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		52014DC0423

			Recommendation for a COUNCIL RECOMMENDATION on Portugal’s 2014 national reform programme and delivering a Council opinion on Portugal’s 2014 stability programme /* COM/2014/0423 final - 2014/ () */

Recommendation for a
COUNCIL RECOMMENDATION
on Portugal’s 2014 national reform
programme
and delivering a Council opinion on Portugal’s 2014 stability programme

THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular
Article 5(2) thereof,
Having regard to the recommendation of the
European Commission[2],
Having regard to the resolutions of the
European Parliament[3],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
Having regard to the opinion of the
Economic and Financial Committee,
Having regard to the opinion of the Social
Protection Committee,
Having regard to the opinion of the
Economic Policy Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to
the Commission’s proposal to launch a new strategy for growth and jobs, Europe
2020, based on enhanced coordination of economic policies, which will focus on
the key areas where action is needed to boost Europe’s potential for
sustainable growth and competitiveness.
(2)
On 13 July 2010, the Council, on the basis of
the Commission's proposals, adopted a recommendation on the broad guidelines
for the economic policies of the Member States and the Union (2010 to 2014)
and, on 21 October 2010, adopted a decision on guidelines for the employment
policies of the Member States, which together form the ‘integrated guidelines’.
Member States were invited to take the integrated guidelines into account in
their national economic and employment policies.
(3)
On 29 June 2012, the Heads of State or
Government decided on a Compact for Growth and Jobs, providing a coherent
framework for action at national, EU and euro area levels using all possible
levers, instruments and policies. They decided on action to be taken at the
level of the Member States, in particular expressing full commitment to
achieving the objectives of the Europe 2020 Strategy and to implementing the
country-specific recommendations.
(4)
Portugal was subject to a macroeconomic adjustment
programme until 17 May 2014 in line with Article 1(2) of Decision 2011/344/EU,
which provided that the financial assistance would be made available for three
years. On 19 March 2014, the Council decided to extend the availability of the
financial assistance by six weeks, to allow for a comprehensive and thorough
assessment of compliance with the programme conditionality and an orderly
disbursement of the last loan tranche. Under Article 12 of Regulation (EU) No
472/2013 Portugal was thus exempt from the monitoring and assessment of the
European Semester for economic policy coordination for the duration of the
programme. Having exited the programme, Portugal should now be fully re-integrated
into the European Semester framework.
(5)
On 13 November 2013, the Commission adopted the
Annual Growth Survey[4],
marking the start of the 2014 European Semester of economic policy
coordination. On the same day on the basis of Regulation (EU) No 1176/2011, the
Commission adopted the Alert Mechanism Report[5].
(6)
On 20 December 2013, the European Council
endorsed the priorities for ensuring financial stability, fiscal consolidation
and action to foster growth. It underscored the need to pursue differentiated,
growth-friendly fiscal consolidation, to restore normal lending conditions to
the economy, to promote growth and competitiveness, to tackle unemployment and
the social consequences of the crisis, and to modernise public administration.
(7)
Pursuant to Regulation (EU) No 472/2013, Portugal was exempted from the obligation to submit its Stability Programme and its
National Reform Programme for the duration of the macroeconomic adjustment
programme. Nevertheless, it submitted an updated Fiscal Strategy Document on 30
April 2014 and a letter from the Portuguese Government providing an update on
developments on the Europe 2020 targets. On 17 May, the
Government presented its ongoing reform programme and new initiatives towards
sustainable growth in a document entitled The Road to Growth, a medium-term
reform strategy for Portugal.
(8)
The objective of the budgetary strategy outlined
in the 2014 Fiscal Strategy Document is to correct the excessive deficit by
2015 in a sustainable manner and reach the medium-term objective by 2017. The
strategy plans to bring the government deficit to 4.0% of GDP in 2014 and to lower
it further to 2.5% of GDP in 2015, in line with the targets set in the Excessive
Deficit Procedure recommendation of 21 June 2013 and re-confirmed by the 12th
review of the macroeconomic adjustment programme. However, on 30 May 2014 the Portuguese Constitutional Court annulled consolidation measures estimated to impact the
budgetary results in 2014 by around 0.35% of GDP, with possible follow-on
effects in 2015. In order to achieve the agreed targets, the government will
have to introduce replacement measures of equivalent size . There are, however,
