Explanatory Memorandum to COM(2001)336 - Establishment of the GALILEO Joint Undertaking - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2001)336 - Establishment of the GALILEO Joint Undertaking. |
|---|---|
| source | COM(2001)336  |
| date | 20-06-2001 |
Satellite radionavigation is a technology consisting in the transmission in orbit of signals which indicate the time extremely accurately. A receiver picking up the signals from a constellation of several satellites can then determine very accurately at any given moment not only the exact time but also the user's position in terms of longitude, latitude and altitude.
This technology is notching up success after success and day by day it is finding new applications. Their uses and markets extend to a multitude of public and private sector activities, e.g. transport (positioning and measurement of the speed of vehicles, insurance, etc.), telecommunications (signals for network integration, banking interconnections, connection of electricity networks), customs (field investigations, etc.), and agriculture (geographical information systems).
This technology therefore has a clear strategic importance, and it is likely to generate considerable economic benefits.
At present, however, the only systems in existence are the GPS in the United States and GLONASS in Russia, both of which are funded and controlled by the military authorities, with the result that their signals can be blocked or jammed at any time to safeguard the national interest.
The European Union cannot afford to be completely dependent on a third country in such a strategic area.
That is why, as requested by the Council in March 1998, the Commission put forward in its Communication of 10 February 1999 i an independent satellite radionavigation programme, to be known as GALILEO, to be developed in four phases: definition in 2000, development by 2005, deployment by 2007 and operation and exploitation after that.
The Cologne European Council in 1999 and the Feira and Nice European Councils in 2000 stressed the strategic importance of GALILEO.
Emphasising both the need to give a positive boost to European industries and services and to ensure Europe's independence in such a vital technology, the Council, in its Resolution of 19 July 1999 i, asked the Commission to develop a system for civil use worldwide to be managed by civilian public authorities and offering significant added value compared with existing systems while remaining compatible with them.
The development of a satellite radionavigation system was included in the 4th and 5th R&D Framework Programmes which made it possible to fund the first research contracts and feasibility studies.
In addition, in their Decision of 23 July 1996 i on Community guidelines for the development of the trans-European transport network, the European Parliament and the Council included navigation and positioning systems as integral parts of the network and also included related projects as projects of common interest.
Support by means of appropriations from the trans-European transport networks was, in particular, based on Article 4(g) of the abovementioned Decision of 23 July 1996 which explicitly provides for the possibility of funding research and development activities.
In the Regulation on the granting of financial aid in the field of trans-European transport networks of 19 July 1999 i, the two Institutions also raised the rate of the Community contribution to navigation and positioning projects to 20%, giving them clear priority.
With the backing of a large majority of countries on all continents which have supported the development of GALILEO as a European system compatible with the existing systems, the European Community took steps to ensure that the necessary frequencies were reserved at the World Radio Communications Conference held in Istanbul in May 2000.
During the definition phase, which was completed at the end of 2000, the Commission and the European Space Agency mobilised much of the European space industry as well as potential service providers to define the basic components of the project.
In order to successfully complete the development phase (2001-2005) which should be financed to the extent of EUR1.1 billion from public funds which are already earmarked and are to be split equally between the budgets of the European Community and the European Space Agency, a single management structure should be established for the Programme.
The Joint Undertaking to be set up should ensure the smooth development of the programme and the continuation of the research and development efforts, bring together the public and private sector funding needed, and prepare for the management of the deployment and operational phases of the programme, including its transformation into another legal structure which could take the form of a European company. The European Space Agency will contribute to this development phase through its optional navigation programme and will have special responsibility for implementing this phase as regards research and development for the space segment and the earth segment associated with the system.
This was confirmed in the clearest possible terms by the Stockholm European Council (23 and 24 March 2001) which 'invited the Council to define the arrangements necessary for launching the next phase of the project, including establishing a single and efficient management structure before the end of 2001, be it a Joint Undertaking under Article 171 of the Treaty, an agency, or another suitable body' and by the Transport Council in its Resolution of 5 April 2001.
The Stockholm European Council also noted that 'the private sector is ready to supplement the public budgets for the development phase'. The representatives of the main industries concerned signed a Memorandum of Understanding in March 2001 whereby they committed themselves to indicating their contribution to the total amount of EUR200 million for the development phase of GALILEO by subscribing to the capital of the Joint Undertaking or contributing in some other form, e.g. by concluding a contract.
To this end, the Commission is proposing the establishment of a Joint Undertaking on the basis of Article 171 of the Treaty establishing the European Community.
The aim is to ensure a single management structure for the Galileo programme and, to this end, to mobilise in one and the same legal entity all the funds assigned to the programme which, as things stand at present, essentially concerns the European Community and the European Space Agency. For this purpose, it is necessary to have a flexible structure with legal personality that is capable of concluding the contracts needed to establish a European satellite radionavigation system, and step up the necessary research and technological development efforts.
