22nd Annual Report from the Commission on monitoring the application of community law (2004) {SEC(2005)1446} {SEC(2005)1447}
Date: 2005-12-23
Institutions: European Commission
Subjects: EU control, activity report, application of EU law, national implementing measure

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.12.2005 
COM(2005) 570 final 

22nd ANNUAL REPORT FROM THE COMMISSION 

ON MONITORING THE APPLICATION OF COMMUNITY LAW  
(2004) 

{SEC(2005)1446} 
{SEC(2005)1447} 

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22nd ANNUAL REPORT FROM THE COMMISSION 

ON MONITORING THE APPLICATION OF COMMUNITY LAW  
(2004) 

Each year the European Commission draws up a report on the monitoring of application 
of Community law, in response to requests made by the European Parliament (resolution 
of 9 February 1983) and the Member States (point 2 of Declaration No 19 annexed to the 
Treaty signed at Maastricht on 7 February 1992). The report also responds to the requests 
expressed by the European Council or the Council in relation to specific areas of activity. 

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1.1 

Introduction 

In exercising its exclusive function as guardian of the Treaties, the Commission ensures and 
monitors the uniform application of Community law by the Member States pursuant to Article 
211 of the EC Treaty. Article 226 EC provides that the Commission can take action against a 
Member  State  for  adopting  or  maintaining  legislation  or  rules  which  are  contrary  to  the 
fundamental principles of Community law as enshrined in the Treaties. 

The White Paper on European Governance1 published by the Commission in 2001 emphasises 
that the primary responsibility for applying Community law lies with national administrations 
and  courts  in  the  Member  States.  The  primary  objective  of  infringement  proceedings, 
particularly  in  the  pre-litigation  stage,  is  to  encourage  the  Member  States  to  comply 
voluntarily  with  Community  law  as  quickly  as  possible.  Furthermore,  the  Commission  has 
aimed to boost cooperation with the Member States by means of complementary or alternative 
methods to resolve problems.  

The undertaking of monitoring the application of Community law is vital in terms of the rule 
of law generally, but it also helps to make the principle of a Community based on the rule of 
law a tangible reality for Europe’s citizens and economic operators. The numerous complaints 
received  from  citizens  of  the  Member  States  constitute  a  vital  means  of  detecting 
infringements of Community law.  

the  Commission’s  departments 

The  22nd  annual  report,  including  the  “staff  working  papers”  annexed  to  it  -  contributions 
annexes 
from 
(SEC(2005)1447)  -  gives  an  account  of  the  Commission's  activities  in  connection  with 
monitoring the application of Community law in 2004.  

(SEC(2005)1446) 

statistical 

and 

1.2. Enlargement of the Union 

In  2004  ten  new  Member  States  joined  the  European  Union.  An  integrated  system  for 
electronic  notification  of  national  measures  for  transposition  of  the  directives  in  the 
25 Member States came into operation on 3 May 2004. By the end of 2004 only France, the 
Netherlands  and  Sweden  had  not  yet  joined  the  system,  although  they  had  started  the 
necessary preparatory work. 

The  significant  work  carried  out  by  the  ten  new  Member  States  using  the  electronic 
pre-notification  system  developed  by  the  Commission  facilitated  reception  of  most  of  the 
measures  required  to  transpose  all  the  directives  included  in  the  pre-accession  acquis 
communautaire.  

In August 2004 an average of 94.14% for the ten new Member States (97.96% for 15 Member 
States)  of  the  national  transposition  measures  had  already  been  notified.  By  31 December 
2004 the average was 97.69 % for EU 25, 97.30 % for the ten new members and 97.95 % for 
the EU 15 Member States. Lithuania had the highest percentage (99.45 %), followed by Spain 
(99.09 %), Austria (98.81 %), Denmark (98.81 %) and Hungary (98.66 %).  

The  total  number  of  infringement  proceedings  initiated  by  the  Commission  also  increased, 
from 2709 in 2003 (for EU 15) to 2993 in 2004 (for EU 25). For EU 15, there was a decrease 

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European Governance – A White Paper (COM (2001)428. 

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to 2146 in 2004. The same treatment as for the current Member States was applied to the new 
members. By 31 December 2004, 2531 cases out of the 2993 registered were still ongoing. 

