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Defence procurement exemptions

Defence procurement exemptions

Outline of the Community (European Union) legislation about Defence procurement exemptions

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Businesses in the internal market > Public procurement

Defence procurement exemptions

Document or Iniciative

Commission interpretative communication of 7 December 2006 on the application of Article 296 of the Treaty in the field of defence procurement [COM(2006) 779 final – Not published in the Official Journal].

Summary

Internal market rules do not apply to defence acquisitions for trade in arms, munitions and war material; the legal basis for this exemption is Article 296. The scope of this exemption is, however, limited by the concept of “essential security interests” and by the list of military equipment mentioned in Article 296(2).

Any exemption authorised by Article 296 goes to the very heart of the fundamental principles and objectives of the internal market. Such exceptions should therefore be strictly confined to cases where Member States have no other choice than to protect their security interests nationally.

The list of military equipment mentioned in Article 296 was adapted in 1958 by Council Decision 255 / 58. The nature of the products on the 1958 list and the explicit reference in Article 296 to “specifically military purposes” confirm that only the procurement of equipment which is designed, developed and produced for specifically military purposes can be exempted from Community rules (Article 296(1)(b) EC).

Nevertheless, Article 296 can also cover the procurement of dual-use equipment for both military and non-military purposes, but only if the application of Community rules would oblige a Member State to disclose information prejudicial to its essential security interests (Article 296(1)(a)).

Military items included in the 1958 list are not automatically exempted from internal market rules. Any Member State seeking exemption under Article 296 must demonstrate that the exemption in question is necessary for the protection of its essential security interests, this being the only objective which may justify such an exemption. General references to the country’s geographical and political situation, history and alliance commitments are not sufficient.

The concept of essential security interests gives Member States flexibility in the choice of measures to protect those interests. It is essential for contracting authorities to assess each procurement contract with great care.

As guardian of the Treaty, the Commission may verify – with due regard to the sensitive nature of the defence sector – whether the conditions for exempting procurement contracts on the basis of Article 296 are fulfilled.

The Commission may also bring the matter directly before the Court of Justice if it considers that a Member State is making improper use of the powers provided for in Article 296.

Background

The majority of defence contracts are exempted from internal market rules and awarded on the basis of widely differing national procurement rules. With a view to the establishment of a European defence equipment market, the 2004 Green Paper on Defence Procurement (link) launches a debate on how to improve transparency and openness of defence markets between EU Member States. In December 2005 the Commission announced two separate initiatives (link to COM(2005) 626 final): the adoption of an “Interpretative Communication on the application of Article 296 EC” (analysed above) and the preparation of a possible new directive on the procurement of defence equipment to which Article 296 exemptions do not apply.

This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.

 

White Paper on the single market for investment funds

White Paper on the single market for investment funds

Outline of the Community (European Union) legislation about White Paper on the single market for investment funds

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: transactions in securities

White Paper on the single market for investment funds

This Commission White Paper defines a package of targeted amendments to the current EU framework for investment funds (the “UCITS Directive”), with a view to simplifying the European legislative and operational environment while providing attractive and secure investment solutions to investors.

Document or Iniciative

Commission White Paper of 15 November 2006 on enhancing the single market framework for investment funds [COM(2006) 686 final – Not published in the Official Journal].

Summary

The UCITS Directive is no longer able to support the European fund industry as it restructures to meet new competitive challenges and the changing needs of European investors.

Supporting a more efficient European fund industry

The Commission’s White Paper proposes several ways of improving the current Directive:

  • removing administrative barriers to cross-border marketing. The existing administrative procedures that must be satisfied before a fund can be marketed in another Member State – in particular, detailed ex ante verification of fund documentation by the host authority and the current two-month maximum waiting period – will be scaled back;
  • facilitating cross-border fund mergers. The Commission will propose additions to the UCITS Directive to create the appropriate legal and regulatory conditions for the merger of funds coordinated on a Europe-wide basis;
  • asset pooling. Amendments to diversification rules are envisaged with a view to enabling an expansive approach to entity pooling;
  • the management company passport. Authorised management companies will be able to manage coordinated corporate and contractual funds in other Member States;
  • strengthening supervisory cooperation. Given the greater legal and technical complexity involved, provisions relating to competent authorities and cooperation will have to be strengthened;
  • efficiency improvements that do not require changes to the Directive. There are many steps that individual Member States can take to improve their domestic operating environment for coordinated investment funds, e.g. expediting initial fund approvals.

