19.8.2014   

EN

Official Journal of the European Union

L 244/1

(1)

Council Regulation (EU) No 43/2014 of 20 January 2014 fixing for 2014 the fishing opportunities for certain fish stocks and groups of fish stocks, applicable in Union waters and, to Union vessels, in certain non-Union waters (2) fixes the amount of Bluefin tuna which may be fished in 2014 in the Atlantic Ocean, east of longitude 45° W, and the Mediterranean Sea by European Union fishing vessels and traps.

(2)

Council Regulation (EC) No 302/2009 of 6 April 2009 concerning a multiannual recovery plan for Bluefin tuna in the Eastern Atlantic and Mediterranean, amending Regulation (EC) No 43/2009 and repealing Regulation (EC) No 1559/2007 (3), requires Member States to inform the Commission of the individual quota allocated to their vessels over 24 metres. For catching vessels less than 24 metres and for traps, Member States need to inform the Commission at least of the quota allocated to producer organisations or groups of vessels fishing with similar gear.

(3)

The Common Fisheries Policy is designed to ensure the long-term viability of the fisheries sector through sustainable exploitation of living aquatic resources based on the precautionary approach.

(4)

In accordance with Article 36, paragraph 2 of Regulation (EC) No 1224/2009, where the Commission finds that, on the basis of information provided by Member States and of other information in its possession, fishing opportunities available to the European Union, a Member State or group of Member States are deemed to have been exhausted for one or more gears or fleets, the Commission shall inform the Member State(s) concerned thereof and shall prohibit fishing activities for the respective area, gear, stock, group of stocks or fleet involved in those specific fishing activities.

(5)

The information in the Commission's possession indicates that the fishing opportunities for bluefin tuna in the Atlantic Ocean, east of longitude 45° W, and the Mediterranean Sea allocated to traps registered in Italy, Portugal and Spain have been exhausted.

(6)

On the 7 July, Italy informed the Commission that it had imposed a stop on the fishing activities of its three traps active in the 2014 bluefin tuna fishery as of 29 June 2014 at 15:00.

(7)

On the 16 July, Portugal informed the Commission that it had imposed a stop on the fishing activities of its three traps active in the 2014 bluefin tuna fishery as of 15 July 2014 at 00:00.

(8)

On the 10, 18 and 20 June, Spain informed the Commission that it had imposed a stop on the fishing activities of its four traps active in the 2014 bluefin tuna fishery as of 10 June for two traps, as of 19 June for one trap and as of 20 June for the remaining trap resulting in the prohibition of all the activities as of 20 June 2014 at 00:00.

(9)

Without prejudice to the actions by Italy, Portugal and Spain mentioned above, it is necessary that the Commission confirms the prohibition of fishing for bluefin tuna in the Atlantic Ocean, east of longitude 45° W and the Mediterranean Sea by traps registered in Italy as of 29 June at 15:00, for traps registered in Portugal as of 15 July at 00:00 and for traps registered in Spain as of 20 June 2014 at 00:00 at the latest.

19.8.2014   

EN

Official Journal of the European Union

L 244/3

(1)

Council Regulation (EU) No 43/2014 of 20 January 2014 fixing for 2014 the fishing opportunities for certain fish stocks and groups of fish stocks, applicable in Union waters and, to Union vessels, in certain non-Union waters (2) fixes the amount of Bluefin tuna which may be fished in 2014 in the Atlantic Ocean, east of longitude 45° W, and the Mediterranean Sea by European Union fishing vessels and traps.

(2)

Council Regulation (EC) No 302/2009 of 6 April 2009 concerning a multiannual recovery plan for Bluefin tuna in the Eastern Atlantic and Mediterranean, amending Regulation (EC) No 43/2009 and repealing Regulation (EC) No 1559/2007 (3), requires Member States to inform the Commission of the individual quota allocated to their vessels over 24 metres. For catching vessels less than 24 metres and for traps, Member States need to inform the Commission at least of the quota allocated to producer organisations or groups of vessels fishing with similar gear.

(3)

The common fisheries policy is designed to ensure the long-term viability of the fisheries sector through sustainable exploitation of living aquatic resources based on the precautionary approach.

(4)

In accordance with Article 36, paragraph 2 of Regulation (EC) No 1224/2009, where the Commission finds that, on the basis of information provided by Member States and of other information in its possession, fishing opportunities available to the European Union, a Member State or group of Member States are deemed to have been exhausted for one or more gears or fleets, the Commission shall inform the Member State(s) concerned thereof and shall prohibit fishing activities for the respective area, gear, stock, group of stocks or fleet involved in those specific fishing activities.

(5)

The information in the Commission's possession indicates that the fishing opportunities for bluefin tuna in the Atlantic Ocean, east of longitude 45° W, and the Mediterranean Sea allocated to purse seiners flying the flag of or registered in Croatia, France, Italy, Malta and Spain have been exhausted.

(6)

On the 24 June, Croatia informed the Commission that it had imposed a stop on the fishing activities of its eight purse seine vessels active in the 2014 bluefin tuna fishery as of 24 June 2014 at 24.00.

(7)

On the 28 May and the 9 and 12 June, France informed the Commission that it had imposed a stop on the fishing activities of its 17 purse seine vessels active in the 2014 bluefin tuna fishery as of 28 May for 11 vessels, as of 9 June for two vessels and as of 12 June for four vessels resulting in the prohibition of all the activities as of 12 June 2014 at 09.04.

(8)

On the 1, 2, 9 and 13 June, Italy informed the Commission that it had imposed a stop on the fishing activities of its 12 purse seine vessels active in the 2014 bluefin tuna fishery as of 1 June for three vessels, as of 2 June for four vessels, as of 8 June for four vessels and as of 13 June for the remaining vessel resulting in the prohibition of all the activities as of 13 June 2014 at 23.02.

(9)

On the 12 June, Malta informed the Commission that it had imposed a stop on the fishing activities of its purse seine vessel active in the 2014 bluefin tuna fishery as of 10 June 2014 at 14.39.

(10)

On the 28 May, Spain informed the Commission that it had imposed a stop on the fishing activities of its six purse seine vessels active in the 2014 bluefin tuna fishery as of 28 May 2014 at 00.00.

(11)

Without prejudice to the actions by Croatia, France, Italy, Malta and Spain mentioned above, it is necessary that the Commission confirms the prohibition of fishing for bluefin tuna in the Atlantic Ocean, east of longitude 45° W and the Mediterranean Sea by purse seiners flying the flag of or registered in the EU Member States concerned as of 24 June 2014 at 24.00 for Croatia as of 12 June 2014 at 09.04 at the latest for France, as of 13 June 2014 at 23.02 at the latest for Italy, as of 10 June 2014 at 14.39 for Malta and as of 28 May 2014 at 00.00 for Spain,

19.8.2014   

EN

Official Journal of the European Union

L 244/6

(1)

Formaldehyde, oligomeric reaction products with aniline (technical MDA) meets the criteria for classification as carcinogenic (category 1B) in accordance with Regulation (EC) No 1272/2008 of the European Parliament and the Council (2) and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(2)

Arsenic acid meets the criteria for classification as carcinogenic (category 1A) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(3)

Bis(2-methoxyethyl) ether (diglyme) meets the criteria for classification as toxic for reproduction (category 1B) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(c) of that Regulation.

(4)

1,2-dichloroethane (EDC) meets the criteria for classification as carcinogenic (category 1B) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(5)

2,2′-dichloro-4,4′-methylenedianiline (MOCA) meets the criteria for classification as carcinogenic (category 1B) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(6)

Dichromium tris(chromate) meets the criteria for classification as carcinogenic (category 1B) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(7)

Strontium chromate meets the criteria for classification as carcinogenic (category 1B) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(8)

Potassium hydroxyoctaoxodizincatedichromate meets the criteria for classification as carcinogenic (category 1A) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(9)

Pentazinc chromate octahydroxide meets the criteria for classification as carcinogenic (category 1A) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(a) of that Regulation.

(10)

Those substances have been identified and included in the candidate list in accordance with Article 59 of Regulation (EC) No 1907/2006. They have furthermore been prioritised for inclusion in Annex XIV to Regulation (EC) No 1907/2006 by the European Chemicals Agency (hereinafter ‘the Agency’) in its recommendation of 17 January 2013 (3) in accordance with Article 58 of that Regulation. It is therefore appropriate to include those substances in that Annex.

(11)

N,N-Dimethylacetamide (DMAC) meets the criteria for classification as toxic for reproduction (category 1B) in accordance with Regulation (EC) No 1272/2008 and therefore meets the criteria for inclusion in Annex XIV to Regulation (EC) No 1907/2006 set out in Article 57(c) of that Regulation. It has also been identified and included in the candidate list in accordance with Article 59 of Regulation (EC) No 1907/2006 and prioritised for inclusion in Annex XIV to that Regulation by the Agency's recommendation of 17 January 2013 in accordance with Article 58 of that Regulation. DMAC has similar intrinsic properties to those of N-Methyl-2-pyrrolidone (NMP) and both substances may be considered as potential alternatives for some of their major uses. Currently the chemical substance NMP is the subject of a restriction procedure in accordance with Article 69 of Regulation (EC) No 1907/2006.In view of the similarities of the two substances, both regarding their intrinsic properties and their industrial applications, and in order to ensure that a consistent regulatory approach is warranted, the Commission considers it appropriate to postpone the decision on the inclusion of DMAC in Annex XIV.

(12)

It is appropriate to specify the latest application dates and the sunset dates referred to in points (i) and (ii) of Article 58(1)(c) of Regulation (EC) No 1907/2006 in Annex XIV to that Regulation.

(13)

The Agency's recommendation of 17 January 2013 has identified the dates referred to in Article 58(1)(c)(ii) of Regulation (EC) No 1907/2006, by which applications must be received if the applicant wishes to continue to use a substance or place it on the market for certain uses, for each of the substances listed in the Annex to this Regulation. Those dates have been identified on the basis of the estimated time that would be required to prepare an application for the authorisation, taking into account the information available on the different substances and the information received during the public consultation carried out in accordance with Article 58(4) of Regulation (EC) No 1907/2006. The Agency's capacity to handle applications in the time provided for in Regulation (EC) No 1907/2006 has also been taken into account, as provided in Article 58(3) of that Regulation.

