European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

Council Regulation (EC) of 7 December 1998  endows the Commission with instruments to fight serious breaches of the free movement of goods. The regulation applies to all obstacles to the free movement of goods among Member States which are attributable to a Member State, whether they involve action or inaction on its part, which may constitute a breach of Articles 34 to 36 TFEU (Art. 1). The obsta …

Early warning mechanism: Regulation No 2679/98

The principle of free movement of goods is an essential factor of the construction of the EU since its purpose is the establishment of an internal market according to Article 3 TEU. It constitutes one of the four fundamental freedoms of the Union.

The objective of the drafters of the Treaty of Rome was not only to eliminate direct obstacles to trade (customs duties were removed between the six initial Member States from 1 July 1968) but also to prevent States from restoring tariff, fiscal barriers or quotas in a disguised manner. 

Customs law (Art. 30 et seq. TFEU) thus prohibits any charge having an effect equivalent to a customs duty. Similarly, Article 110 TFEU prohibits the imposition on the products of other Member States of any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. The removal of quantitative restrictions on trade is regulated by Article 34 TFEU et seq. Article 37 TFEU imposes a specific obligation for the adjustment of State monopolies of a commercial character. Articles 34 and 35 TFEU provide for the elimination (removal and “standstill” obligation) of all measures having equivalent effect to a quantitative restriction on imports or exports. These provisions are directly applicable and may therefore be relied on by individuals before the national courts. However, there remain a number of exceptions to the free movement of goods.

Elimination of tariff, fiscal or quota barriers

Council Regulation (EC) of 7 December 1998  endows the Commission with instruments to fight serious breaches of the free movement of goods. The regulation applies to all obstacles to the free movement of goods among Member States which are attributable to a Member State, whether they involve action or inaction on its part, which may constitute a breach of Articles 34 to 36 TFEU (Art. 1). The obstacle must lead to a serious disruption of the free movement, cause serious loss to the individuals affected and require immediate action in order to put an end to its effects. Inaction consists in the fact for a Member State to fail to take all necessary measures with a view to put an end to the obstacle caused by actions taken by private individuals, excluding the exercise of fundamental rights such as freedom to strike (Art. 3 TEU) . 

The regulation puts in place an early warning mechanism. The Member State, whether or not concerned, which finds an obstacle or a threat of obstacle to free movement must inform the Commission, which transmits that information and any information it considers relevant from any source to the Member State concerned and to the other Member States. The Member State concerned must respond as soon as possible to the request for information from the Commission or from other Member States. The information transmitted to the Member States must also be transmitted to the Commission (Art. 3). Where an obstacle occurs, the Member State must take all necessary and proportionate measures so that the free movement of goods is assured in its territory. It must inform the Commission of the measures it intends to take. The Commission then forwards that information to the Member States. 

The regulation grants the EU authority only a limited power of action, since the notification provided does not include any penalty . However, the Commission is not powerless insofar as the implementation of the Regulation No 2679/98 mechanism does not constitute a prerequisite to an action under Article 258 TFEU .

See Case C-265/95 Commission v France [1997] ECR I-6959, LawLex200900001333JBJ, penalizing the inaction of a Member State.

Where the Commission finds an obstacle, it notifies the Member State concerned of the reasons that have led it to such a conclusion and asks the Member State to take all necessary and proportionate measures to remove it as soon as possible. The notification has no binding force but may be published in the Official Journal of the European Union. The document may be provided to any party requesting it. The Member State concerned has five working days as of receipt of the notification either to inform the Commission of the steps which it has taken or intends to take, or to explain in a reasoned submission why there is no obstacle within the meaning of Article 34 TFEU.

Case C-320/03 Commission v Austria [2005] ECR I-9871), LawLex200900001478JBJ.

European Business Law

10. Early warning mechanism: Regulation No 2679/98

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10. Early warning mechanism: Regulation No 2679/98

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