THIRTEENTH ANNUAL REPORT on monitoring the application of Community law - 1995 - (96/C 303/01) COM(96) 600 final

CONTENTS

Page

INTRODUCTION .......... 8

AREA WITHOUT INTERNAL FRONTIERS

1. Introduction .......... 16

2. Situation sector by sector .......... 17

2.1. Removal of physical barriers .......... 17

2.1.1. Customs .......... 17

2.1.1.1. Progress in implementing Directives applicable to the customs field .......... 17

2.1.2. Free movement of agricultural products .......... 17

2.2. Removal of technical barriers .......... 18

2.2.1. Free movement of goods .......... 18

2.2.1.1. Articles 30 et seq. of the EC Treaty .......... 18

2.2.1.2. The preventive rules of Directive 83/189/EEC .......... 21

2.2.2. Progress in implementing Directives on the free movement of goods .......... 21

2.2.2.1. Foodstuffs .......... 21

2.2.2.2. Progress in implementing Directives applicable to foodstuffs .......... 22

2.2.2.3. Pharmaceutical products .......... 22

2.2.2.4. Progress in implementing Directives applicable to pharmaceuticals .......... 22

2.2.2.5. Chemicals .......... 22

2.2.2.6. Progress in implementing Directives applicable to chemicals .......... 23

2.2.2.7. Motor vehicles, tractors and motorcycles .......... 23

2.2.2.8. Progress in implementing Directives applicable to motor vehicles, tractors and motorcycles

.......... 23

2.2.2.9. Construction products .......... 24

2.2.2.10. Mechanical engineering, personal protection equipment, pre-packaging, measuring

equipment, electronics and medical devices .......... 24

2.2.2.11. Progress in implementing Directives applicable to mechanical engineering, personal

protection equipment, pre-packaging, measuring equipment, electronics and medical devices

