Proposal for a Council Regulation (EC) laying down the conditions under which non-resident carriers may operate national road passenger transport services within a Member State
Date: 1996-01-12
Institutions: European Commission
Subjects: administrative sanction, carriage of passengers, freedom to provide services, international transport, road cabotage, transport licence

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.01.1996 
COM(95) 729  final 

96/0002 (SYN) 

Proposal  for a 

COUNCIL REGULATION (EC\ 

laying down the conditions  under which non-resident  carriers 
may operate  national  road passenger  transport  services  within a Member State 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

Subject: 

Proposal for a Council Regulation laying down the conditions under which 
non-resident  carriers  may  operate  national  road  passenger  transport 
services  within  a Member  State 

A.  BACKGROUND 

1. 

2. 

3. 

4. 

The  Court  of  Justice's  judgment  of  22  May  1985 on  Case  13/83  ruled  that  the 
Council  was under  an obligation  to establish  the freedom  to provide  the national 
transport  services  referred  to  in Article  75(lb)  of the Treaty  within a reasonable 
period. 

To  implement  this  ruling,  on  4 March  1987  the  Commission  submitted  to  the 
Council  a  proposal  for  a  Council  Regulation  laying  down  the  conditions  under 
which  non-resident  carriers  may  operate  national  road  passenger  transport 
services  within a Member  State.1  This established  that any carrier  who operates 
road passenger  transport  services  for  hire or reward,  is established  in a Member 
State  in  accordance  with  its  legislation,  is  authorized  to  provide  international 
the  conditions  laid  down  in  Council 
coach  or  bus  services  and  satisfies 
Directive  74/562/EEC  on  admission  to  the  occupation  shall  be  permitted 
temporarily  to  operate  national  road  passenger  services  for  hire  or  reward  by 
means  of  regular  services,  shuttle  services  or  occasional  services  in a  Member 
State other  than that  in which  he  is  established. 

The  transport  services  provided  on  this  basis  were  governed  by  the  laws, 
regulations  and  administrative  provisions  in  force  in  the  host  Member  State, 
which  had  to  be  applied  to  non-resident  carriers  on  the  same  conditions  as 
imposed on carriers  established  in the host Member State, in order to prevent any 
discrimination  against non-resident  carriers  on grounds of nationality  or place of 
establishment. 

On 10 March  1988 the European Parliament approved the Commission proposal, 
subject  to three amendments.2  The Commission  found two of those amendments 
acceptable  and on 4  November  1988 submitted  an amended  proposal.3 

On  23 July  1992  the  Council  of  Ministers  adopted  the  proposal  as  Regulation 
(EEC) No 2454/92 laying down the conditions under which non-resident  carriers 
may  operate  national  road  passenger  transport  services  within a Member  State.4 
This  Regulation  introduced  the  freedom  to  provide  cabotage  services  by  coach 
and  bus  in two  stages: 

OJ  NoC  77,  24.3.1987,  p.  13. 
OJ  NoC  94,  11.4.1988,  p.  125. 
OJ  NoC  301, 26.11.1988,  p.  8. 
OJ  No  L251,  29.8.1992,  p.  1. 

with  effect  from  1 January  1993  in  the  case  of  closed-door  tours  and 
certain special  regular services  for workers,  school  pupils and students  in 
zones  within 25  km  of  frontiers; 
with  effect  from  1 January  1996  for  all  other  services,  except  regular 
services. 

In the case of the latter,  Article  3(3)  stipulates  that  "the Council  shall  review  the 
situation  of  regular  services  other  than  those  referred  to  in  paragraph  2  in  the 
light of  the Commission  report  referred  to in Article  12,  taking  into account,  in 
particular,  the national  provisions  applied  by  Member  States  regarding  controls 
and  authorization  procedures  for  regular  services." 

On 29  October  1992 the European Parliament brought proceedings for  annulment 
of  this  Regulation.  The  Court  of  Justice's  ruling  of  1 June  19945  annulled  the 
Regulation on the ground that the Council had disregarded  the prerogatives  of the 
Parliament.  In particular,  the obligation  to consult  the Parliament  in the  course 
of the legislative procedure  provided  for  by  Article  75 of  the original  version of 
the  Treaty  of  Rome  includes  the  duty  to  reconsult  the  Parliament  on  each 
occasion  when the text finally  adopted,  viewed  as a whole,  departs  substantially 
from  the text on which  the  Parliament  has  already  been  consulted. 

The  Court  considered  that  "a  comparison  between  the  Commission's  initial 
proposal  and  the  contested  regulation  shows  that,  as far  as  regular  services  are 
concerned,  the amendments  made  have  restricted  the  scope  of  the  regulation  to 
certain  types of  road passenger  transport  and to certain restricted  frontier  zones 
in such a way as to affect  the very essence  of the enactment.  Those  amendments 
must  therefore  be regarded  as  substantial."6 

The Court  of Justice decided that the provisions  of the annulled  Regulation  may 
remain effective until the Council, after proper consultation of the Parliament,  has 
adopted new legislation on the matter,  in order  to avoid calling into question  the 
degree  of  liberalization  which Regulation  2454/92  sought  to  achieve. 

Since then the Treaty  on European  Union has amended the legislative  procedure 
provided  for  in Article  75 of  the Treaty  and replaced  the consultation  procedure 
by the cooperation procedure  in Article  189c.  Consequently,  this new procedure 
was  the  only  way for  adoption  of  the  new  Regulation  implementing  the  Court's 
ruling. 

For  this  reason,  to safeguard  the prerogatives  of  all the  institutions  involved  in 
the  legislative  procedure,  it  was  decided  to  restart  the  procedure  from  the 
beginning,  i.e.  to  submit  a  new  proposal  for  a  Regulation  based  largely  on  the 
annulled  text. 

Articles  3(3)  and  12 of  Regulation  2454/92  require  the  Commission: 

5 
6 

Case  C-388/92. 
Ground  13. 

to report (before  31  December  1995) on the application of the Regulation 
and,  in  particular,  on  the  impact  of  cabotage  transport  operations  on 
national  transport  markets  and on whether  consideration  should  be  given 
to  extending  the  scope  of  the  Regulation  to  other  regular  passenger 
transport  services; 
if  necessary,  in  the  light  of  the  conclusions  of  the  report,  to  submit  a 
proposal  for  a Regulation  to  the  Council. 

