Made in accordance with Article 3(6) of the Statute of the European Ombudsman[1]

The background to the complaint

1. The complainant is a non-profit organisation which represents the interests of Bulgarian duty-free operators in Bulgaria. The complainant is represented by its Chairman, and advised by a Brussels-based consultancy.

2. The complaint is set against the backdrop of the Bulgarian accession to the European Union. Articles 37 and 38 of the Act of Accession of the Republic of Bulgaria to the European Union empower the Commission to take appropriate measures in case of (i) an imminent risk to the proper functioning of the internal market, and (ii) serious shortcomings in Bulgaria's implementation and application of EU rules in the field of justice, freedom and security[2]. On this basis, the Commission adopted a decision on 13 December 2006 establishing a mechanism for cooperation and verification of progress in Bulgaria ('the Cooperation and Verification Mechanism' (CVM)) to address specific benchmarks in the areas of judicial reform and the fight against corruption and organised crime[3].

3. The CVM sets six specific benchmarks, which are annexed to the Commission Decision. In particular, Benchmark 5 requires Bulgaria to "[t]ake further measures to prevent and fight corruption, in particular at the borders and within local government". The Commission is entrusted with the task of monitoring the progress being made towards achieving the objectives identified in the benchmarks. Bulgaria shall report to the Commission by the end of March each year[4], and the Commission will issue reports "as and when required and at least every six months"[5].

4. On 14 February 2008, the Commission issued an Interim Report under the CVM ('the Interim Report') in which, in relation to Bulgaria's progress under Benchmark 5, it stated that: "Duty-free shops on Bulgarian territory at the external borders to Turkey and Serbia and duty-free petrol stations on Bulgarian territory continue to be tolerated and have seen a substantial increase in turnover during 2007. They are a focal point for local corruption and organized crime."

5. Soon afterwards, the Bulgarian Government proposed changes to the 2006 Duty-Free Trade Act, which included the closure of all land-based duty-free shops and petrol stations, the revocation of licenses and the expropriation of all buildings housing the duty-free shops and petrol stations.

6. By letter dated 27 February 2008, the complainant contacted the Commission, expressing its concern over the government's proposals and contesting the three statements contained in the Interim Report, namely, "continue to be tolerated", "substantial increase in turnover in 2007" and "focal point for local corruption and organized crime."

7. As regards the first statement, the complainant argued that this statement implied that the operation of duty-free shops was somehow illegal. The complainant explained that they operated in the same way as duty-free shops at the external land borders in other Member States and that the 2006 amendment of the Duty-Free Trade Act was made in order to ensure the compatibility of the Bulgarian regime with the relevant EU legislation prior to Bulgaria's accession to the EU.

8. As regards the second statement, the complainant argued that this statement was incorrect. In fact, the complainant submitted official data from the Bulgarian National Customs Agency (NCA), which showed a 34.5% decline in sales in 2007.

9. As regards the third statement, the complainant expressed its discontent that such a statement was made with no supporting evidence. The complainant stated that it was not aware of any investigation into corruption or crime involving duty-free border shops on Bulgarian territory.

10. The complainant concluded its letter by expressing reservations in relation to the procedure followed by the Bulgarian Government in order to change the 2006 Duty-Free Trade Act. The proposals were drafted in haste and with no impact assessment. The only possible explanation for this fact was if the Bulgarian Government had acted on the Commission's demands. Given that the Commission publicly welcomed the Bulgarian Government proposals, the complainant asked the Commission to clarify its position on whether it had asked the Bulgarian Government to close the duty-free border shops.

11. On 5 March 2008, the Commission held a meeting with the complainant, its representatives and advisers, ('the Meeting'). During the Meeting, the complainant requested the Commission to provide information on the allegations made against the duty-free sector in the Interim Report. The complainant provided the Commission with data from the Bulgarian NCA regarding duty-free sales in Bulgaria. In contrast to the Commission's statement in its Interim Report, the data showed a significant decline in sales from 2006 to 2007. The complainant requested the Commission to withdraw its allegations in its subsequent report, which was set to be published in July 2008.

12. By letter dated 24 March 2008, the complainant elaborated on the operation and turnover of duty-free shops and duty-free petrol stations in Bulgaria. Moreover, the complainant requested the Commission to provide access to the minutes of the Meeting.

13. In its reply of 29 April 2008, the Commission reassured the complainant that all the information and comments it provided would be taken into consideration in the preparation of the July 2008 Report. The Commission also explained that the decision to close down duty-free shops and petrol stations was an independent decision of the Bulgarian authorities, which it has no powers to instruct. However, the Commission confirmed that it welcomed the government proposal to close down the duty-free shops and petrol stations which, on the basis of numerous independent sources, raised concerns with regard to their links with organised crime and local corruption.

14. In the same letter, the Commission refused access to the minutes of the Meeting on the basis of Article 4(2), third indent of Regulation 1049/2001[6].

15. By letter dated 19 May 2008, the complainant made a confirmatory request for the minutes of the Meeting. In the same letter, the complainant disputed the data brought forward by the Commission in support of its statement that duty-free shops showed an increase in turnover in 2007 and were a focal point of corruption and organised crime. The complainant expressed its concern that such a claim was made in an official report without any supporting evidence.

16. In the meantime, on 23 May 2008, the Bulgarian Parliament approved the Government's proposal to amend the 2006 Duty-Free Trade Act and close down the duty-free shops and petrol stations at the land borders with Turkey and Serbia.

