FIFTEENTH ANNUAL REPORT on monitoring the application of Community law - 1997 - (98/C 250/01) COM(1998) 317 final

(Submitted by the Commission on 27 May 1998)

CONTENTS

Page

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

AREA WITHOUT INTERNAL FRONTIERS

1. Introduction .......... 12

2. Situation sector by sector .......... 14

2.1. Removal of physical borders .......... 14

2.1.1. Customs .......... 14

2.1.1.1. Progress in implementing customs Directives .......... 14

2.1.2. Free movement of agricultural products .......... 14

2.2. Removal of technical barriers .......... 15

2.2.1. Free movement of goods .......... 15

2.2.1.1. Articles 30 et seq. of the EC Treaty .......... 15

2.2.1.2. Preventive rules provided for by Directive 83/189/EEC .......... 18

2.2.2. Progress in implementing Directives on the free movement of goods .......... 18

2.2.2.1. Foodstuffs .......... 18

2.2.2.2. Progress in implementing Directives applicable to foodstuffs .......... 19

2.2.2.3. Pharmaceutical products .......... 19

2.2.2.4. Progress in implementing Directives applicable to pharmaceutical products .......... 19

2.2.2.5. Chemicals .......... 19

2.2.2.6. Progress in implementing Directives applicable to chemicals .......... 20

2.2.2.7. Motor vehicles, tractors and motorcycles .......... 20

2.2.2.8. Progress in implementing Directives applicable to motor vehicles, tractors and motorcycles .......... 20

2.2.2.9. Construction products .......... 21

2.2.2.10. Mechanical engineering, electronics, personal protection equipment, gas equipment, pressure equipment, pre-packaging, measuring equipment, medical devices and pleasure craft .......... 21

2.2.2.11. Progress in implementing Directives applicable to mechanical engineering, electronics, personal protection equipment, gas equipment, pressure equipment, pre-packaging, measuring equipment, medical devices and pleasure craft .......... 22

2.2.2.12. Cosmetics .......... 22

2.2.2.13. Progress in implementing Directives applicable to cosmetics .......... 22

2.2.2.14. Textiles .......... 22

2.2.2.15. Progress in implementing Directives applicable to textiles .......... 23

2.2.2.16. Liability for defective products .......... 23

2.2.3. Free movement of persons, right of establishment and voting rights .......... 23

2.2.3.1. Ending discrimination .......... 23

2.2.3.2. Entry and residence .......... 23

2.2.3.3. Progress in implementing Directives applicable to right of residence .......... 24

2.2.3.4. Right to vote and stand in elections .......... 24

2.2.3.5. Recognition of qualifications .......... 24

2.2.3.6. Progress in implementing Directives applicable to recognition of qualifications .......... 25

2.2.3.7. Independent commercial agents .......... 26

2.2.4. Freedom to provide services .......... 26

2.2.4.1. Articles 59 et seq. .......... 26

2.2.4.2. Audiovisual/Media .......... 26

2.2.4.3. Telecommunications .......... 27

2.2.4.4. Progress in implementing Directives applicable to telecommunications .......... 28

2.2.4.5. Financial services .......... 28

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

2.2.4.7. Commercial communications .......... 31

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

2.2.6. Company law .......... 31

2.2.6.1. Progress in implementing Directives applicable to company law .......... 32

2.2.7. Intellectual and industrial property .......... 32

2.2.7.1. Progress in implementing Directives applicable to intellectual and industrial property .......... 33

2.2.8. Public procurement .......... 33

2.2.8.1. Progress in implementing Directives applicable to public procurement .......... 34

2.3. Removal of tax barriers .......... 34

2.3.1. Direct taxation .......... 34

2.3.1.1. Progress in implementing Directives applicable to direct taxation .......... 35

2.3.2. Indirect taxation .......... 35

2.3.2.1. Progress in implementing Directives applicable to indirect taxation .......... 37

CONSUMER POLICY AND HEALTH PROTECTION

3. Introduction .......... 37

4. Situation sector by sector .......... 37

4.1. Safety and health .......... 37

4.2. Protection of consumers' economic interests .......... 38

4.3. Progress in implementing directives applicable to consumer protection and product safety 38

COMPETITION

5. Introduction .......... 39

6. Situation sector by sector .......... 39

6.1. Public enterprises .......... 39

6.2. Monopolies .......... 40

6.3. Progress in implementing measures in the field of competition .......... 41

SOCIAL POLICY

7. Introduction .......... 41

8. Situation sector by sector .......... 41

8.1. Free movement of workers .......... 41

8.1.1. Ending discrimination .......... 41

8.1.2. Access to employment in the public service .......... 42

8.1.3. Social security .......... 42

8.2. Equal treatment of men and women .......... 43

8.3. Working conditions .......... 43

8.4. Health and safety at work .......... 43

8.5. Public health .......... 44

8.6. Progress in implementing Directives applicable to social policy .......... 44

EDUCATION AND TRAINING .......... 44

AGRICULTURE

9. Situation sector by sector .......... 44

9.1. Markets .......... 44

9.2. Harmonisation .......... 45

9.3. Progress in implementing Directives applicable to agriculture .......... 48

FISHERIES

10. Introduction .......... 48

11. Situation sector by sector .......... 48

11.1. Markets .......... 48

11.2. Resources .......... 48

11.3. Compatibility with Community law of national legislation on the grant of flag rights to fishing vessels .......... 49

ENVIRONMENT

12. Introduction .......... 49

12.1. General situation .......... 49

12.2. Notification of national implementing measures .......... 51

12.3. Conformity of national implementing measures .......... 52

12.4. Correct application of directives .......... 53

12.5. Freedom of access to information .......... 54

12.6. Environmental impact assessment .......... 55

12.7. Action needed .......... 56

13. Situation sector by sector .......... 57

13.1. Air .......... 57

13.2. Chemicals and biotechnology .......... 58

13.3. Water .......... 60

13.4. Noise .......... 63

13.5. Waste .......... 64

13.6. Nature .......... 67

13.7. Radiation protection .......... 70

13.8. Progress in implementing Directives applicable to the environment .......... 70

TRANSPORT

14. Introduction .......... 71

15. Situation sector by sector .......... 71

15.1. Road transport .......... 71

15.2. Combined transport .......... 72

15.3. Inland waterways .......... 72

15.4. Rail transport .......... 73

15.5. Sea transport .......... 73

15.6. Air transport .......... 74

15.7. Summertime .......... 75

15.8. Progress in implementing directives on transport .......... 75

ENERGY

16. Introduction .......... 75

17. Situation sector by sector .......... 75

17.1. Internal market for electricity and natural gas .......... 75

17.2. Energy efficiency .......... 75

17.3. Oil and gas .......... 76

17.4. Progress in implementing directives on energy .......... 76

STRUCTURAL FUNDS AND COMMUNITY LAW .......... 76

BUDGET MATTERS .......... 78

COMMUNITY STAFF .......... 78

STATISTICS .......... 79

ANNEXES

Annex I: Suspected infringements 1993 to 1997 .......... 80

Annex II: Established infringements .......... 87

Annex III: Infringements of treaties, regulations and decisions .......... 95

Annex IV: Report on the application of directives .......... 110

Annex V: Judgments of the Court of Justice up to 31 December 1997 not yet implemented .......... 190

Annex VI: Application of Community law by national courts .......... 195

INTRODUCTION

There are several salient features of activities in 1997:

- statistically speaking, the year saw a sharp rise in the number of Article 169 letters addressed to the Member States;

- the rate of transposal of directives rose for all Member States, some of them displaying particularly impressive 'performance rates`;

- procedurally speaking, 1997 was the first year in which the Commission proposed that the Court of Justice impose a daily penalty payment on a Member State for failure to discharge a Community obligation; eight proposals have now been decided on, and two of them have actually been referred to the Court;

- 1997 was also the first year in which the Commission decided to boost the information made available to complainants, following an own-initiative inquiry by the Ombudsman;

- the Amsterdam European Council of 16 and 17 June 1997 was followed by the proposal of 18 November 1997 for a Regulation creating a mechanism whereby the Commission can intervene in order to remove certain obstacles to trade (1);

- parliamentary questions and petitions continue to play a major role in the detection of infringements and are behind the commencement of a good number of new proceedings each year;

- the Commission presented a proposal for a European Parliament and Council Decision establishing an action programme to improve awareness of Community law for the legal professions (Robert Schuman Project).

It is clear from these developments that the enforcement of Community law is one of the central focuses of Commission attention, as President Santer promised it would be when the present Commission took office.

The statistical analysis: the initial effects of the 1996 procedural reforms - a spectacular increase in the number of Article 169 letters and of cases terminated.

The number of new complaints rose by 17 % from 819 in 1996 to 957 in 1997, thus reversing the trend of recent years. The number of cases detected by the Commission's own investigations remained stable at 261.

The number of Article 169 letters actually sent was up, by 23 % from 1 168 in 1996 to 1 460 in 1997. This applied particularly to cases of failure to notify the Commission of measures implementing directives (+ 47%). Only the number of reasoned opinions fell, by 21 % from 436 in 1996 to 343 in 1997.

The very sharp rise in the number of Article 169 letters decided on is the first fruit of the reforms decided on in July 1996: better compliance with the one-year deadline for a decision on the substance, coupled with a new approach to Article 169 letters (now regarded as a dedramatised request for observations), have greatly reduced the time-lag between registration of the complaint or of a case detected by the Commission's own inquiries and the initial decision on the substance. (NB: the number of cases terminated is also well up - by 22 % from 1 765 to 2 151 - while the total number of cases in progress (the 'stock in trade`) is down.)

