksa, the linn of maardu, the linn of mustvee, the linn of p rnu, the linn of saue, the linn of tallinn, the maakond of l nemaa, the part of the vald of kuusalu located to the north of road 1 (e20), the vald of audru, the vald of haljala, the vald of harku, the vald of j el htme, the vald of keila, the vald of kernu, the vald of kiili, the vald of koonga, the vald of lavassaare, the vald of nissi, the vald of padise, the vald of raasiku, the vald of rae, the vald of saku, the vald of saue, the vald of sauga, the vald of sindi, the vald of t stamaa, the vald of varbla, the vald of vasalemma, the vald of vihula, the vald of viimsi. 2. latvia the following areas in latvia: in the novads of ogres, the pagasti of sunta u and ogresgala, the novads of da u, the novads of amatas, the novads of carnikavas, the novads of garkalnes, the novads of ik iles, the novads of in ukalna, the novads of jaunjelgavas, the novads of eguma, the novads of l gatnes, the novads of m lpils, the novads of neretas, the novads of ropa u, the novads of salas, the novads of siguldas, the novads of vecumnieku, the novads of vies tes. 3. lithuania the following areas in lithuania: in the rajono savivaldyb of jurbarkas, the seni nijos of raudon s, veliuonos, sered iaus and juodai i , in the rajono savivaldyb of pakruojis, the seni nijos of klovaini , rozalimo and pakruojo, in the rajono savivaldyb of paneve ys, the part of the krekenavos seni nijos located to the west of the river nev is, in the rajono savivaldyb of raseiniai, the seni nijos of ariogalos, ariogalos miestas, betygalos, pagojuk and iluvos, in the rajono savivaldyb of akiai, the seni nijos of plok i , kri k , lek i , luk i , gri kab d io, barzd , virg dai i , sintaut , kudirkos naumies io, slavik , aki , the rajono savivaldyb of pasvalys, the rajono savivaldyb of vilkavi kis, the rajono savivaldyb of radvili kis, the savivaldyb of kalvarija, the savivaldyb of kazl r da, the savivaldyb of marijampol . 4. poland the following areas in poland: in the wojew dztwo podlaskie: the gminy of august w with the city of august w, nowinka, p aska, sztabin and barg w ko cielny in the powiat augustowski, the gminy of choroszcz, juchnowiec ko cielny, sura , turo ko cielna, tykocin, apy, po witne, zawady and dobrzyniewo du e in the powiat bia ostocki, the gminy of dubicze cerkiewne, kleszczele and czeremcha in the powiat hajnowski, the gminy of grodzisk, dziadkowice and milejczyce in the powiat siemiatycki, the gminy of kobylin-borzymy, kulesze ko cielne, soko y, wysokie mazowieckie with the city of wysokie mazowieckie, nowe piekuty, szepietowo, klukowo and ciechanowiec in the powiat wysokomazowiecki, the powiat sejne ski, the gminy of rutka-tartak, szypliszki, suwa ki, raczki in the powiat suwalski, the gmina of rutki in the powiat zambrowski, the gminy of suchowola and korycin in the powiat sok lski, the powiat bielski, the powiat m. bia ystok, the powiat m. suwa ki, the powiat moniecki. part ii 1. estonia the following areas in estonia: the linn of kallaste, the linn of rakvere, the linn of tartu, the linn of v ndra, the linn of viljandi, the maakond of ida-virumaa, the maakond of p lvamaa, the maakond of raplamaa, the part of the vald of kuusalu located to the south of road 1 (e20), the part of the vald of palamuse located to the east of the tallinn-tartu railway, the part of the vald of p rsti located to the west of road 24126, the part of the vald of suure-jaani located to the west of road 49, the part of the vald of tabivere located to the east of the tallinn-tartu railway, the part of the vald of tamsalu located to the north-east of the tallinn-tartu railway, the part of the vald of tartu located to the east of the tallinn-tartu railway, the part of the vald of viiratsi located to the west of the line defined by the western part of road 92 until the junction to road 155, then road 155 until the junction to road 24156, then road 24156 until it crosses verilaske river, then the verilaske river until it reaches the southern border of the vald, the vald of abja, the vald of aegviidu, the vald of alatskivi, the vald of anija, the vald of are, the vald of h demeeste, the vald of haaslava, the vald of halinga, the vald of halliste, the vald of kadrina, the vald of kambja, the vald of karksi, the vald of kasep , the vald of k pu, the vald of kose, the vald of k ue, the vald of laekvere, the vald of luunja, the vald of m ksa, the vald of meeksi, the vald of paikuse, the vald of pala, the vald of peipsi re, the vald of piirissaare, the vald of r gavere, the vald of rakvere, the vald of saarde, the vald of saare, the vald of s meru, the vald of surju, the vald of tahkuranna, the vald of tapa, the vald of tootsi, the vald of tori, the vald of v ndra, the vald of vara, the vald of vinni, the vald of viru-nigula, the vald of v nnu. 2. latvia the following areas in latvia: the novads of krimuldas, in the novads of limba u, the pagasti of skultes, vidri u, limba u and umurgas, in the novads of ogres, the pagasti of krapes, eipenes, lauberes, madlienas, mazozolu, men eles and taurupes, the novads of prieku u, in the novads of salacgr vas, the pagasts of liepupes, the novads of aizkraukles, the novads of akn stes, the novads of al ksnes, the novads of apes, the novads of baltinavas, the novads of balvi, the novads of c su, the novads of cesvaines, the novads of rg u, the novads of gulbenes, the novads of il kstes, the novads of jaunpiebalgas, the novads of j kabpils, the novads of koc nu, the novads of kokneses, the novads of krustpils, the novads of lielv rdes, the novads of l v nu, the novads of lub nas, the novads of madonas, the novads of p rgaujas, the novads of p avi u, the novads of raunas, the novads of rug ju, the novads of saulkrastu, the novads of s jas, the novads of skr veru, the novads of smiltenes, the novads of varak nu, the novads of vecpiebalgas, the novads of vi akas, the republikas pils ta of j kabpils, the republikas pils ta of valmiera. 3. lithuania the following areas in lithuania: in the rajono savivaldyb of anyk iai, the seni nijos of andrioni kis, anyk iai, debeikiai, kavarskas, kurkliai, skiemonys, traupis, tro k nai, and the part of sv dasai located south to road no 118, in the rajono savivaldyb of jonava, the seni nijos of il , bukoni and, in the eimi seni nija, the kaimai of biliu kiai, drobi kiai, normainiai ii, normain liai, ju konys, pauliukai, mit ni kiai, zofijauka, naujokai, in the rajono savivaldyb of kai iadorys, the seni nijos of,kai iadori apylink s, kruonio, nemaitoni , papar i , sli , ie mari , ie mari apylink s and the part of the seni nija of rum i ki located south to the road n. a1, in the rajono savivaldyb of kaunas, the seni nijos of akademijos, al n , babt , batniavos, eki k s, domeikavos, e er lio, garliavos, garliavos apylinki , ka ergin s, kulautuvos, linksmakalnio, raudondvario, ringaud , rok , samyl , taurakiemio, u lied i , vilkijos, vilkijos apylinki and zapy kio, in the rajono savivaldyb of k dainiai, the seni nijos of josvaini , pernaravos, kraki , dotnuvos, gud i n , survili kio, vilaini , truskavos, tos, k daini miesto, in the rajono savivaldyb of panev ys the seni nijos of karsaki kio, naujamies io, mie i ki , pa strio, panev io, ramygalos, raguvos, smilgi , upyt s, vadokli ,vel io and the and part of krekenavos seni nija located to the east of the river nev is, in the rajono savivaldyb of al ininkai, the seni nijos of ja i n , turgeli , akmenyn s, al inink , gervi ki , butrimoni , ei i ki , po koni , dieveni ki , in the rajono savivaldyb of var na, the seni nijos of kaniavos, marcinkoni , merkin s, the miesto savivaldyb of alytus, the miesto savivaldyb of kai iadorys, the miesto savivaldyb of kaunas, the miesto savivaldyb of panev ys, the miesto savivaldyb of vilnius, the rajono savivaldyb of alytus, the rajono savivaldyb of bir ai, the rajono savivaldyb of druskininkai, the rajono savivaldyb of ignalina, the rajono savivaldyb of lazdijai, the rajono savivaldyb of mol tai, the rajono savivaldyb of prienai, the rajono savivaldyb of roki kis, the rajono savivaldyb of irvintos, the rajono savivaldyb of ven ionys, the rajono savivaldyb of ukmerg , the rajono savivaldyb of utena, the rajono savivaldyb of vilnius, the rajono savivaldyb of zarasai, the savivaldyb of bir tonas, the savivaldyb of elektr nai, the savivaldyb of visaginas. 4. poland the following areas in poland: in podlaskie wojew dztwo: the gminy of czarna bia ostocka, supra l, wasilk w and zab ud w in the powiat bia ostocki, the gminy of d browa bia ostocka, jan w, nowy dw r and sidra in the powiat sok lski, the gmina of lipsk in the powiat augustowski, the gminy of czy e, bia owie a, hajn wka with the city of hajn wka, narew and narewka in the powiat hajnowski. part iii 1. estonia the following areas in estonia: the linn of elva, the linn of j geva, the linn of p ltsamaa, the linn of v hma, the maakond of j rvamaa, the maakond of valgamaa, the maakond of v rumaa, the part of the vald of palamuse located to the west of the tallinn-tartu railway, the part of the vald of p rsti located to the east of road 24126, the part of the vald of suure-jaani located to the east of road 49, the part of the vald of tabivere located to the west of the tallinn-tartu railway, the part of the vald of tamsalu located to the south-west of the tallinn-tartu railway, the part of the vald of tartu located to the west of the tallinn-tartu railway, the part of the vald of viiratsi located to the east of the line defined by the western part of road 92 until the junction to road 155, then road 155 until the junction to road 24156, then road 24156 until it crosses the verilaske river, then the verilaske river until it reaches the southern border of the vald, the vald of j geva, the vald of kolga-jaani, the vald of konguta, the vald of k o, the vald of laeva, the vald of n o, the vald of paistu, the vald of pajusi, the vald of p ltsamaa, the vald of puhja, the vald of puurmani, the vald of rakke, the vald of rannu, the vald of r ngu, the vald of saarepeedi, the vald of t htvere, the vald of tarvastu, the vald of torma, the vald of lenurme, the vald of v ike-maarja. 2. latvia the following areas in latvia: in the novads of limba u, the pagasti of vi enes, p les and katvaru, in the novads of salacgr vas, the pagasti of aina u and salacgr vas, the novads of aglonas, the novads of alojas, the novads of bever nas, the novads of burtnieku, the novads of ciblas, the novads of dagdas, the novads of daugavpils, the novads of k rsavas, the novads of kr slavas, the novads of ludzas, the novads of mazsalacas, the novads of nauk nu, the novads of prei u, the novads of r zeknes, the novads of riebi u, the novads of r jienas, the novads of stren u, the novads of valkas, the novads of v rkavas, the novads of vi nu, the novads of zilupes, the republikas pils ta of daugavpils, the republikas pils ta of r zekne. 3. lithuania the following areas in lithuania: in the rajono savivaldyb of anyk iai, the seni nija of vie intos and the part of the seni nija of sv dasai located north to road no 118, in the rajono savivaldyb of jonava the seni nijos of upnink , ruklos, dumsi , u usali , kulvos and, in the seni nija of eimiai, the kaimai akliai, akmeniai, barsukin , blauzd iai, gireliai, jag lava, juljanava, kuigaliai, liepkalniai, martyni kiai, mila i kiai, mimaliai, naujasodis, normainiai i, paduobiai, palankesiai, pamelnyt l , p d iai, skryn s, svalkeniai, terespolis, varp nai, eimi gst., ieveli kiai and eimi miestelis, in the rajono savivaldyb of kai iadorys, the seni nijos of palomen s, pravieni ki and the part of the seni nija of rum i ki located north of the road n. a1, in the rajono savivaldyb of kaunas, the seni nijos of vand iogalos, lapi , karm lavos and neveroni , in the rajono savivaldyb of k dainiai, the seni nija of pel dnagi , in the rajono savivaldyb of al ininkai, the seni nijos of baltosios vok s, pabar s, dainavos, kalesnink , in the rajono savivaldyb of var na, the seni nijos of valkinink , jak n ,, matuiz , var nos, vydeni , the miesto savivaldyb of jonava, the rajono savivaldyb of kupi kis, the rajono savivaldyb of trakai, 4. poland the following areas in poland: in podlaskie wojew dztwo: the gminy of gr dek and micha owo in the powiat bia ostocki, the gminy of krynki, ku nica, sok ka and szudzia owo in the powiat sok lski. part iv italy the following areas in italy: all areas of sardinia.

name: commission decision (eu) 2016/151 of 1 october 2014 on the state aid sa.31550 (2012/c) (ex 2012/nn) implemented by germany for n rburgring (notified under document c(2014) 3634) (text with eea relevance) type: decision subject matter: competition; social affairs; economic policy; europe; financial institutions and credit; regions of eu member states date published: 2016-02-10 10.2.2016 en official journal of the european union l 34/1 commission decision (eu) 2016/151 of 1 october 2014 on the state aid sa.31550 (2012/c) (ex 2012/nn) implemented by germany for n rburgring (notified under document c(2014) 3634) (only the german text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof, having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having called on interested parties to submit their comments pursuant to the provisions cited above (1) and having regard to their comments, whereas: 1. procedure 1.1. formal investigation (1) between 2002 and 2012, germany undertook a number of support measures regarding the german race track n rburgring, including support measures relating to the construction of a leisure park, hotels and restaurants as well as the organisation of formula 1 races. the n rburgring complex was owned by state-owned companies n rburgring gmbh (ng), motorsport resort n rburgring gmbh (msr) and congress- und motorsport hotel n rburgring gmbh (cmhn). (2) in july 2010, eifelpark gmbh (eifelpark), an owner of a leisure park in the german eifel region informed the commission about alleged state aid involved in the so-called n rburgring 2009 project and concerning the financing of the construction of leisure facilities at the n rburgring racetrack. in april 2011, the commission received a second state aid complaint by the german motorsport association ja zum n rburgring e.v. the latter was concerned that the allegedly loss-making n rburgring 2009 project puts the activities of the racetrack itself into jeopardy. (3) by letter dated 21 march 2012 (the decision of 21 march 2012), the commission informed germany that it had decided to initiate the procedure laid down in article 108(2) of the treaty on the functioning of the european union (tfeu) in respect of the aid measures 1-17 described in section 2 of the present decision (the formal investigation procedure) (2). the commission decision to initiate the procedure was published in the official journal of the european union (3). the commission invited interested parties to submit their comments on the measures. (4) on 15 may 2012, germany granted new support measures (measures 18 and 19) described in section 2 below and notified them on 25 may 2012. by letter dated 7 august 2012 (the decision of 7 august 2012), the commission informed germany that it had decided to extend the formal investigation procedure in respect of the new aid measures (4). the commission decision to extend the procedure was published in the official journal of the european union (5). the commission invited interested parties to submit their comments on the new measures. (5) the commission received comments from germany on 23 april 2012, 15 june 2012, 18 july 2012, 20 july 2012, 17 august 2012, 7 september 2012 and 18 january 2013. concerning the decision of 21 march 2012, nine interested parties provided the commission with comments between 9 august 2012 and 18 october 2012. on 18 october 2012 and 23 october 2012, the commission forwarded the comments of the interested parties to germany. germany replied on 15 november 2012. in relation to the decision of 7 august 2012, comments from three interested parties were received by the commission between 5 november 2012 and 30 november 2012. on 3 december 2012, the commission forwarded the comments of the interested parties to germany. germany replied on 2 january 2013. (6) the commission requested further information from germany on 29 january 2013, 4 june 2014 and 5 june 2014, to which germany replied on 15 april 2013, 4 june 2014 and 6 june 2014, respectively. 1.2. insolvency proceedings and sale of assets (7) on 24 july 2012, the local court in bad neuenahr-ahrweiler ordered a preliminary own administration of the assets (vorl ufige eigenverwaltung des verm gens) of the companies owning the n rburgring, i.e. ng, msr and cmhn. insolvency proceedings in the form of own administration of the assets (eigenverwaltung des verm gens) were eventually launched by the local court on 1 november 2012. the business of ng, msr and cmhn has been managed since by the managing director under insolvency law (eigenverwalter or sanierunsgesch ftsf hrer) and the insolvency administrator (sachwalter) (hereunder both referred to as the insolvency administrators) that are both not bound by instructions of the shareholders. ng, msr and cmhn retained kpmg ag (kpmg) to act on their behalf as the exclusive financial advisor to the sale of their assets in the insolvency proceedings, and to handle all contacts with the interested bidders. (8) since october 2012, the commission has been discussing with germany and the insolvency administrators the state aid issues that could arise in the sale of the assets of ng, msr and cmhn. (9) since 1 november 2012, the whole complex has been operated by n rburgring betriebsgesellschaft mbh (nbg), a 100 % subsidiary of ng, established by the insolvency administrators. nbg replaced the previous operator n rburgring automotive gmbh (nag) (6). (10) in the context of the insolvency of ng, msr and cmhn, the insolvency administrators have undertaken a sale of their assets since may 2013. on 15 may 2013, a tender process for the sale of those assets was launched. by two letters dated 23 may 2013, the commission services provided to germany and the insolvency administrator an opinion on the various options for selling the assets that would be compliant with the state aid rules (7). (11) as regards the sale of assets of ng, msr and cmhn, germany provided information by submissions of 10 april 2013, 15 april 2013, 30 april 2013, 9 october 2013, 27 february 2014 and following commission's requests for information of 13 march 2014, 23 may 2014, 4 july 2014 and 7 july 2014 on 23 april 2014, 26 may 2014 and 10 july 2014, respectively. meetings between the commission, germany and the insolvency administrators took place in brussels on 18 october 2012, 7 march 2013, 11 october 2013 and 26 february 2014. the commission also received further submissions from interested parties. (12) on 23 december 2013, ja zum n rburgring e.v. (complainant 1) (8) and on 2 january 2014, the german automotive club adac e.v. (complainant 2), the latter automotive club participating in the sale process, submitted letters claiming that the ongoing sale of the n rburgring assets was carried out by the insolvency administrators in breach of the state aid rules. on 4 february 2014, complainant 1 asked the commission to suspend the sales process and provided new information. following a letter from the commission of 13 january 2014, germany sent its comments on the claims raised by the two complainants by letter dated 10 february 2014. complainant 1 submitted further comments on 8 july 2014, on which germany submitted its comments on 14 july 2014. (13) on 10 april 2014, [bidder 3], inc. (complainant 3 or [bidder 3]), participating in the sale process, lodged a complaint on that process with the commission. on 17 april 2014, mr meyrick cox (complainant 4), a member of the consortium [bidder 2], participating in the sale process and consisting of [bidder 2] european capital partners llp, mr meyrick cox, mr marcus graf von oeynhausen-sierstorpff and wadell & reed, inc. ([bidder 2]), filed a complaint on that process with the commission. these complaints were forwarded to germany on 16 april 2014 and 17 april 2014, respectively. as for the complaint filed by complainant 4, germany sent its comments on 25 april 2014. as for the complaint filed by complainant 3, germany sent its comments on 5 may 2014. complainant 3 sent additional arguments on 19 may 2014. germany sent its comments to these additional arguments on 22 may 2014. complainant 3 submitted a further piece of information on 23 may 2014, on which germany submitted its answer on 10 july 2014, and sent further comments on 16 june 2014 and 7 july 2014, on which germany sent its comments on 11 july 2014. the german authorities submitted further information on 29 july 2014, 20 august 2014, 8 september 2014 and 12 september 2014, which also covered comments submitted by complainants 3 and 4 on 3 september 2014, 21 august 2014 and 12 september 2014. finally, two meetings between the commission services and the german authorities, the insolvency administrators and kpmg took place on 22 july and 5 september 2014 in brussels. (14) in view of a potential conclusion of the formal investigation procedure by a negative commission decision requesting the recovery of incompatible aid, germany has requested the commission to confirm that a recovery obligation imposed on ng, msr and cmhn would not concern the buyer of the assets sold or its subsidiary being an operating company, and that that recovery obligation would not hinder the operation of the n rburgring by nbg during the season of 2014, following which a liquidation of the latter company is foreseen. 2. description of the aid measures 2.1. the aid donors (15) five entities have granted funding: (1) the land rhineland-palatinate (9) (the land); (2) investitions- und strukturbank rheinland-pfalz gmbh (isb), fully owned by the land; (3) rheinland-pf lzische gesellschaft f r immobilien und projektmanagement gmbh (rim), fully owned by isb; (4) the district (landkreis) of ahrweiler; and (5) ng (10). 2.2. the alleged beneficiaries (16) until 30 april 2010, the n rburgring complex (11) was owned and managed by ng. (17) on 1 may 2010, a restructuring of the ownership and management of the n rburgring complex took place. ng remained the owner of the race track and the leisure park and acquired indirect ownership of the hotels and restaurants via the 93,3 % ownership of msr (12) and the indirect 93,3 % ownership of cmhn (13) (msr and cmhn remained the direct owners of the hotels and restaurants). the operation of the race track, the leisure park, hotels and restaurants was granted to nag (14) on the basis of a business lease contract (betriebspachtvertrag), see measure 10 (15). (18) as described above, the beneficiaries ng, msr and cmhn are subject to insolvency proceedings. further beneficiaries for which a liquidation procedure has been launched are ipc gesellschaft f r internationale projektcoordination mbh (ipc) (16), weber projektierungs- und realisierungs gmbh (weber) (17) and cash settlement and ticketing gmbh (cst) (18). (19) the beneficiaries which still operate and are not in an insolvency procedure are mediinvest gmbh, renamed to return projektmanagement gmbh in the meantime (mediinvest) (19), geisler & trimmel general contractor gmbh (geisler & trimmel) (20), nag and fahrsicherheitszentrum am n rburgring gmbh & co. kg (fsz) (21). the beneficiaries which do not exist any longer are erlebnispark n rburgring gmbh & co. kg (ewn) (22), motorsport akademie n rburgring gmbh & co. kg (man) (23), test & training international gmbh (tti) (24), bike world n rburgring gmbh (bwn1) (25), bikeworld n rburgring besitz (bwnb), bikeworld n rburgring gmbh (bwn2), camp 4 fun gmbh & co. kg (camp4fun) (26) and mi-beteiligungs- und verwaltungs gmbh (mib) (27). 2.3. description of the measures (20) the current investigation concerns the financing of the construction and operation of the facilities linked to the race track and the facilities for tourism before the n rburgring 2009 project, of the construction of all such facilities under the n rburgring 2009 project and of the organisation of formula 1 races. the project n rburgring 2009 intended to provide the race track with various attractions in order to increase its attractiveness over the whole year. the n rburgring 2009 project consisted of part i (mainly tribune and entertainment facilities) and part ii (mainly accommodation facilities) (28). (a) measures covered by the decision of 21 march 2012 (21) measure 1 (provision of capital by the land and the district of ahrweiler to ng in the form of transfers to the capital reserve and increases of own capital): capital in the form of transfers to the capital reserve (einstellungen in die kapitalr cklage) (29) was granted by the land to ng in the amounts of eur 2 179 000 (30) on 1 may 2002 and eur 22 839 241 (31) on 21 december 2004. in addition, the land and the district of ahrweiler carried out the increases of own capital (kapitalerh hung) of ng of eur 4 887 000 (32) on 31 august 2004 and eur 10 000 000 on 4 september 2007. in total, the land and the district of ahrweiler provided to ng capital amounting to eur 39 905 241 between 2002 and 2007. (22) measure 2 (shareholder loans of ng to its subsidiaries before the n rburgring 2009 project): independently from the n rburgring 2009 project, ng granted to its subsidiaries the shareholder loans in the total amount of eur 11 176 953,14, listed in tables 1-4. the interest rate was agreed at 6 % and no collaterals were provided. table 1 loans granted by ng to ewn, fsz, man, tti and camp4fun beneficiary date of contract amount (in eur) interest rate (%) ewn (33) 1.1.2006 4 853 553,04 6 ewn 30.6.2006 350 000 6 ewn 22.12.2006 350 000 6 ewn 4.7.2007 450 000 6 ewn 17.3.2009 182 313,24 6 ewn 29.4.2009 9 303,74 6 fsz (34) 12.4.2002 [ ] (37) 6 fsz 21.3.2003 [ ] 6 fsz 4.3.2008 [ ] 6 man (35) 10.12.2002 100 000 6 tti 15.8.2002 25 000 6 camp4fun (36) 26.5.2009 100 000 6 camp4fun 22.7.2009 100 000 6 camp4fun 2.11.2009 50 000 6 camp4fun 2.11.2009 50 000 6 camp4fun 18.12.2009 150 000 6 total [ ] table 2 loans granted by ng to bwnb before its renaming date of contract amount of loan (eur) interest rate (%) 17.10.2003 300 000,00 6 4.2.2004 100 000,00 6 27.10.2004 100 000,00 6 total 500 000,00 table 3 loans granted by ng to bwn1 before its merger with bwnb date of contract amount of loan (eur) interest rate (%) 4.2.2004 100 000,00 6 12.3.2004 200 000,00 6 27.4.2004 200 000,00 6 24.11.2004 110 000,00 6 5.1.2005 200 000,00 6 7.1.2005 150 000,00 6 19.1.2005 100 000,00 6 22.2.2005 75 000,00 6 28.2.2005 75 000,00 6 21.4.2005 150 000,00 6 13.6.2005 100 000,00 6 30.6.2005 50 000,00 6 18.7.2005 50 000,00 6 22.7.2005 100 000,00 6 total 1 660 000,00 table 4 loans granted by ng to bwn2 after its merger with bwnb and bwnb's renaming date of contract amount of loan (eur) interest rate (%) 20.9.2005 200 000,00 6 4.10.2005 50 000,00 6 2.11.2005 100 000,00 6 1.12.2005 50 000,00 6 2.1.2006 200 000,00 6 20.1.2006 200 000,00 6 28.2.2006 50 000,00 6 30.6.2006 20 000,00 6 15.8.2006 100 000,00 6 6.9.2006 130 000,00 6 15.1.2007 150 000,00 6 27.2.2007 100 000,00 6 4.4.2007 250 000,00 6 total 1 600 000,00 6 (23) measure 3 (loans provided by the land to ng via the liquidity pool): this measure consists of loans from a so-called liquidity pool (38) of the land provided by the latter to ng. in connection with the formula 1 races and the n rburgring 2009 project (39), ng had been included in the cash pooling of the land since 2003 and 2008, respectively (40). isb is also included in that liquidity pool. the aim of the cash pooling is to optimise the use of liquidity within the different holdings, foundations and public undertakings of the land. the participation of the different undertakings and foundations in the cash pooling is based on a memorandum of understanding between the undertaking/foundation concerned and the ministry of finance of the land. in the event that within the cash pooling, the liquidity demand exceeds the available funds, the liquidity gap is financed on short term basis on the capital market. from 30 june 2003 to 11 may 2010, the land granted to ng loans totalling eur 399 805 370 (including the loans granted by the land to ng of eur 53 443 493 for formula 1 racing from 30 june 2003 to 30 june 2009, and the loans of eur 170 million given by the land to ng for the n rburgring 2009 project from 23 june 2008 to 30 june 2010) (41). the aid beneficiary is ng. for details, see table 5. table 5 loans paid out from the liquidity pool of the land to ng (42) date amount paid out (eur) purpose repayment of the loans (eur) average interest rate/year (%) 30.6.2003 7 000 000 formula 1 fee 2,40 4.8.2003 1 000 000 19.9.2003 1 000 000 28.10.2003 1 000 000 1.1.2004 1 361 877 interests for shareholder loans 2,06 30.6.2004 6 016 931 formula 1 fee 18.2.2005 1 400 000 2,10 27.5.2005 2 000 000 formula 1 fee 8.5.2006 10 000 000 formula 1 fee 2,88 9.5.2006 8 000 000 23.6.2006 2 000 000 23.7.2007 13 000 000 formula 1 fee 23.6.2008 4 000 000 n rburgring 2009 project 3,87 21.7.2008 6 500 000 n rburgring 2009 project 22.8.2008 2 500 000 n rburgring 2009 project 26.8.2008 6 000 000 n rburgring 2009 project 23.9.2008 80 000 000 establishment of bardepot 25.9.2008 6 000 000 n rburgring 2009 project 13.10.2008 10 000 000 n rburgring 2009 project 19.11.2008 10 000 000 n rburgring 2009 project 8.12.2008 80 000 000 19.1.2009 10 000 000 n rburgring 2009 project 0,68 5.3.2009 95 000 000 establishment of bardepot 26.3.2009 15 000 000 n rburgring 2009 project 16.4.2009 10 000 000 n rburgring 2009 project 5.5.2009 15 000 000 n rburgring 2009 project 22.5.2009 15 000 000 n rburgring 2009 project 29.6.2009 10 000 000 n rburgring 2009 project 30.6.2009 15 426 562 formula 1 fee 13.7.2009 95 000 000 24.7.2009 20 000 000 n rburgring 2009 project 2.10.2009 15 000 000 n rburgring 2009 project 24.3.2010 6 000 000 n rburgring 2009 project 0,38 11.5.2010 9 000 000 n rburgring 2009 project 30.6.2010 170 000 000 11.1.2011 40 405 000 13.1.2011 370 (24) measure 4 (loan by ng to msr): in the context of the n rburgring 2009 project, ng granted a loan of eur 300 000 to msr with the interest rate of 7 % on 27 december 2007. no collaterals were provided. (25) measure 5 (loans, letter of comfort and subordination of claims by ng to cst): from 27 august 2008 to 18 april 2011, ng provided to cst loans of the total amount of eur 11 032 060 with an interest of 6 % (43). table 6 loans granted by ng to cst beneficiary date of the loan amount (in eur) interest rate (%) cst 27.8.2008 50 000 6 cst 9.10.2008 100 000 6 cst 30.1.2009 1 000 000 6 cst 18.3.2009 1 000 000 6 cst 17.4.2009 1 476 830,88 6 cst 22.6.2009 1 000 000 6 cst 20.7.2009 1 000 000 6 cst 28.10.2009 2 250 000 6 cst 10.2.2010 1 723 169,12 6 cst 12.10.2010 250 000 6 cst 13.10.2010 150 000 6 cst 5.11.2010 150 000 6 cst 30.10.2010 250 000 6 cst 9.2.2011 500 000 6 cst 18.4.2011 132 060 6 total 11 032 060 (26) in order to prevent the insolvency of cst, on 23 december 2009, ng provided a letter of comfort (patronatserkl rung) to cst committing itself until 31 december 2011 to take measures that are necessary for preventing insolvency of cst. the letter of comfort was acted upon. on 13 december 2010, ng declared subordination of its claims in the amount of eur 10,4 million (rangr cktritt) against cst. (27) measure 6 (service fee paid by ng to ipc, and loan to msr through png as intermediary): between 2006 and 2008, ipc received a total amount of eur 640 000 from ng as consideration for its services consisting in searching for private investors. in addition, ng granted a loan of eur 3 million to pinebeck n rburgring gmbh (png) with the interest rate of 6 % on 15 october 2008. on 15 october 2008, png used this loan for granting a loan of eur 3 million to msr with the interest rate of 6 % whereas png disbursed the loan only up to an amount of eur 2 941 000 (44). both loans had collaterals in favour of ng in the value of eur 3 million. (28) measure 7 (cession of claims of mib to ng): on 17 april 2009, mib ceded its claims from loans taken by cst as borrower of eur 1 476 830,88 (45) to ng. for these loans, ng paid to mib the amount of eur 1 476 830,88. this transaction allowed mib to be fully repaid by ng who in turn became the creditor of cst (46). (29) measure 8 (isb loan to ng, msr and cmhn): in order to save financing costs and to safeguard a long-term financing, a full restructuring of funding arrangements took place on 28 july 2010. the liabilities regarding the liquidity pool of the land (measure 3), a loan of eur [ ] granted by bank f r tirol und vorarlberg ag to cmhn (47), a loan of eur [ ] granted by kreissparkasse ahrweiler to msr (48) and the loans of rim to msr worth eur 85 512 000, granted in the form of the silent participations of rim in mediinvest and subsequent loans of mediinvest to msr (measure 11) were restructured in one loan of eur 325 265 000 given by isb to ng, msr and cmhn, upon an instruction by the land (49). the restructuring of the funding arrangements in question constitutes a separate measure, additional to the underlying loans. this results to a new loan in favour of ng, msr and cmhn. the loan was given in four tranches: tranche 1 of eur 96 574 200 to ng for infrastructure, tranche 2 of eur 113 590 800 to ng for other investments (50), tranche 3 of eur 92 000 000 to msr for other investments and tranche 4 of eur 23 100 000 to cmhn for other investments. tranche 1 relating to the facilities of the ring does not bear interest. tranches 2 to 4 relate to the measures for promotion of tourism (for the interest rate see table 7 below). furthermore, the level of the collateralisation of the isb loan in the form of mortgages equals eur 93 658 000 eur whereas the collateralisation of tranches 2 to 4 has priority over the collateralisation of tranche 1. table 7 summarises the conditions of the isb loan and the at that time applicable base lending rate. table 7 financing conditions of the loan granted by isb tranche no beneficiary amount paid out (eur) date of contract interest rate (51) 1 ng 96 574 200 28.7.2010 0 % 2 ng 113 590 800 28.7.2010 until 31.12.2012: eonia plus 0,64 % = 1,121 % from 1.1.2013: commission reference rate 3 msr 92 000 000 28.7.2010 until 31.12.2012: eonia plus 0,64 % = 1,121 % from 1.1.2013: commission reference rate 4 cmhn 23 100 000 28.7.2010 until 31.12.2012: eonia plus 0,64 % = 1,121 % from 1.1.2013: commission reference rate (30) measure 9 (guarantee of the land to isb concerning measure 8: isb loan granted to ng, msr and cmhn): on 28 july 2010, the land provided an unconditional and irrevocable guarantee and indemnification statement (100 % coverage of liabilities) towards isb for the ng, msr and cmhn's fulfilment of all the liabilities from the isb loan (measure 8). ng, msr or cmhn did not pay any fee for the guarantee. similarly to the isb loan (measure 8), the guarantee relates both to the facilities of the ring and the measures for promotion of tourism. (31) measure 10 (business lease of the n rburgring complex to nag): as part of the 2010 restructuring process, from 1 may 2010, ng, ewn, n rburgring adventure gmbh (52), camp4fun, msr and cmhn let on the basis of a business lease contract the race circuit, the leisure park and other facilities to nag (53) for the period of 20 years (54), without organising an open selection procedure. the lease related to the facilities and operation of the ring and the measures for the promotion of tourism. however, the organisation of formula 1 races was the subject of a separate concession agreement (measure 17) and it was thus excluded from the lease. the minimum annual rent was fixed at eur 0 from 1 may 2010 to 30 april 2011, eur 5 million from 1 may 2011 to 30 april 2012, eur 11,5 million, if deficiencies in construction defects have been removed until 30 april 2012, or otherwise eur 10 million from 1 may 2012 to 30 april 2013, and 15 million as from 1 may 2013 eur (55). for the lease from 1 may 2010 to 31 october 2012 nag actually paid eur [ ] (56). the lease contract was terminated retroactively as of 31 october 2012 by the settlement contract (vergleichsvertrag) concluded between ng, msr, cmhn, cst, nbg and the insolvency administrator on the one side and nag, mediinvest and other companies on the other side on 27 november 2012. (32) measure 11 (loans granted by rim to msr through mediinvest as intermediary and in case of one loan also through png as intermediary): between 29 may 2008 and 7 july 2009, rim granted to mediinvest eleven loans in the total amount of eur 85 512 000 in the form of silent participations (stille beteiligungen) to finance part ii (hotels) of the n rburgring 2009 project (57). during the same period of time, mediinvest, which acted as an intermediary between rim (granting authority) and msr (beneficiary), used these funds to provide loans to msr with an increased interest (see below) (58). the silent participations were provided with a fixed remuneration plus a variable remuneration of 2 % which would in principle depend either on the sale of mediinvest's share of msr or on the profits made by mediinvest in 2009. in addition, collaterals were provided. these silent partnerships are summarised in table 8: table 8 silent participations of rim in mediinvest date of contract amount (eur) interest rate (%) 1 29.5.2008 [ ] [ ] 2 29.9.2008 [ ] [ ] 3 12.11.2008 [ ] [ ] 4 22.12.2008 [ ] [ ] 5 30.4.2009 [ ] [ ] 6 14.5.2009 [ ] [ ] 7 26.5.2009 [ ] [ ] 8 9.6.2009 [ ] [ ] 9 23.6.2009 [ ] [ ] 10 30.6.2009 [ ] [ ] 11 7.7.2009 [ ] [ ] total [ ] (33) between 27 may 2008 and 7 july 2009, mediinvest provided nine loans to msr in the total amount of eur 75 484 000; they contained the interest rate of 7 % (or 5,1 % backdated as from 1 november 2009) and no collaterals were provided. these loans are summarised in table 9: table 9 loans granted by mediinvest to msr date of contract amount (eur) interest rate 1 27.5.2008 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 2 22.12.2008 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 3 30.4.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 4 15.5.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 5 26.5.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 6 9.6.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 7 23.6.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 8 30.6.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. 9 7.7.2009 [ ] [ ] p.a.; from 1.11.2009: [ ]% p.a. total 75 484 000 (34) in addition, on 12 november 2008, mediinvest granted one loan of eur 10 million to png with the interest rate of 6 % (until 31 december 2009) whereas the latter company granted a loan of the same amount and same interest rate to msr on the same date. (35) measure 12 (guarantee of the land to isb concerning measure 11: silent participations of rim in mediinvest): in the context of loans granted by isb to rim, used for loans of rim granted to mediinvest (measure 11), the land provided vis- -vis isb a guarantee for liabilities up to eur 140 million (100 % coverage of liabilities) (59). no guarantee fee was paid. the commission considers that the beneficiary of the measure in question was msr, as that company was the beneficiary of measure 11. (36) measure 13 (revenues from tax on gambling provided by the land to ng): in february 2009, an amendment to the gambling act of the land was adopted, enabling the transfer of revenues from a tax on gambling to ng. the transferred tax proceeds were intended to be used to promote tourism. the amounts were eur 1,6 million on 29 december 2009, eur 3,2 million on 29 october 2010 and eur 3,2 million on 29 march 2011, i.e. eur 8 million in total. (37) measure 14 (shareholder loans by the land to ng and debt subordination for the n rburgring 2009 project): for the preparation and implementation of the n rburgring 2009 project, ng received from the land interest-free loans with no fixed maturity of eur 20 million on 21 august 2007, eur 10 million on 22 december 2009, eur 4,65 million on 28 december 2010 and eur 3,2 million on 26 april 2011 (60). in addition, on 9 december 2011, the land provided to ng a loan of eur 4,95 million. moreover, the land declared debt subordination (rangr cktritt) in relation to the afore-mentioned loan of eur 20 million on 29 august 2007 in order to avoid insolvency of ng, ranking its claims against ng in the last position of all creditors' claims against ng. (38) measure 15 (transfer of shares of msr from mediinvest and geisler & trimmel to ng and from weber to rim): with the share purchase agreement dated 25 march 2010, the shares of msr held by mediinvest (49,5 %) and geisler & trimmel (33,8 %) were transferred to ng which already held 10 % of these shares. the shares of msr held by weber (6,7 %) were transferred with the same agreement to rim. the purchase price amounted to eur 1 per transaction (i.e. eur 3 in total) (61). (39) measure 16 (shareholder loan and grant by the land to ng for formula 1 races): furthermore, an interest free loan with no fixed maturity of the land to ng of eur 40 405 000 for the offsetting of liabilities related to formula 1 under the liquidity pool was provided on 11 january 2011. in addition, in july 2011, the land provided to ng a grant of eur 13,5 million for the organisation of formula 1 races in 2011. (40) measure 17 (formula 1 concession): on 13 december 2010, a concession agreement regarding the organisation of formula 1 race events was concluded between ng and nag (62). in this concession agreement, ng asked nag to organise the formula 1 races and committed itself to provide compensation (63). pursuant to germany, on the basis of this agreement, nag was supposed to receive financial means which would not be taken into account for the calculation of the rent under the business lease contract concluded between ng and nag, but no payments were actually made between ng and nag. on the basis of the settlement contract concluded between ng, msr, cmhn, cst, nbg and the insolvency administrator on the one side and nag, mediinvest and other companies on the other side on 27 november 2012, the concession was terminated. (b) measures covered by the decision of 7 august 2012 (41) measure 18 (rescheduling of interest payments agreed by isb in favour of ng, msr and cmhn): on 15 may 2012, isb made a deferral of interests due on 30 april 2012 until 15 november 2012 in the amount of eur 2,98 million (including a deferral of compensation in the amount of eur 48 913,78 for an unspent part of the loan). for the rescheduled amounts, an interest rate of 8,17 % per annum was charged. the exact distribution of the deferral of interests to the individual companies is eur 1,473 million for ng, eur 1,205 million for msr and eur 303 000 for cmhn. (42) measure 19 (debt subordination and guarantee): on 15 may 2012, the land declared debt subordination regarding loans amounting up to eur 254 million granted by isb to ng, msr & cmhn as part of the loan of eur 325 265 000 (measure 8). furthermore, as regards repayment of those loans from 2014 on, in case ng, msr and cmhn should not be able to pay, on 15 may 2012, the land declared that these companies will be released from their obligation to pay and that the land would honour its guarantee previously given to isb (measure 9). 2.4. grounds for initiating and extending the formal investigation procedure (43) in the decision of 21 march 2012 and the decision of 7 august 2012, the commission reached the preliminary conclusion that all nineteen measures qualified as state aid, and it expressed doubts as regards their compatibility with the tfeu. 2.5. the tender process and the sale of assets (44) the tender process was announced on 14 may 2013 with a press release issued by the insolvency administrator. a call for tenders was published by kpmg in the financial times, handelsblatt and on the n rburgring website on 15 may 2013. the process involved around 300 investor contacts that were handled by kpmg on behalf of the sellers. in the tender process, the interested parties were invited to submit an expression of interest (around 70 entities expressed their interest) and after being provided with various documentation on the n rburgring they were requested to submit an indicative offer until 26 september 2013. with letter dated 19 july 2013, all interested investors were informed by the sellers that: all parties that intend to participate in next stage of the process are invited to submit an indicative offer by 5:00 pm (cet) on 12 september 2013. offer handed in after the deadline will also be considered (64). the above deadline of 12 september 2013 for the submission of indicative offers was extended to 26 september 2013 by letter of 12 september 2013 by indicating that: the vendors have decided to extend the deadline for indicative offers, in order to enable potential investors to complete their analysis of the provided material. the updated deadline now ends at 5 p.m. cet on 26 september 2013. offers handed in after the deadline will also be considered (65). by letter dated 17 december 2013, the deadline for the submission of confirmatory bids was postponed by the sellers from 11 december 2013 to 17 february 2014 by indicating that: in order to enable potential investors to complete their analysis of the provided information material and to provide a final offer that fully reflects the value potential of the n rburgring, the timeline which used to end at 5 p.m. cet on 11 december 2013 now ends at 5 p.m. cet on 17 february 2014. for the sake of clarity, offers handed in after that timeline will, in principle, also be considered provided that the terms of the offer qualify for the further process. any disadvantage caused by the delay will not be compensated for and will have to be fully borne by the investor. please note that the vendors may choose the parties which will qualify for the further process shortly after the updated timeline ends (66). (45) the insolvency administrators decided and implemented the following sales structure for the sale of assets of ng, msr and cmhn. (46) for the tender process, the assets of ng, msr and cmhn were split in 11 individual asset clusters (67). according to the published call for expression of interest: the vendors intend to sell the assets to one or more investors ( project ring ). investors will have the opportunity to acquire all assets, defined asset clusters ( proposed asset clusters ) or individual assets. the proposed asset clusters have been defined based on the separability of assets and related costs. it is intended that the transaction will be structured as an asset deal. all third party and financing liabilities will remain with the insolvent legal entities allowing a new start on a clean balance sheet (68). also, according to the letter sent to the interested investors on 19 july 2013: investors will have the opportunity to acquire the assets of the vendors in either their entirety, or in defined asset clusters ( proposed asset clusters ), or in individual assets. proposed asset clusters have been defined based on the severability of assets of the n rburgring and related costs (69). (47) the insolvency administrators did not establish any conditions as regards the future use of the assets. any limitations of that use stem from existing national construction and environmental law and the public access to the n rburgring which is guaranteed by the relevant act of the land. (48) according to the tender's selection criteria, as defined in the letters sent to the interested investors on 19 july 2013 and 17 october 2013, the investors would be selected based on: (a) a maximisation of the total proceeds for all of the assets; and (b) the expected transaction security (70). these criteria were described in detail as follows: value for the assets in scope of the respective offer; potential value implications for those assets that are not included in the respective offer, if any; costs for further separation of the assets in scope of the respective offer, if any; costs to fulfil key assumptions and conditions of the respective offer; closing probability. it was further explained that: the closing probability will be assessed by taking into consideration the (i) outstanding due diligence requirements; (ii) secured financing for the transaction, supported by confirmation of financing partners; (iii) required steps for the regulatory clearance; (iv) required internal approval steps until the transaction could be consummated; and (v) strategic rationale for the acquisition or future plans for the assets of the ng, msr and cmhn and the likelihood of their realisation. it is noted that environmental considerations were not part of the criteria for selecting the final offer. (49) by letters of 17 october 2013 and 17 december 2013, the bidders that submitted qualified offers were informed that: (a) indicative or final, respectively, offers would be considered even if submitted after the expiry of the respective deadlines, provided that the terms of the offers qualify for the further process; (b) disadvantages caused by late submission would be fully borne by the bidder in question; and (c) the sellers could choose the qualified bidders shortly after the expiry of the deadline. according to the insolvency administrators, the bidders were informed by the sellers that they could improve an offer or submit a new offer between the deadline and the conclusion of the sales contract. (50) 24 candidates (71) sent an indicative bid until the beginning of february 2014. of these candidates, 18 were allowed to proceed to the due diligence stage (72), and 13 bidders submitted confirmatory offers for all or individual asset clusters or individual assets, including offers for all assets from four bidders: (1) capricorn automotive gmbh and capricorn holding gmbh (capricorn); (2) [bidder 2]; (3) [bidder 3]; (4) [bidder 4]. the bids were considered on the basis of: (a) maximisation of the total proceeds for all of the assets; and (b) the expected transaction security (73). the bids which fulfilled these criteria were considered in the final stage of evaluation; those were bids for all asset clusters. of those bidders, capricorn and [bidder 2] submitted confirmations of their access to the funding necessary for the purchase: on 7 march 2014, [bidder 2] submitted a binding letter dated 24 february 2014, informing kpmg of its financial capabilities; and on 11 march 2014, capricorn submitted to the sellers a binding letter by [ ] dated 10 march 2014, addressed to capricorn, informing the latter that [ ] was willing to underwrite a loan of eur 45 million to capricorn for the purpose of the acquisition of the assets in question. on the basis of their offers, contracts were negotiated in parallel and notarised, with [bidder 2] on 7 march 2014 and with capricorn on 10 march 2014. (51) on 11 march 2014, the creditors' committee of the insolvent companies approved the sale to capricorn (specifically to capricorn n rburgring besitzgesellschaft gmbh), as the one with the highest offer including a proof of financing. in particular, the offer of capricorn was at a price of eur 77 million, whereas the offer of [bidder 2] was at a price of eur [47-52] million. the sales contract with capricorn was signed by ng, msr and cmhn on 11 march 2014 and by the insolvency administrator on 13 march 2014 (74). (52) following the tender process described above, the assets of ng, msr and cmhn (all tangible and intangible assets including all land, buildings, trademarks and internet domain rights), but not any liabilities and financial assets, were bought by capricorn. the shareholders of capricorn are capricorn holding gmbh (75) with 67 % of the shares and getspeed gmbh & co kg (76) with 33 % of the shares. (53) the transfer of the employment contracts associated with the tendered asset clusters follows from german law (77) and german labour courts jurisprudence (78), which foresee that the employees are automatically transferred to the buyer of the assets, but that in an insolvency context the buyer can request from the insolvency administrator to terminate employment contracts. in the case at hand, the sales contract foresees that nbg (the current operator of the n rburgring complex) would in 2014 terminate employment contracts upon request of capricorn. indeed, the latter concluded that, in order to achieve an economically viable operation of the acquired assets, it would need 253 of the total 297 employees (as of beginning of 2014), and thus requested nbg to terminate the employment contracts of 44 employees. as a result, 85 % of the total staff of the insolvent companies will be transferred to capricorn on 1 january 2015 (date when capricorn will start operating the acquired assets). (54) the parties to the sales contract are obliged to implement it only upon the existence of a commission decision declaring that neither the buyer nor its operational company are beneficiaries of the aid under assessment subject to recovery, and: (a) either the delays to bring a legal challenge against the commission decision have expired without an appeal; or (b) in case of an appeal, a not further challengeable court judgment has been rendered confirming the commission decision. this condition aimed at covering the discrepancy between the assets' price of eur 77 million and the financial risk they carried, stemming from the possible liability from a state aid recovery of eur 456 million based on the commission decisions of 21 may 2012 and 7 august 2012 to open and extent, respectively, the formal investigation procedure. (55) the business in the season 2014 will be run by nbg. afterwards, a liquidation of this company is foreseen. the 2014 cash flow of nbg (eur 6 million) is cashed in by the seller. it represents, in form of a flat-fee, a part of the sales price in order to facilitate the handling of the contract. as regards the beneficiaries ng, msr and cmhn, in the context of their insolvency proceeding, they have definitely ceased all activities and do not employ any personnel. at the same time, the insolvency administrators are entrusted with legal proceedings under german bankruptcy law, aiming at the arrangement of all the claims and obligations of the companies in insolvency proceedings. once those claims and obligations are settled, and the insolvency court approves the final liquidation, the companies can be erased from the company registries. (56) in order to run the business in the season of 2015, the buyer (capricorn) will establish the operating company capricorn n rburgring gmbh (opco) that will conclude contracts for the season 2015. with a view to ensuring that the aid beneficiaries will definitively disappear from the market, the commission was informed of the following measures. if there is no non-challengeable commission decision at the beginning of 2015, the sold assets will be transferred before 1 january 2015 to a new company (newco) in which 95,1 % of the shares will be owned by the buyer and 4,9 % by an independent trustee. the trustee will be acting in the interests of the creditors and not of the insolvent beneficiaries of state aid, but will not be subject to instructions by the creditors. furthermore, a lease contract will be concluded between newco and opco, terminating on the date of entry into force of the sales contract. the business of the opco will be run under its name, on the basis of its own business plan and with the workforce of its own choice (see recital 53 above). there will be a lease fee of totally eur [4,6-5,1] per year to be paid to newco, which will serve the liquidation mass of the n rburgring companies (all payments in favour of the insolvency estate are transferred to the trust accounts of the insolvency administrators, solely in order to be distributed to the creditors). when the decision of the commission becomes effective, the trustee will transfer all his shares in newco to the buyer. on the other hand, if the buyer does not fulfil its contractual payment obligations, the trustee will be able to sell the assets. in addition, should an annulment of the commission decision take place, the assets will return to the insolvency administrators in order to be sold immediately, since the liquidation obligation of german insolvency law continues to exist even in such case. there is no option of continuing the business of the n rburgring companies by newco. the commission notes that this arrangement does not change the basic conditions of the sale, including the sales price and payment terms, which remain the same (79). 3. comments from germany 3.1. firm in difficulty (57) in their comments to the formal investigation procedure, germany argued that ng was not a firm in difficulty as of 1 july 2008 (80) or at the moment of granting the isb loan of eur 325 265 000 on 28 july 2010 (81). as regards the situation of ng, msr and cmhn in the period from may 2012 to july 2012 and the extension of the formal investigation procedure, germany claims that the commission had not taken into account the insolvency of ng, msr and cmhn as a non-reversible consequence of its decision not to approve the rescue aid in the preliminary proceedings (82) and it has thus breached the principle of proportionality (83). germany also argues that ng carried out the construction of the infrastructure and particularly the organisation of formula 1 and superbike race events on behalf of the public sector (84), and that they therefore cannot be taken into account for analysis of its economic situation, the classification of an undertaking in difficulty and the application of the one-time principle (85). 3.2. state resources and imputability (58) for the measures carried out by ng, germany acknowledges that the resources are imputable to the state (86). 3.3. economic activity (59) pursuant to germany, the construction of the tribune, the multifunctional halls, the access structures and the attractions offering education and entertainment (part i (87) of the n rburgring 2009 project) is no economic activity as the leipzig/halle judgment (88) cannot be applied to the construction of the general (regional and sport) infrastructure (89), the construction concerns facilities for which the criteria of the 2007 white book on sport of the commission (multifunctional use, non-discriminatory access, etc.) are met, no private investor would carry out such project and racetracks are regularly not privately constructed for insufficient profitability (90). (60) as regards the formula 1 events, in the view of germany, they are in principle structurally deficit making, these events cannot be considered as normal business of ng as they led even with the public support to a negative result for ng, this company would not organise these events without the expectation of public financing and the public authorities decided to finance the formula 1 events through ng at arm's length for regional-policy grounds (91). therefore, germany claims that the organisation of these events cannot be considered as an economic activity of ng. if it was aid, germany claims that the sgei criteria are met. 3.4. selectivity (61) germany argues that even if the financing of the measures was an economic activity, it is not selective because the criteria of the 2007 white book on sport are met (no single user; non-discriminatory access; multifunctional use and lease under reasonable market-based prices; the infrastructure is not provided by the market because it would not be economical; responsibility of public authorities). 3.5. advantage (a) measures covered by the decision of 21 march 2012 (62) germany admits that it had not found a long-term private investor who would invest in the n rburgring 2009 project. (63) for measure 1 (payments in capital reserve and capital increases in august 2004, december 2004 and september 2007), germany argues that the question of an advantage does not matter, because the target of the measure was not an economic activity. (64) as regards measure 2, germany argues that the level of the interest of ng's loans granted to its subsidiaries (6 %) does not constitute an advantage to the subsidiaries as it is comparable to the interest of loans on the market. (65) regarding measure 3, pursuant to germany, the measures financed by the liquidity pool in the amount of eur 170 million (92) were carried out on market-based terms, since: (a) the pool is used by the land similarly to a market-based holding (93); (b) ng paid the interests ordinarily; and (c) the funds were fully paid back in connection with measure 8. germany also indicated that the loans granted by the liquidity pool of the land to isb served exclusively to the refinancing of isb for its own loans to ng (see also recital 70) and that the market conditions of the land from the transactions of the liquidity pool were not passed on to ng as debtor. (66) for measure 4 (loan granted by ng to msr), germany states that the interest rate of 7 % seems to be market conform. (67) concerning measure 5 (support provided by ng to cst), germany puts forward that it is market conform: after the initial financing of the project by ng and mib under parity conditions, the mib was later unable to provide the necessary shareholder loans in the same amount as ng. since a withdrawal of ng from the project would compromise the timely provision of the ticket system, as well as make worthless in all probability the previous investment of ng, it was preferable for the ng to stick to the planned project under changed conditions, especially as the business plan allowed for expectations for a reasonable return and ng received collaterals from ng. (68) in respect of measure 6 (consideration paid to ipc, and the loan to msr through png as intermediary), germany argues that the recipients received the respective payments as remuneration to services and as a loan to market equivalent conditions. (69) with regard to measure 7 (cession of mib's claims against cst to ng), germany does not deal with questions concerning a potential advantage. (70) as regards measure 8 (isb loan to ng, msr and cmhn), germany indicates that isb has not acted independently (at arm's length) as a (separate) undertaking, but as a support bank receiving explicit instruction from the administration of the land and being part thereof (94). pursuant to germany, the principles of the agreement ii are applicable to the refinancing of the isb loan (95) through the participation of isb in the liquidity pool and this participation constitutes therefore no aid in favour of isb (96). (71) regarding measure 9 (guarantee of the land to isb concerning measure 8), germany states that the guarantee in question deals with the share of risk in an internal relationship between isb and the land and it provides no advantage to the beneficiaries of the loan (ng, msr and cmhn), because it did not lead to improved terms of their loan (97). (72) as regards measure 10 (business lease contract concluded on 25 march 2010), germany submitted an expert opinion of 29 september 2011, commissioned by the land on the rent for the business lease of the n rburgring, which established a range of minimum and maximum market conform annual rents. germany claims that according to that expert opinion, the expected rent is 20 % above the maximum market level and it would cover the lessor's construction costs of eur 330 million and a reasonable profit (98). (73) as regards loans under measure 11 (loans granted by rim to msr with mediinvest and png as intermediaries), by which part ii of the n rburgring 2009 project was financed, germany argues that they are conform with the market economy investor principle and that they do not involve an advantage, since the interest rates applied are above the applicable reference rates (apart from two loans of 12 november 2008 and 22 december 2008). (74) for measure 12 (guarantee of the land to the loans of rim to msr with mediinvest as intermediary under measure 11), germany states that the guarantee of the land only leads to an advantage to the recipients of the loans, but not to an advantage to isb or rim, because that guarantee was a requirement for the granting of the loans. (75) as regards measures 13 and 14 (grants from gaming tax for tourism promotion (99) and loans by the land), germany does not claim their compliance with the market economy investor principle. concerning the gaming tax, germany describes the measure as a compensation for infrastructural costs in connection with the promotion of tourism. concerning the debt subordination, germany argues that it has merely a declaratory effect as every shareholder loan is subordinated in the insolvency proceedings anyway, that that subordination led therefore only to a potential effect on the public budget and that it does not therefore constitute an advantage (100). (76) as regards measure 15 (takeover of msr shares by ng and rim), germany claims that it does not constitute an economic advantage for mediinvest, geisler & trimmel and weber, because: (a) it was carried out at the symbolic price of eur 1 per share; (b) it did not involve any other advantages such as the cancellation of shareholder loans or guarantees of the shareholder; (c) ng and rim took over the shares in msr as to compile the ownership of part ii with that of part i of the n rburgring 2009 project and to enable a united business concept; and d) the question whether msr was in difficulty at the moment of the transfer has no impact on this assessment, as msr is a company with limited liability, thus the liability of the shareholders is in any event limited to the capital of the company. (77) as far as measure 16 (financing of the losses of ng from the formula 1 races by the land) is concerned, germany states that it is not an economic activity and that the financing of formula 1 events is generally not profitable. (78) for measure 17 (formula 1 concession contract), germany claims that it is linked to the conditions of the business lease contract. germany argues that in view of the rent being considerably ([ ] %) over the market level, both contracts have to be considered balanced in their totality (including the benefits of the nag from the concession contract) (101). (b) measures covered by the decision of 7 august 2012 (102) (79) regarding measure 18 (debt rescheduling), germany states that it was necessary to avoid the imminent insolvency and that it would have been implemented also by a private shareholder. (80) concerning measure 19 (debt subordination and guarantee), germany argues that it does not constitute even a potential burden to the public budget, that it would be implemented also by a private shareholder, and that the debt subordination had no consequences for the shareholders because there were no further substantial creditors. 3.6. distortion of competition and effect on trade (81) germany claims that the measures in favour of hotels and restaurants have no potential effect on trade between member states (103). 3.7. compatibility (a) facilities of the race ring (82) germany claims that the n rburgring is crucial for the economy and employment in the region, that it is an important facility dedicated predominantly to amateur sport, that it is part of the german motorsport history and german culture and thus also part of the cultural heritage of the union, that it has an impact on traffic safety in the whole world, as cars tested on that track are exported worldwide, that its driving centre offers a safe driving training, and that the investigated measures do not relate to the racetrack as such, but rather to the sport and non-sport infrastructure other than the racetrack and to the organisation of formula 1 races. (b) compatibility of aid under 107(3)(c) tfeu objective of common interest (83) germany argues that the construction of sport facilities can be regarded as a common interest in view of article 165 tfeu (104) and that measures enabling access to sport could be supported (105). the n rburgring features not only few professional events but also amateur events and motorsport training of youth. n rburgring is used also for other sport events such as cycling (rad&run), running (fisherman's friend strongmanrun) and triathlon (green hell triathlon). necessity and proportionality of the measures (84) germany states that the measures are necessary for the following reasons: out of [ ] event days, n rburgring is used for professional sport only on [ ] days, for amateur sport on [ ] days and for both amateur and professional sport on [ ] days. the amateur sportsmen represent more than [ ] ([ ] professionals versus [ ] amateurs). non-amateur events are formula 1, german touring car championship, superbike world championship, the music event rock am ring and the test driving of the car manufacturers. amateurs can go for a ride with their own cars. at weekends, amateur competitions of large german motorsport associations (such as adac) are organised. during the week individual clubs use the tracks for training or amateur competitions. in motorsport, there is no separate infrastructure for professional and amateur sport. moreover, the measures under investigation serve to the elimination of a market failure. a return on investment cannot be expected. in contrast to multifunctional arenas, only one or two series of a competition take place every year. no private investor would construct and finance such infrastructure. the participation of private enterprises in the financing of part i of the n rburgring 2009 project failed. public engagement had thus also an incentive effect. without the explicit political will of the land government, ng would not implement the modernisation and expansion of the sport infrastructure in the same extent. in addition, germany argues that the financing of the measures is proportional. the aims could not have been reached with a lower funding by the public sector. the installations were old and required modernisation. there was no duplication of infrastructures. in contrast to the commission cases on multifunctional arenas (106), the measures under investigation do not concern new infrastructure or substantial extension of capacity. effects on trade and competition limited to necessary extent (85) according to germany, effects on trade and competition are small and do not contradict the common interest. as stated by the koblenz court (107), the n rburgring with the nordschleife is unique. the location of international and national events has a long history, and the support to the sport infrastructure at the n rburgring does not therefore lead to a transfer of events to the n rburgring. there are only few international events at the n rburgring. (c) compatibility of aid under 107(3)(d) tfeu (86) germany claims that the n rburgring as the longest permanent racetrack and the oldest pit lane worldwide is part of the cultural heritage of the union (108). parts of the ringowerk (mixture of museum and science centre) have a museum character. the measure for the support of the culture of the motorsport was necessary as it creates a common cultural identity in germany and the union, and the private financing of part i of the n rburgring 2009 project failed. the measure was also proportional because no overcompensation of that measure took place. the trade and competition conditions in the field of cultural facilities are not affected by the support to an extent contrary to the common interest. the cultural facilities at the n rburgring are in competition with other regional or national cultural facilities, so that the market share of the former facilities is limited. (d) compatibility of aid under 107(3)(b) tfeu (87) germany also claims that the drawing of loans of ng from the liquidity pool and the participation of isb in the liquidity pool (measure 3) is compatible under 107(3)(b) tfeu as taking a loan from the real economy was almost impossible at the time because of the breakdown of the interbank market. (e) compatibility of aid under 106(2) tfeu (88) germany claims that part of the investment measures for the promotion of tourism met the sgei requirements that were in force at the time (109) and that no manifest error of appreciation is evident. more concretely, germany indicates that parts of ringowerk (particularly motorsport exhibition, green hell multi-media theatre, ringomeister and testocentre) have a museum character and serve to the public interest of (cultural) education, warsteiner event centre serves as a multifunctional congress, trade fair and conference facility and the parking house is not fully used at days without big events. germany argues that an enterprise acting under normal market conditions would not make the investments in the above three facilities without public financing and that the failed private financing of part i of the n rburgring 2009 project shows that there is no market for the installation of such measures. (89) germany claims that the organisation of formula 1 events is considered a sgei as they are publically funded also in other countries and they have an enormous prestige and macroeconomic and identity effects to the respective member state as well as to the whole union. (f) temporary framework (90) germany claims that tranches 2 to 4 of the isb loan (measure 8) are compatible with the internal market under the commission communication temporary community framework for state aid measures to support access to finance in the current financial and economic crisis (110), and that even if the commission concluded that ng was an undertaking in difficulty as of 1 july 2008 and the temporary framework could not be applied to tranches 2 to 4 of the isb loan, the aid in favour of ng, msr and cmhn would equal to the difference between the interest rate to be paid on the market and the interest rate actually paid, but not to the whole amount of the loan (111). 3.8. sale of assets (91) in its submissions, germany maintains that the sales structure does not involve state aid to the buyer of the assets. in addition, germany argues that the sales process interrupted the economic continuity of the ng, msr and cmhn. thus, in its view, if the formal investigation procedure concluded with a negative commission decision requesting the recovery of incompatible aid, a recovery obligation imposed on ng, msr and cmhn would not concern the buyer of the assets in question. finally, with regards to the condition which foresees that the sale of the n rburgring assets is final only upon the existence of a non-challengeable commission decision declaring that the aid would not be recovered from the buyer of the assets, germany argues that this condition does not constitute an obstacle to the liquidation of the aid beneficiaries and that it is not a continuation of their business, or an advantage to the buyer. (92) as regards the interruption of economic continuity, germany pointed to the following elements: (a) the sale was carried out through an open, transparent, non-discriminatory and non-conditional tender procedure to the bidder submitting the highest bid including a proof of its financing; (b) the economic logic of the sale is determined by the insolvency proceedings, which serve to satisfy jointly the creditors by the sale of the assets of the n rburgring and the distribution of the proceeds among them; (c) the opening of the insolvency proceedings and the takeover of the business by nbg from nag as well as the sale of the assets to capricorn with the subsequent placing of the assets in the control of a separate trustee constituted economic breaks, as the business models of nag, nbg and capricorn vary in the use of the assets substantially; (d) neither capricorn nor the new owner of the assets has any economic or corporate link to ng, msr or cmhn as of january 2015; (e) the buyer has acquired only the assets but not the shares or the obligations of the sellers. the shares of nbg are not transferred to the buyer, either; (f) the significant contracts for the operational business will be terminated predominantly after the 2014 season. the new contracts for the period from 1 january 2015 will be negotiated and concluded by the operating company founded by the buyer. any transfer of employment contracts associated with the tendered assets would be governed by the applicable provision of german law, i.e. the purchaser of the insolvent assets would be free to decide on engaging personnel; (g) as regards timing, the assets were sold before any commission decision; (h) the date of the transfer is determined by the requirements set by insolvency law that are to be considered in the context of the best possible sale of the assets. given the nature of the motorsport business and the tendered assets, germany considered that any successful buyer(s) would be engaged in activities similar to ng, msr and cmhn's. however, any new owner(s) would have the possibility to manage their activities under different operating conditions than ng, msr and cmhn's and would apply their own business model. for the racetrack, capricorn foresees a different utilisation concept based on a new business plan. besides, the buyer will itself be more active as an event organiser at the n rburgring in the future. furthermore, the n rburgring will convert from a tourism attraction to a technology site according to the plans of the buyer. (93) with regards to the condition which foresees that the sale of the n rburgring assets is final only upon the existence of a non-challengeable commission decision declaring that the aid would not be recovered from the buyer of the assets, germany argues the following: (a) no potential investor or financial partner would accept to acquire the assets without such a condition precedent; (b) according to the german insolvency law (112), the insolvency administrators' obligation is to ensure that the debtor's assets are liquidated at the best possible rate or alternatively to reach an arrangement in an insolvency plan which however would result in further state aid to the n rburgring companies; (c) the lessee will operate the leased assets under its own name, on the basis of its own business plan and with the workforce of its own choice; and (d) [bidder 2] had a similar condition in its offer, which foresaw that its offered prices would only be payable upon the existence of a non-challengeable commission decision declaring that the aid would not be recovered from the buyer of the assets. [bidder 3] had a condition stipulating that it could withdraw from the sale if there was no positive commission decision in place until 31 december 2014. (e) the structure by which, in case there is no non-challengeable commission decision at the beginning of 2015 the sold assets will be transferred before 1 january 2015 to a new company, in which 95,1 % of the shares will be owned by the buyer and 4,9 % by an independent trustee (see recital 56 above), will not lead to a continuation of the beneficiaries' business but will ensure their definitive exit from the market. (94) in conclusion, germany argues that through this process there is no economic continuity between ng, msr and cmhn and the assets sold under the tender process. thus, any potential incompatible state aid to ng, msr and cmhn would have to be recovered from these companies, following a relevant commission decision, and would not concern the buyer of the assets under sale. germany also argues that the condition precedent of the sales contract between the sellers and the buyer does not put an obstacle to the liquidation of the n rburgring companies and the recovery of the past aid from them. the aid beneficiaries will disappear from the market definitively. should ever the sale with capricorn be annulled, the assets will still be sold and the sellers liquidated. (95) germany informed the commission about the sales structure, in order to obtain legal certainty that the sale of the assets would not involve state aid and that any successful buyer(s) would not be held liable for recovery of incompatible state aid. (96) germany also undertook the commitment to provide to the commission reports regarding the implementation of the sales procedure. the reports were submitted on a regular basis. the reports confirmed that the sales process was executed following the principles discussed with the commission. they also provided information to the commission about the bidders, their tenders, the final sales price and other relevant issues. 4. complaints on the sale of assets 4.1. complaint from ja zum n rburgring e.v. (complainant 1) (a) complaint (97) complainant 1 claims that the design of the tender process for the sale of the assets of ng, msr and cmhn (i.e. the sale of racetrack, accommodation facilities and leisure park altogether) was not suitable for remedying competition distortions in the relevant markets, because it aimed at an unchanged operation of the complex and a transfer of the majority of employees of ng, msr and cmhn to the buyer of the assets. complainant 1 further complains that in the insolvency proceedings in the own administration (eigenverwaltung) the insolvent companies carry out the sale themselves, under the mere supervision of an insolvency administrator (sachwalter) (113), that the bidders are not required to submit separate offers for each asset cluster and that offers for the totality of assets are acceptable. (98) complainant 1 also argues that aid would be transferred to the buyer of the assets because all the assets, around 300 employees and the operational business of nbg would be transferred to one bidder and there would thus be economic continuity between the old and new owner/operator. complainant 1 also alleges that in consequence of the criterion of the maximisation of value of all assets, offers for the totality of assets were preferred by the sellers, whereas offers for individual assets were discriminated. (99) furthermore, complainant 1 alleges that there is a lack of transparency as regards the award criteria and the financial data about the profits of ng, and that there is discrimination among the bidders, in particular because the access to the virtual data room was limited to five bidders. complainant 1 also states that the sellers communicated the extension of the deadline for the submission of binding offers until the mid of february 2014 only to the bidders for all the assets who qualified for the access to the virtual data room; the bidders that tendered only for individual asset clusters such as complainant 2 were not notified of the extension of the deadline. furthermore, complainant 1 states that the land and capricorn were represented by the same law office. (100) complainant 1 requests the suspension of the tender process and its re-launch with clear award criteria, the qualification of the racetrack as an sgei and its separation from the sale of the accommodation facilities and the leisure park. (101) in addition, complainant 1 alleges that nbg has received new non-notified aid incompatible with the internal market because it was provided capital for the operation of the business at the n rburgring from the insolvent ng of eur 2 239 243 in the form of a transfer in the capital reserve (kapitalr cklage), that the operation is based on a new lease contract between ng, msr, cmhn and nbg that was not tendered out, that nbg does not pay any rent and that nbg does not aim at increasing turnover and saving costs, because it keeps all the personnel and has born the costs for the organisation of formula 1. complainant 1 also claims that a takeover by nbg of employment contracts of nag employees, based on a contract concluded between nbg and the trade union ver.di on 26 july 2013, sets out that, through the takeover, no economic, social or legal disadvantages can be created to the employees, and it shows that a business model which was built up with unlawful aid has been maintained. (b) comments from the insolvency administrators sent by germany (102) pursuant to the insolvency administrators, the complaint should be refused because it does not make evident that the sale process deviated from a usual acquisition process. (103) in an open, unconditional and transparent bidding process, offers for all assets cannot be excluded from the outset. if such offer is higher than the sum of the combined offers for individual assets, an owner behaving in a market-conform manner would conclude the contract with the offer for all assets. under these circumstances, only the latter offer is a market price (114). the exclusion of such offers from purchases in insolvency proceedings would equal to a breach of the business freedom and the ownership right of the insolvency creditors guaranteed by the charter of fundamental rights of the european union. (104) a preferential treatment of offers for all assets did not take place. the non-qualification of complainant 2 for the access to the data room was caused only by the insufficient amount of its price offer. (105) the bidding process had been done in stages. the bidders qualify for a next stage only if there is a sufficient closing probability. the advantage of this approach is that sensible business data are not accessible to more bidders than necessary and that the cost of the due diligence can be reduced for both the seller and the bidders that offer an insufficient price. the bidders were provided sufficient information in each stage of the process. (106) the award criteria were defined unambiguously. the award criterion is the total proceeds weighted in view of the closing probability, which is further defined by sub-criteria. (107) the data room was not limited to five tenders for technical reasons. the number of accesses was the result of the evaluation of offers. (108) according to the insolvency administrators, nbg was established by them as a vehicle for a temporary operation of the assets during the insolvency until the sale of assets. previously, the operational business was carried out by nag. since the lease of the n rburgring to nag, the companies ng, msr and cmhn were mere owner companies without operational business. pursuant to the insolvency administrators, ng, msr and cmhn could not be considered for the take-over of the operational business. first, a split of the operational business between the three companies would require separate concepts. second, that split would not correspond to asset clusters that would lead to an economically meaningful use of the real property. third, the conclusion of contracts with insolvent companies does not comply with internal compliance rules of many companies, and the operational business had thus to be continued via a non-insolvent subsidiary as an acceptable contractual partner to the customers of the n rburgring. the employees could also not be required to change from nag to insolvent companies. nbg was not established and equipped as a long-term solution. in contrast to the assets managed by nbg, the latter company was not for sale. moreover, the insolvency administrators state that the provision of capital to nbg was carried out by the insolvency administrators in view of the sale (avoidance of lower revenues in case of non-operation) only according to economic considerations, that the assets of ng were increased by nbg, not decreased (115), that the said provision of capital does not provide an advantage to nbg, and that the establishment and equipment of nbg is not imputable to the state, but to the insolvency administrators. (109) pursuant to the insolvency administrators, also the contract between nbg and the trade union ver.di was concluded in order to allow the continuation of the operational business of nbg until the sale, and not to keep the n rburgring as an economic entity thereafter. that contract was concluded by nbg, not the sellers. the employment contracts were transferred from nag to nbg according to 613a of the german civil code, and not on the basis of the said contract. in view of article 7 and 9 tfeu and council directive 2001/23/ec (116), competition related considerations cannot lead to the circumvention or decrease of the social standard. it was important for nbg as a temporary solution that the employees necessary for the operational business that were employed by nag (predominantly) and ng (20 employees) are transferred to nbg. nbg had to avoid that the remaining qualified employees have to be replaced during the transitional period. between the beginning of 2011 and the end of 2012 the personnel was reduced by 114 full-time equivalents (from 402 to 288 full-time equivalents). at the beginning of the 2013 season, 290 were employed. the bidders were informed that they have the possibility to adjust the scope of the transaction to their business concept. the transfer of employees is no indicator for the maintenance of a business model. (110) germany considers as not required by the state aid rules and as not acceptable in view of the european social model that a buyer of assets of a company in insolvency should be required to avoid the transfer of employment contracts and to conclude new employment contracts under the threat of recovery of aid granted previously to that company. 4.2. complaint from adac e.v. (complainant 2) (a) complaint (111) according to complainant 2, he was notified by the sellers that his offer could not be taken into account in the next stage of the sale, as the price offered by him was substantially lower than the price included in other offers, and related only to part of the assets, while maximisation of value was sought through all assets. (112) complainant 2 claims that the sale process aims at economic continuity of the activities and the market position of the n rburgring in its current form, and it is therefore not suitable for the avoidance of a transfer of an advantage from the aid already granted to the buyer of the assets. he points out that only a sale to several bidders can breach the economic continuity, that offers for the totality of assets were preferred by the sellers compared to offers for individual assets, the latter being allowed but de facto without any chance, and that there are no criteria for the evaluation of offers for part of the assets in relation to offers for the totality of assets and that only the latter offers qualified for the second stage of the process. (113) complainant 2 also states that the sale process was carried out by the insolvency administrator in breach of the state aid rules, including a lack of transparency and non-discrimination, and it is therefore not suited to achieve a market price. complainant 2 claims that data on the financial situation of ng relevant for the price offers were missing in the tender documentation, which led to excessive indicative offers, which would probably be decreased after the process stage allowing access to the data room. complainant 2 states that the profits were substantially decreased compared to the expected profits for 2013 previously communicated to the bidders, without giving them a possibility for a new analysis of the financial data. complainant 2 also alleges that the information about the financial situation of nbg and the necessary mid-term and long-term investments was not sufficiently disclosed and that the tender documentation implies long-term contractual relationships, although the contracts with complainant 2 were extended only by one year (2014). in addition, the criterion of a secure financing was not sufficiently taken into account, otherwise the bidder la tene capital limited could not access the data room with an unrealistically high offer and without a confirmation of the financing. (b) comments from the insolvency administrators sent by germany (114) comments from the insolvency administrators contained in recitals 101 to 105 apply also to the complaint from complainant 2. 