Seventeenth annual report on monitoring the application of community law (1999) /* COM/2000/0092 final */





SEVENTEENTH ANNUAL REPORT ON MONITORING THE APPLICATION OF COMMUNITY LAW (1999) INTRODUCTION SITUATION SECTOR-BY-SECTOR TABLE OF CONTENTS 1. Introduction 1.1 Statistics for 1999 1.2 Transposal of Directives in 1999 1.3 Graphical overview of all the infringement proceedings commenced or handled by the Commission during 1999 1.4 Application by the Commission of Article 228 of the EC Treaty (developments in 1999) 2. Situation sector-by-sector 2.1 Internal market 2.1.1 General strategy for the internal market 2.1.2 Free movement of persons and citizenship of the Union 2.1.2.1 Entry and residence 2.1.2.2 Right to vote and stand in elections 2.1.2.3 Regulated professions 2.1.2.4 Independent commercial agents 2.1.3 Free movement of goods 2.1.3.1 Articles 28 et seq. EC (ex Articles 30 et seq. of the EC Treaty) 2.1.3.2 Preventive rules provided for by Directive 98/34/EC (formerly 83/189/EEC) 2.1.3.3 Harmonised legislation 2.1.3.3.1 Foodstuffs 2.1.3.3.2 Pharmaceutical products 2.1.3.3.3 Chemicals 2.1.3.3.4 Motor vehicles, tractors and motorcycles 2.1.3.3.5 Construction products 2.1.3.3.6 Capital goods 2.1.3.3.7 Cosmetics 2.1.3.3.8 Textiles and shoes 2.1.3.3.9 Liability for defective products 2.1.3.4 Special arrangements relating to freedom of movement 2.1.3.5 Customs Union 2.1.4 Free movement of services and right of establishment 2.1.4.1 Articles 43 et seq. and Articles 49 et seq. 2.1.4.2 Financial services 2.1.4.3 Commercial communications 2.1.4.4 The media 2.1.5 Free movement of capital 2.1.6 The business environment 2.1.6.1 Company law 2.1.6.2 Intellectual property 2.1.6.3 Data protection 2.1.6.4 Public procurement 2.1.6.5 Direct taxation 2.1.6.6 VAT 2.1.6.7 Other indirect taxes 2.2 Competition 2.2.1 Public enterprises 2.2.2 Monopolies 2.3 Enterprise policy, distributive trades, tourism and cooperatives 2.4 Education, training and youth 2.5 Social affairs 2.5.1 Free movement of workers 2.5.2 Equal treatment for men and women 2.5.3 Working conditions 2.5.4 Health and safety at work 2.6 Regional and cohesion policy 2.7 Budget matters 2.7.1 General points 2.7.2 Incorrect application 2.7.2.1 Previously initiated proceedings 2.7.2.2 New proceedings 2.8 Energy 2.8.1 Introduction 2.8.2 Internal market for electricity and natural gas 2.8.3 Energy efficiency 2.8.4 Oil and gas 2.9 Transport 2.9.1 Road transport 2.9.2 Combined transport 2.9.3 Inland waterways 2.9.4 Rail transport 2.9.5 Sea transport 2.9.6 Air transport 2.10 Telecommunications 2.11 Information, communication, culture and audiovisual media 2.12 Environment 2.12.1 Freedom of access to information 2.12.2 Environmental impact assessment 2.12.3 Air 2.12.4 Water 2.12.5 Nature 2.12.6 Noise 2.12.7 Chemicals and biotechnology 2.12.8 Waste 2.12.9 Environment and industry 2.12.10 Radiation protection 2.13 Agriculture 2.13.1 Free movement of agricultural produce 2.13.2 Markets 2.13.3 Harmonised areas 2.13.4 Implementation of Directive 98/34/EC (technical standards and regulations) in the field of agriculture 2.14 Fisheries 2.14.1 Resources 2.14.2 Grant of flag rights and fishing licences 2.15 Consumer protection 2.15.1 Transposal of the applicable Directives. 2.15.2 Safety and health 2.15.3 Protection of consumers' economic interests 2.16 Community staff 2.17 Statistics Each year the European Commission draws up a report on the monitoring of the application of Community law, in response to requests made by the European Parliament (resolution of 9 February 1983) and the Member States (point 2 of Declaration No 19 annexed to the Treaty signed at Maastricht on 7 February 1992). The report also responds to the requests expressed by the European Council or the Council in relation to specific sectors. 1. Introduction Monitoring the application of Community law is a primary task assigned to the Commission by Article 211 of the Treaty establishing the European Community. The main tools used by the Commission to accomplish this task are the infringement procedure provided for by Article 226 of the Treaty and the second referral to the Court of Justice provided for by Article 228. These two procedures form the subject of this report. The Commission's activities during the year are highlighted below, in the following sections: - a statistical overview of the various stages involved in monitoring the application of Community law, comparing the 1999 figures with last year's (point 1.1); - the transposal of Community directives by the Member States, an important element in the application of Community law (point 1.2); - a graphical overview showing, by Member State, all the infringement procedures commenced or handled by the Commission during the year (point 1.3) and - an overview of the application of the penalty mechanism provided for in Article 228 of the Treaty (point 1.4). 1.1 Statistics for 1999 The statistics relating to the monitoring of the application of Community law in 1999 reflect both the importance attributed by citizens to this task and the Commission's unwavering commitment to its role as guardian of the Community legal order: - the number of complaints received by the Commission continued to rise, increasing by 16% from 1 128 in 1998 to 1 305 in 1999. The Commission also continued to be very active in detecting cases of non-conformity itself, with 288 cases detected by the Commission in 1999, including 16 resulting from parliamentary questions and ten resulting from petitions. Many of these cases relate to the non-conformity of national measures implementing directives or the incorrect application of such measures; - 1 075 letters of formal notice were issued in 1999, similar to the figure of 1 101 in 1998. It should be emphasised that the number relating to non-notification of national implementing measures rose (706 in 1999 compared with 615 in 1998) while the number relating to non-conformity of national implementing measures or incorrect application of the directives fell (from 486 in 1998 to 369 in 1999). There is no obvious, or at any rate no proven, causal link. The Commission is aiming to monitor systematically the conformity of national legislation with Community legislation, and more specifically with the directives, so that it can take action as far as possible before individual complaints are received. Such systematic monitoring will be greatly helped by the enhanced role of the letter of formal notice in the infringement procedure, following the various improvements introduced by the Commission into its system for handling infringement procedures since 1996. The letter of formal notice must be used for its true purpose, i.e. purely as a means of requesting information and in no way expressing the Commission's legal position, the latter being fixed by the reasoned opinion; - the number of reasoned opinions issued in 1999 fell by 32%, from 675 in 1998 to 460 in 1999. This basically reflects a return to normal after the special effort made in 1998 to reduce the delays in implementing this type of Commission decision; - the number of cases referred to the Court of Justice rose to 178 in 1999, compared with 123 in 1998. The number of referrals to the Court remains low in comparison with the number of letters of formal notice issued (16.5%), which indicates the efficacy of the pre-litigation procedure. The increase in the number of referrals to Court reflects the faster handling of infringement proceedings, which continues to improve; - the speed of handling cases continued to rise in 1999: 529 of the 722 letters of formal notice sent to Member States in 1999 related to infringement procedures commenced in the course of the year, i.e. 73% as against 48% in 1998. There was also a substantial speed improvement for reasoned opinions, with 26% of the reasoned opinions issued in 1999 relating to procedures commenced in 1999, as against 19% in 1998; - at the same time, the number of termination decisions fell slightly (by 3.2%), from 1 961 in 1998 to 1 900 in 1999. Nevertheless, this is still a large number of cases resolved with regard to the application of Community law; - finally, the Commission continued with its policy of transparency in 1999, issuing 221 press releases about infringement proceedings. And of course a press release will often cover several separate infringement proceedings. These few statistics demonstrate that infringement proceedings are being handled more efficiently than ever, no doubt due to the Commission's latest administrative reforms in this field. 1.2 Transposal of Directives in 1999 The table below gives an overall picture of the rate of notification of national measures implementing all the directives applicable on 31 December 1999. On 31 December 1999 the Member States had on average notified 94.53% of the national measures needed to implement the directives. This is slightly down on the 1998 figure of 95.70%. This rate of transposal shows that the Member States need to make a greater effort. Although, in absolute terms, an average delay in transposal of less than 6% of the directives applicable is not highly significant, it has important consequences for the functioning of an integrated economic area and covers obvious infringement situations, differing in seriousness from one Member State to another. The Commission therefore has a duty here to ask Member States to improve their implementation of Community directives. >TABLE POSITION> Compared with 1998, the figures for 1999 show that some progress has been made in some areas: Italy, for example, has jumped five places in the transposal rate ranking thanks to its efforts in 1999. At the opposite extreme, in contrast, the transposal rate achieved by Greece continues to give cause for concern (falling from 93.82% in 1998 to 92.02% in 1999). All the other Member States managed a slightly lower transposal rate in 1999 than in 1998. The summary table at the end of Part 1 of Annex IV to this report shows the detailed transposal rate for each Member State and each sector in 1999. 1.3 Graphical overview of all the infringement proceedings commenced or handled by the Commission during 1999 The three tables below show the numbers of infringement proceedings in motion on 31 December 1999, at the three separate stages: letter of formal notice, reasoned opinion and referral to the Court of Justice. One Member State heads all three infringement tables, in every case well clear of the runner-up. It should also be noted that this same Member State is the one against which the largest number of complaints was lodged in 1999 (225 out of 1 305, or 17% of the total). The tables also show the same three Member States (France, Italy and Greece) occupying the first three positions at all three procedural stages, while the position occupied by other Member States recedes significantly as the procedure advances, which would seem to indicate greater efficacy in applying Community law before the Commission is reduced to referring the case to the Court of Justice. >REFERENCE TO A GRAPHIC> >REFERENCE TO A GRAPHIC> >REFERENCE TO A GRAPHIC> 1.4 Application by the Commission of Article 228 of the EC Treaty (developments in 1999) In 1999 the Commission adopted four decisions to refer cases to the Court of Justice for a second time with requests for imposition of a penalty payment. These four cases were against Belgium, Greece, France and Luxembourg. All concern social affairs legislation (whereas the 1998 second-referral decisions mainly concerned environmental legislation). One of these four cases (France: night work by women) was actually brought before the Court in 1999, and the other three referrals were still being prepared on 31 December 1999. Four other cases were before the Court on 31 December 1999, three against Greece and one against France. Finally, in 1999 the Commission found itself able to terminate four other cases (against Greece, France, Italy and Luxembourg) which it had decided to refer to the Court with a request for a penalty payment, but which it had not actually got as far as referring to the Court. These facts confirm that the penalty system introduced by the Maastricht Treaty has a dissuasive effect: the Court has not so far had to impose any penalties for non-compliance with its judgments, since Member States normally come into line with Community law as soon as the case is