Proposal for a Council Regulation (EC) creating a mechanism whereby the Commission can intervene in order to remove certain obstacles to trade
Date: 1997-11-18
Institutions: European Commission
Subjects: EU action, EU law, free movement of goods, liberalisation of trade, trade restriction

COMMISSION OF THE EUROPEAN COMMUNITIES 

•ù 

-ù 

Brussels, 18.11.1997 
COM(97) 619  final 

97/0330 (CNS) 

Proposal for a 
COUNCIL REGULATION (EC) 
creating a mechanism whereby the Commission can intervene 
in order to remove certain obstacles to trade 

(presented by the Commission) 

p\ 

t'iW 

IX 

! , * 

EXPLANATORY  MEMORANDUM 

I.  GENERAL 

Background 

A  Breaches of the principle of free movement of goods 

1  The  free  rnovement  of  goods  is  one  of  the  fundamental  principles  of  the 
European Community; it is contained in Article 7a of the treaty  and is guaranteed in 
particular by Member States' compliance with Articles 30 to 36 of the Treaty 

Both  citizens  and  businesses  can  see  the  resulting  benefits  every  day  But  they  are 
also  particularly  sensitive  to  the  malfunctions  which  may  subsist  or  suddenly 
become apparent. 

2  Various  examples  have  shown  that  there  can  be  grave  breaches  of the  principle  of 
free movement  of goods  Such  infringements  may take  a  variety  of  forms,  but  the 
most  spectacular  are  certainly  the  abrupt  and  unjustified  prohibition  on  imports  of 
products from other Member States, or the prevention of such products from moving 
or even their destruction  Infringements may seriously disrupt the proper  functioning 
of the  internal  market  and  inflict  indisputable  damage on businesses, which  must  be 
rectified  as soon as possible. 

The  Community  must  have  an  effective  means  of  dealing  with  such  serious 
infringements,  if  it  is  not  to  be  criticized  for  failing  to  ensure  real  protection  for 
the rights  of  individuals  and  allowing  one  of  the  fundamental  principles  of  the 
Community  to  be  endangered.  But  the  present  means  of  action  do  not  necessarily 
enable  certain  recurrent  breaches  of  Community  law  to  be  rectified  with  the 
requisite speed. 

B.  The means of action which exist at Community level 

3.  The  present  methods  of  dealing  with  breaches  of  Community  law  fall  into 
two categories:  (i)  individuals  may  enforce  their  rights  before  the  national  courts, 
and (ii) the  Commission  and/or  a  Member State  may  bring  an  action  before  the 
Court of Justice under the infringements  proceedings  (failure  to  fulfil  an  obligation) 
(Articles  169 and 170). 

Despite the fact that the Commission  encourages action before  the national courts, it 
has to acknowledge the large number of complaints which it receives itself and which 
request  it to initiate infringement  proceedings. Individuals are therefore  continuing to 
use  their  legitimate  right  of  reporting  infringements  of  Community  law  which  are 
detrimental ÏO them. 

The procedure establishing failure  to fulfil  an obligation  consists of two  phases,  first 
the  pre-Htigation  procedure  (letter  of  formal  warning  and  Reasoned  Opinion),  and 
second  the  litigation  process  (action  and  proceedings  before  the  Court).  The 
procedure  may  be  lengthy,  before  the  Court  of  Justice  judgment  establishing  the 
failure to fulfil  obligation is delivered. 

C.  The request of the Amsterdam European Council 

4.  At  its  meeting  on  16 and 17  June,  the  Amsterdam  European  Council,  in  its 
conclusions  on  the  action  plan  for  the  single  market,  requested  the  Commission 
"to examine  ways  and  means  of  guaranteeing  in  an  effective  manner  the  free 
movement  of  goods"  including  the  possibility  of  imposing  sanctions  on  the 
Member States,  and  to  "submit  relevant  proposals  before  its  next  meeting  in 
December  1997". The present proposal is a response to these terms of reference, but 
the  Commission  has  ensured  that  it  can  be  adapted,  if  necessary  and  at  the 
appropriate time, to the other freedoms of the internal market,  and to other fields of 
Community law. 

Proposal for a Regulation creating a Commission intervention  mechanism 

5.  While  the  acceleration  of  the  Commission's  internal  treatment  of  the  Article  169 
pre-litigation procedure is an appreciable improvement, and even if Article  186 of the 
Treaty is applied, the application for a declaration  in infringement  proceedings is still 
unsuitable  for  reacting  efficiently  to  certain  serious breaches  of the  principle  of the 
free movement  of goods which need  to  be rectified  urgently.  The litigation  process 
remains  lengthy,  with  a  minimum  of  two  years  elapsing  before  the  judgment 
establishing  the  infringement  is  delivered.  In  the  intervening  period,  no  legally 
binding instrument  will be available particularly to  help economic  operators  enforce 
their rights quickly  and  effectively  as  part  of the  means  of redress  provided  by the 
Member States. 

