31.5.2011   

EN

Official Journal of the European Union

L 145/1

(1)

The United Nations Framework Convention on Climate Change, which was approved on behalf of the European Community by Council Decision 94/69/EC (3), seeks to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. In order to meet this objective, the overall global annual mean surface temperature increase should not exceed 2 degrees Celsius above pre-industrial levels. The Intergovernmental Panel on Climate Change's (IPCC) fourth Assessment Report shows that in order to reach that objective, global emissions of greenhouse gases must peak by 2020. At its meeting of 8-9 March 2007, the European Council made a firm commitment to reduce the overall greenhouse gas emissions of the Community by at least 20 % compared to 1990 levels by 2020 and by 30 % provided that other developed countries commit themselves to comparable emission reductions and economically more advanced developing countries contribute according to their respective capabilities.

(2)

In 2009, the Commission completed a review of the Union's Sustainable Development Strategy focussing on the most pressing problems for sustainable development such as transport, climate change, public health and energy conservation.

(3)

Policies and measures should be implemented at Member State and Union level across all sectors of the Union economy, and not only within the industrial and energy sectors, in order to achieve the necessary emissions reductions. Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community's greenhouse gas emission reduction commitments up to 2020 (4) provides for an average reduction of 10 % compared to 2005 levels in the sectors not covered by the EU Emissions Trading Scheme, established by Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community (5), including road transport. Road transport is the second largest greenhouse gas emitting sector in the Union and its emissions, including those from light commercial vehicles, continue to rise. If road transport emissions continue to increase, it will significantly undermine efforts made by other sectors to combat climate change.

(4)

Union targets for new road vehicles provide manufacturers with more planning certainty and more flexibility to meet the CO2 reduction requirements than would be provided by separate national reduction targets. In setting emission performance standards, it is important to take into account the implications for markets and for the competitiveness of manufacturers, the direct and indirect costs imposed on business and the benefits that accrue in terms of stimulating innovation and reducing energy consumption and fuel costs.

(5)

To enhance the competitiveness of the European automotive industry, incentive schemes such as the offsetting of eco-innovations and the award of super-credits should be used.

(6)

In its Communications of 7 February 2007 entitled ‘Results of the review of the Community Strategy to reduce CO2 emissions from passenger cars and light-commercial vehicles’ and ‘A Competitive Automotive Regulatory Framework for the 21st Century (CARS 21)’, the Commission underlined that the Community objective of average emissions for the new passenger car fleet of 120 g CO2/km would not be met by 2012 in the absence of additional measures.

(7)

In those Communications an integrated approach was proposed with a view to reaching the Community target of average emissions of 120 g CO2/km from new passenger cars and light commercial vehicles registered in the Community by 2012 by focusing on mandatory reductions of emissions of CO2 to reach an objective of 130 g CO2/km for the average new car fleet by means of improvements in vehicle motor technology and a further reduction of 10 g CO2/km, or equivalent if technically necessary, by means of other technological improvements, including fuel efficiency progress in light commercial vehicles.

(8)

The provisions implementing the objective concerning emissions from light commercial vehicles should be consistent with the legislative framework for implementing the objectives concerning emissions from the new passenger car fleet set out in Regulation (EC) No 443/2009 of the European Parliament and of the Council of 23 April 2009 setting emission performance standards for new passenger cars as part of the Community's integrated approach to reduce CO2 emissions from light-duty vehicles (6).

(9)

The legislative framework for achieving the fleet average emissions target for new light commercial vehicles should ensure that reduction targets are competitively neutral, socially equitable and sustainable and take account of the diversity of European automobile manufacturers and avoid any unjustified distortion of competition between them. The legislative framework should be compatible with the overall objective of reaching the Union's emission reduction targets and should be complemented by other more use-related instruments such as differentiated car and energy taxes or measures to limit the speed of light commercial vehicles.

(10)

In order to maintain the diversity of the light commercial vehicle market and its ability to address different consumer needs, CO2 emission targets for light commercial vehicles should be defined according to the utility of the vehicle on a linear basis. Mass is an appropriate parameter to describe this utility as it provides a correlation with present emissions and therefore results in more realistic and competitively neutral targets. Moreover, data on mass is readily available. Data on alternative utility parameters such as footprint (average track width times wheelbase) and payload should be collected in order to facilitate longer-term evaluations of the utility-based approach.

(11)

This Regulation actively promotes eco-innovation and takes into account future technological developments which can enhance the long-term competitiveness of the European automotive industry and create more high-quality jobs. As a means to assess systematically the emissions improvements of eco-innovations the Commission should consider the possibility of including eco-innovation measures in the review of test procedures pursuant to Article 14(3) of 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 (7), taking into consideration the technical and economic impacts of such inclusion.

(12)

Directive 1999/94/EC of the European Parliament and of the Council of 13 December 1999 relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars (8) already requires that promotional literature for cars provides end-users with the official CO2 emission data and the official fuel consumption of the vehicle. The Commission, in its Recommendation 2003/217/EC of 26 March 2003 on the application to other media of the provisions of Directive 1999/94/EC concerning promotional literature (9), has interpreted this as including advertising. The scope of Directive 1999/94/EC should therefore be extended to light commercial vehicles, so that advertisements for any light commercial vehicles should be required to provide end-users with the official CO2 emission data and official fuel consumption of the vehicle where energy- or price-related information is disclosed, at the latest by 2014.

(13)

In recognition of the very high research and development and unit production costs of early generations of very low carbon vehicle technologies to be introduced into the marketplace following its entry into force, this Regulation seeks to accelerate and facilitate, on an interim basis, the process of introducing into the Union market ultra low carbon vehicles at their initial stages of commercialisation.

(14)

The use of certain alternative fuels can offer significant CO2 reductions in well-to-wheel terms. This Regulation therefore incorporates specific provisions aimed at promoting further deployment of certain alternative-fuel vehicles in the Union market.

(15)

By 1 January 2012 at the latest and with a view to improving data gathering on and measurement of fuel consumption, the Commission should consider whether to amend the relevant legislation in order to include an obligation for manufacturers seeking type approval for vehicles of category N1 as defined in Annex II to 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 (10) to equip every vehicle with a fuel consumption meter.

(16)

To ensure consistency with Regulation (EC) No 443/2009 and to avoid abuses, the target should be applied to new light commercial vehicles registered in the Union for the first time and that have not previously been registered outside the Union except for a limited period.

(17)

Directive 2007/46/EC establishes a harmonised framework containing the administrative provisions and general technical requirements for approval of all new vehicles within its scope. The entity responsible for complying with this Regulation should be the same as the entity responsible for all aspects of the type-approval process in accordance with Directive 2007/46/EC and for ensuring conformity of production.

(18)

Manufacturers should have flexibility to decide how to meet their targets under this Regulation and should be allowed to average emissions over their new vehicle fleet rather than having to respect CO2 targets for each individual vehicle. Manufacturers should therefore be required to ensure that the average specific emission for all the new light commercial vehicles registered in the Union for which they are responsible does not exceed the average of the emissions targets for those vehicles. This requirement should be phased in between 2014 and 2017 in order to facilitate its introduction. This is consistent with the lead times given and the duration of the phase-in period set in Regulation (EC) No 443/2009.

(19)

In order to ensure that targets reflect the particularities of small and niche manufacturers and are consistent with the manufacturer's reduction potential, alternative emission reduction targets should be set for such manufacturers, taking into account the technological potential of a given manufacturer's vehicles to reduce their specific emissions of CO2 and consistently with the characteristics of the market segments concerned. This derogation should be covered by the review of the specific emission targets in Annex I, to be completed by the beginning of 2013 at the latest.

(20)

The Union strategy to reduce CO2 emissions from passenger cars and light commercial vehicles established an integrated approach with a view to reaching the Union target of 120 g CO2/km by 2012, while also presenting a longer-term vision of further emission reductions. Regulation (EC) No 443/2009 substantiates this longer-term view by setting a target of 95 g CO2/km as average emissions for the new car fleet. In order to ensure consistency with that approach and to provide planning certainty for the industry, a long-term target for the specific emissions of CO2 of light commercial vehicles in 2020 should be set.

(21)

In order to provide flexibility for manufacturers in meeting their emission targets under this Regulation, manufacturers may agree to form a pool on an open, transparent and non-discriminatory basis. Where a pool is formed, individual manufacturer's targets should be replaced by a joint target for the pool which should be attained collectively by the members of the pool.

(22)

The specific emissions of CO2 of completed vehicles should be allocated to the manufacturer of the base vehicle.

(23)

In order to ensure that the values of CO2 emissions and fuel efficiency of completed vehicles are representative, the Commission should come forward with a specific procedure and consider, where appropriate, reviewing the type-approval legislation.

(24)

A robust compliance mechanism is necessary in order to ensure that the targets under this Regulation are met.

(25)

The specific emissions of CO2 from new light commercial vehicles are measured on a harmonised basis in the Union according to the methodology laid down in Regulation (EC) No 715/2007. To minimise the administrative burden of the scheme, the compliance should be measured by reference to data on registrations of new vehicles in the Union collected by Member States and reported to the Commission. To ensure the consistency of the data used to assess compliance, the rules for the collection and reporting of this data should be harmonised as far as possible.

(26)

Directive 2007/46/EC requires that manufacturers issue a certificate of conformity for each new light commercial vehicle and that Member States permit the registration and entry into service of a new light commercial vehicle only if it is accompanied by a valid certificate of conformity. Data collected by Member States should be consistent with the certificate of conformity issued by the manufacturer of the light commercial vehicle and should be based on this document only. There should be a Union standard database for certificate of conformity data. It should be used as a single reference to enable Member Sates to maintain more easily their registration data when vehicles are newly registered.