Transposal of directives in 1997

The table below gives an overall picture of the rate of notification of national measures implementing all the directives applicable on 31 December 1997.

>TABLE>

On 31 December 1997 the Member States had on average notified 94 % of the national measures needed to implement the directives applicable. This is higher than the figure for 1996 (93 %). But the performance of the individual Member States is variable.

Attention is drawn to the considerable improvement in the notification rate for Sweden, which is three points higher than its rate last year and ranks it first (last year it ranked fifth). Finland, too, has performed well, rising from 81 % to 96,3 % now that the problem of transposal of directives in the Åland Islands (notably in agriculture), mentioned in the Fourteenth Report, has been resolved.

These high rates conceal contrasting realities. The table at Annex IV offers a detailed picture of the situation regarding transposal in 1997 by Member State and by sector.

The sector-by-sector analysis will give more detailed account of the quality of transposal (conformity of national implementing measures with the directives, and sound application of them).

Implementation of second subparagraph of Article 171(2) of the EC Treaty

In 1997 the Commission for the first time made use of the power conferred on it by the Maastricht amendment of Article 171 of the EC Treaty:

'If the Member State concerned fails to take the necessary measures to comply with the Court's judgment within the time-limit laid down by the Commission, the latter may bring the case before the Court of Justice. In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers to be appropriate in the circumstances.

If the Court of Justice finds that the Member State concerned has not complied with the judgment it may impose a lump sum or penalty payment on it.`

When proposing that a Member State be ordered to pay a penalty for failure to comply with a judgment, the Commission is actually proposing a valuable enforcement measure that is available against Member States.

On 28 January and 10 December 1997 eight infringement proceedings reached the referral stage with proposals for penalty payments. The threat of the penalty had a useful deterrent effect as two of the cases were thereupon terminated quite quickly and two more are in the process of being settled. In two cases, however, the referral has been maintained, together with the proposal for penalty payments; these are the two surface-water cases against Germany (Directives 75/440/EEC and 79/869/EEC).

The Ombudsman's own-initiative inquiry into infringement procedures

The Ombudsman's inquiries into a series of complaints about infringement proceedings, notably the environmental complaints about the Newbury Bypass, prompted him to conclude that there was a general need to review the position of complainants in Article 169 proceedings (2). He undertook an own-initiative inquiry.

He proposed among other things that the Commission should seek the complainant's opinion before closing a case. This would involve the citizen more closely in the procedure (there is no appeal against the Commission's decision to close a case) and make the procedure more transparent.

The Commission accepted this recommendation. In a letter addressed to the Ombudsman on 24 July 1997, the Commission Secretary-General stated:

'In several cases the complainant is now informed beforehand . . . as part of the dialogue with the complainant during the investigation of the complaint.

The Commission is prepared to extend this practice. Leaving aside cases where the complaint is obviously without foundation and cases where nothing further is heard from the complainant, the Commission will ensure that a complainant is informed of its intention to close a case.`

The Ombudsman wrote to the Commission on 13 October, stating that he was closing his own-initiative inquiry as there was an improvement in the procedural status of the complainant at the pre-litigation stages and there was no presumption of maladministration.

Follow-up to the Amsterdam European Council: new legal instruments to combat manifest barriers to free movement of goods

The Conclusions of the Amsterdam European Council of 16 and 17 June state:

'The European Council underlines the crucial importance of timely and correct transposition of all agreed legislation into national law, the need to inform citizens and business fully about the Single Market, and the necessity of active enforcement of Community law in the Member States and the introduction of more rapid and effective procedures for problem-solving including deliberations at Council level in cases of recurring problems. The European Council requests the Commission to examine ways and means of guaranteeing in an effective manner the free movement of goods. It requests the Commission to submit relevant proposals before its next meeting in December 1997.`

The Commission responded on 18 November with a proposal for a Council Regulation creating a mechanism whereby the Commission can intervene in order to remove certain obstacles to trade (3). This means that when it detects a particularly serious barrier to the free movement of goods (4), the Commission has the power to take mandatory legal decisions. Individuals who suffer loss can then plead such decision in the national courts in order to obtain interim relief or damages. If a Member State does not comply with the decision within the prescribed period, the Commission may commence Article 169 infringement proceedings, with the referral to the Court of Justice being made quite quickly.

The role of parliamentary questions and petitions in the commencement of new infringement proceedings

In 1997 parliamentary questions and petitions were at the origin of 17 new infringement proceedings.

They mainly concerned nationality discrimination and environmental problems.

The Robert Schuman Project - training judges and lawyers in Community law

Declaration No 19 on the implementation of Community law, annexed to the Final Act of the Treaty on European Union signed on 7 February 1992, 'considers it essential for the proper functioning of the Community that the measures taken by the different Member States should result in Community law being applied with the same effectiveness and rigour as in the application of their national law`.

The Commission responded to the Declaration with a proposal for a European Parliament and Council Decision establishing an action programme to improve awareness of Community law for the legal professions (Robert Schuman Project) (5). This states that 'citizens will be unable to enforce all their rights under the Community legal system before any national court within the Union unless those members of the legal professions involved in the administration of justice, i.e. judges, prosecutors and lawyers are sufficiently informed and trained to do so` (6).

The Commission took over Parliament's amendments to its proposal for the purpose of extending the project to all the practitioners involved in the administration of justice.

The project is to consist of initial and continuing training measures and support for the development of information facilities on Community law. An evaluation report is to be made no later than 31 December 1999.

It can be seen from these examples that the Commission's activities in its capacity as guardian of the Treaties do not consist merely of issuing Article 169 letters and reasoned opinions. The Commission is very active in preventing infringements of Community law, not only when preparing its legislative proposals but also at the pre-litigation stage of Article 169 proceedings. As the Commission stated in 1997, 'better lawmaking means adopting texts at Community level that are easy to transpose and to apply at national level` (7).

This rapid overview of the Commission's activities would not be complete without a reminder of all the European Parliament does in this respect; its annual resolution on the report on monitoring the application of Community law has done much to improve it.

To conclude, the Commission wishes to draw attention to the importance of one particular set of figures given in this report - the numbers of complaints and of infringement proceedings has risen considerably this year. The Commission believes that the rise in the two figures is evidence that the Community's citizens are ever keener to see their rights properly respected, while the Commission has assumed its proper share of the responsibility for enforcing the rules. But it hardly needs restating that the Commission does not operate in isolation here: the practical application of the rules, which is a fundamental political objective of European integration, requires the full cooperation of all the Member States and all the Community institutions.

AREA WITHOUT INTERNAL FRONTIERS

1. INTRODUCTION

The Commission communication on the impact and effectiveness of the single market (8), presented to Parliament and the Council on 26 November 1996, provided an initial assessment of how the single market was functioning, what economic effect it was having and what challenges it would face in the future. The assessment, though positive, reveals a number of shortcomings in the functioning of the single market, which prevent it from delivering all its potential benefits. What Europe needs is a more effective single market, to stimulate growth, innovation and employment. With this in mind, the Commission announced to the Dublin European Council in December 1996 that it intended to draft an action plan for enhancing the single market's effectiveness in the years ahead.

The plan (9) set four objectives, which form a clear strategy for action, starting now:

- make legislation more effective, which means improving transposal and implementation of common provisions and simplifying regulations at both Community and national level;

- eliminate the main distortions in the market, primarily by dismantling tax barriers and fighting measures that discourage competition;

- remove obstacles to market integration affecting particular industries by closing the loopholes in the single market's regulatory framework;

- create a single market which works in everyone's interests, ensuring that individual citizens can enjoy their full rights and working on the social side of the single market.

The European Council, meeting in Amsterdam on 16 and 17 June 1997, reaffirmed its full support for the priorities set out in the action plan and, more specifically, stressed the need to start work straight away on the first strategic objective, enhancing the effectiveness of Community regulations through better transposal and more effective application of the rules governing the single market. To that end, the Member States are requested to put forward detailed transposal timetables and to keep the Commission informed of moves to set up coordination centres to facilitate communication between national authorities and contact points for businesses and the general public.

As far as administrative cooperation is concerned, the Karolus programme (10), launched in 1993, provides for exchanges of officials between the national administrations. Its purpose is to promote harmonised interpretation and uniform implementation of Community single market legislation. All Member States have now taken part in the programme, either sending or receiving officials from national government departments. By 31 December 1997, 417 officials had been on exchanges, comprising a training seminar, the exchange proper (around two months spent in a similar department in another Member State) and a debriefing seminar. The five-year programme is due to expire at the end of 1997. Parliament and the Council are currently looking at a proposal for a decision which would extend it for another two years and open it up to the associated countries in central and eastern Europe, the EFTA countries in the EEA and Cyprus. The Council arrived at a political agreement on the proposal at its first reading on 27 November 1997 and is expected to reach a decision quickly at the second reading.

Alongside Karolus, the Matthaeus programme (11), launched in 1991, provides explicitly for exchanges for customs officials while Matthaeus-Tax (12), launched in 1993, caters for civil servants who deal with tax matters. In addition, the Council adopted two joint actions in 1996, one introducing a programme of incentives and exchanges for legal practitioners ('Grotius`) (13), and another introducing a programme of training, exchanges and cooperation on identity documents ('Sherlock`) (14).

As guardian of the Treaty, the Commission keeps a constant eye on the transposal and effective application of internal market legislation at national level. Once the action plan was adopted, the Commission decided to publish a 'scoreboard` keeping track of application of the legislation and implementation of the plan. The first report, presented to the Council (Internal Market) in November 1997, gave a breakdown by Member State and by industry of the progress made in transposing legislation into national law. It also gave the number of infringements and reported on implementation of the action plan.

