Report from the Commission - “Better lawmaking 2005” pursuant to Article 9 of the Protocol on the application of the principles of subsidiarity and proportionality (13th report) {SEC(2006) 737}
Date: 2006-06-13
Institutions: European Commission
Subjects: activity report, application of EU law, operation of the Institutions, principle of proportionality, principle of subsidiarity

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.6.2006 
COM(2006) 289 final 

REPORT FROM THE COMMISSION 

“BETTER LAWMAKING 2005” 

pursuant to Article 9 of the Protocol 
on the application of the principles of subsidiarity and proportionality 

(13th report) 

{SEC(2006) 737} 

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REPORT FROM THE COMMISSION 

“BETTER LAWMAKING 2005” 

pursuant to Article 9 of the Protocol 
on the application of the principles of subsidiarity and proportionality 

(13th report) 

This  report  is  the  13th  annual  review  of  the  application  of the  principles  of  subsidiarity  and 
proportionality.  It  also  covers  progress  in  improving  the  regulatory  environment  in  the 
European Union1. 

1. 

BETTER REGULATION 

Improvement of the regulatory environment is crucial to enhancing competitiveness, growth 
and  employment  and  to  promoting  sustainable  development  and  a  better  quality  of  life  for 
European  citizens.  This  improvement  requires  joint  efforts  on  the  part  of  the  European 
Parliament, the Council, the Commission and the Member States. 

The main objectives and actions in favour of better regulation of the EU institutions are set 
out  in  two  documents:  the  Commission  action  plan  on  better  regulation,  as  revised  in 
March 20052, and the Inter-Institutional Agreement (IIA) on Better Lawmaking signed by the 
European Parliament, the Council and the Commission in December 20033. 

In  2005,  the  interest  in  improving  regulatory  quality  continued  to  grow.  A  variety  of 
initiatives have been launched in different fora, reflecting the importance attached to the issue. 

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The  obligation  on  the  Commission  to  present  an  annual  report  on  the  application  of  the  principles  of 
subsidiarity and proportionality to the European Council and the European Parliament was enshrined by 
the  Edinburgh  European  Council  in  December  1992.  This  obligation  was  included  in  a  protocol 
annexed  to  the  Treaty  establishing  the  European  Community  (TEC)  in  the  framework  of  the 
amendments  made  by  the  Treaty  of  Amsterdam  in  1997.  Since  1995  this  report  has  also  covered 
measures  taken  to  improve  the  quality  and  accessibility  of  legislation  (for  the  previous  report,  see 
COM(2005)  98).  Some  elements  contributing  to  improve  the  regulatory  environment  are  reviewed  in 
greater detail by the 3rd Report on European governance (2004-2005) 
(see http://www.europa.eu.int/comm/governance/index_fr.htm). 
“Better regulation for growth and jobs in the European Union” COM(2005) 97, March 2005, referred to 
subsequently as the “Action Plan”. This Communication updates and completes the Action Plan set in 
2002  (“Simplifying  and  improving  the  regulatory  environment”,  COM(2002)  278,  5 June  2002).  The 
action plan follows up the White Paper on European Governance (COM(2001) 727, 25 June 2001). 
OJ C 321, 31 December 2003, p.1. 

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1.1. 

Actions taken by the Commission 

In  2005,  the  new  Commission  identified  as  its  central  goal  the  achievement  of  stronger, 
lasting growth and creation of more and better jobs. In announcing a new start for the “Lisbon 
Strategy4,  it  stressed  a  number  of  key  actions  -  putting  in  place  regulatory  incentives  for 
business,  cutting  unnecessary  costs  and  removing  regulatory  obstacles  to  adaptability  and 
innovation. These points were reinforced in the March 2005 Communication entitled “Better 
regulation for growth and jobs in the European Union”5. 

Since then, the Commission has, in line with its revised Action Plan of March 2005: 

–  endorsed revised impact assessment guidelines6; 

–  adopted  a  Communication  on  an  EU  common  methodology  for  assessing  administrative 

costs imposed by legislation7; 

–  adopted  a  Communication  on  the  outcome  of  the  screening  of  pending  legislative 

proposals8; 

–  adopted  a  Communication  on  a  strategy  for  the  simplification  of  the  regulatory 

environment9. 