referred to the Court for a second time or even before the Commission has gone through with its decision to involve the Court. >TABLE POSITION> 2. Situation sector-by-sector 2.1 Internal market 2.1.1 General strategy for the internal market In its communication of 18 February 1999 [1], the Commission evaluated the implementation of its Action Plan [2] which expired on 31 December 1998. Judging by the results, it has been a success; in most (but not all) cases, the given aims have been achieved. Three of the four proposals for legislation regarded as essential to the creation of the legislative framework have been adopted. The discussions concerning taxes have also been given fresh impetus. In addition, the Commission and the Member States have during the course of the Action Plan made progress towards more effective enforcement of legislation and an improved legislative framework. [1] Communication from the Commission to the Council and the European Parliament - Assessment of the Single Market Action Plan, June 1997 - December 1998: COM (99) 74, 18 February 1999. [2] Communication from the Commission to the Council - Action Plan for the Single Market: CSE(97) 1 final, 14 June 1997. In November 1999, the single market scoreboard showed that the Member States had made progress in transposing directives relating to the internal market. The percentage of directives not yet transposed in one or more Member States fell by half within two years and is now around the 12% mark. The non-transposal rate for each Member State also dropped significantly: only five Member States still have a rate more than 5%. In a communication dated 24 November [3], the Commission presented its "Strategy for the internal market" which set out its strategic aims for the next five years (2000-2004): to improve the quality of life of European citizens, to enhance the efficiency of Community product and capital markets, to improve the business environment, and to exploit the achievements of the Internal Market in a changing world. A series of operational objectives has also been defined, with each covering a particular policy dimension that contributes to the achievement of one or more strategic objectives. In order to achieve these operational objectives, short-term priorities are identified as "target actions". [3] Communication from the Commission to the European Parliament and the Council - The Strategy for Europe's Internal Market: COM (1999) 624 final, 24 November 1999. The target actions to improve the effectiveness of the legal framework include steps by the Member States to reduce their rate of non-transposal to less than 1.5% by the end of 2000, and the launch of a pilot project offering Community support for national initiatives in the field of administrative cooperation. This pilot project takes over from the KAROLUS programme for the exchange of officials, which expired at the end of 1999. Simpler and better-quality legislation are still among the most important political priorities. On 25 February [4], the Commission presented its recommendations, drawn up during the third phase of the SLIM initiative, concerning legislation in the field of insurance, coordination of social security schemes and the directive on electromagnetic compatibility. The phase 4 teams have completed their work and drawn up recommendations for simplifying Community legislation in the fields of company law, the classification, packaging and labelling of hazardous substances, and pre-packaging. The Business Test Panel set up under a pilot project in 1998 has been consulted in connection with the proposal for a directive on electrical and electronic equipment wastes. [4] Report from the Commission to the Council and the European Parliament - Results of the third phase of SLIM and follow-up of the implementation of the recommendations of the first and second phases: COM(1999) 88, 25 February 1999. Finally, the Dialogue with Citizens and Business launched at the Cardiff European Council provides information, via the telephone and Internet, on how to exercise the rights conferred by Community law. It also provides feedback on the problems encountered in doing so and thus enables specific conclusions to be drawn for improving the workings of the internal market. A business website (http://europa.eu.int/business) was set up in December 1998 as part of the Dialogue with Business and provides ready access to a wide range of useful information on doing business in the Single Market. 2.1.2 Free movement of persons and citizenship of the Union 2.1.2.1 Entry and residence On 17 March 1999, the Commission submitted a report to the Council and the European Parliament on implementation of Directives 90/364, 90/365 and 93/96 (right of residence) [5]. This report looks at how the three Directives have been applied to the right of residence of students, pensioners and other persons not in employment.. [5] COM(1999) 127 final. On 19 July 1999, the Commission submitted a communication to the Council and the European Parliament on the special measures concerning the movement and residence of citizens of the Union which are justified on grounds of public policy, public security or public health (Directive 64/221/EEC) [6], in which it drew attention to some of the main difficulties involved in implementing the Directive and provided general guidelines and information on how these difficulties can be tackled. [6] COM(1999) 372 final. 2.1.2.2 Right to vote and stand in elections Belgium passed legislation transposing Directive 94/80/EC on 27 January 1999, which means that this Directive has now been transposed by all the Member States. On 30 July 1999, the Commission sent a reasoned opinion to Germany regarding its failure to properly transpose Directive 93/109/EC. The German transposal legislation requires EU citizens resident in Germany to apply for inclusion on the electoral list before each European Parliament election - a requirement which contravenes Article 9(4) of the Directive. The Commission issued to Germany on 30 July two reasoned opinions concerning the failure of two Länder, Bavaria and Saxony, to properly transpose Directive 94/80/EC. The transposal legislation passed by these two Länder requires EU citizens resident in Germany to apply for inclusion on the electoral list before each municipal election; this constitutes an infringement of Article 8(3) of the Directive. On 11 August 1999, the Commission issued a reasoned opinion to Greece because of its failure to properly transpose Directive 94/80/EC. The Commission drew attention to a number of points on which Greek legislation does not comply with the Directive, in particular the rule whereby persons are only entitled to vote if they have knowledge of the Greek language and have been resident in Greece for at least two years. 2.1.2.3 Regulated professions Court of Justice decisions In its preliminary judgment in Case C-234/97 Fernández de Bobadilla v Prado Museum [7], the Court looked in detail at the concept of "regulated professions" within the meaning of Council Directives 89/48/EEC and 92/51/EEC on a general system for the recognition of higher-education diplomas. One particular point that emerges from this judgment is that provisions of a collective agreement regulating, in general terms, access to or the pursuit of a profession are likely to constitute laws, regulations or administrative provisions for regulating a profession as referred to in Article 1(d) of Directive 89/48/EEC and Article 1(f) of Directive 92/51/EEC - especially when this is the result of a unified administrative policy laid down at national level. [7] Judgment of 8 July 1999, not yet reported. Non-compliance with judgments of the Court With regard to the infringement proceedings instituted under Article 228 of the EC Treaty (failure to comply with a judgment of the Court), it should be mentioned that the two sets of proceedings against Italy and France concerning the freedom of tourist guides to provide services (judgments given on 26 February 1991 in Cases C-180/89 [8] et C-154/89 [9]) have both been dropped. Italy has adopted national implementing measures and notified the Commission accordingly, and in France the draft decree previously notified to the Commission has been adopted. [8] Judgment of 26 February 1991, ECR I-709. [9] Judgment of 26 February 1991, ECR I-659. Following the second referral to the Court, with a request for a financial penalty, of the case concerning Greece's failure to notify measures transposing Directive 89/48/EEC (first general system for the recognition of higher-education diplomas) (cf. Court judgment of 23 March 1995 in Case C-365/93 [10]), proceedings are still pending (Case C-98/197). [10] Judgment of 23 March 1995, ECR I-499. As regards other judgments of the Court not yet implemented, mention should be made of the judgment issued on 22 March 1994 (Case C-375/92 [11]) against Spain concerning the freedom of tourist guides to provide services, scrutiny of the new decrees on the exercise of that profession adopted by the Autonomous Communities in cooperation with the Spanish authorities revealed that some amendments still need to be made to certain regional laws. The Commission is waiting for amended provisions to be adopted. [11] Judgment of 22 March 1994, ECR I-923. Cases pending before the Court of Justice: The Commission has referred the following cases to the Court: * A case against Spain concerning the conditions for acquiring Spanish diplomas for specialist doctors (Article 8 of Directive 93/16/EEC on the free movement of doctors and the mutual recognition of their diplomas). * A case against France concerning non-recognition of qualifications obtained in other Member States by divers for high-pressure environments, even though this occupation is covered by Directive 92/51/EEC, which supplements the general system for the recognition of professional education and training. * A case against Italy concerning the provision of services by lawyers and the establishment of legal practices: firstly, Italian legislation restricts the opening of a legal practice in Italy, which is in contravention of the judgment given by the Court in Case C-55/94 Gebhard [12]; and secondly, Council Directive 89/48/EEC (first general system for the recognition of higher-education diplomas) has not been fully transposed in relation to the legal profession. [12] Judgment of 30 November 1995, ECR I-4165. It should also be mentioned that in Case C-98/259 against Germany concerning access to the dental profession (Council Directives 78/686/EEC and 78/687/EEC) and particularly admission to the social security register of Community nationals, the Commission has discontinued proceedings following notification from Germany of legislation putting an end to this infringement. National implementing measures The Commission has decided to bring a case before the Court of Justice against Greece for its failure to give notification of measures to implement Commission Directive 97/38/EC amending Council Directive 92/51/EEC. In 1999, proceedings were instituted against some Member States for failure to give notification of measures to transpose Commission Directives 98/21/EC and 98/63/EC updating the lists of medical specialisations in Council Directive 93/16/EEC on the free movement of doctors and the mutual recognition of their diplomas: following notification of implementing measures, proceedings against Germany, Greece, Spain, Italy, Luxembourg, Austria, Finland and the United Kingdom concerning Directive 98/21/EC were discontinued, as were the proceedings against Belgium, France, Italy, Austria and Sweden concerning Directive 98/63/EC. The Commission decided in connection with Directive 98/21/EC to bring cases before the Court of Justice against Ireland, the Netherlands and Portugal. A reasoned opinion has been sent to Spain, Ireland, the Netherlands and Portugal concerning Directive 98/63/EC. In 1999, proceedings against Austria were instituted and set aside in connection with Council Directives 78/686/EEC and 78/687/EEC (mutual recognition of dentists' diplomas and coordination of their training), with respect to which Austria had been granted an additional deadline until 31 December 1998 for their transposal. Incorrect transposal and incorrect application of directives In 1999 the Commission received around 20 complaints concerning