4.3. complaint from [bidder 3] (complainant 3) (a) complaint (115) complainant 3 claims that the sales contract was not awarded to the bidder with the highest offer, but to a preferred local bidder. pursuant to complainant 3, non-economic considerations such as regional objectives or reasons of industrial policy that would not be accepted by an investor acting in accordance with market economy principles may not be taken into consideration for a lower price but point to a case of state aid (117). complainant 3 claims that it offered a purchase price in the amount of eur 150 million (118), and that capricorn was thus awarded with the contract although complainant 3's offer was substantially higher. complainant 3 further supports that an exceptional decision for the lower bid may only be made if it is obvious that the sale to the highest bidder is not possible (transaction security), i.e. if the purchaser is not able to pay the purchase price (119). according to complainant 3, this was not the case, because: (1) complainant 3 submitted a binding financing commitment by a private equity fund in the amount of eur 30 million; and (2) it was not possible to receive the binding commitment for the further tranches of the purchase price due to a delay and lack of documentation by the sellers. complainant 3 claims to have informed the sellers that the pending financing commitments could be submitted by 31 march 2014. complainant 3 also supports that as of the date of the complaint (10 april 2014), it could provide a financing commitment over eur 110 million, whereas complainant 3 submitted to the commission a letter of intent addressed by jupiter financing group, inc. (jupiter financial group) to complainant 3, dated 26 march 2014, informing complainant 3 of a binding proposal by jupiter financial group for the financing of the acquisition of the n rburgring assets (for the financial components of this proposal, see footnote 105). the financing proposal was subject, among other conditions, to the completion of due diligence satisfactory to jupiter financial group. (116) complainant 3 also claims that, of the total of eur 77 million that capricorn offered as a purchase price for n rburgring, eur 6 million would be paid from the 2014 season and a further eur 11 million only during the years 2015 to 2018, and that this results in an actual cash purchase price in the amount of eur 60 million and thus in a difference of eur 50 million compared to the cash purchase price of eur 110 million offered by complainant 3. according to complainant 3, if one takes further future cash payments into account, the difference between the offers of capricorn and complainant 3 is eur 73 million. finally, complainant 3 alleges that there is aid in favour of capricorn which amounts to at least eur 73 million, i.e. the difference between the purchase price offered by complainant 3 as the bidder with the highest bid and the price offered by the successful bidder. in this regard, according to complainant 3, when taking into account the support in favour of the local communities, the aid amount is raised by eur 200 million, to an overall eur 273 million. (117) complainant 3 also claims that capricorn's offer was not unconditional, since it was subject to a non-contestable decision by the commission making clear that there is no extension of the recovery order. according to complainant 3, this constitutes a deviation from the announced principles of the sales procedure, which caused a violation of the tender procedure since other parties like complainant 3 were not informed about the adjustments. (118) furthermore, complainant 3 argues that the sale of assets has not been made in the course of an open, transparent and unconditional selection process. specifically, complainant 3 alleges that: (a) the fact books provided by the sellers were materially incorrect and misleading; particularly the suggested clean balance sheet transaction structure was unrealisable. immediately after the due diligence process began, complainant 3 found out that the transaction structure proposed by the sellers did not accommodate the factual circumstances resulting from the operation of the n rburgring and could thus not be implemented (120). (b) throughout the process, the sellers delayed the finalisation of the asset purchase agreement. (c) the sellers failed to communicate an unambiguous time limit for ending the bidding process and indicated that the process ends at the end march 2014. complainant 3's exchange of communication with the sellers and a press release by the sellers implied that the submission of complainant 3's bid until the end of march is possible. moreover, capricorn was allegedly given a preferential treatment since it was allowed to provide its binding financing commitment after 17 february 2014 (121). (d) material contracts such as the third party operational contracts of nbg were not provided at all or only with substantial delay. furthermore, the bidders were allegedly provided with decisive information on the key financial figures of nbg in the data room only in german only one working day before the expiry of the deadline for the submission of the final offer or even on that day. in particular, material information such as the audited annual accounts of nbg as at 31 december 2012 was allegedly only provided on the evening of the last working day before the date set for the submission of the final offer. (e) the sellers discriminated the other bidders by allegedly granting capricorn preferential access to major third party suppliers. in particular, complainant 3 claims that there must have been negotiations between capricorn, the sellers as well as the brewery bitburger already weeks before the winning bidder was announced on 11 march 2014 (122). (f) the notarisation of the asset purchase agreement between the sellers and capricorn must have taken place before 11 march 2014. the award of the contract was already communicated to capricorn before a decision by the committee of creditors was made, and a press release by capricorn dates from 9 march 2014 and was thus made 2 days before the decision of the committee of creditors on 11 march 2014. (g) without informing the other bidders the sellers deviated from the process letter of 17 october 2013 by waiving the requirement to provide a financing guarantee for the entire purchase price to the sole benefit of capricorn (123). (h) the sellers violated the conditions of the process letter by not providing individual bidders with an agreed and internally approved mark-up of the asset purchase agreement prior to the submission date of the final offer thus rendering the finalisation of the financing significantly more difficult. (i) the sellers based the award of the assets also on environmental criteria and assumed without further liaising with complainant 3 that the company would not be able to meet such criteria, although no explicit environmental conditions were introduced by the sellers (124). (j) capricorn was given preferential treatment as the company sought state aid advice from the law firm mcdermott, who had already advised the sellers and the land on the same matter prior to advising capricorn. (119) complainant 3 claims that the sale represents resources imputable to the state (125), that new state aid in favour of capricorn is present, and that any recovery order with respect to state aid granted to the sellers of the assets must be extended to capricorn (126). finally, complainant 3 claims that the sales contract is invalid due to the violation of the standstill obligation of article 108(3) tfeu. (120) finally, complainant 3 claims that capricorn failed to pay the second instalment of the purchase price that was due at the end of july, which according to complainant 3 provides an indication that capricorn did not provide a fully financed offer. complainant 3 further claims that, subsequently to the above, the financing conditions for the acquisition of the n rburgring assets were changed to the benefit of capricorn and in clear deviation from the rules set by the sellers and the process letter given to the bidders, which may constitute further aid to the benefit of capricorn. (b) comments from the insolvency administrators sent by germany (121) pursuant to the insolvency administrators, complainant 3 had not submitted any binding financing commitment for eur 30 million neither along with its confirmatory bid of 17 february 2014 (that referred to a binding financing commitment of [ ] in the amount of eur 30 million) nor along with the complaint, and the complainant 3's claim that the evidence of financing could be submitted at a later stage was even not demonstrated by non-binding statements of third parties. in contrast to the confirmatory offers of capricorn and [bidder 2], the confirmatory offer of complainant 3 did not meet the financing requirements set in the process letter of 17 october 2013. on 11 march 2014, the sellers had therefore no ground to award the contract to complainant 3. for the sellers, the risk that waiting for complainant 3's evidence of financing may lead to the reduction of the bidders to one or zero was not acceptable, since: (a) [bidder 2] consortium insisted on the implementation of the transfer of ownership as of 3 april 2014; and (b) there was lack of progress in the substantiation of complainant 3's offer, despite the fact that the latter had handed in its expression of interest on 17 may 2013 and its indicative offer already on 30 september 2013, therefore the likelihood of closing the transaction with complainant 3 was reduced. the alleged financing commitment of jupiter financial group dated 26 march 2014 was not submitted to the sellers, while a later non-signed letter of investment bank and advisory firm [ ], dated 31 march 2014, is conditional on the satisfactory conclusion of the due diligence. the development fund for the municipalities surrounding n rburgring, in the amount of eur 200 million, was to no benefit of the sellers. (122) according to the insolvency administrators, the bidders were informed that the selection of the successful tenderer maybe carried out shortly after the deadline for the submission of offers on 17 february 2014. the information provided by the sellers could not give an expectation that the process would be extended. the press release quoted by complainant 3 states that the insolvent administrators intend to conclude the contract in the first quarter of 2014. the insolvency administrator states that it is not true that he had publically stated that it is aimed to take a decision at the end of march, that capricorn was informed already before the meeting of the creditors' committee about the award of the contract and that a press release was published by capricorn on 9 march 2014. (123) the insolvency administrators state that the transaction structure (sale of individual assets, asset clusters or all assets, without transfer of shares or liabilities) had not changed during the bidding process. the term clean balance sheet stands for nothing else than the exclusion of the transfer of liabilities with the sale. the fact that the sellers are owner companies and that the operation business is carried out by nbg, was communicated to all interested parties already in the teaser that was sent to complainant 3 on 17 may 2013. according to the insolvency administrators, if complainant 3 became aware of the activity of nbg indeed only during the due diligence, as alleged, it can be concluded that complainant 3 dealt unsatisfactorily with the extensive information put at the disposal before the submission of indicative offers. at no moment in time, the sellers had required that the buyer takes over the contracts of nbg. a take-over of the lease contract between the sellers and nbg by the buyer was not considered by the insolvency administrators, because of the special situation of nbg in view of the transfer of assets sought from the outset. the insolvency administrators claim that complainant 3 had realised very late that in case of a take-over of the assets as of 1 january 2014, it would have a predominantly empty n rburgring, and the new contracts with customers and sponsors would lead to (increased) revenues only in the 2015 season due to the planning time of (racing) events. moreover, the sellers had repetitively stressed that the bidders could define the subject of the purchase. (124) as regards the claims for damages of third parties, the sellers informed complainant 3 that it would be hardly possible for it to conclude new contracts with the customers of nbg under terms for the customer worse than the running contract, insofar as the issue of a compensation of damages for the non-fulfilment of the contracts with nbg is not clarified. it was necessary to address the risk that the buyer and the contractual partners conclude a new contract that leads to a situation where the contractual partner pays a high consideration, asks for a compensation of the difference with the old amount of consideration and pays in the later years, for which there was no contract with nbg, a substantial lower consideration. the requirement of the sellers for such exclusion is not unusual for asset deals that lead to business close-down and allows to guarantee the best sale in the interest of the creditors. (125) pursuant to the insolvency administrators, the deadline for the submission of the confirmatory offers was extended by letter of 17 december 2013 because also other bidders had not yet submitted a satisfactory offer. it was repetitively made clear to the bidders that nbg took over the operative business only after the 2012 season, that it had therefore to fulfil largely the contracts of nag and that a reliable accounting for the operational business did thus not (yet) exist. according to the insolvency administrators, it is up to the potential buyers to take account of the related risks. (126) the insolvency administrators indicate that on 6 march 2014, complainant 3 submitted a mark-up to the asset sale agreement to its confirmatory offer. the draft asset purchase agreement negotiated on 13 february was from the sellers; it was therefore clear that the next draft would be produced by complainant 3. (127) according to the insolvency administrators, all the bidders that qualified to the respective phase of the selection process had the same documents at their disposal in the data room. the documents identified in the complaint were not available to the sellers and particularly to other bidders earlier, all tenderers had the same chance to view the documents in the data room, and other tenderers concluded the due diligence with the same documents. all the bidders were informed early enough that the accounting of the companies had deficiencies. almost all documents of the sellers and nbg were put in german in the data room, and the sellers were not obliged to provide all documents in english. (128) in addition, the insolvency administrators bring forward that the deadline for the submission of offers and evidence of financing was satisfactory. complainant 3 had 10 months (8 april 2013, as the date of the first contact between [bidder 3] and the sellers, until 17 february 2014) for the submission of evidence of financing and almost four months (23 october 2013 until 17 february 2014) for the due diligence. the insolvency administrators state that they exceeded the requirements that can be deduced from the decisional practice of the commission (127). (129) the negotiations for the new contract on the supply of beer and with rock am ring were not negotiated by capricorn but by nbg, and the corresponding documents were put in the data room. there is no link to capricorn claimed by complainant 3. (130) the sellers had not introduced any environmental criteria in the tender process for selecting the final offer. the only criteria of the tender process for selecting the final offer were: (a) the maximisation of the total proceeds for all of the assets; and (b) the expected transaction security. complainant 3's offer could not be selected because it was missing the latter criterion, i.e. it did not have transaction security, because complainant 3 had not submitted a proof of financing with its confirmatory offer. at the same time, the sellers carried out discussions with [bidder 2] and the final stage of the purchase agreement's negotiation with [bidder 2] and capricorn, in view of [bidder 2]'s offer of eur [32-39] million (see table 10 below) and the negotiation between capricorn and [ ] resulting in the latter bank's financial commitment dated 10 march 2014. therefore, based on the absence of proof of financing with the confirmatory offer of complainant 3, there was a high risk of non-conclusion of the contract with complainant 3. furthermore, the insolvency administrators tried to estimate the chances of complainant 3 to secure the financing by assessing further indicators of complainant 3's business model that could speak for the implementation of the transaction. the business model of complainant 3 was based on [ ] and on the. [ ]. as the noise requirements valid for n rburgring do not allow for [ ] and a [ ] does not exist, the implementation of the concept in a short term could not be expected. the concept of complainant 3 was therefore evaluated as an indicator for a substantial risk in view of the conclusion of the contract or at least for a substantial time and negotiation requirements. the compliance of the concept with the noise requirements at n rburgring was not an award criterion. (131) with regards to complainant 3's claim that capricorn's offer was not unconditional, since it was subject to a non-contestable decision by the commission making clear that there is no extension of the recovery order, the insolvency administrators and germany argue that complainant 3 had conditions in its mark-up contract with a similar effect. according to the provisions included in the relevant parts of those mark-up contracts, as submitted by the insolvency administrators and germany, the purchaser and/or the seller had the right to withdraw from the contract if no positive decision of the commission had been issued by 15 july 2014 (as stipulated in draft contract of 14 january 2014) or 31 december 2014 (as stipulated in draft mark-up contract of 14 february 2014). (132) according to the insolvency administrators, the fact that none of the two bidders that submitted a qualified confirmatory offer met fully the requirement of a secured financing (guarantee regarding the price amount or payment of that amount to an escrow account), and that the sellers had therefore allegedly waived that requirement de facto, without having informed complainant 3, is no proof of an non-transparent process. complainant 3 was not affected because it did not submit any confirmatory offer with proof of financing. informing all bidders about the alleged waiver would not influence the tender process. moreover, the waiver is not a causal for the non-submission of financing confirmations by complainant 3, and it corresponds to the behaviour of a hypothetical private seller. (133) the insolvency administrators argue that the measures taken by the insolvency administrators or the committee of creditors are not imputable to the state, and that no advantage to capricorn is evident as the sellers implemented the selection process according to the standard of an operator acting on market conditions. (134) finally, as regards the claim that capricorn did not provide a fully financed offer because it failed to pay the second instalment of the purchase price, and that there may be further aid to capricorn because, subsequently to the above, the financing conditions for the acquisition of the n rburgring assets were changed to the benefit of capricorn, the german authorities argue: (a) there was no benefit for capricorn, since the second instalment was rescheduled with interest of 8 % and pledges (see footnote 72); (b) there is no state aid involved in the second payment's rescheduling since the decision for the latter is not imputable to the state, because the second payment's rescheduling was decided solely by the insolvency administrator, without the involvement of the land; and (c) there was no deviation from the rules set by the sellers and the process letter given to the bidders, because in the bidding procedure the sellers made no fixed requirements to the bidders regarding purchase price instalments before closing, therefore also a possible request of a bidder to replace cash collaterals by other valuable collaterals to secure the purchase price would have had no impact on the evaluation of the bids. (135) according to the insolvency administrators, the complaint should be refused as unjustified. the unsubstantiated hints of complainant 3 regarding financing are not compatible with the behaviour of a prudent market player or insolvency administrator. 4.4. complaint from mr meyrick cox (complainant 4) (a) complaint (136) complainant 4 claims that capricorn was awarded the contract not for the most economically advantageous offer, but because it is a german undertaking and the sellers did not want to sell to a private equity led consortium. it further alleges that the offer from capricorn was lower than the offer from [bidder 2] across multiple criteria. specifically, complainant 4 claims that: (a) the financing of the offer from capricorn was less secure than that of [bidder 2] (128). (b) [bidder 2]'s offer foresaw higher up-front payments (129). (c) the execution risk was higher in case of capricorn than in case [bidder 2]'s offer would be accepted (130). (d) [bidder 2] has more experience and capability than capricorn (131). (e) [bidder 2] will invest further eur 25 million in the n rburgring with a higher probability than capricorn. (f) the bidders were treated differently in the tender process and that capricorn was given better treatment in the process (132). (137) complainant 4 also claims that capricorn failed to pay the second instalment of the purchase price that was due at the end of july and that the eur 25 million as well as the 8 % interest rate penalty for late payment were waived in favour of capricorn, resulting in further state aid in favour of capricorn. according to complainant 4, the above also raise questions around the information provided by kpmg and the insolvency administrators to the creditors committee in the context of the tender procedure, and demonstrate that capricorn's financial ability was not properly presented. (138) furthermore, complainant 4 supports that there was never a signed agreement between [ ] and capricorn for the latter's financing, but only a term sheet, therefore at the time of the creditors' committee, capricorn had no funding agreed. (139) finally, complainant 4 concludes that the information put forward by him makes it clear that an advantage was granted to capricorn in the sale of the n rburgring assets, that that advantage stems from a decision that is inconsistent with the manner in which a commercial seller would have run the process and have assessed the bids against the award criteria, that such a commercial seller could not have concluded that the capricorn bid was overall more economically advantageous than [bidder 2]'s bid and that a new process needs to be run in which a consistent set of criteria are applied in order to provide for an open, fair and unconditional tender, a clear timetable is set out and adhered to, and the identity of the bidders is shielded from the creditors' committee. (b) comments from the insolvency administrators sent by germany (140) the insolvency administrators state that complainant 4 as member of the [bidder 2] consortium is affected only indirectly. moreover, they propose to refute the complaint, because the tender process was open, transparent and unconditional, and the assets were sold to the bidder submitting an offer that leads to the highest proceeds. (141) the insolvency administrators reject that the members of the creditors' committee agreed to the sale to capricorn because the latter company is a german company and it is not a private equity led consortium. (142) according to the insolvency administrators, the bid from capricorn leads to a substantially higher revenue from the sale in comparison to the bid from [bidder 2], and there are no decisive differences in the transaction security of both bids that would justify the award to the substantially lower bid (for both bids the transaction security was satisfactory, but not the highest possible). [bidder 2] was also not ready to provide a bank guarantee for the price amount, or transfer the price amount to an escrow account, required by the process letter of 17 october 2013. in spite of several requests, [ ] ([bidder 2] consortium's member that should have facilitated the provision of external capital) or any other member of [bidder 2] had provided no legally binding declaration by which they would be obliged to provide the necessary funding. in contrast, mr robertino wild, shareholder of capricorn, has provided significant securities, and the capricorn's external financing was demonstrated by a business-usual financing confirmation of deutsche bank. that financial confirmation was verified by the insolvency administrators, and they reported to the creditors' committee about the result of that verification, namely that the financial confirmation contains no unusual disclaimers or conditions. the own financing of eur [14-17] million as well as the external financing of eur [41-49] million are secured by a contractual penalty in the amount of eur [22-27] million, which the buyer must pay, if the sellers withdraw from the contract for outstanding payments. that contractual penalty is also secured. the creditors' committee followed the assessment of the insolvent administrators. (143) as regards the up-front payments, the insolvent administrators state that [bidder 2]'s offer had advantages (by 31 march 2014, payment of eur [30-33] million in case of [bidder 2] against eur [4,6-5,4] million in case of capricorn) and disadvantages: apart from an amount of eur [7,1-7,6] million, the money provided by [bidde 2] would be kept in a blocked account and transferred to the sellers either upon the existence of a non-challengeable commission decision or if the buyer did not withdraw from the contract despite there being no such enforceable commission decision by 31 march 2015 (the possibility to extend the period for the withdrawal right was not excluded). in any case, if a non-challengeable commission decision exists in 2014, the sellers would have access to eur [30-33] million in case of [bidder 2] or eur [58-63] million (plus around eur 6 million of cash flow of nbg) in case of capricorn. (144) a comparison of the offers from capricorn and [bidder 2] shows that the offer from capricorn is the highest nominal purchase price and it leads to the best economic result: table 10 comparison of offers from capricorn and [bidder 2] offer capricorn offer [bidder 2] amounts in million eur 1st sales price instalment 31.3.2014 [4,6-5,1] 1st sales price instalment 31.3.2014 [7,1-7,6] 2nd sales price instalment 31.7.2014 [4,6-5,1] 2nd sales price instalment 31.3.2014 [22-27] 3rd sales price instalment 20.12.2014 [4,6-5,1] 3rd sales price instalment in 2016 [2,3-2,6] cash flow nbg 2014 (133) 6,0 earn-out for 2015 in 2016 (133) [2,3-2,6] 4th sales price instalment at closing [41-49] earn-out for 2016 in 2017 (133) [4,6-5,1] remaining sales price [10,5-11,5] earn-out for 2017 in 2018 (133) [7,1-7,6] total sales price 77,0 [47-52] decrease of personnel/restructuring 2,5 3,0 termination of management contracts lindner 1,0 1,0 neg. cash flow nbg 1st q 2014 1,6 balance payments 1,3 economic result [70-77] [41-45] (145) the good track record of the [bidder 2] members and their larger experience with transactions in the field of mergers and acquisitions could not justify an award to an offer for a substantially lower sales price. the competence of the [bidder 2] members was not disputed by the sellers, but it was not an award criterion. the amount of investments into the n rburgring after the sale was not an award criterion, either. (146) the insolvency administrators claim that they had not discriminated any bidder, and that it is not clear from the complaint which of their actions would lead to a price offer by [bidder 2] lower than the price offer by capricorn. the insolvency administrators refute the complainant 4's arguments about the unavailability of the persons involved and the protraction of the sale process in order to allow capricorn the submission of a bid. [bidder 2] was explicitly informed that further negotiations with other bidders would take place until the meeting of the creditors' committee on 11 march 2014. (147) furthermore, the insolvency administrators point out that their measures or the agreement of the creditors' committee cannot be imputable to the state, and that there is no advantage in the sale process, because it corresponds to the market-based behaviour. (148) as regards complainant 4's allegation that there was never an agreement between [ ] and capricorn for the latter's agreement, the german authorities submitted that [ ] guaranteed its financing after an extensive legal and financial due diligence and never cancelled its financing guarantee. (149) finally, regarding complainant 4's claims on capricorn's alleged failure to pay the second instalment of the purchase price, the german authorities argue the same as presented in paragraph (134) above. 5. assessment of the measures (150) this decision addresses as a preliminary point the issue of whether ng and its subsidiaries msr and cmhn were firms in difficulty in the sense of the community guidelines on state aid for rescuing and restructuring firms in difficulty (134) (r&r guidelines) at the time of granting measures 1 to 19. subsequently, the commission will assess whether the measures under scrutiny constitute state aid to the beneficiaries in the meaning of article 107(1) tfeu and finally whether such aid might be compatible with the tfeu. 5.1. difficulties of ng, msr and cmhn (151) if measures 1 to 19 constitute state aid and if ng, msr and cmhn were firms in difficulty at the time of aid granting, these measures should be assessed with regard to their compatibility under article 107(3)(c) tfeu and in particular under the r&r guidelines. one of the main questions is therefore whether ng, msr and cmhn were firms in difficulty. the commission's conclusion is that they were in economic difficulties at the time of aid granting and so would have not been able to have access to the private credit market. (152) the following assessment is based on points 9-11 of the r&r guidelines. the commission recalls its assessment in recitals 202-206 of the decision of 21 march 2012, where it was not excluded on a preliminary basis that ng could be considered a firm in difficulty within the meaning of the r&r guidelines on 1 july 2008 (see also recitals 46-47 of the decision of 7 august 2012). in addition, in recitals 6-13 of the decision of 7 august 2012, the commission found that ng, msr, and cmhn are undertakings in difficulty. (153) the commission considers that it must assess each company as a whole, without leaving out any part of its business. it is not acceptable that germany eliminates the loss making formula 1 activities or the n rburgring 2009 project from the assessment of financial data. it is also clear that the companies did not have access to external financing. (154) ng's key financial data during the period 2001-2011 were as follows: table 11 ng's key financial data 2001-2011 (eur million) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 turnover 34,3 38,3 34,2 28,7 27,1 27,8 29,9 22,0 33,3 5,1 7,0 ebt (135) 0,6 0,5 0,6 9,9 9,6 40,1 (136) 2,4 0,8 9,9 4,6 16,2 registered capital 5,1 5,1 5,1 10,0 10,0 10,0 13,3 16,7 20,0 20,0 20,0 own equity 15,2 18,6 19,1 37,3 27,6 12,6 10,2 9,9 15,8 10,9 27,4 total debt 45,6 43,4 19,7 19,5 27,8 46,8 99,1 234,2 263,2 290,4 debt/equity (ratio) (%) 250 230 50 70 270 460 1 000 1 480 2 410 1 060 debt/turnover (ratio) (%) 119 127 69 72 100 156 450 703 5 160 4 150 (155) point 10(a) of the r&r guidelines stipulates that a company is in difficulty in the case of a limited liability company when more than half of registered capital has disappeared and more than one quarter of that capital has been lost over the preceding 12 months. this provision reflects the assumption that a company experiencing a massive loss in its registered capital will be unable to stem losses that will almost certainly condemn it to go out of business in the short or medium term (as stipulated in point 9 of the r&r guidelines). (156) the commission also notes that in accordance with point 11 of the r&r guidelines, a firm may be considered to be in difficulty where the usual signs of a firm being in difficulty are present, such as increasing losses, diminishing turnover, growing stock inventories, excess capacity, declining cash flow, mounting debt, rising interest charges and falling or nil net asset value. in this respect, according to the general court, the existence of negative own capital [ ] may be considered to be an important indicator that an undertaking is in a difficult financial situation [ ] (137). (157) according to the financial statements of ng for the years 2001-2011, the registered capital of the company was not lost by more than half. however, in the period 2006-2011 the company's own equity was negative. in previous cases the commission has considered that where a company has negative equity, this implies in fact that the entire registered capital of that company has been lost and there is an a priori assumption that the criteria of point 10(a) of the r&r guidelines are met (138). (158) in the case of ng, the commission considers that the only reason why the registered capital does not appear to have been lost by more than half is that the company did not adopt appropriate measures. such appropriate measures would aim at turning the company's own equity from negative to positive and, at the same time, at increasing it to an adequate level. such appropriate measures could be either the capitalisation of losses or a capital increase or both. (159) in this respect, the commission considers that a capitalisation of losses would have resulted in the loss of the entire registered capital of the company, since the accumulated losses were higher than the registered capital. for this reason the commission considers that the criteria of point 10(a) of the r&r guidelines are met in this case since 2006. (160) in addition, on the basis of point 11 of the r&r guidelines, the commission considers ng to have been in difficulty already since 2002, because: (a) ng's annual turnover decreased by 80 % in that period, at a total amount of eur 89,4 million, and the company had annual losses for most part of the same period; (b) during the whole period ng had excessive debt, which increased from 119 % of turnover in 2002 to 4 150 % of turnover in 2011; (c) even in 2004 and 2005, when the company's debt fell below 100 % of its turnover, that debt remained at significantly high levels of around 70 % of turnover, and also during the same years the company had reduced sales and annual losses; and (d) ng had negative equity for the most part of the same period (2006-2011). (161) msr's key financial data during the period 2007-2011 were as follows: table 12 msr's key financial data 2007-2011 (eur million) 2007 2008 2009 2010 2011 turnover 0,0 4,4 3,4 2,2 0,9 ebt 0,1 0,5 4,0 4,8 8,6 registered capital 0,05 0,05 0,05 0,05 0,05 own equity 0,08 0,6 4,6 3,3 11,9 total debt 2,5 28,3 95,6 96,5 103,8 debt/equity (ratio) (%) 3 130 4 720 2 080 2 920 870 debt/turnover (ratio) (%) 643 2 810 4 380 11 500 (162) cmhn's key financial data during the period 2008-2011 were as follows: table 13 cmhn's key financial data 2008-2011 (eur million) 2008 2009 2010 2011 turnover 0,0 2,6 1,2 0,2 ebt 0,8 2,5 3,6 0,0 registered capital 0,03 0,03 0,03 0,03 own equity 0,8 3,3 6,9 6,9 total debt 6,5 13,3 36,9 35,3 debt/equity (ratio) (%) 810 400 530 510 debt/turnover (ratio) (%) 510 3 070 17 650 (163) the commission notes that it has not received any document of msr or cmhn which would demonstrate their prospects for viability. (164) on the basis of point 11 of the r&r guidelines, the commission considers msr and cmhn to have been in difficulty already since 2007 and 2008, respectively, because they had minimal revenue, significant annual losses and mounting debt, which exceeded significantly their annual turnover. (165) the commission does not agree to the argument of germany that ng, msr and cmhn were not in difficulty, because the construction of infrastructure and the organisation of formula 1 and superbike race events were carried out on behalf of the public sector and they cannot be therefore taken into account for analysis of their financial situation. (166) firstly, the commission finds that the construction of infrastructure for motorsport, leisure activities, accommodation and dining and the organisation of motorsport events are not special effects outside the regular business of ng, msr and cmhn. these were the core activities within the business remit of these companies. even if both their shareholders and business management saw ng, msr and cmhn as vehicles to keep the sport infrastructure in public ownership and to organise non-profitable sport events which would not be offered without the coverage of losses by the public funding, these shareholders and business management should not allow the development of liabilities in the non-efficient and loss-making manner demonstrated by the above financial data of these companies without a sound and realistic business plan. the above activities shall be therefore included in the financial assessment. (167) secondly, the commission considers that the fact that the construction of infrastructure for the said purpose and the organisation of motorsport events may well have contributed to ng, msr and cmhn's difficulties does not in itself mitigate the finding that ng showed the usual signs of a firm being in difficulty already before the n rburgring 2009 project was launched. a healthy firm would need to adapt its costs to such activities in order to survive. in the years 2008 and 2009, ng, msr and cmhn had losses and increasing debt (increase by 537 % between 2002-2011, 4 052 % between 2007-2011 and 443 % between 2008-2011, respectively). although the n rburgring 2009 project was implemented in 2010, the subsequent financial results of ng, msr and cmhn indicate that their difficulties persisted. (168) in light of the above, the commission has reached the conclusion that ng, msr and cmhn were firms in difficulty within the meaning of the r&r guidelines at the time when measures 1 to 19 were provided, and that their difficulty was so severe that they would not find any financing in the market. 5.2. existence of state aid (169) article 107(1) tfeu provides that any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market. (a) state resources and imputability (170) part of measure 1 (increases of own capital) taken by the land and the district of ahrweiler as well as another part of measure 1 (transfers to the capital reserve), measures 3, 9, 16 and 19 taken by the land alone amount manifestly to state resources imputable to the state. (171) for the measures carried out by ng (measures 2, 4, 5, 6, 7, 10, 12, 13, 14, 15 as regards the transfer of shares of msr to ng, 17), germany accepts explicitly that the resources are imputable to the state. it is also noted that ng's supervisory board represented the land and the district of ahrweiler as ng's shareholders. in this context, in the meeting of the supervisory board of 28 august 2005, its vice-president declared that the award of the project to private investors can take place only if the risk for the land is small (139). also, in a workshop of the supervisory board on 20 december 2005, its vice-president stated that a decision about an investment of ng must be taken in the new cabinet after the elections in the parliament of the land (140). moreover, the government of the land informed about the investment erlebnisregion n rburgring in the government declaration of 30 may 2006 and the council of ministers took note on 19 september 2006 of the intention of the supervisory board of ng to implement the project under substantial participation of a private third party (141). in addition, the ministry of economy, transport, agriculture and wine as well as the finance ministry of the land provided on a continuous basis opinions, comments or instructions regarding the n rburgring 2009 project (142), which was presented by the land to the public on 2 december 2009. the commission considers that also the loan granted by ng to msr through png as an intermediary (measure 6) is a measure carried out by ng and thus imputable to the state. (172) as regards the isb loan (measure 8) and the rescheduling of interests (measure 18), germany has acknowledged that the land instructed isb to grant the loan. concerning the loans granted by rim to msr through mediinvest and png as an intermediaries (measure 11) and the transfer of shares of msr to rim (part of measure 15), the commission notes that rim is a public institution with the mission of supporting the land's policy in economic and structural development (143). therefore, for the purpose of the above-mentioned measures, isb and rim constitute instruments of the state in the application of its policy, which demonstrates the imputability of isb and rim's actions to the state insofar as these measures are concerned. resources imputable to the state are therefore involved in all the measures. (b) economic activity (173) by analogy with the leipzig/halle judgment (144), the construction of infrastructure can be considered an economic activity if it is intrinsically linked to a commercial exploitation of the infrastructure, which is the case here. (174) the operation of sport facilities (including race tracks and off-road parks), leisure parks (145), accommodation facilities, restaurants, safety driving centres, driving schools, multifunctional halls, and cash free payment systems, and their lease to professional or non-professional users (146), are an economic activity for both the owner and operator. consequently, the construction or renovation of infrastructure which is indissolubly linked to these activities is also an economic activity. by contrast, non-economic activities include the use of a sport facility at the level of non-professional users (147) and the training of youngsters by professional sport clubs if accounts are separated from the accounts for the economic activities (148). in view of the indissoluble link between the infrastructure and the economic activity for which it is used the construction, upgrade or operation of n rburgring sport and tourism infrastructure are thus economic activities for the investors and operators, even if the revenues from the operation of the infrastructure do not cover the costs of its construction and if more than 90 % of sport activities at n rburgring qualify as amateur sport. the latter fact plays a role only at the level of users: non-professional users are not undertakings. indeed, the n rburgring sport and tourism infrastructure is not general infrastructure, such as a public road which is made available for public use. the financing of the construction of the infrastructure at stake (through the loans from the liquidity pool and shareholders' loans, or later through the isb loan) is thus subject to the state aid rules. (175) the organisation of formula 1 or other motorsport races is a provision of services on the market of professional sport which considerably benefits from broadcasting rights. financing of formula 1 or other motorsport events is not exempt from the remit of state aid law for the mere reason that they are run with a structural deficit or implement the objectives of regional policy. the commission thus considers that formula 1 and other motorsport racing is an economic activity. (176) promotion of tourism, project development, the construction of real property, business management and trade with cars or motor bikes also qualify as economic activities. (c) selectivity (177) the commission considers that the measures have a selective character at the level of the operator (ng for measures 1, 3, 8, 9, 13, 14, 16, 18 and 19; ewn, fsz, man, tti, bwn, bwnb, camp4fun for measure 2; msr for measures 4, 5, 8, 9, 11, 12, 18 and 19; cst for measure 5; mib for measure 7; cmhn for measures 8, 9, 18 and 19; nag for measures 10 and 17; mediinvest, geisler & trimmel and weber for measure 15), as they reserve favourable treatment for that operator. furthermore, the entrustment to construct and operate the infrastructure was not transparent, non-discriminatory and in line with procurement rules. however, the measures are not selective at the level of the user, since transparent and non-discriminatory access for amateur sport clubs and the general public is guaranteed. (d) distortion of competition and effect on trade (178) with regard to measures 1 to 19, there is a distortion of competition in the markets of the operation of race tracks, off-road parks, leisure parks, accommodation facilities, restaurants, safety driving centres, driving schools, multifunctional halls, cash free payment systems, promotion of tourism, project development, the construction of real property, business management and trade with cars or motor bikes, since the aid to the n rburgring infrastructure and the formula 1 activities promotes the use of this infrastructure. the organisation of formula 1 racing and other motorsport events promotes the access of customers to those events. (179) the measures in question enabled ng, msr and cmhn to continue operating so that they did not have to face, as other competitors having financial difficulties, the consequences normally deriving from their difficult financial results. this distorts competition as other companies active in the same markets need to operate without such state support. (180) as regards the effect on trade between member states, n rburgring with its formula 1 and the german touring car championship competes with other race tracks in the union organising top motorsport competitions and it cannot be excluded that the n rburgring leisure park could attract visitors from belgium (its border with germany is around 50 km far from the n rburgring). it has to be recalled that a complaint has been received from the competing leisure park operator eifelpark (cf. recital 2). it can also not be excluded that there is an effect on trade between member states in respect of the operation of off-road parks, accommodation facilities, restaurants, safety driving centres, driving schools, multifunctional halls, cash free payment systems, as well as in respect of promotion of tourism, project development, the construction of real property, business management and trade with cars or motor bikes. (e) advantage (181) according to the settled practice of the commission and as confirmed by the case law, the criterion for assessing whether a transaction between a public body and an undertaking amounts to state aid is the market economy investor principle (149). it follows from this principle that, when the state acts in a market as a commercial operator, it must do so in a way comparable to a private operator. if the state does not do so, state aid could be involved. in other words, when the market economy investor principle is applicable, the benchmark for appreciating whether a transaction involves state aid is whether a private operator placed in a similar situation would have behaved in the same way. in applying this principle, non-economic considerations cannot be taken into account as reasons for granting support measures. as established by relevant jurisprudence, the provision of the measures by the state cannot be seen in isolation, but will have to be considered in the context of other aid measures (150) (182) in order to assess whether an advantage was conferred to the owners or the operators (ng, msr and cmhn until 30 april 2010, and also nag from 1 may 2010 to 31 october 2012), the market economy investor principle shall therefore be applied. first of all, measures 1 to 19 are not pari passu transactions (151) because germany had not found a private investor who would invest under comparable conditions (for instance, in part i of the n rburgring 2009 project). there were two loans provided by private operators, but their amounts were small taking account of the amounts of public investment, these loans related only to part ii of the n rburgring 2009 project (i.e. mainly to hotels) (152), and they were granted only to cmhn or msr, but not to ng or another aid beneficiary: table 14 loans granted by private financial institutions to cmhn/msr financial institution year beneficiary amount (eur million) interest rate collaterals (eur million) bank for tirol and vorarlberg 2008 cmhn [ ] [ ] % + [ ] % fee [ ] (mortgage) pledging shares of msr kreissparkasse ahrweiler 2010 msr [ ] [ ] (183) in any case, germany acknowledges that also for part ii no long-term private investor was found. (184) furthermore, for the period from 2006 to 2010, the commission received business plans for the n rburgring 2009 project and for ng as such: table 15 business plans for the n rburgring 2009 project (eur million) relevant entity/activity date costs turnover (2009-2020) result ebt (2009-2020) n rburgring 2009 project 12/2005 113 (153) 281 22 n rburgring 2009 project 3/2006 113 (153) 181 59 n rburgring 2009 project 3/2006 113 (153) 281 22 n rburgring 2009 project 8/2006 113 (153) 281 22 n rburgring 2009 project 11/2007 135 279 45 n rburgring 2009 project 12/2008 140 283 40 n rburgring 2009 project 3/2009 159 287 28 n rburgring 2009 project 8/2009 195 331 (154) 67 (154) n rburgring 2009 project 10/2009 200 260 (154) 17 (154) n rburgring 2009 project 12/2009 200 254 (154) 35 (154) ng, msr, chmn consolidated (155) 7/2010 283 769 (156) ng, msr, chmn consolidated (155) 9/2010 283 269 (156) ng, msr, chmn consolidated (155) 9/2010 59 (156) (185) from table 15, it is obvious that the estimated costs were increasing constantly during the preparation of the n rburgring 2009 project while the latter's profits (ebt) were decreasing significantly, from profits of eur 22 million in december 2005 to losses of eur 35 million in december 2009. a private investor would not accept such a sharp increase of the costs and a significant decrease of profits during the preparation of the project between december 2005 and december 2009 (based on available information, the main financing of the construction had been granted from may 2008 to june 2010). (186) in any case, when considering the business plans in question, which the commission has taken into account while carrying out the market economy investor test, the commission notes the following: (a) part of measures 1, 2 and 3 were applied before the first plan of december 2005. therefore those measures cannot be considered as having been decided on the basis of the business plans in question. (b) also as regards the first business plan (december 2005), part of measures 2 and 3 were granted at the same time with it. in this regard, the commission notes that those measures were granted in a context of continuous public support, which had started already earlier (in 2002 or earlier), without any private support and in favour of a firm in a worsening financial situation. thus, the part of measures 2 and 3 in question cannot be taken in isolation from the ones granted prior to them (part of measures 1, 2 and 3), but they form a continuity of the latter and therefore the part of measures 2 and 3 at hand has to be considered as granting a further advantage. (c) part of measures 2 and 3 was applied at a time when already the first three business plans, of december 2005, march 2006 and august 2006, had been issued. however, the commission notes that those plans' forecasts for ng's future sales and profits remained identical, despite the significant worsening of ng's actual results in the same period (negative equity, significant increase of debt, reduction of sales, annual losses). on this basis, the business plans in question cannot be considered as realistic and acceptable, since they disregarded the company's bad recent historic data and kept the same forecasts as before. (d) the first six business plans (december 2005, march 2006, august 2006, november 2007 and december 2008) did not concern the future operations of ng as a whole but only partially, because they did not take into account the formula 1 activity. on this basis, the business plans in question cannot be considered as a reliable basis for deciding financial support to ng. (e) the business plans of march 2009-december 2009 included forecasts also for the formula 1 activity. however, for the whole period 2009-2020, the formula 1 activity was forecasted to bring losses, with sales which were forecasted to remain stable and at the same level as before 2009, therefore it appears that the formula 1 activity was not foreseen to be restructured. in the same vein, the commission notes that those plans forecasted earnings which were significantly lower than the ones foreseen by the previous business plans (eur 7-9 million, by contrast to eur 22-40 million). the above facts would reduce the validity of the business model presented in the plans of the period march 2009-december 2009. (f) two business plans from july 2010 and september 2010 foresaw losses until 2030, under the worst case scenario, therefore, the activity was not foreseen to be viable. (g) finally, one plan of september 2010 foresaw earnings between 2016 and 2030, however, that plan did not include sensitivity analysis (i.e. worst case scenario results). in any case, that plan's forecasts ignored the significant worsening of ng's actual results in the same period (negative equity, significant increase of debt, reduction of sales, annual losses). on this basis, the business plan in question cannot be considered as realistic and acceptable, since it disregarded the company's bad recent historic data. (187) on the basis of the above, the commission cannot consider that any public support to ng as a firm in difficulty (see section 5.1 above), which aimed at financing its operations at the time (operation of race ring) or in the future (operation of race ring together with new hotels), would be deemed as market conform on the basis of the business plans in question. (188) as for the market economy investor principle, the following can be stated for the individual measures: measures covered by the decision of 21 march 2012 (189) for measure 1 (provision of capital by the land and the district of ahrweiler to ng in the form of payments in capital reserve and capital increases), the commission notes that the analysis presented above for the submitted business plans is relevant. no private investor would have provided capital to ng in 2004 and in the following years. therefore, the capital provided by the land to ng on 1 may 2002 (amounting to eur 2 179 000) and on 21 december 2004 (amounting to eur 22 839 241), as well as the capital provided by the land and the district of ahrweiler on 31 august 2004 (amounting to eur 4 887 000) and 4 september 2007 (amounting to eur 10 000 000) involve aid which is equal to the full amount of capital provided. (190) as regards measure 2 (shareholder loans by ng before the n rburgring 2009 project), on the basis of the financial data submitted by the german authorities, the commission notes that ewn, camp 4 fun and tti had annual losses and negative equity when each of them received its part of measure 2 (see tables 1-4 above). at the same time bwn1, bwnb and bwn2, which received loans in the period 2004-2007, had annual losses during that whole period and also negative equity in 2005, 2006 and 2007. finally, man had both accumulated and annual losses when it received its part of measure 2. therefore, on the basis of point 11 of the r&r guidelines, the commission considers that those companies were in difficulty at the time of measure 2. on the other hand, on the basis of the financial data submitted by the german authorities, the commission notes that fsz was not in difficulty when it received its part of measure 2, because its financial data did not demonstrate any of the signs of point 11 of the r&r guidelines. the provision of loans to companies in such difficulties that no private investor would have financed at any rate, especially since those companies belonged to a company which itself was in severe financial difficulty (ng), involves an advantage to these companies, which is equal to the amount of the loans. therefore, the loans granted by ng to its subsidiaries, namely ewn (eur 6 195 170,02), bwn/bwnb (eur 3 760 000), camp4fun (eur 450 000), man (eur 100 000) and tti (eur 25 000) are not compliant with the market economy investor principle. in this context, it is noted that the loans granted to man and tti are below the de minimis threshold, but germany has neither argued not provided that all the conditions of the commission regulation (ec) no 1998/2006 (157) were fulfilled; that regulation could be applied in the recovery phase if germany demonstrates that all the conditions of the regulation are met. furthermore, the commission notes that the loans granted to fsz (eur 646 738,12) did not confer an advantage to the latter, since they were granted at the interest rate of 6 % which is at market level because it corresponds to the sum of germany's base rate at the time of the granting of the loans (5,06 % in april 2002, 4,8 % in march 2003 and 5,19 % in march 2008) (158) and the basis points to be added for fsz's financial condition (100 basis points) taking into account that it did not present any of the signs of point 11 of the r&r guidelines when it received those loans (159). on this basis, the above loans granted to fsz do not constitute state aid. (191) regarding measure 3 (loans grated to ng from the liquidity pool of the land), germany does not put forward any evidence to demonstrate that ng did not benefit from interest rates that were more advantageous compared with the conditions of its competitors. in addition, it is difficult to accept that there would be any financing available in the market for a company in ng's financial difficulties, at any interest rate. finally, the eventual repayment of the funds and the corresponding interest is an ex post event, unknown at the time of the granting of the measures; therefore it cannot be taken into account for the market economy investor test. therefore, the measures financed by the liquidity pool were not performed on market terms. the provision of loans to a company in such difficulties that no private investor would have financed it at any rate involves an advantage to the company which is equal to the amount of the loans. in sum, the granting of loans by the land to ng between 30 june 2003 and 11 may 2010 (see the list of loans in table 5) involves aid of eur 399 805 370. (192) under the same test as above, the commission concludes the same for measure 4 (loan granted by ng to msr). indeed, it cannot be accepted that at the time of the measure (december 2007), there would be any financing available in the market for a company in msr's financial difficulties (see table 12 and recital 155), at any interest rate. the provision of a loan to a company in such difficulties that no private investor would have financed it at any rate involves an advantage to the company, which is equal to the amount of the loan. therefore, the advantage granted by ng to msr through the loan of eur 300 000 on 27 december 2007 is equal to eur 300 000. (193) the support provided by ng to cst (measure 5) does not comply with the market economy investor principle. indeed, on the basis of the financial data submitted by the german authorities, the commission notes that cst had annual losses and negative equity in the period 2008-2011, and also entered into liquidation in 2009. therefore, on the basis of point 11 of the r&r guidelines, the commission considers that cst was in difficulty when it received each loan of measure 5 (in years 2008-2011, see table 6 above). the provision of loans to a company in such difficulties that no private investor would have financed at any rate, especially since cst belonged to a company which itself was in severe financial difficulty (ng), involves an advantage to the company, which is equal to the amount of the loan. therefore the advantage granted by ng to cst through the loans of a total amount of eur 11 032 060 provided to it between the 27 august 2008 and the 18 april 2011 is equal to the amount of the loans. (194) as regards the letter of comfort, the commission notes that it was granted by ng to cst on 23 december 2009 and constituted a commitment of ng, by which it would fund the repayment of financial obligations of cst, which cst itself was unable to repay. the funding of such financial obligations would take place through loans by ng to cst, with an interest rate of 6 %. the commitment also included a subordination of the claims of ng stemming from those loans, funded by ng on the basis of the comfort letter of 23 december 2009, which foresaw that ng's relevant claims against cst would rank in the last position of all creditors' claims against cst. in this context, the commission considers that a market economy creditor would not commit to fund unpaid loans of a firm in severe difficulty or to subordinate materialised claims against a firm in severe difficulty, since such measure would amount to the actual loss of the claims. on this basis, the commission finds that the letter of comfort, which included the above commitment for the funding of unpaid loans and subordination of subsequent claims, constitutes an advantage. the commission also considers that the letter of comfort constitutes a measure additional to the loans of 2008-2011 (see recital 182 above), since: (a) it was not granted at the same moment with those loans; (b) it was not foreseen or imposed by the underlying loans' contracts; and (c) it was discretionally decided by ng in order to avoid the insolvency of cst. as regards the amount of the measure, it is equal to the total amount of loans funded by ng on the basis of the comfort letter of 23 december 2009, however the commission is not in possession of the relevant amount. (195) finally, as regards the subordination of claims, the commission notes that it was agreed between ng and cst on 13 december 2010 and contractually referred to the loans granted until 30 november 2010 totalling eur 10,4 million (i.e. the 13 first loans of table 6 above, out of the total 15). the commission further notes that the subordination in question resulted in the ranking of ng's claims against cst in the last position of all creditors' claims against cst. in this context, the commission considers that a market economy creditor would not accept such a subordination of materialised claims against a firm in severe difficulty, since such measure would amount to the actual loss of the claims. on this basis, the commission finds that the subordination constitutes an advantage. the commission also considers that the subordination of 2010 constitutes a measure additional to the underlying loans, since: (a) it was not decided at the same moment with those loans; (b) it was not foreseen or imposed by the underlying loans' contracts; and (c) it was discretionally decided by ng in order to avoid the insolvency of cst. as regards the amount of the measure, it is equal to the total amount of the subordinated loans, i.e. eur 10,4 million. (196) concerning the consideration paid by ng to ipc (measure 6), the commission notes that the land's court of auditors found that a prudent entrepreneur would not choose those particular companies for the provision of services, and that ng did not check with the necessary prudence the previous work of those companies, in order to assess their appropriateness and to examine whether the conditions for the financing of the n rburgring 2009 project offered by them were realistic (160). in this context, the commission considers that the choice of ipc for the provision of those particular services conferred an advantage to those companies. thus, the measure constitutes state aid to ipc, in the amount of the total payment to those companies, i.e. eur 640 000. (197) in addition, as regards the eur 3 million loan granted by ng to png and the eur 2 941 000 loan granted by png to msr, the commission considers that the two loans constitute one measure, where png was only an intermediary, who received a fee of eur [ ]. the beneficiary of the measure was msr, who ultimately received the loan, at the time when it was in such a financial difficulty that it would not be able to find any financing in the market. the provision of a loan to a company in such difficulties that no private investor would have financed it at any rate involves an advantage to the company, which is equal to the amount of the loan. therefore, the advantage granted by ng to msr through the loan of 15 october 2008 is equal to eur 2 941 000. (198) under measure 7, mib ceded to ng its claims against cst, who was the borrower of the loans concerned, and ng paid a nominal price plus interest to mib. as cst was in difficulty (see recital 184), the commission notes that it is not probable that mib would receive its claims against cst. on this basis, this measure benefitted mib who received its claims and was replaced by ng who became the creditor of a firm in difficulty. in the absence of a viability plan of cst, which would demonstrate its return to viability and therefore its prospects for repaying its debts, this measure does not comply with the market economy investor principle. therefore, the cession by mib to ng of claims amounting to eur 1 476 830,88 involves aid equal to the amount of the sales price eur 1 476 830,88. (199) as regards measure 8 (loan of eur 325 265 000 granted by isb to ng, msr and cmhn), without a related guarantee (measure 9), the provision of a loan to companies in such difficulties that no private investor would have financed them at any rate could involve an advantage to the companies, which would be equal to the amount of the loans. in this particular case, however, the aid consists only in the guarantee (measure 9) and not in the loan (measure 8), as the commission cannot exclude that a private creditor could grant to ng, msr and cmhn loans under comparable terms because of the guarantee provided by the land (measure 9). (200) regarding measure 9, i.e. the guarantee for the isb loan of eur 325 265 000 (measure 8), the measure in question was not conform with the market economy investor principle. indeed, policy of regional development is pursued by public authorities, whereas market economy investors would not undertake relevant measures in favour of firms in difficulty, to the substantial detriment of their own financial interests. in addition, the commission notes that policy of regional development does not aim at bringing firms in difficulty back to viability. moreover, the commission considers that the conditions that would rule out the existence of state aid, as described in the commission notice on the application of articles 87 and 88 of the ec treaty to state aid in the form of guarantees (161) (guarantee notice), are not fulfilled. indeed, the beneficiaries were firms in difficulty, the guarantee covered 100 % of the loan and there was no guarantee premium for the state reflecting the risk of default for the guaranteed loan. given the severe financial difficulties of the beneficiaries (ng, msr and cmhn) at the time of the granting of the guarantee in question (see tables 11-13), the commission considers that no market creditor would have provided the beneficiaries with a guarantee under those conditions. the commission does not have any information indicating that the guarantee has been triggered. on this basis, the commission considers that measure 9 qualifies as state aid. the aid amounts granted by the guarantee to ng, msr and cmhn by the land are equal to the amounts of the respective loans (measure 8), i.e. eur 96 574 200 and eur 113 590 800 to ng, eur 92 000 000 to msr and of eur 23 100 000 to cmhn. (201) as regards measure 10 (the business lease of the n rburgring complex to nag), the commission notes that a tender procedure can in general rule out an advantage granted to a lessee. however, in the present case, no tender procedure was organised for the selection of the operator of the upgraded complex. nevertheless, apart from the first three years of the lease (i.e. from 1 may 2010 to 30 april 2013), the minimum rent under the lease contract is within the range of minimum and maximum market-conform annual rents identified in the expert opinion of 29 september 2011. the ebitda rent is even higher than the maximum annual market-conform rent identified in that expert opinion, apart from the second year of the lease. the commission therefore notes that the expert opinion of 29 september 2011 demonstrates that the minimum rent of eur 15 million as from 1 may 2013 could have been market-conform, since it was within the range representing market-level rents, and therefore would have not involve a selective advantage to ng. nonetheless, the actual duration of the lease was only between 1 may 2010 and 31 october 2012. the minimum rent set by the expert opinion and by the lease contract for the first three years of the lease is included in table 16: table 16 minimum rent for the lease of the n rburgring 1.5.2010-30.4.2011 1.5.2011-30.4.2012 1.5.2012-30.4.2013 expert opinion eur 1,6 million eur 12 million eur 12,3 million lease contract eur 0 eur 5 million eur 11,5 million in view of the above, the commission considers that the annual rent applied in the period from 1 may 2010 to 31 october 2012 involved a selective advantage to nag, equal to the difference between: (a) the rent which should have been charged, in view of the expert opinion; and (b) the rent which was set in the lease contract. the commission concludes that there is aid of an amount of eur 9 million, i.e. the difference between points (a) and (b) above (for the third year only half of that difference is calculated, as the lease terminated on 31 october 2012, i.e. in the middle of the third year) (162). (202) as regards measure 11 (loans granted by rim to msr through mediinvest and in case of one loan also through png as intermediaries), by which part ii of the n rburgring 2009 project was financed, germany itself states that it was not possible to find private investors financing for part ii of the project. in addition, the opinion of the land's court of auditors implied that the potential investors did not see the project as viable under market terms. indeed, several private operators of leisure parks rejected their engagement in the project. without a related guarantee (measure 12), the provision of a loan to companies in such difficulties that no private investor would have financed them at any rate could involve an advantage to the companies, which would be equal to the amount of the loans. in this particular case, however, the aid consists only in the guarantee (measure 12) and not in the loans (measure 11), as the commission cannot exclude that a private creditor could grant to msr loans under comparable terms because of the guarantee provided by the land (measure 12). the commission notes that mediinvest and png were not the actual receivers of the aid but only provided their services as intermediaries, in order for the loans of rim to reach msr. also, for the provision of the above service, only mediinvest realised a profit, corresponding at most to an interest rate difference of 4,3 % (between the loans that it received from rim and the loans that it granted to msr), whereas png did not profit from any difference of interest rates (png had the same interest rate in the loan that it received from mediinvest and the loan that it granted to msr). in addition, the commission cannot conclude in view of the data included in recitals 32-34 and table 14 above that mediinvest and png charged market non-conform interest rates for their services, or that the difference of interest rates that they received (at most 4,3 % for mediinvest, 0 % for png) went beyond market levels. on the basis of the above, the commission considers that mediinvest and png were not beneficiaries of measure 11. (203) concerning measure 12, i.e. the guarantee by the land to isb for the silent participations of rim in mediinvest (measure 11), the commission considers that the set-up aimed at allowing msr getting the loans described as measure 11. moreover, at the time of the loans, msr was in a very bad financial situation. no private investor would have provided a guarantee to a company in such a bad financial situation. the commission does not have any information indicating that the guarantee has been triggered. on this basis, the commission considers that measure 12 qualifies as state aid. the aid amount granted by the guarantee to msr by the land is equal to the amount of the loans concerned (measure 11), i.e. eur 85 484 000. (204) as regards measure 13 (grants from gaming tax for tourism promotion granted by the land to ng), the commission considers that tourism policy is an objective pursued by public authorities, whereas market economy investors would not undertake relevant measures in favour of firms in difficulty, to the substantial detriment of their own financial interests. in addition, the commission notes that tourism policy does not aim at bringing firms in difficulty back to viability. thus, taking into account ng's bad financial situation, the commission considers the whole amount of the measures at hand to constitute an advantage to ng. in sum, the tax proceeds amounting to eur 1,6 million in 2009 and eur 3,2 million per year in 2010 and 2011 transferred from the land to ng constitute aid in favour of ng. (205) as regards measure 14 (loans by the land to ng and debt subordination), the explanations given for measure 13 regarding tourism policy also apply. in addition, the provision of a loan to companies in such difficulties that no private investor would have financed them at any rate involves an advantage to the companies, which is equal to the amount of the loan. therefore, the loans of eur 20 million on 21 august 2007, eur 10 million on 22 december 2009, eur 4,65 million on 28 december 2010 and eur 3,2 million on 26 april 2011 and a further loan of eur 4,95 million on 9 december 2011 granted to ng by the land involve aid, which is equal to the amount of the loans. (206) concerning the debt subordination, the land declared it in relation to the afore-mentioned loan of eur 20 million on 29 august 2007 in order to avoid insolvency of ng, ranking its claims against ng in the last position of all creditors' claims against ng. on this basis, the commission finds that the subordination (part of measure 14) constitutes a separate advantage to the loan of eur 20 million of measure 14, since it significantly reduced the possibility of collection of its claims against ng. as regards the amount of the measure, it is equal to the amount of the subordinated loan, since it allowed ng to avoid repaying the amount of the subordinated loan, i.e. eur 20 million. (207) as regards measure 15 (takeover of msr shares by ng and rim), msr was in difficulty at the time of the measure, which means that it had loss making operations. in turn, this means that the amount resulting from its operations and put at the disposal of its shareholders was negative. in this sense, the value reflected by msr's operations in each of its shares was negative. in other words, a potential investor in msr would actually require to be paid an amount corresponding to msr's losses, stemming from its operations and reflected in each of its shares. by buying msr, ng and rim clearly intended to support it. however, the change of owner, as such, does not involve aid to msr. it is the measures that might follow the change of ownership (e.g. loans from ng to msr) which would involve aid to msr. the legal form of the company msr is such that the shareholders are not liable for the company's liabilities, and the sale of msr by its previous owners to ng and rim, as such, only involves a symbolic price paid to the sellers equal to the amount of the sales price, i.e. eur 3. on this basis, the commission considers that the price of eur 1 per share does not constitute an economic advantage to the sellers of msr's shares, i.e. mediinvest, geisler & trimmel and weber. (208) measure 16 involves a shareholder loan and a subsidy by the land to ng for formula 1 races. through the liquidity pool, the land provided to ng eur 24 978 808 between 2003 and 2007 and eur 15 426 562 in 2009 (measure 3). to refinance these amounts, the land granted an interest-free loan of eur 40 405 000 to ng in 2011. ng also received a subsidy from the budget of the land in the amount of eur 13,5 million in july 2011. as far as these public subsidies are concerned, the advantage in favour of ng is obvious, as ng is relieved from a burden which it should normally bear. for the loan, the market economy investor test is not met. the provision of a loan to a company in such difficulties that no private investor would have financed it at any rate involves an advantage to the company, which is equal to the amount of the loan. therefore, the advantage granted by the land to ng through the loan of eur 40 405 000 on 11 january 2011 is equal to eur 40 405 000. the advantage granted by the land to ng through the subsidy of eur 13,5 million in july 2011 is equal to eur 13,5 million. (209) for the formula 1 concession contract (measure 17), germany has claimed that the organisation of formula 1 racing constitutes an aid measure that is compatible under the sgei rules. however, germany does not claim that the measure was aid-free compensation as meeting all requirements set out in the altmark jurisprudence. finally, germany has not provided evidence demonstrating that the concession fee was set at market level on the basis of any expert opinion or market report, or that it tendered out the concession. therefore, in the absence of the elements that would demonstrate that the measure is market-conform, the commission considers that the concession contract grants an advantage to nag. for this measure, the aid amount would in principle equal to the difference between the concession fee and the market value of the concession. however, the commission notes that, since no payments were made under the contract, as stated by germany, the state aid involved was not materialised, therefore no aid amount can be established. measures covered by the decision of 7 august 2012 (210) in contrast to the opinion of germany, the commission considers that the rescheduling of interest payments (measure 18) is not conform with the market economy investor principle and therefore constitutes an economic advantage, particularly in view of ng's, msr's and cmhn's financial situation. indeed, ng, msr and cmhn were in a very bad financial position at the moment of the measure, as outlined above. the rescheduling of interest payments relating to a loan to a company in such difficulties, that no private investor would have granted at any rate, involves an advantage to the company, which is equal to the amount of the outstanding amount of the rescheduled loan. therefore, the rescheduling agreed by isb on 15 may 2012, amounting to eur 1,473 million for ng, eur 1,205 million for msr and eur 303 000 for cmhn, involves aid to these companies which is equal to the amount of the rescheduled outstanding loans. (211) as regards the state guarantee and the debt subordination (measure 19): (a) for the state guarantee of 2012 covering claims of up to eur 254 million (for a loan of eur 325 265 000), the commission notes that it was granted, by declaration of the land, in order to avoid insolvency of ng, msr and cmhn, while the latter were in severe difficulty. on this basis, the commission considers that the measure did not fulfil the conditions of the guarantee notice, therefore provided an advantage to the beneficiaries, and thus constituted state aid; (b) the 2012 subordination of the land's claims, stemming from the above guarantee, resulted in the ranking of the land's claims in the last position of all creditors' claims against ng, msr and cmhn. in this context, the commission notes that a market economy creditor would not accept such a subordination of materialised claims against firms in severe difficulty, since such measure would amount to the actual loss of the claims. on this basis, the commission finds that the subordination constitutes an advantage. the commission also considers that the guarantee and subordination of 2012 constitute a measure additional to the guarantee of 2010. indeed, the adoption of the 2012 guarantee and subordination was not foreseen or imposed by the 2010 guarantee, but discretionally decided by the authorities, in order to avoid the insolvency of ng, msr and cmhn in 2012. as regards the amount of the measure, it is equal to the amount of the debt linked to it, i.e. eur 254 million which was covered by the 2012 guarantee and subordination. (212) the commission considers that the above measures relate to the operation of a complex which does not classify as general infrastructure, and that the measures were not triggered by expectations that the state contribution would yield a market-conform return. the commission thus considers that there is state aid for the construction and operation of the above facilities, which benefits their operator, i.e. ng in particular. (213) the commission also considers that the state aid element is the difference between the appropriate market price of the loan or guarantee and the actual price paid for that measure, whereas the aid beneficiaries were in so severe difficulties that they would not find any financing in the market and hence the advantage from the aid is equal to the full amount of the measures in question. (f) conclusion on existence of state aid (214) in light of the above, the commission considers that part of measure 2 (loans granted by ng to fsz), as well as measures 8, 11 and 15 do not constitute state aid, whereas measure 1, part of measure 2 (loans granted by ng to ewn, man, tti, camp4fun, bwn1, bwnb and bwn2), as well as measures 3 to 7, 9 to 10, 12 to 14, and 16 to 19 constitute state aid within the meaning of article 107(1) tfeu. 5.3. unlawful aid (215) measure 1, part of measure 2 (loans granted by ng to ewn, man, tti, camp4fun, bwn1, bwnb and bwn2), as well as measures 3 to 7, 9 to 10, 12 to 14, and 16 to 19 constituting aid have been granted in breach of the notification and stand-still obligations established in article 108(3) tfeu. thus, the commission considers that these measures qualify as unlawful state aid. 5.4. compatibility of the aid (216) inasmuch as certain measures constitute state aid within the meaning of article 107(1) tfeu, their compatibility must be assessed in light of the exceptions laid down in paragraphs 2 and 3 of that article. (217) according to the case-law of the court of justice, it is up to the member state to invoke possible grounds of compatibility and to demonstrate that the conditions for such compatibility are met (163). (218) given that the measures constitute state aid, and since ng, msr and cmhn have been firms in difficulty since 2002, 2007 and 2008, respectively, the commission observes that the measures in question should be assessed with regards to their compatibility only under article 107(3)(c) tfeu and in particular under the r&r guidelines. indeed, according to point 20 of the r&r guidelines, a firm in difficulty cannot be considered an appropriate vehicle for promoting other public policy objectives until such time as its viability is assured. consequently, the commission considers that aid to firms in difficulty may contribute to the development of economic activities without adversely affecting trade to an extent contrary to the community interest only if the conditions set out in these guidelines are met. contrary to what germany claims, the exception laid down in article 106(2) tfeu is not applicable in the case at hand, because the supported operations cannot be considered as services of general economic interest, since they manifestly constitute operations of commercial nature offered in sectors which are subject to competition. the exception laid down in article 107(3)(b) tfeu is not applicable either, since the project and the companies supported through the measures under scrutiny cannot be considered as an important project of common european interest, and germany was not facing a serious disturbance in its economy. finally, the exception laid down in article 107(3)(d) tfeu is not applicable either, because the aided activities are obviously not related to culture or heritage conservation (219) in the case at hand, the relevant conditions of the r&r guidelines (sections 3.1 and 3.2) for rescue and/or restructuring aid are not fulfilled. indeed, the measures were not terminated after 6 months and germany did not notify a restructuring plan within the meaning of the r&r guidelines. finally, there is no evidence that the aid was limited to the minimum necessary, notably through a significant own contribution of the aid beneficiary. the authorities did not provide a liquidation plan either. (220) the commission has not identified any other possible compatibility grounds for the measures (164). indeed, in the case at hand, the beneficiaries were in difficulty at the time of the granting of the measures, and therefore they are excluded from the application of any compatibility basis other than the r&r guidelines. (221) in light of the above, the commission considers measure 1, part of measure 2 (loans granted by ng to ewn, man, tti, camp4fun, bwn1, bwnb and bwn2), as well as measures 3 to 7, 9 to 10, 12 to 14, and 16 to 19 as incompatible with the tfeu. 5.5. recovery (222) according to the tfeu and the court's established case-law, the commission is competent to decide that the member state concerned must abolish or alter aid when it has found that it is incompatible with the internal market (165). the court has also consistently held that the obligation on a member state to abolish aid regarded by the commission as being incompatible with the internal market is designed to re-establish the previously existing situation (166). in this context, the court has established that this objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation prior to the payment of the aid is restored (167). (223) in line with the case-law, article 14(1) of council regulation (ec) no 659/1999 (168) laid down that 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 [ ]. (224) thus, given that the measures at hand were not notified to the commission in violation of article 108 tfeu and are, therefore, to be considered as unlawful and incompatible aids, they must be recovered in order to re-establish the situation that existed on the market prior to their granting. recovery should cover the time from when the advantage accrued to the beneficiary, that is to say when the aids were put at the disposal of the beneficiary, until effective recovery, and the sums to be recovered should bear interest until effective recovery. (225) the commission notes that certain aid beneficiaries (ng, msr, cmhn, cst (169), ipc) are in insolvency proceedings (170). in line with a well-established case-law, the fact that a beneficiary is insolvent or subject to bankruptcy proceedings has no effect on its obligation to repay unlawful and incompatible aid (171). at the same time, in the majority of cases involving an insolvent aid beneficiary, it is not possible to recover the full amount of unlawful and incompatible aid (including interests), as the beneficiary's assets are insufficient to satisfy all creditors' claims. consequently, it is often not possible to fully re-establish the ex ante situation in the traditional manner. since the ultimate objective of recovery is to end the distortion of competition, the european court of justice has stated that the liquidation of the beneficiary can be regarded as an acceptable option to recovery in such cases (172). the commission is therefore of the view that a decision ordering the member state to recover unlawful and incompatible aid from an insolvent beneficiary may be considered to be properly executed either when full recovery is completed or, in case of partial recovery, when there is an appropriate registration of the liability relating to the payment of the aid in the schedule of liabilities and the company is liquidated and its assets are sold under market conditions, which implies a definitive cessation of its activities. more in general it should be ensured that no operator will benefit from the illegal and incompatible aid after the disappearance of the beneficiary. (226) recovery shall also concern beneficiaries not in the insolvency procedure (nag, and bikeworld gmbh for bwn1, bwnb and bwn2, since bwn1 merged with bwnb, subsequently the name of the acquiring company bwnb was changed into bwn2, and the latter company was subsequently renamed to bikeworld gmbh. (227) the commission notes that certain aid beneficiaries no longer exist at the moment of this decision (ewn, man, tti, camp4fun, mib). (228) ewn, man, and camp4fun were dissolved on 6 september 2011, 29 august 2013 on 1 march 2010, respectively. there was no formal liquidation. for those three aid beneficiaries, there is economic continuity, between them as aid beneficiaries and their remaining shareholder, i.e. ng. indeed, since ng is the remaining shareholder of these aid beneficiaries, it is responsible for their debts, including the debts resulting from state aid. since ng is in liquidation, then it should be ensured that there is an appropriate registration of the liability relating to the payment of the aid in the schedule of ng's liabilities, and that there is a definitive cessation of ng's activities. it should also be ensured that no operator will benefit from the incompatible aid after the disappearance of ng. thus, the commission concludes that ng as the economic successor of the beneficiaries has to be subject to the recovery of the state aid granted to them. since ng is the aid grantor as well as the economic successor of the aid beneficiaries, recovery must be implemented in such circumstances by the state. (229) mib was not liquidated, but merged with nag on 6 september 2013, and therefore also no longer exists as a legal entity. in consequence, nag is the economic successor of mib, on the basis of 2 paragraph 1 of the german transformation act (umwandlungsgesetz), as indicated in the german trade register. therefore, nag as the economic successor of mib must pay back the aid. (230) tti was liquidated under german limited liability companies act on 4 december 2007. tti was a limited liability company (gesellschaft mit beschr nkter haftung). by a resolution of the shareholders about liquidation, the company was dissolved. the only remaining purpose of tti was the implementation of liquidation. pursuant to 70 of the limited liability companies act, the liquidator had to quit the current business, to fulfil liabilities of the dissolved company, to collect the claims of the same company and to convert the company's assets in money . the remaining cash assets were then distributed to the shareholders. at that moment in time, the company was dissolved. pursuant to germany, there was no legal succession in the sense of economic continuity, because at most, cash went to the shareholders, there was no economic activity anymore, and a transfer of the business or a take-over of liability by the shareholders was not carried out. germany also indicated that the assets of tti were not sold in a tender process, since on 12 march 2004 as the date of the opening of the liquidation of tti, these assets were only the account balance of eur 19 777,39, tax refund claims of eur 1 222,01 and interests from a bank account of eur 30,69. as tti was liquidated as mentioned above, it had no economic successor, especially since there was no economic activity run by anybody after liquidation, and the shareholders did not receive assets or any operational elements of tti but only a very limited amount of cash. in this context, since there was no transfer of the business of tti to anybody, the commission considers that the state aid stemming from the measure at hand was not passed to anybody else. in such case, the company has already been fully liquidated, and recovery becomes without object because the aid beneficiary no longer exists and has no economic successor. 6. assessment of economic continuity between the insolvent companies and the buyer of the assets 6.1. existence of state aid benefiting the buyer of the assets (231) in the event of a negative commission decision regarding the recovery of incompatible aid to an undertaking in the context of articles 107 and 108 tfeu, the member state in question is required to recover the incompatible aid. the recovery obligation may be extended to a new company, to which the company in question has transferred or sold part of its assets, where that transfer or sale structure will trigger the conclusion that there is economic continuity between the two companies. state aid for the buyer could also result from the sale of the assets under their market value (even in the absence of economic continuity). (232) in order to decide on whether there is state aid benefiting the buyer(s) of the assets, the commission needs to confirm: (a) that the sale of any assets takes place at their market price; and (b) other criteria addressed below. (233) according to the court decision on italy and sim 2 v commission (173), on which the commission founded its decisions on olympic airlines, alitalia and sernam (174), the assessment of economic continuity between the old entity and the new structures is established based on a set of indicators. the following factors may be taken into consideration: the scope of the sold assets (assets and liabilities, maintenance of workforce, bundle of assets), the sale price, the identity of the buyer(s), the moment of the sale (after the initiation of preliminary assessment, the formal investigation procedure or the final decision) and the economic logic of the operation. this set of indicators was confirmed by the court in its decision of 28 march 2012ryanair v commission (175), which confirmed the alitalia decision. 6.1.1. scope of assets sold (234) the commission observes that the assets taken over by capricorn represent all of the assets of the insolvent ng, msr and cmhn, and they relate to the main activities of these companies. however, the commission notes that, in the context of the tender process, the assets of ng, msr and cmhn were split in 11 individual asset clusters and all bidders were allowed to bid for individual assets, as well as for one, several or all asset clusters (see point 2.5). those clusters were formed with a view on the expected economic use of the assets, the expected investors' interest as well as the costs of separating the assets. furthermore, the insolvency administrators did not establish any conditions as regards the future use of the assets. the commission notes that the decision that all the assets were sold to one single company was made by the market, i.e. the economic operators bidding for the assets, not by the insolvency administrators or germany. indeed, all the bidders had the possibility to bid for one of the 11 individual clusters of assets, their totality, or specific assets. for market driven reasons, the value of the bids for individual assets or clusters of assets did not reach the value of the highest bid for the totality of assets. this seems to be the consequence of the economic interdependence of the various clusters of assets: without the race track, the hotels would not be viable; without the hotels, a profitable exploitation of the race track with professional races, rock concerts and other activities with a large catchment area would be more difficult. (235) as regards the employees, the tender specifications or the sales contract do not include any specific obligation, e.g. an employment guarantee, to transfer employment contracts to the new owner, apart from what is required by relevant national legislation. under german law, the employees are automatically transferred to the buyer of the assets. however, under german labour courts jurisprudence (176), in an insolvency context the buyer can request from the insolvency administrator to terminate employment contracts. hence in principle the buyer could take a fresh decision on which personnel it wished to offer new employment. in the case at hand, in order to achieve an economically viable operation of the acquired assets, capricorn assessed its needs, in order to achieve viability of its operations, and chose not to receive the entirety of the employees of the sellers but 85 % of them, i.e. 253 of the total 297 employees, on 1 january 2015 (date when capricorn will start operating the acquired assets). it is maintained however, that since capricorn could take an independent decision to engage or not existing personnel, the confirmed hiring of existing personnel does not lead to continuity of operations. in addition, the management structure and staff is planned to be completely reorganised in 2014. (236) furthermore, the commission notes that the vast majority of the contracts on the organisation of events significant for the operational business will be terminated after the season 2014. new contracts for the period as from 1 january 2015 will be negotiated and concluded with the customers and suppliers by the operational company established by the buyer. in this respect, also new contractual partners will be approached. capricorn itself plans to organise a number of events instead of renting out the race ring to external organisers. (237) finally, the commission notes that the scope of activities to be carried out by capricorn will be to a considerable extent different in comparison with the activities of the n rburgring group, as demonstrated below (see in particular point 6.1.5). 