Bid to curb EU law breakers

Date: 07/03/1996

By Fiona McHugh

THE European Commission is coming under increasing pressure to ensure that the single market works by cracking down on member states which break the rules before embarking on any ambitious new projects.

While Commission officials continue to insist that the single market risks collapse without monetary union, European firms say the internal market is threatened more by non-compliance with existing EU laws.

They argue that the lenient approach often adopted by the Commission towards infringements is in marked contrast to the tough punishments meted out to private firms when they break the law - companies may be fined up to 10&percent; of annual turnover for breaches of competition law.

“I agree that, for the single market to work, we need to ensure that there are no cartels hidden behind national boundaries. But we must equally ensure that there is a level regulatory playing field. It seems to me, however, that there is one set of rules for the private sector and another for the public,” complains John Robinson of EU consultancy Robinson Linton.

“There is a lot of pussyfooting around when it comes to taking action against member states.”

Conscious of the discontent, Internal Market Commissioner Mario Monti is pushing for wholesale reform of the infringement system. “Reforms are necessary for the political credibility of the Commission,” he argues.

After much discussion, Monti persuaded colleagues to include a clause in the Commission's submission to the Intergovernmental Conference, recognising that “the means available to it to enforce Community law should be made more effective, notably as regards the internal market”.

Exactly how that should be done has yet to be worked out, but many believe Monti would like to be granted powers akin to those enjoyed by Competition Commissioner Karel Van Miert at the IGC.

“One of the ideas floating around would be to give the Commission powers along the lines of those currently used to deal with illegal state aid,” said an aide to Commission President Jacques Santer. Such powers would, for example, allow the Commission to order member states to drop suspect national laws pending investigation, or to fine those which step out of line.

However, this idea is likely to run into opposition from some of the Union's more Eurosceptic member states. They will almost certainly argue that the Commission should use its existing power to enforce the law.

To enable it to do so in a more efficient manner, Monti has made a number of suggestions to Santer. Among the proposals tabled are: the introduction of new deadlines, for example, for the legal and translation services where a lot of delays occur, the shortening of existing ones, and - more importantly - the enforcing of timetables.

At the moment, firms which encounter barriers to trade within the bloc may lodge formal complaints with the Commission, which then launches an investigation and, if necessary, takes the guilty government to court.

But critics say the procedure is ineffective because Commissioners all too often defend national interests when talk of legal proceedings crops up.

Greek Commissioner Christos Papoutsis, for instance, interceded on behalf of his country late last year to head off a Commission threat to take Athens to court for an allegedly illegal toy advertisement ban.

Irish Commissioner Pádraig Flynn similarly averted a plan to take Dublin to court for forcing Irish radio stations to play a minimum of 30&percent; home-made music.

Even when the Commission decides to start legal proceedings, delays inevitably follow. Although complaints should be dealt with within a year, they usually take an average of three years to process and can take up to ten.

Some argue, however, that drastic measures may not be necessary following a ruling from the European Court of Justice this week which established the right of citizens to sue governments which break EU law.

“This is excellent news for businesses because it sends a clear message to governments: toe the line or face fines in court,” said a jubilant Nicolaus Bömcke of the Federation Bancaire de l'Union Européenne.