(6)

There is verified evidence of serious safety deficiencies on the part of Air Bangladesh with regard to a certain aircraft of its fleet. These deficiencies have been identified during ramp inspections performed by Germany under the SAFA programme (3).

(7)

Air Bangladesh did not respond adequately and timely to an enquiry by the civil aviation authority of Germany regarding the safety aspect of its operation showing a lack of transparency or communication, as demonstrated by its lack of reply to correspondence from this Member State. To date Germany had no opportunity to verify whether the safety deficiencies have been corrected.

(8)

The authorities of Bangladesh with responsibility for regulatory oversight of Air Bangladesh have not exercised an adequate oversight on one specific aircraft used by this carrier in accordance with their obligations under the Chicago Convention.

(9)

Therefore, on the basis of the common criteria, it is assessed that Air Bangladesh should be submitted to a strict operational restriction and included in Annex B.

(10)

There is verified evidence of serious safety deficiencies on the part of Air Koryo. These deficiencies have been identified by France and Germany, during ramp inspections performed under the SAFA programme (4).

(11)

Persistent failure by Air Koryo to address deficiencies previously communicated by France was identified during other ramp inspections performed under the SAFA programme (5).

(12)

Substantiated and serious incident-related information communicated by France indicates latent systemic safety deficiencies on the part of Air Koryo.

(13)

Air Koryo demonstrated a lack of ability to address these safety deficiencies.

(14)

Air Koryo did not respond adequately and timely to an enquiry by the civil aviation authority of France regarding the safety aspect of its operation showing a lack of transparency or communication, as demonstrated by the absence of reply to a request by that Member State.

(15)

The corrective action plan presented by Air Koryo in response to France’s request was not adequate and sufficient to correct the identified serious safety deficiencies.

(16)

The authorities of the Democratic People Republic of Korea with responsibility for regulatory oversight of Air Koryo have not exercised an adequate oversight on this carrier in accordance with their obligations under the Chicago Convention.

(17)

Therefore, on the basis of the common criteria, it is assessed that Air Koryo does not meet the relevant safety standards.

(18)

There is verified evidence of serious safety deficiencies on the part of certain aircraft operated by Ariana Afghan Airlines. These deficiencies have been identified by Germany, during ramp inspections performed under the SAFA programme (6).

(19)

Ariana Afghan Airlines demonstrated a lack of ability to address these safety deficiencies.

(20)

Ariana Afghan Airlines did not respond adequately and timely to an enquiry by the civil aviation authority of Germany regarding the safety aspect of its operation showing a lack of communication, as demonstrated by the absence of adequate response to correspondence from this Member State.

(21)

The competent authorities of Afghanistan, where the aircraft used by Ariana Afghan Airlines is registered, have not exercised a fully adequate oversight of the aircraft used by this carrier in accordance with their obligations under the Chicago Convention.

(22)

Therefore, on the basis of the common criteria, it is assessed that Ariana Afghan does not meet the relevant safety standards for all the aircraft it operates, with the exception of A310 registration number F-GYYY which is registered in France and subject to the oversight of the French authorities.

(23)

There is verified evidence of serious safety deficiencies on the part of BGB Air. These deficiencies have been identified by Italy, during ramp inspections performed under the SAFA programme (7).

(24)

BGB Air demonstrated a lack of ability or willingness to address safety deficiencies as demonstrated by the submission of a self-assessment with ICAO Standards on the basis of the Foreign Operator Check List provided by Italy, which was found not to be in conformity with the subsequent findings of SAFA inspections.

(25)

BGB Air did not respond adequately to an enquiry by the civil aviation authority of Italy, regarding the safety aspect of its operation showing a lack of transparency or communication, as demonstrated by the absence of reply to some correspondence sent by this Member State.

(26)

There is no evidence of the implementation of an adequate corrective action plan presented by BGB Air to correct the serious safety deficiencies in response to the request from Italy.

(27)

The authorities of Kazakhstan with responsibility for regulatory oversight of BGB Air did not fully cooperate with the civil aviation authority of Italy when concerns about the safety of the operation of BGB Air certified in that state were raised, as demonstrated by the absence of reply to the correspondence sent by this Member State.

(28)

Therefore, on the basis of the common criteria, it is assessed that BGB Air does not meet the relevant safety standards.

(29)

There is verified evidence of serious safety deficiencies on the part of Buraq Air concerning its cargo operations. These deficiencies have been identified by Sweden and the Netherlands, during ramp inspections performed under the SAFA programme (8).

(30)

Buraq Air did not respond adequately and timely to an enquiry by the civil aviation authority of Germany regarding the safety aspect of its Cargo operations showing a lack of transparency or communication, as demonstrated by a lack of response to correspondence from this Member State.

(31)

The authorities of Libya with responsibility for regulatory oversight of Buraq Air have not exercised an adequate oversight on the Cargo operations of this carrier in accordance with their obligations under the Chicago Convention.

(32)

Therefore, on the basis of the common criteria, it is assessed that Buraq Air should be subject to strict operational restrictions and included in Annex B.

(33)

There is verified evidence of serious safety deficiencies on the part of Air Service Comores. These deficiencies have been identified by a Member State, France, during a ramp inspection performed under the SAFA programme (9).

(34)

There is no evidence of the implementation of an adequate corrective action plan presented by Air Service Comores to correct the identified serious safety deficiencies in response to the request from France.

(35)

The authorities with responsibility for regulatory oversight of Air Service Comores have shown a lack of ability to address safety deficiencies.

(36)

The authorities with responsibility for regulatory oversight of Comores did not cooperate in due time with the civil aviation authority of France when concerns about the safety of the operation of a carrier licensed or certified in that state were raised.

(37)

Therefore, on the basis of the common criteria, it is assessed that Air Service Comores does not meet the relevant safety standards.

(38)

There is verified evidence of serious safety deficiencies on the part of GST Aero Air Company. These deficiencies have been identified by Italy, during ramp inspections performed under the SAFA programme (10).

(39)

GST Aero Air Company demonstrated a lack of ability or willingness to address safety deficiencies.

(40)

GST Aero Air Company did not respond adequately and timely to an enquiry by the civil aviation authority of Italy regarding the safety aspect of its operation showing a lack of transparency or communication as demonstrated by the absence of reply to the correspondence sent by this Member State.

(41)

There is no evidence of the implementation of an adequate corrective action plan presented by GST Aero Air Company to correct the serious safety deficiencies in response to Italy’s request.

