Compliance and cooperation or obstruction and opposition?

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Compliance and Collaboration

or

Obstruction and Opposition?

Studying compliance with European rules in an area of multi-level governance

Thesis Research Master Atie de Ruiter (s0822272)

Supervisor: Bernard Steunenberg Date: 20-08-2014

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1

Preface

When I started this research a couple of months ago, I would not have anticipated that this thesis would in the end be more than 100 pages. First, after two years of an extensive and intensive research master program, I expected my thesis to be the crown on my work, my ‘master piece’. However, things never work out the way you planned them. Halfway writing my proposal, I was accepted at my new job. This meant that there was a strict and ‘final’ deadline to my thesis; namely September 1, the first day at my new job. With this as a goal, I set out to explore the complicated world of how governments at various levels dealt with the coordination of European norms regarding ‘state aid’. I would very much like to thank my respondents for finding time in their often busy to overflowing schedules to squeeze in an interview with me.

In the same way, I would like to stress that all faults in this research are mine and mine alone. Hopefully, not a word or meaning of any of my respondents was ‘lost in translation’. I hope that all respondents are content with their participation in this research. Next to my respondents, I would like to thank my friends, boyfriend and family who had to put up with my busy schedule and my stress during their (and my) holidays. Thanks Atie, Tijs and Minou for giving me the opportunity for that inspirational typing session in Cambridge on a rainy Sunday. You have pulled me through. Last, I would like to thank my supervisor Bernard Steunenberg, with whom I had not only great pleasure of working for as a student-assistant in the last three years, but together with Rik de Ruiter also has been extremely flexible in examining this thesis.

Leaves me no more than to wish you ‘good luck’ reading this thesis.

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Table of Contents

Preface 1

Table of Contents 2

List of Tables and Figures 4

1. Introduction 5

1.1 Focusing on compliance

1.2 In a system of Multi-Level Governance 1.3 Research focus and method

1.4 Scientific and societal relevance 1.5 Research outline

2. Theory 8

2.1 Part I: Compliance

2.2 Part II: Focusing on national vertical relationships 2.3 Part III: Multilevel governance

2.4 Part IV: Wrapping up

3. Contextual Framework: Compliance with State Aid regulation 14

in the Netherlands

3.1 European State Aid Regulation

3.2 State aid notification in the Netherlands

4. Research design 17

4.1 Comparative case study

4.2 Research method and operationalization 4.3 Data Collection and Analysis

4.4 Reliability and Validity

5. Case Selection 20

5.1 Selecting only investigation cases

5.2 Selecting both notified and non-notified cases 5.3 Case selection

6. Results 23

6.1 Report through EuropaDecentraal 25

6.1.1 Case 1 – CityNet Amsterdam 6.1.1.1 Internal coordination 6.1.1.2 Preferences

6.1.1.3 Ability to comply 6.1.1.4 External coordination 6.1.1.5 Oversight

6.1.2 Case 2 - subsidy to FarmDairy from the province of Flevoland 6.1.2.1 Internal coordination

6.1.2.2 Preferences 6.1.2.3 Ability to comply 6.1.2.4 External coordination 6.1.2.5 Oversight

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3 6.2 Notification procedure through the Coordination point 45

at the Ministry of Internal Affairs

6.2.1 Case 3 – Marktpassageplan Haaksbergen 6.2.1.1 Internal coordination

6.2.2 Case 4 – project Damcentrum Leidschendam – Voorburg 6.2.2.1 Internal coordination

6.3 Report and Notification through the Ministry of Infrastructure and Environment 71 6.3.1 Case 5 – subsidy of Waterboard Aa and Maas to Heineken BV

6.3.1.1 Internal coordination 6.3.1.2 Preferences

6.3.1.3 Ability to comply 6.3.1.4 External coordination 6.3.1.5 Oversight

6.3.2 Case 6 – the interim subsidies of Reest en Wieden 2001 and Rijn en IJssel 2012 6.3.2.1 Internal coordination

7. Comparative case analysis 92

7.1 Expectation 1 7.2 Expectation 2 7.3 Expectation 3 7.4 Expectation 4 7.5 Analysis

8. Conclusion and implications 97

8.1 Answering the research question

8.2 Limitations and possibilities for generalization 8.3 Further research questions

8.4 Closing remarks

Appendix 1: Reference list 101

Appendix 2: Interview list 109

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List of Tables and Figures Chapter 2:

Table 1: Indicators of inability to comply Figure 1: Visualization of expectations

Chapter 5: Case Selection Table 2: Case Selection

Chapter 6: Results

Case 1: CityNet Amsterdam

Figure 2: Timeline decision making process CityNet Amsterdam Figure 3: Preferences of actors involved

Table 3: Indicators of (in)ability

Figure 4: External Coordination Municipality of Amsterdam

Case 2: FarmDairy Flevoland

Figure 5: Timeline decision making process subsidy FarmDairy Flevoland Figure 6: Preferences of actors involved

Figure 7: External Coordination Province Flevoland

Case 3: Marktpassageplan Haaksbergen

Figure 8: Timeline decision making process Marktpassageplan Haaksbergen Figure 9: Preferences of actors involved

Figure 10: External Coordination Province Flevoland

Case 4: Damcentrum Leidschendam-Voorburg

Figure 11: Timeline decision making process Damcentrum Leidschendam-Voorburg Figure 12: Preferences of actors involved

Figure 13: External Coordination Municipality Leidschendam-Voorburg

Case 5: Subsidy grant water board Aa and Maas to Heineken BV Figure 14: Timeline decision making process Marktpassageplan Haaksbergen Figure 15: Preferences of actors involved

Figure 16: External Coordination water board Aa en Maas

Case 6: Interim subsidies – Reest en Wieden 2001 and Rijn en IJssel 2012

Figure 17: Timeline decision making process subsidies Reest en Wieden and Rijn en IJssel Figure 18: Preferences of actors involved

Figure 19: External Coordination water board Rijn en IJssel

Chapter 7: Comparative Case Analysis Table 9: Case scores on the different indicators

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1. Introduction

A soccer player that uses only half of the field, who barely runs towards the ball and who takes half an hour to reclaim the ball outside the lines.

There seems to be no great career ahead. Yet this example is very similar to the way the Netherlands is dealing with state aid for businesses.

