I.
Basic rules on freedom of establishment and
services
CHAPTER 5
Freedom of Establishment and - Article 49 TEC: restrictions on “freedom to provide
services” within the Community shall be “abolished in
to provide Services respect of nationals of Member States who are established
in a State of the Community other than that of the person for
whom the services are intended”.
Basic rules on freedom of establishment and
services - Van Binsbergen (Case C-33/74, 3 December 1974):
Free circulation in business services (banking, direct applicability of the prohibition on discrimination in
insurance) and services of general interest
respect of the provision of services. Only overriding reasons
relating to the public interest may justify an exception to that
principle, provided that it is proportionate to the aim in view.
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- Services = 70% of GDP of the EU and main employment provider in most Member
States.
What are “services” according to EU law? - Integrated market concerning services in the EU = part of the global strategy set up
in Lisbon (2000).
- Article 50 TEC: provisions on the free movement of services cover all activities
provided for remuneration; of an industrial or commercial character, of craftsmen, - Principle of mutual recognition: if a service is lawfully authorised in one Member
activities of the liberal professions; not governed by the provisions relating to State it must be open to users in the other Member States without having to comply with
freedom of movement for goods, capital and persons. every detail of the legislation of the host country, except those concerning consumer
protection.
- limited in time, be pursued against payment, have a cross-border aspect.
- However, numerous barriers in the Member States prevented providers, particularly
- the person providing a service has to be a national of a Member State. The small and medium-sized enterprises, form extending their operations beyond their
beneficiary of the service may be a foreigner. Both have to be established on the EU national borders.
territory.
⇨ “Services directive” (Directive 2006/123) : establishes a general legal framework
- the person providing a service may temporarily pursue his activity in the State where facilitating the exercise of the freedom of establishment for service providers and
the service is provided, under the same conditions as are imposed by that State on the free movement of services + maintains a high quality of services. Objective =
its own nationals (third paragraph of Article 50 TEC). achieve a genuine internal market for services by 2010.
- the activity does not necessitate the acquisition of real estate in the country of Directive 2006/123 does not affect terms and conditions of employment (maximum
provision of services. work periods and minimum rest periods, minimum paid annual holidays, minimum rates
of pay, health, safety and hygiene at work), does not deal with services of non-
economic general interest (education and health), social services provided for by the
⇨ freedom of establishment and freedom to provide services cannot be State, audiovisual services, gambling, activities connected with the exercise of
clearly distinguished. official authority, private security services, services provided by notaries and services
of temporary work agencies.
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II. Free circulation in business services and
services of general interest 1. Banking
- Financial services (banks, insurance companies and stock - Restrictions on freedom of establishment and freedom to provide
exchanges) = a vast market, indispensable for the proper functioning services abolished since the 1970s + single regulatory framework.
of the other economic sectors.
- Right of access based on the mutual recognition of supervision
systems, “single bank licence” (authorises a bank established in a
- Those services have to be liberalised. Member State to open branches without any other formalities or to
propose its services in the partner countries).
- Reconcile 2 contradictory requirements:
• the need to maintain very stringent criteria for control and - Directive 2006/48: definition of the own funds of credit institutions,
establishes a minimum level for the solvency ratio for credit
financial security, institutions and the method of calculating the ratio to be observed
• the need to leave the branch concerned enough flexibility. between own funds and risk assets and off-balance-sheet items.
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3. Stock exchanges and financial services
2. Insurance - The conditions for the admission to official stock exchange listing are coordinated.
- Effective exercise of freedom to provide insurance services in the - Directive 2004/39 (amended by Directive 2007/44): comprehensive regulatory
framework governing the organised execution of investor transactions by exchanges, other
Community. Arrangements cover major industrial and commercial risks + trading systems and investment firms.
provide adequate protection for minor consumers + concern credit
insurance. - An investment firm in any Member State can carry out its activities anywhere in the
European Union on the basis of a single authorisation (called a “European passport”)
- Offers policy-holders the choice between all the different types of issued by the Member State of origin.
contract available in the Community, while guaranteeing adequate
- Prudential supervision, based on uniform rules, carried out by the authorities of the home
protection. Member State, in cooperation with the authorities of the host Member State.
- Mutual recognition of authorisations and prudential control systems.
- Investment firms have right of access to all the regulated markets in the EU.
- Single authorisation system:
⇨ enables an insurance company with its registered office in a - Directive 2006/49 (amended by Directive 2008/23) lays down minimum initial capital
requirements and sets the equity capital.
Community Member State to open branches and to operate
services in all the Member States without the need for - All Member States must provide for the minimum compensation for investors in the
authorisation procedures in each country event of the failure of an investment firm, authorised to provide services throughout
the Union.
⇨ ensure the free movement of insurance products within the
Community. - Directive 2003/6: prohibits insider dealing and market manipulation (market abuse).
Member States must prohibit any person who possesses inside information from using that
information by acquiring or disposing of for his own account or for the account of a third
- Transparency and comparability of annual and consolidated party, either directly or indirectly, financial instruments to which that information relates.
accounts.
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4. Services of general interest
- “Market” and “non-market” activities of general interest.
- Article 86 of the TEC: undertakings entrusted with the operation of services of general
economic interest are subject to the rules on competition, in so far as the application of
such rules does not obstruct the performance of the particular tasks assigned to
them (postal, telecommunications, transport, electricity, broadcasting, etc.).
- Article 16 of the TEC: the Community and the Member States must take care that such
services operate on the basis of principles and conditions which enable them to fulfil
their missions.
- Community action takes account of the subsidiarity principle, tries to maintain a balance
between market play and general interest in the form of universal service or public
service obligations.
- Example: Directive 97/67 (passed in 1998 and amended by Directive 2008/6 in
December 2008) on common rules for the proper functioning of the internal market,
the gradual liberalisation and the improvement of quality of postal services. The final
date for achieving full market opening of postal services is 31 December 2010, with the
possibility for some Member States to postpone the full market opening by a maximum of 2
more years.