Detailed reports on transposal are now to be presented to every Council meeting on the internal market. They will give an account of progress made in transposing major single market directives. On 1 January 1998, the Member States had reported 93 % of the legislative measures required to implement the 1 374 Directives then in force.

Despite this fairly high percentage, there are still considerable delays in certain key sectors, such as public procurement, financial services and intellectual and industrial property. These delays are often caused by problems in the national decision-making process or the technical complexity of Community texts, which sometimes leads Member States to adopt national measures implementing only part of a directive.

The Commission also takes a keen interest in the quality of implementing measures, since the incomplete or incorrect transposal of Community legislation can lead to unequal treatment between Member States and raise de facto barriers to free movement which the single market is actually meant to eliminate.

Another priority is to put the finishing touches to the legislative framework of the single market. For example, Community legislation on company law is incomplete, with the result that European firms are faced with barriers to their mobility. It is now vital that the Member States reach agreement on a statute for a European company; drafts have been drawn up following the report of the Group chaired by Etienne Davignon. On the indirect taxation front, the only way to resolve the existing problems is by adopting a definitive system. The free movement of persons will not become a reality until essential security measures are in place. Moreover, the priority projects will have to be implemented if the single market is to be adapted to take account of new technological challenges, such as the creation of an information society and the introduction of trans-European networks.

But completing the legislative framework is not enough in itself. The establishment of a genuine frontier-free area also requires an effort to simplify legislation. To this end the Commission launched the SLIM (15) pilot project in 1996 to explore how the constraints and formalities imposed on businesses by the complexity of legislation can be reduced by simplifying laws and administrative procedures. The second stage of the campaign, concerning banking legislation, the combined nomenclature for foreign trade, VAT rules and fertilisers, was started in May 1997. On 27 November a communication setting out the recommendations made by the various working parties on these issues was put to the Council (Internal Market).

If the single market is to function effectively, the relevant legislation must also be correctly implemented by the Member States' judiciaries at all levels. The Robert Schuman campaign aims to ensure better implementation of Community law by providing more training and information for judges and lawyers. In contributing to greater awareness of the practical aspects of Community law amongst the legal profession, the Robert Schuman campaign is helping to ensure that the single market works to the maximum benefit of ordinary citizens, consumers and businesses alike. The campaign relies on the cooperation of the bodies responsible for training judges and lawyers. These establishments can apply for financial support for training or information campaigns dealing specifically with Community law. In the pilot phase in 1997, over 40 local projects were selected for support under the campaign.

Lastly, the success of the single market depends on the public knowing what their rights are and how to exercise them. The second stage of the Commission's Citizens First initiative, launched in 1997, focuses on the rights the European Union confers on its citizens with regard to equal treatment for men and women, consumer protection, the purchase of goods and services in other Member States and travel within the Union. This second stage uses the same tried and tested strategy as the first stage (launched in November 1996, with working, living and studying in another Member State as its theme). It involves putting across clear, practical information to as wide an audience as possible on the rights and opportunities offered by the Union and on what to do when these rights are violated.

2. SITUATION SECTOR BY SECTOR

2.1. Removal of physical borders

2.1.1. Customs

The Commission initiated proceedings against France for failing to fulfil its obligations under the Community customs code. The Commission considers that, by allowing only ship brokers the right to act as representatives in performing customs operations and formalities, and restricting the right to make declarations to approved customs agents and holders of customs clearance authorisations (both for direct and indirect representation), French law does not comply with the Customs Code, which requires free representation for operations not restricted by the Code.

In 1995 the Commission sent an Article 171 letter to Italy for failing to comply with the Court of Justice's judgment (16) against Italy for contravening Community legislation by continuing to restrict representation to Italian customs forwarding agents without making provision for people to make a declaration in their own name or on behalf of others, and by requiring the same qualifications from paid employees responsible for making customs declarations as from self-employed persons. However, the Article 171 procedure was terminated as Italy has now complied with the judgment by allowing both types of representation.

Another case concerning Italy's failure to comply with Community transit rules was also closed after a circular was issued, bringing the Italian rules into line with the relevant customs regulations (Regulations (EEC) No 2913/92 and No 2425/93) (17). Italy no longer uses external transit arrangements in the circumstances which were causing problems previously; the external procedure applies to Community goods only in a limited number of cases where Community measures apply to the export operation.

2.1.1.1. >TABLE>

2.1.2. Free movement of agricultural products

Freedom of movement for agricultural products in a single market is one of the principles underpinning the operation of the common agricultural policy and its common market organisations.

The Court of Justice has repeatedly pointed out that Articles 30 and 34 of the Treaty are still an integral part of the common market organisations, even though there has no longer been any need to write them into the regulations since 1 January 1970.

The Commission kept a constant watch to make sure that barriers to trade in agricultural products in the Community were swiftly removed.

In 1997 there was a further drop in the number of new cases involving 'classic` barriers to the free movement of agricultural products, such as systematic import checks or certification requirements.

An action against Germany is still before the Court of Justice regarding certain types of fresh pigmeat imported from Denmark (18).

The Commission sent a reasoned opinion to Spain regarding the requirement imposed by the authorities in the Valencia region that only the Spanish language be used in the labelling of apples from other Member States. Both Article 30 of the Treaty and Regulation (EEC) No 1035/72 on the common organisation of the market preclude national rules imposing the exclusive use of a specific language for the labelling of food products at the wholesale stage (i.e. where professional traders are involved rather than Spanish consumers). The Spanish authorities came round to the Commission's position and the proceedings were dropped.

In France, the infringements have been of a rather more unusual nature: acts of violence have repeatedly been committed by individuals in protest against fruit and vegetables from other Member States and the French authorities have failed to deal adequately with the problem. The Commission welcomed the Court of Justice's judgment on Case C-265/95 in which it ruled that 'by failing to take all necessary and proportionate measures in order to prevent the free movement of fruit and vegetables from being obstructed by actions by private individuals, the French Republic has failed to fulfil its obligations under the common organisation of the markets in agricultural products and Article 30 of the EC Treaty, in conjunction with Article 5 of that Treaty.`

2.2. Removal of technical barriers

2.2.1. Free movement of goods

2.2.1.1. Articles 30 et seq. of the EC Treaty

The single market cannot function properly unless the principle of the free movement of goods is respected; therefore the Commission pays particular attention to ensuring that Articles 30 to 36 of the Treaty are correctly implemented. There are still a considerable number of cases concerning national measures capable of restricting trade. In 1997 the Commission received 143 new complaints. On 31 December 1997 there were 444 infringement cases pending.

Once again in 1997, a large number of cases involving obstacles to trade were cleared up at 'package meetings` held in the Member States (see below for examples). The meetings have been used for several years now to reach amicable solutions in Article 30 cases; they have proved a valuable means of promoting dialogue and administrative cooperation between the Commission and national civil services. In the interests of efficiency, a network was set up at the beginning of 1997 linking the chairmen of the meetings for the various countries. This followed a meeting of the chairmen in Brussels which brought to light the benefits, both for the Member States and the Commission, of sharing the experience they had in settling disputes through cooperation. The network should also facilitate the flow of information and enable solutions used for one Member State to be applied to others.

In 1997 package meetings were held with Austria, Denmark, Finland, Germany, Greece, Ireland, Italy, the Netherlands, Spain, Sweden and the United Kingdom. Some examples of infringement cases settled through the meetings are given below. They are drawn from a number of different industries.

The Spanish authorities amended their regulations governing the telecommunications industry after infringement proceedings were started against a piece of Spanish legislation regulating sales of decoders for digital satellite television broadcasts. The legislation has now opened the market up to decoders using the various available technologies. The Commission intervened in another case involving telecommunications, as a result of which the Greek and Italian authorities adopted regulations providing for mutual recognition of test certificates for radio communication equipment issued by registered bodies in other Member States.

In the food and drink industry, the British authorities changed the rules governing the sale of beer by public houses owned by breweries. Under the new regulations, tenants are free to sell beers other than those brewed by the pub's owners. This exception, previously restricted to cask-conditioned beers, now also applies to traditional bottled beers. This ensures that beers from other Member States can now be sold in pubs in the United Kingdom.

In the pharmaceuticals industry, the Italian authorities, applying the principle that parallel imports should be allowed as requested by the Commission, issued a regulation introducing a simplified procedure for authorising parallel imports of pharmaceutical products.

There have also been some successes in the car industry, which still accounts for a large proportion of the complaints to the Commission. For example, the Finnish authorities have amended their regulation on the entry into service of second-hand motor vehicles, which previously laid down requirements concerning brakes and pollutant and sound emissions. These requirements were both discriminatory, since they applied only to imported vehicles, and disproportionate, given that they went beyond the standards required to guarantee safety and environmental protection. The new rules are no longer discriminatory and enable concerns about safety and environmental protection to be met without obstructing the free movement of goods.

Public procurement rules can infringe Article 30 of the Treaty if they effectively deny non-domestic tenderers access to public contracts. For instance, an Italian regulation on grants for the purchase of buses, trams and trolley buses specified that local authorities would obtain grants only for vehicles which complied with Italian technical specifications. This was discriminatory vis-à-vis imported vehicles since it had the effect of making it more difficult or more expensive to purchase vehicles manufactured in accordance with other Member States' specifications or already on sale in another Member State. When the Commission approached the Italian authorities about this matter, they issued a decree which removed the discriminatory aspects of the regulation.