6.1.2. the sale price (238) in order to avoid economic continuity, the assets under the tender process have to be sold at their market price. (239) the market price is the price, which could be set by a private investor acting under market conditions (177). (240) germany has sold the assets through an open, transparent, non-discriminatory and non-conditional tender process to the bidder submitting the highest bid with secured financing. (241) firstly, the invitation to submit an expression of interest for the n rburgring assets did not present any limitation as to the parties that could submit offers, therefore any entity could submit an offer in the tender process. (242) secondly, as regards the principle of transparency, the sellers provided all bidders with enough time and all the necessary and detailed information, in order to allow them to carry out a proper valuation of the assets. according to the letter of kpmg titled project ring procedures for the submission of a final offer, sent to the interested investors on 17 october 2013, the tenderers providing proof of secured financing for the price included in their indicative offers would be granted full access to an electronic data room, they could participate in a meeting with the management of nbg, and they would receive the opportunity to participate in a structured question and answers process. on the other hand, tenderers who would not submit the above assurance and proof of necessary financing would only be granted limited access to the electronic data room and to the financial fact book of the sellers, and would be able to meet with the members of the team that prepared the financial fact book, take part in a site visit and meet for the pre-discussion of the draft purchase agreement for the assets. (243) furthermore, there was constant communication throughout the tender process between the sellers (kpmg) and all bidders who qualified for the respective step of the tender process, for the purpose of providing those bidders with all relevant information and clarifications, with letters and e-mails exchanged in the period july 2013-april 2014. in this context, those bidders were provided with the answers to their questions or allegations, and with all information regarding the tender's further steps. for example, in the above context, the following letters and e-mails were sent by kpmg to the bidders: (a) letter of 19 july 2013 informing the bidders of the procedures for the submission of an indicative offer; (b) letter of 12 september 2013 informing the bidders of the extension of the deadline for the submission of indicative offers; (c) e-mail of 19 september 2013 providing one of the bidders (adac) with an update on the financial performance of the n rburgring; (d) letter of 17 october 2013 informing one of the bidders ([bidder 3]) of the procedures for the submission of a final offer; (e) e-mail of 28 october 2013 informing one of the bidders ([bidder 2]) of the preliminary timings for the meetings with stakeholders; (f) letter of 3 december 2013 informing one of the bidders ([ ]) that its indicative offer was no longer considered due to the fact that parties who supported that offer had withdrawn and there had been no presentation of alternative financing partners, therefore the offer's financing was considered as not secured and its closing probability was evaluated as insufficient; (g) letter of 11 december 2013 providing one of the bidders ([bidder 3]) with comprehensive and clear explanations to the concerns and allegations that that bidder had raised in a letter of 9 december 2013 (two days earlier); (h) letter of 18 december 2013 providing one of the bidders ([bidder 3]) with comprehensive and clear explanations to concerns and allegations that that bidder had raised in a letter of 11 december 2013 (seven days earlier); (i) e-mail of 18 february 2014 requesting one of the bidders ([bidder 3]) for specific clarifications and confirmations regarding the latter's final offer as provided with an e-mail of 17 february 2014 (one day earlier), in particular requesting that bidder, among other things, to submit proof and evidence of its binding financing commitment e.g. in the form of a binding financing commitment letter, to provide more detail on the specific timing envisaged by that bidder for obtaining the outstanding financing commitments, and to submit an estimation on the time required to finalise the submitted offer with regard to its commercial terms; and j) e-mail of 9 april 2014 informing one of the bidders ([bidder 3]) that kpmg had not yet received details on that bidder's envisaged financing structure or written confirmation from third party financing sources to support that bidder's offer, as an answer to that bidder's e-mail of 2 april 2014 (seven days earlier). (244) thirdly, the evidence submitted by germany shows that there was no discrimination between the tenderers at any stage of the tender process. indeed, as is also obvious from the above in recital 235, all bidders received information and clarifications on the tender's selection criteria, rules and procedures, on the deadlines for the submission of indicative and final offers, on the extension of such deadlines, on the financial situation of the n rburgring, on elements missing from the bidders' indicative or final offers, and on possible queries of the bidders. at the same time, bidders who fulfilled the tender's selection criteria, in particular the submission of confirmation of the financing of their offers from third party financial partners, were not excluded from the negotiations. the commission also notes that no bidders were offered exclusivity in the negotiations, but the latter were kept, to the reasonable extent in time, also with bidders who had not submitted the above financial confirmation in their final offers, in view of future submission of such financial confirmation. (245) furthermore, as described in recital 54 above, the sales contract includes a clause according to which its parties are obliged to implement it only if: (1) the commission takes a non-challengeable decision implying that neither the buyer nor its operational company are beneficiaries of the aid under assessment subject to recovery; and (2a) either the delays to bring a legal challenge against the commission decision have expired without an appeal; or (2b) in case of an appeal, a not further challengeable court judgment has been rendered confirming the commission decision. germany has explained that this clause was the result of the bidders' unwillingness to take the risk of being liable for a claw-back of state aid, that the sellers accepted that clause in order to be able to sell the assets, and that from the beginning of the tender process, as also stated in the first asset purchase agreement, the sellers advised the bidders that they were willing to discuss the implications of the state aid procedure with the bidders (178). in addition, germany has stated that a commission decision on the state aid to the n rburgring was a condition in the asset purchase agreements mark ups provided by capricorn, [bidder 2] and [bidder 3]. (246) fourthly, apart from limitations stemming from the legal framework, no conditions were set upon the tenderers, as clearly demonstrated in the tender's invitation to submit an expression of interest and the various letters sent to the bidders by kpmg. (247) it results that this selection process as such is sufficient for safeguarding that the price of the assets sold to the buyer corresponds to the market price. thus, the commission concludes that the sale of the assets through an open, transparent, non-discriminatory and non-conditional tender process to the bidder submitting the highest bid including a guaranteed financing leads to the market price. 6.1.3. the identity of the buyer (248) the commission has to establish that the new owner of the assets will not have any link with ng, msr and cmhn, in order to avoid that the new owner will be liable for any recovery of incompatible state aid. (249) capricorn is not an entity having a corporate law or personal direct or indirect link with ng, msr, cmhn or their shareholders, or the previous lessees of the n rburgring. there is therefore no link between the n rburgring group and its shareholders on the one hand and the new owner and its shareholders on the other hand. (250) thus, the commission concludes that the buyer is an independent entity from ng, msr and cmhn. 6.1.4. the moment of the sale (251) the commission needs to assess whether the moment of the tender process may lead to a circumvention of a decision by the commission to recover incompatible state aid. (252) in this case, the commission observes that following the extension of the main investigation to the measures notified to the commission as rescue aid, the insolvency procedure was launched and the insolvency administrators were appointed by the competent local court in 2012. the sale of the assets was launched by the insolvency administrators in may 2013, prior to any commission decision regarding the conclusion of the formal investigation procedure. as the buyer insists on its transfer being made only once a final commission decision cannot be challenged in court, the sales contract will enter into effect and the insolvency procedure will be closed only after the adoption of the present decision ordering recovery. the payment of the first instalment of the price took place before the adoption of the present decision. pursuant to the sales contract, the transfer of the assets is effective as of the date on which the present decision becomes non-challengeable. (253) in the present case, the commission considers that the fact that the sale was launched by the insolvency administrators appointed by the competent local court and that the decision about the transfer of the assets has taken place before the adoption of the present decision is less conclusive in terms of economic continuity than a situation where the decision to sell would be taken by the aid beneficiaries themselves or where the sale process would be launched only after the adoption of the present decision. 6.1.5. the economic logic of the operation (254) the criterion of economic logic aims at assessing whether the buyer of the assets will employ them in the same way as the previous owner or whether it will use them to establish a different activity or strategy. (255) the commission considers that the new owner will have the possibility to manage its activities under different operating conditions than ng, msr and cmhn's and will apply its own business model. (256) the business concept of the sellers will not be taken over by the acquirer. the two existing race tracks (grand-prix track, northern track) shall be used [ ] in the future, allowing [ ]. to this end, capricorn intends to construct additional facilities and to equip the [ ]. part of facilities build under part ii of the n rburgring 2009 project will be turned down (e.g. [ ]). the ring racer will be sold. the ring card as payment system will be dropped. in the ring boulevard, the [ ]. (257) furthermore, according to the plans of the acquirer, n rburgring will be transformed from a touristic attraction to a technology cluster and industry pool. [ ] should become one of the core activities at the race tracks. through [ ] should be established. [ ] should be [ ] at n rburgring. the acquirer itself will be more active as [ ]. (258) the buyer of the assets will thus not use the assets in the same way as the insolvent companies. on the contrary, capricorn will integrate the acquired assets in its own business strategy, realising synergies, which justify its interest in buying the assets. in comparison with the current operation model, capricorn has developed a new concept of the exploitation of the assets. moreover, the operation of some of the assets has been structurally deficit making and it could therefore require further restructuring and optimisation. (259) the afore-mentioned elements demonstrate that the economic logic of the capricorn's offer does not consist in a continuation of an economic activity of the n rburgring group, but in an integration of certain assets and a part of the workforce of the n rburgring group in a group which pursuits its own economic logic. (260) thus, the commission concludes that the economic logic of the operation is to allow the new owner to use the assets of ng, msr and cmhn under different conditions and not to continue the strategy of these companies. 6.1.6. conclusion on the economic continuity of ng, msr and cmhn through the sale of assets (261) the assets have been sold at their market price, as established through an open, transparent, non-discriminatory and non-conditional tender process, to the bidder submitting the highest bid including its guaranteed financing. germany has informed the commission that the buyer has not an economic or corporate link to ng, msr or cmhn. the decision on the sale was taken prior to any potential negative commission decision regarding the formal investigation procedure. finally, the new owner will use the assets under different conditions and according to a different business model than ng, msr and cmhn, and the scope of the buyer's activities will be to a considerable extent different in comparison with the activities of the n rburgring group (262) in light of the above, the commission concludes that there is no economic continuity between ng, msr and cmhn and capricorn, the buyer of the assets, or its operating company, which are therefore not liable for any state aid to be recovered from the beneficiaries. 6.1.7. the conditionality of the sale finalisation upon a commission decision (263) the sales contract between the sellers and capricorn includes a condition that foresees that the sale of the n rburgring assets is final only upon the existence of a non-challengeable commission decision declaring that the aid would not be recovered from the buyer of the assets. as already described in recital 56 above, if there is no non-challengeable commission decision at the beginning of 2015, the sold assets will be sold before 1 january 2015 to newco, in which 95,1 % of the shares will be owned by the buyer and 4,9 % by an independent trustee. the trustee will be acting in the interests of the creditors and not of the insolvent beneficiaries of state aid, but will not be subject to instructions by the creditors. furthermore, a lease contract will be concluded between newco and opco, terminating on the date of entry into force of the sales contract. the business of the opco will be run under its name, on the basis of its own business plan and with the workforce of its own choice. there will be a lease fee of totally eur [4,6-5,1] per year to be paid by opco to newco, which will serve the liquidation mass of the n rburgring companies (all payments in favour of the insolvency estate are transferred to the trust accounts of the insolvency administrators, solely in order to be distributed to the creditors). when the decision of the commission becomes final, the trustee will transfer all his shares in newco to the buyer. on the other hand, if the buyer does not fulfil its contractual payment obligations, the trustee will be able to sell the assets. in addition, should an annulment of the commission decision take place, the assets will return to the insolvency administrators in order to be sold immediately, since the liquidation obligation of german insolvency law continues to exist even in such case. there is no option of continuing the business of the n rburgring companies by newco. (264) the commission notes that with this construction: (a) a real sale of the assets of the beneficiaries will take place within four months after the adoption of the present decision; (b) even if the closing of the operation takes place later, in the meantime, the buyer already controls the society which will own the assets by an overwhelming majority and the remaining part of the assets is owned by a trustee, which is independent from the beneficiaries of the aid and does not receive instructions from their creditors; (c) recovery is not suspended; and (d) the beneficiaries irreversibly exit the market and will not have any activity or receive any stream of money. they will be liquidated as soon as their claims and obligations are settled and the necessary formalities are performed (see recital 55). (265) also, the commission notes that other bidders who reached the final stage of the tender procedure or close to it had similar conditions in their offers (179). on the basis of the above, the commission concludes that there is no purpose or risk of circumvention of recovery and that the construction in question merely exists with the purpose of an orderly liquidation of the business. 6.2. complaints on the sale of assets 6.2.1. complaints from complainant 1 and 2 (266) based on the information provided by the insolvency administrators and complainants 1 to 4, the commission does not consider the claims raised by complainant 1 and complainant 2 to be justified. the n rburgring assets were split in eleven individual assets. based on the evidence submitted by the insolvency administrators and complainants 1 to 4, the commission has found that in an open, transparent and non-discriminatory selection process, the bidders could make offers for one, more or all assets. even the fact that all of the assets were eventually awarded to capricorn as the buyer submitting the highest bid including its secure financing, this does not as such demonstrate economic continuity (see also section 6.2.7 above). the commission also assumes that the underlying aim of complainants 1 and 2 was to avoid a transfer of the racetrack to a private investor. (267) the bidders that tendered only for individual asset clusters such as complainant 2 were not notified of the extension of the deadline for the submission of binding offers until 17 february 2014, because their indicative bids did not qualify to the second stage of the selection process in view of their low price offers; however, the commission does not consider this to be a breach of the principle of transparency, since such bidders had been informed that they could increase their indicative offer any time before the award of the contract, and if they went for such a price increase, it can be presumed that the insolvency administrators would notify them of the extension of the deadline concerned in compliance with the principle of equal treatment. (268) the commission finds it reasonable and efficient that only the bidders that made a sufficiently high price bid were allowed access to the detailed information about the assets (on the basis of which among others the need for future investment could be assessed by the bidders). in view of the information given to them in the various stages, the commission also considers that the bidders were provided with information sufficient for making their offers. on top of this, complainants 1 and 2 have identified no concrete piece of information that would hinder them from bidding. (269) as regards the long-term contractual relationships allegedly implied in the tender documentation, the commission notes that in the present case of an asset deal, the employment and lease contracts are transferred only in the cases foreseen by law, that the contracts for the organisation of events can in principle be maintained only if both contractual parties agree so, and that the latter contracts do not necessarily have a major economic significance for the asset deal. as regards the question whether new aid was granted by the operation of nbg, the commission notes that nbg was established by the insolvency administrators on a temporary basis, until the end of 2014, as a vehicle for the operation of the assets only during the insolvency and the tender process. running the operational business through a temporary subsidiary of an insolvent company during the insolvency proceedings is allowed by national law and cannot be forbidden to insolvency administrators. in the present case, the insolvency administrators also justified the economic rationale of the existence of nbg for ng, msr and cmhn, since, according to them, the creation of nbg increased the value of the assets of ng, msr and cmhn, thus increasing the liquidation subject-matter. however, the commission notes the circumstances of nbg's establishment, i.e. that nbg is a subsidiary of the aid beneficiaries ng, msr and cmhn, is their economic successor since it has received their full assets and liabilities, it has received those assets and liabilities without consideration and outside the scope of any tender or valuation report, employs the exact same personnel as they did and carries on their own business. on this basis, the commission concludes that there is economic continuity between nbg and the beneficiaries ng, msr and cmhn, therefore any incompatible state aid in favour of ng, msr and cmhn is to be recovered also from nbg. (270) the commission considers that also the contract between nbg and the trade union ver.di was concluded in order to enable the operational business of nbg until the sale of assets, and not to maintain the economic continuity of the n rburgring after that sale. the employment contracts are transferred from nbg to capricorn by force of german labour law, and not due to the contract with the trade union. for the lack of economic continuity between the sellers and capricorn, the commission considers only relevant that capricorn itself has the full discretion to decide which of the employment contracts of nbg it will not take over, and that capricorn plans not to take over around 20 % of these employment contracts. (271) the commission therefore rejects the complaints from complainants 1 and 2 as unjustified because the assets in question have been sold to the bidder who submitted the highest bid including a proof of its financing, following an open transparent, non-discriminatory and unconditional tender process. 6.2.2. complaint from complainant 3 (272) the commission notes that the indicative and the final offers from complainant 3 were not supported by evidence of its financing; this was communicated by the sellers to complainant 3 by letters dated 17 october 2013, 11, 17 and 18 december 2013 and by e-mails dated 18 february 2014 and 9 april 2014. indeed, until the award of the sales contract by the committee of creditors on 11 march 2014, and even after that date, complainant 3 did not provide evidence for the financing of its offer, which could justify that the sellers do not award the contract to either of both bids for which there was evidence of their financing, but that they wait for the submission of evidence for the offer from complainant 3. in particular: (a) in its e-mail of 21 february 2014, complainant 3 stated its confidence to have all binding financial commitments within the next two to five weeks; (b) in its letter dated 11 march 2014, complainant 3 indicated that it would be able to submit all binding financial commitments until 31 march 2014; and (c) in a non-signed letter dated 31 march 2014 by the investment bank and advisory firm [ ], submitted by complainant 3 to kpmg on 2 april 2014, it is stated that one prospective investor will provide financing of eur [ ] million to complainant 3 for the purchase of the n rburgring assets; however that alleged financing was subject to completion of satisfactory due diligence by all parties and execution and delivery of definitive documentation, and did not name the prospective buyer in question. on the basis of the above, the commission notes that, even after the award of the n rburgring assets to capricorn, complainant 3 did not provide the sellers with a first-hand commitment by a specific financial partner for the financing of the purchase of the n rburgring assets. instead, complainant 3 only provided the sellers with: (a) a final offer which made reference to a commitment for eur 30 million but did not contain the proof of that commitment e.g. in the form of a binding financing commitment letter by the particular financial partner, and did not include details on the specific timing envisaged by complainant 3 for obtaining the outstanding financing commitments and for finalising the offer with regards to its commercial terms; (b) a non-signed letter, referring to financing by an unnamed investor, still conditional on the satisfactory conclusion of the due diligence execution and the delivery of definitive documentation (letter of [ ] dated 31 march 2014). the commission also notes that there is no demonstration that the alleged financing commitment of jupiter financial group dated 26 march 2014 was ever submitted to the sellers. the commission further notes that the sellers did not extend the deadline for the submission of a proof of the financing of the complainant 3's bid, because there was a high chance that [bidder 2] would withdraw its bid in case of such extension. for example, with an e-mail of 13 january 2014, sent by the representative of [bidder 2] to kpmg, [bidder 2] declared that all requirements for the sale to be concluded should be fulfilled before 3 april 2014, otherwise [bidder 2] would withdraw from the tender. in addition, it was considered by the sellers that the value of the assets could drop later in time also in view of a decreasing buyer's influence on the business in the upcoming 2014 season and of the necessity to start the booking of contracts for 2015. the commission points out that complainant 3 was not hindered to submit the proof of the financing of his confirmatory bid in the final stage in the process, as long as no definite asset purchase agreement had been signed. in view of the above, the commission considers the behaviour of the sellers as corresponding to the behaviour of a market economy vendor. the evaluation of the bid of complainant 3 is therefore market-conform. (273) at the same time, the commission notes that the sellers carried out discussions with [bidder 2] and the final stage of the purchase agreement's negotiation with [bidder 2] and capricorn, in view of [bidder 2]'s offer of eur [32-39] million (see table 10) and a confirmed negotiation between capricorn and [ ] resulting in the latter bank's financial commitment dated 10 march 2014. regarding the evaluation of the offer of capricorn, the commission notes that capricorn submitted a commitment by its financial partner, [ ], for a loan in the amount of eur [41-49] million. this commitment, dated 10 march 2014, was submitted to the sellers on 11 march 2014, i.e. on the date scheduled for the meeting of the creditors' committee, in which the latter intended to decide on the award of the n rburgring assets. the commitment offered by capricorn was higher than the one of [bidder 2], since the latter amounted to eur [32-39] million. the commission also notes that capricorn's total offer was equal to eur 77 million, therefore higher than the one of [bidder 2] which equalled to eur [47-52] million. eur [30-33] million of [bidder 2]'s total offer was foreseen to be paid in 2014, however with eur [22-27] million foreseen to remain in a blocked account until march 2015 and the rest eur [16,5-18] million foreseen to be paid in 2016, 2017 and 2018. (274) furthermore, as regards the condition in the sales contract between the sellers and capricorn which foresees that the sale of the n rburgring assets is final only upon the existence of a non-challengeable commission decision declaring that the aid would not be recovered from the buyer of the assets, the commission notes that, according to the provisions included in the relevant parts of complainant 3's mark-up contracts, as submitted by the insolvency administrators and germany, the purchaser and/or the seller had the right to withdraw from the contract if no positive decision of the commission had been issued by 15 july 2014 (as stipulated in draft contract of 14 january 2014) or 31 december 2014 (as stipulated in draft mark-up contract of 14 february 2014). it is also noted that there was no time limit as to exercising such withdrawal right. (275) as regards further allegations made by complainant 3, the commission notes the following: (a) the commission does not consider that complainant 3 was required to assume the existing contracts or obligations of nbg (with the exception of contracts that transfer automatically by operation of law, such as certain employment or rental contracts). this fact was indicated clearly to complainant 3 by the sellers in kpmg's letter dated 11 december 2013. the commission also considers that to the extent complainant 3 would like to assume these contracts was in its own discretion and would be subject to its business and usage concept of the n rburgring. moreover, the commission has not found evidence that there had been an alteration in the transaction concept during the tender process, or that except for complainant 3 another bidder has complained about an alleged change of the transaction structure. in fact, the latter absence of complaints by other bidders was communicated to complainant 3 with kpmg's letter of 11 december 2013. (b) the duration of the tender process was not excessively long. (c) by letter of 17 december 2013, complainant 3 was informed by the sellers about the deadline of 17 february 2014 for the submission of a confirmatory bid. complainant 3 was also informed that the sellers might choose the parties qualified for the further process shortly after the end of that extended deadline. the qualified bidders were not hindered from amending their confirmatory bids or to submit the proof of their financing even after that deadline, as long as no definite asset purchase agreement had been signed (180). the deadline of 17 february 2014 was thus effectively extended to allow all bidders to amend their bids, provide proof of their financing, or submit new bids. as this procedural change was known to every qualified bidder, there was no breach of the principles of transparency and equal treatment. (d) as all available information was provided by the sellers to all bidders at the same time, and at least three weeks before the final decision of the creditors' committee to award the assets to capricorn, there was sufficient time for the preparation and finalisation of the bidders' offers, and the principle of transparency had been complied with. the commission also finds that complainant 3 was informed sufficiently about the rules of the tender process in advance by letters of the sellers dated 19 july 2013, 17 october 2013 and 17 december 2013. there was also no breach of the principle of equal treatment between the bidders in the access to the relevant information, as a same amount of information was provided to the bidders that qualified for the process stage concerned. (e) there is no evidence that capricorn negotiated with a beer supplier or with rock am ring before the conclusion of the asset purchase agreement. according to the insolvency administrators, it was nbg which conducted all relevant negotiations. (f) the notarisation of the asset purchase agreement by the two best bidders (capricorn and [bidder 2]) carried out before the meeting of the creditors' committee of 11 march 2014 is not an indicator of a breach of the principles of transparency and equal treatment. there is no evidence that capricorn was notified of the result of the tender process before the meeting of the creditors' committee took place on 11 march 2014. (g) none of the bidders has provided a financing guarantee for the entire purchase price. the sellers have therefore not breached the principle of equal treatment by making de facto the requirement of secure financing less strict during the tender process. (h) the provision of a mark-up of the asset purchase agreement was part of commercial negotiation and is not a matter relevant from the state aid point of view. (i) the considerations of environmental aspects of complainant 3's offer by the sellers were carried out only in respect to the fact that complainant 3 had not submitted a proof of the financing of his bid. such considerations were not part of the criteria for the selection of the successful bidder. these considerations therefore had no impact on the result of the tender process. (j) regarding complainant 3's allegation that, in the context of the tender process in question, capricorn and the sellers received state aid advice from the same law firm ([ ]) and in particular one lawyer of that firm, the commission notes that, according to the statement of the german authorities, that law firm and its lawyers: (a) did not provide any advice to the sellers of the tender procedure (including the insolvency administrators and the creditors' committee); (b) did not have any access to any information contained in the bids of other interested investors; (c) only had access to the information concerning the tender procedure which was available in the data room and in the press; and d) did not provide the sellers or the creditors' committee with any recommendation. regarding the particular lawyer of that law firm, to which complainant 3 has referred in its complaint, germany has also explained the following: (a) that lawyer worked for the land from may 2012 until april 2013, i.e. before the initiation of the tender process in june 2013; (b) that lawyer was not in any contact with the land or the federal republic of germany during the tender process; (c) that lawyer never advised the land or the sellers in relation to the bidding process; and (d) the same lawyer only participated as an independent expert in the hearing of the land's parliament on 20 june 2013 concerning the law for the public access to the n rburgring racetrack. furthermore, germany has explained that the state aid aspects of the tender, i.e. the fact that the tender process had to be open, transparent, unconditional and non-discriminatory, in order for the buyer not to be liable for any recovery of incompatible state aid to the sellers of the n rburgring assets, were already made aware to all bidders, as follows: (a) through the commission decisions to open the formal investigation procedure on 21 march 2012 and to extend it on 7 august 2012; (b) by the sellers, with all relevant documents provided in the tender's data room, including communications exchanged between the commission and germany on this matter; and (c) by the relevant case practice of the commission. (276) the commission therefore rejects the complaint from complainant 3 as unjustified because the assets in question have been sold to the bidder who submitted the highest bid including a proof of its financing, following an open, transparent, non-discriminatory and unconditional tender process. 6.2.3. complaint from complainant 4 (277) according to the comparison included in table 10, the bid from capricorn leads to a higher revenue from the sale in comparison to the bid from [bidder 2] (278) as regards the allegations made by complainant 4, the commission notes the following: (a) the commission takes note of the insolvency administrators' statement that the financing of the two offers submitted by [bidder 2] and capricorn was sufficiently secure for the sellers, even though none of both offers reached the highest possible level of security. by letter dated 24 february 2014, [bidder 2] informed the sellers about the financial capability of the [bidder 2] group, indicating that around eur [930-1030] million are available for investment. the commission also notes that by its financing commitment dated 10 march 2014 [ ] established a loan facility with an aggregate maximum debt commitment equal to the amount of eur [41-49] million to the benefit of capricorn. (b). as regards the up-front payments, if a non-challengeable commission decision exists in 2014, the sellers would have access to eur [30-33] million in case of [bidder 2] or eur [58-63] million (plus around eur 6 million of cash flow of nbg) in case of capricorn. (c) taking account of the comments made by complainant 4 and the insolvency administrators, on balance, it is not evident that the execution risk was higher for capricorn's offer compared to [bidder 2]'s offer. (d) in view of the selection criteria indicated in recital 48, the capability of the bidders as such was not a selection criterion. (e) in view of the selection criteria indicated in recital 48, the amount of investment to be made after the sale was not a selection criterion. (f) the sellers communicated with [bidder 2] to an acceptable standard during the tender process. [bidder 2] was not hindered from increasing or modifying his bid until the meeting of the creditors' committee took place on 11 march 2014. (279) the commission has thus not found evidence proving that [bidder 2] was discriminated in the tender process. the claim about a worse treatment of [bidder 2] in comparison to other bidders including capricorn is unjustified. it has to be noted that [bidder 2] submitted a confirmatory offer, it negotiated the terms of the contract, and as the second best bidder with secured financing, [bidder 2] was allowed to sign the final version of the draft contract. in addition, as regards the condition of a non-enforceable commission decision, apart from an amount of eur [7,1-7,6] million, the money provided by [bidder 2] would be kept in a blocked account and transferred to the sellers either upon the existence of a non-challengeable commission decision or if the buyer did not withdraw from the contract despite there being no such enforceable commission decision by 31 march 2015 (the possibility to extend the period for the withdrawal right was not excluded) (280) the commission therefore rejects the complaint from complainant 4 as unjustified because the assets in question have been sold to the bidder who submitted the highest bid including a proof of its financing, following an open, transparent, non-discriminatory and unconditional tender process. 6.2.4. conclusion (281) for the reasons set out above, on the basis of the available information, the commission has not found evidence of a breach of the principles of an open, transparent, non-discriminatory and non-conditional tender process with regards to the sale of the assets of ng, msr and cmhn, or of any offer with a higher price bid with secured financing compared to the price bid made by capricorn. 7. conclusion (282) the commission finds that part of measure 2 (loans granted to fsz), as well as measures 8, 11 and 15 do not constitute aid within the meaning of article 107(1). (283) the commission finds that germany has unlawfully implemented measure 1, part of measure 2 (loans granted by ng to ewn, man, tti, camp4fun, bwn1, bwnb and bwn2), as well as measures 3 to 7, 9 and 10, 12 to 14, and 16 to 19 in breach of article 108(3) of the treaty on the functioning of the european union. (284) the commission has concluded that measure 1, part of measure 2 (loans granted by ng to ewn, man, tti, camp4fun, bwn1, bwnb and bwn2), as well as measures 3 to 7, 9 and 10, 12 to 14, and 16 to 19 in favour of n rburgring gmbh, motorsport resort n rburgring gmbh, congress- und motorsport hotel n rburgring gmbh, cash settlement and ticketing gmbh, n rburgring automotive gmbh, erlebnispark n rburgring gmbh & co. kg, motorsport akademie n rburgring gmbh & co. kg, test & training international gmbh, bike world n rburgring gmbh, bikeworld n rburgring besitz gmbh, bikeworld n rburgring gmbh, camp 4 fun gmbh & co. kg, ipc gesellschaft f r internationale projektcoordination mbh and mi-beteiligungs- und verwaltungs gmbh, respectively, constituted state aid within the meaning of article 107(1) and are incompatible with the internal market, because the relevant conditions of the r&r guidelines are not met and no other compatibility basis was identified. (285) the commission has also concluded that: the sale of assets of n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh does not constitute state aid, the sale of assets of n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh does not lead to economic continuity between n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh and capricorn n rburgring besitzgesellschaft gmbh, the new owner of the assets, or its subsidiaries. thus, any potential recovery of incompatible state aid will not concern capricorn n rburgring besitzgesellschaft gmbh, the buyer of the assets sold following the tender process, or its subsidiaries, has adopted this decision: article 1 the following measures which germany has implemented do not constitute aid within the meaning of article 107(1) of the treaty on the functioning of the european union: part of measure 2 the loans in the total amount of eur 646 738,12 granted by n rburgring gmbh to fahrsicherheitszentrum am n rburgring gmbh & co. kg between 12 april 2002 and march 2008, measure 8 the loans granted by investitions- und strukturbank rheinland-pfalz gmbh to n rburgring gmbh on 28 july 2010 in the amounts of eur 96 574 200 and eur 113 590 800, to motorsport resort n rburgring gmbh in the amount of eur 92 000 000 and to congress- und motorsport hotel n rburgring gmbh in the amount of eur 23 100 000, measure 11 the loans in the total amount of eur 85 484 000 granted by rheinland-pf lzische gesellschaft f r immobilien und projektmanagement gmbh to motorsport resort n rburgring gmbh between 27 may 2008 and 7 july 2009, measure 15 the transfer of 49,5 % of shares of motorsport resort n rburgring gmbh from mediinvest gmbh to n rburgring gmbh for the price in the amount of eur 1 carried out on 25 march 2010, the transfer of 33,8 % of shares of motorsport resort n rburgring gmbh from geisler & trimmel general contractor gmbh to n rburgring gmbh for the price in the amount of eur 1 carried out on 25 march 2010, the transfer of 6,7 % of shares of motorsport resort n rburgring gmbh from weber projektierungs- und realisierungs gmbh to rheinland-pf lzische gesellschaft f r immobilien und projektmanagement gmbh for the price in the amount of eur 1 carried out on 25 march 2010. the sale of assets of n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh does not constitute state aid. article 2 the following state aid, unlawfully put into effect by germany through the measures listed below, in breach of article 108(3) of the treaty on the functioning of the european union, is incompatible with the internal market: the state aid granted in the form of: measure 1 the capital in the form of transfers to the capital reserve granted by the land rhineland-palatinate to n rburgring gmbh in the amounts of eur 2 179 000 on 1 may 2002 and eur 22 839 241 on 21 december 2004, the capital in the form of increases of own capital provided to n rburgring gmbh by the land rhineland-palatinate in the amounts of eur 4 398 300 on 31 august 2004 and eur 9 000 000 on 4 september 2007 and by the district of ahrweiler in the amounts of eur 488 700 on 31 august 2004 and eur 1 000 000 on 4 september 2007, part of measure 2 the loans granted by n rburgring gmbh to erlebnispark n rburgring gmbh & co. kg in the total amount of eur 6 195 170,02 between 1 january 2006 and 29 april 2009, the loans granted by n rburgring gmbh to motorsport akademie n rburgring gmbh & co. kg in the amount of eur 100 000 on 10 december 2002, the loans granted by n rburgring gmbh to test & training international gmbh in the amount of eur 25 000 on 15 august 2002, the loans granted by n rburgring gmbh to camp 4 fun gmbh & co. kg in the total amount of eur 450 000 between 26 may 2009 and 18 december 2009, the loans granted by n rburgring gmbh to bikeworld n rburgring besitz gmbh in the total amount of eur 500 000 between 17 october 2003 and 27 october 2004, the loans granted by n rburgring gmbh to bike world n rburgring gmbh in the total amount of eur 1 660 000 between 4 february 2004 and 22 july 2005, the loans granted by n rburgring gmbh to bikeworld n rburgring gmbh in the total amount of eur 1 600 000 between 20 september 2005 and 4 april 2007, measure 3 the loans in the total amount of eur 399 805 370 granted by the land rhineland-palatinate to n rburgring gmbh from 30 june 2003 to 11 may 2010, measure 4 the loan in the amount of eur 300 000 granted by n rburgring gmbh to motorsport resort n rburgring gmbh on 27 december 2007, part of measure 5 the loans in the total amount of eur 11 032 060 granted by n rburgring gmbh to cash settlement and ticketing gmbh from 27 august 2008 to 18 april 2011, the letter of comfort provided by ng to cst on 23 december 2009, committing ng until 31 december 2011 to take measures that are necessary for preventing insolvency of cst, the subordination of ng's claims against cst in the amount of eur 10,4 million declared by ng on 13 december 2010, measure 6 the service fees in the total amount of eur 640 000 paid by n rburgring gmbh to ipc gesellschaft f r internationale projektcoordination mbh for its services consisting in searching for private investors; the loan in the amount of eur 2 941 000 granted by n rburgring gmbh to motorsport resort n rburgring gmbh on 15 october 2008 measure 7 the consideration in the amount of eur 1 476 830,88 provided by n rburgring gmbh to mi-beteiligungs- und verwaltungs gmbh for the cession of claims of mi-beteiligungs- und verwaltungs gmbh, from loans taken by cash settlement and ticketing gmbh as borrower, to n rburgring gmbh carried out on 17 april 2009, measure 9 the guarantee provided by the land rhineland-palatinate on 28 july 2010, in the amounts of eur 96 574 200 and eur 113 590 800 to n rburgring gmbh, eur 92 000 000 to motorsport resort n rburgring gmbh and of eur 23 100 000 to congress- und motorsport hotel n rburgring gmbh, for the fulfilment of liabilities of n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh from the loans granted as measure 8, measure 10 the fixing of rent below market rate by n rburgring gmbh resulting in a benefit of eur 9 million for n rburgring automotive gmbh from 1 may 2010 to 31 october 2012, measure 12 the guarantee provided by the land rhineland-palatinate towards investitions- und strukturbank rheinland-pfalz gmbh, allowing motorsport resort n rburgring gmbh to receive loans in the amount of eur 85 484 000, measure 13 the grants provided by the land rhineland-palatinate to n rburgring gmbh from revenues of the land rhineland-palatinate from a tax on gambling in the amounts of eur 1,6 million on 29 december 2009, eur 3,2 million on 29 october 2010 and eur 3,2 million on 29 march 2011, measure 14 the loans granted by the land rhineland-palatinate to n rburgring gmbh in the amounts of eur 20 million on 21 august 2007, eur 10 million on 22 december 2009, eur 4,65 million on 28 december 2010, eur 3,2 million on 26 april 2011 and eur 4,95 million on 9 december 2011, the subordination of its claims from the loan of 29 august 2007 declared by the land rhineland-palatinate towards n rburgring gmbh in the amount of eur 20 million, measure 16 the loan in the amount of eur 40 405 000 granted by the land rhineland-palatinate to n rburgring gmbh on 11 january 2011, the grant in the amount of eur 13,5 million provided by the land rhineland-palatinate to n rburgring gmbh in july 2011, measure 17 the compensation granted by n rburgring gmbh to n rburgring automotive gmbh on the basis of the formula 1 concession from 13 december 2010 to 27 november 2012, measure 18 the rescheduling of interest payments in the amount of eur 1,473 million granted by investitions- und strukturbank rheinland-pfalz gmbh to n rburgring gmbh on 15 may 2012, the rescheduling of interest payments in the amount of eur 1,205 million granted by investitions- und strukturbank rheinland-pfalz gmbh to motorsport resort n rburgring gmbh on 15 may 2012, the rescheduling of interest payments in the amount of eur 303 000 granted by investitions- und strukturbank rheinland-pfalz gmbh to congress- und motorsport hotel n rburgring gmbh on 15 may 2012; measure 19 the debt subordination of its claims from measure 8 declared by the land rhineland-palatinate towards n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh on 15 may 2012, in the outstanding amount of the subordinated claim, up to an amount of eur 254 million, at the time when the decision for the debt subordination was adopted, the guarantee provided by the land rhineland-palatinate on 15 may 2012 for the fulfilment of liabilities of n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh from the loans granted as measure 8, in the amount of eur 254 million. article 3 1. germany shall recover the incompatible aid granted and as referred to in article 2 from the beneficiaries, including n rburgring betriebsgesellschaft mbh as the economic successor of n rburgring gmbh, motorsport resort n rburgring gmbh and congress- und motorsport hotel n rburgring gmbh. 2. any potential recovery of incompatible state aid will not concern capricorn n rburgring besitzgesellschaft gmbh, the buyer of the assets sold following the tender process, or its subsidiaries. 3. the sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery. germany shall provide the exact dates of aid provided by the state which are not indicated in the present decision. 4. the interest shall be calculated on a compound basis in accordance with chapter v of commission regulation (ec) no 794/2004 (181) and with commission regulation (ec) no 271/2008 amending regulation (ec) no 794/2004 (182). 5. germany shall cancel all outstanding payments of the aid referred to in article 2 with effect from the date of adoption of this decision. article 4 1. recovery of the aid referred to in article 2 shall be immediate and effective. 2. germany shall ensure that this decision is implemented within four months following the date of notification of this decision. article 5 1. within two months following notification of this decision, germany shall submit the following information: (a) the total amount (principal and recovery interests) to be recovered from each beneficiary; (b) a detailed description of the measures already taken and planned to comply with this decision; (c) documents demonstrating that the beneficiaries have been ordered to repay the aid. 2. germany shall keep the commission informed of the progress of the national measures taken to implement this decision until recovery of the aid referred to in article 2 has been completed. it shall immediately submit, on simple request by the commission, information on the measures already taken and planned to comply with this decision. it shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiaries. article 6 this decision is addressed to the federal republic of germany. done at brussels, 1 october 2014. for the commission joaqu n almunia vice-president (1) case sa.31550 (2012/c) (oj c 216, 21.7.2012, p. 14) and case sa.34890 (2012/c) (oj c 333, 30.10.2012, p. 1). (2) a corrigendum of the decision of 21 march 2012 was sent to germany by commission decision of 20 june 2012. (3) oj c 216, 21.7.2012, p. 14. (4) on 22 august 2012, case sa.34890 (2012/c), opened by the decision of 7 august 2012 extending the formal investigation procedure, was administratively merged with case sa.31550(2012/c). (5) oj c 333, 30.10.2012, p. 1. (6) on the basis of the settlement agreement (vergleichsvertrag) concluded between ng, nag and nbg on 27 november 2012. (7) in particular, the commission services advised that (1) in case of an exclusion of the racetrack from the tender procedure, the presence of further state aid for the buyer and a transfer of old aid could not be ruled out; (2) the imposition of general public access to the racetrack with the exception of the use of the n rburgring race track for commercial purposes, such as testing by the automotive industry could under certain conditions be regarded as a neutral element in the pending state aid procedure; (3) in view of an employment guarantee for the employees until the end of 2016, the commission decision in the sernam case (commission decision of 4 april 2012 sa.34547 france reprise des actifs du groupe sernam dans le cadre de son redressement judiciaire) should be taken into account; (4) the sale should not a priori lead to a transfer of state aid potentially subject to recovery from the owners of the assets to any purchaser(s) of the assets. (8) following the termination of the business lease contract between ng and nag in february 2012, complainant 1, one of the two initial complainants, dropped its negative position to the state aid to the race ring by arguing that the measures notified as rescue aid in 2012 should be approved, that the race ring itself had not received aid and it should therefore be taken out from the investigation, and that the operation of the n rburgring is a service of general economic service (sgei). (9) land rheinland-pfalz (10) ng's business objective includes the support of the car sector and motor sport as well as promotion of tourism in the eifel region. ng is 90 % owned by the land and 10 % by the district of ahrweiler. ng's supervisory board represents the land and the district of ahrweiler as ng's shareholders. (11) for a description of the n rburgring complex, please refer to section 2.1 of the decision of 21 march 2012. (12) the business objective of msr is the project development or the construction of real property, vacation facilities, hotels and resorts as well as the participation in undertakings which are in connection with the project development of n rburgring. since 25 march 2010 msr is 93,3 % owned by ng and 6,7 % owned by rim. until 25 march 2010 the shareholders of msr were mediinvest gmbh (49,5 %), geisler & trimmel general contractor gmbh (33,8 %), ng (10 %) and weber projektierungs- und realisierungs gmbh (6,7 %). (13) the business objective of cmhn is the construction and operation of hotels, vacation real property and resorts. cmhn is 100 % owned by msr. (14) nag's business objective is the operation of the race tracks, hotels, safety driving centre, driving school, multifunctional halls, ringowerk as well as all the other destinations at n rburgring. mediinvest gmbh and lindner unternehmensgruppe gmbh & co hotel kg hold each 50 % shares of nag. (15) the hotels and the restaurants were managed by lindner hotels ag due to a contract with nag. (16) the liquidation of ipc was registered in the trade register on 4 december 2008. the conclusion of the liquidation has not yet been notified to the trade register. (17) weber carried out the construction of the hotels and the restaurants. on 23 november 2010, the liquidation of weber was launched. (18) the business objective of cst was the operation of a cash free payment system allowing the customers to pay for their visit to any attraction of the complex with a card (ringocard). cst was 50 % owned by ng and 50 % owned by mib until 1 november 2012. on 19 december 2012 ng as 100 % owner started the liquidation. the assets were transferred to ng. pursuant to germany, the elimination of the company from the trade register was filed on 22 may 2014. (19) the business objective of mediinvest is mediation of conclusion of contracts regarding land and buildings, project development as well as the construction of real property, vacation facilities and resorts. mediinvest is 100 % owned by mr kai richter. on 18 june 2013, mediinvest was renamed to return projektmanagement gmbh. (20) geisler & trimmel carried out the construction of the hotels and the restaurants. (21) the business objective of fsz is the construction, the ownership and the operation of a driving safety centre. it was 41 % owned by ng. the majority owners terminated the participation of ng in october 2013. (22) the business objective of ewn was the operation of the erlebniswelt with motor sport related attractions at n rburgring. the company was renamed to ringowerk gmbh & co. kg on 31 march 2011 and it was 100 % owned by ng until 24 august 2011 when its property accrued to ng and its elimination without formal liquidation was registered in the trade register. (23) the business objective of man was the support of the german motor sport through the operation of an educational facility. ng was the only owner. the company was liquidated, the elimination of the company was registered in the trade register on 11 december 2013. all assets were transferred to ng. (24) the business objective of tti was the support, launch, construction and operation of driving safety centres. ng owned 26 % of the company, the remaining 74 % were owned by brands hatch leisure group limited, fawkham longfield, kent, uk (26 %), test & training gesellschaft mbh, teesdorf/austria (26 %) and tilke gmbh, aachen (22 %). the company was liquidated. the elimination of the company was registered in the trade register on 4 december 2007. (25) the business objective of bwn was trade with new and used motor bikes and the promotion of motor bike tourism in the region. with effect on 6 september 2005, bike world n rburgring gmbh (bwn1) merged with bikeworld n rburgring besitz gmbh (bwnb). the name of the acquiring company bwnb was subsequently changed into bikeworld n rburgring gmbh (bwn2). on 15 may 2007, ng sold its 49 % of the shares in the latter company to mr norbert br ckner and mr j rg jovy and waived the repayment of its loans. bwn2 ceased operations at the n rburgring in 2008, pursuant to germany, bwn2 was renamed to bikeworld gmbh and changed the company's seat to st. ingbert in the german land saarland. (26) the business objective of camp4fun was the operation of an off-road-park. the company was 100 % owned by ng until 18 october 2010 when its property accrued to ng and its elimination without formal liquidation was registered in the german trade register. (27) the business objective of mib was the participation in other undertakings and the takeover of their business management. mib was 80 % owned by mr kai richter and 20 % owned by mr klaus k nig. on 18 june 2013, mib merged with nag. (28) for a more detailed description of part i and part ii of the n rburgring project, please refer to section 2.2 of the decision of 21 march 2012. (29) capital reserve (capital surplus) is a deposit of a shareholder which is not subscribed capital. this term frequently appears as a balance sheet item as a component of shareholders' equity. capital reserve is used to account for the amount that a firm raises in excess of the par value (nominal value) of the shares (common stock). taken together, common stock issued and paid plus capital reserve represent the total amount actually paid by investors for shares when issued. (30) the transfer of eur 2 179 000 to the capital reserve through a waiver of interest due in 1999 for a loan taken over by the land from the federal republic of germany in 1981 (altdarlehen bund). (31) the transfer of eur 22 839 241 to the capital reserve through a waiver of claims from a loan taken over by the land from the federal republic of germany in 1981 (altdarlehen bund). (32) the amount of eur 4 887 000 consists of a contribution by the land through a waiver of claims from a loan taken over by the land from the federal republic of germany in 1981 (altdarlehen bund) of eur 4 398 300 and of a contribution by the district of ahrweiler through liquidity of eur 488 700. (33) since 2002, the loans to ewn were repaid in the amount of eur 722 264,49. (34) since 2002, the loans to fsz were repaid save the amount of eur [ ] that was settled in the context of a compensation payment of eur [ ] in connection with the exclusion of ng from fahrsicherheitszentrum am n rburgring verwaltungs gmbh and the termination of the participation of ng in fsz. (35) man repaid the loan fully on 28 november 2005. (36) camp4fun repaid the loans fully on 18 december 2003. (37) [ ]: the information in brackets is covered by the obligation of professional secrecy. (38) in the context of the n rburgring 2009 project, the amounts of eur 285 265 000 on 30 july 2010, eur 5 million on 30 september 2010, eur 5 million on 31 december 2010, eur 5 million on 31 march 2011, eur 5 million on 31 may 2011 and eur 10 million on 31 july 2011 were put at the disposal of isb by the land. in total, between 31 july 2010 and 31 october 2011, isb used an amount of eur 315 265 000 from the liquidity pool of the land for the refinancing of its loan to ng, msr and cmhn of eur 325 265 000 (measure 8). until the full repayment of the loans in november 2011, the interest rate was set daily. the interests totalled eur 2 326 680 and they were always repaid in time at the end of the following month. (39) the n rburgring 2009 project consisted of part i and part ii: part i includes tribune, welcomeocenter, ringoarena (for up to 5 100 visitors), access facilities, ringoboulevard (shopping mall with the largest multitouch-video-wall in the world), the warsteiner event-centre (for up to 1 500 visitors), autoworld (autowelten, sale spaces for car producers), ringowerk (indoor attractions such as a multi-media theatre, historical exhibition, interactive applications and ringoracer, the fastest roller coaster in the world) as well as ringokartbahn (an indoor kart track). part ii includes two hotels (including one casino), 100 vacation houses, five restaurants, discotheque and merchandising shop. (40) for problems in the management and financing of the liquidity pool, see the 2011 annual report of the court of auditors of the land, part ii, pages 7 to 15, available at http://www.rechnungshof-rlp.de/jahresberichte/ (41) the loans from the liquidity pool were fully repaid, see table 6. the interest totalling eur 5 059 174,46 was paid. (42) payments were based on a contractual agreement on the liquidity pool between the land and ng of 20 february 2003. the interest for the respective loan was based on the daily rate provided to the land on the market. the calculation of interests was carried out specifically for each day (actual/360). (43) the amount of eur 3 589 297,04 was repaid on 31 december 2010. for problems in the management and financing of the cst, see the 2011 annual report of the court of auditors of the land, part ii, pages 16 to 21, available at http://www.rechnungshof-rlp.de/jahresberichte/ (44) the loan was fully repaid on 22 january 2009, the interests of eur 48 500 were paid. however, germany stated that the loan was repaid to ng by geisler & trimmel, not by msr to png and by png to ng. (45) eur 1 450 000 plus interests of eur 26 830,88. (46) in 2010, ng offset the loan with its liabilities towards cst in the amount of eur 1 439 297,04. the remaining liability of cst towards ng in the amount of eur 37 533,84 was eliminated in the context of the liquidation of cst and the transfer of its assets to ng. (47) on 25 may 2008, bank f r tirol und vorarlberg ag granted a loan of eur [ ] to cmhn. (48) on 18 january 2010, kreissparkasse ahrweiler provided a loan of eur [ ] to msr. (49) based on the loan request by the land, isb did not carry out usual checks of the loan. (50) as regards tranche 2, ng did not use an amount of eur 4 735 000 of the loan contracted in the amount of eur 118 325 800 and the land paid to ng therefore an amount of eur 113 590 800; in this context ng paid to isb a compensation of eur 141 835,54. (51) for the average eonia rate as of 28 july 2010, see http://www.global-rates.com/interest-rates/eonia/2010.aspx (52) n rburgring gmbh was the sole shareholder of n rburgring adventure gmbh on the date of the conclusion of the business lease contract concerned. on 25 october 2010, n rburgring adventure gmbh merged with ng. (53) on 25 march 2010, when the business lease contract was concluded, nag's name was grundkapital management gmbh. (54) with a unilateral option of nag to extend the duration of the lease contract twice by 5 years. (55) the lease contract foresees: (a) a minimum rent; and (b) a rent dependent on the earnings before interest, taxes, depreciation, and amortisation (ebitda) of the lessee (ebitda rent): from 1 may 2010 to 30 april 2011 90 % of ebitda of the lessee, from 1 may 2011 to 30 april 2012 90 % of ebitda of the lessee, but at least eur 5 million, from 1 may 2012 to 30 april 2013 85 % of ebitda of the lessee, but at least eur 11,5 million, if deficiencies in construction defects have been removed until 30 april 2012, or otherwise 90 % of ebitda of the lessee, but at least eur 10 million, and as from 1 may 2013 annually 85 % of ebitda of the lessee, but at least eur 15 million. for a critical analysis of the level of the rent, see the 2012 annual report of the court of auditors of the land, pages 98 to 102, available at http://www.rechnungshof-rlp.de/jahresberichte/ (56) eur [ ] as rent, plus eur [ ] based on the settlement contract. (57) the loans from the silent participations were fully repaid by mediinvest to rim on 30 july 2010. in total, mediinvest paid to rim the interests of eur [ ]. germany did not clarify whether msr repaid the loans granted to it by mediinvest. (58) according to the court of auditors of the land, the advantages from the increased interests in favour of mediinvest equal eur [ ] (opinion of the court of auditors of the land of 15 june 2010, part ii, page 20). (59) the guarantee of up to eur 50 million of 28 august 2008 was increased to eur 80 million on 17 december 2008 and subsequently, to eur 140 million on 26 may 2009. (60) the declared purpose of the loans of 28 december 2010 and 26 april 2011 is the coverage of negative cash flow for the mid-term planning of ng for the period of 2010 to 2030 as indicated in the report by ernst & young of 9 september 2010. (61) ng and rim therefore currently hold 93,3 % and 6,7 % of shares in the msr, respectively. through the sale contract, the sellers were not released from their liability, and neither ng nor rim took over financial obligations. (62) for a critical analysis of the level of the compensation, see the 2012 annual report of the court of auditors of the land, pages 103 to 107, available at http://www.rechnungshof-rlp.de/jahresberichte/ (63) the contractually agreed compensation to nag included a flat fee from the sold tickets of eur [ ] million, [ ] % of revenues from the sale of those tickets which are sold after the first [ ] thousand tickets, and the revenue from [ ] tickets sold in 2011 or from [ ] thousand tickets sold in the following years. for the formula 1 races in 2011, the compensation was at least eur [ ]; if the ticket revenues were below eur [ ], the compensation was reduced by eur [ ]for each eur [ ]of decrease of the revenues below eur [ ] (e.g. if the ticket revenues were eur [ ] million, the compensation was eur [ ] million); however, the minimum compensation was eur [ ]. the fees to formula 1 organisers and drivers as well as the maintenance of the track under the grade 1 licensing of f d ration internationale de l'automobile (fia) are paid fully by ng and they did not fall under the commitments of nag. (64) letter of 19 july 2013 titled project ring information and procedures for the submission of an indicative offer, page 3, section indicative offer. (65) letter of 12 september 2013 titled project ring extension of the timeline for the submission of indicative offers, page 1, section extension of the deadline for the indicative offers. (66) letter of 17 december 2013 titled project ring extension of the timeline for the submission of final offers, page 1, section extension of the timeline for the final offers. (67) 1a. grand-prix track; 1b. northern track; 2. 4-star hotel; 3. eifel village green hell with 3-star hotel; 4. holiday parc dreees; 5. right of construction on land dorint; 6. off-road park; 7. personnel house adenau; 8. apartment building balkhausen; 9. house licht; 10. other land. (68) section disposal of the assets of the n rburgring of the call for expression of interest. (69) letter of 19 july 2013 titled project ring information and procedures for the submission of an indicative offer, page 1, section proposed transaction. (70) selection criteria set in page 4 of the letter of 19 july 2013 titled project ring information and procedures for the submission of an indicative offer, and in page 6 of the letter of 17 october 2013 titled project ring procedures for the submission of a final offer. (71) nine offers related to all asset clusters, three concerned the race track and 11 offers related to other asset clusters or individual assets. (72) the offer for all assets with the highest price scored 100 %. in total, there were 6 indicative offers for all assets that offered more than 25 % of the best offer. the offers for all assets that did not reach 25 % of the best offer, were not taken into account any further because of their price level. the same was valid for offers for the race track and the offers for other assets because they altogether did not reach 25 % of the best offer. 5 out of the 6 qualified offers for all assets did not clarify their financing at the moment of the submission of the indicative offer, and they were therefore asked to present their ability to finance the purchase of the assets. (73) see footnote 60 above. (74) according to germany, the repartition of the sales price of eur 77 million to the three insolvent companies will be made in line with the national insolvency and tax law. (75) the capricorn group is a german business group internationally active in manufacturing racing automotive assemblies, testing racing cars and maintaining historical racing cars. capricorn holding gmbh's shares are all owned by mr robertino wild. (76) getspeed gmbh & co kg is a german motor sport undertaking active in the maintenance of cars, the organisation of race events and the stress level monitoring of drivers. 99 % of the shares of this company are owned by mr axel heinemann and the other 1 % by mr adam osieka. (77) 613 a of the german civil code (b rgerliches gesetzbuch). (78) bag, judgement of 19 december 2013 6 azr 790/12; bag, judgement of 20 march 2003 8 azr 97/02. (79) the insolvency administrators and the buyer agreed on 13 august 2014 that the second instalment of the purchase price is to be paid on 31 october 2014 instead of 31 july 2014, with interest of 8 % and pledges (replacing the cash collateral of eur [4,6-5,1] million) on: (a) shares in capricorn of mr robertino wild, shareholder of capricorn; (b) all claims between companies of the capricorn group; (c) claims resulting from a sales contract regarding the campus project (to be concluded); and (d) the art collection of mr robertino wild. the land was not involved in the decision-making process for the above agreement. (80) the german scheme approved by commission decision of 19 february 2009 in case c 38/2009 federal framework for low interest loans (the temporary framework) applies to firms which were not in difficulty on 1 july 2008. aid may be granted to firms that were not in difficulty at that date but entered in difficulty thereafter as a result of the global financial and economic crisis. (81) germany claims that ng did not meet the hard criteria according to point 10 of the r&r guidelines, the development of soft criteria set in point 11 of the r&r guidelines was heterogeneous, and the general clause in point 9 of the r&r guidelines was also not met. (82) germany argues that the extension of the formal investigation procedure went against the objective of the concept of rescue aid, that the aid should have led to the avoidance of the imminent insolvency of the ng, msr and cmhn to give them six months to prepare a restructuring plan, that the shareholders were ready to agree on concrete objectives of the restructuring plan, including the sale of the assets and the following liquidation of ng, msr and cmhn, that no recovery decision was so far taken against ng and that the criteria of the deggendorf jurisprudence were thus not fulfilled, and that in view of the unique constellation of the case, an approval of the rescue aid would not create a precedent for other cases. (83) germany refers to gc t-237/99, 2000, ii-3849, point 37 bp nederlands and others; t-111/01, 2001, ii-2335, point 26 saxonia edelmetalle. coj, 56/89, 1989, 1693, point 39 publishers association; gc, t-29/92 (r), 1992, ii-2161, point 38 and following spo and others. (84) germany refers to coj t-20/03 kahla/th ringen porzellan gmbh, point 124 and following. germany claims that from the state aid point of view, these measures should be regarded as special effects, not as a regular business of ng, that both the shareholders and business management saw ng as an vehicle to keep the sport infrastructure in public ownership and to organise non-profitable sport events which would not be offered without the coverage of losses by the public funding, that absent this understanding neither the shareholders nor the business management of ng would allow the development of liabilities, and that the costs of these special effects could not therefore be included in the financial assessment. (85) for the meaning of the one-time principle, see section 3.3 of the r&r guidelines. (86) the measures concerned required an approval of the ng' supervisory board whose members were appointed only by public authorities. (87) the investment volume of part i equals eur 215 million (eur 185 million from the liquidity pool, eur 30 million through a shareholder loan of the land). (88) joint cases t-443/08 and t-455/08 freistaat sachsen, flughafen leipzig/halle et al v commission [2011] ecr ii-1311, upheld on appeal, see case c-288/11 p mitteldeutsche flughafen ag and flughafen leipzig-halle gmbh v commission [2012] ecr i-0000. (89) germany argues that such change in commission decisional practice goes against the 2007 white book on sport of the commission and the principles of legal certainty. such change could apply only to future cases, not to the construction of the sport infrastructure at n rburgring already completed in 2011. a state aid prohibition of financing the construction and operation of sport infrastructure would qualify as a change in the repartition of competences between the eu institutions and the member states and it would not be in line with the subsidiarity principle. (90) germany states that out of 11 racetracks, 8 were constructed with state monies worldwide between 1999 and 2011, referring to communication & network consulting, formula money 2011, page 145. (91) germany claims that the formula 1 has substantial macroeconomic effects in the countries of the organisers (ratio between subsidies and the said effects is allegedly 1:5). (92) germany states that the use of the liquidity pool for the project constitutes an exceptional case that does not correspond to the usual use of the liquidity pool and that the financing through the liquidity pool took place temporarily for the preliminary financing of the running project until the takeover through a long-term private investor would take place. (93) germany states that the aim of the liquidity pool is to optimise the cash flow between the land and its subsidiaries in an economically reasonable manner, particularly to reduce the financing costs of the holding, that short-term needs are satisfied by the land on the capital market, that the interest rates for the monies from the liquidity pool correspond to the daily rates of the land on the market, that the land does not incur any interest costs, that the market conditions are transferred 1:1 to the participants to the liquidity pool and that the ministry of finance of the land is only an implementation platform. (94) in view of point 137 of the decision of 21 march 2012, germany states that in case of support banks (spezialkreditinstitute), beneficiaries could be at two levels: (1) special banks; and (2) enterprises financed by special banks, that advantages of special banks are covered by agreement ii (verst ndigung ii) from 2002 and that the decision of 21 march 2012 suggests that special banks can grant loans only in situations in which the debtor would not receive any loan under the same conditions on the market. germany however argues that support banks can grant loans under market conditions (special credit institutes are not limited to granting aid) and that a state aid assessment must be made in each individual case. (95) as regards specifically the isb loan (measure 8), germany suggests that the advantage encompasses at maximum the difference in the interest between the interest paid on the market and the interest actually paid, but not the total amount of the loan, and that an expert opinion should be commissioned if the commission doubts this. (96) germany claims that in view of the agreement ii, the commission agreed to advantages stemming from guarantees in favour of legally separate special credit institutes as long as their activity is limited to a precisely defined public task, and that under these conditions, for instance, the use of special types of guarantees such as gew hrtr gerhaftung, anstaltslast and refinanzierungsgarantien is compatible with the state aid rules. germany also states that the commission acknowledged in its decision of 16 june 2004 in case n179/04 finnish municipal guarantees that special credit institutes do not constitute undertakings as long as they benefit from public funding only in relation to their public task. (97) germany states that the terms of the loan are completely and independently stipulated for in the instruction of the land to grant the loan; the isb had therefore no room for manoeuvre; the decision on granting the loan and related risks remained with the land and that on top of that, due to its loan instruction the land stands security for the loan on the basis of the german civil code. (98) germany also states that it is not important whether or not the construction costs are covered by the rent because the investment costs constitute sunk costs which have no impact on future decisions of a rationally acting investor. in addition, germany indicated that even if the rent had to amortise the investment costs, the basis would be the planned investments, without unforeseen cost increases, whereas the planned costs of the project were initially eur 215 million (eur 135 million for part i of the n rburgring 2009 project and eur 80 for part ii of the n rburgring 2009 project), but the actual costs were eur 330 million (eur 215 million for part i of the n rburgring 2009 project and eur 115 million for part ii of the n rburgring 2009 project), and that this being taken into account, even the minimum rent in the amount of around eur 280 million would amortise the planned investments. (99) germany points out that the subsidies should cover the losses of ng from the investments for the increase of the touristic attractiveness of the n rburgring through the n rburgring 2009 project, and that the aim was to increase the attractiveness of the n rburgring over the whole year and by this to promote the structurally weak region through the strengthening of tourism. (100) germany refers to c-72/91 sloman neptun. (101) germany also argues that this system aimed to attract as many visitors as possible, to maximise the positive macroeconomic effects and to cover the substantial costs of ng (licence fee, fia grade 1 licensing of the racetrack). (102) germany states that the assessment of the commission of ng as an undertaking in difficulty as of 1 july 2008 was inappropriate, that in the context of the notified rescue aid the application of the one-time principle was erroneous, that the extension of the formal investigation procedure was not proportional and that the measures are aid-free. (103) germany argues that the international guests are attracted by the racetrack, not by the accommodation facilities or restaurants. germany thus concludes that the measures concerned have no impact on tourism flows. (104) germany refers to commission decision in case sa.33728 financing of new multi-arena in copenhagen, point 33. (105) germany refers to commission decisions in cases sa.31722 supporting the hungarian sport sector via tax benefit scheme, points 86 and following, and sa.33952 kletteranlagen des deutschen alpenvereins, point 68. (106) germany refers to sa.33168 uppsala arena and sa.33728 financing of new multi-arena in copenhagen. (107) judgment in case u 73/12 kart of 13.12.2012, oberlandesgericht koblenz. (108) germany refers to n 158/2010 fussballmuseum dortmund and n 164/2010 leipziger reit- und rennverein scheibenholz. however, germany does not demonstrate that the race ring is protected as a cultural monument under the german law. (109) germany claims that the public interest was in macroeconomic/regional-economic effects and the promotion of sport and culture, there was a market failure since the measures were not possible without state support, the turnover was below eur 100 million during the three years preceding the measures, the aid was below eur 30 million annually, the entrustment act was constituted by the statutes of ng and the approval by the supervisory board of ng covered by a decision of the government of the land and the calculation parameters could be deduced from the updated business plans. germany also argues that the sgei package entered into force only at the end of 2006, that for the period before, there were therefore no additional provisions about the form of the entrustment act, and that for the period after, the qualification as existing aid is appropriate. (110) oj c 6, 11.1.2011, p. 6 (111) in this context, germany refers to commission decisions in cases c 38/2005 biria gruppe, point 93; c 51/06 arcelor huta warszawa, point 111 and following; c 43/2001 chemischen werke piesteritz, point 107 and following; and judgment of the general court in case t-102/07 and t-120/07 freistaat sachsen/commission, point 218. (112) section 1 of the german insolvency code. (113) complainant 1 submitted a letter of the competent local court of 29 january 2014, in which the said court stated that in case of the own administration, the insolvency court and the insolvency administrator do not carry out the sale of assets, but they only supervise that sale, and in which the court found thus no basis for an intervention in the sale of the assets. (114) the insolvency administrators refer to the judgment of the court of 16 december 2010 in case c-239/09 seydaland, recital 34. (115) nbg closed the business year 2013 successfully and made ebitda (before rent) in the amount of eur 2 920 000. as a rent, nbg paid eur 2 661 000 for 2013. (116) council directive 2001/23/ec of 12 march 2001 on the approximation of the laws of the member states relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (oj l 82, 22.3.2001, p. 16). (117) complainant 3 refers to commission decision of 30 april 2008 in case bank burgenland and to the judgment of the court of 24 october 2013 in case c-214/12p, c-215/12, c-223/12p (not yet published in the ecr) (118) according to complainant 3, the claimed offer consisted of: (1) eur 90 million to be paid as cash payment upon closing; (2) eur 20 million payable by 31 march 2014; and (3) the maximum amount of eur 40 million to be paid as earn-out in the amount of 20 % of the respective annual ebitda of the n rburgring complex after the acquisition by complainant 3. on top of that, complainant 3 claims to have committed to set up a development fund of eur 200 million for the local communities surrounding the n rburgring. (119) complainant 3 refers to commission decision of 30 april 2008 in case bank burgenland. (120) complainant 3 claims that based on the information provided by the sellers in the process, he assumed that the acquisition of the assets and the start of the business would be possible on the basis of a clean balance sheet, i.e. without any past and ongoing liabilities or obligations arising from existing contractual relationships, that he aimed at negotiating new agreements with customers and sponsors on new terms in order to partly refinance his investment, that it then turned out that that all material agreements for the operation of n rburgring were concluded by a third party (i.e. nbg) on the basis of a business lease contract with the sellers, that this meant in essence that the complainant after being awarded with the assets would have been forced to take over the business lease contract as well as some agreements concluded between nbg and third parties, that other agreements entered into by nbg did not transfer automatically but had to be effectively honoured by complainant 3, particularly since allegedly the sellers wanted to force complainant 3 to assume full financial responsibility for damage claims (resulting from nbg's failure to provide the ring facilities), and that consequently, complainant 3 allegedly had to change his initial business concept: whereas initially partly complainant 3 planned to secure the interim financing of the n rburgring acquisition by concluding adjusted agreements with the customers and sponsors of n rburgring, now it was forced to take the existing agreements into account or at least to economically honour them. (121) complainant 3 claims that on the one hand, there is reasonable doubt that capricorn was able to provide a binding financing commitment for the entire purchase price on the date of the expiry of the deadline on 17 february 2014 and the decision on the successful bidder was held back just until capricorn had fulfilled all formal requirements, whereas on the other hand complainant 3 was, as announced in the final offer, able to provide a binding financing commitment over eur 90 million. (122) complainant 3 adds that other bidders like complainant 3 were provided with false information, that complainant 3 intended to start negotiations with its own favourite suppliers in spring 2014 in order to fine-tune its financial offer for the ring assets, and that however, complainant 3 was told by the sellers that for example the beer supply could not be changed in 2014 since otherwise complainant 3 would be forced to take over liability for any damage claims resulting from nbg's failure to fulfil its contractual obligations to the existing beer supplier anymore. pursuant to complainant 3, the change of the beer supplier from warsteiner to bitburger proves that the information provided to complainant 3 was false and that complainant 3 as a bidder was deliberately misled. (123) complainant 3 claims that the process letter of 17 june 2013 requires a guarantee for the payment of the purchase price payable upon first demand and issued by a reputable european bank, that capricorn was not able to provide a full guarantee which covers the entire purchase price, and that the sellers must have altered its own payment conditions in order to bring the award in line with its announced process terms. (124) complainant 3 claims that he had submitted its bid in full awareness and compliance with noise emission regulations under statutory law. (125) complainant 3 refers to the judgment of the court in case c-482/99 stardust marine, recitals 54-55, and to commission decisions in case gerorgsmarienh tte (oj c 199, 14.7.2001, p. 4) recital 27, in case flughafen dortmund (oj c 217, 15.9.2007, p. 25), recitals 54-55, and in case n 510/2008 alitalia. (126) complainant 3 refers to commission decisions in case cda of 16 december 2000, recital 117, and in case biria group of 14 december 2010, recitals 79-80, to the judgments of the court in case t-415/05 olympic airways, recital 157, and in case t-123/09 alitalia, recital 135. (127) the insolvency administrators refer to commission decision of 30 april 2008 in case c 56/06 privatisation of bank burgenland, to commission decision of 19 june 2013 in case sa.36197 privatisation of ana aeroportos de portugal as well as to the commission's communication on land sales. (128) complainant 4 mentions that several entities were allegedly contacted by capricorn in the process to seek help with financing its bid, that capricorn has misrepresented its financing support to the sellers at an early stage of the process, that the ownership structure of getspeed, one-third shareholder of capricorn consortium, is not entirely clear, that the creditors' committee was not fully-informed about [ ]'s financing of the capricorn's bid, and that capricorn had admitted publically that they do not have the financing for their announced eur 25 million of investment in the n rburgring assets. moreover, the creditors' committee had not sufficient time to verify the conditions of the confirmation of [ ] about the provision of financing to capricorn. (129) complainant 4 states that [bidder 2]'s bid contained an upfront payment of eur 32,5 million in early april 2014, whereas capricorn's bid contained only the upfront payments of eur 5 million in march 2014, eur 5 million in july 2014 and eur 5 million in december 2014. (130) complainant 4 claims that its offer foresaw a closing already in april 2014, that [bidder 2].'s payments are guaranteed or based on the profitability of the business, that [bidder 2].'s members are substantial, well-funded entities, with a significant track record in the field of mergers and acquisitions, whereas capricorn's bid has an effective date no earlier than 1 january 2015, that further payments from capricorn are not due until, inter alia, commission review of existing state aid is completed and any eu court process is completed, that the sellers accepted that if the commission review is not completed by 1 january 2015, that capricorn would have the option to lease the n rburgring assets from then until such review is completed, that capricorn is a small company with little in the way of capital and that capricorn has little history in the field of mergers and acquisitions and a recent history of uncompleted projects. (131) complainant 4 indicates that [bidder 2] has experience of owning and operating several major circuits, operating of hotel and leisure facilities, operating festivals, and that [bidder 2] is the largest investor in formula one and an investor in major auto manufacturers and leisure businesses, whereas capricorn have no experience in circuit operations, hotel operations, festival management, race promotion or managing product launches. (132) complainant 4 points out that [bidder 2] was afforded a poorer level of engagement with the sellers than it was made available to capricorn, that the final bid deadline was extended firstly from 11 december 2013 to 17 february 2014 and then cut off on 11 march 2014, hours after capricorn's bid arrived, and that [bidder 2] had not been given the chance to increase or modify its bid. (133) the capricorn cash flow of the nbg for the year 2014 (eur 6 million) and [bidder 2] the earn-out payments for the years 2015-2017 (eur 15 million) depend on the success of the respective operational business. in case of [bidder 2], the sellers cannot, differently than in the case of capricorn, affect this business (134) oj c 244, 1.10.2004, p. 2. (135) earnings before taxes (ebt) (136) increase of losses mainly due to significant increase of expenses for events (aufwendungen f r veranstaltungen) from eur 21,2 million in 2005 to eur 44,0 million in 2006. (137) joined cases t-102/07 freistaat sachsen v commission and t-120/07 mb immobilien and mb system v commission [2010] ecr ii-585, para. 106. (138) commission decision in case c 38/2007 arbel fauvet rail (oj l 238, 5.9.2008, p. 27), as upheld by the general court, see joint cases t-267/08 and t-179/08, ecr 2011 ii-1999, point 141; commission decision in case c 27/2010 united textiles (oj l 279, 12.10.2012, p. 30). (139) opinion of the court of auditors of the land of 15 june 2010, part i, page 14. (140) see footnote above. (141) opinion of the court of auditors of the land of 15 june 2010, part i, page 15. (142) opinion of the court of auditors of the land of 15 june 2010, parts i and ii. (143) see the description of rim at: http://test.isb.rlp.de/de/die-isb/beteiligungen/rheinland-pfaelzische-gesellschaft-fuer-immobilien-und-projektmanagement/ (144) joint cases t-443/08 and t-455/08 freistaat sachsen, flughafen leipzig/halle et al v commission [2011] ecr ii-1311, upheld on appeal, see case c-288/11 p mitteldeutsche flughafen ag and flughafen leipzig-halle gmbh v commission (not yet published in the ecr). (145) c53/2002 space park development. (146) sa.35440 arena jena. for professional sport infrastructure see sa.31722 hungarian tax benefit scheme. for the operation of sport centres for general public against a fee see sa.33952 german alpine association. (147) sa.33618 uppsala arena, sa.35135 arena erfurt, sa.35440 arena jena. (148) n118/2000 support to professional sport clubs. (149) see, e.g. case c-305/89 italy v commission (alfa romeo) [1991] ecr i-1603, paragraphs 18 and 19; case t-16/96 cityflyer express v commission [1998] ecr ii-757, paragraph 51; joined cases t-129/95, t-2/96 and t-97/96 neue maxh tte stahlwerke and lech-stahlwerke v commission [1999] ecr ii-17, paragraph 104; joined cases t-268/08 and t-281/08 land burgenland and austria v commission [2012] ecr ii-0000, paragraph 48. (150) joined cases c-399 10 p and c-401 10 p bouygues sa, bouygues t l com sa v commission (not yet published in the ecr) and bp chemicals v commission, judgment in case t-11/95 [1998], para. 171. (151) a pari passu transaction is a transaction that is carried out under the same terms and conditions (and therefore with the same level of risk and rewards) by public bodies and private operators who are in a comparable situation. (152) the loans of the two minority shareholders of msr (geisler & trimmel: eur [ ] million; weber: eur [ ] million; both with an interest rate of [ ] % with no collaterals) to msr are not relevant because they carried out the construction of the infrastructure and as parties with own interests in the project; they cannot be taken into consideration. (153) the project was called erlebnisregion n rburgring and it included a hotel. (154) base case (not worst or best case). (155) results for the period 2010-2030. (156) worst case (157) commission regulation (ec) no 1998/2006 of 15 december 2006 on the application of articles 87 and 88 of the treaty to de minimis aid (oj l 379, 28.12.2006, p. 5). (158) see http://ec.europa.eu/competition/state_aid/legislation/reference_rates.html (159) see the communication from the commission on the revision of the method for setting the reference and discount rates (oj c 14, 19.1.2008, p. 6). (160) see the 2009 annual report of the court of auditors of the land, pages 3 and 4, available at http://www.landtag.rlp.de/landtag/drucksachen/4741-15.pdf (161) oj c 155, 20.6.2008, p. 10. (162) the aid amount is equal to (in eur million): 1,6 + 12 + (12,3/2) [0 + 5 + (11,5/2)] = 9. (163) case c-364/90, italy v commission [1993] ecr i-2097, para.20. (164) in this context, landkreis ahrweiler is also not an assisted area according to the eu aid map 2007-2013. (165) see case c-70/72 commission v germany [1973] ecr 00813, paragraph 13. (166) see joined cases c-278/92, c-279/92 and c-280/92 spain v commission [1994] ecr i-4103, paragraph 75. (167) see case c-75/97 belgium v commission [1999] ecr i-030671 paragraphs 64-65. (168) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1). (169) pursuant to germany, the elimination of the company from the trade register was filed on 22 may 2014. (170) ng, msr and cmhn are in the liquidation/insolvency procedure since 1 november 2012. under german law, at the moment of the launch of the liquidation/insolvency procedure, the business objective of the company changes from a full activity in a pure implementing company, which is eliminated on the basis of german law, but as long as the insolvency/insolvency proceedings have not been completed, the company as an implementing company must use the total assets in compliance with the principle of sound financial management. (171) case c-42-93, spain v commission (merco) [1994] ecr i-4175. (172) case c-52/84, commission v belgium [1986] ecr p. 89. (173) judgment of the court of 8 may 2003, italian republic and sim 2 multimedia spa v commission of the european communities, joined cases c-328/99 and c-399/00, ecr 2003 i-4035. (174) commission decision of 17 september 2008, state aid n 321/2008, n 322/2008 and n 323/2008 greece vente de certains actifs d'olympic airlines/olympic airways services; commission decision 12 november 2008 state aid n 510/2008 italy sale of assets of alitalia; commission decision of 4 april 2012 sa.34547 france reprise des actifs du groupe sernam dans le cadre de son redressement judiciaire. (175) judgment of the general court of 28 march 2012 in case t-123/09, ryanair ltd v commission, ecli:eu:t:2012:164. (176) bag, judgement of 19 december 2013 6 azr 790/12; bag, judgement of 20 march 2003 8 azr 97/02. (177) judgment of the court of 16 december 2010 in case c-239/09 seydaland, paragraph 34. (178) the relevant text of the first draft of the asset purchase agreement states: the bidder is aware of the fact that currently an investigation procedure is pending at the european commission, the subject-matter of which is the admissibility of state aid which has been granted to the n rburgring and the possible recovery of aid. the sellers are in regular contact with the relevant service of the european commission and strive to achieve a formal decision which indicates that the european commission shall not order any recovery of the granted aid from the purchaser. they are open to a constructive discussion with the bidder as to how the parties shall proceed with regard to these circumstances in connection with the sale of any or all assets of the n rburgring and of a possible transition period until a final decision has been rendered by the commission. (179) in particular, [bidder 2]'s offer foresaw that its offered price would only be payable upon the existence of a non-challengeable commission decision declaring that the aid would not be recovered from the buyer of the assets. [bidder 3]'s offer foresaw that the buyer could withdraw from the sale, in spite the existence of a commission decision, to its own discretion. (180) the respective part of letter of 17 december 2013 reads as follows: for the sake of clarity, offers handed in after that timeline will, in principle, also be considered provided that the terms of the offer qualify for the further process. any disadvantage caused by the delay will not be compensated for and will have to be fully borne by the investor. please note that the vendors may choose the parties which will qualify for the further process shortly after the updated timeline ends. (181) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 140, 30.4.2004, p. 1). (182) commission regulation (ec) no 271/2008 of 30 january 2008 amending regulation (ec) no 794/2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 82, 25.3.2008, p. 1).