two rulings of the Constitutional Court still pending which prevents a complete
quantification of the measures to be taken. In view of the limited time
available, the government  may need to resort to measures of a less
growth-friendly nature, particularly on the revenue side. Beyond 2015, the
strategy confirms the aim of achieving the medium-term objective by 2017 by way
of delivering a structural effort of 0.5% of GDP in 2016 and achieving a
structural deficit of 0.5% in 2017. According to the strategy, general
government gross debt will peak at around 130.5% of GDP in 2014 and will
gradually start declining as from 2015. The macroeconomic scenario underlying the
budgetary projections of the strategy is in line with that agreed in the 12th
review of the macroeconomic adjustment programme and is
being analysed by the Public Finance Council. The fiscal
consolidation measures in 2014 are estimated to be sufficient to achieve the
deficit target of 4% of GDP. Nevertheless, downside risks to the target remain,
notably due to legal uncertainties and the statistical impact of operations
aimed at a more efficient management of the debt overhang of some state-owned
enterprises. The 2015 budgetary adjustment is underpinned by fiscal
consolidation measures amounting to 0.8% of GDP which is considered to be
sufficient to achieve the target of 2.5% of GDP. Based on the assessment of the
programme and the Commission forecast, pursuant to Council Regulation (EC) No
1466/97, the Council is of the opinion that the strategy's targets are
consistent with the requirements of the Stability and Growth Pact.
(9)
Fiscal consolidation needs to be underpinned by
further reforms of the system of public financial management. In particular, despite
progress made under the macroeconomic adjustment
programme, the comprehensive reform of the Budget
Framework Law needs to be completed and further efforts are necessary to strictly
ensure expenditure control by enforcing the commitment control law and to prevent
the further accumulation of public sector arrears. Continued restructuring of
state-owned enterprises, ensuring their financial sustainability and tightly
controlling pension and healthcare expenditure will be crucial. On the revenue
side, there is scope for making the tax system more growth-friendly and further
fostering tax compliance.
(10)
Portugal faces
challenges relating to unemployment which, notwithstanding the recent
decline, remains very high, particularly for the younger cohorts. The
unemployment rate stood at 17% in 2013 and youth unemployment at 37.7%, substantially
above the EU average, as well as the percentage of young people not in education,
employment, or training. Portugal's traditionally high employment rate has
declined markedly since the start of the economic crisis, from 73.1% in 2008 to
65.6 % in 2013. As regards youth unemployment, in line with the objectives of a
youth guarantee, the main challenges include weak outreach to non-registered
young people, and a need to better align education and training with labour
market needs. Under the macroeconomic adjustment
programme, Portugal has implemented a wide range of
labour market reforms aimed at easing overly restrictive employment protection
legislation, making wage-setting mechanisms more flexible and improving the
functioning of the public employment services and activation policies. Challenges
remain, however, in particular the need to tackle labour market segmentation
and improve the responsiveness of wages to the economic conditions. An
independent evaluation of the effects of the recent reforms in the employment
protection system would help to assess, in particular, their impact on job
creation, precariousness, overall labour costs and on the number of court
appeals against dismissals and their outcome. Despite efforts to alleviate the
negative social impact, the necessary economic adjustment following the crisis
has had negative repercussions in terms of poverty.
(11)
Portugal has made
significant progress in reforming its education system by means of several measures
to fight early school leaving, and improve tertiary attainment rate and labour
market matching. However, the full implementation and
efficient use of funding remain crucial. In particular, further work is
necessary to reduce skills mismatches, including by increasing the quality and
attractiveness of vocational education and training, including dual vocational
education and training, fostering employers' involvement in helping to design programmes
and providing adequate in job trainings and apprenticeships. There is also a
need to effectively implement career guidance and counselling services for
secondary and tertiary students in line with labour market needs and skills
anticipation, and strengthen links with the business sector.
(12)
Portugal has taken
significant steps under the macroeconomic adjustment
programme to improve the capital base of the banking
sector and to strengthen its supervision and resolution framework. However,