Lastly, the Commission closed infringement proceedings against Spain and Denmark when they amended their regulations concerning items made from precious metals. The provisions as they stood restricted the range of accepted hallmarks and excluded recognition of hallmarks affixed in other Member States, thus giving the Spanish and Danish markets a disproportionate degree of protection. The regulations are no longer excessively restrictive since the authorities in Spain and Denmark have increased the number of accepted hallmarks and allowed recognition of hallmarks affixed by registered bodies in other Member States.

Four years after the internal frontiers within the Community came down, infringements impeding the free movement of goods persist in quite large numbers. The Commission drew the attention of Parliament and the Member States to the problem in a Communication to the Council and Parliament in September 1996. In response, the European Council, meeting in Amsterdam on 16 and 17 June 1997, asked the Commission to look at ways of ensuring free movement more effectively and to put forward proposals, containing penalties where appropriate, to its December meeting in Luxembourg. Accordingly, on 18 November 1997, the Commission adopted a proposal for a Council Regulation creating a mechanism whereby the Commission can intervene in order to remove certain obstacles to trade (COM(97) 619, 18 November 1997).

One new instrument entered into force at the very beginning of the year, on 1 January. It is intended to enable cases to be dealt with swiftly and in a non-confrontational manner, through an approach based on openness and mutual trust. The notification procedure set up by Decision 3052/95 brings exceptions to the principle of free movement of goods into the open by requiring the Member States to notify the Commission of measures which restrict the movement of goods which have been produced and put on sale lawfully in one or more of the Member States. 35 such measures were reported in 1997.

The Commission decided to refer one case involving obstacles to the free movement of goods to the Court of Justice. It concerns the Italian regulations on precious metals, which contain a number of provisions which contravene Community rules on the free movement of goods. Firstly, they forbid the sale of items bearing all but a limited range of hallmarks in Italy. Furthermore, they require foreign producers to appoint a representative in Italy and affix an additional hallmark as they do not allow recognition of those already on the item. After the Commission had contacted the Italian authorities numerous times and had sent a reasoned opinion to no avail, it decided to refer the matter to the Court of Justice in accordance with the procedure laid down by Article 169 of the Treaty.

In its judgment of 13 March 1997 in Case C-358/95 Morellato, the Court reiterated that there was no justification on grounds of public health for implementing a national law on the composition of a product, in this case an Italian law prohibiting the sale of bread because of its moisture, ash and bran content; it had equivalent effect to a quantitative restriction within the meaning of Article 30 of the Treaty.

In its judgment of 20 March 1997 in Case C-352/95 Phytheron International, the Court ruled on the correct interpretation of Article 7 of Council Directive 89/104/EEC of 21 December 1988 on trade marks, clarifying the rules on parallel imports. First, it pointed out that the Directive comprehensively regulates the question of the exhaustion of trade mark rights for products traded in the Community, so that national rules on the point must be assessed in relation to it and not Articles 30 and 36 of the Treaty. However, it stressed that Article 7 of the Directive is framed in terms corresponding to those used by the Court in judgments which, in interpreting Articles 30 and 36 of the Treaty, recognised the principle of exhaustion, and that the Article could not be interpreted as allowing the owner of a trade mark protected under national legislation from using the same legislation to prevent a product in circulation in another Member State from being imported by the owner of the mark or with his consent.

In its judgment of 20 March 1997 in Case C-13/96 Bic Benelux, the Court clarified the expression 'technical specification` used in Article 1(1) of Council Directive 83/189/EEC of 28 March 1989. The case concerned a measure requiring that a product should bear a distinctive sign indicating the amount of environmental tax payable on the product. The Court concluded that this indeed constituted a technical specification within the meaning of the Directive (and not an accompanying tax measure), and, as such, should have been reported to the Commission, which would have assessed its compatibility with the Treaty, and in particular Article 30.

In its judgment of 7 May in Joined Cases C-321/94, C-322/94 and C-324/94 Pistre on use on labels of the word 'mountain` to describe products, the Court reiterated that national laws were not to be used to hinder intra-Community trade. Such descriptions should not be confused with designations of origin, which were protected by industrial and commercial property rights.

In the same case, the Court also rejected the argument advanced by the French Government that the measures at issue in the main proceedings, i.e. criminal prosecution of French nationals over French goods on sale in France, were not covered by Articles 30 and 36 of the Treaty. The Court held that, in this case, the national measure discriminated against imported products in favour of domestic products and therefore created and maintained differential treatment which at least potentially hindered intra-Community trade.

In its judgment of 5 June 1997 in Case C-105/94 Celestini, the Court held that Articles 30 and 36 of the Treaty did not preclude a Member State from subjecting wine produced in another Member State to an appropriate control in order to test its conformity with Community rules, even where that wine is accompanied by bona fide certificates of analysis issued by research institutes duly authorised in the Member State of origin, provided that those controls are applied in a non-discriminatory manner, that they observe the principle of proportionality and that account is taken of the controls already carried out in the Member State of origin.

In Case C-368/95 Vereinigte Familiapress the Court's judgment, given on 26 June 1997, defined the scope of the term 'selling arrangement`, as used in its judgment of 24 November 1993 in Cases C-267/91 and C-268/91 Keck. Case C-368/95 centred on an Austrian law prohibiting the sale of periodicals containing games or competitions with prizes even if the same periodicals were lawfully produced and sold in another Member State. The Austrian Government argued that Article 30 of the Treaty did not apply to the ban as it was directed against a method of promoting sales, i.e. a selling arrangement within the meaning of Keck. The Court rejected this argument on the grounds that even though the legislation was 'directed against a method of sales promotion`, it bore on the actual content of the products, in so far as the competitions formed an integral part of the magazine. In any case, it impaired access for the product to the market of the Member State of importation and consequently hindered free movement of goods. In response to the arguments advanced by the Austrian Government to justify the measure at issue, the Court accepted that maintenance of press diversity may constitute an overriding requirement which would warrant a restriction of the free movement of goods. But any such measure must be proportionate and must be examined to ensure that the objective cannot be achieved by another means which would not restrict intra-Community trade and freedom of expression to the same degree.

2.2.1.2. Preventive rules provided for by Directive 83/189/EEC (19)

The notification procedure introduced by Directive 83/189/EEC is an essential tool for preventing barriers to trade from being raised and for sharing information. Member States are required to report drafts of new technical regulations for vetting before they are finally adopted. The procedure does not cover technical regulations issued to comply with Community provisions.

In 1997 the Commission received 900 (20) drafts of technical regulations which were scrutinised by the relevant departments. This compares with 439 (21) for 1995 and 523 (22) for 1996. The figures show that, despite the completion of the single market at the end of 1992, the Member States continue to adopt a great many technical regulations. The high number of drafts received in 1997 is partly accounted for by an attempt on the part of the Dutch authorities to clear a backlog which had accumulated; they notified the Commission of 230 instruments which had been adopted but not reported. Consequently, the Commission was able to make correction to a large number of instruments containing provisions which contravened Community law.

Of the 900 drafts received in 1997, 102 (23) required a detailed opinion from the Commission recommending changes to the measure to eliminate barriers to trade. For their part, the Member States issued 113 opinions (24). In one case (25) the Commission had to ask the Member State for a one-year postponement of the reported measures as it intends to propose a harmonisation measure, and in another two cases (26) the measures will have to be postponed for a year because of an overlap with a draft directive or regulation already before the Council.

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 83/189/EEC, it commences infringement proceedings under Article 169 of the EC Treaty. By the end of 1997, about 70 procedures of this type were under investigation.

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

2.2.2.1. Foodstuffs

In general, the Member States did tend to adopt national measures implementing the Directives on foodstuffs, but not always strictly within the time limits laid down by the Directives.

In 1997, the Commission decided to send Article 169 letters in 62 cases involving failure to report national implementing measures. It issued 19 reasoned opinions and closed 71 cases.

For example, a number of Member States were late in implementing Directive 93/43/EEC on food hygiene. The Directive, adopted unanimously in 1993, should have been implemented by December 1995, but seven Member States had still not done so on 1 January 1997. Three Member States finally adopted implementing measures after the Commission issued a reasoned opinion.

In response to the failure to implement Directives and Regulations on foodstuffs properly, the Commission decided to refer one case to the Court of Justice, issue a reasoned opinion in another case, and sent an Article 169 letter in a third.

A further ten or so complaints were lodged. Quite a few of these cases were settled following correspondence between the Commission's departments and the national authorities.

2.2.2.2. >TABLE>

2.2.2.3. Pharmaceutical products

During 1997 a considerable number of transposal measures were notified to the Commission. In some cases notifications took place only after Article 169 proceedings had been opened by the Commission against the respective Member States. To date, nine out of fifteen Member States have transposed all directives applicable in the pharmaceutical sector. The situation regarding the transposal of the homeopathy Directives (92/73/EEC and 92/74/EEC) and the Directives establishing the 'new system` of mutual recognition (93/39/EEC and 93/40/EEC) has significantly improved and several infringement proceedings were closed after Member States notified the - belated - transposal of the above Directives. Infringement proceedings are under way in all remaining cases of non-transposal and progress is being closely followed by the Commission.

There are also some general problems concerning the interpretation and application of the pharmaceutical 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 competent national authorities to observe binding time limits or other procedural requirements. The transposal and application of Article 4(8)(a) (i)-(iii) of Directive 65/65/EEC by Member States is also the subject of several recent complaints.