There was a decrease in the number of complaints registered by the Commission for EU 15, 
from  1290  in  2003  to  1080  in  2004.  For  EU 25,  there  was  an  increase  to  1146.  In  overall 
terms, complaints (for EU 25) accounted for around 38% of the total infringements detected 
in 2004. 

The number of infringement procedures initiated by the Commission on the basis of its own 
investigations increased from 253 in 2003 to 285 in 2004 for EU 15 (328 for EU 25). 

For EU 25, the number of proceedings for failure to notify transposition measures increased to 
1519  (781  cases  detected  for  EU 15  and  738  for  EU 10).  The  statistics  for  2004  show  an 
increase  of  50.8%  over  the  previous  year  (from  1166  to  1519  cases).  The  figures  for  2004 
relate both to proceedings for failure by EU 15 to transpose directives due for transposal and 
for failure by EU 10 to notify with respect to the whole pre-accession acquis.  

For  a  detailed  analysis  see  the  tables  in  the  “staff  working  paper”-  statistical  annex 
SEC(2005)1447. 

1.3 Main developments in each of the areas of Commission activity 

The following are the main developments by area of activity. Detailed analyses can be found 
in  the  attached  Commission  “staff  working  paper”  -  contributions  from  the  Commission’s 
departments SEC(2005)1446. 

In the area of agriculture, monitoring of the application of Community law concentrated on 
removing obstacles to the free movement of agricultural products and ensuring that regulatory 
mechanisms were effectively and correctly applied. 

The  reduction  of  the  traditional  barriers  to  the  free  movement  of  agricultural  products 
continued. With regard to new barriers to free movement, Commission action was designed to 
prevent the spread of arbitrary discrimination towards producers from other Member States. 

As regards application of the specific rules of the common agricultural policy, the Commission 
monitored various areas, for example geographical denominations. With regard to the Structural 
Funds, its objective was to ensure compliance with the provision relating to payment in full to 
beneficiaries  undermined  by  the  levies  charged  by  IFADAP  in  Portugal.  It  also  monitored 
observance of the limits set for the use and destination of products qualifying for advantageous 
treatment under the Community policy for its outermost regions, in particular sugar processed in 
the  Azores.  The  Commission  also  reminded  Member  States  of  their  obligation  to  send  annual 
reports on existing state aid arrangements. 

Most of the national laws transposing the directives were notified. 

In  the  field  of  education  and  culture,  one  of  the  Commission’s  main  concerns  is  the  free 
movement  of  students.  The  barriers  to  this  are  caused  either  by  bureaucratic  administrative 
practices or by discrimination on the basis of nationality. 

this  area 

In 
administrative delays in the academic recognition of qualifications.  

the  Commission 

infringement  proceedings  for 

initiated 

technical  and 

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Another  matter  addressed  was  the  administrative  fees  charged  for  academic  recognition  of 
qualifications. Disproportionately high costs may make it impossible for students to exercise 
their rights, particularly as regards access to education and free movement. 

Following the accession of the new Member States two complaints were received concerning 
unequal treatment of students with respect to other EU citizens as regards access to education. 
The Commission sent a letter of formal notice to the Member State in question. 

The  Commission  has  been  informed  that  certain  Member  States  have  refused  to  register 
holders of law degrees obtained in another Member State in the registers of trainee lawyers. 
The matter is being treated on the basis of the Morgenbesser case. 

In  the  field  of  audiovisual  policy,  the  possibility  of  adapting  the  “Television  without 
Frontiers” Directive to recent technological and market developments was discussed with the 
parties concerned. 

In the area of employment, problems regarding the free movement of workers, which have 
been  brought  to  the  Commission’s  notice  by  citizens’  complaints,  relate  in  particular  to 
flawed  application  of  the  EC  Treaty  and  the  related  regulations.  Most  of  the  infringement 
proceedings  in  other  areas  (equal  treatment  of  men  and  women,  working  conditions,  health 
and  safety  in  the  workplace,  and  equal  treatment/non-discrimination  (Article 13  EC)  were 
initiated for non-compliance and for failure to notify national transposition measures.  