- Gert Jan Koopman (DG Competition, European Commission) in Forum,23-01-‘14

Reclaiming of subsidies of 6,9 million euro from construction companies by the municipality of Leidschendam1 and the problems of funding of private football clubs by municipalities are just two examples of problems of municipalities that deal with compliance with EU state aid regulation. The regulations and rules surrounding state aid is an interesting case to study the possibilities and problems that surround the idea of European multi-level governance, because compliance with these rules is centred at the subnational levels, rather than the national level. This leads to an interesting focus point: the focus on compliance in a situation of Multi-Level Governance in an unitary state.

1.1 Focusing on Compliance

First, in European Union studies, there is mainly a (legal) focus on implementation of European regulation in the national legal systems of the member states (Borzel, 2003; Keading, 2007; Steunenberg and Toshkov, 2009). However, not only transposition of the directives may vary from country to country, the actual practice and enforcement of the rules set in the directive may diverge between member states (Versluis, 2007). How national and regional actors actual comply with the rules and put them into practice is much less studied (see for a discussion Versluis, 2003:9). The only examples are some studies on enforcement in individual countries (Koolhaas, 1990; Vos et al., 1993), and some comparative studies (Versluis, 2003; Versluis, 2007; Borzel, Hoffman and Planke, 2012). However, a lack of scientific focus on enforcement and compliance may lead to a too narrow view on the role of EU regulations, because actual practical implementation could have great differences within countries.

1.2 In a system of Multi-level Governance

Next to the needed focus on actual compliance, the role of compliance in the situation of multi-level governance and the effect of European Union regulation on the relationship between national and subnational state-entities is important. Therefore, research on the effect

1

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6 of internal vertical hierarchical relations within one single member state could give insight into the differentiated impact of organisation on compliance with European regulation. In her discussion on Democracy in Europe, Schmidt (2006) argues that the EU is a highly compound polity that tends to pull member states in a situation of ‘multi-level governance’. This is especially important for the Netherlands as a relatively centralist state, because:

‘the EU’s federalizing effects undermine the traditional concentration of power of the unitary structures of simple polities while it challenges organizing principles which assume that democracy is better served by the concentration of governmental power and authority, such that the government has the sole responsibility as well as the capacity to respond to citizens’ wants and needs effectively ‘for the people’. (Schmidt 2006: 34)

1.3 Research focus and method

In this respect, national vertical hierarchical relations are vital subjects to be studied when assessing actual compliance with European rules and regulations. In order to assess this assumption, my research question will be:

How do differences in procedures and changes in procedures on intergovernmental relations between the local authorities and the central administration affect compliance with European state-aid regulation?

This research question is studied using a comparative case study of six cases within the Netherlands. For each of the cases under study, a thematic narrative with a focus on the relationships between all actors has been conducted using process tracing methodology (George and Bennett, 2004). This research is based on a triangulation of both document analysis of all accessible policy documents and semi-structured interviews of the involved actors.

1.4 Scientific and societal relevance

This study integrates two strands of literature: the literature on compliance and the literature on multi-level governance. In the European Union, subnational entities, not only ministries become more and more responsible for the enforcement of European rules and regulations. The dealings of municipalities with European regulations sheds more light on (problems with) compliance and therefore makes a contribution to the existing compliance literature. Also, research on the effects of (changes in) national vertical relationships on compliance leads to more insight in how all national actors could improve compliance with European state aid

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7 regulation. In this way, best practices on how to deal with European state aid regulation on a national level could be identified.

1.5 Research outline

This thesis will consist of eight chapters. The second chapter will delve into the theoretical framework, which will consist of three parts. The first part will elaborate on the aspects of multi-level governance and the effect of this concept on the member states. The second part will focus on the literature on compliance with European regulation. The third part will deal with the national vertical relationships within member states. From these three strands of literature, expectations for research will be derived. Chapter three will outline the contextual framework of European state aid regulation relevant for this research. The fourth chapter will explain the research design of this thesis, elaborating on the rationale behind a comparative case study, the technique of process tracing, operationalization and data collection and analysis. The fifth chapter will give insight into the method of case selection. Chapter five will show the results of the six cases, giving a thematic narrative of each. The sixth chapter consists of the comparative case analysis, while the seventh chapter finalizes this thesis with a conclusion and a discussion.

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2. Theory

The problem statement introduced above focuses on two strands within the literature on European Union policy: the literature on enforcement and compliance and literature on multilevel governance. Both strands in the literature are related to the broader issue of the influence of Europe on its member states. This top-down approach on ‘Europeanization’ is sometimes defined as ‘processes of a) construction, b) diffusion and c) institutionalization of formal and informal rules, procedures, policy paradigms, styles, ‘ways of doing things’ and shared beliefs and norms which are first defined and consolidated in the EU policy process and then incorporated into the logic of domestic (national and subnational) discourse, political structures and public choices’ (Radaelli, 2003: 30). Scholars that focus on the ‘downloading’ processes of Europeanization look at ‘changes in policies, practices, preferences or participants within local systems of governance, arising from the negotiation and implementation of EU programmes’ (Marshall, 2005:672). Although Marshall proposes a focus on this downloading process in subnational entities, this has not yet been empirically assessed by him.

2.1 Part I: Compliance

The European Union is still very much a system that relies on the member states when it comes to compliance with and enforcement of EU legislation. Although the European Commission (EC) and the European Court of Justice are responsible for initiating and judging infringement procedures in cases of non-compliance, it is also acknowledged that the Commission has only limited resources to monitor and sanction non-compliance (Borzel et al., 2012: 456). Roughly speaking, most literature focus on two factors influencing non-compliance: inability and/or unwillingness (Borzel et al., 2012:459). Theories regarding unwillingness focus on the recalcitrance of both states and the enforcement authorities to monitor compliance and impose sanctions against free-riders and violators (Abbott et al., 2000; Horne and Cutlip, 2002; Borzel et al. 2010). Although most of this literature focuses on the (principal-agent)relationship between the states and the European institutions, this thesis could also hold for the relationship between the national and subnational actors.

In their study on the implementation of European Movable Cultural Heritage Policy in Bulgaria, Dimitrova and Steunenberg (2013:252) identified four different implementation outcomes. The four implementation styles identified were: incidental compliance, domestic adaption and two different parallel policies. First, when the European policy coincides with

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9 national preferences, there is no implementation gap (situation 1). Second, when European regulation is not in line with national preferences, but the European enforcement is strong, forced domestic adaptation of the rules will take place (situation 2). Third, when the official national policy is in line with European regulation, but the national implementer has different preferences, there will be an informal policy that deviates from the formal and European policy (situation 3a). Fourth, when the national preferences are not in line with the European policy and (European) enforcement is weak, both the domestic formal policy and the informal policy will deviate from the European policy and from each other (situation 3b). The last two models could be seen as noncompliance, since it is not in line with European policy. Therefore, the factors enforcement and national domestic preferences of both the national policy makers and the national implementers should be taken into account. In this situation, the actors are the national authority and the subnational authority. Since the enforcement of the national authority will already be discussed in the last expectation, I will focus on the preferences of the actors. In fact, in this case, there are two preferences to be taken into account: first, the preference to implement the policy2, and second, the preference to follow the national procedure correctly. Both preferences will lead to the willingness to comply with European policy.