However,  in view of  the exceptional  circumstances  in this case,  particularly  the 
annulment  of  the  Regulation  by  the  Court  and  the  urgent  need  to  take  the 
measures  required to implement its ruling, this proposal  is being submitted  to the 
In  any  case,  the 
Council  before  the  abovementioned  report  is  drafted. 
Commission's  power  to  propose  new  legislation  is  not  conditional  upon  the 
drafting  of  such a  report. 

9. 

The  Treaty  establishes  the  Single  Market,  within  which  there  must  be  free 
movement  of  goods,  persons,  services  and  capital.  This,  together  with  the 
abolition  of  frontier  controls,  means that the cabotage  system  must  be  extended 
to  all  transport  services  by  bus or  coach,  including  regular  services. 

B. 

GROUNDS  FOR  ACTION  AT COMMUNITY  LEVEL 

I. 

Subsidiarity 

(a)  What  are  the  objectives  of  the  proposed  action  in  relation  to  the 

Community's  obligations? 

The  objective  of  this  proposal  is  to  lay  down  the  conditions  under  which 
non-resident  carriers  may  operate  national  coach  and  bus  services  within  a 
Member  State  ("cabotage"). 

The  fundamental  objective  is  to  establish  the  freedom  to  provide  transport 
services and eliminate all discrimination against carriers on grounds of nationality 
or  of  the  fact  that they  are  established  in a Member  State other  than the State  in 
which  the  service  is  provided. 

(b) 

Does  competence  for  the  planned  activity  lie solely  with  the  Community  or 
is it shared  with the Member  States? 

Competence for  this activity  lies solely  with the Community  (Article  75(1 )(b) of 
the Treaty). 

(c)  What  is the Community  dimension  of the problem  (for  example,  how  many 

Member  States are involved  and  what  solution  has  been  used  up  to  now)? 

This  field  involves  every  Member  State. 

The  proposal  is  based  on  the  text  of  Council  Regulation  No 2454/92  of 
23 July  1992  and  removes  the  restrictions  placed  on  cabotage  for  certain 
passenger  services. 
This  new  Regulation  must  replace  Regulation  No 2454/92  which  the  Court  of 
Justice  annulled  on  1 June  1994  on  the  grounds  of  a  fault  in  the  legislative 
procedure. 

(d)  What  is the  most  effective  solution taking  into account  the  means  available 

to the  Community  and those  of  the Member  States? 

To  make cabotage  possible,  Member  States  must allow  non-resident  carriers  to 
operate  national  transport  services  on  their  territory.  A  clearly  defined 
framework  is needed  for  this to avoid all discrimination between operators  from 
different  Member  States.  Consequently,  the  proposal  lays  down  the  legal 
framework  applicable  to cabotage. 

(e)  What real added value will the activity proposed by the Community  provide 

and what  would  be the cost of  inaction? 

Adoption  of  this  Regulation  on  cabotage  will  open  up  the  national  passenger 
transport  markets  to  non-resident  carriers.  The  freedom  to  provide  cabotage 
services  is  one of  the  fundamental  principles  established  by  the Treaty  itself. 
Inaction  by  the  Community  would jeopardize  this  principle  at  enormous  cost, 
considering that economic progress  in the European Union depends largely on the 
capacity  of  the  Union's  transport  systems  to provide  the  requisite  mobility  for 
goods  and  persons. 

(f)  What  forms  of  action  are  available  to  the  Community  (recommendation, 

financial  support,  regulation,  mutual  recognition,  etc.)? 

This proposal  is based on Regulation (EEC) No 2454/92, which was annulled by 
the  Court  of  Justice.  Consequently,  it  too  takes  the  form  of  a  Council 
Regulation.  Since  non-nationals  must  have  access  to  the  national  passenger 
transport  markets  on  the  same  terms  to  avoid  distortion  of  competition,  a 
regulation  binding  in  its entirety  and directly  applicable  in all Member  States  is 
the  only  form  of  legislation  which can be  considered. 

(g) 

Is it necessary to have a uniform  Regulation or is a Directive setting out  the 
general  objectives  sufficient,  leaving  implementation  at  the  level  of  the 
Member  States? 

As  indicated  in  paragraph  (f),  this  proposal  replaces  and  amends  an  existing 
Regulation  and  must,  therefore,  also take the form  of  a Regulation.  Moreover, 
the  field  covered  makes  it necessary  for  cabotage passenger  services  by  road  to 
be performed  under  the same conditions  and using  the same control  documents. 
A Directive  would  not be an  appropriate  instrument. 

II. 

Economie advantages of further  harmonization 

First,  it  must  be  remembered  that  this  Regulation  is based  on. Article 75(1 )(b)  of  the 
Treaty,  which  stipulates  that  the  freedom  to  provide  transport  services  must  be 
established.  This  implies,.in  particular,  putting  an  end  to  all  discrimination  against 
providers  of  such  services  on  grounds  of  their  nationality  or  place  of  establishment. 
Accordingly,  this draft  Regulation provides that the same conditions and rules apply to 
the operation  of  national  road  passenger  transport  services  within a Member  State by 
non-resident  carriers.  This system  is commonly  known as "cabotage". 

It  must  be stressed  that  the greatest  economic  argument  in favour  of  cabotage  is that 
carriers  authorized  in  their  country  of  establishment  to  operate  international  coach 
services will have the option of operating national passenger services in every European 
Union Member State and in every State in the European Economic Area established  on 
1 July  1994.  This single market offers  coach operators a travelling public of 370 million 
citizens,  for  whom  the  freedom  to  provide  transport  services  will  open  up  new 
opportunities for travel.  These new opportunities could subsequently generate new jobs 
in the transport  industry. 

To  avoid  all  distortion  of  competition,  in  accordance  with  the  obligation  to  ensure 
non-discrimination  between  national  operators  and  with  the  unique  dimension  of  the 
internal  market,  the proposal  lays down  identical  conditions  for  access  to the various 
national markets by non-residents.  Nevertheless,  the proposal leaves all Member States 
the  possibility  of  referring  the  matter  to  the  Commission  in  the  event  of  serious 
disturbance  of a national market by non-resident carriers. 