restrictions in breach of Articles 43 and 49 of the EC Treaty and directives on the mutual recognition of professional qualifications. Some of these complaints gave rise to infringement proceedings, while others were shelved as unfounded. A number of proceedings already in motion against Member States for incorrect transposal or incorrect application of directives were continued. Examples include the case against Spain concerning the duration of the training of nurses responsible for general care, in which the Spanish authorities' response to the reasoned opinion is still being examined. In 1999, the Commission issued a reasoned opinion to Belgium concerning the conditions imposed on the provision of architectural services: the existing procedure in Belgium is too slow, cumbersome and expensive, and contravenes Council Directive 85/384/EEC (on the mutual recognition of architects' diplomas), in addition to which excessive use is made of the rule stating that the professions of architect and building contractor are incompatible. The Commission also sent a reasoned opinion to Austria regarding conditions for the allocation of posts as panel doctors, this is because of the discriminatory nature of the points scheme set up by the provinces (which favours persons born in the province concerned, as well as their descendants). Finally, with respect to the case against Spain concerning the conditions of recognition of dentists' diplomas obtained in Latin America (proceedings mentioned in previous reports), referral to the Court of Justice is still suspended. The renegotiations initiated by the Spanish authorities with a view to amending the clauses of international agreements on recognition of higher-education qualifications are still going on. Dialogue with the national authorities As a means of consolidating administrative cooperation and resolving problems quickly, the Commission in 1999 maintained regular contacts with the national authorities through the group of coordinators for Council Directives 89/48/EEC and 92/51/EEC (general system for the recognition of diplomas) and committees of high-level officials (on public health, for example). 2.1.2.4 Independent commercial agents As regards the infringement proceedings instituted against Italy for failure to fully transpose Directive 86/653/EEC, which were mentioned in the previous report, Italy amended its legislation on 15 April 1999, which brought it into line with the Commission's observations. The proceedings were therefore discontinued. 2.1.3 Free movement of goods 2.1.3.1 Articles 28 et seq. EC (ex Articles 30 et seq. of the EC Treaty) The volume of cases challenging State measures likely to create obstacles to trade remains significant, although statistics show that this volume has remained unchanged over the last three years. In 1999, the number of new cases opened by the Commission rose to 257, of which around 100 were concerned with a single matter (the dioxin crisis). As at 31 December 1999, there were 345 infringement cases pending. In 1999, the litigation surrounding the free movement of goods tended to involve the same complexity as in previous years. The technical and legal complexity of the cases means that the Commission is continuing to emphasise methods of solving these problems that are based on close collaboration with the national authorities. In this spirit, the Community is focusing on package meetings as a framework where an open, informal discussion can achieve rapid solutions to the barriers exposed by operators. In 1999, these meetings took place with all the Member States except Luxembourg and the Netherlands. In general, the success rate of these meetings is high: of all the cases examined, around 50% have been settled, either during the meeting or by the adoption of a measure by the Member State following a commitment made during the meeting. Although the number of disputed cases increased over the last year, they still account for only a small percentage (15%) of the cases discussed. The practice of bringing together once a year the chairmen of the national delegations participating the package meetings was retained in 1999, with the meeting taking place in February. At this and the various other package meetings held in 1999, attention was focused on the need to apply mutual recognition arrangements more effectively, since this would offer a simple solution to a large proportion of the cases recently referred to the Commission (problems of mutual recognition for detergents containing bleach, steel profiles, rubber products etc.). In this respect, the package meetings have provided a framework for seminars on mutual recognition for the benefit of both centralised and decentralised national authorities responsible for its enforcement. Prime among the sectors in which Community action was most called for in 1999 was the foodstuffs industry; this was because of the large number of complaints from Belgian operators affected by the restrictions imposed by the other Member States in response to the dioxin crisis. Given that this situation is of a transitory nature, the motor industry still accounts for the largest number of cases. Although the Commission managed in 1998 to solve problems with France, Portugal and Germany, 1999 saw new problems emerge involving Spain in particular. The competent national authorities have now simplified the registration procedure for cars and motorcycles imported by individuals. As in previous years, the Commission has frequently received complaints from operators concerning the marketing of food supplements, as well as food products enriched with vitamins and nutrients. Parallel imports of pesticides and pharmaceutical products, and the criteria for setting the prices of the latter, are other fields where intervention by the Commission continues to be called for by Community operators. The following cases were referred to the Court of Justice by the Commission in 1999: * A case against France concerning the marketing of food products enriched with vitamins and supplements being made subject to a protracted and costly authorisation procedure; a case against Germany and Austria concerning the automatic classification of vitamin-enriched food supplements as medicines when a given threshold is exceeded; and a case against Belgium concerning the obligation to affix an identification number, by unit of product, on food supplements (nutrients). * A case against France concerning the failure to include a clause of mutual recognition in rules governing rubber products, and a case concerning the non-recognition, under rules relating to precious metals, of sponsors' marks and fineness marks denoting a fineness of 999 parts per thousand used in other Member States. The Commission decided to refer the following cases to the Court in 1999: * Cases against Italy and Spain concerning the banning of the sale of chocolate containing fats other than cocoa butter. During the year, the Commission also sent reasoned opinions to Austria (import of medicines, health labelling of foodstuffs ), France (parallel imports of medicines), Italy (import and export of unrefined gold) and Greece (marking requirements for ceramic tiles, target price of non-alcoholic beverages, registration of imported heavy goods vehicles). As regards judgments of the Court of Justice, a number of preliminary rulings tying in with cases of infringement being dealt with the Commission should be mentioned: * Judgment of 3 June 1999 in Case C-33/97 Colim NV [13], in which the Court ruled that a Member State may not, on the basis of a language requirement, prevent the sale of a product legally offered for sale in another Member State if consumers are fully informed by means of the product's elements of labelling (such as drawings, symbols or pictograms). [13] Not yet reported. * Judgment of 11 March 1999 in Case C-100/96 British Agrochemicals [14], in which the Court stated that a phytopharmaceutical product imported from another EU Member State or member country of the EEA and covered by a marketing authorisation in the country concerned, and which may be regarded as identical to a product covered by a marketing authorisation granted by the importing country in accordance with Community law, may not be made subject to further authorisation. [14] [1999] ECR I-1499. Finally, the Commission welcomes the gradual start-up of the transparency instrument introduced by Parliament and Council Decision 3052/95/EC, pursuant to which the Member States are required to notify the Commission of the national measures constituting exceptions to the principle of the free movement of goods. During 1999, notification was given for only 26 national measures, most of which related to the sale of medical equipment and electrical appliances. 2.1.3.2 Preventive rules provided for by Directive 98/34/EC [15] (formerly 83/189/EEC) [15] Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations (OJ L 204 p. 37); this directive consolidates and repeals Directive 83/189/EEC and its subsequent amendments, and was amended by Directive 98/48/EC of the European Parliament and of the Council of 20 July 1998 which extends the information procedure to the rules on information society services (OJ L 217 p. 18). The notification procedure introduced by Directive 98/34/EC is an essential tool for preventing barriers to trade from being raised and for sharing information. The Directive obliges Member States to submit to the Commission, and to each other, their drafts of new technical regulations for monitoring of compliance with internal market rules before they are finally adopted. This procedure was previously concerned only with products, but was extended on 5 August 1999 to include information society services. The aim of Directive 98/48/EEC, amending Directive 98/34/EC, is to guarantee a solid, transparent and consistent regulatory framework by making national initiatives for legislation specifically concerned with information society services subject to the same consultation arrangements between the Commission and the Member States as have proved successful with regard to goods. In 1999, the Commission received 591 drafts of technical regulations (including 13 relating to rules on information society services) which were scrutinised by the relevant departments. This compares with 900 for 1997 [16] and 604 for 1998 [17]. These figures show that, in spite of the completion of the internal market, the Member States continue to adopt a great many technical regulations, which could undermine the single market and the integrity of the benefits it has brought to all sectors of the economy. [16] Statistics on the regulations notified in 1997 are published in Official Journal C 281 of 10.09.1998, p. 3. [17] Statistics on the regulations notified in 1998 are published in Official Journal C 228 of 11.08.1999, p. 7. Of the 591 drafts received by the Commission in 1999, 44 [18] required a detailed opinion recommending changes to the planned measure in order to eliminate any unjustified barriers to the free movement of information-society goods or services which might arise a s a result.. The Member States, for their part, issued 97 [19] detailed opinions. In one case [20], measures were postponed for a year because a draft directive on the field in question is already before the Council [21]. [18] As at 31 December 1999. The time-limit for issuing detailed opinions on draft regulations reported in 1999 ends on 31 March 2000. [19] As at 31 December 1999. The time-limit for issuing detailed opinions on draft regulations reported in 1999 ends on 31 March 2000. [20] As at 31 December 1999. The time-limit for notifying Member States of requests for postponements of 1999 notifications ends on 31 March 2000. [21] Proposal for a Directive of the European Parliament and of the Council on electronic commerce in the internal market. Since 1989 the Commission has been monitoring compliance with the notification requirement by routinely scrutinising the official gazettes of all the Member States. When it discovers a breach of Directive 98/34/EC, the Commission starts a dialogue with the Member State concerned in order to rectify the situation, or even commences infringement proceedings under Article 226 of the EC Treaty. At the end of 1999, preparatory work was under way on around 15 procedures of this type. Furthermore, on 11 May 1999, the Court of Justice clarified, as part of a preliminary ruling in Cases C-425/97 to C-427/97 (Albers), the scope of the exemption from the notification requirement applying to measures transposing Community acts: a measure which, among other things, prohibits a given substance from being administered to bovine animals in order to meet the requirements of a Community directive is deemed to be a technical regulation if it is of a mandatory nature. However, the State which adopted it is exempted by Article 10 of the Directive from the requirement that it notify the Commission. On 3 June 1999, the Court also provided clarification in Case C-33/97 (Colim) regarding the concept of the technical regulation and the conditions under which a measure replacing an already existing technical regulation is subject to notification requirements. A national measure which, without laying down any new or additional specifications, reproduces or replaces technical regulations already in place and (if adopted after the entry into force of Directive 83/189/EEC) duly notified to the Commission, should not be regarded as a "draft" technical regulation nor, therefore, as being subject to notification. The Court also stated in this judgment that language requirements relating to labelling, instructions for use and the guarantee certificate might, even though they do not constitute technical regulations within the meaning of the Directive, give rise to barriers to trade within the Community. 