E1: The preference to implement the policy correctly and the preference to follow the national procedure correctly of the subnational authority leads to willingness to comply.

Next to willingness, managerial theories focus on the inability of actors that cause non-compliance (Chayes and Chayes, 1995). Three factors are identified in the literature that could

2_{Or in this case: the preference to grant the state aid in line with European policy or not. The contextual}

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10 lead to inability to comply: ‘lacking or insufficient capacities, ambiguous definitions of norms and inadequate timetables’ (Borzel et al., 2012: 459, also Chayes et al., 1998; Jacobsen and Weiss Brown, 1995). Focusing on the vertical hierarchical relationships within the member states, this could mean that some organisations have characteristics that makes compliance with European regulation more difficult. In his study on Europeanisation of subnational entities, de Rooij (2003:172) discusses several structural factors in Dutch entities that explain the capacity to respond to European issues, namely, the size of entity, the social-economic position of a municipality and whether the subnational entity is a province or not. Following Borzel et al (2012) and de Rooij (2003), this leads to six indicators of inadequacy to comply; insufficient capacities, not enough knowledge to interpret the ambiguous norms, inadequate timetables, size, social-economic position and being a province or not (table 1)

Table 1: Indicators of inability to comply

Indicator Measurement

Insufficient capacities Amount of personnel

Not enough knowledge to interpret the ambiguous norms

Education of personnel and presence of lawyers

Inadequate timetables Strict deadlines

Size of subnational authority Size of the budget (de Rooij, 2003:92)

Social-economic position of authority Available income per inhabitant (de Rooij, 2003:93)

Province or not Kind of subnational authority

This leads to the following expectation:

E2: Presence of indicators mentioned in table 1 in subnational authorities will lead to inability to comply with European policy.

2.2 Part II: Focusing on national vertical relationships

One of the factors that has been mentioned in the literature is what has been broadly called the ‘goodness-of-fit’ hypothesis (Borzel and Risse, 2003; Knill and Lenschow, 1998; Borghetto and Franchino, 2012). In this literature, the implementation and compliance is ‘determined by the degree of fit between EU legal obligations and either existing national paradigms and administrative traditions’ (Borghetto and Franchino, 2012; 761). Therefore, the (success of) compliance of actors with that regulation is influenced by the degree of (mis)fit between the divide of tasks and responsibilities of and between national and subnational authorities set out in the European regulation and the existing relationship between those actors. There are several expected relationships between EU legal obligations and existing administrative

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11 traditions. Whereas Knill and Lenschow (1998) argue that national traditions in the form of vertical administrative competences may hinder effective compliance if there is a ‘misfit’ with the co-ordination structures set out in EU legislation. Others have argued that misfit is not the central issue, but the number of institutional veto points (at the subnational level) that the central governments have to face to comply with the EU legislation (Haverland, 2000). Therefore, misfit of coordination structures may not lead to only finding noncompliance, but to finding a more heterogeneous compliance-response by subnational actors.

The (mis)fit of organizational structures, practices and traditions of municipalities could be found in many areas. Several factors are mentioned that affect the dealings of municipalities with European regulation. Some focus on the relationship of municipalities with other actors such as the ministries and advising organisations (Hoetjes, 2003), while others focus on the relationship between municipalities and EU policy (de Rooij, 2002; Hoetjes et al., 2003; Guderjan, 2012). This body of literature leads to the following expectation:

E3: A division of tasks and responsibilities of and between national and subnational authorities for the execution of European policy that reflects more the existing relationship between the national actors in national issues leads to more compliance.

This probable relation is based on the ‘goodness-of-fit’-literature that assumes that compliance will rise if the organisation of the execution of European policy is in line with the existing relationship between national and subnational authorities.

2.3 Part III: Multilevel governance

How does the focus on subnational actors changes the expectations regarding the compliance of actors with EU regulations? While the focus of Versluis is concerned with differences in compliance with EU rules between countries, the differences within countries is also of important concern. In the current situation, the European Union is very much a system of multilevel governance: all levels of government, from municipality, subnational, national to international levels play a role in the formulation, transposition and enforcement of European Union rules and regulations (Asare et al., 2009). The concept of multi-level governance has already been used for some decades in European Union studies (Hooghe, 1996; Bache and Flinders, 2004). One of the main scholars focusing on the concept of multilevel governance is Schmidt (2006:227) in her discussion of the European Union as a highly compound polity. The term ‘high compound’ means that the European Union is a polity with blurred boundaries

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12 of formal and informal sources of authority of government actors at various levels (Asare et al., 2009: 84). In other words, ‘the focus is on the balance of authority among multiple governmental levels rather than an ‘either-or’ struggle [for authority] between only two’ (Asare et al., 2009: 85). Therefore, rather than only focusing on differences between countries, one should research the impact of the EU within one country. Therefore, the literature on multi-level governance could give more insight into the effect of hierarchical structures within a state on compliance with European regulation. As has already been mentioned in the introduction, Schmidt (2006:43) argues that the European Union’s federalizing effects could have a profound effect on the Netherlands as a unitary state. In other words, the idea is that a more centralized, and therefore a more hierarchical organization between the central and the subnational level would lead to more compliance. This leads to the expectation that a more hierarchically structured relation between the national and the subnational authority will lead to more compliance with European regulation by subnational authorities. This thesis is the most important to assess. It could be assessed, because the ‘wet Nerpe’ was introduced in 2012 (Staatsblad 2012, nr. 245). Already in 2004, the Dutch Cabinet emphasized that additional monitoring tools would be desirable in order to ensure compliance with European regulation by public entities such as provinces and municipalities (Kamerstukken II, 2003/04, 21 109, nr. 138). Following this, the ‘wet Nerpe’ was introduced. This law is meant to ‘give the government a number of tools to promote compliance with European regulation by all organs and agencies for which the State Netherlens may be addressed by the European Commission (hereinafter: EC) and the Court of Justice of the European Communities if these organs and agencies do not comply with Community law’( Kamerstukken II, 2009-2010, 32 157, nr. 3:2). Among other instruments, the Minister has gotten the power to instruct a subnational government to comply, and even to act himself to fulfill the legal obligation of the subnational authority to the European Union. The new law therefore, could lead to more hierarchy in the relation between the subnational authorities. The refined expectation is in this case:

E4: The new law ‘Nerpe’ leads to a more hierarchically structured relation between the national and the subnational authority, which will lead to more compliance with European regulation by subnational authorities.