(14)

Concerning dichromium tris(chromate), strontium chromate, potassium hydroxyoctaoxodizincatedichromate and pentazinc chromate octahydroxide, which are all chromium (VI) compounds, the Agency proposed the latest application date to be set at 24 months after entry into force of this Regulation. However, the Commission considers that the latest application date should be set at 35 months after entry into force of this Regulation in order to follow the approach used for the seven chromium VI compounds already listed in entries 16 to 22 of Annex XIV to Regulation (EC) No 1907/2006.

(15)

For each of the substances listed in the Annex to this Regulation the date referred to in Article 58(1)(c)(i) of Regulation (EC) No 1907/2006 should be set at 18 months after the date referred to in Article 58(1)(c)(ii) of that Regulation.

(16)

Article 58(1)(e) in conjunction with Article 58(2) of Regulation (EC) No 1907/2006 provides for the possibility of exemptions of uses or categories of uses in cases where specific Union legislation imposes minimum requirements relating to the protection of human health or the environment ensuring proper control of the risks. In accordance with the information currently available it is not appropriate to set exemptions based on those provisions.

(17)

On the basis of the information currently available it is not appropriate to set exemptions for product and process orientated research and development.

(18)

On the basis of the information currently available it is not appropriate to set review periods for certain uses.

(19)

Regulation (EC) No 1907/2006 should therefore be amended accordingly.

(20)

The measures provided for in this Regulation are in accordance with the opinion of the Committee established under Article 133 of Regulation (EC) No 1907/2006,

19.8.2014   

EN

Official Journal of the European Union

L 244/10

(1)

Commission Implementing Regulation (EU) No 793/2013 of 20 August 2013 establishing measures in respect of the Faeroe Islands to ensure the conservation of the Atlanto-Scandian herring stock (2) identifies the Faroe Islands as a country allowing non-sustainable fishing and adopts certain measures regarding the fishery for Atlanto-Scandian herring and its associated species, pursuant to Regulation (EU) No 1026/2012.

(2)

Article 7 of Regulation (EU) No 1026/2012 provides that such measures shall cease to apply when the country allowing non-sustainable fishing adopts, autonomously or within consultations, appropriate corrective measures for the conservation and management of the stock of common interest which do not undermine the effect of measures taken by the Union.

(3)

By announcement of the Faroese Minister for Fisheries of 12 June 2014, the Faroe Islands have adopted a catch limit of 40 000 t of herring for 2014, a figure which, in absolute and relative terms, is well below the catch limit of 105 230 t adopted for 2013. This would increase by 4,4 % the overall TAC for 2014 proposed by the other coastal States under the existing long-term management plan.

(4)

According to the most recent scientific advice, the estimated effect of this increase in catch in 2014 on the biomass of herring by the beginning of 2015 would only be 0,4 %, a figure that can be considered non-significant in terms of conservation of the stock.

(5)

The corrective measure adopted by the Faroe Islands, when taken together with the shares adopted jointly by the other coastal States, i.e. Russian Federation, Norway, Iceland and the Union, will not therefore undermine the conservation efforts agreed between the EU and the other coastal States.

(6)

As a consequence, the measures adopted by the Commission under Implementing Regulation (EU) No 793/2013 should cease to apply in accordance with Article 7(1) of Regulation (EC) No 1026/2012. Implementing Regulation (EU) No 793/2013 should thus be repealed.

(7)

As continuing the application of those measures is not required, this Regulation should enter into force on the day following that of its publication.

(8)

This is without prejudice to the future quotas to be set by the Faroe Islands or to the forthcoming coastal state consultations on the joint management of Atlanto-Scandian herring.

(9)

The Committee for Fisheries and Aquaculture did not deliver an opinion,

19.8.2014   

EN

Official Journal of the European Union

L 244/12

(1)

One of the strands of Regulation (EU) No 232/2014 involves cooperation between on the one hand one or more Member States of the European Union and, on the other hand, one or more partner countries as defined in its Annex I and/or the Russian Federation taking place along their shared part of the external border of the Union with a view to enhance cross-border cooperation (‘CBC’).

(2)

Regulation (EU) No 236/2014 lays down rules for implementation of assistance which are common to all instruments for external action.

(3)

Regulation (EU) No 232/2014 stipulates that implementing rules laying down specific provisions for the implementation of cross-border cooperation programmes shall be adopted. Those rules shall include provisions on, inter alia, the rate and methods of co-financing; the content, preparation, modification and closure of joint operational programmes; the role and function of the programme structures, including their standing, effective identification, accountability and responsibility, description of management and control systems, and conditions on the technical and financial management of Union support; recovery procedures in all participating countries; monitoring and evaluation; visibility and information activities; shared and indirect management.

(4)

The programming document provided for in Article 9(1) of Regulation (EU) No 232/2014 establishes the strategic objectives to be pursued by cross-border cooperation and the thematic objectives and expected indicative results of that cooperation and contains the list of joint operational programmes to be established.

(5)

Cross-border cooperation should be implemented through multi-annual joint operational programmes covering cooperation for a border or a group of borders and comprising multi-annual priorities that pursue a consistent set of thematic objectives and that may be implemented with the Union support.

(6)

It is necessary to draw up implementing rules which lay down detailed provisions for the implementation of cross-border cooperation programmes financed under Regulation (EU) No 232/2014, while allowing participating countries a certain amount of flexibility as to the detailed arrangements regarding organisation and implementation of specific programmes taking account of the particular features of each programme. On the basis of this principle and in accordance with this Regulation, the participating countries should jointly submit proposals for joint operational programmes to the Commission for adoption in accordance with Article 10(4) of Regulation (EU) No 232/2014.

(7)

Taking into account that all participating countries are to be involved in the decision-making structures of the programme while implementation tasks are usually entrusted to a managing authority based in a Member State, there is a need for rules governing the organisational structure covering the functions of managing authority and the division of functions between and within each body being part of the programme structures.

(8)

Based on lessons learnt from the 2007-2013 programming period, the Commission will not automatically bear the final responsibility for recoveries in partner countries. Therefore new provisions have been set out in the implementing rules giving more responsibilities to the participating countries in terms of management, control and audit. The programmes will have to define their own management and control systems based on these rules. The partner countries will have to assist the managing authorities in the implementation of the programmes by setting up national authorities, control contact points and group of auditors.

(9)

In accordance with Article 10(8) of Regulation (EU) No 232/2014 where necessary, agreements shall be signed between the participating countries and the managing authority to set out provisions not included in the financing agreements signed with partner countries or the Russian Federation.

(10)

Based on lessons learnt from the 2007-2013 programming period, grant award procedures and rules developed by the Commission for external actions will not anymore be compulsory. The programmes should be allowed to apply procedures developed by the participating countries provided certain standards set out in this Regulation are met.

(11)

In accordance with Article 7(7) of Regulation (EU) No 232/2014 funding under this Regulation can be pooled with funding under other relevant Union Regulations. This will allow a transfer of funding from Regulation (EU) No 232/2014 to programmes financed under Regulation (EU) No 1299/2013 of the European Parliament and of the Council (3). The equivalent rule exists in Regulation (EU) No 231/2014 of the European Parliament and of the Council (4) for funding to be transferred to Regulation (EU) No 232/2014 to cover the participation of the latter's beneficiaries in the cross-border cooperation programmes subject to this Regulation. These new rules will simplify the management procedures for these countries' participation in the programmes.

(12)

Since programmes are usually to be implemented through shared management, management and control systems should be in line with Union rules, in particular Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (5) and Commission Delegated Regulation (EU) No 1268/2012 (6), as well as with Council Regulation (EC, Euratom) No 2988/95 (7). The Commission should ensure that Union funds are used in accordance with the applicable rules during the implementation of the programmes.

(13)

These measures are in line with the opinion of the Committee established by Regulation (EU) No 232/2014.

(14)

In order to allow for timely programming and implementation of programmes, this Regulation should enter into force on the third day following its publication in the Official Journal of the European Union,

(a)

‘programme’ means a joint operational programme within the meaning of Article 10 of Regulation (EU) No 232/2014;

(b)

‘participating countries’ means all Member States, CBC partner countries and any European Economic Area country taking part in a programme;

(c)

‘programming document’ means the document which is referred to Article 9(1) of Regulation (EU) No 232/2014 and which establishes the strategic objectives, the list of programmes, their indicative multiannual allocation and geographical eligibility;

(d)

‘programme area’ means core regions, adjoining regions, the major social, economic or cultural centres and territorial units referred to in Article 8(3) and (4) of Regulation (EU) No 232/2014 respectively

(e)

‘core regions’ means the territorial units referred to in Article 8(1) of Regulation (EU) No 232/2014 and border areas in Instrument for Pre-Accession Assistance geographic entities and in European Economic Area countries as set out in the programming document;

(f)

‘adjoining regions’ means the territorial units referred to in Article 8(2) of Regulation (EU) No 232/2014 and those adjoining to core regions in Instrument for Pre-Accession Assistance geographic entities and in European Economic Area countries;

(g)

‘Joint Monitoring Committee’ means the joint committee responsible for monitoring the implementation of the programme;

(h)

‘Managing Authority’ means the authority or body appointed by the participating countries as responsible for managing the programme;

(i)

‘national authority’ means the entity appointed by each participating country bearing the ultimate responsibility for supporting the Managing Authority in the implementation of the programme on its own territory;

(j)

‘Joint Technical Secretariat’ means the body set up by the participating countries to assist the programme bodies;

(k)

‘financial instruments’ means Union measures of financial support provided on a complementary basis in order to address one or more specific policy objectives of the Union. Such instruments may take the form of equity or quasi-equity investments, loans or guarantees, or other risk-sharing instruments, and may, where appropriate, be combined with grants;

(l)

