Address https://gelex.eu/eli/EU/decision/2026/1875@2025-12-17/en

Contents

1. Preamble
2. (36)
3. (47) Map 1 Source: INRAP’s presence in France on 1 January 2024
4. (49) Table 1 Distribution of the number of archaeological excavations authorised in France over the period 2009-2024
5. (50) Table 2 Distribution of excavation market share by value over the period 2009-2024
6. (74)
7. (85)
8. (113)
9. (115)
10. (147)
11. (148) Table 3 Additional costs arising from INRAP’s activities as operator of last resort over the period 2008-2021
12. (161)
13. (170)
14. (205) Table 4 Table 5 Revenue and expenditure in the non-economic sector of INRAP over the period 2008-2021 Revenue and expenditure in the economic sector of INRAP over the period 2008-2021
15. (215)
16. (237)
17. (272)
18. (282)
19. (357)
20. 1. Article 1
    2. Article 2

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to the provisions cited above,

Whereas: PROCEDURE

(1) On 30 May 2018, the Commission received a complaint, lodged by the French company Études et valorisations archéologiques (EVEHA or the complainant), which alleged that certain measures taken for the benefit of the French National Institute for Preventive Archaeological Research (Institut national de recherches archéologiques préventives - INRAP) constituted State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU) that was incompatible with the internal market.

(2) By letter of 20 December 2021, the Commission notified the French authorities of its decision to initiate the procedure provided for in Article 108(2) TFEU in respect of those measures (the opening decision).

(3) The opening decision was published in the Official Journal of the European Union. The Commission invited interested parties to submit their comments on the measures within one month of the publication date.

(4) France submitted its comments on 3 February 2022. On 9 May 2022, the Commission also received written comments from EVEHA.

(5) The Commission forwarded EVEHA’s comments on the opening decision to France by letter dated 16 May 2022. France submitted its comments to the Commission by letter dated 23 June 2022.

(6) Following a conference call on 7 February 2024 with the Commission, EVEHA replied to a request for clarification from the Commission by letter dated 28 June 2024.

(7) By letter dated 28 January 2025, EVEHA sent additional documents in support of its comments to the Commission.

(8) By letter dated 28 July 2025, the Commission requested supplementary clarification from the French authorities; this was provided on 29 September 2025.

DESCRIPTION OF INRAP

(9) INRAP was set up by Law No 2001-44 of 17 January 2001 on preventive archaeology (2001 Law) and was the successor to the Association pour les Fouilles Archéologiques Nationales (AFAN). INRAP is an autonomous public administrative body (établissement public à caractère administratif) under the supervision of the Ministry of Culture and the Ministry for Higher Education, Research and Innovation.

INRAP’s activities

(10) INRAP is active in the field of preventive archaeology. Its tasks are set out in Articles L. 523-1 and R. 545-26 of the Heritage Code.

Non-competitive public service tasks

(11) INRAP is responsible for carrying out preventive archaeology evaluations. These are preliminary operations that take place prior to land development projects which might adversely affect archaeological heritage. By means of studies, surveys or field work, these operations seek to identify and describe any elements of archaeological heritage that may be present on the site and to present the findings in a report. The report contains scientific information which allows the State to order the appropriate heritage safeguard measures (excavations, amendments to the development project or listing as a historical monument).

(12) In practice, when a development project poses a risk of destruction of archaeological remains, the State orders an evaluation, a preventive archaeological excavation or a measure to ensure the preservation of archaeological heritage in situ (amendment of development projects or listing as historical monuments).

(13) Evaluation work is a public service task financed by an operating subsidy paid to INRAP by the State in the form of budget appropriations provided for in the Budget Law (Programme 175 – Heritage). Before 2016, this activity was essentially financed by part of the proceeds from the preventive archaeology charge (redevance d’archéologie préventive – RAP).

(14) Since 2003, this activity of INRAP’s has been shared with the public archaeological departments of the local or regional authorities authorised by the State. The distribution of evaluations between the authorised local or regional authorities and INRAP is not a matter for the State, the developer or INRAP to decide. It is (see recital 15 below) the independent decision of the local or regional authorities authorised to carry out evaluations, taken via a procedure that is strictly regulated by the Heritage Code. The Regional Directorate for Cultural Affairs (direction régionale des affaires culturelles) first calls on the archaeological departments of local or regional authorities. These departments have 14 days to decide whether or not to accept the task. If they refuse (or do not accept), the evaluation is carried out by INRAP. INRAP carries out approximately 80 % of evaluations ordered by the State, while the remaining 20 % are carried out by the authorised archaeological departments of the local or regional authorities.

(15) If an evaluation is required, it may be entrusted to an archaeological department of a local or regional authority, duly authorised by the State in accordance with Article L. 522-8 of the Heritage Code, or, failing this, to INRAP. As at 31 December 2024, 63 local or regional authority departments have the relevant authorisation.

(16) The authorisation empowers the local or regional authority department to carry out all or some of the evaluations ordered. In accordance with Articles L. 523-4 and R. 523-25 of the Heritage Code, a local or regional authority may decide to: (1) carry out a preventive archaeological evaluation in relation to a development project carried out on its territory; as at 31 December 2024, 51 local or regional authority departments had opted to do so; or (2) carry out, for a minimum period of three years (Article R. 523-27 of the Heritage Code), all the evaluations ordered in relation to development projects carried out on its territory. As at 31 December 2024, 12 local or regional authority departments had opted to do so.

carry out a preventive archaeological evaluation in relation to a development project carried out on its territory; as at 31 December 2024, 51 local or regional authority departments had opted to do so; or

carry out, for a minimum period of three years (Article R. 523-27 of the Heritage Code), all the evaluations ordered in relation to development projects carried out on its territory. As at 31 December 2024, 12 local or regional authority departments had opted to do so.

(17) When the State orders an evaluation, the procedure for designating the operator responsible for carrying it out is as follows: (1) If there is an authorised local or regional authority department on the territory on which the development is planned which has chosen to carry out all evaluations, the evaluation is automatically assigned to it. (2) If there is one or more authorised local or regional authority departments on the territory on which the development is planned, the operator responsible is, in order of priority: the municipality, then the department, then the region. The local or regional authority, notified in order of priority, informs the State of its decision regarding the evaluation within 14 days of receipt of the evaluation notification. If no authorised local or regional authority department wishes to carry out the evaluation, it is assigned to INRAP. (3) If there is no authorised local or regional authority on the territory on which the development is planned, the evaluation is automatically assigned to INRAP.

If there is an authorised local or regional authority department on the territory on which the development is planned which has chosen to carry out all evaluations, the evaluation is automatically assigned to it.

If there is one or more authorised local or regional authority departments on the territory on which the development is planned, the operator responsible is, in order of priority: the municipality, then the department, then the region. The local or regional authority, notified in order of priority, informs the State of its decision regarding the evaluation within 14 days of receipt of the evaluation notification. If no authorised local or regional authority department wishes to carry out the evaluation, it is assigned to INRAP.

If there is no authorised local or regional authority on the territory on which the development is planned, the evaluation is automatically assigned to INRAP.

(18) INRAP is also responsible for the scientific study of preventive archaeology operations and the dissemination of their results. It contributes to teaching, public outreach and promotion of archaeology.

Competitive activities relating to archaeological excavations

(19) INRAP also carries out preventive archaeology excavations. These excavations are carried out prior to land development projects which are likely to damage the archaeological remains detected during evaluations. On 1 August 2003, France opened up the market for preventive archaeological excavations to competition by Law No 2003-707.

(20) Developers may now choose one of the following operators to implement an order of the State: (i) INRAP, (ii) the authorised archaeological departments of local or regional authorities or (iii) any other person governed by public or private law, provided their scientific expertise is accredited by the State.

Activities as operator of last resort related to archaeological excavations

(21) Article L 523-10 of the Heritage Code provides that where no other operator has applied or fulfils the conditions for carrying out the excavations, [INRAP] must carry them out at the request of the person planning to carry out the works […]. Article L 523-13 of the Heritage Code further states that in the event that the excavation operator ceases its activities or that its approval or authorisation is withdrawn, [INRAP] shall continue any archaeological operations not yet completed […].

(22) This obligation imposed on INRAP ensures the continuity of the public service of preventive archaeology throughout national territory. The developer freely chooses the preventive archaeology operator (INRAP, accredited private body or authorised department of a local or regional authority) and agrees with it the price of the service.

(23) This obligation to act as operator of last resort requires INRAP to maintain a presence throughout the national territory and to have, at all times, the necessary expertise and resources at its disposal to fulfil its tasks within the deadlines laid down by law. It thus gives rise to a structural cost which cannot be covered in full by the remuneration received by INRAP when it acts as operator of last resort.

(24) In the absence of a candidate, the developer submits its request to INRAP together with the excavation order issued by the State to which a tender specification is annexed, setting out the technical arrangements to be complied with.

(25) INRAP then has two months to send the developer a draft contract setting out the terms for carrying out the excavation. It must include, inter alia, the scientific project description, the provisional start date of the excavation, its duration and the price of the operation. The contract signed between the developer and INRAP must be sent to the regional prefect who authorises or refuses the excavation depending on whether or not the terms of the contract comply with the order.

(26) The price proposed by INRAP must be determined on the basis of the criteria that apply to any competitive activity (following the principle of profitability). These criteria are set by decision of the head of INRAP in accordance with the arrangements laid down by its board of governors.

(27) Any disagreements between the developer and INRAP regarding the terms or the price are settled by the regional prefect. This arbitration by the State is intended to provide a guarantee to the developer, who does not have a choice of operator.

(28) INRAP has six months from the date of issue of the excavation authorisation by the regional prefect to initiate the operation. If it fails to comply with this deadline or if the operation is not completed within 18 months of that date (extendable once by decision of the regional prefect), the excavation order issued by the State is deemed to have lapsed.

(29) If an excavation operator ceases its activities or has its approval or authorisation withdrawn before the excavation is completed, INRAP must continue the unfinished excavation.

(30) Taking into account the state of progress of the operation and the terms of the specification annexed to the excavation order issued by the State, INRAP must draw up a scientific project description for the completion of the operation.

(31) The price proposed by INRAP is determined according to the same criteria that apply in the absence of a candidate to carry out the excavation (see recital 26).

(32) In the event of an agreement, a contract concluded between the developer and INRAP sets out the price and the deadlines for carrying out the excavation. The contract signed between the developer and INRAP must be sent to the regional prefect, who authorises or refuses the excavation depending on whether or not the terms of the contract comply with the order.

(33) In the event of disagreement between the developer and INRAP on the price and/or the deadlines, the party raising the issue refers the matter to the prefect, who sets the price and/or deadlines under the same conditions as in the absence of an initial candidate to carry out the excavations (see recital 27).

Summary of INRAP’s activities

(34) INRAP is thus entrusted with tasks for which it does not compete with private operators accredited by the State (non-competitive or public service activities). These tasks are preventive archaeological evaluations, scientific study of preventive archaeological operations, dissemination of results, educational activities, public outreach and the promotion of archaeology. By contrast, INRAP does compete with operators accredited by the State in the field of preventive archaeological excavations (competitive activities). In the context of those competitive activities, INRAP is subject to a public service obligation that requires it to carry out excavations, at the request of the developer and under the supervision of the State, when there is no other operator capable of implementing the order.

How INRAP is funded

(35) Article L 524-1 of the Heritage Code provides that [INRAP] shall be funded by: ... (b) subsidies from the State or any other public or private person; (c) remuneration for the excavation activities which it carries out.

(36) For its non-competitive activities during the period 2008-2021, i.e. the period covered by the complaint, INRAP received the following public funding: (a) until 31 December 2015, part of the proceeds from the preventive archaeology charge (RAP); (b) subsidies from budget appropriations; (c) from 1 January 2016, an operating grant paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 175); (d) an operating grant paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 186 – Cultural research and scientific culture, since 2021 integrated into Programme 361 Transmission of knowledge and democratisation of culture); (e) various subsidies from French or non-French public entities other than the line ministries.

(36)

(a) until 31 December 2015, part of the proceeds from the preventive archaeology charge (RAP);

(b) subsidies from budget appropriations;

(c) from 1 January 2016, an operating grant paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 175);

(d) an operating grant paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 186 – Cultural research and scientific culture, since 2021 integrated into Programme 361 Transmission of knowledge and democratisation of culture);

(e) various subsidies from French or non-French public entities other than the line ministries.

(37) The amounts of these sources of funding are set out annually in the Budget Law.

(38) After that date, following the adoption of Budget Law No 2015-1785 for 2016 of 29 December 2015, which repealed point (a) of the aforementioned Article L. 524-1, INRAP’s non-competitive activities have been funded essentially by an operating grant paid to it by the State in the form of budget appropriations provided for in the Budget Law (Programme 175 – Heritage). The RAP has since been paid into the general budget of the State. It now meets the definition of a tax.

(39) The total amount of public funding granted to INRAP for its non-competitive activities during the period 2008-2021 was EUR [900-1 300] million.

(40) In addition, during the period 2008-2021, from 2015 onwards INRAP received subsidies for public service costs in respect of its activities as an operator of last resort for archaeological excavations. These subsidies came to EUR 22,69 million for the period 2015-2018. For the period 2019-2021, the amount was EUR 21,72 million (EUR 7,24 million per year). However, in 2019 INRAP chose to allocate all the public funding received from the State, including the subsidy for public service costs, to its strictly non-competitive activities, in accordance with the commitments given to the Competition Authority. Consequently, since 2019 no subsidy for public service costs has financed INRAP’s preventive excavation activities.

(41) The annual subsidy for public service costs is adopted every year by Parliament as part of the Budget Law. It is entered in the budget appropriations of Programme 175 – Heritage. It is therefore a form of flat-rate upfront funding and not a reimbursement or compensation paid after the event for costs incurred by INRAP.

(42) This subsidy was established because of the significant contraction of the excavation market from 2012, after which INRAP’s revenues decreased by [38-52] % between 2013 and 2017. Whereas until 2014 INRAP was able to cover the costs arising from its obligation to intervene as operator of last resort thanks to the surpluses resulting from its competitive activities, from 2015 the contraction of the market no longer enabled it to do so. It was therefore decided to pay subsidies from 2015 onwards specifically for certain additional costs generated by that obligation.

(43) Between 2015 and 2018, the subsidy for public service costs paid to INRAP was specifically for the following additional costs generated by the obligations imposed by the legislator on the excavation market: (1) Presence throughout the territory: INRAP must operate a network of 54 offices to cover the whole territory, whereas the main private operator conducting excavations throughout French territory, who is not subject to such an obligation, only has 16 offices. The 38 additional offices generate additional costs in terms of rent, charges and maintenance. (2) Ability to intervene at all times and in all environments: INRAP needs to employ about 60 specialists on a permanent basis (archaezoologists, palynologists, etc.). This obligation entails marginal costs for remuneration and charges. (3) Plan for addressing precarious employment: on the basis of a political agreement between the Minister for Culture and the trade unions, INRAP adopted a plan for addressing precarious employment over the period 2014-2016 by recruiting on open-ended contracts 210 staff members already working at INRAP on fixed-term contracts, in a context of a very sharp contraction in the excavation market. (1) Company property tax: the additional costs generated by the 38 additional offices run by INRAP automatically give rise to an increase in the company property tax. It should be noted that the regional business tax is attributed in its entirety to the competitive sector. (2) Business value-added contribution: INRAP was liable for the business value-added contribution at a rate of 1,5 % of the value added for tax purposes. As the subsidy for public service costs increased the latter, the taxable amount was accordingly higher, generating an additional cost attributable to the competitive sector. Since 2019, the subsidy has been allocated to the non-competitive sector, which has had the effect of neutralising its impact on the value added and therefore on the amount of the business value-added contribution. (4) Additional tax costs: the additional tax costs are linked to the regional business tax (Contribution Économique Territoriale – CET), which is made up of the company property tax (Cotisation Foncière des Entreprises – CFE) and the business value-added contribution (Cotisation sur la Valeur Ajoutée des Entreprises – CVAE).

Presence throughout the territory: INRAP must operate a network of 54 offices to cover the whole territory, whereas the main private operator conducting excavations throughout French territory, who is not subject to such an obligation, only has 16 offices. The 38 additional offices generate additional costs in terms of rent, charges and maintenance.

Ability to intervene at all times and in all environments: INRAP needs to employ about 60 specialists on a permanent basis (archaezoologists, palynologists, etc.). This obligation entails marginal costs for remuneration and charges.

Plan for addressing precarious employment: on the basis of a political agreement between the Minister for Culture and the trade unions, INRAP adopted a plan for addressing precarious employment over the period 2014-2016 by recruiting on open-ended contracts 210 staff members already working at INRAP on fixed-term contracts, in a context of a very sharp contraction in the excavation market.

Additional tax costs: the additional tax costs are linked to the regional business tax (Contribution Économique Territoriale – CET), which is made up of the company property tax (Cotisation Foncière des Entreprises – CFE) and the business value-added contribution (Cotisation sur la Valeur Ajoutée des Entreprises – CVAE). (1) Company property tax: the additional costs generated by the 38 additional offices run by INRAP automatically give rise to an increase in the company property tax. It should be noted that the regional business tax is attributed in its entirety to the competitive sector. (2) Business value-added contribution: INRAP was liable for the business value-added contribution at a rate of 1,5 % of the value added for tax purposes. As the subsidy for public service costs increased the latter, the taxable amount was accordingly higher, generating an additional cost attributable to the competitive sector. Since 2019, the subsidy has been allocated to the non-competitive sector, which has had the effect of neutralising its impact on the value added and therefore on the amount of the business value-added contribution.

Company property tax: the additional costs generated by the 38 additional offices run by INRAP automatically give rise to an increase in the company property tax. It should be noted that the regional business tax is attributed in its entirety to the competitive sector.

