Consultation Paper TATE ID ODERNISATION REFORM...
Transcript of Consultation Paper TATE ID ODERNISATION REFORM...
Brussels, 13 July 2012
Consultation Paper
STATE AID MODERNISATION: REFORM OF STATE AID PROCEDURES
The purpose of the present consultation is to invite both Member States and stakeholders to
provide comments on the handling of State aid complaints and the methods of the
Commission to gather information in State aid investigations, the two aspects of the State
aid procedural framework which the State Aid Modernisation (SAM) initiative launched on 8
May 2012 proposes to reform.
The Commission invites Member States and stakeholders to submit their comments to DG
Competition by 5 October 2012.
1. INTRODUCTION
On 8 May 2012, the Commission adopted the Communication on "EU State aid
modernisation (SAM)"1 which officially launches a comprehensive reform of the State aid
framework. It will ensure that State aid policy contributes both to the implementation of the
Europe 2020 agenda2, which is Europe's growth strategy for this decade, and to budget
consolidation by pursuing the following objectives:
– Foster growth in a strengthened, dynamic and competitive internal market;
– Focus enforcement on cases with the biggest impact on the internal market;
– Streamlined rules and faster decisions.
The planned revision of Council Regulation (EC) No 659/1999 of 22 March 1999 laying
down detailed rules of procedure to deal with State aid cases ("the Procedural Regulation") is
one of the building blocks of the State aid modernisation package.
State aid procedures, as foreseen by Article 108 TFEU and further detailed by the Procedural
Regulation, are built around three main axes:
– Prior notification by Member States of all planned aid measures is compulsory, except
in cases covered by a block exemption regulation, and the Member State concerned
1 Communication from the Commission to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Regions, EU State Aid Modernisation
(SAM), 8.05.2012, COM(2012) 209 final. 2 Communication from the Commission, Europe 2020: A strategy for smart, sustainable and inclusive
growth, 3.3.2010, COM(2010) 2020 final.
EUROPEAN COMMISSION DG Competition State aid: Cohesion, R&D&I and Enforcement Enforcement and Procedural Reform
may not put the measure into effect until a Commission authorisation decision; to that
end, following an essentially bilateral (Member State/Commission) preliminary
investigation, limited in principle to two months, the Commission may either approve
the aid or open a formal investigation, subject to a best endeavour deadline of 18
months, with a view to thereafter approving (if need be, subject to certain conditions)
or prohibiting the aid;
– The Commission is also bound to examine any information, from whatever source,
concerning alleged unlawful (non-notified) aid. In particular, the Commission is
required to conduct a diligent and impartial examination of the complaints lodged
before it, and take a decision without undue delay. Where the Commission takes a
decision finding that no State aid as alleged by a complainant exists, the Commission
must at least provide the complainant with an adequate explanation of the reasons for
which the facts and points of law put forward in the complaint have failed to
demonstrate the existence of State aid;
– Finally, the Commission shall keep under constant review all existing aid systems in
Member States and may propose to them any appropriate measures required by the
progressive development of the functioning of the internal market.
While reforming the Procedural Regulation should primarily allow the Commission to take
decisions faster, it will also help the Commission focus on cases with the highest impact at the
EU level. Also, the objective to promote growth can only be achieved if the Commission has
the powers to prioritize its work. In that context, the SAM Communication announced that the
Commission will initiate:
"A modernisation of the State aid Procedural Regulation with regards to complaint-
handling and market information tools, in order to enable the Commission to better focus
its action on cases which are most relevant for internal market. It requires enabling the
Commission to set priorities for complaints handling, in order to prioritise allegations of
potential aid with a large impact on competition and trade in internal market. In parallel,
in order for the Commission to be able to effectively investigate cases of aid with
significant impact, it should be endowed with more efficient tools to obtain all the
necessary information from market participants and in good time so as to deliver
decisions within business relevant timelines. Such modernisation of procedures would also
allow the Commission to undertake more ex officio investigations into significant
distortions of competition hampering internal market. It should also permit a quick
verification of market effects of aid measures which would enable quicker decision-
taking."
The present consultation will therefore mainly aim at collecting the views of the Member
States and stakeholders on two aspects of the State aid Procedural framework: improving the
handling of complaints and ensuring that the Commission obtains complete and correct
information.
2. How to contribute to the consultation
Member States and other interested parties are invited to respond to the questionnaire
hereunder. Replies can be submitted in all official EU languages3.
While some of the questions are specifically aimed at public authorities, others are aimed at
both public authorities and other interested parties (stakeholders). For your convenience, the
questions are sorted by their principal target audience. If you do not feel concerned by a
particular question please reply "not applicable".
Questions referring to "your Member State" or "your authorities" and the like may be read by
international entities with no particular Member State affiliation as referring to "Member
States" and "Member State authorities".