.......... 24

2.2.3. Free movement of persons, right of establishment and voting rights .......... 24

2.2.3.1. Ending discrimination .......... 24

2.2.3.2. Entry and residence .......... 25

2.2.3.3. Progress in implementing Directives applicable to right of residence .......... 25

2.2.3.4. Right to vote and stand in elections .......... 26

2.2.3.5. Trade union rights .......... 26

2.2.3.6. Access to employment in the public service .......... 26

2.2.3.7. Social security of migrant workers .......... 26

2.2.3.8. Recognition of qualifications .......... 26

2.2.3.9. Progress in implementing Directives applicable to recognition of qualifications

.......... 28

2.2.3.10. Independent commercial agents .......... 28

2.2.4. Freedom to provide services .......... 28

2.2.4.1. Broadcasting .......... 28

2.2.4.2. Telecommunications .......... 28

2.2.4.3. Progress in implementing Directives applicable to telecommunications .......... 29

2.2.4.4. Financial services .......... 29

2.2.4.5. Progress in implementing Directives applicable to financial services .......... 31

2.2.5. Free movement of capital .......... 31

2.2.6. Company law .......... 32

2.2.6.1. Progress in implementing Directives applicable to company law .......... 33

2.2.7. Intellectual and industrial property .......... 33

2.2.7.1. Progress in implementing Directives applicable to intellectual and industrial property

.......... 34

2.2.8. Public procurement .......... 34

2.2.8.1. Progress in implementing Directives applicable to public procurement .......... 36

2.3. Removal of tax barriers .......... 36

2.3.1. Direct taxation .......... 36

2.3.1.1. Progress in implementing Directives applicable to direct taxation .......... 37

2.3.2. Indirect taxation .......... 37

2.3.2.1. Progress in implementing Directives applicable to indirect taxation .......... 38

CONSUMER PROTECTION

1. Introduction .......... 39

2. Situation sector by sector .......... 39

2.1. Cosmetics .......... 39

2.2. Textiles .......... 39

2.3. Health and safety .......... 39

2.4. Protection of economic interests .......... 39

2.5. Progress in implementing Directives applicable to consumer protection and product safety 40

COMPETITION

1. Introduction .......... 40

2. Situation sector by sector .......... 40

2.1. Public enterprises .......... 40

2.2. Monopolies .......... 41

2.3. Progress in implementing Directives applicable to competition .......... 41

EMPLOYMENT AND SOCIAL POLICY

1. Introduction .......... 42

2. Situation sector by sector .......... 42

2.1. Equal treatment of men and women .......... 42

2.2. Working conditions .......... 43

2.3. Health and safety at work .......... 43

2.4. Public health .......... 43

2.5. Progress in implementing Directives applicable to employment and social policy .......... 43

AGRICULTURE

1. Introduction .......... 43

2. Situation sector by sector .......... 43

2.1. Markets .......... 43

2.2. Harmonization .......... 44

2.3. Progress in implementing Directives applicable to agriculture .......... 46

FISHERIES

1. Introduction .......... 46

2. Situation sector by sector .......... 47

2.1. Markets .......... 47

2.2. Resources .......... 47

2.3. Compatibility with Community law of national legislation on the granting of flag rights

.......... 47

ENVIRONMENT

1. Introduction .......... 48

1.1. General situation .......... 48

1.2. Notification of national implementing measures .......... 48

1.3. Conformity of national implementing measures .......... 48

1.4. Incorrect application of Directives .......... 49

1.5. Freedom of access to information .......... 49

1.6. Environmental impact assessment .......... 50

1.7. Action needed .......... 51

2. Situation sector by sector .......... 51

2.1. Air .......... 51

2.2. Chemicals .......... 52

2.3. Water .......... 52

2.4. Noise .......... 53

2.5. Waste .......... 53

2.6. Nature .......... 54

2.7. Radiation protection .......... 54

2.8. Progress in implementing Directives applicable to the environment .......... 55

TRANSPORT

1. Introduction .......... 56

2. Situation sector by sector .......... 56

2.1. Road transport .......... 56

2.2. Combined transport .......... 56

2.3. Inland waterways .......... 57

2.4. Rail transport .......... 57

2.5. Sea transport .......... 57

2.6. Air transport .......... 57

2.7. Summertime .......... 58

2.8. Progress in implementing Directives applicable to transport .......... 58

ENERGY

1. Introduction .......... 58

2. Situation sector by sector .......... 59

2.1. Transparency of prices .......... 59

2.2. Internal market for electricity and natural gas .......... 59

2.3. Energy efficiency .......... 59

2.4. Oil and gas .......... 59

2.5. Progress in implementing Directives applicable to energy .......... 59

COMMUNITY STAFF .......... 60

STATISTICAL MATTERS .......... 60

ANNEXES

Annex I: Suspected infringements 1991 to 1995 .......... 61

Annex II: Established infringements 1991 to 1995 .......... 68

Annex III: Infringements of Treaties, regulations and decisions .......... 76

Annex IV: Report on the application of Directives .......... 89

Annex V: Judgments of the Court of Justice not yet implemented .......... 174

Annex VI: Application of Community law by national courts .......... 178

INTRODUCTION

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 meets requests from the European Council and the Council for information on specific fields.

The Europe Union would not be a true Union based on the rule of law and founded on a body of law if that law was not enforced by and in its Member States on an on-going basis. The enforcement function is entrusted to the Commission by Article 155 EC (1).

The annual report traditionally analyses the monitoring of the application of Community law by focusing on the infringement proceedings handled by the Commission on the basis of Article 169 of the EC Treaty in the past year.

This report, which reflects the situation on 31 December 1995, follows that pattern.

It must be remembered, however, that the function conferred on the Commission by Article 155 as guardian of the Treaties is not confined to infringement proceedings. When it commences litigation against other institutions (Articles 173 and 175), when it scrutinizes State aids for legality (Article 93), when it acts to combat fraud against the Community budget and when it secures compliance with the ban on restrictive practices and abuse of dominance (Articles 85 and 86), the Commission is also performing its function of enforcing Community law. There are separate reports on activities in these areas.

The originality of Article 169 infringement proceedings cannot be adequately stressed.