(42)

The authorities of Kazakhstan with responsibility for regulatory oversight of GST Aero Air Company did not fully cooperate with the civil aviation authority of Italy when concerns about the safety of the operation of a carrier licensed or certified in that state were raised, as demonstrated by the limited reply to the correspondence sent by Italy.

(43)

Therefore, on the basis of the common criteria, it is assessed that GST Aero Air Company does not meet the relevant safety standards.

(44)

The authorities with responsibility for regulatory oversight of Kirghizstan have shown an insufficient ability to implement and enforce the relevant safety standards with regard to Phoenix Aviation. While Phoenix Aviation’s Air Operator’s Certificate was issued by Kyrgyzstan, there is evidence showing s that the airline has its principal place of business in the United Arab Emirates (UAE), contrary to the requirements of Annex 6 to the Chicago Convention. The US National Transportation Safety Board’s Factual Report (11) into an accident involving Kam Air flight 904, which was operated by Phoenix Aviation, states that Phoenix Aviation has its headquarters in the UAE.

(45)

Therefore, on the basis of the common criteria, it is assessed that Phoenix Aviation does not meet the relevant safety standards.

(46)

There is verified evidence of serious safety deficiencies on the part of Phuket Airlines. These deficiencies have been identified by Member States, the United Kingdom and the Netherlands, during ramp inspections performed under the SAFA programme (12).

(47)

Phuket Airlines demonstrated a lack of ability to address timely and adequately these safety deficiencies.

(48)

The authorities with responsibility for regulatory oversight of Thailand did not fully cooperate with the civil aviation authority of the Netherlands when concerns about the safety of Phuket Airlines certified in that state were raised as demonstrated by the lack of pertinent responses to the correspondence from this Member State.

(49)

Therefore, on the basis of the common criteria, it is assessed that Phuket Airlines does not meet the relevant safety standards.

(50)

There is verified evidence of serious safety deficiencies on the part of Reem Air. These deficiencies have been initially identified by the Netherlands, during ramp inspections performed under the SAFA programme (13).

(51)

Persistent failure by Reem Air to address deficiencies was confirmed by the Netherlands, during subsequent ramp inspections on one specific aircraft performed under the SAFA programme (14).

(52)

Reem Air demonstrated a lack of ability or willingness to address safety deficiencies.

(53)

Reem Air did not respond adequately and timely to an enquiry by the civil aviation authority of the Netherlands regarding the safety aspect of its operation showing a lack of transparency or communication as demonstrated by the absence of reply to the correspondence sent by this Member State.

(54)

There is no evidence of the implementation of an adequate corrective action plan presented by Reem Air to correct the identified serious safety deficiencies in response to the request from the Netherlands.

(55)

The authorities of Kirghizstan with responsibility for regulatory oversight of Reem Air have not exercised an adequate oversight on this carrier in accordance with their obligations under the Chicago Convention, as demonstrated by the persistence of serious safety deficiencies. In addition, information provided to the Commission by Reem Air during the hearing granted to this company evidences that, while Reem Air Operator’s Certificate was issued by Kyrgyzstan, this airline has its principal place of business in the United Arab Emirates (UAE), contrary to the requirements of Annex 6 to the Chicago Convention.

(56)

Therefore, on the basis of the common criteria, it is assessed that Reem Air does not meet the relevant safety standards.

(57)

There is verified evidence of serious safety deficiencies on the part of Silverback Cargo Freighters. These deficiencies have been identified by Belgium during a ramp inspection performed under the SAFA programme (15).

(58)

Silverback Cargo Freighters which equally assures the maintenance (A&B checks) of its own aircraft, did not respond adequately to an enquiry by the civil aviation authority of this Member State regarding the safety aspect of its operation showing a lack of transparency or communication as demonstrated by the lack of pertinent response to requests made by this Member State.

(59)

Therefore, on the basis of the common criteria, it is assessed that Silverback Cargo Freighters does not meet the relevant safety standards.

(60)

In spite of its efforts, the civil aviation authorities of the Democratic Republic of Congo (‘DRC’) have persistent difficulties to implement and enforce the relevant safety standards, as demonstrated by the ICAO-USOAP — Audit Summary Report of the Directorate of Civil Aviation of the Democratic Republic of Congo (Kinshasa, 11-18 June 2001). In particular, no system for the certification of Air Operators is currently in place.

(61)

The authorities of the DRC with responsibility for regulatory oversight have consequently shown a lack of ability to carry out adequate safety oversight.

(62)

An operating ban is imposed on Central Air Express because of substantiated deficiencies related to international safety standards, and its lack of cooperation with a Member State.

(63)

Belgium (16) and Hewa Bora Airways (HBA) have provided information showing that, in the case of HBA, the deficiencies observed in the past by the Belgian authorities have been significantly corrected with respect to certain aircraft. Belgium has further informed the Commission that it intends to conduct systematic ramp inspections of HBA. In view of this, it is considered that this air carrier should be allowed to continue its current operations.

(64)

Therefore, on the basis of the common criteria, it is assessed that all air carriers certified in the Democratic Republic of Congo (RDC) should be included in Annex A with the exception of Hewa Bora Airways (HBA) which should be included in Annex B.

(65)

The authorities with responsibility for regulatory oversight of Equatorial Guinea did not fully cooperate with the civil aviation authority of the United Kingdom (UK) when concerns about the safety of the operation of carriers licensed or certified in that state were raised. The UK wrote to the Director General of Civil Aviation in Equatorial Guinea on 27 March 2002 (17) seeking clarification on the following points:

The letter also advised the Director General of Civil Aviation that the UK would not be in a position to allow further commercial operations to its territory by Equatorial Guinea airlines until the UK authorities were satisfied that these airlines were receiving satisfactory oversight. Equatorial Guinea did not reply to this letter.

(66)

The authorities with responsibility for regulatory oversight of Equatorial Guinea have shown an insufficient ability to implement and enforce the relevant safety standards, in particular as demonstrated by audits and related corrective action plans established under ICAO’s Universal Safety Oversight Audit Programme. Such a USOAP audit of Equatorial Guinea took place in May 2001 whereby the audit report (18) indicated that the Civil Aviation Authority did not, at the time of the audit, have the ability to provide adequate oversight to its airlines and ensure that they operate in accordance with ICAO standards. These audit findings namely included:

Furthermore the Directorate General of Civil Aviation of Equatorial Guinea has never up to date submitted to ICAO an action plan to address these audit findings (19) and consequently an audit follow up mission has not taken place.