The deadline for the replies is 5 October 2012. Replies should be sent to the European
Commission, DG COMP, State aid registry, 1049 Brussels, reference "HT 2664", preferably
via e-mail to [email protected].
The Commission services plan to make the replies to this questionnaire accessible on their
website http://ec.europa.eu/competition/consultations/open.html.
Therefore, if respondents do not wish their identity or parts of their responses to be disclosed,
that fact should be clearly indicated and a non-confidential version should be submitted at the
same time. In the absence of any indication of confidential elements, DG COMP will assume
that the response contains none and that it can be published in its entirety.
3 Given the possible delays in translating replies in certain languages, an English working translation
would be welcome.
ABOUT YOU
Specific privacy statement: All contributions received, together with the identity of the
contributor, will be published on the Internet, unless the contributor objects to the publication
of personal data on the grounds that such publication would harm its legitimate interests. In
that case the contribution may be published in anonymous form.
For rules on data protection on the EUROPA website, please see:
http://ec.europa.eu/geninfo/legal_notices_en.htm#personaldata
1. Do you object to the disclosure of your identity?
Yes No
2. Do any of the exceptions foreseen in Article 4 of Regulation 1049/2001 of the European
Parliament and of the Council of 30 May 2001 regarding public access to European
Parliament, Council and Commission documents4
apply to your response? If so, please
indicate clearly which parts should not be disclosed, justify the need for such confidential
treatment and provide a non-confidential version of your response for publication on the
Commission website.
Please provide your contact details below.
Name Juliusz Komorek
Organisation represented Ryanair
Main business activities Scheduled passenger air travel
Location (country) Ireland (Head Office)
E-mail address: [email protected]
NOTE: You are requested to follow the order of the questions, even though you are not required to
reply to all questions. You can also submit additional information that you consider relevant and
which does not fit any specific question.
4 OJ L 145, 31 May 2001, p. 43.
SECTION 1: HANDLING OF STATE AID COMPLAINTS
Complaints are a very useful source of information to direct Commission investigations
towards those economic sectors where unlawful State aid hampers competition at the EU
level.
Currently, the Commission has to investigate every alleged infringement of State aid rules
received from whatever source, since no specific formal requirement is attached to the
lodging of a State aid complaint. To close the examination of complaints, the Commission
must issue a decision stating either that the measure complained of (i) is not an aid or (ii) is a
compatible aid, or (iii) opening the formal investigation because there are doubts on the
compatibility of the aid.
The Commission receives on average more than 300 complaints per year. The Commission is
entitled to give different degrees of priority to the complaints brought before it, depending for
instance on the scope of the alleged infringement, the size of the beneficiary, the economic
sector concerned or the existence of similar complaints. In the light of its workload and its
right to set the priorities for investigations, it can thus postpone dealing with a measure which
is not a priority. Most complaints are therefore not given priority treatment and the duration of
those cases thus tends to increase.
First attempts to tackle those issues were made in the 2009 Simplification Package, and in
particular in the Best Practices Code which introduced a staged procedure for dealing with
complaints. Based on priority assigned to the relevant complaint, the Commission
endeavoured to send, within two months from the receipt of a complaint, a letter to the
complainant informing it about the priority status given to its complaint. Within one year, the
Commission then endeavoured to close the investigation of priority complaints by formal
decision and send a preliminary assessment letter for non-priority complaints.
To achieve the objectives of the State aid modernisation, a reform in that area should "enable
the Commission to better focus its action on cases which are most relevant for internal
market. It requires enabling the Commission to set priorities for complaints handling, in
order to prioritise allegations of potential aid with a large impact on competition and trade in
internal market".
To prepare such a proposal, the present questionnaire aims at collecting the views of the
Member States and other stakeholders on the State aid complaints handling policy and getting
your feedback on your experience as granting authority, complainant, aid recipient etc... in
State aid complaint cases.
SECTION 1.A. GENERAL QUESTIONS - FACTUAL INFORMATION
Questions aimed at Member States
1. On how many complaints are you consulted on average every year?
2. On average, what are the resources and time needed to reply to requests for information
from the Commission concerning a complaint? How does it compare to, for example,
notifications?
Questions aimed at other interested parties
3. Have you ever lodged a State aid complaint with the Commission?
Yes
4. If yes, how did you lodge your complaint(s) (paper, e-mail, web-based)?
By post, fax and email
5. Have you lodged more than one complaint with the Commission on State aid matters?
Yes
6. If yes, how many complaints have you lodged over the past five years?
We estimate six complaints in the past five years, and also five actions against the
Commission for failure to act regarding State aid complaints made by Ryanair over
five years ago.