(27)

Manufacturers’ compliance with the targets under this Regulation should be assessed at Union level. Manufacturers whose average specific emissions of CO2 exceed those permitted under this Regulation should pay an excess emissions premium with respect to each calendar year from 1 January 2014. The premium should be modulated as a function of the extent to which manufacturers fail to comply with their target. In order to ensure consistency, the premium mechanism should be similar to the one set in Regulation (EC) No 443/2009. The amounts of the excess emissions premium should be considered as revenue for the general budget of the European Union.

(28)

Any national measure that Member States may maintain or introduce in accordance with Article 193 of the Treaty on the Functioning of the European Union (TFEU) should not, in consideration of the purpose of and procedures established in this Regulation, impose additional or more stringent penalties on manufacturers who fail to meet their targets under this Regulation.

(29)

This Regulation should be without prejudice to the full application of Union competition rules.

(30)

New modalities should be considered for reaching the long-term target, in particular the slope of the curve, the utility parameter and the excess emissions premium scheme.

(31)

The speed of road vehicles has a strong influence on their fuel consumption and CO2 emissions. In addition, in the absence of speed limitation for light commercial vehicles, it is possible that there is an element of competition as regards top speed which could lead to oversized powertrains and associated inefficiencies in slower operating conditions. It is therefore appropriate to investigate the feasibility of extending the scope of Council Directive 92/6/EEC of 10 February 1992 on the installation and use of speed limitation devices for certain categories of motor vehicles in the Community (11), with the aim of including light commercial vehicles covered in this Regulation.

(32)

In order to ensure uniform conditions for the implementation of this Regulation, in particular for the adoption of detailed rules for the monitoring and reporting of average emissions, namely the collection, registration, presentation, transmission, calculation and communication of data on average emissions, and the application of the requirements set out in Annex II, as well as for the adoption of detailed arrangements for the collection of excess emissions premiums and of detailed provisions for the procedure to approve innovative technologies, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission's exercise of implementing powers (12).

(33)

The Commission should be empowered to adopt delegated acts in accordance with Article 290 TFEU to amend the monitoring and reporting requirements laid down in Annex II in the light of the experience of the application of this Regulation, to adjust the figure of M0 referred to in Annex I to the average mass of new light commercial vehicles in the previous three calendar years, to establish rules regarding the interpretation of the eligibility criteria for derogations, on the content of applications for a derogation and on the content and assessment of programmes for the reduction of specific emissions of CO2, as well as to adapt the formulae set out in Annex I in order to reflect any change in the regulatory test procedure for the measurement of specific CO2 emissions. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level.

(34)

Since the objective of this Regulation, namely the establishment of CO2 emissions performance requirements for new light commercial vehicles, cannot be achieved by the Member States, and can therefore, by reason of its scale and effects, 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. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective,

(a)

‘average specific emissions of CO2’ means, in relation to a manufacturer, the average of the specific emissions of CO2 of all light commercial vehicles of which it is the manufacturer;

(b)

‘certificate of conformity’ means the certificate referred to in Article 18 of Directive 2007/46/EC;

(c)

‘completed vehicle’ means a vehicle where type-approval is granted following completion of a process of multi-stage type-approval in accordance with Directive 2007/46/EC;

(d)

‘complete vehicle’ means any vehicle which does not need to be completed in order to meet the relevant technical requirements of Directive 2007/46/EC;

(e)

‘base vehicle’ means any vehicle which is used at the initial stage of a multi-stage type-approval process;

(f)

‘manufacturer’ means the person or body responsible to the approval authority for all aspects of the EC type-approval procedure in accordance with Directive 2007/46/EC and for ensuring conformity of production;

(g)

‘mass’ means the mass of the vehicle with bodywork in running order as stated in the certificate of conformity and defined in Section 2.6 of Annex I to Directive 2007/46/EC;

(h)

‘specific emissions of CO2’ means the emissions of a light commercial vehicle measured in accordance with Regulation (EC) No 715/2007 and specified as the CO2 mass emission (combined) in the certificate of conformity of the complete or completed vehicle;

(i)

‘specific emissions target’ means, in relation to a manufacturer, the average of the indicative specific emissions of CO2 determined in accordance with Annex I in respect of each new light commercial vehicle for which it is the manufacturer, or, if the manufacturer is granted a derogation in accordance with Article 11, the specific emissions target determined according to that derogation;

(j)

‘footprint’ means the average track width multiplied by the wheelbase as stated in the certificate of conformity and defined in Sections 2.1 and 2.3 of Annex I to Directive 2007/46/EC;

(k)

‘payload’ means the difference between the technically permissible maximum laden mass pursuant to Annex II to Directive 2007/46/EC and the mass of the vehicle.

(a)

undertakings in which the manufacturer has, directly or indirectly:

(b)

undertakings which directly or indirectly have, over the manufacturer, the rights or powers listed in point (a);

(c)

undertakings in which an undertaking referred to in point (b) has, directly or indirectly, the rights or powers listed in point (a);

(d)

undertakings in which the manufacturer together with one or more of the undertakings referred to in points (a), (b) or (c), or in which two or more of the latter undertakings, jointly have the rights or powers listed in point (a);

(e)

undertakings in which the rights or the powers listed in point (a) are jointly held by the manufacturer or one or more of its connected undertakings referred to in points (a) to (d) and one or more third parties.

—

70 % in 2014,

—

75 % in 2015,

—

80 % in 2016,

—

100 % from 2017 onwards.

—

3,5 light commercial vehicles in 2014,

—

3,5 light commercial vehicles in 2015,

—

2,5 light commercial vehicles in 2016,

—

1,5 light commercial vehicles in 2017,

—

1 light commercial vehicle from 2018.

(a)

the manufacturers who will be included in the pool;

(b)

the manufacturer nominated as the pool manager who will be the contact point for the pool and will be responsible for paying any excess emissions premium imposed on the pool in accordance with Article 9;

(c)

evidence that the pool manager will be able to fulfil the obligations under point (b).

(a)

the average specific emissions of CO2;

(b)

the specific emissions target;

(c)

the total number of vehicles registered.

(a)

the average specific emissions of CO2 in the preceding calendar year;

(b)

the specific emissions target in the preceding calendar year;

(c)

the difference between its average specific emissions of CO2 in the preceding calendar year and its specific emissions target for that year.

(a)

from 2014 until 2018:

(b)

from 2019:

(Excess emissions × EUR 95) × number of new light commercial vehicles.

—

‘excess emissions’ means the positive number of grams per kilometre by which a manufacturer's average specific emissions of CO2, taking into account CO2 emissions reductions due to innovative technologies approved in accordance with Article 12, exceeded its specific emissions target in the calendar year or part thereof to which the obligation under Article 4 applies, rounded to the nearest three decimal places, and

—

‘number of new light commercial vehicles’ means the number of new light commercial vehicles of which it is the manufacturer and which were registered in that period according to the phase-in criteria as set out in Article 4.

(a)

its specific emission target for the preceding calendar year;

(b)

its average specific emissions of CO2 in the preceding calendar year;

(c)

the difference between its average specific emissions of CO2 in the preceding calendar year and its specific emissions target in that year;

(d)

the average specific emissions of CO2 for all new light commercial vehicles registered in the Union in the previous calendar year;

(e)

the average mass for all new light commercial vehicles registered in the Union in the preceding calendar year.

(a)

is not part of a group of connected manufacturers; or

(b)

is part of a group of connected manufacturers that is responsible in total for fewer than 22 000 new light commercial vehicles registered in the Union per calendar year; or

(c)

is part of a group of connected manufacturers but operates its own production facilities and design centre.

(a)

the name of, and contact person for, the manufacturer;

(b)

evidence that the manufacturer is eligible for a derogation under paragraph 1;

(c)

details of the light commercial vehicles which it manufactures including the mass and specific emissions of CO2 of those light commercial vehicles; and

(d)

a specific emissions target consistent with its reduction potential, including the economic and technological potential to reduce its specific emissions of CO2 and taking into account the characteristics of the market for the type of light commercial vehicle manufactured.

(a)

the supplier or manufacturer must be accountable for the CO2 savings achieved through the use of the innovative technologies;

(b)

the innovative technologies must make a verified contribution to CO2 reduction;

(c)

the innovative technologies must not be covered by the standard test cycle CO2 measurement or by mandatory provisions due to complementary additional measures complying with the 10 g CO2/km reduction referred to in Article 1 of Regulation (EC) No 443/2009 or be mandatory under other provisions of Union law.

—

subject to confirmation of its feasibility on the basis of updated impact assessment results, the modalities for reaching, by the year 2020, a long-term target of 147 g CO2/km in a cost-effective manner, and

—

the aspects of the implementation of that target, including the excess emissions premium.

31.5.2011   

EN

Official Journal of the European Union

L 145/19

(1)

On 23 April 2007 the Council authorised the Commission to open negotiations for a free trade agreement with the Republic of Korea (‘Korea’) on behalf of the Union and its Member States.

(2)

Those negotiations have been concluded and the Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part, (‘the Agreement’) was signed on 6 October 2010 (2), received the consent of the European Parliament on 17 February 2011 (3) and is to apply as provided for in Article 15.10 of the Agreement.

(3)

It is necessary to lay down the procedures for applying certain provisions of the Agreement which concern safeguards.

(4)

The terms ‘serious injury’, ‘threat of serious injury’ and ‘transition period’ as referred to in Article 3.5 of the Agreement should be defined.

(5)

Safeguard measures may be considered only if the product in question is imported into the Union in such increased quantities and under such conditions as to cause, or threaten to cause, serious injury to Union producers of like or directly competitive products as laid down in Article 3.1 of the Agreement.

(6)

Safeguard measures should take one of the forms referred to in Article 3.1 of the Agreement.

(7)

The tasks of following up and reviewing the Agreement and, if necessary, imposing safeguard measures should be carried out in the most transparent manner possible.

(8)

The Commission should submit a report once a year on the implementation of the Agreement and the application of the safeguard measures.