‘CBC partner countries’ means countries and territories listed in Annex I to Regulation (EU) No 232/2014, the Russian Federation and beneficiaries listed in Annex I to Regulation (EU) No 231/2014 when there is co-financing under the latter;

(m)

‘irregularities’ means any infringement of a financing agreement, a contract or of applicable law resulting from an act or omission by an economic operator involved in the implementation of the programme, which has, or would have, the effect of prejudicing the budget of the Union by charging an unjustified item of expenditure to the budget of the Union;

(n)

‘Union contribution’ means the part of the eligible expenditure of the programme or project which is financed by the Union;

(o)

‘contract’ means any procurement or grant contract concluded in the framework of a programme;

(p)

‘large infrastructure projects’ means projects comprising a set of works, activities or services intended to fulfil an indivisible function of a precise nature pursuing clearly identified objectives of common interest for the purposes of implementing investments delivering a cross-border impact and benefits and where a budget share of at least EUR 2,5 million is allocated to acquisition of infrastructure;

(q)

‘intermediate body’ means any public or private body which acts under the responsibility of a Managing Authority, or which carries out duties on behalf of such an in relation to beneficiaries implementing projects;

(r)

‘contractor’ means a natural or legal person with whom a procurement contract has been concluded;

(s)

‘beneficiary’ means a natural or legal person with whom a grant contract has been signed;

(t)

‘accounting year’ means the period from 1 July to 30 June, except for the first accounting year, in respect of which it means the period from the start date for eligibility of expenditure until 30 June 2015. The final accounting year shall be from 1 July 2023 to 30 September 2024. In case of indirect management with an international organisation in the sense of Article 80, the accounting year shall be the financial year;

(u)

‘financial year’ means the period from 1 January to 31 December.

1.

Introduction: a short description of the programme preparation steps including information on consultations and actions taken to involve the participating countries and other stakeholders in the preparation of the programme.

2.

Description of the programme area:

3.

Programme's strategy:

4.

Structures and appointment of the competent authorities and management bodies:

5.

Programme implementation:

(a)

the quality of the analysis, its consistency with the proposed priorities and with other Union-financed programmes;

(b)

the accuracy of the financial plan;

(c)

the compliance with Directive 2001/42/EC.

(a)

cumulative changes up to 20 % of the originally allocated Union contribution to each thematic objective or technical assistance or as amended pursuant to paragraph 2 involving transfer between thematic objectives or from technical assistance to thematic objectives;

(b)

cumulative changes up to 20 % of the originally allocated Union contribution to each thematic objective or as amended pursuant to paragraph 2 involving transfer from thematic objectives to technical assistance.

(a)

review of the programming document;

(b)

major socioeconomic changes or substantial changes in the programme's area;

(c)

implementation difficulties;

(d)

changes in the financial plan beyond the margin of flexibility referred to in paragraph 1 or any change significantly affecting the nature and objectives of the programme;

(e)

audits, monitoring and evaluations.

(a)

amount;

(b)

intended use and conditions for use, including conditions for applying;

(c)

modalities of payments;

(d)

financial management;

(e)

record keeping;

(f)

reporting obligations;

(g)

verifications and controls;

(h)

irregularities and recoveries.

(a)

the establishment of the Managing Authority and, where relevant, of the Joint Technical Secretariat;

(b)

the first meetings of the Joint Monitoring Committee, including also representatives of CBC partner countries that have not yet signed a financing agreement or where the financing agreement has not yet entered into force;

(c)

the preparation and launching of project selection or contract award procedures with a suspension clause linked to the entry into force of the financing agreements.

(a)

all contracts concluded under the programme have been closed;

(b)

the final balance has been paid or reimbursed;

(c)

remaining appropriations have been de-committed by the Commission.

(a)

a national authority to support the Managing Authority in the management of the programme in accordance with the principle of sound financial management;

(b)

a control contact point to support the Managing Authority in its control of the programme obligations;

(c)

a representative to the group of auditors referred to in Article 28(2);

(d)

representatives to the Joint Monitoring Committee referred to in Article 21.

(a)

approve the Managing Authority's work programme and financial plan, including planned use of technical assistance;

(b)

monitor the implementation by the Managing Authority of the work programme and financial plan;

(c)

approve the criteria for selecting projects to be financed by the programme;

(d)

be responsible for the evaluation and selection procedure applicable to projects to be financed by the programme;

(e)

approve any proposal to revise the programme;

(f)

examine all reports submitted by the Managing Authority and, if necessary, take appropriate measures;

(g)

examine any contentious cases brought to its attention by the Managing Authority.

(h)

examine and approve the annual report referred to in Article 77;

(i)

examine and approve the annual monitoring and evaluation plan referred to in Article 78;

(j)

examine and approve the annual information and communication plans referred to in Article 79.

—

a designated authority is put under probation, and provide information on the remedial actions and the respective probation period, or

—

following implementation of remedial actions the probation is ended, or

—

the designation of an authority is ended.

(a)

support the work of the Joint Monitoring Committee and provide it with the information it requires to carry out its tasks, in particular data relating to the progress of the programme in achieving its expected results and targets;

(b)

draw up and, after approval by the Joint Monitoring Committee, submit the annual report and the final report to the Commission;

(c)

share information with intermediate bodies, the Joint Technical Secretariat, the Audit Authority and beneficiaries that is relevant to the execution of their tasks or project implementation;

(d)

establish and maintain a computerised system to record and store data on each project necessary for monitoring, evaluation, financial management, control and audit, including data on individual participants in projects, where applicable. In particular, it shall record and store technical and financial reports for each project. The system shall provide all data required for drawing up payment requests and annual accounts, including records of amounts recoverable, amounts recovered and amounts reduced following cancellation of all or part of the contribution for a project or programme;

(e)

carry out where relevant environmental impact assessment studies at programme level;

(f)

implement the information and communication plans in accordance with Article 79;

(g)

implement the monitoring and evaluation plans in accordance with Article 78.

(a)

draw up and launch the selection procedures;

(b)

manage the project selection procedures;

(c)

provide the lead beneficiary with a document setting out the conditions for support for each project including the financing plan and execution deadlines;

(d)

sign contracts with beneficiaries;

(e)

manage projects.

(a)

manage the contract award procedures;

(b)

sign contracts with contractors;

(c)

manage contracts.

(a)

verify that services, supplies or works have been performed, delivered and/or installed and whether expenditure declared by the beneficiaries has been paid by them and that this complies with applicable law, programme rules and conditions for support of the projects;

(b)

ensure that beneficiaries involved in project implementation maintain either a separate accounting system or a suitable accounting code for all transactions relating to a project;

(c)

put in place effective and proportionate anti-fraud measures taking into account the risks identified;

(d)

set up procedures to ensure that all documents regarding expenditure and audits required to ensure a suitable audit trail are held in accordance with the requirements of Article 30;

(e)

draw up the management declaration and annual summary referred to in Article 68;

(f)

draw up and submit payment requests to the Commission in accordance with Article 60;

(g)

draw up the annual accounts;

(h)

take account of the results of all audits carried out by or under the responsibility of the Audit Authority when drawing up and submitting payment requests;

(i)

maintain computerised accounting records for expenditure declared to the Commission and for payments made to beneficiaries;

(j)

keep an account of amounts recoverable and of amounts reduced following cancellation of all or part of the grant.

(a)

administrative verifications for each payment request by beneficiaries;

(b)

on-the-spot project verifications.

(a)

an audit opinion on the annual accounts for the preceding accounting year;

(b)

an annual audit report.

(a)

the functions of each body involved in management and control, including division of functions within each body, their internal organisation in compliance with the principle of separation of functions between and within such bodies;

(b)

procedures for ensuring the correctness and regularity of expenditure declared;

(c)

electronic data systems for accounting, storage, monitoring and reporting;

(d)

systems for monitoring and reporting where the responsible body entrusts execution of tasks to another body;

(e)

arrangements for auditing the functioning of the management and control systems;

(f)

systems and procedures to ensure an adequate audit trail;

(g)

procedures for prevention, detection and correction of irregularities, including fraud and the recovery of amounts unduly paid, together with any interest;

(h)

contract award procedures for technical assistance and projects selection procedures

(i)

the role of national authorities and the responsibilities of the participating countries in accordance with Article 31.

(a)

be responsible for the set up and effective functioning of management and control systems at national level;

(b)

ensure the overall coordination of the institutions involved at national level in the programme implementation, including, inter alia, the institutions acting as control contact points and as member of the group of auditors;

(c)

represent its country in the Joint Monitoring Committee.

(a)

the International Standard on Related Services 4400 Engagements to perform Agreed-upon Procedures regarding Financial Information as promulgated by International Federation of Accountants (IFAC);

(b)

IFAC Code of Ethics for Professional Accountants, developed and issued by IFAC's International Ethics Standards Board for Accountants.

(a)

be a member of a national accounting or auditing body or institution which in turn is member of IFAC;

(b)

be a member of a national accounting or auditing body or institution. Where this organisation is not a member of IFAC, the auditor shall commit to undertake the work in accordance with IFAC standards and ethics;

(c)

be registered as a statutory auditor in the public register of a public oversight body in a Member State in accordance with the principles of public oversight set out in Directive 2006/43/EC of the European Parliament and of the Council (10);

(d)

be registered as a statutory auditor in the public register of a public oversight body in a CBC partner country, provided this register is subject to principles of public oversight as set out in the legislation of the country concerned.

(a)

where it is an entity established in a Member State it shall either apply national laws, regulations and administrative provisions adopted in connection with Union legislation applicable to public procurement or procurement rules set out in Title IV of Part Two of Regulation (EU, Euratom) No 966/2012 and Title II of Part Two of Delegated Regulation (EU) No 1268/2012;

(b)

in all other cases, the relevant procurement rules shall be described in the financing agreement referred to in Articles 8 and 9 or in the agreements referred to in Articles 81 and 82.