However, the structure will not have regulatory powers in the field of satellite radionavigation. These will be exercised by the Commission, the Council and even Parliament in accordance with their respective responsibilities.
Since GALILEO comprises a major research and development component, based on the 4th and 5th R&D framework programmes and the trans-European transport networks, and, additionally, this programme will make it possible to make considerable progress in the development of satellite navigation technologies, there are clear grounds for having recourse to Article 171 of the Treaty establishing the European Community in order to establish a Joint Undertaking for the duration of the programme development phase which should be completed by the end of 2005.
Several solutions were engaged, including the creation of a Community agency, which was not agreed on for the following reasons:
- It would have been impossible to allow the participation of the private sector in an agency, in particular because the latter does not have capital capable of receiving assets brought in by the private sector, except if, alongside the agency, a fund were to be set up bringing together the public and private funds assigned to GALILEO.
- It would have been very difficult (and therefore very time-consuming) to ensure the participation of the European Space Agency in a Community agency, given the legal obstacles involved.
The Commission's proposal comprises a proposal for a Council Regulation establishing the Joint Undertaking and adopting its Statutes which are annexed to the proposal.
Article 1 of the Council Regulation specifies that the seat of the Joint Undertaking will be located in Brussels.
Article 2 of the Council Regulation Article 5 confers legal personality on the Joint Undertaking so that it can contract and effect all the legal operations needed to achieve its object. In the interest of legal certainty, this provision is also included in Article 5 of the Statutes.
Article 1 of the Statutes provides that the European Community, represented by the European Commission i, and the European Space Agency will be founder members of the Joint Undertaking, and that the European Investment Bank, and private undertakings which have subscribed to the initial capital of the Joint Undertaking to the extent of a minimum amount of EUR 20 million may become members. This minimum amount is intended to ensure a substantial - and not a symbolic - private-sector participation in the development phase. It will, however, be reduced to EUR1 million for small and medium-sized enterprises, as defined in the Commission recommendation of 3 April 1996, which subscribe to the capital of the Joint Undertaking individually or collectively.
The capital brought into the Joint Undertaking will be subscribed by the founding members when it is set up or by a new member when it joins. An advantage will be conferred on private undertakings which subscribe within thirty days of the offer made to them by the founding members immediately after the establishment of the Joint Undertaking: they need only subscribe one quarter of the minimum required in Article 1 i, fourth indent, i.e. EUR5 million (EUR250 000 for small and medium-sized enterprises), provided that the balance of their contribution is subscribed before 31 December 2002. This derogation will therefore not apply to undertakings which join the Joint Undertaking after it has been set up.
The Administrative Board will decide upon the amounts of capital to be released each year by each member in proportion to the share of the capital which they subscribe. Assets in kind can be brought in. They will have to be the subject of an independent evaluation of their value and their utility for carrying out the activities of the Joint Undertaking. Any member of the Joint Undertaking which which does not release the amount due within the prescribed time-limits or fails to meet its commitments concerning the bringing-in of assets in kind will be disqualified from voting in the Administrative Board until such time as its obligations have been met.
Article 2, which concerns the activities of the Joint Undertaking, states that the object of the Joint Undertaking is to set up a satellite radionavigation system for the technological development phase.
Article 2 i sets out the two main tasks of the Joint Undertaking which are expanded upon in the following paragraphs:
- overseeing the implementation of the development phase;
- preparing for the subsequent phases of the programme.
Article 2 i refers to the implementation of the development phase which will be entrusted by agreement to the European Space Agency with regard to the space segment and the associated earth segment. It should be noted that this agreement will also set out the detailed rules for supervision and monitoring of the activities entrusted to the European Space Agency and the coordination of the activities carried out directly by the European Space Agency from the funds at its disposal and not directly assigned to the development phase.
This agreement will also determine how the European Space Agency's optional navigation programme will be implemented.
However, certain activities will remain the responsibility of the Joint Undertaking, in particular technical support for the standardisation and certification process and support for the international negotiations to be conducted by the European Community.
Article 2 i sets out the different stages provided for in the Council Resolution of 4 April 2001 to ensure that the private sector is involved to a very large extent in the financing of the programme deployment phase. The Joint Undertaking, which should in principle be wound up, in accordance with Article 20 of the Statutes, at the end of the development phase, should also prepare the structures intended to ensure the management of the deployment and operational phase. In particular it will ensure that private undertakings which have subscribed to the capital of the Joint Undertaking enjoy preferential treatment in becoming members of the entity which will be responsible for the deployment and operation of the system, in order to encourage them to participate in the Joint Undertaking.
Article 3 specifies that the Joint Undertaking will entrust, by agreement, to the European Space Agency the carrying-out of activities needed during the development phase with regard to the space segment and the associated earth segment. The Joint Undertaking will make the necessary funds available to the European Space Agency which will administer them in accordance with procedures to be set out in the agreement. Provision is also made for the Joint Undertaking to reserve the right to adjust the agreement in the light of developments occurring during the development phase. The agreement will also cover activities launched by the European Space Agency financed from funds not assigned to the Joint Undertaking.
