title: 2011/695/: Decision of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings Text with EEA relevance

text:
               20.10.2011

               EN

               Official Journal of the European Union

               L 275/29

         DECISION OF THE PRESIDENT OF THE EUROPEAN COMMISSION
   of 13 October 2011
   on the function and terms of reference of the hearing officer in certain competition proceedings
   (Text with EEA relevance)
   (2011/695/EU)
   THE PRESIDENT OF THE EUROPEAN COMMISSION,
   Having regard to the Treaty on European Union,
   Having regard to the Treaty on the Functioning of the European Union,
   Having regard to the Agreement on the European Economic Area,
   Having regard to the Rules of Procedure of the Commission (1), and in particular Article 22 thereof,
   Whereas:

               (1)

               Under the system for competition law enforcement established under the Treaty on the Functioning of the European Union (hereinafter ‘the Treaty’), the Commission investigates and decides on cases by administrative decision, subject to judicial review by the Court of Justice of the European Union (hereinafter ‘the Court of Justice’).

               (2)

               The Commission has to conduct its competition proceedings fairly, impartially and objectively and must ensure respect of the procedural rights of the parties concerned as set out in Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (2), Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (3), Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (4), and Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (5), as well as in the relevant case-law of the Court of Justice. In particular, the right of the parties concerned to be heard before the adoption of any individual decision adversely affecting them is a fundamental right of European Union law recognised by the Charter of Fundamental Rights, and in particular Article 41 thereof (6).

               (3)

               In order to ensure the effective exercise of the procedural rights of the parties concerned, other involved parties within the meaning of Article 11(b) of Regulation (EC) No 802/2004 (hereinafter ‘other involved parties’), complainants within the meaning of Article 7(2) of Regulation (EC) No 1/2003 (hereinafter ‘complainants’) and persons other than those referred to in Articles 5 and 11 of Regulation (EC) No 773/2004 and third persons within the meaning of Article 11 of Regulation (EC) No 802/2004 (hereinafter ‘third persons’) involved in competition proceedings, responsibility for safeguarding the observance of such rights should be entrusted to an independent person experienced in competition matters who has the integrity necessary to contribute to the objectivity, transparency and efficiency of those proceedings.

               (4)

               The Commission created the function of hearing officer for these purposes in 1982, revised it in Commission Decision 94/810/ECSC, EC of 12 December 1994 on the terms of reference of hearing officers in competition procedures before the Commission (7) and in Commission Decision 2001/462/EC, ECSC of 23 May 2001 on the terms of reference of hearing officers in certain competition proceedings (8). It is now necessary to clarify and further strengthen the role of the hearing officer and to adapt the terms of reference of the hearing officer in the light of developments in Union competition law.

               (5)

               The function of the hearing officer has been generally perceived as an important contribution to the competition proceedings before the Commission due to the independence and expertise that hearing officers have brought to these proceedings. In order to ensure the continued independence of the hearing officer from the Directorate-General for Competition, he or she should be attached, for administrative purposes, to the member of the Commission with special responsibility for competition.

               (6)

               The hearing officer should be appointed in accordance with the rules laid down in the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union. In accordance with those rules, consideration may also be given to candidates who are not officials of the Commission. Transparency as regards the appointment, termination of appointment and transfer of hearing officers should be ensured.

               (7)

               The Commission may appoint one or more hearing officers and should provide for their supporting staff. Where the hearing officer perceives a conflict of interests in the performance of his or her functions, the hearing officer should cease from acting on a case. If the hearing officer is unable to act, his or her role should be carried out by another hearing officer.

               (8)

               The hearing officer should operate as an independent arbiter who seeks to resolve issues affecting the effective exercise of the procedural rights of the parties concerned, other involved parties, complainants or interested third persons where such issues could not be resolved through prior contacts with the Commission services responsible for the conduct of competition proceedings, which must respect these procedural rights.

               (9)

               The terms of reference of the hearing officer in competition proceedings should be framed in such a way as to safeguard the effective exercise of procedural rights throughout proceedings before the Commission pursuant to Articles 101 and 102 of the Treaty and Regulation (EC) No 139/2004, in particular the right to be heard.

               (10)

               In order to strengthen this role, the hearing officer should be attributed with the function of safeguarding the effective exercise of procedural rights of undertakings and associations of undertakings in the context of the Commission’s powers of investigation under Chapter V of Regulation (EC) No 1/2003, as well as pursuant to Article 14 of Regulation (EC) No 139/2004 which empowers the Commission to impose fines on undertakings and associations of undertakings. The hearing officer should also be attributed with specific functions during this investigative phase in relation to claims for legal professional privilege, the privilege against self-incrimination, deadlines for replying to decisions requesting information pursuant to Article 18(3) of Regulation (EC) No 1/2003, as well as with regard to the right of undertakings and associations of undertakings subject to an investigative measure by the Commission under Chapter V of Regulation (EC) No 1/2003 to be informed of their procedural status, namely whether they are subject to an investigation and, if so, the subject matter and purpose of that investigation. In assessing claims made in relation to privilege against self-incrimination, the hearing officer may consider whether undertakings make clearly unfounded claims for protection merely as a delaying tactic.

               (11)

               The hearing officer should be able to facilitate the resolution of claims that a document is covered by legal professional privilege. To this end, if the undertaking or association of undertakings making the claim agrees, the hearing officer will be allowed to examine the document concerned and make an appropriate recommendation, referring to the applicable case-law of the Court of Justice.

               (12)

               The hearing officer should be responsible for deciding whether a third person shows a sufficient interest to be heard. Consumer associations that apply to be heard should be generally regarded as having a sufficient interest, where the proceedings concern products or services used by end-consumers or products or services that constitute a direct input into such products or services.

               (13)

               The hearing officer should decide whether to admit complainants and interested third persons to the oral hearing, taking into account the contribution they can make to the clarification of the relevant facts of the case.

               (14)

               The right of the parties concerned to be heard before a final decision adversely affecting their interests is taken is guaranteed through their right to reply in writing to the preliminary position of the Commission, as set out in the statement of objections and their right to develop their arguments, if they so request, at the oral hearing. In order to exercise these rights effectively, parties to whom a statement of objections has been addressed have the right of access to the Commission’s investigation file.

               (15)

               In order to safeguard the effective exercise of the rights of defence of parties to whom a statement of objections has been addressed, the hearing officer should be responsible for ensuring that disputes about access to the file or about the protection of business secrets and other confidential information between those parties and the Commission’s Directorate-General for Competition are resolved. In exceptional circumstances, the hearing officer may suspend the running of the time period in which an addressee of a statement of objections should reply to that statement until a dispute about access to file has been resolved, if the addressee would not be in a position to reply within the deadline granted and an extension would not be an adequate solution at that point in time.

               (16)

               In order to safeguard the effective exercise of procedural rights while respecting the legitimate interests of confidentiality, the hearing officer should, where appropriate, be able to order specific measures for access to the Commission’s file. In particular, the hearing officer should have the power to decide that parts of the file are made accessible to the party requesting access in a restricted manner, for example by limiting the number or category of persons having access, and the use of the information being accessed.

               (17)

               The hearing officer should be responsible for deciding on requests for the extension of time limits set for the reply to a statement of objections, a supplementary statement of objections or a letter of facts or time limits within which other involved parties, complainants or interested third persons may make comments, in case of disagreement between any such person and the Directorate-General for Competition.

               (18)

               The hearing officer should promote the effectiveness of the oral hearing, by, inter alia, taking all appropriate preparatory measures, including the circulation, in due time before the hearing, of a provisional list of participants and a provisional agenda.

               (19)

               The oral hearing allows the parties to whom the Commission has addressed a statement of objections and other involved parties to further exercise their right to be heard by developing their arguments orally before the Commission, which should be represented by the Directorate-General for Competition as well as other services that contribute to the further preparation of a decision to be taken by the Commission. It should provide an additional opportunity to ensure that all relevant facts – whether favourable or unfavourable to the parties concerned, including the factual elements relating to the gravity and duration of the alleged infringement – are clarified as much as possible. The oral hearing should also allow the parties to present their arguments as to the matters that may be of importance for the possible imposition of fines.

               (20)

               To ensure the effectiveness of oral hearings, the hearing officer may allow the parties to whom a statement of objections has been addressed, other involved parties, complainants, other persons invited to the hearing, the Commission services and the authorities of the Member States to ask questions during the hearing. The oral hearing should not be public so as to guarantee that all participants can express themselves freely. Therefore, information disclosed during the oral hearing should not be used for a purpose other than judicial and/or administrative proceedings for the application of Articles 101 and 102 of the Treaty. Where justified to protect business secrets and other confidential information, the hearing officer should be able to hear persons in a closed session.

