Single market compliance and enforcement

In the blog entries Evidence-based European market reforms? and  Services in EU single market strategy and European standards, public procurement and intellectual property, we used the analytical staff working document underpinning the promised proposals and actions in parallel with the condensed single market communication:

A Single Market Strategy for Europe - Analysis and Evidence; Brussels, 28.10.2015 SWD(2015) 202 final (108 pages)

Upgrading the Single Market: more opportunities for people and business; Brussels, 28.10.2015 COM(2015) 550 final (22 pages)

Compliance and enforcement

Section 4.1. A culture of compliance and smart enforcement encompasses pages 16-17 of the communication and pages 79-86 of the supporting working document.

The SWD (page 83) makes this remark on implementation plans for new legislation:

As part of the Better Regulation Agenda, the Commission should ensure efficient monitoring of EU law throughout the full regulatory life-cycle from the proposal of new legislation, to its adoption, transposition, notification, implementation, enforcement and evaluation, with the overall objective of ensuring clarity, operability and enforceability of EU legislation.

The SWD paper explains the Better Regulation Agenda, but since we are interested in new legislation connected with the single market strategy, we refer to the more detailed better regulation communication, which was accompanied by two Commission staff working documents:

Better regulation for better results - An EU agenda; Strasbourg, 19.5.2015 COM(2015) 215 final

Regulatory Fitness and Performance Programme (REFIT): State of Play and Outlook; Strasbourg, 19.5.2015 SWD(2015) 110 final

Better Regulation Guidelines; Strasbourg, 19.5.2015 SWD(2015) 111 final

At least with regard to the number of pages, the communication is the mere tip of the better regulation iceberg.

The Commission outlined a new instrument for monitoring the single market and its planned scope, SWD(2015) 202 pages 85-86:

The ability to obtain timely, comprehensive, reliable and robust quantitative and qualitative information directly from affected firms would improve enforcement of the Single Market acquis and help addressing flaws in existing legislation. The introduction of a Single Market Information Tool (SMIT), which will allow the collection of information directly from selected market participants, will help the Commission to ensure the optimal enforcement of the Single Market acquis.

The use of the SMIT by the Commission will be decided on a case by case basis and will be adequate and proportionate to the intended objectives. This tool will not be a blanket right to require information from any firm at any time. First of all, before engaging into such an exercise, the Commission will analyse whether already available data are sufficient to address the issues at stake. Second, information request will only be addressed to a subset of the most affected firms. Third, the data sought through the SMIT will normally be readily available to the market players concerned, such as questions relating to the market behaviour, cross-border trade and business model and will typically cover factual market data (e.g. market size and share, level of imports etc.), company data (e.g. cost structure, profits, volumes, new products, ownership, control, participations in other companies, etc.) and facts-based analysis of the market functioning (e.g. regulatory and entry barriers, entry cost, growth rate of the market, growth perspectives or overcapacity). The Commission will consider existing best practice, including from the competition law domain, when shaping the procedural and administrative process of the SMIT, notably with regard to confidentiality-related issues.

In a nutshell:

Data analytics tool for monitoring Single Market legislation (2017)

Proposal for market information tools allowing the Commission to collect information from selected market players (2016)

Right now, the latest edition of the online Single Market Scoreboard is 07/2016.

Services Directive: notification

An improved notification procedure with regard to the Services Directive 2006/123, section 4.2, communication pages 17-18, SWD pages 86-90, was seen as necessary:

As a result, the additional economic gains to be achieved from reforms carried out in 2012 to 2014 are limited. Of the 1.8 % potential additional GDP growth estimated by the Commission in 2012, reforms adopted by mid-2014 are estimated to yield a limited EU GDP long-term growth of no more than 0.1 %.

This lack of progress shows the need for an improved notification procedure allowing for more preventive enforcement.