7. If you have already lodged State aid complaints, could you specify the type of measures,
the beneficiaries and the amount of alleged aid you complained about and the economic
sector concerned?
1. Alitalia
a. Sale of debt-free Alitalia to private investors, CAI, in 2008. This resulted
in the Italian Government retaining between €1.2-2 billion of Alitalia debt.
b. €300m rescue loan
2. KLM - Dutch Environmental tax on passengers, exempting transfer and cargo
traffic (estimated between €100-500 million)
3. Aer Arann and Aer Lingus - Irish Air Travel Tax, with a lower per passenger
rate for flights landing less than 300km from Dublin airport. Ryanair notes that
on foot of this complaint, the Commission found on 25 July that Aer Lingus, Aer
Arann and Ryanair itself benefited from State aid as a result of the two-tier
nature of this tax.
4. Lufthansa - Purchase of a stake in Austrian Airlines in 2008, whereby
Lufthansa were effectively paid €500m by the Austrian Government to take a
non-controlling stake in Austrian Airlines (a precursor to a complete takeover in
2009) for a nominal fee.
5. LOT - In April 2009, we complained about differentiated airport charges at
Polish airports between 2004 and 2005 which provided for a reduced rate for
domestic traffic, favouring LOT. The aid was estimated at approximately $14
million (around €11.5 million).
8. As a complainant, what were the resources and the time needed to provide the
Commission with the necessary information to reply to its requests for information to
clarify the content of your complaint(s)?
We have always endeavoured to provide all the information possible to the
Commission to aid in its investigations, and we do not find their requests unduly
burdensome.
9. Have you ever consulted the dedicated webpage on State aid complaints of DG
Competition (http://ec.europa.eu/competition/forms/intro_en.html)? Is the information
available helpful to understand the purpose of complaints handling for State aid control?
Ryanair has used the structure of the complaint form previously, and, in the case of
other complaints, has not. As the Commission knows, the General Court found that
use of the State aid complaint form provided by the Commission is no bar to the
submission of a valid complaint requiring Commission consideration (Case T-442/07
Ryanair v Commission). The page does not particularly enlighten potential
complainants as to “the purpose of complaints handling for State aid control”. The
Commission could provide an explanation on this page as to its deadlines for
handling of a complaint, and explain the purpose of the deadlines. It may be helpful
for complainants to know the Commission timelines for action prior to submission of
a complaint.
10. As a recipient of an alleged illegal/incompatible aid, what were the resources and the time
needed to provide the national authorities with the necessary information to reply to
requests for information from the Commission concerning a complaint?
The Commission will be aware of the plethora of complaints against Ryanair in
regard to our arrangements at European airports. In very few of these cases has
Ryanair been consulted by Member State authorities in requests for information by
the Commission. The inconsistency of approach of Member States in involving
Ryanair in investigations demonstrates the inherent unfairness in classifying the
alleged recipient of aid as an “interested party” in State aid investigations, with no
rights extending beyond the rights granted to other interested parties under the
Procedural Regulation. While some Member State replies to requests for
information may have the benefit of input from the alleged recipient, others may not,
therefore the treatment of different cases involving the same recipient by the
Commission will naturally be inconsistent.
Ryanair has been consulted directly by the Commission on some, but not all, of the
State aid investigations in which we are alleged aid recipients. We welcomed the
opportunity to contribute to the investigations, but we believe that a more structured
and formal approach is needed to ensure that the Commission has all relevant
information to hand before it opens a formal investigation under Article 108(2)
TFEU/Article 4(4) of the Procedural Regulation and/or takes a final decision under
Article 108(2) TFEU/Article 7 of the Procedural Regulation.
Please see our answers in Section 1.D., 2.A., 2.B. and 2.C. for further details.
11. Have you used other means of action before or at the same time or after lodging a
complaint? Which means of action did you use? What was the outcome? What was in the
end the most effective instrument?
As mentioned in our answer to question six above, Ryanair initiated five actions against
the Commission for failure to act on our State aid complaints in November 2007. These
five actions related to complaints made about State aid to Air France (Case T-404/07),
Alitalia (Case T-442/07), Lufthansa (Case T-423/07), Olympic (Case T-433/07) and
Volare (Case T-441/07).
Ryanair discontinued the cases regarding Air France, Olympic and Volare, but the
General Court ruled in the case of Lufthansa that the Commission did not fail to act
under Article 232 EC, and in the case involving aid to Alitalia that the Commission did
fail to act with regard to a number of our complaints.
If the Commission had dealt with our original complaints in a timely manner, we would
not have had to initiate failure to act proceedings. A more expedited and structured
approach to complaints of unlawful State aid would be far more business-friendly and
provide certainty to complainants.