The Commission is carefully considering these problems and complaints, but for the time being no specific legislative activities are planned. It has to be stressed, however, that a draft consolidation of the pharmaceutical legislation (both human and veterinary) is already very advanced and that this consolidation will increase the clarity of the legislation and ultimately the effectiveness of its implementation.

2.2.2.4. >TABLE>

2.2.2.5. Chemicals

Infringement proceedings are under way for failure to notify implementing measures in the following cases:

Dangerous substances and preparations (Directive 93/18/EC) - a reasoned opinion has been sent to Italy, while Portugal should complete transposal in the next few months;

Restrictions on the marketing and use of dangerous substances and preparations (Directive 94/60/EC) - national legislation is in the pipeline in Belgium, Ireland, Italy and Portugal.

Fertilisers - Belgium, France and Greece have been sent reasoned opinions for failure to transpose Directive 93/69/EC, although implementing measures are expected in France. Luxembourg has still to transpose Directive 95/8/EC, while measures to implement Directive 96/28/EC are expected in Belgium, Germany, Greece, France, Luxembourg, the Netherlands, Austria and Sweden.

The Commission has received no new requests under Article 100a(4) EC in respect of rules stricter than those laid down in the chemicals Directives. Four Article 100a(4) requests are still being considered by the relevant Commission departments, all of them relating to creosote, which is regulated by Directive 94/60/EC.

2.2.2.6. >TABLE>

2.2.2.7. Motor vehicles, tractors and motorcycles

On 1 January 1996 the Community type-approval procedure became mandatory for vehicles of category M1. The separate directives became binding as a result.

In 1997 the transposal of directives, so vital against a background of total harmonisation, was again going smoothly thanks to the experience acquired by the competent national authorities.

Given the detailed, technical nature of the motor vehicles provisions, many Member States routinely refer in their national legislation to the text published in the Official Journal, which in practice facilitates and speeds up the transposal process and scrutiny for conformity with Community law. There are delays, but they rarely exceed a few months and generally arise because the deadline for transposing the directive comes soon after the date of adoption.

2.2.2.8. >TABLE>

2.2.2.9. Construction products

The Commission commenced an action in the Court of Justice against Belgium for failure to notify national measures implementing Directive 89/106/EEC.

There are also particular problems in Austria, which has not transposed the Directive correctly.

The Commission now uses the mechanism laid down in the Directive to follow up complaints on barriers to trade and check that the practices in question are consistent with Community law. In the past such cases were examined only in the light of Articles 30 to 36 of the Treaty.

2.2.2.10. Mechanical engineering, electronics, personal protection equipment, gas equipment, pressure equipment, pre-packaging, measuring equipment, medical devices and pleasure craft

There are 100 directives in this field which had reached their transposal deadline by 31 December 1997.

The transposal rate is satisfactory, considering the complexity of the directives in this field (which mostly follow the 'new approach`). In any case, even where transposal is delayed or incomplete, the free movement of products does not appear to be at risk. Delays in transposal are generally due to domestic reasons in the Member States (opinion of constitutional court pending, more than one Minister responsible, adoption of the acquis communautaire by a new Member State, cumbersome legislative process, etc.)

There have been some problems with the interpretation of texts, for example as regards products placed on the market at the end of the transitional period provided for in the Directives. In such cases the Commission has taken formal measures (initiation of Article 169 proceedings) and informal action (meetings of expert committees, interpretative notes, etc.), which has helped prevent and resolve a number of differences.

The departments responsible for certain sectors, in particular machinery, gas appliances and simple pressure appliances, have also examined a number of safeguard clauses notified by the Member States in connection with market surveillance. Following these notifications the Commission gave an opinion on whether these restrictive national measures were justified.

The Commission closed three of the four proceedings for failure to notify national measures implementing Directive 94/11/EC on the labelling of material used in footwear (the cases against Belgium, France and Ireland), but decided to send a reasoned opinion to Luxembourg.

Directive 93/68/EEC amends Directives 87/404/EEC (simple pressure vessels), 88/378/EEC (safety of toys), 89/106/EEC (construction products), 89/336/EEC (electromagnetic compatibility), 89/392/EEC (machinery), 89/686/EEC (personal protective equipment), 90/384/EEC (non-automatic weighing instruments), 90/385/EEC (active implantable medical devices), 90/396/EEC (appliances burning gaseous fuels), 91/263/EEC (telecommunication terminal equipment), 92/42/EEC (new hot-water boilers fired with liquid or gaseous fuels) and 73/23/EEC (electrical equipment designed for use within certain voltage limits).

The United Kingdom, Spain, Portugal, Greece, Denmark and Sweden have transposed all the Directives.

France, Germany and Finland have transposed all the Directives except 92/42/EEC.

The Netherlands has transposed all the Directives except 91/263/EEC.

Belgium has transposed all the Directives except 89/106/EEC and 90/385/EEC.

Luxembourg has transposed all the Directives except 91/263/EEC and 92/42/EEC.

Italy has transposed all the Directives except 89/106/EEC, 90/396/EEC, 92/42/EEC and 73/23/EEC.

Ireland has transposed all the Directives except 89/106/EEC, 89/336/EEC, 90/385/EEC, 91/263/EEC and 92/42/EEC.

Austria has transposed all the Directives except 88/378/EEC, 89/106/EEC, 89/392/EEC, 89/686/EEC, 90/385/EEC, 90/396/EEC and 92/42/EEC.

2.2.2.11. >TABLE>

2.2.2.12. Cosmetics

The Commission received a number of national measures implementing directives on cosmetics. However, transposal problems persist, particularly as regards Directive 93/35/EEC amending Directive 76/768/EEC for the sixth time.

The Member States had been given an extra period of grace pending publication by the Commission of the inventory provided for in Article 5a of Directive 76/768/EEC. Although the inventory was published on 1 June 1996 (Decision 96/335/EEC), none of the infringement proceedings for failure to transpose Directive 93/35/EEC have been reopened. DG III, which has been responsible for cosmetics since July 1997, will shortly be sending reasoned opinions to the Member States which have yet to transpose the Directive.

2.2.2.13. >TABLE>

2.2.2.14. Textiles

Two new Directives entered into force in 1997: Directive 96/73/EC of the European Parliament and of the Council of 16 December 1996 on certain methods for the quantitative analysis of binary textile fibre mixtures (consolidating and repealing Directives 72/276, 79/76, 81/75 and 87/184) and Directive 96/74/EC of the European Parliament and of the Council of 16 December 1996 on textile names (consolidating and repealing Directives 71/307, 75/36, 83/623 and 87/140).

2.2.2.15. >TABLE>

2.2.2.16. Liability for defective products

The Court of Justice dismissed the action brought by the Commission against the United Kingdom under Article 169 of the Treaty (Case C-300/95) (27). The Commission had contested the UK's transposal of the clause exempting producers from liability as provided for in Article 7(e) of Directive 85/374/EEC concerning liability for defective products (development risk). The Court found there was insufficient evidence to establish that the UK had failed to fulfil its obligations. However, its interpretation of the concept of the state of technical and scientific knowledge does coincide with the Commission's view.

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

2.2.3.1. Ending discrimination

On the question of civil procedure and access to justice, the Commission has been keeping a watchful eye to ensure that national authorities respect the case-law established by the Court in Data Delecta (28), Hayes (29) and Saldanha (30) prohibiting the requirement that Community plaintiffs who bring an action before the courts of a Member State other than their State of their origin must lodge a sum as security for legal costs (the cautio judicatum solvi). All national rules, irrespective of the field they cover, must be compatible with Community law. This means that, where necessary, Community law takes precedence over national rules in the field of private law (31).

2.2.3.2. Entry and residence

Germany has now transposed the Directives on the right of residence of students (93/96/EC), retired persons (90/365/EEC) and other persons not in active employment (90/364/EEC) - the last Member State to do so. On 20 March 1997 the Court of Justice gave judgment against Germany in Case C-96/95. It held that Germany had failed to fulfil its Treaty obligations by not adopting the laws, regulations and administrative provisions necessary for incorporating Directives 90/364 and 90/365 into national law. In reaching this conclusion, the Court found that the manner in which information was conveyed to the competent authorities of the Länder (by means of a circular) did not meet the requirements of publicity, clarity and certainty as to the legal situations governed by the directives.

On 17 July 1997 Germany implemented the judgment by adopting a decree transposing Directives 90/364, 90/365 and 93/96.

The infringement proceedings under way for incorrect transposal of the three Directives are continuing.

The Commission decided to refer cases to the Court of Justice concerning the implementation of provisions on the declaration of financial means by students (France, Italy and Spain), the financial means of retired persons and persons not in active employment (France and Italy), sickness insurance for students, retired persons and persons not in active employment (France and Italy) and the period of validity of residence permits for retired persons not in active employment (Spain and Portugal).

Other proceedings for incorrect transposal of the three Directives are at an earlier stage.

A number of proceedings for incorrect transposal were closed after the national legislation concerned was amended (Denmark, Ireland, Luxembourg and the Netherlands).

The Commission finally decided to bring an action in the Court of Justice against Greece because of the Greek authorities' practice of demanding a higher fee for the issue of residence permits to members of EU citizens' families who are nationals of non-member countries than to EU citizens themselves. The Commission believes that this difference of treatment is contrary to the Directives on right of residence.

2.2.3.3. >TABLE>

2.2.3.4. Right to vote and stand in elections

Following the entry into force of Directive 94/80/EC on 1 January 1996, Union citizens residing in a Member State of which they are not nationals were able to take part in municipal elections in Germany (Hamburg and Hessen), Austria (Burgenland, Carinthia and Upper Austria), Italy, Denmark, Portugal and the United Kingdom.