(9)

There should be detailed provisions on the initiation of proceedings. The Commission should receive information including available evidence from the Member States of any trends in imports which might call for the application of safeguard measures.

(10)

The reliability of statistics on all imports from Korea to the Union is therefore crucial to determining whether the conditions to apply safeguard measures are met.

(11)

In some cases, an increase of imports concentrated in one or several Member States may cause or threaten to cause by itself serious injury to the Union industry. In the event that there is an increase of imports concentrated in one or several Member States, the Commission may introduce prior surveillance measures. The Commission will give full consideration to how the product subject to investigation, and consequently the Union industry producing the like product, can be defined in a manner which provides for an effective remedy, while fully respecting the criteria under this Regulation and the Agreement.

(12)

If there is sufficient prima facie evidence to justify the initiation of a proceeding the Commission should publish a notice as provided for in Article 3.2.2 of the Agreement in the Official Journal of the European Union.

(13)

There should be detailed provisions on the initiation of investigations, access and inspections by interested parties to the information gathered, hearings for the parties involved and the opportunities for those parties to submit their views as provided for in Article 3.2.2 of the Agreement.

(14)

The Commission should notify Korea in writing of the initiation of an investigation and consult with Korea as provided for in Article 3.2.1 of the Agreement.

(15)

It is also necessary, pursuant to Articles 3.2 and 3.3 of the Agreement, to set time limits for the initiation of investigations and for determinations as to whether or not measures are appropriate, with a view to ensuring that such determinations are made quickly, in order to increase legal certainty for the economic operators concerned.

(16)

An investigation should precede the application of any safeguard measure, subject to the Commission being allowed to apply provisional measures in critical circumstances as referred to in Article 3.3 of the Agreement.

(17)

Safeguard measures should be applied only to the extent, and for such time, as may be necessary to prevent serious injury and to facilitate adjustment. The maximum duration of safeguard measures should be determined and specific provisions regarding extension and review of such measures should be laid down, as referred to in Article 3.2.5 of the Agreement.

(18)

Close monitoring will facilitate any timely decision concerning the possible initiation of an investigation or the imposition of measures. Therefore the Commission should regularly monitor imports and exports in sensitive sectors from the date of application of the Agreement.

(19)

It is necessary to lay down certain procedures relating to the application of Article 14 (Drawback of, or Exemption from, Customs Duties) of the Protocol concerning the Definition of ‘Originating Products’ and Methods of Administrative Cooperation (‘the Rules of Origin Protocol’) of the Agreement in order to ensure the effective operation of the mechanisms provided for therein and to provide for a comprehensive exchange of information with relevant stakeholders.

(20)

Because it will not be possible to limit customs duty drawback until 5 years after the Agreement enters into force, it may be necessary, on the basis of this Regulation, to impose safeguard measures in response to a serious injury or threat of serious injury to Union producers that is caused by imports benefiting from duty drawback or exemption from customs duty. In such a proceeding the Commission should evaluate all relevant factors having a bearing on the situation of the Union industry, including the conditions set out in Article 14.2.1 of the Rules of Origin Protocol. Therefore the Commission should monitor Korean statistics for sensitive sectors potentially affected by duty drawback from the date of application of the Agreement.

(21)

From the date of application of the Agreement, the Commission should also monitor particularly closely, especially in sensitive sectors, the statistics showing the evolution of imports into and exports from Korea.

(22)

Definitive safeguard measures adopted pursuant to this Regulation may be referred to by Member States in applications for financial contributions under Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 20 December 2006 on establishing the European Globalisation Adjustment Fund (4).

(23)

The implementation of the bilateral safeguard clause of the Agreement requires uniform conditions for the adoption of provisional and definitive safeguard measures, for the imposition of prior surveillance measures, and for the termination of an investigation without measures. Those measures should be adopted by the Commission in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (5).

(24)

It is appropriate that the advisory procedure be used for the adoption of surveillance and provisional measures given the effects of these measures and their sequential logic in relation to the adoption of definitive safeguard measures. Where a delay in the imposition of measures would cause damage which would be difficult to repair it is necessary to allow the Commission to adopt immediately applicable provisional measures.

(25)

This Regulation should apply only to products originating in the Union or Korea,

(a)

‘products’ means goods originating in the Union or Korea. A product subject to an investigation may cover one or several tariff lines or a subsegment thereof depending on the specific market circumstances, or any product segmentation commonly applied in the Union industry;

(b)

‘interested parties’ means parties affected by the imports of the product in question;

(c)

‘Union industry’ means the Union producers as a whole of the like or directly competitive products, operating within the territory of the Union, or those Union producers whose collective output of the like or directly competitive products constitutes a major proportion of the total Union production of those products. In cases where the like or directly competitive product is only one of several products that are made by the producers constituting the Union industry, the industry shall be defined as the specific operations that are involved in the production of the like or directly competitive product;

(d)

‘serious injury’ means a significant overall impairment in the position of Union producers;

(e)

‘threat of serious injury’ means serious injury that is clearly imminent. A determination of the existence of a threat of serious injury shall be based on verifiable facts and not merely on allegation, conjecture or remote possibility. Forecasts, estimations and analyses made on the basis of factors referred to in Article 5(5), should, inter alia, be taken into account in order to determine the existence of a threat of serious injury;

(f)

‘transition period’ means, for a product, the period from the date of application of the Agreement, as provided for in Article 15.10 thereof, until 10 years from the date of completion of tariff elimination or reduction, as the case may be for each product.

(a)

suspension of further reduction of the rate of customs duty on the product concerned provided for under the Agreement; or

(b)

increase in the rate of customs duty on the product to a level which does not exceed the lesser of:

(a)

give a summary of the information received, and require that all relevant information be communicated to the Commission;

(b)

state the period within which interested parties may make known their views in writing and submit information, if such views and information are to be taken into account during the investigation;

(c)

state the period within which interested parties may apply to be heard orally by the Commission in accordance with Article 5(9).

31.5.2011   

EN

Official Journal of the European Union

L 145/28

(1)

Since 1971, the Union has granted trade preferences to developing countries in the framework of its Generalised Scheme of Preferences (‘GSP’). The GSP has been implemented through successive Regulations applying a scheme of generalised tariff preferences (‘the scheme’) with periods of application usually of three years at a time.

(2)

The current scheme was established by Council Regulation (EC) No 732/2008 (2) and applies until 31 December 2011. This Regulation should ensure that the operation of the scheme continues to apply after that date.

(3)

Future improvements to the scheme should be based on a Commission proposal for a new regulation (‘the next Regulation’) which should take into account relevant considerations relating to the effectiveness of Regulation (EC) No 732/2008 in achieving the objectives of the scheme. The next Regulation should include the necessary amendments to ensure the ongoing effectiveness of the scheme. It is also essential that the Commission’s proposal take into account statistical trade data, which only became available in July 2010, on imports covered by the scheme for the period including 2009, a year marked by a sharp fall in global trade including that of developing countries. It is equally important to ensure that economic operators and beneficiary countries be given adequate notice of the changes to be brought about by the next Regulation. For those reasons, the remaining period of application of Regulation (EC) No 732/2008 is insufficient to allow for the Commission to draw up a proposal and the subsequent adoption of the next Regulation in accordance with the ordinary legislative procedure. It is however desirable to ensure continuity in the operation of the scheme beyond 31 December 2011 until such time as the next Regulation is adopted and applies.

(4)

The period of extension of Regulation (EC) No 732/2008 should not be open-ended. Consequently, and in order to provide the time needed for the legislative procedure for the adoption of the new scheme, the period of application of that Regulation should be extended until 31 December 2013. In case the next Regulation becomes applicable before that date, the period of extension should be correspondingly shortened.

(5)

Some technical amendments to Regulation (EC) No 732/2008 are necessary to ensure coherence and continuity in the operation of the scheme.

(6)

Developing countries which fulfil the criteria for being eligible for the special incentive arrangement for sustainable development and good governance (GSP+) should be able to benefit from the additional tariff preferences under that arrangement if, upon their request by 31 October 2011 or 30 April 2013, the Commission decides to grant them the special incentive arrangement by 15 December 2011 or 15 June 2013 respectively. Developing countries which have already been granted benefits under the special incentive arrangement as a result of Commission Decisions 2008/938/EC of 9 December 2008 on the list of the beneficiary countries which qualify for the special incentive arrangement for sustainable development and good governance, provided for in Council Regulation (EC) No 732/2008 (3), and 2010/318/EU of 9 June 2010 on the beneficiary countries which qualify for the special incentive arrangement for sustainable development and good governance for the period from 1 July 2010 to 31 December 2011, as provided in Council Regulation (EC) No 732/2008 (4) should retain that status during the extension of the current scheme.

(7)

Regulation (EC) No 732/2008 should therefore be amended accordingly,

(1)

the title is replaced by the following:

(2)

in the second subparagraph of Article 8(2) the following points are added:

(3)

Article 9 is amended as follows:

(4)

Article 10(3) is amended as follows:

(5)

in Article 32(2), the words ‘31 December 2011’ are replaced by the words: ‘31 December 2013 or until a date laid down by the next Regulation, whichever is the earlier’.

31.5.2011   

EN

Official Journal of the European Union

L 145/30

(1)

The final report, published on 25 February 2009, of a High-Level group of experts chaired by Jacques de Larosière under a mandate of the Commission concluded that the supervisory framework of the financial sector within the European Union needed to be strengthened to reduce the risk and severity of future financial crises. It recommended far-reaching reforms to the supervisory structure. The group of experts also concluded that a European System of Financial Supervisors (ESFS) should be created, comprising three European Supervisory Authorities – one for the banking sector, one for the insurance and occupational pensions sector and one for the securities and markets sector – and recommended the creation of a European Systemic Risk Council.