SECTION 1.B. STATE AID COMPLAINTS HANDLING POLICY
Questions aimed at all respondents
12. In your experience, do you consider that a complaint to the European Commission is an
adequate way of protecting business and consumer interests?
13. If not, please describe the main shortcomings of the handling of State aid complaints and
explain which redress mechanisms would be more adequate in your view, and why.
The manner in which State aid complaints are handled by the Commission can be
counter-intuitive, in that the most egregious and blatant cases of unlawful aid are
dealt with in a slow manner, and some of the more spurious complaints appear to be
dealt with at much the same speed or even quicker. The Commission should have
some kind of fast-track mechanism whereby the most blatantly unlawful, valuable
and potentially anti-competitive cases could be prioritised immediately. Some
tinkering of the Commission’s right to prioritise cases could be carried out to ensure
that these cases are dealt with using some kind of “fast-track” mechanism.
Importantly, complaints are investigated and acted upon (in terms of formal
investigations being opened) without any input from the alleged recipient of aid. As
stated in the letter of 29 May 2012 by our counsel, Covington & Burling, on our
behalf, and addressed to Mr Alain Alexis, Ryanair (and for the purposes of these
comments, all alleged recipients) should be informed in advance of the Commission’s
intention to open a formal investigation and should be allowed to present its views to
the Commission in this regard.
One of the objectives of the Commission’s State aid Modernisation Initiative is to
ensure that the procedure for investigations allows the Commission “to obtain all the
necessary information from market participants…in good time so as to deliver
decisions within business-relevant timelines.”5 It is difficult to square this laudable
objective with the manner in which alleged recipients can be excluded from the
procedure, both before and after a formal investigation is opened. The early
participation of the alleged recipient can only enhance the Commission’s ability to
gather the necessary information and come to an informed decision within
“business-relevant timelines”.
14. In your opinion, does the current complaints-handling procedure in State aid help detect
those measures which produce the most distortive effect on competition and trade in the
internal market? Please substantiate your reply.
15. If not, based on your experience, how could the focus of State aid complaints handling be
better targeted at measures with a large impact on trade and competition in the internal
market?
The Commission needs to come up with some kind of mechanism to exclude cases
which will, if State aid is even found to exist at the end of the formal investigation,
have only a minimal effect on trade between Member States. Some balance has to be
found between the resources expended by the Commission, the Member State and
interested parties on cases with minimal impact (and the opportunity cost of
examining such cases) and the benefits of the Commission examining such cases. An
amended Procedural Regulation could be used to address this drain on Commission
resources, whereby a swift decision could be taken by the Commission to exclude
cases that are clearly of so little import that they do not warrant further
investigation.
SECTION 1.C. LODGING STATE AID COMPLAINTS
Questions aimed at Member States
16. Do you consider that the non-confidential version of a complaint transmitted by the
Commission to your authorities allowed you to properly assess the problem identified? If
not, what was the nature of the missing information? Which impact did that missing
information have on your ability to properly answer the Commission’s information
request? Please substantiate your reply with concrete examples.
17. Based on your experience, do you consider that use of the complaint form by
complainants makes it easier for your authorities to comment on complaints?
5 Commission Communication COM (2012) 209, ‘EU State Aid Modernisation’, 8 May 2012, paragraph 23(b)
18. Based on your experience, how could the Commission best ensure that its investigations
of complaints prioritize complainants truly affected by the alleged illegal State aid?
Questions aimed at other interested parties
19. Based on your experience, have you encountered difficulties to lodge a complaint with the
Commission? If yes, could you indicate the most serious and/or the most frequent
problems encountered (e.g. access to evidence, gathering the relevant information…) ?
Gathering evidence can be an issue, as clearly a complainant will sometimes have
access to only a limited amount of information about a measure, but we will always
endeavour to supply the Commission with as much information as is possible to
allow them to examine the complaint “without delay”, as required by Article 10(1) of
the Procedural Regulation. Given this natural lack of information from the
complainant, the logical thing to do for the Commission would be to request
information from the alleged beneficiary in a structured, formal manner, with
deadlines, and even penalties for non-provision of information. An amended
Procedural Regulation should provide for this structure, which would put alleged
beneficiaries in a position above that of “interested party”, and allow it proper rights
of defence. As well as complying with the principle of good administration (which
applies to the Commission under Article 41(2) of the Charter of Fundamental Rights
of the European Union), it would allow the Commission to examine a complaint with
full visibility of the facts and aid it in taking an informed decision within “business-
relevant timelines”.
20. Have you ever used the complaint form available on DG Competition's website
(http://ec.europa.eu/competition/forms/intro_en.html)?