(67)

The authorities with responsibility for regulatory oversight of Equatorial Guinea have shown an insufficient ability to implement and enforce the relevant safety standards in accordance with their obligations under the Chicago Convention. In fact, some holders of Air Operator Certificate (AOC) issued by Equatorial Guinea do not have their principal place of business in Equatorial Guinea, contrary to the requirements of Annex 6 to the Chicago Convention (20).

(68)

The authorities of Equatorial Guinea with responsibility for regulatory oversight of the following air carriers have shown a lack of ability to carry out adequate safety oversight on these carriers: Air Consul SA, Avirex Guinée Equatoriale, COAGE — Compagnie Aeree de Guinée Equatorial, Ecuato Guineana de Aviación, Ecuatorial Cargo, GEASA — Guinea Ecuatorial Airlines SA, GETRA — Guinea Ecuatorial de Transportes Aéreos, Jetline Inc., King Transavia Cargo, Prompt Air GE SA, UTAGE — Unión de Transporte Aéreo de Guinea Ecuatorial.

(69)

Therefore, on the basis of the common criteria, it is assessed that all air carriers certified in Equatorial Guinea should be subject to an operating ban and included in Annex A.

(70)

There is verified evidence of serious safety deficiencies on the part of International Air Services certified in Liberia. These deficiencies have been identified by France, during ramp inspections performed under the SAFA programme (21).

(71)

The authorities with responsibility for regulatory oversight of Liberia did not fully cooperate with the civil aviation authority of the United Kingdom (UK) when informed of serious safety deficiencies identified during a ramp inspection of a Liberian-registered aircraft carried out by the UK civil aviation authority on 5 March 1996 (22). Concerns about the safety of the operation of carriers licensed or certified in Liberia were promptly raised when on 12 March 1996 the Liberian DCA was advised by the UK civil aviation authority that all requests for permits for Liberian registered aircraft to operate commercial services to the UK would be refused until the Liberian authorities could demonstrate the existence of an effective regulatory system to ensure the airworthiness of aircraft on the Liberian register. No response was ever received from the Liberian authorities. Likewise, the Liberian authorities did not fully cooperate with the civil aviation authority of France by declining to reply when the latter Member State raised concerns about the safety of the operation of a carrier licensed or certified in Liberia.

(72)

The authorities with responsibility for regulatory oversight of Liberia have shown an insufficient ability to implement and enforce the relevant safety standards. The Government of Liberia itself admitted in 1996 (23) that it was unable to maintain regulatory control over Liberian registered aircraft because of the civil conflict. While the Comprehensive Peace Agreement was signed in 2003 and the UN and the National Transitional Government of Liberia are slowly putting in place measures to improve security, it is unlikely that the Government’s ability to regulate its register has improved since 1996. ICAO has not yet carried out a USOAP audit of Liberia because of the security situation.

(73)

The authorities of Liberia with responsibility for regulatory oversight of the following air carriers have shown a lack of ability to carry out adequate safety oversight on these carriers: International Air Services Inc., Satgur Air Transport Corp., Weasua Air Transport Co. Ltd.

(74)

Therefore, on the basis of the common criteria, it is assessed that all air carriers certified in Liberia should be subject to an operating ban and included in Annex A.

(75)

There is verified evidence of serious safety deficiencies on the part of Air Universal Ltd. These deficiencies have been identified by Sweden during a ramp inspection performed under the SAFA programme (24).

(76)

The authorities with responsibility for regulatory oversight of Sierra Leone did not fully cooperate with the civil aviation authority of Sweden when concerns about the safety of the operation of Air Universal Ltd. certified in that state were raised, as demonstrated by the lack of response to the correspondence from this Member State.

(77)

The operating authorisation or technical permission of any carrier under the oversight of Sierra Leone has previously been refused or revoked by the United Kingdom.

(78)

While the Air Operator’s Certificate of Air Universal Ltd was issued by Sierra Leone, evidence shows that the airline has currently its principal place of business in Jordan, contrary to the requirements of Annex 6 to the Chicago Convention.

(79)

The authorities of Sierra Leone with responsibility for regulatory oversight of Air Universal Ltd have not exercised an adequate oversight on this carrier in accordance with their obligations under the Chicago Convention.

(80)

Therefore, on the basis of the common criteria, it is assessed that Air Universal Ltd. does not meet the relevant safety standards.

(81)

There is verified evidence of serious safety deficiencies on the part of air carriers certified in Sierra Leone. These deficiencies have been identified by three Member States, the UK, Malta and Sweden, during ramp inspections performed under the SAFA programme (25).

(82)

The authorities with responsibility for regulatory oversight of Sierra Leone did not fully cooperate with the civil aviation authorities of Sweden and of Malta when concerns about the safety of the operation of Air Universal Ltd certified in that state were raised as demonstrated by the lack of response to the correspondence from this Member State.

(83)

The authorities with responsibility for regulatory oversight of Sierra Leone have shown an insufficient ability to implement and enforce the relevant safety standards in accordance with their obligations under the Chicago Convention. Sierra Leone lacks an appropriate system in place to oversee its operators or the aircraft, and does not have the technical capability or resources to undertake such a task. Some holders of Air Operator Certificate (AOC) issued by Sierra Leone did not have their principal place of business in Sierra Leone, contrary to the requirements of Annex 6 to the Chicago Convention.

(84)

The corrective action plan presented by Sierra Leone is considered inappropriate (or insufficient) to correct the identified serious safety deficiencies. The Civil Aviation Authority of Sierra Leone has contracted a private company, International Aviation Surveyors (IAS), to conduct certain oversight activities on its behalf. However, the arrangements entered into between the two parties in a Memorandum of Understanding (26) do not provide an adequate oversight system for aircraft on the Sierra Leone register. In particular:

(85)

The authorities of Sierra Leone with responsibility for regulatory oversight of the following air carriers have shown a lack of ability to carry out adequate safety oversight on these carriers: Aerolift Co. Ltd, Afrik Air Links, Air Leone Ltd, Air Rum Ltd, Air Salone Ltd, Air Universal Ltd, Destiny Air Services Ltd, First Line Air (SL) Ltd, Heavylift Cargo, Paramount Airlines Ltd, Star Air Ltd, Teebah Airways, West Coast Airways Ltd.

(86)

Therefore, on the basis of the common criteria, it is assessed that all air carriers certified in Sierra Leone should be subject to an operating ban and included in Annex A.

(87)

There is verified evidence of serious safety deficiencies on the part of Jet Africa, an air carrier certified in Swaziland. These deficiencies have been identified by the Netherlands during a ramp inspection performed under the SAFA programme (27).