C. 

CURRENT SITUATION AND OBJECTIVES OF THE PROPOSAL 

I. 

Current situation 

Although the Court of Justice annulled Regulation 2454/92, it decided that the provisions 
of the Regulation may remain effective until the Council, after proper consultation of the 
Parliament,  has  adopted  new  legislation  on the  matter,  in order  to avoid  calling  into 
question the degree of liberalization which the Regulation sought to achieve. 

Regulation 2454/92 provides  for  different  stages  for  the establishment  of cabotage  for 
different  types of coach and bus service: 

1. 

Occasional services 

-  Until 31 December  1995 authorization to operate non-regular cabotage services 

is restricted  to closed-door tours; 

-  after  that date, all non-regular  cabotage services  will be authorized. 

2. 

Special  regular  services 

Since the entry  into force of Regulation 2454/92 cabotage in the form of special  regular 
services  - regular services carrying specific categories of passengers,  to the exclusion of 
all other passengers  -  is authorized,  subject  to certain limits: 

(a) 

(b) 

limits concerning the type of service, since only special regular services carrying 
workers  between  home  and  work  and  school  pupils  and  students  to  and  from 
educational  establishments  are covered; 

geographical limits, since the services must be carried out in the frontier zone of 
a  Member  State -  within 25  km as  the crow  flies  from  the  frontier  common to 
two Member  States  - by carriers  with a registered  office  or other establishment 
in the frontier  zone of an adjacent Member State,  provided that: 

- 

- 

the points of departure and destination of the transport services  are situated in 
the frontier  zone of the host Member State; and 

the  total  distance  involved  does  not exceed  50 km as  the crow  flies  in each 
direction. 

3. 

Regular  services 

Regulation  No.2454,  which was  annulled by the  Court,  did  not cover  cabotage  in the 
form  of  regular  services  -  services  carrying  passengers  at  specified  intervals  along 
specified routes, with passengers being taken up and set down at predetermined stopping 
points.  Regular  services  can  be  used  by  anyone  -  though  passengers  may,  where 
appropriate,  be obliged  to make a booking. 

Article  3(3) of Regulation No.2454  stipulates that the Council will  review  the situation 
of regular services other than the special regular services covered by Article  3(2), taking 
into account,  in particular,  the national provisions  applied by Member States regarding 
controls and authorization procedures for regular services,  in the light of the Commission 
report.  This  report  must  cover  application  of  the  Regulation  and,  in particular,  the 
impact of cabotage on the national transport markets  and whether consideration should 
be given to extending  the scope  of  the Regulation to other  regular  passenger  transport 
services. 

IL 

Objectives  of  the  proposal 

The objectives  of  the proposal  are as  follows: 

1. 

2. 

3. 

To 
implement 
Regulation 2454/92. 

the 

judgment 

in  Case  C-388/92,  which  annulled 

To  implement  the  principle  of  freedom  to  provide  services  in  the  sector 
concerned,  which  will  entail  removal  of  all  restrictions  placed  on providers  of 
services  on grounds of their nationality or of the fact that they are established  in 
a Member  State other than the State  in which the service  must be provided. 

To  remove  the  restrictions  which  will  persist  even after  1 January  1996  in the 
case  of  special  regular services. 

4. 

To introduce cabotage  in the course  of  regular  services,  particularly: 

-  Regular cabotage in the course of a regular international service in accordance 

with Regulation 684/92 (Article  3(2) of  the proposal). 

regular 

At the moment,  national  services  are never  authorized  as part of 
a 
service. 
a 
London-Calais-Paris-Marseilles  service may pick up passengers in 
London but not in Calais  for  the journey  to Paris  or Marseilles). 

international 

example, 

(For 

Opening  up  such  national  operations  as  part  of  international 
services  must  be  considered  authentic  cabotage,  provided  the 
operator  is a non-resident. 

The proposal is that such cabotage operations should be subject to 
authorization  by  the  competent  authorities  in  the  host  Member 
State.  The  reasons  allowed  for  refusal  of  authorization  are 
extremely  strict  and  are  largely  the  same  as  those  provided  for 
international  services  in Regulation 684/92. 

-  Acceptance of regular cabotage services.  For this type of cabotage transport, 
the  Member  States  are  obliged  to  apply  the  existing  laws,  regulations  and 
administrative  provisions 
in  force  in the  host  Member  State  regarding  the 
routes to be operated and the regularity,  continuity and frequency of services. 
All these provisions must be applied under the same conditions as are imposed 
on national carriers,  so as to rule out any discrimination against  non-resident 
carriers  on the grounds of their nationality  or place of establishment.  These 
conditions  are  often  defined  in  contracts,  franchises  or  licences  to  operate 
public transport  services  by bus  or coach in the Member States. 

It is also stipulated that any compensation for public service obligations must 
be paid to all the Community  operators  concerned. 

To  reincorporate  most  of  the  provisions  of  Regulation 2454/92,  particularly 
Articles  5,  6,  7,  8,  9,  10,  11,  12 and  14  thereof. 

D. 

ARTICLE  BY  ARTICLE  COMMENTS 

Article 1 

Article  1 of  the proposal  includes  the  full  text  of  Article  1 of  the  annulled  Regulation 
2454/92, plus a more explicit reference  to the fact that carriers  satisfying  the conditions 
laid  down  in  this  Article  must  be  allowed  to  perform  cabotage  operations  without 
discrimination  on grounds  of  their nationality  or place of establishment. 

Article  2 

This Article contains definitions of the various transport services.  These definitions are 
partly  taken from Regulation 684/92 on common rules  for  the international  carriage  of 
passengers by coach and bus,7  the aim being to standardize the definitions  applicable to 
international  and national transport  services. 

Regulation  684/92  defines  four  different  types  of  service:  regular  services,  special 
regular  services,  shuttle  services  and  occasional  services.  Definition  of  the  first  two 
in 
types  poses  no  problem. 
Regulation 684/92,  depending  whether  or  not  accommodation  is  provided.  This 
distinction has not been drawn in the proposal nor, moreover,  in the legislation of most 
Member  States,  which  classifies  such  services  as  either  regular  or  non-regular 
(occasional).  Nor did Regulation 2454/92  include the concept of  shuttle services. 