Yes
21. If yes, does the scope and the content of the complaint form facilitate the lodging of
complaints? If not, please specify for each of the following criteria the problems that you
may have faced:
a. existence of the complaint form:
b. accessibility of the complaint form on the Commission website:
c. complexity of the complaint form:
d. length of the complaint form:
e. possibility to attach additional information to the complaint form:
f. confidentiality of the identity of the complainant:
g. confidentiality of the information submitted to the Commission:
h. acknowledgement that the form has been registered by the Commission:
i. response of the Commission services:
No comment on this.
SECTION 1.D. COMPLAINTS HANDLING PROCEDURES
Questions aimed at all respondents
22. In your experience, do you consider that the Commission has kept you sufficiently
informed of the different steps involved in the processing of a complaint? If not, could
you indicate the most serious and/or the most frequent problems encountered?
As mentioned in our answers to questions 6 and 11, Ryanair launched five actions
against the Commission for failure to act on our State aid complaints in November
2007. These actions were borne out of frustration in the Commission’s lack of action
on our complaints. Sufficient information and timely action may have prevented the
initiation of these actions.
23. Did you contact the Commission services to get guidance on how to respond to the
Commission's request for information? Were they able to provide the technical guidance
you needed to prepare the answer?
N/A
24. In your experience, did the Commission conclude the investigation of complaint in good
time? If not, why not?
See answers to Q 11 and Q 22.
25. Were you satisfied with the way in which the Commission informed you of the outcome
of the investigation of your complaint(s)? If not, why not? What could the Commission
services have done better? Please be as specific as possible in your reply.
See answers to Q 11 and Q 22.
26. Based on your experience, do you consider that the 2009 Notice on the enforcement of
EU State aid law by national Courts has raised the awareness of your national courts as
regards State aid issues? If not, could you explain how this cooperation could be
reinforced? In particular, do you consider that a more pro-active stance of the Commission
in national State aid litigation could have been of assistance to the courts concerned?
If there is a perceived lack of action at national court level regards State aid, it may
be because litigants are unaware of their rights rather than any lack of awareness of
national courts. The Commission should ensure that it respects the boundaries of its
own procedures, and how its actions may affect proceedings at national level. For
example, it should not let its opening of a formal investigation be the basis for a final
decision by a national court as to whether a measure be considered State aid or not
(and therefore whether the standstill obligation should be applied and recovery of
the “aid” sought). The Commission will be aware of the pending Court of Justice
preliminary reference from the Oberlandesgericht Koblenz (Case C- 284/12), where
the national court has asked the Court of Justice whether a Commission decision to
open a formal investigation into alleged unlawful aid binds the national court in its
assessment of whether State aid exists. This would be an unacceptable extension of
the Commission’s jurisdiction into national proceedings and would serve to actually
undermine national courts’ abilities to assess whether measures constitute State aid.
In a system of State aid control whereby competences are decentralised to national
courts, these courts should not be bound by what is a preliminary assessment by the
Commission of the nature of a measure. A decision to open a formal investigation is
merely a precursor to a more detailed examination of the measure, and should not be
used to bind national courts both as a matter of respect for national courts’
jurisdictions, and due to the adverse consequences for an alleged recipient of
unlawful aid.
SECTION 1.E. MISCELLANEOUS
27. Do you have any additional comments on State aid complaints handling, other than those
covered in the previous questions?
Ryanair is concerned about the length of time it takes the Commission to examine
complaints alleging the implementation of unlawful aid. At present the Commission is
under no deadline to examine the complaint and come to a decision (Articles 4(5), 7(6)
and 7(7) of the Procedural Regulation do not apply to cases of possible unlawful aid),
and such unlimited discretion leads to the Commission taking an unreasonable amount
of time to come to decisions in such cases.
Ryanair appreciates that the same deadlines may not be suitable for cases of potential
unlawful aid as for cases of notified aid, but structured deadlines of some kind should be
worked into an amended Procedural Regulation alongside the obligation to consult
alleged beneficiaries. The current situation of almost absolute discretion for the
Commission in its examination of such cases is not working and is untenable.
28. Please provide copies of any documents or studies which may be relevant for assessing
the Commission's State aid complaints handling policy and practice.
N/A
SECTION 2: INFORMATION-GATHERING IN STATE AID INVESTIGATIONS
Over recent years, there has been a significant evolution in the compatibility assessment of
State aid measures, especially as regards large individual cases. The Commission has refined
an effects-based approach which seeks to balance the positive and negative effects of State aid
measures under assessment.
In the current procedural setup, Member States are the primary information source for that
assessment. They have to answer the Commission's information requests, which in turn may
imply commissioning market studies, exchanging information with the beneficiary, gathering
information from the market as well as preparing responses to complainants' arguments. The
Commission is therefore largely dependent on information provided by the Member State,
which can lead to delays when the information is not readily available to the national
authorities and may place a heavy burden on those authorities.