important challenges remain and need to be carefully monitored and managed;
these include the profitability of the Portuguese banks. Data for the first
quarter of 2014 show that some of the assisted banks registered positive
results. Asset quality deterioration is still a problem, with impairment levels
remaining high at about 6% of total gross loans and non-performing loans at
elevated levels (10.6%), in particular in the corporate segment (over 16%). Portugal has adopted a number of measures to facilitate lending to viable companies, but
financing conditions remain difficult, particularly for SMEs, and the range of
financing alternatives for the corporate sector, other than bank-based finance,
remains limited. Freshly granted loans to SMEs fell by 4.8% in 2013 as compared
with 2012. The average interest rates on new loans to Portuguese firms have
come down somewhat since early 2013, but remain significantly above euro area
average. Given the high corporate debt overhang and the need for a further deleveraging
of the banking sector, banks' ability to extend credit to viable firms at
reasonable cost remains constrained.
(13)
With a view to ensuring the efficiency and
sustainability of the energy sector and lowering the energy cost for the
economy, two packages of measures have been enacted under the macroeconomic
adjustment programme. Rents in the energy sector must, however, be further
reduced and the high and rising tariff debt tackled. To this end, Portugal has recently announced a third package of measures, including the extension to
2015 of the 2014 special levy on the energy operators. In addition, improving
cross-border integration of the energy networks and speeding up implementation
of the electricity and gas interconnection projects remain outstanding issues
and call for robust follow-up. In the transport sector, progress has been made
under the programme, in particular in enhancing the competitive position of the
Portuguese ports, drawing up a comprehensive long-term transport plan, after weaknesses and gaps had been addressed, and improving the regulatory framework. However, further measures remain
necessary to effectively implement the comprehensive long-term transport plan
and the reform action plan for ports. Steps are also needed to ensure the
independence and capacity of the transport regulator, and the financial
sustainability of the state-owned enterprises in the sector and enhance
efficiency and competition in rail transport.
(14)
A landmark reform has been implemented in the
urban lease market with the view to making the housing market more dynamic
including by better balancing rights and obligations of landlords and tenants,
introducing more flexibility in the choice of contract duration and
incentivising renovation works. More work is still required to comprehensively
evaluate the impact of this reform on the basis of data on key drivers of the
market and on the shadow economy in the Portuguese rental market. Portugal has made substantial progress in enhancing its business environment, in particular by fostering better framework conditions, promoting entrepreneurial
culture and improving insolvency proceedings for firms in distress. Attention
should now be shifted to implementation. The simplification
of administrative and licensing procedures has made progress but a number of
measures still require completion. Further efforts are necessary to remove
obstacles to competition in the services sector, in particular by adopting
sectoral amendments, and in professional services, adopting legislation on the
remaining professional bodies. As regards regulation and competition, follow-up
measures are necessary to ensure the independence and autonomy of the national
sectoral regulators and the Competition Authority. Significant delays still
affect payments by public authorities.
(15)
Good progress has been made under the
macroeconomic adjustment programme in rationalising and modernising the public
administration in terms of employment, remuneration policy, working
conditions, organisational efficiency and quality of services. However, some of
the envisaged reform measures still need to be completed and transparency
improved. Despite significant progress made to improve the efficiency of the
judicial system, further improvements are called for in
particular in terms of the length of proceedings, the clearance rate, the number
of pending cases, and the monitoring and evaluation process.
(16)
On [17 June 2014], the Commission completed the
12th and final review under the macroeconomic adjustment programme for Portugal. Its analysis leads it to conclude that the successful implementation of the programme
was instrumental in managing economic and financial risks and reducing
imbalances. Portugal has
adopted a wide range of challenging structural reforms under the programme,
which are starting to bear fruit in terms of enhanced competitiveness and
resuming economic growth, but more work is needed to assess the reforms' impact