One  of  the  main  developments  was  the  referral  to  the  Court  of  Justice  of  the  first  action 
brought for failure to transpose the Article 13 directives (equal treatment/non-discrimination).  

Another  matter  referred  to  the  Court  of  Justice  was  the  Article 228  EC  infringement 
to 
proceeding  against  Italy  for  failure 
non-recognition  by  certain  Italian  universities  of  the  rights  of  former  foreign  language 
assistants  (“lettori”).  The  Commission  asked  the  Court  to  impose  a  penalty  payment  of 
€309 750 per day of delay. 

judgment  relating 

the  Court’s 

to  enforce 

Another  priority  was  monitoring  application  of  the  Community  acquis  by  the  new  Member 
States. The periodic and systematic monitoring process was extended beyond 1 May. Bilateral 
contacts made it possible to identify the main problems encountered in transposing the social 
acquis and to resolve some of these problems. The first package meeting, held in December, 
was devoted principally to the failures to notify transposition measures. 

By the end of 2004 the Commission’s enterprise and industry department was responsible 
for 480 directives, 23 of which came into force in the course of the year. 

In 2004 complaints and infringement proceedings in this area accounted for around 12% of all 
the cases investigated by the Commission, an increase over the previous year. 

However, the overall volume of infringement proceedings decreased for EU 15. This may be 
attributable  to  the  dialogue  established  in  recent  years  to  ensure  compliance  with  the  time 
limits for transposition, in particular for the three new pharmaceuticals directives. 

The  procedure  for  notifying  draft  technical  regulations  provided  for  by  Directive  98/34/EC 
continued  to  prove  its  worth  by  producing  solutions  that  complied  with  Community  law  in 
95%  of  cases.  The  Commission  also  used  other  means  of  preventing  problems  and 
cooperating with Member States. These included groups of experts and bilateral contacts with 

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Member  States,  in  particular  in  the  pharmaceuticals  and  cosmetics  industries,  in  order  to 
identify transposition problems and, if necessary, provide technical assistance to ensure that 
the directives are properly transposed and uniformly applied. 

Enlargement led to an increase in proceedings against the ten new Member States for failure 
to notify. However, the number of cases is not very high in view of the number of directives 
to  be  transposed,  owing  to  the  work  done  by  the  national  authorities  during  the  preparatory 
stage for enlargement and by the Commission under the conformity assessment agreements. 

In the area of the environment, implementation of Community legislation by the Member 
States  has  improved  in  recent  years.  This  is  borne  out  by  the  substantial  reduction  in  the 
number of new complaints registered by the Commission in 2004 (336 as compared with 555 
in 2002).  

The  Commission  issued  101  reasoned  opinions  under  Article 226  of  the  EC  Treaty  and 
referred  45  cases  to  the  Court  of  Justice.  It  also  adopted  14  letters  of  formal  notice  and 
6 reasoned opinions under Article 228 of the EC Treaty. It initiated infringement proceedings 
against eight new Member States. 

The Commission  also used other measures to  ensure  proper application  of  Community law. 
Pro-active initiatives include drawing up guidelines and interpretative documents, discussions 
within  technical  committees  and  bilateral  contacts  with  Member  States,  e.g.  “package” 
meetings.  

The  Commission  endeavours  to  check  compliance  with  legislation  as  systematically  as 
possible.  In  some  areas  of  activity,  reports  play  a  key  role  while  in  others  the  Commission 
gathers and analyses the necessary information. It organised assistance by legal experts in the 
preparatory phase of the strategic annual checking of compliance with Community legislation, 
and  initiated  a  process  of  national  legislation  adopted  by  the  ten  new  Member  States  for 
compliance. 

In  the  area  of  competition  policy,  the  Commission  monitored  transposition  of  the 
competition  Directive 
framework  on  electronic 
communications, as well as the transparency Directive (both of which are based on Article 86 
EC).  As  regards  individual  cases,  the  Commission  handled  several  complaints  relating  to 
Article 86 combined with Article 82 EC. In particular, it adopted a decision against Germany 
concerning its national legislation on postal services. 

forming  part  of 

regulatory 

the 

In  the  area  of  the  information  society,  the  2002  regulatory  framework  on  electronic 
communications  pursues  three  of  the  main  objectives  of  the  Lisbon  strategy  –  to  create  a 
stable and predictable regulatory environment, encourage innovation and stimulate investment 
in communications networks and services. 