               (21)

               Parties to the proceedings which offer commitments pursuant to Article 9 of Regulation (EC) No 1/2003, as well as parties which engage in settlement procedures in cartel cases pursuant to Article 10a of Regulation (EC) No 773/2004, should be able to call upon the hearing officer in relation to the effective exercise of their procedural rights.

               (22)

               The hearing officer should report on the respect for the effective exercise of procedural rights throughout competition proceedings. Moreover, and separately from his or her reporting function, the hearing officer should also be able to make observations on the further progress and objectivity of the proceedings and thereby contribute to ensuring that competition proceedings are concluded on the basis of a sound assessment of all relevant facts.

               (23)

               When disclosing information about natural persons, the hearing officer should have regard, in particular, to Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (9).

               (24)

               Decision 2001/462/EC, ECSC should be repealed,

         HAS DECIDED AS FOLLOWS:
   CHAPTER 1

      ROLE, APPOINTMENT AND DUTIES OF THE HEARING OFFICER

   Article 1
   The Hearing Officer
   1.   There shall be one or more hearing officers for competition proceedings, whose powers and functions are laid down in the present decision.
   2.   The hearing officer shall safeguard the effective exercise of procedural rights throughout competition proceedings before the Commission for the implementation of Articles 101 and 102 of the Treaty, and under Regulation (EC) No 139/2004 (hereinafter ‘competition proceedings’).
   Article 2
   Appointment, Termination of Appointment and Deputising
   1.   The Commission shall appoint the hearing officer. The appointment shall be published in the Official Journal of the European Union. Any interruption, termination or transfer of the hearing officer shall be the subject of a reasoned decision of the Commission. That decision shall be published in the Official Journal of the European Union.
   2.   The hearing officer shall be attached, for administrative purposes, to the member of the Commission with special responsibility for competition (hereinafter ‘the competent member of the Commission’).
   3.   Where the hearing officer is unable to act, his or her role shall be carried out by another hearing officer. If no hearing officer is able to act, the competent member of the Commission, where appropriate after consultation of the hearing officer, shall designate another competent Commission official, who is not involved in the case in question, to carry out the hearing officer’s duties.
   4.   In case of an actual or potential conflict of interests, the hearing officer shall refrain from acting on a case. Paragraph 3 shall apply.
   Article 3
   Method of Operation
   1.   In exercising his or her functions, the hearing officer shall act independently.
   2.   In exercising his or her functions, the hearing officer shall take account of the need for effective application of the competition rules in accordance with Union legislation in force and the principles laid down by the Court of Justice.
   3.   In exercising his or her functions, the hearing officer shall have access to any files relating to competition proceedings.
   4.   The hearing officer shall be kept informed by the director responsible for investigating the case in the Directorate-General for Competition (hereinafter ‘the director responsible’) about the development of the procedure.
   5.   The hearing officer may present observations on any matter arising out of any Commission competition proceeding to the competent member of the Commission.
   6.   If the hearing officer makes reasoned recommendations to the competent member of the Commission or takes decisions as foreseen in this decision, the hearing officer shall provide a copy of these documents to the director responsible and the Legal Service of the Commission.
   7.   Any issue regarding the effective exercise of the procedural rights of the parties concerned, other involved parties within the meaning of Article 11(b) of Regulation (EC) No 802/2004 (hereinafter ‘the other involved parties’), complainants within the meaning of Article 7(2) of Regulation (EC) No 1/2003 (hereinafter ‘complainants’) and interested third persons within the meaning of Article 5 of this Decision involved in such proceedings shall first be raised by those persons with the Directorate-General for Competition. If the issue is not resolved, it may be referred to the hearing officer for independent review. Requests related to a measure for which a time limit applies must be made in due time, within the original time limit.
   CHAPTER 2

      INVESTIGATION

   Article 4
   Procedural rights in the investigation phase
   1.   The hearing officer shall safeguard the effective exercise of procedural rights which arise in the context of the exercise of the Commission’s powers of investigation under Chapter V of Regulation (EC) No 1/2003 and in proceedings that can result in the imposition of fines pursuant to Article 14 of Regulation (EC) No 139/2004.
   2.   In particular, the hearing officer shall have the following functions, subject to Article 3(7):

               (a)

               The hearing officer may be asked by undertakings or associations of undertakings to examine claims that a document required by the Commission in the exercise of powers conferred on it pursuant to Article 18, 20 or 21 of Regulation (EC) No 1/2003, in inspections pursuant to Article 13 of Regulation (EC) No 139/2004 or in the context of investigatory measures in proceedings that can result in the imposition of fines pursuant to Article 14 of Regulation (EC) No 139/2004 and which was withheld from the Commission is covered by legal professional privilege, within the meaning of the case-law of the Court of Justice. The hearing officer may only review the matter if the undertaking or association of undertakings making the claim consent to the hearing officer viewing the information claimed to be covered by legal professional privilege as well as related documents that the hearing officer considers necessary for his or her review. Without revealing the potentially privileged content of the information, the hearing officer shall communicate to the director responsible and the undertaking or association of undertakings concerned his or her preliminary view, and may take appropriate steps to promote a mutually acceptable resolution. Where no resolution is reached, the hearing officer may formulate a reasoned recommendation to the competent member of the Commission, without revealing the potentially privileged content of the document. The party making the claim shall receive a copy of this recommendation.

               (b)

               Where the addressee of a request for information pursuant to Article 18(2) of Regulation (EC) No 1/2003 refuses to reply to a question in such a request invoking the privilege against self-incrimination, as determined by the case-law of the Court of Justice, it may refer the matter, in due time following the receipt of the request, to the hearing officer. In appropriate cases, and having regard to the need to avoid undue delay in proceedings, the hearing officer may make a reasoned recommendation as to whether the privilege against self-incrimination applies and inform the director responsible of the conclusions drawn, to be taken into account in case of any decision taken subsequently pursuant to Article 18(3) of Regulation (EC) No 1/2003. The addressee of the request shall receive a copy of the reasoned recommendation.

               (c)

               Where the addressee of a decision requesting information pursuant to Article 18(3) of Regulation (EC) No 1/2003 considers that the time limit imposed for its reply is too short, it may refer the matter to the hearing officer, in due time before the expiry of the original time limit set. The hearing officer shall decide on whether an extension of the time limit should be granted, taking account of the length and complexity of the request for information and the requirements of the investigation.

               (d)

               Undertakings or associations of undertakings subject to an investigative measure by the Commission under Chapter V of Regulation (EC) No 1/2003 shall have the right to be informed of their procedural status, namely whether they are subject to an investigation and, if so, the subject matter and purpose of that investigation. If such an undertaking or association of undertakings considers that it has not been properly informed by the Directorate-General for Competition of its procedural status, it may refer the matter to the hearing officer for resolution. The hearing officer shall take a decision that the Directorate-General for Competition will inform the undertaking or association of undertakings that made the request of their procedural status. This decision shall be communicated to the undertaking or association of undertakings that made the request.

         CHAPTER 3

      APPLICATIONS TO BE HEARD

   Article 5
   Interested third persons
   1.   Applications to be heard from persons other than those referred to in Articles 5 and 11 of Regulation (EC) No 773/2004 and third persons within the meaning of Article 11 of Regulation (EC) No 802/2004 (hereinafter ‘third persons’) shall be made in accordance with Article 13(1) of Regulation (EC) No 773/2004 and Article 16 of Regulation (EC) No 802/2004. Applications shall be submitted in writing and explain the applicant’s interest in the outcome of the procedure.
   2.   The hearing officer shall decide as to whether third persons are to be heard after consulting the director responsible. In assessing whether a third person shows a sufficient interest, the hearing officer shall take into account whether and to what extent the applicant is sufficiently affected by the conduct which is the subject of the competition proceedings or whether the applicant fulfils the requirements of Article 18(4) of Regulation (EC) No 139/2004.
   3.   Where the hearing officer considers that an applicant has not shown a sufficient interest to be heard, he or she shall inform the applicant in writing of the reasons thereof. A time limit shall be fixed within which the applicant may make known its views in writing. If the applicant makes known its views in writing within the time limit set by the hearing officer and the written submission does not lead to a different assessment, that finding shall be stated in a reasoned decision which shall be notified to the applicant.
   4.   The hearing officer shall inform parties to competition proceedings as from the initiation of proceedings pursuant to Article 11(6) of Regulation (EC) No 1/2003 or Article 6(1)(c) of Regulation (EC) No 139/2004 of the identities of interested third persons to be heard, unless such disclosure would significantly harm a person or undertaking.
   Article 6
   Right to an oral hearing; participation of complainants and third persons in the oral hearing
   1.   At the request of parties to whom the Commission has addressed a statement of objections or other involved parties, the hearing officer shall conduct an oral hearing so that such parties can further develop their written submissions.
   2.   The hearing officer may, where appropriate and after consulting the director responsible, decide to afford complainants and interested third persons within the meaning of Article 5 the opportunity to express their views at the oral hearing of the parties to which a statement of objections has been issued, provided they so request in their written comments. The hearing officer may also invite representatives from competition authorities from third countries to attend the oral hearing as observers in accordance with agreements concluded between the Union and third countries.
   CHAPTER 4

