Communication from the Commission to the Council, the European Parliament and the European Central Bank - Application to financial services of article 3(4) to (6) of the electronic commerce directive
Date: 2003-05-14
Institutions: European Commission
Subjects: derogation from EU law, electronic commerce, financial market, freedom to provide services

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.5.2003
COM(2003) 259 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE
EUROPEAN PARLIAMENT AND THE EUROPEAN CENTRAL BANK

APPLICATION TO FINANCIAL SERVICES OF ARTICLE 3(4) TO (6) OF
THE ELECTRONIC COMMERCE DIRECTIVE

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE
EUROPEAN PARLIAMENT AND THE EUROPEAN CENTRAL BANK

APPLICATION TO FINANCIAL SERVICES OF ARTICLE 3(4) TO (6) OF
THE ELECTRONIC COMMERCE DIRECTIVE

1.

INTRODUCTION

The purpose of this communication is to describe the mechanisms introduced in the specific
area of financial services by Article 3(4) to (6) of the Electronic Commerce Directive.1

In  the  case  of  financial  services,  the  communication  is  justified  by  the  fact  that,  since  the
adoption of the Electronic Commerce Directive and, in particular, during the negotiations on
the Directive on the  distance  selling  of  financial  services,  a  number  of  Member States  have
expressed misgivings regarding full application of the "internal market" clause in the area of
financial services. They have taken the view that, pending closer convergence in certain areas
(such as the rules of conduct for investment services or non-harmonised funds), they should
still be able to impose some of their rules on input services provided electronically despite the
existence  of  the  Electronic  Commerce  Directive.  A  transitional  period  of  this  kind,  which
would  have  been  tantamount  to  an  albeit  temporary  derogation  from  the  Directive,  was
rejected by the Commission and by a majority of the Member States.

The  Commission  had  stressed  at  the  time  that  Article 3(4),  (5)  and  (6)  of  the  Electronic
Commerce  Directive  provides  sufficient  safeguards  for  Member States  wishing  to  take
measures  on  a  case-by-case  basis  against  a  service  provider  that  is  prejudicing  one  of  the
objectives  of  general  interest  specified  in  Article 3(4)(a)(i)  of  the  Directive  or  presenting  a
serious risk of prejudice to such an objective.

This communication sets out to provide assistance to Member States who may  wish to avail
themselves of these mechanisms. In no way does it constitute an interpretative document. Nor
does it systematically cover all the aspects of Article 3(4) to (6) of the Directive, addressing
only those aspects where the Commission has noted that there is a need for some explanation
and assistance.

This  communication  does  not  impose  any  legal  obligation  on  Member States.  It  does  not
prejudge  the  position  that  the  Commission  might  decide  to  take  on  the  same  matters  if
developments, including Court rulings, were to lead it to revise some of the views expressed
here.

Together with the Member States, the Commission will also continue to identify the areas in
which  closer  convergence  of  national  rules  might  be  necessary.  In  this  connection,  it  will
examine the harmonisation needs in certain sectors where it transpired that national rules still
diverged,  creating  potential  problems  for  the  free  movement  of  services  and  consumer
protection (e.g. in the case of certain non-harmonised investment funds).

The Commission is aware of the fact that not all the rulings referred to in this Communication
are  related  to  the  area  of  financial  services  and  that  none  refer  to  disputes  concerning
electronic  commerce.  Nevertheless,  on  the  basis  that  the  Court  of  Justice  regularly  works

1

European Parliament and Council Directive 2000/31/EC of 8 June 2000 (OJ L 178, 17.7.2000, p. 1).

2

                                                
according to analogies and strictly speaking has no “sectoral” case law, the Commission is of
the opinion that it is both possible and accurate to base the following analysis on existing case
law.

However it certainly cannot be ruled out that the Court will develop case law in the specific
area of E-Commerce. Such case law could confirm or contradict existing case law. This risk is
inherent in the current exercise.

2.