The  work  done  in  the  new  groups  and  committees  and  the  new  coordination  mechanisms 
provided  for  by  the  new  regulatory  framework,  was  fully  up  and  running  in  2004.  These 
activities  focused  mainly  on  implementation  of  the  new  rules  and  the  creation  of  common 
regulatory  approaches.  The  Commission  continued  to  cooperate  closely  with  the  regulatory 
authorities  on  the  notifications  of  draft  “Article 7”  measures,  and  used  its  veto  right  for  the 
first time. 

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The  regulatory  framework  for  EU 15  came  into  force  in  July  2003  and  the  Commission 
continued  to  monitor  closely  the  transposition  of  Community  law  in  these  States.  It  also 
cooperated closely with EU 10 in implementing the new framework, which came into force in 
these States at the date of accession. By the end of 2004, 20 Member States had adopted all 
the  primary  legislation  transposing  the  2002  framework  and  had  notified  the  Commission 
accordingly.  In  2004  the  focus  therefore  shifted  gradually  away  from  transposition  towards 
ensuring full compliance and implementation in all 25 Member States. 

The  communication  European  Electronic  Communications  Regulation  and  Markets  2004 
(10th implementation report) was adopted in December2. 

In the area of justice, freedom and security, the Commission referred a number of cases to 
the  Court  of  Justice  concerning  failure  to  notify  national  implementation  measures  for  two 
directives adopted in 2001. 

In the area of free movement of persons, the Commission sent two reasoned opinions to the 
Netherlands for expelling two Italian nationals who were long-term residents in the country. 
The  adoption  of  Law  No 2003-1119  in  France  enabled  the  Commission  to  close  the 
infringement proceedings against France concerning students’ rights of residence. Following 
amendment of the Italian highway code, the Commission closed the infringement proceedings 
relating to the differentiated and disproportionate treatment of drivers of vehicles registered in 
other Member States. 

Lastly,  the  Commission  closed  proceedings  against  Belgium  concerning  voting  rights  of 
nationals of other Member States resident in the commune of Honnelles who had been struck 
off the electoral roll for the municipal elections, after Belgium wrote to them informing them 
that  they  would  be  registered  for  the  next  municipal  elections  on  the  basis  of  their  initial 
application. 

Policy in the area of the internal market was pursued on three fronts: 

Firstly,  several  measures  were  implemented  aimed  at  developing  cooperation  with  Member 
States  in  transposing  the  directives  and  in  the  framework  of  infringement  proceedings.  A 
Commission  recommendation  calls  on  Member States  to  apply  best  practices  in  order  to 
ensure that the directives are rapidly and properly transposed. The publication of an internal 
market  scoreboard  and  of  regularly  updated  information  on  the  number  of  directives 
transposed helped to improve the overall results. The average transposition deficit for EU 25 
fell  from  7.1%  in  July  2004  to  3.6%  in  January  2005.  Bilateral  (transposition  package 
meetings)  and  multilateral  contacts  on  the  transposition  of  directives  were  stepped  up. 
Meetings  of  experts  were  organised  for  the  new  Directives  on  insurance  brokers,  market 
abuse and pension funds. In the field of public procurement, several package meetings were 
organised on ongoing infringements. In most cases these meetings led to significant progress.  

Secondly,  the  SOLVIT  network  for  resolving  problems  relating  to  application  of  internal 
market law was developed further. The SOLVIT centres in the ten new Member States came 
into operation on the accession date. 289 cases were handled by the network, 73% more than 
in 2003. 80% of the cases were resolved, compared with 73% in 2003. 

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COM(2004)759, 2.12.2004 

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Lastly,  efforts  continued  to  ensure  that  infringement  procedures  are  handled  rapidly  and 
efficiently. 

In the area of health and consumer protection, the Commission initiated 457 infringement 
proceedings for failure to notify transposition measures and sent 37 reasoned opinions. Five 
reasoned  opinions  were  sent  for  failure  to  transpose  the  Directive  on  general  product  safety 
and  infringement  proceeding  were  initiated  against  Estonia  for  failure  to  transpose  the 
Directive on tobacco. 

