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Brussels, 26 June 2008

State aid: Italy, Luxembourg, Latvia and Slovak Republic implement Financial Transparency Directive in full; Commission closes infringement procedures

The European Commission has decided to close infringement procedures launched in November 2007 against Italy, Luxembourg, Latvia and the Slovak Republic (see IP/07/1667) for their failure to implement the Commission Directive on the transparency of financial relations between Member States and public undertakings. The Commission's decision follows the adoption by the four Member States of legislation implementing in full the latest amendment to the Financial Transparency Directive (Commission Directive 2005/81/EC).

Competition Commissioner Neelie Kroes commented: "It is clearly in the interest of European citizens that the Commission is in a position to verify that public money is used to provide public services, rather than being diverted to subsidise commercial activities. I am pleased that Italy, Latvia, Luxembourg and the Slovak Republic have now complied with their financial transparency obligations".

Member States were required to implement Commission Directive 2005/81/EC on financial transparency in national law by 19 December 2006. This latest amendment to the original Transparency Directive (80/723/EEC) modified the definition of undertakings required to keep separate accounts.

In November 2007, the Commission opened infringement proceedings under Article 226 of the EC Treaty against Italy, Luxembourg, Latvia and the Slovak Republic for failure to notify the Commission of measures taken to comply with the Directive (see IP/07/1667).

In reaction to the Commission's infringement procedures, the four Member States have recently amended their respective national laws and have now fully implemented the Transparency Directive.

The Financial Transparency Directive

Fair and effective application of the competition rules requires detailed knowledge of companies' financial and organisational structures. Therefore, financial relations between public authorities, public undertakings and other undertakings must be transparent.

Commission Directive 80/723/EEC imposes a general transparency obligation on financial relations between public authorities and public undertakings. The Directive (as amended in 1985 (85/413/EEC) and 1993 (93/84/EEC)) also requires Member States to collect and submit to the Commission, upon request, certain financial data concerning large public undertakings active in the manufacturing sector.

Commission Directive 2000/52/EC extended the transparency requirements to the obligation of keeping separate accounts for public and private companies which, on the one hand, are entrusted with special or exclusive rights or operate services of general economic interest and receive state aid related to these services and, on the other hand, also carry out other economic activities.

Commission Directive 2005/81/EC modified the definition of undertakings required to keep separate accounts. The obligation now applies to all undertakings which are entrusted with a special or exclusive right, or operate a service of general economic interest and receive public service compensation, whether it is state aid or not, while also carrying out other economic activities. Separate accounts identify the costs imputable to the service of general economic interest and make it possible to check that the correct amount of compensation has been paid.

Commission Directive 2006/111/EC of 16 November 2006 consolidated into one text and replaced the original Transparency Directive and its amendments when it entered into force on 20 December 2006. This does not however affect Member States' obligation to respect the implementation deadlines set out in the abovementioned Directives.

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