ANALYSIS OF ARTICLE 3(4) TO (6)

The  Electronic  Commerce  Directive  stipulates  that  each  Member State  must  ensure  that  the
information society services provided by a service provider established on its territory comply
with the national provisions applicable in the Member State in question which fall within the
coordinated field.

It also stipulates that Member States may not, for reasons falling within the coordinated field,
restrict the freedom to provide information society services from another Member State

(cid:1) 

However, it lays down certain derogations.

First, the annex to the Directive contains a number of derogations from the "internal market"
clause. These derogations reproduce a number of the provisions laid down  in the Directives
on  insurance,2  advertising  in  the  case  of  UCITS3  and  the  issue  of  electronic  money  by
institutions not in possession of a European passport.4

Second, there are a number of other general derogations that could be particularly relevant to
financial services.  They  relate  to  the  freedom  of  the  parties  to  choose  the  law  applicable  to
their contract, the contractual obligations set out in contracts concluded with consumers, etc.

Lastly, Article 3(4), (5) and (6) of the Directive allows Member States to take measures such
as  sanctions  or  injunctions  that  may  restrict  the  provision  of  on-line  services  from  other
Member States. These measures are subject to strict conditions.

2

3

4

Article  30  and  Title  IV  of  Directive  92/49/EEC  (OJ  L  311,  14.11.1997,  p.  42),  Title  IV  of
Directive 92/96/EEC  (OJ  L  311,  14.11.1997,  p.  43),  Articles  7  and  8  of  Directive  88/357/EEC
(OJ L 172, 4.7.1988, p. 1) and Article 4 of Directive 90/619/EEC (OJ L 330, 29.11.1990, pp. 50-61).
Article 44(2) of Directive 85/611/EEC (OJ L 375, 31.12.1985, pp. 3-18).
Institutions  in  respect  of  which  Member  States  have  applied  one  of  the  derogations  provided  for  in
Article 8(1) of Directive 2000/46/EC (OJ L 275, 27.10.2000, pp. 39-43).

3

                                                
The relevant provisions of the Directive read as follows:

Member States may take measures to derogate from paragraph 2 in respect of a given

"4.
information society service if the following conditions are fulfilled:

(a)

(i)

the measures shall be:

necessary for one of the following reasons:

-  public  policy,  in  particular  the  prevention,  investigation,  detection  and  prosecution  of
criminal offences, including the protection of minors and the fight against any incitement to
hatred  on  grounds  of  race,  sex,  religion  or  nationality,  and  violations  of  human  dignity
concerning individual persons,

- the protection of public health,

- public security, including the safeguarding of national security and defence,

- the protection of consumers, including investors;

(ii)
taken  against  a  given  information  society  service  which  prejudices  the  objectives
referred  to  in  point  (i)  or  which  presents  a  serious  and  grave  risk  of  prejudice  to  those
objectives;

(iii)

proportionate to those objectives;

(b)
before  taking  the  measures  in  question  and  without  prejudice  to  court  proceedings,
including  preliminary  proceedings  and  acts  carried  out  in  the  framework  of  a  criminal
investigation, the Member State has:

- asked the Member State referred to in paragraph 1 to take measures and the latter did not
take such measures, or they were inadequate,

- notified the Commission and the Member State referred to in paragraph 1 of its intention to
take such measures.

5.
Member States may, in the case of urgency, derogate from the conditions stipulated in
paragraph 4(b). Where this is the case, the measures shall be notified in the shortest possible
time to the Commission and to the Member State referred to in paragraph  1, indicating  the
reasons for which the Member State considers that there is urgency.

6.
Without prejudice to the Member State's possibility of proceeding with the measures in
question,  the  Commission  shall  examine  the  compatibility  of  the  notified  measures  with
Community  law  in  the  shortest  possible  time;  where  it  comes  to  the  conclusion  that  the
measure is incompatible with Community law, the Commission shall ask the Member State in
question  to  refrain  from  taking  any  proposed  measures  or  urgently  to  put  an  end  to  the
measures in question."

4

2.1.

ANALYSIS OF ARTICLE 3(4)

2.1.1.