The Commission tried to tackle some of those issues in the Best Practices Code6. It was in
particular formalised that the Commission services can send, in the context of the formal
investigation procedure, a copy of the decision to initiate the formal investigation procedure
to interested parties and invite them to comment on specific aspects of the case.
To achieve the objectives of State aid modernisation, the current State aid procedures need to
be improved in order to be able to effectively investigate cases with significant impact. In that
respect, the Communication adopted on 8 May 2012 proposes that the Commission should be
endowed with more efficient tools to obtain all the necessary information directly from
market participants and in good time, to deliver decisions within business-relevant timelines.
To prepare such a proposal, the present questionnaire aims at collecting the views of the
Member States and other stakeholders on the possibility for the Commission to collect
information in the context of State aid investigations, and feedback on your experience as
granting authorities, aid recipient, interested parties or others on the gathering of information
in the context of State aid investigations.
SECTION 2.A. GENERAL QUESTIONS - FACTUAL INFORMATION
Questions aimed at Member States
29. How many information requests do you receive on average per year from the
Commission?
30. Based on your experience, could you specify the major difficulties you encountered in
replying to these information requests? In particular, could you specify the type of
information (business plan; market shares; pricing policy…) you found difficult to obtain?
31. In how many cases were responses difficult to obtain because the information requested
concerned market information not publicly available?
32. Based on your experience, how technical and/or long were the information requests sent
by the Commission, especially in case of State aid schemes?
33. In your experience, did you find it preferable to request the necessary data from
companies directly, or did you prefer to commission a study? In the latter case, did your
authorities have sufficient expertise to carry out the study, or did you have recourse to
external expertise? How much did it cost you to do so, both in monetary termsand in terms
of time and resources spent?
Questions aimed at other interested parties
6 Point 34, Communication from the Commission, Best Practices Code for the conduct of State aid
procedures, cited above footnote 9.
34. Were you aware that the Commission offers the possibility for interested parties to
comment on the decision to open a formal investigation regarding alleged incompatible
aid?
Yes
35. Have you ever provided comments to the Commission following the publication of a
decision to open the formal investigation in the Official Journal of the EU? If yes, please
specify:
a. the form of your comments sent to the Commission (letter, e-mail)
b. the type of information submitted (financial documents, business plans,
commercial information, etc.)
c. the time needed to prepare your comments
Yes, we have submitted such comments. The comments are usually by way of letter, with
annexes if needed. Depending on the case, we would submit financial information,
contracts, documents prepared by advisers as well as publicly available information. It
generally takes a number of weeks to prepare comments, so the one month deadline for
provision of comments should not be reduced.
36. Have you ever had informal contacts with the Commission in the course of a State aid
investigation during the preliminary examination phase? After the opening of the formal
investigation? What was the impact of those contacts on the overall course of the
investigation?
We have had informal contacts during the preliminary examination phase and during
the formal investigation. The impact of such contacts is impossible to tell for us. If there
was some impact, only the Commission could say.
Our point is that such ad hoc contacts are unsatisfactory in terms of a coherent and
predictable State aid examination procedure. There must exist a structure whereby, at
preliminary investigation stage, alleged beneficiaries are consulted by the Commission
on the complaint against them and given an opportunity to make comments before the
opening of a formal investigation. Such a structure would allow the Commission to hear
all sides of the story before taking a decision to open a formal investigation.
As stated in the letter of 29 May 2012 by Covington & Burling on our behalf, once a
formal investigation decision is taken, Ryanair (and other alleged beneficiaries of aid)
should have the following rights (in addition to being able to provide comments
following the publication of the decision in the Official Journal) before the adoption of
any final decision:
a. The Commission will inform the alleged beneficiary of the facts and
considerations upon which it intends to base its decision;
b. The Commission should grant the alleged beneficiary access to file, and
particularly the evidence on which the Commission bases its findings;
c. The Commission should allow the alleged beneficiary the opportunity to
present its views in writing, and, if the alleged beneficiary so wishes,
orally, within a reasonable period of time (e.g. two months) of the
notification to the alleged beneficiary of the evidence on which the
Commission bases its findings.
SECTION 2.B. INFORMATION-GATHERING POLICY
Questions aimed at all respondents
37. Based on your experience, to what extent do you consider that the information-gathering
tools at the Commission's disposal are sufficient to detect potential incompatible aid with
a large impact on competition and trade in the Internal market? If not, could you explain
why those tools are insufficient in your view?
