17.11.2006 _EN | Official Journal of the European Union L 318/17 COMMISSION DIRECTIVE 2006/111/EC of 16 November 2006 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (Text with EEA relevance) (Codified version) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular Article 86(3) thereof, Whereas: Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (') has been substantially amended several times (3). In the interests of clarity and rationality the said Directive should be codified. Public undertakings play a substantial role in the national economy of the Member States. Member States sometimes grant special or exclusive rights to particular undertakings, or make payments or give some other kind of compensation to particular undertakings entrusted with the operation of services of general economic interest. These undertakings are often also in competition with other undertakings. Article 295 of the Treaty provides that the Treaty is in no way to prejudice the rules in Member States governing the system of property ownership. There should be no unjustified discrimination between public and private undertakings in the application of the rules on competition. This Directive should apply to both public and private undertakings. The Treaty requires the Commission to ensure that Member States do not grant undertakings, public or private, aids incompatible with the common market. However, the complexity of the financial relations between national public authorities and public under- takings tends to hinder the performance of this duty. (") OJ L 195, 29.7.1980, p. 35. Directive as last amended by Directive 2005/81/EC (O] L 312, 29.11.2005, p. 47). () See Annex I, Part A. ) (10) (11) (12) (13) A fair and effective application of the aid rules in the Treaty to both public and private undertakings will be possible only if these financial relations are made trans- parent. Such transparency applied to public undertakings should enable a clear distinction to be made between the role of the State as public authority and its role as proprietor. Article 86(1) of the Treaty imposes obligations on Member States in the case of public undertakings and undertakings to which Member States grant special or exclusive rights. Article 86(2) of the Treaty applies to undertakings entrusted with the operation of services of general economic interest. Article 86(3) of the Treaty requires the Commission to ensure the application of the provisions of that Article and provides it with the requisite means to this end. In order to ensure the appli- cation of the provisions of Article 86 of the Treaty the Commission must have the necessary information. This entails defining the conditions for ensuring such trans- parency. It should be made clear what is to be understood by the terms ‘public authorities’ and ‘public undertakings’. The Member States have differing administrative terri- torial structures. This Directive should cover public authorities at all levels in each Member State. Public authorities may exercise a dominant influence on the behaviour of public undertakings not only where they are the proprietor or have a majority participation but also by virtue of powers they hold in management or supervisory bodies as a result either of the rules governing the undertaking or of the manner in which the shareholdings are distributed. The provision of public funds to public undertakings may take place either directly or indirectly. Transparency must be achieved irrespective of the manner in which such provision of public funds is made. It may also be necessary to ensure that adequate information is made available as regards the reasons for such provision of public funds and their actual use.