Proposal for a COUNCIL REGULATION extending the application of Regulation (EC) No..... concerning medals and tokens similar to the euro coins to the non-participating Member States

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Background

The proposed legislation intends to regulate the use of the terms "euro" and "euro cent" and of the euro symbol (EUR) on metallic objects having the appearance and/or technical properties of coins (medals and tokens) and to define the levels of similarity to the euro coins that should be banned for medals and tokens. The purpose is to protect the public against fraud and confusion related to the euro coins, while at the same time establishing a level playing field for the production of such medals and tokens.

In particular, the relevant risk to the public is twofold. Firstly, citizens could believe that metallic objects (medals and tokens) have legal tender status if they show the text appearing on the euro coins or use the euro symbol. Secondly, medals or tokens could fraudulently be used in coin operated machines, if their size and metal properties are close to the ones of the euro coins.

The circulation of the euro coins in a large number of Member States makes it necessary to have a set of rules respected by all participants. A number of measures which have already been taken at Community level, have not proven to be sufficient to effectively prevent the appearance of euro coin-like objects, which entered into circulation.

In particular, prior to the introduction of the euro coins, the Community assigned to the competent authorities of the Member States the rights it held entitling it to claim copyright as regards the designs of the common face of the euro coins [1]. As a result, national law is now applicable to the copyright protection, on the basis of a common set of rules. These rules are mandatory and i.a. forbid the reproduction of the designs on medals and tokens made in metal. As these rules only refer to the designs themselves, Member States have not been able to use them to ban medals and tokens with a design similar to the one of the euro coins.

[1] Communication from the Commission on copyright protection of the common face design of the euro coins. OJ C 318, 13.11.2001, p. 3, COM(2001) 600 final.

Commission Recommendation of 19 August 2002 on medals and tokens similar to the euro coins [2] aims at protecting against the use on medals and tokens of the terms "euro" and "euro cent", as well as of the euro symbol [3]. Apart from the fact that the Recommendation only covered visual aspects, it was not generally transposed into national law, as Member States expressed preference for binding Community legislation. In itself, while the Recommendation constituted a useful guide, it proved to be less than fully effective. On the whole, national rules concerning medals and tokens are rare and mostly of a general nature. Finally, practice since the euro coins were introduced showed that, in addition to visual characteristics, it was necessary to establish the mandatory rules concerning technical properties as included in the proposed legislation.

[2] OJ L 225, 22.8.2002, p.34.

[3] This Recommendation renewed a similar Commission Recommendation of 13 January 1999, concerning collector coins, medals and tokens, OJ L 20, 27.1.1999, p. 61.

A rising number of incidents involving medals closely similar to the euro coins has demonstrated the need for stricter and binding measures, aimed at creating a level playing field throughout the Community with regard to medals and tokens. Such incidents concern, for example, cases of euro coin-like medals, one of which came into circulation instead of euro coins, as well as cases of coin like objects fraudulently used in coin operated machines.

The Economic and Financial Committee's Euro Coin Sub-committee and the EU Mint Directors have considered these incidents and concluded that a mandatory legal instrument regarding medals and tokens is necessary to cope with such cases. The present proposal takes into consideration the comments offered during these discussions.

In addition, the issue has been discussed extensively with representatives of the coin operated industry, in the framework of its regular meetings with the Commission and the EU Mint Directors. The coin operated industry is strongly in favour of a regulatory framework such as the one proposed, since this could reduce the cost that is caused by fraud in vending machines. Finally, account was taken, in the proposed Regulation, of the comments offered by token manufacturers.

2. The proposed Council Regulation

Article 1 provides definitions in line with formal Community texts, where such definitions are available. The definition of medals and tokens is in line with the one included in the Commission Recommendation of 19 August 2002. With regard to medals and tokens made of gold, silver and platinum, in the absence of European legislation on the content in precious metal and hallmarking of articles, the levels proposed for the exclusive purpose of this Regulation are based on minimum standards among Member States. The organisational structure of the European Technical and Scientific Centre (ETSC), which is already operating, will be consolidated through a Council decision for which the Commission has submitted a proposal (COM(2003) 426 of 17.7.2003). The national designated authorities mentioned are the ones who are responsible for issuing coins in Member States (Annex II). Since a number of requests concerning euro-like medals come from countries outside the EU, it is proposed that the Commission should be the designated authority in such cases. Finally, the reference band for the size of medals and tokens is fundamental for the proposed Regulation. The reference band defines a set of combinations between values for diameter and values for edge height, within which the size of a medal or token is considered to be similar to the one of the euro coins.

