Decision of the European Ombudsman on complaint 1372/98/OV against the European Commission
- Institution(s) concerned: European Commission
- Field(s) of law: External relations,Regional policy and coordination of structural instruments
- Types of maladministration alleged – (i) breach of, or (ii) breach of duties relating to: Absence of discrimination [Article 5 ECGAB],Fairness [Article 11 ECGAB]
Dear Mrs W.,
On 22 December 1998, Mr Marc Morgan-Huws, Leader, and Mr Harry Rees, Deputy Leader of the Isle of Wight Council (hereafter “the complainants”) complained on behalf of the Isle of Wight Council to the European Ombudsman concerning the decision of Eurostat not to classify the Isle of Wight as a separate NUTS Level II area.
They complainants more particularly alleged that:
1. The decision of Eurostat not to accept the proposal made in March 1997 by the UK Office for National Statistics (ONS) to make the Isle of Wight a separate NUTS level II area takes no account of either Article 158 of the EC Treaty or the adoption by the European Parliament on 28 May 1998 of the Viola Report(1). Article 158 of the EC Treaty states that “in particular, the Community shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands, including rural areas.” In the Viola Report, the European Parliament recognised that islands should be given special treatment and recommended that a revision of NUTS should be made to ensure that the true situation of islands is recognised at NUTS level II and that statistically, they are not joined with mainland regions which are not at all similar in terms of GDP, employment or structures.
2. The above-mentioned decision discriminated against the Isle of Wight, in the sense defined by the judgement of the Court of Justice of 23 February 1983 in case 8/82(2), which states that “according to case-law of the Court discrimination is defined as treating differently situations which are identical, or treating in the same way situations which are different.”
THE DRAFT RECOMMENDATION 
No instance of maladministration was found with regard to the second allegation. By decision of 13 March 2000, following an inquiry into the first allegation of the complaint and given that it did not appear possible to seek a friendly solution, the Ombudsman addressed the following draft recommendation to the Commission in accordance with Article 3 (6) of the Statute of the Ombudsman(3):
The Ombudsman’s conclusion that Eurostat has not demonstrated that it has taken into account all relevant factors in reaching a decision on the NUTS level classification of the Isle of Wight implies that Eurostat should reconsider the matter and make a new decision, taking into account all the relevant factors of the case, including Article 158 of the EC Treaty and the Viola Report of the European Parliament which give special consideration to the situation of islands.
Full details of the inquiry and the draft recommendation are provided in the decision of 13 March 2000, a copy of which was also forwarded to the complainants.
THE COMMISSION’S DETAILED OPINION
The Ombudsman informed the Commission that, according to Article 3 (6) of the Statute of the Ombudsman, it should send a detailed opinion before 30 June 2000 and that the detailed opinion could consist of acceptance of the Ombudsman’s draft recommendation and a description of how it has been implemented.
On 16 June 2000, the Commission sent its detailed opinion to the Ombudsman. The Commission pointed out that the Nomenclature of the Territorial Units for Statistics (NUTS) was established in the 1970s by Eurostat to provide a single uniform breakdown of territorial units for the production of regional statistics for the EU. It was created and developed according to the following principles:
– the NUTS favours institutional breakdowns;
– the NUTS favours regional units of a general character;
– the NUTS is a hierarchical classification (three regional levels).
Eurostat considers that its decision to classify the Isle of Wight as a NUTS level III area should be examined solely in the light of the above-mentioned general objective, the basic principles and their consequences. The fact that the NUTS is used in conjunction with certain Community policies must not deflect Eurostat from the essence of its mission, which is to provide the Union with harmonised and comparable statistics. The purpose of the NUTS is not to reduce regional disparities by adapting the statistical nomenclature. That is a Structural Fund objective. When the Council, acting under Article 158 of the Treaty, after receiving Parliament’s assent, adopted Council Regulation (EC) n° 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds, it saw no need to give special treatment to islands in general nor to the Isle of Wight in particular. It considered that the situation of island regions varied so widely that there were no grounds for a general derogation.