Business value-added contribution: INRAP was liable for the business value-added contribution at a rate of 1,5 % of the value added for tax purposes. As the subsidy for public service costs increased the latter, the taxable amount was accordingly higher, generating an additional cost attributable to the competitive sector. Since 2019, the subsidy has been allocated to the non-competitive sector, which has had the effect of neutralising its impact on the value added and therefore on the amount of the business value-added contribution.

(44) During the period 2008-2021, INRAP also benefited from the tax credit for research (crédit d’impôt recherche – CIR). The tax credit for research was paid from 2016 onwards for the years from 2013. The amount of the tax credit for research granted for the years 2013-2021 is EUR [55-75] million.

(45) Finally, INRAP received a capital injection of EUR [20-25] million from the Ministry of Culture over three successive financial years (2015, 2016 and 2017) to enable it to service the debt it incurred when it was set up with Agence France Trésor (AFT).

(46) According to INRAP’s 2020 activity report, on 31 December 2020 it had: 2286 staff members, EUR 175 million in revenue in 2020, and a net income of EUR 6,4 million.

INRAP’s presence on the market for preventive archaeological excavations

(47) Map 1 Source: INRAP’s presence in France on 1 January 2024

INRAP is present in the regions of Auvergne – Rhône-Alpes, Bourgogne – Franche-Comté, Ile-de-France, Grand Est, Grand Ouest, Hauts-de-France, Midi-Méditerranée and Nouvelle-Aquitaine and in the overseas territories. INRAP activity report for 2023

(48) To meet the objectives set by the legislator concerning the coherence and smooth functioning of the public service of preventive archaeology (Article L. 522-1 of the Heritage Code), the Ministry of Culture must carry out an inventory of the market in preventive archaeological excavations. For this, it relies on a regular flow of information from the archaeological departments of the State on all the contracts concluded between operators and developers which the departments have at their disposal in accordance with Article R 523-45 of the Heritage Code.

(49) Table 1 Distribution of the number of archaeological excavations authorised in France over the period 2009-2024

This inventory of the market for preventive archaeological excavations must include the number of authorised excavations and the estimated amounts of the contracts concluded between developers and operators. Year INRAP Other operators Total Number of authorised preventive archaeological excavations % Number of authorised preventive archaeological excavations % 2009 […] […] […] […] 368 2010 […] […] […] […] 457 2011 […] […] […] […] 448 2012 […] […] […] […] 525 2013 […] […] […] […] 490 2014 […] […] […] […] 457 2015 […] […] […] […] 447 2016 […] […] […] […] 458 2017 […] […] […] […] 431 2018 […] […] […] […] 478 2019 […] […] […] […] 460 2020 […] […] […] […] 413 2021 […] […] […] […] 442 2022 […] […] […] […] 462 2023 […] […] […] […] 496 2024 […] […] […] […] 468 Total [3600-4000] [38-53] % [3300-3700] [40-50] % 7300

(50) Table 2 Distribution of excavation market share by value over the period 2009-2024

It is clear from the publicly available information for the period 2009-2024 that INRAP occupies a significant position on the market for preventive archaeological excavations and carries out on average [38-53] % of authorised preventive excavations, compared with [40-50] % carried out by other operators in France. Year INRAP Other operators Total Projected excavation costs (millions of euros) % Projected excavation costs (millions of euros) % 2009 […] […] […] […] […] 2010 […] […] […] […] […] 2011 […] […] […] […] […] 2012 […] […] […] […] […] 2013 […] […] […] […] […] 2014 […] […] […] […] […] 2015 […] […] […] […] […] 2016 […] […] […] […] […] 2017 […] […] […] […] […] 2018 […] […] […] […] […] 2019 […] […] […] […] […] 2020 […] […] […] […] […] 2021 […] […] […] […] […] 2022 […] […] […] […] […] 2023 […] […] […] […] […] 2024 […] […] […] […] […] Total […] [52-61] % […] [41-49] % […]

(51) Over the period 2009-2024, INRAP’s share by value of the preventive excavation market was, on average, [52-61] %, compared with [41-49] % for other operators (authorised departments of local or regional authorities and private operators).

THE FORMAL INVESTIGATION PROCEDURE Description of the measures covered by the formal investigation procedure

(52) The complaint lodged by EVEHA concerns (i) the potential cross-subsidisation between INRAP’s competitive and non-competitive activities, and (ii) the subsidies for INRAP’s public service costs.

Potential cross-subsidisation between INRAP’s competitive and non-competitive activities.

(53) As indicated in recital 29 of the opening decision, EVEHA argues that INRAP does not have proper accounting separation between its non-competitive and competitive activities.

(54) First, as regards the period 2008-2018, which corresponds to part of the period covered by the Commission’s preliminary examination of these measures, before the implementation of INRAP’s new accounting separation: (1) The Commission noted in its opening decision that the need to improve INRAP’s cost accounting had been raised on several occasions since 2013. Thus, the First President of the French Court of Auditors indicated in memorandum No 67181 of 6 June 2013 addressed to the Minister for Culture and Communication and the Minister for Higher Education and Research that several actions [seemed] urgently needed to ensure fair competition and preserve the scientific quality of excavation operations. In particular, reference was made to the need to [improve] the cost accounting method currently used by INRAP. Moreover, in the Court of Auditors’ 2016 annual public report, the Minister for Finance and Public Accounts and the State Secretary for the Budget acknowledged that cost accounting has yet to be fully introduced within INRAP. (2) In addition, as referred to by EVEHA and noted by the Commission in the opening decision, in its decision of 1 June 2017 the French Competition Authority pointed out that INRAP’s cost accounting did not guarantee watertight and reliable accounting and financial separation between INRAP’s non-competitive and competitive activities. It added that it cannot, therefore, be ruled out that a risk exists of cross-subsidisation between its [non-profit and for-profit] activities, which is likely to result in the application of pricing practices that may amount to predatory pricing or produce a crowding-out effect. The Competition Authority noted that, since 2013, revenues assigned by INRAP to its for-profit activities have been lower than the costs assigned to these same for-profit activities, despite the fact that their share of INRAP’s overall activity has followed the opposite trend, which suggests that INRAP’s overall activity is driven primarily by its non-profit activities (given that INRAP’s overall activity is the sum of its for-profit and non-profit activities). Thus, the Competition Authority accepted the commitments given by INRAP concerning the introduction of a cost accounting system that would make it possible not only to ensure strict (watertight and reliable) accounting and financial separation between its non-profit and for-profit activities, but also to ensure the traceability of the resources allocated to each of its tasks in order to prevent any risk of cross-subsidisation and made them mandatory.

The Commission noted in its opening decision that the need to improve INRAP’s cost accounting had been raised on several occasions since 2013. Thus, the First President of the French Court of Auditors indicated in memorandum No 67181 of 6 June 2013 addressed to the Minister for Culture and Communication and the Minister for Higher Education and Research that several actions [seemed] urgently needed to ensure fair competition and preserve the scientific quality of excavation operations. In particular, reference was made to the need to [improve] the cost accounting method currently used by INRAP. Moreover, in the Court of Auditors’ 2016 annual public report, the Minister for Finance and Public Accounts and the State Secretary for the Budget acknowledged that cost accounting has yet to be fully introduced within INRAP.

In addition, as referred to by EVEHA and noted by the Commission in the opening decision, in its decision of 1 June 2017 the French Competition Authority pointed out that INRAP’s cost accounting did not guarantee watertight and reliable accounting and financial separation between INRAP’s non-competitive and competitive activities. It added that it cannot, therefore, be ruled out that a risk exists of cross-subsidisation between its [non-profit and for-profit] activities, which is likely to result in the application of pricing practices that may amount to predatory pricing or produce a crowding-out effect. The Competition Authority noted that, since 2013, revenues assigned by INRAP to its for-profit activities have been lower than the costs assigned to these same for-profit activities, despite the fact that their share of INRAP’s overall activity has followed the opposite trend, which suggests that INRAP’s overall activity is driven primarily by its non-profit activities (given that INRAP’s overall activity is the sum of its for-profit and non-profit activities). Thus, the Competition Authority accepted the commitments given by INRAP concerning the introduction of a cost accounting system that would make it possible not only to ensure strict (watertight and reliable) accounting and financial separation between its non-profit and for-profit activities, but also to ensure the traceability of the resources allocated to each of its tasks in order to prevent any risk of cross-subsidisation and made them mandatory.

(55) Second, as regards the period after 1 January 2018, the Commission notes in its opening decision that, in accordance with the commitments given in the context of the Competition Authority’s decision of 1 June 2017, INRAP had put in place a cost accounting system that allowed for a more precise identification of revenues and costs relating to competitive and non-competitive activities, respectively.

(56) However, the Commission noted that the independent auditor mandated to check, audit and certify INRAP’s new cost accounting system seemed to consider, in their statement of compliance for 2018, that INRAP’s cost accounting could still be improved. While certifying that INRAP’s cost accounting compl[ied] with general accounting principles, respect[ed] the principle of accounting separation and d[id] not reveal any cross-subsidisation, the auditor noted that the methodology for allocating indirect costs will need to be further developed and improved in future.

(57) Finally, the Commission noted in its opening decision that the 2020 statement of compliance no longer referred to the need to further develop and improve the methodology for allocating indirect costs. It stated that the cost accounts in their current form do not ... reveal any cross-subsidisation. Nevertheless, the Commission noted that, despite this improvement, the auditor did not explicitly rule out the risk of cross-subsidisation.

Subsidies for public service costs

(58) The subsidies granted for INRAP’s competitive activities amount to EUR 22,69 million over the period covered by the complaint. These subsidies were granted over the period 2015-2018.

The opening decision

(59) In the opening decision, the Commission expressed doubts in relation to the possible existence of a cross-subsidy between INRAP’s competitive and non-competitive activities that might amount to unlawful State aid (see recital 74 of the opening decision).

(60) Furthermore, the Commission concluded that the subsidies for public service costs constitute State aid within the meaning of Article 107(1) TFEU (see recitals 48 to 65 of the opening decision).

(61) The Commission was also unconvinced by the French authorities’ claim that the subsidies for public service costs fall under framework scheme SA.42681, implemented in accordance with Article 53 of the General Block Exemption Regulation (GBER), and as such are compatible with the internal market (see recital 78 of the opening decision).

(62) The Commission pointed out that, in the absence of a reliable accounting separation between competitive and non-competitive activities, the amount of aid for competitive activities (covered by the subsidies for public service costs) could not be determined accurately, and that it could not therefore be guaranteed that the aid was proportionate within the meaning of Article 53(7) of the GBER.

(63) In its opening decision, the Commission pointed out that the French authorities had denied the existence of a cross-subsidy benefiting INRAP’s competitive activities. It also noted that France had not provided any evidence to establish the compatibility of the aid resulting from a potential cross-subsidy. Consequently, the Commission also expressed doubts as to the compatibility of measure (i) in the event that it were to be found to constitute State aid.

(64) Furthermore, in its opening decision the Commission envisaged examining the compatibility of the two measures jointly under Article 107(3)(d) TFEU (see recitals 82 to 100 of the opening decision).

(65) The Commission stated that, according to its understanding of the relevant French legislation, preventive archaeology and all INRAP’s activities appear to contribute to the promotion of culture and heritage conservation, and that, in any event, it is for France to determine which projects or activities fall under promotion of culture and heritage conservation, as the Commission only has the power to examine whether there has been a manifest error of assessment (see recitals 86 and 87 of the opening decision).

(66) Given that all the public funding granted to INRAP appears to be intended to promote culture and heritage conservation, in the opening decision the Commission raised the possibility that it might be deemed necessary, appropriate and proportionate, and not to adversely affect trading conditions and competition to an extent contrary to the common interest.

(67) In this regard, the Commission put forward, in a preliminary manner, a number of facts from which it could be concluded that the funding granted to INRAP had been necessary, appropriate and proportionate to the objectives of promoting culture and conserving heritage and had not adversely affected trading conditions and competition to an extent contrary to the common interest.

(68) Nevertheless, the Commission wondered whether a compatibility analysis under Article 107(3)(d) TFEU could be carried out without a prior decision on the classification of the measures at issue as State aid being necessary.

(69) Consequently, in view of the existence of doubts that made it impossible to rule out definitively the presence of State aid in favour of INRAP or to establish with certainty its compatibility with the internal market, the Commission decided to initiate a formal investigation procedure in order to give interested parties the opportunity to submit their comments in that regard and to reach a conclusion concerning the measures contested by EVEHA.

COMMENTS FROM EVEHA

(70) Only EVEHA submitted comments on the opening decision to the Commission.

(71) As regards the existence of State aid in favour of INRAP, EVEHA submits, first, that it agrees with the Commission’s analysis regarding the finding that the subsidies for public service costs – which are for activities open to competition – constitute State aid within the meaning of Article 107(1) TFEU.

(72) Second, EVEHA reiterates the position set out in its complaint that the mere fact that (i) INRAP is engaged in both competitive and non-competitive activities and that (ii) INRAP has failed to put in place a sufficiently reliable cost accounting system to ensure that those two activities are kept strictly separate is sufficient to establish the existence of State aid in favour of INRAP’s competitive activities.

(73) As regards the possibility raised by the Commission that the aid may be compatible – were the INRAP funding to be classified as aid – on the basis of Article 107(3)(d) TFEU, EVEHA submits, first, that the approach referred to by the Commission, which consists of analysing the funding granted to INRAP without distinguishing between the activities financed (competitive/non-competitive), is wrong in law, and second, that it is inapplicable in the present case.

The approach proposed by the Commission is vitiated by an error of law

(74) EVEHA considers, first of all, that it is not possible to assess all the funding granted to INRAP in its totality without distinguishing the share of that funding allocated to each type of INRAP activity. EVEHA puts forward the following arguments: (a) the assessment of the compatibility of a measure presupposes its prior classification as State aid; (b) measures can be classified as State aid only on an activity-by-activity basis and in the light of each relevant market; (c) the State aid rules preclude the Commission from analysing all the funding granted to INRAP jointly; and (d) an analysis of its decision-making practice confirms that the Commission cannot, save in special circumstances, take a global approach such as that envisaged in recitals 82 et seq. of the opening decision.

(74)

(a) the assessment of the compatibility of a measure presupposes its prior classification as State aid;

(b) measures can be classified as State aid only on an activity-by-activity basis and in the light of each relevant market;

(c) the State aid rules preclude the Commission from analysing all the funding granted to INRAP jointly; and

(d) an analysis of its decision-making practice confirms that the Commission cannot, save in special circumstances, take a global approach such as that envisaged in recitals 82 et seq. of the opening decision.

(75) First, EVEHA explains that the analysis of the compatibility of an aid measure involves assessing, in order, whether the measure should be classified as State aid within the meaning of Article 107(1) TFEU and, if it is, whether it is compatible with the internal market, either on the basis of Article 107(2) TFEU or on the basis of Article 107(3) TFEU.

(76) Second, EVEHA considers that classification as State aid requires an examination of several criteria, including whether or not the activities concerned are economic in nature and whether or not there is a risk of a distortion of competition linked to the measure.

(77) EVEHA refers to the judgment of the Court in Congregacíon de Escuelas Pías Povincia Betania, which states that [i]n order to determine whether the activities in question are those of an undertaking within the meaning of EU competition law, it is necessary to ascertain what the nature of those activities is: each of the different activities of a given entity must thus be examined to determine whether it falls to be classified as an economic activity.

(78) EVEHA infers from this that, in the case of an establishment which, like INRAP, carries out varies types of activities, the case-law requires prior identification of (i) the activities of that establishment which are of an economic nature and those which, on the contrary, are not of an economic nature, and (ii) the relevant market or markets likely to be affected by the funding granted to the establishment.

(79) Third, as regards the joint analysis of the funding of all INRAP’s activities, according to EVEHA the approach envisaged by the Commission could be followed only on condition that all the funding granted to INRAP could be classified as State aid

(80) However, EVEHA submits that, in the present case, that condition is not met as, on the one hand, the French authorities consider that some of INRAP’s activities are not economic in nature (which precludes classifying their funding as State aid) and, on the other, INRAP’s activities, even if they were all economic in nature (as EVEHA maintains), are carried out in part in markets which are not open to competition and on which no distortion of competition can therefore be found (which, again, precludes classifying their funding as State aid).

(81) EVEHA further points out that classification of the funding as State aid, which is a prerequisite for the assessment of its compatibility, also presupposes verification of the existence of a distortion of competition (in addition to verification of the economic nature of the activities funded). According to EVEHA, that assessment can be carried out only at the level of each relevant market. In the present case, and independently of the monopolistic nature of some of INRAP’s activities, the Commission cannot, according to EVEHA, assess the compatibility of the aid received by INRAP in its entirety without first determining on which market (archaeological excavations, evaluations, etc.) this aid would be likely to have an effect.

(82) Fourth, EVEHA submits that, according to its analysis of Commission decisions on State aid, when the Commission assesses the compatibility of a set of measures, it is, in principle, required to identify each measure and then consider, measure by measure, whether it constitutes State aid and whether it is compatible with the internal market.

(83) EVEHA infers from the examples to which it refers in its comments that, except where several measures are inextricably linked, the European Commission never assesses jointly all the funding for an undertaking, in particular where that undertaking carries out several types of activities and the funding takes several different forms.

Article 107(3)(d) TFEU does not apply to the measures at issue

(84) EVEHA considers that the measures at issue do not fall within the scope of Article 107(3)(d) TFEU.

(85) In that regard, EVEHA argues that: (a) Article 107(3)(d) TFEU cannot be used to justify cross-subsidisation, which is inherently incompatible with the internal market; (b) Article 107(3)(d) TFEU cannot be used to validate general subsidies in the cultural field; and (c) Article 107(3)(d) TFEU had never been invoked by the French authorities in the present case.

(85)

(a) Article 107(3)(d) TFEU cannot be used to justify cross-subsidisation, which is inherently incompatible with the internal market;

(b) Article 107(3)(d) TFEU cannot be used to validate general subsidies in the cultural field; and

(c) Article 107(3)(d) TFEU had never been invoked by the French authorities in the present case.