      ACCESS TO FILE, CONFIDENTIALITY AND BUSINESS SECRETS

   Article 7
   Access to File and Access to Documents and Information
   1.   Where a party which has exercised its right of access to the file has reason to believe that the Commission has in its possession documents which have not been disclosed to it and that those documents are necessary for the proper exercise of the right to be heard, it may make a reasoned request for access to these documents to the hearing officer, subject to Article 3(7).
   2.   Subject to Article 3(7), other involved parties, complainants and interested third persons within the meaning of Article 5 may make a reasoned request to the hearing officer in the circumstances listed hereafter:

               (a)

               Other involved parties who have reason to believe that they have not been informed of the objections addressed to the notifying parties in accordance with Article 13(2) of Regulation (EC) No 802/2004.

               (b)

               A complainant who has been informed by the Commission of its intention to reject a complaint pursuant to Article 7(1) of Regulation (EC) No 773/2004 and has reason to believe that the Commission has in its possession documents which have not been disclosed to it and that those documents are necessary for the proper exercise of its rights in accordance with Article 8(1) of Regulation (EC) No 773/2004.

               (c)

               A complainant who considers that it has not received a copy of the non-confidential version of the statement of objections in accordance with Article 6(1) of Regulation (EC) No 773/2004 or that the non-confidential version of the statement of objections has not been established in a manner which enables it to exercise its rights effectively, with the exception of cases where the settlement procedure applies.

               (d)

               An interested third person within the meaning of Article 5 of this Decision who has reason to believe that it has not been informed of the nature and subject matter of a procedure in accordance with Article 13(1) of Regulation (EC) No 773/2004 and Article 16(1) of Regulation (EC) No 802/2004. The same applies to a complainant in a case to which the settlement procedure applies who has reason to believe that it has not been informed of the nature and subject matter of the procedure in accordance with Article 6(1) of Regulation (EC) No 773/2004.

         3.   The hearing officer shall take a reasoned decision on a request addressed to him or her under paragraph 1 or 2 and communicate such decision to the person that made the request and to any other person concerned by the procedure.
   Article 8
   Business secrets and other confidential information
   1.   Where the Commission intends to disclose information which may constitute a business secret or other confidential information of any undertaking or person, the latter shall be informed in writing of this intention and the reasons thereof by the Directorate-General for Competition. A time limit shall be fixed within which the undertaking or person concerned may submit any written comments.
   2.   Where the undertaking or person concerned objects to the disclosure of the information it may refer the matter to the hearing officer. If the hearing officer finds that the information may be disclosed because it does not constitute a business secret or other confidential information or because there is an overriding interest in its disclosure that finding shall be stated in a reasoned decision which shall be notified to the undertaking or person concerned. The decision shall specify the date after which the information will be disclosed. This date shall not be less than 1 week from the date of notification.
   3.   Paragraphs 1 and 2 shall apply mutatis mutandis to the disclosure of information by publication in the Official Journal of the European Union.
   4.   Where appropriate in order to balance the effective exercise of a party’s rights of defence with legitimate interests of confidentiality, the hearing officer may decide that parts of the file which are indispensable for the exercise of the party’s rights of defence will be made accessible to the party requesting access in a restricted manner, the details of which shall be determined by the hearing officer.
   CHAPTER 5

      EXTENSION OF TIME LIMITS

   Article 9
   Requests for extension of time limits
   1.   If an addressee of a statement of objections considers that the time limit imposed for its reply to the statement of objections is too short, it may seek an extension of that time limit by means of a reasoned request addressed to the director responsible. Such a request must be made in due time before the expiry of the original time limit in proceedings pursuant to Articles 101 and 102 of the Treaty and at least 5 working days before the expiry of the original time limit in proceedings under Regulation (EC) No 139/2004. If such a request is not granted or the addressee of the statement of objections making the request disagrees with the length of the extension granted, it may refer the matter to the hearing officer for review before the expiry of the original time limit. After hearing the director responsible, the hearing officer shall decide on whether an extension of the time limit is necessary to allow the addressee of a statement of objections to exercise its right to be heard effectively, while also having regard to the need to avoid undue delay in proceedings. In proceedings pursuant to Articles 101 and 102 of the Treaty, the hearing officer shall take into account, among others, the following elements:

               (a)

               the size and complexity of the file;

               (b)

               whether the addressee of the statement of objections making the request has had prior access to information;

               (c)

               any other objective obstacles which may be faced by the addressee of the statement of objections making the request in providing its observations.

         For the purposes of assessing point (a) of the first subparagraph, the number of infringements, the alleged duration of the infringement(s), the size and number of documents and the size and complexity of expert studies may be taken into consideration.
   2.   If other involved parties, a complainant or an interested third person within the meaning of Article 5 considers that the time limit to make its views known is too short, it may seek an extension of that time limit by means of a reasoned request addressed to the director responsible in due time before the expiry of the original time limit. If such a request is not granted or the other involved party, complainant or interested third person disagrees with this decision, it may refer the matter to the hearing officer for review. After hearing the director responsible, the hearing officer shall decide on whether an extension of the time limit should be granted.
   CHAPTER 6

      THE ORAL HEARING

   Article 10
   Organisation and function
   1.   The hearing officer shall organise and conduct the hearings provided for in the provisions implementing Articles 101 and 102 of the Treaty and Regulation (EC) No 139/2004.
   2.   The oral hearing shall be conducted by the hearing officer in full independence.
   3.   The hearing officer shall ensure that the hearing is properly conducted and shall contribute to the objectivity of the hearing itself and of any decision taken subsequently.
   4.   The hearing officer shall ensure that the oral hearing provides addressees of the statement of objections, other involved parties, as well as complainants and interested third persons within the meaning of Article 5 which have been admitted to the oral hearing, with sufficient opportunity to develop their views as to the preliminary findings of the Commission.
   Article 11
   Preparation of the oral hearing
   1.   The hearing officer shall be responsible for the preparation of the oral hearing and shall take all appropriate measures in that regard. In order to ensure the proper preparation of the oral hearing, the hearing officer may, after consulting the director responsible, supply in advance to the persons invited to the hearing a list of questions on which they are invited to make known their views. The hearing officer may also indicate to the persons invited to the hearing the focal areas for debate, having regard, in particular, to the facts and issues that the addressees of a statement of objections who have requested an oral hearing want to raise.
   2.   For this purpose, after consulting the director responsible, the hearing officer may hold a meeting with the persons invited to the hearing and, where appropriate, the Commission services, in order to prepare for the hearing itself.
   3.   The hearing officer may also ask for prior written notification of the essential contents of the intended statements of persons invited to the hearing.
   4.   The hearing officer may set a time limit for all persons invited to the oral hearing to provide a list of participants who will attend on their behalf. The hearing officer shall make this list available to all persons invited to the oral hearing in due time before the date of the hearing.
   Article 12
   Timing and conduct
   1.   After consulting the director responsible, the hearing officer shall determine the date, the duration and the place of the hearing. Where a postponement is requested, the hearing officer shall decide whether or not to allow it.
   2.   The hearing officer shall decide whether new documents should be admitted during the hearing and which persons should be heard on behalf of a party.
   3.   The hearing officer may allow the parties to whom a statement of objections has been addressed, other involved parties, complainants, other persons invited to the hearing, the Commission services and the authorities of the Member States to ask questions during the hearing. To the extent that, exceptionally, a question cannot be answered in whole or in part at the oral hearing, the hearing officer may allow the reply to be given in writing within a set time limit. Such written reply shall be distributed to all participants in the oral hearing, unless the hearing officer decides otherwise in order to protect the rights of defence of an addressee of a statement of objections or the business secrets or other confidential information of any person.
   4.   Where required by the need to ensure the right to be heard, the hearing officer may, after consulting the director responsible, afford the parties concerned, other involved parties, complainants or interested third persons within the meaning of Article 5 the opportunity to submit further written comments after the oral hearing. The hearing officer shall fix a date by which such submissions may be made. The Commission shall not be obliged to take into account written comments received after that date.
   Article 13
   Protection of business secrets and confidentiality at the oral hearing
   Each person shall normally be heard in the presence of all other persons invited to attend the oral hearing. The hearing officer may also decide to hear persons separately in a closed session, having regard to their legitimate interest in the protection of their business secrets and other confidential information.
   CHAPTER 7

      INTERIM REPORT AND RIGHT TO MAKE OBSERVATIONS

   Article 14
   Interim report and observations
   1.   The hearing officer shall submit an interim report to the competent member of the Commission on the hearing and the conclusions he or she draws with regard to the respect for the effective exercise of procedural rights. The observations in this report shall concern procedural issues including the following:

               (a)

               disclosure of documents and access to the file;

               (b)

               time limits for replying to the statement of objections;

               (c)

               the observance of the right to be heard;

               (d)

               the proper conduct of the oral hearing.