(88)

Jet Africa did not respond adequately and timely to an enquiry by the civil aviation authority of the Netherlands regarding the safety aspect of its operation showing a lack of transparency or communication as demonstrated by the absence of reply to the correspondence sent by this Member State.

(89)

There is no evidence of a corrective action plan presented by Jet Africa to correct the serious safety deficiencies in response to the Netherlands request.

(90)

The authorities with responsibility for regulatory oversight of Swaziland have shown an insufficient ability to implement and enforce the relevant safety standards, in particular as demonstrated by a USOAP audit which took place in March 1999. The audit report (28) concluded that at the time of the audit, Swaziland was not capable of satisfactorily undertaking safety oversight related responsibilities in respect of its airlines and aircraft register. It also noted that it was not possible to determine the actual number of aircraft on the register as it was not properly maintained. Neither was it possible for the audit team to determine the actual number of personnel licences issued by Swaziland that were still valid, as records were not being maintained. A USOAP audit follow up mission has not taken place because Swaziland has not provided ICAO with information on the progress it has made in implementing the action plan to address the audit findings.

(91)

The authorities of Swaziland with responsibility for regulatory oversight of the following air carriers have shown a lack of ability to carry out adequate safety oversight on these carriers: Aero Africa (Pty) Ltd, African International Airways (Pty) Ltd, Airlink Swaziland Ltd, Northeast Airlines (Pty) Ltd, Scan Air Charter Ltd, Swazi Express Airways, Jet Africa.

(92)

Therefore, on the basis of the common criteria, it is assessed that all air carriers certified in Swaziland should be subject to an operating ban and included in Annex A.

(93)

Since it would not compromise safety, all air carriers mentioned above can be permitted to exercise traffic rights by using wet-leased aircraft of an air carrier which is not subject to an operating ban, provided that the relevant safety standards are complied with.

(94)

The Community list has to be updated regularly and as soon as it is required, in order to take into account the evolution of safety in relation to the air carriers concerned and on the basis of further evidence of remedial actions undertaken.

(95)

In light of the evidence provided by Tuninter and the authorities of Tunisia with responsibility for its regulatory oversight and further confirmation by Italy, it is considered that there is substantiated evidence that the safety deficiencies observed during two on-site inspections by the Italian authorities have been corrected by this carrier.

(96)

On the basis of the information provided by Germany, it is considered that there is no longer substantiated evidence of a lack of ability or willingness of the authorities of Tajikistan with responsibility for regulatory oversight of air carriers certified in this State.

(97)

On the basis of the information provided to Belgium showing that the deficiencies which led to a national ban on I.C.T.T.P.W. and South Airlines have been fully remedied, it is considered that there is no substantiated evidence of persisting serious safety deficiencies on the part of these air carriers.

(98)

On the basis of the information provided by Germany showing that the specific aircraft which led to the imposition of a operational restriction on Atlant Soyuz is no more part of its fleet, it is considered that there is no substantiated evidence of persisting serious safety deficiencies on the part of this air carrier.

(99)

On the basis of the information available at this stage, it is considered that there is no substantiated evidence of non-corrected serious safety deficiencies on the part of Air Mauritanie. Nevertheless, the ability of the authorities of Mauritania with responsibility for regulatory oversight of this air carrier needs to be further assessed. To this end, an evaluation of the authorities of Mauritania with responsibility for regulatory oversight of this air carrier and the undertakings under its responsibility should be conducted within 2 months by the Commission with the assistance of the authorities of any interested Member States.

(100)

The measures provided for in this Regulation are in accordance with the opinion of the Air Safety Committee,

(1)

By letter of 7 January 2003 (registered as received on 10 January under No A/30189), the Netherlands notified operating aid for AVR Nutsbedrijf Gevaarlijk Afval B.V. (hereinafter ‘AVR Nuts’) for treating hazardous waste in the Netherlands with a view to disposal. The bulk of the aid was for the incineration of such waste in two rotating drum furnaces (‘RDFs’). The Netherlands invoked Article 86(2) of the Treaty and asked the Commission to decide that the measure does not constitute state aid within the meaning of Article 87(1) of the Treaty since it represents appropriate compensation for the obligation to provide a service of general economic interest (‘SGEI’) within the meaning of Article 86(2) of the Treaty. The case was registered under No N 43/2003.

(2)

The Commission requested additional information by letters of 7 February 2003 (D/50847) and 22 April 2003 (D/52566). The Netherlands submitted that information by letters of 24 March 2003 (registered as received on 28 March 2003 under No A/32279) and 19 June 2003 (registered as received on 25 June under No A/34394). Representatives of the Netherlands and of the Commission met on 21 May 2003. Two competitors submitted a joint complaint on the aid by letter of 2 May 2003 (registered as received on 5 May under No A/33155). By letter of 20 May 2003 (registered as received the same day under No A/33548), they informed the Commission that a subsidiary of one of them supported the complaint as well.

(3)

By decision C(2003)1763 of 24 June 2003, the Commission initiated the Article 88(2) procedure in respect of the notified measure. The case was registered as aid measure No C 43/2003. This decision was sent to the Netherlands by letter of 26 June 2003 (D/230250). It was published in the Official Journal of the European Union dated 20 August 2003 (2). The Commission received comments from four interested parties (registered under Nos A/36309, A/36463, A/36645, A/36679, A/36870, A/37077, A/37480 and A/37569), including from the two competitors that had submitted the complaint in May, also on behalf of another company belonging to the group to which one of the two original competitors belongs (hereinafter these four entities together are referred to as ‘the two joint competitors’). The Commission forwarded these comments to the Netherlands by letters of 1 October 2003 (D/56129), 29 October 2003 (D/56898), 7 November 2003 (D/57120) and 12 November 2003 (D/57185). These letters also contained some further questions from the Commission.

(4)

By letter of 13 August 2003 (registered as received on 14 August 2003 under No A/35706), the two joint competitors informed the Commission that part of the aid had been paid to AVR Nuts and they asked the Commission to take an injunction decision to suspend further payments and a decision ordering the Netherlands to provisionally recover the aid pursuant to Article 11 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (3). As requested by the Commission on 20 August 2003 (D/55321), the Netherlands confirmed by letter of 25 September 2003 (registered as received on 30 September under No A/36690) that, as regards 2002 and the first quarter of 2003, the notified aid had been paid to AVR Nuts. By letter of 20 October 2003 (D/56735), the Commission informed the two joint competitors that it did not intend to take the decisions requested. The two joint competitors restated their request by letters of 14 November 2003 (registered as received on 17 November under No A/37909) and of 1 December 2003 (registered as received on 2 December under No A/38325). The letter of 1 December and the Commission’s reply of 24 November 2003 (D/57541) confirming its position actually crossed in the post.