(86) First, EVEHA points out that its complaint mainly concerns the question of cross-subsidisation. In the absence of accounting separation between the various activities of INRAP, it cannot be ruled out that the subsidies granted to INRAP in respect of its non-competitive activities exceed the needs linked to those activities and also indirectly finance INRAP’s competitive activities.

(87) EVEHA argues that Article 107 TFEU makes the possibility for a Member State to grant subsidies to an undertaking engaged in both competitive and non-competitive activities subject to the condition that the undertaking concerned implements a strict separation of accounts which ensures that there is no cross-subsidisation of those two types of activities.

(88) In its observations, EVEHA submits that the case-law creates a general prohibition of any form of cross-subsidisation from which no compatibility scheme may derogate.

(89) The complainant insists that this case-law also applies to the cultural sector and refers to the Commission’s analytical grid for assessing the application of Article 107 TFEU to funding of infrastructure, one of which covers culture and specifies: If cultural infrastructure is used for both economic and non-economic activities (for example, the organization of conferences and commercial events in museums or culture centres), public funding thereof will fall under State aid rules only insofar as it covers the costs linked to the economic activities in question. In such cases, Member States have to ensure that the public funding provided for the non-economic activities cannot be used to cross-subsidize the entity’s economic activities. This can notably be ensured by limiting the public funding to the net cost (including the cost of capital) of the non-economic activities, to be identified on a basis of a clear separation of accounts.

(90) EVEHA concludes that Article 107(3)(d) TFEU cannot be used to justify cross-subsidisation, as it is inherently prohibited in EU law.

(91) Second, EVEHA argues that the derogation provided for in Article 107(3)(d) TFEU justifies aid only to fund specific cultural projects, such as the loan of works between museums, plans to digitise heritage cinematographic works or support for cinema and audiovisual production. It cannot be used, for example, to justify general subsidies in the cultural field (e.g. funding of public television).

(92) According to EVEHA, this rule is explained by (i) the fact that Article 107(3)(d) TFEU constitutes an exception to Article 107(1) TFEU which, like any exception, is to be interpreted strictly, and (ii) the substantive conditions that must be met for Article 107(3)(d) TFEU to apply (in particular, the conditions of necessity and proportionality).

(93) Furthermore, EVEHA bases its arguments on its analysis of the Commission’s decision-making practice, which shows that where measures declared compatible on the basis of Article 107(3)(d) TFEU are intended to support a sector or an activity in general (which is rare) , they are not reserved for a single operator but apply to all operators contributing to the development of the sector.

(94) The complainant therefore concludes that, contrary to what is proposed by the Commission in its opening decision, Article 107(3)(d) TFEU cannot be used to declare the entirety of the funding for a public establishment compatible with the internal market solely on the grounds that it operates in the cultural sector.

(95) Finally, in the alternative, EVEHA points out that, to its knowledge, the French authorities, despite being responsible for notifying the aid measures granted to INRAP and thus, in principle, for demonstrating the compatibility of those measures, have at no point relied on Article 107(3)(d) TFEU (in particular in their observations submitted in January and October 2019) to demonstrate the compatibility of those aid measures.

(96) According to EVEHA, the fact that the French authorities never notified any funding measure for INRAP and never invoked Article 107(3)(d) TFEU (including in their exchanges with the Commission after EVEHA lodged its complaint) is an extremely strong indication that this justification is not effective in the present case.

The conditions in Article 107(3)(d) TFEU are not met in the present case

(97) Finally, in its comments EVEHA explains that, even if the approach to establishing the compatibility of the measures referred to by the Commission in the opening decision were possible, the conditions required for Article 107(3)(d) TFEU to apply would in any event not be met.

The aid granted to INRAP is not necessary

(98) First of all, EVEHA understands from the Commission’s explanations in its opening decision (recitals 91 and 92) that the necessity of the funding granted to INRAP is linked solely to the specific public service obligations imposed on INRAP by the French State.

(99) EVEHA submits that this argument is not admissible.

(100) First, EVEHA points out that State aid granted in the form of compensation for public service costs must be assessed exclusively in the light of Article 106(2) TFEU and the rules adopted by the Commission on that basis, and not in the light of Article 107(3)(d) TFEU.

(101) By referring to INRAP’s particular position (that is, the public service obligations imposed on it) in order to justify the necessity of the aid, the Commission could demonstrate, at most, only the necessity of the funding granted to INRAP as compensation for public service costs and not by virtue of promoting culture and heritage.

(102) Second, EVEHA claims, in any event, that none of the obligations imposed on INRAP and referred to in recitals 91 and 92 of the opening decision justify any compensation.

(103) According to EVEHA, this is notably the case for INRAP’s obligation to take over excavation operations for which no candidate has come forward or in respect of which the selected operator defaults. EVEHA submits that such services – in respect of which EVEHA does not call into question INRAP’s obligation to provide them – are to be paid for at prices which are to be set freely (subject to State arbitration in the event of disagreement between the parties). As these services are to be paid for in the normal way, none of the obligations imposed on INRAP can justify any compensation.

The method set out in the opening decision for assessing the proportionality of the aid is inappropriate

(104) According to EVEHA, State aid can only be considered proportionate if the same result cannot be achieved with less aid and less distortion. It follows that, where the aid exceeds the minimum necessary, its recipient benefits from an exceptional profit liable to distort competition unnecessarily, and the aid cannot therefore be considered compatible with the common market.

(105) EVEHA infers from this that aid paid to an operator can be regarded as proportionate only on condition that its amount is limited to the strict minimum required and that the arrangements for its payment or use have been designed in such a way as to limit as far as possible any distortion of competition.

(106) In EVEHA’s view, those conditions are not met in the present case.

(107) EVEHA observes, first, that the Commission’s demonstration in its opening decision is based solely on a short paragraph and a table detailing INRAP’s operational margin rates for all activities taken together, which (i) makes no economic and accounting sense and (ii) is in any event insufficient to demonstrate the proportionality of the aid.

(108) EVEHA also considers that, in the absence of cost accounting allowing revenues and costs to be allocated correctly to INRAP’s different activities, the proportionality criterion cannot – by definition – be met, since the aid is not implemented under conditions that minimise any distortion of competition.

The appropriateness of the measures is not demonstrated

(109) In its comments on the opening decision, EVEHA claims that the Commission has not demonstrated to the requisite legal standard how other measures that are potentially less harmful to competition would not have made it possible to remedy the (supposed) lack of profitability of INRAP resulting from the particular constraints imposed on it.

(110) EVEHA considers that limiting public funding measures to what is strictly necessary, determined on the basis of cost accounting that makes it possible to allocate INRAP’s revenues and costs correctly to its different activities, is sufficient to limit the potentially harmful effects on competition of the public funding received by INRAP. In EVEHA’s view, this fact alone is sufficient to demonstrate that the aid from which INRAP has benefited since its creation is not appropriate in the way it has been put in place.

Trading and competition conditions are clearly affected by the funding in question

(111) Finally, EVEHA disputes the explanations put forward by the Commission in its opening decision, according to which the aid at issue does not adversely affect trading conditions and competition to an extent contrary to the common interest.

(112) First, EVEHA disputes the Commission’s assumption that the rates charged by INRAP do not amount to predatory pricing or produce a crowding-out effect, which is based on a comparison of the average price per hectare charged by INRAP with the price charged by its competitors.

(113) According to EVEHA, this method contains three statistical biases: (a) First, this method does not take account of the particular position of INRAP on the market. As the incumbent (and the main market player), INRAP typically intervenes on the most sophisticated and large-scale projects, to which smaller operators without the necessary resources do not always have access. (b) Second, this method does not take account of the fact that part of INRAP’s activity concerns sites which it has had to take over as an operator of last resort and for which it has been able to set its prices without any competitive pressure. (c) Third and last, EVEHA considers that the concept of price per hectare to which the opening decision refers is not relevant for analysing the pricing policy of the various operators present on the excavation market. The cost of an archaeological excavation cannot be assessed on the basis of the surface area alone, but must also take account of the complexity of the excavation, the conservation of remains and the technical and scientific constraints laid down in the specification (particularly in terms of human resources – person-days)

(113)

(a) First, this method does not take account of the particular position of INRAP on the market. As the incumbent (and the main market player), INRAP typically intervenes on the most sophisticated and large-scale projects, to which smaller operators without the necessary resources do not always have access.

(b) Second, this method does not take account of the fact that part of INRAP’s activity concerns sites which it has had to take over as an operator of last resort and for which it has been able to set its prices without any competitive pressure.

(c) Third and last, EVEHA considers that the concept of price per hectare to which the opening decision refers is not relevant for analysing the pricing policy of the various operators present on the excavation market. The cost of an archaeological excavation cannot be assessed on the basis of the surface area alone, but must also take account of the complexity of the excavation, the conservation of remains and the technical and scientific constraints laid down in the specification (particularly in terms of human resources – person-days)

(114) In addition, in the context of the formal investigation procedure, EVEHA submitted four judgments delivered by the Administrative Courts (Tribunaux administratifs) of Caen and Amiens between 2022 and 2024, invalidating public procurement procedures for preventive archaeological excavations which had resulted in the selection of INRAP to the detriment of EVEHA. In those four judgments, the Administrative Court – albeit without making a finding as to the existence of predatory pricing – annulled the public procurement procedures on the grounds that the contracting authority had not taken the necessary steps to ensure that INRAP’s tenders, which were more advantageous than those of EVEHA, were not derived from an advantage resulting from the resources allocated to INRAP for its public service tasks.

(115) EVEHA also submits that the Commission’s demonstration in its opening decision is vitiated by two methodological errors. (a) First, EVEHA notes that the opening decision, while purporting to weigh the positive effects of the aid received by INRAP against its negative effects, does not at any time quantify its effects in any way. (b) Second, EVEHA notes that the opening decision limits its analysis solely to INRAP’s pricing practices, without taking into account the numerous other competitive advantages available to it (such as privileged access to information obtained through its evaluation activities) owing to its status and/or the public funding it enjoys.

(115)

(a) First, EVEHA notes that the opening decision, while purporting to weigh the positive effects of the aid received by INRAP against its negative effects, does not at any time quantify its effects in any way.

(b) Second, EVEHA notes that the opening decision limits its analysis solely to INRAP’s pricing practices, without taking into account the numerous other competitive advantages available to it (such as privileged access to information obtained through its evaluation activities) owing to its status and/or the public funding it enjoys.

(116) According to EVEHA, such advantages should also be taken into account by the Commission in its analysis, under Article 107 TFEU, of the compatibility of the funding granted to INRAP.

COMMENTS FROM FRANCE

(117) The French authorities transmitted their comments on the opening decision by letter dated 3 February 2022 and on the comments from EVEHA on the opening decision by letter dated 23 June 2022.

(118) As a preliminary point, the French authorities note the importance of the culture and heritage conservation sector in France and the central role of INRAP in this sector.

(119) In particular, the French authorities have provided the following explanations.

Promotion of culture and heritage conservation in France

(120) To implement in national law the European Valetta Convention of 16 January 1992 (the Valletta Convention), in 2001 France adopted a law, which put in place a structured framework for preventive archaeology, in which INRAP plays a major role. The main aim of this framework is to ensure the protection and study of archaeological heritage affected or likely to be affected by development works by integrating the respective requirements of scientific research, heritage conservation and economic and social development.

(121) By pursuing the objective of promoting the conservation of archaeological heritage, the 2001 Law has made it possible to avoid the destruction of France’s exceptional heritage, with its long history characterised by a continuous, geographically wide and dense human presence since prehistoric times. It was structured around the establishment of a public administrative body.

(122) This is how INRAP was created and placed under the supervision of the Ministry of Culture and the Ministry for Higher Education, Research and Innovation; it took over the rights and obligations of AFAN.

(123) The Valetta Convention, to which all the Member States of the European Union are signatories, states that [there is a] need to protect the archaeological heritage should be reflected in town and country planning and cultural development policies and requires the State Parties [undertake] to institute, by means appropriate to the State in question, a legal system for the protection of the archaeological heritage. It also requires States to guarantee the scientific significance of archaeological research work and to increase the material resources for rescue archaeology.

(124) INRAP plays a major role in the operational chain of preventive archaeology, carrying out, through the missions entrusted to it, non-competitive and competitive activities relating to the study, conservation and promotion of archaeological heritage.

(125) Its non-competitive activity mainly involves carrying out evaluations to detect and preserve remains that might be destroyed by development projects. INRAP also contributes to the cultural dissemination and promotion of archaeology and the sharing of knowledge with the scientific community.

(126) INRAP also engages in economic activities on the preventive excavation market. Excavations must be carried out in order to safeguard archaeological remains detected during evaluations carried out prior to development projects. Since 2003, the law has provided that developers may call on public operators (INRAP and archaeological departments of local or regional authorities) or private operators to carry out excavation operations.

(127) The legislator chose to require INRAP to carry out excavations for which no other operator comes forward or in respect of which an operator is in default, for all French territory, for all archaeological periods and in all locations. In the absence of a candidate to carry out an excavation (or a candidate that fulfils the conditions for carrying out the excavation) or where a preventive archaeology operator ceases its activity or has its accreditation or authorisation withdrawn during the course of an excavation, INRAP is obliged to carry out or continue the excavation. INRAP is thus required to make up for the deficiencies or defaults of other operators.

(128) In the first case, where no preventive archaeology operator bids to carry out an excavation or no operator fulfils the conditions for carrying it out, INRAP is required to carry out the excavation at the request of the developer. The developer must submit its request to INRAP, together with the order prescribing the excavation issued by the State, to which the scientific specification is annexed. INRAP then has two months to send the developer a draft contract setting out the terms for carrying out the excavation. It must include the scientific project description, the provisional start date of the excavation, its duration and the proposed price for carrying out the operation. The contract signed between the developer and INRAP must be forwarded to the regional prefect by the developer. The regional prefect then authorises the excavation, or refuses to authorise it if the contract does not allow for the excavation order to be executed. The price of the operation proposed by INRAP must be determined by INRAP according to the same criteria as for any competitive activity. These criteria must be defined by decision of the head of INRAP in accordance with the arrangements laid down by its governing board. Any disagreements between the developer and INRAP on the terms or the funding of the excavation must be settled by decision of the regional prefect. This procedure of arbitration by the State is intended to provide a guarantee to developers, who do not have a choice of operator. From the date of issue of the excavation authorisation by the regional prefect, INRAP has six months to initiate the operation. If it fails to comply with this deadline, or if the operation is not completed within 18 months of that same date (extendable once by decision of the regional prefect), the excavation order issued by the State is deemed to have lapsed.

(129) In the second case, where a preventive archaeology operator ceases its activity or has its accreditation or authorisation withdrawn before the excavation is completed, INRAP is obliged to continue the excavation. Taking into account the state of progress of the operation and the terms of the specification annexed to the excavation order issued by the State, INRAP must draw up a scientific project description for the completion of the operation.

(130) The price of the operation proposed by INRAP must be determined according to the same criteria as in the first case (see recital 128 above).

(131) In their comments on the opening decision, the French authorities stress the importance of conserving archaeological heritage, which is an important part of Europe’s heritage, so that it can be passed on to future generations.

(132) They argue that this importance is enshrined in Article 167(1) TFEU, which provides that [t]he Union shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore. They also refer to Article 167(4), which provides that [t]he Union shall take cultural aspects into account in its action under other provisions of the Treaties, in particular in order to respect and to promote the diversity of its cultures.

(133) The French authorities explain that archaeology serves overriding requirements in the public interest relating to the conservation of national historical and artistic heritage, the pursuit of cultural policy objectives and protection of the environment and the urban environment. Historical and artistic heritage, once uncovered, may also benefit from the protection of national treasures within the meaning of Article 36 TFEU.

(134) Finally, the French authorities maintain that the French model of preventive archaeology, which fulfils the obligations of the Valletta Convention, has proved its effectiveness by ensuring an appropriate balance between the need to protect the heritage in all its richness and the implementation of development projects. Major discoveries have thus been made in recent years, as evidenced by the excavations of exceptional importance recently carried out by INRAP in Lavau (in the department of Aube) on a Celtic prince’s tomb (5th century BC), or by the accredited excavation firm Archeodunum SAS in Sainte-Colombe (in the department of Rhône) on a Gallo-Roman settlement (1st-4th century AD).

(135) The French authorities also explain that the results of excavations are regularly promoted by INRAP in scientific or mainstream publications, as well as through exhibitions, such as the exhibition held at the Science and Industry Museum in Paris (Cité des sciences et de l’industrie) devoted to the inhabitants of central and northern Gaul between the 3rd and 1st centuries BC.

Funding of INRAP under the rules on State aid

(136) In their comments, the French authorities point out that the Commission, in its Notice on the notion of aid, acknowledges that [c]ulture is a vehicle of identities, values and meanings that mirror and shape the Union’s societies. The area of culture and heritage conservation covers a vast array of purposes and activities, inter alia, ... archaeological sites ... Taking into account their particular nature, certain activities related to culture, heritage and nature conservation may be organised in a non-commercial way and thus be non-economic in nature. Public funding thereof may therefore not constitute State aid. Moreover, many cultural or heritage conservation activities are objectively non-substitutable ... and thus exclude the existence of a genuine market. In the Commission’s view, such activities would also qualify as non-economic in nature..

(137) In addition, the French authorities rely on the Commission’s explanations in the Notice on the notion of State aid to argue that the State aid rules only apply where the beneficiary of a measure is an undertaking, that [t]he classification of a particular entity as an undertaking thus depends entirely on the nature of its activities, and that [a]n entity that carries out both economic and non-economic activities is to be regarded as an undertaking only with regard to the former.

(138) On that basis, the French authorities argue that, in order to assess the measures contested by EVEHA, a distinction must first be made between situations where INRAP engages in economic activities and situations where it engages in non-economic activities.

INRAP’s non-economic activities

(139) The French authorities point out that the bulk of the public funding granted to INRAP is intended to cover non-economic missions of general interest (evaluations, research and promotion).

(140) According to the French authorities, INRAP’s main non-economic mission is to carry out evaluations, which are the cornerstone of preventive archaeology.