The procedure can be launched only by the Commission to settle disputes between it and the Member States; individuals cannot be parties to proceedings. The procedure is considered to be an objective one; its purpose is to induce a Member State to come into line with Community law. Its primary purpose is not to protect an individual who wishes to rely on Community law. Individuals have other redress procedures before national authorities and the national courts, operating as the ordinary courts of Community law, with the possibility of going so far as to have the State ordered to pay damages for breaches of Community law (2). But the complaint to the Commission is still an indispensable instrument, not only for the Commission but also for the individual citizen. This is especially true where a citizen fails to secure respect for the rights he enjoys under Community law.

The Community citizen may not be able to commence infringement proceedings, but he still plays a key role in them. Complaints to the Commission are a vital source of information for launching such proceedings, as where they provide evidence of administrative practices contrary to Community law or of breaches in areas where the Commission cannot detect them in the absence of powers of inspection. Complaints also bring to the Commission's attention infringements committed in the course of co-financed operations (3).

It is therefore vitally important for the Commission to give an answer not only to complainants - many of whom have only the Commission to rely on - but also to the public at large and to Parliament. The annual report is the Commission's way of meeting the need for transparency.

1995 was the first year of the 15-member Community. This report covers the application of Community law in Austria, Sweden and Finland. For the first time the Community welcomed new members from the European Economic Area. European Economic Area membership was probably the main reason for the high rate of notification of national measures implementing directives in the new Member States, as they had had to incorporate a large proportion of the acquis communautaire into their national legislation when the European Economic Area Treaty entered into force on 1 January 1994. As required by Article 172 (1) of the Act of Accession, the EFTA Surveillance Authority notified the Commission of all the legislation of which it had been notified by these States (1). In one year, the new Member States transposed the acquis communautaire to such an extent as to attain a notification rate in excess of the Community average in Sweden and Finland (2) and a rate of 84,2 % in Austria.

1995 was a year of intense Community law enforcement activity at the Commission, with an unprecedented number of Article 169 decisions - 5 068 of them, as against 4 802 in 1994.

I. THE TREND OF INFRINGEMENT PROCEEDINGS IN 1995

There were seven major trends in 1995:

A. infringement proceedings registered in 1995: a decline in the number of complaints and a rise in the number of cases detected by the Commission;

B. the important role played by the European Parliament in prompting infringement proceedings;

C. proceedings commenced in 1995: a stable number of Article 169 letters;

D. proceedings relating to established infringements: a decline in the number of reasoned opinions and a stable number of referrals to the Court;

E. a sharp increase in the number of cases terminated;

F. a start made on clearing up the legacy of the past: many of the longest-running cases were terminated;

G. greater transparency.

A. Infringement proceedings registered in 1995

- declining number of complaints

An analysis of the statistics prompts a surprising conclusion: the number of complaints received at the Commission is no longer rising. Figures for the last five years (1991: 1 051; 1992: 1 185; 1993: 1 040; 1994: 1 145; 1995: 978) show that this is a genuine pattern and not a statistical blip (3). But the situation varies from one area to another: there is, for instance, a stable pattern as regards customs and indirect taxation. The figure for public procurement rose from 100 to 137 in one year, and the figures for transport also rose; but in agriculture it fell from 191 to 127).

Given enlargement, the stability in the absolute number of complaints means that there has been a relative decline, especially as the conferment of new powers on the Union ought to have been a source of new difficulties, disputes and complaints.

The decline in the number of complaints must be interpreted with a great deal of caution.

It might be thought that citizens relying on Community law are gaining greater satisfaction in national authorities or courts without having to bring the Commission into action, but that would probably be over-optimistic. At any rate the conclusion would be difficult to support, and evidence going beyond what is available in this report would be needed.

The declining number of complaints might also be evidence that Member States are applying Community law better as a result of experience and of the deterrent effect of infringement proceedings.

Another possible explanation might be that citizens in the new Member States are inadequately informed of the possibilities of complaining to the Commission, as the number of complaints has not risen in proportion to the new membership.

It is true that the Commission's role is imperfectly perceived, as can be seen from the number of complaints that are not within its powers to review.

- the rise in the number of cases detected by the Commission Between 1994 and 1995, the number of such cases rose from 277 to 320.

This suggests that the current period is one of consolidation.

Community legislative activity is less intense than in the past (1). It is also more clearly targeted on specific objectives.