–  launched the group of high-level national regulatory experts10. 

Consultation of interested parties 

In  2005,  the  number  of  consultations  increased  significantly,  with  187  non-legislative 
Communications (+28 compared to 2004) and 106 internet-based consultations (+11) via the 
web  portal  “Your  Voice  in  Europe”.  Overall  compliance  with  the  minimum  standards  for 
public  consultation  has  been  good.11  Experience  has  shown  that  there  is  room  for  further 
improvement in (1) providing general feedback on how comments were taken into account in 
a  proposal  or  why  they  were  discarded;  and  (2)  ensuring  that  comments  received  are 
systematically published. 

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COM(2005) 24. 
COM(2005) 97. 
SEC(2005) 791. See http://www.europa.eu.int/comm/secretariat_general/impact/docs_en.htm. 
COM(2005) 518. 
COM(2005) 462. 
COM(2005) 535. 
The  two  meetings  (November  and  December)  were  essentially  devoted  to  better  regulation  in  the 
Lisbon  national  programmes.  The  mandate  of  the  group  is  to  advise  the  Commission  on  better 
regulation issues in general, but also to provide an efficient interface between the Commission and key 
governmental authorities for the development of better regulation at EU and national levels. 
These standards have been introduced in 2003 (COM(2002) 704, 11 December 2002).  

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Impact assessment 

In  2005,  the  Commission  further  improved  its  methodological  framework  for  assessing  the 
potential impacts of its proposals12, and increased the number13 and quality14 of actual impact 
assessments accompanying its most important initiatives. Particular attention needs to be paid 
to  ensuring  that  alternative  policy  options  are  thoroughly  examined,  starting  early  in  the 
policy development cycle, as part of a strengthened quality support and control framework. 

Collection and use of expertise 

2005 saw the operational launch of SINAPSE (Scientific INformAtion for Policy Support in 
Europe), a new and powerful interface between experts and (EU) policy makers15. More than 
300 European and international scientific organisations registered in 2005. This tool will help 
further progress on the quality, openness and effectiveness of collection of expertise, in line 
with the principles and standards set by the Commission in its 2002 Communication on the 
collection and use of advice from external experts16. 

Following  the  commitments  made  in  July  2004  by  President  Barroso  to  the  European 
Parliament, the Commission has taken major steps to improve transparency in respect of its 
expert groups. In particular, since October 2005, a register provides Parliament and the public 
at  large  with  standard  information  on  approximately  1200  expert  groups  advising  the 
Commission17. 

Updating and simplifying the acquis 

In  October  2005,  the  Commission  adopted  a  new  phase  of  its  strategy  for  simplification  of 
existing  rules18,  which  continues  and  reinforces  the  first  comprehensive  simplification 
programme  launched  in  February  200319.  Based  on  input  from  the  Member  States20  and 
stakeholders21, the new strategy proposed a 3-year rolling programme which will be regularly 
updated.  The  number  of  simplification  proposals  presented  by  the  Commission  will 
significantly  increase:  the  rolling  programme  foresees  the  repeal,  codification,  recasting  or 
modification of 222 legal acts (with significant knock-on effects on more than 1 400 related 
acts). 

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The Commission’s internal Impact Assessment guidelines were revised in June 2005. They have been 
widely welcomed for their improved readability and their reinforced analytical framework of economic, 
environmental and social impacts. 
77 Impact Assessments were completed in 2005, against 29 in 2004. 
The result of the independent evaluation to be launched in 2006 will provide more specific data on the 
overall quality of Commission’s IAs and its evolution. 
http://europa.eu.int/comm/secretariat_general/regexp/index.cfm?lang=EN. 
COM(2002) 713, 11 December 2002.  
Register access http://europa.eu.int/comm/secretariat_general/regexp/index.cfm?lang=EN. 
COM(2005) 535. 
COM(2003) 71. 
Including simplification priorities identified by the Council in November 2004. 
The Commission launched on 1 June of 2005 a public consultation on internet “10 Minutes to improve 
the business environment” (http://europa.eu.int/yourvoice/forms/dispatch?form=418&lang=EN). 