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13 2.4 Part IV: Wrapping up

Concluding, a structure that leads to more oversight of the ‘higher’ authorities could lead to more compliance. The other expectations focus on indicators of goodness-of-fit of the hierarchical relation between the central government and the subnational authority (E3), the (in)ability of the subnational authority to comply with European regulation (E2) and the willingness of the subnational authority to comply with European regulation (E1). Inability could be seen as an intervening variable between the preferences of the subnational actors and the actions to comply with European regulation. These expectations form the basis of the research on the effect of national vertical relationships on compliance with European regulation. I have tried to visualize these expectations in figure 1. These expectations and the subsequent visualization are used to make a so-called coding scheme to analyse the interviews and the documents. This will be further discussed in the research design, chapter four. The contextual framework will be outlined in the next chapter.

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3. Contextual Framework: Compliance with State Aid regulation in the Netherlands

As van Gerven et al. (2014:4) argue, the Netherlands is an example of what Schmidt (2006) calls ‘a simple polity’, because the Netherlands is an unitary state with no federal features. Therefore, the effect of different responsibility design of European policy should have a bigger effect on the Netherlands than on other (more federalist) countries in Europe, because ‘Schmidt’s theory implies that EU policy should have a comparatively greater impact on simple polities than on compound ones, precisely because of their lack of fit in terms of institutional arrangements’ (Van Gerven et al., 2014:4).

The policies regarding the (notification of) state aid have been chosen because this European policy field has a complicated structure of task and responsibility lines between the European level (mainly the EC), national and subnational level.

3.1 European State Aid Regulation

The rationale behind the European state aid regulation is that subsidies and other aid from public entities should not have a distorting effect on trade and competition. Therefore, the European Treaty generally prohibits state aid measures at the national level, leaving open certain options in the exemption clauses within the Treaty and in the complex secondary legislation. Member states are required to notify their aid measures in advance and the European Commission has the sole competency to reject or approve these measures (Minnaard, 2012:7). From the 70s onwards, the European Commission has dealt with the issue of state aid at the national level. In the famous case of Germany against the Commission, the European Court of Justice decided that it was within the powers of the Commission to demand the reclaim of state aid that was in violation with the internal market (ECJ 1973, No. 70/72: 813 (Commission v Germany)). The European state aid regulation is mainly based on articles 107, 108 and 109 of the European Treaty that prevent member states to take certain measures that could distort competition in the internal market. In short, state aid is prohibited if (art. 107, par. 1 TFEU);

1. There is a measure implemented by a member state, or a measure that is financed with public resources.

2. This measure only benefits certain companies or productions.

3. This measure leads to a benefit that could not be obtained through the market. 4. This measure distorts or threatens to distort the competition.

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15 However, if the aid measure fulfils these cumulative criteria, but is less than €200.000,-, is a Service of General Economic Interest that covers only necessary support, or it falls within one of the specific block exemption regulations, the state aid is deemed not incompatible with the internal European market (Minnaard, 2012:25).

Both measures that fall within the criteria for state aid and measures that are deemed compatible should be reported to the European Commission. For state aid measures that fall within one of the block exemptions, the responsible public body should only report to the European Commission that they will implement this aid measure (based on the General Block Exemption Regulation and the SME Agricultural exemption). State aid measures that not fall within the exemption should comply with the notification procedure, meaning that public bodies should notify the European Commission of their intentions of implementing a state aid measure. Until the Commission decides that the state aid measure is compatible with the internal market, the public body is not allowed to execute the measure (contrary to measures that fall within one of the exemptions). However, the national procedures on how the national public bodies should report to or notify the Commission differs between and within countries. 3.2. State aid notification in the Netherlands

With this respect there are multiple procedures within the Netherlands for the notification of state aid to the European Commission. There are three major vertical relationships for the notification of state aid:

1. Report (‘kennisgeving’) through ‘EuropaDecentraal’ by a province or municipality 2. Notification (‘melding’) through the ‘Coordinatiepunt Staatssteun’ at the Ministry of

Internal Affairs by a subnational authority.

3. Notification or report through the Ministry of Infrastructure and Environment by a water board.

Officially, the subnational authorities are responsible themselves for the notification of state aid by the European Commission, but this happens within the Netherlands through these bodies. Notifications (meldingen) should be sent through the Coordinatiepunt Staatssteun of the Ministry of Internal Affairs. Reports (meldingen) of subsidies that are officially exempted from the notification obligation (but still could constitute state aid) should be reported to the European Commission through EuropaDecentraal, the organisation supportive for the subnational authorities such as provinces and municipalities. Third, water boards should notify and report through the Ministry of Infrastructure and Environment. Last, if any

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16 difficulties arise, or it possibly constitutes state aid at the Ministry level, the state aid notification is discussed within the Interdepartementaal Steunoverleg (situated at the Ministry of Economic Affairs). However, since this constitutes no national vertical relationship, the information exchange within the Interdepartementaal Steunoverleg (mainly for possible state aid at a Ministry) will not be under investigation in this thesis.

In order to study these different notification procedures, a comparative case study is conducted. The research design will be elaborately discussed in chapter four.

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4. Research design

In order to study the differentiated impact of compliance in a situation of Multi-Level Governance within one member state, a comparative case study design within one member state will be conducted. The research design is based on a qualitative approach by using data from written documents from all actors and interviews with the actors on the national and subnational levels. The next paragraphs will elaborate on this.

4.1. Comparative case study

A case study approach has been advanced for research purposes were it was necessary to enable causal inference and systematic theory building (Ragin, 1987; George and Bennett, 2005). In order to have variation on the critical conditions, but still maintain a holistic view, case studies are deemed very appropriate (Ragin, 1987:x). In this way, the researcher is able to see the whole process with all actors and to fully incorporate contextual conditions into the research. With ‘qualitative data one can preserve chronological flow and therefore enable the researcher a more open view on which events and which strategies led to which outcomes’ (Miles and Huberman, 1994: 1). To open the ‘black box’ of compliance in an area of shared competency lines and complex notification procedures, a qualitative comparative case study is best suited.