The procedure whereby alleged beneficiaries are not informed of the complaint until
the announcement of the formal investigation, unless the Commission makes
informal discretionary contact with them before this time, inevitably results in
decisions to open formal investigations being made without being in possession of the
full facts. The Commission has the ability to seek information from the beneficiary at
the preliminary stage, but this process needs to be formalised and standardised, with
deadlines, and even penalties for non-provision of information. As well as being fair
to the alleged recipient, it would also allow the Commission to take decisions after
getting all necessary information from market participants within set deadlines,
which will allow decisions to be taken within business-relevant timelines. It would
also allow the Commission to make an informed assessment of whether the case is
one with a large impact on competition and trade in the internal market.
As stated in our answer to Question 36, more involvement of the alleged beneficiary
should take place once the formal investigation procedure has opened and before a
final decision has been taken. Full access to file is crucial, given the information
asymmetry between the Commission and alleged recipients of aid. A right to be
heard lacks effectiveness without full access to file, so that the alleged beneficiary
knows exactly what allegations have been made and can respond in kind. Given the
extremely serious effects of a finding of illegal aid by the Commission, alleged
recipients must be given the right to see the allegations against them and the
evidence gathered by the Commission. Hiding behind the classification of the alleged
beneficiary as a mere “interested party” will not stand up to scrutiny under the
Charter of Fundamental Rights. The rights of defence of alleged beneficiaries
demand that enhanced rights be given to alleged beneficiaries in an amended
Procedural Regulation. This would ensure a full gathering of necessary information
by the Commission, while respecting the rights of defence of alleged beneficiaries.
38. Do you consider that the Commission has enough information on the functioning of the
various markets concerned by its investigation and the State aid granting system of the
Member States to effectively tackle illegal and incompatible State aid in a particular
economic sector across all Member States and thereby ensure equal treatment?
It is inevitable that there are information asymmetries between the Commission’s
understanding of the functioning of markets across Member States when there is no
formal, consistent and predictable manner by which the Commission collects
information on alleged aid granted. Such a structure, laid down in an amended
Procedural Regulation or at least in Guidelines, would ensure that complaints of
breaches of the standstill obligation are dealt with in a consistent manner across all
Member States in as much as possible. This information gathering exercise should
include a formal structure for alleged recipients to provide input to the Commission
before any decision to open a formal investigation, as well as the formal procedural
safeguards during the formal investigation (and prior to any final decision) set out in
our answer to question 36 above. Additional obligations to consult alleged
beneficiaries, set down in an amended Procedural Regulation and applicable to all
economic sectors in all Member States, would ensure that the Commission has full
information on the functioning of markets across all Member States.
39. In light of your experience, do you consider that the Commission should have other tools
to obtain the necessary information from market participants and in good time to deliver
decisions within more business-relevant timelines? Which tools would have been more
appropriate?
As set out in our answers to questions 13, 19, 36, 37 and 38, we believe that the
Commission should be given additional powers (and obligations) to consult alleged
beneficiaries of aid. A structure laid down in EU law that gives alleged beneficiaries
a status above that of mere “interested party”, with the rights set out in our letter of
29 May 2012 to Mr Alain Alexis, would have the double-benefit of ensuring that the
Commission gathers all necessary information from market participants in good
time and securing compliance with the Commission’s obligations under the Charter
of Fundamental Rights.
SECTION 2.C. DESIGN OF INFORMATION-GATHERING PROCEDURES
Questions aimed at Member States
40. Do you consider that the invitation to provide comments on the decision to open the
formal investigation published in the Official Journal of the EU is sufficient to collect
relevant information from third parties? If not, why not?
41. Based on your experience, do you consider that the information that the Commission
receives from third parties after the opening of formal investigations is relevant for the
investigation? Is it complete? Is it reliable?
Questions aimed at other interested parties
42. Do you consider that the invitation to provide comments on the decision to open the
formal investigation published in the Official Journal of the EU is sufficient to collect
relevant information from third parties? If not, why not?
As will be obvious from our answers above (in particular our answers to questions
13, 19 and 36 – 39), we do not believe that the current method of merely inviting
comments through publication in the Official Journal is sufficient to collect all
relevant information from third parties.
The main issue preventing the collection of all relevant information is the
classification of alleged beneficiaries as mere interested parties, which means that
alleged beneficiaries are in the same procedural position as any other individual who
wishes to submit comments to the Commission. This is clearly wrong for a number of
reasons. Firstly, the alleged beneficiary is likely to be in a unique position to provide
information to the Commission on the measure allegedly constituting State aid, and
elevating the alleged beneficiary to a status above that of interested party would
ensure an early gathering of information which would obviously be helpful for the
Commission’s decision-making (as well as ensuring that the fundamental rights of
the alleged beneficiary are respected). Secondly, the alleged beneficiary is clearly not
in the same position as any other third party in terms of the implications of any
findings of State aid. Decisions that illegal State aid has been granted requires a
Member State to recover the aid from the alleged beneficiary, which could have
catastrophic consequences for the alleged beneficiary. The present procedure
whereby alleged beneficiaries only have the right to provide comments following
publication in the Official Journal is clearly unsatisfactory as it does not even ensure
that alleged beneficiaries can address all the allegations made by a complainant. The
alleged beneficiary has one hand tied behind its back when making observations
following the publication of the decision in the Official Journal, as it does not possess
full information that allows it to address all the points made in a complaint. This
situation is untenable when one considers the consequences of a negative State aid
decision on an alleged beneficiary.