(5)

After requesting an extension (letter of 14 July 2003, registered as received on 18 July under No A/35109 and letter of 29 October 2003, registered as received on 5 November under No A/37568) that was granted by letter of 23 July 2003 (D/54737), the Netherlands commented on the Commission’s decision by letter of 18 December 2003 (registered as received on 8 January 2004 under No A/30088). It gave its observations on the comments from interested parties by letters of 23 December 2003 (registered as received on 8 January 2004 under No A/30090), 23 January 2004 (registered as received on 29 January under No A/30621), 25 February 2004 (registered as received on 27 February under No A/31451) and 23 April 2004 (registered as received on 30 April under No A/33118). By means of the last two letters, the Netherlands also informed the Commission of ongoing developments at AVR Nuts. Since the mounting deficits would require increasing amounts of aid, it was decided to close one of the two RDFs with effect from 1 July 2004. Closure of the second RDF was still under consideration. It transpired that the original aid contract contained provisions to the effect that the Netherlands would grant some compensation for the costs of closure.

(6)

In view of the new information, the Commission adopted on 14 July 2004 decision C(2004) 2640 fin extending the Article 88(2) procedure to the compensation for the costs of the (possible) closure of the RDFs. On 16 July this decision was sent to the Netherlands, which asked for an extension of the deadline for comments and for a meeting to be convened to discuss the ongoing developments (letter of 30 July 2003, registered as received on 4 August under A/35996). A meeting between representatives of the Netherlands and of the Commission took place on 23 August 2004. Another meeting between representatives of the Commission and of the two joint competitors took place on 26 August 2004. For the rest, the law firm represented yet another competitor. The Netherlands commented on the Commission’s decision by letter of 10 September 2004 (registered as received on 17 September under No A/36999). By letter of 30 September 2004 (D/56902), the Commission requested further information which the Netherlands provided by letter of 22 October 2004 (registered as received on 27 October under No A/38271). In that letter, the Netherlands confirmed that further aid had been paid to the recipient for the remainder of 2003, the first three quarters of 2004 and the closure of one of the installations.

(7)

The decision to extend the procedure was published in the Official Journal of 9 October 2004 (4). The Commission received comments from the two joint competitors (letters of 16 and 19 November 2004, registered under Nos A/38860 and A/38978). It forwarded these comments to the Netherlands by letter of 22 November 2004 (D/58307). The Netherlands made observations on these comments and answered the Commission's questions by letters of 22 December 2004 (registered as received on 5 January 2005 under No A/30171) and 12 January 2005 (registered as received on 17 January under No A/30525). In these letters, the Netherlands informed the Commission not only of the decision to close the remaining RDF but also of the corresponding compensation for the costs of closure.

(8)

Lastly, the two joint competitors confirmed their opposition to the aid by letters of 25 April 2005 (registered as received the same day under No A/33476) and 2 May 2005 (registered as received on 12 May under No A/33884). Following these letters, yet another meeting between representatives of the Commission and of the two joint competitors took place on 26 May. Again, the law firm also represented the same third competitor (hereinafter this competitor together with the other two are referred to as the ‘three joint competitors’). At the meeting, a document was presented suggesting that further aid for 2004 had been paid to AVR Nuts.

(9)

Article 5(1) of Council Directive 75/442/EEC of 15 July 1975 on waste (5) stipulates that ‘Member States shall take appropriate measures, in cooperation with other Member States where this is necessary or advisable, to establish an integrated and adequate network of disposal installations, taking account of the best available technology not involving excessive costs. The network must enable the Community as a whole to become self-sufficient in waste disposal and the Member States to move towards that aim individually, taking into account geographical circumstances or the need for specialized installations for certain types of waste.’ Article 5(2) of the Directive stipulates that ‘the network must also enable waste to be disposed of in one of the nearest appropriate installations, by means of the most appropriate methods and technologies in order to ensure a high level of protection for the environment and public health.’

(10)

In the early 1990s, with a view to meeting these objectives, a special landfill site (‘C2 depot’) and several RDFs began operations in the Netherlands. The C2 depot is used for the appropriate disposal of hazardous waste that cannot be incinerated (‘C2 waste’). The RDFs are used for the appropriate disposal of hazardous waste that, despite a low calorific value, can still be incinerated (6) (‘RDF waste’). This incineration requires co-fuelling and, in practice, the most cost-efficient fuel is hazardous waste with a high calorific value.

(11)

In accordance with Article 8(3) of Directive 75/442/EC and Article 4(3) of Council Regulation (EEC) No 259/93 on the supervision and control of shipments of waste within, into and out of the European Community (7), Member States may prohibit export of ‘waste for disposal’. It is only after various controls have been carried out that such waste may be traded. However, Member States are not generally allowed to prohibit the exportation to other Member States of ‘waste for recovery’ (8). The concepts of ‘waste for disposal’ and ‘waste for recovery’ have been clarified in various judgments by the Court of Justice of the European Communities (9). As a result, compared with the interpretation given to date by the Netherlands, a smaller amount of hazardous waste qualifies as waste for disposal while a larger amount qualifies as waste for recovery. The distinction does not depend on the calorific value of the waste, but rather on the primary objective of the installation in which the waste is treated and on the nature of the waste.

(12)

C2 waste and RDF waste are supplied by companies in all sectors of the economy. Important sectors include metalworking, business and public services, the (petro-) chemical industry, transport and mining. Most of the waste is handled by specialised intermediaries that typically offer a service covering the various types of waste produced by a company, i.e. C2 and RDF waste, other hazardous waste and non-hazardous waste. Such services are, of course, largely tied to the place where the waste is produced, but the more specific types of waste are transported over longer distances. Several large industrial waste companies operate internationally, with establishments in various countries.

(13)

In recent years, the options for putting hazardous waste to effective use have increased. More and more of it is being used in the cement industry (in particular in Belgium) or for filling abandoned mines (in particular in Germany). The Court’s strict interpretation of ‘waste for disposal’ has facilitated this development. At the same time, producers have further reduced the amounts of waste they generate. Within legal limits they can, at least to some extent, blend some of it with less hazardous waste, thereby reducing the costs of disposal or recovery. As a result, the supply of RDF waste fell from about 80 000/100 000 tonnes in 1995 to about 34 000 tonnes in 2002, compared with an anticipated figure of some 38 500 tonnes. In mid-2004 AVR estimated that only 16 000 tonnes of RDF waste would be offered to it annually (10). The supply of C2 waste decreased from about 6 000 tonnes in 2000 to 4 000 tonnes in 2002. Exports of hazardous waste produced in the Netherlands have increased to some 36 000 tonnes, of which some 4 000 tonnes is RDF waste, resulting in overcapacity as regards disposal facilities. This has become a wider phenomenon affecting, for example, the United Kingdom, Germany and Belgium.