17. On 2 July 2008, the Commission acknowledged receipt of the confirmatory request and noted that the complainant's letter dated 19 May 2008 was registered on 12 June 2008. The Commission noted that the time-limit for handling the application would expire on 2 July 2008 but that that time-limit would have to be extended to 25 July 2008.

18. On 23 July 2008, the Commission published its next report under the CVM ('the July Report'), in which it stated that "Bulgaria has made progress on local corruption, by introducing new administrative procedures, in particular for the border police, which reduce the possibilities for corruption. Bulgaria closed duty-free shops and duty free petrol stations which were allegedly focal points for local corruption and organised crime."[7]

19. On 24 July 2008, the Commission replied to the complainant's confirmatory application. In its letter, the Commission made a preliminary remark to the effect that the private interests of the applicant may not be taken into account when assessing whether or not access to a document can be granted on the basis of Regulation 1049/2001. After outlining the operation of the CVM and referring to both the Interim Report and the July Report,[8] the Commission stated that disclosure of the minutes of the Meeting would seriously undermine the Commission's decision-making process within the framework of the CVM and is therefore covered by the exception under Article 4(3), first paragraph of Regulation 1049/2001.

20. On 17 March 2009, the complainant lodged the present complaint with the Ombudsman.

The subject matter of the inquiry

21. The Ombudsman opened an inquiry into the complainant's allegations against the Commission. The complainant alleges that the Commission:

(1) made incorrect and unsubstantiated allegations against the Bulgarian duty-free sector in its Interim Report, which it failed to withdraw in its July Report.

(2) failed to provide access to the minutes of its meeting with the complainant on 5 March 2008.

(3) delayed the handling of the complainant's confirmatory application for access.

The inquiry

22. On 22 April 2009, the Ombudsman sent a request for an opinion to the Commission.

23. On 6 August 2009, the complainant wrote to the Ombudsman and requested that the present complaint be treated as a matter of priority. On 11 August 2009, pursuant to Article 10.2 of the Ombudsman's Implementing Provisions[9], the Ombudsman granted the request.

24. On 28 August 2009, the Commission delivered its opinion. On 23 September 2009, the complainant submitted his observations.

25. On 8 October 2009, the Ombudsman informed the complainant and the Commission that he considered it necessary to inspect the documents, which the Commission took into account in drafting Section 2.2.5 of its Interim Report, as well as the minutes of the Meeting. On 10 November 2009, the Ombudsman's representatives carried out an inspection of the above documents at the Commission's premises in Brussels. On 25 November 2009, the Ombudsman sent his inspection report to the complainant. On 9 December 2009, the complainant submitted his observations on the inspection report.

The Ombudsman's analysis and conclusions

A. The Commission's allegations against the Bulgarian duty-free sector

Arguments presented to the Ombudsman

26. In his complaint to the Ombudsman, the complainant contested the statements made by the Commission in its Interim Report and alleged that the Commission's allegations made against the Bulgarian duty-free sector were based on false data. The complainant argued that the Commission based its Interim Report on information given to it by the Centre for the Study of Democracy (CSD), a Bulgaria-based NGO, which receives funding from the European Commission. In failing to substantiate its statements, the Commission abused its powers under the CVM.

27. As regards the content of the Interim Report, the complainant argued that the statement that duty-free shops and petrol stations "continue to be tolerated" insinuated that the operation of duty-free outlets was somehow illegal. However, duty-free outlets operate at the external borders of other EU Member States with non-Member States. Moreover, the 2006 Duty-Free Trade Act governing the operation of duty-free outlets in Bulgaria was drafted in close consultation with the Commission's Directorate-General for Taxation and Customs Union (TAXUD) in order to harmonise Bulgarian legislation with the Union acquis.

28. As regards the statement that duty-free shops and petrol stations "have seen a substantial increase in turnover during 2007", the complainant provided official data from the Bulgarian NCA to demonstrate that the combined duty-free turnover fell by more than 34% from 2006 to 2007.

29. As regards the Commission's statement that Bulgaria's duty-free border shops were "a focal point for local corruption and organized crime", the complainant argued that the Commission did not provide any evidence to substantiate this allegation. The complainant indicated that there are no records of judicial investigations of any duty-free shop or petrol station operators in Bulgaria. Furthermore, the Bulgarian NCA audited the accounts of all duty-free shops and petrol stations over the last five years. The complainant provided a letter from the Director of the Agency stating that the audit revealed no evidence of wrongdoing in the activities of economic operators at the land borders of Bulgaria during the above-mentioned period.

30. In its opinion, the Commission explained that it had consulted various sources, "including diplomatic representations from Member States and third countries, experts, civil society and media." The Commission argued that it never stated, nor meant to allege, that duty-free trade in general is illegal. However, it outlined that it did have reservations concerning duty-free trade in Bulgaria. The Commission's reservations concerned practices of duty-free operators "which seemed to be at variance with Community VAT legislation" and the great difficulty of controlling duty-free shops located at land borders. In this regard, the Commission referred to the Recommendation of the Customs Cooperation Council (CCC) of 16 June 1960 concerning tax-free shops[10]. The Commission argued that its "sources confirmed that the concerns of the Customs Cooperation Council on the control of the duty-free shops at land borders proved correct in the case of Bulgaria."

31. As regards its statement about the "substantial increase in turnover during 2007", the Commission argued that "data available to the Commission shows a substantial increase in sales over several years since 2001." The increase in turnover was linked to organised crime. In fact, the Bulgarian Government seemed to share this analysis by deciding to close the duty-free shops.

32. As regards the statement that duty-free shops are "a focal point for local corruption and organized crime", the Commission was not convinced by the argument that no duty-free shop owner has ever been convicted of a felony.