(2)

In its Communication of 4 March 2009 entitled ‘Driving European Recovery’, the Commission proposed to put forward draft legislation creating the ESFS, and in its Communication of 27 May 2009 entitled ‘European Financial Supervision’, it provided more detail about the possible architecture of such a new supervisory framework, highlighting the specificity of the supervision of credit rating agencies.

(3)

The European Council, in its conclusions of 19 June 2009, recommended that the ESFS, consisting of a network of national financial supervisors working in tandem with three new European Supervisory Authorities, be established. The ESFS should be aimed at upgrading the quality and consistency of national supervision, strengthening oversight of cross-border groups through the setting up of supervisory colleges and establishing a European single rule book applicable to all financial market participants in the internal market. The European Council stressed that a European securities and markets authority should have supervisory powers over credit rating agencies. Further, the Commission should retain its competence to enforce the Treaties, in particular Chapter I of Title VII of the Treaty on the Functioning of the European Union (TFEU) regarding the common rules on competition in accordance with the provisions adopted for the implementation of those rules.

(4)

Regulation (EU) No 1095/2010 of the European Parliament and of the Council (4) established the European Supervisory Authority (European Securities and Markets Authority) (ESMA).

(5)

The scope of competence of ESMA should be clearly defined so that financial market participants can identify the authority competent in the field of activity of credit rating agencies. ESMA should be given general competence under Regulation (EC) No 1060/2009 of the European Parliament and of the Council (5) regarding matters relating to the registration and ongoing supervision of registered credit rating agencies.

(6)

ESMA should be exclusively responsible for the registration and supervision of credit rating agencies in the Union. Where ESMA delegates specific tasks to competent authorities, ESMA should continue to be legally responsible. The heads and other staff of competent authorities should be involved in the decision-making process within ESMA in accordance with Regulation (EU) No 1095/2010, acting as members of ESMA bodies, such as its board of supervisors or its internal panels. ESMA should have the exclusive power to conclude cooperation agreements on information exchange with the supervisory authorities of third countries. To the extent that competent authorities participate in the decision-making process within ESMA or when executing tasks on behalf of ESMA, they should be covered by those cooperation agreements.

(7)

Transparency of information given by the issuer of a rated financial instrument to the appointed credit rating agency could have much potential added value for the functioning of the market and investor protection. Consideration should therefore be given on how best to extend the transparency of information underlying the ratings of all financial instruments. First, disclosing that information to other registered or certified credit rating agencies is likely to reinforce the competition between credit rating agencies, because it could lead, in particular, to an increase in the number of unsolicited ratings. The issuing of such unsolicited ratings should promote the use of more than one rating per financial instrument. This is also likely to help avoid possible conflicts of interest, especially under the issuer-pays model, and should enhance the quality of the ratings. Second, disclosing that information to the whole market could also increase the ability of investors to develop their own risk analyses by basing their due diligence on that additional information. Such disclosure could also lead to decreasing reliance on credit ratings issued by credit rating agencies. In order to achieve those fundamental objectives, the Commission should assess those issues in greater depth by giving further consideration to the appropriate scope of the disclosure obligation, having regard to the impact on local securitisation markets, further dialogue with interested parties, the monitoring of market and regulatory developments, and experience gained by other jurisdictions. In the light of that assessment, the Commission should put forward appropriate legislative proposals. The Commission's assessment and proposals should allow the definition of new transparency obligations in the manner most appropriate to meet the public interest, and most consistent with the protection of investors.

(8)

As credit ratings are used throughout the Union, the traditional distinction between the home competent authority and the other competent authorities and the use of supervisory coordination by colleges are not the most appropriate structure for supervising credit rating agencies. Following the establishment of ESMA, it is no longer necessary to maintain such a structure. The registration process should therefore be streamlined and the time limits should be reduced accordingly.

(9)

ESMA should be responsible for the registration and ongoing supervision of credit rating agencies, but not for the oversight of the users of credit ratings. Competent authorities designated under the relevant sectoral legislation for the supervision of credit institutions, investment firms, insurance undertakings, assurance undertakings, reinsurance undertakings, undertakings for collective investment in transferable securities (UCITS), institutions for occupational retirement provision and alternative investment funds should therefore remain responsible for the supervision of the use of credit ratings by those financial institutions and entities which are supervised at national level in the context and for the purpose of the application of other financial services directives, and of the use of credit ratings in prospectuses.

(10)

There is a need for an effective instrument to establish harmonised regulatory technical standards to facilitate the application of Regulation (EC) No 1060/2009 in day-to-day practice and to ensure a level playing field and the adequate protection of investors and consumers across the Union. As a body with highly specialised expertise, it is efficient and appropriate to entrust ESMA with the development of draft regulatory technical standards.

(11)

In the field of credit rating agencies, ESMA should submit to the Commission draft regulatory technical standards concerning the information to be provided by a credit rating agency in its application for registration, the information that a credit rating agency must provide for the application for certification and for an assessment of its systemic importance to the financial stability or integrity of financial markets, the presentation of the information, including structure, format, method and period of reporting, that a credit rating agency must disclose, concerning the assessment of compliance of credit rating methodologies with the requirements set out in Regulation (EC) No 1060/2009, and the content and format of ratings data periodic reporting to be requested from a credit rating agency for the purpose of ongoing supervision by ESMA. In accordance with Regulation (EU) No 1095/2010, those draft regulatory technical standards should be endorsed by the Commission to give them binding legal effect. In developing its draft regulatory technical standards, ESMA should consider and, if appropriate and necessary, update the guidelines already issued by the Committee of European Securities Regulators regarding the content of Regulation (EC) No 1060/2009.

(12)

In areas not covered by regulatory technical standards, ESMA should have the power to issue and update non-binding guidelines on issues related to the application of Regulation (EC) No 1060/2009.

(13)

In order to carry out its duties effectively, ESMA should be able to require, by simple request or by decision, all necessary information from credit rating agencies, persons involved in credit rating activities, rated entities and related third parties, third parties to whom the credit rating agencies have outsourced operational functions and persons otherwise closely and substantially related or connected to credit rating agencies or credit rating activities. The latter group of persons should cover, for instance, the staff of a credit rating agency who are not directly involved in rating activities but who, due to their function within the credit rating agency, may hold important information on a specific case. Firms which have provided services to the credit rating agency may also fall into that category. Undertakings using the credit ratings should not fall into that category. If ESMA requires such information by simple request, the addressee is not obliged to provide the information but, in the event that it does so voluntarily, the information provided should not be incorrect or misleading. Such information should be made available without delay.

(14)

In order to exercise its supervisory powers effectively, ESMA should be able to conduct investigations and on-site inspections.

(15)

The competent authorities should communicate any information required pursuant to Regulation (EC) No 1060/2009 and assist and cooperate with ESMA. ESMA and the competent authorities should also cooperate closely with the sectoral competent authorities responsible for supervision of the undertakings referred to in Article 4(1) of Regulation (EC) No 1060/2009. ESMA should be able to delegate specific supervisory tasks to the competent authority of a Member State, for instance where a supervisory task requires knowledge and experience with respect to local conditions, which are more easily available at national level. The kind of tasks that it should be possible to delegate include the carrying out of specific investigatory tasks and on-site inspections. Prior to the delegation of tasks, ESMA should consult the relevant competent authority about the detailed conditions relating to such delegation of tasks, including the scope of the task to be delegated, the timetable for the performance of the task, and the transmission of necessary information by and to ESMA. ESMA should compensate the competent authorities for carrying out a delegated task in accordance with a regulation on fees to be adopted by the Commission by means of a delegated act. ESMA should not be able to delegate the power to adopt decisions on registration.

(16)

It is necessary to ensure that competent authorities are able to request that ESMA examine whether the conditions for withdrawal of a credit rating agency's registration are met and to request that ESMA suspend the use of ratings where a credit rating agency is considered to be in a serious and persistent breach of Regulation (EC) No 1060/2009. ESMA should assess such requests and take any appropriate measures.

(17)

ESMA should be able to impose periodic penalty payments to compel credit rating agencies to put an end to an infringement, to supply complete information required by ESMA or to submit to an investigation or on-site inspection.

(18)

ESMA should also be able to impose fines on credit rating agencies, where it finds that they have committed, intentionally or negligently, an infringement of Regulation (EC) No 1060/2009. Fines should be imposed according to the level of seriousness of the infringements. The infringements should be divided into different groups for which specific fines should be allocated. In order to calculate the fine related to a specific infringement, ESMA should use a two-step methodology consisting of setting a basic amount and adjusting that basic amount, if necessary, by certain coefficients. The basic amount should be established by taking into account the annual turnover of the credit rating agency concerned and the adjustments should be made by increasing or decreasing the basic amount through the application of the relevant coefficients in accordance with this Regulation.

(19)

This Regulation establishes coefficients linked to aggravating and mitigating circumstances in order to give the necessary tools to ESMA to decide on a fine which is proportionate to the seriousness of an infringement committed by a credit rating agency, taking into account the circumstances under which that infringement was committed.

(20)

Before taking a decision to impose fines or periodic penalty payments, ESMA should give the persons subject to the proceedings the opportunity to be heard in order to respect their rights of defence.

(21)

Member States should remain competent to lay down and implement the rules on penalties applicable to the infringement of the obligation on financial institutions and other entities to use, for regulatory purposes, only credit ratings issued by credit rating agencies registered in accordance with Regulation (EC) No 1060/2009.

(22)

This Regulation should not create a precedent for the imposition of financial or non-financial penalties by European Supervisory Authorities on financial market participants or other undertakings in relation to other types of activity.

(23)

ESMA should refrain from imposing fines or periodic penalty payments where a prior acquittal or conviction arising from identical facts, or from facts which are substantially the same, has acquired the force of res judicata as the result of criminal proceedings under national law.

(24)

ESMA decisions imposing fines and periodic penalty payments should be enforceable and their enforcement should be governed by the rules of civil procedure which are in force in the State in the territory of which it is carried out. Rules of civil procedure should not include criminal procedural rules but it should be possible that they include administrative procedural rules.