Shuttle  services  are  subdivided 

into  two  types 

Article 3 

Article 3 lays down the rules on access to the market.  Under these, with effect from the 
date of  entry  into force  of  the Regulation,  cabotage will be authorized  for: 

all special regular services;  the restrictions  imposed by Regulation 2454/92 have 
been removed; 

all occasional  services.  Provision  had been made for authorization of cabotage 
for  such  services,  in  any  case,  by  Article  3(1)  of  Regulation 2454/92,  which 
after 
would  have  allowed 
31  December  1995; 

for  all  non-regular 

cabotage 

services 

two forms  of  cabotage  have been provided  for  regular services: 

-  regular cabotage in the course of a regular international service  in compliance 
with  Regulation 684/92  (Article  3(2)  of  the  proposal).  This  provision  will 

OJNo  L74,  20.3.1992,  p.  1. 

allow  better  allocation of  resources  by carriers,  since at the moment  national 
services  are  never  authorized  as part  of  international  services; 

acceptance  of  regular  cabotage  services  (Article  3.3  of  the draft  Regulation). 
the Member  States  are  obliged  to apply 
For  this  type of  cabotage  transport, 
the  existing  laws,  regulations  and  administrative  provisions 
in  force  in  the 
host  Member  State  regarding  the  routes  to  be  operated  and  the  regularity, 
continuity  and frequency  of  services.  All these provisions  must  be applied 
under  the  same  conditions  as are  imposed  on  national  carriers,  so as  to  rule 
out  any  discrimination  against  non-resident  carriers  on  the  grounds  of  their 
nationality  or  place  of  establishment.  These  conditions  are  often  defined  in 
contracts,  franchises  or licences to operate public transport  services  by bus or 
coach  in the  Member  States. 

It is also stipulated  that any compensation  for  public service  obligations  must 
be paid  to all  the Community  operators  concerned. 

Article  4 

This  Article  establishes  the  legal provisions  applicable  to cabotage  in the course  of  the 
international  transport  services  referred  to  in Article  3(2)  of  the proposal. 

Regular  international  coach and bus  services  are  subject  to authorization  in accordance 
with  Article  4(4)  of  Regulation 684/92. 
the 
authorization  procedure,  the  grounds  for  rejection  of  applications  to  operate  an 
international  service  and  the obligations  of  carriers  are  set  out  in  Articles  5 et seq.  of 
Regulation  684/92. 

The  nature  of  the  authorization, 

This proposal  makes cabotage in the course of international  transport  services  subject  to 
authorization.  The  need for  such authorization  is warranted  by the  internal  logic of the 
system,  since  authorization  is required  for  the  international  service  itself. 

The authorization will be issued by the competent  authorities of the host Member  State, 
i.e.  of  the  Member  State  in  which  the  cabotage  operation  is  performed,  unlike  the 
authorizations  for  international  services  which  are  issued  in  agreement  with  the 
competent authorities of all the Member States in whose territories passengers are picked 
up or  set  down. 

The reasons for rejection of authorization are the same as in Regulation  684/92, with one 
important  change: 

include 

the  proposal  does  not 
in  Article  7(4)(b)(ii)  of 
the 
Regulation  684/92,  which  stipulates  that  applications  may  be  rejected  "if  it  is 
shown  that  the  said service  would  seriously  affect  the viability  of  a  comparable 
rail  service  on  the direct'sections  concerned".  This  clause  has  been  omitted  in 
order  to  maintain competition  between  the  various  modes  of  transport. 

reason 

10 

The  rest  of  Article 4  incorporates  the  equivalent  clauses  from  Regulation 684/92  on 
international  services. 

Article 5 

This  Article  incorporates  all  of  Article  4  of  the  annulled  Regulation 2454/92  plus  one 
new  reference:  save  as otherwise  provided  in Community  legislation,  the operation  of 
the regular cabotage services  provided  for  in Article 3.3 is to be subject to the existing 
laws,  regulations  and  administrative  provisions  in  force  in  the  host  Member  State 
regarding  the  routes  to  be  operated  and  the  regularity,  continuity  and  frequency  of 
services. 

Any  compensation  for  public  service  obligations  must  be  paid  to  all  the  Community 
operators  concerned. 

Articles  6.  7.  8.  9.  10.  11 and 12 

These  Articles  contain  virtually  the  full  text  of  the  equivalent  clauses  in the  annulled 
Regulation 2454/92, with very minor changes which make no difference to the substance. 

11 

COUNCIL REGULATION  (EC)  No 

of 

laying down the conditions  under which non-resident  carriers  may operate 
national road passenger  transport  services  within a Member State 

13) 

12 

COUNCIL  REGULATION  (EC) No 

of 

laying  down  the conditions  under  which  non-resident  carriers  may  operate 
national  road  passenger  transport  services within  a Member  State 

THE COUNCIL OF THE EUROPEAN UNION 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  75 thereof, 

Having  regard to the proposal  from  the  Commission, 

Having regard  to the  opinion  of the  Economic  and  Social  Committee, 

In cooperation  with the European  Parliament, 

Whereas Council Regulation (EEC) No 2454/92 laying down the conditions under which 
non-resident  carriers  may  operate  national  road  passenger  transport  services  within  a 
Member  State was annulled  by the  Court of  Justice's ruling  of  1 June  1994,8 by  reason 
of a fault  in the  legislative  procedure  for  adoption thereof; 

Whereas,  pursuant  to  Article  75(lb)  of  the  Treaty,  the  establishment  of  a  common 
transport policy entails, inter alia, laying down the conditions under which  non-resident 
carriers may operate national transport  services within a Member  State; 

Whereas  Article  59  of  the  Treaty  establishes  the  objective  of  abolishing  restrictions  on 
the freedom  to provide  services within  the Community; whereas  this objective  must  be 
achieved within the framework of the common transport policy in accordance with Article 
61(1) of the Treaty; 

Whereas,  as  the  Court  of  Justice  has  said,9  the  obligations  imposed  on  the  Council  by 
Article  75(1 )(a)  and  (b)  of  the  Treaty  include  the  obligation  to  ensure  that  there  is 
freedom  to provide services in the field  of transport; whereas the extent of this obligation 
is clearly  defined  in the  Treaty; 

Whereas that provision  entails the removal  of all  restrictions against  a person  providing 
the services in question on the grounds of his nationality or the fact that he is established 
in a Member  State other  than that  in which  the  service  is to be  provided; 

Whereas establishing  the  internal  market  involves the abolition  of  frontier  controls  and, 
consequently,  an  increase  in  intra-Community  traffic; 

Judgment  of  1 June  1994, Case C-388/92,  Parliament  v. Council. 