As guardian of the Treaties, the Commission pursued a number of proceedings in 1997 to ensure that Directive 94/80/EC is incorporated into national law by all the Member States. Infringement proceedings against Greece, Finland, Sweden and Spain were terminated after the countries in question adopted implementing measures. On 26 June the Commission decided to bring an action in the Court of Justice against Belgium for failure to notify national implementing measures (Case C-323/97).

On 7 January 1998, the Commission adopted a report on the application of Directive 93/109/EEC on the right of Union citizens residing in a Member State of which they are not nationals to vote and stand in elections to the European Parliament (COM(97) 371). The report does not propose any amendments to the Directive, but sets out possible improvements in the way it is applied.

2.2.3.5. Recognition of qualifications

Cases decided by the Court of Justice

The following are noteworthy among the Article 171 cases for failure to comply with earlier Court of Justice judgments:

Following the adoption of new legislation, the Commission closed the infringement proceeding against Belgium for failing to comply with the judgment given on 16 May 1991 (Case C-167/90) concerning the incorrect transposal of Directives 85/432/EEC and 85/433/EEC (pharmacists).

In Case C-147/86, the Court condemned Greece for a breach of Articles 48, 52 and 59 of the Treaty in the form of a ban on nationals of other Member States setting up 'frontistiria` and private music and dance schools. On 30 January 1992 Greece was condemned a second time (Case C-328/90), and the Greek authorities subsequently amended their legislation, which made it possible to terminate the proceeding.

The Article 171 proceedings against Italy and France concerning the freedom of tourist guides to provide services (implementation of judgment given on 26 February 1991) are pending. Italy has notified the Commission of the adoption of new legislation and France has sent notification of a draft decree.

Two other cases stand out:

Following the judgment given against Spain on 22 March 1994 concerning the freedom of tourist guides to provide services (Case C-375/92), some of the Autonomous Communities adopted new decrees on the exercise of that profession. Following remarks made by the Commission, Spain has notified new legislation which is being scrutinised.

Greece notified measures to bring its legislation into line with the judgment given by the Court on 26 February 1991 on the freedom of tourist guides to provide services. After scrutinising these new measures, the Commission has decided to close the case.

National implementing measures

The case concerning Greece's failure to notify measures transposing Directive 89/48/EEC (first general system), on which the Court of Justice gave judgment on 23 March 1995 (Cases C-365/93), has now been referred to the Court once more. Proceedings against Belgium were terminated after the Belgian authorities notified national implementing measures.

Infringement proceedings have also been commenced against Greece regarding Council Directive 92/51/EEC of 18 June 1992 on a second general system for the recognition of professional education and training, which supplements Directive 89/48/EEC.

With regard to Directive 94/38/EC amending Directive 92/51/EEC with respect to the level of certain qualifications, proceedings are also under way against several Member States.

Incorrect transposal and incorrect application of directives

In 1997 the Commission received around fifty complaints concerning restrictions in breach of Articles 52 and 59 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.

The Commission pursued a number of proceedings already in motion against Member States for incorrect transposal or incorrect application of directives, for example the case concerning the transposal of Directive 89/48/EEC (first general system) with regard to the teaching profession in Germany.

In another case, proceedings are still under way against Germany concerning access to the dental profession (requirements not allowed by the dentists Directives for admission to the social security register of dentists who hold non-German qualifications which conform to the Directives).

The Commission decided to refer to the Court of Justice a case against Spain for admitting dentists with qualifications obtained in Latin America at a level far below the Directive's requirements.

It has also pursued a proceeding against the Spanish legislation implementing the architects Directives, which lays down restrictions on the maximum period during which services may be provided in Spain.

2.2.3.6. >TABLE>

2.2.3.7. Independent commercial agents

After sending Ireland a reasoned opinion for incorrect transposal of Directive 86/653/EEC on independent commercial agents, the Commission terminated Article 169 proceedings after the Irish authorities adopted additional implementing measures. It also shelved the proceedings under way against Portugal after the authorities there gave a satisfactory reply to its letter of notice under Article 169.

Finally, the Commission has decided to send a reasoned opinion to the Italian authorities for incorrect transposal of the Directive.

2.2.4. Freedom to provide services

2.2.4.1. Articles 59 et seq.

Articles 59 et seq. of the Treaty establish the principle of the free movement of services, i.e. cross-border trade in services of a temporary nature. This principle became directly and unconditionally applicable on expiry of the transition period, since when the Commission has ensured that it is correctly applied in the light of the Court of Justice case law.

The Court has condemned the existence not simply of discrimination but also of restrictions, even if they are the result of the imprecise application of a national rule.

In terms of services which are not regulated at Community level, the Commission ensures that where discrimination or restrictions that are not justified by vital reasons of national interest are encountered, the situation is corrected.

The Commission thus sent a reasoned opinion to the Italian authorities on the subject of Act No 82 of 25 January 1994, which obliges cleaning services to be included in two official registers. This is an unjustifiable obstacle to freedom to provide services.

Likewise, the refusal by the Belgian authorities to grant flight authorisations to economic operators who wish to take aerial photographs if they have no aeroplane registered in Belgium, constitutes an unjustified restriction, as a result of which the Commission has sent a reasoned opinion to the Belgian authorities.

As far as private security services are concerned (private detectives, transport of securities, installation and maintenance of alarm systems), the Commission has brought infringement proceedings against three Member States. In March 1997, it referred to the Court of Justice the discriminatory restrictions based on nationality in Spanish law, which it considers to be incompatible with Article 59, and sent a reasoned opinion in October 1997. The Commission also sent a reasoned opinion on the same subject to Portugal and Belgium in June 1997.

The discrimination may be based on the place of business, as is the case for the application of a bilateral subcontracting agreement between a Member State and a non-member country. Thus, the German authorities allow only businesses that are established in Germany to subcontract with Polish companies and effect the subcontracting by seconding Polish workers to German territory. Businesses established in another Member State are not allowed to do this. The Commission considers the situation to be incompatible with Article 59 and gave a reasoned opinion in October 1997.

2.2.4.2. Audiovisual/Media

In the communications field, the Commission commenced infringement proceedings for breach of Articles 52 and 59 of the Treaty, following complaints made to it. The proceedings reached the reasoned opinion stage, following which the Member State concerned (Portugal) aligned its legislation with Community law (certain provisions on the pursuit of television broadcasting activities). According to these provisions, the foreign share of a broadcaster's capital could not represent more than 15 % of the company's capital; furthermore, the applicant for a broadcasting licence had to be established in Portugal.

As far as the audiovisual field is concerned, it should be emphasised that all the Member States have notified national measures to implement Directive 89/552/EEC (television without frontiers).

Two infringement proceedings concerning Belgium and the United Kingdom, in which the Court of Justice gave judgment on 10 September 1996, are on the way to being settled.

These two major cases primarily concern the main Directive's central provision, Article 2 (freedom of reception and retransmission, applicable law). The Court first stated, upholding the Commission's arguments, that a system of prior authorisation for television broadcasts emanating from another Member State was in breach of the principle of freedom of reception and retransmission of television broadcasts laid down by the Directive. In its second judgment, the Court ruled that both the failure to respect the hierarchy of criteria determining a Member State's jurisdiction and the introduction of a double control on broadcasting services depending on the target audience were in breach of the Directive.

Infringement proceedings are also under way against Finland, France, Greece and Italy.

On 30 July 1997, the new Television without Frontiers Directive came into force (Parliament and Council Directive 97/36/EC of 30 June 1997, OJ L 202, 30.7.1997, p. 60).

This directive amends the 1989 directive regulating television broadcasting activities, updating it and clarifying its provisions. The main amendments clarify certain definitions such as the concepts of 'television advertising`, 'teleshopping`, 'European works`, and the broadcasting of 'events of major importance for society`, introduce rules on teleshopping and channels exclusively devoted to self-promotion, strengthen the protection of minors, in particular by making it compulsory to include a warning identifying unencoded programmes which could be harmful to minors and asking the Commission to carry out a survey of the efficiency of v-chip type filtering systems; and they set up a forum for consultation between the Member States and the Commission on the application and development of legislation in this field, on which subject the Commission will write a periodic report surveying new technological developments.

The Commission, through its contact committee, will ensure that this Directive is correctly transposed by the deadline, i.e. 30 December 1998.

2.2.4.3. Telecommunications

The directives making up Community telecommunications legislation set the date of 1 January 1998 for the creation of a liberalised and harmonised European telecommunications market. Almost all the directives were in place in 1997, and should be transposed into national law by the end of this year at the latest.

The fundamental importance of implementing a legislative framework is recognised throughout the Union. First of all, a single, liberalised telecommunications market is essential to the creation of the information society in Europe, with all that that implies in terms of growth, employment and quality of life. Secondly, the importance of the 1 January 1998 deadline has increased as a result of the Community's commitment to open its market in accordance with the WTO agreement on basic telecommunications services.

On 29 May 1997, the Commission adopted a first communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the state of implementation (32). The aim of this document was to review the situation of the directives as a whole, including those that were not yet in force; to state how the Commission envisaged the task of ensuring the transposal and effective implementation of legislation, stressing the use of recourse to informal measures, combined with full application of the infringement procedure; in particular, closely examining several essential aspects of the legislation which could be considered to be indicative of the state of progress in transposing the regulatory framework for the date set for complete liberalisation.

At its meeting on 27 June 1997, the Council scrutinised the communication and asked the Commission to rapidly consult the Member States and report on progress at its next and subsequent meetings.