name: commission decision (eu) 2016/154 of 22 july 2015 on state aid sa.13869 (c 68/2002) (ex nn 80/2002) reclassification as capital of the tax-exempt accounting provisions for the renewal of the high-voltage transmission network (rag) implemented by france in favour of edf (notified under document c(2015) 4959) (text with eea relevance) type: decision subject matter: accounting; industrial structures and policy; competition; economic policy; cooperation policy; europe; electrical and nuclear industries; energy policy date published: 2016-02-10 10.2.2016 en official journal of the european union l 34/152 commission decision (eu) 2016/154 of 22 july 2015 on state aid sa.13869 (c 68/2002) (ex nn 80/2002) reclassification as capital of the tax-exempt accounting provisions for the renewal of the high-voltage transmission network (rag) implemented by france in favour of edf (notified under document c(2015) 4959) (only the french text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof (1), having called on interested parties to submit their comments pursuant to that article (2), and having regard to their comments, whereas: (1) by decision of 16 october 2002 the commission initiated the formal investigation procedure under article 108(2) of the tfeu (the opening decision) into the advantage resulting from the non-payment by tablissement public caract re industriel et commercial lectricit de france (e.d.f.), service national (edf, which became the public limited company lectricit de france sa towards the end of 2004) of the corporation tax due, when it restructured its balance sheet in 1997, on some of the accounting provisions created free of tax for the renewal of the high-voltage transmission network (r seau d'alimentation g n ral rag) and reclassified as capital. (2) the french authorities, in their comments submitted to the commission by letter dated 11 december 2002, denied that edf had received a tax concession and argued that the additional capital contribution corrected an under-capitalisation and was therefore justified. (3) by letter dated 21 january 2003, the commission forwarded to france the only observations received from one interested third party and invited the french authorities to submit their comments. france did not present any comments on these observations. (4) a technical meeting between the commission and the french authorities was held on 12 february 2003, followed by a request for information by the commission dated 4 july 2003. (5) on 11 november 2003, france provided additional information. on 17 november 2003, a further technical meeting was held between the commission, the french authorities and representatives of edf. the french authorities provided additional information on 20 november 2003. (6) by decision of 16 december 2003 (3), the commission declared the aid measure in favour of edf incompatible with the internal market and requested recovery of the aid with interest. the aid was repaid in february 2004. (7) by judgment of 15 december 2009, the general court annulled the commission's decision (4). france repaid to edf the amount of aid which had been reimbursed in 2004. (8) by judgment of 5 june 2012, the court of justice rejected the appeal lodged by the commission against the judgment of the general court (5). (9) by decision of 2 may 2013, the commission extended the formal investigation procedure (the extension decision) (6). (10) the french authorities submitted their comments to the commission on 1 july 2013. (11) by letter dated 13 august 2013, the commission forwarded to france the observations dated 29 july 2013 received from one interested third party, namely edf, and invited the french authorities to submit their comments. on 11 october 2013, france submitted its comments on the observations by edf. (12) on 18 october 2013, edf sent to the commission a study prepared by a consultant (oxera) dated 15 october 2013. on 22 october 2013, the commission sent this study to france and invited the french authorities to submit their comments. however, the invitation was subject to the reservation that the study had been submitted more than two and a half months after the deadline set by the extension decision and, furthermore, it had been drawn up after the decision to invest in edf on which france was relying. on 6 november 2013, france submitted its comments on the study. (13) a meeting between the commission and the french authorities was held on 14 november 2013. on 15 november 2013, the commission asked for further information and clarifications on the observations by france, which were submitted on 23 december 2013. (14) on 22 november 2013, edf sent to the commission a legal opinion commissioned by edf further to and in support of its observations of 29 july 2013. (15) at the request of edf, a meeting with the commission in the presence of the french authorities was held on 12 march 2014. (16) on 13 may 2014, the commission requested comments on the legal opinion submitted by edf and clarifications and additional information from france, which the latter provided by letter dated 19 june 2014. 1. detailed description of the measure 1.1. the beneficiary: edf, changes in its status and its capital (17) edf was set up by act no 46-628 of 8 april 1946 on the nationalisation of electricity and gas (act no 46-628), which, in its first article, nationalised the production, transport, distribution, and import and export of electricity in france. this act entrusted the management of the nationalised electricity enterprises to a national public industrial and commercial establishment called lectricit de france (e.d.f.), service national. (18) article 16 of act no 46-628 provided that the net balance of the assets, rights and obligations transferred to edf constituted its capital, belonged to the nation, was inalienable and, in the event of operating losses, had to be reconstituted using the results of subsequent years. under article 1 of decree no 56-493 of 14 may 1956 on capital contributions to edf, those contributions were subject to the rules laid down by article 16 of the above act. article 2 of the same decree stipulates that the capital contributions give rise to payment to the state of interest and a dividend. (19) by virtue of act no 46-628, edf had been since its creation, and still was in 1997, a national public industrial and commercial establishment that was not governed by the provisions applicable to public limited companies. a national public industrial and commercial establishment does not have any share capital, unlike a limited company governed by public law, which is owned by its shareholders (7). despite the terms capital and capital contribution used in the relevant instruments, edf, because of its status as a legal person governed by public law, did not have any share capital. act no 2004-803 of 9 august 2004 on the public electricity and gas service and on electricity and gas enterprises (act no 2004-803) provided for a future change to this status. article 24 of act no 2004-803 stipulated that edf, in which the state had to hold more than 70 % of the capital, would be governed by the laws applicable to public limited companies, save as otherwise provided by statute. article 47 of the act also provided for the subsequent conversion of the public establishment edf into a public limited company, subject to the publication of a decree on its new status. article 46 laid down that the balance sheet of the company edf at 31 december 2004 would be based on the balance sheet at 31 december 2003 and the income statement of the public establishment edf for the 2004 financial year. (20) the conversion of edf into a public limited company became effective by application of decree no 2004-1224 of 17 november 2004 on the statutes of the public limited company lectricit de france. the statutes annexed to the decree provided that edf would now be a public limited company governed by the laws and regulations applicable to commercial companies, in particular the commercial code, unless otherwise specified by more detailed provisions, including the statutes themselves. (21) article 6 of the edf statutes provides that the company's share capital, which was initially wholly owned by the state, is set at eur 8,129 billion, divided into 1 625 800 000 shares of eur 5 each. the share capital of the new public limited company edf was set in november 2004 at the same amount as the cumulated capital and capital contributions of the publicly owned industrial and commercial establishment edf at that time, i.e. eur 8,1 billion. this amount of capital and capital contributions had been reached under application of act no 97-1026 of 10 november 1997 on various economic and commercial measures (act no 97-1026) and had remained unchanged since 1997. (22) as stipulated by act no 2004-803 and the edf statutes, the state had and has to hold more than 70 % of the company's capital at any time. in november 2005, new edf shares accepted for listing on euronext were offered at an open price, thereby effectively opening edf's capital to shareholders other than the state. 1.2. the creation of accounting provisions for the renewal of the high-voltage transmission network (rag) (23) article 36 of act no 46-628 transferred all the nationalised electricity concessions to edf. under article 37 of the act, the concessionaire is required to comply with a standard set of terms and conditions in relation to the concessions. in 1958, the various electricity transmission concessions that had been transferred to edf by the state were converted into a single concession known as the r seau d'alimentation g n rale (rag) (high-voltage transmission network). (24) in the absence of specific accounting rules for concessions, as early as 1946 edf considered that it was the owner of the assets comprising the rag and included those assets in its balance sheet. pursuant to article 8 of the terms and conditions approved by decree no 56-1225 of 28 november 1956, edf was required to carry out, at its expense, all the maintenance and renewal work needed to keep the concession structures in good working order. (25) in 1987, following a 1982 amendment to the general accounting plan that laid down specific rules for the assets to be returned to the state at the end of the concession, edf changed its accounting practice for the assets constituting the rag, which had until then been considered to be own assets, and classified them under the balance sheet item assets under concession. edf applied to those assets the special accounting rules established in france for assets under concession that have to be returned to the state at the end of the concession period, and created tax-free provisions for the renewal of the rag. (26) in a 1994 report (8), the french court of auditors considered that, in the presence of a sole and permanent concessionaire from the state, nominated by law, such as edf, it was difficult to regard the assets constituting the rag as having to be returned to the state at the end of the concession, as opposed to the rag's own assets belonging to edf. in other words, the court of auditors took the view that the accounting change introduced by edf in 1987, which was reflected in the setting-up of tax-free provisions, was not justified. work to regularise edf's situation was started rapidly between the undertaking and the supervising authorities. (27) in 1997, edf's accounts contained two types of tax-exempt provisions for the renewal of the rag: unused provisions amounting to frf 38,5 billion, and grantor rights corresponding to renewal operations already carried out, amounting to frf 18,345 billion. 1.3. reclassification of the accounting provisions (28) act no 97-1026 clarified the status of the assets constituting the rag. article 4 of the act provides: i. the structures of the high-voltage electricity transmission network are deemed to have been owned by lectricit de france (edf) from the time that it was granted the concession for that network. ii. for the purposes of applying the provisions of paragraph i, as at 1 january 1997, the value of the assets in kind allocated under concession to the high-voltage transmission network appearing as liabilities on edf's balance sheet is to be entered, net of the corresponding revaluation differences, under the item contributed capital . (29) reference to the act was necessary for any operation relating to edf's capital. article 16 of act no 46-628, in the version in force in 1997, provided that edf's capital was inalienable and belonged to the nation. therefore, under french law, the capital contributions to edf resulting from the reclassification of the provisions for the renewal of the rag were a matter for the law. (30) act no 97-1026 establishes the ownership of the assets constituting the rag. edf's balance sheet was therefore reorganised by act no 97-1026. the provisions set up by edf between 1987 and 1996 for the renewal of the rag with a view to returning those assets to the state, whether or not they had been used, would become superfluous if edf were deemed to own the assets constituting the rag. (31) annex 1 to a letter addressed to edf on 22 december 1997 by the minister for economic affairs, finance and industry, the secretary of state for the budget and the secretary of state for industry (the letter from the minister for economic affairs) explained the restructuring of the upper part of edf's balance sheet pursuant to article 4 of act no 97-1026 of 10 november 1997: reclassification of grantor rights (frf 18 345 563 605): consolidation as capital contributions of the value of assets in kind allocated under concession to the rag, amounting to frf 14 119 065 335. amalgamation of the revaluation reserves for the rag in 1959 (frf 2 425 million) and 1976 (non-depreciable fixed assets: frf 97 million) with the item revaluation reserves rag , which is thus increased from frf 1 720 million to frf 4 145 million. amalgamation of the statutory provisions for the revaluation of depreciable fixed assets in 1976 (frf 1 704 million), the item thus increasing from frf 877 million to frf 2 581 million. reclassification of the renewal provisions which have become unwarranted (frf 38 520 943 408) as retained income, in accordance with national accountancy council opinion no 97-06 of 18 june 1997 on accountancy changes. (32) in reorganising edf's balance sheet, the french authorities followed national accountancy council opinion no 97-06 of 18 june 1997 on changes to accounting methods, changes to estimates, changes to tax options and corrections to errors (the national accountancy council opinion), which states that corrections to accounting errors, which by their very nature relate to the posting of past transactions, should be posted in the accounts for the financial year in which they are discovered. (33) in accordance with act no 97-1026 of 10 november 1997 and the letter from the minister for economic affairs, the revaluation reserves were transferred to the item own funds without incurring any tax since they corresponded to revaluation surpluses realised free of tax or under a tax neutrality arrangement pursuant to the 1959 and 1976 revaluation acts. 1.4. tax implications of the reclassification of the accounting provisions (34) annex 3 to the letter from the minister for economic affairs also sets out the tax implications of the reorganisation of edf's balance sheet. a net asset variation results from the reclassification of the unused renewal provisions amounting to frf 38,5 billion as retained income and is subject to corporation tax at the rate of 41,66 % applicable in 1997. the unused provisions amounting to frf 38,5 billion were thus correctly taxed by the french authorities. however, the part of the tax-free provisions consolidated as a capital contribution corresponding to the grantor rights was not taxed. (35) a memorandum by the directorate-general for taxation dated 9 april 2002, sent to the commission by the french authorities, stated that the grantor rights in respect of the rag represent an unowed debt which was unjustifiably exempted from tax by being incorporated into the capital and that before this reserve was incorporated into the capital, it should have been transferred from the enterprise's liabilities, where it was incorrectly posted, to a net assets account, thereby resulting in a positive variation in net worth that was taxable under article 38(2) of the general tax code. they noted that the tax concession thus obtained [by edf in 1997] can be estimated at frf 5,88 billion (14,119 41,66 %). 2. opening decision (36) in its opening decision, the commission concluded that the irregular creation of additional provisions for the renewal of the rag between 1987 and 1996 had favoured edf within the meaning of article 107(1) of the tfeu. this operation had conferred on edf a selective economic advantage resulting from the difference between the capitalised value of the unpaid corporation tax on the provisions during the same period and the amount of corporation tax paid by edf in 1997, following the entry into force of article 4 of act no 97-1026. (37) despite the fact that edf engaged in activities in france on a series of markets subject to monopoly rights before the entry into force of directive 96/92/ec of the european parliament and of the council (9) liberalising the electricity sector, the commission considered that the aid measures in question in favour of edf had distorted or threatened to distort competition and affected trade between member states within the meaning of article 107(1) of the tfeu. this resulted in particular from the fact that, despite the exclusive rights enjoyed by edf in engaging in certain activities in france, there was nevertheless a degree of trade between member states on those markets. moreover, free competition also existed on related markets where edf had already diversified its activities beyond its exclusive rights in both geographic and sectoral terms. these effects already existed well before the liberalisation of the electricity sector. (38) the commission also concluded that it was new aid which did not appear, at that stage, to meet the requirements that must be fulfilled for finding that the conditions laid down in article 107(2) and (3) of the tfeu were fulfilled. furthermore, the french authorities did not rely on the application of article 106(2) of the tfeu. 3. comments by an interested party (39) by letter dated 6 january 2003, the national association of independent thermal electricity producers (snpiet) submitted comments to the commission in the context of the formal investigation procedure. in relation to the non-payment in 1997 of corporation tax on some of the tax-free provisions created for the renewal of the rag, snpiet alleged that edf had not complied in its operations with normal practice in industrial and commercial enterprises, contrary to the provisions of act no 46-628 of 8 april 1946. 4. comments by france on the decision to initiate the formal investigation procedure (40) the french authorities submitted their comments to the commission by letter of 11 december 2002. they challenged the classification as state aid of the non-payment in 1997 of corporation tax on some of the accounting provisions created free of tax for the renewal of the high-voltage transmission network. (41) first of all, they disputed the amount of the provisions created for the renewal of the high-voltage transmission network (rag) advanced by the commission. second, the french authorities claimed that, even if edf had not set aside provisions for the renewal of the rag, it would still not have been liable for the payment of corporation tax between 1987 and 1996 because of the carry-over of large tax losses. furthermore, since the state was both the owner of edf and the grantor of the concession on the rag, they considered that the grantor rights did not provide it with a genuinely enforceable claim. consequently, when the balance sheet was restructured in 1997, they assigned those rights to edf's capital and reserves in order to correct its under-capitalisation, but without subjecting them to corporation tax. (42) the french authorities took the view that the restructuring of edf's accounts in 1997 could be interpreted as a capital contribution of an amount equivalent to the partial tax exemption, the aim of which was also to correct under-capitalisation. edf and the state would have liked to allocate the quasi-own assets to capital, leaving aside the question of corporation tax. it was thought that it would be more efficient and more neutral to allocate the grantor rights directly, and in their full amount, to own funds, rather than to carry out the equivalent transaction, which would have entailed assigning to capital a net amount after corporation tax, requesting edf to pay corporation tax in an amount equal to the variation in net worth and, finally, making an additional capital contribution in an amount equal to the tax paid. (43) the french authorities took the view that an additional contribution was justified by edf's projected profits in 1997, which were in fact achieved during subsequent years. according to the french authorities, in comparable circumstances, a private investor in a market economy would have made such a capital contribution. (44) they also denied that the remuneration of the state had been unduly reduced between 1987 and 1996 as a result of the creation of the provisions in question. they argued that, even if the net result had been higher, the remuneration of the state would not have been increased since, during that period, the level of that remuneration did not correspond to a predetermined percentage of edf's net result. the level was determined freely by the state in absolute terms and did not necessarily depend on edf's financial situation. nor did the remuneration have to be deducted from the net profits for each year. in view of the foregoing, and given the losses carried over by edf, the french authorities stressed that between 1987 and 1996 the state had in fact taken a dividend considerably in excess of the limits laid down by company law. (45) the french authorities also considered that, even if the creation of provisions for the renewal of the rag had resulted in an advantage, that advantage had to be regarded as cancelled out by the increase in corporation tax paid in 1997. they claimed that, over the period from 1987 to 1996, edf paid more to the state overall than the corporation tax that would have been paid by a commercial company which did not create provisions for the renewal of the rag and which paid its shareholder a dividend equal to 37,5 % of its net result after tax. (46) the french authorities also argued that, if edf were found to have benefited from an undue advantage, it would constitute existing aid and not new aid on account of the expiry of the 10-year limitation period laid down in article 15 of council regulation (ec) no 659/1999 (10), which started to run from the date on which the initial aid was granted. since the commission's first request for information was made on 10 july 2001, any aid granted before 1991 would be time-barred. the french authorities took the view that the legislative measures adopted in 1997 did not suspend the limitation period since only action by the commission could have that effect. the french authorities argued finally that the measure would constitute existing aid in any event since it was granted prior to the liberalisation of the electricity market. (47) in their letter dated 20 november 2003, the french authorities reiterated their arguments concerning the revaluation reserves included in the amount of the grantor rights appearing in the accounts and concerning application of the limitation rule. moreover, they claimed that the rate of corporation tax that should have been applied when edf's balance sheet was restructured was the 1996 rate (36,67 %) and not the 1997 rate (41,66 %). they considered that the restructuring was carried out on the basis of a tax return filed on 23 december 1997, after closure of the accounts for 1996 but before the 1997 accounts were finalised. (48) the french authorities thus disputed the commission's claim that edf benefited from an advantage in 1997 on account of the non-payment of corporation tax on some of the provisions created free of tax for the renewal of the high-voltage transmission network. 5. judgments by the eu courts (49) by its judgment of 15 december 2009, the general court annulled the commission's decision of 16 december 2003 on the ground that it was incumbent on the commission to determine whether a private investor would have invested a comparable amount in similar circumstances. the general court took the view that the commission should have checked whether the operation satisfied the private investor test. the general court therefore considered that the commission had committed an error of law and infringed article 107 of the tfeu. (50) in its judgment of 5 june 2012, the court of justice dismissed the appeal brought by the commission against the judgment of the general court. the court of justice considered that the finding made by the general court, to the effect that the obligation for the commission to verify whether the capital had been provided by the state in circumstances corresponding to normal market conditions existed regardless of the way in which that capital had been provided by the state, was not vitiated by an error of law. the court of justice also took the view that the general court did not err in law either in finding that the private investor test may be applicable even where fiscal means have been employed. 6. decision to extend the formal investigation procedure (51) as a result of the annulment of the decision of 16 december 2003, the commission had to adopt a new decision under article 266 of the tfeu and article 13 of regulation (ec) no 659/1999 terminating the procedure by complying with the points of law established definitively by the judgment of the general court. since the decision of 16 december 2003 had been annulled, the commission had to re-examine the questions relating to articles 3 and 4 of that decision. (52) on the one hand, neither the court of justice nor the general court had found that the opening decision was irregular. it could therefore form the basis for a new final decision. on the other hand, the general court clearly laid down the conditions governing the applicability and application of the private investor test. these criteria were based on the existence of objective and verifiable evidence showing that the decision by the member state was to make an investment in the public undertaking on the basis of economic evaluations comparable to those which a rational private investor would have had carried out, before making the investment, in order to determine its future profitability (11). (53) in the decision to extend the formal investigation procedure, the commission noted that, at that stage of the administrative procedure, there was no evidence, demonstration or document to support the statement by the french authorities that the accounting reform of 1997 could be interpreted as a capital contribution of an amount equivalent to the partial tax exemption. contrary to the observations by the french authorities, nor was such a capital contribution an investment rather than an aid measure which a rational private investor in a market economy would have made in comparable circumstances, justified by edf's projected profits in 1997, which were in fact achieved during subsequent years. (54) accordingly, in the extension decision, the commission set out, in the light of the available information and documents, its preliminary analysis of the potential economic advantage arising from the non-payment by edf in 1997 of corporation tax on the part of the provisions corresponding to the frf 14,119 billion in grantor rights which were reclassified as capital contributions. (55) in that regard, the overall assessment of the facts of the case seemed to indicate that that measure involved the public authorities, thereby precluding the applicability of the principle of the private investor. in support of their claim, the french authorities had not provided any information or business plan preceding or contemporaneous with the decision not to levy the tax on edf demonstrating the profitability of such an operation. from a substantive perspective, having regard to the criteria laid down by the general court, the commission noted that it was for france to duly establish the date of the documents provided and the evidence that they had been examined by the relevant ministers and officials and the houses of parliament before the contested decision was adopted. (56) in the absence of this information, however, it was in the exercise of its powers of taxation that france appeared to have reserved a more favourable tax treatment for the restructuring of the upper part of edf's balance sheet, in relation to the reclassification of the grantor rights provided for in article 4 of act no 97-1026. no specific budgetary provision earmarked this tax resource to edf, just as the rules and checks relating to investments had not been implemented to provide a legal basis for the alleged investment. (57) likewise, in its extension decision, the commission noted in the alternative that, even if the principle of the private investor in a market economy had been applicable, application of the principle resulted in the conclusion at that stage that a private investor would not have invested frf 5,88 billion in the capital contribution to edf in 1997. in the absence of information provided by the french authorities, it seemed excluded that a private shareholder under normal market conditions would have gone ahead with the alleged investment without previously examining objective and reliable studies, preferably carried out by an impartial independent investment adviser, rather than, for example, by the beneficiary enterprise, which stated, in particular, the return on capital invested, the return period on the investment and the inherent risks in absolute terms and in relation to the remuneration arrangements linked to such an investment. (58) in that regard, the commission added to the factors which a rational private investor would have examined before committing funds the uncertainty about the amount and the future course of the pension financing costs facing edf in 1997, under its specific pension scheme, and the assessment that an investor would make at that time. (59) under those conditions, the partial exemption from corporation tax in 1997 was not a productive investment by the state shareholder but rather a tax exemption measure likely to have conferred an economic advantage on edf. (60) furthermore, it appeared that the failure to levy the corporation tax owed by edf involved state resources and was likely to distort competition and affect trade between member states, thereby fulfilling the conditions for the application of article 107(1) of the tfeu. (61) in the absence of a legal basis justifying the compatibility with the internal market of operating aid that strengthened edf's position in relation to its competitors, the commission, in its decision of 2 may 2013, doubted whether the aid was compatible with the internal market. similar doubts had already been raised in the opening decision. 7. comments by third parties (62) by letter dated 29 july 2013, edf submitted its comments on the extension decision. edf levelled three main criticisms at the arguments set out in that decision: (i) the decision ignored the lessons of the judgment of the general court and failed to recognise the true nature of the recapitalisation of edf carried out by the state; (ii) the decision was excessively formalistic in that it wrongly postulated the need for a business plan linked to the investment, whereas the recapitalisation was the fruit of a lengthy reflection process, as attested by many documents from that period; and (iii) the decision argued, without any demonstration, that no investor in a situation as close as possible to that of the state would have made a comparable investment, contrary to the information provided by edf in support of its observations. (63) edf took the view that the commission was therefore continuing to analyse the measure adopted by the french state in 1997 from the sole perspective of its alleged tax implications, even though the general court had clearly rejected that approach. as the general court had confirmed, the measure implemented by the state when it reclassified the grantor rights as capital contributions constituted a recapitalisation of edf intended to correct the imbalance on edf's balance sheet with view to the opening-up of the energy markets to competition. the letter from the minister for economic affairs dated 22 december 1997 did not contain a tax decision that departed from the 1997 act but served to point out the tax implications. it was that this single and indivisible recapitalisation measure that should be examined, not the alleged tax implications, which were artificially dissociated in the decision to extend the formal investigation procedure. (64) according to edf, a business plan specific to the investment was not required by the case-law, which did not establish any formalism on that question but requires objective and verifiable evidence pre-dating or contemporaneous with the measure under examination. incidentally, such a business plan would not have been essential for the state in 1997. the state had five representatives on edf's management board, had held all of edf's capital since 1946 and, at the time, had detailed knowledge of the enterprise and was involved in its management and in setting its strategic objectives, with a long-term time horizon. according to edf, such a long-term time horizon was particularly relevant in the case of edf because of the capital intensiveness of its activity and the decades-long useful life of its installations, ranging from 30 to 75 years in some cases. (65) edf took the view that it was as a shareholder and not as a public authority that the state, as attested by many contemporary documents, had carried out an investment on the basis of precise forward-looking analyses and assessments. thus, as early as 1995 discussions had begun between edf and its line ministries in order to draw the conclusions from the opinion of the court of auditors referred to in recital 26. these discussions focused on the reorganisation of the balance sheet of the undertaking and the return on capital. they resulted in the signature, on 8 april 1997, of the contract for services between the state and edf for the period 1997-2000 and the concomitant tabling, on 2 april 1997, of a draft law on various economic and financial measures, article 45 of which was identical to article 4 of act no 97-1026. according to edf, the preparatory work in the national assembly and the senate, and even the act itself, demonstrated that the nature of the intervention by the state was that of a shareholder: a capital contribution recapitalising edf. (66) as attested by some 40 contemporaneous documents that edf attached to its accounts, the state had been guided in its analyses and reflections by four main concerns: taking into consideration the new competitive context of the gradual opening-up of the markets following directive 96/92/ec, normalising its financial relations with edf on the basis of ordinary law by putting an end to the ambiguities which had existed in the past, rectifying the significant imbalance which was affecting the structure of edf's balance sheet by strengthening its own funds, facilitating international comparisons to increase the credibility of the enterprise within the financial community. (67) lastly, for edf, the criterion of the prudent private investor in a market economy was not only applicable because of the considerations referred to above but was also satisfied in this case since the state had acted as a private investor would have done. in the view of edf, according to the court of justice (paragraphs 78 and 89 of the judgment), the question was one of determining whether edf, in circumstances which corresponded to normal market conditions, could have obtained the same advantage as that which had been made available to it through state resources and whether the advantage, because of its effects, distorted or threatened to distort competition. (68) here again, many contemporaneous documents demonstrate that the state had indeed examined and quantified the profitability of its investment, as would have done an investor who was the sole shareholder in the undertaking operating to a long-term time horizon. it was on that basis that the remuneration of the state had been set in the contract for services between the state and edf for the period 1997-2000. at the time, the remuneration was consistent with the remuneration of shareholders in comparable companies. the estimates of the amounts that edf would have to pay to the state from 1997 to 2000 had therefore been examined by the latter before the contract was concluded. (69) moreover, in its comments of july 2013, edf had anticipated a study commissioned from oxera, which had not yet been finalised when edf made its submission. edf had claimed that the oxera study would compare the internal rate of return expected on the investment by the state in 1997 with that required by the capital markets for a similar investment and would show that a private investor would have made the investment under the conditions set in the contract for services for 1997-2000. (70) on 18 october 2013, edf had sent to the commission the study by oxera, which was dated 15 october 2013 (12), without further comment. as edf had anticipated in its comments in july 2013, the study by oxera concluded that a prudent private investor in a market economy would have invested in the increase in the amount of capital in edf. this conclusion resulted from the fact that the profitability (internal rate of return) that an investor could have expected in 1997 lay somewhere between 35 % and 15 %, with an average of 27 %, over five years, which in any event was higher than the return of 12,7 % that such an investor would have required. the return was calculated by taking into account the value, at the start and end of the period, of the sale of the rights in edf held by the state. (71) edf took the view that, apart from the weakness in own funds, its economic fundamentals were healthy in 1997, as analysts had commented at the time, without expressing any concerns about its financial viability or its commercial prospects at the time the state made its investment. edf's credit rating was excellent (aaa for moody's between 1992 and 1997, aaa for standard & poor's in 1996-1997) and remained so despite it having been necessary to lower it by one or two notches to take account of the state guarantee available to edf as a public industrial and commercial establishment. several contemporaneous documents showed that the level of remuneration of the french state by edf was comparable to the rate of return from dividends from companies listed on the french stock exchange (cac 40) (4,5 % to 5 % on capital) and from undertakings active in the energy sector in europe (estimated at 4,7 % and 5,27 % for 1996 and 1997 respectively). moreover, this demonstrated that edf could have obtained the same amount of capital on the capital market, so the measure, because of its effects, had not been of such a nature as to distort competition. (72) in particular, edf took the view that a private investor holding the entire share capital in a subsidiary would have been able to make, under comparable conditions, a similar investment in that subsidiary by converting any type of claim held against the subsidiary into capital. this analysis was supported by a legal opinion issued at the request of edf. in seeking to rectify a financial structure that was distorted by the weakness of its own capital compared with the financial indebtedness, the state would also have allowed the undertaking to compete with other leading operators in the sector in the eu. the same shareholder would not, therefore, have left untouched a significant imbalance in the balance sheet of its subsidiary with sound economic fundamentals, while it had an easy method of correcting the imbalance by converting a claim into capital. (73) in the view of edf, it was therefore reasonable to think that a private investor in a situation as close as possible to that of the state, i.e. the sole shareholder in the company, operating to a long-term time horizon, in a highly capital-intensive market on the verge of being opened up to competition, would have made the same investment. 8. comments by france on the decision to extend the formal investigation procedure (74) the french authorities considered, first, that the state had acted as a prudent investor in a market economy when it reclassified, free of corporation tax, the grantor rights as capital contributions to edf. they took the view that, contrary to the presentation in the decision to open the investigation procedure of 16 october 2002 and in the decision to extend the procedure of 2 may 2013, the measure that the commission should analyse was a single measure to recapitalise edf through the adoption of article 4 of act no 9-1026 and not the measure to grant a tax exemption on the reclassification of the grantor rights as a capital contribution, which was separable under the said act. they relied on the information presented in a number of documents dating from 1996 and 1997 annexed to their comments, which they believed supported and corroborated that argument. these documents are referred to in recitals 87 to 108. as far as the french authorities were concerned, other documents submitted by edf backed up their comments. (75) in the alternative, the french authorities pointed out that they disputed the amount of aid and reiterated their comments of 20 november 2003 to the effect that the rate of the relevant tax to be applied should be the 1996 rate and not the 1997 rate, as set out in recital 47. on the applicability of the principle of the private investor in a market economy (76) the french authorities disputed that france had granted the tax exemption at issue in its capacity as a public authority, which made the principle of the prudent private investor in a market economy inapplicable. they considered that the general court did not require the member state to submit a genuine business plan relating to the contested measure. (77) in that regard, first, they pointed out that in 1997 edf was a public industrial and commercial establishment placed under the supervision of the state, which, therefore, had a detailed knowledge of the undertaking and of its industrial strategy and financial prospects. accordingly, they took the view that the submission of the information and evaluations available to the state before it took the contested measure, which demonstrated the profitability of the investment, was admissible. the commission had to carry out an overall analysis, including in particular this information and any other relevant information. (78) second, given the nature and purpose of article 4 of act no 97-1026, the french authorities took the view that the state had acted in its capacity as shareholder by granting a tax exemption on the reclassification of the grantor rights. thus, this act had been preceded by the signature on 8 april 1997 of the contract for services between the state and edf for the period 1997-2000, the performance of which involved the adoption of legislative measures to restructure edf's balance sheet. previously, in a letter dated 12 july 1996, the supervisory authorities had informed edf that the contract should set it an ambitious target for the remuneration of the state. title iii of the contract provided for a remuneration of the state comprising two elements: (i) a remuneration on the capital contributions at a fixed rate of 3 %; and (ii) an additional remuneration equal to 40 % of edf's net income, whereby the combined amount of the two elements could not, however, exceed 6 % of the amount of the capital contributions. (79) the state had examined this remuneration in the form of prospective dividends and quantified the additional remuneration at frf 3,5 billion, which could reach frf 6 billion over the period, as documented by a letter dated 22 april 1997 from the supervisory authorities to edf. this estimate was based on the economic-financial prospects that edf had sent to the ministry of finance on 19 february 1997 and on the assumptions underlying the contract for services. the report from september 1997 by the rapporteur to the senate on act no 97-1026 also included analyses by the ministry's departments of the expected impact on the remuneration of the state as shareholder for 1998, i.e. frf 2,6 billion, of which frf 1,5 billion was fixed interest and frf 1,1 billion was additional remuneration. the state had therefore estimated the projected remuneration before adopting the measure at issue, as would any shareholder wishing to take part in a capital increase in their company. (80) third, the french authorities considered that the reclassification of the grantor rights and, more broadly, the restructuring of edf's balance sheet and the strengthening of own funds had rectified the weakness in the financial structure of the enterprise. if this weakness had persisted, edf would probably have had to face an increase in the interest rate on its debt and a difficulty with its commercial partners because of a negative perception of the counterparty risk. that the state as shareholder had had such a concern emerged from the explanatory memorandum to article 4 of the draft law which then became act no 97-1026 and from the speech by the minister responsible when he tabled the draft law before the senate on 2 october 1997. (81) furthermore, the reports by the deputy and senator who acted as rapporteurs on the draft law before the national assembly and the senate respectively had stressed the positive effect of restructuring edf's balance sheet on the debt-equity ratios: the first report had judged the equity (frf 24,2 billion) to be insufficient in relation to the loan debts (frf 131,9 billion) and the net assets (frf 696,4 million); the strengthening of own funds had given edf a balance-sheet structure that better reflected its economic reality, while enabling more relevant comparisons with its european competitors; the second report, moreover, had stressed the positive effect for edf of greater credibility among the financial community and with its potential partners. the french authorities took the view that strengthening the financial structure of an enterprise was a concern of a prudent private investor in a market economy in a comparable situation. (82) according to the french authorities, the outcome was that the prudent private investor in a market economy test was indeed applicable since the state had acted as shareholder in reclassifying, free of tax, the provisions for grantor rights as capital contributions to edf. on the applicability of the principle of the private investor in a market economy (83) first of all, the french authorities pointed out that the contract for services between the state and edf had provided for a remuneration of the state resulting from two elements: (i) a fixed rate of 3 % on its capital contributions; and (ii) additional remuneration of 40 % of edf's net income, which demonstrated that the state had information on the expected yield on the invested capital. as attested, moreover, by the report by the member of the national assembly referred to above, given the existence of a fixed rate on the capital contributions, the reclassification of the grantor rights as capital had had the effect of increasing in absolute terms the value of the remuneration of the state, because of the broadening of the capital base. (84) next, the french authorities considered that the profitability of the investment in edf in 1997 should be looked at from a long-term perspective, having regard to the future payments to the state and to the increase in the value of the enterprise. substantial generation of resources between 1997 and 2000, of almost frf 70 billion, as forecast by the contract for services, had to be added to the positive net results after taxation and remuneration of the state (frf 1,4 billion in addition to frf 2,5 billion remuneration of the state in 1998). as underlined by the letter from edf dated 19 february 1997, the state had indeed set a target for the increase in the asset value of the enterprise of this amount, resulting from debt reduction, asset formation and investments in development, providing prospects for growth in the capital value of edf. (85) lastly, in assessing the risks of the investment, the state as shareholder had taken into account the characteristics of edf's main activity, which was conducted principally in france, on the basis of a principle of regulated tariffs which would have to cover the company's costs. these characteristics reduced the risk associated with the investment and, consequently, the profitability requirement. furthermore, a memo from edf dated 27 july 1996, which was sent to the senate on 15 september 1997, showed that the shareholder remuneration in foreign companies differed markedly, depending on the institutional and regulatory environment in the sector in each country. (86) according to the french authorities, the result was that the state had behaved as a prudent private investor in a market economy when it reclassified the provisions for grantor rights as capital contributions without levying corporation tax. furthermore, this conclusion was also confirmed by edf's comments, including the studies and analyses on which it relied, as set out in recitals 62 to73. in particular, as regards the economic study by oxera submitted by edf, the french authorities took the view that the commission should carry out the same analysis in order to determine whether or not the recapitalisation of edf by the state in 1997 was a prudent investment. documents submitted by france in support of its comments (87) in support of their reply to the extension decision, the french authorities sent the commission nine documents in attachment to their comments of 1 july 2013. they submitted these nine documents in support of the argument they had already put forward in their comments of 11 december 2002 to the effect that an additional capital contribution equivalent to the revenue from the uncollected tax was justified by edf's projected profits in 1997, which were achieved in the subsequent years. without prejudice to the documentary evidence cited by france in its comments, a systematic analysis of the evidence contained in these documents is required. (88) the documents relate either to the preparation or implementation of the contract for services for 1997-2000 between edf and the french state or to debates on the draft law which became act no 97-1026. they date from 1996 to 1997 and thus from the same period as the supposed investment decision. the documents concerned are the 1997-2000 contract for services (13), letters from the line ministers responsible for supervising edf (14), letters from edf to the ministry or the senate (15) and documents and two reports from the national assembly and the senate in preparation for debates on the draft law (16). their content is outlined in more detail below. (89) in a letter of 12 july 1996 to the chairman of edf, the line ministers welcomed the results of the 1993-1996 plan contract between edf and the state and, as it was due to expire on 31 december 1996, launched the preparation of the next plan contract for 1997-2000. they explained that the financial equilibrium in the 1997-2000 contract would be determined as part of a new tax and accounting framework for edf, following work conducted since 1995. they asked for discussions to start between the relevant departments and edf and outlined the three primary objectives for the future contract: first, the ministers wanted: the productivity gains achieved by the undertaking [to] allow it to continue its price reduction policy, thereby helping to boost the competitiveness of french industry and the purchasing power of domestic consumers, at the same time edf was to continue its debt reduction efforts and to set an ambitious target for the remuneration of the state, with an income-growth incentive mechanism for edf, lastly, the contract was to set strategic guidelines for developing edf worldwide, in order of priority. (90) as part of the ongoing preparatory work on the contract, on 19 february 1997 edf's finance director sent the treasury department a memo dated 18 february 1997. it contained the main hypotheses regarding the financial scenario underpinning the contract for services between edf and the state for 1997-2000, including in particular the projected annual income statements and cash flow statements for the period. (91) the memo forecast a price reduction each year ( [ ] (17) %, [ ] %, [ ] %, [ ] %), industrial investment of frf [ ], of which frf [ ] for international development, and investment of frf [ ] in the core business over the period 1997-2000. it also mentioned a tax-deductible remuneration for capital contributions of 3 % on an estimated base of frf 50 billion after restructuring of the balance sheet and of 40 % of income after the fixed remuneration component and corporation tax. debt at end of year was expected to go from frf [ ] at end 1996 to frf [ ] at end 2000. similarly, outstanding debt less assets was expected to go from frf [ ] at end 1996 to frf [ ] at end 2000. (92) of the documents submitted in annex to their comments by the french authorities, the edf memo of 18 february 1997, sent to the supervising authorities the following day, is the only one to contain systematic quantified projections for edf's economic and financial operating income. on the basis of these projections dating from february 1997, the state as shareholder could expect a return on the invested capital of frf 2,1 billion in 1997, frf 2,5 billion in 1998, frf 2,4 billion in 1999 and frf 2,4 billion in 2000, or an annual average of frf 2,35 billion. edf's projected income statement for 1997-2000 as set out in the memo was as follows: table 1 f projected income statement 1997-2000 (frf billion current value) 1997 1998 1999 2000 revenue 186,3 184,2 185,7 187,5 expenses 177,0 177,2 179,1 180,9 of which fuel and energy purchases 36,9 36,8 37,8 38,5 of which operating expenses 88,3 91,2 93,6 95,7 income from core business 9,3 7,0 6,6 6,6 income before remuneration of the state 6,8 6,5 6,1 6,1 remuneration for capital contributions 1,5 1,5 1,5 1,5 additional remuneration 0,6 1,0 0,9 0,9 corporation tax 3,9 2,6 2,4 2,3 net income 0,9 1,4 1,3 1,4 source: edf memo of 18 february 1997contract for services economic and financial prospects. (93) as mentioned in the edf memo, the remuneration paid to the state was tax deductible. this marked a departure from the principle of corporation tax being levied on income after interest and depreciation, thereby reducing net income and thus the amount that could potentially be paid out in dividends. this ad hoc departure potentially increased the state's remuneration as shareholder but decreased by the same amount the tax to be paid to the state as revenue collector. in their reply of 23 december 2013, the french authorities stated that the remuneration for the capital contributions was treated as a standard dividend from 2001 onwards, as a result of which it ceased to be tax deductible. this treatment was used for the group contract between edf and the state for 2001-2003, which replaced the 1997-2000 contract. (94) on 8 april 1997 a contract for services between edf and the state for the 1997-2000 period was agreed and signed by the line ministers and the edf chairman and ceo. the contract set out the main direction edf's medium-term action should take and contained reciprocal commitments by the parties, stating that these commitments had been entered into in the light of broad reference hypotheses and could be called into question only if there was a significant change in the business environment. the contract contained various commitments under three headings: reaffirming the core tasks of a public undertaking (title i), preparing the undertaking's future today (title ii) and a new financial and institutional framework for the undertaking (title iii). two annexes to the contract set out performance indicators used for implementation (annex i) and price movements forecast per year between 1997 and 2000 (annex ii). (95) the main commitments and guidelines laid down in the contract which relate to the scope of this decision are described below: the state confirmed that it wanted the undertaking to retain its legal status, which had proved its effectiveness and should remain a stable point of reference for future developments; this was in compliance with the eu directive on the internal market in electricity (18). for its part, edf was to contribute to spatial planning and national solidarity through an ambitious policy to support economic activity and employment by helping local authorities to create jobs and by improving the situation of its poorest customers (title i). edf's development was intended to boost the competitiveness of french business; the productivity gains to which it was committing were to be allocated as a priority to a reduction in the average level of its prices. the price adjustments should result in an average reduction at constant prices of [ ] % in april 1997, [ ] % in april 1998 followed by [ ] % in april 1999 and [ ] % in april 2000. at the same time, edf's development should be geared towards winning new markets, particularly in europe (title ii). edf's balance sheet was to be restructured with the two-fold aim of strengthening its net assets and stabilising its financial relationship with the state on a basis more akin to ordinary law. to this end the government undertook to present to parliament a legislative measure restructuring edf's balance sheet in 1997, with an effective restructuring date of 1 january 1997. the contract provided for a remuneration of the state as shareholder comprising two elements: a remuneration on the capital contributions at a rate of 3 % and an additional remuneration equal to 40 % of net income, whereby the combined amount of the two elements could not exceed 6 % of the amount of the capital contributions, though no estimate of the absolute amounts involved was included. in addition, for the period 1997-2000 edf undertook to allocate frf [ ] to industrial investment worldwide, to cut its gross debt by frf [ ] to bring it to frf [ ] at end 2000, with a view to an ultimate objective of zero debt by the time the generation system was renewed. lastly, the contract provided that, if targets were exceeded and a surplus resulted, this should be allocated as a priority to additional price reductions before paying out any dividends to the state as shareholder or profit-sharing bonuses to staff (title iii). (96) a letter dated 22 april 1997 to the edf chairman from the ministers who co-signed the contract for services confirmed that the reference hypotheses and financial projections contained in the edf memo of 18 february 1997 and which underpinned the 1997-2000 contract for services were consensual and fixed. the letter made express reference to the prior concertation between edf and the public authorities in preparing the financial scenario. it mentioned the target of an average [ ] % reduction in edf's prices in four years. (97) the letter of 22 april 1997 referred to the provisions of the decree of 14 may 1956, as amended, and the arrangements for the remuneration of the state included in title iii of the contract for services. in accordance with these provisions, the letter stated that the reference scenario gave an additional remuneration amount of frf 3,5 billion over the period 1997-2000 and that in these circumstances it would be possible to achieve a total value of payments to the state of frf 5,1 billion in 1997, including the fixed interest rate and the advance on corporation tax. these amounts are consistent with those contained in the edf memo of 18 february 1997. the consistency between the amounts of additional remuneration calculated on the basis of income demonstrates that all the amounts (revenue, expenses, net income, etc.) included in edf's projected income statement for the period 1997-2000 were examined, validated and approved by the supervising authorities. (98) the letter of 22 april 1997 from the ministers also stressed that the means of achieving equilibrium in the contract came under the accounting and tax framework accompanying the restructuring of edf's balance sheet, which was to take effect, subject to the necessary legislative provisions, on 1 january 1997. the letter stated, the detailed arrangements for implementing this restructuring, on both the accounting and the tax fronts, will be the subject, on the basis of the plan now adopted, of further discussions between the line ministries and the undertaking. (99) not long before this letter, the government had tabled a draft law before the national assembly. the draft law on various economic and financial measures was adopted by the council of ministers on 5 april 1997. article 45 provided for the reclassification of edf's accounting provisions. the explanatory memorandum to the draft law stated that the planned accounting adjustments would give edf a balance sheet that better reflected its real economic circumstances, with a level of own funds proportionate to its volume of activity. the draft law was not examined on account of the national assembly's being dissolved on 21 april 1997. (100) after the transmission to parliament of the draft law on urgent tax and financial measures, subsequently adopted as act no 97-1026, the national assembly and the senate appointed their rapporteurs. national assembly report no 204 described the background to the need to clarify the ownership of edf's transmission structures, which would nullify the accounting practices contested by the court of auditors in its special report on the edf concessions, no 1993 of 10 october 1994. it explained the accounting changes needed and provided estimates of their effects on the various balance-sheet items as follows: table 2 effects of the reorganisation of edf's own funds as a result of article 4 of the urgent tax and financial measures act on the accounts for 1996 (frf billion) end 1996 effect of article 4 own funds 24,2 79,8 of which (liabilities): paid-in capital 2,6 2,6 contributed capital 36,6 50,7 revaluation reserves 2,1 6,2 statutory reserves 0,15 0,15 retained income (19) 20,2 18,3 income after remuneration of the state 1,9 1,9 source: ministry of economic affairs and finance (101) the national assembly report stressed the draft law's effects that made comparisons with the debt ratios of european competitors (austria, united kingdom, sweden, spain, germany) more meaningful: after the restructuring of the balance sheet, edf's net debt/equity ratio would go from 480 % to 148 %. (102) the report also stressed the changes in the financial relations between edf and the state. it explained the legal regime and the remuneration for the capital contributions to edf, governed by decree no 56-493 of 14 may 1956, as amended by decree no 86-1360 of 30 december 1986. this regime provided for a fixed-rate remuneration capped at 8 % and additional remuneration as a percentage of edf's income after tax and fixed interest. the payments made by edf from 1991 to 1996 as described in the report total frf 3,41 billion per year on average during the period; proportional to own funds at the end of 1996, these payments gave an average operating profitability of 14,1 % for the state as shareholder (20). they are summarised in the table below. table 3 financial relations between the state and edf (frf million current value) 1991 1992 1993 1994 1995 1996 interest on capital contributions (gb line 407) 1 816 1 816 1 816 1 816 1 816 1 816 additional remuneration on capital contributions (gb line 116) 500 665 965 1 938 1 500 4 002 total 2 316 2 481 2 781 3 754 3 316 5 818 source: national assembly report, p. 77, committee calculations for total (103) the national assembly report stated with respect to the changes envisaged for the edf balance sheet that as the capital contributions form the base for the fixed interest, increasing them as a result of this article would increase the payment burden on edf. an amendment to the terms of remuneration was therefore included in the state-edf contract for 1997-2000 signed on 8 april 1997. the fixed interest rate has been brought down to 3 % in order to offset the effect of the base. the report pointed out that, despite the profits earned since 1990, edf had not paid corporation tax and that moving the provisions linked to the rag concessions up would wipe out in one go the accumulated tax and accounting deficit. the report noted that, according to the line ministry, this would leave the public establishment (edf) owing corporation tax of frf 3 billion in 1997 and frf 2,5 billion in 1998. (104) the national assembly report referred to a parliamentary amendment to the draft law, which was scrutinised and rejected by the committee. the amendment specified that the reclassified accounting provisions should be converted to own funds by an accounting entry that bypassed edf's income statement, in order to avoid showing a very high profit that the state might be tempted to tax in part. to this end, the amendment proposed that the act should define the accounting process and stipulate that no additional revenue could be collected from edf by the state on the ownership of the rag assets being transferred. the report indicated that the inclusion of the accounting process for converting the provisions to own funds in the act was ruled out at the request of the council of state on account of its not being of a legislative nature; in the discussion the report cited a number of parliamentary opinions to the effect that the state should be able to impose other charges on edf, the undertaking should pay corporation tax on its profits and the real question was how much the government was to collect from edf and by what means. (105) as for the senate, its report preparatory to the debate on the draft law found that there was no justification for creating accounting provisions for the renewal of the rag assets from 1987 onwards. when the draft law was presented to the senate on 2 october 1997, the minister responsible stressed the fictitious nature of edf's losses from a tax point of view, as well as the non-payment of corporation tax resulting from the provisions. the minister reassured the senate that the arrangements did nothing to call into question edf's monopoly position. the senate report outlined the consequences of the article under scrutiny on the items in edf's balance sheet before and after reclassification of the provisions, along similar lines to the national assembly report, as set out in table 2. it pointed out that cleaning up the balance sheet would make it easier to compare it with the balance sheets of edf's competitors; this would make edf more credible to the financial world, which was all the more important considering that the cost of debt renegotiation depended in particular on the debt/equity ratio. (106) as part of the clarification of edf's financial relations with the state, the senate report stated that in exchange for the tax revenue that the public establishment would now pay to the state, the contract for services signed on 8 april 1997 for 1997 to 2000 provides for a slight reduction in edf transfers to the state. as a result of the writing back of the renewal provision of frf 38,5 billion, making edf liable for corporation tax, the senate report stated that the financial relations between edf and the state have been revised downwards. (107) the other documents submitted by france include a cover letter dated 15 september 1997 from edf's finance department to the senate administration, to which were attached a table quantifying the effects of article 4 of the draft law, and showing the effects on the balance sheet, a copy of the instruction of 27 july 1993 on the electricity distribution concessions and an internal edf memo discussing foreign experiences of remunerating shareholders in the electricity sector, dated 27 july 1996. this memo explained the key principles applicable to remunerating shareholders, the disparity and return figures for certain undertakings in the sector: 60-80 % of profits in the us, 40 % for national power and power gen, 78 % for union fenosa and 30 % for endesa, giving the spanish state a return of 28 % for the period 1991-1996 taking account of dividends and the increase in share price. (108) despite the two further documents sent by edf to the senate with its letter of 15 september 1997, the principles, figures and their application to shareholder remuneration by edf as set out in the memo of 27 july 1996 were not analysed or included in the senate report. on the contrary, the senate report, like that of the national assembly, stated that the planned reduction in the remuneration on the capital contributions paid by edf to the state as shareholder was: to take account of the increase in capital contributions brought about by this article. 9. assessment of the measures: existence of state aid (109) article 107(1) tfeu provides: save as otherwise provided in the treaties, any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market. the question whether these cumulative tests apply to the tax exemption granted by france to edf is examined below. 9.1. selective advantage to an undertaking (110) since act no 97-1026 established that edf was deemed to have been the owner of the high-voltage transmission network (rag) for which it had been granted the concession, it has to be ascertained whether the act involved a transfer of ownership of the rag. (111) according to the information provided by the french authorities, edf can reasonably be regarded as the owner of the rag before the entry into force of the act. this finding is supported by the following considerations: the features of the different types of concession contract under french law; the special features of the original concession granted to edf, which did not include an explicit retrocession clause; the procedure for the acquisition of the assets concerned, for which edf had to pay a fee similar to compensation under a compulsory purchase procedure; and the conditions for the financing, maintenance and extension of the rag at edf's expense. the clarification of the ownership of the rag provided by act no 97-1026 does not therefore in itself appear to confer an economic advantage on edf. (112) it therefore has to be examined whether act no 97-1026 addressed all the tax implications of the clarification of ownership of the rag and, if not, whether an economic advantage in the form of a tax concession was granted to edf. 9.1.1. waiving the tax owed by edf constitutes prima facie a selective advantage (113) during the period between 1987 and 1996, edf created tax-free provisions for the renewal of the rag, provisions which were identified as irregular by the french court of auditors. article 4 of act no 97-1026 declaring that edf was deemed to be the owner of the rag rendered those provisions superfluous and they therefore had to be reallocated to other items in the balance sheet. (114) the letter from the minister for economic affairs setting out the tax implications of the restructuring of edf's balance sheet shows that the unused provisions for renewal of the rag were subjected by the french authorities to corporation tax at 41,66 %, the rate applicable in 1997. (115) on the other hand, the provisions corresponding to renewal operations already carried out, also called grantor rights, were reclassified as capital contributions amounting to frf 14,119 billion without being subjected to corporation tax. the tax authorities acknowledge that this transaction was illegal, as can be seen from the memorandum dated 9 april 2002 addressed by the directorate-general for taxation to the commission and quoted in recital 35. (116) in line with the national accountancy council opinion, corrections to accounting errors should be posted in the accounts for the financial year in which they are discovered. moreover, since the unused provisions amounting to frf 38,5 billion that had been created free of tax were subjected to corporation tax at the rate of 41,66 % in 1997, there is no objective reason why the rest of the provisions created free of tax should not have been taxed at the same rate. (117) the grantor rights should have been taxed at the same time and at the same rate as the other accounting provisions created free of tax. this means that the frf 14,119 billion in grantor rights should have been added to the frf 38,5 billion in unused provisions and taxed at the rate of 41,66 % applied to the restructuring of edf's balance sheet. by not paying all the corporation tax due when it restructured its balance sheet, edf made tax savings of frf 5 882 849 762. (118) the tax measure was advantageous to edf in 1997, as the amount of frf 5,88 billion exempted from tax and included in the amount of frf 14,119 billion was recorded in edf's balance sheet as grantor rights reclassified by the state when it implemented act no 97-1026 with retroactive effect from 1 january 1997. the tax implications of the act are set out in the letter from the minister for economic affairs with effect from the same date of 1 january 1997. (119) the french authorities claim that, even if edf had not set aside provisions for the renewal of the rag, it would still not have been liable for payment of corporation tax between 1987 and 1996 because of the tax loss carry-forward. that argument misses the point. the tax advantage dates from 1997, not from the preceding years. moreover the irregular provisions were in part responsible for the tax loss carry-forward. the carry-forwards would have been gradually absorbed between 1987 and 1996 and the amount of tax payable by edf would have been significantly higher, even without taking account of the non-payment of tax for the reclassification of the grantor rights. (120) the french authorities also take the view that, even if the creation of provisions for the renewal of the rag resulted in an advantage, that advantage should be regarded as cancelled out by the increase in corporation tax paid in 1997. however, as the french authorities themselves acknowledged in their memorandum dated 9 april 2002 and quoted in recital 35, although the unused replacement provisions were correctly taxed, the grantor rights were reclassified as capital contributions without being subjected to corporation tax. the tax paid by edf in 1997 is therefore lower than the tax normally due. (121) the french authorities also claim that, over the period from 1987 to 1996, edf paid more to the state overall than the corporation tax that would have been paid by a commercial company which did not create provisions for the renewal of the rag and which paid its shareholder a dividend equal to 37,5 % of its net income after tax. moreover, the rate of corporation tax that should have been applied when edf's balance sheet was restructured was the 1996 rate and not the 1997 rate. (122) first, as stated in recitals 32 and 116, the national accountancy council takes the view that corrections to accounting errors should be posted in the accounts for the financial year in which they are discovered. since the provisions for renewal of the rag became superfluous following act no 97-1026 of 10 november 1997, they should have been reclassified in the accounts for the 1997 financial year and therefore taxed at the rate of corporation tax applicable to that year. second, the french authorities themselves applied the 1997 rate of corporation tax to the share of the provisions that was taxed, as set out in recital 34. (123) the non-payment by edf, in 1997, of frf 5 882 849 762 in corporation tax constitutes an economic advantage for the undertaking. edf was able to use this amount to increase its own funds without having to raise outside finance. if the tax had in fact been paid and the increase in own funds financed by the undertaking's operating profit, it would have had to cut costs, increase profit or refrain from investment expenditure. by having at its disposal amounts that should have been paid to the french state by way of corporation tax, edf benefited from a selective measure which placed it at an advantage over french undertakings in a similar situation, and which had to pay corporation tax on the reclassification of irregular provisions under article 38-2 of the general tax code in force in 1997, as set out in recital 35. (124) however, in its comments of 11 december 2002, france called for application of the principle of the prudent private investor in a market economy. as pointed out by the eu courts in their judgments referred to in recitals 7 and 8 in this case, a further capital contribution to edf of an amount equal to the tax owed could not be regarded as conferring an economic advantage on the undertaking within the meaning of article 107(1) tfeu, if it was established that a hypothetical private shareholder would have invested an equivalent amount in edf, on similar terms and in similar circumstances, in accordance with the prudent private investor in a market economy test. (125) in paragraph 99 of its judgment of 5 june 2012, the court of justice stated that, by the judgment under appeal, the general court had not prejudged the applicability of that test to the present case or the outcome of applying that test. the applicability and application of that test to the facts of the case must therefore now be examined in the light of the criteria set out by the court of justice. 