Judgement  of  22  May  1985, Case  13/83,  Parliament  v.  Council 

13 

Whereas the rules applicable to cabotage for all forms of coach and bus service  must be 
established; 

Whereas  the  provisions  of  the  host  Member  State  applicable  to  cabotage  transport 
operations  should  be  fixed; 

Whereas provisions  should be adopted so that action can be taken in the event of serious 
disturbance  of  the transport  markets  affected; 

Whereas  it  is  desirable  that Member  States  should  grant each other  mutual  assistance 
with  a  view  to  the  sound  application  of  this  Regulation,  particularly  in  respect  of 
penalties  applicable  in the event of  infringements; 

Whereas  it  is  for  the  Member  States  to  adopt  the  measures  necessary  for  the 
implementation of  this Regulation; 

Whereas the application of this Regulation should be monitored by means of a report to 
be submitted by  the Commission, 

HAS ADOPTED  THIS REGULATION: 

Article  1 

Any carrier who operates  road passenger  transport services for hire or reward who: 

is established in a Member State, hereinafter referred to as the "Member State of 
establishment",  in accordance  with its legislation, and 

is  authorized,  in  that  State,  in  accordance  with  relevant  Community  law,  to 
pursue  the  occupation  of  road  passenger  transport  operator  in  international 
transport  operations, 

shall  be  permitted,  under  the  conditions  laid  down  in  this  Regulation  and  without 
discrimination  on  grounds  of  the  carrier's  nationality  or  place  of  establishment, 
temporarily  to  operate  national  road  passenger  services  for  hire  or  reward  in another 
Member  State,  hereinafter  referred  to  as  the  "host  Member  State",  without  being 
required  to have a registered-office  or other establishment  in that State. 

Such  national  transport  services  are  hereinafter  referred  to  as  "cabotage  transport 
operations". 

For the purposes  of  this Regulation: 

Article  2 

1. 

"Regular services"  means services  which provide for the carriage of passengers 
at specified  intervals  along  specified  routes,  passengers  being  taken up and set 

14 

down at predetermined  stopping  points.  Regular services  shall  be open to all -
subject,  where  appropriate,  to compulsory  reservation. 

"Regular international  services"  means the services  referred  to in Article  2(1.1) 
of  Council  Regulation  No.684/9210 

"Special regular services" means regular services  which provide for the carriage 
of  specified  categories  of  passengers,  to  the  exclusion  of  other  passengers,  at 
specified  intervals along specified routes, passengers being taken up and set down 
at predetermined  stopping points. 

Special  regular  services  shall  include: 

(a) 
(b) 

(c) 

the carriage  of  workers  between home and work, 
carriage  to  and  from  the  educational  institution  for  school  pupils  and 
students, 
the carriage of soldiers and their families between their place of origin and 
the area of their barracks. 

The fact that a special service may be varied according to the needs of users shall 
not affect  its classification  as a regular service. 

"Occasional  services"  means  services  falling  neither  within the  definition  of a 
regular  service  nor  within  the  definition  of  a  special  regular  service.  These 
services shall not cease to be occasional services solely because they are provided 
at certain intervals. 

"Vehicles"  means motor vehicles  which,  by  virtue of their type of  construction 
and equipment,  are suitable  for carrying more than nine persons  - including the 
driver  - and are intended for that purpose. 

2. 

3. 

4. 

5. 

Article 3 

With  effect  from  the  date  of  entry  into  force  of  this  Regulation,  cabotage  transport 
operations  shall  be authorized  for  the following  services: 

1. 

2. 

special  regular  services  and occasional  services; 

the  regular  services  defined  in Article 2(1),  provided  they  are  performed  by a 
carrier  not  resident  in  the  host  Member  State  in  the  course  of  a  regular 
international  service  in  accordance  with  the  provisions  of  Council  Regulation 
684/92;  * 

3. 

the other  regular services. 

10 OJ L 74, 20.3.1992, p. 1 

15 

Article  4 

1. 

Cabotage  transport  operations  carried  out  in  accordance  with  Article  3(2)  shall 
be subject to authorization by the competent authorities  in the host Member State. 

2. 

Applications  for  authorization  may  be  refused: 

(a) 

(b) 

if the competent authorities  in the host Member State produce evidence that 
the regular service for which the application to perform  cabotage operations 
has  been  submitted  would  directly  compromise  the  existence  of  regular 
services  already  authorized,  except  in cases  in which  the  regular  services 
in question  are  carried  out  only  by  a single  carrier  or  group  of  carriers; 

if the competent authorities  in the host Member State produce evidence that 
the regular service for which the application to perform  cabotage operations 
has  been  submitted  is  aimed  only  at  the  most  lucrative  of  the  services 
existing  on the  links  concerned. 

The  fact  that  an  operator  offers  lower  prices  than  are  offered  by  other  road 
carriers  or  the  fact  that  the  link  in  question  is  already  operated  by  other  road 
carriers  may  not  in  itself  constitute justification  for  rejecting  the  application. 

Paragraph  4(a) of  Article  7 of Regulation  684/92  shall apply,  mutatis  mutandis, 
to applications  for  authorization of cabotage operations  in the form  of the regular 
services  provided  for  in Article  3(2). 

Reasons  must  be  given  for  rejection  of  the  application. 

The  competent  authorities  may  refuse  applications  only  on the  basis  of  reasons 
compatible  with  this  Regulation. 

The  Member  States  shall  guarantee  carriers  an  opportunity  to  defend  their 
interests  in the  event  of  rejection  of  their  application  for  authorization. 