33. The Commission concluded its opinion by stating that "[i]n preparing the interim report, the Commission took into account various, often confidential, sources of information. Many of the sources raised concerns with regard to smuggling and irregularities related to the operation of duty-free shops and petrol stations." On the basis of the information collected, the Commission criticised the operation of duty-free shops, and in its July Report welcomed "an independent decision of the Bulgarian government to close down duty-free petrol stations and shops at the land borders with non-EU countries."

34. In its observations, the complainant was critical of the Commission's opinion. In summary, it argued that "the Commission seems to have based its allegations wholly on information it did not bother to verify from sources it refuses to disclose." The complainant argued that the Commission failed to cite a single, verifiable source to substantiate the serious allegations against duty-free shops.

35. As regards the Commission's statement to the effect that duty-free shops continue to be tolerated at border areas on Bulgarian territory, which implies that duty-free shops are somehow illegal, the complainant argued that the Commission should not continue citing the 1960 CCC Notice. In this regard, the complainant pointed out that EU legislation allows Member States to exempt excisable goods sold from land border duty-free shops from excise and other taxes just as they do for duty-free shops located at airports or ports[11].

36. At the same time, if the Commission claims that information from unnamed sources indicated that illegal activities were occurring at duty-free shops and fuel stations, it should explain what these infringements were, when they occurred and who was responsible.

37. As regards the statement about "a substantial increase in turnover during 2007", the complainant rejected the explanation in the Commission's opinion that statistical data differ with respect to specific years and that duty-free sales had shown a substantial increase since 2001. The complainant stated that it was not aware of such a variance. In its opinion, the statistical data published by Bulgaria's NCA constitute the sole official record of duty-free sales of excise goods in Bulgaria. These data clearly show a decline in sales between 2006 and 2007 and directly contradict the Commission's statement in the Interim Report.

38. As regards the Commission's arguments in defence of the statement that Bulgarian duty-free shops are "a focal point of local corruption and organized crime", the complainant argued that they are "feeble and [that they] demonstrate an extraordinary, unique logic." In this regard, the complainant argued that the Commission ignored the fact that there were no records of any judicial investigations into duty-free shops or petrol stations, as well as the comprehensive audit by the NCA, which showed no impropriety. Instead, the Commission claims that the absence of a criminal conviction does not mean that all business activities are lawful and legitimate. The complainant took the view that "[t]his is absurd and insinuates that duty-free shop and fuel station operators should be compelled to somehow prove their innocence to the Commission rather than the Commission being obliged to demonstrate evidence of their wrongdoing."

39. The Ombudsman's representatives inspected the sources which the Commission took into account in drafting Section 2.2.5 of its Interim Report, as well as the minutes of the Meeting. In his inspection report, the Ombudsman noted that the Commission received information from the Bulgarian Government, but also from embassies of Member States and third countries, experts, NGOs, international organisations and the Commission’s own services. The inspection file contained recent e-mail confirmations concerning information given orally to the Commission by embassies of the Member States. A copy of the file was given to the Ombudsman's representatives on the condition that it would not be disclosed to the complainant[12].

40. In its observations to the Ombudsman's inspection report, the complainant expressed doubt as to whether the Commission's confidential sources would justify the broad allegations made against the complainant in the Interim Report. Moreover, the complainant stated that the Commission should not accept at face value information presented to it but must seek to verify the claims made.

The Ombudsman's assessment

41. As a preliminary remark, it should be noted that the Ombudsman has not conducted a separate investigation into the facts in order to (i) make a subsequent comparison with the factual findings underpinning the Commission's statements, and (ii) assess whether they were correct and substantiated. Rather, the focus of the Ombudsman's review is whether, taking into account the Commission's explanations, the disputed statements made by the Commission were adequately substantiated in the sense of there being a sufficient link between those statements and the relevant evidence, and whether that evidence was adequate in light of the content of the statements and the context in which they were made.

42. The issue whether the statements at issue were adequately substantiated arises on two occasions, first, at the stage when these statements were presented in the Interim Report, a report which was published; and second, within the framework of the subsequent exchanges with the complainant, an association representing interests which are directly affected by these statements. Naturally, a Report under the CVM is not expected to provide all justifications for the statements contained in it. Consequently, the question whether the Commission substantiated these statements should be assessed within the framework of its exchanges with the complainant. In this context, the Ombudsman also considers it useful to take into account that a citizen reading the Commission's Report under the CVM would infer that the Commission was in possession of concrete evidence to substantiate the statements made. Clearly, if the Commission failed to substantiate the statements made, then these statements must also be presumed to be misleading to citizens[13].

43. The Commission's task to 'substantiate' the statements made is complicated by the fact that the Commission considers the evidence available to it to be of a confidential nature. While the question of confidentiality of information does not fall within the scope of the present inquiry, the separate issue of substantiating findings that are made, even in part, on the basis of confidential documents, merits separate, albeit incidental, examination. In this regard, the Ombudsman, in line with his mandate, requested an opinion from the Commission, and inspected the documents on which the Commission based its findings. The Ombudsman will proceed with his analysis on the basis of the information obtained in this manner.

44. As regards whether the substantive assessment of the Commission's statements was in line with the rules and principles of good administration, the European Code of Good Administrative Behaviour (ECGAB)[14] provides that:

"... the official shall respect the fair balance between the interests of private persons and the general public interest"[15], "... abstain from any arbitrary action adversely affecting members of the public..."[16] and "... take into consideration the relevant factors and give each of them its proper weight in the decision, whilst excluding any irrelevant element from consideration."[17]

Moreover, good administration requires that the Union institutions should act with care, caution[18] and diligence[19]. In view of the above, it is clear that the Commission is required to carry out its tasks under the CVM in a manner which is proportionate, impartial, objective and diligent[20].