2.1.3.3 Harmonised legislation Questions on agricultural products are dealt with in point 2.13.2. 2.1.3.3.1 Foodstuffs In general, the Member States are adopting national measures to implement the Directives on foodstuffs, but not always strictly within the time-limits laid down in the Directives. A considerable number of implementing measures were notified to the Commission in 1999. Sixty-six infringement cases for failure to report measures were closed before the end of the year. During 1999, the Commission sent letters of formal notice in 47 cases. At the same time, four opinions were sent and the Commission referred three cases to the Court of Justice. In response to the failure to properly implement directives and regulations on foodstuffs, the Commission decided to send two letters of formal notice and closed two cases. At the same time, four complaints were lodged and are still being processed. 2.1.3.3.2 Pharmaceutical products During 1999, almost all the implementing measures still requiring notification were reported to the Commission. Fourteen of Member States have now transposed all directives relating to the pharmaceuticals sector. Only France still has to complete this process. As in previous years, certain general problems also remain concerning the interpretation and application of the pharmaceuticals Directives by Member States. These cases concern mainly the different interpretations given by Member States to the term "medicinal product" (sometimes resulting in barriers to the free movement of goods) and complaints concerning the alleged failure by the competent national authorities to observe the provisions of the "transparency" Directive (89/105/EEC). The transposal of Article 4(8)(a)(i)-(iii) of Directive 65/65/EEC by Member States and the management of the re-authorisation of "old" medicinal products are also the subject of ongoing infringement proceedings. The Commission is carefully considering these problems and complaints. It should be stressed that a draft consolidation of the legislation on pharmaceuticals (both human and veterinary) is already very advanced (the Commission officially submitted a proposal to the Council and the European Parliament in 1999), and that this consolidation will increase the clarity of the legislation and ultimately the effectiveness of its implementation. 2.1.3.3.3 Chemicals In the chemicals sectors, 40 infringement cases for failure to report measures were closed in 1999. These were concerned with the classification, packaging and labelling of dangerous preparations (Directive 96/65), restrictions on the marketing of dangerous substances and preparations (Directives 91/338, 94/60, 96/55, 97/10, 97/16, 97/56 and 97/64) and of fertilisers (Directives 93/69, 96/28, 97/63 and 98/3). After six reasoned opinions were sent with regard to the directives for which the deadline for transposal had expired in 1998 (Directives 97/56, 97/64 and 98/3), most of the Member States transposed the legislation. There is still a total of nine infringement proceedings under way for failure to give notification of transposal measures. Most of these cases have been brought before the Court of Justice, and relate principally to restrictions on the marketing of dangerous substances (Directive 97/56), as well as the classification, packaging and labelling of dangerous preparations (Directive 96/65), fertilisers (Directive 98/3) and explosives (Directive 93/15). The deadline for transposal of three directives concerning good laboratory practice (Directives 99/662, 99/11 and 99/12) ran out in September 1999. Eleven Member States had not transposed these directives on time. Two infringement cases are pending for failure to properly transpose Directive 93/15/EEC on the placing on the market of explosives. 2.1.3.3.4 Motor vehicles, tractors and motorcycles In this sector, Community directives are generally transposed on time. In the cases where there is a delay, the launch of infringement proceedings is normally enough to ensure rapid transposal. Nevertheless, the situation worsened in 1999 in that several Member States were unable to complete transposal measures on time; this may have been due to the significant increase in the number of directives adapting earlier directives to technical progress. Delays in transposal were also noted in relation to Directive 98/69/EC (known as the "auto oil" Directive), which among other things was intended to reduce limit values for air pollution by emissions from certain categories of motor vehicle. At the end of 1999, Commission Directives 98/38/EC, 98/39/EC, 98/40/EC and 98/89/EC adapting to technical progress the Council Directives on wheeled agricultural or forestry tractors had still not yet been transposed by six, five, four and nine Member States respectively. The following references to Directives adapting to technical progress the Council Directives on motor vehicles are followed by a figure in brackets indicating the number of Member States which have failed to report transposal measures: Commission Directives 98/77/EC (4), 98/90/EC (5), 1999/7/EC (6), 1999/14/EC (7), 1999/15/EC (7), 1999/16/EC (7), 1999/17/EC (7) and 1999/18/EC (7). As regards the adaption to technical progress of Council Directives concerning two- or three-wheel motor vehicles, Commission Directives 1999/23/EC, 1999/24/EC, 1999/25/EC and 1999/26/EC had not yet been transposed by seven, seven, seven and eight Member States respectively. As at the end of 1999, nine Member States had still not transposed Directive 98/69/EC relating to measures to be taken against air pollution by emissions from motor vehicles. As indicated in the Sixteenth Annual Report (relating to 1998), the final deadline for transposal of Directive 97/24/EC on certain components and characteristics of two or three-wheel motor vehicles was 18 December 1998. Under this Directive, type-approval for two or three-wheel vehicles was to become compulsory as from 17 June 1999. At the end of 1999, two Member States had still not transposed the Directive, and infringement proceedings for failure to report appropriate measures had reached the stage of hearings in the Court of Justice. Directive 98/14/EC on the type-approval of motor vehicles and their trailers had been transposed by all but one of the Member States by the end of 1999. By the same time, two Member States had failed to transpose on time Directive 97/54/EEC on the maximum design speed of wheeled agricultural or forestry tractors; two Article 226 proceedings have been instituted. 2.1.3.3.5 Construction products As far as the transposal of Directive 89/106/EEC by Austria is concerned, infringement proceedings were opened because certain provisions of the Austrian legislation did not comply with the Directive. A letter has been sent to the Austrian authorities asking them for information clarifying their position. As part of ongoing infringement proceedings against Greece concerning checks on the quality of certain imported steels, the response to the reasoned opinion sent to the Greek authorities on 4 December 1998 cannot be regarded as satisfactory, and the Commission decided in December 1998 to authorise contacts with the Greek authorities prior to referring the matter to the Court of Justice. 2.1.3.3.6 Capital goods (mechanical engineering, electronics, personal protection equipment, gas equipment, pre-packaging, measuring equipment, medical devices and pleasure craft) In 1999, all the Member States took national measures to transpose Directive 94/25/EC on pleasure craft. This year, considerable progress has been made on transposing the directives in the above-mentioned sectors. Thus, most of the directives which had a time-limit for transposal of 31 December 1998, and particularly Directives 93/42/EC, 94/9/EC and 97/53/EC, which were mentioned in the Sixteenth Annual Report ( for 1998), have been incorporated into national law in all Member States. However, problems remain for two directives which will be considered below. As regards cases of incomplete implementation of the directives or where national law conflicts with the directives, there has also been considerable progress. However, some difficulties remain, particularly as regards Directives 98/37/EC (machines) and 89/686/EEC (personal protection equipment). Fifty-five infringement cases were dealt with in 1999, of which 20 were registered during the year. At the end of 1999, 28 remain, including seven cases of failure to notify and 21 other cases. One case against Italy was referred to the Court of Justice for failure to properly implement Directive 73/23/EEC. For the cases of failure to notify, the situation is as follows. Proceedings against France were brought before the Court of Justice in connection with European Parliament and Council Directive 95/16/EC relating to lifts. Italy and Luxembourg, which had been the subject of actions before the Court in 1999, gave notification of national transposal measures. Finally, as regards Directive 97/23/EC of the European Parliament and of the Council concerning pressure equipment, the Commission decided in 1999 to issue a reasoned opinion to Germany, Ireland, Italy and Luxembourg. This decision was implemented in 1999 in relation to Luxembourg. 2.1.3.3.7 Cosmetics During 1999, the Commission established that progress had been made in implementing Community legislation on cosmetics. As far as failure to notify national measures implementing Community directives is concerned, the Commission was able to close numerous infringement proceedings against Member States following notification by a number of them that national measures had been taken to transpose Directives 97/45/EC, 97/18/EC and 98/16/EC. However, the Commission deplores the fact that some Member States have still not transposed Directive 97/18/EC (postponing the date from which animal experiments are banned for ingredients or combinations of ingredients), which should have been incorporated into national law by 31 December 1997 at the latest, in order to provide economic operators with a degree of legal certainty. As regards Council Directive 93/35/EEC amending for the sixth time Council Directive 76/768/EEC, only France still has to complete the transposal process by publishing its implementing legislation. Finally, 11 Member States have already notified the Commission about national measures to implement the 23rd Commission Directive 98/62/EC adapting to technical progress Council Directive 76/768/EEC, which should have been transposed by 30 June 1999 at the latest. Cases of infringement other than those for failure to notify national implementing measures are being scrutinised very thoroughly by the Commission, and the dialogue taking place between it and the national authorities is leading to satisfactory solutions. 