Authorizations  shall be issued in the name of the transport undertaking;  they may 
not  be  transferred  by  the  latter  to  third  parties.  However,  the carrier  who  has 
received the authorization may, with the consent of the competent authority  in the 
host Member  State, operate the service through the only subcontractor  authorized 
to  provide 
in  Article  2(1.1)  of 
Regulation  684/92.  In this case,  the  name and  role of the subcontractor  shall be 
indicated  in the  authorization.  The  subcontractor  must  fulfil  the conditions  laid 
down  in Article  1. 

international 

referred 

service 

the 

to 

In  the  case  of  undertakings  associated  for  the  purpose  of  performing  cabotage 
operations  in the  form  of  a  regular  service,  the  cabotage  authorization  shall  be 
issued  in the  names  of all  the undertakings.  It shall  be given to the  undertaking 
that  manages  the  operation  and  copies  shall  be  given  to  the  others.  The 
authorization  shall  state  the  names  of  all  the  operators. 

16 

3. 

4. 

5. 

6. 

7. 

8. 

The  authorization  shall  be  valid  for  a  maximum  of  five  years  and,  in any  case, 
for  not  longer  than  the  authorization  relating  to  the  international  service  within 
the  framework  of  which  the  cabotage  operation  is carried  out. 

Save  in  the  event  of  force  majeure,  the  operator  of  a  regular  cabotage  service 
shall,  until  the  authorization  expires,  take  all  measures  to guarantee  a transport 
service  that  fulfils  the  standards  of  continuity,  regularity  and  capacity  and  the 
other  conditions  laid down  by the competent  authority  of the host  Member  State 
with regard  to the route of the service,  the bus stops, the timetable and the period 
of validity of the authorization.  These conditions may not be less favourable  than 
the conditions applied to regular  transport  services  provided by resident  carriers. 

The  authorization  or  a  certified  true  copy  thereof  must  be  kept  on  board  the 
vehicle. 

The  Commission  shall,  after  consulting  the Member  States,  lay down the model 
for  applications  for  authorization  of  cabotage  operations  in the  form  of  regular 
services,  the  model  authorization  and  the  way  in which they  are  to be used. 

Article  5 

The  performance  of  the  cabotage  transport  operations  referred  to  in  Article  3 
shall  be  subject,  save  as  otherwise  provided  in  Community  legislation,  to  the 
laws,  regulations and administrative provisions  in force in the host Member State 
in the  following  areas: 

(a) 

rates  and  conditions  governing  the transport  contract; 

(b)  weights  and  dimensions  of  road  vehicles;  such  weights  and  dimensions 
may,  where  appropriate,  exceed  those  applicable  in the carrier's  Member 
State  of  establishment,  but  they  may  under  no  circumstances  exceed  the 
technical  standards  set  out  in the certificate  of  conformity; 

(c) 

requirements  relating  to  the  carriage  of  certain  categories  of  passengers, 
viz.  schoolchildren,  children  and  persons  with reduced  mobility; 

(d) 

driving  and  rest  time; 

(e)  VAT  (value  added  tax)  on  transport  services.  In  this  area  Article  21(la) 
of Council Directive  77/388/EEC  of  17 May  1977 on the harmonization of 
the laws of the Member  States relating  to turnover  taxes  - common system 
of  value  added  tax:  uniform  basis  of  assessment11  - shall  apply  to  the 
services  referred  to  in Article  1 of  this  Regulation; 

OJ No L  145,  13.6.1977, p.  1; Directive  last amended  by Directive  91/680/EEC (OJ No L 376, 
31.12.1991,  p.  1). 

17 

2. 

3. 

4. 

5. 

Save as otherwise provided in Community  legislation, cabotage operations  which 
form  part  of  the  transport  services  provided  for  in Article  3(3)  shall  be  subject 
to the existing laws, regulations and administrative provisions  in force  in the host 
Member  State,  regarding  the routes to be operated  and  the regularity,  continuity 
and  frequency  of  services. 

Any  compensation  for  public  service  obligations  must  be  paid  to  all  the 
Community  operators  concerned. 

The  technical  standards  of  construction  and  equipment  which  must  be  met  by 
vehicles used to carry  out cabotage transport  operations  shall be those  laid  down 
for  vehicles  put  into circulation  in international  transport. 

The national  provisions  referred  to in paragraphs  1 and 2 shall be applied by the 
Member  States to non-resident carriers  on the same conditions  as those  imposed 
on  their  own  nationals,  so  as  effectively  to  prevent  any  open  or  hidden 
discrimination  on grounds  of  nationality  or  place of  establishment. 

If it is established  that,  in the light of experience,  the list of areas covered  by the 
host  Member  State's  provisions,  as  referred  to  in  paragraph  1,  needs  to  be 
amended,  the Council shall do so by a qualified  majority,  in cooperation with the 
European  Parliament,  on a proposal  from  the  Commission. 

Article  6 

The  Member  State  of  establishment  shall  issue  a  certificate  conforming  to  the  model 
adopted  by  the  Commission  after  consulting  the  Member  States  to  carriers  who  apply 
therefor  and  who  satisfy  the conditions  laid down  in Article  1. 

The authority or agency in that Member State with the power to issue the certificate  shall 
also have the power  to withdraw  it,  temporarily  or  definitively,  in particular  as  one of 
the penalties  referred  to in Article  11(4). 

That certificate  or a certified  true copy thereof  shall be kept on board the vehicle and be 
produced  when  requested  by  an authorized  inspecting  officer. 

Article  7 

1. 

Cabotage transport  operations  in the form  of occasional services  shall be carried 
out under  cover  of  a control  document  - the journey  form  - which  must  be kept 
on board the vehicle and be produced when requested by an authorized  inspecting 
officer. 

2. 

The journey  form,  the model for which shall be adopted by the Commission  after 
. consulting  the  Member  States,  shall  comprise  the  following  information: 

(a) 

the  points  of  departure  and  destination  of  the  service; 

(b) 

the date  of  departure  and  the date on  which  the service  ends. 

18 

The journey  forms  shall be supplied  in books certified  by the competent  authority 
or  agency  in  the  Member  State  of  establishment.  The  model  for  the  book  of 
journey  forms  shall  be adopted  by the Commission  after  consulting  the  Member 
States. 

In the case of special  regular  services,  the contract concluded  between the carrier 
and the transport  organizer,  or  a certified  copy of the contract,  shall  serve  as the 
control  document. 

However,  the  journey  form  shall  be  completed  in  the  form  of  a  monthly 
statement. 