45. In view of the arguments presented to the Ombudsman, it is clear that the Commission's statement, contained in Section 2.2.5 of its Interim Report, is made up of the following three distinct statements:

(a) The Bulgarian Government continues to tolerate duty-free shops and petrol stations;

(b) The turnover of Bulgarian border-based duty-free shops and petrol stations saw an increase in turnover in 2007 compared to 2006; and

(c) The Bulgarian border-based duty-free shops and petrol stations are a focal point of local corruption and organised crime.

46. The Ombudsman notes that the statement "continues to tolerate" is linked to the Commission's statement that the duty-free shops and petrol stations are "a focal point of corruption and organized crime" and is potentially misleading when taken in conjunction with (c). If the Commission were justified in making a public statement that the Bulgarian duty-free shops constitute a focal point for corruption and organised crime, it follows that the Commission would be justified in stating that the Bulgarian Government should not continue to tolerate them. This is due to the importance of the matter at hand with respect to the functioning of the internal market, the establishment of an area of justice, freedom and security, as well as to budgetary considerations relating to the Union's own resources. Consequently, the Ombudsman's analysis will commence with statement (c).

47. The Commission defends this statement in its opinion with reference to confidential information it received from "numerous sources independent of those of the complainant", including embassies of Member States and third countries, NGOs and its own services.

48. In its observations, the complainant states that the Commission cites not a single, verifiable source to substantiate this statement. On the contrary, the complainant goes on to say that there have been no investigations or prosecutions relating to any instance of corruption or crime. In addition, the audit by the NCA demonstrated that there has been no impropriety in the past five years.

49. The Ombudsman emphasises that the public statement that duty-free shops and petrol stations are "a focal point of local corruption and organized crime" is of such gravity that, in order to be duly substantiated, it must be underpinned by adequately convincing supporting evidence.

50. It is clear that the Interim Report itself provides no information in relation to the Commission's sources. The Ombudsman has carefully considered the evidence to which the Commission refers in this regard, both in its exchanges with the complainant and in the course of the present inquiry. The Ombudsman has also inspected the documents in the Commission's file. The Ombudsman takes the view that, although the above evidence could reasonably have led the Commission to have concerns, it failed to meet the high threshold needed to justify its public statement. On this basis, the Ombudsman reaches the conclusion that the Commission based statement (c) not on concrete evidence in its possession, but on views expressed to it confidentially by secondary sources which do not suffice to substantiate the public statement in question.

51. Consequently, the Commission's statement (a) that Bulgaria "continues to tolerate" the operation of duty-free shops and petrol stations is misleading.

52. As regards statement (b), the Commission did not provide any evidence to counteract the official statistical data provided by the complainant as regards the statement relating to the increased revenue of duty-free shops in 2007. Furthermore, the Ombudsman's inspection of the file revealed nothing to substantiate to the Commission’s statement.

53. In light of the above, the Ombudsman finds that the three public statements contained in the Commission's Interim Report were not adequately substantiated (statements (b) and (c)), or misleading (statement (a)). This constitutes maladministration.

54. As regards the Commission's July Report, in which the Commission stated that "Bulgaria closed duty-free shops and duty free petrol stations which were allegedly focal points for local corruption and organised crime", the complainant argued that, in essence, the Commission repeated its incorrect and unsubstantiated allegations against the Bulgarian duty-free shops and petrol stations.

55. It is clear, on the basis of the above extract from the July Report, that the Commission did not repeat its statements from the Interim Report. The Commission did not mention parts (a) and (b) of its earlier statement, but did make an important change to part (c) by inserting the word "allegedly". However, these changes do not amount to a withdrawal of the Commission's allegations contained in the Interim Report. Consequently, the Commission has not withdrawn its unsubstantiated allegations and this statement cannot rectify the instances of maladministration identified beforehand.

56. The Ombudsman notes that, while it is undisputed that the decision to close duty-free shops and petrol stations was an independent decision of the Bulgarian Government, it is obvious, as the Commission acknowledges in its letter dated 24 July 2008, that the Commission's Interim Report "led to the decision of the Bulgarian authorities to close down the duty free shops and petrol stations."

57. In this regard, it must be noted that the Act of Accession and the CVM entrust the Commission with broad powers. In this regard, the Act of Accession grants the Commission competence to take appropriate measures, should Bulgaria fail to implement the commitments undertaken in the context of accession negotiations[21]. The CVM specifies that the appropriate measures may include sectoral safeguards, such as the suspension of the Member States' obligation to recognise and execute Bulgarian judgments and judicial decisions such as European arrest warrants[22]. In view of this, it is extremely important that the Commission, in carrying out its tasks under the CVM, adhere to the principles of proportionality, impartiality, objectivity and diligence. Furthermore, given that the Commission provides the Bulgarian Government with useful technical assistance on matters falling within the scope of the CVM[23], the Commission should exercise its administrative duties under the CVM with the utmost caution and in line with the rules and principles outlined above.