         A copy of the report shall be given to the Director-General for Competition, to the director responsible and to the other competent services of the Commission.
   2.   In addition to, and separately from, the report referred to in paragraph 1, the hearing officer may make observations on the further progress and impartiality of the proceedings. In so doing, the hearing officer shall seek to ensure in particular that, in the preparation of draft Commission decisions, due account is taken of all the relevant facts, whether favourable or unfavourable to the parties concerned, including the factual elements relevant to the gravity and duration of any infringement. Such observations may relate to, inter alia, the need for further information, the withdrawal of certain objections, the formulation of further objections or suggestions for further investigative measures pursuant to Chapter V of Regulation (EC) No 1/2003.
   The Director-General for Competition, the director responsible and the Legal Service shall be informed of such observations.
   CHAPTER 8

      COMMITMENTS AND SETTLEMENTS

   Article 15
   Commitments and settlements
   1.   Parties to the proceedings which offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment pursuant to Article 9 of Regulation (EC) No 1/2003 may call upon the hearing officer at any stage in the procedure pursuant to Article 9, in order to ensure the effective exercise of their procedural rights.
   2.   Parties to proceedings in cartel cases which engage in settlement discussions pursuant to Article 10a of Regulation (EC) No 773/2004 may call upon the hearing officer at any stage during the settlement procedure in order to ensure the effective exercise of their procedural rights.
   CHAPTER 9

      FINAL REPORT

   Article 16
   Content and transmission prior to the adoption of a decision
   1.   The hearing officer shall, on the basis of the draft decision to be submitted to the Advisory Committee in the case in question, prepare a final report in writing on the respect for the effective exercise of procedural rights, as referred to in Article 14(1), at any stage of the proceedings. That report will also consider whether the draft decision deals only with objections in respect of which the parties have been afforded the opportunity of making known their views.
   2.   The final report shall be submitted to the competent member of the Commission, the Director-General for Competition, the director responsible and the other competent services of the Commission. It shall be communicated to the competent authorities of the Member States and, in accordance with the provisions on cooperation laid down in Protocols 23 and 24 of the EEA Agreement, to the EFTA Surveillance Authority.
   Article 17
   Submission to the Commission and publication
   1.   The hearing officer’s final report shall be presented to the Commission together with the draft decision submitted to it, in order to ensure that, when it reaches a decision on an individual case, the Commission is fully apprised of all relevant information as to the course of the procedure and that the effective exercise of procedural rights has been respected throughout the proceedings.
   2.   The final report may be modified by the hearing officer in the light of any amendments to the draft decision prior to its adoption by the Commission.
   3.   The Commission shall communicate the hearing officer’s final report, together with the decision, to the addressees of the decision. It shall publish the hearing officer’s final report in the Official Journal of the European Union, together with the decision, having regard to the legitimate interest of undertakings in the protection of their business secrets.
   CHAPTER 10

      FINAL PROVISIONS

   Article 18
   Repeal and transitional provision
   1.   Decision 2001/462/EC, ECSC is repealed.
   2.   Procedural steps already taken under Decision 2001/462/EC, ECSC shall continue to have effect. In relation to investigatory measures that were taken before the entry into force of this Decision, the hearing officer may decline to exercise his or her powers pursuant to Article 4.
   In cases where the initiation of proceedings pursuant to Article 11(6) of Regulation (EC) No 1/2003 or the initiation of proceedings pursuant to Article 6(1)(c) of Regulation (EC) No 139/2004 took place before the entry into force of the present Decision, the interim report pursuant to Article 14 of the present Decision and the final report pursuant to Article 16 shall not cover the investigation phase, unless the hearing officer decides otherwise.
   Article 19
   Entry into force
   This Decision shall enter into force on the day following its publication in the Official Journal of the European Union.

      Done at Brussels, 13 October 2011.

            For the Commission

            The President

         José Manuel BARROSO

      (1)  OJ L 308, 8.12.2000, p. 26.

      (2)  OJ L 1, 4.1.2003, p. 1.

      (3)  OJ L 24, 29.1.2004, p. 1.

      (4)  OJ L 123, 27.4.2004, p. 18.

      (5)  OJ L 133, 30.4.2004, p. 1.

      (6)  OJ C 303, 14.12.2007, p. 1.

      (7)  OJ L 330, 21.12.1994, p. 67.

      (8)  OJ L 162, 19.6.2001, p. 21.

      (9)  OJ L 8, 12.1.2001, p. 1.


title: 2014/676/EU: Council Decision of 25 September 2014 appointing a Czech alternate member of the Committee of the Regions

text:
               27.9.2014

               EN

               Official Journal of the European Union

               L 283/56

         COUNCIL DECISION
   of 25 September 2014
   appointing a Czech alternate member of the Committee of the Regions

      (2014/676/EU)

   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 305 thereof,
   Having regard to the proposal of the CzechGovernment,
   Whereas:

               (1)

               On 22 December 2009 and on 18 January 2010, the Council adopted Decisions 2009/1014/EU (1) and 2010/29/EU (2) appointing the members and alternate members of the Committee of the Regions for the period from 26 January 2010 to 25 January 2015. On 24 September 2012, by Council Decision 2012/524/EU (3), Mr Milan CHOVANEC was appointed alternate member until 25 January 2015.

               (2)

               An alternate member's seat on the Committee of the Regions has become vacant following the end of the term of office of Mr Milan CHOVANEC,

         HAS ADOPTED THIS DECISION:
   Article 1
   The following is hereby appointed as alternate member to the Committee of the Regions for the remainder of the current term of office, which runs until 25 January 2015:

               —

               Mr Václav ŠLAJS, Hejtman Plzeňského kraje.

         Article 2
   This Decision shall enter into force on the day of its adoption.

      Done at Brussels, 25 September 2014.

            For the Council

            The President

         F. GUIDI

      (1)  OJ L 348, 29.12.2009, p. 22.

      (2)  OJ L 12, 19.1.2010, p. 11.

      (3)  OJ L 263, 28.9.2012, p. 41.


title: Decision of the European Parliament of 23 April 2009 on discharge in respect of the implementation of the budget of the Seventh, Eighth and Ninth European Development Funds for the financial year 2007

text:
               26.9.2009

               EN

               Official Journal of the European Union

               L 255/96

         DECISION OF THE EUROPEAN PARLIAMENT
   of 23 April 2009
   on discharge in respect of the implementation of the budget of the Seventh, Eighth and Ninth European Development Funds for the financial year 2007
   (2009/641/EC)
   THE EUROPEAN PARLIAMENT,

               —

               having regard to the Commission report on the follow-up to the 2006 discharge decisions (COM(2008) 629 and its annex SEC(2008) 2579),

               —

               having regard to the financial statements and revenue and expenditure accounts for the Seventh, Eighth and Ninth European Development Funds for the financial year 2007 (COM(2008) 490 — C6-0296/2008),

               —

               having regard to the report on the financial management of the Seventh, Eighth and Ninth European Development Funds for the year 2007 (COM(2008) 224),

               —

               having regard to the Court of Auditors’ annual report on the activities funded by the Seventh, Eighth and Ninth European Development Funds concerning the financial year 2007, together with the Commission’s replies (1),

               —

               having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors pursuant to Article 248 of the EC Treaty (2),

               —

               having regard to the Council’s recommendations of 10 February 2009 (5042/2009 — C6-0057/2009, 5044/2009 — C6-0058/2009, 5045/2009 — C6-0059/2009),

               —

               having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 (3) and revised in Luxembourg on 25 June 2005 (4),

               —

               having regard to Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories with the European Community (the Overseas Association Decision) (5), amended by Council Decision 2007/249/EC of 19 March 2007 (6),

               —

               having regard to Article 33 of the Internal Agreement of 20 December 1995, between the representatives of the governments of the Member States meeting within the Council, on the financing and administration of the Community aid under the Second Financial Protocol to the fourth ACP-EC Convention (7),

               —

               having regard to Article 32 of the Internal Agreement of 18 September 2000, between representatives of the governments of the Member States meeting within the Council, on the financing and administration of Community aid under the Financial Protocol to the Partnership Agreement between the African, Caribbean and Pacific States and the European Community and its Member States signed in Cotonou (Benin) on 23 June 2000, and the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the EC Treaty applies (8),

               —

               having regard to Article 276 of the EC Treaty,

               —

               having regard to Article 74 of the Financial Regulation of 16 June 1998 applicable to development finance cooperation under the fourth ACP-EC Convention (9),

               —

               having regard to Article 119 of the Financial Regulation of 27 March 2003 applicable to the Ninth European Development Fund (10),

               —

               having regard to Rules 70 and 71, third indent of, and Annex V to, its Rules of Procedure,

               —

               having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Development (A6-0159/2009),

               1.