Under the Procedural Regulation, the ramifications for an alleged beneficiary can be
extremely severe, where the alleged beneficiary has no right to rebut allegations
made that a measure constitutes State aid and does not know what information is in
the Commission’s file. For example, Article 11 provides that the Commission can
order a suspension and recovery of any (potentially) unlawful aid. Any such
injunction may come out of the blue for an alleged beneficiary, which may have
made non-recoverable investments or entered into irrevocable commitments on the
basis of the alleged aid. The alleged aid may turn out not to be State aid at all, or
may be compatible aid, but the damage to the alleged beneficiary of such an
injunction may be irrevocable. The Procedural Regulation allows the Commission to
order such an injunction with no obligation to seek input from the alleged
beneficiary, which is a serious breach of the alleged beneficiary’s fundamental
rights.
We do not see any issue with real “interested parties” commenting following the
publication of a decision to open a formal investigation in the Official Journal, but
alleged beneficiaries must not be given the same status as these third parties when
they are clearly not in the same legal or factual situation.
43. Based on your experience, do you consider that you would have been in a better position
than the authorities of your Member State to provide the Commission with the information
needed for its investigation in State aid cases?
Both the Member State and the alleged beneficiary (which Ryanair frequently is
alleged to be) are generally in a good position to provide quality information to the
Commission in a State aid investigation. It is impossible to say one is in a better
position than another. Hence both should be treated equally in terms of information
gathering and access to file.
44. Based on your experience as an aid recipient, do you consider that direct contacts with the
Commission would have facilitated and accelerated the investigation?
As an alleged aid recipient, direct contacts have been useful for us (and we hope for
the Commission) in understanding the issues involved in the investigations. The key
point is that such direct contacts should be set down in an amended Procedural
Regulation (or at least in Guidelines) instead of being ad hoc, unpredictable and
completely at the Commission’s discretion. We believe that a formal structure in this
respect would help the Commission in gathering all relevant information at an early
stage, taking fully informed decisions within business-relevant timelines and
ensuring the rights of alleged beneficiaries are respected.
Given the extreme delays in dealing with some State aid investigations where no such
direct contact is made, we do not believe that any direct contact structure would
result in undue delays in the investigation.
45. Would you voluntarily be willing to reply to information requests from the Commission
on State aid granted to your competitors?
Yes
SECTION 2.D. MISCELLANEOUS
46. Do you have any additional comments on the gathering of information in the context of
State aid investigations, other than those covered in the previous questions?
The situation whereby the Commission, in cases of possible unlawful aid, is not
bound by any of the time-limits provided for in the Procedural Regulation for both
preliminary examination of a notification of a measure and the closing of a formal
investigation is untenable and in our experience leads to a lack of discipline on behalf
of the Commission in terms of information gathering. In this respect, and as stated
earlier in this submission, there should be formal timelines for examination of cases
of possible unlawful aid, with an obligation to consult alleged beneficiaries and grant
them access to file. Such a structure would allow for comprehensive information
gathering by the Commission within definitive timelines, with penalties for non-
provision of information. The current approach is inconsistent as between cases of
possible unlawful aid, which means that the Commission inevitably possesses more
information about some cases than others, as a result of its own incoherent approach
across the cases.
It is important to note that these cases are ones where unlawful aid is only possible,
i.e. it is generally contentious whether State aid exists in these cases (and therefore
whether the standstill obligation in Article 108(3) TFEU. The current lack of any
obligation on the Commission in terms of deadlines for examination of such cases
effectively presumes non-compliance with Article 108(3) and leads to open-ended
investigations, often lasting half a decade or more, where the Member State and the
alleged beneficiary acted in good faith in not notifying a measure where they firmly
believe that it does not constitute State aid.
47. Please provide copies of any documents or studies which may be relevant for assessing
the gathering of information in State aid cases.
The Commission already possesses Covington & Burling’s letters of 29 May 2012
and 20 July 2012 on behalf of Ryanair, which are directly relevant to the planned
revision of the Procedural Regulation.
48. Please indicate whether the Commission services may contact you for further details on
the information submitted, if required.
YES
THANK YOU FOR RESPONDING TO THIS QUESTIONNAIRE.