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Estimation of administrative costs 

In  2005,  the  Commission  tested,  validated  and  presented  a  methodology  for  estimating 
administrative costs imposed by EU legislation22. It also concluded that a common approach 
at EU level was feasible and would have clear added value. 

The  Commission  announced  the  inclusion  of  that  methodology  in  its  impact  assessment 
guidelines  and  evaluation  guidelines23.  It  undertook  to  explore  whether  the  EU  common 
methodology  could  be  used  to  assess  cumulative  administrative  burden  at  sectoral  level24.  It 
also announced its intention to further refine the methodology with the help of the high level 
group of national experts on better regulation. 

Choice of instruments 

In its revised 2005 Action Plan, the Commission reiterated the need to pay more attention to 
the  choice  of  instruments  for  pursuing  Treaty  objectives  and  implementing  EU  policies. 
Policy-makers  should  always  strive  to  explore  a  range  of  legislative  and  non-legislative 
options  which  could  potentially  meet  these  objectives.  In  order  to  increase  awareness  and 
contribute to a more favourable environment for the use of alternative regulatory instruments, 
the Commission started an inventory of existing cases of EU self-regulation and coregulation. 
The European Economic and Social Committee (EESC) and the Commission have examined 
how  to  gather  operational  knowledge  on  EU  self-  and  co-regulation,  facilitate  exchange  of 
information and identify best practices. They decided to launch a new database in 2006. 

While  insisting  on  the  potential  of  regulatory  alternatives,  the  Commission’s  approach  also 
recognises that, in many cases, regulations remain the simplest way to reach EU objectives. 
This  was  for  instance  underlined  by  the  Single  Market  Observatory  of  the  European 
Economic and Social Committee.  

Monitoring the application of Community law 

Primary  responsibility  for  applying  Community  law  lies  with  the  national  administrations 
(and courts) in the Member States. The role of the Commission is to ensure that Community 
law is diligently and properly transposed and applied. 

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Communication  on  an  EU  common  methodology  for  assessing  administrative  costs  imposed  by 
legislation (COM(2005) 518, accompanied by Commission Staff Working Document SEC(2005) 1329 
Outline  of  the  proposed  EU  common  methodology  and  Report  on  the  Pilot  Phase  (April  – 
September 2005). 
The Communication specified that actual implementation and use of the methodology will be “subject 
to  (a)  the principle  of  proportionate  analysis  (the  Commission retaining  responsibility  for judging  the 
costs of its proposals); (b) the availability of sufficient, reliable and representative data, compatible with 
the  EU  common  methodology;  and  (c)  the  availability  of  an  adequate  level  of  staffing  and  financial 
resources”. 
In  the  Annual  Progress  Report  on  the  Lisbon  strategy  adopted  in  January  2006,  the  Commission 
confirmed this by announcing the launch of “a major exercise to measure the administrative cost arising 
from Community rules (or the way in which they have been implemented) in specific policy areas as 
part  of  the  ongoing  work  on  legislative  simplification,  with  a  special  emphasis  on  SMEs” 
(COM(2006) 30, 25 January 2006). 

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Progress  with  transposition  monitoring  and  conformity  checking  depends  mainly  on  the 
availability  of  standard  concordance  tables25,  the  systematic  use  of  electronic  notification  of 
transposed measures, early identification of likely problems and technical assistance, as well 
as the use of reminders. In 2005, the new Member States were fully integrated into the regular 
monitoring process. The new Member States are performing comparatively well with regard 
to the notification of national measures transposing directives. Progress on concordance tables 
was  more  limited.  In  its  proposed  directives,  the  Commission  has  systematically  included  a 
provision  requiring  Member  States  to  provide  such  tables  but  this  provision  has  not  always 
been agreed by the Council. 

The management of complaints and infringements, another key element for ensuring proper 
application of EU law, was improved at different levels. The use of less formal measures has 
also grown in 2005. 

Screening and withdrawal of pending proposals 

The  revised  Action  Plan  of  March  2005  provided  for  screening  of  pending  proposals,  with 
regard  to  their  general  relevance  and  their  impact  on  competitiveness26.  Pending  proposals 
transmitted  to  the  legislator  before  1  January  2004  were  all  screened  (183  proposals).  This 
initiative  was  an  innovation,  as  it  went  beyond  a  technical  exercise  (i.e.  the  regular 
withdrawal of proposals which are no longer topical). 