(14)

The C2 depot and the various RDFs were originally set up by AVR Chemie C.V. (‘AVR Chemie’), which is owned 30 % by the State and 70 % by Holding AVR Bedrijven N.V. (‘AVR-Holding’ or ‘AVR’ in short). AVR is a major player on the Dutch waste market. It is currently 100 %-owned by Rotterdam municipality, which has though recently announced its intention to sell its shares in AVR. As from the mid-1990s, AVR Chemie incurred losses (€10,9 million in 2000 and €7,2 million in 2001). For this reason, AVR wished to close down the three RDFs operating at that time. The Netherlands, however, reached an agreement on a restructuring. AVR Chemie was split up and AVR Nuts was created in order to continue with the disposal of C2 and RDF waste after the closure of one of the three RDFs. AVR-Industrial Waste Services Rotterdam B.V. (‘AVR IW’) was set up to take over the remaining activities on the (hazardous) waste markets, on which AVR wanted to remain active for its own commercial reasons. Both are wholly owned by AVR. AVR Chemie’s only remaining activity is renting out the facilities to AVR Nuts. AVR Nuts and AVR IW cooperate closely. A service contract stipulates that most of AVR Nuts’ management and commercial functions are carried out by AVR IW.

(15)

The capacity of the two RDFs for which AVR has a permit is 100 000 tonnes of hazardous waste per year. The theoretically available capacity is 80-85 % of the permitted capacity. AVR treated 84 880 tonnes of hazardous waste (both RDF and other) in 2001, 81 274 tonnes in 2002 and 78 297 tonnes in 2003. Incineration of RDF waste requires more or less the same quantity of other hazardous waste as fuel. The actual volume of RDF waste treated in the RDFs is estimated at 19 000 tonnes for 2002 and 23 000 tonnes for 2003. Certain types of RDF waste can also be disposed of in municipal waste incinerators, which operate at a lower temperature.

(16)

AVR Nuts is obliged to keep separate accounts in accordance with Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings (11).

(17)

The aid and the activities for which it is granted are defined in a concession decision by the Minister for Housing, Spatial Planning and the Environment (VROM) dated 3 July 2002 and in a concession agreement between the Netherlands, AVR Holding, AVR Nuts, AVR IW and a number of other subsidiaries signed on 10 July 2002. By virtue of the decision, the State ‘grants AVR Nuts the exclusive right for a period of 5 years to operate the C2 depot and deal with hazardous waste in the RDFs subject to the obligation to offer the services of these installations as services of general economic interest to the public on reasonable, transparent and non-discriminatory conditions and against socially acceptable tariffs, in compliance with the conditions and provisions laid down in greater detail in the concession agreement.’ The agreement determines in detail the conditions for AVR Nuts’ operations. It was to run from 1 January 2002 to 31 December 2006.

(18)

The aid amounts to 100 % of the predetermined operating deficit, which is calculated on the basis of a methodology laid down by an independent accountant. In the event of a predetermined operating surplus, 70 % of it would be used to pay back the aid granted previously. The predetermined deficits for 2002 and 2003 amounted to €1,5 million and €2,8 million respectively. Annex I to this decision provides a summary of the methodology and its application for 2002, 2003 and 2004. Most of the aid concerns the RDFs. For the C2 depot, the predetermined deficit amounted to €0.37 million in 2003, for example.

(19)

In accordance with the service contract, AVR IW carries out most of AVR Nuts’ administrative and operational functions. For this, it receives compensation the amount of which is included in the predetermined deficit on the basis of ‘activity-based costing’. In practice, this meant that, for the years 2002-04, an average of 30 % of AVR’s overheads was allocated to AVR Nuts.

(20)

One additional cost element which is included in the predetermined budget and for which AVR Nuts receives aid that it passes on to AVR IW concerns waste acquisition. Given the important weight of fixed costs, active acquisition of waste was considered necessary to maximise capacity utilisation and thus to minimise operating costs. The predetermined and actual costs are presented in Table 1 below.

Table 1

Predetermined and actual acquisition costs

(21)

At the outset, the deficit was expected to increase to €3,8 million in 2006, but market and operating conditions proved to be much more difficult than anticipated, with little hope for improvement. For the period 2002-03, in addition to the predetermined deficit, AVR Nuts incurred losses of €12 million. The predetermined deficits for 2004 and thereafter were expected to be much higher than foreseen and, indeed, the predetermined deficit for 2004 amounted to €8,898 million (12). The calculation took account of the decision to close the RDFs.

(22)

In view of the mounting operating deficits, the Netherlands, as already indicated in points 5 and 7, reconsidered its policy. At the end of 2003, it was decided to close one of the two RDFs with effect from 1 July 2004. In the summer of 2004, it was decided to close the second one with effect from 1 January 2005. For the remaining years, the predetermined losses for accepting C2 waste were, as expected, small.

(23)

The concession agreement provided that the State would compensate AVR financially for the remaining book value of investments carried out in favour of AVR-Nuts during the period covered by the agreement with the approval of the State but not yet written off. Applying this clause in advance, the Dutch authorities calculated compensation of €8 670 108 for the costs of closing down the first RDF. This amount concerns various investments which were written off to the extent of 50 % if they concerned both RDFs or to the extent of 100 % if they were made specifically for the RDF that was being closed down. The main items in this amount are €1,9 million for investments in fire safety, €3,3 million for a homogenisation plant, €1,5 million for replacing coke funnels and €0,5 million for a drum end and Stefferson ring. For the closure of the second RDF, the calculation includes €11 151 000 for the remaining book value of the installations and tangible fixed assets. This amount includes the other 50 % of the remaining book value of the above investments carried out with the approval of the State and 100 % of the remaining book value of the investments carried out with the approval of the State but concerning only the second RDF. This latter item includes notably the investment in the general overhaul of the remaining RDF, which was carried out during 2004. The overall cost was €3 273 000, which was more than expected. With the benefit of hindsight, this turned out to be an unfortunate investment.