               Grants the Commission discharge in respect of the implementation of the budget of the Seventh, Eighth and Ninth European Development Funds for the financial year 2007;

               2.

               Sets out its observations in the Resolution below;

               3.

               Instructs its President to forward this Decision and the Resolution that forms an integral part of it to the Council, the Commission, the Court of Justice, the Court of Auditors, the European Investment Bank, and the governments and parliaments of the Member States and to arrange for their publication in the Official Journal of the European Union (L series).

            The President

         Hans-Gert PÖTTERING

            The Secretary-General

         Klaus WELLE

      (1)  OJ C 286, 10.11.2008, p. 273.

      (2)  OJ C 277, 31.10.2008, p. 243.

      (3)  OJ L 317, 15.12.2000, p. 3.

      (4)  OJ L 287, 28.10.2005, p. 1.

      (5)  OJ L 314, 30.11.2001, p. 1 and OJ L 324, 7.12.2001, p. 1.

      (6)  OJ L 109, 26.4.2007, p. 33.

      (7)  OJ L 156, 29.5.1998, p. 108.

      (8)  OJ L 317, 15.12.2000, p. 355.

      (9)  OJ L 191, 7.7.1998, p. 53.

      (10)  OJ L 83, 1.4.2003, p. 1.
   RESOLUTION OF THE EUROPEAN PARLIAMENT
   of 23 April 2009
   with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the Seventh, Eighth and Ninth European Development Funds for the financial year 2007
   THE EUROPEAN PARLIAMENT,

               —

               having regard to the Commission report on the follow-up to the 2006 discharge decisions (COM(2008) 629 and its annex SEC(2008) 2579),

               —

               having regard to the financial statements and revenue and expenditure accounts for the Seventh, Eighth and Ninth European Development Funds for the financial year 2007 (COM(2008) 490 — C6-0296/2008),

               —

               having regard to the report on the financial management of the Seventh, Eighth and Ninth European Development Funds for the year 2007 (COM(2008) 224),

               —

               having regard to the Court of Auditors’ annual report on the activities funded by the Seventh, Eighth and Ninth European Development Funds concerning the financial year 2007, together with the Commission’s replies (1),

               —

               having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors pursuant to Article 248 of the EC Treaty (2),

               —

               having regard to the Council’s recommendations of 10 February 2009 (5042/2009 — C6-0057/2009, 5044/2009 — C6-0058/2009, 5045/2009 — C6-0059/2009),

               —

               having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 (3) and revised in Luxembourg on 25 June 2005 (4),

               —

               having regard to Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories with the European Community (the Overseas Association Decision) (5), amended by Council Decision 2007/249/EC of 19 March 2007 (6),

               —

               having regard to Article 33 of the Internal Agreement of 20 December 1995, between the representatives of the governments of the Member States meeting within the Council, on the financing and administration of the Community aid under the Second Financial Protocol to the fourth ACP-EC Convention (7),

               —

               having regard to Article 32 of the Internal Agreement of 18 September 2000, between representatives of the governments of the Member States meeting within the Council, on the financing and administration of Community aid under the Financial Protocol to the Partnership Agreement between the African, Caribbean and Pacific States and the European Community and its Member States signed in Cotonou (Benin) on 23 June 2000, and the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the EC Treaty applies (8),

               —

               having regard to Article 276 of the EC Treaty,

               —

               having regard to Article 74 of the Financial Regulation of 16 June 1998 applicable to development finance cooperation under the fourth ACP-EC Convention (9),

               —

               having regard to Article 119 of the Financial Regulation of 27 March 2003 applicable to the Ninth European Development Fund (10),

               —

               having regard to Rules 70 and 71, third indent of, and Annex V to, its Rules of Procedure,

               —

               having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Development (A6-0159/2009),

               A.

               whereas the European Development Fund (EDF) is the European Union’s most important financial instrument for development cooperation with the African, Caribbean and Pacific States,

               B.

               whereas the total amount of aid channelled through the EDF will increase considerably over the coming years since the amount of Community aid under the 10th EDF for the period 2008 to 2013 has been set at EUR 21 966 000 000 which represents a 62 % increase compared with the financial allocations under the Ninth EDF,

               C.

               whereas budget support is an aid instrument which requires a paradigm shift in parliamentary oversight moving from control over inputs to check of results and outputs,

               D.

               whereas it is determined continuously to develop its oversight capacities in order to fulfil as efficiently as possible its obligations as discharge authority,

               1.

               Agrees with the Commission that ‘weak administrations’ and ‘weak governance’ in many beneficiary countries are significant risks affecting the sound management of the EDFs (Commission’s replies to points 1 to 5 of the Court of Auditors’ Annual Report on the activities funded by the EDFs);

               2.

               Invites the Commission — when ‘fine-tuning’ its control strategy (points 1 to 5 of the Annual Report on the EDFs) — to identify the point where lack of results and the costs of control call for a policy change;

               3.

               Takes the view that the implementation strategy for the 10th EDF (EUR 21 966 000 000 for the period from 2008 to 2013) should focus on areas of crucial importance for ensuring sustainable development; encourages the Commission to prioritise and avoid proliferation;

               4.

               Believes that the Commission, in an effort to prioritise and concentrate its development activities, could look for opportunities to increase assistance to low-income countries;

               5.

               Points out that due attention must be paid to the sustainability of the Commission’s interventions, including the formulation of a clear exit strategy and monitoring of implementation; considers that the enhanced evaluation of results represents a major factor for ensuring the democratic legitimacy of EU development cooperation;

         Financial implementation

               6.

               Welcomes the Commission’s performance in 2007, and notes that payments increased by 12 % and commitments by 9 %, whereas the increase in outstanding commitments was kept down to 2,8 %; considers the implementation rate of 3,7 years as acceptable given the increase in efficiency;

               7.

               Welcomes the commitment of all available funding for the Ninth EDF in 2007; calls on the Commission to formulate recommendations applicable for the non-committed parts of the Eighth EDF; stresses however that speedy commitment of funds should not be carried out to the detriment of the quality of projects;

               8.

               Recalls the Commission’s commitment (11) to endeavour to ensure that a benchmark of 20 % of its allocated assistance under the Development Cooperation Instrument (DCI) is dedicated to basic and secondary education and basic health; calls for reporting against the same benchmark to be provided for the EDFs;

               9.

               Expresses concern at the findings contained in the Court of Auditors’ Special Report No 10/2008 on EC Development assistance to health services in sub-Saharan Africa, which points out that ‘Financial allocations to the health sector in sub-Saharan Africa have not increased since 2000 as a proportion of its total development assistance despite the Commission's MDG commitments and the health crisis in sub-Saharan Africa’; calls on the Commission to prioritise support to health systems and identify the most appropriate aid delivery instruments for this area;

         The Commission’s financial management of the EDFs

               10.

               Notes with satisfaction that in the Court’s opinion the abovementioned Commission’s report on the financial management of the Seventh, Eighth and Ninth European Development Funds for the year 2007 presents ‘an accurate description of the achievements of the objectives for the financial year, the financial situation and the events that had a significant influence on the activities carried out in 2007’ (point 13 of the Annual Report on the EDFs);

               11.

               Regrets however that the Commission’s follow up to observations made by the Court in a number of cases is inadequate; stresses that the Commission’s action on the Court’s recommendations is an important element of accountability for the discharge authority; welcomes the fact that the Commission ‘will provide more detailed information in the future’ (point 13 of the Annual Report on the EDFs);

         The Court of Auditors’ Statement of Assurance
   Reliability of the accounts

               12.