In this case, variances on the different notification procedures are theoretically driven, whereas the selection of both notified and non-notified aid measures is necessary to achieve variance in the dependent variable. In this case non-notification is seen as noncompliance. The precise method of case selection will be explained in the next chapter (5). By focusing on two cases per notification procedure, there is variation of research within a procedure, as well as between procedures. In this way, the study becomes more ‘robust’ (Yin, 2009:53).

4.2 Research method and operationalization

In order to study the differences in compliance with different vertical hierarchical procedural relationships, one should focus on the three different competency-lines. With this research, the expectations will be assessed. However, because of the relatively understudied nature of the subject, the goal is more to investigate the experiences of all actors involved the functioning of the different procedures. Therefore, it is more appropriate to talk about ‘expectations’ that form the basis of so-called ‘configurational thinking’ (Blatter and Haverland, 2012: 80). Blatter and Haverland (2012:18) understand this as appropriate for studying a process where ‘there are strong interaction effects between specific factors and

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18 contexts’. However, to be able to actually identify causal chains, because ‘to identify the process, one must perform the difficult cognitive feat of figuring out which aspects of the initial conditions observed, in conjunction with which simple principles of the many that may be at work would have combined to generate the observed sequence of events’ (Goldstone, cited in: George and Bennett, 2005: 206). This ‘cognitive feat’ could be initiated with ‘process-tracing’, a method that ‘attempts to identify the intervening causal process – the causal chain and causal mechanism – between an independent variable (or variables) and the outcome of the dependent variable’ (George and Bennett, 2005: 206). In other words, with more cases, the researcher ‘can begin to chart the repertoire of causal paths that lead to a given outcome and the conditions under which they occur’ (George and Bennett, 2005: 207). Using this approach it is possible to investigate if and under which conditions national vertical hierarchical procedural relationships affect compliance with European regulation.

This research focuses on the three causal-process observations identified by Blatter and Haverland (2012: 111). First, in order to identify the most important structural conditions and to identify the most important steps, a ‘comprehensive storyline’ has to be made. Second, the research will be concentrated around ‘smoking guns’. Blatter and Haverland (2012: 116) use this term for ‘an observation that presents a central piece of evidence within a cluster of observations, which together provide a high level of certainty for a causal inference’. These observations are centred around the behaviour and capabilities of actors (Blatter and Haverland, 2012: 117). Third, the motivations of actors are studied by focusing on so-called ‘confessions’ by combining empirical information with explicit statements of actors both in documents and in interviews.

4.3 Data Collection and Analysis

In order to study the processes described above and following Versluis (2003), I have proposed to conduct my research by analysing legal documents, sending questionnaires and conducting interviews at two levels. I will conduct semi-structured interviews using open-ended questions, ideally multiple interviews per level. Also, actors’ view on the relationship with the national (and European) actors and whether this has changed will be researched with open ended questions. Because of the possible sensitive nature of questions about ‘compliance’, the questions will be more framed around the dealings with possible state aid related issues, their feelings/opinion about state aid, whether they have experienced problems. This design might gain the most insights in the complex field of compliance with state aid regulations. In this way, semi-structured interviews are conducted using a topic list (van

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19 Thiel, 2007: 107). Next to interviews, document analysis is conducted. In this way, it is possible to corroborate and augment the evidence that is found in the interviews (Yin, 2009: 103). Therefore, systematic searches for relevant documents are vital to this research. In this way, a triangulation of multiple data sources is made possible. This triangulation is important to eliminate measurement error, but also because case studies are really vulnerable for questions of quality and trustworthiness of the empirical findings (Blatter and Haverland, 2012: 105).

Therefore, the interviews and documents will be analysed using a coding scheme (van Thiel, 2007: 161). The coding scheme of this interview is shown in appendix three. Because of the deductive nature of the research, preliminary codes will be used. These are taken from the expectations. For analysing the coding, the technique of ‘pattern-matching’ will be used (Yin, 2009:136). In this way, it will be assessed whether patterns identified in the literature are seen in practice.

4.4 Reliability and Validity

As with every research, case study research should be assessed for its ‘trustworthiness’, namely its reliability and validity. Although some researchers argue that these concepts are not applicable to qualitative research, others argue that the goal of finding plausible and credible explanations is an universal research goal (Yin, 2009:40). The reliability of the study is enhanced by its replicability by explaining clearly the steps made in the case selection, data collection and data analysis (Yin, 2009:119). One of the examples is the coding scheme for the interviews. The validity, or the accuracy of measurement and the generalizability are guaranteed by a careful operationalization and open coding scheme and a ‘possibilistic’ approach to generalization (Blatter and Haverland, 2012:82). This possibilistic generalization is aimed at ‘drawing conclusions toward the set of causal configurations that make a specific kind of outcome (Y) possible’ (Blatter and Haverland, 2012: 82). This research is not set up to draw hard conclusions for the entire population of cases, although the causal configurations identified in the case studies could be relevant for the other cases in the population.

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20

5. Case Selection

A good case selection is vital for a qualitative case study (Yin, 2009:25). Therefore, it is important to have a thorough and rigorous case selection. In order to make sure that there is a sound case selection, use is made of the database on state aid from the DG Competition of the European Commission.3 All reports and notifications from the Dutch authorities from 2000 are reported here. All in all, the Netherlands had 935 cases listed in the database, of which 64 cases were at first non-notified aid measures from Dutch authorities. In order to build my case selection, a few selection criteria are set up.

5.1 Selecting only investigation cases

If a state aid measure is reported by the Permanent Representative of the national member states, the Commission has a few choices. As can be seen in chapter three, the Commission could already decide in the preliminary investigation that it ‘decides not to raise objections’ on the national assessment that the aid is not incompatible with the internal market, or even that there is even no aid within the meaning of the European rules. If that is the case, the European Commission does not delve further into the matter. The majority of Dutch cases fall into this category.

However, in some instances, the European Commission has serious doubts that the notified state aid measures do not fall within the limits of the European rules. That decision leads to the formal investigation procedure, where the member state and interested third parties have one month to submit comments. The Commission can give three possible verdicts: the positive decision (measure is no aid or compatible with the internal market), conditional decision (compatible, but subject to conditions), and the negative decision (incompatible and cannot be implemented or has to be recovered). This research will focus on six cases in which the European Commission has decided to launch a formal investigation procedure. In this research, only investigation cases will be chosen, since these cases are uncertain regarding compliance. An investigation of the European Commission will necessarily lead to contact of the central government with the subnational government and therefore reveal any questions of coordination that arise or already have risen. Since clear-cut cases will not have any questions regarding compliance or noncompliance, it is likely that there has been no or hardly any contact between the governmental levels. These non-investigation cases are therefore not suitable for my research purpose.

