Judgment — ECLI:EU:C:2001:578
Date: 2001-10-25
Language of the case: German
Court formation: Fifth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment;Freedom to provide services
Concepts: General
Procedure: Action for failure to fulfil obligations - successful
Origin: Germany

Summary of the Judgment 
1. Freedom to provide services — Restrictions — Requirement of an establishment on 
national territory for construction undertakings providing transfrontier services on the 
national market as part of a consortium — Not permissible — Justified on grounds of 
public interest — Social protection of workers in the construction industry — No 
such justification 
(EC Treaty, Art. 59 (now, after amendment. Art. 49 EC)) 
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SUMMARY — CASE C-493/99 
2. Freedom to provide services — Restrictions — Requirement of an establishment on 
national territory for construction undertakings contracting out workers from another 
country to other construction undertakings in that industry — Not permissible — 
Justified on grounds of public interest — Social protection of workers in the 
construction industry — No such justification 
(EC Treaty, Art. 59 (now, after amendment, Art. 49 EC)) 
3. Freedom of movement for persons — Freedom of establishment — Restrictions — 
Requirement, for the establishment by construction undertakings of other Member 
States of branches recognised as construction undertakings, that they employ workers 
who spend more than 50% of the firm's total working time on building sites — Not 
permissible 
(EC Treaty, Art. 52 (now, after amendment, Art. 43 EC)) 
1. A Member State fails to fulfil its 
obligations under Article 59 of the 
Treaty (now, after amendment, Arti­
cle 49 EC) where it provides in its 
legislation that construction undertak­
ings established in other Member States 
may not provide transfrontier services 
on the national market as part of a 
consortium unless they have their seat 
or at least an establishment on its 
national territory employing their own 
staff and have concluded a company-
wide collective agreement for those 
staff. Such an establishment require­
ment constitutes an obstacle to exercise 
of the freedom to provide services and 
goes beyond what is necessary to attain 
the objective of providing social pro­
tection for workers in the building 
industry. 
(see paras 18, 22 
and operative part) 
2. A Member State fails to fulfil its 
obligations under Article 59 of the 
Treaty (now, after amendment, Arti­
cle 49 EC) where it provides in its 
legislation that construction undertak­
ings established in other Member States 
may not contract out workers from 
another country to other construction 
undertakings unless they have their seat 
or at least an establishment in its 
national territory employing their own 
staff and, as members of a national 
employers' association, are covered by 
framework and social-welfare collec­
tive agreements. Such an establishment 
requirement constitutes an obstacle to 
exercise of the freedom to provide 
services and goes beyond what is 
necessary to attain the objective of 
providing social protection for workers 
in the building industry. 
(see paras 18, 22 
and operative part) 
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COMMISSION v GERMANY 
3. A Member State fails to fulfil its 
obligations under Article 52 of the 
Treaty (now, after amendment, Arti­
cle 43 EC) where it provides in its 
legislation that construction undertak­
ings established in other Member States 
may not establish in its national terri­
tory a branch recognised as a construc­
tion undertaking if its staff is entrusted 
solely with work on administration, 
marketing, planning, supervision and/ 
or wages and salaries, but in order to 
be so recognised, such an establishment 
must employ on the national labour 
market workers who spend more than 
50% of the firm's total working time 
on building sites. 
On the one hand, that condition com­
plicates access to the national market 
for those construction undertakings in 
that it makes treatment of the branches 
established on its national territory as 
construction undertakings depend on 
fulfilment of criteria which those 
branches have difficulty in fulfilling. 
On the other hand, that condition is 
likely to be less onerous for undertak­
ings from the first Member State than 
for undertakings from other Member 
States in so far as there is less need for 
the former undertakings to assign 
administrative, technical and sales staff 
to their national branches because such 
tasks can be performed by the staff 
employed at the undertaking's seat on 
national territory. 
(see paras 32, 34 
and operative part) 
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