Areas covered by Article 3(4)

Article 3(4) does not cover all the reasons identified by the Court in the context of Articles 49
and 28 of the Treaty as justifying a restriction on the ground of defending the general interest.
Except  for  the  grounds  stipulated  in  Article 46  of  the  Treaty  (public  policy,  public  security
and public health), it identifies only one of the objectives that could, according to the Court,
justify  infringements  of  the  free  movement  of  services.  This  objective  is  the  protection  of
consumers, including investors.

The exhaustive nature of this list means that some of the objectives recognised by the Court as
being in  the  general  interest, such as protecting  the  good reputation of  the financial sector,5
cannot provide justification for measures taken under Article 34, except in cases where such
measures are purportedly designed to protect the consumer.

2.1.2. Concept of "given information society service"

A "given" service is taken to mean here that the Member State of destination may not, under
Article 3(4),  take  general  measures  in  respect  of  a  category  of  financial  services  such  as
investment funds or loans.

To be covered by Article 3(4), the measure must, therefore, be taken on a case-by-case basis
against a specific financial service provided by a given operator.

For example, it could be a measure such as a warning or a penalty payment taken by a country
of destination against a bank proposing from its place of establishment in another EU country
non-harmonised  investment  services  to  residents  of  that  country.  Such  measures  could,  for
instance,  be  taken  on  the  ground  that  the  bank  was  not  complying  with  certain  rules  of
conduct designed to protect consumers in the country of destination.

However,  a  Member State  could  not,  on  the  basis  of  Article 3(4),  decide  that  its  entire
legislation  on,  say,  non-harmonised  investment  funds  was  applicable  in  a  general  and
horizontal fashion to all services accessible to its residents.

2.1.3.

Protection of "public policy"

The reasons given in the paragraph of the Directive concerning public policy are intended as
examples.

In the area of financial services, it is highly unlikely on the face of it that such services can
prejudice public policy, in the Community meaning of the term. This concept must be viewed
in the light of the Court of Justice's relevant case law, which states that it must be interpreted
in a very restrictive manner.6

The  Court  has,  for  example,  consistently  held  that  economic  objectives  cannot  constitute
grounds of public policy within the meaning of Article 46 of the Treaty.7

5

6

7

Case C-384/93 Alpine Investments [1995] ECR I-1141.
Case C-348/96 Calfa [1999] ECR I-11.
Case 352/85 Bond van Adverteerders [1988] ECR 2085.

5

                                                
For the Court, "recourse by a national authority to the concept of public policy presupposes,
in  any  event,  the  existence,  in  addition  to  the  perturbation  to  the  social  order  which  any
infringement of the law involves, of a genuine and sufficiently serious threat affecting one of
the fundamental interests of society."8

With the exception of services  provided illegally  in  the context  of  the  financing of  criminal
activities  (including  terrorism)  and  money  laundering,  it  is  difficult  to  see  which  financial
services  could  meet  this  judicial  condition  of  a  "serious  threat  affecting  one  of  the
fundamental interests of society".

2.1.4.

Protection of consumers, including investors

The Electronic Commerce Directive defines a consumer as "any natural person who is acting
for purposes which are outside his or her trade, business or profession".

It is thus clear from the text that a legal person cannot be regarded as a "consumer" within the
meaning of the Directive.

By contrast, investors are not defined. However, it is clear from the wording of Article 3(4)
that  only  "investors"  caught  by  the  definition  of  "consumer"  are  concerned.  Any  measure
concerning, for example, investors who were legal persons or individuals acting within their
profession would not be covered by Article 3(4).9

The Court has ruled that both insurance10 and banking11 are particularly sensitive sectors from
the point of view of consumer protection.

2.1.5. Concept of "serious and grave" risk

The  measures  must  be  taken  against  a  given  service  that  effectively  prejudices  one  of  the
objectives spelt out or presents a serious and grave risk of so doing.

This  wording  allows  the  Member State  in  which  the  service  is  provided  to  take  not  only
punitive  but  also  preventive  measures  where  there  is  a  serious  and  grave  risk  to  those
objectives.