9.1.2. applicability of the principle of the prudent private investor in a market economy (126) to determine whether the principle of the prudent private investor in a market economy is applicable, an overall assessment must be made of whether the french republic granted the tax exemption in its capacity as shareholder or in its capacity as public authority. in its judgment of 5 june 2012, the court of justice set out a number of factors that should be taken into account in this overall assessment. these factors, examined in more detail below in relation to the circumstances of the case, are: the member state must, where there is doubt, establish unequivocally and on the basis of objective and verifiable evidence that the measure implemented falls to be ascribed to the state acting as shareholder (21); that evidence must show clearly that, before or at the same time as conferring the economic advantage, the member state concerned took the decision to make an investment, by means of the measure actually implemented, in the public undertaking (22), in that regard, it may have to produce evidence showing that the decision was based on economic evaluations comparable to those which, in the circumstances, a rational private investor in a situation as close as possible to that of the member state would have had carried out, before making the investment, in order to determine its future profitability (23); the commission may refuse to examine evidence established after the decision to make the investment in question (24), the nature and subject-matter of the measure are relevant in that regard, as is its context, the objective pursued and the rules to which the measure is subject (25), application of the private investor test must make it possible to determine whether, in similar circumstances, a private shareholder would have subscribed, to an undertaking in a situation comparable with that of edf, an amount equal to the tax due (26). (127) in their comments of 11 december 2002 referred to in recital 42, the french authorities argued that it was thought to be more efficient and more neutral for edf to allocate the grantor rights directly, and in their full amount, to own funds, without paying corporation tax. however, none of the documents prior to or contemporaneous with the supposed decision not to levy tax, that were submitted by france or edf in support of their comments on the decision to extend the formal investigation procedure, made any direct or indirect mention of the supposed decision to invest, with its implications, benefits or costs, or of the corresponding decision to increase the amount of contributed capital by not levying tax. the documents submitted by the french authorities as described in recitals 87 to 108 do not mention, still less analyse, the benefits or costs for the state of the decision not to levy corporation tax on the part of the grantor rights reclassified as capital under act no 97-1026 of 10 november 1997. (128) it is for france, in the event of any doubts, such as those formulated by the commission, about the applicability of the prudent private investor in a market economy test, to establish unequivocally and on the basis of objective and verifiable evidence that the measure implemented falls to be ascribed to the state acting as shareholder. however, in the light of the evidence provided, the decision to make an investment by way of waiving the tax edf should have paid must be deemed to have been taken tacitly, without a reasoned legal act that would reveal the precise content of the decision, its grounds and legal basis or by what authority and on what date it was taken. in the light of the factors set out by the court of justice for establishing the applicability of the prudent private investor in a market economy test, namely the need for objective and verifiable evidence, a measure that has actually been implemented or economic evaluations carried out in advance, the absence of references or material evidence must be regarded as an initial indication that the test is not applicable. (129) in the absence of any documentary evidence tracing the supposed decision, the investment measure that the french state might have taken needs to be described. in this case, the court of justice found that application of the private investor test must make it possible to determine whether, in similar circumstances, a private shareholder would have subscribed frf 5,88 billion to an undertaking in a situation comparable to that of edf. an investment by france would constitute waiving the collection of this amount with a view to making a profit greater than the resources initially invested. the analysis must therefore be made with reference to the amount of corporation tax due. (130) the absence of any specific studies, references or analyses of the profitability of the investment in the amount of the tax exemption makes it difficult to isolate the effects of the supposed investment in the information submitted by france or by edf. this difficulty is not insurmountable if, for the purposes of analysing most of the factors relevant for determining the applicability and the application of the prudent private investor principle, the additional capital contribution to edf equivalent to the amount of unpaid tax is regarded as benefiting from the rights attaching to all the capital contributions. so, if the capital contributions were remunerated at a certain rate, this rate had to be, and indeed was, applied to the amount of unpaid tax. if, on the other hand, the marginal or incremental effect is taken into account, the information provided by france or edf does not at first sight demonstrate that the amount of contributed capital was increased by the amount of unpaid tax. (131) the non-collection of the tax had the effect of increasing the capital contribution to edf, and thus edf's own funds, by an additional frf 5,88 billion, within the overall amount of frf 14,119 billion of reclassified provisions. these provisions, which did not correspond to a prior injection of fresh capital by the state as shareholder, were reclassified as capital contributions and posted under the corresponding item in the upper part of edf's balance sheet, together with the other equity items (paid-in capital, contributed capital, etc., see table 2). without the tax exemption, edf's own funds, which were to reach frf 79,8 billion in 1997, would have reached frf 72,1 billion, according to the documents examined at the time (see table 2, recital 100). instead of frf 50,7 billion, the state contributions to edf's capital would have stood at frf 44,8 billion. supposed investment decision: factors for analysis (132) first, as pointed out by the french authorities, given that the amount in unpaid tax was included in the capital contribution base, and that this was remunerated at a fixed rate (3 %), the absolute value of the remuneration to the state was increased by the tax exemption (or non-collection, see recital 83). however, the increase in the capital contribution by the amount of the tax exemption did not have the effect of increasing the state's remuneration in relative terms. it is common ground that the remuneration for the capital contributed to edf by the state was laid down as from decree no 56-1360 of 30 december 1956 (recitals 18 and 103). different types of remuneration were therefore included in the contracts which preceded and succeeded the 1997-2000 contract for services, as set out in recitals 93 and 102. the principle of remuneration pre-dated the supposed decision and was maintained afterwards. (133) moreover, an examination of the facts demonstrates that the tax exemption had the effect of reducing the state's return on its investment. the report produced by the national assembly in september 1997 unequivocally shows that the increase in the total capital contribution was the reason for the reduction in the remuneration so as not to increase the payment burden on edf (recital 103). the senate report confirms this deliberate reduction by the public authorities (recital 108). (134) between 1991 and 1996, edf gave the state a higher return for a lower capital contribution base compared with what was offered between 1997 and 2000 for a higher base. the average annual remuneration in absolute terms of frf 3,41 billion for 1991-1996, when the amount of the capital contribution came to frf 36,6 billion, was well above the frf 2,35 billion put in place for a base increased to frf 50,7 billion during the 1997-2000 period (recitals 92 and 102-103, table 3). it follows that the current marginal return on the frf 5,88 billion increase in the amount of contributed capital expected in the 1997-2000 period by the state as shareholder was lower than in the period 1991-1996. (135) the french authorities saw to it that the remuneration paid to the state on its capital contribution fell, in absolute and relative terms, as the contribution base increased, as unequivocally established by the national assembly and senate reports. it follows that, by increasing the total capital contribution with a lower return than the contribution which pre-dated act no 97-1026, the decision to grant a tax exemption did not necessarily constitute an investment. (136) second, the way in which the remuneration on the increased capital contribution was determined is not what a prudent private investor in a market economy might have chosen. (137) as demonstrated by the references contained in the letters from the line ministers and the parliamentary reports referred to in recitals 97, 103 and 106, in making their 1997 scrutiny of the french state's remuneration after the restructuring of edf's balance sheet, the french authorities took account both of the return on the capital contributions due to the state as shareholder in the strict sense, and of the expected amount of tax that the state, acting as a tax-raising public authority, would collect after 1997 following several years of tax loss carry-over. as set out in recital 93, the remuneration on the capital contributions was in its turn deductible from income tax, by way of exception to the ordinary law. (138) the concept examined and adopted by the french authorities in 1997 was therefore one of the overall amount collected from edf, tax and shareholder remuneration combined. the overall amount of tax collected from edf, above and beyond the contested exemption, under the state's tax-raising powers, and the remuneration paid to the state as shareholder, are mixed up together in the evidence submitted by the french authorities. nevertheless, in their view, this evidence points to the existence of an investment decision. on the contrary, the fact that the payment of tax due by edf to the state as revenue collector, including by the regularisation and discharge of the tax that had not been collected prior to act no 97-1026, was constantly taken into account for the purposes of examining and setting the remuneration to the state as shareholder tends to indicate that the disputed tax exemption was adopted by the state acting as a public authority and not as an investor. (139) this impression is reinforced by the nature of the objectives set for edf by the state in 1997 in the light of the concerns and goals of a public authority, not a shareholder. these concerns are reflected in the setting of edf's tariffs, as agreed in the 1997-2000 contract for services, under which the state as shareholder was remunerated. the state asked edf to help boost the competitiveness of french industry and the purchasing power of french households. not only would such concerns have been alien to a prudent private investor in a market economy, they would have run counter to the hypothetical investor's financial interests. the same goes for the objective laid down for edf in the 1997-2000 contract for services to put in place an ambitious policy to support economic activity and employment by helping local authorities (recitals 89 and 95). economic evaluations to determine the profitability of the supposed investment (140) the contract for services between edf and the state signed on 8 april 1997 contained a prior evaluation of the financial scenario, including projections of the return for the state as shareholder on the investment in the form of contributions to edf's capital (recital 92). the documents and analyses put forward by the french authorities relate to the expected effects of reclassifying all the provisions constituted by edf, whether mandatory or not, whether resulting from act no 97-1026 or not. the only systematic evaluation presented by the french authorities in the edf memo of 18 february 1997 (recital 92) is general and confined to the statutory remuneration on the capital contributions, including those pre-dating the restructuring of edf's balance sheet, but excluding, for example, remuneration on other capital or own funds. (141) none of the documents submitted by france or by edf demonstrate that the supposed investment decision, namely to make a bigger capital contribution to edf by waiving tax on the reclassification, was the subject of specific scrutiny, study or analysis. however, given the amounts involved, a prudent private investor in a market economy would in all probability have conducted a financial and economic analysis of the investment before deciding whether, in view of the statutory return on the capital contributions, the amount of frf 5,88 billion in tax exemption was needed for the undertaking to guarantee the long-term profitability of its overall investment and for the shareholder to be sufficiently remunerated. this type of prior economic study, cited by the court of justice in paragraph 84 of its judgment as one of the conditions for the private investor test to apply, is absent. (142) it is particularly striking that, apart from the remuneration to be paid to the state over the 1997-2000 period, no study of the remuneration or return in the longer term was carried out, although france claims precisely to have made a long-term investment. however, a prudent private investor in a market economy would not have neglected to conduct an analysis of the profitability of the investment for the period after the year 2000. (143) while it is reasonable to suppose that a prudent private investor in a market economy would have taken into account the effects of the reduction in edf's debt ratio, it must be noted that the advantage to edf of lower-cost borrowing on account of an improved debt/equity ratio is referred to in general terms in some of the documents furnished by france (recitals 101 and 105) and edf. however, none of the documents mentions the advantages and the profitability for the state as shareholder of a reduction in edf's borrowing costs or a lower debt ratio. according to the figures produced at the time as set out in recital 101, edf's net debt/equity ratio was to drop to 148 % as a result of the new capital contribution overall, which came to frf 50,7 billion, including the frf 5,88 billion by way of the contested exemption. without the tax exemption, the ratio would have been around 163 %, or some three times lower than the ratio of 480 % before act no 97-1026. considered separately from the other effects of the reclassification of the various provisions, the contribution of the tax exemption to the improvement in the ratio is negligible and it is very doubtful that it had a real effect in terms of reducing the cost of borrowing for edf (recitals 170 to 172). in any event, the documents submitted by the french authorities do not mention or analyse in investment terms the return for the shareholder resulting from a ratio of 148 %, still less a ratio of 163 %. in this connection, there are no prior economic evaluations comparable to those which a rational private investor in a market economy would have had carried out, as referred to by the court of justice in paragraph 84 of its judgment. (144) the economic study submitted by edf in support of its comments (recitals 69-70) does not find that france acted as an investor rather than a public authority. the study was produced after the supposed investment decision taken in 1997 and was not examined by the authorities responsible for taking such a decision. for this reason alone, the study is not admissible as evidence, as set out by the court of justice (recital 126, paragraph 104 of the judgment of 5 june). the fact that the study used authentic basic data available at the time does not invalidate this conclusion. the study was commissioned to support the case following the extension of the investigation procedure in may 2013 and the conclusions it would reach were apparently known to edf in july 2013, although the study dates from october 2013. other grounds also invalidate the quantified findings of the study, and consequently undermine the conclusions that edf draws from it in support of its comments; these grounds are: the study uses basic data almost exclusively from the time and applies widely recognised methodological approaches for evaluating enterprise value, subject to the major reservations set out below. for all that, it constitutes a particularly complex economic evaluation, following relatively thorough data research, which took some three months to carry out and validate. this complex process comprised successive and various methodological choices, some of which are questionable. without this process, it is quite impossible, from the basic data drawn from scattered and diverse sources, to form an overall view or make a quantified projection of the profitability that the french state could expect in 1997, as the study does. however, the court of justice requires the private investor test to be based on evaluations which were foreseeable at the time when the decision to make the investment was taken (paragraph 105 of the judgment of 5 june 2012). contrary to what is claimed by edf, the very fact that, with data available in 1996-1997, the relevant authorities of the french state did not themselves carry out or commission a study on this scale and with this level of complexity indicates that the profitability of the investment for the shareholder was not the sole relevant consideration for the french authorities when they took their decision. the study analyses the conduct of the french state in the light of the private investor principle using information and hypotheses that are very different from those outlined in recitals 87 to 108 and which, according to the french authorities, formed the basis for the supposed decision. however, it is not edf which took the investment decision, and, according to the court of justice (paragraphs 82 and 83 of its judgment of 5 june 2012), it falls to france to produce evidence of the nature and context of the decision taken. since france alleges that it was in the light of the information and data submitted by it that it took its decision, the study, and edf, are de facto substituting themselves for the alleged investor and claiming to know better than the french state the concerns and information that supposedly underpinned the decision taken and the hypotheses used to reach it. as such, the study is based on speculation and conjecture with respect to the data, information and hypotheses that the french authorities might have taken into account (among other possible options) in 1997 and has no force as evidence in 2015 (or october 2013, when it was carried out) to explain the decision taken by the french authorities in 1997, which these authorities themselves explain with reference to different data and hypotheses. the study's value as evidence is undermined still further by the fact that, to reach the findings outlined in recital 70, the study relies on hypotheses which are arbitrary or random, or uncorroborated by the facts, or counter to the information contained in the evidence provided by the french authorities and which, according to them, illustrates that the private investor test is applicable and does in fact apply in this case. so, first, the study conjectures that after 2000, the remuneration paid to the state as shareholder would not be regulated by decree and contained in a contract between the state and edf but would be set by reference to the dividends which other undertakings in the sector paid in 1996-1997 (27). however, the remuneration on the capital contributions to edf had been regulated by decree since 1956 (recital 102) and was statutory and reflected in the multiannual contracts before and after 1997, in the light of considerations unrelated to the dividends paid by undertakings in the sector operating in markets other than france (recitals 94 and 95). likewise, and in second place, the study, with no good reason, reintroduced into edf's income statement provisions from edf's company accounts worth frf 11,6 billion (before tax) and frf 7,3 billion (after tax) (28), artificially increasing edf's value by that amount without taking account of the information which was available and the developments which were foreseeable in 1997 with respect to edf's commitments under its staff pension scheme (recitals 168-169). thirdly, the increase in the value of edf resulting from the increase in return and results is calculated in the study on the basis of the market expectations in 1997 (29). however, the french authorities had specific and quantified projections for edf's revenue and income for 1997 to 2000, validated as part of the process of drawing up the contract for services for the same period and stated that they relied on these projections and data to take their decision (recitals 78-79, 90, 94, 96); they also had in 1997 detailed knowledge of the undertaking and its financial prospects (recital 77). the use of market expectations from third parties to estimate edf's value in these circumstances is neither reliable nor consistent with the arguments put forward by france to explain the decision which its authorities are supposed to have taken, all the more so since the french authorities argue that most of edf's business in 1997 was conducted in france subject to regulated tariffs (recital 85). moreover, these tariffs were set at a low level with a view to boosting the competitiveness of french industry and the purchasing power of french households (recitals 89 and 95). the study fails to explain, still less to justify, why the remuneration, dividends and results of listed companies which had no significant presence in france and operated in markets subject to different competitive and regulatory constraints (such as endesa, gas natural and union fenosa in spain, rwe, eon and verbund in germany, fluxys in belgium, etc.) should determine the results, remuneration and dividends of edf, which is one of the hypotheses on which the findings set out in recital 70 are based (30). lastly, and in fourth place, the study postulates with no justification that increasing the capital contribution to edf in 1997 was, at least potentially, equivalent to acquiring a liquid financial asset (31). however, in 1997 edf was a public industrial and commercial establishment with no share capital (recital 19), with the french authorities and edf affirming at the time that it would retain this status in the future (recitals 95, 105). the arbitrary nature of this postulation, on which the findings of the study none the less crucially depend, is demonstrated in more detail in recitals 179 to 181. nature and subject-matter of the measure, its context and the rules to which it is subject (145) the court of justice states that the nature of the measure is one of the relevant factors to take into account when ascertaining whether the private investor principle is applicable (paragraph 86 of its judgment). the decision to contribute additional capital to edf by waiving the tax on the reclassification of the irregular rag provisions is both an accounting decision on moving amounts between different items on edf's balance sheet (recitals 100 and 105) and a tax decision, since the authorities responsible deemed that the corporation tax should be levied before reclassification (recital 35), even though tax was paid on other reclassified accounting provisions. contrary to what is claimed by the french authorities, it has not been established that the two accounting and tax strands are indissociable within a single measure put in place by act no 97-1026 of 10 november 1997. (146) article 4(2) of the act provides that the value of the assets in kind allocated under concession to the rag and appearing as liabilities on edf's balance sheet should be entered, net of the corresponding revaluation reserves, under the item contributed capital (recital 28). it could be concluded that, under the act, any revaluation reserves aside, no further accounting or tax treatment was to reduce the value entered as a capital contribution to edf. however, in accordance with article 34 of the french constitution, the decision to levy tax or not is not a matter regulated by law, and act no 97-1026 could not therefore legitimately settle this question. under this article, parliament's legislative powers in tax matters are confined to setting the base, rates and collection procedures for tax of all kinds. edf paid corporation tax on some accounting provisions and not on others following the same reclassification operation provided for in the act. (147) furthermore, the preparatory documents submitted by the french authorities and referred to in recital 104 show that the council of state took the view in 1997 that non-legislative provisions should be eliminated from the draft law; a draft amendment designed to limit the amounts that the state could collect from edf under the act was also rejected. lastly, the line ministers took the view in april 1997 that the detailed arrangements for implementing edf's restructuring, on both the accounting and the tax fronts, should be the subject of further discussions between the supervising authorities and the undertaking (recital 98). (148) these implementation arrangements, detailed and quantified in the letter from the line ministries to edf on 22 december 1997, following the adoption of the act (recital 31), suggest that the tax elements were dissociable from the provisions of act no 97-1026 of 10 november 1997. in their letter the ministers explain the restructuring of the upper part of edf's balance sheet pursuant to article 4 of act no 97-1026 of 10 november 1997 and appear to reach a tacit decision on the tax implications of the restructuring, without there being any question of a profitable investment or of any mandatory requirements of the law. (149) as regards the context of the measure, this being one of the factors cited by the court of justice for the purposes of ascertaining the applicability of the private investor test, the preparatory meetings and supporting documents dating from the period, and which resulted in the contract for services between the state and edf signed on 8 april 1997, demonstrate that the reclassification of the provisions took place in the light of the prospect of the partial liberalisation of energy markets in the eu, planned as from 1996. hence the concern for edf's activities to become more international evident in the 1997-2000 contract and the preparatory documents, as well as the parliamentary documents. the contract itself presupposes that its implementation will require a regularising legislative measure such as that laid down in act no 97-1026, thereby establishing a de facto link between the objectives of the contract and of the legislator. however, neither the contract concluded in april 1997 nor the preparatory documents or exchanges with edf's line ministries take a position on the precise amount of tax. (150) this context, outlined by the evidence cited by france in its comments, does not, however, establish beyond doubt that the measure could be ascribed to a shareholder making an investment. the need to correct the irregularities identified by the court of auditors in october 1994 is also part of the picture. while, on one side, there was a need to correct an accounting irregularity that had allowed edf to avoid paying corporation tax for years, on the other, the french authorities stressed that the measure did not call into question edf's monopoly (recital 105) and that the stable framework allowed by the liberalisation of the market should be maintained (recital 95). although liberalisation opened up possibilities for expansion into the national markets of other member states and some measures were included in the 1997-2000 contract for services so that edf could become more international, the concern of the public authorities to place national undertakings at an advantage through financial support in the early stages of liberalisation was not confined to public undertakings; nor does it constitute typical behaviour by a prudent investor in a public undertaking. (151) lastly, the court of justice states that the rules to which the disputed measure is subject are relevant for determining whether it constitutes an investment by the state as shareholder or a prerogative of a public authority. classing the measure as one or the other may therefore take account of compliance with the rules governing it. the rules governing the investment of tax resources in undertakings like edf must therefore be examined. without the measure, the revenue from the uncollected corporation tax would have been paid into the general revenue of the budget of the french state in 1997. under article 18 of order no 59-2 of 2 january 1959 laying down an organic law for budget laws, which was in force at the time of the facts, as all revenue is used to implement all expenditure, all revenue and all expenditure of the state are posted to a single account, called the general budget. so, tax revenue is posted to the budget for the benefit of the state, and not for the benefit of public undertakings. (152) the budget is subject to the constitutional principle of universality, whereby all revenue and all appropriations are posted as two separate blocks, with no specific link made, for example, between revenue from corporation tax and an allocation such as a capital contribution to a public undertaking like edf. of course, the pre-allocation of a tax resource to a legal person other than the state in the form of a subsidy or an investment is possible under french law, where expressly provided for. article 18 of order no 59-2 thus provided that, apart from in the case of loans and advances in particular, the allocation of state resources was exceptional and could take place only pursuant to a provision of a budget law, which was for the government to adopt. (153) however, act no 97-1026 of 10 november 1997 was not a budget law and as such could not allocate a tax resource to edf's capital. moreover, there do not appear to have been any specific government initiatives to adopt budget-law provisions applicable to the 1997 budget with a view to pre-allocating the revenue from the tax owed by edf to expenditure by the french state on any investment in edf's capital as part of the same budget. the rule allowing the investment of a tax resource constituted for the benefit of the state in a legal entity distinct from the state, such as edf, does not seem to have been applied here. (154) the vast majority of the evidence described above clearly shows that france did not, either before or at the same time as conferring the economic advantage resulting from the non-payment of the corporation tax, take a decision to make an investment in edf by way of the tax exemption. accordingly, the prudent private investor in a market economy principle does not appear to be applicable to this measure. the considerations set out below on the application of the private investor test are therefore provided in the alternative. 9.1.3. application of the principle of the prudent private investor in a market economy (155) in its judgment of 5 june 2012 in the present case, the court of justice held that application of the private investor principle should make it possible to determine whether, in similar circumstances, a private shareholder would have subscribed, to an undertaking in a situation comparable to that of edf, an amount equal to the tax due (paragraph 95 of the judgment). any difference between the cost to the private investor and the cost to the state as investor may be taken into account when assessing whether the conditions laid down by that principle are met (paragraph 96 of the judgment). (156) the assessment must be carried out by reference to the objective and verifiable evidence which is available and the developments which were foreseeable, at the time when the decision to make the investment was taken (paragraphs 102 and 105 of the judgment). on that view, only the benefits and obligations linked to the situation of the state as shareholder to the exclusion of those linked to its situation as a public authority are to be taken into account (paragraph 79 of the judgment). (157) in view of the situation and the characteristics of edf, which had existed as a public corporation fully controlled by the french state for over 50 years, it is advisable to keep in mind the benchmark of an investor pursuing an objective of long-term profitability and to examine in particular the information supplied by france as set out in recitals 87 to 108. it is this information that the french authorities relied on as the basis for their own decision in 1997. (158) first it is necessary to examine the rate of return that edf gave its shareholder in 1997. this rate of return must be compared with reference values. in 1997, the average rate of return on french long-term bonds (30 years) was 6,35 %. even for shorter maturities (10 years) shorter than the life cycle of edf's installations the average interest rate on french government securities was 5,58 % (32). these values represent both the return on financial assets deemed to be low risk and the french state's long-term financing cost at the time. an investment in an undertaking such as edf in 1997 was a riskier investment than holding government bonds during the same time period. as a result, a prudent private investor in a market economy would have required a better rate of return than the rate for government bonds. (159) analysis of the current rate of return that the french state could expect in 1996-1997, as revealed by the documents submitted by the french authorities, does not justify the conclusion that the investment met the test of the prudent private investor in a market economy. (160) the french authorities forwarded edf's projected income statement for the period subsequent to the restructuring of the balance sheet, as examined in 1997 by the authorities concerned (recital 92, table 1). the estimates in the table are corroborated by other contemporaneous documents (recitals 96-97, 103). these edf baseline scenario estimates for the following period had been validated by the state authorities (recital 97). from this income statement, and from the expected amounts of resources invested by the state in edf (recital 100, table 2), it is possible to calculate the rate of return that the state could have expected on contributions to capital, to total capital (initial capital plus contributions) and to edf's equity (total capital, revaluation reserves, reserve requirements and retained income) (33), as shown in table 4. table 4 estimated remuneration from the capital on edf's balance sheet 1997-2000 (billion frf) 1997 1998 1999 2000 1997-2000 portion fixed at 3 % 1,5 1,5 1,5 1,5 6,0 variable portion 0,6 1,0 0,9 0,9 3,4 fixed and variable portions 2,1 2,5 2,4 2,4 9,4 return on equity (frf 79,8 billion) (%) 2,63 3,13 3,01 3,01 2,94 return on capital and contributions (frf 53,3 billion) (%) 3,94 4,69 4,50 4,50 4,41 return on contributions to capital (frf 50,7 billion) 4,14 % 4,93 % 4,73 % 4,73 % 4,64 % source: commission calculations based on tables 1 and 2 (161) it is clear from the documents referred to and submitted by the french authorities that in 1997 the remuneration the state as shareholder expected from edf for the whole period 1997-2000 was frf 9,4 billion, of which frf 6 billion was in respect of the portion at the fixed rate of 3 % and eur 3,4 billion for the whole period in respect of the supplementary portion, after the reclassification made by act no 97-1026. on the basis of the estimates validated at the time, on average, the future current rate of return that the state as shareholder could expect was 2,94 % of edf's total equity, 4,41 % of the total capital invested by the state in edf and 4,64 % of the amount of the contributions to capital. this rate of return, applicable to the amount of the tax exemption reclassified as contribution to capital, was well below the 6,35 % paid on the bonds that the french government issued in 1997 with a view to its own long-term financing. a prudent private investor in a market economy would have found that the expected current rate of return on an amount of frf 5,88 billion corresponding to the tax exemption was insufficient to justify the investment. (162) furthermore, the court of justice held in paragraph 96 of its judgment of 5 june 2012 that it is possible in the context of the application of the principle of the prudent private investor in a market economy to take into account the difference between the investment cost to a private investor and the cost to the state. this amounts to comparing the rate of return which, according to the french authorities, justified the reclassification of the grantor rights provisions at the amount of the tax exemption, with the rate that would have been obtained by a private shareholder on the same recapitalisation operation in an undertaking similar in every respect to edf, except for the prerogative, which is not available to the private investor, to exempt the capital contribution from corporation tax. (163) such an undertaking whose shareholder had frf 5,88 billion available to recapitalise it under conditions identical to those of edf would have had the prospect of an annual return of 4,64 % on the additional capital invested by the shareholder, i.e. frf 272 million per year, without taking account of corporation tax. by applying the rate of corporation tax of 41,66 % applicable in 1997, the prospective rate of return would be frf 159 million per year for the same capital contribution, or a nominal annual rate of return of 2,7 %. such a rate for a share in the capital of a company with the risks associated with such an investment must be compared with 6,35 % paid on french bonds at that time. the low rate of return would have deterred a private investor who did not have the tax privileges of the state. with such poor prospects of return on the invested capital, it appears out of the question that a prudent private investor whose company is liable for corporation tax on contributions to capital would, instead of france, have participated in the increase in the capital of edf in 1997. (164) it is therefore necessary to examine whether the evidence and information dating from the time of the decision to reclassify the provisions without levying the tax submitted by france contain additional information which would have convinced a prudent private investor to make the alleged investment notwithstanding the apparent very low rate of return. these details may relate in particular to the capacity of edf (i) to increase its long-term operating income; (ii) to improve its operating results through efficiency gains; (iii) to increase the net value of the productive assets of the undertaking; or (iv) to provide a steady and adequate remuneration for its shareholder. these are factors which have the potential to create long-term value for the shareholder with a positive outlook, but destructive of value with a negative outlook. (165) in this respect, none of the documents forwarded by the french authorities contain a quantification, or even a qualitative assessment, of any potential creation of value for the shareholder that the french authorities examined and took into account for the period 1997-2000 or beyond. there are only general references to taking better account of the interests of the state as shareholder. this would indicate that the increase in the undertaking's value as an investment for the state as shareholder was not taken into account in deciding on the investment claimed. in any event, examination of four factors that potentially create value for the shareholder does not justify a conclusion of foreseeable growth on the basis of the data available in 1997, in particular edf's forecast operating account 1997-2000 and the financial scenario forecasts used by the supervising authorities (recital 92, table 1, recital 96). (166) in terms of edf's total revenue, the state as shareholder could expect to receive a very small increase of 0,64 %. this virtual stagnation can be explained by the objective set by the state to contribute to the competitiveness of french industry and the purchasing power of domestic consumers, which resulted in an average reduction of [ ] % in edf's tariffs over four years (recitals 89, 95-96), which represents an annual decrease of [ ] %. edf conducted its business mainly in france since, for the period from 1997 to 2000, it was envisaged that more than 89 % of edf's revenues would come from the french market. therefore, the majority of its revenue depended on the choices the state made in setting electricity tariffs. a prudent private investor would not have failed to note that the setting of public policy objectives contrary to its interests as shareholder was prejudicial to its proprietorial interests. no prudent private investor would have agreed to lower earnings from its investment to foster the competitiveness of french undertakings. (167) the item in the projected income statement 1997-2000 showing the income from edf's core business was also set to decrease by 29 % during the period, from frf 9,3 billion in 1997 to frf 6,6 billion in 2000. operating expenses were, for their part, set to increase by 2,2 %, mainly owing to the increase in day-to-day operating expenditure, since financial charges, depreciation and interest, excluding return on capital, were set to decrease. adding depreciation and financial charges to the income from the core business, the outlook for the period 1997-2000 was also negative, because this aggregate was set to decrease from frf 62,6 billion to frf 53,9 billion, i.e. by 13,9 %. however, it is the trend in income from everyday operations before depreciation and interest that determines the future capacity of the undertaking to generate value and a positive cash flow. in addition to the projected deterioration, in pursuit of economic policy or regulatory objectives, the state had set edf the objective of allocating any earnings from efficiency and productivity gains to further reducing tariffs, which was to take priority over a better return for the shareholder (recital 95). it follows that edf's ongoing activities, weighed down by the state's economic policy objectives, would not have offered the prospect of satisfactory future earnings. (168) as the commission pointed out in the extension decision, a prudent private investor would have taken account of the uncertainty about the amount and evolution of the pension financing charges facing edf in 1997 under the specific scheme for the electricity and gas industries. in the case of edf in 1997, the cost of pensions and, a fortiori, the related off-balance-sheet commitments represented an encumbrance in anticipation of additional drains on the undertaking's already poor net result. (169) whereas edf's pension bill amounted to frf 12,2 billion in 1997, assuming no change in legislation, the pension bill for the entire scheme (including gdf and non-nationalised undertakings) was expected to grow significantly in the following years to reach frf 20 billion in 2010 and frf 25 billion in 2020 (34). by applying an allocation key of 78,4 % for edf, reflecting the weight of its wage bill in the industrial sector covered by the scheme, edf's share would have been frf 15,7 billion in 2010 and frf 19,6 billion in 2020, without taking account of any provision made for future commitments, assuming no change in legislation (35). the expected increase in pension costs was therefore bigger than net earnings, after remuneration of the state and tax, foreseen for the period 1997-2000, as illustrated in table 1. therefore, any appraisal by a prudent private investor in a market economy in 1997 with, like the french state, a thorough knowledge of the situation of the undertaking, would have led the investor to accentuate the future liabilities of the undertaking and to downplay accordingly the profitability prospects of the investment. (170) in addition, the prudent private investor could expect a considerable reduction in edf's debt, which was set to fall from frf [ ] to frf [ ] over four years (recitals 91 and 95). however, it has been shown that between 1992 and 1996 edf kept its aaa credit rating by the credit rating agency moody's with a debt ratio of 480 %. the french authorities also refer rather vaguely to the generation of resources of frf 70 billion by edf for the period 1997 to 2000 (recital 84). however, edf's debt reduction and its automatic effect on the undertaking's net asset value was not to result in improved remuneration of the french state during the same period, but rather in a marked deterioration compared with the period between 1991 and 1996 (recital 134). (171) as indicated by edf, despite a deterioration in the rating assigned to edf by credit rating agencies such as moody's or standard & poor's, edf still retained an excellent rating (recital 71). moreover, one the objectives set between 1997 and 2000 was to reduce edf's indebtedness to frf [ ]. a substantial reduction in the total interest charges incurred by edf was therefore expected to follow. consequently, neither the reduction in edf's total debt nor its cost, nor any advantages arising for the state as shareholder would have been compromised by a lesser contribution to capital of frf 44,8 billion instead of frf 50,7 billion. a debt-to-equity ratio of 163 % instead of the 148 % foreseen as a result of the tax exemption would not have been detrimental to the interests of the shareholder. in this area, there is no optimal financial structure, and the report of the national assembly (recital 100) shows ratios in the sector ranging from 250 % (verbund, austria) to 10-15 % (veba, germany and powergen, uk). (172) indebtedness enabled edf to finance its growth and its results without additional funds from the shareholder, using the leverage effect of the debt to increase the rate of return on the funds already invested by the state. however, priority was given to debt reduction, even though edf's credit rating was excellent before the envisaged debt reduction (recital 71). moreover, the excellent credit rating before 1996, reflecting edf's capacity to repay its creditors, is not incompatible with poor remuneration of the shareholder. on the contrary, the less drawn down by its shareholder, the better the credit rating of the debt instruments that edf issued. within the time-frame put forward in the projections submitted by the french authorities, the foreseeable reduction in the leveraging effect and, in any event, the low impact of the amount of tax on the debt ratio would have led a prudent private investor in a market economy either to reduce the profitability prospects of its investment or to not consider that the equity investment equivalent to the amount of tax was justified by the need to improve the debt situation of edf in 1997. (173) finally, a prudent private investor would likely have based its investment decision on an assessment of the undertaking's capacity to provide it with stable and adequate remuneration. in this regard, the remuneration for the state as shareholder for the period 1997-2000 described by the french authorities was well below the 6,35 % paid on french bonds during the same period. in addition, this remuneration could in practice be reduced to take account of the tax paid to the state as revenue collector (recitals 103 and 106). the remuneration of the shareholder was also considerably reduced at the very time the state was making the alleged investment. any shareholder would have taken into account negatively the sudden and very significant reduction in the return on contributions of capital. this return was to decrease from an actual average of 9,32 % over the period 1991-1996 to 4,64 % for the period 1997-2000, which is a reduction of more than half. in terms of equity capital, the rate of return fell from an average of 14,1 % at the end of 1996 to 2,94 % in the same period (recitals 92 and 102, tables 1 and 3). (174) admittedly, a prudent private investor may accept a reduction in its current return in the expectation that the growth of the undertaking will result either in better future earnings or in an increase in the undertaking's value which is likely to generate a value-added on the sale of its asset reflecting an ownership right over the undertaking. in that regard, first, the current rate of return that could be expected in 1997 would not have been sufficient to offset the sharp reduction in the past rate of return. secondly, analysis of the four factors with the potential to create value for the shareholder identified in recitals 164 to 173 does not support the conclusion that growth in the value of the company was foreseeable by the shareholder from the data available in the documents forwarded by the french authorities. (175) moreover, the available evidence does not support the conclusion that a prudent private investor acting in the place of the french state in 1997 could have counted on a capital appreciation to offset the low current rate of return paid to the state, in the light of the information available. the french authorities did not carry out any assessment of the value of edf before and after reclassification of the provisions in 1997. (176) moreover, in 1997, edf had, for more than fifty years, been a public industrial and commercial establishment and not a public limited company. under article 16 of act no 46-628, its capital belonged to the french nation and could not be alienated (recital 18). furthermore, it should be pointed out that, even after the restructuring of edf's balance sheet under act no 97-1026, in 1997 edf's total net debt of frf 118 billion far exceeded the value of its equity capital, which stood at frf 79,8 billion (recital 101, table 2). (177) none of the documents shedding light on the alleged investment decision of the french authorities records a plan for a possible privatisation of edf through the sale of all or part of the capital held by the state. this would have required the prior adoption of the status of public limited company and the abandonment of the status of publicly owned industrial and commercial establishment. on the contrary, the only reference to the status of edf contained in those documents was the reaffirmation by the state of its intention to maintain the specific status of edf which should remain a stable point of reference for future developments within the internal market for electricity (recital 95). it is on the basis of this information that france claims the investment decision was taken. these facts must therefore remain the reference framework for analysis of the alleged decision. (178) accordingly, it would not have been reasonable or wise for an investor to expect a capital gain which depended on the action by the legislature contrary to both the provisions of law adopted by the french authorities in 1946 and applied unfailingly and the express intention of the state, affirmed by the minister responsible for state holdings at the material time in 1997, to maintain the specific legal status of edf in a liberalised internal market for energy at eu level. the assumptions underpinning edf's conclusions as to the return on investment that a prudent private investor would have expected, based on the initial and future value of edf's shares in 1997 (recitals 69 and 70), do not take account of the status of edf in 1997, and are contradicted by the evidence submitted by the french authorities referring thereto. (179) as the french authorities emphasise, as a public industrial and commercial establishment, in 1997 edf had no share capital, unlike, for example, a public limited company whose capital is owned by the shareholders (see recital 19), who may sell their shares at any time. thus, in 1997 the reference investor would have had in particular to determine a number of factors or make assumptions that were necessarily open to question; namely: (i) the amount at which the state would set the share capital of a future public limited company, and in particular the inclusion or otherwise of quasi-own assets, which determines the company's capacity to provide a stable dividend; (ii) the number of shares into which this capital would be divided, bearing in mind that a greater or lesser number partially determines their attractiveness in the market; (iii) the form of any share flotation and the amount to be raised, which determines the potential level of dilution of its holding; finally (iv) when the operation would be implemented, which, owing to the poor recovery prospects offered by edf's projected income until 2000 (recital 167), could be envisaged only in the distant future. there is nothing in the information submitted by the french authorities for the period preceding the alleged investment to suggest that these unknowns could have been cleared up in 1997. (180) accordingly, any increase in the value of the right held by the state in the capital of edf resulting from the contested capital contribution, assuming the increase was established which is manifestly not the case would have involved a prudent investor speculating about at least four key factors over which, unlike the legislator and the regulator, it had no influence or, in any event, no valid information available in 1997. a prudent private investor would not have ignored the virtual absence of liquidity of its investment. it follows that a prudent private investor would have taken that fact into account when deciding whether or not to invest. this lack of liquidity is likely to reduce the benefit of any increase in the value of the company. (181) furthermore, as mentioned in recital 144, the test of the prudent private investor in a market economy must be based primarily on the information and evidence submitted by the member state in a situation where the decision has already been taken, since it is the member state that is arguing that these are the elements that the member state has taken into account, and not others which are more hypothetical or even contradictory in relation to those submitted. however, the court of justice requires the application of the principle of the prudent private investor in a market economy to be based on assessments foreseeable at the time the decision was taken (paragraph 105 of the judgment of 5 june 2012). thus, the french authorities claimed in 1997 that the status of edf, which did not allow the creation and disposal of edf shares, would be maintained as a stable point of reference, including in the liberalised european market (recital 95). adopting assumptions which contradict the assertion of the french authorities amounts to placing the test in a situation which is not as close as possible to that of the member state, contrary to what the case-law requires (recital 126). (182) however, even assuming for the purposes of the analysis that a prudent private investor could have taken into account a future increase in the value of its investment at an uncertain date in addition to the regular returns offered, in deciding on the alleged investment the investor would have borne in mind the capacity of the undertaking to generate dividends over the long term, thereby following the time horizon of the french state, which had been controlling edf since 1946. in estimating the value of its ownership interest in edf, the prudent private investor would have disregarded the book value of the undertaking's net assets, even if it was counting on the debt reduction and generation of resources underlined by the french authorities (recital 84). the value of the assets, the amounts of investment or debt reduction do not necessarily coincide with the real economic value with a view to fixing a transaction price. one should therefore not focus on the fact that full repayment of edf's debts in 1997 would have required amounts far exceeding the equity capital of edf (recital 177). in the long term, an undertaking's value is a function of its capacity to generate value for its shareholders in the form of dividends or capital appreciation rather than in terms of the book value of its assets. (183) among the various methods used in finance to estimate the opportunity cost or the rate of return required of an ownership interest transferable against consideration in the capital of an undertaking, the most common is that of the capital asset pricing model (capm) (36). as shown in table 5, application of the capm model to an investment in the capital of edf in 1997 gives a target value for the required rate of return of approximately 12 %, and as high as 13,4 %, for a liquid asset such as an edf share. however, this target value must be seen as a minimum. it presupposes not only that an ownership right in edf such as a share is possible and transferable but also that there is a liquid market, whereas the state held 100 % of the capital and edf could not issue shares. a premium of between 0,5 and 1,5 % (37) must be added to the required rate of return on a liquid asset to reflect the great uncertainty resulting from the factors examined in recitals 179 and 180 as regards the liquidity of the edf securities that a prudent private investor could entertain in 1997. (184) in any event, the validity of the order of magnitude of 12 %, excluding a liquidity premium, is close to, although lower than, the current rate of return on equity capital of 14 % used by edf to remunerate the french state between 1991 and 1996 (recital 102, table 3). the actual rate of return obtained is normally the starting point for the expected rate of return in the future. the validity of this order of magnitude of 12 % is also corroborated by the use of other parameters based on figures available at the time, including those used in the study carried out for edf referred to in recital 70, which gives a target value in a range of between 11,9 % and 13,5 %, with an average of 12,7 %. since the results of the analysis do not change when a liquidity premium is added to the target rate of return of around 12 %, or when the 14 % actual rate of return in the recent past is applied from 1997, it is not necessary to take this premium and the actual rate of return into account. table 5 target rate of return required for an investment in edf shares in 1997: calculation values parameter value source risk-free rate 6,35 5,58 annual average in 1997 of the daily rate of the 30-year and 10-year french bellwether bond, source bank of france: reference rate treasury bills and fungible government bonds, http://www.banque-france.fr/economie-et-statistiques/changes-et-taux) beta of edf (leveraged) 0,45 0,54 0,62 1. beta of edf vernimmen et al. op cit., graph p. 427. 2. and 3. oxera study, table 3.8, beta of eu companies in the sector. indebtedness (%) 60 capital structure of edf after 1997 restructuring b of edf (deleveraged) 0,84 0,89 1,36 1. and 2. commission calculation. 3. oxera study, table 3.8 market risk premium 6,3 7,3 1. vernimmen op cit. p. 423, citing mehra prescott 2/2003 t.2 fr 1973-98. 2. forward risk premium in france on average 1988-1996 (this premium was 10,1 % in 1996). an examination of equity risk premium forecasts in the g-6 countries, khorana, moyer & pattel, i/b/e/s working paper, august 1997, p 25. target return range 11,7 12,1 13,4 commission calculation median return 12 commission calculation (185) in making its investment decision in 1997, a prudent private investor in a situation as close as possible to that of the french authorities would have used the regular estimates of edf's future earnings validated by the competent authorities and used as a financial scenario, as contained in the edf's projected income statement 1997-2000 (recitals 90-92, table 1, recital 97). the tax exemption represented 11 % of the frf 53,3 billion of edf's capital and capital contributions in 1997, after the restructuring of the balance sheet. it can therefore be assumed that the investment conferred a right to receive 11 % of the dividends (remuneration of the capital contributions as estimated in tables 1 and 4) and of the value of edf. in order to determine this value, a model for calculating the long-term value of an undertaking should be applied, i.e. the dividend discount model (ddm) (38). (186) the results of the ddm analysis of an investment of frf 5,88 billion based on the dividends foreseen in edf's projected income statement 1997-2000 (remuneration for capital contributions and additional remuneration in table 1) are presented in table 6, noting the internal rate of return (irr) of financial flows and the net present value (npv) for the target rates of return of 12 %, 6,35 % and 5,58 % (39). these results are calculated for a baseline scenario based on standard analysis practice (table 6.1), with three less plausible sensitivity analyses which loosen the assumptions of the baseline scenario and thus simulate a higher rate of return for the shareholder than the reference scenario (tables 6.2, 6.3 and 6.4). table 6 estimate of the return (npv) on an investment of frf 5,88 billion using the mdd model based on the projected income statement of edf 1997-2000 (table 1) (billion frf) 6.1. baseline scenario (growth of dividends foreseen for end of period 1999-2000) 1.1.1997 31.12.1997 31.12.1998 31.12.1999 31.12.2000 31.12.2000 investment dividend dividend dividend dividend ddm value 5,88 0,23 0,28 0,26 0,26 2,21 npv at 12 % 3.43 npv at 6,35 % 3.17 npv at 5,58 % 3.12 irr 13 % nb: the table reads as follows: for financial flows between 1.1.1997 and 31.12.2000, the npv with a discount rate of 12 % is frf 3,43 billion ( ) and the irr is 3 % 6.2. sensitivity 1 ( dividends = 4,51 % annual rate 1997/2000) 1.1.1997 31.12.1997 31.12.1998 31.12.1999 31.12.2000 31.12.2000 investment dividend dividend dividend dividend ddm value 5,88 0,23 0,28 0,26 0,26 3,69 npv at 12 % 2,68 npv at 6,35 % 2,14 npv at 5,58 % 2,05 irr 4,7 % 6.3. sensitivity 2 (base scenario + additional 11 % quasi-equity capital) 1.1.1997 31.12.1997 31.12.1998 31.12.1999 31.12.2000 31.12.2000 investment dividend dividend dividend dividend ddm value 5,88 0,23 0,28 0,26 0,26 4,93 npv at 12 % 2,06 npv at 6,35 % 1,29 npv at 5,58 % 1,16 irr 0,3 % 6.4. sensitivity 3 (sensitivity 1 + additional 11 % quasi-equity capital) 1.1.1997 31.12.1997 31.12.1998 31.12.1999 31.12.2000 31.12.2000 investment dividend dividend dividend dividend ddm value 5,88 0,23 0,28 0,26 0,26 6,41 npv at 12 % 1,30 npv at 6,35 % 0,26 npv at 5,58 % 0,08 irr 5,2 % (187) the estimates from table 6 show that, if the amount of frf 5,88 billion allegedly invested had conferred entitlement to a proportional percentage of the dividends and the value of edf, the operation would have produced a large negative net present value (frf 3,43 billion). in order for the investment to be financially advantageous for a private market economy investor, on the most widely used assumption (table 6.1), it would have been necessary for the prudent private investor to be satisfied by a rate of return well below an opportunity cost of capital of 12 % for an investment in liquid edf shares, and indeed also below the rate paid on french government bonds with maturities of 30 years (6,35 %) and 10 years (5,58 %) in 1997. clearly, a prudent private investor would not have made the investment in those circumstances. (188) these conclusions do not change qualitatively if, as sensitivity test, other assumptions are used which, although less plausible, value the alleged investment more (tables 6.2 to 6.4) (40). in any event, the rate of return provided is below 12 %, and indeed also even lower than the return on french government 30-year and 10-year bonds in 1997. finally, examination of other variables available in edf's projected operating results, such as the revenue estimates, core business income or the net income (recitals 166 to 168) would not have allowed the prudent private investor to expect a complete trend reversal leading to a better return or the creation of value for the state as shareholder down the line. these developments, which were foreseeable and foreseen in 1997, further corroborate the conclusions and their extension to the period after 2000, as foreseeable by a prudent private investor in 1997 on the basis of the information supplied by the french authorities. (189) even supposing that the prudent private investor would have expected a capital gain in addition to a regular return from edf, which nothing in the information and data sent by the french authorities indicates, and which moreover would be too risky to expect having regard to the status of edf in 1997, it can be ruled out that it would have made the alleged investment. accordingly, the application of the test of the prudent private investor in a market economy shows that, even if the tax exemption of frf 5,88 billion was in fact an investment decision on the part of the state as shareholder, the operation would not have been carried out by a prudent private investor in possession of the information put forward by the french authorities. (190) in this connection, the comments by edf reproduced in recital 71, according to which the tax exemption had no detrimental effect on competition and did not provide an advantage since edf could in any event have found equivalent financing on the capital markets, are contradicted by the facts. it is common ground that edf could not have issued shares on the markets to obtain this amount. even if edf would probably have been able to find a lender, the corresponding loan or bond issue would have had to be remunerated, in all likelihood, at a higher rate than the rate that the french state anticipated for capital contributions to edf for the period 1997-2000 and higher than the refinancing cost equivalent to the government bonds in 1997. if edf could have had an equivalent amount in principal, the financing costs would have been greater than that of the alleged investment. even then, without taking into account a repayment of principal, which edf was not required to make, in the amount of the tax exemption or the equivalent amount in capital contributions in 1997, the measure would have provided an economic advantage to edf by reducing its financing costs. (191) even if the principle of the prudent private investor in a market economy were applicable, in the light of the documents provided by the french authorities shedding light, according to them, on the profit expectations and risks attached to the alleged investment in the form of a tax exemption, application of the test of the private investor in a market economy leads to the conclusion that a prudent private investor would not have invested an amount equal to the tax due in the edf capital increase in 1997. (192) the non-payment by edf of frf 5,88 billion in corporation tax does not appear to be a productive investment by the state as shareholder in application of the principle of the prudent private investor in a market economy. it appears rather to be an ad hoc derogating tax exemption that provided an economic advantage to edf equal to the amount of tax not paid. such an advantage necessarily strengthens the position of edf vis- -vis its competitors, since the amount of equity capital determines, among other factors, the external financing capacity and conditions of an undertaking while, moreover, the resources saved in this way could be used for other purposes such as, for example, investment in france or in other member states where competitors conducted their business in 1997. (193) the economic advantage therefore distorts competition within the meaning of article 107(1) of the tfeu. the advantage is selective, since the non-payment of corporation tax on some of the accounting provisions constitutes an exception to the tax treatment normally applicable to such an operation and, in the present case, this exception was applied only to edf. 9.2. state resources (194) the concept of aid embraces not only positive benefits, such as subsidies, but also interventions by the public authorities which mitigate the charges that are normally included in the budget of an undertaking and which have the same effect as subsidies (41). the eu courts have consistently held (42) that the non-collection by the state of a tax which should normally have been collected is equivalent to the consumption of state resources. (195) the non-collection of the full amount of corporation tax due in respect of the 1997 financial year derived directly from a measure adopted by the state, namely act no 97-1026 of 10 november 1997. 9.3. distortion of competition and effect on trade between member states (196) from its creation in 1946 to the entry into force of directive 96/92/ec, edf enjoyed a monopoly position in the french market with exclusive rights for the transmission, distribution, and import and export of electricity. however, edf competed with other producers in other member states already ahead of the entry into force of directive 96/92/ec. moreover, free competition existed in related markets not subject to exclusive rights where edf had already diversified its activities beyond its exclusive rights in both geographic and sectoral terms. effects on competition did therefore exist well before the liberalisation provided for by directive 96/92/ec. (197) electricity was the subject of significant, growing trade between member states in which edf was actively engaged. these exchanges, reinforced by the adoption of council directive 90/547/eec (43), were taking place on the basis of commercial agreements between the various operators of the high-voltage electricity networks in the member states. in the european oecd member countries, electricity imports grew at an average annual rate of over 7 % between 1980 and 1990. between 1981 and 1989, edf multiplied the surplus on its balance of trade in electricity nine fold, achieving net exports of 42 twh, representing 10 % of its total production. in 1985, edf already exported 19 twh to other member states. (198) even before directive 96/92/ec entered into force in february 1999, some member states acted unilaterally to open up their electricity market. in particular, the united kingdom opened up its market completely for large industrial customers in 1990. sweden opened up its market completely in 1996, finland began the process in 1995 and reached 100 % market opening in 1997, germany completely opened up its market in 1998 and the netherlands opened up its market completely for industrial customers in 1998. in those circumstances, even before the deadline set by the directive for opening up the market to competition, state aid granted to enterprises enjoying a monopoly in a member state that took an active part in intra-union trade, as in the case of edf, was likely to affect trade between member states within the meaning of article 107(1) of the treaty. (199) in its annual report for 1997, edf stated that it ranked among the world's leading operators in the electricity industry, with, outside france, more than frf 13 billion invested, a total installed production capacity equal to nearly 11 % of the figure for france and over 8 million customers. the report also stressed that in 1997 edf had increased the number and size of its investments in europe by extending its presence to austria and poland and had exported over 70 twh in europe. these exports were delivered in competition with alternative suppliers in the markets concerned. (200) the 1997-2000 management contract, signed on 8 april 1997 between the french state and edf, stipulated that edf was to allocate some frf 12-13 billion to its international investments, assigning priority to regions in europe. between 2000 and 2002, edf acquired one third of the capital of the german company enbw, increased the production and distribution capacities of its united kingdom subsidiary london electricity, took direct control of the italian enterprise fenice and set up a partnership with fiat for the purchase of montedison (now edison). (201) in 1997, sds, a wholly owned subsidiary of edf, brought together its activities associated with the provision of services to individual customers, businesses and local authorities. sds was active in waste treatment, street lighting and other energy-related services and generated turnover equivalent of eur 685 million in 1998 as against eur 650 million in 1997. in 2000, edf established a partnership with veolia environnement via the company dalkia, the european leader in energy services to businesses and local authorities. dalkia offers energy engineering and maintenance services, manages heating plants and technical services to do with the operation of buildings and operates district heating networks, combined heat and power schemes, and energy production and industrial fluid systems. (202) edf has also developed its activities in the market for renewable energy sources. in 1997, the holding company chart, a wholly owned edf subsidiary, brought together its activities in the renewables sector, e.g. geothermal energy and wind power. its contribution to consolidated turnover that year was eur 70 million. (203) lastly, as an electricity producer and distributor, edf was and still is in competition with suppliers of other substitute energy sources such as coal, oil and gas, both in its domestic market and in international markets. in france, for example, edf has launched a successful campaign to promote the use of electricity for heating. it has thus increased its market share in comparison with its competitors who supply substitute energy sources such as oil or gas. in the steel industry, electric furnaces are in competition with gas and oil-fired furnaces. it follows that a measure such as the one at issue is liable to distort competition with alternative suppliers, such as gaz de france. (204) edf thus occupied a prominent position in electricity trading between the member states in 1997, whereas now the french electricity market is fully open and many european suppliers are present. it is therefore clear that, in 1997, edf was already well established in certain markets in other member states and that the aid resulting from the non-payment by edf of corporation tax on some of the accounting provisions created free of tax for the renewal of the rag inevitably affected competition between member states. (205) the above considerations were detailed in the extension decision. neither france nor edf disputed in their comments that the aid was likely to affect trade between member states. (206) thus, since the four criteria set out in article 107(1) tfeu are fulfilled, the non-payment by edf of corporation tax on some of the accounting provisions created free of tax for the renewal of the high-voltage transmission network constitutes state aid. the compatibility of the aid with the internal market must now be assessed. 10. assessment of the compatibility of the aid with the internal market (207) article 107(1) of the tfeu provides that aid fulfilling the criteria laid down therein is in principle incompatible with the internal market. according to settled case-law, it is for the member state to cite the reasons and evidence of any kind for which state aid is compatible with the internal market (44). in the present case, the french republic has cited no reason nor provided any information in this regard. (208) the exceptions laid down in article 107(2) of the tfeu are not applicable in the case in point because of the nature of the aid since it does not pursue the objectives listed in that paragraph. (209) nor does the aid in question fulfil the conditions laid down for exceptions in article 107(3)(a) and (c) of the tfeu in respect of aid intended to promote the economic development of certain regions, particularly since it corresponds to operating aid. it is not conditional on investments or on job creation as envisaged in the guidelines on regional state aid (45). (210) article 107(3)(c) of the tfeu also allows an exception to be made for aid to facilitate the development of certain economic activities, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. the aid measure under examination does not qualify for this exception. the derogation from the applicable tax law, granted for the benefit of a single enterprise, cannot be regarded as being intended to facilitate the development of an activity. its sole purpose is to assist an enterprise by reducing its operating costs. (211) as regards the exceptions allowed by article 107(3)(b) and (d) of the tfeu, the aid measure under examination is not intended to promote the execution of a project of common interest, remedy a serious disturbance in the french economy or promote culture and heritage conservation. (212) the compatibility criteria set out in article 107(2) and (3) of the tfeu are therefore not met. furthermore, as regards compensation for public service costs, the french authorities have not cited article 106(2) of the tfeu in defence of the tax concession, but they have stressed the fact that edf performs public service tasks. they have not, however, provided any assessment of the cost incurred by edf in carrying out those tasks. the commission cannot therefore determine whether or not the tax concession in question compensates for any additional cost linked to the public service tasks entrusted to it. in any event, if the non-payment of the tax must be qualified as compensation for the provision of a service of general economic interest, it has not been established that such compensation was determined in advance in accordance with transparent and objective criteria and calculated by reference to the costs of an efficient undertaking. (213) it is consequently not possible in the case in point to examine whether the conditions set out in the judgment in altmark (46) for escaping the application of article 107(1) of the tfeu, and the criteria for qualifying for the exception allowed by article 106(2) of the tfeu, which, moreover, the french authorities do not cite, are fulfilled. (214) in the light of the foregoing considerations, it appears that the aid under examination constitutes operating aid which has had the effect of strengthening edf's competitive position in relation to its competitors. in those circumstances, it would be incompatible with the internal market. (215) the commission also considers that, contrary to what is claimed by the french authorities, the rule on limitation periods does not apply in the case in point. admittedly, edf created the accounting provisions free of tax between 1987 and 1996. however, it should be pointed out, firstly, that corrections to accounting errors, which by their very nature relate to the posting of past transactions, should according to the national accountancy council be posted in the accounts for the financial year in which they are discovered and, secondly, that the act providing that the grantor rights were to be reclassified as capital contributions without being subject to corporation tax dates from 10 november 1997. the tax concession therefore dates from 1997 and any new aid paid on that date is therefore not time-barred because the first commission instrument concerning this measure dates from 10 july 2001. furthermore, under article 15 of regulation (ec) no 659/1999, legal proceedings suspend the period of limitation. 11. conclusions (216) the commission finds that france has unlawfully implemented the aid in question in breach of article 108(3) of the tfeu. the commission considers that the exemption from corporation tax in the amount of frf 5 882 849 762 relating to the reclassification as a capital contribution, provided for by act no 97-1026, of accounting provisions for the renewal of the high-voltage transmission network, already implemented to the tune of frf 14 119 065 335, constitutes aid that is illegal and incompatible with the internal market. (217) under article 108(2) of the tfeu, when the commission has found that aid is incompatible with the internal market, it is competent to oblige the member state concerned to abolish or alter it. according to article 14 of regulation (ec) no 659/1999 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. (218) the commission's objective in requiring the member state concerned to recover the aid incompatible with the internal market is to restore the previously existing situation (47). in this context, the court of justice has established that that objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage it enjoyed over its competitors. in this way, the situation prior to payment of the aid is restored (48). (219) in the present case, it appears that no general principle of eu law would run counter to the recovery of the unlawful aid found to exist. in particular, neither france nor the interested parties presented any arguments to that effect. (220) it follows that france must take all necessary measures to recover from edf the aid unlawfully paid in the form of exemption from corporation tax in the amount of frf 5 882 849 762 relating to the reclassification of part of the provisions to the tune of frf 14 119 065 335 as capital. (221) for the purposes of recovery, the french authorities must also add to the amount of the aid the recovery interest due from the date on which the incompatible aid was made available to the undertaking, i.e. the date on which the corporation tax in respect of tax year 1997 became payable, until it is actually recovered (49), in accordance with chapter v of commission regulation (ec) no 794/2004 (50). (222) in the context of france's obligation of loyal cooperation within the framework of the recovery procedure, this amount will have to be established more precisely during the procedure, on the basis of information to be supplied by the french authorities, and which will take account, inter alia, of the exchange rates between the ecu/eur and the french franc (frf) that may apply to the instalments of corporation tax paid by edf during 1997 and of the reimbursement to edf of the aid following the annulment of the first negative decision in 2009. in the present case, interest is not due for the period during which the aid was no longer at the disposal of the undertaking, namely the period between the actual recovery of the aid by france and the repayment to edf. any interest paid by france to edf will nevertheless have to be taken into account. (223) the french authorities must recover the above amount within four months from the date of notification of this decision. (224) in accordance with settled case-law, in the event that a member state encounters unforeseen and unforeseeable difficulties or perceives consequences overlooked by the commission, it may submit those problems for consideration by the commission, together with proposals for suitable amendments. in such a case, the commission and the member state concerned must work together in good faith with a view to overcoming the difficulties while fully observing the provisions (51) of the tfeu. (225) the commission therefore requests france to submit to it without delay any problems with which it would be faced in implementing this decision, has adopted this decision: article 1 1. the exemption from corporation tax in favour of lectricit de france for an amount of 5 882 849 762 french francs, relating to the reclassification as capital of the provisions corresponding to the value of the assets in kind allocated under concession to the high-voltage transmission network, constitutes state aid within the meaning of article 107(1) of the tfeu. 2. the aid mentioned in paragraph 1, unlawfully granted by the french republic, is incompatible with the internal market. article 2 1. the french republic is required to recover from the beneficiary the equivalent in euro of the aid referred to in article 1. 2. the sums to be recovered shall bear interest from the date on which they were placed at the disposal of the beneficiary until that of their actual recovery. 3. the interest shall be calculated on a compound basis in accordance with chapter v of regulation (ec) no 794/2004. article 3 1. recovery of the aid referred to in article 1 shall be immediate and effective. 2. the french republic shall ensure that this decision is implemented within four months of the date of its notification. article 4 1. within two months of notification of this decision, the french republic shall provide the following information to the commission: (a) the total amount (principal and interest) to be recovered from the beneficiary; (b) a detailed description of the measures already taken and planned to comply with this decision; and (c) the documents proving that the beneficiary has been ordered to repay the aid. 2. the french republic shall keep the commission informed of the progress of the national measures adopted pursuant to this decision until the recovery of the aid specified in article 1 has been concluded. at the commission's request, it shall immediately submit information on the measures already adopted and planned for the purpose of complying with this decision. it shall also provide detailed information on the amounts of aid and the interest already recovered from the beneficiary. article 5 this decision is addressed to the french republic. done at brussels, 22 july 2015. for the commission margrethe vestager member of the commission (1) with effect from 1 december 2009, articles 87 and 88 of the ec treaty have become articles 107 and 108, respectively, of the treaty on the functioning of the european union (tfeu). the two sets of provisions are, in substance, identical. for the purposes of this decision, references to articles 107 and 108 of the tfeu should be understood as references to articles 87 and 88, respectively, of the ec treaty, where appropriate. the tfeu also introduced certain changes in terminology, such as the replacement of community by union, common market by internal market and court of first instance by general court. the terminology of the tfeu is used throughout this decision. (2) oj c 280, 16.11.2002, p. 8. (3) oj l 49, 22.2.2005, p. 9. (4) judgment of the general court in case t-156/04 edf v commission [2009] ecr ii-4503. (5) judgment in commission v edf c-124/10 p, eu:c:2012:318. (6) oj c 186, 28.6.2013, p. 73. (7) reply by the french authorities dated 23 december 2013, points 71 and 72. (8) rapport particulier sur les concessions d'edf no 1993, 10 october 1994. (9) directive 96/92/ec of the european parliament and of the council of 19 december 1996 concerning common rules for the internal market in electricity (oj l 27, 30.1.1997, p. 20). (10) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1). (11) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 84. (12) does the 1997 recapitalisation of edf by the french state meet the private investor test? final report of 15 october 2013. (13) 1997-2000 state-edf contract for services, signed on 8 april 1997. (14) letter of 12 july 1996 from the minister for economic and financial affairs and the minister for industry, posts and telecommunications to the chairman of edf, letter of 22 april 1997 from the minister for economic and financial affairs, the deputy minister for the budget and the minister for industry, posts and telecommunications to the chairman of edf. (15) letter dated 19 february 1997 from edf's finance director to the head of financing and holdings at the treasury department; edf memo dated 27 july 1996 on the shareholder's remuneration, sent to the senate on 15 september 1997. (16) explanatory memorandum to article 45 of the draft law laying down various economic and financial rules, adopted by the council of ministers on 5 april 1997; report by the national assembly's committee on finance, the general economy and the plan, submitted by member of the national assembly didier migaud on 10 september 1997, on draft law no 201 on urgent tax and financial measures; report by member of the senate alain lambert on the draft law on urgent tax and financial measures submitted on 24 september 1997; speech by the minister for economic affairs, finance and industry presenting the draft law on urgent tax and financial measures to the senate on 2 october 1997. (17) business secret. (18) the contract refers to directive 96/92/ec. this directive, like those which have succeeded it, did not contain any rules on the legal form to be taken by companies generating, transmitting or distributing electricity in the internal market. (19) the changes to retained income are not a direct effect of article 4, but a logical consequence. (20) the profitability for the state as shareholder is explained by the low capital contribution base of frf 36 billion (denominator) and the size of the accounting provisions. until 1996, once they had been entered into the accounts, edf ended up with a negative annual net income. the loss carried over from the income statement was reflected in the balance sheet as depleting the own funds set at frf 24,2 billion (see table 2, end 1996 column, showing how edf's own funds were slashed by negative retained income of frf 20,2 billion before the amendment introduced by article 4 of act no 97-1026). as tax was not levied on negative income, the high profitability for the state as shareholder was at the expense of the state as revenue collector. (21) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 82. (22) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 83. (23) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 84. (24) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 104. (25) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 86. (26) judgment in commission v edf, c-124/10 p, eu:c:2012:318, paragraph 95. (27) oxera study, points 3.3, 3.24-3.25. (28) oxera study, table a2.2. (29) oxera study, point 3.3. (30) oxera study, points 3.3, 3.15, table 3.2, table 3.8 for beta coefficient and annex 5. (31) oxera study, points 3.5, 3.13, 3.20 to 3.23. (32) annual average of the daily rate of the 30-year and 10-year french bellwether bond, source bank of france: benchmark rate of treasury bonds and fungible government bonds, http://www.banque-france.fr/economie-et-statistiques/changes-et-taux (33) the relevance of a calculation of the rate of return on the total equity tied up in the undertaking in relation only to the capital invested in the form of capital contributions is confirmed by the fact that, in the contract between the state and edf for the period 2001-2003, the state's remuneration calculated as a percentage (37,5 %) of net income was confined within a minimum (1,5 %) and maximum (4,5 %) range of the equity base. reply by the french authorities of 23 december 2013, point 53. (34) edf annual report 1997, p. 103. (35) by article 2 of the decision of 16 december 2003 (c(2003) 4637 final) (oj l 49, 22.2.2005, p. 9), the commission decided not to raise any objections to the reform of the pension scheme for the electricity and gas industries to which edf was subject. the effect of the reform was to transfer to the general social security scheme the pension liabilities and commitments of the specific scheme for the staff of edf and other participating companies. (36) the model estimates the target rate of return required by an investor in an undertaking's capital (k) as the result of an addition to the rate of return on a financial asset deemed to be risk free or low risk, namely, a sovereign bond in the reference financial market (rf), a market-risk premium reflecting the higher risk of an investment in shares (km rf) multiplied by a risk coefficient specific to the share of the undertaking concerned ( ) which can be, preferably, that of the undertaking itself or, failing this, that of comparable undertakings used as a reference. parameter must be estimated for an undertaking with no debt (gearing) in order to measure the inherent risk of (the share of) the undertaking in relation to the market. the model is k = rf + (km rf). the commission has applied the capm model to estimate the required rate of return on capital investments in an undertaking, endorsed by the general court of the european union: t-319/12 spain v commission, ciudad de la luz, eu:t:2014:604, paragraphs 48 to 66. for a fuller description, see vernimmen et al. corporate finance john wiley & sons ed. 2nd edition, 2009, chap. 22; for the findings of surveys of the frequency of use of estimation methods, see p. 460. the theoretical bases and a numerical application of the capm model to the present case are also contained in the study carried out by oxera on behalf of edf (recital 70), in particular annex i. (37) vernimmen et al. corporate finance john wiley & sons ed. 2nd edition, 2009, pp. 433-4. (38) the ddm model gives the value of the undertaking from the (last) dividend paid (dt), the growth rate of the dividends ( d) and the target return, or opportunity cost of the capital (k), applying the formula vr = dt (1 + d) / (k d). the mdd model is also used in the oxera study on behalf of edf (points 3.27-3.31, table 3.4), but with different and sometimes highly unrealistic values. the oxera study uses a dividend growth rate of 9,3 % per year. in a perpetuity formula such as the ddm model, dividend growth rates are associated with the growth of the undertaking. growth rates of 9,3 %, which are well above inflation and the long-term growth rate of gross domestic product (gdp), mean that, ultimately, edf would monopolise the entire gdp of france. (39) a negative net present value for a given interest rate (updating-financing) indicates that the investment is not viable at that interest rate. the internal rate of return (positive irr-) indicates the effective interest rate at which the expected financial flows remunerate an investment. (40) the assumption that the edf dividend would increase by 4,51 % (sensitivity 1, table 6.2) appears optimistic; it is obtained by smoothing the forecast growth rate for the four forecast years 1997-2000. besides the fact that in usual practice the dividend growth used is the end-of-period growth (baseline scenario), in actual fact the dividends to be paid by edf were to decrease in 1997-2000 compared with 1991-1996, and in 1999 and 2000 compared with 1998. in any event, a rate of 4,51 % in perpetuity is high in absolute terms. the assumption (sensitivity 2, table 6.3) that the shareholder would add or the buyer would pay for (a pro rata) quasi-equity capital of edf as estimated in 1997 to the objective value of edf as calculated, does not take into account the regulatory character of certain types of equity capital (reserves). this assumption combined with the mdd model is also optimistic as it amounts to allocating to the shareholder (a pro rata of 11 %) quasi-equity capital (excluding subscribed capital) which allows the undertaking to absorb possible losses and, in the long term, to be able to provide regular dividends and remuneration for the shareholder. it presupposes that the quasi-equity capital of edf set in 1997-2000 would be permanently available, whereas the mdd disregards sources of remuneration other than the dividend. it is therefore an unjustifiable assumption. the combination of the two assumptions (sensitivity 3, table 6.4) magnifies their respective disadvantages or weaknesses and makes the results of the calculation even more unlikely and arbitrary. (41) judgments in gezamenlijke steenkolenmijnen v high authority, 30/59, eu:c:1961:2; judgment in banco de cr dito industrial c-387/92, eu:c:1994:100; judgment in sfei, c-39/94, eu:c:1996:285; judgment in france v commission, c-241/94, eu:c:1996:353; judgment in ffsa v commission, t-106/95, eu:t:1997:23. (42) see in particular ladbroke v commission, t-67/94, eu:t:1998:7, paragraph 109. (43) council directive 90/547/eec of 29 october 1990 on the transit of electricity through transmission grids (oj l 313, 13.11.1990, p. 30). (44) c-364/90 italy v commission, eu:c:1993:157, paragraph 20. (45) guidelines on regional state aid (oj c 209, 23.7.2013, p. 1). (46) c-280/00 altmark trans and regierungspr sidium magdeburg; eu:c:2003:415. (47) judgment in spain v commission, c- 280/92, eu:c:1994:325, paragraph 75. (48) judgment in belgium v commission, c-75/97, eu:c:1999:311, paragraphs 64-65. (49) see article 14(2) of regulation (ec) no 659/99 (cited above). (50) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 140, 30.4.2004, p. 1). (51) judgment in commission v germany, c-94/87, eu:c:1989:46, paragraph 9, and judgment in commission v italy, c-348/93, eu:c:1995:95, paragraph 17.