2.1.3.3.8 Textiles and shoes Directive 97/37/EC adapting to technical progress Annexes I and II to Directive 96/74/EC of the European Parliament and of the Council on textile names reached its deadline on 1 June 1998. The Directive was transposed in all the Member States in 1999. The infringement proceedings instituted against Italy, Belgium and Luxembourg in 1998 were dropped. As regards Directive 94/11/EC of the European Parliament and of the Council of 23 March 1994 on the approximation of the laws, regulations and administrative provisions of the Member States relating to labelling of the materials used in the main components of footwear for sale to the consumer, transposal has been completed in all the Member States. The infringement proceedings against Luxembourg for failure to notify national implementing measures were discontinued in 1999. 2.1.3.3.9 Liability for defective products The Commission instituted three infringement proceedings against inadequate national implementing measures. The proceedings against Austria were dropped following its adoption of a law modifying its transposal legislation and thus bringing into line with legal requirements. In December 1999, the Commission decided to refer cases against France and Greece to the Court of Justice. Directive 99/34/EC aims to extend the rules on liability without fault to agricultural primary products. The Member States must introduce the laws, regulations and administrative provisions necessary to comply with the Directive by 4 December 2000 at the latest. One referral to the Court for a preliminary ruling relates to the first ever case (C-203/99) relating to the interpretation of Directive 85/374/EEC. The case is concerned with the liability of the public authorities running a hospital in Denmark in which a patient was unable to have an organ for transplant because it had been damaged. 2.1.3.4 Special arrangements relating to freedom of movement Cultural goods The Commission initiated infringement proceedings at the Court of Justice against Austria for failure to give notification of the transposal, and the date of transposal, of Directive 96/100/EC of the European Parliament and of the Council of 17 February amending the Annex to Directive 93/7/EEC [22]. [22] OJ L 60, 1.3.1997, p. 59. Apart from this one exception, all the Member States have given notification of measures to transpose Council Directive 93/7/EEC on the return of cultural objects unlawfully removed from the territory of a Member State [23], and Directive 96/100/EEC mentioned above. The Commission then looked, in consultation with the Member States, at the application of these Directives for the purposes of a report to be submitted to Parliament, the Council and the Economic and Social Committee. [23] OJ L 74, 27.3.1993, p. 74. Rapid intervention in the event of serious obstacles to the free movement of goods At the beginning of 1999, Council Regulation (EC) No 2679/98 of 7 December 1998 on the functioning of the internal market in relation to the free movement of goods among the Member States [24] entered into force. [24] OJ L 337, 12.12.1998, p. 8. The warning system provided for in Article 3 of this Regulation has been used successfully in a number of instances. The Member States concerned responded satisfactorily to the requests for information addressed to them by the Commission, and no obstacles within the meaning of the regulation were found to exist. These instances involved: * hindrances on main roads in Belgium as a result of industrial action by Belgian road hauliers in June 1999; * hindrances on main roads in Belgium as a result of protest demonstrations by Belgian farmers in connection with the dioxin crisis in June 1999; * the European road hauliers' day of action in October 1999. 2.1.3.5 Customs Union The European Commission's main function as regards customs activity is to manage the customs instruments needed for the application of the European Union's common policies (commercial policy, agricultural policy, environment, public health etc.) for the purposes of controlling its external frontiers and guaranteeing the security of European citizens and fair trading for businesses and in the internal market and economic and monetary union. This task of managing the Customs Union is the basis for measures by the Taxation and Customs Union DG aimed in particular at establishing a customs nomenclature, managing databases relating to tariff arrangements and rules of origin, setting up a system for the exchange of information on controls and checks to fight fraud and irregular practices. These measures allow the Community to pursue an active commercial policy as regards preferences on the one hand and monitoring of compliance with rules of origin and coordination of anti-dumping measures on the other. Monitoring the correct implementation of Community provisions, of course, remains an essential element of the Commission's activity in this sector. In this connection, it should be mentioned that a reasoned opinion was sent to Sweden for failure to comply with Article 76 of the Community Customs Code, and Articles 254 et seq. of the implementing provisions. At the end of Article 76(1)(a) of the Code, it is stated that, in order to simplify completion of formalities and procedures as far as possible while ensuring that operations are conducted in a proper manner, the customs authorities shall, under conditions laid down in accordance with the Customs Code Committee's procedure, grant a concession whereby some of the documents required for implementation of the provisions governing the customs procedure for which the goods are declared need not be attached to the customs declaration. The conditions laid down under this Committee's procedure are set out in Articles 254 et seq. of Commission Regulation (EEC) No 2454/93 [25] laying down provisions for the implementation of the Community Customs Code. According to these conditions - and more specifically those set out in Articles 255 to 257 of the Regulation - the customs authorities allow a period for the submission of missing documents provided that certain conditions are complied with to their satisfaction. The Swedish customs authorities are now failing to apply the above-mentioned provisions; this means that if an importer does not have the required documents, such as the certificate of preferential origin, the import duties are charged immediately at the full rate by the Swedish authorities, subject to appropriate reimbursement when the document concerned is presented. [25] OJ L 253, 11.10.1993, p. 1. Another reasoned opinion issued last year was addressed to Greece, firstly in connection with the Greek ports in the Free Zone whose structure and organisation are such that the customs inspections carried out there infringe a number of provisions of the Community Customs Code, and secondly because in certain situations the formalities and checks in connection with car imports are incompatible with Directives 77/388/EEC [26] and 92/12/EEC [27] as regards VAT. [26] OJ L 145, 13.6.1977, p. 1. [27] OJ L 76, 23.3.1992, p. 1. Two sets of infringement proceedings were dropped after the Member States concerned complied with the Commission's requirements. First of all, Belgium rescinded the circular stating that an exporter has the choice of submitting the export declaration either to the customs office with principal responsibility in Belgium, or to the office through which the goods leave the country, despite the fact that Article 161(5) of the Customs Code stipulates that the export declaration must be filed at the customs office with jurisdiction at the location of the exporter's business establishment or at the place the goods are packed or loaded for export. The other proceedings that were discontinued relate to Portugal, which took measures to comply with the Court of Justice's judgment of 17 June 1997 in Case C-164/95 concerning the tariff classification of grated cheese which, when imported, is by reason of the method of packaging and preservation used, in an agglomerated form and, after unpacking and exposure to the surrounding air, breaks down into irregular granules [28]. [28] 1997 [ECR] I-3441. 2.1.4 Free movement of services and right of establishment 2.1.4.1 Articles 43 et seq. and Articles 49 et seq. Some German regulations governing the profession of patent agent stipulate that any person who is neither resident nor established in Germany may not take part in proceedings before the Patents Office unless they appoint a patent agent or attorney to represent them. Furthermore, a patent agent cannot represent an applicant before the Patent Office unless he has an address for service with a patent agent established in Germany. These conditions raise questions of compatibility with the principle of freedom to provide services laid down in Article 49 of the EC Treaty, which is why a reasoned opinion was issued to the German authorities. Under French regulations on patent applications and the profession of patent agent, only persons entered in the French register of patent agents may represent their clients agents in proceedings before the National Industrial Property Institute, and then only if they have passed an aptitude test. In addition, all patent agents must have a business establishment in France. Conditions of this kind are incompatible with the principle of freedom to provide services embodied in Article 49 of the EC Treaty, which was further elaborated in Directive 89/48/EEC [29] on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years' duration. A reasoned opinion was therefore sent to the French authorities. [29] Op cit. A case was also brought before the Court of Justice concerning Italian legislation which establishes lists of licences for forwarding agents and requires the registration of all natural and legal persons engaged in this activity on a specific list kept by the competent chamber of commerce. This registration requirement interferes with the exercise of this activity by economic operators who are not based in Italy but wish to carry out incidental work there pursuant to Article 49. The rules on taking aerial photographs as part of a service provided in Portugal state that foreign companies and individuals will be authorised only in duly justified cases. Such discrimination on the basis of nationality, which cannot be justified on grounds of public safety, has resulted in the proceedings against Portugal being referred to the Court of Justice. As regards the posting of workers in the context of freedom to provide services, the Commission has referred matters to the Court of Justice concerning the national legislation of two Member States: Italian legislation currently in force bans any cross-border activities by temporary employment firms and stipulates that such firms must have their registered office in Italy, whilst German legislation allows the posting of workers between two firms in the construction sector only if no movement across borders in involved. In the case of private security services, the Commission had instituted proceedings at the Court of Justice concerning Belgian regulations requiring registered offices to be located in Belgium. The Advocate-General's Opinion of 16 September 1999 (in Case C-355/98) supported the Commission's position. Similarly, the Commission brought a case before the Court of Justice concerning Italian legislation in the same field, which states that only Italian nationals may engage in paid employment or self-employment in this sector. 