58. It follows that the Commission is obliged to provide all non-confidential information to interested parties in order to substantiate statements contained in public reports. If confidential information is involved, the Commission should act consistently with its obligations under Regulation 1049/2001 and its own rules of procedure and do its utmost to address the concerns raised by an interested party. In circumstances such as those in the present complaint, which involve statements of the gravity here concerned, the Commission must be able to verify the accuracy of the information contained in its CVM Reports. Moreover, the Commission must ensure that it will be in a position to substantiate its statements on the basis of the information and evidence available. If unavailable, the Commission's own services must, following on-the-spot inspections and meetings, gather the necessary evidence. If confidential information is involved, a fully anonymised Commission report should be made available. The Commission would thereby observe the principles of good administration outlined above.

59. Moreover, the Commission should act with a view to finding the right balance between the public interest and any private interests involved, and provide an adequate opportunity for affected parties to present their views with the purpose of reaching an objective and balanced assessment. The obligation of genuine consultation is highlighted in the present case, given that the complainant is a representative association[24]. The consultation process must be carried out in a manner which is consistent with the principles of good administration.

60. In accordance with Article 3(6) of the Statute of the European Ombudsman, the Ombudsman will make corresponding draft recommendations below.

B. Access to the minutes of the Meeting of 5 March 2008

Arguments presented to the Ombudsman

61. The Commission rejected the complainant's initial application for access to the minutes of the 5 March 2008 meeting on 29 April 2009, on the basis of Article 4(2), third indent of Regulation 1049/2001. It did not provide any further explanations for its refusal[25].

62. By letter dated 24 July 2008, the Commission rejected the complainant's confirmatory application on the basis of Article 4(3), first sentence of Regulation 1049/2001[26]. This exception foresees that access to a document drawn up by an institution for internal use and relating to a matter where the decision has not yet been taken by the institution, shall be refused if its disclosure would seriously undermine the institution's decision-making process.

63. More specifically, the Commission stated that the topic of discussion at the Meeting was "the operation of duty free shops and petrol stations on the borders which is currently being investigated by the Commission in the framework of the Cooperation and Verification Mechanism (CVM)." The Commission then explained that:

"[m]aking public the notes on the meeting of 5 March 2008 at this point in time would seriously undermine the decision-making process since it would anticipate positions the Commission may adopt in the course of its monitoring activities in the framework of the CVM, more in particular on the issue of the operation of duty-free shops and petrol stations on the borders of Bulgaria. Depending on the outcome of future CVM reports, it is not excluded that the Commission will have to take further measures to ensure Bulgaria's compliance with Community law on VAT. Disclosure of the requested minutes at this stage would limit the Commission's margin of manoeuvre and put at risk its flexibility and its efficient decision-making under the CVM."

64. The Commission also refused partial access. Regarding the overriding public interest requirement, it held that the interest invoked by the complainant is of a private nature and could not outweigh "the need to protect the Commission's decision-making process as regards the monitoring of Bulgaria's efforts in meeting the benchmarks in the fields of judicial reform, corruption and organised crime."

65. In its opinion, the Commission summarised its above arguments as follows:

"On 24 July 2008 the Commission took a decision on the confirmatory application by the complainant, refusing access to the requested document on the basis of the exception set out in Article 4(3), first subparagraph of Regulation 1049/2001, which foresees that access to a document drawn up by an institution for internal use, relating to a matter where the decision has not been taken by the institution, shall be refused if its disclosure would seriously undermine the institution's decision-making process. This decision explained that the monitoring of Bulgarian progress in the framework of CVM is an ongoing process that would continue until all the agreed benchmarks have been met. Depending on the outcome of future CVM reports, it could not be excluded that the Commission would have to take further measures to ensure Bulgaria's compliance with Community Law on VAT. Consequently, it was reasonable to conclude that the disclosure of the requested minutes would reduce the Commission's margin of manoeuvre and put at risk its flexibility and its efficient decision-making under the CVM.

Neither the Commission erred by concluding that the interest defended by the complainant, a representative of the duty-free business in Bulgaria, is of a private nature. Therefore, the decision of 24 July 2008 correctly applied the provisions of Regulation 1049/2001."

66. In its observations, the complainant argued that the Commission undertook no inspection, investigation or audit of its own[27]. The complainant also argued that the Commission withheld the minutes of the Meeting so as "to cover up its appalling failures to check and verify second-hand information it used for its reporting under the Cooperation and Verification Mechanism." The complainant asked if the allegations against it were a specific decision under the CVM, and, if so, "why would the Commission repeatedly deny it had any role in the decision of the previous Bulgarian government to close duty-free shops and fuel stations?" On the overriding public interest issue, the complainant argued that given "the sanctions available to the Commission under the CVM on the populations of Bulgaria and Romania, the decision-making under the CVM should be transparent and robust."

67. In its observations on the inspection report, the complainant further argued that the Commission's argument that the CVM is somehow wholly exempt from the normal rules on transparency does not find premise either in the Accession Treaty or the CVM itself. The complainant insists that the Commission denied access "in an effort to cover up its reliance on the CSD analysis" in preparation of the Interim Report.

The Ombudsman's assessment

68. Article 42 of the Charter of Fundamental Rights of the European Union[28] provides as follows: "Any citizen of the Union and any natural or legal person residing or having its registered office in a Member State, has a right of access to the European Parliament, Council and Commission documents."

69. The fundamental right of access to documents, which embodies the quest for transparency, legitimacy and accountability of the European Union institutions, is ensured in the Union legal order by Regulation 1049/2001. The Court of Justice has stated on multiple occasions that the right of access to Commission documents exists as a matter of principle, and a decision to refuse access is valid only if it is based on one of the exceptions laid down in Article 4 of Regulation 1049 /2001[29].