In short:

Legislative proposal modelled on the successful features of the current notification procedure under Directive (EU) 2015/1535 for services currently not covered by that Directive (2016)

Single market for goods

Communication pages 18-20 and SWD pages 90-100, section 4.3. Strengthening the Single Market for goods taught us that the Commission was going to present an EU-wide Action Plan to increase awareness of mutual recognition and revise the Mutual Recognition Regulation 764/2008.  

Briefly:

Action Plan to increase awareness of the mutual recognition principle (2016)

Revision of Mutual Recognition Regulation (2017)

Comprehensive set of actions to further enhance efforts to keep non-compliant products from the EU market (including a possible legislative initiative) (2016-2017)

Ralf Grahn

Stability, convergence and EU2020 compliance: EU member states and Commission

The spring meeting of the European Council 24 to 25 March 2011 (EUCO 10/11, paragraph 2 and footnote 1) outlined the the next steps within the framework of the European semester and endorsed the the priorities for fiscal consolidation and structural reform ”in line with” the Council's conclusions of 15 February and 7 March 2011 and further to the Commission's Annual Growth Survey, while also referring to the synthesis report of 16 March 2011 by the Hungarian presidency of the Council of the European Union.

The conclusions of the Ecofin Council (Economic and Financial Affairs) 15 February 2011 on the European Semester stated that the Stability and Convergence Programmes and National Reform Programmes for the period 2011/2012 were to be submitted by the EU member states preferably by mid-April or end April at the latest (paragraph 1).

During our pre-deadline peek on 22 April 2011 we found both programmes, but mainly in the national languages, from four countries (Belgium, Bulgaria, Hungary and Finland) plus the Stability programme of Slovenia posted on the web pages of DG Economic and Financial Affairs (Ecfin) of the European Commission.

The next day we looked for updates on the website of the Europe 2020 strategy, but found none.

However, by searching for documents from the EU member states, we unearthed and provided links to the posted language versions of the first Stability Programmes, Convergence Programmes or National Reform Programmes stashed away on the website (Germany, Bulgaria, Belgium and Hungary).

We also provided direct links to the different language versions of the programmes posted on the Ecfin web page.

In part, different sets had been posted on the two Commission websites. At the time, even after combining the EU2020 and Ecfin websites, we still had no programmes from 21 out of 27 EU member states, and only one programme each from two of the six countries posted on the websites of the European Commission. Only Hungary and Finland offered both programmes in English.


Submission deadline

We have passed the 30 April 2011 deadline and we have entered what the Elisabethan writer Thomas Dekker called ”The Merry Month of May”.

The final version of the Stability Programme of each eurozone country or the Convergence Programme from each EU member progressing towards euro adoption, plus the National Reform Programme for every member, is its main contribution towards fulfilling its obligations according to the Stability and Growth Pact, the European Semester and the growth-enhancing reforms in line with the EU2020 strategy.

The drafts were submitted last autumn, but have been under wraps. It is high time for the European public to be able to access the final programmes, the new language versions (especially English) and possible related improvements and updates on the EU2020 and Ecfin websites.


Europe 2020 improvements and updates

The latest updates on the EU2020 website are press releases from the Commission.

If we search for Latest documents, the last addition is from 25 March 2011, namely a link to the conclusions of the [European] Council, which include the agreed text on the Euro Plus Pact.

In other words, the Commission has not improved its presentation since our latest visit.

In my humble opinion, on a pan-EU website such as Europe 2020, all the EU institutions and the member states should be treated on an equal basis.

Forewarned, or inspired enough to search for Member states' documents, you find six NRPs added to the ones we found on our previous visit: from Poland (in Polish), Lithuania (in English), Luxembourg (in French), the Czech Republic (in Czech), Ireland (in English) and the United Kingdom (in English).

Eight National Reform Programmes out of 27 EU member states, but only four programmes in English.