name: commission decision (eu) 2016/152 of 1 october 2014 on state aid sa 27339 (12/c) (ex 11/nn) implemented by germany for zweibr cken airport and airlines using the airport (notified under document c(2014) 5063) (text with eea relevance) type: decision subject matter: air and space transport; financing and investment; regions of eu member states; financial institutions and credit; economic policy; europe; cooperation policy; competition date published: 2016-02-10 10.2.2016 en official journal of the european union l 34/68 commission decision (eu) 2016/152 of 1 october 2014 on state aid sa 27339 (12/c) (ex 11/nn) implemented by germany for zweibr cken airport and airlines using the airport (notified under document c(2014) 5063) (only the english text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof (1), having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having called on interested parties to submit their comments pursuant to the provision(s) cited above (2) and having regard to their comments, whereas: 1. procedure (1) in a parliamentary question of december 2008, mep hiltrud breyer raised the issue of the public financing of zweibr cken airport (3). she alleged that in the period 2005-2006, the land rhineland-palatinate (land) had funded the flugplatz gmbh aeroville zweibr cken (fgaz) with eur 2,4 million, which fgaz in turned used to fund its 100 % subsidiary, the flughafen zweibr cken gmbh (fzg). she further alleged that during the same period, construction works on the airport costing eur 6,96 million were fully paid for by the land. (2) the parliamentary question was answered by commissioner tajani on 6 january 2009. in addition, it was registered as a complaint under cp 5/2009. on 22 january 2009, 24 september 2010, and 15 march 2011, the commission requested further information from germany, which it provided by letters dated 23 march 2009, 27 january 2011, and 19 may 2011. (3) on 8 april 2008, the commission also requested further information from the airline ryanair, which was provided on 15 july 2011. a german translation of ryanair's submission was forwarded to germany on 18 august 2011, and germany declared on 26 september 2011 that it did not intend to comment on ryanair's submission at that time. (4) by letter dated 22 february 2012, the commission informed germany that it had decided to initiate the procedure laid down in article 108(2) of the treaty (the opening decision) in respect of the public funding of the operator of zweibr cken airport and incentives in favour of airlines using the airport. (5) by letter dated 24 february 2012, the commission requested further information after the opening decision. germany submitted its comments on the opening decision on 4 may 2012 and responded to the commission's request for further information on 16 april 2012. (6) the commission decision to initiate the procedure was published in the official journal of the european union (4). the commission invited interested parties to submit their comments on the alleged aid. (7) the commission received comments from four interested parties, namely ryanair, airport marketing services (ams), germanwings and tuifly. it forwarded them to germany, which was given the opportunity to react within one month; its comments were received by letter dated 26 october 2012. (8) in addition, the commission received further comments from ryanair on 20 december 2013, 17 january 2014 and 31 january 2014. those submissions were forwarded to germany, which did not wish to comment on them. (9) by letters dated 6 november 2013, 14 march 2014, and 2 april 2014 the commission requested further information. germany responded to the commission's requests for further information on 16 december 2013, 15 january 2014, 5 april 2014, 15 april 2014, 24 april 2014, 11 june 2014 and 27 june 2014. (10) by a letter dated 25 february 2014, the commission informed germany of the adoption of the 2014 aviation guidelines (5) on 20 february 2014, of the fact that those guidelines would become applicable to the case at hand from the moment of their publication in the official journal of the european union, and gave germany the opportunity to comment on the guidelines and their application within 20 working days of their publication in the official journal. (11) by letters dated 24 february 2014, the commission also informed the third parties of the adoption of the 2014 aviation guidelines on 20 february 2014, of the fact that those guidelines would become applicable to the case at hand from the moment of their publication in the official journal of the european union, and gave the third parties the opportunity to comment on those guidelines and their application within 20 working days of their publication in the official journal. (12) the 2014 aviation guidelines were published in the official journal of the european union on 4 april 2014. they replaced the 1994 aviation guidelines (6) as well as the 2005 aviation guidelines (7). (13) on 15 april 2014 a notice was published in the official journal of the european union inviting member states and interested parties to submit comments on the application of the 2014 aviation guidelines in this case within one month of their publication date (8). (14) comments on the application of the 2014 guidelines were received from germany on 8 may 2014. germany agreed with the application of the 2014 aviation guidelines in this case. the third parties did not submit any comments. (15) by letter dated 17 july 2014, germany agreed exceptionally to waive its rights deriving from article 342 of the treaty in conjunction with article 3 of regulation (ec) no 1/1958 (9) and to have this decision adopted and notified pursuant to article 297 of the treaty in english. 2. background to the investigation and context of the measures 2.1. history and development of zweibr cken airport (16) zweibr cken airport was a military airfield until 1991, when it was abandoned by the u.s. military. from 1992 until 1999, the airfield was the object of a conversion project co-financed by the union (10). the union funding was used to render the airfield available for civilian aviation, and the necessary measures encompassed the eradication of obstacles, the modernisation and installation of a tower and the drainage of the runway. the private investors of the project also envisaged the subsequent creation of a business park, a multimedia park and leisure installations. (17) from 2000 until 2006, the airfield was not generally used for commercial aviation. it was used by military planes, private planes, leisure flights and only occasional commercial flights. the majority of the passengers flying from and to zweibr cken airport were transported by military flights, whilst the remainder used company-owned planes or taxi flights. attempts to attract commercial operators failed. part of the reason was the existence of a nato air combat training zone (polygone), which severely restricted the ability of civilian operators to reach or leave zweibr cken during the training zone's operating hours. (18) it was only after the establishment of a control zone (ctr zweibr cken), regulating the use of the airspace by civilian and military aircraft, that a commercial operator could be attracted. commercial traffic with scheduled and charter flights started with germanwings' inaugural flight to berlin on 15 september 2006. charter operator tuifly commenced operations on 30 march 2007. ryanair operated its only route from zweibr cken (to london-stansted) in the period between 28 october 2008 and 22 september 2009, thereafter ceasing its services at zweibr cken airport. (19) the annual capacity of zweibr cken airport is currently around 700 000 passengers, but could reach up to 1 million passengers in view of the capacity of the runway and handling areas. (20) table 1 indicates the development of zweibr cken airport in terms of passenger numbers and aircraft movements from 2006 to 2012. table 1 passenger numbers 2006-2012 (11) year passengers aircraft movements 2006 78 000 23 160 2007 288 000 26 474 2008 327 000 27 000 2009 338 000 21 000 2010 265 000 16 000 2011 224 000 14 500 2012 242 880 13 230 2.2. geographic situation of zweibr cken airport (21) zweibr cken airport is situated 4 km south-east of the city of zweibr cken in the german land rhineland-palatinate. the nearest (12) other airports are: (a) saarbr cken airport (approximately 39 km, or approximately 29 minutes by car) (b) frankfurt-hahn airport (approximately 128 km, or approximately 84 minutes by car) (c) frankfurt (main) airport (approximately 163 km, or approximately 91 minutes by car) (d) luxembourg airport (approximately 145 km, or approximately 86 minutes by car) (e) karlsruhe/baden-baden airport (approximately 105 km, or approximately 88 minutes by car) (f) metz-nancy airport (approximately 129 km, or approximately 78 minutes by car) (g) strasbourg airport (approximately 113 km, or approximately 87 minutes by car) (22) according to the study provided by desel consulting and the airport research gmbh in 2009 (13), on average about 15 % of passengers per year originate from other member states (luxembourg and france). the remaining passengers originate from within germany, mostly from the region of kreis south-west saarpfalz, the city of saarbr cken, the city of saarlouis, and the region of saarpfalz-kreis. 2.3. legal and economic set-up of zweibr cken airport (23) zweibr cken airport is owned and operated by fzg. fzg is a 100 % subsidiary of fgaz, with whom it has concluded a profit and loss transfer agreement (p&l agreement). the p&l agreement ensures that all of fzg's losses will be covered by and all profits transferred to fgaz. (24) fgaz, in turn, is in shared ownership. the land rhineland-palatinate owns 50 % of the shares, while the remaining 50 % are owned by the zweckverband entwicklungsgebiet flugplatz zweibr cken (zef), an association of public territorial entities in rhineland-palatinate. the public owners of fgaz cover its financing needs by providing annual capital injections. according to germany, fgaz does not itself carry out any activities related to aviation. as far as aviation is concerned, fgaz simply passes the public funding on to fzg. fgaz does, however, carry out some activities related to marketing plots of land in the vicinity of the airport. 3. description of the measures and grounds for initiating the procedure (25) the commission investigated several measures involving zweibr cken airport. the commission assessed whether those measures constituted state aid and whether any state aid could be considered compatible with the internal market. (26) the following measures were investigated as potentially constituting state aid to fgaz and fzg: (a) direct public financing by land rhineland-palatinate and zef of zweibr cken airport's costs as regards: infrastructure investments (2000-2009) operating costs (2000-2009); (b) a bank loan and participation in the land rhineland-palatinate's internal cash pool. (27) the following measures were investigated as potentially constituting state aid to the airlines operating from zweibr cken: (a) discounts on airport charges for various airlines (germanwings, tuifly, and ryanair); (b) the marketing contracts with ryanair. 3.1. public financing by land rhineland-palatinate and zef of zweibr cken airport 3.1.1. detailed description of the measure (28) the public financing of zweibr cken airport took place in two different forms. first, the land rhineland-palatinate and the zef supported specific infrastructure investments of fzg with direct grants. secondly, the owners of fgaz annually injected capital into fgaz. the purpose of these capital injections, which cover fgaz's own losses, is to allow fgaz to comply with its obligations under the p&l agreement, according to which fgaz has to cover the losses of fzg. (29) the direct grants supporting specific infrastructure investments made between 2000 and 2005 and between 2006 and 2009 are listed in tables 2 and 3. table 2 infrastructure investments 2000-2005 zuwendungs-bescheid vom ma nahmen gesamtkosten der investitions-ma nahmen landesmittel mittel des tr gers ausgezahlte mittel insgesamt davon landesmittel f r bauma nahmen 2000 5.6.2000 wendeh mmer, bodenger te, usw. [ ] (14) [ ] [ ] [ ] [ ] 30.11.2000 flugzeughalle 25 25 [ ] [ ] [ ] [ ] [ ] 30.11.2000 flugzeughalle 56 18 [ ] [ ] [ ] [ ] [ ] 24.11.2000 renovierung halle 360 [ ] [ ] [ ] [ ] [ ] 1.12.2000 renovierung halle 370 [ ] [ ] [ ] [ ] [ ] gesamt 2000 [ ] [ ] [ ] [ ] [ ] 2001 23.7.2001 toda 1. phase [ ] [ ] [ ] [ ] [ ] 22.11.2001 umorg. sicherheitsbereich [ ] [ ] [ ] [ ] [ ] gesamt 2001 [ ] [ ] [ ] [ ] [ ] 2002 16.7.2002 au erord. rep. start- u. landebahn [ ] [ ] [ ] [ ] [ ] gesamt 2002 [ ] [ ] [ ] [ ] [ ] 2003 14.4.2003 berarb. markierungen flugbetr. fl che [ ] [ ] [ ] [ ] [ ] 15.9.2003 2. phase toda [ ] [ ] [ ] [ ] [ ] gesamt 2003 [ ] [ ] [ ] [ ] [ ] 2004 26.1.2004 geb ude 320 [ ] [ ] [ ] [ ] [ ] 1.11.2004 luftsicherheitsma n. [ ] [ ] [ ] [ ] [ ] gesamt 2004 [ ] [ ] [ ] [ ] [ ] 2005 4.8.2005 feuerl schfahrzeug [ ] [ ] [ ] [ ] [ ] 13.12.2005 feuerl schfahrzeug [ ] [ ] [ ] [ ] [ ] gesamt 2005 [ ] [ ] [ ] [ ] [ ] table 3 infrastructure investments 2006-2009 zuwendungsbescheid vom ma nahme gesamtkosten der investitionsma nahme landesmittel mittel des zef mittel des tr gers ausgezahlte mittel des landes ausgezahlte mittel des zef davon landesmittel f r bauma nahme 2006 22.11.2006 trinkwasseranlage [ ] [ ] [ ] [ ] 21.11.2006 verbesserung verkehrssicherheit [ ] [ ] [ ] [ ] [ ] [ ] [ ] 13.12.2006 erweiterung des terminals [ ] [ ] [ ] [ ] [ ] [ ] [ ] gesamt 2006 [ ] [ ] [ ] [ ] [ ] 2007 23.11.2007 erweiterung terminal, mehrkosten [ ] [ ] [ ] [ ] [ ] [ ] [ ] 30.1.2007 ausr stung abfertigung von luftfahrz. [ ] [ ] [ ] [ ] [ ] [ ] [ ] 30.9.2007 sicherheitsma nahmen [ ] [ ] [ ] [ ] [ ] [ ] [ ] 27.9.2007 verbesserung der verkehrssicherheit [ ] [ ] [ ] [ ] [ ] [ ] [ ] 31.10.2007 lfz-enteisungsfahrzeug [ ] [ ] [ ] [ ] [ ] [ ] [ ] 9.12.2007 luftsicherheitsger te [ ] [ ] [ ] [ ] [ ] [ ] [ ] gesamt 2007 [ ] [ ] [ ] [ ] [ ] 2008 23.11.2007 erweiterung terminal, mehrkosten [ ] [ ] [ ] [ ] [ ] [ ] [ ] 28.3.2008 erweiterung terminal, mehrkosten [ ] [ ] [ ] [ ] [ ] [ ] [ ] 17.6.2008 sicherheit vorfeld 1 [ ] [ ] [ ] [ ] [ ] [ ] [ ] 9.8.2008 schlepper, funk [ ] [ ] [ ] [ ] [ ] [ ] [ ] 21.10.2008 vorfeldbeleuchtung [ ] [ ] [ ] [ ] [ ] [ ] [ ] 27.10.2008 heizger t [ ] [ ] [ ] [ ] [ ] [ ] [ ] 9.11.2008 sanierung landebahn [ ] [ ] [ ] [ ] [ ] [ ] [ ] 31.10.2008 umbau terminal [ ] [ ] [ ] [ ] [ ] [ ] [ ] 24.11.2008 wetterbeobachtungssystem [ ] [ ] [ ] [ ] [ ] [ ] [ ] 24.11.2008 ger te, fahrzeuge [ ] [ ] [ ] [ ] [ ] [ ] [ ] gesamt 2008 [ ] [ ] [ ] [ ] [ ] 2009 12.8.2009 landebahnsanierung [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2.9.2009 erstellung des [ ] [ ] [ ] [ ] [ ] [ ] [ ] 16.10.2009 guard lights [ ] [ ] [ ] [ ] [ ] [ ] [ ] 19.10.2009 flugzeugschlepper, f rderband [ ] [ ] [ ] [ ] [ ] [ ] [ ] gesamt 2009 [ ] [ ] [ ] [ ] [ ] [ ] [ ] (30) the total investment amount between 2000 and 2009 amounted to eur 27 987 281, whereas the total amount of grants from the land amounted to eur 21 588 534. the biggest single investments were the extension of the runway in 2001/2003 (eur [ ]), the modernisation of the terminal in 2006 (eur [ ]), and the modernisation of the runway in 2008/2009 (eur [ ]). (31) as far as the capital injections by the land rhineland-palatinate/zef into fgaz and the coverage of fzg's losses by fgaz are concerned, table 4 provides the relevant data. (32) it must furthermore be noted that while land and zef both held 50 % of the shares in fgaz between 2000 and 2009 and in principle provided equal parts of the capital injections, the land in reality subsidised zef's share. until the end of 2005, the land covered, in addition to its own share of 50 % of the required capital injections, 90 % of zef's share as well. afterwards, the land reduced that latter percentage, first to 80 % in 2006 and then to 60 % from 2007 onward. in consequence, the land covered between 95 % (until 2005) and 80 % (from 2007 onward) of the annual losses of fgaz. table 4 capital injections and results of business activities year capital injections of land rhineland-palatinate/zef into fgaz annual result fgaz annual results fzg ebitda fzg 2000 [ ] [ ] [ ] [ ] 2001 [ ] [ ] [ ] [ ] 2002 [ ] [ ] [ ] [ ] 2003 [ ] [ ] [ ] [ ] 2004 [ ] [ ] [ ] [ ] 2005 [ ] [ ] [ ] [ ] 2006 [ ] [ ] [ ] [ ] 2007 [ ] [ ] [ ] [ ] 2008 [ ] [ ] [ ] [ ] 2009 [ ] [ ] [ ] [ ] total [ ] [ ] [ ] [ ] 3.1.2. reasons for opening the formal investigation procedure (33) the opening decision distinguishes between public financing of investments in the infrastructure of zweibr cken airport and public financing of its operating costs. 3.1.2.1. infrastructure investments existence of aid (34) the opening decision first noted that as regards investments into the airport infrastructure, fzg is an undertaking for the purposes of article 107(1) of the treaty. it recalled that in the leipzig/halle judgment (15), the general court confirmed that an entity which constructs and operates airport infrastructure while levying a charge on the users is carrying out an economic activity. the only exception would be certain activities that could be qualified as an exercise of public power; those activities would be qualified as non-economic in nature, and therefore not subject to state aid rules. the opening decision also asked germany to submit further information on which activities could be qualified as being non-economic in nature. (35) the opening decision also observed that fgaz did not carry out any airport-related activities itself, but merely passed on the public funding it received to fzg. however, it noted that fgaz did carry out some economic activities with respect to plots of land located in the vicinity of the airport. because of those activities, the opening decision considered that fgaz also constituted an undertaking for the purposes of article 107(1) of the treaty. (36) considering that the direct grants for investment projects were financed from the land's budget, and that the capital injections in favour of fgaz (and ultimately fzg) stemmed from the public budget of the land and zef, the opening decision concluded that the measures were financed through public resources. (37) as regards the question of whether fgaz and fzg received an advantage, the opening decision observed that public funding does not constitute an advantage where the public body granting the funding acted like a market economy operator (meo). the opening decision noted that germany had not presented any evidence that in granting the public funding, it acted like a meo. rather, it was apparent that, unlike a private investor, in granting the funding the public authorities had regional and social policy considerations in mind. as it could, therefore, not be concluded that the public authorities acted like a meo, the opening decision reached the preliminary conclusion that the public funding provided an advantage to fgaz/fzg. (38) the opening decision next noted that the public funding was only granted to fgaz/fzg, meaning that it was selective in nature. (39) finally, the opening decision explained that because there was increasing competition between regional airports, any advantage granted to zweibr cken airport was liable to distort competition. it particularly referred to saarbr cken airport, located only 39 kilometres by road away from zweibr cken airport. noting further the traffic development forecasts for zweibr cken airport, the opening decision also observed that the advantage would probably have an effect on trade between member states. (40) in conclusion, the opening decision found that since all required elements were fulfilled, the public financing of infrastructure investments at zweibr cken airport constituted state aid. compatibility (41) the opening decision observed that the 2005 aviation guidelines provide the framework against which to assess the compatibility of the public financing of infrastructure investments. they set out a number of criteria, which the commission has to take into account for the assessment of compatibility pursuant to article 107(3)(c) of the treaty. pursuant to point 61 of the 2005 aviation guidelines, such public financing is compatible where: (a) the construction and operation of the infrastructure meets a clearly defined objective of common interest (regional development, accessibility, etc.); (b) the infrastructure is necessary and proportional to the objective which has been set; (c) the infrastructure has satisfactory medium-term prospects for use, in particular as regards the use of existing infrastructure; (d) all potential users of the infrastructure have access to it in an equal and non-discriminatory manner; and (e) the development of trade is not affected to an extent contrary to the union interest. (42) in addition, state aid to airports as any other state aid measure should have an incentive effect and should be necessary and proportional in relation to the targeted legitimate objective in order to be compatible. (43) as regards the question whether the construction and operation of the infrastructure meets a clearly defined objective of common interest, the opening decision noted that zweibr cken airport serves to improve the accessibility of the part of land rhineland-palatinate in which it is located. it furthermore recalled the german submission that the airport promotes the economic development of the region. however, the opening decision also recalled that the airport only commenced its commercial aviation services in 2006, and that other airports, above all saarbr cken airport, are located in its vicinity and provide connectivity to the region. on the basis of the latter finding, the opening decision expressed doubts as to whether the public funding of zweibr cken's infrastructure served an objective of common interest or merely duplicates the already available infrastructure in the region. (44) with respect to the necessity and proportionality of the infrastructure, germany had submitted that only those investments had been undertaken that were necessary to ensure the compliance of the airport with all relevant safety standards. the opening decision, however, noted that zweibr cken airport was located in such close vicinity to saarbr cken airport that it had to be presumed to be in competition with it. other airports might also stand in direct competition with zweibr cken airport, in particular as regards freight or leisure travel. under these circumstances, the opening decision expressed doubts as to whether the infrastructure at zweibr cken was necessary and proportionate as regards the stated objective. (45) as regards the infrastructure's prospects, the opening decision recalled germany's submission that the passenger numbers were expected to increase to approximately 335 000 in 2015 and possibly to more than 1 000 000 by 2025. germany had also submitted that it expected zweibr cken to become profitable by 2015. however, the opening decision observed that zweibr cken airport had generated increasing losses since the start of commercial aviation in 2006, which casts doubt on the ability of the airport to generate profits in the future. these doubts are reaffirmed by the proximity of saarbr cken airport, which could be in competition with zweibr cken for the same passengers. in the light of this, the opening decision expressed doubts as to the medium-term prospects for use of the airport infrastructure. (46) the opening decision finally expressed doubts as to whether all potential users had access to the infrastructure in an equal and non-discriminatory manner. it also raised the question of whether the development of trade would be affected to an extent contrary to the union's interest, notably in the light of its vicinity to saarbr cken airport. 3.1.2.2. operating aid existence of aid (47) the opening decision first recalled its previous conclusion that both the fgaz and fzg are undertakings for the purposes of article 107(1) of the treaty. it also recalled that since the capital injections stemmed directly from public authorities, they constitute a transfer of state resources and are imputable to the state. considering further that operating aid relieves the beneficiary of some of the expenditure connected to its business, the capital injections granted fgaz and fzg an economic advantage which they would not have obtained under normal market conditions. finally, it recalled that operating aid is liable to distort competition and affect trade between member states in the same way that public financing of infrastructure investments is. it concluded that the operating aid in the form of capital injections to the benefit of fgaz and fzg constituted state aid. compatibility sgei decision (48) germany had argued that zweibr cken airport was entrusted with providing a service of general economic interest (sgei) and that operating aid was exempted from notification and compatible with the internal market on the basis of the 2005 sgei decision (16). after observing that zweibr cken airport served less than 1 000 000 passengers per year and therefore complied with the condition of article 2(1)(d) of the 2005 sgei decision, the opening decision expressed doubts whether the operation of the airport constitutes an sgei. (49) more particularly, the opening decision rejected germany's argument that a contribution to the regional and economic development of the region was sufficient to classify the entire operation of the airport as an sgei. the opening decision stressed that the region was already well served by other airports and that it was therefore not apparent why it would be necessary to entrust zweibr cken airport with an sgei to provide airport services. (50) the opening decision also explained that on the basis of the available information it was not clear whether the conditions of article 4 of the 2005 sgei decision were met. the general obligation to operate the airport, contained in 45 luftverkehrs-zulassungs-ordnung (air traffic licensing regulation, luftvzo), did not fulfil the conditions listed in article 4 of the 2005 sgei decision, and this obligation would in any event disappear if it were decided to close the airport. it was further observed that due to missing data, the commission had not been able to assess compliance with article 5 of the 2005 sgei decision. (51) the opening decision finally observed that since the 2012 sgei decision (17) only exempted state aid for airports with less than 200 000 passengers from notification, any aid to zweibr cken airport would have to be notified to the commission for the period from 31 january 2014 onward, even if it could be considered to comply with the 2005 sgei decision. compatibility 2005 aviation guidelines (52) the opening decision recalled that operating aid is generally not compatible with the internal market, and that it can only exceptionally be declared compatible under strict conditions. according to point 27 of the 2005 aviation guidelines, operating aid can only be declared compatible for airports located in the most disadvantaged regions of the union, that is to say, those falling under article 107(3)(a) of the treaty as well as the most remote regions and sparsely populated areas. it observed that zweibr cken airport was located in any of those areas, so that the aid could not be considered compatible under point 27 of the guidelines. (53) as regards the possibility of declaring the operating aid compatible pursuant to section 4.2 of the 2005 aviation guidelines, the opening decision pointed out that the compatibility criteria in that section are similar to those listed in the 2005 sgei decision. as the commission had reached the preliminary conclusion that the l conditions of the 2005 sgei decision were not fulfilled, it reached the same conclusion as regards the conditions of the 2005 aviation guidelines. (54) the opening decision finally also noted that, since 31 january 2012, the rules contained in section 4.2 of the 2005 aviation guidelines are supplemented by the provisions of the 2012 sgei framework (18). this means that any public funding that is covered by the 2005 sgei decision, but not the 2012 sgei decision, would, from 31 january 2014 onward, need to fulfil both the requirements laid down in section 4.2 of the 2005 aviation guidelines and the provisions of the 2012 sgei framework. compatibility rescue & restructuring guidelines (55) the opening decision finally commented on the possible compatibility of the capital injections pursuant to the rescue & restructuring guidelines (19). it observed that since the airport only commenced its commercial operation in 2006, it could be considered to constitute a new undertaking in the sense of the rescue & restructuring guidelines, excluding therefore their application. it also noted that no restructuring plan had been presented on the basis of which the aid could have been granted. (56) accordingly, on the basis of the available information, it was concluded that the operating aid to fzg/fgaz could not be declared compatible with the internal market. 3.2. potential aid in connection with a bank loan and participation in the land rhineland-palatinate's internal cash pool 3.2.1. detailed description of the measure (57) on 20 october 2009, the fzg obtained a loan of [ ] million from sparkasse s dwestpfalz. the interest rate was set at 2,05 % per annum until 15 october 2012, after which the parties could renegotiate the conditions. the land rhineland-palatinate granted fzg a 100 % guarantee of the loan, without demanding any remuneration or collateral in return. (58) since 26 february 2003, fgaz has also been entitled to participate in a cash-pool (that is to say, a financing pool) established by land rhineland-palatinate's ministry of finance. the cash-pool is a refinancing mechanism open to undertakings in which the land holds at least 50 % of the shares. (59) the maximum loan amount that fgaz could draw from the cash-pool was set at eur 3,5 million from 16 january 2009 onward and raised to eur 6 million on 1 october 2009. fgaz does not have to provide collateral, the interest rates are set at call money rate, and the loans are repaid whenever fgaz has liquidity available. (60) germany explained that the cash-pool functions as follows: the fgaz requests funds from the cash-pool to ensure its liquidity, and the land provides those funds from the cash-pool. the interest rates charged are market-based call money rates. if the balance of the cash-pool itself is negative, the land replenishes it by taking up loans on the market in its own name. germany further explained that the land essentially passes on the conditions it obtains on the capital market to the participants in the cash-pool, thereby allowing the participants the undertakings in which the land holds a majority of the shares to refinance themselves under the same conditions as the land itself. (61) germany submitted that until may 2006, the fgaz's balance with the cash-pool was always positive, and only thereafter started to be negative. germany provided the data set out in table 5 on the fgaz's balance with the cash-pool between 2006 and 2009. table 5 fgaz's balance with the cash-pool between 2006 and 2009 year deposits withdrawals balance on 31.12. 2006 [ ] [ ] [ ] 2007 [ ] [ ] [ ] 2008 [ ] [ ] [ ] 2009 [ ] [ ] [ ] 3.2.2. reasons for opening the formal investigation procedure 3.2.2.1. existence of aid (62) the opening decision first stated that fzg and fgaz constitute undertakings for the purposes of article 107(1) of the treaty. it next observed that it was clear that the guarantee and the cash-pool were imputable to the state and granted from public resources. as regards the loan itself, however, the opening decision asked for further information from germany on the question of whether the grant of the loan by sparkasse s dwestpfalz, a public bank, was imputable to the state. (63) the opening decision applied the meo test to determine whether the loan, the guarantee, or the cash-pool had provided an advantage to fzg/fgaz. it noted that as regards the loan and the cash-pool, it had to assess whether both complied with the conditions set out in the 2008 reference rate communication (20). as no information on the relevant reference interest rate had been provided, the commission asked germany to provide all the information necessary to assess whether the loan and cash-pool complied with the conditions set out in the 2008 reference rate communication. (64) with respect to the guarantee granted by the land rhineland-palatinate, the opening decision observed that whether or not the guarantee constituted state aid had to be assessed pursuant to the guarantee notice (21). noting that sufficient information was not available, the opening decision requested germany to supply all information necessary to assess the guarantee under the guarantee notice. (65) considering next that the loan, the guarantee, and the cash-pool were only available to fgaz/fzg, the opening decision found that they were selective. it also considered that as was the case regarding the public financing of infrastructure and operating aid it could not be excluded that the loan, guarantee, and cash-pool distorted competition. (66) on the basis of the available information, the opening decision accordingly concluded that the loan, the public guarantee, and the cash-pool constituted state aid within the meaning of article 107(1) of the treaty. the possible compatibility of those measures was not assessed. 3.3. discounts on airport charges for ryanair, germanwings and tuifly 3.3.1. detailed description of the measure (67) the schedule of charges presented by germany entered into force on 1 october 2005. according to that schedule, the landing charges are determined by reference to the aircraft's maximum take-off weight (mtow) and the number of passengers on board. for scheduled flights with more than 50 passengers, however, a lump sum of eur 6 per passenger is envisaged. that lump sum covers all airport charges, including the security charge of eur 3,58. (68) a series of discounts are available where certain conditions are fulfilled: (a) new scheduled connections: the airport grants a 100 % discount on landing, handling and passenger charges for a period of 12 months for any airline operating a new route from zweibr cken, as long as the new destination is served daily during the summer schedule and at least three times per week during the winter schedule. if the airline bases an aircraft at the airport, the 100 % discount can be extended for an additional six months. (b) new charter connections: the airport grants a 100 % discount on landing, handling and passenger charges for any airline newly operating from zweibr cken until a threshold of 100 000 passengers is reached; consequently, for these first 100 000 passengers, no landing, handling or passenger charges have to be paid. the airline has to serve the new destination daily during the summer schedule and at least three times per week during the winter schedule. airlines fulfilling certain further conditions such as increasing the frequency of their services by 50-100 % in two consecutive summer schedules and reaching a certain passenger-threshold are granted a further 100 % discount for an additional 50 000-100 000 passengers. 3.3.1.1. charges paid by germanwings (69) in august/september 2006, germanwings and fzg concluded an agreement regarding the establishment of the route zweibr cken berlin-sch nefeld, starting in september 2006. that contract envisaged charges of eur [ ] per passenger, covering landing, parking, passenger and security charges. the charges were discounted by [ ] for the first year of operation. from 16 september 2007 onward, germanwings paid eur [ ] per passenger, while from 1 january 2008 onward that payment was reduced to eur [ ] per passenger. on 9 january 2011, germanwings discontinued its service to and from zweibr cken. 3.3.1.2. charges paid by tuifly (70) germany provided a contract between fzg and tuifly, according to which tuifly had to pay a lump sum of eur [ ] per passenger, covering all relevant charges. nevertheless, it further submitted that tuifly was exempted from all charges for the first [ ] passengers. after that passenger number was reached on 1 august 2010, tuifly paid a lump sum of [ ] per passenger. 3.3.1.3. charges paid by ryanair (71) ryanair served the route zweibr cken london-stansted between 28 october 2008 and 22 september 2009. for the first year of operation, fzg and ryanair had agreed on [ ]. in return, ryanair committed to reach at least [ ] passengers per year. according to germany, ryanair paid [ ]. 3.3.1.4. services received by germanwings, tuifly and ryanair (72) the contracts between fzg and the various airlines all contain a section on additional services and charges. table 6 contains a comparison of the most important additional services and the prices charged to those airlines. table 6 additional services and charges service price tuifly price germanwings price ryanair air starter unit [ ] [ ] [ ] ground power unit [ ] [ ] [ ] aircraft cleaning (standard) [ ] [ ] [ ] aircraft cleaning (overnight stop) [ ] [ ] [ ] aircraft de-icing [ ] [ ] [ ] de-icing fluid and water [ ] [ ] [ ] empty wall space for advertising [ ] [ ] [ ] car rental till [ ] [ ] [ ] hangar access for ad hoc technical maintenance [ ] [ ] [ ] at least 4 press conference per year [ ] [ ] [ ] two journeys for journalists per year, organised by airport [ ] [ ] [ ] pc, printers, phones, fax and sita-equipment [ ] [ ] [ ] 3.3.2. reasons for opening the formal investigation procedure 3.3.2.1. existence of aid (73) the opening decision first observed that since fzg, which granted the discounts on the airport charges to the various airlines, was entirely owned and controlled by the state, those discounts had to be considered to have been granted by foregoing state resources. it was further considered that the state was very likely to have been involved in the actual conclusion of the contracts with the various airlines, and that the relevant public supervisory authority had to approve the airport's schedule of charges, with the consequence that the granting of discounts on the airport charges to various airlines was imputable to the state. (74) in order to answer the question of whether the discounts provided an advantage to the respective airlines, the opening decision recalled that it had to be assessed whether fzg acted like a meo in granting the discounts. to comply with the meo test, it was necessary to demonstrate that the decision to grant the discounts was based on sound economic logic and improved the airport's profitability. in addition, the revenue generated by the airport in connection with a contract with a particular airline could not be lower than the costs of providing airport services to that airline. (75) the opening decision noted that there was no indication that germany had compared expected costs and revenues over the duration of the respective airline contracts. germany had only provided a medium-term business plan covering the period 2011-2015. in this light, the opening decision considered it to be doubtful whether the revenues generated from the agreements with the airlines were sufficient to cover the costs related to providing them with airport services. it noted that since it commenced its commercial operations, fzg had generated increasing losses, and that the agreements did not include clause, common in other agreements, allowing fzg to recover the discounts in case the airlines decided to terminate their operations from zweibr cken. (76) the opening decision also considered that if zweibr cken airport had acted like a meo, it would have had to consider whether closing the airport was less costly than continuing its operation. it requested germany to provide information regarding the costs of closure of the airport in comparison to the costs of continuing its operation. finally, the opening decision noted that the discounts seemed to include the security charges which fzg had to pay to the security service. it observed that any price charged to the airlines which did not allow fzg to recover those costs would constitute an advantage to the airlines. in conclusion, the opening decision expressed serious doubts as regards the compliance of the discounts granted to various airlines with the meo principle. (77) considering, finally, that the airlines operated on a competitive market and that any advantage granted to them would allow them to strengthen their position on that market, the opening decision found that the discount granted on the charges was likely to affect trade between member states and to distort or threaten to distort competition. (78) the opening decision reached the preliminary conclusion that the discounted charges constituted state aid to the respective airlines (germanwings, tuifly, and ryanair). 3.3.2.2. compatibility (79) the opening decision assessed whether the discounted charges could be considered to constitute compatible start-up aid pursuant to section 5 of the 2005 aviation guidelines. in its assessment, the commission expressed doubts as to whether the various conditions for the compatibility of start-up aid were fulfilled. (80) in particular, the opening decision observed that: (a) it was doubtful whether the discounted charges fulfilled the conditions of point 79(c) of the 2005 aviation guidelines, since it was not clear whether and how the discounts were tied to an increase in passenger numbers; (b) it was doubtful whether the discounted charges fulfilled the conditions of point 79(d) of the 2005 aviation guidelines, since it was not clear whether the discounts were degressive and limited in duration; (c) it was doubtful whether the discounted charges fulfilled the conditions of point 79(e) of the 2005 aviation guidelines, since it was not clear which costs were covered by the discounted charges; (d) it was doubtful whether the discounted charges fulfilled the conditions of point 79(f) of the 2005 aviation guidelines, since the measure did not appear to be linked to the eligible costs; (e) it was doubtful whether the discounted charges fulfilled the conditions of point 79(h) of the 2005 aviation guidelines, since there was no indication that fzg made its intention to grant the discounts public and offered them to other airlines as well; (f) it was doubtful whether the discounted charges fulfilled the conditions of point 79(i) of the 2005 aviation guidelines, since no business plans on the profitability of the benefiting routes had been made available and it was not clear whether there had been any impact on competing routes; (g) it was doubtful whether the discounted charges fulfilled the conditions of point 79(j) of the 2005 aviation guidelines, since there was no indication that the required list had been produced; (h) it was doubtful whether the discounted charges fulfilled the conditions of points 79(k) and 79(l) of the 2005 aviation guidelines; and (i) it was doubtful whether the discounted charges fulfilled the conditions of point 80 of the 2005 aviation guidelines, since it was not clear whether the discounted charges were cumulated with other types of aid. (81) in conclusion, the commission reached the preliminary conclusion that the discounted charges could not be considered compatible start-up aid, since they do not fulfil all the conditions listed in section 5 of the 2005 aviation guidelines. 3.4. the marketing contracts with ryanair and ams 3.4.1. detailed description of the measure (82) two marketing services agreements were concluded with ryanair and its subsidiary ams. under a first contract, concluded between ryanair and fzg, the latter paid eur [ ] to ryanair for various marketing activities carried out by ryanair. (83) a second contract was concluded on 6 october 2008 between the land rhineland-palatinate, represented by the ministry of economics, traffic, agriculture and viticulture, and ams. neither fgaz nor fzg are parties to that contract. under the contract, ams provided various marketing activities, such as placing links to websites determined by the land on ryanair's website and including short texts about land rhineland-palatinate on ryanair's website. during the first year, the land paid ams a total of eur [ ], while for the second year the services were to be reduced and the land would have had to pay eur [ ]. (84) as ryanair discontinued its services to and from zweibr cken after less than one year, the marketing services agreement for the second year was eventually cancelled and the price for the first year was reduced to [ ] of the agreed upon price. in practice, the land rhineland-palatinate then paid a total of eur 320 833 to ams for marketing services. it appears that ams carried out all the agreed activities. 3.4.2. reasons for opening the formal investigation procedure 3.4.2.1. existence of aid (85) the opening decision first observed that the payments by the land rhineland-palatinate to ams/ryanair involve state resources and are imputable to the state. to the extent that the price paid by rhineland-palatinate exceeded the economic value of the services rendered by ams/ryanair, they constitute a loss of state resources. (86) to assess whether the marketing services agreements granted ams/ryanair an advantage, the commission again had to apply the meo principle. it observed that at zweibr cken airport, only ryanair had received marketing support to such an extent, that the payments were apparently not conditional on the marketing measures having a measurable impact (such as an increase in the number of passengers), and that it was not known whether land rhineland-palatinate had any control over the provision of the marketing services by ams/ryanair. the opening decision noted further that the marketing services agreement was clearly tied to the route zweibr cken london-stansted, so that it could be considered an incentive for that new route established by ryanair in october 2008. considering that ryanair directly profited from the marketing activities, it was concluded that ryanair should have covered at least a part of the related costs. in conclusion, the commission doubted whether land rhineland-palatinate had behaved like a meo, thereby granting an advantage to ams/ryanair. (87) as the marketing support was only granted to ams/ryanair, it was clear that the measure was selective. for the same reasons as outlined with respect to the discounted airport charges, the opening decision also found that the measure affected trade between member states and distorted or threatened to distort competition. it accordingly concluded that the marketing support constituted state aid within the meaning of article 107(1) of the treaty. 3.4.2.2. compatibility (88) the opening decision assessed whether the marketing support granted to ams/ryanair could be considered to constitute compatible start up aid pursuant to section 5 of the 2005 aviation guidelines. in its assessment, the commission expressed its doubts as to whether the various conditions for the compatibility of start-up aid were fulfilled. the reasons were essentially the same as those listed in recital 80 of this decision regarding the compatibility of the discounted charges. accordingly, it reached the conclusion that the marketing support does not constitute compatible start-up aid. 4. comments from germany 4.1. public financing by land rhineland-palatinate/zef of zweibr cken airport 4.1.1. infrastructure 4.1.1.1. existence of aid economic activity and advantage (89) the german authorities first recalled that they did not agree with the commission's position that the construction of airport infrastructure constitutes an economic activity. pointing out that the commission mainly referred to the general court's judgment in the leipzig-halle case, germany noted that an appeal against that judgment was still pending before the court of justice, reserving its position until the court of justice has decided. (90) secondly, the german authorities asserted that none of the infrastructure investments made before 2006, when zweibr cken airport commenced its commercial operations, were subject to state aid rules. until 2006 the airport served only for general aviation and military aviation purposes, and the german authorities claimed that providing airport services for those purposes did not constitute an economic activity. in any event, it was asserted that because of the small scale of the operations at zweibr cken airport until 2006 (there were never more than 30 000 passengers per year until 2006), any public funding did not distort or threaten to distort competition and had no effect on trade between member states. (91) thirdly, the german authorities submitted that the majority of investments supported with public grants fell within the public policy remit. it was emphasised that most investments were necessary in order to guarantee the safety of operations at the airport (in particular following an order from the relevant safety supervisory authority and complaints by the pilot association cockpit). all of the measures connected to ensuring the safety of operations at the airport were therefore regarded as falling under the public policy remit. (92) germany strongly objected to the notion that any measures falling within the public policy remit might, if only partially, confer an advantage on the airport in question if that funding was not granted on a non-discriminatory basis to all other airports in the member state. germany contended that funding for measures falling within the public policy remit did not constitute state aid, independent of the question whether one or all airports have to bear the costs for such measures. in this regard, there should be a uniform interpretation of the concept of public policy remit, especially in the light of the different ways in which member states define the concept. (93) germany submitted a list of investments which were made in relation to the public policy remit between 2006 and 2009 (for comparison, the total investment during that period amounted to eur 22 476 812). table 7 overview of costs falling into the public policy remit submitted by germany (22) measures costs total costs 2006 [ ] [ ] [ ] 2007 [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2008 [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] 2009 [ ] [ ] [ ] [ ] [ ] grand total eur 19 707 315 (94) germany stated that it considers the provision of airport security measures pursuant to 8 luftsicherheitsgesetz (air security law), measures assuring operational safety, air control and air safety measures pursuant to 27c(2) luftverkehrsgesetz (air traffic law), meteorological services, and fire brigade services to fall within the public policy remit, whether as investments or operating expenses. (95) germany argued that as regards air control and air safety measures, the financing of those activities has to be seen in the light of 27c(2) luftverkehrsgesetz. under that provision, a distinction is made between certain airports where the financing of those safety measures at federal level is regarded as being essential for reasons of safety and transport policy, and other, regional airports where such measures are not regarded as strictly necessary from a federal perspective. this is why it is justified that the land publicly finances air control and safety measures at regional airports such as zweibr cken, since otherwise the airport would have to bear those costs itself. therefore, the funding of air control and air safety measures, whether financed directly by the state on the federal level or by the l nder, is considered by germany to be part of public policy in all cases. (96) furthermore, according to germany, costs for the fire brigade are not regulated on the federal level, but fall within the competence of the l nder, which is why the fire brigade is not financed by the state at all airports. germany argued that the difference in treatment is rooted in historical as well as objective reasons. mainly, it lies in the nature of the airport business that smaller regional airports cannot bear the high fixed costs which a fire brigade creates, and that therefore these will be borne by the respective land. (97) concerning the renovation of the runway, germany submitted that the related measures fall within the public policy remit as they were urgently needed in order to guarantee the safe utilisation of zweibr cken airport. germany argued in this regard that use even for military purposes would not have been possible without those measures. therefore, the renovation was necessary to ensure that military use and general aviation would be possible at all. germany therefore claims that the costs for renovation are not exclusively connected to commercial aviation. (98) in this regard, germany stated that the type of renovation and the costs connected with it were necessitated by the military history of the airport. according to germany, the works entailed certain dangers, since the presence of unexploded bombs from the war could not be excluded. in fact, two unexploded bombs were apparently removed in the course of the renovation. (99) otherwise, the renovation works included, inter alia, adapting the runway to modern standards regarding width, renewal of drainage, navigation lights and guard lights, signs, emergency power supply with network parallelism, and extension of the fence and the taxiway. the renovations concerning lights, signs and the lifting of the taxiway had been requested in complaints by the pilot association cockpit. another substantial part of the renovation was the reorganisation of airport security, including new fences, doors, video supervision and intercom, installation of sliding doors, cable channels, etc. (100) germany, finally, argued that closing zweibr cken airport was never considered a viable option, as the continuous operation of the airport was necessitated by the military and general aviation purposes it serves. in this regard, germany furthermore argued that a closure and deconstruction of the airport would be associated with unjustifiable costs surpassing by far the costs invested. germany did not, however, present any estimate of the costs related to a closure, or a comparison of those costs with continuing operations. (101) in this light, germany submitted that providing airport services to commercial aviation makes economic sense. germany argued that the great majority of costs would need to be incurred in any event in order to provide airport services to military and general aviation users (infrastructure etc.), so that also serving commercial aviation only causes limited additional costs while creating additional revenue. distortion of competition and effect on trade (102) germany asserted that the public financing of zweibr cken airport's infrastructure does not distort competition and has no effect on trade between member states. germany submitted further that neither a distortion of competition nor an effect on trade could be deduced from the mere fact that other airports are located in the vicinity of zweibr cken. germany argued that zweibr cken airport is not in competition with the airports listed in the opening decision, above all not with saarbr cken airport. (103) with regard to the relationship between zweibr cken and saarbr cken airports, germany stated that the two airports complement each other, rather than being in competition. germany explained that the two airports have different profiles, stemming from their different infrastructure: saarbr cken airport has higher quality passenger infrastructure (such as a modern terminal building), and concentrates on scheduled flights and business travellers; zweibr cken airport, on the other hand, has a longer runway with a higher weight capacity, making it more suitable for heavier aircraft flying long distance or transporting freight. according to germany, zweibr cken airport therefore concentrates on charter flights and freight. (104) building on the perceived complementarity between zweibr cken and saarbr cken airports, germany declared that a closer cooperation between the two airports is envisaged. germany submitted further that the respective regional governments have already decided to cooperate more closely in the future, envisaging the creation of a joint airport (saar-palatinate-airport) with two locations (saarbr cken and zweibr cken). according to germany, the cooperation should lead to synergies and save funds. finally, germany emphasised that demand for aviation services in the region (the two airports taken together already have 750 000 passengers), maintaining that only saarbr cken and zweibr cken together can properly satisfy this demand, in particular because the other neighbouring airports cannot serve as substitutes. according to germany, the new saar-palatinate-airport would therefore not be in competition with the neighbouring airports, such as luxembourg, metz-nancy-lorraine, and frankfurt-hahn. 4.1.1.2. compatibility (105) germany explained that, even if the public financing of infrastructure measures was considered to constitute state aid, it would be compatible with the internal market as it complies with the conditions set out in point 61 of the 2005 aviation guidelines. before discussing each required element, germany stressed that the infrastructure investments made in zweibr cken were relatively minor compared to those found to be compatible with the internal market at other publicly funded regional airports and only served to convert existing military infrastructure for civilian use. construction and operation of the infrastructure meets a clearly defined objective of common interest (106) first of all, germany submitted that the public support for infrastructure investments meets a clearly defined objective of common interest: the infrastructure investments were made in a c-assisted region with the objective of improving regional economic structures. germany pointed out that union funding (which was provided from 1991 onwards through the programmes konver i, konver ii and perifra) was used to convert the military infrastructure for civilian use, financing for example the modernisation and installation of a tower and the drainage of the runway. germany claimed that it cannot understand why the commission has doubts as to the objective of common interest after having participated in the financing of the conversion of the former military airfield. (107) providing historical context, germany explained that the withdrawal of us armed forces from the zweibr cken airfield in 1991 caused significant structural problems in the zweibr cken region, such as an unemployment rate of 20 % in the city of zweibr cken. germany stated that converting the airfield into a civilian airport therefore served the purpose of creating jobs and improving the regional economic infrastructure. germany submitted further that the services provided by the airport are indispensable for the region and that the regional economy is highly dependent on easily accessible aviation infrastructure. (108) germany claimed that the commission's only reason for doubting compliance with that criterion again appears to be the proximity and perceived competition with saarbr cken airport. in response, germany again referred to the complementarity of the two airports, excluding any competition between them. in addition, it further argued that proximity to other regional airports was not of importance as regards the question of whether the subsidised infrastructure meets an objective of common interest. germany stated further that the only relevant factor was the interest of the land rhineland-palatinate, as it was concerned with serving the common interests in its own territory and not having to rely on infrastructure located in other regions. the infrastructure is necessary and proportional to the objective (109) germany explained that the infrastructure is necessary and proportional to the objective which has been set. according to germany, the infrastructure investments were always limited to complementing and extending existing infrastructure, without creating unnecessarily elaborate or expensive additional facilities. it emphasised that no new airport was created in zweibr cken, but that a former military airport was simply converted to civilian use. germany also stressed that the infrastructure is necessary to create jobs. according to germany, throughout land rhineland-palatinate, about 5 000 jobs were directly or indirectly created in connection with the existence of zweibr cken airport. out of those 5 000 jobs, 2 708 were created directly and indirectly at the airport or the surrounding conversion area until 2011. those jobs also helped save social costs (eur 25 million per year) and create tax income. germany stated further that jobs are especially important in this area with an unemployment rate which is currently 2 % above the average of the land. germany submitted that two expert opinions underline the importance of the airport for the regional economy (23). (110) germany again emphasised that the proximity to saarbr cken airport does not undermine the necessity and proportionality of the infrastructure in zweibr cken. according to germany, the infrastructure in zweibr cken is necessary for large and heavy aircraft because they can only land in zweibr cken, since the runway at saarbr cken does not provide the necessary length. germany submits further that zweibr cken also offers the possibility of night-flights, which is important for freight flights. the infrastructure has satisfactory medium-term prospects for use (111) germany stated that the infrastructure has satisfactory medium-term prospects for use germany emphasised that passenger numbers for zweibr cken airport increased from only 17 732 passengers in 2005 to 223 165 passengers in 2011. it explained that under that criterion only the projected passenger numbers are relevant, and that the relevant projections demonstrate an increasing demand in the region. referring to the forecast study provided by desel consulting and the airport research gmbh in 2009, germany argued that by 2025 an increase to at least 1 350 000 passengers at zweibr cken airport could be expected. (112) germany once more asserted that the proximity of saarbr cken airport did not diminish zweibr cken's medium-term prospects for use. it submitted forecasts showing that saarbr cken airport could also expect increasing passenger numbers and that the envisaged cooperation between the two airports would ensure that they will not compete for the same passengers in the future. equal and non-discriminatory access to the infrastructure (113) germany stated that all potential users of the infrastructure have access to it in an equal and non-discriminatory manner. the schedule of charges from 2005 in principle applies uniformly to all users of the airport under the same conditions. while germany submitted that some deviations from the official schedule of charges were agreed upon in practice for scheduled and charter flights, it maintained that reduced charges for the first year and discounts were offered to all airline companies on a non-discriminatory basis, with comparable quotas. the development of trade is not affected to an extent contrary to the union interest; the general principles of necessity and proportionality (114) germany explained that the development of trade is not affected to an extent contrary to the common interest based on the arguments already made. according to germany, the measures were necessary because zweibr cken airport cannot be substituted by saarbr cken airport. germany stated further that the infrastructure investments were limited to measures necessary to ensure the operational safety of the airport. it stressed, in this context, that the modernisation of the runway would have been necessary even if the airport had not been made available for commercial aviation. 4.1.2. operating aid 4.1.2.1. existence of aid (115) as regards the question of whether operating an airport is an economic activity, germany repeated that until the airport started providing services for commercial aviation in 2006, it merely served general aviation and military aviation purposes. in this respect, germany submitted that financing the operation of the airport with respect to those activities did not constitute an economic activity. (116) germany further argued that the majority of the losses of fzg that are covered by fgaz via the p&l agreement stem from fzg performing tasks falling within the public policy remit. according to germany, covering costs related to the performance of public powers cannot constitute state aid. (117) as regards the remaining elements of the definition of state aid in article 107(1) of the treaty, germany referred to the arguments it submitted in this regard with respect to the infrastructure investment measures, holding that they equally apply here. 4.1.2.2. compatibility 2005 sgei decision (118) germany argued that the annual payments covering the losses of fzg comply with the principles of the 2005 sgei decision. germany asserted that the airport's operating license, which imposes a duty to operate, constitutes the entrustment act. in addition, german stated that the airport has been at least in fact entrusted with the provision of an sgei. according to germany, even if, however, the commission were to find that no entrustment act existed, the operating aid to the airport would nevertheless comply with the principles of the sgei rules and would therefore have to be considered to be compatible with the internal market. (119) germany furthermore rejected the commission's suggestion that the duty to operate pursuant to the airport's operating licence would automatically come to an end if the airport was to cease its operations. it asserted that the financial support granted to the airport serves to enable the airport to continue operating and thereby to fulfil its duty to operate, that is to say, to provide the sgei with which it has been entrusted. germany argued further that preventing the closure of the facility is the essence of the duty to operate. (120) referring to the wide discretion of member states to define what constitutes a sgei, germany pointed out that it had discretion to determine the necessity and extent of entrusting the airport with an sgei. in as far as the commission had referred to the proximity to saarbr cken airport, germany again stressed that without the two airports the region would suffer from a severe under-supply of airport services, necessitating the entrustment of both airports with an sgei. sections 4.2 and 4.3 of the 2005 aviation guidelines (121) germany asserted that even if the operating aid were to be considered not to have been exempted from notification under the 2005 sgei decision, it would be compatible pursuant to the 2005 aviation guidelines. (122) at the outset, germany stressed that a large part of the losses covered result from the airport performing activities falling within the public policy remit. in addition, it pointed out that the p&l agreement does not cover costs that an airport operator normally would have to bear. it argued in this context that a large part of the costs not related to the performance of activities falling within the public policy remit stem from the particular history of zweibr cken airport and are, in this sense, not normal costs. germany submitted that the airport has the obligation to cater to general aviation and had to incur costs to convert the existing military infrastructure. (123) in any event, germany asserted that the conditions of sections 4.2 and 4.3 of the 2005 aviation guidelines were fulfilled in fact. in particular, germany stated that, as only the actual losses are covered, the presence of overcompensation can be excluded. 4.2. potential aid in connection with a bank loan and participation in the land rhineland-palatinate's internal cash pool (124) with respect to the bank loan, germany submitted that the sparkasse s dwestpfalz, which granted the loan, operates as a normal commercial bank and acted as such in granting the loan, so that the decision to grant the loan is not imputable to the state. germany stated further that when taking up the loan, the fzg compared offers from various banks, and the sparkasse loan complied with market terms. (125) as regards the 100 % guarantee of the loan granted by the land, germany submitted that it is normal commercial practice for a shareholder to guarantee the loans taken out by its subsidiaries. in any event, germany argued that the loan was used exclusively for the modernisation of the runway, necessitated by safety concerns and thus falling within the public policy remit. as the measure financed by the loan was thus not subject to state aid rules, it argued that the guarantee granted by the land does not constitute aid either. finally, germany asserted that even if the guarantee were to be considered to be subject to state aid rules, no advantage was conferred on fzg, since the interest rate on the guaranteed loan was still higher than comparable loans granted to fgaz that were not secured by a guarantee. (126) concerning the internal cash pool, germany claimed that the land's internal cash-pool is a normal financing mechanism used in the relationship between mother companies and subsidiaries. germany stated that the cash-pool is a financial instrument which was established by the land in 2002. the land's institutions and foundations and all undertakings governed by private law of which the land owns more than 50 %, can participate in the cash pooling facility. germany explained that the daily account balance of the cash pool is managed by the landeshauptkasse of the land. (127) according to germany, the cash pool is not financed directly out of the budget of the land, but from the surplus cash of the participants. germany explains further that any surplus of cash in the cash pool is invested on the capital markets; in the same way, a deficit is balanced by loans obtained on the capital market. thus, germany was of the opinion that any financial support from the cash-pooling facility is not granted through state resources, and is also not imputable to the state. (128) germany pointed out that even though no collateral is required from the undertakings benefiting from the cash-pool, they are under the land's supervision and as majority shareholder of fgaz the land could always request securities. (129) in germany's opinion it makes economic sense that the mother company enables its subsidiaries to finance themselves at rates comparable to those available to the mother company in this case the land rhineland-palatinate itself. according to germany, the financing derived from the cash pool could therefore not be compared to a classical loan. germany finally asserted that the land has never injected resources from its regular budget into the cash-pool, but has rather taken up capital on the market where necessary. (130) asserting that the loan, the guarantee and the cash-pool do not constitute state aid, germany did not submit any arguments concerning their compatibility. 4.3. discounts on airport charges for ryanair, germanwings and tuifly (131) germany submitted that the contracts between zweibr cken airport and the various airlines did not contain any state aid, as they were not imputable to the state in the first place. it asserted that the negotiation and conclusion of those agreements was the responsibility of fzg, falling within the scope of its purely commercial tasks. according to germany, while the contracts were discussed with fzg's supervisory board, the land rhineland-palatinate was only indirectly involved via its representatives on the supervisory board of fgaz. germany stated further that the land did not directly participate in any negotiations on discounts with the airlines. germany submitted that imputability could, finally, not stem from the fact that the schedule of charges had to be approved by a public supervisory authority according to 43a luftvzo, which is a general regulatory requirement applying to public and private airports alike. (132) germany was further of the opinion that the discounts granted to various airlines did not confer any selective advantage upon them, as the discounts were equally available to all interested airlines. it submitted that the discounts would only have granted a selective advantage if they had not been available on a non-discriminatory basis and if one airline had paid higher or lower charges than others, without there being any objective reason for this differentiation. (133) according to germany, at the same time, granting the discounts is said to have made economic sense for fzg, as it allowed the airlines to establish themselves at an airport that was new to commercial aviation. germany submitted that by granting the discounts, the airport distributed the risk involved in establishing a new route between itself and the airlines, while also allowing both sides to profit from increasing passenger numbers. germany asserted that without the discounts, the airlines would not have been willing to establish themselves in zweibr cken. (134) germany stated that the rebates for the airlines have to be regarded as a possibility to generate additional income for fzg, as the fixed costs for operating the airport had to be incurred in any event (to serve general and military aviation) while the establishment of new airlines only causes very marginal additional variable costs. according to germany, because serving new airlines did not lead to noticeable incremental costs, it was not necessary to prepare ex ante business plans to determine whether a contract with an airline would be incrementally profitable. (135) according to germany the reduced airport fees are not selective because they were granted on a non-discriminatory basis. therefore, germany was of the opinion that there was no distortion of competition. germany asserted that the airlines were not able to create a stronger position on the market based on these fees. (136) asserting that the discounts to various airlines do not constitute state aid, germany did not submit any arguments concerning their compatibility. 4.4. the marketing contracts with ryanair and ams (137) germany stressed that the marketing contracts concluded between the land and ams are independent from fzg. german asserted that the objective of the marketing contracts was to buy marketing services at market price that would primarily promote land rhineland-palatinate as a destination for tourism and economic activities. according to germany, as the marketing services agreement was not directed specifically at promoting the airport, there was no link between the marketing measures and passenger numbers. germany stated that the marketing measures incidentally also aimed at promoting zweibr cken airport. (138) stressing that by concluding the marketing services agreement the land simply purchased marketing services at market price, germany submitted that the marketing contract did not contain state aid and did not have to be assessed as an aid measure benefiting an airline pursuant to the 2005 aviation guidelines. 5. comments from interested parties 5.1. ryanair 5.1.1. discounted airport charges (139) ryanair asserted that the discounts granted to various airlines by fzg did not contain state aid, as they complied with the meo principle. first, ryanair argued that in applying the meo principle to the relationship between airport and airlines, it should only be asked whether the contract was incrementally profitable for the airport. ryanair considered that all infrastructure and fixed operating costs should be treated as sunk costs. according to ryanair, when assessing whether the contract complied with the meo principle, the commission should thus only take the incremental costs of the airport, which are directly related to providing airport services to the airline in question, into account, and examine whether the total revenue derived from the contract outweighs those incremental costs. in this context, ryanair emphasised that none of the infrastructure costs were incurred in connection with the agreement between ryanair and fzg, and they could thus not count as incremental costs connected to that agreement. (140) in assessing the revenue, on the other hand, ryanair asserted that the commission must also take account of network externalities that would have been expected to materialise when fzg and ryanair concluded the services contract in 2008. ryanair stated that the fact that those network externalities did not materialise, in the end, could not have been foreseen and is therefore of no relevance. (141) ryanair further explained that the discount did not selectively favour ryanair. ryanair asserted that the discount available for the first year of operations was offered in recognition of the significant commercial risk it took when establishing scheduled year-round operations to an airport that was unknown at that time. according to ryanair, in the case of zweibr cken it would have made no sense for ryanair to accept such a commercial risk without an incentive scheme. (142) ryanair furthermore stated that a similar arrangement was open to any other airline, that is to say, the discount on airport services fees for the first year of operation was available to all airlines starting new routes from zweibr cken. in particular, ryanair stressed that its contract with fzg contained a clause providing that [t]his agreement is entered into on a non-exclusive basis. the parties agree that the conditions granted to ryanair according to the agreement are also available, on a transparent and non-discriminatory basis, to any other airline that would commit itself to an equivalent volume of airline activity at the airport (24). (143) in any event, ryanair put forward that the agreements between itself and fzg cannot contain state aid as they are not imputable to the state. ryanair claimed that the evidence used by the commission in order to show imputability to the state is not sufficient, as it may reflect the public authorities' interest in the airport's commercial relations and future, but does not show any actual involvement of any of the public authorities in fzg's negotiations and agreements with ryanair. (144) furthermore, ryanair submitted a series of notes prepared by oxera, and an analysis prepared by professor damien p. mcloughlin. oxera note 1 identifying the market benchmark in comparator analysis for meo tests. ryanair state aid cases, prepared for ryanair by oxera, 9 april 2013 (145) oxera believed that the commission's approach of only accepting comparator airports in the same catchment area as the airport under investigation is flawed. (146) oxera argued that market benchmark prices obtained from comparator airports are not tainted by state aid given to surrounding airports. therefore, it is possible to robustly estimate a market benchmark for the meo tests. (147) this is because: (a) comparator analyses are widely used for meo tests outside of the field of state aid; (b) companies affect each other's pricing decisions only to the extent that their products are substitutes or complements; (c) airports in the same catchment area do not necessarily compete with each other, and the comparator airports used in the reports submitted face only limited competition from state-owned airports within their respective catchment areas (less than 1/3 of commercial airports within the catchment areas of the comparator airports are fully state owned, and none of them were subject to state aid investigations (as of april 2013)); (d) even where comparator airports face competition from state-owned airports within the same catchment area, there may be reasons to believe their behaviour is in line with the meo principle (for example, where there is a large private ownership stake or where the airport is privately managed); (e) meo airports will not set prices below incremental cost. oxera note 2 principles underlying profitability analysis for meo tests. ryanair state aid cases, prepared for ryanair by oxera, 9 april 2013 (148) oxera argued that the profitability analysis undertaken by oxera in its reports submitted to the commission follows the principles that would be adopted by a rational private sector investor and reflects the approach apparent from commission precedents. (149) the principles underlying the profitability analysis are: (a) the assessment is undertaken on an incremental basis; (b) an ex ante business plan is not necessarily required; (c) for an uncongested airport, the single till approach is the appropriate pricing methodology; (d) only those revenues associated with the economic activity of the operating airport should be considered; (e) the entire duration of the agreement, including any extensions, should be considered; (f) future financial flows should be discounted in order to assess profitability of the agreements; (g) incremental profitability of ryanair agreements to the airports should be assessed on the basis of estimates of the internal rate of return or net present value (npv) measures. analysis of professor damien p. mcloughlin brand building: why and how small brands should invest in marketing, prepared for ryanair, 10 april 2013 (150) the paper aimed to set out the commercial logic underlying regional airports' decisions to buy advertising on ryanair.com from ams. (151) the paper argued that there are a large number of very strong, well known, and habitually used airports. weaker competitors must overcome static buying behaviour of consumers to expand their business. smaller regional airports need to find a way to consistently communicate their brand message to as wide an audience as possible. traditional forms of marketing communication require expenditure beyond their resources. oxera notes 3 and 4 how should ams agreements be treated within the profitability analysis as part of the market operator test?, 17 and 31 january 2014 (152) ryanair submitted further reports by its consultant oxera. in these reports, oxera discussed the principles which, according to the airline, should be taken into account as part of the meo test in the profitability analysis of, on the one hand, airport services agreements between ryanair and airports and, on the other hand, the marketing services agreements between ams and the same airports (25). ryanair emphasised that those reports do not in any way change its position presented earlier that the airport services agreements and the marketing services agreements should be analysed under separate meo tests. (153) the reports indicated that the profits generated by ams should be included as revenues in a joint analysis regarding profitability while the expenses of ams would have to be incorporated in the costs. to do this, the reports suggested the application of a cash-flow-based methodology to the joint profitability analysis, meaning that the expenditure by airports on ams could be treated as incremental operating expenses. (154) the reports emphasised that marketing activities contribute to the creation and support of the brand's value, which helps to generate effects and benefits not only for the duration of the contract, but also after its termination. this would especially be the case if, due to the fact that ryanair has concluded an agreement with this airport, other airlines establish themselves at the airport, which will in turn attract more shops to install themselves there and therefore bring in more non aeronautical revenues for the airport. according to ryanair, if the commission proceeds to undertake a joint analysis of profitability, those benefits have to be taken into account by treating the expenses of ams as incremental operating costs, net of ams payments. (155) furthermore, ryanair is of the opinion that a terminal value would have to be included in the projected incremental profits at the end of the airport services agreement in order to take into account the value generated after the termination of the agreement. the terminal value could be adapted on the basis of a renewal-probability, measuring the expectation that profits will persist after the termination of the agreement with ryanair or if similar conditions are agreed with other airlines. ryanair considered that it would then be possible to calculate a lower limit for benefits generated jointly by the agreement with ams and the airport services agreement, reflecting the uncertainties of incremental profits after the termination of the airport services agreement. (156) to supplement this approach, the reports presented a synthesis of the results of studies on the effects of marketing on the value of a brand. those studies recognise that marketing can support the value of a brand and can help to build a customer base. according to the reports, in the case of an airport, marketing on ryanair.com increases the visibility of the brand in particular. the reports moreover stated that smaller regional airports wishing to increase their air traffic can therefore especially increase the value of their brand by concluding marketing services agreements with ams. (157) the reports lastly indicated that a cash-flow-based approach is to be preferred over a capitalisation approach, in which the costs of marketing services provided by ams would be treated as capital expenditure on an intangible asset (that is, the value of the brand) (26). the capitalisation approach would only take into account the proportion of marketing expenditure that is attributable to the intangible assets of an airport. the marketing expenses would be treated as capital expenditure in an intangible asset, and then depreciated for the duration of the contract, taking into consideration a residual value at the foreseen termination of the airport services agreement. this approach would not take into account the incremental profits which the conclusion of the airport services agreement with ryanair would bring in and it is also difficult to calculate the value of the intangible asset due to the expenses of the brand and the time period of use of the asset. the cash-flow method is more appropriate than a capitalisation approach, since the latter would not capture the positive benefits to the airport that are expected to arise as a result of signing the airport services agreement with ryanair. 5.1.2. marketing services agreements (158) ryanair stressed that ams' marketing services agreements are separate from ryanair's agreements with airports and should be assessed separately, since they cannot be considered a single beneficiary. the agreements were negotiated independently, related to different services, and were not subject to any linkage that would justify their consideration as a single alleged state aid measure. the conclusion of a marketing services agreement with ams is not a condition for the operation of routes by ryanair to and from an airport. ryanair stressed that the marketing services agreement of ams was concluded with the ministry, the co-owner of the airport, and it benefitted the airport but was not intended to improve the load factor or yield on ryanair routes. (159) as to the value of marketing, ryanair claimed that marketing space on ryanair's website is a scarce resource and demand for that space is high, including from businesses other than airports. according to ryanair, even legacy airlines now realise the value of their websites for marketing and advertising. ryanair submitted that airports choose to build a brand by advertising on ryanair.com or on other airline websites. ryanair stated further that this increased brand recognition can benefit the airports in a number of mutually reinforcing and complementary ways. zweibr cken airport is far less renowned internationally than either a roport de paris or heathrow airport, and it therefore needs to invest in advertising to improve its brand recognition and maximise the number of inbound passengers. ryanair concluded that the land had a double motivation to conclude the marketing services agreement with ams: first, a purely commercial one, as a 50 % co-owner of the operator of the zweibr cken airport; secondly, as part of its duty to promote tourism and business opportunities in the land. ryanair is therefore of the opinion that the land purchased valuable marketing services at market price. 5.2. airport marketing services (ams) (160) ams submitted that the commission should not, contrary to what is suggested in the opening decision, treat fzg's agreement with ryanair and the land's marketing services agreement with ams as connected, but rather as two separate business transactions. ams stated that it is a subsidiary of ryanair with a real commercial purpose of its own, created in order to develop an activity that does not belong to the core business of ryanair. ams clarified that it is used by ryanair as an intermediary to sell advertising space on its website. ams submitted further that, in principle, ams' marketing services agreements with airports are negotiated and concluded separately from ryanair's agreements with the same airports. ams claimed that the agreement between ams and the land does not grant any advantage to ryanair; ryanair does not pressure its partners to conclude marketing services agreements with ams and ryanair's route performance is generally the same on routes to airports with an ams marketing services agreement and to those without such an agreement. (161) ams further submitted that in purchasing marketing services, fzg acted in line with the meo principle, as advertising on ryanair.com is said to represent a high real value for the land and that the price charged by ams was the market price for these services. ams argued that the prices at which advertising space is provided by ams, and the volumes in which it is acquired, do not discriminate between public and private advertisers. ams stated further that public and private bodies are said to compete for access to the limited space to advertise on ryanair.com. this means, according to ams, that no state aid can be contained in ams' arrangements with public airports, as ams could just as easily sell the website space to a private company, at a comparable price. (162) ams also emphasised that it makes inherent sense for a small regional airport to purchase marketing services from ams. ams asserted that those airports typically have a need to increase their brand recognition and that advertising on an airline website can increase the number of more profitable foreign passengers (foreign passengers generate more non-aeronautical revenue than outbound passengers originating from the region where the airport is located). ams stressed that the land acted not only as the co-owner of the airport's operator, with a direct interest in the enhancement of its brand image and revenues, but also as the authority entrusted with the task of promoting tourism and business opportunities in land rhineland-palatinate through various means including, in particular, advertising. 5.3. germanwings (163) by way of background, germanwings briefly explained why it first decided to take up operations from zweibr cken. it indicated that it chose zweibr cken over saarbr cken because of the better runway in zweibr cken, pointing out that the topography of the runway in saarbr cken was difficult. it also explains that in 2006, when germanwings decided to fly from zweibr cken, zweibr cken was better equipped for instrument landing (cat system) and the flying time to berlin was slightly shorter. germanwings asserted that due to unprofitability of the berlin route it decided to discontinue its services from zweibr cken in 2011. (164) germanwings first asserted that its contracts with fzg do not contain state aid because it is not imputable to the state. it claimed that various press releases by politicians cannot demonstrate that the state was involved in negotiating or concluding these contracts, and that the obligation to have a schedule of charges approved by the supervisory authority pursuant to 43a luftvzo did not apply to individual agreements. (165) secondly, germanwings claimed that in concluding the various agreements fzg acted like a meo. it stressed that the meo principle does not require that an investor makes no losses in the short term, but that doing so may be a normal business strategy to be profitable in the medium to long term. the idea that an airport cannot impose charges that do not cover its costs, which germanwings finds reflected in the opening decision, is said to stem from article 102 of the treaty and to only be applicable in the antitrust context, so that it should not be applied in state aid cases. 5.4. tuifly (166) by way of background, tuifly explained why it first moved its operations from saarbr cken airport to zweibr cken airport. tuifly stated that it moved to zweibr cken airport because of safety concerns at saarbr cken airport. tuifly asserted that during bad weather, the infrastructure and topographical features of saarbr cken airport meant that a fully-loaded tuifly aircraft of type b737-800 could not properly land at the airport, thereby forcing those airplanes to divert to zweibr cken airport even before it had commenced its commercial operations. according to tuifly, apart from causing delays and inconveniences for passengers, those diversions were associated with additional costs and organisational issues for the airline. tuifly maintained that the severe safety concerns at saarbr cken airport made its operations there unsustainable and a move to zweibr cken airport unavoidable. in addition, it noted that the short runway in saarbr cken meant that some fully loaded planes could not start, with the consequence that medium distance flights (such as to the canary islands) had to start with half-empty tanks and stop for refuelling in spain or portugal. (167) tuifly claimed that its agreement with fzg did not contain any state aid, and that the charges paid by tuifly conformed to market rates. it asserted that the conditions at zweibr cken airport and in the surrounding region are such that, in order for an airline to operate profitably from zweibr cken, low airport charges are necessary. in particular, tuifly referred to the state of the passenger infrastructure at zweibr cken airport, the lack of suitable public transportation (railway) to and from the airport, the airport's location in a region with low purchasing power, the initially bad state of the runway, the absence of crew accommodation, etc. tuifly also claimed that unlike saarbr cken airport (or any other airport where tuifly operates), zweibr cken airport does not have the status of a customs airport, with the consequence that tuifly is obliged to pay a custom charge of between eur [ ] and eur [ ] per flight. according to tuifly, this represents an additional cost of approximately eur [ ] per passenger and increases tuifly's total operating costs by more than eur [ ] per year. 6. comments from germany on third party comments 6.1. comments on ryanair's comments (168) germany welcomed the fact that ryanair's submissions confirm germany's position that neither zweibr cken airport, nor the airlines operating from zweibr cken, have received state aid. it also agreed that the contract between the land rhineland-palatinate and ams has to be assessed separately from the contract between fzg and ryanair, that the former had real value for the land, and that it was concluded at market price. germany stressed, in particular, the importance of tourism for the region, maintaining that the agreement with ams served to promote tourism. 6.2. comments on ams's comments (169) as ams confirmed germany's position that the contract between ams and the land rhineland-palatinate did not contain any state aid, germany refrained from commenting on individual submissions in detail. 6.3. comments on germanwings' comments (170) germany limited its response to germanwings' submission to commenting on a number of factual suggestions put forward by germanwings. in particular, it stressed that contrary to what germanwings appears to suggest, there was no competition between zweibr cken and saarbr cken, but that the two airports always considered themselves to complement each other. germany asserted that the choice of an airline to serve one airport or another is the result of a strategic decision of that airline, on which germany could not comment. 7. assessment (171) by virtue of article 107(1) of the treaty any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between member states, be incompatible with the internal market. (172) the criteria in article 107(1) of the treaty are cumulative. therefore, in order to determine whether the measure in question constitutes aid within the meaning of article 107(1) of the treaty all of the following conditions need to be fulfilled. namely, the financial support must: (a) be granted by the state or through state resources; (b) favour certain undertakings or the production of certain goods; (c) distort or threaten to distort competition; and (d) affect trade between member states. 7.1. public financing by land rhineland-palatinate/zef of zweibr cken airport 7.1.1. existence of aid 7.1.1.1. economic activity and notion of undertaking (173) according to settled case law, the commission must first establish whether the fgaz and fzg are undertakings within the meaning of article 107(1) of the treaty. the concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed (27). any activity consisting in offering goods or services on a given market is an economic activity (28). (174) in its leipzig/halle airport judgment the court of justice confirmed that the operation of an airport for commercial purpose and the construction of the airport infrastructure constitute an economic activity (29). once an airport operator engages in economic activities by offering airport services against remuneration, regardless of its legal status or the way in which it is financed, it constitutes an undertaking within the meaning of article 107(1) of the treaty, and the treaty rules on state aid are therefore capable of applying to advantages granted by the state or through state resources to that airport operator (30). (175) regarding the moment in time from which on the construction and operation of an airport became an economic activity, the commission recalls that the gradual development of market forces in the airport sector does not allow for a precise date to be determined. however, the court of justice of the european union has recognized the evolution in the nature of airport activities and in its judgment in leipzig/halle airport, the general court held that from 2000 onward the application of state aid rules to the financing of airport infrastructure could no longer be excluded. consequently, from the date of the judgment in a roports de paris (12 december 2000) (31), the operation and construction of airport infrastructure must be considered as an economic activity falling within the ambit of state aid control. single economic unit (176) before examining the nature of the activities carried out by fgaz and fzg, however, the commission recalls that two separate legal entities may be considered to form one economic unit for the purpose of the application of state aid rules. that economic unit is then considered to be the relevant undertaking. (177) as the court of justice held, [i]n competition law, the term undertaking must be understood as designating an economic unit even if in law that economic unit consists of several persons, natural or legal (32). in this respect, the court has ruled that several entities can be deemed to perform an economic activity together, thereby constituting an economic unit, under specific conditions (33). (178) to determine whether several entities form an economic unit, the court of justice looks at the existence of a controlling share or functional, economic or organic links (34). (179) in this case, the commission considers that fgaz and fzg are so closely connected that they must be considered to constitute one single economic unit for the purposes of state aid rules. first, it must be recalled that fzg is a 100 % subsidiary of fgaz, giving fgaz the power to control fzg via the shareholder assembly. in addition, fgaz and fzg are connected via a p&l agreement, which according to germany means that the two entities are treated as a single economic unit under german tax law. the members of fzg's supervisory board are, according to its statute, always identical to those on the fgaz's supervisory board. in both undertakings, fgaz and fzg, the management is appointed by the respective supervisory board (which, as indicated, is identical for both entities). in practice, [ ] was at all material times the managing director for both fgaz and fzg (in addition, a second managing director was appointed only for fzg, but not for fgaz). as sole managing director of fgaz, [ ] therefore represented fgaz in the shareholder assembly of fzg, with fgaz being the sole shareholder. (180) in practice, the available information demonstrates that important decisions regarding zweibr cken airport are regularly taken at the level of fgaz, with instructions then being passed down to fzg. the information provided by germany regarding the decision-taking process with respect to the modernisation of the runway in 2008/2009 is instructive in this regard. the supervisory board of fgaz first took the decision to modernise the runway. fgaz's shareholder assembly then directed fgaz's management to call a shareholder assembly of fzg. the management of fgaz then represented fgaz as the sole shareholder in fzg's shareholder assembly and directed fzg's management to implement fgaz's decision to modernise the runway. (181) in conclusion, the commission considers that the links between fgaz and fzg are sufficiently close to treat the two entities as one economic unit. in particular, fzg is economically and legally entirely dependent on fgaz and does not have a commercial will of its own. for the purpose of the application of union state aid law, fgaz/fzg therefore form one undertaking. economic activity (182) fgaz/fzg are engaged in constructing, maintaining and operating zweibr cken airport. fgaz/fzg offer airport services and charge users commercial aviation operators as well as non-commercial general aviation users for the use of the airport infrastructure, thereby commercially exploiting the infrastructure. following from the case law cited in recitals 174-175, it must therefore be concluded that fgaz/fzg were engaged in an economic activity as from the date of judgment in a roports de paris (that is to say, 12 december 2000) onward. (183) in this context, the commission stresses that the economic activity of fgaz/fzg did not commence only with the start of commercial aviation at zweibr cken in 2006. (184) first, it is clear from the submission of germany that zweibr cken had already previously attempted unsuccessfully to attract commercial aviation to the airport, demonstrating the intent to enter into this market. (185) secondly, maintaining that constructing and operating an airport only amounts to an economic activity once commercial aviation has successfully been attracted would lead to unacceptable conclusions: there is no cause to dissociate the preparatory activity of building or enlarging infrastructure from the subsequent commercial use to which it is put; indeed, the nature of the development activity must be determined according to whether or not the subsequent use of the infrastructure which has been built amounts to an economic activity (35). in its judgment in the leipzig/halle airport case, the general court clarified that the operation of an airport is an economic activity, of which the construction of airport infrastructure is an inseparable part. (186) finally, it must be pointed out that offering airport services for general aviation purposes also constitutes an economic activity. the same is true as regards the provision of airport services to military users for remuneration (36). fgaz/fzg therefore already engaged in an economic activity before 2006. (187) it is therefore concluded that from 12 december 2000 onward, fgaz/fzg were engaged in an economic activity and constitute, as a single economic unit, an undertaking for the purposes of article 107(1) of the treaty. public policy remit (188) while fgaz/fzg must therefore be considered to constitute an undertaking for the purposes of article 107(1) of the treaty, it must be recalled that not all activities of an airport owner and operator are necessarily of an economic nature (37). (189) the court of justice (38) has held that activities that normally fall under a state's responsibility in the exercise of its official powers as a public authority are not of an economic nature and do not fall within the scope of the rules on state aid. such activities may include, for example, security, air traffic control, police, customs, etc. the financing has to be strictly limited to compensation of the costs to which they give rise and may not be used instead to fund other economic activities (39). (190) therefore, the financing of activities falling within the public policy remit or of infrastructure directly related to those activities in general does not constitute state aid (40). at an airport, activities such as air traffic control, police, customs, firefighting, activities necessary to safeguard civil aviation against acts of unlawful interference and the investments relating to the infrastructure and equipment necessary to perform those activities are considered in general to be of a non-economic nature (41). (191) however, public financing of non-economic activities necessarily linked to the carrying out of an economic activity must not lead to undue discrimination between airlines and airport managers. indeed, it is established case law that there is an advantage when public authorities relieve undertakings of the costs inherent to their economic activities (42). therefore, if in a given legal system it is normal that airlines or airport managers bear the costs of certain services, whereas some airlines or airport managers providing the same services do not have to bear those costs, the latter may enjoy an advantage, even if those services are considered in themselves as non-economic. therefore, an analysis of the legal framework applicable to the airport operator is necessary in order to assess whether under that legal framework airport managers or airlines are required to bear the costs of the provision of some activities that might be non-economic in themselves but are inherent to the deployment of their economic activities. (192) germany submitted that the costs arising from the following activities (whether as investment costs or operating expenses) are to be considered as falling within the public policy remit: airport security measures pursuant to 8 luftsicherheitsgesetz (air security law, hereinafter: luftsig), measures assuring operational safety, air control and air safety measures pursuant to 27c(2) luftverkehrsgesetz (air traffic law, hereinafter: luftvg), meteorological services, and the fire brigade. (193) the commission is of the view that measures pursuant to 8 luftsig, measures pursuant to 27c(2) luftvg (including meteorological services), and the fire brigade service can, in principle and subject to the analysis in recitals 195 et seq. below, be considered to constitute activities falling within the public policy remit. (194) with respect to measures relating purely to operational safety, however, the commission considers that ensuring safe operations at the airport is a normal part of the economic activity of operating an airport (43). subject to a more detailed review with respect to individual activities and costs, the commission finds that measures designed to ensure the safety of operations at the airport do not constitute activities falling within the public policy remit. any undertaking wishing to operate an airport has to ensure the safety of the installations, such as of the runway and aprons. (195) as regards the legal framework, germany has submitted that for the fire brigade there are no legal rules strictly imposing those costs on the airport operator. furthermore, the commission observes that the remuneration of costs for the fire brigades falls within the legal competence of the l nder and those costs are usually remunerated by the relevant regional authorities. the remuneration is limited to the extent necessary to cover those costs. (196) as regards air traffic control and meteorological services, the commission notes that 27d and 27f luftvg provide that the costs related to 27c luftvg are covered by the state for a number of specific airports. while the commission does not, in this case, need to decide whether the provision may grant an advantage to those airports that profit from state financing pursuant to 27d and 27f luftvg, it is clear that the law envisages that all other airports have to bear the relevant costs themselves. in this light, costs related to air traffic control and meteorological services must be considered to constitute normal operating expenses of at least those airports not addressed by 27d and 27f luftvg. (197) with respect to measures pursuant to 8 luftsig, it appears that germany considers that all costs related to the measures prescribed therein may be borne by the relevant public authorities. the commission notes, however, that pursuant to 8(3) luftsig only the costs related to the provision and maintenance of spaces and premises necessary for the performance of the activities listed in 8(1), (2) luftsig may be reimbursed. all other costs must be borne by the airport operator. hence, to the extent that public financing granted to fgaz/fzg relieved that undertaking of costs it had to bear pursuant to 8(3) luftsig, that public financing is not exempted from scrutiny under union state aid rules. conclusions on public policy remit (198) in the light of the above considerations, the commission finds it appropriate to draw more specific conclusions regarding investment costs and operating expenses allegedly falling with the public policy remit. (199) as regards operating expenses incurred between 2000 and 2009, the commission accepts that operating expenses linked to the fire brigade qualify as public policy remit expenses, in so far as the remuneration of those costs is strictly limited to what is necessary to pursue those activities. as regards operating costs linked to measures taken pursuant to 8 luftsig, the commission considers that only those costs for which the airport operator is entitled to reimbursement pursuant to 8(3) luftsig qualify as public policy remit costs. with respect to air control and air safety measures as well as meteorological services pursuant to 27c(2) luftvg, and noting that zweibr cken is not one of the airports for which a corresponding need has been recognised by the federal government pursuant to 27d(1) and 27f(1) luftvg, the commission finds that operating costs linked to air control and air safety measures as well as meteorological services cannot qualify as public policy remit costs. also, operating costs related to ensuring the operational safety of the airport do not qualify as public policy remit costs. (200) considering investments made between 2000 and 2009, the commission accepts that investments directly related to the fire brigade qualify as public policy remit expenses. moreover, the remuneration by the relevant public authorities was limited to the extent necessary to cover those costs. as regards investments linked to measures taken pursuant to 8 luftsig, the commission considers that only those costs for which the airport operator is entitled to reimbursement pursuant to 8(3) luftsig qualify as public policy remit costs. with respect to investments linked to air control and air safety measures as well as meteorological services pursuant to 27c(2) luftvg, and noting that zweibr cken is not one of the airports for which a corresponding need has been recognised by the federal government pursuant to 27d and 27f luftvg, the commission finds that investments linked to air traffic control and air safety measures as well as meteorological services cannot qualify as public policy remit costs. also, investments related to ensuring the operational safety of the airport do not qualify as public policy remit costs. in particular, this means that the investments into the modernisation and extension of the runway, as well as the installation of guard lights etc., cannot be qualified as falling within the public policy remit. (201) in any case, regardless of the legal classification of those costs as falling within the public remit or not, it has been demonstrated that they must be borne by the airport operator, under the applicable legal framework. accordingly, were the state to pay for those costs, the airport operator would be relieved from a cost that it should normally have incurred. economic activity and use by the military (202) the commission observes that zweibr cken airport is also used by the german and other military forces, including for training purposes. this is despite the fact that zweibr cken is not a military airfield, but a civilian airport (44). (203) the commission considers that, in principle, the provision of airport services to the military, including by civilian airports, can constitute an activity falling within the public policy remit. it is not clear, however, to what extent germany is of the opinion that the public financing of the airport merely covers the costs arising from catering to the airport services needs of the military. the commission observes that particularly as regards the operating costs, germany does not include costs arising from the presence of the military as falling within the public policy remit. the same is in principle true for the investments, where germany does not point to investments being strictly related to the military users of the airport. (204) however, germany does maintain that the continuing use of the airport by the military is one reason why investments into the safety of the airport (runway etc.) were absolutely necessary and why closure of the airport was not an option. (205) the commission observes, in this context, that zweibr cken airport appears to be offering airport services to the military for remuneration. the supervisory board minutes of fgaz of 2 october 2006 recount a discussion about military exercises in zweibr cken. the management stresses that one of the reasons in favour of allowing such exercises to take place is the revenue generated thereby, which indicates that, from the perspective of fgaz/fzg, offering airport services to the military is an economic activity. the discussion further touches upon whether fzg should allow military exercises in zweibr cken in the future, which suggests that it is within the discretion of fgaz/fzg whether or not to cater to the military. (206) the commission further considers that the failure of germany to identify any particular costs incurred, either in terms of investments or operating costs, specifically related to the military users of the airport may be taken to indicate that the military is, indeed, just another customer of zweibr cken airport. (207) in conclusion, the commission considers the provision of airport services to the military to be an economic activity at zweibr cken airport, noting in particular the failure to identify any costs individually linked to the presence of the military at zweibr cken airport and the (partially) economic justification given by fgaz/fzg's for catering to the military. (208) even in the alternative scenario namely if the commission would have concluded that the costs arising due to the military's presence could be covered by the state as falling within the public policy remit , it would still have to be observed that the public funding of the airport's non-economic activity of catering to the military should not be allowed to lead to a cross-subsidisation of the airport's economic activities. in particular, it would not be possible to consider the entire investment into assets also used by the military (runway etc.) or fixed operating costs as falling within the public policy remit. 7.1.1.2. state resources and imputability to the state (209) in order to constitute state aid, the measures in question have to be financed from state resources and the decision to grant the measure must be imputable to the state. (210) the concept of state aid applies to any advantage granted through state resources by the state itself or by any intermediary body acting by virtue of powers conferred on it (45). resources of local authorities are, for the application of article 107 of the treaty, state resources (46). (211) in this case, the relevant measures namely direct investment grants to fzg and annual capital injections in favour of fgaz/fzg were granted directly from the budget of the local authorities. the investment grants came directly from the land rhineland-palatinate, while the capital injections were co-financed by the land and the zef, an association of local public territorial entities. (212) thus, the commission considers that they are financed through state resources and are also imputable to the state. 7.1.1.3. economic advantage (213) an advantage within the meaning of article 107(1) of the treaty is any economic benefit which an undertaking would not have obtained under normal market conditions, that is to say, in the absence of state intervention (47). only the effect of the measure on the undertaking is relevant, not the cause nor the objective of the state intervention (48). whenever the financial situation of the undertaking is improved as a result of state intervention, an advantage is present. (214) the commission further recalls that capital placed directly or indirectly at the disposal of an undertaking by the state in circumstances which correspond to normal market conditions cannot be regarded as state aid (49). in this case, in order to determine whether the public financing of zweibr cken airport grants fgaz/fzg an advantage that it would not have received under normal market conditions, the commission has to compare the conduct of the public authorities providing the direct investment grants and capital injections to that of a meo who is guided by prospects of profitability in the long-term (50). (215) the assessment should leave aside any positive repercussions on the economy of the region in which the airport is located, since the court has clarified that the relevant question for applying the meo principle is whether in similar circumstances a private shareholder, having regard to the foreseeability of obtaining a return and leaving aside all social, regional-policy and sectoral considerations, would have subscribed the capital in question (51). (216) in stardust marine the court stated that, [ ] in order to examine whether or not the state has adopted the conduct of a prudent investor operating in a market economy, it is necessary to place oneself in the context of the period during which the financial support measures were taken in order to assess the economic rationality of the state's conduct, and thus to refrain from any assessment based on a later situation. (52). (217) furthermore, the court declared in the edf case that, [ ] for the purposes of showing that, before or at the same time as conferring the advantage, the member state took that decision as a shareholder, it is not enough to rely on economic evaluations made after the advantage was conferred, on a retrospective finding that the investment made by the member state concerned was actually profitable, or on subsequent justifications of the course of action actually chosen. (53). (218) in order to be able to apply the meo principle, the commission has to place itself at the time when each decision to provide public funds to fgaz/fzg was taken. the commission must also base its assessment on the information and assumptions which were at the disposal of the relevant local authorities at the time when the decision regarding the financial arrangements of the infrastructure measures at stake was taken. direct investment grants (219) the commission notes that the direct investment grants covered a portion of the investment costs incurred by fgaz/fzg in the context of its economic activity. the operator of an airport normally has to bear all the costs related to the construction and operation of the airport (with the exception of those costs that fall within the public policy remit and do not generally have to be borne by the airport operator under the applicable legal framework), including the investment costs, so that covering a part of those costs relieves the fgaz/fzg of a burden it would normally have to bear. (220) germany did not explicitly argue that the direct investment grants complied with the meo principle. it rather submitted that closing the airport was never a realistic option for the local authorities and that, given the need to operate the airport, it was economically sensible to also open it to commercial aviation. at other points, germany argued that the investments in the airport were motivated by the will to economically invigorate the region, and that public subsidies were necessary since the revenue generated by the commercial exploitation of the airport would not be sufficient to cover the related costs. (221) germany also stressed that the infrastructure is necessary to create jobs (about 5 000 in all of land rhineland-palatinate, out of which 2 708 jobs depend directly and indirectly on the airport), save social costs (eur 25 million per year) and create tax income. germany stated further that jobs are especially important in this area with an unemployment rate which is currently 2 % above the average of the land. germany also submitted that two expert opinions underline the importance of the airport for the regional economy (54). (222) however, social and regional considerations cannot be taken into account when conducting the meo test. moreover, even if the commission were to take those social and regional considerations into account, the studies submitted by germany show that, in june 2012, fzg only provided 115 jobs, at zweibr cken airport itself. those studies confirm that the commercial area around the converted airport provides a total of 2 708 direct and indirect jobs. however, out of those, only 7,8 %, so 210 jobs, are concerned with transport and storage, that is to say, activities which are directly connected to the presence of the airport. (223) while it could, in principle, be accepted that even non-repayable grants to a company that is entirely owned by the state could qualify as market-conform investments, germany has not presented a business plan or ex ante calculations regarding the expected profitability of the investment grants. the only projections that were presented are a study from 2003 outlining which commercial aviation passenger numbers could lead to profitability and the 2010 projection of expected annual results between 2011 and 2015. the latter expected that the fzg would become profitable only in 2015, assuming that the passenger numbers would rise to more than 500 000 passengers per annum. (224) the infrastructure investments at zweibr cken airport entail significant costs (see investments costs detailed in tables 2 and 3, net of any public policy remit investments as identified in recitals 198 to 200 and investment that took place before 12 december 2000), and a long period of negative results (foreseeably at least until 2015). (225) despite the inherent and significant uncertainties related to the project, such as its long-term nature, there was neither an ex ante business plan, nor a sensitivity analysis of any underlying profitability assumptions. this is not in line with the type of analysis that a prudent investor would have undertaken for such a project. (226) finally, the commission notes that since 2000, fgaz/fzg have generated losses every year, with an increasing tendency since 2005. (227) firstly, the direct investment grants were non-repayable in nature and did not yield a return on investment. secondly, germany has not presented any evidence that the investment grants were put at the disposal of fzg on market terms. thirdly, germany does not rely on the meo principle. the commission therefore finds that the direct investment grants by the land in favour of fzg granted after 12 december 2000 conferred an economic advantage on fzg (to the extent that the investment grants were not purely related to public policy remit activities as concluded in recitals 198 to 200). annual capital injections (228) the annual capital injections by the land rhineland-palatinate and zef served to cover fgaz's annual losses, which were in turn almost entirely brought about by the annual losses of fzg (see table 4). in the end, the annual capital injections therefore served to cover a part of the normal investment and operating expenses of fgaz/fzg, thereby relieving the undertaking of an economic burden it would normally have to bear. (229) for the same reason as outlined in recitals 222 to 228 with respect to the direct investment grants to fzg, the commission also finds that the annual capital injections in favour of fgaz/fzg were not provided under normal market conditions. notably, germany has not submitted that the capital injections were normal market investments. germany has not presented any evidence demonstrating ex ante profitability considerations, nor has it explained why a meo would continue injecting capital into an undertaking that constantly generates losses. in this light, the annual capital injections must be qualified as granting an economic advantage to fgaz/fzg. conclusion (230) in view of the foregoing, the commission considers that in the absence of an ex ante business plan or other sensible profitability studies, a meo would not have taken the decision to embark on the investment project in question and to cover, on a continuous annual basis, increasing losses of fgaz/fzg. therefore, the decision of land rhineland-palatinate and zef to grant those measures confers an economic advantage on fgaz/fzg which it would not have obtained under normal market conditions. 