(a)

they deliver a clear cross-border cooperation impact and benefits as described in the programming document and demonstrate added value to Union strategies and programmes;

(b)

they are implemented in the programme area;

(c)

they fall within one of the following categories:

(a)

the projects are necessary for achieving the programme's objectives and they benefit the programme area;

(b)

the total amount allocated under the programme to activities outside the programme area does not exceed 20 % of the Union contribution at programme level;

(c)

the obligations of the Managing and Audit authorities in relation to management, control and audit concerning the project are fulfilled either by the programme authorities or through agreements concluded with authorities in the countries where the activity is implemented.

(a)

the body to which a project is awarded enjoys a de jure or de facto monopoly;

(b)

the project relates to actions with specific characteristics that require a particular type of body based on its technical competence, high degree of specialisation or administrative power.

(a)

an analysis of the problems and needs justifying the project, taking into account the programme strategy and its expected contribution to address the corresponding priority;

(b)

an assessment of its cross-border impact;

(c)

the logical framework;

(d)

an assessment of the sustainability of the project's expected results after project's completion;

(e)

objectively verifiable indicators;

(f)

information on the geographic coverage and target groups of the project;

(g)

the expected project implementation period and detailed work plan;

(h)

an analysis of the effects of the project on the cross-cutting issues referred to in point 3(d) of Article 4 where relevant;

(i)

the project implementation requirements, including the following:

(j)

detailed financial plan and budget.

(a)

a detailed description of the infrastructure investment and its location;

(b)

a detailed description of the capacity building component of the project, except in duly justified cases;

(c)

a full feasibility study or equivalent carried out, including the options analysis, the results, and independent quality review;

(d)

an assessment of its environmental impact in compliance with the Directive 2011/92/EU of the European Parliament and of the Council (11) and, for the participating countries which are parties to it, UN/ECE Espoo Convention on Environmental Impact Assessment in a Transboundary Context of 25 February 1991;

(e)

evidence of ownership by the beneficiaries or access to the land;

(f)

building permit.

—

beneficiary name (only legal entities; no natural persons shall be named),

—

project name,

—

project summary,

—

project implementation period,

—

total eligible expenditure,

—

Union co-financing rate,

—

project postcode; or other appropriate location indicator,

—

geographical coverage,

—

date of last update of the list of projects.

(a)

nationals of any of the participating countries, or legal persons who are effectively established in the programme area or international organisations with a base of operations in the programme area. A European grouping of territorial cooperation may be a beneficiary, regardless of its place of establishment, provided its geographic coverage is within the programme area;

(b)

comply with the eligibility criteria defined for each selection procedure;

(c)

not fall under any of the exclusion situations set out in Article 106(1) and Article 107 of Regulation (EU, Euratom) No 966/2012.

(a)

they may participate in accordance with Articles 8 and 9 of Regulation (EU) No 236/2014;

(b)

their participation is required by the nature and by the objectives of the project and as necessary for its effective implementation;

(c)

the total amount allocated under the programme to beneficiaries that do not meet the criteria referred to in point (a) of paragraph 3 is within the limit indicated in point (b) of Article 39(2).

(a)

receive the financial contribution from the Managing Authority for the implementation of project activities;

(b)

ensure that the beneficiaries receive the total amount of the grant as quickly as possible and in full in accordance with the arrangements referred to in (c). No amount shall be deducted or withheld and no specific charge with equivalent effect shall be levied that would reduce these amounts for the beneficiaries;

(c)

lay down the partnership arrangements with the beneficiaries in an agreement comprising, provisions that, inter alia, guarantee the sound financial management of the funds allocated to the project including the arrangements for recovery of funds unduly paid;

(d)

assume responsibility for ensuring implementation of the entire project;

(e)

ensure that the expenditure presented by the beneficiaries has been incurred for the purpose of implementing the project and corresponds to activities set in the contract and agreed between all beneficiaries;

(f)

verify that the expenditure presented by the beneficiaries has been examined pursuant Article 32(1).

(a)

reimbursement of a specified proportion of the eligible costs referred to in Article 48 actually incurred;

(b)

flat-rate financing, determined by the application of a percentage to one or several defined categories of costs;

(c)

lump sums;

(d)

reimbursement on the basis of unit costs;

(e)

a combination of the forms referred to in points (a) to (d), only where each covers different categories of costs.

(a)

they are incurred during the implementation period of the project. In particular:

(b)

they are indicated in the project's estimated overall budget;

(c)

they are necessary for the project implementation;

(d)

they are identifiable and verifiable, in particular being recorded in the accounting records of the beneficiary and determined according to the accounting standards and the usual cost accounting practices applicable to the beneficiary;

(e)

they comply with the requirements of applicable tax and social legislation;

(f)

they are reasonable, justified, and comply with the requirements of sound financial management, in particular regarding economy and efficiency;

(g)

they are supported by invoices or documents of equivalent probative value;

(a)

where the applicant can demonstrate the need to start the project before the contract is signed. Costs eligible for financing shall however not have been incurred prior to the date of the submission of the grant application; or

(b)

for costs related to studies and documentation for projects including an infrastructure component.

(a)

they are incurred after the publication of the call for proposals;

(b)

they are limited to travel and subsistence costs of staff employed by the beneficiaries, provided they meet the conditions of point (b) of paragraph 5;

(c)

they do not exceed the maximum amount fixed at programme level.

(a)

the costs of staff assigned to the project under the following cumulative conditions:

(b)

travel and subsistence costs of staff and other persons taking part in the project, provided they exceed neither the costs normally paid by the beneficiary according to its rules and regulations nor the rates published by the Commission at the time of the mission if reimbursed on the basis of lump sums, unit costs or flat rate financing;

(c)

purchase or rental costs for equipment (new or used) and supplies specifically for the purpose of the project, provided they correspond to market prices;

(d)

the cost of consumables specifically purchased for the project;

(e)

costs entailed by contracts awarded by the beneficiaries for the purposes of the project;

(f)

costs deriving directly from requirements imposed by this Regulation and the project (such as information and visibility operations, evaluations, external audits, translations) including financial service costs (such as costs of bank transfers and financial guarantees).

(a)

debts and debt service charges (interest);

(b)

provisions for losses or liabilities;

(c)

costs declared by the beneficiary and already financed by the Union budget;

(d)

purchases of land or buildings for an amount exceeding 10 % of the eligible expenditure of the project concerned;

(e)

exchange-rate losses;

(f)

duties, taxes and charges, including VAT, except where non-recoverable under the relevant national tax legislation, unless otherwise provided in appropriate provisions negotiated with CBC partner countries;

(g)

loans to third parties;

(h)

fines, financial penalties and expenses of litigation;

(i)

contributions in kind as defined in Article 14(1).

(a)

justification concerning the appropriateness of such forms of financing with regard to the nature of the projects as well as to the risks of irregularities and fraud and costs of control;

(b)

identification of the costs or categories of costs covered by lump sums, unit costs or flat-rate financing, which shall exclude ineligible costs as referred to in Article 49.

(c)

description of the methods for determining lump sums, unit costs or flat-rate financing, and of the conditions for reasonably ensuring that the no-profit rule and co-financing principles are complied with and that double financing is avoided. These methods shall be based on:

(a)

where the beneficiary is a contracting authority or a contracting entity within the meaning of the Union legislation applicable to procurement procedures, it may apply national laws, regulations and administrative provisions adopted in connection with Union legislation or rules of paragraph 2;

(b)

where the beneficiary is an international organisation, it may apply its own procurement rules if they offer guarantees equivalent to internationally accepted standards;

(c)

where the beneficiary is a public authority of a CBC partner country whose co-financing is transferred to the Managing Authority, it may apply national laws, regulations and administrative provisions, provided that the financing agreement allows it and the general principles set out in point (a) of paragraph 2 are respected.

(a)

the contract is awarded to the tender offering best value for money, or as appropriate, to the tender offering the lowest price, while avoiding any conflict of interests;

(b)

for contracts with a value of more than EUR 60 000, the following rules shall also apply:

(a)

each third party offers adequate guarantees as regards the recovery of amounts;

(b)

principles of proportionality, transparency, sound financial management, equal treatment and non-discrimination are complied with;

(c)

conflicts of interests are prevented;

(d)

financial support may not be cumulative or awarded retrospectively, it shall, in principle, involve co-financing and it may not have the purpose or the effect of producing a profit for each third party;

(e)

conditions for giving financial support are strictly defined in the contract to avoid the exercise of discretion by the beneficiary. In particular, the contract shall specify the categories of persons which are eligible for the support, the award criteria (including the criteria for determining the exact amount) and a fixed list of the different types of activity that may receive such financial support;

(f)

the maximum amount of financial support that can be paid does not exceed EUR 60 000 per third party, except where the financial support is the primary aim of the project.

(a)

following information provided by a national or Union audit body, there is a clear evidence to suggest a significant deficiency in the functioning of the management and control system;

(b)

the authorising officer by delegation has to carry out additional verifications following information coming to his attention alerting him that expenditure is linked to an irregularity having serious financial consequences;

(c)

there is a failure to submit one of the documents required under Article 77;

(d)

there is a failure to submit one of the documents required under Articles 60 and 64.

(a)

there is a serious deficiency in the effective functioning of the management and control systems of the programme which has put the Union contribution at risk and for which corrective measures have not been taken;

(b)

there is a serious breach by participating countries of their obligations under Article 31;

(c)

expenditure is linked to an irregularity which has not been corrected having serious financial consequences;

(d)

there is a serious deficiency in the quality and reliability of the evaluation and monitoring system;

(e)

there is evidence resulting from monitoring, evaluation or audit that the programme does not deliver in accordance with the time-frames indicated in Article 4 and as reported in accordance with Article 77.

(a)

prefinancing;

(b)

interim payment;

(c)

payment of the final balance.

(a)

projects suspended by a legal proceeding or by an administrative appeal having suspensory effect; or

(b)

reasons of force majeure seriously affecting the implementation of all or part of the programme;

(c)

application of Articles 61 or 62;

(a)

the month during which the expenditure was incurred;

(b)

the month during which the expenditure was submitted for examination in accordance with Article 32(1);

(c)

the month during which the expenditure was reported to the lead beneficiary.