Ecfin improvements and updates

Through the Ecfin web page 'Stability and Convergence programmes (or updates) and National Reform Programmes 2011 – programmes received to date' we find thirteen Stability or Convergence programmes and nine NRPs, but most English versions are not yet available.

The DG Ecfin offers a dedicated web page and the available programmes can be seen at a glance. In addition to the submitted programmes, the page contains space for the later stages: Staff Working Paper, Commission recommendation and Council recommendation.

Clearly, someone has done some thinking. Perhaps the people responsible for the Europe 2020 strategy and website could pay a visit.

The missing Swedish version of the NRP from Finland I remarked about has not been added in the meantime.

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Hopefully, we are going to see improvements within the next few days, by the EU member states as well as the Commission, because the deadline for proposed recommendations is approaching (late May, early June).



Ralf Grahn



P.S. Infopolitics.eu is a public service dedicated to news and opinion concerning netizens' rights and freedoms. It is a joint project by the Greens-EFA in the European Parliament and Piratpartiet.

Sweden and eurozone: Optional treaty compliance?

Sweden is a unique case among the member state economies in the European Union: competitive and social and with healthy public finances.



According to Wikipedia eight states are obliged to join the eurozone once they fulfil the strict entry criteria, but this does not include Sweden, “which has a de facto opt out”.

The Wikipedia article Eurozone explains this interpretation in the following way:

Sweden gained a de facto opt-out by using a legal loophole. It is required to join the eurozone as soon as it fulfills the convergence criteria, which includes being part of ERM II for two years, while joining ERM II is voluntary. Sweden has so far decided not to join ERM II.

We can all agree that Sweden is factually outside the euro area, but the European Central Bank (ECB) takes a different view on the admissibility.



The European Central Bank’s Convergence Report May 2010 (273 pages) states in the country summary (page 53):

Sweden is a Member State with a derogation and must therefore comply with all adaptation requirements under Article 131 of the Treaty. Furthermore, the ECB notes that, pursuant to the Treaty, Sweden has been under the obligation to adopt national legislation with a view to integration into the Eurosystem since 1 June 1998. As yet no legislative action has been taken by the Swedish authorities to remedy the incompatibilities described in this and previous reports.

When we read the European Commission’s Convergence Report 2010 (Brussels, 12.5.2010 COM(2010) 238 final;30 pages), we notice that legislation in Sweden is not fully compatible with Articles 130 and 131 TFEU.

Sweden does not fulfil the criterion on price stability, nor the exchange rate criterion (pages 28 to 29).

In the light of its assessment on legal compatibility and on the fulfilment of the convergence criteria, the Commission considers that Sweden does not fulfil the conditions for the adoption of the euro.

Rule of law?


The Swedish government position seems to be that possible treaty compliance is subject to the outcome of a referendum in an unforeseeable future.

Normally, if a member state has failed to fulfil an obligation under the treaties, the Commission delivers a reasoned opinion. In case of non-compliance, the Commission or a member state may bring the matter before the Court of Justice of the European Union (Articles 258 and 259 TFEU).

Sweden has been in breach since 1998, but no Court proceedings seem to be imminent.

Are we to conclude that treaty compliance is optional in the European Union, at least de facto?

The rule of law is mentioned as one of the founding values of the European Union (Article 2 TEU), but would it be more to the point to call it a floundering value?




Ralf Grahn

EU procurement law: Central purchasing bodies (CPB)

Contracting authorities can achieve market clout by joint purchasing through a central purchasing body (CPB).

Allowing the use of CPBs is voluntary for each member state, but the EC (EU) Procurement Directive covers the basic points for this form of collaborative public purchasing.



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Article 11 Procurement Directive


Procurement Directive Article 11 allows central purchasing bodies (CPBs), meant to achieve economies of scale for buyers. The national legislation in each member state can make use of this opportunity.

The CPB can make either one off bulk purchases or use framework agreements for recurring needs.


