Opinion of the European Economic and Social Committee on the 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 COM(2006) 748 final — 2006/0249 (COD)
Date: 2007-03-14
Institutions: European Economic and Social Committee
Subjects: EC Directive, ESC opinion, branch, company law, freedom to provide services, repeal, right of establishment, simplification of legislation, works contract

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Official Journal of the European Union

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6.
In conclusion, the Committee, within the strict limits of
the codification effected by the Commission on the basis of the
decision of 1 April 1987 [COM(1987) 868 PV], is favourable to

this proposal, as it has been previously in relation to the same
directive.

Brussels, 14 March 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on the 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

COM(2006) 748 final — 2006/0249 (COD)

(2007/C 161/12)

On 13 December 2006 the Council decided to consult the European Economic and Social Committee,
under Article 95 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 7 February 2007. The rapporteur was Mr Wilms.

At its 434th plenary session held on 14/15 March 2007 (meeting of 14 March), the European Economic
and Social Committee adopted the following opinion by 87 votes to one, with 13 abstentions:

1. Introduction

1.1
Fifty years of continuous development without any
consistent consolidation has made European legislation — in
the form of treaties, directives and regulations, recommenda-
tions, European Court of Justice case law and other Community
documents — highly complex and very difficult even for specia-
lists to fathom.

1.2
In some areas, for instance, new directives have been
adopted without any consistent checks on whether the body of
directives already in place is thereby rendered obsolete or
whether the relevant provisions can be incorporated into the
new text, thus making it possible to repeal the earlier directive
on the same subject. Similarly, certain facets of a particular legal
area that, in essence, belong together have, over the years, come
to be dealt with separately in an increasing number of new and
independent directives. Or again, certain directives have, over
time, been partially amended by various legal
instruments
without the adoption of any new and legally binding consoli-
dated text.

1.3
The time therefore really is ripe for change in this field.
There can be no objection to a technical consolidation of the
existing directives, provided this is carried out with the best of
intentions and is not done for any ulterior motive, such as to
settle old scores with other institutions and to push through a
particular viewpoint that has thus far failed to secure acceptance
in the political process.

The Commission's declared intention is to tidy up Community
law from a purely technical angle and it is thus, in principle, to
be welcomed.

1.4
In the same way, the Commission's declared intention of
simplifying European law in a bid to cut red tape and reduce
useless effort in the Member States can only be welcomed.

The relevant Commission proposals for directives to
1.5
repeal or amend existing legislation as part of this process must,
however, be examined in the light of the two considerations
mentioned above.

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2. Gist of

the Commission proposal (1) and Directive

71/304/EEC

protection for economic operators that is just as good as that
provided for under the directive that is to be repealed.

The Commission is proposing a new directive (2)

2.1
repeal Directive 71/304/EEC.

to

2.2
The purpose of Council Directive 71/304/EEC of 26 July
1971 was to oblige 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 any public entities or legal persons for the benefit of
cross-border service providers. The directive sought to combat
direct or indirect discrimination against non-national service
providers in the awarding of public contracts by the Member
States. It also obliged Member States to ensure that non-national
enterprises should have access to credits, grants and subsidies
under the same conditions as nationals and that non-national
enterprises should ‘have access without restriction and in any
event under
to (state-
‘supply facilities’ that are essential for the perfor-
controlled)
mance of their contract.

the same conditions as nationals’

The Commission says the current proposal

is needed
2.3
because this directive is now obsolete, given the changes that
have taken place since it was adopted.

As the Commission notes, the field of public procure-
2.3.1
ment
by Directives 2004/17/EC and
is now covered
2004/18/EC, which supersede the directive under discussion
here.

2.3.2
As Directive 71/304/EEC also relates in general terms
to the freedom to provide services, the Commission further
notes that European Court of Justice case law in this area has
changed substantially. To back up this statement, the Commis-
sion, in a footnote, quotes verbatim from Case C-76/90 Säger,
ECR I-4221, which states that Article 59 [now Article 49 —
freedom to provide services] 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 restric-
tion, even if it applies without distinction to all providers of
services regardless of their place of origin,
‘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’.

In its explanatory memorandum,

the Commission
2.3.3
sums up the case law in question, noting that the ECJ has made
clear that ‘Article 49 of the EC Treaty prohibits measures that
apply indiscriminately and that are likely to impede the freedom
to provide services’.