(a)

the accounts for the preceding accounting year;

(b)

a management declaration signed by the representative of the Managing Authority confirming that:

(c)

an annual summary of the controls carried out by the Managing Authority, including an analysis of the nature and extent of errors and weaknesses identified in systems, as well as corrective action taken or planned;

(d)

an audit opinion on the annual accounts;

(e)

an annual audit report drawn up by the Audit Authority providing a summary of audits carried out, including an analysis of the nature and extent of errors and weaknesses identified, both at system level and for projects, as well as the corrective actions taken or planned;

(f)

an estimate of costs incurred from 1 July to 31 December of the preceding year;

(g)

the list of projects closed during the accounting year.

(a)

the expenditure incurred and paid and the revenue earned and received by the Managing Authority;

(b)

the amounts waived and recovered during the accounting year, the amounts to be recovered by the end of the accounting year and the unrecoverable amounts.

(a)

the breach has affected the selection of a project or a technical assistance contract or in cases where, due to the nature of the breach, it is not possible to establish that impact but there is a substantiated risk that the breach has had such an effect;

(b)

the breach has affected the amount of expenditure declared by the programme or in cases where, due to the nature of the breach, it is not possible to quantify its financial impact but there is a substantiated risk that the breach has had such an effect.

(a)

there is a serious deficiency in the programme management and control systems of the programme which has put at risk the Union contribution already paid;

(b)

the Managing Authority has not complied with its obligations under Article 71 prior to the opening of the financial correction procedure under this paragraph;

(c)

the expenditure declared in the annual or final report is irregular and has not been corrected by the Managing Authority prior to the opening of the financial correction procedure under this paragraph.

(a)

had been identified in the management declaration, annual control report or the audit opinion submitted to the Commission in accordance with Article 68, or in other audit reports of the Audit Authority submitted to the Commission and appropriate measures taken; or

(b)

had been the subject of appropriate remedial measures by the Managing Authority.

(a)

respect the principle of proportionality by taking account of the nature and gravity of the serious deficiency in the effective functioning of a management and control system and its financial implications for the budget of the Union;

(b)

for the purpose of applying a flat rate or extrapolated correction, exclude irregular expenditure previously detected by the Managing Authority which has been the subject of an adjustment in the accounts and expenditure subject to an ongoing assessment of its legality and regularity;

(c)

take into account flat rate or extrapolated corrections applied to the expenditure by the Managing Authority for other serious deficiencies detected by the Managing Authority when determining the residual risk for the budget of the Union.

(a)

the progress achieved in implementing the programme and its priorities;

(b)

the detailed list of signed contracts as well as the list of selected projects not yet contracted, including reserve lists;

(c)

the technical assistance activities carried out;

(d)

the measures undertaken to monitor and evaluate projects, their results and actions undertaken to remedy the problems identified;

(e)

the implemented information and communication activities.

(a)

an updated audit strategy;

(b)

the work programme, financial plan and planned use of technical assistance;

(c)

the annual monitoring and evaluation plan in accordance with Article 78(2);

(d)

the annual information and communication plan in accordance with Article 79(4).

19.8.2014   

EN

Official Journal of the European Union

L 244/55

(1)

Following an anti-dumping investigation (‘the original investigation’), the Council imposed a definitive anti-dumping duty on imports of powdered activated carbon (‘PAC’) currently falling within CN code ex 3802 10 00 originating in the People's Republic of China (‘PRC’) (‘the definitive anti-dumping measures’) by Regulation (EC) No 1006/96 (2). The measures took the form of a fixed duty of EUR 323 per tonne (net weight).

(2)

Following two expiry reviews, the Council has maintained the measures in force by Regulation (EC) No 1011/2002 (3) (‘the first expiry review’) and Regulation (EC) No 649/2008 (4) (‘the second expiry review’) respectively.

(3)

Following the publication of a notice of impending expiry (5) of the definitive anti-dumping measures in force, the Commission received on 9 April 2013 a request for the initiation of an expiry review of these measures pursuant to Article 11(2) of the basic Regulation. The request was lodged by Cabot Norit Nederland BV and Cabot Norit (UK) Ltd (‘the applicants’) on behalf of producers representing a major proportion of the total Union production of PAC, in this case more than 25 %.

(4)

The request was based on the grounds that the expiry of the measures would be likely to result in a continuation of dumping and recurrence of injury to the Union industry.

(5)

Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of an expiry review, the Commission announced on 6 July 2013, by a notice published in the Official Journal of the European Union  (6) (‘the Notice of initiation’), the initiation of an expiry review pursuant to Article 11(2) of the basic Regulation.

(6)

By a letter addressed to the Commission, dated 7 May 2014, the applicants formally withdrew their request for an expiry review.

(7)

In accordance with Article 9(1) of the basic Regulation, a proceeding may be terminated where the request for review is withdrawn unless such a termination would not be in the Union interest.

(8)

The investigation has not brought to light any considerations showing that such termination would be against the Union interest. Therefore, the Commission considered that the present proceeding should be terminated and the anti-dumping duty in force repealed.

(9)

Interested parties were informed accordingly and were given the opportunity to submit comments. No comments were received.

(10)

The Commission therefore concludes that the anti-dumping proceeding concerning imports into the Union of PAC, originating in the PRC, should be terminated and the anti-dumping duty repealed.

(11)

The repeal of the measures provided for in this Regulation is in accordance with the opinion of the Committee established by Article 15(1) of the basic Regulation,

19.8.2014   

EN

Official Journal of the European Union

L 244/57

(1)

Implementing Regulation (EU) No 543/2011 lays down, pursuant to the outcome of the Uruguay Round multilateral trade negotiations, the criteria whereby the Commission fixes the standard values for imports from third countries, in respect of the products and periods stipulated in Annex XVI, Part A thereto.

(2)

The standard import value is calculated each working day, in accordance with Article 136(1) of Implementing Regulation (EU) No 543/2011, taking into account variable daily data. Therefore this Regulation should enter into force on the day of its publication in the Official Journal of the European Union,

19.8.2014   

EN

Official Journal of the European Union

L 244/59

(1)

This decision concerns State aid put into effect by Portugal in the form of a short-term export credit insurance scheme (hereinafter ‘the scheme’).

(2)

On 12 January 2009 Portugal notified a short-term export-credit insurance scheme under section 5.1 of the Commission Communication ‘Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis’ (2) (hereinafter referred to as ‘the Temporary Framework’).

(3)

Although the scheme was originally notified as short-term export-credit insurance for OECD countries, the scheme also covers domestic trade transactions.

(4)

Insofar as the Portuguese authorities confirmed that the scheme was implemented as of January 2009, the Commission informed Portugal by letter dated 19 April 2010 that the scheme had been transferred to the Non-Notified aid registry.

(5)

By letter of 27 October 2010, the Commission informed Portugal of the opening of an investigation under Article 108(2) of the TFEU in relation to the scheme.

(6)

By letter of 29 November 2010, the Portuguese authorities sent their observations on the Commission's letter of 27 October 2010. They attached two letters from credit insurers (CESCE and COSEC) dated 22 November 2010 and 23 November 2010 respectively.

(7)

The Commission's decision to initiate the procedure was published in the Official Journal of the European Union of 9 April 2011 (3). The Commission invited interested parties to submit comments on the scheme. No comments were received.

(8)

The Portuguese authorities have alleged that the current financial crisis has resulted in an increased risk for commercial operations. This in turn has led to an increasingly conservative attitude on the part of credit insurers, reflected in the level of insurance cover for risks inherent in commercial operations.

(9)

The objective of the scheme is to address a market failure due to the unavailability of credit insurance and to help restore confidence in the credit insurance market.

(10)

Those aims are pursued through the provision of credit insurance coverage to exporters and to companies that are temporarily confronted with the unavailability of export insurance cover in the private market for transactions with buyers in OECD countries or for domestic transaction.

(11)

According to the Portuguese authorities, the insurance sector has shrunk considerably since 2008, which resulted in the unavailability of cover. On 30 September 2010 the total value of the insured portfolio decreased by 32,84 % between 31 December 2009 and 31 December 2009 and by a further 22,4 % from 31 December 2009 to 30 September 2010. The total value of the insurance portfolio was down to EUR 15,9 billion in 2010 from EUR 30,6 billion at the end of 2008. The number of insured firms decreased from 3 709 at the end of 2008 to 2 290 in September 2010. Letters from insurers were also provided to justify the need for continuation of the scheme until the end of 2010, despite allegations in the letters that the maximum cover amount granted by the scheme would not be reached. Those letters explained the need for the scheme by referring to the increased risk of export credit insurance due to the general economic situation in times of recovery from the crisis, with a subsequent increase in prices and reduction of coverage from private insurers in certain sectors.

(12)

The national legal basis for the scheme is Decree-Law No 175/2008 establishing the Finova of 26 August 2008 and Decree-Law No 211/1998 of 16 July 1998 laying down the rules applicable to mutual guarantee societies (as amended by Decree-Laws No 19/2001 of 30 January 2001 and No 309-A/2007 of 7 September 2007).

(13)

The scheme is implemented through the following private credit insurers active on the Portuguese market: COSEC, CESCE, Coface and Credito y Caución.

(14)

According to information submitted on 26 November 2010 by the Portuguese authorities, 399 beneficiaries were subscribed to the scheme at October 2010.

(15)

The segmentation of the credit limits granted at October 2010 is reproduced in the following tables:

(16)

Utilization by intermediary insurer:

(17)

Breakdown by market size in euros into domestic and export transactions in October 2010:

(18)

Breakdown by size of beneficiary:

(19)

The scheme covers commercial risks (such as insolvency and protracted default) linked to export transactions for periods of less than two years with OECD countries, and risks linked to domestic trade transactions.

(20)

The public insurance operates as a risk-sharing facility (‘a top-up’) with private insurers. It is granted only as a supplement to the cover provided by a private insurer.