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21 5.2 Selecting both notified and non-notified cases

Also, the decision was made to select both notified and non-notified aid measures. Although there are researchers critical of selecting cases based on variation of the dependent variable, this selection criterion avoids bias in explaining only non-notification or notification in the various procedures (George and Bennett, 2005:23). Non-notification is in this research seen as non-compliance, since the European Commission rules clearly state that the European Commission has the sole competency to assess the congruence of aid measures with the European regulations surrounding state aid. Therefore, from each of the procedures, one case will be chosen where the European Commission was notified and one case will be chosen where the European Commission was not notified in advance and decided to open the procedure themselves to investigate whether the (sub)national aid granted was according to the European state aid rules. However, this case selection could clearly have a downside. As the notified cases (871) clearly exceeds the notified cases (64), the importance of non-notifications and the relationship between factors identified in the non-notification cases could be overstated (George and Bennett, 2005:22). However, this selection bias is less important in this type of case study research, because this research is used to map out the decision making processes, reconstruct decisions and identify the causal processes. In this way the causal links could be identified, but there could be made no inferences to the actual significance of occurrences in the population of all 935 cases. As George and Bennett (2005:84) argue, it is less a problem if the researcher is careful not to ‘overgeneralize’ his cases.

5.3 Case selection

In order to study the three different procedures, two cases per procedure will be selected. This case selection is by no means meant to apply the sampling logic of surveys where the selection is based on the identification of the entire population and then statistically selecting a specific subset. As Yin (2009:56) emphasizes, this logic would be misplaced because this method assumes studying the prevalence of phenomena and it would need to take into account all possibly relevant context factors, yielding an impossibly large number of cases. Therefore, the cases are selected on the dependent variable, namely whether the aid measures were notified or not to the European Commission. However, ‘accessibility’ is an second important factor when selecting cases (Blatter and Haverland, 2012: 102). In the table below, the case selection is depicted in table 2 (next page).

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22 Table 2: Case selection

Procedure Compliance Case Commissionnumber

Report through EuropaDecentraal

Yes Citynet Amsterdam: investment by the city of Amsterdam in a fibre-to-the home (FTTH) network

C53/2006

Report through EuropaDecentraal

No Subsidy by the Province of Flevolen

to Farm Dairy C 45/08 Notification through the

Ministry of Internal Affairs

Yes Aid by municipality Haaksbergen to MARKT Passage Plan Project

C33/2005

Notification through the Ministry of Internal Affairs

No Sale of len below market price by the municipality Leidschendam-Voorburg– Voorburg

SA.24123

Notification/report through the Ministry of Infrastructure and Environment

Yes Subsidy Waterboard Aa and Maas to Heineken

N 157/2002 -

Notification/report through the Ministry of Infrastructure and Environment

No Other ‘anti-opt-out subsidies’ during the interim period

Not reported

In the next chapters, the results of the case studies will be reported. First, all cases will be elaborated on individually, focusing on the ‘comprehensive story lines’, the ‘smoking gun’ observations and the ‘confessions’.

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23

6. Results

Given the case selection as stated in the previous section, I will focus in this chapter on six cases. These cases will be grouped per procedure. Therefore, I will first focus on the reporting procedure that has been moved to EuropaDecentraal from 2012 onwards, elaborating that with the cases concerning CityNet Amsterdam and the subsidy to FarmDairy of the province of Flevoland. Second, I will study the notification procedure that has been guided by the Ministry of Internal Affairs, elaborating on that procedure by reviewing the cases of the Marktpassageplan of the municipality Haaksbergen and the project Damcentrum of the municipality Leidschendam-Voorburg. Last, I will review the notification and reporting procedure for the water boards that is guided by the Ministry of Infrastructure and Environment, focusing on (the problems surrounding) the anti-opt out scheme.

First, it has to be stressed that the area of state aid is a complicated area to study and that the procedures sometimes seem like a tangled web that are difficult to untangle. Second, studying state aid issues at the local level by no means implies that the central authorities are not in danger of providing unlawful state aid. It was stressed that it is not always convenient that there is no central coordination point for all Ministry departments (Respondent Ministry of Internal Affairs). However, since the focus of this research lies on the effect of coordination of European rules on a unitary state, the research is targeted to the coordination of local level issues. For the central government, the Interdepartementaal Steunoverleg (ISO) is set up in 1999 and formally established in 2003 to align and coordinate the Dutch position on new Community legislation in the state aid field. Also, more operational aspects are discussed in the council (Kamerstukken II, 2003–2004, 21 109, nr. 138:6). The Ministry of Economic Affairs chairs the council and acts as the secretariat. The representatives of the local bodies, namely the Association of Netherlands Municipalities (VNG), the Provincial Council (IPO) and the Dutch Water Authorities (UvW) are also represented in the council, next to the representatives of the Ministries (Staatscourant 2006, nr 35:19). In 2011, the decision was formally made to maintain the structure of the ISO whereby the memorandum stressed ‘the premise that each governing body is responsible for the assessment of the aid character of his (support) measures and notification thereof’ (Staatscourant 2011, nr. 2695). The fact that the council was not actively used by the representatives of the local authorities became clear in the so-called Code Intergovernmental Relations where it was said that ‘provinces and municipalities will more actively exploit the potential of their membership of Dutch EU Consultation forums, such as the Working Group on Assessment of New

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24 Commission Proposals (..) and the Interdepartmental State Aid Council (ISO)’ (Ministerie van Binnenlandse Zaken, IPO and VNG, 2005:22). However, since the same Interdepartmental agreements that established the ISO also formally arranged that the notifications and reports of the local governments are the responsibility of respectively the Ministry of Internal Affairs and the (at that time) Ministry for Transport and Water management, these fora will be studied (Staatscourant 2006, nr 35:19).

In the next sections, first the official procedure will be discussed. Then, the case description including a timeline will be depicted. Further, the internal coordination (with the preferences of the involved actors), the capacity of the organisations involved (ability) and external coordination (goodness-of-fit procedure and oversight) will be discussed. The expectations will be assessed in the comparative case analysis (chapter seven).