In  September  2005,  the  Commission  announced  its  intention  to  withdraw  68  proposals27. 
These  were  found  to  be  not  consistent  with  the  Lisbon  objectives  and/or  better  regulation 
principles,  had  little  chance  of  being  adopted  or  to  have  become  obsolete  for  objectives 
reasons.  After  having  given  Parliament  and  the  Council  time  to  express  their  views  and 
having  examined  their  comments,  the  Commission  formally  withdrew  its  proposals  by 
publishing their list in 2006 in the Official Journal. 

1.2. 

Actions  taken  by  the  European Parliament, the Council, the  Committee of the 
Regions and the European Economic and Social Committee  

In  2005,  the  European  Parliament  started  working  on  several  reports  looking  at  various 
aspects  of  better  regulation,  most  being  due  for  adoption  in  2006.  The  Council  and  its 
Presidency were equally keen to keep momentum high on better regulation28. The Committee 
of the Regions and the European Economic and Social Committee also took an active part in 
the better regulation debate. 

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Concordance tables indicate which national measure transposes which provision of the directive. 
COM(2005) 97. 
COM(2005) 462. 
In  November  2005,  the  UK,  Austrian  and  Finnish  Presidencies  submitted  a  discussion  paper  entitled 
"Advancing Better Regulation in Europe". Council Doc. 15140/05, 29 November 2005. 

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There  were  promising  developments  on  impact  assessments.  The  European  Parliament 
completed its first impact assessment on amendments to a Commission proposal, as did the 
Council,  in  the  form  of  a  pilot  project.  The  challenge  will  be  to  move  from  a  test  phase  to 
more  widespread  application.  A  noteworthy  development  was  the  agreement  in  November 
2005  of  an  Inter-Institutional  ‘Common  Approach  to  Impact  Assessment’,  setting  out  some 
basic ‘traffic rules’ for impact assessment throughout the legislative process. The ‘Common 
Approach’  can  be  seen  as  the  first  step  in  the  elaboration  of  the  common  methodology  for 
impact assessment foreseen in the Inter-Institutional Agreement on Better Lawmaking (IIA). 

More needs to be done by the other Institutions. For example, the Commission would like to 
see a commitment from the Member States to carry out impact assessments of proposals they 
present for police and judicial cooperation in criminal matters (the so-called third pillar). In 
this  area,  the  Commission  and  Member  States  share  the  right  of  initiative.  Although  the 
Commission analyses the possible impact of its ‘third-pillar’ proposals, the Member States do 
not. In many cases, their proposals do not include a proper explanatory memorandum either. 

On  administrative  costs  imposed  by  EU  legislation,  the  clear  commitment  taken  by  the 
Ministers in the Council to provide, on request and in a proportionate manner, the information 
needed  to  assess  these  costs  was  a  welcome  development29.  The  Council  did  not  respond 
however to the European Council’s invitation of March 2005 to reach an agreement with the 
Commission on a common methodology30. 

Implementation  of  the  IIA  provisions  on  simplification  and  coordination  of  legislative 
programming  was,  by  contrast,  rather  limited.  Neither  Parliament  nor  the  Council  modified 
their working methods for the adoption of simplification proposals31. Insofar as this is a key 
element  for  the  success  of  any  simplification  programme,  the  Commission  hopes  that  the 
legislator  will  proceed  with  the  simplification  proposals  in  an  expeditious  manner.  Better 
coordination  of  the  annual  legislative  timetables  of  the  three  Institutions  proved  difficult 
because of the noncommittal approach of the Council. 

1.3. 

Actions taken by the Member States 

The regulatory burden on European operators is mainly attributable to national legislation due 
to  its  relative  importance  compared  to  EU  legislation.  Moreover,  Member  States  have  an 
essential role to play in better regulation as they are responsible for applying and, in the case 
of  directives,  transposing  EU  legislation  at  national  level.  Delivery  on  better  regulation 
therefore relies largely on them. 