               Notes that, pursuant to Articles 1 and 103(3) of the Financial Regulation of 27 March 2003 applicable to the Ninth European Development Fund, the Statement of Assurance does not extend to the part of the Ninth EDF resources (EUR 2 200 000 000) that is managed by the EIB and for which the EIB is responsible (footnotes 2 and 11 of the Annual Report on the EDFs);

               13.

               Notes that the Court is of the opinion that the final annual accounts of the Seventh, Eighth and Ninth EDFs fairly present, in all material respects, the financial position of the EDFs as of 31 December 2007 (paragraph VI, Statement of Assurance);

               14.

               Notes that the Court draws attention to the fact that the validity of the assumptions used for the estimate of the provision for costs incurred has not been demonstrated by the Commission and that this may lead to an understatement of accrued expenditure as well as to an overstatement of the amount of guarantees disclosed in the notes to the financial statements (paragraph VII, Statement of Assurance);

         Legality and regularity of the underlying transactions

               15.

               Notes that:

                           —

                           in the Court’s opinion, the transactions underlying the revenue and commitments for the financial year are, taken as a whole, legal and regular (paragraph VIII, Statement of Assurance), whilst the Court draws attention to the high fiduciary risk with regard to budget support resulting from the Commission’s ‘dynamic interpretation’ of the eligibility criteria (paragraph X, Statement of Assurance),

                           —

                           the Court’s audit revealed ‘a material level of errors’ affecting transactions underlying payments (paragraph IX, Statement of Assurance),

                           —

                           the Court found that the Commission has introduced improvements as regards its supervisory and control systems and states that there is still room for improvement;

         Comments on the information presented by the Court in support of its Statement of Assurance
   Scope of the audit

               16.

               Notes that the Court’s observations regarding the legality and regularity of the underlying transactions are based on:

                           (a)

                           an evaluation of the supervisory and control systems at EuropeAid’s central services and in five delegations covering six countries;

                           (b)

                           an audit of 90 payments and 15 individual legal commitments;

                           (c)

                           as regards budget support, an examination of 30 payments and 15 financial commitments statistically selected;

                           (d)

                           an examination of 30 statistically selected payments authorised by EuropeAid’s central services;

                           (e)

                           an examination of 30 statistically selected transactions already checked ex post by EuropeAid’s central services;

                           (f)

                           an examination of 30 statistically selected financial commitments; and

                           (g)

                           an examination of the Annual Activity Report and the declaration by the Director-General of EuropeAid (point 15 of the Annual Report on the EDFs);

         Reliability of the accounts

               17.

               Regrets that the Commission is still not able to give full accounting information due to technical difficulties; notes the Commission’s reply according to which the ‘introduction of the new accounting system as from 2009 will overcome current limitations’ (point 16 of the Annual Report on the EDFs); welcomes the introduction of the ABAC-EDF system in February 2009;

               18.

               Notes the Court’s recurrent remark concerning the validity of the Commission’s statistical approach used to estimate the provision for costs incurred in the reporting period for which no invoices have been received at year-end; further notes that this provision amounts to EUR 2 087 000 000 or 83 % of total liabilities (point 17 of the Annual Report on the EDFs); invites the Commission to continue to fine-tune and improve its approach;

         Legality and regularity of the underlying transactions

               19.

               Notes the difference of opinion between the Commission and the Court as regards the moment when financing agreements should be ‘drawn up’ and ‘signed’ (point 19 of the Annual Report on the EDFs); regrets the unclear message to the discharge authority, and invites the Commission to provide clarification so that all parties — Commission and ACP States — have the same understanding of ‘drawn up’;

               20.

               Notes that the Court, in the course of checking transactions, was unable to obtain the relevant documentation from United Nations bodies in the case of two payments (out of a sample of eleven); calls on the Commission, therefore, to ensure full compliance with the financial and administrative framework agreement;

               21.

               Notes that, on the basis of its audit results (points 32 to 47 of the Annual Report on the EDFs), the Court concludes that EuropeAid’s supervisory and control systems for the EDFs are only ‘partially effective’ (point 53 of the Annual Report on the EDFs);

               22.

               Further notes that, out of nine elements of the internal control system at central level, six are effective, two are partially effective and one element — quantity of monitoring missions — is not effective at all, and that out of five elements of the internal control system at delegation level, two elements are effective and three only partially effective (Table 3 of the Annual Report on the EDFs);

               23.

               Notes that the Commission considers that ‘(g)iven the financial and human resources available to it, (…) it has set up control systems which provide reasonable assurance’ (point 53 of the Annual Report on the EDFs);

               24.

               Regards the Commission’s answers as unsatisfactory in that it seems reluctant to review the arrangements it has put in place, and invites the Commission to give more precise information as to the notion of ‘reasonable assurance’ and, in particular, as regards the actual cost/benefit ratio of controls and the actual error rate, as well as a breakdown indicating which additional human and financial resources are necessary to improve the control system in order to allow the Court to give the mark ‘effective’ as the overall assessment;

               25.

               Notes that the Court highlights the inadequacy of the controls carried out by supervisors or auditors, which indicates the weaknesses in the supervisory and control systems; calls on the Commission, therefore, to tighten up its controls and, in particular, to introduce a system of review of external audit reports to check their quality;

         Budget support commitments and payments

               26.

               Notes that in five out of 15 budget support commitments examined, the Court found:

                           —

                           ‘serious weaknesses in the internal oversight of the budget, accounting systems, public procurement or anti-corruption measures’,

                           —

                           that the failure to produce timely audited accounts and the ineffectiveness of external control are ‘important matters of concern’,

                           —

                           that providing budget support in these conditions implies a ‘very high fiduciary risk’ (point 26 of the Annual Report on the EDFs);

               27.

               Stresses that the Court is of the opinion that the requirements of the Cotonou Agreement — that public expenditure management has to be sufficiently transparent, accountable and effective — are not met in these five cases;

               28.

               Recalls that ‘fiduciary risk’ means that there is a risk that European taxpayers’ money is not used for its intended purposes, does not achieve value for money or is not properly accounted for;

               29.

               Further notes that the Commission ‘does not agree with the Court’s assessment’ that commitments, according to the Commission, were made following an evaluation of ‘sufficient positive progress in PFM (public finance management) systems’, that the countries concerned subsequently ‘continued to show progress’ and have ‘remained on track for further budget support’ (point 26 of the Annual Report on the EDFs);

               30.

               Regrets the Commission’s reply in so far as it does not reflect the seriousness of the Court’s findings (important matters of ‘concern’, very high fiduciary risk); considers the use of open-ended and non-result-based expressions like ‘sufficient’, ‘progress’ and ‘on track’ in this serious context to be inadequate, if not superficial;

               31.

               Invites the Commission to provide the evidence on which it has based its conclusions and to present it in such a way that it is clear how much progress has been made (from where to where) and why this amount of progress was considered ‘sufficient’;

               32.

               Notes that in seven out of 33 financing agreements examined, the Court found that the provisions of the financing agreements for budget support were incomplete or unclear in so far as they did not contain the general conditions for budget support, ambiguously defined the method for the calculation of the amounts for disbursement or referred to commitments made by government without defining a due date and the consequences when these commitments are not met (point 27 of the Annual Report on the EDFs); also notes that the Commission ‘will (…) seek to further improve the quality of financing agreements under the 10th EDF’;

               33.

               Notes, as regards budget support payments, that the underlying transactions are ‘affected by a material level of error’ (point 52(b) of the Annual Report on the EDFs) due to:

                           —

                           calculations of amounts for disbursement based on a positive conclusion as regards progress in public finance management which is not consistent with the underlying assessment of the situation,

                           —

                           use of a calculation method not provided for by the financing agreement,

                           —

                           payments made without up-to-date reports concerning public finance management being available (point 28 of the Annual Report on the EDFs);

               34.

               Also notes the following findings by the Court in relation to six out of 30 payments examined:

                           —

                           failure by the Commission to demonstrate in a structured and formalised way whether the payment conditions relating to public finance management were met,

                           —

                           assessment of progress being unreasonably optimistic or based on outdated or inappropriate information,

                           —

                           conclusions not supported by underlying information,

                           —

                           reliance put on future occurrences rather than on events that had taken place,

                           —

                           inaccurate appraisal of indicators (point 29 of the Annual Report on the EDFs);

               35.