(25)

In the case of an infringement committed by a credit rating agency, ESMA should be empowered to take a range of supervisory measures, including, but not limited to, requiring the credit rating agency to bring the infringement to an end, suspending the use of credit ratings for regulatory purposes, temporarily prohibiting the credit rating agency from issuing credit ratings and, as a last resort, withdrawing the registration when the credit rating agency has seriously or repeatedly infringed Regulation (EC) No 1060/2009. The supervisory measures should be applied by ESMA taking into account the nature and seriousness of the infringement and should respect the principle of proportionality. Before taking a decision on supervisory measures, ESMA should give the persons subject to the proceedings the opportunity to be heard in order to respect their rights of defence.

(26)

This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union, and by the constitutional traditions in the Member States. Accordingly, this Regulation should be interpreted and applied in accordance with those rights and principles, including those relating to freedom of the press and freedom of expression in the media, and the right to interpretation and translation for those who do not speak or understand the language of the proceedings as part of the general right to a fair trial.

(27)

For reasons of legal certainty, it is appropriate to establish clear transitional measures for the transmission of files and working documents from the competent authorities to ESMA.

(28)

The registration of a credit rating agency granted by a competent authority should remain valid throughout the Union after the transition of supervisory powers from the competent authorities to ESMA.

(29)

The Commission should be empowered to adopt delegated acts in accordance with Article 290 TFEU in order to specify further or amend the criteria for assessing the equivalence of the regulatory and supervisory framework of a third country in order to take into account developments on financial markets, to adopt a regulation on fees and detailed rules concerning fines and periodic penalty payments, and to amend the Annexes to Regulation (EC) No 1060/2009. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level.

(30)

When preparing and drawing up delegated acts, the Commission should ensure the early and ongoing transmission of information on relevant documents to the European Parliament and the Council.

(31)

The European Parliament and the Council should have three months from the date of notification to object to a delegated act. On the initiative of the European Parliament or the Council, it should be possible to prolong that period by three months in regard to significant areas of concern. It should also be possible for the European Parliament and the Council to inform the other institutions of their intention not to raise objections. Such early approval of delegated acts is particularly appropriate when deadlines need to be met, for example where there are timetables in the basic act for the Commission to adopt delegated acts.

(32)

In the Declaration on Article 290 of the Treaty on the Functioning of the European Union, annexed to the Final Act of the Intergovernmental Conference which adopted the Treaty of Lisbon, the Conference took note of the Commission's intention to continue to consult experts appointed by the Member States in the preparation of draft delegated acts in the financial services area, in accordance with its established practice.

(33)

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 (6) applies to the processing of personal data for the purposes of Regulation (EC) No 1060/2009.

(34)

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 (7) is fully applicable to the processing of personal data for the purposes of Regulation (EC) No 1060/2009.

(35)

Since the objectives of this Regulation, namely setting up an efficient and effective supervisory framework for credit rating agencies by entrusting a single supervisory authority with the supervision of credit rating activities in the Union, providing a single point of contact for credit rating agencies and ensuring the consistent application of the rules for credit rating agencies, cannot be sufficiently achieved at the Member State level and can therefore, by reason of the pan-Union structure and impact of the credit rating activities to be supervised, be better achieved at the 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. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(36)

Regulation (EC) No 1060/2009 should therefore be amended accordingly,

(1)

in Article 3(1), the following points are added:

(2)

Article 4 is amended as follows:

(3)

Article 5 is amended as follows:

(4)

in Article 6, paragraph 3 is amended as follows:

(5)

Article 9 is replaced by the following:

‘Article 9

Outsourcing

Outsourcing of important operational functions shall not be undertaken in such a way as to impair materially the quality of the credit rating agency's internal control and the ability of ESMA to supervise the credit rating agency's compliance with obligations under this Regulation.’;

(6)

in Article 10, paragraph 6 is replaced by the following:

‘6.   A credit rating agency shall not use the name of ESMA or any competent authority in such a way that would indicate or suggest endorsement or approval by ESMA or any competent authority of the credit ratings or any credit rating activities of the credit rating agency.’;

(7)

in Article 11, paragraphs 2 and 3 are replaced by the following:

‘2.   A credit rating agency shall make available in a central repository established by ESMA information on its historical performance data including the ratings transition frequency and information about credit ratings issued in the past and on their changes. A credit rating agency shall provide information to that repository on a standard form as provided for by ESMA. ESMA shall make that information accessible to the public and shall publish summary information on the main developments observed on an annual basis.

3.   A credit rating agency shall provide annually, by 31 March, to ESMA information relating to matters set out in point 2 of Part II of Section E of Annex I.’;

(8)

Article 14 is amended as follows:

(9)

Articles 15 to 21 are replaced by the following:

‘Article 15

Application for registration

1.   The credit rating agency shall submit an application for registration to ESMA. The application shall contain information on the matters set out in Annex II.

2.   Where a group of credit rating agencies applies for registration, the members of the group shall mandate one of their number to submit all the applications to ESMA on behalf of the group. The mandated credit rating agency shall provide the information on the matters set out in Annex II for each member of the group.

3.   A credit rating agency shall submit its application in any of the official languages of the institutions of the Union. The provisions of Regulation No 1 of 15 April 1958 determining the languages to be used by the European Economic Community (13) shall apply mutatis mutandis to any other communication between ESMA and the credit rating agencies and their staff.

4.   Within 20 working days of receipt of the application, ESMA shall assess whether the application is complete. If the application is not complete, ESMA shall set a deadline by which the credit rating agency is to provide additional information.

After assessing an application as complete, ESMA shall notify the credit rating agency accordingly.

Article 16

Examination of the application for registration of a credit rating agency by ESMA

1.   ESMA shall, within 45 working days of the notification referred to in the second subparagraph of Article 15(4), examine the application for registration of a credit rating agency based on the compliance of the credit rating agency with the conditions set out in this Regulation.

2.   ESMA may extend the period of examination by 15 working days, in particular if the credit rating agency:

3.   Within 45 working days of the notification referred to in the second subparagraph of Article 15(4), or within 60 working days thereof where paragraph 2 of this Article applies, ESMA shall adopt a fully reasoned decision to register or refuse registration.

4.   The decision adopted by ESMA pursuant to paragraph 3 shall take effect on the fifth working day following its adoption.

Article 17

Examination of the applications for registration of a group of credit rating agencies by ESMA

1.   ESMA shall, within 55 working days of the notification referred to in the second subparagraph of Article 15(4), examine the applications for registration of a group of credit rating agencies based on the compliance of those credit rating agencies with the conditions set out in this Regulation.

2.   ESMA may extend the period of examination by 15 working days, in particular if any of the credit rating agencies in the group:

3.   Within 55 working days of the notification as referred to in the second subparagraph of Article 15(4), or within 70 working days thereof where paragraph 2 of this Article applies, ESMA shall adopt a fully reasoned individual decision to register or refuse registration for each credit rating agency of the group.

4.   The decision adopted by ESMA pursuant to paragraph 3 shall take effect on the fifth working day following its adoption.

Article 18

Notification of a decision to register, refuse or withdraw registration, and publication of the list of registered credit rating agencies

1.   Within five working days of the adoption of a decision under Article 16, 17 or 20 ESMA shall notify its decision to the credit rating agency concerned. Where ESMA refuses to register the credit rating agency or withdraws the registration of the credit rating agency, it shall provide full reasons in its decision.

2.   ESMA shall communicate to the Commission, the European Supervisory Authority (European Banking Authority) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (14) (EBA), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (15) (EIOPA), the competent authorities and the sectoral competent authorities, any decision under Article 16, 17 or 20.

3.   ESMA shall publish on its website a list of credit rating agencies registered in accordance with this Regulation. That list shall be updated within five working days following the adoption of a decision under Article 16, 17 or 20. The Commission shall publish that updated list in the Official Journal of the European Union within 30 days following such update.

Article 19

Registration and supervisory fees

1.   ESMA shall charge fees to the credit rating agencies in accordance with this Regulation and the regulation on fees referred to in paragraph 2. Those fees shall fully cover ESMA's necessary expenditure relating to the registration and supervision of credit rating agencies and the reimbursement of any costs that the competent authorities may incur carrying out work pursuant to this Regulation, in particular as a result of any delegation of tasks in accordance with Article 30.

2.   The Commission shall adopt a regulation on fees. That regulation shall determine in particular the type of fees and the matters for which fees are due, the amount of the fees, the way in which they are to be paid and the way in which ESMA is to reimburse competent authorities in respect of any costs that they may incur carrying out work pursuant to this Regulation, in particular as a result of any delegation of tasks in accordance with Article 30.

The amount of a fee charged to a credit rating agency shall cover all administrative costs and be proportionate to the turnover of the credit rating agency concerned.

The Commission shall adopt the regulation on fees referred to in the first subparagraph by means of a delegated act in accordance with Article 38a and subject to the conditions of Articles 38b and 38c.

Article 20

Withdrawal of registration

1.   Without prejudice to Article 24, ESMA shall withdraw the registration of a credit rating agency where the credit rating agency:

2.   The competent authority of a Member State in which credit ratings issued by the credit rating agency concerned are used and which considers that one of the conditions referred to in paragraph 1 has been met may request that ESMA examine whether the conditions for the withdrawal of the registration of the credit rating agency concerned are met. If ESMA decides not to withdraw the registration of the credit rating agency concerned, it shall provide full reasons.

3.   The decision on the withdrawal of registration shall take immediate effect throughout the Union, subject to the transitional period for the use of credit ratings referred to in Article 24(4).