The journey  forms  used  shall  be  returned  to the competent  authority  or  agency 
in  the  Member  State  of  establishment  in accordance  with  procedures  to  be  laid 
down  by  the  aforementioned  authority  or  agency. 

Article  8 

At  the  end  of  each  quarter  and  within  three  months,  which  may  be  reduced  by 
the Commission  to one month in the case referred  to in Article  9,  the competent 
authority  or agency  in each Member  State shall communicate to the Commission 
the data concerning cabotage transport operations,  in the form  of  special  regular 
services  and  occasional  services,  carried  out  during  that  quarter  by  resident 
carriers. 

The  communication  shall  be  effected  by  means  of  a  table  conforming  to  the 
model  adopted  by  the  Commission  after  consulting  the Member  States. 

Once  a year  the  competent  authorities  in  the  host  Member  State  shall  send  the 
Commission  statistics  on  the  number  of  authorizations  issued  for  cabotage 
transport operations in the form of the regular services defined  in Article  3(2) and 
(3). 

The  Commission  shall  send  the  Member  States  as  soon  as  possible  summary 
statements  drawn  up  on  the basis  of  the data  submitted  under  paragraph  1. 

Article  9 

In  the  event  of  serious  disturbance  of  the  internal  transport  market  in  a  given 
geographical  area due to or aggravated by cabotage, any Member  State may  refer 
the matter  to the Commission  with a view to the adoption of safeguard  measures 
and shall provide the Commission  with the necessary  information  and notify  it of 
the  measures  it  intends  to take  as  regards  resident  carriers. 

For  the  purposes  of  paragraph  1 : 

"serious disturbance of the internal transport market in a given geographical 
area"  means  the occurrence  on that market of problems  specific  to  it,  such 
that  there  is  a  serious  and  potentially  enduring  excess  of  supply  over 

19 

demand,  implying  a  threat  to  the  financial  stability  and  survival  of  a 
significant  number  of  passenger  transport  undertakings; 

"geographical  area"  means  an  area  comprising  part  or  all  of  the  territory 
of a Member  State or including  part or all of the territory  of other  Member 
States. 

3. 

4. 

The  Commission  shall  examine  the  situation  and,  after  consulting  the  Advisory 
Committee  referred  to  in Article  10,  shall  decide within one month of  receipt of 
the  relevant  Member  State's  request  whether  or  not  safeguard  measures  are 
necessary  and  shall  adopt  them  if  they  are  necessary. 

The measures  introduced  in accordance with this Article shall remain in force  for 
a  period  not exceeding  six  months,  renewable  once  for  the same  period. 

The  Commission  shall  without  delay  notify  the  Member  States  and  the  Council 
of  any  decision  taken  pursuant  to this  paragraph. 

If  the  Commission  decides  to  take  safeguard  measures  concerning  one  or  more 
Member States, the competent authorities of the Member States involved shall be 
required  to take measures  of equivalent  scope  in respect  of resident carriers  and 
shall  inform  the  Commission  thereof. 

These measures  shall be implemented no later than the same date as the safeguard 
measures  decided  on by  the  Commission. 

5. 

Each  Member  State  may  submit  a  Commission  decision  as  referred  to  in 
paragraph  3 to  the Council  within  30 days  of  its  notification. 

The  Council,  acting  by  a  qualified  majority  within  30  days  of  referral  by  a 
Member  State or,  if  there  are  referrals  by  more  than one Member  State,  of  the 
first  referral,  may  take  a different  decision. 

The limits of validity  laid down in the second subparagraph  of paragraph  3 shall 
apply  to  the  Council's  decision. 

The competent authorities of the Member States concerned shall be bound to take 
measures  of equivalent  scope in respect  of  resident  carriers  and shall  inform  the 
Commission  thereof. 

If  the  Council  takes  no  decision  within  the  period  laid  down  in  the  second 
subparagraph,  the Commission  decision  becomes  final. 

6. 

Where  the  Commission  considers-that  the  measures  referred  to  in  paragraph  3 
need  to be prolonged,  it shall submit  a proposal  to the Council,  which shall  take 
a decision  by  qualified  majority. 

Article  10 

20 

The  Commission  shall  be  assisted  by  an  Advisory  Committee  composed  of 
representatives  of the Member States and chaired by a representative  of the Commission. 

The  tasks  of  the  Committee  shall  be  to  advise  the  Commission  on: 

any  request  from  a  Member  State  under  Article  9(1); 

measures  intended  to  resolve  a  serious  disturbance  of  the  market  as  referred  to 
in Article  9,  in particular  on  the  practical  application  of  such  measures. 

The  Committee  shall  draw  up  its  rules  of  procedure. 

1. 

2. 

3. 

4. 

Article 11 

Member  States  shall  assist  one  another  in applying  this  Regulation. 

Without  prejudice  to criminal  prosecution,  the  host  Member  State  may  impose 
penalties  on  non-resident  carriers  who  have  committed  infringements  of  this 
Regulation or of Community or national transport  regulations  within its  territory 
on the occasion  of  a cabotage  transport  operation. 

The penalties  shall  be  imposed  on a non-discriminatory  basis  and  in  accordance 
with paragraph  3. 

The penalties referred  to in paragraph  2 may, inter alia, consist of a warning  or, 
in the event  of  serious  or  repeated  infringements,  a  temporary  ban on  cabotage 
transport  operations  within  the  territory  of  the  host  Member  State  where  the 
infringement  was  committed. 

Where  a  falsified  certificate,  falsified  authorization  or  falsified  certified  copy 
thereof  is produced,  the falsified  document  shall be withdrawn  immediately  and, 
where  appropriate,  forwarded  as  soon  as  possible  to the competent  authority  of 
the carrier's  Member  State of  establishment. 

The  competent  authorities  of  the  host  Member  State shall  inform  the  competent 
authorities  of  the  Member  State  of establishment  of  the  infringements  recorded 
and  any  penalties  imposed  on  the  carrier  and  may,  in  the  event  of  serious  or 
repeated  infringements,  at  the  same  time  transmit  a  request  that  a  penalty  be 
imposed. 