               Notes the Commission's reply, according to which ‘the Commission balances the progress made, the political commitment to reform and the remaining areas of concern to arrive at an informed decision’ (Commission’s reply to point 29 of the Annual Report on the EDFs);

               36.

               Is worried by the Court’s findings, but even more by the Commission’s replies, which show that the Commission is very reluctant to share the information on which its decisions on budget support are based;

         Effective parliamentary oversight

               37.

               Believes that the decision on use of budget support as a development aid instrument fully falls within the powers of the executive and that budgetary support operations should not require prior parliamentary approval;

               38.

               Notes that parliamentary assessment of budget support should not focus only on the risks but also on the benefits, as well as on the risks and benefits of alternative aid delivery; notes further that traditional project approaches used over several decades have not delivered what was expected;

               39.

               Believes that the ultimate aim of parliamentary oversight is to achieve aid effectiveness, which means the effective, economic, legal and regular use of aid to produce sustainable development, and considers the oversight of budget support to be a part of its general efforts in overseeing the effectiveness and the results of overall development spending;

               40.

               Regrets that it does not have sufficient useful, comprehensive and reliable information in order to carry out an effective oversight of budget support results;

               41.

               Calls for the ending of the previous system of consecutive EDFs by means of the full consolidation of the financing of EU/ACP cooperation in the EU budget in order to ensure parliamentary oversight of the allocation of resources under the EDFs;

         Annual report on the use of budget support

               42.

               Invites the Commission to draw up an annual report on the use of budget support — and its Committee on Budgetary Control to draw up an own initiative report on this annual report — including useful, comprehensive, reliable, analytical and evaluative, and not only descriptive, information on:

                           —

                           planned and disbursed budget support,

                           —

                           achievement of expected results as set out by donor objectives and country strategies,

                           —

                           existence and quality of complementary conditions,

                           —

                           the effectiveness of the dialogue, the state of donor harmonisation, the complementary capacity building which has taken place and the effect of that capacity building,

                           —

                           achievement of improved country systems,

                           —

                           accountability institutions, public finance management institutions, monitoring and evaluation institutions,

                           —

                           the amount and rate of irregular expenditure,

                           —

                           an analysis of the typology of irregularities (systemic and non-systemic) brought to light by controls and audits,

                           —

                           remedial action taken;

               43.

               Further invites the Commission to identify, with the utmost rigour, countries or issues in budgetary support implementation where particular parliamentary attention could prove useful in improving donor accountability;

               44.

               Also invites the Commission to introduce annual monitoring of this risk;

         Assessing and managing risks

               45.

               Notes that channelling funds through systems in developing countries which are weak creates a risk of inefficiency and wastage, and that a comprehensive fiduciary risk assessment is therefore absolutely necessary prior to starting budget support programmes;

               46.

               Recalls that the Commission is not using a system in which risk assessment results in a clear threshold of values below which budget support should not be given, but rather a ‘dynamic approach’ in which the degree of discretion is much higher;

               47.

               Takes the view that the higher degree of discretion in ‘dynamic approach’ decisions on budget support must be counterbalanced by an equally high degree of transparency; invites, therefore, the Commission to make available to its Committee on Budgetary Control and its Committee on Development the information on which it bases its assessments;

               48.

               Expects in particular to receive explicit information on the Commission’s risk assessments and analyses of government systems in developing countries, its judgement of the significance of system weaknesses as regards potential inefficiencies and wastage of aid and estimates, quantified to the extent possible, of these factors, as well as information on measures taken, or to be taken in future, in order to mitigate the identified risks;

         Rhetoric or reality

               49.

               Notes that the responsible Commissioner Louis Michel in a booklet entitled ‘Budget support — A question of mutual trust’ (12) states that ‘(b)udget support and more of it is the only answer. For this reason I have decided to increase the proportion of budget support from 20 % of our funding to 50 %’;

               50.

               Invites the Commissioner to review these intentions until rhetoric has been replaced by reality and conclusive evidence, showing the extent to which budget support has given better value for money than other aid instruments or has had an impact on income poverty is available;

               51.

               Notes the letter and note from Commissioner Louis Michel to Mr Jacek Uczkiewicz, Member of the European Court of Auditors, and with copy to Mr Herbert Bösch, Chairman of the Committee on Budgetary Control, dated 9 January 2009 (DR/amw/S(08)0418) in which the Commissioner indicates that:

                           —

                           ‘there is scope to improve the Commission's formulation and implementation of budget support programmes in line with the ECA’s observations, through a more transparent, structured and formalised approach’, and

                           —

                           ‘there is scope for a more systematic attention to risk management and the consideration of appropriate safeguard measures or conditions’ (page 9 in the note ‘Responding to the European Court of Auditors' proposal to apply public financial management baseline requirements in determining eligibility for budget support’ attached to the letter);

               52.

               Welcomes the Commission’s acceptance of the Court’s observations, as well as the Commission’s intentions, and looks forward to being informed of the detailed design and implementation of this ‘enhanced approach’ (ibidem page 1);

         The European Court of Auditors

               53.

               Invites the Court to inform it of the quality of the Commission’s assessment and management of risk, and would welcome more performance audits assessing the results of development spending in general and budget support in particular;

         Recipient country parliaments

               54.

               Invites its Committee on Budgetary Control to establish direct contacts with its sister committees in selected recipient country parliaments in order to encourage and support their role in ensuring aid effectiveness through parliamentary oversight activities;

               55.

               Urges the Commission to prioritise support to partner countries to develop parliamentary control and audit capacities, in particular when aid is provided via budget support, and invites the Commission to report regularly on progress achieved;

               56.

               Is of the view that the involvement of national parliaments, civil society and local authorities in partner countries is indispensable for achieving genuine ownership of the process; urges the Commission to make every effort to improve dialogue with these bodies at all the different stages of the programming process;

         Involvement of the ACP States

               57.

               Is worried about ‘the lack of involvement by the ACP States’ in assuring effective control of EDF expenditure and is disappointed that delegations ‘can place only limited reliance on the controls performed by the NAO (National Authorising Officer) administrations’ (point 36 of the Annual Report on the EDFs);

               58.

               Notes that NAOs are obligatory in ACP States but do not exist in RELEX developing countries; invites the Commission to inform it of the advantages and disadvantages of the EDF approach and to assess best practices across ACP States in order to improve the control of EDF expenditure by NAO administrations;

               59.

               Further notes that ‘the lack of capacity and resources within NAO administrations’ is ‘regularly reported by delegations’ (point 41 of the Annual Report on the EDFs) to EuropeAid’s central services; invites the Commission to inform it of feedback given to delegations on this issue;

         Human resources

               60.

               Notes that, according to the Court, the number of Commission staff compared to the funds committed is decreasing, and that no significant increase of staff is foreseen despite the forecasted substantial increase of commitments under the 10th EDF (point 33 of the Annual Report on the EDFs);

               61.

               Fully agrees with the Court that there ‘is a risk that shortage or inadequate distribution of staff or unavailability of specific skills and knowledge has an impact on the quality of the controls, verification and monitoring’ (point 33 of the Annual Report on the EDFs);

               62.

               Invites the Commission to explain how it envisages managing the tension — if not contradiction — between the need for additional human resources at delegations and its commitment ‘to maintain stable staffing once all enlargement-related personnel are integrated, with no requests for new posts for the period 2009-2013’ and ‘to meet new staffing needs in key policy areas exclusively through redeployment within and between departments’ (13);

               63.

               Takes the view that additional human resources could be found by abolishing the split responsibility for development between RELEX and DEV; invites the current Commission to take the necessary steps with a view to facilitating this reorganisation in the new Commission; believes that the current division of labour on development cooperation between DEV and RELEX does not allow the Commission to participate fully in nurturing international efforts to promote development coherence and aid effectiveness; further invites the Commission to ensure that development cooperation is unambiguously dedicated to the primary objective of poverty eradication;

               64.

               Calls on the Commission to take the necessary measures to increase the number of staff allocated to the EDF’s management and control structures in view of the anticipated increase in the volume of commitments under the 10th EDF;

         Comments on the Court’s conclusions and recommendations

               65.

               Notes with satisfaction the Court’s recognition of EuropeAid’s efforts to develop a control strategy; takes the view that an efficient control strategy aims at preventing errors ex ante and not primarily at recovering undue paid funds ex post; invites the Commission to continue developing its control strategy in the light of this approach, which is a priority for the discharge authority;

               66.