The  Commission  is  therefore  proposing  the  adoption  of  a  Regulation  creating  a 
specific  Commission  intervention  mechanism  so  that  certain  obstacles  to  the  free 
movement of goods are rectified  rapidly. 

6.  Under this mechanism, the Commission would request the Member State concerned, 
by means of a decision, to take the measures necessary to bring to an end a clear and 
unmistakable  obstacle  to  the  free  movement  of  goods  within  the  meaning  of 
Articles 30  to 36  of  the  Treaty.  The  power  given  to  the  Commission  would  be 
confined  to certain cases for which rapid action is necessary. 

The  creation  of  such  a mechanism  would  bring  clear  advantages  as compared  with 
the present situation. A Decision taken by the Commission would produce immediate 
legal effects  for individuals in the national legal systems. 

Unlike the Reasoned  Opinion in the  Article  169 procedure,  which  is only  one phase 
in the process in which the Court  of Justice is required  to  establish  an  infringement, 
individuals  could  have the  Decision  rapidly  enforced  before  the national  courts  and 
could,  under  the  ways  and  means  of  national  redress,  obtain  provisional  measures, 
combined  with penalty payments or fines, to prevent extension  or aggravation  of the 
obstacle,  to  end  the  alleged  infringement  and,  if  appropriate,  achieve  compensation 
for the loss  suffered. 

The Commission considers that the Decision it takes will therefore  constitute a useful 
basis  which  individuals  can  invoke  in  their  national  legal  systems  so  that  effective, 
proportionate and deterrent  sanctions can be imposed. The advantage of creating this 
mechanism  will  be  that  it  encourages  individuals  to  bring  actions  before  the 

national courts  by  giving  them  the  means  to  obtain  sanctions  rapidly  and  at  the 
appropriate time. 

7.  Where  the  Member  State  concerned  does  not  comply  with  the  Commission's 
decision,  an 
in  line  with  the  second  part  of  the 
Amsterdam Mandate,  could  be  envisaged,  which  would  take  the  form  of  penalty 
payments  or fines to  be  established  by the  Commission  at the  end  of the  period  laid 
down for compliance with the Commission Decision. 

intervention  mechanism, 

8. 

9. 

However,  it  was  considered  inappropriate  to  go  any  further  as  of  now  in  this 
direction,  since  a  penalty  payment  intervention  mechanism  of  this  type  would 
constitute a first in Community law which needs to be examined in greater depth. 

It  was,  therefore,  judged  preferable  to  use  as  an  example  the  procedure  set  out  in 
the Treaty  regarding  State  aids  (Article 93),  the  first  part  of  which  is  a  decision 
with effects  similar  to  those  in  the  decision  provided  for  in  the  proposal  for  a 
régulation.  The  second  part  consists  of  an  accelerated  procedure  for  referral  to  the 
Court of Justice, facilitated by the removal of the pre-contentious  stage. 

In  this  perspective,  the  present  proposal  envisages  that,  where  the  Member  State 
does  not  comply  with  the  Commission's  decision  within  the  given  period, 
immediately  refer  the  matter  to  the  Court  of  Justice 
the Commission  will 
under Article  169  of  the  EC  Treaty  within  the  very  short  deadlines  set  out  in 
the Regulation. 

10.  In  deciding  to  propose  the  creation  of  a  specific  intervention  mechanism,  the 
Commission  has  taken  into  consideration,  in  addition  to  the  terms  of  reference  laid 
down by the Amsterdam  European Council, the following points: 

(a) 

the  fact  that  the  intervention  mechanism  should  apply  only  to  very  specific 
situations; it is therefore  limited  to  serious  infringements  of the  free  movement 
of goods, which can cause the Commission to intervene; 

(b)  the expectations of individuals  and in particular  of businesses:  given the  gravity 
of the obstacles  to  trade concerned,  these  individuals  suffer  very  serious  losses 
which  require  the  European  Community  and  the  Member States  to  take  the 
necessary measures; 

(c) 

the fact that Community law does not  provide appropriate means for  putting an 
end  to  certain  types  of  obstacles  to  the  free  movement  of  goods  with  the 
effectiveness  and urgency required; 

(d) 

the safeguarding of the institutional balance established by the Treaty. 