70. In view of the objectives pursued by Regulation 1049/2001, in particular the aim of ensuring the widest possible access to documents held by the Council, the European Parliament and the Commission[30], any exceptions to this principle have to be interpreted strictly[31].

71. Furthermore, according to the established case-law of the Court of Justice, the application of the exception may be justified only if the institution has previously assessed: (i) whether the access to the document would specifically and actually undermine the protected interest; and (ii) and if the reply is in the affirmative, whether, in the circumstances referred to in Article 4(2) and 4(3) of Regulation 1049/2001, there was no overriding public interest in disclosure. However, the risk of a protected interest being undermined must be reasonably foreseeable and not purely hypothetical. The above assessment must be apparent from the decision[32].

72. Moreover, the Ombudsman, in his decisions on cases concerning the same issue, has consistently pointed out that:

"Article 4(3) is intended to protect the internal decision-making process of the institutions. In certain circumstances, the institution's decision-making ability may be compromised if documents which are immediately and directly to be made use of by the institution in order to adopt a future decision were to come into the public domain before that decision is taken. Such an eventuality could materialise by virtue of the fact that such premature disclosure of documents may lead to undue external pressure being exerted on the institution and/or its services (Article 4(3), first subparagraph). An institution's decision-making ability may also be compromised if internal documents are made public after a decision has been taken (Article 4(3), second subparagraph). However, the danger that an institution's decision-making ability will be compromised is greatly reduced once a decision has been taken. In such circumstances, there is only a limited danger that undue external pressure will be effectively exerted on the institution or its services as a result of public disclosure of the document."[33]

73. In view of the above, the question arises in the present case as to whether the disclosure of the documents in question would seriously undermine the Commission's decision-making process under the CVM.

74. In its opinion on the complaint, the Commission relied on Article 4(3), first subparagraph and refused access to the minutes of the Meeting on the grounds that: (i) decision-making under the CVM is an ongoing process and that, therefore, the disclosure of the requested minutes would reduce the Commission's margin of manoeuvre and put at risk its flexibility and its efficient decision-making under the CVM; and, in any event, (ii) the complainant's private interests may not override the public interest in monitoring Bulgaria's efforts in the field of judicial reform, corruption and organised crime.

75. The Commission's arguments cannot be accepted. As regards the risk of compromising the Commission's decision-making, it is clear from the above cited case-law that the risk for the Commission's decision-making process must be clearly foreseeable and not merely hypothetical. In the present circumstances, the Commission did not demonstrate the existence of a concrete risk which could undermine its decision-making process.

76. In contrast, the risk is rather hypothetical. This is so for reasons of both timing and substance. As regards timing, the Commission is not likely to deal with these aspects of Benchmark 5 or Union law on VAT in its Reports under the CVM. As regards substance, the Commission failed to establish the link between the disclosure of minutes of the Meeting and the risk to its decision-making process.

77. A closer look at the issue of timing reveals that the Commission conflates its decision-making on the specific issue of duty-free shops and petrol stations under Benchmark 5 – which it dealt with in its Interim Report and July Report in 2008 – with the ongoing CVM and the methodology used thereunder. If the Commission's reasoning were to be accepted, the entire process under the CVM would always be protected from disclosure. Such an approach manifestly contradicts the aim and objectives of Regulation 1049/2001 and the principle of transparency the latter encapsulates. In fact, given that the decision on the Commission's position as regards the Bulgarian duty-free shops and petrol stations was already taken and clearly expressed in its Interim Report and July Report, the Commission's approach to invoke Article 4(3), first sentence of Regulation 1049/2001 is questionable.

78. As regards the issue of substance, the Commission's approach echoes arguments previously presented to the Ombudsman in relation to the disclosure of documents from internal meetings and briefings. The Ombudsman has held that "[t]his approach clearly cannot be squared with the principle of strict interpretation of the exception laid down in Article 4(3) second subparagraph; in fact, it would amount to little less than a broad license for non-disclosure of such documents, in obvious disregard of the intent of the Community legislator who enacted Regulation 1049/2001."[34] In order for the Ombudsman to accept that a serious risk to the Commission's decision-making process exists, the Commission must, in line with existing case-law, provide convincing and sound reasons for this view in the particular circumstances of the case under consideration.

79. The Ombudsman considers that the Commission's above justification is general, abstract and not well supported by the facts of the case. The Commission did not specify, in a sound and effective manner, how the disclosure of the minutes in question would undermine its decision-making process under the CVM.

80. As regards the Commission's second argument, namely, that the complainant's interest is of a private nature and cannot outweigh the public interest of "monitoring of Bulgaria's efforts in meeting the benchmarks in the fields of judicial reform, corruption and organised crime", which the Commission stated in its letter of 24 July 2008 and defended in its opinion, the Ombudsman considers that this argument is more in favour than against the disclosure of the minutes of the Meeting.

81. If, as the Commission argued, the public interest in this case is the monitoring of Bulgaria's efforts to meet the CVM Benchmarks, then that interest is best served by the full transparency of the available documents. This is particularly so when the document at issue concerns the minutes of a meeting between the Commission and the representative association of the Bulgarian duty-free sector to discuss the Commission's concerns about the said sector. Moreover, the complainant was present at the meeting and was allowed to take notes. It is therefore fully aware of the content of the discussions that took place. The Commission would protect the public interest better by providing the public with an accurate record of the Meeting.

82. In light of the above, the Ombudsman finds that the Commission wrongly refused access to the minutes of the Meeting, on the basis of the exception in Article 4(3), first subparagraph of Regulation No 1049/2001. This is an instance of maladministration.