Following the policy set out in its 1995 work programme, the Commission placed the accent on the proper application of existing rules, verifying how Community law was actually applied in the Member States; this is clear from the rising number of cases detected by the Commission itself and of infringement proceedings commenced in the course of the year. The Commission considered more than 4 800 cases in 1994. The figure leapt to 5 068 in 1995.

B. The important role played by the European Parliament in prompting infringement proceedings The Commission makes out a suspected infringement record as a matter of routine whenever a breach of Community law is indicated either by a parliamentary question (2) or by a petition.

Of the new infringement cases registered by the Commission in 1995, 30 originated in a written or oral question by a Member of the European Parliament and four in a petition.

The figures for 1992 were 45 questions and 33 petitions; those for 1993 were 30 questions and 23 petitions (3). But these figures are but a pale reflection of the qualitative and quantitative importance of Parliament's role in identifying infringements, for in addition to these cases, Members of Parliament reported other infringements that had sometimes already been detected by the Commission's own investigations or through complaints received.

A third of them concerned violations of environmental legislation (chiefly industrial projects launched without prior environmental impact assessment), and another third concerned the internal market (all manner of problems, such as barriers to freedom of establishment for dentists, violations of the public procurement Directives, etc.). To give but one example, an MEP drew the Commission's attention to a series of contracts for environmental advisory and management services that had not been announced in the Official Journal of the European Communities.

Parliament tends to show the greatest interest in the two areas (environment and internal market) that between them account for more than 60 % of all the cases currently running at the Commission.

C. Proceedings commenced in 1995: a stable number of Article 169 letters The Commission commenced 1 016 infringement proceedings in 1995, as against 974 in 1994 and 1 209 in 1993.

Clearly, then, the number of complaints is no longer rising; moreover, preliminary contacts between the Commission and the Member States - who manifestly are aware of their Community law obligations - are more and more fruitful.

D. Proceedings regarding established infringements

- A sharp decline in the number of reasoned opinions

The sharp decline in the number of reasoned opinions (192) is the result of the exceptionally high number of reasoned opinions issued in 1994 (546 as against 352 in 1993) and of technical delays at the Commission, now made up.

- A stable number of referrals to the Court

The Court of Justice had 72 new infringement cases referred to it in 1995 (as against 64 in 1992, 44 in 1993 and 89 in 1994).

The Commission endeavours to make the fullest use of the pre-litigation stage of the infringement proceedings to persuade the offending Member State to remedy its deficiency or to negotiate a settlement. As the Court has held, referral of an action to it is the last resort, 'the ultima ratio enabling the Community interests enshrined in the Treaty to prevail over the inertia and resistance of the Member States` (4).

The relative stability in the number of cases referred to the Court is the direct consequence of the Member States' strong tendency to remedy deficiencies after the reasoned opinion stage.

E. A sharp increase in the number of cases terminated The aggregate number of proceedings for suspected or established infringements that were terminated rose from 1 811 in 1994 to 2 045 in 1995. There were particularly significant figures regarding the free movement of goods, where 238 cases were terminated and only two went to the Court. The Commission is reaping the fruits of a long tradition of dialogue with the Member States at package meetings.

The number of cases closed after proceedings had commenced was 1 344 in 1995, up from 668 in 1994.

These figures do not mean that the Commission is taking a softer line but that the action taken in relation to the Member States to secure proper and timely implementation of Directives and to have Community law applied properly is proving effective. The Commission's policy in environmental matters offers an eloquent illustration: 182 cases that had gone beyond the Article 169 letter stage were terminated in 1995, whereas the number for 1994 was only 70. The examples given for public procurement and VAT are also noteworthy (1).

F. Clearing up the legacy of the past: many of the longest-running cases were terminated In the course of its review of cases in motion, the Commission looks at all of them from time to time. In 1995, as in previous years, all the longer-running cases were reviewed.

Of the 1 545 cases opened in 1992, 161 were still in motion in 1995. Of the 1 340 cases opened in 1993, 225 were still in motion in 1995 whereas the figure a year earlier was 404. The number of cases opened in 1994 and still in motion was halved in a year, from 1 136 to 670 (see Table 1.3).