Legal  basis 

11.  Conferring  on  the  Commission  the  power  tô  take  a  Decision  requesting  a 
Member State to take rapid and appropriate measures to  remove an obstacle  to  trade 
is necessary  if one  of  the  objectives  of  the  Community  is  to  be  attained,  namely  the 
free  movement  of  goods,  as  contained  in  Article 7a  of  the  Treaty  and  therefore 
the proper  functioning  of  the  internal  market.  However,  the  procedures  provided 
under Articles  169 and  186 of the Treaty are not suitable for removing this obstacle in 
due time. 

4 

Besides,  conferral  of  this  power  is  not,  directly  or  indirectly,  associated  with 
harmonization, within the meaning of Article 100a of the Treaty. The purpose of the 
Regulation  is action  by the  Commission  which does not  call into  question  the laws, 
regulations and administrative provisions of the Member States as such. 

Accordingly,  since  the  Treaty  has  not  provided  the  powers  of  action  so  that  the 
Commission is given such a right of intervention,  the Commission  considers that  the 
only appropriate legal basis for this purpose would be Article 235. 

The proposal takes the form of a Regulation. 

11.  JUSTIFICATION  FOR  THE  PROPOSAL  IN  THE  LIGHT  OF  THE 

PRINCIPLE OF PRpPORTIONALITY 

What are the objectives of the proposed  measure  in  relation  to the  obligations 
incumbent on the Community? 

12.  The objectives  of the  measure  are to  ensure  rapid  restoration  of the free movement 
of  goods  when  it  is  impeded  in  such  a  way  as  to  seriously  disrupt  the  proper 
functioning  of  the  internal  market.  This  measure  is  in  keeping  with  the  strategic 
objective of guaranteeing the advantages of the internal market and its cohesion 

Does  the  proposed  measure  fall  within 
competence or within a field of competence shared with the Member States? 

the  Community's  sole  field  of 

13.  The  measure  in  question  falls  within  the  Community's  sole  field  of  competence: 

compliance with the principle of the free movement of goods. 

Are the means of Community  intervention  proportionate to the objectives? 

14.  Yes, since the proposed instrument is confined  to clear and unmistakable obstacles to 
the free  movement  of goods, within the  meaning of Articles 30 to 36 of the  Treaty, 
which seriously disrupt the functioning  of the internal market, inflict  serious losses on 
businesses  and  require  immediate  intervention.  These  are  consequently  special 
situations  to  which  the  appropriate  response  is  specific  means  of  action  The 
proportionality of the proposed mechanism is therefore based essentially on the speed 
and the binding force  of the Commission's intervention  in response to the  situations 
described above. 

III.  EXAMINATION  OF THE PROVISIONS OF THE  PROPOSAL 

Article 1 

15.  This Article restrictively defines the scope of the proposed  Regulation. 

The Regulation  applies only to obstacles to the free movement  of goods,  within  the 
meaning  of  Articles 30 to 36  of  the  Treaty,  and  does  so  under  the  application  of 
primary and secondary legislation. 

The obstacles must originate in an act or failure to act of a Member State. Failure to 
act exists when the Member State concerned  refrains from implementing any general 
or particular  measure, necessary  and proportionate  to  stop  actions taken  by  private 
individuals.  It  is  clear  that  the  evaluation  of  cases  of  inaction  does  not  affect  the 
exercise of fundamental rights, recognized in national legal systems, such as the right 
to strike, rights which are not  as such affected  by Community law. In its evaluation, 
and,  case  by  case,  the  Commission  will  assess  whether  the  Member  State 
has implemented the measures available to it under  its legal  system for  safeguarding 
the  free  movement  of  goods  without  affecting 
the  exercise  of  fundamental 
rights concerned. 

Three cumulative conditions must also exist: 

- 

- 

the existence of a grave disruption of the free movement of goods; 

this disruption must Cause serious loss to the individuals  affected; 

-  and lastly, immediate intervention is required in order to prevent any continuation, 

extension or aggravation of the disruption or loss. 

16.  The most  typical  cases of the type  of obstacle covered  by the  Regulation  might  be 

the following: 

• 

the untimely and unjustified  prohibition on the importation of products from  other 
Member States; 

•  measures abruptly introducing or reintroducing import formalities,  e.g.  permits or 

technical certificates; 

• 

• 

the  destruction  of  large  quantities  of  products  from  other  Member States  for 
example, on the roads, in shopping centres or in warehouses; 

the prevention of products from moving so that  they are unable to gain  access to 
the national territory or to move on that territory: for example, blocking of means 
of transport at borders, on motorways, in ports or in airports. 