The  Commission  has  proposed  that  better  regulation  becomes  part  of  the  national  “Lisbon” 
programmes and recommended that the Member States report on their current activities and 
the actions that they intend to take. This dimension is covered in the Commission’s Annual 
Progress Report on Growth and Jobs of January 2006. 

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Reducing  the  administrative  burden  on  business,  Conclusions  of  the  Economic  and  Financial  Affairs 
Council (8 November 2005) 13678/05. 
European Council conclusions of 22 and 23 March 2005. 
The  deadline  was  maximum  six  months  after  the  entry  into  force  of  the  Agreement,  i.e.  end  of 
June 2004. 

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The Commission calls in particular on Member States which do not have a better regulation 
strategy, to assess the impact of proposed legislation, to systematically consult stakeholders, 
to  set  up  a  legislation  simplification  programme  and  to  develop  a  methodology  for  the 
measurement of administrative costs. 

2. 

APPLICATION OF THE PRINCIPLES OF SUBSIDIARITY AND PROPORTIONALITY 

The Commission has made a special effort to explain how the measures it proposes comply 
with  both  principles.  The  introduction  of  a  new  system  for  drafting  the  explanatory 
memorandum that accompanies each legislative proposal led to more detailed and systematic 
justification of the need for EU action. 

The  European  Parliament  and  the  Council  introduced  relatively  few  amendments  referring 
explicitly to subsidiarity and proportionality. The consensual interpretation of these principles 
is  not  surprising  considering  that  consultation  reached  record  levels32,  but  also  that  a  very 
large proportion of the Commission’s proposals were in fact responding to invitations made 
by the European Council, the Council and the European Parliament. Differences emerged in a 
few cases33, but the three Institutions eventually managed to come to a common interpretation 
of subsidiarity and proportionality for almost all of them. 

As for the Committee of the Regions, the great majority of its opinions did not criticise the 
Commission’s  proposals  on  the  grounds  of  subsidiarity.  In  one  case,  the  Committee 
concluded that the proposal was not fully complying with that principle34. The Commission 
has since decided to withdraw that proposal. 

For  its  part,  COSAC35  organised  a  pilot  project  to  test  the  subsidiarity  early  warning 
mechanism, provided for in the Constitutional Treaty, on a package of proposals made by the 
Commission  in  2004.  Twenty  national  parliamentary  chambers  considered  that  the 
Commission  did  not  adequately  justify  its  proposals  in  regard  to  subsidiarity.  Fourteen 
concluded  that  at  least  one  aspect  of  the  package  was  breaching  the  subsidiarity  principle. 
Some of these criticisms were shared by the European Parliament. However, some comments 
were motivated by arguments that were not related to subsidiarity. This demonstrates the need 
to work out a common understanding of the meaning of the subsidiarity principle, as well as 
the need for renewed efforts on the part of the Commission to provide explicit and detailed 
justification of its proposals in light of subsidiarity concerns. 

As  regards  ex-post  judicial  control,  the  principle  of  subsidiarity  was  referred  to  in  four 
judgments and orders delivered by the Court of Justice and the Court of First Instance of the 
European Communities in 2005. No judgment concluded that the principle of subsidiarity had 
been  contravened.  The  principle  of  proportionality  was  also  analysed  in  several  judgments, 
leading the European Court of Justice to conclude that certain obligations were not necessary 
to reach the objectives set by a contested directive. 

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See Annex 2 of the accompanying Commission Staff Working Document. 
See Section 3.2. of the accompanying Commission Staff Working Document. 
See Section 3.3.1 of the accompanying Commission Staff Working Document. 
“Community and European Affairs Committees of the Parliaments of the European Union”. 

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Finally, future institutional arrangements for the monitoring and control of the application of 
subsidiarity were discussed as part of the “period for reflection, clarification and discussion” 
called for by the European Council on 16 June 2005, after the negative results of the French 
and Dutch referenda on the Constitutional Treaty. In November 2005, the Presidency of the 
Council and the Netherlands co-organised a conference entitled “Sharing power in Europe”, 
aimed mainly at finding ways to improve the monitoring and control of compliance with the 
subsidiarity principle. The debate focused on the possible contribution of national Parliaments 
on the basis of existing Treaties and Protocols. A follow-up conference will be organised in 
April 2006 by the Presidency of the Council. 

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