The effort must clearly be pursued. Infringement proceedings run in successive stages at which the Member State can put matters right without being taken to the Court. But this obviously takes time, and the duration of the scrutiny procedure is still too long; the Commission is endeavouring to accelerate it.

G. Greater transparency

The infringement procedure is wholly directed, by the Treaty itself, to securing a remedy for the infringement without the need for referral to the Court. Traditionally, it has therefore been confidential, so as to preserve the discretion that will make it easier for the Member State to rectify matters.

The completion of the internal market, Parliament's constantly growing interest in monitoring the application of Community law and the Commission's determination to achieve greater openness in its activities have combined to prompt the Commission to boost transparency policy.

It has, for instance, extended its practice of issuing press releases. On 19 July it decided to put out 22 press releases on 58 cases without awaiting the issue of reasoned opinions or referral decisions. Transparency in Commission activities for the enforcement of internal market legislation in particular was treated as a political priority. The operation was repeated later in the year and was well received.

II. ANALYSIS OF THE RESULTS FOR 1995

A. Directly applicable rules

The processing of infringements of Community instruments other than Directives continues apace. There were 89 Article 169 letters in 1995 (up from 67 in 1994).

Fuller details can be found in the sector-by-sector analyses, but there are a few noteworthy general points about activities in 1995.

The Court of Justice gave a series of judgments spelling out the scope of Article 30 as interpreted in Keck and Mithouard (2) (see point 2.2.1.1).

The frequency of infringements relating to freedom of movement of persons is particularly noteworthy; there were many cases concerning discrimination as regards access to employment and the right of residence (Article 48 of the Treaty and Regulation (EEC) No 1612/68) (3).

In competition matters, the Commission secured the final abolition of the monopoly of port services at Genoa.

Turning to employment and social policy, there has been no decline in the volume of disputes relating to Article 119 of the Treaty (equal treatment for women and men). The judgment in Kalanke (17 October 1995) concerning positive discrimination in favour of women prompted the Commission to issue an interpretative statement (1).

In fisheries and aquaculture, the Commission systematically scrutinizes national legislation for compatibility with Community law applicable to flag rights and technical measures for the conservation of resources.

B. Directives

1. Notification of transposal measures

The number of proceedings commenced in 1995 for failure to notify implementing measures was slightly up on the previous year (799 as against 732).

The table below gives a general picture of progress in implementing all the Directives applicable on 31 December 1995. It will be noted that the number of Directives that came into force in the course of the year rose less sharply than in previous years (forty or so, as against 60 in 1994). This is the first impact of the Community's policy of enacting less but better legislation. The trend can be expected to continue in the years ahead (cf. the Commission's paper for the Madrid European Council in December 1995, 'Better law-making`: the Commission made 25 legislative proposals in 1995 as against 61 in 1990 and 51 in 1992. It is planning only 19 in 1996) (2).

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On 31 December 1995, the Member States had on average notified 90,7 % of the national implementing measures required to give effect to all the Directives to be implemented. This is lower than the 1994 figure (91,89 %) as three new Member States are now brought into the calculation. The individual 'performances` of the 12 older Member States have all improved. The following conclusions can be drawn:

- a high rate of notification in the three new Member States.

- Sweden ranks sixth.

- The figure for Austria is substantially the result of delays in notifying measures transposing agricultural legislation (point 2.3).

- The main explanation for the situation in Finland is the special status of the AAland Islands in international law (5). They enjoy a degree of autonomy in certain respects (e.g. agriculture and the environment) and are required to enact specific implementing measures.

Apart from the situation in the AAland Islands, Finland's rate is above the Community average.

- an improvement in the rate of notification of national measures implementing Directives in all the other twelve Member States with a new record of virtually 98 % in one of them (Denmark).

But the reality behind these averages is far from uniform.

The rate of notification is 100 % in customs matters and right of residence (except as regards Belgium and Germany in the latter area).

It is everywhere in excess of 90 % as regards machinery, motor vehicles and recognition of qualifications.

There are wide variations between Member States as regards telecommunications and financial services.

The areas where the greatest difficulties persist and measures transposing Directives enacted years ago are still absent are the environment (points 1.2 and 2.8), transport (point 2.8) and energy (point 2.5).