Article 2 

17.  Article 2  describes  the  principle  of  the  Commission  intervention  mechanism.  This 

mechanism is based on: 

(a) 

the  Commission  establishing  the  existence  of  obstacles  to  trade  which  satisfy 
the conditions in Article 1  of the draft  Regulation; 

(b) 

the Commission taking a Decision with binding legal  effects. 

(c) 

the Member States being obliged to take necessary  and proportionate  measures 
within a time-limit fixed by the Commission. 

Article 2 contains  an  obligation  for  the  Commission  to  take  a  Decision  once  it  has 
established  the  existence  of  an  obstacle  to  trade  which  satisfies  the  conditions  in 
Article 1  of the draft  Regulation. 

18.  The Commission Decision  produces  immediate  legally  binding  effects  In the  national 
legal  system.  The  individuals  affected  by  the  obstacle  concerned  will  be  able  to 
invoke  the  Decision  rapidly  before  the  national  authorities  responsible,  in  particular 
the courts. 

They will  thus be  able to  obtain,  within the ways  and means  of the  national  redress, 
provisional  measures  couriled,  if  appropriate,  with  penalty  payments  or  fines,  to 
prevent any extension or aggravation of the consequences  of the obstacle  concerned, 
to remove the obstacle, or to achieve compensation for the loss  suffered. 

19.  Since  this is  a  Decision  under  Article  189  of  the  Treaty,  proceedings  for  annulment 

will be possible under Article  173. 

Similarly  the  powers  of  the  Court  of  Justice  defined  by  Article  169  are  fully 
respected;  under  Article 2  of  the  draft  Regulation,  the  Commission's  intervention  is 
conceived  as  a mechanism  to  be  implemented  outside  the  infringement  proceedings 
(establishing failure to fulfil  an obligation) provided for in Article  169. 

Article 3 

20.  Article 3  describes  the  procedure  that  the  Commission  must  follow  to  take 

the Decision. 

The rights of  defence  of  the Member State  concerned  will  be  respected  in  so  far  as 
the Commission has to give it an opportunity to make known its point of view  before 
it  takes  the  Decision.  To  this  end,  any  means  may  be  used,  including  bilateral 
meetings with the Commission. 

In  view  of  the  criteria  of  urgency  and  efficacy  which  typify  the  intervention 
mechanism  laid  down  by  the  draft  Regulation,  binding  time-limits  for  action  or 
reaction are laid down for both the Member State concerned and the Commission. 

Article 4 

21.  Article 4  lays  down  the  extremely  short  and  strict  time-limits  after  which,  if  the 
Member State does not  comply  with the Commission  Decision  within the period  laid 
down,  the  Commission  can  refer  the  matter  rapidly  to  the  Court  of  Justice.  Such 
referral  will  have  to  take  place  in  accordance  with  the  conditions  laid  down  in 
Article  169 of the Treaty. 

Articles 5 and 6 

22.  Article 5  defines  the  obligation  for  the  Commission  to  publish  the  Decision  that 
it takes  under  Article 2  and  to  transmit  the  text  to  any  interested  parties  which 
so request. 

Article 6 lays down the date on which the Regulation enters into force. 

Proposal for a 
COUNCIL REGULATION (EC) 
creating a mechanism whereby the Commission can intervene 
in order to remove certain obstacles to trade 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 235 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

1.  Whereas  in  its  conclusions  the  Amsterdam  European  Council  of  16  and 
17 June 1997 invited  the  Commission to  examine ways and  means of  guaranteeing 
in  an  effective  manner  the  free  movement  of  goods,  including  the  possibility  of 
imposing sanctions and requested the Commission to submit relevant proposals; 

2  Whereas as provided  for  in Article 7a of the Treaty, the Internal Market  comprises 
an area without internal frontiers  in which, in particular, the free movement of goods 
is ensured in accordance with the provisions of Articles 30 to 36 of the Treaty; 

3.  Whereas breaches of this principle, such as occur when products originating in other 
Member  States  are  prevented  from  moving  or  destroyed,  or  their  importation 
abruptly  suspended  without justification,  may cause  grave  disruption  to  the  proper 
pperation  of  the  Internal  Market  and  inflict  very  serious  losses  on  the  individuals 
affected,  while the  procedures  provided  under  Articles  169 and  186 of the  Treaty 
are not capable of ensuring that such breaches are remedied in due time; 