83. The Ombudsman therefore makes a draft recommendation below in relation to the request for access to the document in question.

C. Delay in the handling of the complainant's confirmatory application

Arguments presented to the Ombudsman

84. The complainant argued that the Commission intentionally delayed its response to the confirmatory application until after the publication of the July Report. The complainant insisted that the timing of the Commission's reply, which arrived only one day after the July Report and failed to remove the unsubstantiated allegations against the complainant, was not coincidental. The Ombudsman therefore understands the complainant to argue, in substance, that the Commission deliberately delayed its response until the July report had been published.

85. In its opinion, the Commission argued that the delay in the registration of the confirmatory application was due to the fact that it was unsure whether or not the complainant's letter of 19 May 2008 constituted a confirmatory application. The letter did not mention refusal of the Commission's Directorate-General for Justice, Freedom and Security's (DG JFS) to grant access to the minutes after the complainant's initial application. Instead, the letter focused on the rebuttal of the Commission's statement in section 2.2.5 of the Interim Report. The Commission argued that it dealt with the complainant's confirmatory application within the time limits foreseen in Article 8 of Regulation 1049/2001.

86. In its observations on the Commission's opinion, the complainant argued that Article 8(2) of Regulation 1049/2001 permits an institution to extend the deadline for response by a further 15 days only in "exceptional cases", such as when the request concerns "a very long document" or "a very large number of documents". In these cases, an institution may extend the deadline "provided that the applicant is notified in advance and that detailed reasons are given". In this respect, the complainant is not convinced by the Commission's arguments as to why it required 14 working days following registration to send an acknowledgement of receipt and an additional 15 working days to "make a full analysis of the requested documents", when the request only concerned access to the record of a single meeting lasting approximately 45 minutes.

87. In its observations on the inspection report, the complainant repeated its main arguments and argued that the Commission's decision on the confirmatory application for access to the minutes was delayed until after the July Report had been issued so as to avoid any additional scrutiny from the complainant.

The Ombudsman's assessment

88. Article 8 of Regulation 1049/2001 on the processing of confirmatory applications provides:

"1. A confirmatory application shall be handled promptly. Within 15 working days from registration of such an application, the institution shall either grant access to the document requested and provide access in accordance with Article 10 within that period or, in a written reply, state the reasons for the total or partial refusal....

2. In exceptional cases, for example in the event of an application relating to a very long document or to a very large number of documents, the time limit provided for in paragraph 1 may be extended by 15 working days, provided that the applicant is notified in advance and that detailed reasons are given."

89. It follows that, following the registration of a confirmatory application, the Commission must reply to the applicant within 15 working days. That deadline may only be extended if the following cumulative conditions are fulfilled:

- the Commission must notify the applicant in advance;

- the Commission must give detailed reasons for the extension of the deadline; and

- there must be exceptional circumstances which justify the delay, for instance, when the request concerns a very long document or a very large number of documents.

90. As regards this allegation, the Commission's delay in handling the complainant's confirmatory application has two aspects: first, the delay in the registration of the application and the acknowledgment of its receipt, and second, the delay in replying to the applicant.

91. As regards the delay in registration, the Commission argued that it was not clear from the complainant's letter dated 19 May 2008 that it constituted a confirmatory application. This was so because it did not mention DG JFS's refusal to grant access to the minutes following the complainant's initial application, instead the complainant's letter focused on the rebuttal of the Commission's statement in section 2.2.5 of the Interim Report.

92. As regards the delay in replying to the complainant's letter, the Commission did notify the complainant in advance, but the only ground brought forward to defend the delay was that of "the necessity to make a full analysis of the requested documents".

93. In view of the above, the Ombudsman takes the view that in failing to identify that the complainant's letter was a confirmatory application and, consequently, in delaying its registration, the Commission failed to act at the level of diligence expected from a Union institution, office, body or agency. At the same time, the Commission failed to provide sufficiently detailed reasons for the delay in replying. Moreover, there were no exceptional circumstances which would justify the delay in the reply to the complainant's confirmatory application. Having inspected the minutes of the Meeting, the Ombudsman can confirm that these do not constitute a very long document within the meaning of Article 8(2) of Regulation 1049/2001.

94. However, the Ombudsman has found no evidence to substantiate the complainant’s argument that the Commission deliberately delayed its response until the July report had been published. The Ombudsman, therefore, considers (a) that it would be misleading to make a finding of maladministration as regards this allegation and (b) that no further inquiries are justified as regards this aspect of the complaint.

B. The draft recommendations

On the basis of his inquiries into this complaint, the Ombudsman makes the following draft recommendations to the Commission:

1. In its next Report under the CVM, the Commission should acknowledge that the statements in its Interim Report of 14 February 2008 that duty-free shops and petrol stations "have seen a substantial increase in turnover during 2007" and that the Bulgarian border-based duty-free shops and petrol stations are a "focal point for local corruption and organized crime" were not substantiated by concrete evidence in its possession. The Commission should further acknowledge that the statement that the Bulgarian Government “continues to tolerate duty-free shops and petrol stations” was misleading.

2. Taking account of the broad powers conferred upon it under the CVM, the Commission should take appropriate steps to improve its procedures and ensure the proportionality, impartiality, objectivity and diligence of its Reports issued under the CVM. In line with the Ombudsman's suggestions in paragraphs 58-59 of the present draft recommendation, the Commission should issue appropriate instructions or guidelines to its services to ensure that the statements in public reports contain accurate information, which the Commission will be in a position to defend. Moreover, the Commission should ensure that it offers adequate opportunity of consultation and due regard to the interests of affected parties.