2.1.6. Notification conditions

There are three notification conditions:

– 

– 

– 

8

9

10

11

the Member State taking the measures must have  asked the  Member State in which
the provider is established to take measures;

the latter must not have  taken  any  measures or any measures it  did take  have  been
inadequate;

the  Member State  taking  the  measures  must  have  notified  the  Commission  and  the
Member State  in  which  the  provider  is  established  of  its  intention  to  take  such
measures.

Case 30/77 Bouchereau [1977] ECR 1999.
Joined Cases C-541/99 and C-542/99 Idealservice [2001] ECR I-9049.
Case 205/84 Commission v Germany [1986] ECR 3755.
Case C-222/95 Parodi [1997] ECR I-3899.

6

                                                
These three conditions are perfectly clear.

The  first  condition  requires  the  Member State  in  which  the  provider  is  established  to  have
been  informed  and  put  in  a  position  to  resolve  the  problem  at  its  own  level.  The  second
condition  is  that,  in  the  view  of  the  Member State  of  destination,  it  has  not  done  this
adequately. The third condition requires prior notification of the Commission in order for it to
be able to exercise the  powers  enjoyed by it under  paragraph 6  and  of  the  Member State  of
origin. The Directive does not specify any precise deadline by which the Member State of the
provider  must  act  following  the  notification  received  from  the  Member State  in  which  the
service  is  provided.  However,  Article 19(3)  of  the  Directive  stipulates  that  Member States
must,  "as  quickly  as  possible",  provide  the  assistance  and  information  requested  by  other
Member States or by the Commission.

It is also clear from Article 3(4)(b) of the Directive that the notification requirement in no way
deprives  the  Member State  in  question  of  the  right  to  institute  court  proceedings,  including
preliminary proceedings, and to carry out acts in the framework of a criminal investigation.

Lastly, it should be pointed out that the dialogue with the Member State in which the provider
is  established  and  notification  of  the  Commission  are  matters  for  the  State's  central
administration and not, for example, the courts.

2.1.7. Consequences of a lack of notification

If  the  Commission  and  the  Member State  of  origin  have  not  been  notified  in  advance,  the
Commission  could  initiate  proceedings  against  the  Member State  taking  the  measure  for
failure  to  comply  with  its  obligations.  In  addition,  since  they  are  sufficiently  precise  and
unconditional,  the  provisions  of  the  Directive  requiring  Member States  to  give  notification
could presumably be relied upon before  a national court. Accordingly, a bank could bring a
matter  before  a  national  court  on  the  ground  that  the  measures  taken  against  it  in  a
Member State on the basis of Article 3(4) were not notified in advance.

2.2.

ANALYSIS OF ARTICLE 3(6)

Article 3(6) requires the Commission to examine the compatibility of measures notified under
paragraph 4.

It  is  important  to  note  that  this  examination  does  not  have  suspensory  effect  in  that  the
Member State of destination may take  the  proposed measures without awaiting the  result of
the Commission's examination.

In conducting this examination, the Commission will base itself on the conditions set out in
paragraph 4 and on the Court of Justice's case law.

7

The Court has consistently held that:

"National  measures  liable  to  hinder  or  make  less  attractive  the  exercise  of  a  fundamental
freedom  guaranteed  by  the  Treaty  must  fulfil  four  conditions:  they  must  be  applied  in  a
non-discriminatory manner; they must be justified by imperative requirements in the general
interest; they must be suitable for securing the attainment of the objective which they pursue;
and they must not go beyond what is necessary in order to attain it."12

On the basis of this case law, the Commission will therefore apply a number of tests in order
to ascertain the conformity of a notified measure.

2.2.1. General-interest test

It  is  essential  that  the  measure  taken  falls  within  one  of  the  areas  expressly  referred  to  in
Article 3(4); we have seen that these are fewer than the objectives recognised as being in the
general interest by the Court.

2.2.2. Non-discrimination test

The Court has consistently defined discrimination as:

"the application of different rules to comparable situations or the application of the same rule
to different situations"13.