Article 4 specifies that, in order to carry out the tasks provided for in Article 2 i, the Joint Undertaking may, following an invitation to tender, conclude a contract for the provision of services with private undertakings or a consortium of private undertakings.
Pursuant to Article 6, the Joint Undertaking will own all the tangible and intangible assets created or transferred to it for the development phase, in particular the results of the definition phase.
Articles 7 - 10 describe the bodies of the Joint Undertaking: the Administrative Board (which may, where appropriate, consult an Advisory Committee), the Executive Committee and the Director.
The Administrative Board will be made up of the members of the Joint Undertaking (Article 7), i.e., when it is set up, its founding members. The Commission and the European Space Agency will each have 30 votes and the other members will have a number of votes in proportion to the share of the capital they have subscribed.
Decisions will be taken by a simple majority of votes, except in the following cases where a majority of 75% of the votes will be required: Articles 8 (major changes in the implementation of the programme). 13 (adoption of the budget), 14 (adoption of the financial regulations), 18 (accession by new members), 20 (winding-up of the Joint Undertaking) and 22 (amendments to the Statutes)
The Chairman of the Administrative Board will be appointed from among its members.
The Director and a representative of the Executive Committee - who is not necessarily a member of the Administrative Board - will attend its meetings.
Article 8 i describes the functions of the Administrative Board which is the body which will take all the strategic Decisions on programming, financial and budgetary matters. The Commission will ensure in particular, pursuant to paragraph 2.b, 8th indent, that there is significant representation for the sector of applications likely to use GALILEO. In addition, acting on a proposal from the Commission, the Administrative Board will appoint the Director of the Joint Undertaking and approve its organisation chart.
The Executive Committee (Article 9) will consist of three members: a representative of the European Commission, a representative of the European Space Agency, and a representative designated by the Administrative Board from the private sector. The Director will attend its meetings.
Paragraph 2 describes the functions of the Executive Committee to which the Administrative Board may entrust or delegate tasks that it considers necessary in order to allow more flexible management of the Joint Undertaking. It goes without saying that the Executive Committee will work in close coordination with the Director who will attend its meetings. These meetings will be held at least twice a month.
The Director (Article 10), who will be designated the Administrative Board acting on a proposal from the Commission, will be the legal representative of Joint Undertaking and will ensure its day-to-day management under the direct supervision of the Executive Committee. He will direct the staff of the Joint Undertaking in accordance with directives issued by the Administrative Board. He will draw up for the latter the various documents and reports provided for in the Statutes (organisation chart, development plan, budget, balance-sheet, annual report and any other document judged necessary).
Article 11 concerns the staff of the Joint Undertaking the Director of which will be designated by the Administrative Board while the other members will be designated on the basis of procedures to be established by the Administrative Board. Members of staff will be recruited by the Director on fixed-term contracts concluded with the Joint Undertaking which will be based on the conditions of employment of other servants of the European Communities.
Article 12 provides that the Joint Undertaking will not distribute any surplus revenue to its members, except in the event of winding-up, such surplus being automatically reassigned to its budget.
Articles 13-15, which concern the financial management of the Joint Undertaking, establish procedures concerning the drawing-up of the budget and the annual accounts. In parallel, Article 14 provides for the drawing-up of a development plan and an annual report so that, with those four documents, the members of the Joint Undertaking can have a complete picture of the situation of the Joint Undertaking.
Article 17 concerns the question of the contractual and non-contractual liability of the Joint Undertaking. It should be noted that the Joint Undertaking, which will have legal personality, will be responsible for its acts, and its members will not be liable in this connection.
Article 18 concerns the accession of new members, which will be decided upon by the Administrative Board acting by a majority of 75% of the votes.
Article 19 provides that the Joint Undertaking is to be set up for four years, which means that it will be wound up towards 2005, i.e. at the beginning of the deployment phase which marks the end of the preponderance of public funding and the development phase which justifies recourse to Article 171 of the Treaty. This period may, however, be extended by amending the Statutes in accordance with Article 22. The Joint Undertaking cannot, in any event, be wound up before the obligations deriving from the agreement to be concluded with the European Space Agency pursuant to Article 3 have been met.
Article 20 provides that, in the event of winding-up, the Administrative Board of the Joint Undertaking will designate one or more liquidators who will act according to its instructions. However, it will be necessary to determine the use of the tangible and intangible assets, and in particular industrial property rights, owned by the Joint Undertaking. They should in principle be transferred to the structure set up for the deployment phase.
Article 21 provides that any matter not covered by the Statutes will be covered by the law of the State where the undertaking has its seat.
The Statutes of the Joint Undertaking may be amended in accordance with the procedure laid down in Article 22.