The  Commission  initiated  infringement  proceedings  under  Article 228  of  the  Treaty  against 
Belgium  (failure  to  transpose  the  Directive  on  the  protection  of  laying  hens)  and  France 
(failure to transpose the Directive on consumer goods guarantees). 

The  inspections  carried  out  by  the  Food  and  Veterinary  Office  (FVO)  contributed  to 
improving  the  application  of  Community  legislation  in  the  area  of  food  and  feed,  animal 
health,  the  preservation  of  plants  and  animal  protection.  The  Commission  sent  a  letter  of 
formal  notice  and  a  reasoned  opinion  to  Greece  on  the  reinforcement  of  veterinary 
inspections. Similar infringement proceedings were closed after the UK adopted appropriate 
measures. 

The Court ruled against Spain for incorrect transposition of the Directive on unfair clauses in 
contracts with consumers. 

Considerable efforts were made to enable the accession of the ten new Member States. By the 
end of 2004, the level of transposition was only slightly higher than in the old Member States.  

In the area of energy and transport, 458 infringement cases were processed, 266 for failure 
to notify transposition measures and 192 for incorrect transposition of directives or incorrect 
application  of  Community  law.  There  was  an  increase  in  the  number  of  infringement  cases 
despite the significant number of cases closed during the same period (154, 103 of them for 
failure  to  notify).  The  reason  was  the  faster  transposition  of  the  transport  Directives,  even 
though  Member  States  often  fail  to  comply  with  the  transposition  deadlines.  223  new 
infringement  proceedings  were  initiated  (183  for  failure  to  notify)  and  38  registered 
complaints  were  processed  in  the  course  of  the  same  period.  The  Court  ruled  on 
22 infringement proceedings. Eight transport directives were due for transposition (compared 
with 15 in 2003).  The percentage of energy  and  transport directives transposed was still far 
short of the objective set in Lisbon (98.5%). 

In the energy area, letters of formal notice were sent to 18 Member States for failure to notify 
national measures transposing the two Directives on the internal electricity and/or gas market. 
Proceedings  were  brought  against  several  Member  States  for  failure  to  comply  with  the 
Directive  on  minimum  stocks  of  crude  oil  and/or  petroleum  products.  Complaints  were 
processed  relating  to  flawed  application  of  the  Directive  on  the  promotion  of  electricity 
produced  from  renewable  energy  sources.  The  Commission  stepped  up  infringement 
proceedings  in  the  area  of  health  protection  measures  against  ionizing  radiation  and  in  the 
event of a radiological emergency. 

In  the  area  of  road  transport  safety,  proceedings  were  brought  in  relation  to  technical 
regulations and driving licences. 

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With  respect  to  the  “railway  infrastructure”  package,  the  Court  of  Justice  ruled  against  the 
Member  States  which  had  not  yet  notified  the  national  measures  for  implementing  one  or 
other of the three Directives. 

Following  the  “open  skies”  judgments  of  19 November  2002,  the  Commission  asked  the 
Member  States  to  take  measures  to  remedy  the  situation.  Further  proceedings  were  brought 
for  bilateral  agreements  discriminatory  to  third  countries  and  for  non-compliance  with  civil 
aviation safety legislation. 

In the area of maritime safety, the Commission referred to the Court of Justice eight Member 
States that had not yet transposed the Directives on the installation of vessel traffic monitoring 
and of information systems. 

In  the  fisheries  area,  the  Commission  initiated  proceedings  against  a  number  of 
Member States  in  which  certain  fishing  quotas  had  been  exceeded  for  failure  to  fulfil  their 
control  obligations.  It  also  brought  proceedings  for  failure  to  notify  certain  information  on 
catches and fishing activity. 

The Court ruled against three Member States for exceeding quotas. The Commission lodged 
an  appeal  with  the  Court  against  Greece  for  failure  to  comply  with  the  deadline  for 
implementation of the satellite-based fishing vessel monitoring system.  