(24)

Since the Netherlands was, in principle, also required by the concession agreement to compensate for the budget deficits up to and including 2006, the State had to negotiate with AVR on compensation for the additional costs of closing down the second RDF with effect from 1 January 2004, instead of the original date on which the agreement would have expired. The compensation thus includes the following additional amounts:

(25)

In those negotiations, the Netherlands was assisted by an independent accountant whose report was made available to the Commission. Altogether, the agreed compensation for closure of the second RDF amounted to €27,850 million. This is significantly lower than the sum of AVR’s own estimates, viz. €58,544 million (or €46 828 million when the additional losses incurred by AVR Nuts in 2002 and 2003 are excluded). The Netherlands explained that, if the remaining RDF had continued operating until the end of 2006, the sum of the estimated operating deficits for 2005 and 2006 and the compensation for the costs of closure at the end of 2006 would have amounted to €31 million. The agreement on early closure therefore reduced the cost to the State.

(26)

This compensation for closure brings the total amount of aid for the period 2002-04 to €49 718 108 (see overview in Table 2).

Table 2

Overview of compensation paid to AVR

(27)

The Netherlands acknowledged that aid totalling €19 543 608 had been paid to AVR. The compensation for the closure of the second RDF has been paid into a blocked account.

(28)

The concession agreement also contains a guarantee by the State that, if AVR Chemie is wound up, the State will pay a maximum of 30 % of the removal and follow-up costs of dismantling and decontaminating the installations. This percentage corresponds to the State’s holding in AVR Chemie.

(29)

Prior to the concession agreement, the gate fees charged by AVR Chemie had been increased to a level of NLG 700/tonne (€317,6). Increasing fees even further would, according to the Netherlands, lead to practices such as mixing hazardous waste with other waste streams and illegal landfill, and this would not be conducive to reducing the operating deficit. The fees are high in comparison with those in neighbouring Member States, this being possible thanks to the Dutch policy of prohibiting exports of waste for disposal. The objective of the aid measures was to maintain the fees unchanged, not to reduce them. To this end, the concession agreement contains an annex laying down the structure and coverage of the fees and the method of calculating them. The Dutch authorities have control over the level of the fees as the predetermined budget deficit requires their approval beforehand and the fees are, of course, a crucial element in the calculation.

(30)

Gate fees for high-calorific hazardous waste used as fuel are much lower than those for RDF waste. AVR Nuts ‘buys’ the former at market rates, i.e. fees that would be charged in the event of treatment, say, in foreign RDFs or in the cement industry.

(31)

Fixed costs are very high compared with variable costs so, in order to minimise its losses, AVR Nuts seeks to maximise capacity utilisation. Therefore, the gate fees charged to suppliers of hazardous waste are reduced when the annual volume supplied increases. These ‘staggered rebates’ are fixed in advance and apply when RDF waste is offered together with at least 75 % of the same volume of high-calorific waste.

(32)

All fees are fixed in advance for the entire concession period (13) and apply equally to AVR’s competitors and AVR IW. As from the start of the concession agreement, the fees for C2 and RDF waste were publicly available to any supplier. As from early 2004, this was also the case for high-calorific hazardous waste.

(33)

In order to be able to plan capacity utilisation, AVR IW asks suppliers each year to indicate how much waste they plan to supply and gate fees are calculated during the year on the basis of the corresponding staggered rebate. If the actual volume supplied at the end of year is higher or lower than indicated, a repayment is made or an additional charge calculated to take account of the appropriate staggered rebate based on actual supply. The agreements generally did not contain an obligation to supply the quantity indicated in advance.

(34)

In its decision to initiate the Article 88(2) procedure, the Commission expressed the following doubts.

(35)

First, the Commission doubted whether AVR Nuts’ activities could properly be regarded as an SGEI within the meaning of Article 86(2) of the Treaty as it was not clear, for example, whether AVR would be the only company capable of offering such services on the same or similar conditions. It also doubted whether the Netherlands had followed the appropriate procedure in selecting AVR Nuts. Furthermore, it doubted whether infringement of the ‘polluter pays’ principle was avoided under all circumstances as producers of the waste concerned must pay gate fees at a level that can be considered as a normal cost.

(36)

Second, the Commission expressed doubts regarding possible overcompensation that could spill over into other segments of the waste market. It was concerned that overcompensation may also stem from the fact that the aid was based on an ex ante calculation, allowing AVR Nuts to keep part of any positive difference between actual and predetermined profits or losses.

(37)

Third, if the measure were to be assessed under Article 87, the Commission doubted whether the Community guidelines on state aid for environmental protection (14) (the ‘guidelines on environmental aid’) would provide justification for finding the aid compatible with the common market.

(38)

In its decision to extend the Article 88(2) procedure, the Commission explained that it had similar doubts as regards the much higher amount of aid for 2004 and the compensation for the untimely closure of the RDFs.

(39)

Four interested parties sent in their comments following the Commission’s decision to initiate the Article 88(2) procedure.

(40)

The first of them argued that the measure would distort competition on the Irish market as it would enable AVR to charge prices below cost and significantly below normal market prices on the Irish market through its 50 % shareholding in a joint venture with the Irish company Safeway Warehousing/South Coast Transport.

(41)

The second interested party also pointed to the unfair competitive advantage enjoyed by the AVR/Safeway joint venture. Large quantities of hazardous waste are imported from Ireland. This interested party maintained too that the measure would distort competition on the international market for ‘turnkey clean-up’ operations of PCBs, pesticides and other hazardous organic waste.

(42)

The third interested party, Edelchemie, was concerned about the domestic market. It had developed its own technology for treating photographic and galvanic waste (ECO option) and recovering valuable materials from this waste (including precious metals and obsidian). The measures to assist AVR would not only harm its business but would also stifle technological development. Edelchemie's comments concern AVR Nuts, AVR Chemie and its predecessors as from 1963, providing details on Dutch hazardous waste policy over the years.

(43)

Lastly, the three joint competitors drew attention to the domestic market for RDF waste. Equivalent capacity to AVR’s RDFs would exist both in the Netherlands and in other Member States. The expansion of AVR’s activities would have created overcapacity on the Dutch market for RDF waste and the data on RDF waste would not give a complete and correct picture. In the mid-1990s AVR closed one of its RDFs and, even then, the supply of hazardous waste could be expected to decline further. In view of those expectations, it had been appropriate to close one of the two remaining RDFs. At the meeting on 26 May 2005, a representative stated literally that ‘The right decision [in 2002] had been to close down one RDF’. Moreover, AVR would abuse its dominant position by charging high fees, by requiring that the RDFs be supplied at the same time with high-calorific waste and because the fee structure would not be transparent and publicly available. It would, furthermore, enable AVR IW to charge fees for certain types of RDF waste and subsequently to treat this waste in the grate incinerators of the municipal waste incinerators, and this would result in lower operating costs as these furnaces can operate at a lower temperature.