on the functioning of the economy. Continued monitoring of all implemented
reforms is therefore essential to assess whether they contribute to boosting
competitiveness, output and employment growth.
(17)
Since after the end of the macroeconomic
adjustment programme, which will be legally concluded on 28 June 2014, Portugal will be fully re-integrated in the European Semester exercise, the Commission, on this
basis and in the light of its 12th and final review under the macroeconomic
adjustment programme, has assessed the documents submitted by Portugal. It has taken into account not only their relevance for sustainable fiscal and
socio-economic policy in Portugal but also their compliance with EU rules and
guidance, given the need to reinforce the overall economic governance of the
Union by providing EU-level input for future national decisions. Its
recommendations for Portugal under the European Semester are reflected in
recommendations (1) to (8) below.
(18)
In the light of this assessment, the Council has
examined Portugal’s stability programme, and its opinion[6] is reflected in
particular in recommendation (1) below. These recommendations were prepared in
the wake of the very recent successful conclusion of the adjustment programme
and therefore build on the programme's achievements to secure its lasting
implementation.
(19)
In the context of the European Semester the
Commission has also carried out an analysis of the economic policy of the euro
area as a whole. On the basis of this analysis, the Council has issued specific
recommendations for the Member States whose currency is the euro. Portugal should also ensure the full and timely implementation of these recommendations.
HEREBY RECOMMENDS that Portugal take action within the period 2014-2015 to:
1.           Fully
implement the budgetary strategy for 2014 so as to achieve the fiscal targets
and prevent the accumulation of new arrears. For the year 2015, rigorously
implement the budgetary strategy as laid out in the Fiscal Strategy Document
2014, in order to bring the deficit to 2.5% of GDP, in line with the target set
in the Excessive Deficit Procedure recommendation, while achieving the required
structural adjustment. Replace consolidation measures which  the Constitutional Court considers unconstitutional by measures of similar size and quality as
soon as possible. The correction of the excessive deficit should be done in a
sustainable and growth-friendly manner, limiting recourse to one-off/temporary
measures. After the correction of the excessive deficit, pursue the planned
annual structural adjustment towards the medium-term objective, in line with
the requirement of an annual structural adjustment of at least 0.5% of GDP,
more in good times, and ensure that the debt rule is met in order to put the
high general debt ratio on a sustainable path. Prioritise expenditure-based
fiscal consolidation and increase further the efficiency and quality of public
expenditure. Maintain tight control of expenditure in central, regional and
local administration. Continue the restructuring of the state-owned
enterprises. Develop a durable solution to ensure the medium-term sustainability
of the pensions system by the end of 2014. Control health care expenditure
growth and proceed with the hospital reform. Review the tax system and make it
more growth-friendly. Continue to improve tax compliance and fight tax evasion
by increasing the efficiency of tax administration. Strengthen the system of public
financial management by swiftly finalising and implementing the comprehensive
reform of the Budgetary Framework Law by the end of 2014. Ensure strict
compliance with the Commitment Control Law. Effectively implement single wage and
supplements' scales in the public sector from 2015 onwards.
2.           Maintain minimum wage
developments consistent with the objectives of promoting employment and
competitiveness. Ensure a wage setting system that promotes the alignment of
wages and productivity at sectoral and/or firm level. Explore, in consultation
with the social partners and in accordance with national practice, the
possibility of firm-level temporary opt-out arrangements from sectoral
contracts agreed between employers and workers' representatives. By September
2014, present proposals on firm-level opt-out arrangements from sectoral
contracts agreed between employers and workers' representatives and on a
revision of the survival of collective agreements.
3.           Present, by March 2015, an
independent evaluation of the recent reforms in the employment protection
system, together with an action plan for possible further reforms to tackle
labour market segmentation. Pursue the ongoing reform of active labour market
policies and Public Employment Services aimed at increasing employment and
labour participation rates, specifically by improving job counselling/job
search assistance and activation/sanction systems with a view to reducing
long-term unemployment and integrating those furthest away from the labour