CHAPTER II

SUPERVISION BY ESMA

Article 21

ESMA

1.   Without prejudice to Article 25a, ESMA shall ensure that this Regulation is applied.

2.   In accordance with Article 16 of Regulation (EU) No 1095/2010, ESMA shall issue and update guidelines on the cooperation between ESMA, the competent authorities and the sectoral competent authorities for the purposes of this Regulation and for those of the relevant sectoral legislation, including the procedures and detailed conditions relating to the delegation of tasks.

3.   In accordance with Article 16 of Regulation (EU) No 1095/2010, ESMA shall, in cooperation with EBA and EIOPA, issue and update guidelines on the application of the endorsement regime under Article 4(3) of this Regulation by 7 June 2011.

4.   By 2 January 2012 ESMA shall submit draft regulatory technical standards for endorsement by the Commission in accordance with Article 10 of Regulation (EU) No 1095/2010 on:

5.   ESMA shall publish, annually and for the first time by 1 January 2012, a report on the application of this Regulation. That report shall contain, in particular, an assessment of the implementation of Annex I by the credit rating agencies registered under this Regulation.

6.   ESMA shall present annually to the European Parliament, the Council and the Commission a report on supervisory measures taken and penalties imposed by ESMA under this Regulation, including fines and periodic penalty payments.

7.   ESMA shall cooperate with EBA and EIOPA in performing its tasks and shall consult EBA and EIOPA before issuing and updating guidelines and submitting draft regulatory technical standards referred to in paragraphs 2, 3 and 4.

(10)

the following Article is inserted:

‘Article 22a

Examination of compliance with the back-testing obligation

1.   In the exercise of its ongoing supervision of credit rating agencies registered under this Regulation, ESMA shall examine regularly compliance with Article 8(3).

2.   Without prejudice to Article 23, ESMA shall also in the framework of the examination referred to in paragraph 1:

(11)

Articles 23 to 27 are replaced by the following:

‘Article 23

Non-interference with content of ratings or methodologies

In carrying out their duties under this Regulation, ESMA, the Commission or any public authorities of a Member State shall not interfere with the content of credit ratings or methodologies.

Article 23a

Exercise of the powers referred to in Articles 23b to 23d

The powers conferred on ESMA or any official of or other person authorised by ESMA by Articles 23b to 23d shall not be used to require the disclosure of information or documents which are subject to legal privilege.

Article 23b

Requests for information

1.   ESMA may by simple request or by decision require credit rating agencies, persons involved in credit rating activities, rated entities and related third parties, third parties to whom the credit rating agencies have outsourced operational functions or activities and persons otherwise closely and substantially related or connected to credit rating agencies or credit rating activities to provide all information that is necessary in order to carry out its duties under this Regulation.

2.   When sending a simple request for information under paragraph 1, ESMA shall:

3.   When requiring the supply of information under paragraph 1 by decision, ESMA shall:

4.   The persons referred to in paragraph 1 or their representatives and, in the case of legal persons or associations having no legal personality, the persons authorised to represent them by law or by their constitution, shall supply the information requested. Lawyers duly authorised to act may supply the information on behalf of their clients. The latter shall remain fully responsible if the information supplied is incomplete, incorrect or misleading.

5.   ESMA shall, without delay, send a copy of the simple request or of its decision to the competent authority of the Member State where the persons referred to in paragraph 1 who are concerned by the request for information are domiciled or established.

Article 23c

General investigations

1.   In order to carry out its duties under this Regulation, ESMA may conduct all necessary investigations of persons referred to in Article 23b(1). To that end, the officials of and other persons authorised by ESMA shall be empowered to:

2.   The officials of and other persons authorised by ESMA for the purposes of the investigations referred to in paragraph 1 shall exercise their powers upon production of a written authorisation specifying the subject matter and purpose of the investigation. That authorisation shall also indicate the periodic penalty payments provided for in Article 36b where the production of the required records, data, procedures or any other material, or the answers to questions asked of the persons referred to in Article 23b(1) are not provided or are incomplete, and the fines provided for in Article 36a, in conjunction with point 8 of Section II of Annex III, where the answers to questions asked of the persons referred to in Article 23b(1) are incorrect or misleading.

3.   The persons referred to in Article 23b(1) shall submit to investigations launched on the basis of a decision of ESMA. The decision shall specify the subject matter and purpose of the investigation, the periodic penalty payments provided for in Article 36b, the legal remedies available under Regulation (EU) No 1095/2010 and the right to have the decision reviewed by the Court of Justice of the European Union.

4.   In good time before the investigation, ESMA shall inform the competent authority of the Member State where the investigation is to be carried out of the investigation and of the identity of the authorised persons. Officials of the competent authority concerned shall, upon the request of ESMA, assist those authorised persons in carrying out their duties. Officials of the competent authority concerned may also attend the investigations upon request.

5.   If a request for records of telephone or data traffic referred to in point (e) of paragraph 1 requires authorisation from a judicial authority according to national rules, such authorisation shall be applied for. Such authorisation may also be applied for as a precautionary measure.

6.   Where authorisation as referred to in paragraph 5 is applied for, the national judicial authority shall control that the decision of ESMA is authentic and that the coercive measures envisaged are neither arbitrary nor excessive having regard to the subject matter of the investigations. In its control of the proportionality of the coercive measures, the national judicial authority may ask ESMA for detailed explanations, in particular relating to the grounds ESMA has for suspecting that an infringement of this Regulation has taken place and the seriousness of the suspected infringement and the nature of the involvement of the person subject to the coercive measures. However, the national judicial authority shall not review the necessity for the investigation or demand that it be provided with the information on ESMA's file. The lawfulness of ESMA's decision shall be subject to review only by the Court of Justice of the European Union following the procedure set out in Regulation (EU) No 1095/2010.

Article 23d

On-site inspections

1.   In order to carry out its duties under this Regulation, ESMA may conduct all necessary on-site inspections at the business premises of the legal persons referred to in Article 23b(1). Where the proper conduct and efficiency of the inspection so require, ESMA may carry out the on-site inspection without prior announcement.

2.   The officials of and other persons authorised by ESMA to conduct an on-site inspection may enter any business premises and land of the legal persons subject to an investigation decision adopted by ESMA and shall have all the powers stipulated in Article 23c(1). They shall also have the power to seal any business premises and books or records for the period of, and to the extent necessary for, the inspection.

3.   The officials of and other persons authorised by ESMA to conduct an on-site inspection shall exercise their powers upon production of a written authorisation specifying the subject matter and purpose of the inspection, and the periodic penalty payments provided for in Article 36b where the persons concerned do not submit to the inspection. In good time before the inspection, ESMA shall give notice of the inspection to the competent authority of the Member State where it is to be conducted.

4.   The persons referred to in Article 23b(1) shall submit to on-site inspections ordered by decision of ESMA. The decision shall specify the subject matter and purpose of the inspection, specify the date on which it is to begin and indicate the periodic penalty payments provided for in Article 36b, the legal remedies available under Regulation (EU) No 1095/2010 as well as the right to have the decision reviewed by the Court of Justice of the European Union. ESMA shall take such decisions after consulting the competent authority of the Member State where the inspection is to be conducted.

5.   Officials of, as well as those authorised or appointed by, the competent authority of the Member State where the inspection is to be conducted shall, upon the request of ESMA, actively assist the officials of and other persons authorised by ESMA. To that end, they shall enjoy the powers set out in paragraph 2. Officials of the competent authority of the Member State concerned may also attend the on-site inspections upon request.

6.   ESMA may also require competent authorities to carry out specific investigatory tasks and on-site inspections as provided for in this Article and in Article 23c(1) on its behalf. To that end, competent authorities shall enjoy the same powers as ESMA as set out in this Article and in Article 23c(1).

7.   Where the officials of and other accompanying persons authorised by ESMA find that a person opposes an inspection ordered pursuant to this Article, the competent authority of the Member State concerned shall afford them the necessary assistance, requesting, where appropriate, the assistance of the police or of an equivalent enforcement authority, so as to enable them to conduct their on-site inspection.

8.   If the on-site inspection provided for in paragraph 1 or the assistance provided for in paragraph 7 requires authorisation by a judicial authority according to national rules, such authorisation shall be applied for. Such authorisation may also be applied for as a precautionary measure.

9.   Where authorisation as referred to in paragraph 8 is applied for, the national judicial authority shall control that the decision of ESMA is authentic and that the coercive measures envisaged are neither arbitrary nor excessive having regard to the subject matter of the inspection. In its control of the proportionality of the coercive measures, the national judicial authority may ask ESMA for detailed explanations, in particular relating to the grounds ESMA has for suspecting that an infringement of this Regulation has taken place and the seriousness of the suspected infringement and the nature of the involvement of the person subject to the coercive measures. However, the national judicial authority shall not review the necessity for the inspection or demand to be provided with the information on ESMA's file. The lawfulness of ESMA's decision shall be subject to review only by the Court of Justice of the European Union following the procedure set out in Regulation (EU) No 1095/2010.

Article 23e

Procedural rules for taking supervisory measures and imposing fines

1.   Where, in carrying out its duties under this Regulation, ESMA finds that there are serious indications of the possible existence of facts liable to constitute one or more of the infringements listed in Annex III, ESMA shall appoint an independent investigating officer within ESMA to investigate the matter. The investigating officer shall not be involved or have been involved in the direct or indirect supervision or registration process of the credit rating agency concerned and shall perform his functions independently from ESMA's Board of Supervisors.

2.   The investigating officer shall investigate the alleged infringements, taking into account any comments submitted by the persons subject to investigation, and shall submit a complete file with his findings to ESMA's Board of Supervisors.

In order to carry out his tasks, the investigating officer may exercise the power to require information in accordance with Article 23b and to conduct investigations and on-site inspections in accordance with Articles 23c and 23d. When using those powers, the investigating officer shall comply with Article 23a.

Where carrying out his tasks, the investigating officer shall have access to all documents and information gathered by ESMA in its supervisory activities.