(21)

The public insurance is granted, according to the Portuguese authorities, under exactly the same terms and conditions as the private insurance. Thus, the amount covered by the public insurance may never exceed the amount covered by the private insurer. However, the applicable insurance premium is equal to 60 % of the premium charged by the private insurer. The average rate applicable under the scheme represented 0,21 % of turnover, while the market rate charged by private insurers represented on average 0,36 % of turnover in 2009. Even the average market rates — of 0,23 % and 0,24 % in 2007 and 2008 respectively — were higher than the average rate applicable under the scheme from 2009 onwards.

(22)

In the event of occurrence of the insured event, any recovered amounts are divided between the State and the private insurer providing the basic cover, in proportion to the share of the total cover guaranteed, i.e. quota share. The recovery procedure is administered by the private insurer.

(23)

The scheme was notified on 12 January 2009 for a duration from 1 January 2009 to 31 December 2010. No prolongation has been notified to the Commission.

(24)

According to the information submitted to the Commission by the Portuguese authorities, the maximum guarantee per single beneficiary is EUR 1,5 million.

(25)

According to the information submitted to the Commission by the Portuguese authorities, the overall budget of the scheme for both domestic and export transactions is EUR 2 billion (5).

(26)

In its decision of 27 October 2010 initiating the formal investigation procedure, the Commission set out its preliminary assessment and expressed doubts as to the compatibility of the scheme with the internal market. The doubts expressed in that decision concerned:

(27)

In their comments on the initiation of the formal investigation procedure, the Portuguese authorities argue that the Commission's claim that companies under the scheme benefit from an advantage that would otherwise not be available is not consistent with the objectives expressed in the Temporary Framework. To prove the market failure, the Portuguese authorities refer to the loss ratio, which had attained a record of 102 % in 2008, despite the fact that the number of firms covered by insurance had decreased by 29,41 % at the end of 2009 compared with the end of 2008 and by another 12,53 % by the end of September 2010. The value of the insured portfolio had decreased by 32,84 % at the end of 2009 compared to end 2008 and by another 22,36 % at September 2010. Portugal also argues that other Member States have also adopted such schemes.

(28)

As regards the selective nature of the advantage, Portugal argues that the scheme is not selective, but instead constitutes a measure of general character which does not entail any intra-sectoral or cross-sectoral discrimination. Portugal also deplores the absence of a definition by the Commission of what constitutes a general measure. According to Portugal, the absence of discrimination is proven by: (i) the application of the scheme also to companies from other Member States which are active in Portugal; (ii) the acceptance of applications to the scheme from all four insurers active in Portugal, all of which are held at least in part by foreign entities; (iii) the absence of a change of the financing needs during the crisis; (iv) the major beneficiary of the scheme, which in October 2010 was the segment of operations relating to the national market (73,2 %); (v) the possibility of all firms operating in Portugal to use the scheme, independently of whether the nature of their activities is linked to trade in goods (the sectors ‘construction’, ‘transport’ and ‘other services — excluding commerce’ have benefitted from the scheme for the amounts of EUR 2 155 000, EUR 471 500 and EUR 4 580 000 respectively), although by their nature, export credits are mainly related to transactions in goods. Moreover, the top-up model would not be a source of discrimination, according to Portugal, as it does not prevent any firm from negotiating such a policy with a private insurer. The public authorities rely entirely on the risk assessment of the private insurers. Also, according to the Portuguese authorities, the maximum limit set per insurance does not prevent access to it by big firms, which have benefitted from the scheme (up to 47,79 % in terms of value of operations, as opposed to 33,79 % for medium-sized and 18,42 % for small-sized firms, but only up to 31,58 % in terms of number of beneficiaries, as opposed to 39,60 % for medium-sized firms and 28,82 % for small-sized firms). That maximum limit is designed to ensure that the State resources involved are proportional to the objectives pursued, and that risk is well diversified, while at the same time ensuring access to the scheme for a greater number of firms. The fact that the maximum amount of the scheme has not been used stands as a proof of the absence of discrimination for big firms, according to the Portuguese authorities. Finally, Portugal questions the link between the case law indicated by the Commission in point 36 of the decision to open the formal investigation procedure and the discrimination. It regrets that the Commission has not set out criteria that a measure must fulfil in order to be of a general nature.

(29)

Portugal justified the lower pricing of the scheme compared to that of private insurance, arguing that an adverse selection can be observed as firms chose to ensure the less risky operations under the scheme, leaving the riskier operations for coverage by the private insurance. In that respect, the reasoning of the Commission would not be relevant, according to the Portuguese authorities, in the sector of export credit, where risk does not increase with the amount of the credit as it does for bank credits. The low risk is also shown, according to the Portuguese authorities, by the fact that at October 2010 the volume of claims accumulated in the scheme increased by only 0,26 % of the total value of insurance contracted. Moreover, the pricing applied to the State guarantee corresponds, according to the Portuguese authorities, to the market pricing before the crisis and does therefore not entail an advantage for its beneficiaries.

(30)

Further, according to the Portuguese authorities the scheme does not give rise to a distortion of competition between Member States, because: (i) it also covers national operations; (ii) the costs of insurance differ in the Member States, as shown by the different pricing of the insurance; and (iii) that type of service is unavailable on the market.

(31)

Following the publication of the Commission Decision to open the formal investigation procedure in the Official Journal on 9 April 2011, the Commission received no comments from third parties.

(32)

Article 107(1) TFEU states:

‘Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.’

(33)

In order for Article 107(1) TFEU to be applicable, there needs to be an aid measure imputable to the State which is granted by State resources, affects trade between Member States and distorts competition in the internal market by conferring a selective advantage on certain undertakings.

(34)

As explained in the Commission decision of 27 October 2010 initiating the formal investigation procedure, the insurance is directly provided by the State and any losses stemming from the scheme affect the national budget. The scheme therefore involves State resources. The involvement of State resources is not contested by Portugal.

(35)

The Commission has analysed export credit insurance markets in its decisions on short-term export credit insurance schemes (7). Premium rates in the short-term export credit insurance market are typically fixed in contracts for periods of at least one year. Therefore, any change in the pricing of the cover offered is effective only with a time lag. Further, the market practice is to adjust the supply of credit insurance by increasing or decreasing the amounts of credit offered and not by changing the rate charged on the cover. This practice has also been observed since the beginning of the financial crisis, as evidenced by the letters of refusal of cover sent by Portugal and the letters of refusal sent in other cases of short-term export credit insurance schemes (8). In general, the letters of refusal from insurers do not offer exporters, as an alternative, a higher price for the cover of certain buyers. Evidence shows that as a consequence of the financial crisis, private insurers significantly reduced the cover offered, often withdrawing it altogether. Other data supplied by market operators confirm the above (9). Thus, competition between insurers is based chiefly on quantities rather than prices. Through the measure, the State responded to demand not covered by the existing private operators. However, in a competitive market with no state intervention, a new operator would have responded to the demand by granting additional insurance cover. Consequently, the effect of the State's intervention was to protect the market positions of the private operators already active on the Portuguese market.

(36)

Short-term export credit insurance is a product in which the insurer takes over the commercial and political risk of default by the buyer in a trade transaction. Banks also offer to take over the commercial risks of trade transactions through documentary credit and non-recourse factoring. Short-term export credit insurance offered by export credit insurance companies and documentary credit offered by banks are demand-side substitutes in the market for protection against the commercial risk of trade transactions. In the absence of State intervention, exporters might have resorted at least to some extent to documentary credit (letter of credit) offered by banks (10). Owing to the possible substitutability between short-term export credit insurance offered by insurers and the documentary credit offered by banks, the measure entails an advantage in favour of the sector of short-term export credit insurance, because it contributes to maintaining the market share of export credit insurers in the market for protection against the commercial and political risks of trade transactions. As banks are not eligible to apply for the scheme, under which public insurance is offered only as a supplement to the cover granted by private insurers, the advantage is selective.

(37)

In the light of the foregoing, the Commission concludes that the measure confers a selective advantage on insurers.

(38)

Exporters and trading companies subscribing to the scheme pay a premium which is lower than the market premium. This leads to a strengthening of the position of the companies that benefit from the scheme compared to those who would potentially receive their coverage only from private insurers at a market price. The mere strengthening, through measures of a scheme, of the position of some market players compared to their competitors in a comparable situation, has been considered to constitute an advantage (11). In the present case, strengthening of the position of those beneficiaries would not have been possible to the same extent without the intervention of the State.

(39)

Furthermore, as affirmed by Portugal, cover is unavailable on the market, at least to the same extent, for the risks covered under the scheme. Thus companies benefiting from the scheme receive a double advantage in the form of access to insurance cover that would otherwise be unavailable: not only do they benefit from a lower premium than the market price, but they also benefit from the existence of the additional cover.

(40)

The Portuguese scheme is de facto selective.

(41)

An initial indication that the scheme is selective is that the companies that benefit from the measure are almost exclusively companies that trade in goods, while companies that provide services benefit much less from it. In the context of the formal investigation proceedings, the Portuguese authorities state that there are no legal obstacles preventing companies not involved in commercial activities to benefit from the scheme and that the sectors ‘construction’, ‘transport’ and ‘other services — excluding commerce’ have benefitted from the scheme. However, Portugal also admits that by their nature, export credit insurance mainly concerns transactions in goods. Companies that supply transport and other services accounted for only 2,4 % of the insurance provided under the scheme at October 2010. Given that undertakings that supply services accounted for only 8 of a total of 361 undertakings that benefitted from the scheme and about 1,25 % of the share of credit limits, it is clear that the measure in question essentially aided companies that trade in goods.

(42)

There are other elements that show that the scheme is de facto selective.

(43)

First, despite the claim of the Portuguese authorities that the scheme has a general character because the beneficiaries are defined by objective criteria which do not entail a discrimination against entities from other Member States, the conditions set under the scheme grant a certain margin of discretion in the choice of beneficiaries. The scheme follows a ‘top-up’ model, according to which only companies that have a credit limit with a private insurer are eligible for the scheme, while companies to which private credit insurers refuse cover completely are not eligible for the ‘top-up’. The scheme leaves it entirely to the private companies to judge the eligibility for cover. In the absence of uniform and objective criteria for determining the risk entailed in the transactions which each exporter or trader carries out, the scheme grants private operators a degree of latitude in judging the creditworthiness of the companies that are eligible to apply for cover. The Court of Justice has considered that to be considered as non-selective, a measure should be based on a criterion of application which is objective, has no geographic or sectoral connotation, and is in keeping with the objective of the measure (12). In the present case, the absence of objective criteria for the decision to grant private cover leads to potential discrimination between beneficiaries that are in a comparable factual situation (13).