market. Address the high youth unemployment, notably by effective skills
anticipation and outreach to non-registered young people, in line with the
objectives of a youth guarantee. Increase the threshold for the eligibility for
the minimum income scheme. Ensure adequate coverage of
social assistance, while ensuring effective activation of benefit recipients.
4.           Improve the quality and
labour-market relevance of the education system in order to reduce early school
leaving and address low educational performance rates. Ensure efficient public
expenditure in education and reduce skills mismatches, including by increasing
the quality and attractiveness of vocational education and training and
fostering co-operation with the business sector. Enhance cooperation between
public research and business and foster knowledge transfer.
5.           Monitor banks' liquidity
position and potential capital shortfalls, including by on-site thematic
inspections and stress-testing. Continue the assessment of the banks' recovery
plans and introduce improvements to the evaluation process where necessary. Implement
a comprehensive strategy to reduce the corporate debt overhang and reinforce
efforts to widen the range of financing alternatives, including for early
stages of business developments, by enhancing the efficiency of the debt
restructuring tools (particularly PER and SIREVE) for viable companies,
introducing incentives for banks and debtors to engage in restructuring
processes at an early stage and improving the availability of financing via the
capital market. Ensure that the identified measures support the reallocation of
financing towards the productive sectors of the economy. Implement, by end September
2014, an early warning system to detect weak financial conditions of firms,
including SMEs, with a view to supporting early corporate debt restructuring,
decreasing SME loans arrears, and speeding up the resolution of non-performing
loans.
6.           Implement the second and
third package of measures in the energy sector aimed at reducing energy costs
for the economy, while eliminating the electricity tariff debt by 2020, and
closely monitor implementation. Improve the cross-border integration of the energy
networks and speed up implementation of the electricity and gas interconnection
projects. Implement the comprehensive long-term transport plan and the
"chronogram" setting out the ports sector reforms. Ensure that the
renegotiations of the existing port concessions and the new authorisation
schemes are performance-oriented and in line with internal market principles, in
particular procurement rules. Ensure that the national regulatory authority for
transport (AMT) is fully independent and operational by the end of September
2014. Ensure the financial sustainability of the state-owned enterprises in the
transport sector. Strengthen efficiency and competition in the railways sector,
by implementing the plan for the competitiveness of CP Carga, after the
transfer of the freight terminals, and by ensuring the management independence
of the state-owned infrastructure manager and railway undertakings.
7.           Further improve the
evaluation of the Portuguese housing market, including by setting up, by the end
of November 2014, a more systematic monitoring and reporting framework and issue
a comprehensive report on the shadow economy in that market. Continue efforts
to carry out further inventories of regulatory burdens with a view to
including, by March 2015, sectors not yet covered. Adopt and implement, by the end
of September 2014, the outstanding licensing decrees and sectoral amendments. Remove,
by the end of September 2014, remaining restrictions in the professional
services sector and enact the professional bodies' amended by laws which have
not yet been adopted under the macroeconomic adjustment programme. Eliminate
payment delays by the public sector. Ensure adequate resources of the national
regulators and competition authority and swiftly adopt the by laws of the
national competition authority.
8.           Continue to rationalise
and modernise central, regional and local public administration. Implement the
reforms to enhance the efficiency of the judicial system and increase
transparency. Step up efforts to evaluate the implementation of reforms
undertaken under the macroeconomic adjustment programme as well as planned and
future reforms. In particular, insert mandatory systematic ex ante and ex post
assessments in the legislation process. Set up a functionally independent central
evaluation unit at government level, which assesses and reports every six months
on the implementation of these reforms, including consistency with the ex
ante impact assessment, with corrective action if needed.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               COM(2014) 423 final.
[3]               P7_TA(2014)0128 and P7_TA(2014)0129.
[4]               COM(2013) 800 final
[5]               COM(2013) 790 final
[6]               Under Article 5(2) of Council Regulation (EC) No
1466/97.