3.   Upon completion of his investigation and before submitting the file with his findings to ESMA's Board of Supervisors, the investigating officer shall give the persons subject to investigation the opportunity to be heard on the matters being investigated. The investigating officer shall base his findings only on facts on which the persons subject to investigation have had the opportunity to comment.

The rights of defence of the persons concerned shall be fully respected during investigations under this Article.

4.   When submitting the file with his findings to ESMA's Board of Supervisors, the investigating officer shall notify that fact to the persons subject to investigation. The persons subject to investigation shall be entitled to have access to the file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information affecting third parties.

5.   On the basis of the file containing the investigating officer's findings and, when requested by the persons concerned, after having heard the persons subject to investigation in accordance with Articles 25 and 36c, ESMA's Board of Supervisors shall decide if one or more of the infringements listed in Annex III has been committed by the persons who have been subject to investigation, and in such case, shall take a supervisory measure in accordance with Article 24 and impose a fine in accordance with Article 36a.

6.   The investigating officer shall not participate in the deliberations of ESMA's Board of Supervisors or in any other way intervene in the decision-making process of ESMA's Board of Supervisors.

7.   The Commission shall adopt further rules of procedure for the exercise of the power to impose fines or periodic penalty payments, including provisions on rights of defence, temporal provisions, and the collection of fines or periodic penalty payments, and shall adopt detailed rules on the limitation periods for the imposition and enforcement of penalties.

The rules referred to in the first subparagraph shall be adopted by means of delegated acts in accordance with Article 38a and subject to the conditions of Articles 38b and 38c.

8.   ESMA shall refer matters for criminal prosecution to the relevant national authorities where, in carrying out its duties under this Regulation, it finds that there are serious indications of the possible existence of facts liable to constitute criminal offences. In addition, ESMA shall refrain from imposing fines or periodic penalty payments where a prior acquittal or conviction arising from identical facts, or from facts which are substantially the same, has acquired the force of res judicata as the result of criminal proceedings under national law.

Article 24

Supervisory measures by ESMA

1.   Where, in accordance with Article 23e(5), ESMA's Board of Supervisors finds that a credit rating agency has committed one of the infringements listed in Annex III, it shall take one or more of the following decisions:

2.   When taking the decisions referred to in paragraph 1, ESMA's Board of Supervisors shall take into account the nature and seriousness of the infringement, having regard to the following criteria:

3.   Before taking the decisions referred to in points (a), (b) and (c) of paragraph 1, ESMA's Board of Supervisors shall inform EBA and EIOPA thereof.

4.   Credit ratings may continue to be used for regulatory purposes following the adoption of the decisions referred to in points (a) and (c) of paragraph 1 during a period not exceeding:

ESMA's Board of Supervisors may extend, including following a request by EBA or EIOPA, the period referred to in point (b) of the first subparagraph by three months in exceptional circumstances relating to the potential for market disruption or financial instability.

5.   Without undue delay, ESMA's Board of Supervisors shall notify any decision adopted pursuant to paragraph 1 to the credit rating agency concerned and shall communicate any such decision to the competent authorities and the sectoral competent authorities, the Commission, EBA and EIOPA. It shall make public any such decision on its website within 10 working days from the date when it was adopted.

When making public its decision as referred to in the first subparagraph, ESMA's Board of Supervisors shall also make public the right for the credit rating agency concerned to appeal the decision, the fact, where relevant, that such an appeal has been lodged, specifying that such an appeal does not have suspensive effect, and the fact that it is possible for the Board of Appeal to suspend the application of the contested decision in accordance with Article 60(3) of Regulation (EU) No 1095/2010.

Article 25

Hearing of the persons concerned

1.   Before taking any decision under Article 24(1), ESMA's Board of Supervisors shall give the persons subject to the proceedings the opportunity to be heard on ESMA's findings. ESMA's Board of Supervisors shall base its decisions only on findings on which the persons subject to the proceedings have had the opportunity to comment.

The first subparagraph shall not apply if urgent action is needed in order to prevent significant and imminent damage to the financial system. In such a case ESMA's Board of Supervisors may adopt an interim decision and shall give the persons concerned the opportunity to be heard as soon as possible after taking its decision.

2.   The rights of defence of the persons subject to the proceedings shall be fully respected during the proceedings. They shall be entitled to have access to ESMA's file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information.

Article 25a

Sectoral competent authorities responsible for the supervision and enforcement of Article 4(1) (the use of credit ratings)

The sectoral competent authorities shall be responsible for the supervision and enforcement of Article 4(1) in accordance with the relevant sectoral legislation.

CHAPTER III

COOPERATION BETWEEN ESMA, COMPETENT AUTHORITIES AND SECTORAL COMPETENT AUTHORITIES

Article 26

Obligation to cooperate

ESMA, EBA, EIOPA, the competent authorities and the sectoral competent authorities shall cooperate where it is necessary for the purposes of this Regulation and for those of the relevant sectoral legislation.

Article 27

Exchange of information

1.   ESMA, the competent authorities, and the sectoral competent authorities shall, without undue delay, supply each other with the information required for the purposes of carrying out their duties under this Regulation and under the relevant sectoral legislation.

2.   ESMA may transmit to the central banks, the European System of Central Banks and the European Central Bank, in their capacity as monetary authorities, to the European Systemic Risk Board and, where appropriate, to other public authorities responsible for overseeing payment and settlement systems, confidential information intended for the performance of their tasks. Similarly, such authorities or bodies shall not be prevented from communicating to ESMA information that ESMA may need in order to carry out its duties under this Regulation.’;

(12)

Articles 28 and 29 are deleted;

(13)

Articles 30, 31 and 32 are replaced by the following:

‘Article 30

Delegation of tasks by ESMA to competent authorities

1.   Where it is necessary for the proper performance of a supervisory task, ESMA may delegate specific supervisory tasks to the competent authority of a Member State in accordance with the guidelines issued by ESMA pursuant to Article 21(2). Such specific supervisory tasks may, in particular, include the power to request information in accordance with Article 23b and to conduct investigations and on-site inspections in accordance with Article 23d(6).

2.   Prior to the delegation of a task, ESMA shall consult the relevant competent authority. Such consultation shall concern:

3.   In accordance with the regulation on fees to be adopted by the Commission pursuant to Article 19(2), ESMA shall reimburse a competent authority for the costs incurred as a result of carrying out delegated tasks.

4.   ESMA shall review the delegation referred to in paragraph 1 at appropriate intervals. A delegation of tasks may be revoked at any time.

A delegation of tasks shall not affect the responsibility of ESMA and shall not limit ESMA's ability to conduct and oversee the delegated activity. Supervisory responsibilities under this Regulation, including registration decisions, final assessments and follow-up decisions concerning infringements, shall not be delegated.

Article 31

Notifications and suspension requests by competent authorities

1.   Where a competent authority of a Member State finds that acts contrary to this Regulation are being, or have been, carried out on the territory of its own or of another Member State, it shall give notice of that fact in as specific a manner as possible to ESMA. Where the competent authority considers it appropriate for investigatory purposes, the competent authority may also suggest to ESMA that it assess the need to use the powers under Articles 23b and 23c in relation to the credit rating agency involved in those acts.

ESMA shall take appropriate action. It shall inform the notifying competent authority of the outcome and, as far as possible, of any significant interim developments.

2.   Without prejudice to the duty to notify set out in paragraph 1, where the notifying competent authority of a Member State considers that a registered credit rating agency, whose credit ratings are used within the territory of that Member State, breaches the obligations arising from this Regulation and the infringements are sufficiently serious and persistent to have a significant impact on the protection of investors or on the stability of the financial system in that Member State, the notifying competent authority may request that ESMA suspend the use, for regulatory purposes, of credit ratings of the credit rating agency concerned by the financial institutions and other entities referred to in Article 4(1). The notifying competent authority shall provide ESMA with full reasons for its request.

Where ESMA considers that the request is not justified, it shall inform the notifying competent authority in writing, setting out the reasons. Where ESMA considers that the request is justified, it shall take the appropriate measures to resolve the issue.

Article 32

Professional secrecy

1.   The obligation of professional secrecy shall apply to ESMA, the competent authorities, and all persons who work or who have worked for ESMA, for the competent authorities or for any other person to whom ESMA has delegated tasks, including auditors and experts contracted by ESMA. Information covered by professional secrecy shall not be disclosed to another person or authority except where such disclosure is necessary for legal proceedings.

2.   All the information that, under this Regulation, is acquired by, or exchanged between, ESMA, the competent authorities, the sectoral competent authorities or other authorities and bodies referred to in Article 27(2), shall be considered confidential, except where ESMA or the competent authority or other authority or body concerned states at the time of communication that such information may be disclosed or where such disclosure is necessary for legal proceedings.’;

(14)

Article 33 is deleted;

(15)

Articles 34 and 35 are replaced by the following:

‘Article 34

Agreement on exchange of information

ESMA may conclude cooperation agreements on exchange of information with the supervisory authorities of third countries only if the information disclosed is subject to guarantees of professional secrecy which are at least equivalent to those set out in Article 32.

Such exchange of information shall be intended for the performance of the tasks of ESMA or those supervisory authorities.

With regard to transfer of personal data to a third country, ESMA shall apply 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 (16).

Article 35

Disclosure of information from third countries

ESMA may disclose the information received from supervisory authorities of third countries only if ESMA or a competent authority has obtained the express agreement of the supervisory authority that has transmitted the information and, where applicable, the information is disclosed only for the purposes for which that supervisory authority gave its agreement or where such disclosure is necessary for legal proceedings.

(16)

the heading of Chapter I of Title IV ‘Penalties, committee procedure and reporting’ is replaced by the heading ‘Penalties, fines, periodic penalty payments, committee procedure, delegated powers and reporting’;

(17)

in Article 36, the first and second paragraphs are replaced by the following:

‘Member States shall lay down the rules on penalties applicable to infringements of Article 4(1) and shall take all measures necessary to ensure that they are implemented. The penalties provided for shall be effective, proportionate and dissuasive.