3. The Commission should grant access to the minutes of the Meeting of 5 March 2008.

The Commission and the complainant will be informed of these draft recommendations. In accordance with Article 3(6) of the Statute of the European Ombudsman, the Institution shall send a detailed opinion by 31 January 2011. The detailed opinion could consist of the acceptance of the draft recommendations and a description of how they have been implemented.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 14 October 2010

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[1] Decision of the European Parliament of 9 March 1994 on the regulations and general conditions governing the performance of the Ombudsman's duties (94/262/ECSC, EC, Euratom), OJ 1994 L 113, p. 15.

[2] Act concerning the conditions of accession of the Republic (the plural would have been better but this is official name) of Bulgaria and Romania and the adjustments to the treaties on which the European Union is founded, OJ 2005 L 157, p. 203.

[3] Commission Decision 2006/929 of 13 December 2006 establishing a mechanism for cooperation and verification of progress in Bulgaria to address specific benchmarks in the areas of judicial reform and fight against corruption and organised crime, OJ 2006 L 354, p. 58.

[4] Article 1 of the CVM Decision.

[5] Article 2 of the CVM Decision.

[6] Regulation 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, OJ 2001 L 145, p. 43.

[7] The issue has not been mentioned in any of the following CVM Reports (on 12 February 2009, 22 July 2009 and 23 March 2010).

[8] The Commission refers to the July 2008 report, which was adopted one day before the letter refusing access to the minutes was sent to the complainant.

[9] Article 10.2 of the Decision of the European Ombudsman adopting Implementing Provisions states: "If he considers it appropriate to do so, the Ombudsman may take steps to ensure that a complaint is dealt with as a matter of priority." The Ombudsman's Implementing Provisions are available on the website of the European Ombudsman, http://www.ombudsman.europa.eu.

[10] According to the Commission, the CCC, the predecessor of the World Customs Organization, "considers that the existence of such shops on land frontiers (road or rail traffic) gives rise to a grave risk of fraudulent importation. As a result, the Customs Cooperation Council recommends its members against the establishment of tax free shops at places other than seaports and customs airports and to limit sales in tax-free shops to travellers leaving for abroad by sea or air."

[11] Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC, OJ 2009 L 9, p. 12.

[12] In accordance with Article 3.2 of the Ombudsman's Statute.

[13] See, Draft recommendation of the European Ombudsman in his inquiry into complaint 1475/2005/(IP)GG, paragraph 1.18, which states "The Ombudsman considers that it is good administrative practice for EU institutions and bodies to take care that the statements they make are accurate and not misleading and to correct promptly any errors that may occur. .... In this context, the term "misleading" ... is therefore to be understood objectively, i.e., as meaning that a certain statement is likely to be interpreted inaccurately by the persons to whom it is addressed."

[14] Available on the website of the European Ombudsman, http://www.ombudsman.europa.eu

[15] Article 6(2) ECGAB (Proportionality).

[16] Article 8(1) ECGAB (Impartiality and independence).

[17] Article 9 ECGAB (Objectivity).

[18] Case C-47/07 P Masdar (UK) v Commission [2008] ECR I-9761, paragraphs 92-93.

[19] See, Decision of the European Ombudsman closing his inquiry into complaint 1843/2007/JMA against the European Commission, at paragraph 48, and Decision of the European Ombudsman on complaint 524/2005/BB against the European Agency for the Evaluation of Medicinal Products, paragraph 2.12.

[20] See, also, The Code of Good Administrative Behaviour for Staff of the European Commission in their Relations with the Public, Annexed to the Commission's Rules of Procedure, at paragraph 3.

[21] Articles 36 - 38 of Bulgaria's Act of Accession, also confirmed in Preambular clause (8) of the CVM.

[22] Preambular clause (7) of the CVM.

[23] Article 1(2) of the CVM.

[24] See also Article 11 of the Treaty on European Union.

[25] "The institutions shall refuse access to a document where disclosure would undermine the protection of: ...

- the purpose of inspections, investigations and audits, unless there is an overriding public interest in disclosure."

[26] "Access to a document, drawn up by an institution for internal use or received by an institution, which relates to a matter where the decision has not been taken by the institution, shall be refused if disclosure of the document would seriously undermine the institution's decision-making process, unless there is an overriding public interest in disclosure."

[27] It appears that the complainant failed to notice that the Commission had shifted the ground for its refusal of access to the document requested from Article 4(2), third indent in the initial application to Article 4(3), first paragraph in the confirmatory application.

[28] Pursuant to Article 6(1) of the Treaty on European Union, the Charter of Fundamental Rights of the European Union shall have the same legal value as the Treaties.

[29] Case C-64/05 Sweden v Commission [2007] ECR I-11389, paragraph 57 and Case C-266/05 P Sison v Council [2007] ECR I-1233, paragraph 62.

[30] Article 1(a) of Regulation 1049/2001.

[31] Case C-64/05 Sweden v Commission [2007] ECR I-11389, paragraph 66 and Case C-266/05 P Sison v Council [2007] ECR I-1233, paragraph 63.

[32] Case T-2/03 Verein für Konsumenteninformation v Commission [2005] ECR II-1121, paragraph 69.

[33] See, Draft recommendation of the European Ombudsman in his inquiry into complaint 2502/2007/RT against the European Commission, paragraph 30; Draft recommendation of the European Ombudsman in his inquiry into complaint 355/2007/TN against the European Commission, paragraph 48.

[34] Decision of the European Ombudsman on complaint 1434/2004/PB against the European Commission, paragraph 1.22.