Proposal for a Directive of the European Parliament and of the Council repealing Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches
Date: 2006-11-30
Institutions: European Commission
Subjects: EC Directive, branch, company law, freedom to provide services, repeal, right of establishment, simplification of legislation, works contract

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.11.2006 
COM(2006) 748 final 

2006/0249 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

repealing Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of 
restrictions on freedom to provide services in respect of public works contracts and on 
the award of public works contracts to contractors acting through agencies or branches 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

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•  Grounds for and objectives of the proposal 

This proposal seeks to contribute to the task of simplifying the Community acquis by 
repealing a Directive that has become obsolete. 

120 

•  General context 

Following the adoption of its communication on the updating and simplification of the 
Community acquis,1 the Commission has intensified its scrutiny of the acquis in order 
to identify instances where legislative acts had become obsolete and could therefore be 
repealed in the interests of simplification. One of the acts examined in this context is 
Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions 
on freedom to provide services in respect of public works contracts and on the award of 
public works contracts to contractors acting through agencies or branches.2 

Directive  71/304/EEC,  which  applies  exclusively  to  the  public  works  sector,3  first  of 
all  imposes  an  obligation  on  the  Member  States  to  remove  restrictions  “affecting  the 
right  to  enter  into,  award,  perform  or  participate  in  the  performance  of  public  works 
contracts  on  behalf  of  the  state,  or  regional  or  local  authorities  or  legal  persons 
governed  by  public  law”.  The  removal  of  these  restrictions  is  intended  to  benefit 
economic operators acting, either directly or through agencies or branches, as service 
providers.  Among  the  restrictions  to  be  removed,  the  Directive  cites  a  number  of 
examples  such  as  clauses  whereby  entities  that  have  been  awarded  a  public  works 
contract  or  a  service  or  public  works  concession  contract  are  obliged  to  engage  in 
discriminatory practices when choosing their subcontractors4 or, again, the example of 
technical specifications that have a discriminatory effect. Under the Directive, Member 
States also have to ensure that non-national enterprises have the same access to credits, 
grants  and  subsidies  as  nationals  and  that  the  non-national  enterprises  “have  access 
without  restriction  and  in  any  event  under  the  same  conditions  as  nationals,  to  the 
supply facilities which the state is in a position to control and which they need for the 
performance of their contract”.5 

This Directive is therefore in two parts: one part concerning the procurement procedure 
as  currently  addressed  by  Directives  2004/18/EC  and  2004/17/EC,6  and  another  part 
relating to non-discriminatory access to public works in general which seeks to ensure 
the  direct  implementation  of  Articles  43  and  49  of  the  EC  Treaty  and  is  upstream  or 

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COM (2003) 71 final,11.2.2003. 
OJ L 185, 16.8.1971. 
Apart from a number of exceptions listed in Article 2(2) thereof. 
Article 3(1)(a). 
Article 3(2)(b). 
Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating 
the  procurement  procedures  of  entities  operating  in  the  water,  energy,  transport  and  postal  services 
sectors and Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on 
the  coordination  of  procedures  for  the  award  of  public  works  contracts,  public  supply  contracts  and 
public service contracts (OJ L 134, 30.4.2004, p. 1 and p. 114 respectively).  

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downstream of the ongoing tendering procedure. 

The first part has been superseded by the public procurement legislation that followed 
on from the 1971 Directive, i.e. most recently Directives 2004/17/EC and 2004/18/EC.  

As far as the second part is concerned, it needs to be pointed out that, since the entry 
into  force  of  Directive  71/304/EEC,  the  case  law  of  the  Court  in  matters  relating  to 
freedom  to  provide  services  has  changed  substantially.7  Consequently,  it  is  clear  that 
Article 49 of the EC Treaty prohibits measures that apply indiscriminately and that are 
likely to impede the freedom to provide services.8 Henceforth, the scope of Article 49 
of the EC Treaty is broader than that of Article 3 of Directive 71/304/EEC. 

It  may  therefore  be  concluded  that  there  is  no  longer  any  need  for  Directive 
71/304/CEE  and  that,  consequently,  steps  can  be  taken  to  repeal  the  said  Directive 
without in any way limiting the rights of economic operators. 

130 

•  Existing provisions in the area of the proposal 

Apart from the fact that it is governed by the Treaty (in particular, Articles 43 and 49 
thereof),  this  area  is  currently  governed  by  Directive  2004/17/EC  of  the  European 
Parliament  and  of  the  Council  of  31  March  2004  coordinating  the  procurement 
procedures  of  entities  operating  in  the  water,  energy,  transport  and  postal  services 
sectors9 and Directive 2004/18/EC of the European Parliament and of the Council of 31 
March 2004 on the coordination of procedures for the award of public works contracts, 
public supply contracts and public service contracts.10 

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•  Consistency with other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

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Unnecessary given that the rights of the economic operators and the obligations of the 
contracting authorities and contracting entities remain unchanged. 