(44)

Second, even if the criteria for access to the scheme were to be considered objective, the Court has held that the mere existence of objective criteria does not prejudge the selective nature of the measure where the measure has the effect of advantaging certain undertakings to the detriment of others. Thus, the Court has stated that ‘[t]he fact that the aid is not aimed at one or more specific recipients defined in advance, but that it is subject to a series of objective criteria pursuant to which it may be granted, within the framework of a predetermined overall budget allocation, to an indefinite number of beneficiaries who are not initially individually identified, cannot suffice to call in question the selective nature of the measure and, accordingly, its classification as State aid within the meaning of Article 92 of the Treaty [107(1) TFEU].At the very most, that circumstance means that the measure in question is not an individual aid. It does not, however, preclude that public measure from having to be regarded as a system of aid constituting a selective, and therefore specific, measure if, owing to the criteria governing its application, it procures an advantage for certain undertakings or the production of certain goods, to the exclusion of others (14)’. Thus, according to the Court of Justice, State interventions should not be judged on their causes or aims, but on their effects (15). In the case at hand, the scheme is de facto selective.

(45)

Third, in order to be of a general nature, a measure must not only be based on objective and horizontal criteria, but must also not be limited either in time or in its field of application. The scheme, despite Portugal's insistence on its general character, is limited both in time and in its field of application, including by the very nature of the top-up model, as has been explained above in recital 43.

(46)

Finally, the criteria under the scheme are not in conformity with the aim and logic of the measure (16). Even if the scheme were to be applied in an objective manner by the private insurers, only companies which saw their cover reduced during the crisis would be eligible under the scheme. Companies for which private insurers have cancelled credit limits completely are excluded from the scheme. Therefore, despite the aim of the scheme to address an alleged unavailability of cover on the private market, it does not cover the companies which are most severely affected by the reduction of the private insurance capacity in the market. In that respect, the design of the measure is not appropriate to address the identified market failure

(47)

On the basis of the foregoing considerations, the advantages conferred on the exporters and trading companies subscribing to the scheme are of a selective nature.

(48)

Concerning the effect on trade, the scheme covers export transactions and domestic transactions in tradable goods.

(49)

By covering domestic transactions, the scheme may potentially affect trade between Member States to the extent that it could appreciably distort trade flows, for instance by diverting economic activities from exports into domestic transactions.

(50)

As regards the distortion of competition, according to the case law of the Court of Justice, the mere fact that the competitive position of an undertaking is strengthened compared to other competing undertakings, by giving it an economic benefit which it would not otherwise have received in the normal course of its business, points to a possible distortion of competition (17).

(51)

As the scheme applies to exports, including for other Member States, the measure clearly affects trade flows between Member States, as it facilitates the exercise of an export activity by beneficiaries.

(52)

The scheme also affects trade insofar as it covers domestic transactions. It is well-established case-law that where aid granted by a Member State strengthens the position of a company compared with other competing companies in intra-Union trade, the latter should be considered affected by that aid. In this regard, the fact that an economic sector has been liberalised at the level of the Union could serve to determine that the aid has a real or potential effect on the competition and affects trade between the Member States. Additionally, it is not necessary that the beneficiary company itself be involved in the trade within the Union. Aid granted by a Member State to a company may contribute to maintaining or increasing the activity in the domestic market, with the result that companies established in another Member States have fewer opportunities to penetrate the market of the Member State in question. Furthermore, the strengthening of an undertaking which, until then, was not involved in intra-Union trade may place that undertaking in a position that enables it to penetrate the market of another Member State (18).

(53)

In the present case, the measure benefits companies active in various sectors open to trade within the European Union. Thus even advantages conferred on domestic transactions of companies active only in the Portuguese market affect trade between Member States.

(54)

Moreover, the purpose of the measure is to support the commercial trading activities of companies established in Portugal as opposed to undertakings established in other Member States. The measure may, therefore, distort competition in the internal market.

(55)

Consequently, this project constitutes state aid within the meaning of Article 107(1) of the TFUE. The aid may be considered compatible with the common market if it can qualify for one of the exceptions provided for in the Treaty.

(56)

The Commission has laid down in its Communication conditions under which aid to insurers in the form of State-supported short-term export credit schemes is considered to be compatible. In the context of the financial crisis, the Temporary Framework sets out the conditions of application of the Communication.

(57)

Point 2.5 of the Communication as amended (19) defines ‘marketable risks’ as the commercial and political risks relating to public and non-public debtors established in the countries listed in the Annex (20) to the Communication. Financial advantages in favour of export credit insurers that enter or cover a transaction qualified as a marketable risk are normally prohibited.

(58)

Point 3.1 of the Communication states that factors that may distort competition between private and public or publicly supported export-credit insurers insuring marketable risks include de jure and de facto State guarantees of borrowing and losses. Such guarantees enable insurers to borrow at rates lower than the normal market rates or make it possible for them to borrow money at all. Furthermore, they obviate the need for insurers to reinsure themselves on the private market,

(59)

As far as countries not listed in the Annex to the Communication are concerned, such risks are ‘non-marketable’ within the meaning of the Communication and public support for insuring them is not covered by the Communication.

(60)

Point 4.2 of the Communication provides that ‘marketable risks’ cannot be covered by export credit insurance with aid from the Member States. However, point 4.4 of the Communication provides that under certain conditions, these risks can be temporarily covered by public or publicly-supported export credit insurers. In particular it states that risks incurred in respect of debtors established in countries listed in the Annex to the Communication are considered temporarily non-marketable only if it can be demonstrated that private insurance cover for the risks generally viewed as marketable is unavailable. Member States which wish to invoke that escape clause must provide a market report and produce evidence from two major, internationally recognised export credit insurers as well as a national credit insurer, both demonstrating the unavailability of cover for the risks in the private insurance market. Moreover, the publicly-supported export credit insurer must, as far as possible, align its premium rates for such non-marketable risks with the rates charged elsewhere by private export credit insurers for the type of risk in question and provide a description of the conditions which the public export credit insurer intends to apply in respect of such risks.

(61)

In order to speed up the procedure, the Temporary Framework simplified, until 31 December 2010, the proof that Member States need to produce to demonstrate the unavailability of cover. To that end, Member States had to submit evidence supplied by a large internationally recognised private export credit insurer and a national credit insurer or by at least four well-established exporters in the domestic market. The Temporary Framework was prolonged until 31 December 2011 (21).

(62)

Portugal submitted a number of letters from exporters which show that they have been refused cover for a number of transactions. Nevertheless, the Commission has not found sufficient proof of the unavailability of cover in the letters provided by the Portuguese authorities. The reasons provided in those letters for refusal are either confidential or explicitly state that refusal is due to the customer's poor liquidity and financial position, which is a normal business practice in a properly functioning insurance market. Portugal provided data, in its reply to the Commission decision of 27 October 2010 initiating the formal investigation procedure, that shows a decline in the number of firms taking up insurance (there is a 29,41 % decline up to the end of 2009 compared with the previous year, and of another 12,53 % up to September 2010), as well as a decline in the value of the insured portfolio (32,84 % decline at the end of 2009 compared with the previous year, and of another 22,36 % until September 2010). However, of the two letters from private insurers provided by Portugal pointing to the unavailability of cover in the private market, one of them (from CESCE, dated 22 November 2010) states that the financing needs of firms have also diminished due to the decrease of the buying markets. Therefore, the alleged reduction of insured volumes is not sufficient proof of the unavailability of cover on the market.

(63)

Moreover, if indeed cover is unavailable in the private market and it then becomes available when the State grants a partial coverage, it could constitute a sign that the insurers have received State aid. As that market adjusts mainly by quantity not by prices, as explained in recital 35, the availability of credit deriving from the state aid allows the operators already present on the market to maintain their position.

(64)

The rates charged under the scheme represent 60 % of the rate charged by a private insurer to cover the same client. Further, contrary to the allegations of Portugal, the risk transferred to the State under the scheme can be considered higher than the risk covered by the private insurer on a stand-alone basis. It should be recalled that the risk of default increases when the insured amount increases. Thus, with a larger amount of insurance cover the exporter would accept to conclude more commercial transactions with a given buyer. The total volume of transactions could exceed the capacity to repay of the buyer.

(65)

The Portuguese authorities consider that the risk of additional transactions is lower, considering that an exporter which obtained limited cover would first insure the riskiest buyers; with increased cover, the exporter would progressively insure buyers that are less risky. However, that argument overlooks the fact that credit limits are granted per buyer, and therefore the exporter does not have the choice to exclusively use the entirety of the limit granted for the least credit-worthy buyers.

(66)

Moreover, the argument of the Portuguese authorities that the additional transactions insured are of lower risk than the transactions insured by the private insurer would lead to the conclusion that the private insurers accept, for a given level of premium, a higher risk, while they refuse to cover transactions with lower risk for the same level of premium. If that argument was correct, a rational private insurer would insure more transactions, which would increase their premium income while decreasing the risk. In other words, the argument of the Portuguese authorities would point to an irrational behaviour of private insurers, who would agree to insure a riskier part of the portfolio instead of the less risky part. Therefore that argument cannot be accepted.

(67)

As a result of the increased risk covered by the measure, the State assumes exposure to a higher expected ultimate loss than the private insurer, when granting and pricing the initial cover on a stand-alone basis. Therefore, in the case of a top-up scheme where the decision to extend the cover is taken only after the premium for the initial credit insurance limit has been set, the price of the top-up must reflect a higher risk of possible excess cover. The argument of the Portuguese authorities, according to which firms would operate an adverse selection which would ensure that the riskier operations would be covered by private insurance, is not supported by any concrete data nor by the known market practice. The most common form of private short-term credit insurance (whole turnover policy) requires that whole portfolio of credited sales is covered under the policy. Thus, the insured company is prevented from insuring their risks selectively. The Commission considers that the price of supplementary insurance should have taken into account the higher level of risk assumed. The pricing should therefore have been higher than the price charged for the base cover by the private insurers.