The same argument applies to the European Parliament’s Viola Report, which the Commission was not legally bound to take into account, as its proposal to review the classification of the Isle of Wight is based on the fact that the effect of NUTS level III classification is the loss of a series of financial advantages which it would have enjoyed under a level II classification. The Report also hopes that a clear distinction will be established in European official statistics between island regions on the one hand and neighbouring coastal regions on the other. In the case of the Isle of Wight, Eurostat believes it has responded in full to that wish by classifying it at NUTS level III on the basis of its administrative situation when this was not justified by its size (population nearly three times below the average of units in that level).
More generally, it should again be pointed out that the NUTS favours regional units of a general character and it is therefore not its task to identify all the islands of the Union – very few islands are singled out in the nomenclature. The Isle of Wight thus already enjoys a special status in Community regional statistics owing to its administrative identity.
The Commission also observed that, if the Isle of Wight were classified as a NUTS level II region, it would be on the same footing as Crete, Corsica, Guadeloupe, Martinique, Réunion, Sicily, Sardinia and Åland, the only islands individually classified as such, even though they have far denser populations (with the exception of Åland) and are far bigger. This, then, would be a case of treating in the same way situations, which are different.
The Commission concluded that the decision by Eurostat to classify the Isle of Wight as a NUTS level III region is based on the general objective and the basic principles of the NUTS. It has taken account of all the objective elements in its possession. Furthermore, as it is a statistical nomenclature, it was drawn up in accordance with the principles of impartiality, objectivity and scientific independence, which must govern Union statistics, in accordance with Article 285 of the Treaty. It should be noted that the principle of impartiality is defined by the primary statistical regulation (Article 10 of Regulation n° 322/97) as “an objective and independent manner of producing Community statistics, free from any pressure from political or other interest groups particularly as regards the selection of techniques, definitions and methodologies best suited to the attainment of the objectives as set out”.
The Commission stated that there were accordingly no grounds for amending the decision.
THE COMPLAINANTS’ OBSERVATIONS
The Commission’s detailed opinion was sent to the complainants who sent their observations on 25 September 2000. The complainants observed that the Commission failed to comply with either the letter or the spirit of the Ombudsman’s draft recommendation.
The complainants argued that, contrary to its previous independence and impartiality, Eurostat has since the 1980’s become more closely involved in political areas outside its original remit such as its contributions to the political negotiations for the 1981, 1986 and 1995 enlargements. The fact that political considerations are a matter of legitimate concern to Eurostat reinforces the requirement that it is subject to all the Treaties and decisions adopted by the EU institutions, in particular Article 158 of the EC Treaty and the Viola Report.
As regards the three NUTS principles quoted by the Commission, the complainants observed that, on the basis of the institutional principle, and given that the Isle of Wight was acknowledged as a single administrative area, the Isle of Wight should have parity with other UK NUTS level II administrative areas and with comparable island regions (Crete, Corsica, Guadeloupe, Martinique, Réunion, Sicily, Sardinia and Åland. As regards the Commission’s claim that the situation of island regions varied so widely that there were no grounds for a general derogation, the complainants pointed out that many similar island regions had been accepted as NUTS level II areas and were therefore, in the vast majority of cases, in receipt of Structural Funds despite their position at the lower end of the population scale.
The complainants further observed that in its opinion the Commission gave no indication that it has given consideration whatsoever to the consequences of its decision, namely that a NUTS level II designation would have automatically qualified the Isle of Wight for Objective 1 structural funding and ensured continued eligibility for UK state aid (prior to 1999 the Isle of Wight was a designated Intermediate Assisted Area).