2.5
The directive itself has only four articles. Article 1 repeals
Directive 71/304/EEC. Article 2 enjoins Member States to bring
into force the laws and administrative provisions necessary to
comply with this directive, the purpose of which is to repeal
another directive; to communicate to the Commission the text
of the provisions and a correlation table between the directive
and the national provisions; and to make due reference to this
directive in the measures themselves or on the occasion of their
official publication; the Member States themselves are to lay
down the methods of making such a reference. Article 3 sets
the entry into force of the directive as the day of its publication,
while Article 4 states that the directive is addressed to the
Member States.

3. Assessment of the Commission proposal

The proposal

3.1
repealing Directive
71/304/EEC unfortunately fails to fully meet all the criteria set
out in point 1 of this opinion.

a Directive

for

3.2
As a general point, it should be noted that the proposed
directive, the purpose of which is to repeal another directive, is
one of the first of a whole series of directives of this kind. It
would be well, therefore, to ask whether the most effective way
of implementing the work programme for the repeal of a large
number of now-obsolete directives over the coming months and
years really is to adopt a separate new directive repealing every
single obsolete directive. In the ongoing implementation of the
work programme, consideration should again be given to
whether, as an alternative, it might not be possible — and also
more efficient — to repeal several directives at once via a single
new directive. Since Member States frequently adopt legislation
transposing a number of directives at once, such an approach
could be a way of avoiding having to amend the same laws of
the Member States repeatedly over a short period of time.

3.3 With regard to the proposed directive under discussion
here, further consideration should be given to the question as to
whether the transposition arrangements set out in Article 2
really do brook no alternative, or whether, to attain the desired
objective, it might not be enough to ask the Member States to
check their body of law for any changes that might be necessary
and to implement those changes where appropriate.

2.4
In the recitals, the Commission again refers to the new
public procurement directives and the Säger judgment, stressing
that, thanks to them, it has been possible to achieve a level of

(1) COM(2006) 748 final.
(2) COM(2006) 748 final.

3.4
After all, the main purpose of the 1971 directive that is
to be repealed was to eliminate discriminatory laws and rules in
place in the Member States at that time and to enforce general
principles of Community law in the field of public procurement
— principles that have been reiterated and further fleshed out
in directives adopted in the intervening years.

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3.5
The abolition of discriminatory rules in force in the
Member States was undertaken back in the 1970s as part of the
transposition of Directive 71/304/EEC — or, for those countries
that joined later, in the course of their adoption of the Com-
munity aquis. The planned repeal of this directive does not of
course mean that the abolition of these earlier discriminatory
national rules is to be rescinded. The repeal of the directive does
not therefore necessitate any changes to the national legislation
adopted at the time to abolish discriminatory rules, as that legis-
lation has by and large fulfilled its purpose (i.e. the discrimina-
tory rules have been abolished) and, in any case, the Treaty and
all the more recent directives require such discriminatory rules
to stay abolished or to be prohibited.

At the latest after the adoption of Directives 2004/18/EC
3.6
and 2004/17/EC,
the
the public procurement
Member States was in most cases brought to a level reflecting
the changes in European law since 1971. Where this has not yet
happened, the Commission can still enforce the new directives.
Since all directives are anyway addressed to the legislatures of
the Member States, simply repealing Directive 71/304/EEC at

legislation of

European level and requiring the Member States to carry out the
necessary checks would obviously in this case be quite enough
to achieve the desired effect. In the majority of cases, this will, at
most, involve the deletion, wherever they are still in place, of
any references to the now-obsolete Directive 71/304/EEC.

3.7
Although it is too late to do anything about it, it is none-
theless regrettable that Directive 71/304/EEC was not repealed
in conjunction with the adoption of Directives 2004/17/EC and
2004/18/EC. It is therefore suggested that, for all future directive
proposals, checks should always, as a matter of principle, be
made on whether the new directive does not render earlier
directives obsolete and whether such obsolete directives should
not be repealed straight away. This measure too could progres-
sively lead to clearer and more coherent European law.

4.
The EESC therefore recommends that the proposal for a
Directive should be amended so as to simply note the repeal of
the Directive and to ask the Member States to check their body
of law for any changes that might be necessary and to imple-
ment those changes where appropriate.