title: 2013/461/EU: Commission Recommendation of 17 September 2013 on the principles governing SOLVIT Text with EEA relevance

text:
               19.9.2013

               EN

               Official Journal of the European Union

               L 249/10

         COMMISSION RECOMMENDATION
   of 17 September 2013
   on the principles governing SOLVIT
   (Text with EEA relevance)
   (2013/461/EU)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
   Whereas:

               (1)

               Article 26 of the TFEU defines the internal market as an area without internal borders in which the free movement of goods, persons, services and capital is ensured. Article 4, paragraph 3 of the TEU requires Member States to take any appropriate steps to comply fully with their obligations in accordance with Union law.

               (2)

               The internal market offers many opportunities to individuals who want to live and work in another Member State and to businesses that wish to expand their markets. While the internal market generally functions well, problems sometimes arise where public authorities do not respect Union law.

               (3)

               Following Commission Recommendation 2001/893/EC of 7 December 2001 on principles for using ‘SOLVIT’ – the Internal Market Problem Solving Network (1), SOLVIT was created as a network of centres set up by Member States within their own national administrations, as a fast and informal means of resolving problems individuals and businesses encounter when exercising their rights in the internal market.

               (4)

               Whilst SOLVIT is informal and pragmatic in nature, its set-up contributes to ensuring that solutions found are compliant with Union law. SOLVIT is based on a transparent problem-solving process involving two Member States. Whilst the Commission is not normally involved in resolving cases, it is in close contact with SOLVIT centres, offers regular legal training and, in some complex cases, provides informal advice. It also monitors SOLVIT case handling and outcomes via the online database and can intervene whenever it considers that solutions proposed by SOLVIT centres are not compliant with Union law. The aforementioned set-up not only contributes to the legality of outcomes in individual cases, but evaluation results indicate that the work of SOLVIT has also led to an overall improved compliance with Union law by national authorities.

               (5)

               SOLVIT has evolved significantly since its inception. It now handles ten times more cases than it did 10 years ago. It also handles a much wider variety of cases than originally foreseen. The overwhelming majority of cases are resolved successfully, within an average of nine weeks, leading to high satisfaction scores amongst those individuals and businesses that have used SOLVIT.

               (6)

               Whilst SOLVIT is a success, the increased scale of the service has amplified various challenges. An in-depth evaluation of the network carried out over 2010 indicates that not all SOLVIT centres are equally well resourced or positioned. The take-up of cases and the level of service offered also vary across the network. In addition, too few people and businesses find their way to SOLVIT.

               (7)

               Based on those findings, it is necessary to take measures to further reinforce SOLVIT and increase its visibility on and off line, as stressed in the Commission Staff Working Document ‘Reinforcing effective problem-solving in the Single Market’, in the Communication on Better Governance for the Single Market (2) and in the EU Citizenship Report (3). As a part of this exercise, Recommendation 2001/893/EC should be replaced by a new one. This new Recommendation aims to provide clarity on what SOLVIT should deliver, based on best practice. It sets out targets and standards for both Member States and the Commission to ensure that businesses and citizens receive effective assistance in those situations where Union law is not being respected. It also aims to guarantee that SOLVIT centres apply the same rules and deliver the same consistent type of service across the network.

               (8)

               In order to ensure a consistent interpretation of the mandate across the network, this Recommendation defines the types of cases that should be handled by SOLVIT. Recommendation 2001/893/EC stated that SOLVIT deals with cases of ‘misapplication’ of ‘single market rules’. Defining the scope in this way has led to inconsistency. First it has been argued that the term misapplication implies that SOLVIT centres cannot deal with cases where national rules run counter to Union law (so called ‘structural cases’), and second that SOLVIT can only act where the Union legislation in question has an internal market basis.

               (9)

               SOLVIT cases are now defined as all cross-border problems caused by a potential breach of Union law governing the internal market by a public authority, where and to the extent such problems are not subject to legal proceedings at either national or EU level.

               (10)

               The term ‘breach’ is used to specify that SOLVIT centres take on as a SOLVIT case all situations where public authorities do not respect Union law governing the internal market, regardless of the root cause of the problem. The overwhelming majority of cases handled by SOLVIT reflect situations wherein a public authority incorrectly applies Union law governing the internal market. However, SOLVIT centres have also shown to be able to offer effective help where structural problems arise. Although structural cases present only a small part of SOLVIT’s overall case load, the take-up of such cases by SOLVIT is important to ensure that such problems do not pass unnoticed. It offers the best guarantee that the structural problems are effectively tackled at the appropriate level.