The complainants made also the following legal considerations. They referred to the clear requirements of Articles 158 and 159 of the EC Treaty, the Viola Report and the Declaration n° 30 to the Final Act on Islands of the Amsterdam Treaty. They also quoted an opinion of the Economic and Social Committee of the EU of July 2000 on “Guidelines for integrated actions on the island regions of the EU following the Amsterdam Treaty (Article 158) which emphasised that the intention of Article 158 EC “must be fully reflected in all Community policies and instruments, as a factor in prioritising actions, and believes that it should be included in project selection criteria”. The complainants observed that the Commission’s statement that it “saw no need to give special treatment to islands” was contrary to the Treaty obligations and the Ombudsman’s draft recommendation. They repeated the same argument with regard to the Commission’s claim that, “when the Council adopted Council Regulation (EC) n° 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds, it saw no need to give special treatment to islands.”. They alleged that this statement does not comply with the terms of the published Regulation, paragraph 1 of which refers to the Community’s aim of “reducing levels of disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands”.
With regard to the follow-up of the Ombudsman’s draft recommendation, the complainants alleged that the Commission has failed to satisfactorily comply with its duty to examine carefully and impartially all the relevant aspects of the individual case as required by the case-law (case C-269/90), more particularly Article 158 of the EC Treaty and the Viola Report. They therefore urged the Ombudsman to uphold his finding of maladministration against the Commission.
THE COMMISSION’S ADDITIONAL OPINION
The complainants’ observations were sent to the Commission, which sent an additional opinion on 5 December 2000:
The Commission pointed out that the contribution of Eurostat to enlargement negotiations was neither outside the original remit of Eurostat nor did it influence its independence and impartiality.
It was not the Commission but the Council which, after receiving Parliament’s assent, saw no need to give special treatment to islands in the Council Regulation (EC) n° 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds.
Only 7 islands of the EU are individually classified at NUTS Level II: Crete, Corsica, Guadeloupe, Martinique, Réunion, Sicily and Åland. The Commission does not consider these islands as being comparable with the Isle of Wight, as these islands are much more densely populated (with the exception of Åland which enjoys a particular, internationally recognised, legal and administrative status within the Finnish administration) and far bigger.
The consequences of the decisions taken with regard to the NUTS classification have been reviewed by Eurostat from a statistical viewpoint. This assessment did not touch on the issue of eligibility for Objective 1 of the Structural Funds, a matter, which is entirely within the remit of the above-mentioned Council Regulation.
With regard to the legal issues, the Commission observed that Article 158 of the Treaty refers to the “least favoured regions or islands” and that de facto it is not possible to consider every island region in the EU as “least favoured”. Article 3 of Council Regulation (EC) n° 1260/1999 explicitly states that “the regions covered by Objective 1 shall be regions corresponding to level II of the Nomenclature of Territorial Statistical Units (NUTS level II)”. The Commission has strictly applied this provision. The Isle of Wight it not a NUTS II region. Accordingly, the Commission sees no reason either to alter its decision concerning the list of regions eligible for support under Objective 1 or to put forward any amendment to the above Regulation.
The Commission concluded that the decision to classify the Isle of Wight as a NUTS level III region, based on the general objective and the basic principles of the NUTS, has taken into account all the objective elements in its possession. It therefore does not intend to amend this decision.
ADDITIONAL INFORMATION PROVIDED BY THE COMPLAINANTS
On 18 December 2000, the complainants sent a copy of a letter to the Ombudsman sent the same day by the Isle of Wight to Commissioner Barnier, responsible for regional policy, inviting him to come and visit the Isle of Wight in order to see the problems the Island is facing. The complainants also sent a copy of a press release from the office of Mr Roy Perry MEP on one of the Conclusions from the Nice Summit which gives a clear signal that island regions need specific help.
On 8 February 2001, the Ombudsman was forwarded a copy of Commissioner Barnier’s reply of 7 February 2001 to the complainants. The Commissioner referred to a study which the services of the Directorate General for Regional Policy would launch into the social and economic conditions of island regions across the Union, as well as to the Second Cohesion Report of 31 January 2001 which will help to shape the Commission’s formal proposals for the period after 2006.