In the event of serious or repeated infringements,  the competent authorities of the 
Member State of establishment shall decide whether an appropriate penalty should 
be imposed on the carrier concerned;  these authorities shall take into account any 
penalty  already  imposed  in the  host  Member  State and ensure  that  the  penalties 
already  imposed  on  the  carrier  concerned  are,  as  a  whole,  proportional  to  the 
infringement  or  infringements  which  gave  rise  to  such  penalties. 

21 

The  penalty  imposed  by  the  competent  authorities  of  the  Member  State  of 
establishment,  after  consulting  the  competent  authorities  of  the  host  Member 
State, may extend  to withdrawal of authorization to pursue the occupation of road 
passenger  transport  operator. 

The  competent  authorities  of  the  Member  State  of  establishment  may  also, 
pursuant  to  its  national  law,  arraign  the  carrier  concerned  before  a  competent 
national  court  or  tribunal. 

They  shall  inform  the  competent  authorities  of  the  host  Member  State  of  the 
decisions  taken  pursuant  to this  paragraph. 

Article 12 

Member  States  shall  ensure  that carriers  may appeal  against  any  administrative  penalty 
imposed  on  them. 

Article  13 

The Commission shall report to the Council before 31 December  1999 on the application 
of this  Regulation  and,  in particular,  on the impact of cabotage transport  operations  on 
national  transport  markets. 

Article  14 

Member  States  shall  adopt  in good  time and communicate  to the Commission  the laws, 
regulations  and  administrative  provisions  relating  to  the  implementation  of  this 
Regulation. 

Article  15 

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

It  shall  apply  from  1 January  1996. 

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

Done  at  Brussels, 

For  the  Council 
The  President 

22 

IMPACT  ASSESSMENT  FORM 

THE  IMPACT  OF  THE  PROPOSAL  ON  BUSINESS  WITH 
SPECIAL  REFERENCE  TO  SMALL  AND 
MEDIUM-SIZED  ENTERPRISES  (SMEs) 

Title  of  proposal: 

Council  Regulation  laying  down  the  conditions  under  which  non-resident  carriers  may 
operate  national  road  passenger  transport  services  within  a Member  State. 

The  proposal 

1. 

Taking  account  of  the  principle  of  subsidiarity,  why  is  Community  legislation 
necessary  in this  area  and  what are  the main  aims? 

This Community  legislation  is based  on Article  75(l)(b) of the Treaty.  This  confers  on 
the  Community  exclusive  powers  to  define  the  conditions  under  which  non-resident 
carriers  may operate transport  services within a Member  State.  In addition, the  internal 
market has established  the principle of the freedom  to provide services which, in the case 
of  transport,  implies  ending  all  discrimination  against  providers  of  services  on  the 
grounds  of  their  nationality  or  place  of  establishment. 

Also,  the proposal  will  replace  Council Regulation  No 2454/92  of 23 July  1992  laying 
down  the  conditions  under  which  non-resident  carriers  may  operate  national  road 
passenger  transport  services  within a Member State, which the Court of Justice  annulled 
on  1 June  1994  following  a fault  in the procedure. 

Nevertheless  the  new  proposal  has  been  updated  to  take  full  account  of  the  progress 
made  in  the  transport  sector  since  the  establishment  of  the  internal  market. 
In  this 
context,  the  new  proposal  incorporates  most  of  the  clauses  in  Regulation  2454/92  but 
also  removes  certain  restrictions  maintained  by  Regulation 2454/92  on  special  regular 
services  and  introduces  cabotage  in regular  services,  subject  to certain  conditions. 

The, impact  on  business 

2. 

Who  will  be  affected  by  the  proposal? 

Which  sectors  of  business? 
Operators  of road passenger services for hire or reward admitted in their Member 
States  of establishment  to the occupation of  road passenger  transport  operator  in 
international  transport. 
Will  the  proposal  affect  SMEs  more  than big  businesses? 
The  proposal  will  affect  all  businesses,  irrespective  of  their  size.  That  said,  it 
must  be added  that approximately  80%  of  road  transport  undertakings  are  small 
firms. 
Are there particular  geographical areas of the Community where these businesses 
are  found? 

23 

The  proportion  of  small  businesses  is  relatively  high  in  the  southern  Member 
States. 

3. 

What  will  business have to do  to  comply  with the  proposal? 

Nothing 

4. 

What  economic  effects  is the  proposal  likely  to  have? 

On  employment? 
Cabotage  opens  up  new  opportunities  for  coach  services  and  will  lay  the 
foundation  for  the  creation  of  new jobs  in this  industry  in the medium  term. 
On  investment  and  the creation  of  new  businesses? 
The undertakings concerned  will  be able to benefit  from  the internal  market,  the 
European  Economic  Area  and  a  travelling  public  of  370 million  citizens.  This 
large market will inevitably require new investment by existing undertakings and 
the  creation  of  other  new undertakings  in the  coach transport  sector. 
On the  competitive  position  of  businesses? 
The introduction of cabotage will open up the various national passenger transport 
markets in the European Union and the European Economic Area to non-resident 
undertakings.  As a result, these  will  be  able to offer  their  services wherever  the 
opportunities  arise.  A  single  market  of  370 million  citizens  will  undeniably 
enhance  the  competitiveness  of  the  undertakings  concerned  but  also  benefit 
European  citizens,  wherever  they  live, since  greater  competition  will  offer  them 
a  wider  choice  of means of  transport. 

5. 

Does  the  proposal  contain  measures  to  take  account  of  the  specific  situation  of 
small  and  medium-sized  firms  (reduced  or  different  requirements,  etc.)? 

No. 

Consultation 

6. 

List  the organizations  which have  been consulted  about the proposal  and  outline 
their  main  views 

Since  the proposal  will  replace  Council  Regulation No  2454/92  of 23 July  1992 
laying down the conditions under which non-resident carriers may operate national 
road  passenger  transport  services  within  a  Member  State,  which  the  Court  of 
Justice  annulled  on  1 June  1994 because  of a fault  in the procedure,  and  since  it 
incorporates  virtually  all the provisions  of that Regulation,  there was no need  to 
consult  the trade  associations. 

24 

ISSN 0254-1475 

COM(95) 729  final 

DOCUMENTS 

EN 

07  06 

Catalogue number  :  CB-C0-95-763-EN-C 

ISBN 92-77-98702-2 

Office for Official  Publications of the European Communities 

L-2985 Luxembourg