The Commission adopted an update of this first communication on 8 October 1997 (33). It concluded by saying the considerable progress made in transposing the legislation was encouraging. However, clearer support is needed in a few Member States, while in some other Member States work remains to be done on certain specific aspects.

The Commission intends to present an updated report at the beginning of 1998 on the basis of its bilateral contacts with the Member States. At this stage it is planned that the report should contain a more comprehensive table showing the state of transposal of the legislative framework. The report will also present a series of indicators of the real and effective state of implementation of the measures transposed into national law, and will provide an initial indication of how the European telecommunications market is functioning, on the basis of relevant economic indicators.

As regards the state of transposal of the various directives and decisions, the situation is as follows.

Framework Directive 90/387/EEC prescribing the principles to be applied to the implementation of open network provision (ONP) has been transposed by all the Member States.

All the Member States have communicated national measures implementing Directive 92/44/EEC (leased lines), but these are incomplete in Greece and Luxembourg. Luxembourg was sent an Article 171 letter in 1997. The Commission is still examining the state of transposal of the Directive in Belgium and Portugal. The proceedings opened in 1997 against Austria were terminated following notification of the implementing measures.

All the Member States except Greece have notified national measures transposing Directive 95/62/EC on the application of open network provision (ONP) to voice telephony, though these are not complete in the case of Belgium and Luxembourg. The infringement proceedings that had been opened against France, Ireland, Italy and the United Kingdom were closed in 1997 following notification of the national measures.

Parliament and the Council adopted three directives in 1997 with 31 December 1997 as the deadline for transposal. They were Directives 97/51 (amendment of the framework and leased lines directives), 97/13 (licences) and 97/33 (interconnection). Some Member States have already notified implementing measures (see Annex 4), but the transposal situation will be examined in the next annual report.

Directive 91/263/EEC on telecommunications terminal equipment has been transposed by all the Member States. The Netherlands, to which a reasoned opinion was sent in 1997, notified its implementing measures in December 1997. Infringement proceedings against the four Member States that the Court had found against in 1995 (Belgium and Greece) and 1996 (Ireland and Luxembourg) were closed, following the adoption of national implementing measures.

Directive 93/97/EEC extends the scope of Directive 91/263/EEC to the equipment of ground satellite tracking stations. Ten Member States (Denmark, Germany, Spain, Finland, France, Italy, the Netherlands, Portugal, Sweden and the United Kingdom) have notified the Commission of national measures transposing the new Directive. In 1997 five reasoned opinions (Belgium, Greece, Ireland, Luxembourg and the Netherlands) and one Article 169 letter (Austria) were sent to the Member States which had not notified their implementing measures. The Netherlands notified its implementing measures in December 1997, as they did for Directive 91/263/EEC.

All the Member States have notified national measures implementing the three Directives on frequencies - Directives 87/372/EEC (GSM), 90/544/EEC (Ermes) and 91/287/EEC (DECT). The Commission is reviewing the state of transposal of Directive 90/544/EEC by the United Kingdom.

All the Member States except Greece have adopted measures required under Decision 91/396/EEC on the introduction of '112` as the standard emergency services number throughout the Union. Spain and Portugal did so in 1997 and the infringement proceedings against them were therefore closed.

All the Member States have already introduced '00` as the standard code for access to the international network in the Community, in accordance with Decision 92/264/EEC.

Finally, five Member States (Denmark, Spain, Luxembourg, Finland and the United Kingdom) have notified national measures transposing Directive 95/47/EEC on the use of standards for the transmission of television signals. Infringement proceedings against the other Member States were opened in 1997.

2.2.4.4. >TABLE>

2.2.4.5. Financial services

As a means of consolidating administrative cooperation and resolving problems quickly, in 1997 the Commission maintained regular contacts with the national authorities through institutional committees (Banking Advisory Committee, Insurance Committee, UCITS - Undertakings for Collective Investment in Transferable Securities - Contact Committee), ad hoc interpretation groups (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).

In the field of insurance, the Commission commenced four new infringement proceedings for breaches of Articles 52 and 59 of the EC Treaty and the Directives under Article 169 of the Treaty. All cases were detected by the Commission itself. One of the proceedings opened in 1996 was shelved because the Member State concerned complied with Community law. In the banking sector, the Commission opened two new proceedings in 1997, one on the basis of a complaint, the other detected by the Commission.

Many infringement proceedings have reached the reasoned opinion stage. In the insurance sector, the number of proceedings for non-compliance or incorrect application officially opened in 1997 was considerably higher than in 1996. This can be explained by the fact that, in view of the great complexity of the insurance sector, the discussions started with national governments in the context of the proceedings launched in 1996 have not yet borne fruit. In the banking sector, the failure to transpose Directive 95/26/EEC ('post-BCCI`) resulted in the Commission deciding to send reasoned opinions to eight Member States.

In the banking sector, the infringement proceedings opened against Italy because of its discriminatory tax treatment, in terms of mortgage credit, to banks that were not established in Italy (see 13th report) was terminated as Italy complied with the Commission's reasoned opinion.

In the securities sector, it was decided to refer Germany to the Court for infringement of Articles 52 and 59 of the EC Treaty by discriminating against UK investment trusts both with respect to public offers of their shares in Germany and in terms of taxation.

In the banking sector, it was decided to send reasoned opinions for failure to transpose Directive 95/26/EEC ('post-BCCI`) to Germany, Spain, Italy, Luxembourg, Belgium, Ireland, France and Greece. It was decided to refer Germany to the Court of Justice for its failure to transpose Directive 94/19/EC on deposit guarantees. A suspended referral was made in respect of Directive 93/6/EC on the capital adequacy of investment firms and credit institutions as Germany had transposed the Directive but had not yet officially informed the Commission.

As regards securities, the Commission decided to send a reasoned opinion for failure to transpose Directive 93/22/EEC (investment services in the securities field) to Greece, Spain, Portugal and Luxembourg, and for incomplete transposal to Germany. Subsequently it decided to refer Spain, Luxembourg and Germany to the Court.

As regards Directive 92/49/EEC and 92/96/EEC (third 'non-life` and 'life` insurance Directives), the cases before the Court against Greece for failure to notify national implementing measures transposing these two directives were withdrawn, while the Court ruled against Spain regarding Directive 92/49/EEC. However, even though most of the Member States have already notified the measures taken for these two directives, the transposal or application of the directives is not problem-free. There are several cases of incomplete or incorrect transposal.

The Commission suspended its decision to refer Spain to the Court for failure to notify its national implementing measures for Directive 92/96/EEC, pending judgment in the case on Directive 92/49/EEC. Furthermore, a reasoned opinion was also sent to Spain regarding Directive 91/674/EEC (annual and consolidated accounts of insurance companies), and it was decided to refer the case to the Court. The Court also found against Spain for failure to transpose Directive 91/371/EEC concerning an agreement with Switzerland.

Finally, the cases of failure to transpose Directive 91/674/EEC by Italy, 90/618 (motor vehicle liability insurance) and 90/619 (second life insurance directive) by Spain, and 93/22/EEC (investment services in the securities field) by Greece and Portugal were terminated.

In the banking sector, it was decided to refer Austria to the Court of Justice because the existence of anonymous accounts in Austria is incompatible with its obligation to check the identity of customers when they open an account under Article 3(1) of Directive 91/308/EEC (money laundering).

In the insurance field, the Commission sent a reasoned opinion to France for failing to implement Directives 92/49/EEC and 92/96/EEC in their entirety, in view of the fact that no measure adapting the mutual insurance code to the third non-life and life insurance directives has been notified to date.

A reasoned opinion was also sent to Belgium because Belgian legislation on the supervision of insurance companies excludes accidents at work from Directive 92/49/EEC. The Commission considers that such risks are covered by the Directive where they are insured by private insurance companies. Finland was also found to commit the same breach of Directive 92/49/EEC and an Article 169 letter was therefore sent in 1996.

The Commission has yet to send a reasoned opinion to Germany for incorrect application of Directive 92/49/EEC, as was decided in 1996. In its legislation implementing this Directive, Germany formally abolished the provision prohibiting the simultaneous transaction of health insurance and other classes by non-German companies hoping to set up a branch or operate as service-providers in Germany, in line with the third non-life insurance directive, which ruled out this possibility. However, Germany introduced a new provision into its social security legislation whereby the employee would benefit from contributions paid by the employer only if the insurance company did not provide both health insurance and other classes of insurance simultaneously, irrespective of where it had its headquarters. This was an indirect violation of Directive 92/49/EEC.

Furthermore, the Commission sent a reasoned opinion to Spain because Spanish legislation implementing Directive 84/5/EEC did not meet the requirement of Article 1(4) of that Directive that a body be set up with the task of providing compensation for damage to property or personal injuries caused by an unidentified vehicle and the victim be given a reasoned reply regarding the payment of any compensation. Finally, the Commission decided to send a reasoned opinion to France because it required insurers to fill out an information sheet before putting new insurance policies on the market, in breach of Directives 92/49/EEC and 92/96/EEC, which prohibit Member States from stipulating provisions requiring the prior approval or systematic notification of the general and special conditions of insurance policies.

As regards requests for preliminary rulings, the Court of Justice reached a decision on 9 July 1997 in Case C-222/95 concerning a Member State's right, before the entry into force of the second banking Directive (89/646/EEC), to require a Community credit establishment already accredited in its country of origin to obtain further accreditation in order to enjoy freedom to provide services on its territory. The Court held that such a second accreditation would contravene Community law unless it was not discriminatory, was justified for reasons of general interest and was objectively necessary and in proportion with the aims pursued.