THE DECISION
1.1 On 13 March 2000, the Ombudsman addressed the following draft recommendation to the Commission in accordance with Article 3 (6) of the Statute of the Ombudsman:
The Ombudsman’s conclusion that Eurostat has not demonstrated that it has taken into account all relevant factors in reaching a decision on the NUTS level classification of the Isle of Wight implies that Eurostat should reconsider the matter and make a new decision, taking into account all the relevant factors of the case, including Article 158 of the EC Treaty and the Viola Report of the European Parliament which give special consideration to the situation of islands.
1.2 On 16 June 2000, the Commission informed the Ombudsman of its detailed opinion on the draft recommendation. Considering that it had taken into account all the objective elements in its possession and that the decision of Eurostat to classify the Isle of Wight as a NUTS level III region was based on the general objective and the basic principles of NUTS, the Commission concluded that there were no grounds for amending its decision.
1.3 The Ombudsman notes that the Commission has reconsidered the matter, but has confirmed its previous decision. The Commission has also communicated to the Ombudsman the reasons why it did not alter its decision after the reconsideration:
1.4 With regard to Article 158 of the EC Treaty, the Commission observed that when the Council adopted Council Regulation (EC) n° 1260/1999 of 21 June laying down general provisions on the Structural Funds, it saw no need to give special treatment to islands in general or to the Isle of Wight in particular. It considered that the situation of island regions varied so widely that there were no grounds for a general derogation. In its additional opinion, the Commission pointed out that Article 158 of the Treaty refers to the “least favoured regions or islands” and that de facto it is not possible to consider every island region in the EU as “least favoured”.
1.5 With regard to the Viola Report, the Commission observed that its proposal to review the classification of the Isle of Wight was based on the fact that the effect of NUTS level III classification was the loss of a series of financial advantages which it would have enjoyed under a level II classification. The Commission moreover stated that the Report hoped that a clear distinction would be established in European official statistics between island regions on the one hand and neighbouring coastal regions on the other. In the case of the Isle of Wight, Eurostat believes that it responded in full to that wish by classifying it at NUTS level III on the basis of its administrative situation when this was not justified by its size (population nearly three times below the average of units in that level).
1.6 The complainants observed that many similar island regions had been accepted as NUTS level II areas and were in receipt of Structural Funds despite their position at the lower end of the population scale. They stated that the Commission gave no indication that it considered the consequences of its decision, namely the qualification for Objective 1 structural funding. The complainants also pointed out that paragraph 1 of Council Regulation (EC) n° 1260/1999 of 21 June 1999 referred to the Community’s aim of “reducing levels of disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands”.
1.7 It appears from the above elements that this time the Commission has given consideration to Article 158 of the EC Treaty and the Viola Report in its decision to classify the Isle of Wight as a NUTS level III region. The Commission has also explained why the reconsideration of these elements did not make it necessary to modify its decision.
1.8 The Ombudsman notes that the Commission has a discretionary power when deciding on the NUTS classification of an EU region. The Ombudsman also considers that the exercise of discretionary powers are to be limited by the basic principles of law. In the present case it appears that, when deciding on the NUTS classification of the Isle of Wight, the Commission stayed within the limits of its legal authority.
1.9 On basis of the above elements, the Ombudsman concludes that the Commission has duly executed the draft recommendation, which was to reconsider the matter of the classification of the Isle of Wight in the NUTS. The Ombudsman therefore closes the case.
The President of the European Commission will also be informed of this decision.
Yours sincerely,
Jacob SÖDERMAN
(1) Report A4-0118/98 on the problems of island regions in the European Union, Committee on Regional Policy, Rapporteur Vincenzo Viola.
(2) Case 8/82, Kommanditgesellschaft in der Firma Hans-Otto Wagner v. Bundesanstalt für landwirtschftliche Marktordnung, [1983] ECR 371.
(3) Decision 94/262 of 9 March 1994 of the European Parliament on the Regulations and General Conditions governing the Performance of the Ombudsman’s Duties, 1991 OJ L 113/15.
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