Brussels, 14 March 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

APPENDIX

to the opinion of the European Economic and Social Committee

The following section opinion text was rejected in favour of amendments adopted by the assembly but obtained at least
one-quarter of the votes cast:

3.9

The explanatory memorandum and the second recital of the proposed directive implicitly try to promote a some-
what slanted interpretation of EU primary law.

3.10

As was already the case in the Commission's draft of the services directive, this is done in particular by giving an
edited, one-sided account of the European Court of Justice's case law on freedom to provide services, in this
instance the judgment of 25 July 1991 in Case C-76/90 Säger, which is summed up as having made clear ‘that
Article 49 of the EC Treaty prohibits measures that apply indiscriminately and that are likely to impede the
freedom to provide services’. This interpretation is backed up by a paragraph of the judgment cited in footnote 7.

3.11

Apart from the fact that the Court of Justice was not referring in this paragraph very broadly to all measures that
might apply, but only to discrimination and restrictions, the Commission's summary and selective quote fail to
take account of another very important principle of the judgment, found in paragraph 15 thereof — which the
Commission does not cite — and in many other judgments: while all direct and indirect discriminatory measures
and obligations imposed by the Member States are clearly prohibited, the European Court of Justice still permits
non-discriminatory measures and obligations imposed by the Member State if they are justified by imperative
reasons relating to the public interest and are also appropriate and necessary to achieve the objectives and do not
exceed what is strictly necessary.

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3.12

But the point of the Commission's interpretation, implicit in its selective citing from the judgment, is obviously
that no rules and obligations, or measures, of the contracting Member States should apply any more to cross-
border service providers, even if they are absolutely compatible with the objectives of the European Treaties and
other European legislation, are applied without any discrimination and clearly satisfy all the requirements of the
European Court of Justice.

3.12.1 If this interpretation were correct, all obligations on service providers would have to be seen as illegal, even in the
case of Member State projects with EU funding, including those based on explicit EU provisions under which EU
funding is made available. The same would also apply to obligations which serve to secure compliance with
certain standards in the as-yet non-harmonised area and also foster road safety, such as national rules on the
colour, reflectiveness and dimensions of place-name signs. The same would go for exemplary national provisions
on health and safety at work, covering, as in the Netherlands for instance, the maximum weight and dimensions
of kerbstones in a bid to cut invalidity rates among road workers.

3.12.2 These examples alone demonstrate the absurdity of any over-rigorous interpretation of freedom to provide
services. Such an interpretation would make Article 49 of the EU Treaty — contrary to its wording and to the
legal context in relation to other articles of the European Treaties — into a type of ‘super basic right’ for busi-
nesses operating across borders, which would obviate the entire framework of legislation that has been adopted
for good reasons and in accordance with the general legal principles of the EU and its Member States in order to
regulate company activities. This idea would be well-nigh impossible to uphold vis-à-vis the EU public and has
already been rejected by all the other European institutions in connection with the services directive.

3.13

3.14

3.15

4.

Such an interpretation would contradict not just the content of the more recent Directives 2004/18/EC and
2004/17/EC, but also the spirit and letter of the European Treaties, the provisions and supplementary protocols
on the subsidiarity principle and the case law of the European Court of Justice.

Nor is it the task of the Commission or of any other European institution to provide binding interpretations of
judgments delivered by the European Court of Justice. And it is certainly not their task to distort the content of
those judgments, by citing only part of them, in a way which clearly runs counter to the intention of the Euro-
pean Court of Justice as expressed in the judgments.

If such biased interpretations were to become part of European secondary law via a proposal for a Directive, new
possibilities for interpreting the earlier Directives 2004/18/EC and 2004/17/EC would be opened up, which
would produce not more legal clarity and certainty, but the opposite.

The EESC therefore recommends that the proposal for a Directive should be amended so as to simply note the
repeal of the Directive and to ask the Member States to check their body of law for any changes that might be
necessary and to implement those changes where appropriate, justifying this on technical grounds only, i.e. the
previous adoption of Directives 2004/18/EC and 2004/17/EC.

Outcome:

43 votes for deleting these paragraphs, 38 against, 12 abstentions.