7.1.1.4. selectivity (231) to fall within the scope of article 107(1) of the treaty, a state measure must favour certain undertakings or the production of certain goods. hence, only those measures favouring undertakings which grant an advantage in a selective way fall under the notion of state aid. (232) in the case at hand, the direct investment grants and the annual capital injections only benefit fgaz/fzg. both measures are thus selective by definition within the meaning of article 107(1) of the treaty. 7.1.1.5. distortion of competition and effect on trade (233) when aid granted by a member state strengthens the position of an undertaking compared with other undertakings competing in the internal market, the latter must be regarded as affected by that aid (55). the economic advantage granted by the direct investment grants and the annual capital injections in this case to the airport operator strengthen its economic position, as the airport operator was able to set up its business without bearing all of the inherent investment and operating costs. (234) as assessed in recital 173 et seq., the operation of an airport is an economic activity. competition takes place, on the one hand, between airports to attract airlines and the corresponding air traffic (passengers and freight), and, on the other hand, between airport managers, which may compete between themselves to be entrusted with the management of a given airport. moreover, in particular with respect to low cost carriers and charter operators, airports that are not located in the same catchment areas and even in different member states can also be in competition with each other to attract those airlines. (235) as mentioned in point 40 of the 2005 aviation guidelines and reaffirmed in point 45 of the 2014 aviation guidelines, it is not possible to exclude even small airports from the scope of application of article 107(1) of the treaty. furthermore, point 45 of the 2014 aviation guidelines explicitly states that the relatively small size of the undertaking which receives public funding does not, as such, exclude the possibility that trade between member states might be affected. (236) zweibr cken airport currently serves approximately 242 000 passengers per year, and has served as many as approximately 340 000 passengers per year in the past. the forecast provided by germany established that passenger numbers could rise to more than 1 million passengers per year in 2025. as observed in recital 21, zweibr cken airport is located in the immediate vicinity of saarbr cken airport (39 kilometres) and within two hours' drive from six other airports. according to the air traffic projection study provided by germany, on average 15 % of passengers using zweibr cken airport originate from other member states (france and luxembourg). there are international flights from zweibr cken airport to destinations such as mallorca or antalya. the runway at zweibr cken is of sufficient length (3 000 m) and allows airlines to serve medium-haul international destinations. in the light of these facts, it must be considered that public funding to fgaz/fzg distorts or threatens to distort competition and has at least a potential effect on trade between member states. (237) apart from these general considerations, the commission also considers that zweibr cken airport is or has been in direct competition with saarbr cken airport. first, it must not be overlooked that tuifly, formerly saarbr cken airport's biggest client, left that airport and moved to saarbr cken in 2007. secondly, for a substantial period of time flights to berlin were offered from both zweibr cken (germanwings) and saarbr cken (air berlin and luxair) in parallel, demonstrating competition both between the airports and the airlines. fzg's airport services agreement with germanwings even envisaged higher service charges to be paid to fzg in the event that air berlin should terminate its berlin service from saarbr cken. (238) in addition to these indicators for competition between zweibr cken and saarbr cken airports, there is also evidence that despite the official submission by germany that the two airports never perceived themselves as being in direct competition, officials of the land rhineland-palatinate clearly perceived the existence of competition. in two internal notes of the rhineland-palatinate government written in 2003, the position defended by the authors is that cooperation between zweibr cken and saarbr cken airports was not possible/advisable at that time. rather, one note explained that at least as long as fraport ag was involved with saarbr cken airport, the relationship between the two airports would be one of competition (56). the notes further state that from the perspective of rhineland-palatinate, it can be expected that zweibr cken airport will prevail in this competition in the long term (57). those statements indicate that at least in 2003, the perceived relationship between the two airports was indeed one of competition. (239) against this background, the public financing granted to fgaz/fzg must be considered as being liable to distort competition and have an effect on trade between member states. 7.1.1.6. conclusion (240) in the light of the considerations in recitals 173 to 239, the commission considers that the public funding granted to fgaz/fzg in the form of direct investment grants and annual capital injections between 2000 and 2009 constitutes state aid within the meaning of article 107(1) of the tfeu. 7.1.2. lawfulness of the aid (241) pursuant to article 108(3) of the treaty, member states must notify any plans to grant or alter aid, and must not put the proposed measures into effect until the notification procedure has resulted in a final decision. (242) as the funds have already been put at the disposal of fgaz/fzg, the commission considers that germany has not respected the prohibition of article 108(3) of the treaty (58). 7.1.3. compatibility 7.1.3.1. the applicability of the 2014 and 2005 aviation guidelines (243) article 107(3) of the treaty provides for certain exemptions to the general rule set out in article 107(1) of the treaty that state aid is not compatible with the internal market. the aid in question can be assessed on the basis of article 107(3)(c) of the treaty, which stipulates that: aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest, may be considered to be compatible with the internal market. (244) in this regard, the 2014 aviation guidelines provide a framework for assessing whether aid to airports may be declared compatible pursuant to article 107(3)(c) of the treaty. (245) according to the 2014 aviation guidelines, the commission considers that the commission notice on the determination of the applicable rules for the assessment of unlawful state aid (59) applies to unlawful investment aid to airports. in this respect, if the unlawful investment aid was granted before 4 april 2014, the commission will apply the compatibility rules in force at the time when the unlawful investment aid was granted. accordingly, the commission will apply the principles set out in the 2005 aviation guidelines in the case of unlawful investment aid to airports granted before 4 april 2014 (60). (246) according to the 2014 aviation guidelines, the commission considers that the provisions of the notice on the determination of the applicable rules for the assessment of unlawful state aid should not apply to pending cases of illegal operating aid to airports granted prior to 4 april 2014. instead, the commission will apply the principles set out in the 2014 aviation guidelines to all cases concerning operating aid (pending notifications and unlawful non-notified aid) to airports even if the aid was granted before 4 april 2014 and the beginning of the transitional period (61). (247) the commission has already concluded in recital 242 that the direct and annual capital injections constitute unlawful state aid granted before 4 april 2014. 7.1.3.2. distinction between investment and operating aid (248) in view of the provisions of the 2014 aviation guidelines referred to in recitals 245 and 246, the commission has to determine whether the measure in question constitutes unlawful investment or operating aid. (249) according to point 25(r) of the 2014 aviation guidelines, investment aid is defined as aid to finance fixed capital assets; specifically, to cover the capital costs funding gap . moreover, according to point 25(r) of the guidelines investment aid can relate both to an upfront payment (that is to say cover upfront investment costs) and to aid paid out in the form of periodic instalments (to cover capital costs, in terms of annual depreciation and costs of financing). (250) operating aid, on the other hand, means aid covering all or part of the operating costs of an airport, defined as the underlying costs of the provision of airport services, including categories such as costs of personnel, contracted services, communications, waste, energy, maintenance, rent, administration, etc., but excluding the capital costs, marketing support or any other incentives granted to airlines by the airport, and costs falling within a public policy remit (62). (251) in the light of those definitions, it can be considered that the direct capital injections, which were all linked to particular investment projects, constitute investment aid in favour of fgaz/fzg. (252) in contrast, the part of the annual capital injections that was used to cover annual operating losses (63) of fgaz/fzg, net of the costs included in the ebitda that fall within a public policy remit as established in recitals 198 to 200 and the costs incurred prior to 12 december 2000, constitute operating aid in favour of fgaz/fzg. (253) finally, the part of the annual capital injections that covers losses of fgaz/fzg that are not already included in the ebitda (that is to say, the annual depreciation of assets, costs of financing, etc.), minus costs falling within a public policy remit as established in recitals 198 to 200 and the costs incurred prior to 12 december 2000, constitute investment aid. 7.1.3.3. compatibility of investment aid (254) according to paragraph 61 of the 2005 aviation guidelines, the commission must examine whether the following cumulative conditions are met: (a) the construction and operation of the infrastructure meets a clearly defined objective of common interest (regional development, accessibility, etc.); (b) the infrastructure is necessary and proportional to the objective which has been set; (c) the infrastructure has satisfactory medium-term prospects for use, in particular as regards the use of existing infrastructure; (d) all potential users of the infrastructure have access to it in an equal and non-discriminatory manner; and (e) the development of trade is not affected to an extent contrary to the union interest. (255) in addition, state aid to airports as any other state aid measure must have an incentive effect and be necessary and proportional in relation to the aimed legitimate objective in order to be compatible. (256) germany asserted that the investment aid in favour of fgaz/fzg complies with all the compatibility criteria in the 2005 aviation guidelines. (a) contribution to a clearly defined objective of common interest (257) the commission recalls that the 2005 aviation guidelines do not set out precise criteria according to which it will be assessed whether investment aid to an airport contributes to a clearly defined objective of common interest. however, a mere duplication of existing airport infrastructure cannot be considered to serve an objective of common interest. (258) in this respect, the commission therefore has to assess, first, whether zweibr cken airport duplicates existing airport infrastructure in the region. duplication: overlap between zweibr cken and saarbr cken airports (259) the commission recalls that zweibr cken airport is located in the immediate vicinity of saarbr cken airport. the linear distance between the two airports is approximately 20 kilometres, which translates into approximately 39 road kilometres. the traveling time by car between the two airports is approximately 30 minutes. in addition, at least 6 other airports are located within less than 2 hours traveling time from zweibr cken airport. (260) the close proximity between the two airports means that both serve virtually identical catchment areas. the various studies presented by germany in this case (64), as well as in the parallel formal investigation procedure regarding saarbr cken airport (65) confirm that the majority of passengers using the two airports stem from western rhineland-palatinate and saarland. (261) the profiles of saarbr cken and zweibr cken airports are also relatively similar. when commercial aviation commenced in zweibr cken in 2006, the first client was germanwings, offering a route to berlin. the same route was served from saarbr cken by luxair and, from 2007 onward, by air berlin. zweibr cken's second big client was tuifly, offering flights to various vacation locations, mainly in the mediterranean. before serving zweibr cken, tuifly had been one of saarbr cken airport's biggest clients. (262) zweibr cken also attempted to break into the low-cost market more broadly by contracting with ryanair, which, however, only maintained the london-stansted route for less than a year. eventually germanwings also abandoned the airport, with the consequence that since the end of 2011 zweibr cken airport concentrates almost exclusively on vacation charter flights and some air freight. (263) vacation charter flights are and were, however, also offered from saarbr cken. importantly, it appears that the main destinations served from zweibr cken are also frequently served from saarbr cken. by way of example, the summer 2014 flight schedule demonstrates that the two most frequent destinations served from zweibr cken are antalya and palma de mallorca, making up as much as 70 % of the weekly flights. at the same time, both destinations are served from saarbr cken as well with a similar frequency: in the week of 16-23 june 2014, 16 flights departed from zweibr cken to antalya or palma de mallorca, while 18 flights to those same destinations departed from saarbr cken. duplication: capacity, passenger numbers, and annual results (264) after zweibr cken airport entered the market for commercial aviation, the passenger numbers increased rapidly, from 78 000 passengers in 2006 to 338 000 passengers in 2009. following this period of rapid growth, the numbers started to decrease, falling to 242 000 passengers in 2012. considering that the capacity at zweibr cken is 700 000 passengers, the airport has therefore never operated at more than 50 % of its available capacity, and is currently operating at approximately 35 % of the available capacity. (265) in comparison, the passenger numbers at saarbr cken were essentially steady at around 450 000 passengers per annum until zweibr cken entered the commercial aviation market, when passenger numbers dropped from 487 000 passengers in 2005 to 350 000 passengers in 2007. after adapting the airport charges, saarbr cken airport managed to attract air berlin in 2007, which led to a rebound and increasing passenger numbers, reaching a maximum of 518 000 passengers in 2008. in 2012, 425 000 passengers used saarbr cken airport. considering that saarbr cken's capacity is currently also 700 000 passengers per annum, only between 50-75 % of its available capacity was used. in this regard it must be noted that the capacity of saarbr cken airport could be higher (namely 750 000-800 000 passengers per annum) if it were not limited with respect to the number of security checks on passengers the airport can handle per hour. this limitation arises from the fact that saarbr cken airport only has two security scanners available at the moment. (266) the commission also notes that both saarbr cken and zweibr cken airports were loss-making during the period under investigation (2000-2009). notably, at both airports the annual losses increased sharply from 2006 onward, when zweibr cken entered the commercial aviation market. duplication: evidence of direct competition between the two airports (267) the commission has already observed in recitals 237 and 238, that there are some indications that zweibr cken airport found itself in direct competition with saarbr cken airport. first, it must again be recalled that tuifly, formerly saarbr cken airport's biggest client, left that airport and moved to zweibr cken airport in 2007 (66). secondly, for a substantial period of time, flights to berlin were offered from both zweibr cken (germanwings) and saarbr cken (air berlin and luxair) in parallel, demonstrating competition both between the airports and the routes served by airlines. fzg's airport services agreement with germanwings even envisaged higher services charges to be paid to fzg in the event that air berlin should terminate its berlin service from saarbr cken. (268) in addition to the further indicators already mentioned (see recital 238), the commission also points to the minutes of fgaz's supervisory board meeting of 26 june 2009. in summarizing the report from the management board, the minutes recount a meeting between fgaz's management, ryanair, and the rhineland-palatinate ministry of economics. during that meeting, which discussed the future of ryanair's relationship with zweibr cken, the representative of the ministry pointed out to [ryanair] that the rhineland-palatinate government would consider it a very unpleasant act if ryanair were to start serving saarbr cken. rather than demonstrating complementarity between the two airports, that note rather indicates that the two airports were competing for business. duplication: freight (269) the commission further observes that zweibr cken airport is also engaged in handling air freight. while freight is not a significant aspect of operations at saarbr cken airport, it forms a central element of frankfurt-hahn airport's business model. as stated in recital 21, frankfurt-hahn airport is located only approximately 128 km or approximately 84 minutes by car away from zweibr cken. in addition, freight is also handled at luxembourg airport, located approximately 145 km, or approximately 86 minutes by car (see recital 21) away from zweibr cken airport. (270) in this regard, the commission notes that freight is usually more mobile than passenger transport (67). in general, the catchment area for freight airports is considered to have a radius of at least around 200 kilometres and 2 hours travelling time. to a certain extent the industry seems to suggest that up to a half a day of trucking time (that is to say, up to 12 hours driving time by trucks) would in general be acceptable (68). (271) considering that the catchment area for freight is typically much larger than for passengers, frankfurt-hahn and luxembourg airports provide sufficient air freight capacity for the region. duplication: discussion of findings (272) on the basis of the considerations outlined in recitals 259 to 270, the commission finds that zweibr cken airport duplicates the airport infrastructure available at saarbr cken airport. more particularly, the commission considers that even before zweibr cken entered the commercial aviation market, the region was well connected by the existing airports, primarily saarbr cken airport, and that zweibr cken airport does not increase the connectivity of the region. (273) moreover, any aviation service demand not satisfied by saarbr cken airport could easily be met by the other 6 airports that can be reached within less than 2 hours traveling time. in particular as regards leisure flights, traveling times of up to 2 hours are commonly accepted. the same is true as regards demand for air freight services. (274) germany has not presented any evidence that projected passenger numbers required the market entry of zweibr cken airport. in particular, while the entry into the commercial aviation market took place in 2006, the earliest passenger number projection study provided dates from september 2009 (69). it cannot therefore be maintained that the public funding since 2000 was aimed at satisfying demand for aviation services that would otherwise not be met. (275) the commission also notes that in 1997 saarbr cken airport projected its own passenger numbers to rise to 676 000 by 2010 (70). as zweibr cken airport was, at that time, not yet active on the commercial aviation market, it can be assumed that that projection was the most reliable passenger forecast for the region. as saarbr cken has a capacity of 700 000-800 000 passengers per annum, it is clear that the passenger numbers forecasted in 1997 could be satisfied by saarbr cken airport alone for a significant period of time. (276) the commission is furthermore of the opinion that even the actual passenger numbers at zweibr cken and saarbr cken airports do not demonstrate that saarbr cken's capacity is insufficient to satisfy demand in the region. it is true that the combined passenger numbers at saarbr cken and zweibr cken reached approximately 850 000 passengers in 2008 and 810 000 in 2009, which is more than the maximum capacity of saarbr cken airport. at the same time, the commission considers that those numbers project a somewhat distorted image of the real demand in the region: first, the high passenger numbers appear to be driven by direct competition between the berlin routes offered from zweibr cken and saarbr cken (and germanwings and air berlin/luxair, respectively), which temporarily attracted additional passengers. however, once germanwings terminated its unprofitable route to berlin, the demand on the route decreased. secondly, the commission finds (see section 7.3) that germanwings, tuifly and ryanair all benefited from incompatible state aid granted to them by fgaz/fzg. insofar as this might have translated into reduced ticket prices, it is doubtful that the thus-subsidised passenger numbers at zweibr cken represented the real demand in the region. finally, it must be noted that the joint passenger numbers have dropped since 2009: the joint passenger numbers for zweibr cken and saarbr cken were approximately 670 000 in 2012, and thus below the capacity limit of saarbr cken airport. (277) the commission can furthermore not accept the argument advanced by germany that the two airports are only complementing rather than competing with each other. first, despite the fact that the business models of the two airports appear to differ to some degree, it is clear that zweibr cken airport's core business (vacation flights, in particular to antalya/palma de mallorca) is also catered for by saarbr cken. it is true that saarbr cken otherwise concentrates on scheduled flights to major cities such as luxembourg, berlin, and hamburg. this does not, however, change the fact that zweibr cken appears to have only limited business that is not or could not be served from saarbr cken. (278) the commission further finds that the differences in infrastructure that do exist between the two airports do not undermine its finding that zweibr cken airport duplicates airport infrastructure that already existed before in saarbr cken. while it is again true that zweibr cken has a longer runway, making it more suitable for long-distance flights and heavy freight planes, these differences are not sufficient to justify two airports in such close proximity. first, as explained in recitals 269 and 270, air freight demand is sufficiently served by frankfurt-hahn and luxembourg airports, where according to the commission's information there is no relevant restriction with respect to the weight of planes. secondly, germany has not demonstrated that a significant number of the commercial passenger flights that depart from zweibr cken could not start from saarbr cken. (279) considering, finally, that saarbr cken airport was apparently able to accommodate the aviation service demands now partially taken over by zweibr cken before the latter entered the market, the difference in infrastructure does not justify duplicating the infrastructure that already existed in saarbr cken. conclusion (280) in the light of the facts and considerations presented and discussed in recitals 255 to 279, the commission finds that the investment aid in favour of fgaz/fzg served to create or maintain infrastructure that merely duplicates the (unprofitable) airport in saarbr cken. the investment aid therefore cannot be considered to contribute to an objective of common interest. (281) as the compatibility conditions enumerated (in recital 254) are cumulative, the commission does not need to assess the remaining compatibility conditions. accordingly, to the extent that it constitutes state aid, the investment aid should be found not to be compatible with the internal market pursuant to article 107(3)(c) of the treaty. (282) as germany has not put forward and the commission has not identified any alternative grounds of compatibility, it is therefore concluded that, to the extent that it amounts to state aid, the investment aid in favour of fgaz/fzg is incompatible with the internal market. 7.1.3.4. compatibility of operating aid under the sgei rules (283) germany argues that public funding relating to operating aid in favour of fgaz/fzg must be considered to be compatible with the internal market as compensation for the provision of a sgei pursuant to article 106(2) of the treaty. (284) article 106(2) of the treaty states that undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in the treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. the development of trade must not be affected to such an extent as would be contrary to the interests of the union. (285) that article contains a (partial) derogation from the prohibition of state aid contained in article 107(1) of the treaty to the extent that the aid is necessary and proportional to ensure the performance of the sgei under acceptable economic conditions. (286) prior to 31 january 2012, the 2005 sgei framework (71) and the 2005 sgei decision represented the commission's policy in applying the derogation in article 106(2) of the treaty. (287) the commission notes that both those instruments require that the undertaking in question be entrusted with a genuine sgei. the entrustment of the airport operator with public service missions must also be recorded in one or more official documents containing, inter alia, the precise nature of the public service obligation (72). genuine sgei (288) as regards, first, the question of whether the operation of zweibr cken airport constitutes a genuine sgei, the commission recalls that for an activity to constitute an sgei, that activity should exhibit special characteristics as compared with ordinary economic activities, and that the objective of general interest which is pursued cannot simply be that of development of certain economic activities or economic areas as provided for in article 107(3)(c) of the treaty (73). in this light, the commission considers that this can only be the case if part of the area served by the airport would, without the airport, be isolated from the rest of the union to an extent that would prejudice its social and economic development (74). (289) the commission further considers that there is a certain overlap between the proper definition of a sgei and the question whether the public financing of an airport (both investment and operating costs) contributes to a well-defined objective of common interest. the commission has recalled in recitals 257 et seq. that public funding that leads to the duplication of airport infrastructure in a given region cannot be considered as contributing to an objective of common interest (see also recitals 294 et seq.). the commission also recalls that the overall management of an airport can only be considered to constitute an sgei if part of the area potentially served by the airport would, without the airport, be isolated from the rest of the union to an extent that would prejudice its social and economic development (75). in this light, the commission likewise considers that the operation of an airport that duplicates another airport in the same region cannot be considered to constitute a genuine sgei (76). (290) the commission has concluded that, to the extent that it amounts to state aid, the public funding of zweibr cken airport's infrastructure is incompatible with the internal market because it duplicates existing infrastructure. likewise, the commission finds that the operation of zweibr cken airport does not constitute a genuine service of general economic interest. to the extent that germany considers that the operation of zweibr cken airport amounts to an sgei, it has therefore made a manifest error in the definition of the sgei (77). entrustment act (291) secondly, the commission finds that fgaz/fzg were in any event not properly entrusted with the operation of zweibr cken airport as an sgei. as relevant entrustment acts, germany has only pointed to the general operating licence of the airport and its obligation to operate pursuant to 45 luftvzo. the commission notes that according to germany, the imposition of an obligation to operate was the result of an upgrade of zweibr cken airport from an airfield to an airport in the sense of 49 and 38 luftvzo (78). that upgrade, however, only occurred at the beginning of 2010, meaning that for the period under investigation in this case (2000-2009) no entrustment can be inferred from 45 luftvzo. (292) germany furthermore submits that [a] general official entrustment of fzg with sgei did not occur, apart from the operating licence and the inclusion in rhineland-palatinate's conversion project. considering that germany has not explained how the operating licence, by itself, can constitute a proper entrustment act fulfilling the requirements mentioned in recital 287, or how inclusion in the conversion project constitutes a proper entrustment, the commission finds that fgaz/fzg have not been properly entrusted with a genuine sgei. (293) accordingly, for the reasons outlined in recitals 288 et seq. it is concluded that the public funding granted to fgaz/fzg amounting to operating aid cannot be considered as sgei compensation compatible with the internal market. 7.1.3.5. compatibility of operating aid pursuant to the 2014 aviation guidelines (294) section 5.1 of the 2014 aviation guidelines sets out the criteria that the commission will apply in assessing the compatibility of operating aid with the internal market pursuant to article 107(3)(c) of the treaty. pursuant to point 172 of the 2014 aviation guidelines, the commission will apply those criteria to all cases concerning operating aid, including pending notifications and unlawful non-notified aid cases. (295) unlawful operating aid granted before the date of publication of the 2014 aviation guidelines may be declared compatible to the full extent of uncovered operating costs provided that the following conditions (79) are met: (a) contribution to a well-defined objective of common interest: this condition is fulfilled, inter alia, if the aid increases the mobility of citizens of the union and connectivity of the regions or facilitates regional development (80); (b) need for state intervention: the aid must be targeted towards situations where such aid can bring about a material improvement that the market itself cannot deliver (81); (c) existence of incentive effect: this condition is fulfilled if it is likely that, in the absence of operating aid, and taking into account the possible presence of investment aid and the level of traffic, the level of economic activity of the airport concerned would be significantly reduced (82); (d) proportionality of the aid amount (aid limited to the minimum necessary): in order to be proportionate, operating aid to airports must be limited to the minimum necessary for the aided activity to take place (83); (e) avoidance of undue negative effects on competition and trade (84). (a) contribution to a well-defined objective of common interest (296) point 114 of the 2014 aviation guidelines outlines that the duplication of unprofitable airports does not contribute to an objective of common interest. the commission considers that the arguments presented in recitals 259 et seq. with respect to the compatibility of investment aid in favour of fgaz/fzg under the 2005 aviation guidelines are equally applicable to the compatibility of operating aid pursuant to the 2014 aviation guidelines. for that reason, the commission finds that the operating aid granted to fgaz/fzg merely duplicates an unprofitable airport and therefore does not contribute to a well-defined objective of common interest. the operating aid to fgaz/fzg, to the extent that it constitutes state aid, can therefore not be found to be compatible with the internal market pursuant to article 107(3)(c) of the treaty. conclusion (297) the commission concludes that the operating aid granted to fgaz/fzg is not compatible with the internal market, either pursuant to article 106(2) of the treaty or pursuant to article 107(3)(c) of the treaty. as germany has not put forward and the commission has not identified any alternative grounds of compatibility, it is therefore concluded that, to the extent that it amounts to state aid, the operating aid in favour of fgaz/fzg is incompatible with the internal market. 7.2. potential aid in connection with a bank loan and participation in the land rhineland-palatinate's internal cash pool 7.2.1. existence of aid 7.2.1.1. economic activity and notion of undertaking (298) for the reasons outlined in recital 173 et seq., fgaz/fzg must be considered to constitute an undertaking for the purposes of article 107(1) of the treaty. 7.2.1.2. state resources and imputability to the state (299) in order to constitute state aid, the measures in question must be financed from state resources and the decision to grant the measure must be imputable to the state. (300) the concept of state aid applies to any advantage granted through state resources by the state itself or by any intermediary body acting by virtue of powers conferred on it (85). resources of local authorities are, for the application of article 107 of the treaty, state resources (86). 100 % state guarantee (301) any public guarantee involves a potential loss of resources by the state. as the 100 % state guarantee was issued directly by the land rhineland-palatinate, it was granted from state resources and is also imputable to the state. cash-pool of the land (302) germany submitted that the cash-pool of the land rhineland-palatinate is not financed directly out of the public budget of the land. it claims that that all funds in the cash-pool either stem from the participating undertakings or are obtained in the form of loans on the capital market. (303) the commission considers that in the case at hand, at all material times the state exercised direct or indirect control over the resources in the cash-pool, with the consequence that they constituted state resources. first, only undertakings in majority ownership by land rhineland-palatinate (at least 50 % ownership) can participate in the cash-pool. because of the majority public ownership, the participating undertakings are clearly public undertakings within the meaning of article 2(b) of commission directive 2006/111/ec (87). since all the participating undertakings are thus public undertakings, their resources constitute state resources. this fact alone signifies that the funds of the cash-pool, to the extent they are made up of the deposits made by the participating undertakings, constitute state resources. (304) secondly, in the event that the participating undertakings' deposits in the cash-pool are insufficient to satisfy the liquidity needs of a participant, land rhineland-palatinate obtains short-term financing on the financial market in its own name and passes those funds on to the undertakings participating in the cash-pool. as the land takes out the necessary loans in its own name, it must be considered that the funds thus obtained constitute state resources as well. (305) thus, the commission considers that the funding provided by the cash-pool is financed by state resources, as both the deposits by participating undertakings and the loans taken out by the land to overcome liquidity gaps in the cash-pool constitute state resources. (306) it is furthermore clear that the land had far-reaching control over the operation of the cash-pool, with the consequence that the financing provided to participating undertakings is imputable to the state. the commission first notes that the agreement for participation in the cash-pool is concluded between the land and the undertakings involved. the decision to allow an undertaking to participate in the cash-pool is thus taken directly by the land. the land also decides on the maximum amount that a participating undertaking may withdraw from the cash-pool in the form of a credit line. in addition, land rhineland-palatinate directly manages the day-to-day operations of the cash-pool through the landeshauptkasse, which is an institution of the ministry of finance of the land rhineland-palatinate. the landeshauptkasse also officially represents the land when obtaining funds on the market to bridge liquidity gaps in the cash-pool. (307) based on these elements, it appears that the state is capable of directly controlling the activities of the cash-pool, most centrally the question of which undertaking may participate and the individual credit line granted to each participating undertaking. hence, the decisions concerning the participation in the cash-pool and concerning the extent of that participation are imputable to the state. loan granted by sparkasse s dwestpfalz (308) as regards the loan itself, the commission accepts that the sparkasse s dwestpfalz is an independent bank that takes decisions on granting loans under its own responsibility. there is no clear indication that the decision to grant the loan to fgaz/fzg is imputable to the state. thus, the commission considers that the measure is not imputable to the state. 7.2.1.3. economic advantage 100 % state guarantee (309) according to point 3.2 of the guarantee notice, an individual state guarantee is not aid when the following conditions are all met: (a) the borrower is not in financial difficulty [ ], (b) the extent of the guarantee can be properly measured when it is granted. [ ] (c) the guarantee does not cover more than 80 % of the outstanding loan or other financial obligation [ ], (d) a market-oriented price is paid for the guarantee [ ]. (310) in this case the land rhineland-palatinate provided a 100 % guarantee to collateralise a loan granted in favour of fgaz/fzg, thus the guarantee exceeds the threshold of 80 % of the outstanding loan. also, as explained below, the market price of the guarantee is not paid. therefore the guarantee clearly involves an advantage. (311) according to point 4.2 second subparagraph of the guarantee notice, the advantage can be calculated as the difference between the specific market interest rate fgaz/fzg would have borne without the guarantee and the interest rate obtained by means of the state guarantee after any premium paid has been taken into account. (312) with respect to the guarantee issued by the land, the commission recalls that fgaz/fzg obtained this 100 % guarantee free of charge and without providing collateral. it is clear that under normal market conditions, fgaz/fzg would have had to pay a premium in order to obtain a guarantee on its loans from a third party. (313) as fgaz/fzg did not have to pay a premium, it obtained an economic advantage not otherwise available on the market. the amount of that advantage is equivalent to the premium that fgaz/fzg would have had to pay under normal market conditions. cash-pool of the land (314) with respect to the participation of fgaz/fzg in the cash-pool, germany has explained that the cash-pool functions as follows: the fgaz requests funds from the pool to ensure its liquidity, and the land provides those funds from the cash-pool. the interest rates charged are market-based call money rates, at the level available to the land itself. where the deposits of participating undertakings are insufficient to cover the request, the land replenishes the cash-pool by taking up loans in its own name. germany further explains that the land essentially passes on the conditions it obtains on the capital market to the participants in the cash-pool, thereby allowing the participants the land's subsidiary undertakings to refinance themselves under the same conditions as the land itself, without any considerations of their creditworthiness. moreover, the commission observes that this financing is available to the undertakings for an unlimited period of time. (315) in the light of this mechanism, an advantage is granted to fgaz where the conditions on which the land grants loans from the cash-pool are more favourable than those otherwise available to fgaz on the market. the conditions for taking up loans from the cash-pool are the same as those available to the land to refinance itself. considering that the land, as a public authority, is able to take up loans at very favourable rates (as there is virtually no risk of default), the commission considers that the rate at which fgaz can obtain a loan from the cash-pool is more favourable than that otherwise available to it. in addition, fgaz does not have to provide collateral for those loans and its financial situation/creditworthiness is not taken into account. thus, by allowing the fgaz to participate in the cash-pool, the land granted the undertaking fgaz/fzg an economic advantage (88). 7.2.1.4. selectivity (316) as the 100 % guarantee and the right to participate in the cash-pool was granted only to fgaz/fzg (and, in the case of the cash-pool, other undertakings in which the land holds a majority of shares), both measures have to be qualified as being selective in nature. 7.2.1.5. distortion of competition and effect on trade (317) for the same reasons as outlined in recitals 233 et seq., the commission considers that any selective economic advantage granted to fgaz/fzg is liable to distort competition and affect trade between member states. 7.2.1.6. conclusion (318) in conclusion, the commission finds that by granting fgaz/fzg a 100 % guarantee on a bank loan free of charge and allowing fgaz to participate in the land's cash-pool, the land granted state aid to fgaz/fzg. (319) in addition, the commission concludes that the loan by sparkasse s dwestpfalz itself did not constitute state aid. 7.2.2. compatibility (320) the commission considers that the compatibility considerations presented in recitals 248 et seq. and 283 et seq. with respect to state aid in the form of direct investment grants and annual capital injections are equally applicable to the state aid in the form of a guarantee and participation in the cash-pool. accordingly, the commission finds that the state aid granted by way of providing fgaz/fzg a 100 % guarantee free of charge and allowing it to participate in the land's cash-pool is incompatible with the internal market. 7.3. discounts on airport charges and marketing services agreement with ryanair 7.3.1. existence of aid 7.3.1.1. economic activity and notion of undertaking (321) by providing air transportation services, airlines are performing an economic activity and therefore constitute undertakings for the purposes of article 107(1) of the treaty. it must accordingly be analysed whether the agreements between the airlines and the airport in question, if imputable to the state and effecting a transfer of state resources, granted the former an economic advantage. 7.3.1.2. state resources and imputability to the state (322) the measure must be imputable to the state and be granted from state resources. the court of justice held in the stardust marine (89) judgment that the resources of an undertaking incorporated under private law, whose shares are in majority publicly owned, constitute state resources. in this respect, it is consistent commission practice to consider that irrespective of whether a public undertaking is loss-making or profit-making, all its resources are to be considered as state resources (90). (323) concerning imputability, in its stardust marine judgment the court of justice furthermore held that the fact that the state or a state entity is the sole or majority shareholder of an undertaking is not sufficient to find that a transfer of resources by that undertaking is imputable to its public shareholders (91). according to the court of justice, even if the state was in a position to control a public undertaking and to exercise a dominant influence over its operations, actual exercise of that control in a particular case could not be automatically presumed, since a public undertaking may also act with more or less independence, according to the degree of autonomy left to it by the state. (324) according to the court of justice, indicators from which imputability might be inferred, are (92): (a) the fact that the undertaking in question could not take the contested decision without taking account of the requirements of the public authorities; (b) the fact that the undertaking had to take account of directives issued by public authorities; (c) the integration of the public undertaking into the structures of the public administration; (d) the nature of the public undertaking's activities and the exercise of those activities on the market in normal conditions of competition with private operators; (e) the legal status of the undertaking; (f) the intensity of the supervision exercised by the public authorities over the management of the undertaking; (g) any other indicator showing, in the particular case, an involvement by the public authorities in the adoption of a measure or the unlikelihood of their not being involved, having regard also to the compass of the measure, its content or the conditions which it contains. state resources (325) the commission notes that fgaz/fzg are owned 100 % by the state, namely 50 % by the land rhineland-palatinate and 50 % by the zef. fgaz/fzg must thus be considered to constitute public undertakings within the meaning of article 2(b) of directive 2006/111/ec. the state, as the sole shareholder of fgaz/fzg and by appointing the (identical) supervisory boards of fgaz/fzg (which in turn appoint the management), can be presumed to have a dominant influence over fgaz/fzg, and can control its resources. thus, any advantage granted from fgaz/fzg's resources would signify a loss of state resources, thus constituting a transfer of state resources. imputability (326) while germany submitted that the conclusion of contracts between airlines and fzg is not imputable to the state, it acknowledged that the state represented by the land rhineland-palatinate and the zef is indirectly involved, namely via its representatives on the supervisory board of fzg's mother company, fgaz. according to the statutes of fgaz and fzg, the supervisory boards of both entities are entirely constituted by representatives appointed by public authorities, namely the land and the zef. a representative appointed by the land is automatically the chairman of both supervisory boards. the supervisory boards appoint fgaz's and fzg's management. for both entities the supervisory boards have to approve all transactions amounting to more than eur [ ], which gives them broad control over the economic activities of fgaz/fzg. (327) secondly, the minutes of the supervisory board of fgaz demonstrate that the supervisory board was informed of and consulted on the negotiation and conclusion of contracts with airlines. what is more, the minutes also demonstrate that, in concluding the contracts, the fgaz/fzg management had to take the requirements of the public authorities into account. for instance, the minutes of the board meeting of 13 july 2006 show that after the management reported on the successful conclusion of the contract with germanwings, the chairman of the supervisory board indicated that the land was very pleased with the development, noting that it could lead to the creation of jobs and help to economically justify the airport. most notably, the chairman also suggested that these positive effects the creation of jobs and economic justification of the airport could lead to an extension of the p&l agreement between fgaz and fzg. considering that fzg was vitally dependent on the p&l agreement to cover its operating losses, and that the land and zef had the power not to extend the profit and loss transfer agreement or to discontinue the capital injections that made its operation possible, it is clear that the fgaz/fzg management had to take the requirements of the public authorities into account if it wanted to ensure its own economic survival. (328) the supervisory board minutes of 13 july 2006 also indicate that a military exercise which had taken place at zweibr cken airport had led to complaints from the population about the noise. the management pointed out that the military exercise by the dutch air force had created significant revenue. the chairman nevertheless suggested that the management should, in the future, carefully consider whether military exercises should be carried out and should inform the population in time. all of the above shows that the public authorities were involved in the day-to-day management decisions of fgaz/fzg and agreed to them. (329) the minutes of the supervisory board meeting of 26 june 2009 furthermore suggest that the state, represented by the land rhineland-palatinate, was directly involved in negotiations with airlines. the minutes recount the management's report to the supervisory board, mentioning a meeting between the management, a representative of rhineland-palatinate's ministry of economics, and ryanair in london. during that meeting the relationship between ryanair and zweibr cken airport was discussed. the active involvement of the ministry may be deduced, apart from the mere presence of a representative in those commercial negotiations, from the ministry's representative reminding ryanair that serving saarbr cken airport would be considered an unpleasant act by rhineland-palatinate's government. (330) the future of ryanair's engagement in zweibr cken was then discussed in the supervisory board, which considered that without a marked improvement in ryanair's schedule and taking into account the monetary contribution demanded by ryanair (93), it supported the management's proposal to terminate the relationship. taking into account the monetary contribution demanded by ryanair, which would have rendered the approval of a new contract by the supervisory board obligatory, and the early involvement of the public authorities in the negotiations, it is clear that the supervisory board had far-reaching control over the commercial decision of the management. this may be seen as a further indicator that the management had to take the requirements of the public authorities into account in taking decisions, and demonstrates the degree of control and influence exercised by the supervisory board over the commercial decisions of fgaz/fzg. (331) in the light of these considerations, the commission considers that there are sufficient indicators to find that the conclusion of airport service contracts between fgaz/fzg and the various airlines are imputable to the state. 7.3.1.3. economic advantage (332) in order to assess whether an agreement between a publically-owned airport and an airline confers an economic advantage on the latter, it is necessary to analyse whether that agreement complied with the meo principle. in applying the meo test to an agreement between an airport and an airline, it must be assessed whether, at the date when the agreement was concluded, a prudent market economy operator would have expected the agreement to lead to a higher profit than would have been achieved otherwise. that higher profit is to be measured by the difference between the incremental revenues expected to be generated by the agreement (that is, the difference between the revenues that would be achieved if the agreement were concluded and the revenues that would be achieved in the absence of the agreement) and the incremental costs expected to be incurred as a result of the contract (that is, the difference between the costs that would be incurred if the agreement were concluded and the costs that would be incurred in the absence of the agreement), the resulting cash flows being discounted with an appropriate discount rate. (333) in this analysis, all the relevant incremental revenues and costs associated with the agreement must be taken into account. the various elements (discounts to airport charges, marketing grants, other financial incentives) must not be assessed separately. indeed, as stated in the charleroi judgment: it is ( ) necessary, when applying the private investor test, to envisage the commercial transaction as a whole in order to determine whether the public entity and the entity which is controlled by it, taken together, have acted as rational operators in a market economy. the commission must, when assessing the measures at issue, examine all the relevant features of the measures and their context [ ] (94). (334) the expected incremental revenues must include in particular the revenues from airport charges, taking into account the discounts as well as the traffic expected to be generated by the agreement and the non-aeronautical revenues expected to be generated by the additional traffic. the expected incremental costs must include in particular all the incremental operating and investment costs that would not be incurred in the absence of the agreement as well as the costs of the marketing grants and other financial incentives. (335) the commission also notes in this context that price differentiation (including marketing support and other incentives) is a standard business practice. such differentiated pricing policies should, however, be commercially justified (95). application of the meop to the agreements in question, in particular with ryanair (336) in order to apply this principle, taking into account the facts of this case, the commission considers that the first step should be to reply to the following questions: (a) should the marketing services agreement and the airport services agreement, which were signed within two weeks of each other, be analysed separately or together? (b) what benefits could a hypothetical meo acting in the stead of fgaz/fzg the land have expected to gain from marketing services agreements? (c) what, for the purposes of applying the meo principle, is the relevance of comparing the terms of the airport services agreements referred to in the formal investigation procedure with the airport charges billed at other airports? (337) after replying to these questions, the next step for the commission will be to apply the meo principle to the various measures under discussion. (a) regarding an analysis of the marketing services agreement and the airport services agreement together (338) the commission considers that two types of measures covered by the formal investigation in this case, namely the airports service agreement and the marketing services agreements, must be evaluated together as one single measure. this approach concerns the airport services agreement concluded between ryanair and fzg, on the one hand, and the marketing services agreements between fzg and ryanair as well as ams and land rhineland-palatinate, on the other hand. ryanair does not dispute that the marketing services agreement concluded directly between ryanair and fzg is to be assessed together with the airport services agreement. in the commission's view, the same applies for the marketing services agreement with ams. (339) there are several indications pointing towards the fact that those agreements should be evaluated as one single measure since they were entered into within the framework of a single transaction. (340) first of all, the contracts were entered into by essentially the same parties at nearly the same point in time: (a) ams is the 100 % subsidiary of ryanair. the marketing services agreement was signed on behalf of ams by mr edward wilson, who at the time was a director of ams and concurrently a director of ryanair (96). for the purpose of the application of state aid rules, ams and ryanair are considered to be a single undertaking, in the sense that ams acts as an intermediary in the interest and under the control of ryanair. for the agreements in this case, this can also be inferred from the fact that the marketing services agreement states in its preamble that ams has exclusive license to offer marketing services on the travel website www.ryanair.com, the website of the irish low fares airline ryanair. furthermore, it was noted in recitals 326 et seq. that the decision of fgaz/fzg to conclude airport services agreements with airlines such as ryanair were imputable to the state. the controlling influence over fgaz/fzg was, in this regard, exercised by the land rhineland-palatinate and zef. considering, however, that it was always the land which appointed fgaz/fzg's supervisory board chairman, and that the land effectively financed between 95 % and 80 % of the losses of the fgaz/fzg (thereby having significant influence on the zef and a larger financial interest in the undertaking), it can safely be considered that the land had effective control over fgaz/fzg. as regards the commercial relationship between ryanair and fgaz/fzg on the one hand, and the land rhineland-palatinate on the other hand, the commission finds that the interest of fgaz/fzg and the land in entering into the respective agreements converged to a very large degree: both were interested in increasing traffic at the airport, and it made little difference to the land whether the fgaz/fzg concluded the contract (the costs of which it would later have to reimburse via the p&l agreement) or whether it concluded the contract itself. in this light, the fact that one of the marketing services agreements was concluded with the land directly while the airport services agreement was concluded with its dependent subsidiary cannot militate against assessing the agreements as one commercial transaction. (b) the agreements were also concluded at nearly the same point in time, as the airports service agreement (22 september 2008) was concluded exactly two weeks before the marketing services agreement with ams (6 october 2008). (341) second, the marketing services agreement with ams states in its first section, entitled purpose of the agreement, that the agreement is rooted in the ryanair's commitment to operate on a route between zweibr cken and london. that formulation establishes an unambiguous direct link between the service agreement and the marketing services agreement in the sense that one would not have been concluded without the other. the marketing services agreement is based on the conclusion of the airport services agreement and the services provided by ryanair. indeed, the preamble to the marketing services agreement states that the land rhineland-palatinate intends to target ryanair passengers in order to promote tourism and business opportunities in the region, and in particular zweibr cken airport as a destination. (342) third, the marketing services agreement states in its preamble that land rhineland-palatinate has decided to actively promote the zweibr cken airport as a holiday destination for international air travellers and also as an attractive business centre. this is an indication that the conclusion of the marketing services agreement has as its primary and specific purpose to promote specifically zweibr cken airport (and the surrounding region). (343) fourth, the marketing services agreement provides specifically that two links are to be placed in the right hand bar on the zweibr cken destination page and five paragraphs within the top five things to do section of the zweibr cken destination page of ryanair.com. it can be deduced from those provisions that the purpose of the agreement is to support zweibr cken airport specifically and not land rhineland-palatinate as a whole. (344) fifth, the agreement can be terminated immediately by rhineland-palatinate in the event that ryanair stops operating the route between zweibr cken and london. this demonstrates yet again that the marketing services agreement and the airport services agreement are inseparably linked. (345) in conclusion, the marketing services agreement concluded by rhineland-palatinate and ams is thus indivisibly linked to the airport service agreement signed by ryanair and fzg. the above considerations demonstrate that without the airport services agreement, the marketing services agreement would not have been concluded. indeed, the marketing services agreement states explicitly that it is based on ryanair's zweibr cken-london service, and essentially envisages marketing services aimed at promoting that route. at the same time, it appears that the conclusion of the airport services agreement was also dependent on the marketing services agreement: although the airport services agreement was concluded earlier in time, it did not oblige ryanair to take up services from zweibr cken. rather, it explicitly stipulated that if service is not commenced by 28 october 2008 this agreement will lapse without liability to either party. in fact, ryanair only commenced its operations at zweibr cken after the ams contract had been concluded. (346) for those reasons, the commission considers it appropriate to analyse the airport services agreement of 22 september 2008 and the marketing services agreement of 6 october 2008 jointly, with a view to determining whether they constitute state aid or not. (b) regarding the benefits that an meo could have expected to gain from marketing services agreements and the price that it would have been willing to pay for those services (347) in order to be able to apply the meo principle to the case in point, the behaviour of fgaz/fzg and the land as signatories of airport services agreement with ryanair and the marketing services agreement with ams must be compared to that of a hypothetical meo in charge of operating zweibr cken airport. (348) when analysing the transaction in question, it would be advisable to assess the benefits that this hypothetical meo, motivated by the prospect of profits, could gain from purchasing marketing services. this analysis should not take into account the general impact of such services on tourism and the region's economic performance. only the impact of these services on the airport's profitability should be taken into account, as this would be the only concern for a hypothetical meo. (349) thus, marketing services should stimulate passenger traffic on the air routes covered by marketing services agreements and the corresponding airport services agreements, as the marketing services are designed to promote those air routes. although that impact will mainly benefit the airline concerned, it may also be of benefit to the airport operator. an increase in passenger traffic may lead to an increase in revenues generated by certain airport charges for the airport operator, as well as an increase in non-aviation revenues, in particular from car parks, restaurants and other businesses. (350) there can therefore be no doubt that an meo operating zweibr cken airport in the stead of fgaz/fzg and the land would have taken this positive effect into account when considering entering into a marketing services agreement and the corresponding airport services agreement. the meo would have taken into account the impact of the air route in question on future revenues and costs by, in this case, estimating the number of passengers using these routes, which would have reflected the positive effect of marketing services. moreover, this effect would have been evaluated for the entire term of operation of the air routes in question, as set out in the airport services agreement and the marketing services agreement. (351) when an airport operator enters into an agreement for the promotion of certain air routes, it is standard practice to estimate the load ratio (or the load factor) (97) for the air routes in question and to take this into account when assessing future revenues. the commission agrees with ryanair on this issue, that is to say, that marketing services agreements do not just generate costs for the airport operator, they also bring benefits with them. (352) in addition, it would be advisable to determine whether other benefits could reasonably be expected and quantified for a hypothetical meo operating zweibr cken airport in the stead of fgaz/fzg and the land, that is to say, other than the benefits from the positive effect on passenger traffic on the air routes covered by the marketing services agreement during the term of operation of these routes, as set out in the marketing services agreement or the airport services agreement. (353) certain interested third parties support this argument, in particular ryanair in its study of 17 january 2014. the study of 17 january 2014 is based on the theory that marketing services acquired by an airport operator, such as fgaz/fzg and the land, will help to improve the airport's brand image and, as a result, to sustainably increase the number of passengers using the airport and not just the numbers on the air routes covered by the marketing services agreement and the airport services agreement for the term of operation set out in those agreements. in particular, ryanair found in its study that the marketing services will have sustainable positive effects on passenger traffic in the airport even after the marketing services agreement has expired. (354) it should first be noted that there is nothing to suggest that, when the marketing services agreement was entered into, the airport operator or the land ever considered, still less quantified, the marketing services agreement's possible beneficial effects on air routes additional to those covered by the agreement, or the possibility of such effects continuing after the agreement had expired. moreover, germany did not suggest any method for estimating the possible value that a hypothetical meo operating zweibr cken airport in the stead of fgaz/fzg and the land could have placed on such effects when assessing whether or not to enter into the agreements in 2008. (355) in addition, the sustainable nature of these effects cannot be assessed based on the information available. it is possible that advertising zweibr cken and the region on ryanair's internet site may have encouraged people visiting that site to buy ryanair tickets to zweibr cken when the advertising was first posted or just thereafter. however, it is highly unlikely that the effect of the advertising on visitors lasted or had an influence on plane ticket purchases for more than a few weeks after it was posted on the ryanair internet site. an advertising campaign is more likely to have a sustainable effect when the promotional activities involve one or more advertising media to which consumers are regularly exposed over a given period. for example, an advertising campaign involving general tv and radio stations, popular internet sites and/or various advertising posters displayed outside or inside public places could have a sustainable effect if consumers are regularly exposed to those media. however, promotional activities limited to just ryanair's internet site are highly unlikely to have an effect that lasts much past the end of the promotion. (356) in fact, it is very likely that most people do not visit ryanair's internet site frequently enough for the advertising there alone to leave them with a clear recollection of the region concerned. this argument is well supported by two factors. firstly, under the terms of the marketing services agreement, the promotion of the zweibr cken region on the homepage of the ryanair internet site was limited to five paragraphs of 150 words under top five things to do on the page for the destination of zweibr cken, the presence for a very short period of time (16 days) of a simple link on the www.ryanair.com homepage leading to a site made available by the land, and the presence of two simple links on the page for the destination of zweibr cken leading again to a site made available by the land. both the type of promotional activities (a simple link with a limited marketing value) and their short lifespan would have severely reduced the effect of these activities after the end of the promotion, in particular as these activities were limited to the ryanair internet site and were not supported by any other media. secondly, the preponderance of marketing activities set out in the agreement entered into with ams was only in relation to the internet page for the destination of zweibr cken. it is very likely that most people do not visit that page often; if and when they do, it is probably only because they are already interested in that destination. (357) thus, even if the marketing services did increase passenger traffic on the air routes covered by the marketing services agreements for the period of their implementation, it is very likely that this effect was zero or negligible after that period and that the effect on other air routes was similarly insignificant. (358) it also follows from the ryanair studies of 17 and 31 january 2014 that the generation of benefits going beyond the air routes covered by marketing services agreements or lasting after the period of their implementation for these routes, as set out in the marketing services agreement and airport services agreement, was extremely uncertain and could not be quantified with a degree of reliability that would be considered sufficient by a prudent meo. (359) thus, for example, according to the study of 17 january 2014, future incremental profits beyond the scheduled expiry of the airport services agreement are inherently uncertain. moreover, that study suggests two methods for evaluating a priori the positive effects of marketing service agreements: a cash flow approach and a capitalisation approach. (360) the cash flow approach involves evaluating the benefits of marketing services agreements and airport services agreements by assessing the future revenues which may be generated by the airport operator through marketing services and the airport services agreement, minus corresponding costs. in the capitalisation approach, improvement of the brand image of the airport through marketing services is treated as an intangible asset, acquired for the price laid down in the marketing services agreement. (361) however, the study highlights the major difficulties presented by the capitalisation approach and shows that the results produced by this method may be unreliable; it suggests that the cash flow approach would be better. in particular, the study finds: the capitalisation approach should only take into account the proportion of marketing expenditure that is attributable to the intangible asset base of an airport. however, it may be difficult to identify the proportion of marketing expenditure that is targeted towards generating expected future revenues for the airport (i.e. an investment in the intangible asset base of the airport) as opposed to generating current revenues for the airport. it also stresses that: in order to implement the capitalisation-based approach, it is necessary to estimate the average length of time that an airport would be able to retain a customer due to the ams marketing campaign. in practice, it would be very difficult to estimate the average period of customer retention following an ams campaign due to insufficient data. (362) the study of 31 january 2014 proposes a practical application of the cash flow approach. under this approach, the benefits of marketing services agreements and airport services agreements which last even after the marketing services agreement has expired are expressed as a terminal value that is calculated on the agreement's expiry date. this terminal value is calculated based on the incremental profits expected from the airport services agreement and marketing services agreement in the final year of application of the airport services agreement. those profits are extended into the following period, the term of which is equal to the term of the airport services agreement, and are adjusted to take into account the growth rate for the air transport market in europe and the probability factor designed to reflect the airport services agreement's and marketing services agreement's capacities to contribute to the airport's profits after they have expired. according to the study of 31 january 2014, the capacity for producing lasting benefits depends on various factors including greater prominence and a stronger brand, alongside network externalities and repeat passengers, although no details are given about these factors. moreover, this method takes into account a discount rate which reflects capital costs. (363) the study suggests a probability factor of 30 %, which it considers prudent. however, this very theoretical study does not provide any serious evidence for this factor, either quantitatively or qualitatively. it does not base itself on any facts relating to ryanair's activities, air transport markets or airport services to substantiate this rate of 30 %. it does not establish any link between this rate and the factors that it mentions in passing (prominence, strong brand, network externalities and repeat passengers) and that are supposed to extend the benefits of the airport services agreement and market service agreement after their expiry dates. finally, it does not in any way base itself on the specific content of marketing services provided for in the various contracts with ams when analysing to what extent those services could influence those factors. (364) moreover, it does not prove that there is any likelihood that, on expiry of the airport services agreement and the marketing services agreement, the profits generated by these agreements for the airport operator in the final year of their application will continue in the future. likewise, it provides no evidence that the growth rate of the air transport market in europe is a useful indicator for measuring the impact of an airport services agreement and a marketing services agreement for a given airport. (365) a terminal value calculated using the method suggested by ryanair would therefore be highly unlikely to be taken into account by a prudent meo when deciding whether or not to enter into an agreement. (366) the study of 31 january 2014 therefore shows that a cash flow approach would only lead to very uncertain and unreliable results, as would the capitalisation method. (367) moreover, neither germany nor any interested third party has provided any evidence that the method put forward by ryanair in the study of 31 january 2014, or any other method aiming to quantify the profits after expiry of airport services agreements and marketing services agreements, has been successfully implemented by regional airport operators comparable to zweibr cken's operator. germany has not made any comments on the studies of 17 and 31 january 2014. (368) moreover, a terminal value calculated using the method put forward by ryanair is only positive (and, therefore, only tends to increase the profitability of the airport services agreement and marketing services agreement) if the incremental profit expected from these agreements in the final year of application of the airport services agreement is positive. if it is negative, taking the terminal value into account will usually reduce the profitability of the agreements. it will be demonstrated below (see recitals 378 et seq.) that the 2008 agreements resulted in negative incremental cash flows. (369) moreover, as stated above (see recitals 341 et seq.), the marketing services clearly target persons likely to use the route covered by the marketing services agreement. if this route is not renewed on expiry of the airport services agreement, it is unlikely that marketing services will continue to have a positive effect on passenger traffic at the airport after the expiry date. it is very difficult for an airport operator to assess the likelihood of an airline continuing to run a route on expiry of the term to which it has committed itself in the airport services agreement. low-cost airlines, in particular, have shown that, when it comes to opening and closing routes, they are very responsive to market conditions which, more often than not, change very quickly. therefore, when entering into a transaction such as the one being examined in this case, a prudent meo would not rely on an airline company extending the operation of the route in question on expiry of the agreement. (370) to conclude, it is clear from the above that the only benefit that a prudent meo would expect from a marketing services agreement, and which it would quantify when deciding on whether or not to enter into such an agreement, together with an airport services agreement, would be that the marketing services would have a positive effect on the number of passengers using the routes covered by the agreements in question for the term of operation of those routes, as set out in the agreements. the commission considers that any other possible benefits are too uncertain to be quantified and taken into account. (c) the feasibility of comparing zweibr cken airport to other european airports (371) under the new guidelines for applying the meo principle, the existence of aid to an airline using a particular airport can, in principle, be excluded if the price charged for the airport services corresponds to the market price, or if it can be demonstrated through an ex ante analysis that is to say one founded on information available when the aid is granted and on developments foreseeable at the time that the airport/airline arrangement will lead to a positive incremental profit contribution for the airport (98). however, as regards the first approach (a comparison with the market price), the commission doubts that, at the present time, an appropriate benchmark can be identified to establish a true market price for services provided by airports. it therefore considers an ex ante incremental profitability analysis to be the most relevant criterion for the assessment of arrangements concluded by airports with individual airlines (99). (372) it should be noted that, in general, the application of the meo principle based on an average price on other, similar markets may prove helpful if such a price can be reasonably identified or deduced from other market indicators. however, this method is not as relevant in the case of airport services, as the structure of costs and revenues tends to differ greatly from one airport to another. this is because costs and revenues depend on how developed an airport is, the number of airlines which use the airport, its capacity in terms of passenger traffic, the state of the infrastructure and related investments, the regulatory framework which can vary from one member state to another and any debts or obligations entered into by the airport in the past (100). (373) moreover, the liberalisation of the air transport market complicates any purely comparative analysis. as can be seen in this case, commercial practices between airports and airlines are not always based exclusively on a published schedule of charges. rather, these commercial relations are very varied. they include sharing risks with regard to passenger traffic and any related commercial and financial liability, standard incentive schemes and changing the spread of risks over the term of the agreements. consequently, one transaction cannot really be compared with another based on a turnaround price or price per passenger. (374) finally, assuming that it could be established, based on a valid comparative analysis, that the prices involved in the various transactions that are the subject of this assessment are equivalent to or higher than the market prices established through a comparative sample of transactions, the commission would, for all that, not be able to conclude from this that these transactions comply with meo test if it emerges that, when they were set, the airport operator had expected them to generate incremental costs higher than the incremental revenues. an meo will thus have no incentive to offer goods or services at market price if doing so would result in an incremental loss. (375) in such conditions, the commission considers that, taking into account all the information available to it, there are no grounds for diverging from the approach recommended in the 2014 aviation guidelines for applying the meo principle to relations between airports and airlines, that is to say, an ex-ante analysis of incremental profitability. 7.3.1.4. assessment of incremental costs and revenues time frame (376) when deciding on whether or not to enter into an airport services agreement and/or a marketing services agreement, a meo will choose a time frame for its assessment based on the term of the agreements in question or the term set in each individual agreement. in other words, it will assess the incremental costs and revenues for the term of application of the agreements. (377) there does not seem to be any justification for choosing a longer period. on the date of signature of the agreements, a prudent meo will not count on the agreements being renewed once they have expired, whether under the same or new terms. moreover, a generally prudent operator would be aware that low-cost airlines such as ryanair have always been and are known for being very responsive to market developments, both when starting up or shutting down routes and when increasing or decreasing the number of flights. assessment (378) germany asserts that fgaz/fzg did not prepare ex ante business plans before concluding individual airport services agreements with the various airlines. it explained that since the majority of the costs of the airport could be considered to be fixed and that an expansion of the commercial activities would not lead to significant additional costs, no such ex ante business plans were necessary. (379) nevertheless, upon request by the commission, germany prepared an overview of the incremental costs and revenues that could have been expected at the time the relevant agreements were concluded. germany prepared that data for each of the agreements concluded with airlines during the period under investigation, that is to say 2000-2009, as summarised in table 8. table 8 incremental profitability of contracts with germanwings, tuifly and ryanair germanwings (contract 15 sept. 2006-15 sept. 2009) germanwings (contract 30 june 2008-31 dec. 2011) (101) tuifly (contract 1 apr. 2008-31 mar. 2011) (102) ryanair (contract 22 sept. 2008-21 sept. 2009) (103) expected passengers [ ] [ ] [ ] [ ] expected additional aviation revenue [ ] [ ] [ ] [ ] expected additional non-aviation revenue [ ] [ ] [ ] [ ] expected additional costs [ ] [ ] [ ] [ ] costs marketing support [ ] [ ] [ ] [ ] expected nominal result [ ] [ ] [ ] [ ] discount rate [ ] [ ] [ ] [ ] expected discounted result [ ] [ ] [ ] [ ] (380) in preparing table 8, germany took the following considerations into account: (a) the expected passenger numbers were deduced from the envisaged number of flights per week and extrapolated for the duration of the agreement. (b) the expected aviation revenues (handling and landing charges, cleaning and de-icing, etc.) were calculated over the duration of the agreement on the basis of the conditions agreed on with each airline, taking into account the relevant rebates and incentives. (c) the expected non-aviation revenues (parking charges, spending in the terminal, etc.) were also calculated over the duration of the agreement. (d) the expected incremental costs were calculated over the duration of the agreement, taking into account depreciation of investments necessary for handling commercial aviation (the new terminal, new check-in counters, parking lots, etc.) as well as additional personnel and materials costs. only the costs caused by each individual airline were taken into account. on that basis, germany argued that the costs of the new terminal and if hiring new staff were originally caused by germanwings taking up business from zweibr cken, so that those costs were mostly allocated to the first germanwings contract. (e) at the commission's request, marketing support payments made to ryanair under the agreement between the land and ams were taken into account as incremental costs of the ryanair contract. (f) the discount rate was based on the discount rates of the german bundesbank starting from 2008. (381) the commission finds that the approach taken by germany in estimating the passenger numbers, and calculating on that basis the expected incremental aviation and non-aviation revenues, is sound. the same holds true with respect to the discount rates. (382) the commission further notes germany's disagreement that in calculating the incremental revenue only over the duration of the agreement, long-term gains are not taken into account. in response, the commission refers to its reasoning developed in recitals 376 and 377, that it is indeed appropriate to take only the incremental costs and revenues generated over the duration of the agreement into account. (383) the commission also takes note of germany's submission that the marketing services agreement could not be regarded as only producing costs, but should be also viewed as generating income. germany did not propose any methodology to evaluate the specific incremental revenue generated by the marketing services agreement beyond increasing traffic (and thus also non-aeronautical revenues) at the airport. in any event, the commission has already determined in recitals 347 et seq. that a meo would take only the incremental revenue of the airport into account in evaluating the positive effects of the marketing services agreement. (384) as regards incremental operating costs in particular, the commission must base itself on the data provided by germany and fgaz/fzg as long as these appear reasonable, as it is not itself in a position to independently estimate those costs. the same is, in principle, true for the incremental investment costs, as germany and fgaz/fzg are in a better position to estimate which investment can be directly traced back to a particular airport services agreement. having analysed the information provided by germany, the commission accepts the general calculation of the incremental costs as reasonable. (385) furthermore, it appears reasonable that the hiring of additional staff to handle germanwings and initial investments in renovating the terminal can be traced back to the first agreement with germanwings, as that agreement was the trigger to forcefully develop commercial aviation at zweibr cken. conclusion (386) as the expected discounted result is negative for the first germanwings agreement as well as for the tuifly and ryanair agreements, the commission finds that fgaz/fzg did not act like a meo in concluding those agreements. the airport could not have expected to cover at least the incremental costs brought about by any one of those agreements. as fgaz/fzg thus did not behave like a meo, its decision to conclude the agreements on those terms granted germanwings, tuifly and ryanair an economic advantage. (387) in contrast, the second germanwings agreement could have been expected to lead to a positive discounted result. in concluding that agreement, fgaz/fzg therefore did not grant an economic advantage to germanwings. 7.3.1.5. selectivity (388) the economic advantage identified in recitals 376 et seq. was granted on a selective basis, as only airlines operating from zweibr cken airport benefited from it. (389) in this context, the argument advanced by germany that the discounts on airport charges granted to airlines flying from zweibr cken were not selective must be rejected. germany argued that the discounts were open to all airlines wishing to operate from zweibr cken, which allegedly rendered them non-selective. (390) in response, the commission first observes that the individual agreements concluded with the airlines diverge from the schedule of charges and from each other (see recitals 67 to 72), thus containing individually-negotiated conditions. the precise advantage granted would then appear to be selective as regards each individual airline. (391) secondly, however, the commission observes that even if the schedule of charges had been applied in the same way to each airline wishing to operate from zweibr cken, any advantage conferred thereunder would still have to be considered selective. as advocate-general mengozzi opined in the deutsche lufthansa ag v flughafen frankfurt-hahn gmbh case, accepting germany's argumentation would amount to radically denying the possibility of classifying as state aid the conditions on which a public undertaking offers its services where those conditions are applicable to all its contracting parties without distinction (104). advocate-general mengozzi further remarked that in my opinion, the commission correctly observed, such an exclusion would not appear to be in line with either the case-law of the court according to which public interventions which affect all the traders of a particular economic sector without distinction can also be selective in nature, nor with the various precedents where selective benefits arising from the provision of goods or services by public (or private) undertakings at identical rates or on identical conditions for all operators carrying on a specific activity were regarded as selective (105). 7.3.1.6. distortion of competition and effect on trade (392) a measure granted by a state is considered to distort or to threaten to distort competition when it is liable to improve the competitive position of the recipient compared to other undertakings with which it competes (106). for all practical purposes, a distortion of competition is thus assumed as soon as a state grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition. the case law of the european courts has established that any grant of aid to an undertaking exercising its activities in the internal market can be liable to affect trade between member states (107). (393) since the entry into force of the third package on the liberalisation of air transport on 1 january 1993 (108), air carriers can freely operate flights on intra-european connections. as the court of justice has observed, where an undertaking operates in a sector in which producers from various member states compete, any aid which it may receive from the public authorities is liable to affect trade between the member states and impair competition, inasmuch as its continuing presence on the market prevents competitors from increasing their market share and reduces their chances of increasing exports (109). (394) the commission has found that fgaz/fzg and the land rhineland-palatinate granted a selective advantage to germanwings, tuifly and ryanair. these airlines are active on a competitive, union-wide market and the advantage they received was liable to improve their competitive position on that market. in this light, the commission finds that the advantage granted to germanwings, tuifly and ryanair is liable to distort competition and affect trade between member states. 7.3.1.7. conclusion (395) for the foregoing reasons, the commission finds that germanwings, tuifly, and ryanair have received state aid, amounting to approximately eur 1 054 985, eur 232 781, and eur 464 879, respectively. 7.3.2. compatibility (396) the commission notes that germany has not advanced any arguments to show that the aid granted to tuifly, germanwings and ryanair is compatible with the internal market. (397) following the case law of the court of justice (110), the commission recalls that it is germany's responsibility to indicate the legal basis on which a state aid measure could be found compatible with the internal market and to demonstrate that all required conditions are met. in the opening decision the commission requested germany to provide information on whether compatibility could be established pursuant to the 2005 aviation guidelines. germany, however, did not make any submissions with a view to showing that the relevant conditions for compatible start-up aid under the 2005 aviation guidelines were met. nor did the interested parties who submitted comments put forward any arguments demonstrating the compatibility of the state aid measure with the internal market. (398) the commission nevertheless finds it useful to briefly consider whether the state aid in question could be considered compatible start-up aid. 7.3.2.1. applicable legal framework (399) as regards start-up aid, the 2014 aviation guidelines state that: the commission will apply the principles set out in these guidelines to all notified start-up aid measure in respect of which it is called upon to take a decision from 4 april 2014, even where the measures were notified prior that date. in accordance with the commission notice on the determination of the applicable rules for the assessment of unlawful state aid, the commission will apply to unlawful start-up aid to airlines the rules in force at the time when the aid was granted. accordingly, it will not apply the principles set out in these guidelines in the case of unlawful start-up aid to airlines granted before 4 april 2014 (111). (400) the 2005 aviation guidelines, in turn, stipulate that: the commission will assess the compatibility of start-up aid granted without its authorisation and which therefore infringes article 88(3) of the treaty [now article 108(3) of the treaty], on the basis of these guidelines if payment of the aid started after the guidelines were published in the official journal of the european union. (401) as the agreements with germanwings, tuifly, and ryanair were concluded after the publication of the 2005 aviation guidelines in the official journal on 9 december 2005, those guidelines constitute the applicable legal basis for the assessment of their compatibility with the internal market. 7.3.2.2. compatibility assessment pursuant to 2005 aviation guidelines (402) given that the compatibility conditions for start-up aid enshrined in point 79 of the 2005 aviation guidelines are cumulative, the commission considers that it is only necessary to demonstrate that one of those conditions is not fulfilled in order to find that the aid to the airlines is not compatible. the commission starts its analysis with the condition set out in point 79(d) of the 2005 aviation guidelines. (403) point 79(d) of the 2005 aviation guidelines requires, inter alia, that the amount of aid granted in any one year does not exceed 50 % of total eligible costs for that year and total aid does not exceed an average of 30 % of eligible costs. eligible costs are defined as the additional start-up costs incurred in launching the new route or frequency which the air operator will not have to bear once it is up and running (112). (404) in the opening decision the commission observed that the agreements with germanwings, tuifly and ryanair did not provide for any connection between the aid granted and the eligible costs. germany was therefore asked to provide details on the relationship between the aid and the eligible costs. neither germany nor the third parties commenting on the opening decision provided any such information. in this light, and considering that the agreements with the airlines in question make no reference to the costs of the airlines, let alone the eligible costs, the commission finds that the compatibility condition enshrined in point 79(d) of the 2005 aviation guidelines is not fulfilled. (405) in conclusion, the aid to the airlines cannot be found to constitute compatible start-up aid, as at least one of the compatibility conditions is not fulfilled. the state aid granted to germanwings, tuifly and ryanair therefore constitutes unlawful and incompatible state aid that has to be recovered. 8. recovery (406) in accordance with the treaty and the court of justice's established case-law, the commission is competent to decide that the member state concerned must abolish or alter aid (113) when it has found that it is incompatible with the internal market. the court has also consistently held that the obligation on a state to abolish aid regarded by the commission as being incompatible with the internal market is designed to re-establish the previously existing situation (114). in this context, the court has stated that that objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation prior to the payment of the aid is restored (115). (407) following that case-law, article 14 of council regulation (ec) no 659/1999 (116) laid down that where negative decisions are taken in respect of unlawful aid, the commission shall decide that the member state concerned shall take all necessary measures to recover the aid from the beneficiary. (408) therefore, the state aid mentioned above (see recitals 282, 297, 318, 320, 395 and 405, taking into account recitals 198 to 200) must be reimbursed to germany, insofar as it has been paid out. (409) table 9 indicates the approximate recovery amounts. table 9 information about the approximate amounts of aid received, to be recovered and already recovered identity of the beneficiary total approximate amount of aid received (in eur) total approximate amount of aid to be recovered (117) (in eur) (principal) total amount already reimbursed (in eur) principal recovery interest (118) fgaz/fzg: direct investment grants fgaz/fzg: capital injections fgaz/fzg: 100 % guarantee fgaz/fzg: cash-pool participation germanwings 1 115 971 1 115 971 tuifly 233 002 233 002 ryanair/ams 469 132 469 132 (410) to take account of the actual advantage received by the airline and its subsidiaries under the agreements, the amounts indicated in table 9 may be adjusted, according to the supporting evidence provided by germany, based on (i) the difference between, on the one hand, actual payments as presented ex post, that were made by the airline with regard to the airport charges (including the landing fee, the passenger fee and ground handling services under the airport services agreement), and on the other hand the forecasted cash flows (ex ante) on these items of income and shown in table 8, and (ii) the difference between, on the one hand, the actual marketing payments as presented ex post which were paid to the airline or its subsidiaries under marketing services agreements and, other the other hand, the marketing costs as foreseen ex ante, corresponding to the amounts indicated in table 8, has adopted this decision: article 1 1. the state aid, unlawfully put into effect by germany in breach of article 108(3) of the treaty in favour of flugplatz gmbh aeroville zweibr cken (fgaz)/flughafen zweibr cken gmbh (fzg) between 2000 and 2009 by means of direct investment grants, annual capital injections, the grant of a 100 % guarantee on a bank loan free of charge, and allowing fgaz to participate in land rhineland-pfalz's cash-pool, is incompatible with the internal market. 2. the state aid, unlawfully put into effect by germany in breach of article 108(3) of the treaty in favour of germanwings, tuifly and ryanair/ams by means of the airport services agreements and marketing services agreements concluded on 15 september 2006 (germanwings), 1 april 2008 (tuifly), and 22 september 2008/6 october 2008 (ryanair/airport marketing services (ams)) is incompatible with the internal market. article 2 1. the loan granted to fzg by sparkasse s dwestpfalz does not constitute state aid. 2. the airport services agreement concluded by fzg with germanwings on 30 june 2008 does not constitute state aid. article 3 1. germany shall recover the incompatible aid referred to in article 1 from the beneficiaries. 2. fgaz and fzg shall be jointly liable to repay the state aid received by either of them. 3. ryanair and ams shall be jointly liable to repay the state aid received by either of them. 4. the sums to be recovered are as follows: (a) in respect of the direct investment grants granted by the land rhineland-palatinate and the zef in favour of fzg: eur 20 564 170 granted between 12 december 2000 and 31 december 2009, minus the costs of fire brigade services and the costs for which the airport operator is entitled to reimbursement pursuant to 8(3) luftsicherheitsgesetz to the extent that they were covered by the direct investment grants; (b) in respect of the annual capital injections granted by the land rhineland-palatinate and the zef in favour of fgaz: eur 26 629 000 granted between 2000 and 2009, minus the costs of fire brigade services and the costs for which the airport operator is entitled to reimbursement pursuant to 8(3) luftsicherheitsgesetz to the extent that they were covered by the annual capital injections, and minus those sums granted before 12 december 2000; (c) in respect of the 100 % guarantee on the loan granted by the land rhineland-palatinate in favour of fzg: the cash-equivalent of the value of the guarantee, to be determined pursuant to the commission notice on the application of article 87 and 88 of the ec treaty to state aid in the form of guarantees; (d) in respect of the participation of fgaz in the cash-pool of land rhineland-palatinate: the cash-equivalent of the advantageous loan conditions, to be determined pursuant to the communication from the commission on the revision of the method for setting the reference and discount rates of 12 december 2007, minus any advantage received on loans that were used to cover the costs of fire brigade services and the costs for which the airport operator is entitled to reimbursement pursuant to 8(3) luftsicherheitsgesetz; (e) in respect of the airport services agreement concluded between germanwings and fzg on 15 september 2006: the amount of incompatible aid; (f) in respect of the airport services agreement concluded between tuifly and fzg on 1 april 2008: the amount of incompatible aid; (g) in respect of the airport services agreement and marketing services agreements concluded between ryanair and fzg on 22 september 2008 and between ams and the land rhineland-palatinate on 6 october 2008: the amount of incompatible aid. 5. the sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery. 6. germany shall provide the exact dates on which the aid provided by the state was put at the disposal of the respective beneficiaries. 7. the interest shall be calculated on a compound basis in accordance with chapter v of commission regulation (ec) no 794/2004 (119). 8. germany shall cancel all outstanding payments of the aid referred to in article 1 with effect from the date of adoption of this decision. article 4 1. recovery of the aid referred to in article 1 shall be immediate and effective. 2. germany shall ensure that this decision is implemented within four months following the date of notification of this decision. article 5 1. within two months following notification of this decision, germany shall submit the following information: (a) the total amount of aid received by the beneficiaries, and in particular: (i) the amount of direct investment grants, capital injections, and the cash-equivalent of advantageous loans that covered the costs of fire brigade services and costs for which the airport operator is entitled to reimbursement pursuant to 8(3) luftsig; (ii) information on the creditworthiness of fgaz/fzg when the 100 % guarantee was issued and when each loan from the cash-pool was provided, with a view to enabling the commission to determine the cash-equivalent of the guarantee and the advantageous conditions of the cash-pool loans in line with the commission notice on the application of article 87 and 88 of the ec treaty to state aid in the form of guarantees and communication from the commission on the revision of the method for setting the reference and discount rates of 12 december 2007, respectively; (b) the total amount (principal and recovery interests) to be recovered from each beneficiary; (c) a detailed description of the measures already taken and planned to comply with this decision; (d) documents demonstrating that the beneficiaries have been ordered to repay the aid. 2. germany shall keep the commission informed of the progress of the national measures taken to implement this decision until recovery of the aid referred to in article 1 has been completed. it shall immediately submit, on simple request by the commission, information on the measures already taken and planned to comply with this decision. it shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiaries. article 6 this decision is addressed to the federal republic of germany. done at brussels, 1 october 2014. for the commission joaqu n almunia vice-president (1) with effect from 1 december 2009, articles 87, and 88 of the ec treaty have become articles 107 and 108, respectively, of the treaty on the functioning of the european union (hereinafter: tfeu). the two sets of articles are in substance identical. for the purposes of this decision references to articles 107 and 108 tfeu should be understood as references to articles 87 and 88 of the ec treaty when appropriate. the tfeu also introduced certain changes in terminology, such as the replacement of community by union and common market by internal market. the terminology of the tfeu will be used throughout this decision. (2) oj c 216, 21.7.2012, p. 56. (3) written question e-6470/08 of 2 december 2008 by hiltrud breyer (verts/ale) to the commission regarding subsidisation of zweibr cken airport by the land rhineland-palatinate. (4) oj c 216, 21.7.2012, p. 56. (5) communication from the commission guidelines on state aid to airports and airlines (oj c 99, 4.4.2014, p. 3). (6) application of article 92 and 93 of the ec treaty and article 61 of the eea agreement to state aids in the aviation sector (oj c 350, 10.12.1994, p. 5). (7) community guidelines on financing of airports and start-up aid to airlines departing from regional airports (oj c 312, 9.12.2005, p. 1). (8) oj c 113, 15.4.2014, p. 30. (9) regulation no 1 of 15 april 1958 determining the languages to be used by the european economic community (oj 17, 6.10.1958, p. 385/58). (10) commission decision of 22 december 1993 k (93) 3964/6 konver i and commission decision of 21 december 1995 k (95) 3208 konver ii. for rhineland-palatine the conversion projects included the project military airfield zweibr cken. union financing reached eur 9 million. (11) http://www.flughafen-zweibruecken.de/de/wir-ueber-uns-de/daten-und-fakten-de. (12) all distances in road kilometres, based on the fastest route. source: maps.google.com, accessed 25 june 2014. (13) desel consulting und airport research center gmbh, fluggast- und flugbewegungsprognose f r den flughafen zweibr cken bis zum jahr 2025, gutachten im auftrag der flughafen zweibr cken gmbh, september 2009, p. 56. (14) covered by the obligation of professional secrecy (15) joined cases t-443/08 and t-455/08 mitteldeutsche flughafen ag and flughafen leipzig halle gmbh v commission (hereinafter: leipzig/halle judgment) [2011] ecr ii-1311, in particular paragraphs 93-94; confirmed by case c-288/11 p mitteldeutsche flughafen and flughafen leipzig-halle v commission [2012] ecli:eu:c:2012:821. (16) commission decision 2005/842/ec of 28 november 2005 on the application of article 86(2) of the ec treaty to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (oj l 312, 29.11.2005, p. 67). (17) commission decision 2012/21/eu of 20 december 2011 on the application of article 106(2) of the treaty on the functioning of the european union to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (oj l 7, 11.1.2012, p. 3). (18) commission communication on a european union framework for state aid in the form of public service compensation (2011) (oj c 8, 11.1.2012, p. 15). (19) communication from the commission: community guidelines on state aid for rescuing and restructuring firms in difficulty (2004) (oj c 244, 1.10.2004, p. 2). (20) communication from the commission on the revision of the method for setting the reference and discount rates of 12 december 2007 (oj c 14, 19.1.2008, p. 6). (21) commission notice on the application of article 87 and 88 of the ec treaty to state aid in the form of guarantees (oj c 155, 20.6.2008, p. 10). (22) submitted as annex 8 to germany's submission of 27 january 2011. (23) prof. dr heuer und prof. dr klophaus, unter mitarbeit von dr berster and wilken, deutsches zentrum f r luft und raumfahrt, januar 2006, regional konomische bedeutung und perspektiven des flugplatzes zweibr cken, s. 146; desel consulting und airport research center gmbh, fluggast- und flugbewegungsprognose f r den flughafen zweibr cken bis zum jahr 2025, gutachten im auftrag der flughafen zweibr cken gmbh, september 2009, p. 85. (24) airport services agreement between ryanair and fzg of 22 september 2008, section 3. (25) oxera, how should ams agreements be treated within the profitability analysis as part of the market economy operator test? prepared for ryanair, on 17 january 2014. (26) oxera, how should ams agreements be treated within the profitability analysis as part of the market economy operator test? practical application prepared for ryanair, on 31 january 2014. (27) case c-35/96 commission v italy [1998] ecr i-3851; case c-41/90 h fner and elser [1991] ecr i-1979; case c-244/94 f d ration fran aise des soci t s d'assurances v minist re de l'agriculture et de la p che [1995] ecr i-4013; case c-55/96 job centre [1997] ecr i-7119. (28) case 118/85 commission v italy [1987] ecr 2599; case 35/96 commission v italy [1998] ecr i-3851. (29) leipzig/halle judgment, in particular paragraphs 93-94; confirmed by case c-288/11 p mitteldeutsche flughafen and flughafen leipzig-halle v commission [2012] ecli:eu:c:2012:821; see also case t-128/89 a roports de paris v commission [2000] ecr ii-3929, confirmed by case c-82/01p a roports de paris v commission [2002] ecr i-9297 and case t-196/04 ryanair v commission (charleroi judgment) [2008] ecr ii-3643. (30) cases c-159/91 and c-160/91 poucet v agv and pistre v cancave [1993] ecr i-637. (31) leipzig-halle judgment, paragraphs 42-43. (32) case c-170/83 hydrotherm [1984] ecr i-2999, paragraph 11. see also case t-137/02 pollmeier malchow v commission [2004] ecr ii-3541, paragraph 50. (33) the joint exercise of an economic activity is normally assessed by analysing the existence of functional, economic and organic links between the entities. see for instance, case c-480/09 p aceaelectrabel produzione spa v commission, [2010] ecr i-13355, paragraphs 47-55; case c-222/04 ministero dell'economia e delle finanze v cassa di risparmio di firenze spa and others [2006] ecr i-289, paragraph 112. (34) case c-480/09 p acea electrabel produzione spa v commission [2010] ecr i-13355, paragraphs 47-55; case c-222/04 cassa di risparmio di firenze spa and others [2006] ecr i-289, paragraph 112. (35) leipzig/halle judgment, paragraph 95. see also, by analogy, case c-205/03 p fenin v commission [2006] ecr i-6295, paragraph 26. (36) see minutes of fgaz's supervisory board of 2 october 2006, indicating that the airport is remunerated for offering services to military users. (37) case c-364/92 sat fluggesellschaft v eurocontrol [1994] ecr i-43. (38) case 118/85 commission v italy [1987] ecr 2599, paragraphs 7 and 8, and case c-30/87 bodson/pompes fun bres des r gions lib r es [1988] ecr 2479, paragraph 18. (39) case c-343/95 cali & figli v servizi ecologici porto di genova [1997] ecr i-1547; commission decision n309/02 of 19 march 2003; commission decision n438/02 of 16 october 2002, aid in support of the public authority functions in the belgian port sector (oj c 284, 21.11.2002). (40) commission decision n309/02 of 19 march 2003. (41) see, in particular, case c-364/92 sat fluggesellschaft v eurocontrol [1994] ecr i-43, paragraph 30 and case c-113/07 p selex sistemi integrati v commission [2009] ecr i-2207, paragraph 71. (42) see, amongst others, case c-172/03 wolfgang heiser v finanzamt innsbruck [2005] ecr i-1627, paragraph 36, and case-law cited. (43) commission decision of 20 february 2014 in state aid case sa.35847 (2012/n) czech republic ostrava airport, not yet published in the official journal, recital 16. (44) zweibr cken is not listed in the military aeronautical information publication germany (mil aip germany), containing a list of all military airports in germany. (45) case c-482/99 france v commission (stardust marine) [2002] ecr i-4397. (46) joined cases t-267/08 and t-279/08, nord-pas-de-calais [2011], ecli:eu:t:2011:209, paragraph 108. (47) case c-39/94 syndicat fran ais de l'express international (sfei) and others v la poste and others [1996] ecr i-3547, paragraph 60 and case c-342/96 kingdom of spain v commission of the european communities [1999] ecr i-2459, paragraph 41. (48) case 173/73 italian republic v commission of the european communities [1974] ecr 709, paragraph 13. (49) case c-482/99 france v commission (stardust marine) [2002] ecr i-4397, paragraph 69. (50) case c-305/89 italy v commission (alfa romeo) [1991] ecr i-1603, paragraph 23; case t-296/97 alitalia v commission [2000] ecr ii-03871, paragraph 84. (51) case 40/85 belgium v commission [1986] ecr i-2321. (52) stardust marine, paragraph 71. (53) case c-124/10p european commission v lectricit de france (edf) [2012], ecli:eu:c:2012:318, paragraph 85. (54) see footnote 22. (55) case t-214/95 het vlaamse gewest v commission [1998] ecr ii-717. (56) vorlage f r den ministerrat, gemeinsame kabinettssitzung der regierung des saarlandes und der landesregierung von rheinland-pfalz am 27. mai 2003, ministerium f r wirtschaft, verkehr, landwirtschaft und weinbau, 15 may 2003. (57) einsch tzung der rheinland-pf lzischen innenministeriums, 15 may 2003. (58) case t-109/01 fleuren compost v commission [2004] ecr ii-127. (59) oj c 119, 22.5.2002, p. 22. (60) point 173 of the 2014 aviation guidelines. (61) point 172 of the 2014 aviation guidelines. (62) point 25(v) of the 2014 aviation guidelines. (63) expressed in earnings before interest, taxes, depreciation and amortisation (ebitda). (64) desel consulting und airport research center gmbh, fluggast- und flugbewegungsprognose f r den flughafen zweibr cken bis zum jahr 2025, gutachten im auftrag der flughafen zweibr cken gmbh, september 2009; intraplan consult gmbh, luftverkehrsprognose flughafen saarbr cken vorgehensweise und ergebnisse, october 2010. (65) commission decision of 1 october 2014 in state aid case sa.26190 germany saarbr cken airport, not yet published in official journal. (66) the commission notes that tuifly submitted that its decision to leave saarbr cken and move to zweibr cken was motivated by security concerns related to saarbr cken's runway. on the other hand, germany has asserted in the context of the formal investigation procedure in case sa.26190 that decisions of airlines to leave saarbr cken were never justified with reference to saarbr cken's infrastructure. the commission is not in a position to speculate as to the precise motives of tuifly in moving from saarbr cken to zweibr cken. (67) for example leipzig/halle airport was in competition with vatry airport (france) for the establishment of the dhl european hub. see leipzig/halle judgment, paragraph 93. (68) response of liege airport to the public consultation on the 2014 aviation guidelines. (69) desel consulting und airport research center gmbh, fluggast- und flugbewegungsprognose f r den flughafen zweibr cken bis zum jahr 2025, gutachten im auftrag der flughafen zweibr cken gmbh, september 2009. (70) commission decision of 1 october 2014 in state aid case sa.26190 germany saarbr cken airport, not yet published in official journal. (71) oj c 297, 29.11.2005. (72) 2005 aviation guidelines, paragraph 66. see also article 4 of the 2005 sgei decision. (73) see decision n 381/04 france project for a high capacity telecommunications network in the pyr n es-atlantiques (dorsal) (oj c 162, 2.7.2005, p. 5). (74) see 2014 aviation guidelines, point 72. (75) point 72 of the 2014 aviation guidelines. see also point 34 of the 2005 aviation guidelines. (76) see also case t-79/10 colt t l communications france v commission [2013], ecli:eu:t:2013:463, paragraphs 150-151, 154, 158 and 166. (77) ibid, paragraphs 92, 119. (78) submission germany of 27 january 2011, p. 17: aus der aufstufung des flughafens [vom verkehrslandeplatz zum verkehrsflughafen] folgt des weiteren eine betriebspflicht des flughafens. (79) according to point 137 of the 2014 aviation guidelines, not all of the conditions set out in section 5.1 of the guidelines apply to operating aid granted in the past. (80) point 137, 113 and 114 of the 2014 aviation guidelines. (81) point 137 and 116 of the 2014 aviation guidelines. (82) point 137 and 124 of the 2014 aviation guidelines. (83) point 137 and 125 of the 2014 aviation guidelines. (84) point 137 and 131 of the 2014 aviation guidelines. (85) case c-482/99 france v commission (stardust marine) [2002] ecr i-4397. (86) joined cases t-267/08 and t-279/08 nord-pas-de-calais [2011], ecli:eu:t:2011:209, paragraph 108. (87) commission directive 2006/111/ec of 16 november 2006 on the transparency of financial relations between member states and public undertakings as well as financial transparency within certain undertakings (oj l 318, 17.11.2006, p. 17). (88) the effect of the cash-pool is rather similar to a 100 % guarantee granted to fgaz/fzg without charging a premium or requesting collateral. the land bears the risk of fgaz/fzg defaulting, without obtaining a compensatory payment in return. (89) stardust marine, paragraphs 51 et seq. (90) see for example commission decision c 41/2005, hungarian stranded costs (oj c 324, 21.12.2005, p. 12), with further references. (91) stardust marine, paragraphs 51 et seq. (92) ibid. (93) in the course of that meeting, ryanair offered to maintain the route between london and zweibr cken open during the winter for eur [ ], and that it would be willing to start two new routes (barcelona and alicante) from zweibr cken for eur [ ]. (94) case t-196/04 ryanair v commission [2008] ecr ii-3643, paragraph 59. (95) see commission decision 2011/60/eu of 27 january 2010 on state aid c 12/08 (ex nn 74/07) slovakia agreement between bratislava airport and ryanair (oj l 27, 1.2.2011, p. 24). (96) see http://corporate.ryanair.com/investors/biographies/, accessed on 23 june 2014. (97) the load ratio or load factor is defined as the proportion of places filled in the aircraft in operation on the air route in question. (98) see point 53 of the 2014 aviation guidelines. (99) see points 59 and 61 of the 2014 aviation guidelines. (100) see footnote 94. (101) [ ] (102) [ ] (103) [ ] (104) opinion advocate-general, case c-284/12 lufthansa v flughafen frankfurt-hahn [2013] not yet reported, paragraph 50. (105) ibid (internal footnotes omitted). see also ibid, paragraphs 51-52. (106) case 730/79 philip morris holland bv v commission of the european communities [1980] ecr 267, paragraph 11 and joined cases t-298/97, t-312/97, t-313/97, t-315/97, t-600/97 to 607/97, t-1/98, t-3/98 to t-6/98 and t-23/98 alzetta mauro and others v commission of the european communities [2000] ecr ii-2325, paragraph 80. (107) case 730/79 philip morris holland bv v commission of the european communities [1980], ecr 2671, paragraphs 11 and 12 and case t-214/95 het vlaamse gewest (flemish region) v commission of the european communities [1998] ecr ii-717, paragraphs 48-50. (108) council regulation (eec) no 2407/92 of 23 july 1992 on licensing of air carriers (oj l 240, 24.8.1992, p. 1), council regulation (eec) no 2408/92 of 23 july 1992 on access for community air carriers to intra-community air routes (oj l 240, 24.8.1992, p. 8) and council regulation (eec) no 2409/92 of 23 july 1992 on fares and rates for air services (oj l 240, 24.8.1992, p. 15). (109) case c-305/89 italy v commission [1991] ecr i-1603, paragraph 26. (110) see notably case c-364/90 italy v commission [1993] ecr i-2097, paragraph 20. (111) 2014 aviation guidelines, point 174. (112) 2005 aviation guidelines, point 79(e). (113) case c-70/72 commission v germany [1973] ecr 813, paragraph 13. (114) joined cases c-278/92, c-279/92 and c-280/92 spain v commission [1994] ecr i-4103, paragraph 75. (115) case c-75/97 belgium v commission [1999] ecr i-3671, paragraphs 64-65. (116) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1). (117) the amounts to be recovered from fgaz/fzg have to be calculated on the basis of the formula set out in article 3 and cannot at this stage be identified approximately. (118) considering that the aid is put at the disposal of the airlines continuously during the time concerned, the commission considers it acceptable to fix as the date from which onward the recovery interest has to be calculated the last day of the period for which the aid amount was calculated (for example, 31 december if that period is a calendar year, or 31 october if that period starts on 1 january and ends on 31 october). in that respect, by choosing the last day of the period at stake, the commission adopts the approach which is the most favourable to the beneficiaries. (119) commission regulation (ec) no 794/2004 of 21 april 2004 implementing council regulation (ec) no 659/1999 laying down detailed rules for the application of article 93 of the ec treaty (oj l 140, 30.4.2004, p. 1).