In  the  area  of  taxation  and  customs,  there  was  an  increase  in  the  number  of  civil  society 
complaints against the Member States. In the area of direct taxation, these complaints related 
in particular to national legislation and practices that impose an excessive burden on activities 
and investments  in  other Member States. However, also in this area, the Commission noted 
that  Member  States  have  responded  positively  to  its  two  communications  on  occupational 
pension schemes and dividends3, by bringing their national systems into line with Community 
principles.  In  one  case,  the  Commission  had  to  refer  an  infringement  case  to  the  Court 
(against Denmark in relation to pensions, Case C-150/04). 

Numerous  new  infringement  proceedings  were  also  initiated.  For  example,  in  the  area  of 
indirect  taxation,  priority  was  given  to  cases  with  implications  for  own  resources,  and 
increased  verification  of  correct  application  of  the  directives  (in  particular  Directive 
2000/65/EC  on  tax  representatives  and  Directive  2001/115/EC  on  invoicing)  led  to 
compliance requirements being met during proceedings. 

At  the  same  time,  the  Commission  was  responsible  for  the  technical  monitoring  of  an 
increasing number of preliminary rulings by the Court. 

In the budgetary area, the Commission, in accordance with the principle of sound financial 
management,  has  to  ensure  that  the  budgetary  burden  is  fairly  shared  among  the  Member 
States and initiate proceedings for infringements with an adverse effect on own resources to 
ensure that the other Member States do not have to bear the financial consequences of these 
infringements.  Different  interpretations  as  to  the  proper  collection  of  own  resources  have 
recently been submitted to the Court for clarification.  

3 

Commission  communications  on  the  elimination  of  tax  obstacles  to  the  cross-border  provision  of 
occupational  pensions  (19.4.2001)  (IP/01/575)  and  on  dividend  taxation  of  individuals  in  the  internal 
market (19.12.2003) (COM 2003/810). 

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In  the  area  of  Community  statistics,  there  were  20  new  infringement  proceedings. 
Proceedings  were  initiated  against  Greece  for  failure  to  submit  the  statistics  on  excessive 
deficits to the Commission.  

The Commission also sent letters of formal notice to Greece on the short-term statistics and to 
Belgium on the social statistics.  

In the area of agricultural statistics, formal letters of notice were sent to nine Member States 
for  failure  to  notify  national  transposition  measures.  Additional  efforts  were  required  as  a 
result of enlargement. The Commission initiated eight infringement proceedings against five 
new Member States for failure to notify national transposition measures.  

In the area of statistics on transport of goods by road, the Commission filed an action against 
Greece with the Court of Justice.  

In  the  area  of  regional  policy,  most  of  the  infringement  proceedings  for  irregularities 
detected  in  the  use  of  the  Structural  Funds  concern  the  incorrect  application  of  the 
sector-specific rules that must be complied with in order to qualify for Community funding. 
Establishment  of  the  irregularities  also  resulting  in  the  total  or  partial  withdrawal  of 
Community aid. 

Infringement  proceedings  relating  to  enlargement  are  based  on  complaints  concerning 
incorrect  application  of  the  association  agreements  and  Europe  agreements  between  the 
Community and the candidate countries. Following the accession of ten new Member States 
in May 2004, the relevant association agreements and Europe agreements must be considered 
to be terminated following the subsequent conclusion of a new treaty on the same subject. 

This  change  affected  the  pending  complaints  by  certain  Polish  and  Lithuanian  citizens 
concerning  the  failure  of  the  Austrian  and  Swedish  authorities  to  respect  their  rights  of 
establishment. However, the analysis begun revealed that these complaints were unfounded.  

The complaints by certain citizens of the new Member States relating to the right to provide 
services, the right of residence and the right to obtain work permits were also rejected since 
these sectors have not yet been fully liberalised. 

The  Commission  began  to  examine  complaints  relating  to  the  rights  of  access  to  the  labour 
market  of  the  Member  States  in  accordance  with  Decision  1/80  relating  to  the  EU-Turkey 
Association Agreement. 

In  the  area  of  external  relations,  an  infringement  for  failure  to  comply  with  Community 
legislation involving six Member States was detected in the context of Article 27 of Council 
Regulation  No 2368/2002  implementing  the  Kimberley  Process  certification  scheme  for  the 
international trade in rough diamonds. 

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