29.11.2005 Official Journal of the European Union L 312/67 COMMISSION DECISION of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (notified under document number C(2005) 2673) (2005/842[EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular Article 86(3) thereof, Whereas: Article 16 of the Treaty requires the Community, without prejudice to Articles 73, 86 and 87, to use its powers in such a way as to make sure that services of general economic interest operate on the basis of principles and conditions which enable them to fulfil their missions. For certain services of general economic interest to operate on the basis of principles and under conditions that enable them to fulfil their missions, financial support from the State intended to cover some or all of the specific costs resulting from the public service obligations may prove necessary. In accordance with Article 295 of the Treaty, as interpreted by the case-law of the Court of Justice and Court of First Instance of the European Communities, it is irrelevant from the viewpoint of Community law whether such services of general economic interest are operated by public or private undertakings. Article 86(2) of the Treaty states in this respect that undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly are subject to the rules contained in the Treaty, in particular to the rules on competition. However, Article 86(2) allows an exception from the rules contained in the Treaty, provided that a number of criteria are met. Firstly, there must be an act of entrustment, whereby the State confers responsibility for the execution of a certain task to an undertaking. Secondly, the entrustment must relate to a service of general economic interest. Thirdly, the exception has to be necessary for the performance of the tasks assigned and proportional to that end (here- inafter the necessity requirement). Finally, the devel- opment of trade must not be affected to such an extent as would be contrary to the interests of the Community. In its judgment in the case of Altmark Trans GmbH and Regierungsprasidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH (') (Altmark), the Court of Justice held that public service compensation does not constitute State aid within the meaning of Article 87 of the Treaty provided that four cumulative criteria are met. First, the recipient undertaking must actually have public service obligations to discharge, and the obli- gations must be clearly defined. Second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and trans- parent manner. Third, the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obli- gations, taking into account the relevant receipts and a reasonable profit. Finally, where the undertaking which is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, 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, would have incurred. Where those four criteria are met, public service compen- sation does not constitute State aid, and Articles 87 and 88 of the Treaty do not apply. If the Member States do not respect those criteria and if the general criteria for the applicability of Article 87(1) of the Treaty are met, public service compensation constitutes State aid that is subject to Articles 73, 86, 87 and 88 of the Treaty. This Decision should therefore only apply to public service compensation in so far as it constitutes State aid. () [2003] ECR 1-7747.