               Fully agrees with the Court’s recommendations expressed in points 55(a) to (g) and 56(a) to (f) of the Annual Report on the EDFs; draws in particular the Commission’s attention to the recommendation set out in point 56(a) that
               ‘compliance with the Cotonou Agreement should be benchmarked against baseline requirements, such as the availability of timely published and audited accounts, to be met before budget support is granted’
               and that set out in point 56(d) that
               ‘EuropeAid should ensure, before the start of a budget support programme, that there is a clear and complete assessment of the public finance management and that the recipient country has a credible and relevant reform programme to address all significant weaknesses over a foreseeable timetable’;
               therefore calls on the Commission to grant budget support only where public expenditure management is sufficiently transparent, accountable and effective, or is at least likely to be so with the implementation within a short time frame of a reform programme; further points out that the selection of financing arrangements for a specific sector should be directly linked to their efficiency for this specific area of intervention;

               67.

               Invites the Commission to give priority to the swift implementation of these recommendations, to which the discharge authority attaches particular importance, in so far as clear and agreed limits for executive discretion are indispensable for meaningful parliamentary supervision;

         A new approach to a new situation

               68.

               Stresses that the recipient country’s use of funds delivered as budget support is outside the direct control of the Commission (and other donors) since it is the sovereign right of the recipient country concerned to manage its budget in accordance with its own specific rules and national budgetary procedures;

               69.

               Recalls that public sector financial management, internal control and external audit functions in some recipient countries are often not sufficiently reliable to ensure that donors’ funds are managed adequately and used for the intended purposes;

               70.

               Believes that the Commission, in the light of the growing attention given to accountability issues and the increasing interest among donor country taxpayers in seeing concrete results of development aid, has every interest in knowing the risks assumed when granting budget support and in sharing this knowledge with the discharge authority, to which it is accountable;

               71.

               Further believes that the Commission should inform recipient countries’ administrations of its accountability obligations and request those who manage funds downstream to be subject to similar obligations;

         A Country Disclosure Statement

               72.

               Takes the view, therefore, that development aid in general and budget support in particular should be tied to an ex-ante disclosure statement, issued by the recipient country’s government and signed by the finance minister, concerning selected issues that affect the governance and accountability structure of a beneficiary country;

               73.

               Strongly believes that a recipient country’s own assessment and understanding of control weaknesses will provide greater motivation for improvement than audits and controls imposed on it by an outside authority;

               74.

               Takes the view that a Country Disclosure Statement will enhance transparency and accountability and give international donors valuable information with a view to making an informed judgement of the overall transparency and reliability of the beneficiary country’s governance and accountability structure;

               75.

               Invites the Commission to take the lead and to present this proposal to other international donors — in particular the World Bank — with a view to developing and implementing such an instrument in agreement with other donors; stresses that the nature of penalties for a deliberately misleading disclosure statement will need particular attention;

               76.

               Invites the Commission to inform it of a possible timeframe for these negotiations;

         Integration of the EDF budget in the general budget of the European Union

               77.

               Welcomes the Commission engagement to ‘raise again its proposal to fully incorporate the EDF into the budget during discussions on the next financial framework’ (14); invites the Commission to keep its Committee on Budgetary Control fully informed as regards the preparation of this initiative;

               78.

               Reaffirms its support for the incorporation of the EDF into the general budget of the European Union, which it considers would make it possible to enhance the coherence, transparency and effectiveness of the EDF and to strengthen its oversight system;

         Tailoring parliamentary oversight to the instrument

               79.

               Takes the view that its role as regards budget support is to hold the Commission accountable for the results of spending, and that budget support is an aid instrument which requires a paradigm shift in oversight behaviour moving from control over inputs to the checking of results against indicators;

               80.

               Believes that it is obliged to develop its present way of working in order to achieve this; takes the view that a sub-committee on the oversight of budget support set up by its Committee on Budgetary Control would be an efficient tool to ensure that aid support spending benefits the population of the recipient country and that taxpayers’ contributions to aid spending are not misappropriated;

         The Investment Facility

               81.

               Recalls that in paragraphs 20 to 24 of its Resolution of 22 April 2008 on discharge in respect of the implementation of the budget of the Sixth, Seventh, Eighth and Ninth European Development Funds for the financial year 2006 (15) it expressed its concern that the management of the Investment Facility by the European Investment Bank (EIB) is excluded from the discharge; further recalls that EDF resources are public money contributed by European taxpayers and not by the financial markets;

               82.

               Regrets, as did the Court in its Opinion No 9/2007 on the proposal for a Council Regulation on a Financial Regulation applicable to the 10th European Development Fund (16), the creation of two separate areas of management, as this limits the scope of the discharge, creates additional needs for coordination between the Commission and the EIB, and makes it difficult to get a complete picture of results achieved;

               83.

               Notes that the EIB’s annual report on the Investment Facility contains mainly financial information and very little — if any — information on the results of the different financed programmes;

               84.

               Invites the EIB to focus its reporting on results and to present complete, relevant and objective information as regards outcomes, objectives set, objectives achieved and reasons for possible deviation, as well as evaluations carried out and a summary of evaluation results;

               85.

               Stresses that the EIB is operating in ACP countries under the Cotonou Agreement, whose primary aim is to eradicate poverty and promote sustainable development, and that it must therefore respect these goals with regard to its lending policy to these countries;

               86.

               Invites the Commission to inform it of the specific procedures it has established with the EIB in order to coordinate the two institutions’ efforts to achieve EU development objectives, as well as of the efficiency of these procedures;

               87.

               Is concerned about the image of the EIB as being the least transparent, least accountable and least democratically controlled institution among all the bodies entrusted with implementing EU policies as well as public financial institutions;

               88.

               Invites the EIB, in the interests of the European Union and its values and with a view to improving public perception of the EIB as an institution, to present evidence showing:

                           —

                           how it lives up to the spirit of Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (17) and the Aarhus Convention of 25 June 1998 on access to information, public participation in decision-making and access to justice in environmental matters,

                           —

                           how it lives up to the global development commitments of the EU and the standards set by other multilateral development banks,

                           —

                           how its financing of capital-intensive projects in the extractive sectors contributes to poverty alleviation,

                           —

                           the guidelines it has developed for investment in the energy, forestry, transport, water and waste management sectors, and how its investment decisions fully follow these guidelines,

                           —

                           that the very few full-time environmental experts in its staff responsible for reviewing its entire lending portfolio and ensuring compliance with relevant policies are sufficient,

                           —

                           the efficiency of its complaint mechanism for affected citizens, to which citizens from outside the European Union should also have access,

                           —

                           the efficiency of measures taken to combat corruption and money laundering,

                           —

                           its criteria for lending to the private sector, beyond basic financial standards and the completeness of a list of final beneficiaries of its lending to the private sector;

               89.

               Invites the Commission to follow up closely the implementation of the Investment Facility with a view to guaranteeing that it fulfils its objective as a development tool, and to inform its Committee on Budgetary Control on a regular basis of its findings;

               90.

               Invites its Committee on Budgetary Control to strengthen its activities as regards control of the financial activities of the EIB, which fully falls under the responsibilities of that committee under the Rules of Procedure, Annex VI, Chapter V, point 3.

      (1)  OJ C 286, 10.11.2008, p. 273.

      (2)  OJ C 277, 31.10.2008, p. 243.

      (3)  OJ L 317, 15.12.2000, p. 3.

      (4)  OJ L 287, 28.10.2005, p. 1.

      (5)  OJ L 314, 30.11.2001, p. 1 and OJ L 324, 7.12.2001, p. 1.

      (6)  OJ L 109, 26.4.2007, p. 33.

      (7)  OJ L 156, 29.5.1998, p. 108.

      (8)  OJ L 317, 15.12.2000, p. 355.

      (9)  OJ L 191, 7.7.1998, p. 53.

      (10)  OJ L 83, 1.4.2003, p. 1.

      (11)  Commission Declaration concerning Article 5 DCI, Annex to the communication from the Commission to the European Parliament of 24 October 2006 (COM(2006) 628).

      (12)  ISBN 978-92-79-10115-1 at http://ec.europa.eu/commission_barroso/michel/Policy/key_documents/docs/NH8108406ENC_web.pdf

      (13)  Report from the Commission. Planning and optimising Commission human resources to serve EU priorities (SEC(2007) 530), p. 3, at http://www.europarl.europa.eu/meetdocs/2004_2009/documents/dv/sec_2007_5/sec_2007_530.pdf

      (14)  (SEC(2008) 2579) Commission Staff Working Document. Annex to the report from the Commission to the European Parliament on the follow-up to 2006 discharge procedure, p. 86.

      (15)  OJ L 88, 31.3.2009, p. 253.

      (16)  OJ C 23, 28.1.2008, p. 3.

      (17)  OJ L 145, 31.5.2001, p. 43.