2.1.4.2 Financial services Dialogue with the national authorities In an effort to consolidate administrative cooperation and find rapid solutions to the problems encountered, the Commission has maintained regular contacts with the national authorities in 1999, through institutional committees (Banking Advisory Committee, Insurance Committee, the UCITS - Undertakings for Collective Investment in Transferable Securities - Contact Committee), ad hoc interpretation groups (group of national experts on payment systems, the banking directives group, the insurance group and the "capital adequacy" Directive group, etc.) and high-level working parties (HLSSC - High-Level Security Supervisors Committee for negotiable securities). Complaints and infringements In the banking sector, five sets of infringement proceedings were instituted in 1999 for breach of Articles 43 and 49 of the EC Treaty, and of Directives. Two cases involved Italy. The first involved apparent discrimination on grounds of nationality in the refunding of tax credits to banks established in Italy. A reasoned opinion was sent to Italy enquiring about the criteria used to draw up the list on the basis of which the credits were refunded. The second case concerned withholding tax on interest income from loans. The Commission investigated the matter in order to determine whether Italian legislation discriminates according to whether the credit institution is based in Italy or another Member State. A letter was sent to the Italian authorities requesting further information. A letter of formal notice was sent to the Greek authorities in connection with State guarantees for loans to firms in certain disadvantaged regions of the country. It emerged from information provided to the Commission that such guarantees are only issued to credit institutions established in Greece. Loans granted by institutions based in other EU Member States on the basis of the freedom to provide services are not eligible for such guarantees. Two cases of suspected infringement concern France. In the first, the Commission sent a letter requesting information because it appears that Frances does not allow French credit institutions - or branches of foreign institutions - to pay interest on current accounts. The second case concerns the failure of the French authorities to comply with the Court of Justice's judgment in Ambry [30] (see "Cases before the Court of Justice"). [30] Judgment of 1 December 1998 in Case C-410/96 [1998] ECR I-7875. In the insurance sector, proceedings continue against Spain concerning the requirement - in contravention of the EC Treaty's provisions on freedom to provide services(Article 49) - that prior authorisation be obtained by professionals wishing to work in Spain as insurance brokers. The proceedings are also still under way against Germany concerning the ban on combining sickness insurance with other forms of insurance, which is deemed to be incompatible with the third Directive on insurance other than life assurance. Finally, the Champalimaud affair led to proceedings being instituted against Portugal in response to the Portuguese authorities' refusal to accept an agreement under which a Spanish banking group was to acquire a qualifying holding in this Portuguese group. This matter is in the process of being resolved. As regards securities, the Commission in 1998 sent reasoned opinions in connection with infringement proceedings already under way against Italy (Articles 49 and 56) and France (Articles 43, 49 and 56) [31]. In these documents the Commission criticised the fact that national tax measures had the effect of placing domestic stockmarkets at an advantage over other stock exchanges in the European Union. In Italy, tax benefits are restricted to issuers of securities which will be quoted on the Italian stockmarkets for the first time. The case against France concerns tax exemptions for life-insurance contracts of at least eight years duration, provided that contracts are expressed in units of collective investment funds which invest at least 50% of their assets in French shares, with at least 5% being in shares of unlisted companies or those listed on the nouveau marché. [31] IP/99/755, 15 October 1999. National implementing measures Failure to notify measures In the banking sector, all the infringement proceedings for failure to transpose the banking Directives, especially Council Directive 95/26/EC, have been dropped. All the Member States have now transposed these directives and given notification of their national implementing measures. With regard to insurance, the Commission, following notification of national implementing measures, dropped the two sets of proceedings concerning the incorporation into national law of the third "life insurance" Directive (92/96/EEC) and the third "non-life insurance" (92/49/EEC) [32], as well as the proceedings relating to the partial transposal of Council Directive 91/371/EEC ("Agreement with Switzerland") [33]. [32] See judgment of 18 December 1997 in Case C-361/95 Commission v Spain [1997] ECR. I-7351 (concerning the partial transposal of Directive 92/49/EEC). [33] See judgment of 18 December 1997 in Case C-360/95 Commission v Spain [1997] ECR. I-7337. The process of adoption into national law of the third "life insurance" Directive and the third "non-life insurance" Directive is almost complete. The departments of the Commission are now concentrating on problems of non-conformity, and on day-to-day monitoring of the application of the Directives. In the securities sector, the Commission sent a reasoned opinion to Austria, France, Luxembourg [34] and Portugal [35] for failure to transpose Directive 97/9/EC of the European Parliament and of the Council on investor-compensation schemes. Given that no response was received from Luxembourg, the Commission decided to refer the matter to the Court. [34] IP/99/601, 30 July 1999. [35] IP/00/9, 11 January 2000. As regards payment systems, two directives entered into force in 1999: Directive 97/5/EC on cross-border credit transfers and Directive 98/26/EC on settlement finality in payment and securities settlement systems. Directive 97/5/EC aims to speed up and reduce the cost of low-value cross-border transfers (up to EUR 50 000), and obliges banks to observe transparency rules prior and subsequent to transfers; it also lays down conditions for transfers (time-limit, ban on double-charging, refund in the event of sums transferred failing to reach the beneficiary). The Directive entered into force on 14 August 1999. As at 31 December 1999, nine Member States (Denmark, Spain, Ireland, Luxembourg, the Netherlands, Austria, Finland, Sweden, the United Kingdom) had transposed the Directive and notified the Commission of their national implementing measures. Belgium, Germany, Greece, France, Italy and Portugal have not yet transposed the Directive. Infringement proceedings were launched on 16 November 1999, when formal letters of notice were sent out. The purpose of Directive 98/26/EC is to limit the systemic risk in payment and securities settlement systems. This is essential to enable large-value payment systems such as TARGET to function properly, and in order to generally increase the efficiency of payment and securities settlement systems. The Directive contains provisions on compensation and guarantees, and stipulates that insolvency procedures relating to these systems may not have any retroactive effects. As at 31 December 1999, notification of transposal of Directive 98/26/EC (which entered into force on 11 December 1999) had been given by five Member States (Belgium, Spain, Portugal, Austria, Finland). No infringement proceedings have yet been instituted against the other Member States. Cases before the Court In the banking sector, the existence of anonymous (savings and securities) accounts in Austria was deemed to be incompatible with the obligation to identify customers when they open an account as provided for in Article 3(1) of Council Directive 91/308/EEC on money laundering. The matter was referred by the Commission to the Court of Justice. In the Commission's view, the anonymity of the accounts may make it easier to launder money. It should be stressed that the Commission is not attempting to violate banking secrecy in this Member State. The Austrian authorities have given notice of their intention to amend their legislation. As regards applications for a preliminary ruling, the Court has handed down its judgment in Ambry [36]. Under French law a financial guarantee that can be called in immediately is required in order to obtain an administrative licence (to operate as a travel agent). However, if the institution providing this guarantee is located in a Member State other than France it must have an agreement with a French bank or insurance company. The Court ruled that this requirement represented an unacceptable restriction on the freedom to provide services. Given that no action seems to have been taken by the French authorities to make appropriate legislative changes, the Commission sent a letter of formal notice and a reasoned opinion to France. The next step will be to refer the matter to the Court of Justice. [36] Judgment of 1 December 1998 in Case C-410/96 [1998] ECR I-7875. In Trummer [37], the Court stated that rules requiring a mortgage to be registered in national currency should in principle be deemed to constitute a restriction on the movement of capital. Austria has taken the necessary steps to modify its legislation. Sweden, however, seems to have similar legislation in place, and the Commission has therefore sent it a letter of formal notice. [37] Judgment of 16 March 1999 in Case C-222/97 [1999] ECR 1661. In the insurance sector, infringements of Articles 43 and 49 of the EC Treaty and of directives led in 1999 to a Court judgment which found that France had failed to give notification of the measures required to bring the mutual insurance code into line with Community law [38]. Two other cases are also before the Court: on 27 October, a hearing took place in a case aimed at establishing that the third Directive on insurance other than life assurance [39] applies to compulsory occupational accident insurance schemes of the kind existing in Belgium, which has not correctly transposed the Directive [40]; and on 28 October, the Advocate-General S. Alber delivered his Opinion in another case brought against France [41], in which he indicated that the automatic requirement that insurance companies file an information sheet before new policies are placed on the market should be regarded as an excessive barrier to trade and contrary to the provisions of the third insurance Directives [42]. [38] Judgment of 16 December 1999 in Case C-239/98 Commission v France (not yet reported). [39] Directive 92/49/EEC (OJ L 228, 11.8.1992, p. 1-23). [40] Case C-206/98, pending. [41] Case C-296/98, pending. [42] Directives 92/49/EEC (op cit.) and 92/96/EEC (OJ L 360, 9.12.1992, p. 1-27). As regards investment services in the field of securities (Council Directive 93/22/EEC), the proceedings against Spain were dropped following notification of transposal. In the proceedings against Luxembourg [43], however, the Court found against this Member State on 3 June 1999 [44]. [43] Case C-417/97. [44] Not yet reported. 2.1.4.3 Commercial communications The Commission also continued its examination of ongoing infringement proceedings. It has started discussions with the French authorities on the interpretation of the Evin law prohibiting television advertising of alcoholic drinks in the particular case of sporting events held abroad but broadcast in France. A reasoned opinion on this matter was sent in 1997. The Commission also sent a reasoned opinion to Germany because its legislation on promotional gifts and discounts is deemed to be in breach of Article 49 of the Treaty. The proceedings were started in response to a complaint by an operator selling goods and services through a "club" based in another Member State. 2.1.4.4 The media The Commission sent a reasoned opinion to Belgium concerning barriers to the free provision of services resulting from the imposition of taxes on dish aerials by many local authorities. 2.1.5 Free movement of capital The situation as regards the free movement of capital and payments in the EU and non-member countries can generally be regarded as satisfactory. Further progress was made during the year to remove certain restrictions on direct investment (United Kingdom and Ireland) and investment in pension funds (Belgium and Finland), whilst certain discriminatory restrictions on the admission of securities to the capital markets - basically arising with regard to the issuing currency - have disappeared automatically because of the introduction of the single currency (France and Germany). New infringement proceedings, most of which were launched following complaints from economic operators, are mainly concerned with restrictions on the granting of mortgage loans across borders and the acquisition of real property, and also with special rights introduced by Member States in relation to certain privatised assets. Various infringement proceedings had been opened earlier following the publication of the Commission communication on certain legal aspects concerning intra-EU investment (OJ C 220, 19.7.1997, p. 15) and the replies to a questionnaire to collect information on national practice in this field. Proceedings concerning the maintenance of privileges relating to privatised assets have include two reasoned opinions being sent out (to the United Kingdom and Spain) and four cases being brought before the Court of Justice (France, Italy and - in two instances - Belgium). Similar infringement proceedings had also previously been brought before the Court, where the cases concerned are still being considered. It had also been decided to refer Greece to the Court of Justice in connection with its procedures on property acquisition, but changes to Greek legislation should mean that these proceedings will soon be dropped. 