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25 6.1 Report through EuropaDecentraal

The knowledge centre EuropaDecentraal was established in 2002 by the Ministry of Internal Affairs, the Association of Netherlands Municipalities (VNG), the Provincial Council (IPO) and the Dutch Water Authorities (UvW) and is substantially funded by all four organisations (Kamerstukken II 2003–2004, 21 109, nr. 138: 8). The main task of the organisation is to ‘inform and advise on European law and policy and to make it understandable for (local) governments’.4 State aid is one of the policy areas EuropaDecentraal advises on. The establishment of the foundation was advised by the ICER in order to strengthen the knowledge of European law both at the local and the central level (Kamerstukken II 2003– 2004, 21 109, nr. 138: 8). This effort to enhance the knowledge of local authorities seems partly motivated by the fear at the central level for the consequences of non-compliance: The Government and the local authorities have distinguishable responsibilities, but also need each other for a strong Netherlands in Europe. Within the Dutch administrative relations, municipalities and provinces are themselves responsible for the obligation to comply with European law (e.g. be Europe Proof). A major focus point is improving information and knowledge of the relevant EU rules by directors and officers of local authorities. This is also an essential interest of the State, because the Dutch State may be held accountable by the European Commission for the consequences of inadequate compliance with EU rules on local level. Therefore, I find it desirable to continue to offer structural financial support to EuropaDecentraal, which provides information to local authorities on the relevant European regulations (Minister of Internal Affairs, in: Kamerstukken II, 2007–2008, 31 200 VII, nr. 4: 2).

In the first years, EuropaDecentraal was only responsible for advising on the European legislation concerning state aid. The first evaluations of the knowledge centre were very positive and the evaluation stated that this caused that the ‘clients’ of EuropaDecentraal reported that the organisation had built a position of trust with them. Also, it was felt that the organisation was particularly good in offering information and building knowledge (Lindblom, 2004:8). The organisation is therefore mentioned as one of the main places were local governments gather their information.

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26 Source: Lindblom, 2004: 8.

In one of their guides, the knowledge centre points out to municipalities that aid that falls within the scope of the European block exemption regulations doesn’t have to be notified, but do has to be reported to the Coordination point State aid at the Ministry of Internal Affairs (VNG, EuropaDecentraal and Ministerie van Binnenlandse Zaken, 2006:52). In another guidance, it is stressed that local governments should be aware of the reporting obligation at an early stage in the decision making process, since the report procedure takes about four to six months. Also, gathering advice from EuropaDecentraal, the coordination point at the Ministry, or even an informal conversation is strongly recommended (Ministerie van Binnenlandse Zaken and EuropaDecentraal, 2008:85). From March 2012 onwards, the organization also is officially the contact point for municipalities and provinces for these reports to the European Commission (Kamerstukken II, 2012–2013, 33 400 VII, nr. 2: 18). The Ministry of Internal Affairs is still officially responsible for these tasks (Kamerstukken II, 2012–2013, 33 400 VII, nr. 2: 18). This change has been implemented because of the significant growth in reports by subnational authorities (respondent former EuropaDecentraal). Also, the assigned personnel at the Ministry has declined from four FTE to two FTE in the last years, leading to an overflow in request accompanied with not enough capacity (Respondent 1 Ministry of Internal Affairs). It is emphasized that the Ministry is still officially responsible, but because of the close ties between the Ministry and EuropaDecentraal, it is not seen as a problem (respondent 2 Ministry of Internal Affairs).

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27 However, although the knowledge centre advises on the European requirements surrounding state aid, and the Coordination point is responsible for the coordination of issues from the local authorities to the European Commission, it is stressed that the local authorities have their own responsibility to comply with Community law. Local governments should make sure that their own organisation is arranged in a matter that timely attention exists for the quality and legality of the decision under question (Kamerstukken II, 2003– 2004, 21 109, nr. 138: 8). However, multiple respondents in the evaluation of EuropaDecentraal stress that there is lack of knowledge and lack of priority in their own organisation (Lindblom, 2004:6). Also, some of the local representatives are sceptical of the role of the central government with regard to these issues, since ‘there are indeed differences in interests’ and ‘it could be for local governments more interesting to gather their information directly in Brussels’ (Lindblom, 2004:10). In this area of tensions between different organisations with their own tasks and responsibilities, compliance with state aid regulation becomes an interesting field of study.

6.1.1 Case 1 – CityNet Amsterdam

On 20 September 2006, the European Commission notified the Netherlands that they would launch an official investigation procedure on the basis of article 88 of the European Treaty with respect to the programme ‘CityNet Amsterdam’. This programme envisaged in an investment by the municipality of Amsterdam in a fiber access network. Already before this date, the municipality had contact with the European Commission and the Ministry. However, since the European Commission could not rule out that the investment constituted state aid towards Fiber Network Amsterdam, her shareholders, BBned and the operators who would use the network, the European Commission launched the official investigation procedure (Europese Commissie 17 december 2007, Pb. EU. 2007/C 134/06).

The measure under investigation constituted the formal request of the municipality of Amsterdam that their investment in a Fiber-to-the-Home telecommunication network (CityNet Amsterdam) did not constitute state aid, in order to obtain legal certainty that the investment was compatible with the European regulations concerning (unlawful) state aid. The project CityNet should lead to the access of 37 000 households to a glass-fiber network. The network would be built by the organisation Glasvezelnet Amsterdam, whereby the municipality would own one-third of this organisation. This organisation would own the network and rent out the work to other companies (as is seen in the figure below).

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28 Source: Commission Decision 17 December 2007, (2008/729/EG), Pb. EU L. 247/27).

Eventually, on the 11th of December 2007, the European Commission decided after the formal investigation procedure that the investment of the municipality in Glasvezelnet Amsterdam (GNA) did not constitute state aid. Since the municipality was investing in GNA in the same manner as the other private parties and the pre-investments were repaid, the European Commission concluded that the municipality acted as a private investor in a market economy (Europese Commissie, 17 december 2007, 2008/729/EG, L 247/28).

Both before and after the formal investigation procedure, coordination within the municipality and between the municipality and other actors was abundant. A short recap of the decision making process is shown in the timeline on the next page.