If the CPB complies with Directive, the contracting authority is deemed to have complied with it:

Article 11
Public contracts and framework agreements awarded by central purchasing bodies

1. Member States may stipulate that contracting authorities may purchase works, supplies and/or services from or through a central purchasing body.

2. Contracting authorities which purchase works, supplies and/or services from or through a central purchasing body in the cases set out in Article 1(10) shall be deemed to have complied with this Directive insofar as the central purchasing body has complied with it.


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Central purchasing body explained


The Recitals of the Procurement Directive present reasons for the consolidated legislation and for novelties. Recital 15 describes the central purchasing body (CPB):

(15) Certain centralised purchasing techniques have been developed in Member States. Several contracting authorities are responsible for making acquisitions or awarding public contracts/framework agreements for other contracting authorities. In view of the large volumes purchased, those techniques help increase competition and streamline public purchasing. Provision should therefore be made for a Community definition of central purchasing bodies dedicated to contracting authorities. A definition should also be given of the conditions under which, in accordance with the principles of non-discrimination and equal treatment, contracting authorities purchasing works, supplies and/or services through a central purchasing body may be deemed to have complied with this Directive.


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Voluntary nature

The voluntary nature of central purchasing bodies is further underlined in Recital 16 of the Procurement Directive:

(16) In order to take account of the different circumstances obtaining in Member States, Member States should be allowed to choose whether contracting authorities may use framework agreements, central purchasing bodies, dynamic purchasing systems, electronic auctions or the competitive dialogue procedure, as defined and regulated by this Directive.


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Central purchasing body defined


The EC (EU) Procurement Directive 2004/18/EC, also known as the Classic Directive, defines a central purchasing body (CPB) in Article 1(10):



10. A ‘central purchasing body’ is a contracting authority which:

— acquires supplies and/or services intended for contracting authorities, or

— awards public contracts or concludes framework agreements for works, supplies or services intended for contracting authorities.


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Contracting authority described


The definition of a central purchasing body builds on the concept of a contracting authority.

You can turn to the blog post EU procurement: Contracting authority, at:

http://grahnlaw.blogspot.com/2008/12/eu-procurement-contracting-authority.html


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Guidance on central purchasing bodies




UK OGC

The United Kingdom Office of Government Commerce has published OGC Guidance on Central Purchasing Bodies (March 2008):

http://www.ogc.gov.uk/documents/OGC_Guidance_on_Central_Purchasing_Bodies.pdf

The updated six page brochure (pdf) gives advice to contracting authorities entering into agreements with central purchasing bodies. Basic points are covered through questions and answers, including potential compliance problems.




Ralf Grahn

EU procurement: Subsidised contracts

The EC (EU) Procurement Directive 2004/18/EC covers the award of building contracts concerning hospitals, facilities intended for sports, recreation and leisure, school and university buildings and buildings used for administrative purposes, even if the awarding entity is private, if the contract is subsidised by more than 50 per cent by contracting authorities (public bodies) and the value of the contract is equal to or greater than EUR 5 150 000.

Related service contracts of at least EUR 206 000 fall within the scope of the Procurement Directive.


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Article 8

Article 8 of the Procurement Directive (Classic Directive) sets out the scope in more detail:


Article 8
Contracts subsidised by more than 50 % by contracting authorities

This Directive shall apply to the awarding of:

(a) contracts which are subsidised directly by contracting authorities by more than 50 % and the estimated value of which, net of VAT, is equal to or greater than EUR 5 150 000,

— where those contracts involve civil engineering activities within the meaning of Annex I,

— where those contracts involve building work for hospitals, facilities intended for sports, recreation and leisure, school and university buildings and buildings used for administrative purposes;

(b) service contracts which are subsidised directly by contracting authorities by more than 50 % and the estimated value of which, net of VAT, is equal to or greater than EUR 206 000 and which are connected with a works contract within the meaning of point (a).