2.1.6 The business environment 2.1.6.1 Company law Following the Court of Justice's judgment of 29 September 1998 (Case C-191/95) that Germany had failed to fulfil its obligations under Council Directives 68/151/EEC (commercial register) and 78/660/EEC (annual accounts), the German authorities prepared the necessary implementing measures. These were adopted by the Bundestag in December 1999 and should be passed by the Bundesrat early in 2000. The Commission also began to examine the measures adopted by the United Kingdom in October 1999 to apply Directives 78/660/EEC, 83/349/EEC, 90/604/EEC and 90/605/EEC to Gibraltar. 2.1.6.2 Intellectual property Industrial property There are currently three Directives in force in the field of industrial property: Council Directive 89/104/EEC on trade marks, Parliament and Council Directive 98/44/EC on the legal protection of biotechnological inventions and Parliament and Council Directive 98/71/EC on the legal protection of designs. Under the trade marks Directive, the registration of a trade mark confers on its owner exclusive rights allowing him to prohibit third-party use for commercial purposes without his consent. The harmonisation of Member States' legislation on national trade marks is not comprehensive, but confined to aspects which most directly affect the functioning of the internal market. Outside these harmonised fields, the Member States retain complete freedom to lay down arrangements best suited to their traditions, particularly as regards procedural aspects. In principle, the Directive covers only substantive law on registered trade marks; it is not contain any provisions aimed at harmonising procedures. The scope of harmonisation is defined by the Directive as follows: registered trade marks only (arrangements for protecting trade marks resulting from usage are left to the Member States); all categories of registered trade marks recognised by national legislation (trade marks in respect of products or services, individual trade marks, collective marks and guarantee or certification marks), though this does not mean that the Member States are required to introduce these various categories of trade marks into their legislation; trade marks which have been registered under international arrangements and have effect in the Member States. The deadline for the transposal of this Directive was extended until 31 December 1992. All Member States, including the new ones, have notified the Commission of national legislation transposing this Directive. Since the uncoordinated development of national laws on the legal protection of biotechnological inventions in the Community could be detrimental to the industrial development of such inventions and the smooth operation of the internal market, Community legislation in this field was seen as essential. However, it was felt there was no need to create a separate body of law in place of national patent law. The Community framework can be confined to laying down certain principles designed to determine the difference between inventions and discoveries with regard to the patentability of certain elements of human origin, the scope of protection conferred by a patent on a biotechnological invention, the right to use a deposit mechanism in addition to written descriptions, and the option of obtaining non-exclusive compulsory licences in respect of interdependence between plant varieties and inventions. The Member States must introduce the laws, regulations and administrative provisions necessary to comply with Directive 98/44/EEC by 30 July 2000. As is the case with legislation on national trade marks, the harmonisation of the Member States' legislation on designs is not complete, but is confined to aspects which most directly affect the functioning of the internal market, namely identical conditions for obtaining a registered design right, a unitary definition of the notion of design and of the requirements as to novelty and individual character with which registered design rights must comply, and equivalent protection in all Member States. Outside these harmonised fields, Member States retain complete freedom to lay down arrangements best suited to their traditions. The Member States must introduce legislation to comply with the Directive by 28 October 2001. Copyright and related rights Intellectual property has long been regarded as an area in which Member States find it difficult to transpose Community legislation, and delays are commonplace. However, the situation has considerably improved, particularly over the last two years. All Member States except Ireland have notified national implementing measures for all the Directives applicable on 1 January 1997. However, only 11 Member States have notified national measures implementing the Directive on databases, which should have been transposed by 1 January 1998. The Commission will continue its efforts to ensure that all Member States transpose the directives into national law and will also ensure that they are correctly applied. Incorrect application will in future be the main reason for litigation. All Member States have now notified their national measures transposing Council Directives 87/54/EEC (legal protection of topographies of semiconductors), 91/250/EEC (legal protection of computer programs) and 93/98/EEC (harmonisation of the term of protection of copyright and certain related rights). Reasoned opinions were sent to Greece, Ireland, Italy, Luxembourg, the Netherlands and Portugal for failure to notify national measures implementing Parliament and Council Directive 96/9/EC on the legal protection of databases. After receiving these reasoned opinions, Italy and the Netherlands notified national implementing measures during the reference period, thus complying with Community law. The infringement proceedings against them were therefore closed. By contrast, it was decided to refer the cases of Greece (C-484/99), Ireland (C-370/99), Luxembourg (C-348/99) and Portugal (C-506/99) to the Court of Justice. Reasoned opinions were also sent to Belgium for failure to ratify the Berne Convention (Paris Act of 1971) and the 1961 Rome Convention, to Portugal for failure to ratify the 1961 Rome Convention and to Ireland for failure to ratify the Berne Convention (Paris Act of 1971). Following notification of their legislation ratifying these Conventions, the proceedings against Belgium and Portugal were dropped. However, it was decided to take Ireland to the Court of Justice (C-013/00) for failing to ratify the Berne Convention (Paris Act of 1971). A reasoned opinion was sent to Italy for failing to comply with Council Directive 93/98/EEC harmonising the term of protection of copyright and certain related rights. Two letters of formal notice were sent to the United Kingdom for failing to comply with Council Directive 92/100/EEC on rental right and lending right and to Denmark for discriminating against non-Danish management companies. Finally, the Court delivered judgments on 12 October 1999 and 25 November 1999 in two cases against Ireland, for failing to notify national measures implementing Directive 92/100/EEC (C-213/98) and Directive 93/83/EEC on satellite broadcasting and cable retransmission (C-212/98) respectively. 2.1.6.3 Data protection Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and Directive 97/66/EC of the European Parliament and of the Council concerning the processing of personal data and the protection of privacy in the telecommunications sector entered into force on 25 October 1999. Nine Member States notified national measures implementing Directive 95/46/EC. These will be scrutinised to check that transposal is correct and complete. The Commission decided to take action before the Court of Justice against all Member States which had not notified national implementing measures. As regards Directive 97/66/EC, see section 2.10 Telecommunications. 2.1.6.4 Public procurement Completion of the internal market in a key area of the European economy such as public procurement first and foremost necessitates correct transposal of the relevant Community directives. However, a number of directives adopted in the field of public procurement had still not been transposed by 1999, and infringement proceedings were initiated against Germany, Austria, Belgium, Spain, France, Greece, Italy, Ireland, Luxembourg, Portugal and the United Kingdom concerning Directives 97/52/EC and 98/04/EC, which cover traditional areas [45] and special sectors [46] respectively and incorporate certain provisions of the Agreement on government procurement. [45] Directives 93/36/EEC, 93/37/EEC and 92/50/EEC concerning, respectively, procedures for the award of public supply contracts, public works contracts and public services contracts. [46] Directive 93/38/EEC coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors. Examination of communicated national measures concerning the directives on public procurement as a whole led to a total of 18 infringement proceedings for non-compliance, of which seven have reached at least the reasoned opinion stage. Some of these cases relate to questions of principle. Even where legislation has been transposed, it is necessary to ensure that the provisions are properly applied. The Commission therefore continued to monitor application of Community law in the procedures for awarding private contracts, by following up complaints and investigating and checking cases on its own initiative. During the year the Commission dealt with 409 cases, including 229 new ones. It was able to close 104 cases, mostly as a result of action by the awarding authorities or their supervisory bodies to remedy irregularities. The dialogue and consultation procedure (package meetings), set up to help Member States settle outstanding disputes by agreeing on solutions which comply with Community law, undoubtedly helped in this respect. A few examples are worth mentioning. Following Commission intervention, several awarding authorities cancelled contracts, especially for waste collection, insurance or catering services. For example, the SACE, responsible for export credit insurance in Italy, cancelled a financial services management contract. In one case concerning Portugal, the national authorities sent a circular to awarding authorities prohibiting them from requiring European Union nationals not established in Portugal to be entered in Portuguese professional registers or registered with professional bodies and reminding them of the obligation to provide precise details of the contract nature and implementation conditions before launching the award procedure. In 1996 the Commission brought an action before the Court of Justice on the grounds that, in conjunction with the construction of an administrative centre in St. Pölten, capital of the Land of Lower Austria, the competent authorities had not published invitations to tender, which meant that the contracts were not open to competition. Austria did not contest the substance of the charges and was found to have contravened Directives 93/37/EEC, 89/665/EEC and Article 28 of the EC Treaty [47]. [47] Case C-328/96, judgment of 28 October 1999. The Commission also decided to send a reasoned opinion to Germany concerning a public services contract for the thermal incineration of waste awarded by the city of Braunschweig without publishing an invitation to tender and without this being justified on technical grounds. Although the German authorities admitted contravening Directing 92/50/EEC, the infringement proceedings continued, as the contract is for 30 years and will therefore produce effects for some time yet. Other cases must be or have been referred to the Court of Justice. For example, the Commission decided to bring an action before the Court of Justice against Italy for failure to notify measures transposing Directive 97/52/EC and because a regional law in Lombardy allows public contracts and public works concessions for the construction of waste treatment plants to be awarded in a manner not consistent with the Community rules on public works contracts. The Commission also decided to refer France to the Court for numerous cases of failing to have notices of works contracts awarded by social housing associations published in the Official Journal of the European Communities, the Commission taking the view that such bodies normally come under the scope of the Community legislation. 