(141) The purpose of evaluations is to detect and classify remains present in the ground by means of appropriate technical tools, irrespective of place, time and type of development works planned, in order to check whether the works are likely to damage elements of archaeological heritage. The reports drawn up in connection with these operations contain scientific information that enables the State to issue reasoned orders for such heritage protection measures as it deems appropriate (excavations, amendments to the development project or listing as historical monuments).

(142) The French authorities explain that another of INRAP’s missions is to contribute to cultural dissemination and the promotion of archaeology and to knowledge-sharing with the scientific community, which falls within the scope of the activities excluded from the State aid rules as indicated under paragraph 31 of the Commission Notice on the notion of State aid.

(143) The French authorities accordingly argue that the aforementioned activities, which are activities of general interest carried out with public funding (which amounted to EUR [900-1 300] million over the period 2008-2021), must be considered non-economic activities.

(144) According to the French authorities, these activities should therefore be considered outside the scope of Article 107(1) TFEU.

INRAP’s economic activities as operator of last resort

(145) The French authorities explain that, in addition to its publicly funded non-economic activities, INRAP also carries out preventive archaeology excavations as operator of last resort which, over the period 2008-2021, were financed almost exclusively by the revenue generated by INRAP on the excavation market, with public subsidies (i.e. subsidies for public service costs) representing just [...] % of the revenue collected by INRAP from these activities.

(146) The French authorities explain that the objective of these subsidies for preventive archaeological excavations is to help INRAP meet the general interest costs imposed on it by law, in order to ensure that preventive excavations are carried out properly in all circumstances, so as not to penalise the development and construction market.

(147) According to the explanations provided by the French authorities, INRAP is obliged to: (a) have expertise covering all archaeological periods and geomorphological contexts; (b) carry out excavations where no bids are submitted under calls for tenders issued by developers; and (c) take over the running of a site if an operator defaults during an operation.

(147)

(a) have expertise covering all archaeological periods and geomorphological contexts;

(b) carry out excavations where no bids are submitted under calls for tenders issued by developers; and

(c) take over the running of a site if an operator defaults during an operation.

(148) Table 3 Additional costs arising from INRAP’s activities as operator of last resort over the period 2008-2021

To illustrate the importance of these operations and the need to finance them through subsidies, the French authorities adduce the following data: 2015 2016 2017 2018 2019 2020 2021 TOTAL Additional costs relating to premises […] […] […] […] […] […] […] […] Additional costs relating to specialists […] […] […] […] […] […] […] […] Additional costs relating to addressing precarious employment […] […] […] […] […] […] […] […] Additional costs relating to company property tax […] […] […] […] […] […] […] […] Additional costs relating to business value-added contribution […] […] […] […] […] […] […] […] Total additional marginal costs to be financed […] […] […] […] […] […] […] […] Subsidy for public service costs 3850000 5800000 5800000 7242000 - - - 22692000 Difference between INRAP’s costs and the subsidy […] […] […] […] […] […] […] - […]

(149) The French authorities explain that, for the period 2015-2017, the annual amount of the subsidy for public service costs actually allocated to the economic sector has remained below the marginal costs borne by INRAP. For 2018, the year in which the new cost accounting system came into operation (implemented from 1 January 2018), the marginal costs borne by INRAP ended up being lower than the amount of the annual subsidy. According to the French authorities, this difference can be explained in part by the reduction in the marginal costs associated with multiple premises, resulting from a short-term effect caused by the introduction of the new cost accounting system and the long-term effect of controlling the costs generated by the premises. Against this background, the French authorities argue that the subsidy for 2018 does not cover the entire difference between the cumulative amount of the subsidy for public service costs and the total additional costs generated over the period 2015-2018, which amount to EUR [...] million. Over the period 2019-2021, the EUR [...] million in marginal costs generated by the constraints imposed on INRAP on the excavation market were covered almost exclusively by INRAP’s own resources.

(150) Although they accept that this funding may be classified as State aid, the French authorities dispute the doubts expressed by the Commission in its opening decision as to the potential incompatibility of this aid with the provisions of Article 53 of the GBER.

(151) The French authorities maintain that the funding mentioned above meets the requirements of Article 53 of the GBER, which exempts, inter alia, operating aid for culture and heritage conservation below EUR 50 million before 2017, EUR 75 million from 2017 to 2023 and EUR 82,5 million after 2023, per undertaking per year, from the notification obligation in Article 108(3) TFEU (Article 4(1)(z) of the GBER).

(152) The French authorities argue that, over the period under examination in connection with the complaint, the subsidies for public service costs amounted to EUR 22,69 million paid between 2015 and 2018, i.e. an amount well below the thresholds mentioned above.

(153) The French authorities explain that INRAP’s activities are covered by Article 53(2) of the GBER, and in particular its subparagraph (b), which lists tangible heritage including all forms of movable or immovable cultural heritage and archaeological sites, monuments, historical sites and buildings; natural heritage linked to cultural heritage or if formally recognized as cultural or natural heritage by the competent public authorities of a Member State.

(154) According to the French authorities, the subsidies challenged in the complaint fund costs that are eligible under Article 53(5)(d), (e) and (f) of the GBER (costs of renting and equipping premises throughout the national territory, staffing costs resulting from the need for INRAP to cover all scientific fields and have at its disposal permanent scientific teams to ensure it has the capacity to intervene anywhere on the territory and in any environment (plan for addressing precarious employment)).

(155) The French authorities note that in recital 78 of the opening decision, the Commission states that it cannot be ruled out that the aid granted under Article 53 of the GBER funds INRAP beyond what is necessary for it to make a reasonable profit.

(156) However, in view of the amounts involved, they believe that the subsidies granted comply with the intensity and proportionality requirements set out in Article 53(7), which allows for a reasonable profit.

(157) First (see Table 3), the operating aid granted in the form of the subsidy for public service costs was not sufficient to cover all the additional costs generated over the period 2015-2018, which came to EUR [...] million. This is all the more true for the period 2015-2021, considering that the subsidies for public service costs ceased to be booked to INRAP’s activities as operator of last resort from 2019 while the additional costs came to EUR [7,03-28,8] million. Second, for all preventive archaeological excavation activities (including activities as operator of last resort), the balance between resources and expenditure amounts to EUR [...] million (gross operating surplus level, after accounting for the research and development tax credit (crédit d'impôt-recherche – CIR)) over the 2008-2021 financial years (see Table 5 below), which represents an operating margin of around [2,8-4,6] % and therefore a reasonable profit. The amounts of that aid were determined on the basis of reasonable projections of the costs entailed by the obligations imposed on INRAP by the Heritage Code in respect of excavations, i.e. a field of activity covering the entire territory, human resources qualified to cover all archaeological periods, all locations and environments, and interventions in the event of an absence of candidates or default on the part of the initial operator.

(158) Since the French authorities consider that the conditions for the application of the Regulation have been met, in particular as regards activities, eligible costs and aid intensity, in the interest of legal certainty the subsidies were placed under framework scheme SA.42681.

INRAP’s accounting separation

(159) As a preliminary point, the French authorities point to the existence and situation of INRAP’s accounting separation, which has been gradually strengthened and fine-tuned.

The period 2008-2017

(160) Specifically for the period 2008-2017, the French authorities explain that INRAP kept separate accounts for its non-economic activities, which were financed by the Ministry of Culture, and its economic activities.

(161) Before 1 January 2018, INRAP’s accounts were based on the following allocation principles: (1) Direct costs were allocated to areas of activity and organisational units. INRAP initially allocated all direct costs to their area of activity (excavations, evaluations, research, promotion, etc.) and organisational unit (HQ directorates, interregional directorates or archaeological research centres). Consumption of support services (logistics, IT, training, etc.) and overhead costs were assigned to indirect costs and structural costs. (2) Direct costs were assigned to activities and sectors. Activities were assigned to a sector – in the case of excavations and expert advice activities, to the competitive sector. (1) 100 % of the regional business tax (CET) was allocated to the for-profit sector. (2) The research and development tax credit (CIR) was allocated to the excavation activity. (3) The payroll tax was allocated in full to the non-competitive sector. (3) (Indirect) costs relating to the mixed (competitive and non-competitive) sector were allocated. This stage involved allocating the costs relating to the mixed sector. INRAP allocated the indirect operational costs to all the archaeological activities which they supported on the basis of the number of person-days committed to each activity. Common overhead costs, which constituted costs common to the competitive and non-competitive sectors, were broken down according to the number of the person-days by activity and sector. Tax costs were also allocated according to specific rules: (1) 100 % of the operating grant (budgeted RAP) was allocated to non-competitive activities. (2) 100 % of the research subsidy was allocated to the research activity. (3) The operating grant was allocated to the non-competitive sector. (4) The subsidy for public service costs was allocated to the competitive sector. (4) Allocation of revenues. Direct revenues were initially assigned to their area of activity and organisational unit. Subsidies were allocated as follows:

(161)

Stage 1: Direct costs were allocated to areas of activity and organisational units. INRAP initially allocated all direct costs to their area of activity (excavations, evaluations, research, promotion, etc.) and organisational unit (HQ directorates, interregional directorates or archaeological research centres). Consumption of support services (logistics, IT, training, etc.) and overhead costs were assigned to indirect costs and structural costs.

Stage 2: Direct costs were assigned to activities and sectors. Activities were assigned to a sector – in the case of excavations and expert advice activities, to the competitive sector.

Stage 3: (Indirect) costs relating to the mixed (competitive and non-competitive) sector were allocated. This stage involved allocating the costs relating to the mixed sector. INRAP allocated the indirect operational costs to all the archaeological activities which they supported on the basis of the number of person-days committed to each activity. Common overhead costs, which constituted costs common to the competitive and non-competitive sectors, were broken down according to the number of the person-days by activity and sector. Tax costs were also allocated according to specific rules: (1) 100 % of the regional business tax (CET) was allocated to the for-profit sector. (2) The research and development tax credit (CIR) was allocated to the excavation activity. (3) The payroll tax was allocated in full to the non-competitive sector.

100 % of the regional business tax (CET) was allocated to the for-profit sector.

The research and development tax credit (CIR) was allocated to the excavation activity.

The payroll tax was allocated in full to the non-competitive sector.

Stage 4: Allocation of revenues. Direct revenues were initially assigned to their area of activity and organisational unit. Subsidies were allocated as follows: (1) 100 % of the operating grant (budgeted RAP) was allocated to non-competitive activities. (2) 100 % of the research subsidy was allocated to the research activity. (3) The operating grant was allocated to the non-competitive sector. (4) The subsidy for public service costs was allocated to the competitive sector.

100 % of the operating grant (budgeted RAP) was allocated to non-competitive activities.

100 % of the research subsidy was allocated to the research activity.

The operating grant was allocated to the non-competitive sector.

The subsidy for public service costs was allocated to the competitive sector.

(162) The French authorities point out that this accounting system has been fine-tuned in the light of the advice and recommendations received.

(163) In response to EVEHA’s allegations in its complaint and to the Commission’s explanations in its opening decision, the French authorities argue that INRAP’s objectives and performance contract for 2011-2013, drawn up between INRAP and its line ministries and extended to cover 2014, stated that INRAP already had in place cost accounting that makes it possible to distinguish and allocate costs between the non-profit and for-profit sectors and to steer activities along major axes: evaluations, excavations, research, promotion and international action.

(164) In this regard, the French authorities point out that memorandum No 67181 of 6 June 2013 issued by the First President of the Court of Auditors to the Minister for Culture and Communication and the Minister for Higher Education and Research and covering the period 2002-2011, already cited by the complainant, acknowledges the existence of cost accounting, although it stresses the need to improve it.

(165) The French authorities also argue that, following on from the Court of Auditors’ 2013 report, INRAP’s objectives and performance contract for 2015-2017, extended to cover 2018, referred to the fact that it had been engaged for several years in setting up cost accounting, with a view to improving the quality of information on its cost prices and their structure and variable components.

(166) The French authorities explain that INRAP has taken steps to improve the quality of its budget, accounting and analytical management through a thorough internal control process. According to the French authorities, INRAP is focused on strengthening its system by means of updated, validated and mutually consistent tools for steering the various processes. The internal control framework, the risk mapping and the action plans are submitted annually to the board of governors for discussion.

(167) The French authorities argue that the Court of Auditors must have been convinced by INRAP’s efforts to improve its management system, since in its 2016 annual report, it states, with regard to INRAP’s archaeology policy, that [i]n the financial field, the institute’s cost accounting has been improved, and the deployment of the information system for managing the various aspects of evaluation and excavation operations (resource planning, budget management, monitoring of time spent) is almost completed. These tools will make it possible to distinguish, on objective grounds, expenditure relating to the institute’s public service activities, financed from public funds, from the cost of its for-profit activities (primarily excavations), so as not to distort competition with other operators. The resulting better knowledge of costs and net income for each activity is also an important lever for improving the management of the institute. Internal accounting and budgetary control processes have also been put in place gradually.

(168) The French authorities also explain that, contrary to EVEHA’s allegations, in its 2017 decision the Competition Authority did not find that INRAP had infringed competition law, and thus did not impose a penalty. Moreover, the French authorities argue that the Competition Authority did not find that there was no proper separation of accounts between INRAP’s competitive and non-competitive activities, but merely noted that the system could be improved.

(169) In conclusion, the French authorities argue that, over the period 2008-2017, INRAP did have a cost accounting system, which had been improved by the various measures undertaken since 2013 in compliance with the regulatory framework established by Decree No 2012-1246 of 7 November 2012 on budgetary management and public accounting.

The period after 2018

(170) From 1 January 2018, INRAP introduced a new cost accounting model to ensure an even stricter and more reliable accounting separation between its non-profit activities (non-economic public service) and its for-profit activities (economic sector open to competition), based on an incremental cost approach. (1) Direct costs are allocated to areas of activity and organisational units. INRAP initially allocates all direct costs to their area of activity (excavations, evaluations, research, promotion, etc.) and organisational unit (HQ directorates, interregional directorates or archaeological research centres). Consumption of support services (logistics, IT, training, etc.) and overhead costs are assigned to indirect costs and structural costs. (2) Activities are assigned to sectors (competitive and non-competitive). Activities are assigned to a sector: (1) First, INRAP allocates the indirect operational costs to all the archaeological activities which they support on the basis of the number of person-days committed to each activity. (2) In a second step, it then allocates the common overhead costs, including those of the headquarters and the central support functions, which are costs common to the competitive and non-competitive sectors. They are allocated based on the incremental cost approach, using a specific allocation key. Overhead costs that cannot be allocated directly are broken down according to a ratio of [...] % for the economic sector open to competition and [...] % for the non-economic sector. This ratio is calculated by combining two criteria: an external criterion based on a benchmark of 12 private competitors, and an internal criterion of support activities. The ratio of [...] % is the average of these two scenarios, resulting in an allocation that stands up to scrutiny in the light of the principle of incremental costs. (1) 100 % of the regional business tax (CET) is allocated to the competitive sector. (2) The research and development tax credit (CIR) is allocated to the excavation activity. (3) The payroll tax is allocated in full to the non-competitive sector. (3) Tax costs are also allocated according to specific rules: (3) Costs of support functions and overhead costs are processed. This stage, at which indirect costs and overhead costs are processed, involves two steps: (1) Since 2019, all operating grants are allocated to the non-competitive sector. (2) 100 % of the research subsidy is allocated to the research activity. (4) Allocation of revenues. Direct revenues are initially assigned to their area of activity and organisational unit. Subsidies are allocated as follows:

(170)

Stage 1: Direct costs are allocated to areas of activity and organisational units. INRAP initially allocates all direct costs to their area of activity (excavations, evaluations, research, promotion, etc.) and organisational unit (HQ directorates, interregional directorates or archaeological research centres). Consumption of support services (logistics, IT, training, etc.) and overhead costs are assigned to indirect costs and structural costs.

Stage 2: Activities are assigned to sectors (competitive and non-competitive). Activities are assigned to a sector:

Stage 3: Costs of support functions and overhead costs are processed. This stage, at which indirect costs and overhead costs are processed, involves two steps: (1) First, INRAP allocates the indirect operational costs to all the archaeological activities which they support on the basis of the number of person-days committed to each activity. (2) In a second step, it then allocates the common overhead costs, including those of the headquarters and the central support functions, which are costs common to the competitive and non-competitive sectors. They are allocated based on the incremental cost approach, using a specific allocation key. Overhead costs that cannot be allocated directly are broken down according to a ratio of [...] % for the economic sector open to competition and [...] % for the non-economic sector. This ratio is calculated by combining two criteria: an external criterion based on a benchmark of 12 private competitors, and an internal criterion of support activities. The ratio of [...] % is the average of these two scenarios, resulting in an allocation that stands up to scrutiny in the light of the principle of incremental costs. (1) 100 % of the regional business tax (CET) is allocated to the competitive sector. (2) The research and development tax credit (CIR) is allocated to the excavation activity. (3) The payroll tax is allocated in full to the non-competitive sector. (3) Tax costs are also allocated according to specific rules:

First, INRAP allocates the indirect operational costs to all the archaeological activities which they support on the basis of the number of person-days committed to each activity.

In a second step, it then allocates the common overhead costs, including those of the headquarters and the central support functions, which are costs common to the competitive and non-competitive sectors. They are allocated based on the incremental cost approach, using a specific allocation key. Overhead costs that cannot be allocated directly are broken down according to a ratio of [...] % for the economic sector open to competition and [...] % for the non-economic sector. This ratio is calculated by combining two criteria: an external criterion based on a benchmark of 12 private competitors, and an internal criterion of support activities. The ratio of [...] % is the average of these two scenarios, resulting in an allocation that stands up to scrutiny in the light of the principle of incremental costs.

Tax costs are also allocated according to specific rules: (1) 100 % of the regional business tax (CET) is allocated to the competitive sector. (2) The research and development tax credit (CIR) is allocated to the excavation activity. (3) The payroll tax is allocated in full to the non-competitive sector.

100 % of the regional business tax (CET) is allocated to the competitive sector.