Member States shall ensure that the sectoral competent authority disclose to the public every penalty that has been imposed for infringements of Article 4(1), unless such disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.’;

(18)

the following Articles are inserted:

‘Article 36a

Fines

1.   Where, in accordance with Article 23e(5), ESMA's Board of Supervisors finds that a credit rating agency has, intentionally or negligently, committed one of the infringements listed in Annex III, it shall adopt a decision imposing a fine in accordance with paragraph 2.

An infringement by a credit rating agency shall be considered to have been committed intentionally if ESMA finds objective factors which demonstrate that the credit rating agency or its senior management acted deliberately to commit the infringement.

2.   The basic amount of the fines referred to in paragraph 1 shall be included within the following limits:

In order to decide whether the basic amount of the fines should be set at the lower, the middle or the higher end of the limits set out in the first subparagraph, ESMA shall have regard to the annual turnover in the preceding business year of the credit rating agency concerned. The basic amount shall be at the lower end of the limit for credit rating agencies whose annual turnover is below EUR 10 million, the middle of the limit for the credit rating agencies whose annual turnover is between EUR 10 and 50 million and the higher end of the limit for the credit rating agencies whose annual turnover is higher than EUR 50 million.

3.   The basic amounts defined within the limits set out in paragraph 2 shall be adjusted, if need be, by taking into account aggravating or mitigating factors in accordance with the relevant coefficients set out in Annex IV.

The relevant aggravating coefficient shall be applied one by one to the basic amount. If more than one aggravating coefficient is applicable, the difference between the basic amount and the amount resulting from the application of each individual aggravating coefficient shall be added to the basic amount.

The relevant mitigating coefficient shall be applied one by one to the basic amount. If more than one mitigating coefficient is applicable, the difference between the basic amount and the amount resulting from the application of each individual mitigating coefficient shall be subtracted from the basic amount.

4.   Notwithstanding paragraphs 2 and 3, the fine shall not exceed 20 % of the annual turnover of the credit rating agency concerned in the preceding business year and, where the credit rating agency has directly or indirectly benefitted financially from the infringement, the fine shall be at least equal to that financial benefit.

Where an act or omission of a credit rating agency constitutes more than one infringement listed in Annex III, only the higher fine calculated in accordance with paragraphs 2 and 3 and related to one of those infringements shall apply.

Article 36b

Periodic penalty payments

1.   ESMA's Board of Supervisors shall by decision impose a periodic penalty payment in order to compel:

2.   A periodic penalty payment shall be effective and proportionate. The periodic penalty payment shall be imposed on a daily basis until the credit rating agency or person concerned complies with the relevant decision referred to in paragraph 1.

3.   Notwithstanding paragraph 2, the amount of a periodic penalty payment shall be 3 % of the average daily turnover in the preceding business year or, in the case of natural persons, 2 % of the average daily income in the preceding calendar year. It shall be calculated from the date stipulated in the decision imposing the periodic penalty payment.

4.   A periodic penalty payment may be imposed for a period of no more than six months following the notification of ESMA's decision.

Article 36c

Hearing of the persons subject to the proceedings

1.   Before taking any decision imposing a fine and/or periodic penalty payment under Article 36a or points (a) to (d) of Article 36b(1), ESMA's Board of Supervisors shall give the persons subject to the proceedings the opportunity to be heard on ESMA's findings. ESMA's Board of Supervisors shall base its decisions only on findings on which the persons subject to the proceedings have had the opportunity to comment.

2.   The rights of defence of the persons subject to the proceedings shall be fully respected during the proceedings. They shall be entitled to have access to ESMA's file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information or internal preparatory documents of ESMA.

Article 36d

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments

1.   ESMA shall disclose to the public every fine and periodic penalty payment that has been imposed pursuant to Articles 36a and 36b, unless such disclosure to the public would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.

2.   Fines and periodic penalty payments imposed pursuant to Articles 36a and 36b shall be of an administrative nature.

3.   Fines and periodic penalty payments imposed pursuant to Articles 36a and 36b shall be enforceable.

Enforcement shall be governed by the rules of civil procedure in force in the State in the territory of which it is carried out. The order for its enforcement shall be appended to the decision without other formality than verification of the authenticity of the decision by the authority which the government of each Member State shall designate for that purpose and shall make known to ESMA and to the Court of Justice of the European Union.

When those formalities have been completed on application by the party concerned, the latter may proceed to enforcement in accordance with the national law, by bringing the matter directly before the competent body.

Enforcement may be suspended only by a decision of the Court of Justice of the European Union. However, the courts of the Member State concerned shall have jurisdiction over complaints that enforcement is being carried out in an irregular manner.

4.   The amounts of the fines and periodic penalty payments shall be allocated to the general budget of the European Union.

Article 36e

Review by the Court of Justice of the European Union

The Court of Justice of the European Union shall have unlimited jurisdiction to review decisions whereby ESMA has imposed a fine or a periodic penalty payment. It may annul, reduce or increase the fine or periodic penalty payment imposed.’;

(19)

Article 37 is replaced by the following:

‘Article 37

Amendments to Annexes

In order to take account of developments, including international developments, on financial markets, in particular in relation to new financial instruments, the Commission may adopt, by means of delegated acts in accordance with Article 38a and subject to the conditions of Articles 38b and 38c, measures to amend the Annexes, excluding Annex III.’;

(20)

in Article 38, paragraph 2 is deleted;

(21)

the following Articles are inserted:

‘Article 38a

Exercise of the delegation

1.   The power to adopt delegated acts referred to in the third subparagraph of Article 5(6), Article 19(2), Article 23e(7) and Article 37 shall be conferred on the Commission for a period of four years from 1 June 2011. The Commission shall draw up a report in respect of the delegated power at the latest six months before the end of the four-year period. The delegation of power shall be automatically extended for periods of an identical duration, unless the European Parliament or the Council revokes it in accordance with Article 38b.

2.   As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

3.   The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in Articles 38b and 38c.

Article 38b

Revocation of the delegation

1.   The delegation of power referred to in the third subparagraph of Article 5(6), Article 19(2), Article 23e(7) and Article 37 may be revoked at any time by the European Parliament or by the Council.

2.   The institution which has commenced an internal procedure for deciding whether to revoke the delegation of power shall endeavour to inform the other institution and the Commission within a reasonable time before the final decision is taken, indicating the delegated power which could be subject to revocation.

3.   The decision of revocation shall put an end to the delegation of the power specified in that decision. It shall take effect immediately or at a later date specified therein. It shall not affect the validity of the delegated acts already in force. It shall be published in the Official Journal of the European Union.

Article 38c

Objections to delegated acts

1.   The European Parliament or the Council may object to a delegated act within a period of three months from the date of notification.

At the initiative of the European Parliament or the Council that period shall be extended by three months.

2.   If, on expiry of the period referred to in paragraph 1, neither the European Parliament nor the Council has objected to the delegated act, it shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein.

The delegated act may be published in the Official Journal of the European Union and enter into force before the expiry of that period if the European Parliament and the Council have both informed the Commission of their intention not to raise objections.

3.   If either the European Parliament or the Council objects to the delegated act within the period referred to in paragraph 1, it shall not enter into force. In accordance with Article 296 of the Treaty on the Functioning of the European Union, the institution which objects shall state the reasons for objecting to the delegated act.’;

(22)

Article 39 is amended as follows:

(23)

the following Article is inserted:

‘Article 39a

Report by ESMA

By 31 December 2011, ESMA shall assess the staffing and resources needs arising from the assumption of its powers and duties in accordance with this Regulation and submit a report to the European Parliament, the Council and the Commission.’;

(24)

in Article 40, the third paragraph is replaced by the following:

‘Existing credit rating agencies may continue issuing credit ratings which may be used for regulatory purposes by the financial institutions and other entities referred to in Article 4(1) unless registration is refused. Where registration is refused, Article 24(4) and (5) shall apply.’;

(25)

the following Article is inserted:

‘Article 40a

Transitional measures related to ESMA

1.   All competences and duties related to the supervisory and enforcement activity in the field of credit rating agencies, which were conferred on the competent authorities, whether acting as competent authorities of the home Member State or not, and on colleges where those have been established, shall be terminated on 1 July 2011.

However, an application for registration that has been received by the competent authorities of the home Member State or the relevant college by 7 September 2010 shall not be transferred to ESMA, and the decision to register or refuse registration shall be taken by those authorities and the relevant college.

2.   Without prejudice to the second subparagraph of paragraph 1, any files and working documents related to the supervisory and enforcement activity in the field of credit rating agencies, including any ongoing examinations and enforcement actions, or certified copies thereof, shall be taken over by ESMA on the date as referred to in paragraph 1.

3.   The competent authorities and colleges referred to in paragraph 1 shall ensure that any existing records and working papers, or certified copies thereof, shall be transferred to ESMA as soon as possible and in any event by 1 July 2011. Those competent authorities and colleges shall also render all necessary assistance and advice to ESMA to facilitate effective and efficient transfer and taking-up of supervisory and enforcement activity in the field of credit rating agencies.

4.   ESMA shall act as the legal successor of the competent authorities and colleges referred to in paragraph 1 in any administrative or judicial proceedings that result from supervisory and enforcement activity pursued by those competent authorities and colleges in relation to matters that fall under this Regulation.

5.   Any registration of a credit rating agency, in accordance with Chapter I of Title III, by a competent authority referred to in paragraph 1 of this Article shall remain valid after the transfer of competences to ESMA.

6.   By 1 July 2014 and within the scope of its ongoing supervision, ESMA shall conduct at least one verification of all credit rating agencies falling under its supervisory competences.’;

(26)

Annex I is hereby amended in accordance with Annex I to this Regulation;

(27)

the Annexes set out in Annex II hereto are added.