(68)

In the present case, the rates charged under the scheme are lower than the current rates in the export credit insurance market, which is confirmed by Portugal in its reply to the Commission decision of 27 October 2010 initiating the formal investigation procedure. That pricing is also lower than the 2007 and 2008 market rates. For that reason, the argument brought forward by the Portuguese authorities, according to which the pricing corresponds to the market rates before the crisis, is also not confirmed. Moreover, the price should also take into account the level of risk assumed. Therefore, the pricing should in fact be higher than the market price.

(69)

In the light of the foregoing, the scheme as applied to insurers is incompatible with the Communication and the Temporary Framework.

(70)

Article 107(3)(c), applicable under normal market circumstances, and Article 107(3)(b) of the TFEU, applicable in periods of serious disturbance in the economy, allow aid to be considered compatible with the internal market under certain conditions.

(71)

The Commission recalls that according to case law, Article 107(3)(b) of the TFEU must be applied restrictively and must tackle a disturbance in the entire economy of a Member State. (22)

(72)

In line with the principles set out in the Temporary Framework (paragraph 5.1), as prolonged until 31 December 2012, in order to be deemed compatible, aid measures must fulfil the following criteria:

a.

b.

c.

(73)

As explained in recital 46, the design of the scheme excludes companies which are hardest hit by the crisis and therefore it is not appropriate to address the alleged market failure of unavailability of private cover.

(74)

As stated above in recital 62, although the information provided by Portugal indicates strains in the private credit insurance market, it fails to prove an unavailability of cover. Therefore the necessity of the State intervention cannot be established.

(75)

As explained in recitals 21 and 64, the rates charged under the scheme represent 60 % of the rates charged by private insurers to cover the same client.

(76)

As explained above in recitals 65 to 67, in the case of a top-up scheme where the decision to extend the cover is taken only after the premium for the initial credit insurance limit has been set, the price of the top-up must reflect a higher risk of possible excess cover.

(77)

The objective to provide the allegedly unavailable insurance cover could also be achieved through a scheme priced in such a way as to reflect the underlying risk assumed by the State. Therefore, the pricing of the scheme based on a premium lower than the premium which would be charged by the market for similar risks is not proportionate to the objective of the scheme.

(78)

In view of the above, the export credit insurance part of the scheme cannot be considered to be compatible aid to exporters under Article 107(3)(b) of the TFEU and the Temporary Framework.

(79)

Regarding Article 107(3)(c), all the arguments in respect of appropriateness, necessity and proportionality are equally pertinent in the compatibility analysis under Article 107(3)(b). Therefore the aid to export credit insurers under the scheme affects trade conditions to an extent contrary to the common interest.

(80)

As regards the application of the scheme to domestic transactions, domestic trade insurance below market price could divert trade transactions away from exports in favour of domestic transactions and have a major impact on imports. Therefore, under normal market conditions State support in favour of domestic trade operations is strictly forbidden. However, subparagraphs (c) and (b) of Articles 107(3) of the TFEU allow aid to be considered compatible with the internal market under certain circumstances. In that context, the Communication and the Temporary Framework set criteria for the compatibility of aid measures for short-term export credit insurance. However, those texts do not cover domestic trade transactions.

(81)

Nevertheless, Portugal notified the scheme in the context of the current financial crisis under the Temporary Framework. Therefore it must be established whether, in view of the far-reaching consequences of the current economic crisis, the scheme could be regarded as compatible directly under Article 107(3)(b) of the TFEU. If not, then it must be analysed whether the measure can be deemed compatible under Article 107(3)(c).

(82)

Concerning compatibility under Article 107(3)(b) of the TFEU, that provision enables the Commission to declare aid compatible with the internal market if it aims ‘to remedy a serious disturbance in the economy of a Member State’.

(83)

The Commission reiterates that Article 107(3)(b) of the TFEU needs to be applied restrictively and must tackle a disturbance that effects the entire economy of a Member State (24). It also recalls that, as stated above in recital 73, the measure must fulfil the principles of appropriateness, necessity and proportionality.

(84)

The measure was put in place in the context of the current financial crisis and is limited in time.

(85)

The Commission has received letters from exporters and private insurers indicating a reduction in insurance cover for domestic transactions The Portuguese authorities argue that the loss ratio has increased to 102 %. However, that observation is not conclusive since the increase follows a constant trend since 2004, as shown in the observations provided by the Portuguese authorities. That constant increase in the loss ratio even before the outbreak of the financial crisis may point, not to a market failure in domestic trade financing, but rather to a structural problem in the market. Therefore, the Commission has not found evidence that the scheme is appropriate to address a serious disturbance in the economy and considers the scheme cannot be declared compatible under the Temporary Framework or Article 107(3)(b).

(86)

Concerning the compatibility of the measure under the Communication and Article 107(3)(c), the aim of the scheme is to address the unavailability of cover in the insurance market. However, being a top-up scheme which leaves some degree of latitude in the choice of the beneficiary to private insurers, the scheme potentially excludes companies from cover which are in a comparable factual situation to the companies covered, but were more affected by the crisis. Such excluded companies would have had insurance cover completely withdrawn as opposed to only partially cancelled. Moreover, the measure not only provides additional cover to beneficiaries, it also provides an advantage in terms of pricing, given that the premiums are below market rates. As already noted, the rates charged under the scheme represent 60 % of the rates charged by a private insurer to cover the same client, while the fact that the cover limit is extended to double the initial limit implies a higher risk not reflected by the premium. The level of the pricing under the scheme is not justified in view of the need to address the unavailability of insurance cover. The scheme is not proportionate to achieving its stated objective given the potential distortions of competition.

(87)

The Commission therefore concludes that the State aid granted to domestic trade insurance operations does not fulfil the conditions under subparagraphs (b) or (c) of Articles 107(3) of the TFEU and is incompatible with the internal market.

(88)

In the light of the foregoing, the Commission concludes that the scheme grants State aid within the meaning of Article 107(1) TFEU which cannot be declared compatible with the internal market.

(89)

According to Article 14(1) of Council Regulation (EC) No 659/1999 (25), where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiaries. Only aid which is incompatible with the internal market shall be recovered.

(90)

The purpose of recovery is to restore the situation that existed prior to the granting of the aid. It is achieved once the incompatible aids are repaid by the beneficiaries, which therefore forfeit the advantages which they enjoyed over their competitors. The amount to be recovered should be such as to eliminate the economic advantage given to the beneficiaries.

(91)

For the exact quantification of the amount of aid, as no appropriate market price is available for remuneration of the State cover, a proper benchmark has to be defined. As set out in the first indent of point 4.2 of the Commission Notice on guarantees, (26) the ‘cash grant equivalent’ of a loan guarantee in a given year can be calculated in the same way as the grant equivalent of a soft loan. Hence the aid amount can be calculated as the difference between a theoretical market rate and the rate obtained thanks to the State guarantee after any premiums paid have been deducted.

(92)

In respect of the aid to insurers, the advantage takes the form of the preservation of the market share of the insurers. In the absence of aid, cover could have been provided by another market player. In particular, as explained above in recital 35, competition in the market is based mainly on quantities and not on prices. Furthermore, market practice is to fix an average price for the entire portfolio which is then to be insured with the same insurer (27) to avoid cherry picking by the insured company. Cherry picking could occur if the insured company paid an average price only for clients with high risk and did not insure the lower risk clients or insure low risk clients with another insurer. Therefore, if another market player had provided cover to the exporters for the entire requested credit limits even at a higher price, exporters would probably have moved their entire insurance policies to the alternative cover provider. The advantage in monetary terms is the profit margin realised on the volume insured by each private insurer decreased by the costs associated to this volume. These elements, translated into the profits realised by the private insurers participating in the scheme over the period over which top-up cover was provided by the State, would have been recorded by another market player in the absence of the scheme. The aid in favour of the insurers is therefore quantified as the profits realised by the insurers participating in the scheme over the period it was in place as a result of their cover of individual exporters and domestic trading companies subscribing to the scheme. The advantage for the clients subscribing to the scheme should be calculated at the level of each individual insurer participating in the scheme and in case of profit exceeding the de minimis amount it should be recovered.

(93)

In respect of the exporters, the beneficiaries should have paid remuneration for the State cover under market conditions. The aid amount should therefore be calculated as the difference between that actual market rate, adapted for the change in the level of risk. The Commission has developed a method for the calculation of the amount to be recovered (explained in the Annex to this Decision) based on reasonable assumptions and on common market practice. Under that method, a theoretical market price for the cover granted by the State is equal to 110 % of the price (in terms of premium rate) charged by the private insurer in the case of each individual exporter. As the price charged under the scheme is 60 % of the premiums charged by the private insurer, the amount to be recovered in each transaction is equal to the amount charged by the State under the scheme multiplied by 5/6.

(94)

The amount referred to in recital 93 constitutes the amount to be recovered, plus the recovery interest effectively accrued on that amount from the date on which the aid was made available to the beneficiaries (date of the individual guarantees) until its actual recovery. The recovery interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004 (28) as amended by Regulation (EC) No 271/2008 (29).

(95)

The present decision shall be implemented immediately, in particular in respect of the recovery of all the individual aids granted under the scheme with the exception of the aids that fulfil the conditions laid down by Regulations adopted pursuant to Articles 1 and 2 of Council Regulation (EC) No 994/98 (30) or by any other approved aid scheme up to the maximum aid intensity or de minimis limits applicable to this type of aid.

(a)

The list of beneficiaries that have received aid under the scheme referred to in Article 1 and the total amount of aid received by each of them;

(b)

The total amount (principal and recovery interest) to be recovered from each beneficiary;

(c)

A detailed description of the measures already taken and planned to comply with this Decision;

(d)

Documents demonstrating that the beneficiaries have been ordered to repay the aid.