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29 Figure 2: Timeline decision making process CityNet Amsterdam

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30 6.1.1.1 Internal Coordination

Concerning the bureaucratic decision making process, it is also visible that the Amsterdam civil service was already aware of state aid concerns. The alderman tried to reassure the council that there should be no concerns, because there was a very close internal look on what was allowed and what not. Also, several experts were consulted and the municipality was ‘more Catholic than the Pope’ in this respect (gemeenteraad Amsterdam, 2004:65). The European dimension of municipality operations was visible in Amsterdam, as the brochure ‘European strategy Amsterdam’ (Europastrategie Amsterdam) showed. In this pamphlet, the municipality emphasized the importance of being in check with European guidelines, such as the state aid regulation. Being part of that ‘is internal agreements concerning the needed (legal) check whether European regulation are met and if necessary the central control on subject like state aid, investigations of the European Commission or OLAF etc’ (gemeente Amsterdam, 2012:17). The brochure further mentioned that a state aid check (‘staatssteuncheck’) was desirable with respect to subsidies and financial benefits to firms, given the stricter audit (accountantscontrole) on this subject. The broadband deployment was mentioned as one of the dossiers where Amsterdam faced ‘an European dimension’ to the issue, that needed a targeted capacity utilization (gemeente Amsterdam, 2012:7).

The fiber access network CityNet was not the only project in which state aid issues where mentioned in the internal policy documents. In 2006, with the decision making process of CityNet ongoing, the internal civil service advised against subsidizing a wireless network referring to the fiberaccess networkproject. Although it would be legally conceivable that the municipality would act as a market investor like in the CityNet project, the wireless network was already done by others without the help of the municipality. Therefore, the legal service doubted whether it would be in line with state aid rules (gemeente Amsterdam, 2006:3). Also, state aid rules govern the decision making concerning land development. The municipality emphasized that it would make sure a land price was asked according to market conditions (gemeenteraad Amsterdam, 2014:6). Although the (property) policy advisors of the Development Company (Ontwikkelingsbedrijf) of the municipality were responsible for state aid in that area, normally this was being handled by the legal affairs department, a part of the City Administration, and the department of Economic Affairs. The City manager was mentioned as the ‘leader’ for the engagement of Amsterdam in Europe (gemeente Amsterdam, 2012:21).

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31 What can be seen from the internal political decision making process concerning CityNet Amsterdam, is that the municipality of Amsterdam was already aware at an early stage in the process that state aid questions could arise. The alderman responsible for the project emphasized in the debate on October 6, 2004, that he considered that:

‘In this project, you do not need to go to Europe, but I approved a review. Consultation showed that people in Europe were positive towards the model chosen. Now we take the formal way via the Hague to Europe, in which we emphasize that there is no State aid. I expect a positive judgment at the end of this year.’ (raadscommissie VVI-ZLIC, 2004:29).

However, the representative of the cable companies was concerned, because the municipality guaranteed that the project was in line with state aid rules, but the letter of the European Commission of July 22 clearly showed doubts and that at the least it was ‘not a neutral or friendly letter’ (raadscommissie VVI-ZLIC, 2004:31). Responding to one of the council members who was concerned the government could forbid the municipality to start the project, the Alderman said that he hoped that the government would not ‘bother’ him, because there were a lot of private parties interested in the project (raadscommissie VVI-ZLIC, 2004:38). Later, when the discussion regarding asking formal approval to the European Commission was ongoing, the alderman emphasized that:

‘Should we just wait until we have received that paper from Brussels? No, at first because we don’t really need that approval. In addition, the procedure in Brussels takes very long. It could mean that we have to sit and wait for a letter from Brussels a year, while we already know what the letter will say. Meanwhile, we cannot move forward.’ (gemeenteraad Amsterdam, 2004:62).

In this response, it is visible that the political pressure to move forward with the project was high. The alderman stated later that the risk of delay would be ‘extremely disappointing’ (gemeenteraad Amsterdam, 2004:63). Later, it was stated in a council meeting regarding moving forward with the project that ‘the risk in the area of state aid rests with those have received state aid’ (raadscommissie, 2005:8). Therefore, in the council meeting of the 22th of December 2005, the council agreed to the nomination of the Board to establish Glasvezelnetwerk Amsterdam BV and invest 6 million euro into the CityNet project (Gemeenteblad afd. 3A, nr. 293/729). Interestingly, this process started with a direct letter from the municipality of Amsterdam to the European Commission with the request to confirm that the project CityNet was in line with European state aid rules. However, the European Commission responded to the Permanent Representation of the Netherlands, stating that ‘unfortunately, such a request cannot be met. If an authority wants to obtain certainty, a measure has to be submitted by means of a formal notification to the Commission’ (gemeenteraad Amsterdam, 2004: 52). This meant that the municipality was not able to

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by-32 pass the central government, but should follow the official procedure. In the meantime, the project already started, although the approval of the European Commission was only received on the 11th of December 2007, almost two years after the start of the project.

6.1.1.2 Preferences

Focusing on the preferences of the municipality to grant the aid (whether or not in line with state aid regulation), multiple remarks can be made studying the internal coordination. For one, the municipality actors were concerned with making sure that the project would start, but with the approval of the European Commission. However, they did start with the project before the actual approval was obtained. The Ministry is hesitant in general with asking the European Commission for certainty that the project does not constitute state aid. They emphasized: ‘if you report it to obtain legal certainty, you have to be very sure of yourself, because before you know it, the Commission, and this usually happens, will say: I have yet discovered one piece that constitutes state aid’. (Respondent Ministry of Internal Affairs). Also, there was an central government advice from the Interdepartmentale Commissie Marktordening (‘Interdepartmental Commission concerning Market Organization’ or short ICM) (Permanente vertegenwoordiging, 2004b). The ICM wrote the memorandum ‘Recommendations Broadband activities Public organisations (Interdepartementale commissie marktordening, 2004). In these recommendations the organisation stated that investments that are in line with market conditions do not require notification to the European Commission (Interdepartementale commissie marktordening, 2004:46). Activities of municipalities that are more favourable to private parties than according to market conditions should be notified through the coordination point state aid at the Ministry of Internal Affairs who will perform a marginal test, send it through to the Permanent Representation and which will in turn notify officially to the European Commission (Interdepartementale commissie marktordening, 2004: 47). The Interdepartmental Commission advised to notify as soon as possible, because the procedure would take approximately 4 to 6 months (Interdepartementale commissie marktordening, 2004:58). The report to Parliament in November 2005 regarding the development of broadband networks refers to the notification of the municipality of Amsterdam and also states that there is a guideline for municipalities ‘Well on track with broadband’ (Kamerstukken II, 2005 – 2006, 26643, nr. 78:14). This guide was written by organisation EuropaDecentraal commissioned by the Ministry of Internal Affairs, the Ministry of Housing and Environment, and the representatives of municipalities and provinces VNG and IPO (EuropaDecentraal, 2005).