Member States shall take the necessary measures to ensure that the contracting authorities awarding such subsidies ensure compliance with this Directive where that contract is awarded by one or more entities other than themselves or comply with this Directive where they themselves award that contract for and on behalf of those other entities.


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Subsidy level

The Procurement Directive applies if a number of cumulative conditions are met. The contract awarded by a private entity is subsidised by more than 50 per cent by one or more contracting authorities (public bodies).

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Thresholds

The estimated value of the contract, net of VAT, is equal to or greater than EUR 5 150 000.

The estimated value of the related service contract, net of VAT, is equal to or greater than EUR 206 000.


The sums were amended from the beginning of 2008 by Commission Regulation (EC) No 1422/2007. For EU member states outside the eurozone, the corresponding amounts in national currencies are found in the Commission’s information, published in OJEU 13.12.2007 C 301/, taking into account the corrigendum published OJEU 20.12.2007 C 310/37.


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Civil engineering activities


The contract involves civil engineering (building) activities within the meaning of Annex I.



New Annex I

In the consolidated version (of 15 September 2008) of the Procurement directive 2004/18/EC, Annex I stands as amended by Commission Regulation (EC) No 213/2008 (OJEU 15.3.2008 L 74/1), which replaced the old Annex I with a new one. The Regulation applies from 15 September 2008.


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Type of building (intended purpose)



In addition, the contract involves building work for one of the following: hospitals, facilities intended for sports, recreation and leisure, school and university buildings and buildings used for administrative purposes.




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Related service contracts

Article 8 point (b) covers related service contracts, which are subsidised directly by contracting authorities by more than 50 % and the estimated value of which, net of VAT, is equal to or greater than EUR 206 000 and which are connected with a works contract within the meaning of point (a).


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Compliance

The second paragraph of Article 8 entails an obligation for the Member States to take the necessary measures to ensure that the contracting authorities awarding such subsidies ensure compliance with this Directive where that contract is awarded by one or more entities other than themselves or comply with this Directive where they themselves award that contract for and on behalf of those other entities.


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Commission guidance

The Commission’s Guide to the Community rules on public works contracts (based on the old Directive 93/37/EEC) offers the following explanations (page 12 to 13):


1.5 Contracts subsidized to more than 50% by contracting authorities

The Directive requires Member States to take the necessary measures to ensure that contracting authorities comply or ensure compliance with its provisions where they subsidize directly by more than 50% a works contract awarded by an entity other than themselves, whether that entity is public or private.

This requirement applies, however, only to contracts concerning civil engineering works (covered by Class 50, Group 502, of the NACE nomenclature) and to contracts relating to building work for hospitals, facilities intended for sports, recreation and leisure, school and university buildings and buildings used for administrative purposes.

The subsidies to be taken into consideration are all the different forms of assistance, including that provided by the Community, which are directly intended for the works contracts in question.

In view of the subsidy it is granting and its experience in awarding contracts, a contracting authority could itself choose the contractor, even if the outcome of the works is not intended for its own use. In such cases, it must itself comply with the provisions of the Directive.

If, on the other hand, the choice of contractor is left to the recipient of the subsidy, the contracting authority must require the recipient to comply with the Directive, for example by including such compliance among the general conditions to be met in order to obtain certain grants or among the specific conditions laid down in the instrument granting the subsidy.

The list of the types of works concerned given in the relevant article of the Directive is exhaustive. However, the list of premises, namely hospitals, facilities intended for sports, recreation and leisure, school and university buildings and buildings used for administrative purposes, is a generic list of categories of premises. These categories should not be construed narrowly, since a restrictive interpretation would undermine the aim of the Directive, which is to ensure greater transparency in the award of public works contracts.

Homes for retired people or the physically disabled should thus, for example, be treated in the same way as hospitals where their purpose is to provide medical or surgical care for sick people, whether elderly or disabled, rather than assisting the elderly or disabled and only occasionally administering minor treatment.



Ralf Grahn