However, the Court has not yet given its preliminary ruling in Case C-410/96 (Procureur de la République v André Ambry), concerning the recognition by a Member State of a financial guarantee granted in another Member State.

Furthermore, in a judgment given on 20 March 1997 (Case C-57/95) following an action for annulment introduced by France against the Commission, the Court annulled Commission communication 94/C 360/08 on an internal market for pension funds. The Court considered that this communication did not confine itself to clarifying the correct application of the Treaty provisions, but was intended to produce legal effects of its own, distinct from those already envisaged by those provisions.

As regards the case brought against the Commission by the departmental farmers' union for failure to act (Case T-47/96), on the grounds that, contrary to the plaintiffs' requests, the Commission had not commenced infringement proceedings against France for incorrect transposal of Directives 92/49/EEC and 92/96/EEC due to the monopoly on covering health risks established by French legislation in the field of statutory social insurance, the Court has not yet given its judgment in the case brought before the Court of First Instance.

Greece has now implemented judgments given for its failure to transpose Directives 90/618/EEC (motor vehicle liability insurance - provision of services), 90/619/EEC (second life insurance directive) and 88/357/EEC (second non-life insurance directive) - (Joined Cases C-109/94, C-209/94 and C-225/94; judgment given on 29 June 1995).

Actions against Greece were withdrawn, as it had transposed Directives 92/49/EEC (Case C-111/96), 92/96/EEC (Case C-112/96), 91/674/CEE (Case C-110/96) and 91/371/EEC (Case C-109/96). Proceedings against Ireland for failure to transpose Directive 91/371/EEC (Case C-394/95) are being continued. The Court also found against Spain for incomplete transposal of Directives 92/49/EEC (Case C-361/95) and 91/371/EEC (Case C-360/95).

The action against Italy was also withdrawn, as it has transposed Directive 91/674/EEC (annual accounts and consolidated accounts of insurance undertakings). Finally, the Commission commenced an action in the Court of Justice against Belgium (Case C-97/608) for incomplete transposal of Directive 90/232/EEC (third vehicle insurance Directive).

2.2.4.6. >TABLE>

2.2.4.7. Commercial communications

Over the course of the year the Commission has received several complaints about restrictions on cross-border commercial communication services, especially sponsorship, promotion and advertising services. The Commission is examining these cases.

2.2.5. Free movement of capital

The situation concerning the free movement of capital and payments in the EU is in general satisfactory. Further progress was made during the year with the elimination of restrictions on the physical transfer of means of payments and investment abroad by residents, by Greece, and on the physical transfer of means of payments by Italy. However, in a number of cases, national provisions continue to constitute impediments to the free movement of capital and action has been initiated by the Commission for their elimination. The infringement procedure has reached reasoned opinion stage in the case of France, concerning the ban on foreign certificates of deposit denominated in FF (although the connected lead management issue was resolved), Greece, regarding restrictions on real estate acquisition in border areas, while a referral to the ECJ has been decided in the case of Germany, concerning the ban on foreign certificates of deposit denominated in DM and the requirement that lead managers have to be established in the country.

2.2.6. Company law

Apart from the cases listed below where no measures have been notified, and a few problems with incorrect implementation, the seriousness of which will be examined in a study on Directives 78/660/EEC and 83/349/EEC to be completed by the end of 1998, no particular difficulties have arisen regarding the transposal of directives in this field.

The Commission has brought an action against Germany (Case C-191/95) for incorrect application of Directive 68/151/EEC (companies register) and 78/660/EEC (annual accounts). About 90 % of German private limited companies are refusing to publish their accounts by depositing them with the companies register, as required by the Directives and the German legislation transposing them.

The Commission has commenced another action in the Court against Germany for failure to notify national measures implementing Directive 90/605/EEC (amending the scope of the Directives on annual accounts and consolidated accounts).

The Commission has also sent an Article 169 letter to Italy for incorrect application of Directive 84/253/EEC (qualifications required of auditors). The Italian government has not yet put into effect the implementing measures in Italian law transposing this directive.

Finally, the infringement proceedings commenced against Greece and Luxembourg for failure to notify national measures implementing Directive 92/101/EEC (amending Directive 77/91/EEC on the capital of public limited liability companies) are to be brought before the Court in 1998 and those against Finland for failure to notify national measures implementing Directives 78/660/EEC, 83/349/EEC, 90/604/EEC and 90/605/EEC have reached the reasoned opinion stage.

2.2.6.1. >TABLE>

2.2.7. Intellectual and industrial property

Industrial property

There is currently only one directive in force in the field of industrial property - Directive 89/104/EEC on trade marks. Under its provisions, the registration of a trade mark confers on its owner exclusive rights allowing him to prohibit its use for commercial purposes by a third party without his consent.

The harmonisation of Member States' legislation on national trade marks is not comprehensive, but confined to certain aspects which have a direct impact on 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.

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 up 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 but have effect in the Member States.

However, the Directive covers only substantive law on registered trade marks; none of its provisions is aimed at harmonising procedures.

The deadline for the transposal of this Directive was extended until 31 December 1992.

All of the Member States, including the new Members, have notified the Commission of national legislation on the transposal of this Directive. The Spanish authorities notified the Commission of transposal even before the Directive had been adopted. The Commission is currently checking that the measures adopted at national level conform to the Directive.

Intellectual property

Member States generally adopt the national measures implementing the directives relating to this sector only after long delays and often only after infringement proceedings have been launched.

However, the situation has considerably improved, particularly over the last year. While in 1996 only three Member States had notified national implementing measures for all the Directives applicable on 1 January 1997, this year twelve Member States had done so.

The Commission will continue its efforts to make sure that all the Member States transpose the Directives into national law and will also ensure that they are correctly applied - incorrect application appearing to be the main reason for litigation.

All the Member States have now notified their national measures transposing Directive 87/54/EEC on the legal protection of topographies of semiconductors and Directive 91/250/EEC on the legal protection of computer programs. Examination of the measures notified by the United Kingdom transposing the latter directive has, however, revealed problems of compatibility with Community legislation, the UK having chosen to retain certain concepts of copyright in the transposal of the Directive, instead of adapting its traditions in this area to the requirements of the Community regulations. After an Article 169 letter was sent to the UK and a reply was received from the British authorities, it transpired that the issue could be resolved by transposing the other Directives on copyright into national law, including Directive 96/9/EC on the legal protection of data bases, for which the deadline is 1 January 1998.

Infringement proceedings against Ireland for failure to notify national measures implementing Directive 92/100/EEC (lending right) and against Germany for failure to notify national measures implementing Directive 93/83/EEC (on satellite broadcasting and cable retransmission) are at the reasoned opinion stage.

It has been decided to refer Greece and Ireland to the Court for failure to notify national implementing measures for Directive 93/83/EEC.

Finally, although the deadline for transposal of Directive 96/9/EEC on the legal protection of data bases has been set for 1 January 1998, Germany, Austria, Sweden and the United Kingdom have already notified their national implementing measures.

2.2.7.1. >TABLE>

2.2.8. Public procurement

A number of directives adopted in the field of public procurement had still not been transposed in certain Member States in 1997. For example, for Directive 92/50/EEC on services, the Court of Justice found against Greece, which had not notified its national implementing measures, on 2 May 1996 (34), and a case was brought under Article 171 of the Treaty for failing to implement this ruling. As regards Directive 93/36/EEC on supplies, the Court ruled against Italy on 17 July 1997 (35), because it had not notified its measures transposing this directive. The Commission has opened infringement proceedings against Spain, which has not notified its measures transposing Directive 93/38/EEC on the utilities sectors.

However, the measures notified to the Commission have been examined for compatibility with Community legislation, revealing numerous problems in many Member States where the national legislation is inadequate or incorrect.

An examination of the national measures that have been notified has led to 34 proceedings for failure to comply with Community law, including six which are at least at the reasoned opinion stage. Some of these cases involve questions of principle which could undermine the liberalisation of public contracts awarded in the Member States concerned.

The Commission also continued its monitoring of the application of Community law in the procedures for awarding private contracts, by following up complaints and investigating and checking cases on its own initiative.

The Commission processed 215 complaints and investigations of its own over the course of the year, including 80 new cases. It was able to settle 65 cases, mostly as a result of action by the awarding authorities or their supervisory bodies to remedy the irregularities. The dialogue and consultation procedure ('package meetings`), set up to help Member States find and reach agreement on solutions to outstanding disputes which conform to Community law, undoubtedly helped in this respect.

A few examples of incorrect application of Community provisions can be cited.

The Commission decided to refer to the Court of Justice supply of fertiliser for the Irish Forestry Board in order to establish that the latter is an adjudicating authority within the meaning of the public procurement directives.

The Commission also decided to refer France to the Court for failure by the Syndicat Interdépartemental d'électrification de la Vendée to apply competitive tendering as laid down in Directive 93/38, and for incorrect application of Directive 93/37 by the Région Nord Pas-de-Calais in a plan for the renovation of its lycées.

Following Commission intervention, Greece amended its national provisions authorising the adjudicating bodies to use technology transfer as a criteria for awarding contracts.

In a supply contract in the utilities sectors, the Commission impressed upon Belgium the need to admit that reference to national laws where authorised involved the possibility of producing equivalents. Instructions were sent to the clients of the Belgian company to sort out the difficulties.

2.2.8.1. >TABLE>

2.3. Removal of tax barriers

2.3.1. Direct taxation

There is no significant harmonisation in direc