name: commission decision (eu) 2016/153 of 2 july 2015 on the state aid sa.31883 2015/n, 2011/c which austria implemented and is further planning to implement for vag and the volksbanken verbund and to amend decision 2013/298/eu (notified under document c(2015) 4635) (text with eea relevance) type: decision subject matter: europe; economic policy; competition; financial institutions and credit date published: 2016-02-10 10.2.2016 en official journal of the european union l 34/132 commission decision (eu) 2016/153 of 2 july 2015 on the state aid sa.31883 2015/n, 2011/c which austria implemented and is further planning to implement for vag and the volksbanken verbund and to amend decision 2013/298/eu (notified under document c(2015) 4635) (only the german text is authentic) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, and in particular the first subparagraph of article 108(2) thereof, having regard to the agreement on the european economic area, and in particular article 62(1)(a) thereof, having called on interested parties to submit their comments pursuant to the provision(s) cited above (1), whereas: 1. procedure (1) on 9 december 2008 (2) (the 2008 decision), the commission approved the austrian bank support scheme, which was subsequently prolonged four times (3) and expired on 30 june 2011. (2) in april 2009 sterreichische volksbanken ag ( vag) received eur 1 billion in fresh capital under the austrian bank support scheme. in addition, vag placed three issues of debt instruments which were state guaranteed under that scheme in the market, each of eur 1 billion, on 9 february, 18 march and 14 september 2009 respectively. austria provided those aid measures on the assumption that vag was a sound financial institution, and submitted a viability plan on 29 september 2009. (3) further analysis by the commission led it to conclude that the application of the criteria laid down in the annex to the commission communication on the recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition (4) (the recapitalisation communication) indicated that the bank could not be considered sound within the meaning of that communication at the time of the recapitalisation. austria maintained its position that the bank was sound, but submitted a restructuring plan for vag on 2 november 2010. (4) by letter dated 9 december 2011 (5), the commission informed austria that it had decided to initiate the procedure laid down in article 108(2) of the treaty on the functioning of the european union (the treaty) in respect of the recapitalisation of eur 1 billion and the guarantee of eur 3 billion granted by austria to vag, and requested austria to submit an amended restructuring plan, the final version of which was submitted on 4 september 2012 (the 2012 restructuring plan). (5) on 19 september 2012, the commission concluded the formal investigation procedure by adopting a compatible restructuring aid decision concerning vag (the 2012 decision) (6), including the measures referred to in recital 2 above as well as a eur 250 million capital injection by the state in the form of ordinary shares and an asset guarantee with the effect of increasing the capital by eur 100 million. that decision was based on the 2012 restructuring plan and the commitments in the annex to the 2012 decision (the 2012 commitments). (6) the 2012 decision was based on a plan to reorganise the volksbanken-verbund in austria (the verbund) as an association with joint liability (haftungsgemeinschaft). the group encompassed 51 independent volksbanken (primary banks) and vag. the primary banks had only limited liability in relation to vag, while vag had full liability in relation to the verbund (7). (7) on 26 october 2014 the results of the comprehensive assessment carried out by the european central bank and the european banking authority (the ecb/eba comprehensive assessment) revealed a capital shortfall in core equity tier 1 (cet1) in both baseline and adverse scenarios at the level of the verbund, which included vag. (8) the austrian authorities publicly announced that they would not provide any further aid to the verbund. the measures identified at the time by the verbund to close the capital shortfall (notably the sale of non-core subsidiaries and further reduction of risk-weighted assets (rwas) would not on their own have been sufficient to close the capital shortfall in the timeframe required by the single supervisory mechanism (the ssm). (9) on 23 december 2014 vag held an extraordinary general meeting where it was decided to take the necessary steps to put vag into wind-down (abbaugesellschaft), subject to approval from the national regulators, the ssm and the commission. the core functions of vag as the central organisation for the verbund would be transferred to one of the primary banks as part of a new restructuring plan (the new restructuring plan) for the verbund which included a system of fully joint and several liability. (10) the new restructuring plan represents a fundamental change to the 2012 restructuring plan, which renders necessary an amendment decision from the commission. (11) during the period from october 2014 to june 2015, the commission, the austrian authorities, the ssm, vag and the verbund discussed the new restructuring plan in a succession of telephone conversations and written correspondence. the commission met representatives of vag and austria on 18 december 2014 and representatives of the verbund on 7 may 2015. (12) on 28 may 2015, a meeting of vag shareholders approved the transfer of its core functions to volksbank wien-baden (vbwb) and the establishment of a liquidation unit for residual functions pursuant to section 162 of the austrian act on the recovery and resolution of banks (bundesgesetz ber die sanierung und abwicklung von banken, basag). (13) on 29 may 2015, a meeting of vbwb shareholders approved the transfer of vag's core functions and a capital increase of eur 113 million. (14) also on 29 may 2015, primary banks representing 97,83 % of the verbund's rwas signed a banking association agreement (verbundvertrag) and a cooperation agreement (zusammenarbeitsvertrag). (15) the verbund submitted the final version of the new restructuring plan on 23 june 2015. (16) on 25 june 2015, austria submitted commitments, which are set out in the annex to this decision. (17) since the present decision is taken on the basis of the commission's state aid powers, it is without prejudice to any merger control obligations to which the different parties involved in the transactions may be subject. 2. detailed description of past and future measures 2.1. the recipient and its difficulties (18) the verbund currently encompasses: (i) 51 legally independent primary banks 41 regional cooperative banks, 5 special banks, 4 credit unions and 1 building society (bausparkasse); (ii) the central organisation, vag; and (iii) the legal deposit insurance scheme, volksbank haftungsgenossenschaft eg. vag is the central organisation of the verbund and as such provides services for the primary banks in the form of centralised administration and liquidity management activities. the primary banks are small banking operations (balance sheet size between eur 65 million and eur 3 600 million) mainly providing banking services to local and regional private and corporate clients. (19) the verbund has a market share of approximately 6 % in austria, with around 900 000 private customers and 80 000 business customers. the primary banks have more than 500 branches, with 4 900 members of staff. the total volume of advances to customers amounts to around eur 30 billion and the total volume of liabilities to customers amounts to around eur 27 billion. (20) the members of the verbund are bound together by an association agreement providing for joint liability and a transfer of liquidity. under the current system, the central organisation, vag, has unlimited liability for the primary banks, whilst the liability of the primary banks for the central organisation is limited to the extent that the equity ratio of a primary bank cannot fall below the minimum regulatory requirements. (21) 51,6 % of vag is currently held by the primary banks through its holding company volksbanken holding. austria holds 43,3 % of vag. other significant shareholders are dz bank ag (3,8 %) and raiffeisen zentralbank (0,9 %), while 0,4 % is owned by other parties. (22) the verbund's most significant geographic market is austria. however, vag was previously active in several central and eastern european countries, although its market share was small there, except in romania. (23) the sources of vag's difficulties were manifold: its exposure to central and eastern european countries through its retail banking subsidiaries, grouped in vb international ag (vbi); its engagement in public finance and infrastructure financing; real estate activities; an investment portfolio containing among others instruments issued by lehman brothers and icelandic banks; and reliance on wholesale funding (8). those factors led to significant losses at vag in 2008 and resulted in the support measures granted to the bank by austria in 2009 (9). the magnitude of losses for 2011 led to further state aid measures (10). despite restructuring efforts, in 2014 the ecb/eba comprehensive assessment in 2014 revealed an additional capital shortfall at the level of the verbund (including vag), mainly driven by risks and weaknesses in vag (11). 2.2. aid measures of 2009 and the subsequent restructuring aid measures (24) in april 2009, austria underwrote participation certificates (partizipationsscheine, ps) for vag amounting to eur 1 billion (the 2009 recapitalisation). that ps instrument did not confer voting rights on the state but gave it a preferential coupon and a conversion option. the instrument is perpetual and is still treated as core tier 1 capital. the ps absorb losses in proportion to the total loss-absorbing capital. vag had the right to redeem all or tranches of the ps at any time. the state had the right to convert the ps into ordinary shares in vag, but did not do so. (25) vag also received government guarantees under the austrian bank support scheme and issued eur 3 billion of state-guaranteed bonds in 2009 that matured in 2012 and 2013. restructuring (26) vag had already initiated a restructuring process in 2009, which among other things aimed at separating the bank from the activities which were the main source of its problems. nevertheless, some of the risks stemming from the legacy portfolio affected the bank again in 2011. they included: (a) losses generated by the vbi subsidiaries and impairments on their book value in vag's accounts totalling eur 380 million; (b) impairments of eur 300 million on vag's investments linked to the countries most affected by the sovereign crisis; (c) a write-down by eur 142 million of the remaining participation capital which vag held in kommunalkredit; (d) a downward revaluation of the book value of investkredit (ik) by eur 323 million in the context of a merger by absorption by vag. 2.3. aid measures of 2012 and the subsequent restructuring aid measures (27) the magnitude of the losses reported by vag for 2011 led to further state aid measures, consisting of a eur 250 million capital injection by the state in form of ordinary shares (the 2012 recapitalisation) and an asset guarantee. (28) the 2012 recapitalisation was conducted in two steps. first, the bank's capital was reduced by 70 % to offset the accumulated losses. that reduction in capital also reduced pro rata the ps which austria had injected in 2009, leaving eur 300 million of state participation capital in vag. in a second step, vag received fresh capital totalling eur 484 million, eur 250 million of which was underwritten by austria, the rest by the volksbanken holding. the price per share was eur 2,181. (29) as a result, the state obtained a 43,4 % stake in vag and became the second-biggest shareholder after the volksbanken holding (then 50,2 %), thereby diluting the stakes of the other shareholders, which did not participate in the capital injection: dz-bank 3,8 %, ergo 1,5 %, rzb 0,9 %, and free float 0,1 %. (30) the asset guarantee increased vag's capital by eur 100 million through covering losses on the insured portfolio of non-performing loans. vag can draw on the asset guarantee only under certain conditions which will be verified on 31 december 2015 (12). the asset guarantee is remunerated at 10 % p.a. (i.e. like a capital injection) and will expire on 1 january 2016. restructuring (31) in connection with the aid measures of 2012, vag revised its original restructuring plan and opted for a profound restructuring. the measures were approved in the 2012 decision. the 2012 restructuring plan, which underpinned the 2012 decision, included the following points: (a) vag created an internal resolution division within which certain assets, the so-called non-core segment, were to be liquidated. (b) vag's balance sheet and risk-weighted assets had to shrink to eur 18,4 billion and eur 10,1 billion respectively by 31 december 2017. the greater part of the reduction was to be achieved in the non-core segment, whilst the balance sheet and risk-weighted assets in the core segment had to drop only slightly (target values of eur 5,4 billion and eur 4,5 billion respectively by 31 december 2017). (c) in the core segment, vag was to maintain only its role as the central organisation of the verbund and to offer products and services for the primary banks and their customers. vag was no longer authorised to carry out credit operations with third parties for its own account. (d) vag was to withdraw from certain business areas, in particular renewable energy and specific types of real estate financing (modellfinanzierung). (e) vag was to sell its shares in vbli, malta/ik malta volksbank, volksbank romania and rzb to parties independent of the verbund and the austrian state. (f) the shareholders dz bank, ergo gruppe and rzb were to take certain measures to boost the capital of vag. (g) until the end of the restructuring period on 31 december 2017, vag was to refrain from making any acquisitions, paying out dividends, leading on prices in its internet banking unit, live bank, and referring to state aid for advertising purposes, and to observe certain rules on the remuneration of its managerial staff. (h) vag committed to pay back the entire remaining state participation of eur 300 million by 31 december 2017, with at least eur 150 million being paid in the first half of 2017. the primary banks were to play a part in realising that repayment, as far as the minimum regulatory capital adequacy requirements allowed. (32) between 2012 and 2014 vag succeeded in reducing its balance sheet and its rwas in both the non-core and core segments quicker than required under the 2012 decision. at 31 december 2014 it had a balance sheet total of eur 15,1 billion, rwas of eur 8,7 billion and a core equity capital ratio of 6,21 %. 2.4. ecb/eba comprehensive assessment (33) in 2014 the european central bank (ecb) and the european banking authority carried out the comprehensive assessment, scrutinising 130 of the biggest banks in the euro area for the quality of their balance sheets and their financial resilience. the results of the comprehensive assessment were published on 26 october 2014. the verbund was assessed on a consolidated basis including vag, in accordance with article 10 of the capital requirements regulation (13) and article 30 of the austrian banking act (14). the verbund was one of the 25 banks that failed to meet the minimum own funds requirements in the projected scenarios. its cet1 ratio for 2016 was 7,2 % (threshold: 8 %) in the baseline scenario and 2,1 % (threshold: 5,5 %) in the stress scenario. the maximum difference between the test result and the threshold corresponds to an additional cet1 capital requirement of eur 865 million. (34) the ecb gave the verbund until 26 july 2015 to cover that capital requirement and reach a cet1 ratio of 14,63 %. 2.5. the notified new restructuring plan 2015 (35) as a result of the difficulties outlined above, the verbund has embarked on a fundamental transformation, in agreement with the austrian state. that transformation plan is underpinned by the following principles: (a) the central organisational function will be transferred from vag to vbwb. (b) once the central organisation has been transferred, vag will be deconsolidated from the verbund. (c) the deconsolidated vag will go into liquidation, and will relinquish its banking licence, so that it no longer has to meet the own funds requirements for banks. (d) the 51 primary banks in the verbund will be merged into 10 bigger institutions and will cooperate to a greater extent than in the past. (e) the primary banks will henceforth have unlimited liability for the obligations of the verbund and the central organisation. until now they have been liable only insofar as this did not prevent them from meeting the regulatory requirements on minimum own funds. (36) the measures set out in the transformation plan, in particular the liquidation of vag, the relinquishing of its banking licence and its deconsolidation from the verbund, will enable the verbund to achieve a cet1 ratio of [9-11] (15) % immediately. furthermore, the verbund has set in motion a number of additional measures to free up capital. they include reducing its exposure in the corporate and real estate sector (with a cumulative effect on cet1 of eur [100-200] million from january 2014 to december 2017), selling off product companies (eur [100-200] million), and selling off securities (eur [50-100] million). however, for the period up to the end of 2017 those measures will release capital of only eur [450-550] million, which is not enough to offset a capital shortfall of eur 865 million. transfer of the central organisational function (37) vbwb will take over the central organisational function of the verbund, which has so far been performed by vag. the assets required for that function will be transferred to vbwb, together with the corresponding liabilities of vag, on 30 june 2015, with retroactive effect from 1 january 2015. the total assets and liabilities to be transferred each amount to just under eur 8,6 billion. that sum encompasses all the activities assigned to the core segment in the 2012 decision, except for three smaller subsidiaries vb factoring, vb mobilienleasing and vb investments which will remain in vag making up less than 10 % of the overall sum. deconsolidation and liquidation of vag (38) after the central organisation and the relevant assets and liabilities have been transferred, vag will on 4 july 2015 be placed in liquidation and converted into a wind-down entity (abbaugesellschaft) under section 162 of basag. the name of the institution will be changed to immigon portfolioabbau ag (immigon). the remaining assets of eur 7,4 billion will be liquidated by 31 december 2017. they include all the activities assigned to the non-core segment in the 2012 decision and the holdings in vb factoring, vb mobilienleasing and vb investments mentioned in recital 37. (39) under the current plan, the revenue from liquidating the assets will be sufficient to fully cover the remaining liabilities. in the process, vag's equity capital and the participation capital will be reduced by 96,65 %. that reduction also applies to the remaining state participation capital of eur 300 million. (40) the existing asset guarantee will remain in vag/immigon but will be modified. currently, all assets giving rise to a claim under the guarantee need to be registered by 31 december 2015 and the sum of these claims will be settled by 31 july 2016. under the modified guarantee agreement, the date for registering claims under the guarantee remains on 31 december 2015. however, settlement of the sum of these claims can be requested at any time between 31 december 2015 and the end of the wind-down period in 2017. at the same time, the capital threshold below which settlement can be requested will be reduced from below 10 % cet ratio to below zero capital, i.e. guarantee claims can only be settled if vag/immigon would otherwise become insolvent during the wind-down process. the fee for the extended settlement period of the guarantee remains at 10 % per annum. (41) in order to realise a capital benefit from that transformation, the verbund needs to implement two major steps: (a) the return of the banking licence by vag/immigon in order to free the company from the obligation to fulfil the applicable capital requirements on a stand-alone basis. (b) the deconsolidation of vag/immigon from the verbund in order to ensure that the verbund will not have to fulfil capital requirements for vag/immigon on a consolidated basis. (42) on 10 december 2014, vag signed a contract with the romanian bank banca transilvania for the sale of its 51 % stake in volksbank romania sa, which removed the major obstacle to a return of its banking licence. the transaction was completed on 7 april 2015. that transaction also allowed vag to meet one of the conditions of the 2012 restructuring plan. in addition, vag has closed the sale of vb malta in september 2014, and decided to wind down ik malta, fulfilling the corresponding requirements of the 2012 decision. (43) in order to deconsolidate immigon, the verbund must reduce its share in immigon to a minority holding. it will do so by transferring 8,5 % of the share capital of 51,6 % held by the volksbanken holding to an independent third party, gpvaubeoe beteiligungen gmbh, a special-purpose vehicle. (44) with the transfer of the central organisation, a substantial part of vag's liabilities to the verbund will be transferred to vbwb. nevertheless, after the break-up, the verbund will retain an exposure to immigon amounting to eur [700-800] million in the form of various financial instruments used to provide funding to vag. (45) to neutralise the risk to the verbund arising from this remaining exposure to immigon, the verbund has taken the following steps: (a) eur [200-300] million of the immigon exposure will be sold immediately in the market, reducing the remaining exposure to eur [400-600] million. this transaction will result in losses to the verbund of eur [0-100] million. (b) the remaining eur [400-600] million will be covered by a commercial guarantee for an annual fee of [0-5] %. the guarantee will only become effective after a first loss piece of eur [0-200] million has been consumed. (c) the first loss piece of eur [0-200] million will be fully provisioned, resulting in a further negative impact on the 2015 result of eur [0-200] million. the transformation of the verbund (46) the verbund currently consists of 51 primary banks. under the transformation plan those 51 institutions will merge to form 10 larger banks: 8 regional banks with balance sheet totals of eur 1,9 billion to eur 5,3 billion, operating in different parts of austria, and two special banks sparda bank austria (eur 0,8 billion) and the rzte-/apothekerbank (eur 1,1 billion). the relevant mergers will take place by the end of 2017. the start:bausparkasse grouping together the building societies (bausparkassen) of the verbund are likely to be sold off. (47) the relationships between the primary banks within the verbund are governed by two agreements: the association agreement under section 30a bwg (verbundvertrag) and the cooperation agreement. (48) the association agreement is concluded between the central organisation in the form of vbwb, the primary banks of the verbund, and volksbank haftungsgenossenschaft eg. its main provisions are the following: (a) the central organisation ensures the supply of liquidity to the primary banks and compliance with the regulatory requirements on own funds. the members undertake to conclude agreements on fund transfer pricing for the allocation of own funds. (b) as before, the central organisation has unlimited liability in relation to the payment of contributions to members. in the new association agreement the primary banks now also have unlimited liability. (c) the central organisation receives greater powers and can now also issue instructions that affect the interests of individual banks in the verbund. it can impose penalties in the event of infringements. the greater powers cover in particular administrative, financial and technical supervision, verbund planning and control, compliance with supervisory rules, internal control mechanisms for members, risk analysis, risk assessment and risk control procedures, and criteria for the ongoing business of members. (d) capital withdrawals and reductions are, as before, allowed only with the approval of the central organisation. (49) the cooperation agreement (zusammenarbeitsvertrag) regulates those areas that are not covered by the association agreement. the contracting partners are the primary banks of the verbund and volksbank haftungsgenossenschaft eg. the aim of the cooperation agreement is to realise synergies in the verbund by implementing the planned mergers and stepping up cooperation between members. the decision-making powers in the areas covered by the cooperation agreement are transferred to volksbank haftungsgenossenschaft. decisions by the management board of volksbank haftungsgenossenschaft are binding on the contracting partners. the cooperation agreement regulates in particular the areas of marketing, a single sales strategy, product policy including framework contracts with third-party suppliers, sales control, optimisation and standardisation of business processes, it procurement and legal representation. (50) in the event of a dispute, the central organisation decides whether a measure under the cooperation agreement constitutes an inadmissible encroachment on its responsibilities under the association agreement. should the regulator require amendments to the association agreement, the cooperation agreement contains a clause enabling it to be adjusted accordingly as well. (51) the aim of the transformation plan is to establish a structure consisting of eight strong regional banks, together with a central organisation, and two special banks. the local offices will focus on sales and local customer service, while administration is concentrated in the regional banks and the central organisation. (52) the verbund will focus on customers in austria, with a particular emphasis on small and medium-sized businesses, the self-employed, private customers, housing finance and wealthy customers. financial planning (53) on the basis of the new restructuring plan, the verbund has sent the commission forecasts of the expected trend in key financial indicators in the next five years. those forecasts have been made for two scenarios a baseline scenario and a stress scenario. (54) the financial planning as delivered takes into account the impact of the neutralisation of the immigon exposure (16) as well as the projected payment flows by the verbund on the profit participation right (genussrecht) provided to austria under the commitment catalogue. (55) the baseline scenario assumes moderate economic growth in the core market, austria, amounting to a nominal 0,8 % in 2015, 1,5 % in 2016 and 1,7 % in subsequent years up to 2019, an annual inflation rate of between 1,1 % and 2,2 %, and a three-month euribor rising from 0,1 % in 2015 to 1,9 % in 2019. on those assumptions the verbund forecasts losses for 2015 but a positive return on equity (roe) of [8-9] % in 2019. the cet1 ratio is expected to increase from [9-11] % in 2015 to [11-13] % in 2019. trends in further key figures can be seen from the following profit and loss calculation and balance tables. table 1 key financial data in baseline scenario [ ] (56) the stress scenario is based on the assumption of a credit crunch caused by weaknesses in the european banking sector which foreign funders (donors) and the ecb cannot resolve. real economic growth is slightly negative, with a slow recovery as from 2017. in 2015 and 2016 the rate of inflation is negative, and in the subsequent years marginally positive. interest rates remain extraordinarily low and the value of the swiss franc rises further against the euro. on the basis of those assumptions, the verbund predicts that the roe will remain negative in 2015 and 2016 and rise subsequently to [5-8] % in 2019, and the cet1 ratio will rise from [8-10] % in 2015 to [10-12] % in 2019. trends in further key figures can be seen from the following profit and loss calculation and balance tables. table 2 key financial data in stress scenario [ ] new commitments and compensatory measures on the part of austria (57) the austrian authorities have undertaken a number of commitments relating to the implementation of the new restructuring plan. those commitments by the austrian authorities are set out in a separate document annexed to this decision. (58) under section 5 of the restructuring communication, reports must be submitted regularly so that the commission can check whether the new restructuring plan is being properly implemented. austria will employ a monitoring trustee to support the commission in meeting its task of ensuring that the decision is implemented correctly. the monitoring trustee will submit a monitoring report every six months. the first report should be submitted no later than six months after the restructuring plan has been approved. in the commission's view, that commitment ensures proper monitoring of implementation of the restructuring plan. supervisory approval of the plan (59) the new restructuring plan notified to the commission corresponds to the capital raising plan submitted to the ecb/ssm and has the main objective of transforming the verbund in such a way that the capital shortfall identified in the comprehensive assessment by the ecb/eba will be addressed. (60) the ssm has set a prudential capital requirement of 14,63 % to be achieved from 26 july 2015. on that day, the ssm will review the prudential capital requirement also taking into account the implementation of the capital raising plan. the implementation of the plan has been initiated by the entry of measures (a) to (c) in recital 35 in the austrian corporate register. in order for the national austrian courts to approve the entry into the corporate register, the ssm has approved these measures. 3. the formal investigation procedure (61) the commission recalls that it has opened a formal investigation procedure in consequence of which the 2012 decision was adopted. it has become necessary to amend that decision pursuant to article 7(3) of council regulation (ec) no 659/1999 (17). 4. position of austria (62) in public statements austria has excluded any new aid for the verbund. austria takes the view that the restructuring plan submitted does not constitute new aid. (63) however, austria acknowledges that the new restructuring plan significantly changes the 2012 restructuring plan so that an amendment decision by the commission is necessary before it can be implemented. it has accordingly notified the new plan to the commission. (64) austria similarly acknowledges that the verbund must be seen, in terms of state aid rules, as the successor to vag and is therefore also the object of this amendment decision. (65) at the same time, austria maintains that the new restructuring plan, with its list of commitments, preserves the balance of the 2012 decision and therefore the original compatibility of the aid. 5. assessment of the measures 5.1. state aid presence of existing state aid and economic succession (66) with regard to the measures approved by the commission as restructuring aid in favour of vag in 2009 and 2012, the commission has already concluded that those measures constituted state aid. as a consequence, it is not necessary to reassess the state aid nature of these measures in this decision. (67) a central element of the 2012 restructuring plan on which the 2012 decision was based was refocusing vag on its function as a central organisation integrated in a joint liability scheme with the primary banks. in that setup, vag as central organisation assumed liability for the entirety of obligations of the verbund, whereas the individual primary banks were only liable as long as it would not breach their own individual capital ratio. (68) some of the 2012 commitments provided by austria also concerned the primary banks, protecting particular revenue streams of vag as the central institution (commitment 9) and obliging the primary banks to participate in the repayment of the participation capital in vag as far as the minimum regulatory requirements allow (commitment 11.2). those commitments were necessary because of the particular liability arrangement in the verbund to find the aid compatible. moreover, those commitments in combination with the particular liability arrangement allowed the commission to treat vag separately from the verbund. (69) under the new restructuring plan, the core economic activity of vag will be carried out by one of the primary banks, vbwb. more specifically, vbwb will take over vag's role as the central organisation of the verbund, with all relevant necessary functions and assets being transferred from vag to vbwb. in total, eur 8,6 billion in assets and liabilities will be transferred, including all core functions of vag, as defined in the 2012 decision, with the exception of three minor subsidiaries, vb factoring (with a balance sheet of eur 86 million), vb mobilienleasing (eur 700 million) and vb investments (eur 30 million), which will remain in the wind-down entity immigon. (70) in contrast with the asymmetric liability structure between primary banks and central organisation, the verbund will be integrated into a fully joint and several liability arrangement under the new restructuring plan. in conjunction with the further structural changes in the verbund (recital 49), the new central organisation, vbwb, can no longer be considered separately from the primary banks. that view is supported by the consolidated approach that the ssm took in the comprehensive assessment, and the fact that the capital requirement was formulated at aggregated (verbund) level. (71) for those reasons, the commission considers the verbund to be the economic successor of the entity aided under the 2012 decision, vag. therefore, the verbund is the beneficiary of the existing state aid. no new state aid to vag, immigon, vbwb or the verbund (72) in addition to the question of the transfer of the existing state aid to the economic successor, the commission also has to assess whether any new aid is involved in the new restructuring plan. (73) the commission observes that, according to austria, no additional state aid will be granted as part of the new restructuring plan. (74) according to article 107(1) tfeu, state aid means any aid granted by a member state or through state resources in any form whatsoever which distorts, or threatens to distort, competition by favouring certain undertakings, in so far as it affects trade between member states. a measure constitutes state aid within the meaning of that provision if all of the following conditions are met: (a) the measure must be imputable to the state and financed through state resources; (b) it must confer an advantage on its recipient; (c) that advantage must be selective; and (d) the measure must distort or threaten to distort competition and have the potential to affect trade between member states. (75) the new restructuring plan does not confer any new advantage on vag or immigon. vag ceases to exist, with all its core assets and liabilities being transferred to vbwb, and the remainder being wound down in immigon. according to the current plan, it is expected that the wind-down of immigon will consume its capital almost entirely however without recourse to the asset guarantee. this implies that the risks immanent in the cet1 instruments of vag are expected to materialise, including the loss of austria's equity share in vag of eur 250 million as well as the outstanding participation capital in the nominal amount of eur 300 million. (76) the asset guarantee continues to cover vag/immigon. under the current contractual arrangement, the guarantee can only be exercised on 31 december 2015 on claims registered up to that date and to the amount necessary to support a cet1 ratio of 10 %. according to information provided by austria, securities eligible for compensation under the guarantee have already been registered exceeding in sum the maximum guarantee amount of eur 100 million. while the eligibility of registered claims will be decided only on 31 december 2015, the immigon management has no choice under its legal obligation to protect the interests of the owners but to register all possible claims for settlement at the end of 2015. (77) at 31 december 2015, immigon as a wind-down entity will no longer have to fulfil capital requirements. accordingly, it is difficult to assess the guarantee settlement condition linked to a cet1 ratio. however, given that this assessment is entirely a question of national law, the commission accepts austria's position according to which the continuation of vag in the form of a wind-down entity according to article 162 basag has no influence on the continuing validity of the guarantee. on the basis of this position and because immigon will at that date have suffered a capital reduction of 96,65 %, the settlement condition of less than 10 % cet ratio will be fulfilled and all at 31 december 2015 eligible claims will have to be settled. (78) under those conditions, the changes in the guarantee agreement (a) prolonging the settlement period of the guarantee payment without allowing further claims to be registered beyond 31 december 2015 and (b) making the settlement payment exercisable only in the case that the capital would otherwise fall below zero actually reduce the risk to the guarantee provider of the guarantee being exercised. moreover, the applicable fee payments of 10 % per annum will continue to apply for a further two years. therefore, the new conditions of the asset guarantee only strengthen the position of the guarantee provider and do not provide a further advantage to vag/immigon. (79) the new restructuring plan also confers no new advantage on the verbund, including its new central organisation, vbwb. as explained above (18), the verbund is the beneficiary of the existing aid. more specifically, under the 2012 decision, the primary banks had to participate in realising the repayment of the outstanding eur 300 million of participation capital by the end of 2017 as far as their minimum regulatory requirements allowed. it has to be recalled that in the comprehensive assessment the capital shortfall was assessed not at the level of vag alone but at the level of the verbund as a whole. (80) while the risk-bearing participation capital is being consumed in the wind-down of vag/immigon, the new commitments presented by austria include a payment by the verbund to austria in the amount of eur 300 million, through the granting of a profit participation right to austria. the verbund commits to a payment schedule amounting to a cumulative eur 300 million by the end of [2020-2025], subject to intermediary payment thresholds in [ ], [ ] and [ ]. (81) by providing a new commitment to pay eur 300 million to the state, the verbund reinstates a claim equivalent in amount to the original repayment required. that original claim would be lost in the liquidation of vag as immanent risks would materialise. while the new payment schedule will result in a significant payment delay compared with the original commitment, it must be considered that under a simple liquidation for vag (as well as the counterfactual scenario of the resolution of the entire verbund), all state claims, equity and participation capital would cease to exist. (82) in addition, that new commitment is binding on the verbund, although the payments relating to the profit participation right remain profit-dependent. at the same time, the commitment ensures that austria's claim to those payments is senior to any dividend payments. moreover, for any dividend distribution to parties outside the consolidated verbund, austria will receive a compensation payment of equal amount and in addition to the payment from the profit participation right. (83) furthermore, austria will receive a stake of 25 % plus one share in vbwb as collateral for the payments on the profit participation right. if the verbund fails to make payments according to the thresholds set in the payment schedule, vbwb shareholders will transfer further shares to austria for free, increasing austria's stake in vbwb to [26-40] %. in addition, austria will also be able to seize the collateral at that moment. (84) as such, the new commitment, although it differs in some features from the original commitment, is equivalent to the latter and cannot therefore be considered to confer an advantage on vag, immigon, vbwb or the verbund. (85) apart from the new commitment to pay an amount equivalent to the original value of the participation capital in vag on a newly instated profit participation right in vbwb, the new restructuring plan makes no other substantial modifications in relation to the austrian state that could be interpreted as conferring an advantage on vbwb or the verbund. (86) as the new restructuring plan does not confer an advantage on vag, immigon, vbwb or the verbund, there is no need to pursue the assessment of the cumulative state aid criteria. on that basis, the commission considers that the measures provided for in the new restructuring plan do not fulfil the conditions of article 107(1) tfeu and, therefore, do not constitute new state aid to vag, immigon, vbwb or the verbund within the meaning of that provision. 5.2. assessment of the legal compatibility of the measures (87) as explained in section 5.1, the new restructuring plan contains no new aid, while the aid for vag approved in the 2012 decision is transferred to the verbund as the economic successor of vag. (88) on the basis of the 2012 decision, therefore, the commission needs to establish whether the 2012 aid measures remain compatible with the internal market under the new restructuring plan and catalogue of commitments. that assessment must take place on the same legal basis that applied in the 2012 decision, i.e. on the basis of the recapitalisation communication and the 2011 prolongation communication (19) and also the restructuring communication (20). (89) recitals 83 to 92 of the 2012 decision regarding the compatibility of the 2012 aid assessed on the basis of the recapitalisation communication and the 2011 prolongation communication continue to apply without any change. the recapitalisation granted to vag in the amount of eur 250 million and the remaining participation capital in the amount of eur 300 million will remain with immigon and will, according to the plan, be completely consumed in the liquidation by 2017. (90) as explained in recital 93 of the 2012 decision, the restructuring communication provides that the restructuring of a financial institution in the context of the current crisis is compatible with the internal market under article 107(3)(b) tfeu only if it will restore the profitability of the bank, includes a sufficient own contribution and appropriate burden-sharing, and also contains sufficient measures to limit the distortion of competition. with regard to those three elements, the commission must check to what extent the changes submitted in the restructuring plan and in the catalogue of commitments preserve the compatibility of the measures established in the 2012 decision. viability under the baseline scenario (91) as explained in recital 71, the 2012 aid is transferred to the verbund, which is also fully covered by the new restructuring plan. here it is necessary to examine whether the long-term profitability of the verbund in its new form under the restructuring plan will be re-established by 2019. (92) to that end, austria has submitted a financial plan running up to 2019, which includes a baseline scenario and a stress scenario for the entire verbund, on the basis of which the commission carried out its analysis. (93) the transformation of the structure of the verbund itself through the merging of the local primary banks into regionally organised institutions can be assessed as beneficial in so far as the existing differences in the verbund with regard to capital contribution and profitability will be somewhat equalised and economies of scale and potential synergies can be exploited. the graph below clearly shows that in a comparison between the old and new verbund the spread in the cet1 capital ratio and roe is reduced. (94) the commission welcomes the fact that potential synergies have influenced financial planning only in the area of costs which are more easily quantifiable than revenues and have been included at only [70-80] % of the potential that has already been identified. with less than [10-20] % per annum in staffing costs and less than [5-10] % per annum in non-staffing costs, the commission is of the opinion that a rather cautious approach has been adopted and that further synergies might be available than those already included into the plan. (95) the business strategy of the verbund in its new form remains essentially unchanged. the focus is clearly placed on local and regional clients both in the private and commercial customer segments and on business with small and medium-sized companies. those business activities already make up the bulk of the portfolio, are profitable, and were not considered to be problematic in the 2012 decision. in the baseline scenario, the interest-bearing assets in those areas increase by around [5-7] % until 2019 and thus by less than half of the predicted real economic growth of around 15 % over this same period (21). it is only in special business areas, such as, for example, securities investment services, that higher growth rates are envisaged. given the very limited initial size of those businesses, higher growth assumptions are justified. (96) on the liabilities side, the particular relevance of business with private clients' deposits must be stressed (around 80 % of all liabilities). that type of funding is rated under basel iii as especially reliable and counts correspondingly highly in funding indicators such as the liquidity coverage ratio and the net stable funding ratio. the verbund has also supplied proof of the particular stability of the deposit business even during the crisis, so that the commission finds the verbund's funding situation to be a particular strength. in the deposit business too, growth by 2019 is at around [5-7] % and over 50 % lower than predicted real economic growth. (97) risk assumptions with regard to the various credit portfolios appear plausible. in the baseline scenario, the planned values for risk provisioning and impairments correspond to standard risk cost rates of approximately [7-15] basis points for private client business and [30-45] basis points for commercial client business. those assumptions seem appropriate for the economic situation in the austrian credit business, although not conservative. (98) the plan according to the baseline scenario will bring the verbund from a negative after-tax roe with a cet1 of [9-11] % in 2015 to an after-tax roe of [8-9] % with a cet1-ratio of [11-13] % in 2019. in view of the moderate risk profile of the verbund's business model, the planned after-tax roe can be assessed as an appropriate remuneration of capital. (99) the considerations in recitals 94 to 98 on the financial planning with regard to growth, liquidity, costs, risk management and profitability allow the commission to conclude that the planning is solid, that it has been calculated on the basis of essentially cautious assumptions, and that it is likely to ensure the long-term profitability of the verbund and thus its ability to access the capital market. viability under the stress scenario (100) that assessment of long-term profitability and of viability is also confirmed by the stress scenario provided at the same time. here, the assumption is that there will be simultaneous stress through (a) a longer-lasting low-interest environment than is currently envisaged and (b) a credit crisis. while longer-lasting low interest rates exert pressure on the interest margin, the credit crisis also has to be simultaneously financed through higher risk provisioning and impairments as well as a generally higher risk weighting of loan stocks resulting in higher capital requirements. (101) given the reduced yields and the higher risk provisioning and impairments, the verbund would make significant losses in 2015 and further light losses in 2016. however, it is clear that even without taking countermeasures such as a cost saving programme or adjusting pricing margins accordingly the resulting losses can be met out of the core capital ratio at the time, and will affect the verbund's long-term yield position only to a limited extent. in that scenario the core capital ratio does not sink below [8-10] %, and the verbund still achieves after-tax profitability of [5-8] % in 2019. supervisory requirements (102) following on from the capital shortfall identified in the supervisory authority's comprehensive assessment of 2014, the verbund has currently been given the objective of achieving a cet1 core capital ratio of 14,63 % by 26 july 2015. the current financial planning will not deliver such a capital ratio. (103) moreover, the commission notes that the measures taken to neutralise the verbund's risk stemming from the exposure to immigon (22) have a detrimental impact on the cet1-ratio roughly equivalent to [0-2] %. in addition, the submitted planning is based on the assumption that the immigon exposure can be reduced in [ ] and [ ] through further sales. these sales would lead to an overall expected loss from the exposure of eur [0-200] million with an additional downside risk of a further eur [0-100] million if sales cannot be achieved and the eur [0-200] million first loss piece is fully consumed. additional losses of eur [0-100] million would further reduce the cet1-ratio by [0-2] percentage points. (104) on the other hand, the verbund has also identified measures to further reduce its rwa beyond the measures already included in the financial planning. further possible measures include a securitisation structure for a credit portfolio of small and medium-sized enterprises and the sale of start:bausparkasse and immo-bank, which would increase the core capital ratio to up to [10-15] % when taking into account the necessary threshold payment on the austrian profit participation right. here, the commission notes that the simultaneous implementation of all these measures if required could have a detrimental impact on the future profitability of the bank. (105) however, given the limited size of downside risks and the scope of the already identified rwa measures, the commission considers that there is a sufficient buffer in the plan to limit the impact on viability. this view is further strengthened by the positive decision the supervisor has taken regarding the approval of measures (a) to (c) in recital 35 with a view to allowing their entry into the austrian corporate register. that positive decision by the ssm has been based on the same restructuring plan underlying the present decision, suggesting to the commission that the ssm will also consider that the verbund even when taking into account the risks inherent in the plan will be capable of fulfilling the necessary prudential capital requirements applicable after the supervisory review on 26 july 2015. own contribution and burden-sharing (106) the commission has to assess whether the new set of commitments can adequately replace the 2012 commitments to guarantee the compatibility of the existing aid for the verbund, the economic successor of vag. accordingly, it must be examined whether the verbund's own contribution and burden-sharing are adequate. (107) in relation to own contribution and burden-sharing, the list of commitments annexed to the 2012 decision included provisions on remuneration and repayment of (a) the asset guarantee and (b) the participation capital, as well as a dividend ban. (108) with regard to the changes to the asset guarantee, the current wind-down plan does not rely on any cash payment from the guarantee for a solvent wind-down. if all assumptions materialise as predicted and the wind-down remains solvent without the guarantee, then a windfall payment from the guarantee corresponding to the settlement of all eligible claims in july 2016 will actually only serve to increase the final liquidation mass of immigon available to participation capital and equity holders. the current plan of limiting the guarantee payment to the case of preventing the insolvency of immigon serves to limit to a minimum the risk of state aid being used to compensate the holders of own fund instruments. (109) with regard to participation capital, pursuant to the list of commitments annexed to the 2012 decision (23), vag had to repay eur 300 million by the end of 2017, with the verbund having to contribute as far as the minimum regulatory requirements allow. its wording made it clear that, in the case of the verbund, that commitment was a declaration of intent rather than a legally binding requirement. (110) the new set of commitments introduces a legally-binding requirement for the verbund. more specifically, the verbund undertakes to make available to austria a new financial instrument, a profit participation right (genussrecht). on the basis of that instrument, which has a small nominal value, austria will receive profit-dependent distributions which will be senior to all other hybrid or dividend distributions. by [2020-2025], distributions on a profit participation right will amount to eur 300 million, minus any payments received from the winding down of vag. (111) the cash flow corresponding to the profit participation right will be further ensured by the fact that austria will receive (a) a shareholding in vbwb of 25 % and one share (a blocking minority) as collateral and (b) the right to appoint a half of supervisory board members of vbwb. (112) the profit participation right has the following cumulative payment thresholds: eur [0-50] million in [ ]; eur [0-100] million in [ ]; eur [0-200] million in [ ]; and eur 300 million in [2020-2025]. should a threshold not be adhered to, austria receives the title right to the shareholding held as collateral, which otherwise, after receipt of the full amount of eur 300 million, returns to the ownership of the verbund. in addition, in the case of non-adherence to payment thresholds, austria would get a further [1-15] % of all shares as well as the right to seize this collateral. furthermore, there is an obligation for the verbund in this event to present a new restructuring plan which austria would then have to notify to the commission. (113) the commission has assessed the influence of the new repayment arrangement on the restructuring plan and has concluded that the latter is sufficiently robust for the repayment to be made as planned, without placing an undue burden on the core capital ratio. the threshold of eur [0-50] million in [ ] remains feasible even in the stress scenario. however, the commission has noted that simultaneous implementation of all identified rwa-reduction measures (24) would have a negative influence on the bank's profitability which could also jeopardise the repayment plan. (114) the commission considers that the new commitment on aid repayment ensures the continued compatibility of the existing aid for the following reasons: (a) by means of that commitment austria receives a new claim that adequately replaces the defaulted claim on vag. as a wind-down entity, vag is not expected to repay participation capital beyond residual surpluses from its wind-down. (b) the combination of the cumulative threshold values and voluntary distributions of dividends described below (25) is an adequate compromise between ensuring aid repayment and restoring the verbund's viability. (c) on that basis, the extension of the repayment schedule can be accepted. (d) austria has the possibility to use its blocking minority to amend the new restructuring plan if necessary. (115) with regard to the dividend ban, the relevant commitment (26) annexed to the 2012 decision continues to apply in a modified manner. under the new commitment, dividends can be distributed to external investors provided that (a) the total of all the distributions is less than eur [5-8] million; (b) the profit participation right has been exercised as a priority in at least the same amount in accordance with the agreed thresholds and in the same year; (c) austria receives an additional compensatory payment of the same amount as the proposed dividends; and (d) fresh external core capital has been generated of at least the sum of any dividend and additional compensatory payments. (116) the commission considers that the combination of the priority nature of the repayment obligation, the compensatory payment and fresh external core capital generation are sufficient to ensure that aid does not serve as a return on capital, and that any dividends are paid solely from surplus revenues. (117) overall, the commission considers that the new set of commitments ensures the compatibility of the existing aid with regard to own contribution and burden-sharing. measures to limit distortions of competition (118) the commission has to assess whether the new set of commitments can adequately replace the 2012 commitments to guarantee the continuing compatibility of the existing aid for the verbund. accordingly, it must be examined whether distortions of competition due to aid to the verbund are limited as far as possible. (119) the 2012 commitments included the following measures with respect to vag, to limit distortions of competition: (i) reduction of balance sheet and rwas; (ii) restriction of activities to the association-related business of vag, as the verbund's central organisation; (iii) a ban on acquisitions; (iv) a ban on price leadership, applicable to vag's online banking subsidiary, live bank; (v) a ban on referring to state aid for advertising purposes; and (vi) behavioural measures relating to remuneration and risk management systems. (120) the new set of commitments, annexed to this decision, maintains the original balance in terms of limiting distortions of competition. in particular, the issues of balance sheet and rwa reduction are addressed by the wind-down of vag, whilst the issue of focusing on the functions of the verbund's central organisation is addressed by the transfer of those functions to vbwb. the new set of commitments also maintains the bans on price leadership, acquisitions and state aid advertising as well as the existing behavioural measures. (121) in relation to price leadership, live bank will not be allowed to offer customers interest rates, relating to any maturity, higher than those offered by the third-best competitor in the direct online banking market. (122) in relation to acquisitions, the verbund will not be allowed to acquire controlling or minority stakes and any asset bundles. the only exceptions to that ban are (a) acquisitions necessary to preserve financial or verbund-level stability, or those carried out in the interests of effective competition, provided that they are approved beforehand by the commission, and (b) acquisitions that belong, in terms of management of existing obligations of customers in financial difficulty, to the verbund's normal ongoing business. (123) in relation to advertising, the verbund will not be allowed to advertise the granting of the state aid measures or any advantages arising therefrom. (124) in relation to behavioural measures, the verbund will maintain adequate remuneration and risk management systems. more specifically, the verbund's remuneration systems will be transparent, based on incentives preventing inappropriate risks, and aligned with sustainable long-term business objectives. the verbund's risk management system will be further developed, with the aim of pursuing a prudent, sound and sustainable business policy. (125) considering the above the commission believes that the new set of commitments adequately limits distortion of competition brought about by the existing state aid to the verbund, has adopted this decision: article 1 1. the measures contained in the restructuring plan of 23 june 2015 and the corresponding set of commitments do not constitute new state aid. 2. the measures contained in the restructuring plan of 23 june 2015 and the corresponding set of commitments are such that the measures referred to in article 1(1) of decision 2013/298/eu remain compatible with the internal market. article 2 1. article 2 of decision 2013/298/eu is replaced with the following: article 2 austria shall ensure that the restructuring plan submitted on 23 june 2015 is implemented in full, including the commitments set out in the annex to this decision. 2. the annex to decision 2013/298/eu is replaced with the annex to the present decision. article 3 this decision is addressed to the republic of austria. done at brussels, 2 july 2015. for the commission margrethe vestager member of the commission (1) oj c 46, 17.2.2012, p. 3. (2) commission decision of 9 december 2008 in state aid case n 557/2008 ma nahmen nach dem finanzmarktstabilit ts- und dem interbankmarktst rkungsgesetz f r kreditinstitute und versicherungsunternehmen in sterreich (oj c 3, 8.1.2009, p. 2). (3) the first extension of the scheme, including certain amendments, was approved on 30 june 2009 (oj c 172, 24.7.2009, p. 4), the second extension on 17 december 2009 (oj c 28, 4.2.2010, p. 6), the third extension on 25 june 2010 (oj c 250, 17.9.2010, p. 4) and the fourth extension on 16 december 2010 (oj c 20, 21.1.2011, p. 3). (4) see point 13 and the annex to the commission communication (oj c 10, 15.1.2009, p. 2). (5) commission decision of 9 december 2011 in case sa.31883 (2011/c) (ex n516/10), restructuring of sterreichische volksbanken ag (oj c 46, 17.2.2012, p. 3). (6) commission decision 2013/298/eu of 19 september 2012 on the state aid sa.31883 (2011/c) (ex n516/10) which austria implemented and is planning to implement for sterreichische volksbanken ag (oj l 168, 20.6.2013, p. 30). (7) the verbund is further described in recitals 18 et seq. (8) see recitals 13 and 14 of the 2012 decision. (9) see recitals 24 and 25. (10) see recitals 27 to 30 and the 2012 decision for more detail. (11) the capital shortfall is further described in recital 33. (12) for details, refer to recitals 24 to 29 of the 2012 decision. (13) regulation (eu) no 575/2013 of the european parliament and of the council of 26 june 2013 on prudential requirements for credit institutions and investment firms and amending regulation (eu) no 648/2012 (oj l 176, 27.6.2013, p. 1). (14) bankwesengesetz (bwg). (15) confidential information. (16) see recital 45. (17) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1). (18) see recitals 66 to 71. (19) see recital 82 of the 2012 decision. (20) see recital 93 of the 2012 decision. (21) all assumptions regarding economic growth and inflation are taken from the commission's spring 2015 report. (22) see recital 45. (23) point 11.2 of the list of commitments annexed to the 2012 decision. (24) those measures are further described in recital 100. (25) see recital 115. (26) point 9.3 of the list of commitments annexed to the 2012 decision. annex annex list of commitments in state aid procedure sa.31883 sterreichische volksbanken ag preamble by commission decision of 19 september 2012, state aid sa.31883 (2011/c) which austria granted to sterreichische volksbanken ag ( vag) was found to be compatible with the internal market. owing to the renewed need for restructuring of the volksbanken sector, the present list of commitments has been drawn up taking into account the earlier set of commitments and the underlying restructuring and liquidation plan of vag ( the restructuring plan ). the provisions of the earlier set of commitments annexed to the commission decision of 19 september 2012 thereby cease to have effect. the modified restructuring plan makes no provision for additional state support measures for vag. the reduction in vag's share capital including the republic of austria's share in the amount of 43,3 % (corresponding to approximately eur 250 million) and the simultaneous reduction in the republic of austria's participation capital in the amount of eur 300 million by 96,65 % do not constitute new aid within the meaning of article 1(c) of council regulation (ec) no 659/1999 (1). the republic of austria hereby provides the following commitments concerning sterreichische volksbanken-aktiengesellschaft ( vag ) and the volksbanken-verbund, represented by volksbank wien-baden ag ( vbwb ) in its capacity as the new central organisation of the verbund, in order that the european commission, by decision under article 107(3)(b) of the treaty on the functioning of the european union ( tfeu ), may find the aid granted to vag compatible with the internal market. this text should be interpreted within the general framework of eu law and with reference to regulation (ec) no 659/1999, as well as with regard to the decision, to which the commitments are attached as commitments and/or conditions and obligations. 1. general 1.1. the republic of austria undertakes to ensure that the restructuring for vag submitted end of june 2015 is correctly and fully implemented. 1.2. the republic of austria undertakes to ensure that the commitments listed below ( the commitments ) are fully observed during the implementation of the restructuring plan. 1.3. the restructuring phase will end on the date of the general meeting of vbwb which decides on the annual accounts for the fiscal year 2019, but at the latest on 30 june 2020. the following commitments will apply during the restructuring phase unless otherwise provided. 2. restructuring and liquidation plan 2.1. vag's share capital of eur 577 328 623,46 (including the republic of austria's share in the amount of 43,3 %) will be reduced to eur 19 335 951,23. the state's participation capital in the amount of eur 300 million will be reduced in the same proportion by 96,65 %. 2.2. the central organisation and central institution function of vag will be transferred retroactively with effect from 31 december 2014 by it as transferor company to vbwb as transferee company subject to the continued existence of the transferor company, in exchange for the issue of shares. 2.3. with effect from 4 july 2015, vag will with the agreement of the competent supervisory authority (ecb) withdraw from the verbund, after supervisory approval operate henceforth as a wind-down entity in accordance with section 162 of the federal act on the recovery and resolution of banks (bundesgesetz ber die sanierung und abwicklung von banken basag) and as such will no longer hold a banking licence in accordance with section 1 of the banking act (bankwesengesetz, bwg). the name of the wind-down entity will be changed to immigon portfolioabbau ag . 2.4. drawing on the federal republic as provider of an asset guarantee to the amount of eur 100 million in line with the agreement on an asset guarantee from 15 march 2013 as amended by the draft agreement from 25 june 2015 ( the guarantee amendment agreement ) is allowed at any time between 31 december 2015 up to and including the day of the approval of the annual accounts of vag for the financial year 2017. 2.5. conditions for an eventual drawing on the asset guarantee are either the partial or entire uncollectibility of the assets concerned or the formal insolvency of the debtor in addition to the necessity of the payout from the guarantee to prevent over-indebtedness of vag in accordance with insolvency law and subject to all other applicable conditions in the guarantee amendment agreement. reference date for the evaluation of guaranteed claims in the pool according to annex 1 to the guarantee agreement from 15 march 2013 as amended by the guarantee amendment agreement is 31 december 2015. no further claims from the guarantee will be accepted after that date. 2.6. the aim of the liquidation plan of vag is to fully liquidate all assets by 31 december 2017. it also follows from vag's liquidation plan that a positive residual value will remain. as partial compensation for the reduction in the share capital held by the republic of austria in vag, the verbund and volksbanken holding egen will assign their claims to the liquidation proceeds of vag to the republic. moreover, the verbund has given a best endeavour commitment to the effect that other shareholders in vag will also assign their claims to the republic of austria. 3. sale of vag holdings in implementation of the provided draft of the restructuring agreement with the republic of austria from 23 june 2015 ( the restructuring agreement ), vag will sell off all shares in rzb completely ( signing ) by 31 december 2017. 4. measures by rzb austria undertakes that the measures planned by raiffeisen zentralbank sterreich ag (rzb) to reduce vag's equity capital as laid down in the restructuring agreement of 26 april 2012 with a current residual amount of eur [0-20] million will be implemented by [ ]. 5. future profit distribution by the verbund 5.1. profit distributions by entities consolidated in the credit institution association (kreditinstituteverbund) of the volksbanken in agreement with section 30a(1) bwg, as amended, to third (natural or legal) persons will in principle be admissible only if the conditions set out in points 5.2 to 5.6 of this agreement are fulfilled. 5.2. the exercise of the republic of austria's profit participation right will take place in agreement with the restructuring agreement; in particular, non-observance of the thresholds laid down therein will entitle the republic of austria to dispose of the shares in vbwb transferred to it pursuant to the restructuring agreement. 5.3. the exercise of the republic of austria's profit participation right in accordance with the restructuring agreement will take place preferentially in at least the amount of the distribution. 5.4. the total amount of all distributions will be limited to eur [5-8] million p.a. 5.5. the republic of austria will receive a compensation payment independent of point 5.3 in the amount of the distribution. profit distributions on own-fund items designated after 29 june 2015 to strengthen and aid the recovery of the verbund will not give rise to any compensation payment to the republic of austria. 5.6. the verbund will raise fresh external common equity tier 1 capital (net, after the deduction of repayments) in at least an amount corresponding to the annual sum of the distributions and compensation payments (compensation for retained earnings). 6. vag dividend ban vag will not pay dividends in the period up to the end of the liquidation. in so far as they are legally separable, payments for remunerating the aid measures will remain unaffected. 7. ban on price leadership in the area of deposit services, live bank is prohibited in the period up to the end of the liquidation from offering interest rate conditions (for all maturities) better than its competitor with the third-best conditions in the austrian market for direct online banking without the commission's prior approval. 8. representation of the republic of austria in volksbank wien-baden ag in its capacity as central organisation of the verbund 8.1. with effect from the splitting-up of vag and the transfer of the function as central organisation of the verbund to vbwb the republic of austria will have transferred to it a share of 25 % plus one share ( 25 % + 1 ) free of charge by the verbund. 8.2. if the verbund fails to fulfil its repayment commitments in accordance with point 9.3, the republic of austria will have transferred to it additional shares in vbwb free of charge by the verbund up to a total stake of austria of [26-40] %. in addition, the republic of austria will receive the right of disposal over its entire shareholding in accordance with the provisions of the restructuring agreement. 8.3. the republic of austria will be granted by the verbund a right of representation of half of the members of the vbwb supervisory board to be appointed by the owners. 9. remuneration of the aid measures 9.1. the asset guarantee of eur 100 million provided by the republic of austria to vag will be remunerated with a non-profit-related bonus of 10 % p.a. 9.2. vbwb grants the republic of austria a profit participation right as compensation for the reduction under the restructuring agreement in the state's eur 300 million participation capital in vag during the course of the split-up. from the entire payment to be made on the profit participation right will be deducted any participation capital held by the state which is retained during the course of the split-up and is duly repaid. 9.3. the payment on the profit participation right has to reach at least eur [0-50] million by the time of approval of the [ ] annual accounts of vbwb and at least eur [0-100] million by the time of approval of the [ ] annual accounts of vbwb. in the event of one of these two thresholds not being reached, a new restructuring plan will have to be notified. it should be noted that the restructuring agreement provides for a payment threshold of at least eur [0-200] million by the time of approval of the [ ] annual accounts of vbwb and for a complete payment by the time of approval of the [2020-2025] annual accounts of vbwb. 10. other behavioural obligations 10.1. vag and the verbund commit to refrain from acquisitions. this applies to both the purchase of companies with their own legal structure, and shares in companies, as well as asset bundles that represent a commercial transaction or a branch of activity. this does not apply to acquisitions that must be made in order to maintain financial and/or association-related stability, or in the interests of effective competition, provided that they have been approved beforehand by the commission. this does not apply either to acquisitions that belong, in terms of the management of existing obligations of customers in financial difficulty, to a bank's normal ongoing business. 10.2. vag and the verbund must not use the granting of the aid measures or any advantages arising therefrom for advertising purposes. 10.3. vag and the verbund must verify the incentive effect and appropriateness of their remuneration systems and ensure, using the possibilities under civil law, that they do not result in exposure to undue risks, are oriented towards sustainable, long-term company objectives, and are transparent. 10.4. the verbund is to continue expansion of its risk-monitoring operations and to conduct a commercial policy that is prudent, sound and oriented towards sustainability. 11. monitoring trustee 11.1. the republic of austria is to ensure that the full and correct implementation of the restructuring plan of vag and the verbund and the full and correct implementation of all commitments within this commitments document are continuously monitored by an independent, sufficiently qualified monitoring trustee who is obliged to maintain confidentiality. 11.2. the appointment, duties, obligations and discharge of the monitoring trustee must follow the procedures set out in the trustee annex. 11.3. the republic of austria is to ensure that, during the implementation of the decision, the commission or the trustee has unrestricted access to all information needed to monitor the implementation of this decision. the commission or the trustee may ask vag and the verbund for explanations and clarifications. the republic of austria, vag and the verbund are to cooperate fully with the commission and the monitoring trustee with regard to all enquiries associated with monitoring of the implementation of this decision. (1) council regulation (ec) no 659/1999 of 22 march 1999 laying down detailed rules for the application of article 108 of the treaty on the functioning of the european union (oj l 83, 27.3.1999, p. 1).

name: commission implementing decision (eu) 2016/175 of 8 february 2016 on a measure taken by spain pursuant to directive 2006/42/ec of the european parliament and of the council, to prohibit the placing on the market of a type of pressure washer (notified under document c(2016) 670) (text with eea relevance) type: decision_impl subject matter: consumption; technology and technical regulations; marketing; mechanical engineering; electronics and electrical engineering; europe date published: 2016-02-10 10.2.2016 en official journal of the european union l 33/12 commission implementing decision (eu) 2016/175 of 8 february 2016 on a measure taken by spain pursuant to directive 2006/42/ec of the european parliament and of the council, to prohibit the placing on the market of a type of pressure washer (notified under document c(2016) 670) (text with eea relevance) the european commission, having regard to the treaty on the functioning of the european union, having regard to directive 2006/42/ec of the european parliament and of the council of 17 may 2006 on machinery, and amending directive 95/16/ec (1), and in particular article 11(3) thereof, whereas: (1) in accordance with the procedure set out in article 11(2) of directive 2006/42/ec, spain informed the commission of a measure to prohibit the placing on the market of a pressure washer of type parkside phd 100 b2 manufactured by grizzly gartenger te gmbh & co. kg germany and distributed by lidl supermercados, s.a.u. spain. (2) the reason for taking the measure was the non-conformity of the pressure washer with the essential health and safety requirements set out in annex i to directive 2006/42/ec. (3) section 1.5.1 (electricity supply) of annex i to directive 2006/42/ec requires that machinery which has an electricity supply must be designed, constructed and equipped in such a way that all hazards of an electrical nature can be prevented. section 1.5.2 (static electricity) of the same annex i requires that machinery must be designed and constructed to prevent or limit the build-up of potentially dangerous electrostatic charges and/or be fitted with a discharging system. (4) the ec declaration of conformity issued by the manufacturer for the pressure washer made reference, among others, to the harmonised standard en 60335-2-67:2009 household and similar electrical appliances safety part 2-67: particular requirements for floor treatment and floor cleaning machines for commercial use (iec 60335-2-67:2002 (modified) + a1:2005 (modified)). (5) according to the spanish authorities, the pressure washer presented the following shortcomings: the protection grade against harmful ingress of water was lower than the level ipx7 requested for hand-held appliances, with the consequent risk of electrocution. this was not in accordance with sections 1.5.1 and 1.5.2 of annex i to directive 2006/42/ec, nor with paragraph 6.2 of harmonised standard en 60335-2-67:2009 with regard to hand-held appliances; the length of the electric cable was less than 15 m, with the consequent risk of electrocution. this was not in accordance with sections 1.5.1 and 1.5.2 of annex i to directive 2006/42/ec, nor with paragraph 25.7 of harmonised standard en 60335-2-67:2009 with regard to hand-held appliances; the pressure washer had an opening at less than 60 mm from the floor that could admit liquid to live parts, with the consequent risk of electrocution. this was not in accordance with sections 1.5.1 and 1.5.2 of annex i to directive 2006/42/ec, nor with paragraph 22.101 of harmonised standard en 60335-2-67:2009. (6) the commission invited the manufacturer, grizzly gartenger te gmbh & co. kg, and the distributor, lidl supermercados, s.a.u., to present their observations on the measure taken by spain. (7) no reply from the manufacturer was received. the distributor, in the reply received from his representative, considered that the machinery is a portable appliance and that lower technical requirements, protection grade and length of the electric cable were in line with what is requested in case of portable appliances, while the shortcomings remarked by the spanish authorities were referred to requirements for hand-held appliances. concerning the opening, the distributor considered that the requirement had been fulfilled as there were no active parts in the high pressure washer at a distance of less than 60 mm to the ground. (8) according to the available documents, the different level of technical safety requirements taken into account by the spanish authorities and by the distributor were directly connected to whether the pressure washer should be classified as a hand-held appliance or as a portable appliance as defined by the harmonised standard en 60335-1 household and similar electrical appliances safety part 1: general requirements. furthermore, standard en 60335-2-67 has to be used in conjunction with en 60335-1. (9) the analysis of the evidence provided by the spanish authorities and of the documents delivered by the distributor led to the conclusion that the pressure washer is of a dual use, this is to say, it can be used not only as portable appliance, as declared by the distributor, but also as hand-held appliance, as remarked by the spanish authorities. in any case, even if it were considered that the pressure washer is a portable appliance, its use as hand-held appliance could be considered as a reasonably foreseeable misuse in terms of the principles of safety integration laid down in sections 1.1.2 and 1.7.4.1 of annex i to directive 2006/42/ec, that prescribe that the manufacturer must take into account the intended use and any reasonably foreseeable misuse of the machine. therefore, the pressure washer should in any event fulfil the higher technical safety requirements for hand-held appliances. (10) consequently, the pressure washer of type parkside phd 100 b2 manufactured by grizzly gartenger te gmbh & co. kg germany and distributed by lidl supermercados, s.a.u. spain, fails to comply with the essential health and safety requirements referred to in article 5(1)(a) of directive 2006/42/ec. the non-conformity gives rise to serious risks of injury to users. it is therefore appropriate to consider the measure taken by spain as justified, has adopted this decision: article 1 the measure taken by spain to prohibit the placing on the market of a pressure washer of type parkside phd 100 b2 manufactured by grizzly gartenger te gmbh & co. kg germany and distributed by lidl supermercados, s.a.u. spain, is justified. article 2 this decision is addressed to the member states. done at brussels, 8 february 2016. for the commission el bieta bie kowska member of the commission (1) oj l 157, 9.6.2006, p. 24.