Making the single fund market work for the end-investor

If the end-investor is to see tangible improvements, the sector must be subject to strong competition across the single market. Two measures appear to be required for this:

  • a simplified prospectus. This information instrument must be improved: it is, first and foremost, supposed to be a short and understandable statement of charges, risks and expected performance which is meaningful and easily understandable for the end-investor;
  • distribution systems: putting investors’ interests first. As fund distribution accounts for the biggest single component of costs in the investment fund industry, distribution systems must work efficiently. Investors should, in particular, be able to count on objective and professional intermediaries and distributors.

Non-harmonised funds distributed to retail investors

Non-harmonised funds distributed to retail investors, which are not covered by UCITS legislation (e.g. open-ended real estate funds), constitute an ever more important sector. The Commission will undertake a systematic analysis of the risk and performance of these funds and assess whether or not a framework enabling the establishment of a single market for non-harmonised funds distributed to retail investors is a realistic option and, if so, in what way.

The MiFID places responsibility on the distributing investment firm to ascertain, on a client-by-client basis, whether a particular investment is suitable or appropriate. The Commission will study the types of marketing and sales restrictions that should be repealed in favour of reliance on the investment firms exercising responsibility for the sale of products which are suited to the clients for which they are intended.

The Commission and CESR will perform a systematic inventory and analysis of national barriers to “private placement” of financial instruments with institutional investors and other eligible counterparties.

Background

Since the UCITS Directive was adopted in 1985, the European investment fund market has increased significantly in size and the number of funds continues to grow. By the end of 2005, there were more than 29 000 UCITSs. In 2005 the total volume of assets managed by investment funds in Europe grew, representing 59% of EU GDP (EUR 5 000 billion).
Core elements of the Directive are no longer functioning effectively due to the significant changes of the last twenty years.

The Commission has drawn up this White Paper, which aims to simplify Directive 85/611/EEC (l24036a), on the basis of extensive consultation and debate since 2004 with consumers, industry practitioners and policymakers, and with due regard to the replies received to the Green Paper [COM(2005) 314 final] and to the three reports drawn up by ad hoc expert groups. The Commission intends to put forward the necessary amendments to the Directive in the autumn of 2007.

 

Markets for agricultural products

Markets for agricultural products

Outline of the Community (European Union) legislation about Markets for agricultural products

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Agriculture > Markets for agricultural products

Markets for agricultural products

EU legislation supports the production and marketing of agricultural products, taking into account the specific nature of the individual products. 2007/2008 will see a period of transition from the sectoral approach, where each category of products is governed by its own common organisation of the market (CMO), to the single CMO, a new, unified, approach covering all products. Despite this technical revolution, the principles adopted under the common agricultural policy (CAP) will continue to apply. This new unified framework will be applied gradually to the relevant sectors in the course of 2008.

SECTORAL APPLICATIONS

  • Common organisation of agricultural markets
  • Wine
  • Bananas
  • Common organisation of the market in cereals
  • Live plants and floricultural products
  • Dried fodder
  • Common organisation of the fruit and vegetable markets – (2007 reform)
  • Common organisation of the fruit and vegetable markets
  • Common organisation of the market in processed fruit and vegetables
  • Hops
  • Common organisation of the market in olive oil and table olives
  • Flax and hemp grown for fibre
  • Eggs
  • Pigmeat
  • Common organisation of the market in milk and milk products
  • Additional levy in the milk and milk products sector (milk quotas)
  • Rice
  • Seeds
  • Common organisation of the sugar market
  • Tobacco
  • Beef and veal
  • Common organisation of sheepmeat and goatmeat markets
  • Poultrymeat
  • Towards a sustainable wine sector

PRODUCTS NOT INCLUDED IN THE COMMON ORGANISATION OF AGRICULTURAL MARKETS

  • Cotton
  • Ethyl alcohol of agricultural origin
  • Ovalbumin and laktalbumin
  • Silkworms
  • Products not covered by a specific CMO