4.  Whereas  such breaches may result  not  only from the  action  but  also from inaction 
on  the  part  of  a  Member  S(ate;  whereas  this  is the  case,  in  particular,  where  the 
action is taken by private individuals and the Member  State  fails  to  implement  any 
necessary  and  proportionate  measure  available  to  it  for  safeguarding  the  free 
movement of goods without  affecting  the exercise of fundamental rights recognized 
under national law; 

5.  Whereas, in the absence of immediate intervention, there is a risk that the disruption 
or  loss  in  question  will  continue,  increase  or  intensify;  whereas  there  may  be  a 
breakdown in trade and the contractual relations which underlie it; 

6.  Whereas, in addition,  this type of situation  may call into question  the  achievements 

and the credibility of the Internal Market; 

1  OJC 
2  OJC 

7.  Whereas  Community  law  offers  no  adequate  means  for  putting  an  end  to  such 
obstacles with the necessary efficiency  and urgency and whereas injured parties have 
no appropriate instrument to rely on in defending their  rights; 

8.  Whereas  the  Commission  should  be  able  to  intervene  with  the  Member  State 
concerned  by  way  of  decision  in  order  that  it  speedily  and  effectively  corrects 
the aforementibned  breaches  of  the  principle  of  free  movement  of  goods,  and 
individuals can defend their rights within the national legal system; 

9.  Whereas,  if  the  Member  State  concerned  fails  to  comply  with  its  decision,  the 
Commission should be in a position  speedily to refer the case to the Court of Justice 
pursuant to Article  169 of the Treaty, whereas, to this end, strict time-limits must be 
provided for the pre-litigation phase of the procedure; 

10.  Whereas  the  Treaty  provides  for  no  powers,  other than those  in Article 235  of  the 

Treaty, for the adoption of this Regulation, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

This  Regulation  shall  apply  to  clear,  unmistakable  and  unjustified  obstacles  to  the 
free  movement  of  goods,  within  the  meaning  of  Articles  30  to  36  of  the  Treaty, 
originating in an action or inaction on the part of a Member State, which: 

lead to serious disruption of the free movement  of goods; and 

cause serious loss to the individuals affected; and 

require  immediate  action  in  order  to  prevent  any  continuation,  increase  or 
intensification  of the disruption or loss in question. 

2. 

Inaction  within the  meaning  of this Regulation  exists  when  a Member  State,  in the 
presence  of  actions  taken  by  private  individuals,  fails  to  implement  any  necessary 
and  proportionate  measure  available  to  it  for  safeguarding  the  free  movement  of 
goods  without  adversely  affecting  the  exercise  of  fundamental  rights  recognized 
under national law. 

Article 2 

Where the Commission establishes the existence in a Member State of obstacles within the 
meaning  of  Article  1,  it  shall  address  a decision  to  the Member  State  directing  it  to  take 
the  necessary  and  proportionate  measures  to  remove  the  said  obstacles,  within  a  period 
which it shall fix. 

Article 3 
r 

1. 

The Commission  shall  open the procedure provided  for  in this Article not  later than 
five  days  following  the  day  on  which  it  becomes  fully  apprised  of  all  the  facts 
concerning the obstacles. 

2.  Before  adopting  the  decision  provided  for  in  Article  2,  the  Commission  shall  give 
the Member State concerned an opportunity to make known its point of view within 
a period which it shall fix with reference to  the urgency of the case, and which shall 
in any event comprise between three and five working days from the day on which 
the Commission raises the issue with that Member State. 

3. 

The Commission shall adopt the decision referred  to in Article 2 as soon as possible 
and  not  later  than  ten  days  following  the  expiry  of  the  period  provided  for  in 
paragraph 2. 

Article 4 

1.  Where  a  Member  State  to  which  a  decision  is  addressed  fails  to  comply  with  it 
withjn  the prescribed  period,  the Commission  shall  immediately  put  it  on  notice  to 
submit its observations within three days. 

2.  Where the obstacle continues after  the expiry of the period  of three days mentioned 
in paragraph  1, the Commission  shall immediately issue a Reasoned Opinion calling 
upon the Member State to comply with it within three days. 

3.  Where, by the end of the period  referred  to in paragraph  2, the  Member  State has 
not complied with the Reasoned Opinion, the Commission may institute proceedings 
before the Court of Justice. 

Article 5 

The  Commission  shall  publish  in  the  Official Journal of  the  European  Communities 
decisions which it adopts pursuant to  Article 2 and shall immediately transmit  the text  to 
any interested party which so requests. 

Article 6 

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

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

Done at Brussels, 

For the Council 
The President 

10 

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