The research and development tax credit (CIR) is allocated to the excavation activity.

The payroll tax is allocated in full to the non-competitive sector.

Stage 4: Allocation of revenues. Direct revenues are initially assigned to their area of activity and organisational unit. Subsidies are allocated as follows: (1) Since 2019, all operating grants are allocated to the non-competitive sector. (2) 100 % of the research subsidy is allocated to the research activity.

Since 2019, all operating grants are allocated to the non-competitive sector.

100 % of the research subsidy is allocated to the research activity.

(171) With regard to this period, the French authorities point out that the accountancy firm commissioned as an independent auditor under the INRAP Audit of the cost accounting, costing and certification model contract states, in its statement of compliance for 2018, that INRAP’s cost accounting complies with the principle of accounting separation and does not reveal the existence of cross-subsidisation.

(172) The French authorities point out that the auditor also stated that in the future, the methodology for allocating indirect costs will have to be developed further and improved. In addition, the French authorities explain that, in its statement of compliance for 2019, the auditor did not reiterate this request for a more detailed methodology for allocating indirect costs, which is evidence that the methodology had been improved in the meantime and that the auditor’s recommendation had been implemented.

(173) According to the French authorities, for 2020 the auditor again concluded that INRAP’s cost accounting is consistent with the general accounts and includes all the costs recorded therein and respects the principle of accounting separation, that INRAP’s cost accounting complies with general accounting principles and that the current presentation of INRAP’s cost accounting does not reveal the existence of cross-subsidisation.

(174) In addition, the French authorities argue that the cost accounting put in place in 2018 as part of the commitments given to the Competition Authority reveals the revenues and costs of INRAP’s non-economic and economic activities according to a method and allocation keys recommended by an independent consultancy firm, the principle of which must have been accepted by the Competition Authority, since it has not so far called into question INRAP’s compliance with the commitments given.

(175) The French authorities point out that, in accordance with the principle of accounting separation, the costs relating to INRAP’s activities are determined by direct allocation of the costs of operations and indirect allocation of structural costs, on the basis of specific allocation keys whose consistency and relevance ensure a quantitative causal relationship with the units of work.

(176) According to the French authorities, INRAP’s cost accounting thus makes it possible to determine precisely the full costs associated with each of INRAP’s activities, including those of the non-economic sector.

(177) The French authorities dispute the complainant’s allegation, referred to by the Commission in its opening decision, that INRAP’s cost accounting method is biased.

(178) They explain that, besides the link drawn between cost accounting and the amount of public subsidies, they are surprised by the unsubstantiated assertion of an allegedly excessively high level of public subsidies. The amount of these subsidies is estimated by the Ministry of Culture in the light of the operational and budgetary needs arising from INRAP’s public service mission. This estimate is then submitted to Parliament, which adopts it in the form of budget appropriations entered in a budget law. Operating grants paid to INRAP’s non-economic sector were kept at a stable level (excluding COVID-19-related support) over the 2018, 2019 and 2020 financial years.

(179) According to the French authorities, the complainant’s allegation is all the more incorrect since, for those three financial years, those subsidies proved insufficient to cover all the costs generated by the activities of that sector, the liabilities having been covered by the revenues of the competitive sector.

(180) In addition, the French authorities argue that the Court of Auditors, which is an independent court, is there to judge, audit and evaluate public accounts in accordance with the national and European standards in force, including those relating to cost accounting (see the 2012 Decree referred to in recital 169 above).

(181) The Court of Auditors did not, however, initiate proceedings against INRAP. On the contrary, as mentioned above, in its 2016 annual report the Court of Auditors highlighted the improvement of INRAP’s budgetary management system.

(182) In addition, the French authorities point out that, in 2020, the Ministry of Culture’s internal risk control function (MCIMR) welcomed the efforts made by INRAP to maintain and improve its internal control approach. In the same vein, in 2021 the General Economic and Financial Audit Service (Contrôle Général Économique et Financier – CGefi), which performs control, audit and advisory functions under the authority of the Minister for Economic Affairs and Finance in accordance in particular with Decree No 2017-510 of 7 April 2017 and Decree No 2012-1246 of 7 November 2012, found that INRAP’s implementation of internal budgetary and accounting control designed to guarantee the quality of the accounts drawn up was effective and noted the high standard of INRAP’s internal control arrangements.

(183) On the basis of the above, the French authorities argue that INRAP, which already complied with the legal and regulatory standards on accounting before 2018, has continued to strengthen and fine-tune the existing cost accounting system in order to satisfy the growing requirements, including those imposed by the Competition Authority in 2018, and to distinguish as precisely as possible the expenditures and revenues relating to its public service activities, financed from public funds, from those relating to competitive activities, as evidenced by the auditors’ statements.

Absence of cross-subsidisation and compatibility of the contested measures France’s case for the absence of cross-subsidisation

(184) In their comments on the opening decision, the French authorities explain that, in accordance with the principles relating to the burden of proof in matters of State aid, it is for the European Commission to prove the existence of aid.

(185) According to the French authorities, the General Court of the European Union has stated that the inculpatory evidence and the statement of reasons for a Commission decision must enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review. They also explain that it follows from the case law of the Court of Justice that the Commission must ensure that the information at its disposal, even if incomplete and fragmented, constitutes ... a sufficient basis on which to conclude that aid was given.

(186) According to the French authorities, when it comes to proving the existence of cross-subsidisation, the Court has specified that it cannot be excluded that in the absence of any separate accounting for its various activities, there was a risk of cross-subsidisation [...] which it is also for the national court to determine.

(187) According to the French authorities, however, in view of the fact that INRAP did indeed have a cost accounting system for its competitive and non-competitive activities – even if, by the French authorities’ own admission, that system was imperfect – a causal link between existing but imperfect cost accounting and the existence of cross-subsidisation cannot be established.

(188) Thus, the French authorities argue, the fact that the Court of Auditors or the Competition Authority have pointed out that INRAP’s cost accounting could be improved does not in any way constitute proof of cross-subsidisation.

(189) In this respect, they point out that the General Court has held that contrary to what the applicants maintain, the fact that the Commission has urged the French Government to ensure that La Poste’s accounting system is improved in the future provides no ground for inferring that in adopting the [contested] decision the Commission recognised that a cross-subsidy existed.

The compatibility of the funding on the basis of Article 53 of the GBER

(190) In their comments on the opening decision, the French authorities explain that the objective of heritage conservation may have led to State aid being granted to INRAP – albeit for a tiny part of the costs of its competitive activities.

(191) However, the French authorities argue that, contrary to the comments made by EVEHA in response to the opening decision, they do not have to prove strict and necessary compensation for public service costs within the meaning of the SGEI Decision.

(192) The French authorities, being of the view that the funding granted for INRAP’s competitive activities could be classified as State aid, declared it under Article 53 of the GBER and, more specifically, on the basis of framework scheme SA.42681 adopted for the implementation of Article 53 of the GBER.

(193) In this regard, the French authorities point out that Article 53 of the GBER provides that aid for heritage conservation is compatible with the internal market. The French authorities argue that Article 53(2)(b) of the GBER covers tangible heritage including all forms of movable or immovable cultural heritage and archaeological sites, monuments, historical sites and buildings; natural heritage linked to cultural heritage or if formally recognized as cultural or natural heritage by the competent public authorities of a Member State.

(194) Moreover, they explain that Article 53(3) of the GBER provides that [t]he aid may take the form, specifically, of (b) operating aid, a principle that appears to be called into question by EVEHA in its submission.

(195) According to the French authorities, when it comes to eligible costs, the aid paid to INRAP as operating aid falls mainly under Article 53(5)(d), (e) and (f) of the GBER. More specifically, it made it possible to support the funding of the costs of renting and fitting out the premises required to carry out archaeological excavations throughout the national territory, staffing costs to ensure the availability of all scientific specialisms and permanent teams to ensure operational capacity throughout the territory and in all environments.

(196) Thus, the French authorities argue that, contrary to what EVEHA claims in its comments, Article 53 of the GBER and framework scheme SA.42681 constitute a sufficient legal basis for funding INRAP’s operating costs, as the other conditions appear to be met.

(197) Furthermore, the French authorities stress that the aid granted complies with the intensity conditions set out in Article 53(6) and (7) of the GBER, which provides for the possibility for the beneficiary to factor in a reasonable profit. According to the French authorities, the reasonable profit cannot be disputed, given INRAP’s low operating margin (in the light of its revenues) of [0,5-2,0] % , the very limited nature of which is noted by the Commission in recital 93 of the opening decision.

The compatibility of the funding on the basis of Article 107(3)(d) TFEU

(198) In the alternative, the French authorities explain that, notwithstanding the possible applicability of framework scheme SA.42681, which is exempted on the basis of Article 53 of the GBER, the Commission’s observations, in its opening decision, regarding the potential compatibility of the aid granted to INRAP on the basis of Article 107(3)(d) are well founded

(199) The French authorities explain that Article 107(3)(d) TFEU provides that aid to promote culture and heritage conservation may be declared compatible with the internal market where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest.

(200) The French authorities note that it is up to the Member States to determine which projects and activities relate to promoting culture and conserving heritage.

(201) They explain that, regardless of the scale or context, each operation carried out by INRAP, whether in the non-economic or the economic field, contributes, on the ground and during successive study phases, to the conservation of archaeological heritage and to cultural policy objectives, including through the overall improvement of scientific knowledge, and to the protection, and therefore the promotion, of archaeological heritage.

(202) They argue that the funding, without which INRAP would not be able to perform its tasks, is entirely aimed at promoting culture and heritage conservation.

(203) They maintain that the funding is necessary for INRAP to pursue its missions to protect, promote and safeguard archaeological heritage. It is also appropriate and proportionate. Without this funding, INRAP – which has the obligation to carry out excavations as operator of last resort – would not be able to bear, on its own, the costs inherent in these obligations solely on the basis of the revenues generated by its archaeological excavation activities. It follows that, in the absence of this funding, part of the missions to protect, promote and safeguard archaeological heritage pursued by INRAP would not be sustainable in the long term.

(204) The funding granted to INRAP corresponds as closely as possible to its budgetary, financial and operational needs. Prior to the initiation of the formal investigation procedure, the French authorities had argued that the operating margin (based on INRAP’s revenues) for 2008-2020 was very limited and amounted to only [0,5-2,0] %, i.e. a balance of EUR [...] million. According to the French authorities, INRAP is therefore not over-funded by public funds to carry out all of its activities.

(205) Table 4 Table 5 Revenue and expenditure in the non-economic sector of INRAP over the period 2008-2021 Revenue and expenditure in the economic sector of INRAP over the period 2008-2021

During the formal investigation procedure, the French authorities also provided, for the period 2008-2021, detailed data concerning the revenue and expenditure relating to INRAP’s economic and non-economic activities:

(206) The information provided by the French authorities also shows that the balance (understood as the difference between revenue and expenditure) of INRAP’s economic sector over the period 2008-2021 is approximately EUR [...] million, giving an operating margin of [2,8-4,6] % over the whole period.

(207) Furthermore, the French authorities explain that the funding of INRAP’s activities does not affect trading conditions and competition to an extent that is contrary to the common interest.

(208) According to the French authorities, it has a very limited effect on trade, especially since, by its very nature, it concerns missions and services which are eminently national and missions that generate public service costs. Any negative effects on the market are extremely limited, as evidenced by the prices charged by INRAP on the excavation market which, according to the French authorities, and contrary to the complainant’s allegation, do not affect trading conditions or amount to predatory pricing or produce a crowding-out effect, especially since they are on average higher over the period under examination than those charged by other operators in the field of preventive archaeology. In this regard, the French authorities argue that INRAP, in the context of its competitive activities, is attentive to the fact that any profits likely to accrue from each operation remain reasonable. They explain that, following the Competition Authority’s decision of 1 June 2017, INRAP introduced a tool for calculating its margins by operation prior to the submission of its tenders for excavation contracts. This tool makes it possible to standardise the methodology, while ensuring that INRAP automatically generates a profit. Thus, for each operation, INRAP ensures that the forecasted net margin takes into account all costs in their entirety. According to the French authorities, it follows that INRAP could never be in a position where it would be able to engage in predatory pricing.

(209) Moreover, as regards the contribution to the objective of common interest, according to the French authorities there can be no doubt that the positive effects far outweigh any potential negative effect, as what is involved is the pursuit of a legitimate objective of general interest in the form of archaeological heritage conservation, the means for which are for the Member States to determine, and the importance of which is also recognised by the TFEU, for example in its Article 36 as regards national treasures of archaeological value.

(210) Finally, the French authorities conclude that all the compatibility criteria in Article 107(3)(d) are satisfied as far as the funding granted to INRAP is concerned.

ASSESSMENT OF THE MEASURES AT ISSUE Identification of the measures at issue

(211) The two measures at issue, namely (i) potential cross-subsidisation between INRAP’s non-economic activities and its economic activities and (ii) subsidies for public service costs, are described in Sections 3.1.1 and 3.1.2 of this Decision.

(212) Following the opening of the procedure, the Commission did not receive any comments from EVEHA or from France calling into question the identification of these measures

(213) Consequently, the Commission carried out the following analysis.

Existence of State aid

(214) Under Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.

(215) It follows that, for a measure to be considered as State aid within the meaning of Article 107(1) TFEU, the following cumulative criteria must be met: (a) the measure must be imputable to the State and granted through State resources; (b) the measure must be selective and benefit an undertaking engaged in economic activities; (c) the measure must confer an economic advantage; and (d) the measure must distort or threaten to distort competition and affect trade between Member States.

(215)

(a) the measure must be imputable to the State and granted through State resources;

(b) the measure must be selective and benefit an undertaking engaged in economic activities;

(c) the measure must confer an economic advantage; and

(d) the measure must distort or threaten to distort competition and affect trade between Member States.

(216) Since these criteria are cumulative, if one of them is not met the measure cannot be classified as State aid within the meaning of Article 107(1) TFEU.

Subsidies for public service costs in connection with preventive archaeological excavations Concepts of undertaking and economic activity

(217) In accordance with settled case-law, the concept of an undertaking covers any entity engaged in an economic activity, regardless of the legal status of the entity or the way in which it is financed. The classification of a particular entity as an undertaking thus depends entirely on the nature of its activities. The Court of Justice has held that any activity consisting in offering goods and services on a given market is an economic activity.

(218) As indicated in recitals 19 to 21, the market for preventive archaeological excavations was opened up to competition by Law No 2003-707 of 1 August 2003. In accordance with Article L.523-8 of the Heritage Code, developers may choose one of the following operators to implement an order by the State: (i) INRAP, (ii) a local or regional archaeological department, or (iii) any other public or private entity, provided its scientific expertise is accredited by the State.

(219) The Commission notes that INRAP offers fee-based services on the deregulated market for preventive archaeological excavations to enable developers to comply with government orders prior to carrying out land development projects.

(220) INRAP’s preventive archaeological excavation activities are therefore economic activities. This classification as an economic activity has in fact been recognised both by the Competition Authority, in its decision of 1 June 2017, and by its predecessor (the Competition Panel, Conseil de la Concurrence), in its opinion of 19 May 1998 concerning AFAN, the predecessor of INRAP.

(221) Thus, there is no doubt that on the market for preventive archaeological excavations, INRAP does indeed constitute an undertaking for the purposes of Article 107(1) TFEU.

(222) This conclusion, which had already been reached by the Commission in its opening decision, is not disputed by the French authorities.

Use of State resources and imputability of the measure to the State

(223) In accordance with Article 107(1) TFEU, only measures granted by a Member State or through State resources are liable to constitute State aid. The granting of an advantage directly or indirectly through State resources and the imputability of such a measure to the State are two separate conditions, both of which have to be met to establish the existence of State aid.

(224) First, as regards the criterion relating to imputability to the State, it should be noted that INRAP’s funding is provided for by Article L. 524-1 of the Heritage Code. Moreover, the subsidies for public service costs are granted by the Ministry of Culture.

(225) There is therefore no doubt that the measure is imputable to the State.

(226) Second, as regards the criterion of State resources, it should be borne in mind that State resources include all resources of the public sector. The transfer of State resources may take many forms, such as direct grants, loans, guarantees, direct investment in the capital of companies and benefits in kind. Direct subsidies granted by a public entity are, by their nature, State resources.

(227) Thus, the measure in question relating to potential aid to the competitive sector is imputable to the French State and is granted through State resources.

(228) This conclusion, which had already been reached by the Commission in its opening decision, is similarly not disputed by the French authorities.

Selectivity of the measure

(229) In order to be considered State aid, a measure must be selective, in other words it must favour certain undertakings or the production of certain goods within the meaning of Article 107(1) TFEU.

(230) Only INRAP has been granted subsidies for public service costs, although other undertakings within the meaning of Article 107(1) TFEU are active in the same sector as that in which INRAP operates. As this is individual aid, it is assumed to be selective. INRAP is the only entity receiving these subsidies. Hence, the measure is selective within the meaning of Article 107(1) TFEU. This conclusion, which had already been reached by the Commission in its opening decision, is similarly not disputed by the French authorities.

Existence of an economic advantage

(231) An economic advantage within the meaning of Article 107(1) TFEU is any benefit which an undertaking could not have obtained under normal market conditions, that is to say in the absence of State intervention. Both the granting of positive economic advantages and relief from economic burdens may constitute an advantage. The latter is a broad category which comprises any mitigation of charges normally included in the budget of an undertaking.

(232) To assess whether or not there is an advantage, the financial situation of the undertaking following the measure should be compared with its financial situation had the measure not been introduced. Since only the effect of the measure on the undertaking matters, it is irrelevant whether the advantage is compulsory for the undertaking in that it could not avoid or refuse it.

(233) Costs arising from regulatory obligations imposed by the State can in principle be considered to relate to the inherent costs of the economic activity, so that any compensation for these costs confers an advantage on the undertaking. This means that the existence of an advantage is in principle not excluded by the fact that the benefit does not go beyond compensation for a cost stemming from the imposition of a regulatory obligation. The same applies to relief for costs that the undertaking would not have incurred had there been no incentive stemming from the State measure because without this incentive it would have structured its activities differently.