Account  will  need  to  be  taken  here  of  the  objective  circumstances  in  order  to  determine
whether there is actual discrimination.14

Such  discriminatory  measures  are  nowadays  not  very  often  to  be  found  in  national  rules
governing financial services but there can be no ruling out the possibility that some still exist.
For example, if a penalty imposed on a non-established financial service provider were more
severe  than  a  penalty  imposed  in  identical  circumstances  on  an  established  provider,  this
would be tantamount to discrimination.

In  accordance  with  the  Court's  case  law  and  subject  to  its  being  proportionate,  the
discriminatory measure  could be justified only on the  grounds specified in Article 46  of the
Treaty (public policy, public safety, public health).15

2.2.3. Non-duplication test

The Commission will examine the  legal  arrangements  in  the  country  of  origin  to  determine
whether there is duplication between the proposed measures and, say, the protection offered
in the country of origin and the checks carried out there. If this were to be the case, it could be
concluded  that  the  objective  of  general  interest  pursued  by  the  country  of  destination  was
already  met  by  the  rules  in  force  in  the  provider's  country  of  establishment.  Similarly,  the
Commission  will  examine  whether  the  measures  taken  by  the  country  of  establishment  are
inadequate within the meaning of Article 3(4)(b).

12

13

14

15

Case C-55/94 Gebhard [1995] ECR I-4165.
Case C-107/94 Asscher [1996] ECR I-3089.
Case C-224/00 Commission v Italy (not yet published).
Case C-17/92 Federación de Distribuidores Cinematográficos [1993] ECR I-2239.

8

                                                
One illustration of this criterion can be found in the judgment of 9 March 2000, in which the
Court ruled as follows:

"By requiring all undertakings to fulfil the same conditions for obtaining prior authorisation
or approval, the Belgian legislation makes it impossible for account to be taken of obligations
to which the person providing the service is already subject in the Member State in which he
is established."16

This ruling could be particularly useful in that the Commission has come to realise that some
Member States continue to apply prior authorisation procedures in certain areas in particular.

The Court has also ruled that Member States "must have mutual trust in each other as far as
controls carried out on their respective territories are concerned"17.

For example, if the country of destination imposes its own rules of conduct on an investment
service  provided  to  one  of  its  residents,  the  Commission  will  examine  whether  the  rules  of
conduct in force in the country of origin are not equivalent to those on which the country of
destination intends to rely.

2.2.4.

Proportionality test

This  test  has  two  components.  The  measures  must  be  suitable  for  achieving  the  objective
pursued  (suitability  test)  and  they  must  not  go  beyond  what  is  necessary  to  obtain  that
objective (test of substitution by less restrictive measures).

2.2.4.1. Suitability of the measure to the objective pursued

Even if a measure taken by a Member State is described as being in defence of an objective of
general interest, it may be open to question whether the measure is really necessary to protect
that interest. There may be cases in which, objectively, the measure is not necessary or is not
suited to protecting that interest.

The  Court  of  Justice  has,  in  a  number  of  judgments,  held  that  a  given  rule  invoked  by  a
Member State with an avowed aim of protecting the consumer was not, in the final analysis,
suited to providing this protection.

For  example,  the  Court  has  taken  the  view  that,  since  the  provision  of  information  is  a
principal requirement with regard to consumer protection, a Member State that imposes rules
which, in the final analysis, restrict the  access  of  consumers to certain  items  of  information
cannot rely on consumer protection to justify them.18

The  Court  thus  examines  closely  whether  the  measure  referred  to  it  actually  benefits  the
consumer19  and  whether  the  Member State  taking  it  does  not  underestimate  the  consumer's
ability  to  make  a  judgment  in  the  matter.20  It  has  recourse  here  to  the  term  "average

16

17

18

19

20

Case C-355/98 Commission v Belgium [2000] ECR I-1221.
Case C-11/95 Commission v Belgium [1996] ECR I-4115.
Case C-362/88 GB-INNO-BM [1990] ECR I-667.
Case C-240/95 Schmit [1996] ECR I-3179.
Case C-470/93 Mars [1995] ECR I-1923.