2.1.6.5 Direct taxation During the year the Commission received a growing number of complaints in the field of direct taxation, after other obstacles had been removed by legislative measures adopted at Community level. In this connection, attention is drawn to the difficulties involved in rectifying the internal market's imperfections with regard to direct taxation, owing to the unanimity at the Council required under Article 94 of the EC Treaty. However, it was possible to resolve many cases at an early stage, as it was often a matter of complainants being unaware of their rights and obligations or ignorance on the part of the tax authorities of aspects of Community law which can, however, be taken into consideration in connection with a complaint. The Commission issued only two reasoned opinions in 1999. The first concerned Germany, whose corporation tax legislation (KStG) makes provision for differential rates of taxation on the profits of German companies, i.e. distributed profits are subject to cooperation tax at 30%, whereas undistributed profits are taxed at 40%. This difference is due to the fact that distributed profits (i.e. dividends) are subject to income tax payable by shareholders, who can apply for a tax credit equal to the corporation tax payable on dividends. In the case of German subsidiaries of foreign companies (permanent establishments), the profits realised in Germany are subject to German corporation tax at a rate of 40%, regardless of whether they are distributed or not. This differential taxation is inconsistent with Articles 43 and 48 of the Treaty. The second reasoned opinion concerns Greece, and a tax system which discriminates against non-Greek European citizens who purchase immovable property with foreign currency. A Greek law of 1950 made provision for exemption, in certain circumstances, from the tax on transfers of immovable property (which is 9% or 11% depending on the value) for Greek nationals purchasing immovable property with foreign currency. This law still includes a lower tax rate (reduced by half) for certain other cases. The exemption was abolished in 1997, but the previously exempted categories of operation were added to those to which the lower tax rate applies. The Commission sees the granting of preferential rates only to Greek nationals as an infringement of a fundamental principle of the European Union, non-discrimination on grounds of nationality (Article 12 of the Treaty). This principle, which forms part of the various constituent freedoms of the internal market (Article 14 of the Treaty), is regarded as infringed with regard to these freedoms in various situations. The Commission has noted a contravention of the principles of free movement of persons (Article 39 of the Treaty and Article 7 of Regulation No 1612/68 [48] in respect of employees; Article 43 of the Treaty in respect of the self-employed) and free movement of capital (Article 56 of the Treaty). [48] OJ L 257, 19.10.1968, p. 2. 2.1.6.6 VAT On the subject of VAT, the principal objective of the Directorate-General for Taxation and Customs Union (TAXUD) remains the adoption of the common system of VAT based on the country-of-origin principle. This is the guiding policy behind all work in the field of VAT. However, given the rate of progress, it is necessary to push ahead with the simplification and modernisation of the VAT system and with essential harmonisation work arising from specific technical problems. Compliance with measures already adopted, especially with regard to a uniform basis of assessment, takes on a particular significance against this background, and the TAXUD DG is keen to identify any relevant shortcomings as quickly as possible. During 1999 several new infringement proceedings were initiated, concerning failure to apply the provisions of the sixth VAT Directive [49] correctly: [49] OJ L 145, 13.6.1977, p. 1. - Germany: the German authorities exempt research activities by State university-level establishments from VAT (cf. 4 No 21.a, USTG), which is in contravention of Article 2(1) of the sixth Directive, as such establishments are subject to VAT in that they are not public authorities and carry out operations against payment; their research activities are therefore taxable, and not exempt. - France: the French Finance Act of 1998 removed the partial VAT-deductibility (50%) applicable to diesel fuel used for taxable activities involving vehicles excluded from the right of deduction. This new French measure is at odds with Community provisions; Article 17(6) of the sixth Directive, which allows Member States to retain existing exclusions following the entry into force of the Directive, means that France was able to retain the ban on the right of deduction which already existed for certain vehicles, but does not authorise it to introduce a new exclusion from the right of deduction for diesel fuel for the vehicles in question. - Greece: the Greek authorities impose the adjustment of VAT charged on the acquisition of goods and deducted by the acquiring taxpayer, if the goods are destroyed and their value reimbursed by an insurance company. This practice is contrary to the provisions of Article 20(1)(b) of the sixth Directive, which prohibits adjustment in cases of destruction, loss or theft of property duly proved or confirmed. - Italy: Italian taxpayers who in 1992 had imported from other Member States a sum in excess of 10% of their turnover and had a tax credit corresponding of not less than ITL 100 million were unable to deduct VAT. According to the law, they would receive government bonds in compensation. However, Article 18(4) of the sixth Directive requires Member States, in the event of a tax credit, either to make a refund or to carry the excess forward to the following period. It has emerged that some taxpayers do not yet seem to have received these bonds and that, as these taxpayers have not been able to cash in their bonds, the Italian State has, in reality, carried the excess forward to the following periods rather than period (singular) as stipulated by the Directive. The Commission also sent reasoned opinions to Germany, Spain, Finland, Italy, Portugal, the United Kingdom and Sweden, which do not tax European Union grants to companies producing dried fodder (such grants represent a sum paid by a third party and allow the company to achieve a profitable price in a sector in which the world price is lower than its cost price), whereas the Directive stipulates that "subsidies directly linked to the price" must be included in the taxable basis. This situation also creates a distortion of competition between producers in different Member States. A number of infringement proceedings previously initiated by the Commission were referred to the Court of Justice. Four of these involve France: the first concerns VAT levied on the fees charged for forwarding the results of laboratory medical analyses [50], the second VAT on goods purchased with money-off coupons [51], the third the right of deduction relating to vehicles not used exclusively for driving-school purposes [52], and the fourth the non-inclusion of tips in the VAT basis for certain commercial undertakings (hotels, restaurants, cafés, hairdressers, etc.) [53]. Another case was referred to the Court concerning Spain, for lowering the rate of VAT on motorway tolls [54]. [50] Case C-76/99. [51] Case C-156/99. [52] Case C-345/99. [53] Case C-404/99. [54] Case C-83/99. Other proceedings were dropped after the Member States concerned fell into line with the Commission's point of view. These involved Spain, which amended its legislation concerning VAT on sports organisations pursuant to the Court's judgment of 7 May 1998 in Case C-124/96 [55]; Germany, which repealed its offending legislation allowing the deduction of import tax on expenses incurred by taxpayers during travel, business trips or removals; and finally France, which first of all amended its tax system concerning the compensatory sums which persons leasing cars had to pay to leasing companies in the event of theft or loss of leased vehicles and, secondly, removed the tax distinction between different types of equipment for disabled persons. Two infringement proceedings initiated previously, concerning the exemption of gold in Austria and the zero rating of scrap metal deliveries in Italy, were closed after being resolved at the Council. [55] ECR 1998, I-6151. 2.1.6.7 Other indirect taxes 1 July 1999 saw the end of exemptions for tax-free sales between Member States' territories. Sales of tobacco and alcohol products on board ferries are now subject to customs duties, with the exception of goods for consumption on board, which may continue to be exempted in the same way as, for example, sales of alcohol on board cruising ships. In 1999 the TAXUD DG also took action towards implementing the recommendations of the high-level group on preventing excise duty fraud, in particular by setting up an early warning system based on the study concerning computerised surveillance of movements of the products targeted by fraud prevention. In the field of excise duties, the enforcement of Article 90 of the Treaty, which prohibits discrimination against products imported from other Member States, is being carefully monitored by the Commission and has led to several new infringement proceedings both in the alcoholic drinks and tobacco sector and relating to tax on vehicles. Concerning indirect taxes on alcohol, the Commission has sent reasoned opinions to the following Member States: - Austria: the Commission feels that the municipal tax on drinks is merely a way of allowing the country's municipal authorities to collect additional income, and it does not serve a "specific purpose", e.g. social or environmental. The Commission also considers that the exemption from municipal tax of wine supplied by producers directly to final consumers must be regarded as discriminating against products from other Member States. - Greece: the Greek authorities have reduced the tax on ouzo by 50%, whereas similar drinks imported from other Member States continue to be taxed at the full rate. Differential taxation of this nature, which benefits Greek ouzo producers only - Greece is the sole producer of this drink - contravenes Article 90 of the Treaty. - Ireland: the Irish authorities apply to beer an excise duty of IEP 15.65 per hectolitre and degree of alcohol of the finished product. In the case of beer containing 5% alcohol by volume, this comes to around IEP 78 per hectolitre. By contrast, the excise duty on wine with a comparable alcohol content is IEP 215. As there is little or no wine production in Ireland, the measure in question constitutes differential taxation, which is unacceptable under Article 90 of the Treaty. Two infringement proceedings initiated in the same sector against France were dropped when the national legislation in question was amended following the Commission's intervention. One case concerned production duty on alcohol, while the other related to the tax on certain mixtures of alcoholic and non-alcoholic beverages. The conformity of the new French legislation on the latter products is, however, being scrutinised in detail. As regards excise duties on manufactured tobacco, the Commission sent a reasoned opinion to France relating to its new legislation on cigarettes, according to which the price per 1 000 of a category of cigarettes sold under a particular brand may not be lower than the price of the biggest selling category