In agriculture, delays in notifying national implementing measures are substantial for the internal market White Paper directives. The number of referrals to the Court rose from 34 in 1994 to 57 in 1995 (points 1 and 2.2). But there are positive signs: the number of new proceedings for failure to notify national implementing measures is down on 1994. The same applies to reasoned opinions.

As for consumer protection, five Member States have still to notify the Commission of national measures implementing Directive 92/59/EEC (1) on general product safety.

2. Conformity of implementing measures The Commission proceeds from the principle that many incorrect application cases could be avoided if transposal measures were in conformity with the Directive in the first place.

The Commission consequently attaches priority to quality control of national measures implementing Directives when monitoring the application of Community law. Wherever possible, it systematically scrutinizes existing legislation, as witness its activities in relation to free movement of goods (see point 2.2.1).

The number of new proceedings for incorrect implementing measures rose from 54 in 1994 to 63 in 1995. There were 23 Article 169 letters (32 the previous year).

The number of proceedings in motion for incorrect measures implementing public procurement Directives more than doubled, from 14 in 1994 to 30 in 1995.

There is a detailed analysis of the main causes for non-conformity in environmental matters at point 1.3, where it is stated that scrutinizing measures for conformity may require particularly delicate analysis of national law, especially where the authority with power to transpose is not at national but at regional or provincial level - which may involve enactment of several sets of legislation in one and the same Member State. Moreover, directives sometimes subject Member States to complex obligations making it necessary to enact or amend a whole series of instruments.

3. The application of transposal measures

Complaints relating to individual cases of incorrect application of national implementing measures are a valuable source of information for the Commission, especially when they reveal that the measure was not in conformity with the Directive or they bring to light repeated infringements or horizontal problems, such as administrative practices that are incompatible with it. In 1995, for instance, there were more than 40 complaints concerning the Directives on the mutual recognition of qualifications.

Admittedly, many of the complaints alleging incorrect application of a piece of national legislation that is compatible with the Community legislation it transposes could be settled by national authorities and courts (2). But the Commission is often perceived as a vital support, especially where national redress procedures have been exhausted or are either illusory or ineffective.

Better application of Community law requires a policy to prevent infringements.

Greater involvement of national bodies in general and Parliaments in particular in the Community legislative process would be conducive to this. It would surely help solve difficulties with proper implementation of Community law at national level.

Maintaining regular contacts with the national authorities through institutional committees avoids many infringements (1).

Timely provision of information to the Commission, by means such as the procedure for technical standards and regulations set up by Directive 83/189/CEE (2), also helps to prevent the erection of new barriers to trade (3). In a recent judgment, the Court of Justice gave added force to this information procedure (4).

The Commission's efforts to make Community law more familiar, more comprehensible and more accessible are part of this policy.

But the task of monitoring the application of Community law is an unending task in the performance of which the Commission has set itself two priority objectives:

- putting monitoring the application of Community law at the centre of its business. Its work programme for 1996 firmly underscores this concern (5);

- finding a judicious balance between monitoring the application of Community law at Community level and the role played by national authorities in general and the courts in particular.

The work done by the Commission would be futile without Community citizens jealously and vigilantly enforcing their rights, without national courts and administrative bodies placing observance of Community law among their priorities. The Commission clearly stated this in its opinion of 28 February 1996 on the Intergovernmental Conference provided for by Article N (2) of the Maastricht Treaty:

To consolidate the rule of law as the basis of the Union, the proper implementation and enforcement of Community law has to be ensured, a task which falls primarily to the national authorities. This will be even more vital in an enlarged Community encompassing a wide diversity of national legal and administrative systems.

The Commission therefore believes that:

- the means available to it to enforce Community law should be made more effective, notably as regards the internal market;

- there should be a stronger role for the Court of Justice, particularly as regards compliance with its judgments (6).

The Commission welcomes the vigilance shown by the European Parliament in matters of enforcement of Community law. Its role in detecting infringements has already been emphasized. By approaching national political authorities and generating awareness among public opinion, Parliament can play an even bigger role in having the infringements recorded in this report ended.

The Commission needs the unfailing support of a European Parliament that attaches the same importance to the proper application of Community law as to its enactment.

ANNEX

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