9

                                                
consumer",21 taking into account "the presumed expectations of an average customer who is
reasonably well-informed and reasonably observant and circumspect".22

The Court thus checks in particular whether, under the pretext of consumer protection, some
measures do not in fact pursue objectives aimed at protecting the domestic market.

It  also  examines  the  nature  of  the  services  in  question  and  the  corresponding  need  for
protection. For example, in the area of banking services, it has held that:

"…a  distinction  according  to  the  nature  of  the  banking  activity  in  question  and  the  risk
incurred by the person for whom the service is intended. Thus, the conclusion of a  contract
for a mortgage loan presents the consumer with risks that differ from those  associated  with
the lodging of funds with a credit institution. Furthermore, the need to protect the borrower
will  vary  according  to  the  nature  of  the  mortgage  loans,  and  there  may  be  cases  where,
precisely because of the nature of the loan granted and the status of the borrower, there is no
need to protect the latter by the application of the mandatory rules of his national law." 23

The Commission could, therefore, be guided by the same considerations when faced with the
task of examining the proportionality of a notified measure.

2.2.4.2. Possibility of substitution by less restrictive measures

Existence of less restrictive measures

In determining the proportionality of a given measure, the Commission will ascertain whether
the measure does not go beyond what is necessary or whether there are less restrictive ways of
achieving the objective of general interest being pursued or measures that are less restrictive
in their effect on intra-Community trade.24

The  Court  has,  for  example,  ruled  that,  instead  of  preventing  the  broadcasting  and
retransmission  of  broadcasts  by  a  television  company,  a  Member State  could  achieve  the
objective  of  protecting  a  general  interest  by  taking  specific  measures  solely  against  the
advertiser  that  is  the  source  of  a  given  advertisement  broadcast  by  that  company  and  that
provides its services from another Member State.25

In  addition,  in  a  recent  case  concerning  the  taxes  imposed  on  satellite  dishes  by  Belgian
municipalities, the Court had the opportunity to apply the "substitution" principle, ruling that:

"there are methods other than the tax in question in the main proceedings, less restrictive of
the freedom to provide  services, which  could  achieve  an objective such as the protection of
the urban environment, for instance the adoption of requirements concerning the size of the
dishes, their position and the way in which they are fixed to the building or its surroundings
or the use of communal dishes."26

21

22

23

24

25

26

Case C-220/98 Estée Lauder [2000] ECR I-117.
Case C-210/96 Gut Springenheide Gmbh [1998] ECR I-4657.
Case C-222/95 Parodi [1997] ECR I-3899.
Case C-368/95 Familiapress [1997] ECR I-3689.
Joined Cases C-34/95 Konsumentombudsmannen (KO) v De Agostini (Svenska) Förlag AB and C-35/95
and C-36/95 TV-Shop i Sverige AB [1997] ECR I-3843.
Case C-17/00 De Coster [2001] ECR I-9445.

10

                                                
Although  it  concerns  an  area  not  directly  related  to  the  matters  covered  by  this
communication, this last example illustrates particularly well the approach that is taken by the
Court,  and  the  Commission  could,  therefore,  be  guided  by  the  same  considerations  when
making its assessment under Article 3(6).

In Ambry,27 the Court held that the requirement on travel agencies to lodge a security with a
financial  institution  situated  on  the  national  territory  was  disproportionate  since  the
requirement  that  funds  must  be  available  for  immediate  payment  "can  normally  be  met
adequately even where the guarantor is established in another Member State".