(44)

The measure would constitute incompatible operating aid. The service would not constitute an SGEI and the four criteria resulting from the Altmark judgment and which determine whether or not compensation constitutes state aid (15) would not be fulfilled. For the Commission to approve (part of) the aid, various conditions would have to be met to prevent cross-subsidisation, tying practices and price discrimination. In addition, the Netherlands should not be allowed to extend the measure by another ten years.

(45)

The two joint competitors also sent in comments following the Commission’s decision to extend the procedure. They restated all the elements of their first submission and provided additional documents to demonstrate the existence of cross-subsidisation. In addition, the following issues were raised.

(46)

First, it was surprising that, despite the closure of one of the RDFs, the predetermined operating deficit was so much higher than initially foreseen. If the fourth Altmark criterion (efficiency) had been respected, the operating deficit should have fallen.

(47)

Second, they objected to the aid as compensation for closing down the RDFs. There was no countervailing obligation on AVR. This compensation should not be referred to as an indemnification and was not justified, among other things because the investments were made with a view to maintaining operations for 10 years, whereas they have been used for less than 3 years. They questioned as well the details of the calculations, in particular the amount to be written off, the redundancy costs and the recurrent fixed costs. The total amount was very high, much higher than the amount of €2 million referred to in Article 21(2) of the concession agreement. Furthermore, in a parliamentary document, it was stated that ‘when establishing the compensation to be paid to AVR for closure of the RDF, an agreement was reached on an outstanding claim of the Ministry for Housing, Spatial Planning and the Environment on AVR in connection with dioxine pollution of the Lickebaertpolder’. As a consequence, the Ministry received an amount of €2,5 million that was not expected for 2004. The three joint competitors were concerned that settling this dispute may have ‘polluted’ the calculation of the compensation. It gave them the feeling that ‘things are being covered up’.

(48)

Third, they objected to other advantages conferred on AVR by Article 21(5) of the concession agreement, in particular payment by the State of 30 % of the costs of removal and decontamination of the installations in the event of AVR-Chemie's being wound up. In the light of the state aid rules, the State should never have taken on such obligations.

(49)

Fourth, no SGEI would exist, especially since such a service was not necessary in the light of the various alternatives that existed such as pyrolysis, treatment in the cement industry, disposal in salt mines or treatment in energy plants and foreign RDFs. The activities concerned would be defined as an SGEI only when they proved to be loss-making. The concession agreement had been concluded merely with a view to financing the investments in the RDFs for which AVR Nuts had obtained an exclusive right. Furthermore, the two joint competitors doubted whether the aid guaranteed affordable prices for the service since AVR’s gate fees were higher than those in neighbouring countries. The high fees would be explained by AVR’s practices of tying and cross-subsidisation with respect to high-calorific waste used as fuel. They would not be transparent or publicly available. The profits would be booked with AVR IW, the losses with AVR Nuts. This enabled AVR IW to charge higher gate fees for RDF waste. Furthermore, AVR would refuse to accept RDF waste if not accompanied by high-calorific waste, thereby not complying with its obligations under the concession agreement by not providing the service to all customers. Finally, unlike with other alternatives, the quality of the service would be neither maintained nor improved.

(50)

Fifth, the aid would not respect the Altmark criteria. There had been no public tender procedure for granting the concession and the aid would not be established on the basis of the costs of an average, well-managed undertaking. Nor would it be established on the basis of criteria laid down in an objective and transparent way, it would be higher than necessary and it would spill over into other markets. RDFs abroad would be able to charge lower tariffs without state aid. Cheaper alternative disposal methods had not been taken into account either. Furthermore, AVR would be allowed to retain some of the profits if it operated more efficiently than expected.

(51)

Finally, the two joint competitors remarked that the Dutch authorities intended to continue to infringe the state aid rules since, in the case of a negative decision by the Commission, they would discuss it with AVR and look for a solution to the financial problems this might cause for AVR.

(52)

Since Community legislation allows Member States to prohibit the exportation of waste for disposal, the aid would not distort competition between Member States.

(53)

The Netherlands argued that the aid is granted exclusively for an SGEI carried out by AVR Nuts. A public invitation to tender was not considered appropriate as AVR Nuts was the only company in the Netherlands able and willing to deal with all the C2 and RDF waste concerned. The concession, however, was published in the Staatscourant, following which any interested party had the possibility to lodge an appeal. No appeals were lodged. Furthermore, before the decision to close the RDFs, the Dutch authorities had already made the necessary arrangements for organising a public tender procedure for a prolongation.

(54)

The measure would comply with the Altmark criteria and should therefore not be regarded as state aid. Taking the predetermined deficits, for example, the State was assisted by an independent accountancy firm. The measure would not infringe the ‘polluter pays’ principle as the fees are higher than those in neighbouring Member States.

(55)

It would be absolutely wrong for AVR Nuts to accept only RDF waste when offered in combination with high-calorific waste. It also has been explicitly stated that the fees charged to other AVR companies for treating other waste should be the same as those charged to third parties (16). The Netherlands asked an accountancy firm for advice on the possibilities of increasing transparency with regard to the agreements between AVR Nuts and AVR IW. The recommendations given were accepted and implemented.

(56)

As regards AVR Nuts’ results, the Netherlands noted that the calculation of the operating deficit did not take into account any profit margin. In the unexpected event of a predetermined operating surplus, the profit would be limited to only 30 % of the surplus until such time as all previous aid had been repaid.

(57)

The Netherlands noted that the comments did not demonstrate how aid could affect the cost price of the joint venture between AVR and Safeways. That company would have to pay the same fees for treatment in Rotterdam as those charged to domestic suppliers of waste. Moreover, only one third of the waste collected by the joint venture would be treated in Rotterdam and only a small part of that would be C2 and RDF waste as defined in the concession agreement. Competitive prices might be explained by various other factors: 1. Safeway is the only company in Ireland operating transfer station where waste is efficiently sorted and separated before being sent to the most appropriate treatment facility; 2. there is a direct link with the transport company Southcoast, and this gives rise to logistic advantages and cost savings; and 3. in Ireland the level of fees used to be relatively high on account of the absence of competition.

(58)

For the treatment of waste resulting from turnkey clean-up projects, AVR would charge higher fees than it charges domestic suppliers. The average fee for all waste flows from other countries would be somewhat higher than the average fee charged domestically. Furthermore, lower fees would not result in higher aid as the aid depends on the predetermined operating deficit.