Article 2 sets out the restrictions on medals and tokens. In particular, paragraph (a) prohibits the use of the terms "euro" or "euro cent" or the euro symbol (defined in Annex I) on the surface of medals and tokens, since these may lead to the wrong impression that these have legal tender status [4]. Paragraph (b) prohibits medals and tokens which are of a size similar to the euro coins, i.e. inside the reference band. The prohibition is for designs that are "similar" since the designs in themselves are protected by national provisions. Finally, paragraph (c) protects the edge design of the 2-euro coins. The designs of the common and the national sides of the euro coins, as well as the edge designs, are described in the Commission's publication in December 2001 [5].

[4] This provision is similar to the one in Commission Recommendation of 19 August 2002.

[5] OJ C 373, 28.12.2001.

Article 3 describes automatic exemptions to the rules. In particular, paragraph 1 allows the terms "euro" and "euro cent" or the euro symbol, without an associated nominal value, to be used on medals tokens which are very different in size compared to the euro coins (i.e. are outside the reference band). Paragraph 2 of Article 3 introduces an exemption from the size restriction (under Article 2(1)b) for medals and tokens with a large hole in the centre and have different metal properties; or which are made of gold or silver or platinum.

Article 4(1) provides for the possibility that the designated authorities may authorise specific derogations with respect to the visual characteristics (Article 2(a)) under specific conditions. Such conditions refer mainly to cases where the use of the terms euro, euro cent or the euro symbol is practical. Typical for this case are the casinos, where tokens bearing a face value in euro are sold the equivalent in euro, at face value. In some cases such tokens are convenient for the functioning of these companies. In order to limit the possibility of abuse, the origin of the authorised medal or token must be clearly identifiable and the indication "Not legal tender" must be stamped on the medal or token.

Article 4(2) provides for the possibility to authorise derogations from the size restrictions (Article 2(b)) under two cumulative conditions: (i) the size of the medals and tokens, although inside the reference band, should not be in the immediate vicinity of the euro coins; and (ii) the metal properties should be sufficiently different from the ones of the euro coins. As a result, medals and tokens with such derogation could not normally be used instead of the euro coins in coin operated machines. An important element of Article 4(2) is that it provides flexibility as to the application in line with national rules and practices, as long as the strict minimal conditions are respected. In particular, countries with a tradition of not authorising medals and tokens inside the reference band may continue to do so, although some cross border effects may occur. Others may continue to provide authorisations, under the above-mentioned conditions.

Article 4(3) establishes the competence of the designated authorities to declare whether the degree of similarity, referred to in Article 2(c), is acceptable.

In order to visually illustrate the technical concepts, Annex III includes a section showing an indicative graphical representation of the reference band and the related definitions.

With a view to achieving some degree of harmonisation in the interpretation of the Regulation for Member States to grant derogations, a mechanism is proposed in Article 5(1) whereby all derogations are communicated to the ETSC. The ETSC compiles a list that Member States can consult and, where appropriate, prepares reports. In addition, it was considered necessary to avoid upsetting the functioning of companies which use such tokens as part of their activity (for example casinos). For that purpose it is proposed in Article 5(2) that medals and tokens not observing the rules but existing at the time of entry into force of this Regulation should only be replaced when they reach the end of their life-time, at the latest by the end of 2012. These tokens should be recorded according to the applicable national procedures and communicated to the ETSC. In some cases, such recording will not be necessary, as medals and tokens similar to euro coins do not exist, as a result of national legislation or practice.

Article 6 requires that Member States shall take the necessary measures to ensure the proper implementation of the proposed Regulation, through appropriate sanctions to be adopted by January 2005 and communicated to the Commission.

Article 7 limits the applicability of the Regulation to the participating Member States, reflecting the legal basis used, i.e. Article 123(4) TEC. As was the case, i.a. with Regulation 1338/2001, a second Regulation, based on Treaty Article 308 should extend the effects of the proposed Regulation to the non participating Member States.

2004/0011 (CNS)

Proposal for a COUNCIL REGULATION extending the application of Regulation (EC) No..... concerning medals and tokens similar to the euro coins to the non-participating Member States

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 308 thereof,

Having regard to the proposal from the Commission [6],

[6] OJ C , , p. .

Having regard to the opinion of the European Parliament [7],

[7] OJ C , , p. .

Whereas:

(1) When adopting Regulation (EC) No [8] the Council indicated that it should apply in the participating Member States as defined in Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro [9],

[8] See page [x] of this Official Journal.

[9] OJ L 139, 11.5.1998, p. 1.

(2) However, it is important that the rules concerning medals and tokens similar to the euro coins should be uniform throughout the Community, and the requisite provisions should be taken to that end,

HAS ADOPTED THIS REGULATION:

Article 1

The application of Regulation (EC) No [...] shall be extended to Member States other than the participating Member States as defined in Regulation (EC) No 974/98.

Article 2

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, [...]

For the Council

The President