This example, which, while not relating to a problem associated with the on-line provision of
financial services, is of particular interest since it concerns investment services and is one of
the  cases  in  which  the  Court  has  applied  the  substitution  test  in  a  particularly  thorough
fashion, viz. the SIM case, in which the Court ruled:

"While  the  obligation  to  have  the  registered  office  in  Italy  facilitates  the  supervision  and
control  of  the  operators  in  the  market,  such  an  obligation  is  not  the  only  means  of  making
sure  that  they  comply  with  the  rules  for  pursuing  the  activity  of  dealer  in  transferable
securities laid down by the Italian legislature and of imposing effective sanctions on dealers
who breach those rules."28

Situation in the other Member States

As part of this examination, the Commission could look at the legislation in force in the other
Member States  in  order  to  determine  whether  less  restrictive  measures  suited  to  ensuring
consumer protection exist.29

However, it must be borne in mind that this exercise is limited in scope in so far as the Court
has  ruled  that  "the  fact  that  one  Member State  imposes  less  strict  rules  than  another
Member State  does  not  mean  that  the  latter's  rules  are  disproportionate  and  hence
incompatible with Community law"30

and that:

"… the mere fact that a Member State has opted for a system of protection which differs from
that  adopted  by  another  Member State  cannot  affect  the  assessment  of  the  need  for,  and
proportionality  of,  the  provisions  enacted  to  that  end.  Those  provisions  must  be  assessed
solely by reference to the objectives pursued by the national authorities of the Member State
concerned and the level of protection which they are intended to provide."31

Accordingly, the situation obtaining in the other Member States is of interest when it comes to
identifying  and  proposing  different,  less  restrictive  measures.  However,  the  existence  in
another  Member State  of  a  less  restrictive  measure  does  not  in  itself  provide  proof  of  any
disproportionality.  Although  the  situation  in  the  other  Member States  could  not  be  ignored,
the arrangements in force in the Member State of destination must be assessed intrinsically in
the light of the objectives pursued by that Member State.

27

28

29

30

31

Case C-410/96 Ambry [1998] ECR I-7875.
Case C-94/101 Commission v Italy [1996] ECR I-2691.
Case C-126/91 Yves Rocher [1993] ECR I-2361.
Case C-384/93 Alpine Investments, loc. cit.
Case C-124/97 Läärä [1999] ECR I-6067.

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Specific nature of electronic commerce

Lastly,  account  could  be  taken  of  the  fact  that  the  measures  are  taken  against  services
provided at a distance electronically. The Court has ruled that:

"[…] a restriction is all the less permissible where, as in the main proceedings, and unlike the
situation  governed  by  the  third  paragraph  of  Article 60  [now  Article 50]  of  the  Treaty,  the
service is supplied without its being necessary for the person providing it to visit the territory
of the Member State where it is provided."32

On the basis of this ruling a measure could theoretically be deemed proportionate as regards
its  application  to  providers  visiting  in  person  the  territory  of  the  country  of  destination  but
disproportionate in the case of a service provided at a distance. On the basis of this case law,
the Commission might require a Member State to take due account of the way in which the
service  is  provided  and,  where  appropriate,  might  regard  as  less  permissible  any  restriction
applicable to on-line services.

Considerable  care  should,  of  course,  be  taken  when  extending  this  ruling  by  analogy  to
electronic commerce. In the situation leading up to the ruling in Säger referred to above, the
client  could  not  at  any  time  have  failed  to  know  that  he  was  dealing  with  a  provider
established in another Member State.

2.2.5. Commission decision

In accordance with Article 3(6), if it comes to the conclusion on the basis of the tests that the
measure  is  incompatible  with  Community  law,  the  Commission  will  ask  the  Member State
concerned to refrain from taking the proposed measures or urgently to put an end to them.

It should be pointed out that the Commission's examination does not have suspensory effect
and does not, therefore, prevent the Member State from taking the proposed measures.

Even  if  the  Commission's  examination  is  not  subject  to  precise  deadlines,  action  should  be
taken "in the shortest possible time", as provided for in the Directive.

If  the  Commission  decides  that  the  measure  is  compatible  with  Community  law,  the
Member State  concerned  will  be  able  to  pursue  (or  begin,  if  it  has  not  yet  done  so  as  a
precaution) implementation of the measures against the Community undertaking in question.

At  any  event,  the  position  that  the  Commission  might  have  to  defend  in  a  given  case  is
without prejudice to what the Court of Justice might decide.

32

Case C-76/90 Säger [1991] ECR I-4221.

12