(234) In the case at hand, the measure consists of an annual subsidy to compensate INRAP for losses incurred as a result of the obligations imposed on it in its capacity as operator of last resort for preventive archaeological excavations. Consequently, compensation for these costs, in principle, confers an economic advantage on INRAP.

(235) The economic advantage derives from the fact that INRAP is relieved from certain economic burdens that would have been charged to its budget, and benefits from financial revenue which it would not have received under normal market conditions. This conclusion, which had already been reached by the Commission in its opening decision, is similarly not disputed by the French authorities.

(236) In their comments, the French authorities argue that the compensation for public service costs does not constitute public service compensation within the meaning of the Altmark ruling, but rather operating aid covered by Article 53 GBER. By that reasoning, the French authorities implicitly accept that the subsidy for public service costs confers an economic advantage on INRAP (only State aid is covered by the GBER).

(237) However, as the Commission pointed out in its opening decision, in the case of subsidies granted as compensation for public service costs, the economic advantage could, in the alternative and for the sake of completeness, be assessed in the light of the Altmark ruling. That ruling held that the granting of an advantage could be ruled out in the context of public service compensation if four cumulative conditions are met: (1) the recipient undertaking must actually have public service obligations to discharge and the obligations must be clearly defined; (2) the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner; (3) the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations; (4) where the undertaking which is to discharge public service obligations is not chosen pursuant to a public procurement procedure, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for discharging the obligations.

(237)

(1) the recipient undertaking must actually have public service obligations to discharge and the obligations must be clearly defined;

(2) the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner;

(3) the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations;

(4) where the undertaking which is to discharge public service obligations is not chosen pursuant to a public procurement procedure, the level of compensation needed must be determined on the basis of an analysis of the costs which a typical undertaking, well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements, would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for discharging the obligations.

(238) Due to the cumulative nature of the conditions set out in the Altmark judgment, it is sufficient for one of the conditions not to be met for the compensation to constitute State aid within the meaning of Article 107(1) TFEU.

(239) Without prejudice to the analysis of the other conditions, it is clear that at least the fourth criterion is not complied with in so far as INRAP’s tasks have not been entrusted to it by means of a public procurement procedure and there is no evidence that the amount of compensation corresponds to the costs of a well-run undertaking.

(240) The Commission therefore concludes that the subsidies for public service costs confer on INRAP an economic advantage within the meaning of Article 107(1) TFEU.

Distortion of competition and effect on trade

(241) A measure granted by the State is considered to distort or threaten to distort competition when it is liable to strengthen the competitive position of the recipient compared with other undertakings with which it competes.

(242) For all practical purposes, a distortion of competition within the meaning of Article 107(1) TFEU is generally found to exist when the State grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition.

(243) As indicated in recitals 19 to 21, the market for preventive archaeological excavations was opened up to competition by Law No 2003-707 of 1 August 2003. Therefore, any financial advantage granted to INRAP in the context of its economic activities (such as the award of subsidies for public service costs) is liable to strengthen its competitive position vis-à-vis other preventive archaeology operators, at least since 1 August 2003.

(244) As regards the criterion of affecting trade, it is settled case-law that it is not necessary to establish that the aid has an actual effect on trade between Member States but only whether the aid is liable to affect such trade.

(245) Law No 2003/707 of 1 August 2003 allowed operators from other Member States to enter the French market. Accordingly, the financial advantage enjoyed by INRAP by virtue of its being granted aid in a competitive sector in the form of subsidies for public service costs is liable to make market entry more difficult for those operators and to affect trade between Member States. This conclusion, which had already been reached by the Commission in its opening decision, is similarly not disputed by the French authorities.

Conclusion on classification of the subsidies for public service costs as aid

(246) In the context of the formal investigation procedure, the Commission has not received any comments that alter its assessment to the effect that the subsidies for public service costs should be classified as State aid.

(247) Consequently, for all the above reasons, the Commission concludes that the subsidies for public service costs constitute State aid in favour of INRAP.

Potential cross-subsidisation between INRAP’s non-competitive activities subsidised by the State and its competitive activities INRAP’s accounting separation

(248) As explained by EVEHA (see recital 86), potential cross-subsidisation between INRAP’s non-economic activities and its economic activities constitutes the crux of the complaint.

(249) In its opening decision, the Commission expressed detailed doubts regarding a lack of accounting separation such as would rule out cross-subsidisation between INRAP’s non-competitive activities and its competitive activities. It did not, however, reach a definitive conclusion on such a lack of separation and, therefore, on whether State aid could have been granted to INRAP in this way.

(250) Given the difficulties of ascertaining the suitability of the cost accounting system put in place by INRAP, the Commission, in its opening decision, did not take a definitive position on the existence of State aid arising from potential cross-subsidisation, but noted that it would be possible, in any event, for it to assess compatibility with the internal market.

(251) However, in its comments in response to the opening decision, EVEHA argues (see recitals 75 et seq.) that the Commission cannot take a position on the compatibility of a measure until it has first determined whether that measure constitutes State aid. This position has been confirmed by the Court in a recent judgment handed down in the Vattenfall case.

(252) The Commission must therefore first determine whether or not State aid is present before taking a decision on the possible compatibility of any such aid resulting from potential cross-subsidisation.

(253) During the formal investigation procedure, the Commission received comments from EVEHA in this respect (see recital 72), reiterating its view that there was a lack of reliable accounting separation between 2008 and 2021.

(254) Likewise, the Commission received the arguments of the French authorities (see section 5.3) to the effect that, between 2008 and 2018, INRAP already had a cost accounting system in place, albeit one that could be improved (see recital 164), and that INRAP had been engaged since before 2015 in setting up cost accounting, with a view to improving the quality of information on its cost prices and their structure and variable components. (see recital 165). The French authorities also cite a decision of the Competition Authority dated 2017, which did not find that there was a lack of appropriate accounting separation between competitive and non-competitive activities but nevertheless noted that the system could be improved. Lastly, the French authorities indicate that, at the very least after 2018, INRAP’s cost accounting was such as to preclude cross-subsidisation thanks to its having been strengthened in the preceding years (see recital 170). This was established by an accountancy firm commissioned as an independent auditor between 2018 and 2020 in particular (see recitals 170 to 173).

(255) In addition to these considerations, the Commission states that during the formal investigation procedure it took note of the expert report of 18 December 2023, commissioned by the Tribunal de Commerce de Paris (Paris Commercial Court) as part of an action brought by EVEHA against INRAP (on 31 December 2018) for compensation for damage suffered as a result of alleged anti-competitive practices on the part of INRAP.

(256) The expert report is itself based on the audit previously carried out by the independent auditor referred to in recital 254. The expert witness’s conclusion is as follows: In conclusion, after having carried out all the checks we considered appropriate, we can confirm that the data in INRAP’s communication of 1 July 2021 are taken from its cost accounting system, which is consistent with the general accounts. For the reasons set out in this report and summarised above, we are able to validate the turnover figures (breakdown between the profit and the non-profit sectors) [bold type added by the expert witness]. However, we are unable to validate the cost data (percentage breakdown between direct and indirect costs for each of the two sectors of activity), as there is no methodology for allocating certain indirect costs supported by sufficiently objective and robust criteria [bold type added by the expert witness]. This does not in itself mean that the data provided by INRAP regarding the allocation of indirect costs are necessarily incorrect. It means that, as things stand, the main allocation key used to allocate these costs between the two sectors of activity (profit and non-profit) is not sufficiently substantiated to allow for validation, particularly as the allocation key used by INRAP deviates from the practice generally observed in comparable economic sectors. [Commission underlining]

(257) The Commission notes that in order for the funding of a non-economic activity to fall outside State aid rules, the Member State concerned must ensure that the funding cannot under any circumstances be used to cross-subsidise or indirectly subsidise other economic activities.

(258) The Commission also notes that cross-subsidisation can be precluded by keeping separate accounts, allocating costs and revenues in an appropriate way and ensuring that any public funding does not benefit other activities.

(259) However, the above information shows that despite years of scrutiny, both before the Commission and before the national authorities or courts, no independent auditor has been able to establish that the allocation key(s) used to allocate the costs incurred by INRAP between the two sectors of activity (economic and non-economic) is(are) sufficiently substantiated as to rule out any risk of cross-subsidisation.

(260) Therefore, while it accepts France’s arguments concerning the existence of a cost accounting system put in place by INRAP and the efforts by the French authorities to improve it (including for the future), the fact remains that the Commission is required, at the end of the formal investigation procedure, to assess whether or not there is State aid in the form of cross-subsidisation in favour of INRAP.

(261) It is therefore on the basis of this finding that the Commission will assess whether all the conditions laid down in Article 107(1) TFEU are met.

Concepts of undertaking and economic activity

(262) As indicated in recital 217, the classification of a particular entity as an undertaking depends entirely on the nature of its activities. The Court of Justice has held that any activity consisting in offering goods and services on a given market is an economic activity.

(263) In the case at hand, the potential cross-subsidisation alleged by EVEHA purportedly stems from the public funding granted by the French State to INRAP’s non-competitive sector.

(264) It is therefore necessary to define the nature of the activities covered by this funding, namely the activities involving preventive archaeology evaluations, the preparation of reports and the dissemination of the resulting knowledge (see section 2.1.1).

(265) As explained by the French authorities, the evaluation activity is a public service of general interest for which the developer does not pay the operator.

(266) Indeed, as explained below, there is no real market for this activity. The evaluation activity is closely linked to the State’s public functions relating to land development which aim to protect archaeological heritage.

(267) INRAP finances its evaluation activity through an operating subsidy paid by the State. This activity is a public service of general interest aimed at preserving archaeological heritage. It seeks to identify and describe, by means of studies, surveys or field work, any elements of archaeological heritage that may be present on the site, and to present the findings in a report (Article R. 523-15(1) of the Heritage Code).

(268) The evaluation work culminates in the preparation of a report submitted to the State. The report forms an integral part of the evaluation and sets out its findings. The reports are drawn up by INRAP and the relevant authorised departments of local or regional authorities. They contain scientific information that enables the State to order developers to take appropriate heritage protection measures (preventive archaeological excavations, amendments to the development project or listing as a historical monument).

(269) This work is strictly regulated by the State; it orders and authorises the evaluations and monitors their implementation, which is entrusted to an authorised department of a local or regional authority or to INRAP. Developers do not choose who carries out the evaluation. The designation process is strictly laid down by law: the authorised departments of local or regional authorities are first in line for conducting the evaluation; if they are unable to do so, it is conducted by INRAP.

(270) The evaluation report constitutes scientific archaeological data, an administrative document and a public record. It can therefore be used by archaeological researchers for scientific studies unrelated to land development, with no restrictions.

(271) Research activities (conducting research projects, writing articles, participating in scientific symposia, etc.) and initiatives to publicise archaeological findings (helping to organise exhibitions etc.) are carried out by INRAP independently of its preventive archaeology activity. They are financed entirely by INRAP’s operating subsidy and are not paid for by third parties.

(272) The preventive archaeology evaluation activity is therefore not an economic or competitive activity, given the way in which it is governed and organised by the State: (1) First, there is no market for preventive archaeology evaluation services as the State has decided to entrust this service exclusively to INRAP or to local or regional authorities. (2) Second, this activity falls under the exercise of the prerogatives of official authority, within the meaning of paragraph 17 of the Commission Notice on the notion of State aid: Article 107(1) of the Treaty does not apply where the State acts by exercising public power or where public entities act in their capacity as public authorities. The preventive archaeology evaluation activity is intrinsically linked to the exercise of the prerogatives of public power concerning the way in which the State wishes to manage town and country planning and preserve its archaeological and historical heritage. In this regard, the purpose of the preventive archaeology evaluation activity is clearly to establish whether a site contains traces of past human occupation using appropriate equipment and drawing on highly specialised scientific knowledge. This analysis task is necessary for the conservation of archaeological heritage and pursues a public interest objective that has no economic dimension. It is an archaeological heritage protection activity which is inseparable from research for more knowledge and better understanding and the dissemination of research results within the meaning of paragraph 31 of the Commission Notice on the notion of State aid. (3) Lastly, in view of the specific nature and role of preventive archaeology evaluations that are carried out in a standardised manner throughout the country, and given the absence of a genuine market for this type of services, the evaluation activity appears to be non-substitutable within the meaning of paragraph 36 of the Commission Notice on the notion of State aid.

(272)

(1) First, there is no market for preventive archaeology evaluation services as the State has decided to entrust this service exclusively to INRAP or to local or regional authorities.

(2) Second, this activity falls under the exercise of the prerogatives of official authority, within the meaning of paragraph 17 of the Commission Notice on the notion of State aid: Article 107(1) of the Treaty does not apply where the State acts by exercising public power or where public entities act in their capacity as public authorities. The preventive archaeology evaluation activity is intrinsically linked to the exercise of the prerogatives of public power concerning the way in which the State wishes to manage town and country planning and preserve its archaeological and historical heritage. In this regard, the purpose of the preventive archaeology evaluation activity is clearly to establish whether a site contains traces of past human occupation using appropriate equipment and drawing on highly specialised scientific knowledge. This analysis task is necessary for the conservation of archaeological heritage and pursues a public interest objective that has no economic dimension. It is an archaeological heritage protection activity which is inseparable from research for more knowledge and better understanding and the dissemination of research results within the meaning of paragraph 31 of the Commission Notice on the notion of State aid.

(3) Lastly, in view of the specific nature and role of preventive archaeology evaluations that are carried out in a standardised manner throughout the country, and given the absence of a genuine market for this type of services, the evaluation activity appears to be non-substitutable within the meaning of paragraph 36 of the Commission Notice on the notion of State aid.

(273) Hence, it is not a matter here of an activity consisting in offering goods and services on a given market. These cultural and scientific tasks that pursue a non-profit public interest objective are therefore non-economic in nature within the meaning of Article 107(1) TFEU.

(274) Furthermore, in accordance with paragraph 34 of the Commission Notice on the notion of State aid, Taking into account their particular nature, certain activities related to culture, heritage and nature conservation may be organised in a non-commercial way and thus be non-economic in nature, which appears to be the case for INRAP’s evaluation activities.

(275) Moreover, paragraph 37 of the Commission Notice provides that In cases where an entity carries out cultural or heritage conservation activities, some of which are non-economic activities as set out in paragraphs 34 and 36 and some of which are economic activities, public funding it receives will fall under the State aid rules only insofar as it covers the costs linked to the economic activities.

(276) Since, in the case at hand, the public funding linked to the evaluation activities does not cover economic activities within the meaning of Article 107(1) TFEU, the Commission considers that it should, as a matter of principle, be excluded from the scope of the State aid rules.

(277) The same conclusion applies to the activities relating to research and to the promotion of the results, as they constitute research for more knowledge and better understanding and dissemination of research results within the meaning of paragraph 31 of the Commission Notice.

(278) On that basis, the Commission considers that these activities do not constitute economic activities within the meaning of Article 107(1) TFEU and therefore do not fall within the scope of the State aid rules.

(279) However, any cross-subsidisation between INRAP’s non-economic activities – which would, in principle, fall outside the scope of Article 107(1) TFEU – and its economic activities would have an impact on the market for preventive archaeological excavations in so far as it would enable INRAP to receive support from the French State which it could use on the market for preventive archaeological excavations.

(280) As indicated in recitals 217 to 221, there is no doubt that, on the market for preventive archaeological excavations, INRAP does constitute an undertaking engaged in an economic activity for the purposes of Article 107(1) TFEU.

(281) Therefore, in view of the Commission’s analysis in recitals 248 to 261 above and its conclusion that there is no guarantee of reliable accounting separation such as to preclude cross-subsidisation, the Commission concludes that part of the public funding for INRAP’s non-economic activities benefits an undertaking within the meaning of Article 107(1) TFEU since that funding could be used for archaeological excavations.

Use of State resources and imputability of the measure to the State

(282) Any potential cross-subsidisation of INRAP over the period from 2008 to 2021 would consist of part of the following public funding granted for INRAP’s non-economic activities (see recital 36): (a) until 31 December 2015, a portion of the proceeds from the preventive archaeology charge (RAP); (b) subsidies from budget appropriations; (c) from 1 January 2016, an operating subsidy paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 175); (d) an operating subsidy paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 186); (e) various subsidies from public entities other than the line ministries, whether French or otherwise.

(282)

(a) until 31 December 2015, a portion of the proceeds from the preventive archaeology charge (RAP);

(b) subsidies from budget appropriations;

(c) from 1 January 2016, an operating subsidy paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 175);

(d) an operating subsidy paid by the Ministry of Culture in the form of budget appropriations provided for in the Budget Law (Programme 186);

(e) various subsidies from public entities other than the line ministries, whether French or otherwise.

(283) First, the Commission notes, as indicated in recital 224, that INRAP’s funding is provided for by Article L. 524-1 of the Heritage Code and that the funding is granted by the French State or by public entities.

(284) Second, the Commission considers that the funding referred to above (recital 282) constitutes State resources. The French authorities have indicated that the RAP operated, at least until 31 December 2015, as a tax earmarked for the direct benefit of: (i) the National Fund for Preventive Archaeology (hereinafter FNAP); and (ii) evaluation operators (INRAP and local or regional authorities). It is settled case-law that a tax which is established and allocated to the recipients (in the case at hand FNAP and evaluation operators) in a binding manner by national legislation constitutes a State resource.

(285) Moreover, as indicated in recital 226 of this Decision, subsidies granted by a public entity (Ministry of Culture or other public entity) are by nature State resources.

Selectivity of the measure

(286) In order to be considered State aid, a measure must be selective, in other words it must favour certain undertakings or the production of certain goods within the meaning of Article 107(1) TFEU.

(287) The issue of cross-subsidisation between INRAP’s non-economic activities and its economic activities concerns only INRAP, even though other undertakings within the meaning of Article 107(1) TFEU are active in the same economic and competitive sector as that in which INRAP operates.