Thus, in its judgment of 25 July 1991 in Case C-76/90 Säger, ECR I-4221, the Court states in paragraph 
12 of the grounds for the judgment: “It must be observed, first, that Article 59 [formerly Article 49] of 
the  Treaty  requires  not  only  the  elimination  of  all  discrimination  on  grounds  of  nationality  against 
providers  of  services  but  also  the  abolition  of  any  restriction,  even  if  it  applies  without  distinction  to 
national  providers  of  services  and  to  those  of  other  Member  States,  which  is  liable  to  prohibit  or 
otherwise impede the activities of a provider of services established in another Member State where he 
lawfully provides similar services.” 
See also judgment of the Court of 25 July 1997 in Case C-288/89 Gouda, ECR I-4007, paragraphs 12 
and 13.  
OJ L 134, 30.4.2004, p. 1. 
OJ L 134, 30.4.2004, p. 114. 

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229 

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•  Collection and use of expertise 

Use of external expertise was not necessary. 

•  Impact assessment 

Unnecessary given that: 

the rights of the economic operators and the obligations of the contracting authorities 
and contracting entities remain unchanged. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The proposed directive repeals Directive 71/304/EEC, which has become obsolete as a 
result of case law and legislative developments in respect of public works contracts. 

•  Legal basis 

Article 47(2) and Articles 55 and 95 of the Treaty. 

•  Subsidiarity principle 

The proposal concerns an area that falls under exclusive Community competence. The 
subsidiarity principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reasons: 

the  formal  repeal  of  a  directive  that  is  not  time-limited  per  se  can  only  take  place 
through the adoption of a legislative act; 

repeal will have no financial impact. 

•  Choice of instruments 

Proposed instrument(s): Directive. 

Other means would not have been appropriate for the following reasons: 

By analogy, the proposal for a directive is based on the same Treaty provisions as the 
Directive  that  is  due  to  be  repealed.  In  the  light  of  these  legal  bases,  the  directive 
option is unavoidable. 

4)  BUDGETARY IMPLICATIONS 

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The proposal has no implications for the Community budget. 

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510 

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5)  ADDITIONAL INFORMATION 

•  Simplification 

The proposal simplifies the legislative framework. 

As  a  result,  the  Community  acquis  will  no  longer  contain  an  act  that  has  become 
redundant. 

•  European Economic Area 

As  the  proposed  act  concerns  a  matter  covered  by  the  EEA  Agreement,  it  should 
therefore be extended to the European Economic Area. 

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2006/0249 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

repealing Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of 
restrictions on freedom to provide services in respect of public works contracts and on 
the award of public works contracts to contractors acting through agencies or branches 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
47(2) and Articles 55 and 95 thereof, 

Having regard to the proposal from the Commission,11 

Having regard to the opinion of the European Economic and Social Committee,12 

Having regard to the opinion of the Committee of the Regions,13 

Acting in accordance with the procedure laid down in Article 251 of the Treaty,14 

Whereas: 

(1) 

(2) 

In its communication on the updating and  simplification of the Community acquis,15 
the  Commission  announced,  inter  alia,  its  intention  to  scrutinise  the  acquis  so  as  to 
establish whether it could be simplified, for instance through the repeal of acts that had 
become obsolete. 

As  a  result  of  the  adoption  of  various  acts  of  a  legislative  nature  in  the  public 
procurement  sector,  most  recently  Directive  2004/17/EC  of  the  European  Parliament 
and  of  the  Council  of  31  March  2004  coordinating  the  procurement  procedures  of 
entities  operating  in  the  water,  energy,  transport  and  postal  services  sectors,16  and 
Directive  2004/18/EC  of  the  European  Parliament  and  of  the  Council  of  31  March 
2004 on the coordination of procedures for the award of public works contracts, public 
supply contracts and public service contracts,17 and also in the light of developments 
involving the case-law of the European Court of Justice, notably in its judgment of 25 

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OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
COM (2003) 71 final, 11.2.2003. 
OJ L 134, 30.4.2004, p. 1. 
OJ L 134, 30.4.2004, p. 114. 

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July 1991 in Case C-76/90 Säger,18 it has been possible to achieve a level of protection 
equal  to or  greater than  that  offered  under Council  Directive 71/304/EEC of 26 July 
1971 concerning the abolition of restrictions on freedom to provide services in respect 
of  public  works  contracts  and  on  the  award  of  public  works  contracts  to  contractors 
acting through agencies or branches.19 Consequently, Directive 71/304/EEC should be 
repealed  in  order  to  simplify  the  Community  acquis,  while  at  the  same  time  not 
prejudicing the rights of economic operators. 

HAVE ADOPTED THIS DIRECTIVE: 

Directive 71/304/EEC is hereby repealed. 

Article 1 

Article 2 

Transposition 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions 
necessary  to  comply  with  this  Directive  by  […]  at  the  latest.  They  shall  forthwith 
communicate to the Commission the text of those provisions and a correlation table between 
those provisions and this Directive. 

When  Member  States  adopt  these  measures,  the  latter  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  on  the  occasion  of  their  official 
publication.  The  methods  of  making  such  a  reference  shall  be  laid  down  by  the  Member 
States. 

This Directive shall enter into force on the day of its publication in the Official Journal of the 
European Union. 

Article 3 

Article 4 

This Directive is addressed to the Member States. 

Done at Brussels, […] 

For the European Parliament 
The President 
[…] 

For the Council 
The President 
[…] 

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ECR I-4221. 
OJ L 185, 16.8.1971, p. 1. 

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