(288) As this is individual aid, it is assumed to be selective. INRAP is the sole recipient of the funding, and it cannot be ruled out that the funding benefits its economic activities.

(289) Hence, the measure is selective within the meaning of Article 107(1) TFEU.

Existence of an economic advantage

(290) An economic advantage within the meaning of Article 107(1) TFEU is any benefit which an undertaking could not have obtained under normal market conditions, that is to say in the absence of State intervention. Both the granting of positive economic benefits and relief from economic burdens may constitute an advantage. The latter is a broad category which comprises any mitigation of charges normally included in the budget of an undertaking.

(291) First, the Commission notes that the lack of any guarantee of an absence of cross-subsidisation of INRAP’s economic activities by part of the State funding listed in recital 282 means that the possibility of INRAP’s being relieved of costs inherent in the exercise of its economic activities cannot be ruled out.

(292) Second, the Commission refers to its assessment in recitals 237 to 240 regarding the non-application of the Altmark ruling to the subsidies for public service costs, and takes the view that that ruling is likewise not applicable to this measure.

(293) Since INRAP enjoys an economic advantage it would not have received under normal market conditions and its financial situation is improved as a result of State intervention or intervention by other public entities, it must be concluded that INRAP enjoys an economic advantage within the meaning of Article 107(1) TFEU.

Distortion of competition and effect on trade

(294) A measure granted by the State is considered to distort or threaten to distort competition when it is liable to improve the competitive position of the recipient compared with other undertakings with which it competes.

(295) For all practical purposes, a distortion of competition within the meaning of Article 107(1) TFEU is generally found to exist when the State grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition.

(296) As indicated in recitals 19 to 21 of this Decision, the market for preventive archaeological excavations was opened up to competition by Law No 2003-707 of 1 August 2003. Consequently, any advantage granted to INRAP in the competitive sector (in particular through cross-subsidisation from funding received for non-economic activities) could strengthen its competitive position vis-à-vis other preventive archaeology operators.

(297) As regards the criterion of affecting trade, it is settled case-law that it is not necessary to establish that the aid has an actual effect on trade between Member States but only whether the aid is liable to affect such trade.

(298) Law No 2003/707 of 1 August 2003 allowed operators from other Member States to enter the French market. Accordingly, the financial advantage enjoyed by INRAP, resulting in aid to its competitive sector in the form of cross-subsidies, is liable to make market entry more difficult for those operators and to affect trade between Member States.

(299) Consequently, the Commission considers that the measure must be deemed liable to distort competition and affect trade between Member States.

Conclusion on classification as aid due to INRAP’s cost accounting system failing to provide any guarantee of the absence of cross-subsidisation

(300) On the basis of the above explanations, the Commission considers that, following the formal investigation procedure, it has not received any conclusive evidence allowing it to definitively rule out the existence of cross-subsidisation. The accounting reports drawn up by independent auditors, in particular the most recent report of 18 December 2023 referred to above (see recitals 255 and 256), highlight the fact that there is no methodology for allocating certain indirect costs supported by sufficiently objective and robust criteria. Therefore, the reports do not validate the main allocation key used to allocate the costs incurred by INRAP for its economic and non-economic activities.

(301) Since (i) the main cost allocation key, which is the only means of precluding cross-subsidisation, has not been validated by independent auditors despite several audits having been carried out, and (ii) all the conditions laid down in Article 107(1) TFEU are met, the Commission concludes that part of the public funding received by INRAP in connection with its non-economic activities constitutes State aid within the meaning of that Article, since it is liable to be used in connection with its economic activities on the market for preventive archaeological excavations.

Unlawfulness of the measures at issue

(302) The Commission notes that the French authorities have already granted the subsidies for public service costs as well as the funding that could potentially be used to cross-subsidise INRAP’s economic activities.

(303) Since the French authorities did not notify these measures before implementing them, they failed to comply with their obligation under Article 108(3) TFEU, and the State aid granted to INRAP is unlawful.

Compatibility of the measures at issue

(304) The French authorities maintain that the public service costs at issue are covered by the framework scheme SA.42681 (adopted on the basis of Article 53 GBER) (see recitals 192 to 197).

(305) However, in view of its conclusion that the accounting separation was not reliable and watertight (see Section 6.2.2.1), the Commission considers that at least one of the conditions of Article 53 GBER is not fulfilled. Article 53(7) GBER provides that... the aid amount shall not exceed what is necessary to cover the operating losses and a reasonable profit over the relevant period. This shall be ensured ex ante, on the basis of reasonable projections, or through a claw-back mechanism. Given the lack of watertight and reliable accounting separation between the economic and non-economic activities, it would be impossible to determine those costs and revenues precisely for archaeological excavation activities, especially in cases where INRAP acts as the operator of last resort. Specifically, Article 53(5) GBER provides that, for operating aid, eligible costs include operating costs directly relating to the ... project, costs for personnel working for ... a project and costs for advisory and support services provided by outside consultants and service providers. In the case at hand, it is not possible to identify in advance the projects for which INRAP will act as an operator of last resort, and some of the costs relating to that particular activity (see Table 3 below), such as additional costs of running premises, are not linked to specific projects, as they are permanent, structural costs.

(306) Consequently, the Commission considers that, although put forward by the French authorities as a reason for the aid to be considered compatible, this legal basis is not applicable to the case at hand.

(307) As a result, it is necessary to examine whether the funding received by INRAP is covered by one of the grounds set out in Article 107(3) TFEU. Aid may be deemed compatible with the internal market if the Commission considers that it is covered by one of the grounds listed in Article 107(3) TFEU.

(308) Article 107(3)(d) TFEU provides that aid to promote culture and heritage conservation, where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest, may be considered compatible with the internal market.

(309) Since the measures contested by EVEHA fall – as regards both the subsidies for public service costs and any potential cross-subsidies – within the scope of public funding for archaeological excavation activities, they constitute, in their entirety, financing of economic activities linked to the promotion of culture and heritage conservation. Therefore, the compatibility of both measures must be examined on the basis of Article 107(3)(d).

(310) The French authorities invoked this legal basis to maintain that the two measures were compatible with the internal market (see recitals 199 to 210).

(311) In particular, the French authorities explained that every operation carried out by INRAP in the economic sector contributed to the conservation of archaeological heritage and to cultural policy objectives, in particular by protecting and promoting archaeological heritage (see recital 201) in France.

(312) They also explained in particular that, in respect of the archaeological excavations for which INRAP acted as operator of last resort, it would not be able to carry out its tasks were it not for the funding contested by EVEHA. The French authorities argued that the entire purpose of the funding received by INRAP was to promote culture and conserve heritage (see recital 202).

(313) Lastly, they stated that the funding granted to INRAP was limited to covering its budgetary, financial and operational requirements, insofar as INRAP’s operating margin for 2008-2020 was very limited and stood at only [0,5-2] %, i.e. giving a balance of EUR […] million (see recital 204), and that the funding was not liable to affect trading conditions and competition to an extent that would be contrary to the common interest (see recitals 207 and 208).

(314) Conversely, in its comments in response to the opening decision, EVEHA maintained that this approach to assessing compatibility was not legally sound (see Sections 4.1 and 4.2).

On the possibility of examining jointly the compatibility of the measures at issue on the basis of Article 107(3)(d) TFEU

(315) Before analysing the compatibility of the measures at issue, the Commission must examine EVEHA’s arguments to establish whether they are well founded and, if so, whether the joint compatibility assessment envisaged in the opening decision on the basis of Article 107(3)(d) TFEU would ultimately not be applicable.

EVEHA’s arguments on the inapplicability of a joint approach

(316) EVEHA argues that, before a compatibility assessment is carried out, a measure must first be classified as State aid (see recitals 74 to 75), that this classification must be approached on an activity-by-activity basis looking at each relevant market (see recitals 76 to 78) and that, since the authorities maintain that some of the activities carried out by INRAP are non-economic in nature, it is not possible to classify all the funding as State aid (see recitals 79 to 81). Moreover, EVEHA submits that, according to its own analysis of Commission decisions on State aid, the Commission is in principle required, when examining the compatibility of a set of measures, to identify and examine each measure in turn to determine whether it constitutes State aid and is compatible with the internal market (see recital 82).

The Commission’s analysis in response to the arguments put forward by EVEHA

(317) First, in view of the fact that, for the reasons set out in Section 6.2, the measures at issue must be classified as State aid, the first argument put forward by EVEHA (see recital 316) is, for practical purposes, without effect.

(318) Second, since both the subsidies for public service costs and any cross-subsidies cover preventive archaeological excavation activities, which constitute one and the same activity (regardless of how they are funded) and a single relevant market, the argument put forward on that point is also without effect.

(319) Third, irrespective of the fact that a significant proportion of the funding received by INRAP is for non-economic activities (see recitals 262 to 278), the State aid identified by the Commission (see Section 6.2) is intended to support only preventive archaeological excavation activities, the economic nature of which is not disputed. Thus, for the same reason, the argument put forward by EVEHA is without effect.

(320) Lastly, as regards the argument relating to the Commission’s supposed obligation (or its decision-making practice) with respect to identifying each aid measure and then examining each one in turn to determine whether it should be classified as State aid and is compatible with the internal market, the Commission notes that it has identified the aid measures separately (subsidies for public service costs and potential cross-subsidies), and has concluded that they targeted the same economic activities – namely INRAP’s preventive archaeological excavation activities – and that those activities can be classified as cultural in that they contribute to heritage conservation. Thus, once again, the Commission considers the argument put forward by EVEHA to be without effect.

EVEHA’s arguments on the inapplicability of Article 107(3)(d)

(321) First, EVEHA argues in its observations that Article 107(3)(d) TFEU does not apply to the measures at issue, as both established case-law and the Commission’s decision-making practice give rise to a strict general prohibition of any form of cross-subsidisation (see recitals 86 to 89).

(322) Second, EVEHA argues that Article 107(3)(d) TFEU is to be strictly applied and does not apply to general subsidies in the cultural field (see recitals 91 and 92). Moreover, EVEHA argues that Article 107(3)(d) cannot cover aid earmarked for a single operator, but only aid granted to a group of operators contributing to the development of the sector (see recital 93).

(323) Third, EVEHA submits that Article 107(3)(d) TFEU is manifestly not applicable to the measures at issue, since the French authorities never referred to it as a basis for claiming the aid should be considered compatible.

The Commission’s analysis in response to the arguments put forward by EVEHA

(324) First, contrary to EVEHA’s claims, cross-subsidisation between non-economic and economic activities merely leads to a situation where funding that would otherwise fall outside the scope of Article 107(1) TFEU (in that it primarily supports non-economic activities – see recitals 262 to 278) is classified as State aid within the meaning of that Article if that funding can be used for economic activities (in this case, archaeological excavations).

(325) While Article 107(1) TFEU does establish the general principle that State aid is prohibited, paragraphs 2 and 3 of that same Article allow such aid to be declared compatible with the internal market under certain conditions. The fact that funding could potentially be used for cross-subsidising has no particular bearing on the applicability of Article 107 TFEU and the funding must be analysed as aid for archaeological excavation activities in order to assess its compatibility with the internal market.

(326) Second, in accordance with Article 107(3)(d) TFEU, aid to promote culture and heritage conservation, where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest may be considered compatible with the internal market.

(327) In the absence of specific guidelines on aid to promote culture and heritage conservation, the Commission is required to assess the compatibility of measures designed to promote those objectives directly on the basis of the Treaty.

(328) Thus, for State aid to be considered compatible with the internal market under Article 107(3)(d) TFEU, it must meet two conditions, the first being that it must be intended to promote culture or heritage conservation and the second, expressed in negative terms, being that it must not adversely affect trading conditions to an extent contrary to the common interest.

(329) Therefore, the Commission finds that, contrary to the assertions made by EVEHA, for aid to be considered compatible on the basis of Article 107(3)(d) TFEU, there is no requirement for the aid to be intended for a specific cultural project.

(330) In addition, provided that the aid meets the two requirements above, the Commission finds that there is no compelling reason to rule out compatibility on the basis of Article 107(3)(d) TFEU simply because the aid benefits a single operator and not a group of operators active in the same sector. Article 107(3)(d) TFEU does not rule out individual aid and the Commission notes that EVEHA does not invoke any case-law or Commission decision-making practice in this regard.

(331) Third, the Commission notes that, for one thing, it is for the Commission to assess the compatibility of State aid with the internal market, irrespective of how a Member State has classified a given measure. For another, the Commission notes that, as part of the formal investigation procedure, the French authorities explained that, in their view, the measures at issue are compatible on the basis of Article 107(3)(d) TFEU and provided reasons for their opinion (see recitals 199 to 210). Accordingly, EVEHA’s argument cannot be accepted.

Conclusion on the applicability of Article 107(3)(d) TFEU to all of the aid measures at issue

(332) In the light of the considerations set out above, the Commission finds that, despite EVEHA’s opposition in principle to the compatibility assessment proposed by the Commission in its opening decision, on the basis of Article 107(3)(d) TFEU, none of EVEHA’s arguments give grounds to consider this approach to be inapplicable to the measures at issue.

Compatibility of the measures at issue pursuant to Article 107(3)(d) TFEU

(333) Under Article 107(3)(d) aid to promote culture and heritage conservation may be declared compatible with the internal market where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest.

(334) Thus, to be covered by this Article, aid (i) must be intended to promote culture or heritage conservation, and (ii) must not adversely affect trading conditions to an extent contrary to the common interest.

Promotion of culture and heritage conservation

(335) In accordance with Article 107(3)(d) TFEU, for aid to be deemed compatible it must promote culture and heritage conservation.

(336) In that connection, the Commission notes that it is up to the Member States to determine which projects and activities fall within the scope of promoting culture and conserving heritage. The Commission merely has the discretion to determine if the Member State in question has made manifest errors in its assessment.

Identifying the cultural activities supported by the aid

(337) First, the Commission notes that, in accordance with Article L.523-1 of the Heritage Code, INRAP is tasked with, inter alia, carrying out preventive archaeological excavation operations, including as an operator of last resort where no other operator wishes to or is able to provide that service.

(338) Therefore, it follows unequivocally from Article L.523-1 that the funding received by INRAP in the context of its archaeological excavation activities, including the funding that constitutes the State aid measures at issue, is intended to promote and conserve French archaeological heritage.

(339) Moreover, Article L.521-1 of the Heritage Code explicitly states that activities related to preventive archaeology are intended to conserve (archaeological) heritage, which is one of the grounds set out in Article 107(3)(d) TFEU.

Demonstration of whether the aid actually promotes culture and conserves heritage

(340) As explained by the French authorities during the formal investigation procedure (see Sections 5.2.1 and 5.2.2), the funding received by INRAP in the context of its economic activities (i.e. in the field of preventive archaeological excavations) has the purpose and effect of promoting culture and heritage conservation.

(341) First, the Commission notes that part of the public funding received by INRAP (subsidies for public service costs) enables INRAP to comply with its legal obligations and to cover (only) part of the general interest costs imposed on it by law to ensure that preventive excavations are properly carried out in all circumstances, so as not to penalise the development and construction market.

(342) INRAP is required to: (i) have expertise covering all archaeological periods and geomorphological contexts; (ii) carry out excavations if no bids are submitted under calls for tenders issued by developers; (iii) take over the running of an excavation site if an operator defaults during an operation, these being tasks that the French authorities, in the exercise of their public powers, have determined to be relevant to promoting heritage conservation.

(343) Second, in the same way as other public and private operators, INRAP is involved in promoting culture and conserving heritage through legally mandated archaeological excavation operations (aside from its obligations as an operator of last resort) with a view to conserving French archaeological heritage. Since any potential cross-subsidisation resulting from public funding would necessarily be used in the archaeological excavation market, it would also have the effect of contributing to the promotion of culture and heritage conservation.

(344) Archaeological excavation is an integral part of the heritage conservation policy that France has put in place. Compared with evaluation and research activities (which are upstream operations to identify the presence of any potential works forming an integral part of France’s archaeological heritage), archaeological excavation is on the front line of conserving that heritage, since it makes it possible to specifically identify and preserve the heritage before there is any chance of it being altered as a result of construction works. The fact that government accreditation is needed for these excavations to be carried out illustrates their importance to the French State. Accreditation is granted by the State (Ministry of Culture and Ministry of Research) after seeking the opinion of the National Council for Archaeological Research (CNRA). This guarantees that accredited archaeological operators have the required scientific expertise and operational capacity, and details the archaeological periods for which the organisation has been accredited (Paleolithic, Neolithic, the Metal Ages, the Classical Age, the Middle Ages, the modern era, the contemporary era).

Assessment of whether the aid and/or activity complies with applicable European legislation

(345) First of all, the Commission notes that, in accordance with Article 107(3)(d) TFEU, it is possible to allow State aid for the promotion of culture and heritage conservation, derogating from the general principle that State aid is prohibited.

(346) The Commission also notes that the objectives of promoting culture and conserving heritage are explicitly enshrined in Article 167 TFEU, which reads as follows: The Union shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore and Action by the Union shall be aimed at encouraging cooperation between Member States and, if necessary, supporting and supplementing their action in the following areas: - improvement of the knowledge and dissemination of the culture and history of the European peoples, - conservation and safeguarding of cultural heritage of European significance ....

(347) Lastly, the Commission notes that the parties did not point to any breaches of applicable EU law during the formal investigation procedure.

(348) Thus, the Commission has no reason to doubt that the measures and the activities in receipt of aid comply with applicable EU legislation.

The aid does not adversely affect trading conditions to an extent contrary to the common interest Identifying the markets affected by the aid

(349) In the light of the explanations given in recitals 47, 48 and 218 to 222, the market affected by the aid contested by EVEHA is the market for preventive archaeological excavations. This market is open to competition and INRAP and other private operators such as EVEHA operate in it.

Identifying the positive effects of the aid

(350) The aid granted to INRAP has several positive effects in terms of promoting culture and conserving heritage.

(351) First of all, the fact that INRAP intervenes at all stages of the process of conserving archaeological heritage (from evaluation to excavation and promotion) sets it apart, broadly speaking, from operators who are active on the archaeological excavation market only.

(352) Moreover, the Commission notes that, on the archaeological excavation market in particular, INRAP has specific obligations, namely it must: (a) carry out excavations if no bids are submitted under calls for tenders issued by developers; (b) take over the running of a site if an operator defaults during an operation. To that end, INRAP has expertise covering the entire country, all archaeological periods and all geomorphological contexts.

(353) As a result, INRAP’s activity on the market is not always guided by a strictly profit-making approach (in particular when it acts as an operator of last resort and does not always obtain the expected remuneration) and the financial support it receives from the State is thus necessary for it to carry out its tasks.

(354) Moreover, this aspect sets INRAP apart from private operators accredited by the State, as they are able to choose, on the basis of their commercial policies and with profit in mind, their geographical area of intervention, as well as the archaeological periods and fields in which they wish to develop their expertise.

(355) Therefore, the aid received by INRAP not only enables it to fulfil its central role in heritage conservation in France, but (by virtue of its obligations) its presence on the market also allows smaller private market players to focus on specific projects/activities without having to bear the burden placed on INRAP.

Limitation of negative effects of the measure on competition and trade between Member States

(356) In the following section, the Commission assesses the aspects that help limit the negative effects of the measure in question on competition and trade between Member States.

(357) In that connection, the Commission is taking the following principles into account: (1) the need for state intervention: a State aid measure must be targeted towards a situation where aid can bring about a material improvement that the market cannot deliver itself, for example by remedying a market failure or addressing an equity or cohesion concern; (2) the appropriateness of the aid measure: the proposed aid measure must be an appropriate instrument for achieving the desired objective; (3) the proportionality of the aid: the amount of the aid and the aid intensity must be limited to the minimum level necessary to trigger the contribution to an economic activity; and to the minimum level necessary to stimulate the undertaking(s) concerned to make additional investment or carry out an additional activity; and (4) the transparency of the aid.

(357)

(1) the need for state intervention: a State aid measure must be targeted towards a situation where aid can bring about a material improvement that the market cannot deliver itself, for example by remedying a market failure or addressing an equity or cohesion concern;

(2) the appropriateness of the aid measure: the proposed aid measure must be an appropriate instrument for achieving the desired objective;

(3) the proportionality of the aid: the amount of the aid and the aid intensity must be limited to the minimum level necessary to trigger the contribution to an economic activity; and to the minimum level necessary to stimulate the undertaking(s) concerned to make additional investment or carry out an additional activity; and

(4) the transparency of the aid.

Need for the aid

(358) In order to demonstrate the need for the aid, it must be established that the measures allow cultural-promotion and heritage-conservation activities to take place that would not otherwise have occurred or at least would not have taken place under the same conditions.

(359) The aid granted to INRAP enables it to fulfil its specific obligations under French law, in particular when INRAP acts as an operator of last resort for preventive archaeological excavations.

(360) In that connection, the Commission notes that, as explained by the French authorities, the obligations imposed on INRAP on the archaeological excavation market are not profitable and generate significant losses totalling around EUR […] to […] million per year (see recitals 148 to 149).

(361) Moreover, the Commission notes that the State aid in the form of a subsidy for public service costs is not sufficient to cover the additional costs borne by INRAP (this is the case, for example, for the years 2015-2021, when these obligations resulted in a deficit of around EUR [7-28] million, in spite of the public subsidies received). This is all the more evident if one considers that, prior to 2015, INRAP had to finance, on its own and in the absence of any public aid, the additional costs it had to bear by virtue of its obligations as an operator of last resort. Over the period covering 2008 to 2015, on the sole basis of its revenue generated on the archaeological excavation market, INRAP bore the cost of these operations, for which it could potentially have been compensated by the State, as happened after 2015.

(362) It follows that, without funding (either directly through subsidies for public service costs or through potential cross-subsidisation), INRAP would not have been able to act as an operator of last resort on the archaeological excavation market.

(363) The Commission therefore considers that the public funding intended to support INRAP’s archaeological excavation activities is necessary so that the objective pursued by the French authorities – conserving heritage – can be achieved.

Appropriateness of the aid

(364) A measure is an appropriate policy instrument for promoting a cultural activity and heritage conservation where it is not possible to achieve the same result through other less distortive policy instruments or other less distortive types of measure.

(365) On the question of the appropriateness of the measures, the Commission notes that they are in the form of subsidies from the State to enable INRAP to carry out its economic activities on the market for preventive archaeological excavations, in particular where INRAP takes on costs that it would not have taken on if acting on a purely commercial basis, like other private actors active on the market.

(366) As explained by the Commission in its opening decision, other potentially less distortive forms of aid, such as repayable advances or forms of aid based on debt or equity instruments (such as state guarantees, the acquisition of shareholdings or the provision of loans or capital on favourable terms), would in all likelihood not allow INRAP to perform its duties to the same degree.

(367) Since the aid is intended, for one thing, to enable INRAP to carry out its tasks on a not-for-profit (and non-economic) basis and, for another, to remedy a market failure in the market for preventive archaeological excavations, it would not be possible to ensure that INRAP remained viable if instruments other than direct grants were used.

(368) In the light of the above, the Commission considers that the aid measures at issue are an appropriate instrument for promoting culture and the conservation of French heritage, involving a chain of operations focused on studying, preserving and promoting archaeological heritage.

Proportionality of the aid

(369) Aid is considered proportionate only if the same change in behaviour could not be brought about with less aid and less distortion. In other words, the aid amount must be limited to the minimum necessary to ensure that culture is promoted and heritage conserved by allowing the activities targeted by the aid to be carried out.

(370) In the light of the information from the French authorities based on INRAP’s accounts and financial statements (the overall reliability of which – aside from the aspects concerning cost allocation keys that led the Commission to conclude that the measures constituted aid – is not called into question by any expert reports, see recital 256), the Commission finds that the aid granted to INRAP during the period at issue is proportionate to the objectives pursued, i.e. promoting culture and preserving heritage, and that the nature of the aid limits any distortions of competition that could be caused by it.

(371) For one thing, the Commission observes that the subsidies for public service costs, which were only granted from 2015, were not sufficient to cover the costs generated by the general interest obligations imposed on INRAP by virtue of its status as an operator of last resort that operates throughout French territory and is able to cover all archaeological periods (see Table 1, Table 3 above). Moreover, the Commission considers that the funding received falls well short of covering all the costs borne by INRAP over the period from 2008 to 2021 (or indeed since 2004).

(372) For another, as regards the proportionality of the aid resulting from potential cross-subsidisation, the Commission notes the following points.

(373) First, the information provided by the French authorities shows that INRAP uses cost accounting that is consistent with general accounting principles, making it possible to correctly differentiate between the direct costs of competitive activities and those of non-competitive activities (see recitals 161 to 173). Using the various accountants’ reports, it was possible to validate the figures relating to turnover, and in particular the breakdown between the competitive sector and the non-competitive sector (see recital 256).

(374) Second, the information provided by the French authorities shows that the aid resulting from any potential cross-subsidisation implemented by INRAP would be limited to certain indirect costs (mixed-sector costs). Without firmly and definitively calling into question the validity of the allocation carried out by INRAP, the chartered accountant considers that the allocation keys for these costs are not supported by sufficiently objective and robust criteria, although they account for only a relatively small proportion of the total costs borne by INRAP on the archaeological excavation market.

(375) Third, it is clear from the information at the Commission’s disposal that none of the auditors or chartered accountants who were asked to give their opinion on INRAP’s cost accounting were able to identify, unequivocally, any evidence of cross-subsidies being granted to INRAP, still less to quantify the amount of any such cross-subsidisation. Therefore, the Commission finds EVEHA’s claims implausible when it alleges that INRAP is receiving so much aid through cross-subsidisation that it can charge predatory prices on the market for preventive archaeological excavations and thus unduly distort that market.

(376) As regards all the aid received by INRAP, the Commission notes, on the basis of the information provided by the French authorities (see recital 204), that INRAP’s operating margin over the period from 2008 to 2021 for its economic activities stands at [2,8-4,6] % (see Table 5). This would appear to rule out the possibility that INRAP became more profitable as a result of overcompensation. By way of comparison, the Caen Administrative Court, in its judgment of 23 May 2024 (added to the file by EVEHA), noted that, for 2021 and 2022, EVEVA made an average net profit of 6 %. Furthermore, the fact that INRAP has a positive net margin over that period demonstrates, at the same time, that the prices charged by INRAP as part of its economic activities were profit-generating, which makes it less plausible that it would have charged predatory prices as a result of cross-subsidisation.

(377) In addition, the information provided by the French authorities shows that, between 2009 and 2024, [40-53] % of archaeological excavations in France were carried out by INRAP (slightly more than [3600-4000] excavations), whereas [38-50] % of excavations over the same period (slightly more than [3300-3700] excavations) were carried out by other operators (accredited private operators or accredited local authorities). This demonstrates that the archaeological excavations market is far from being closed off to anyone but INRAP by virtue of the prices it is allegedly able to charge as a result of the potential cross-subsidisation of its activities (see Table 1). The same conclusion can be drawn from the market share by value of archaeological excavations between 2009 and 2024; 43 % (more than EUR [0,9-1,3] billion) of the total value was accounted for by operators other than INRAP (authorised departments of local or regional authorities and private operators) (see Table 2).

(378) This trend, both in terms of the number of excavations carried out and INRAP’s market share (by value), remained stable throughout the period covered by the complaint. A downward trend can even be seen over time, which would tend to confirm that there is no distortion of competition stemming from the aid received by INRAP.

(379) As for the prices charged by INRAP, the Commission also notes that, in the context of domestic legal disputes relating to the award to INRAP of public contracts for archaeological excavations, the administrative court found that the difference between the prices proposed by INRAP and those of its competitors (in particular EVEHA) was explained by the substantial differences in terms of the human and material resources allocated to the same operation (and that this difference was not caused by INRAP charging significantly lower prices as a result of cross-subsidies). Furthermore, it is apparent from the investigation, in particular from the comparative analysis of the detailed prices charged by both INRAP and Éveha carried out by the Poher joint local authority (document covered by business secrecy and excluded from the adversarial process), that, of the two, INRAP sometimes charges higher unit prices for human resources, and, when INRAP’s prices are lower, the difference is only slight, and the unit prices for materials are more or less identical. In fact, this analysis shows that the difference in price between the two operators is caused by the quantities that each one allocated to preventive excavation operations, with the figure being almost 35 % higher for Éveha. Thus, the difference in price between the two tenders is not the result of INRAP charging significantly lower prices; instead, it stems from the difference in the resources allocated by each of the two tenderers. The documents excluded from the adversarial process also show that INRAP, as part of the contract at issue, has been able to assess its provisional net margin. (Rennes Administrative Court, 27 March 2024, EVEHA v Communauté de communes Poher communauté, No 2401238); It follows that INRAP’s tender took into account all direct and indirect costs to set the price of the services proposed and that, although the prices for removing topsoil and excavating are similar, the price of Éveha’s tender is significantly higher than the successful tenderer’s for the study phase owing to the number of people it intended to allocate to this phase of the work, particularly for anthropological studies. More specifically, the difference in price between the two tenders is not the result of a difference affecting their unit costs – in particular, the personnel unit costs mentioned in INRAP’s tender are similar to or higher than those of the claimant – but rather this stems from the difference in terms of the services proposed, particularly for the study of grave sites, to which the claimant decided to allocate many more human resources as a precaution, though this was not valued by the purchaser. Given these circumstances, the price proposed by INRAP, which was significantly higher than the initial cost estimate for the contract, did not appear, for comparable service levels, to be significantly lower than the tender prices put forward by other tenderers, nor did it seem to be manifestly underestimated in the light of all the costs involved. As a result, the conurbation authority was not required to ensure, by requesting the necessary documents, that all the Institute’s direct and indirect costs were taken into account in setting that price, to prevent any distortion of competition. Consequently, the pleas in law, alleging that INRAP’s tender was selected following an irregular procedure, that it distorted competition and was not made in good faith, must be dismissed. (Bordeaux Administrative Court, 6 May 2025, EVEHA v Communauté d’agglomération du Grand Périgueux, No 2205878).

(380) The Commission further notes that the judgments of the administrative courts referred to by EVEHA (see recital 114) do not alter the analysis set out above, insofar as the court judgments annulled the award of public contracts for reasons of compliance with public procurement rules (and not as a result of predatory prices or cross-subsidisation). In the judgments cited above (see recital 379), the Bordeaux Administrative Court and the Rennes Administrative Court respectively ruled out the possibility that INRAP was charging much lower prices and reflecting those prices in its tenders, and found that INRAP’s tenders were not liable to distort competition. In contrast, the judgments adduced by EVEHA merely illustrate that, during the procurement procedure, the contracting authorities concerned did not conduct checks on INRAP’s tenders. Therefore, it cannot be ruled out that INRAP’s tender might have been found to contain no irregularities had it been checked.

(381) The Commission therefore concludes that INRAP’s average profitability of [2,8-4,6] % (compared with EVEHA’s average net profit of around 6 % – see recital 376) over the period from 2008 to 2021 (see Table 5) for its economic activities (the bulk of which are archaeological excavations) cannot be explained by a large-scale diversion of public subsidies to cover INRAP’s alleged practice of submitting unusually low-priced tenders on the competitive market, which would then call into question whether the amount of funding paid to INRAP over the same period was proportional.

(382) It follows from the foregoing that, even if economic activities might potentially have been cross-subsidised, the total amount of aid received by INRAP only just allows it to carry out its activities of promoting culture and preserving heritage, in line with the tasks and central role conferred on it by the State, such that the aid is limited to what is strictly necessary to enable INRAP to achieve the objectives pursued by the French authorities.

Transparency of the aid

(383) With regard to the transparency considerations pertaining to the aid granted to INRAP, the Commission notes that the French authorities, believing the aid could be covered by the exempted framework scheme SA.42681 (adopted on the basis of Article 53 GBER), published the amount of public aid in the State Aid Transparency Register, under reference SA.42681.

(384) As a result, the French authorities fulfilled their transparency obligation for the aid in question.

(385) Nevertheless, the Commission considers that, in so doing, the French authorities wrongly linked those amounts of aid to the exempted framework scheme SA.42681, which does not apply to the aid in question (see recitals 304 to 306).

(386) The Commission therefore invites the French authorities to correct this erroneous reference, which does not affect the Commission’s analysis of the transparency of the aid.

Weighing up the positive effects of the aid with the negative effects on the internal market

(387) The aid granted to INRAP has many positive effects in terms of promoting culture and heritage.

(388) First, major discoveries have been made as a result of the work INRAP has carried out thanks to the public funding it has received. As explained by the French authorities, France’s set-up for archaeology, which includes supporting and financing INRAP, has allowed a number of major discoveries to be made in recent years. Recent examples of exceptionally important excavations include one carried out by INRAP in Lavau (Aube, France) on a Celtic prince’s tomb (5th century BC) and one carried out by the accredited undertaking Archeodunum SAS in Sainte-Colombe (Rhône, France) on a Gallo-Roman site (1st to 4th century AD) (see recital 134).

(389) Second, the excavation activities carried out with public funding contribute to the overall advancement of scientific knowledge and thus help protect and promote archaeological heritage. Indeed, the findings made during excavations carried out with the help of public funding are regularly promoted in scientific or more general publications, as well as through exhibitions, such as the exhibition held at the Cité des sciences et de l’industrie (Science and Industry Museum in Paris) devoted to the inhabitants of central and northern Gaul between the 3rd and 1st centuries BC (see recital 135).

(390) That notwithstanding, the notified measures could distort competition in the market for preventive archaeological excavations and affect intra-EU trade.

(391) Nevertheless, the Commission considers that the relative weight of the aid’s positive and negative effects on competition and trade is such that the positive effects outweigh the potential negative effects.

(392) First, INRAP’s accounting and financial results show that it was not overcompensated by the State for all its activities (non-economic and economic).

(393) Second, as noted by the French Competition Authority in its 2017 decision, although an effect on trade between Member States cannot be entirely ruled out (see recitals 241 to 245 and 294 to 299), the market for preventive archaeological excavations on which any distortions could occur is domestic in scope. The Competition Authority pointed out that, save in exceptional circumstances, preventive archaeology operators do not work beyond national borders, given the local/regional nature of the specific scientific issues that come up during most excavations. Therefore, the Commission considers that the negative effects of the aid on the internal market are extremely limited.

(394) In addition, on the same (domestic) archaeological excavation market, it is clear from the information available to the Commission, as explained in recitals 377 to 380, that any distortions stemming from the public subsidies received by INRAP (and used for its excavation activities) would be extremely limited, given the significant presence of operators competing with INRAP on the competitive market, for one thing, and the legal disputes which concluded that INRAP had not submitted unusually low-priced tenders, for another.

(395) Therefore, the Commission concludes that, while it is not possible to entirely rule out potential negative effects on competition in the market for preventive archaeological excavations, those effects are extremely limited and outweighed by the positive effects of the aid in terms of promoting culture and heritage conservation in France.

Conclusion on the compatibility of the aid pursuant to Article 107(3)(d) TFEU

(396) In view of the above, the Commission considers that the measures at issue contribute to the promotion of culture and heritage conservation without adversely affecting trading conditions to an extent contrary to the common interest and are therefore compatible with the internal market on the basis of Article 107(3)(d) TFEU.

CONCLUSION

(397) The Commission finds that the French authorities unlawfully implemented the aid granted to INRAP in breach of Article 108(3) TFEU. However, the Commission considers that the aid is compatible with the internal market pursuant to Article 107(3)(d) TFEU,

HAS ADOPTED THIS DECISION:

Article 1

The State aid granted by France to INRAP is compatible with the internal market.

Article 2

This Decision is addressed to the French Republic.

Done at Brussels, 17 December 2025. For the Commission Teresa Ribera Executive Vice-President

Versions

1. 2025-12-17