               (11)

               This Recommendation confirms that SOLVIT deals with cases presenting a cross-border problem with a public authority. The cross-border criterion ensures that a SOLVIT case is handled by SOLVIT centres in two Member States, which guarantees transparency and quality of outcomes. The public authority criterion is linked to the fact that SOLVIT is part of the national administration and acts on an informal basis only.

               (12)

               This Recommendation also seeks to clarify the level of service individuals and businesses can expect from SOLVIT. It indicates how applicants should be informed and what minimum assistance they should be offered. It also clarifies the various procedural steps and deadlines to be respected when handling a SOLVIT case together with the follow-up to be given when a case cannot be resolved.

               (13)

               Further, this Recommendation sets out minimum standards SOLVIT centres should comply with, in terms of organisation, legal expertise, and relations with other networks. It also clarifies the role of the Commission within the SOLVIT network.

               (14)

               The Commission has recently rebuilt the SOLVIT online database as a stand-alone module in the Internal Market Information system. Given this technical integration, the rules set out in Regulation (EU) No 1024/2012 of the European Parliament and of the Council of 25 October 2012 on administrative cooperation through the Internal Market Information System and repealing Commission Decision 2008/49/EC (the ‘IMI Regulation’) (4) on the processing of personal data and of confidential information also apply to SOLVIT procedures. This Recommendation further specifies certain aspects of the processing of personal data in SOLVIT, in accordance with the IMI Regulation.

               (15)

               This Recommendation does not aim to specify how the Commission deals with complaints it receives directly and does not prejudice in any manner the Commission’s role as the guardian of the Treaties. It also does not aim to specify the role of EU Pilot and the national EU Pilot coordinators. These elements are addressed in specific guidelines, which are regularly updated.

         HAS ADOPTED THIS RECOMMENDATION:
   I.   OBJECTIVE AND DEFINITIONS

   A.   Objective

   This Recommendation sets out principles governing the functioning of SOLVIT. SOLVIT aims to deliver fast, effective and informal solutions to problems individuals and businesses encounter when their EU rights in the internal market are being denied by public authorities. It contributes to a better functioning single market by fostering and promoting better compliance with Union law. To achieve this purpose, national SOLVIT centres should work together on the basis of the principles set out in this Recommendation.
   B.   Definitions

   For the purposes of this Recommendation the following definitions apply:
   1.   ‘Applicant’: a natural or legal person encountering a cross-border problem and submitting it to SOLVIT directly or through an intermediary, or an organisation submitting a concrete problem on behalf of its member(s);
   2.   ‘Cross-border problem’: a problem an applicant in one Member State encounters involving a potential breach of EU law governing the internal market by a public authority in another Member State; this includes problems caused to applicants by their own public administrations, after having exercised their free movement rights or when trying to do so;
   3.   ‘Union law governing the internal market’: any Union legislation, rules or principles related to the functioning of the internal market within the meaning of Article 26(2) TFEU. This includes rules that do not aim to regulate the internal market as such but have an impact on the free movement of goods, services, persons or capital between Member States;
   4.   ‘Public authority’: any part of the public administration of a Member State, at national, regional or local level, or any body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and that has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals;
   5.   ‘Legal proceedings’: formal proceedings for the resolution of a dispute before a judicial or quasi-judicial body. This excludes administrative appeals against the same authority that has caused the problem;
   6.   ‘Structural problem’: a breach caused by a national rule running counter to Union law;
   7.   ‘Home Centre’: the SOLVIT centre in the Member State that has the closest links with the applicant based on for example nationality, residence, establishment or the place where the applicant acquired the rights at stake;
   8.   ‘Lead Centre’: the SOLVIT centre of the Member State in which the alleged breach of Union law governing the internal market has occurred;
   9.   ‘SOLVIT database’: the online application created within the Internal Market Information System (IMI) to support the handling of SOLVIT cases.
   II.   MANDATE OF SOLVIT

   The SOLVIT network deals with cross-border problems caused by a potential breach of Union law governing the internal market by a public authority, where and to the extent such problems are not subject to legal proceedings at either national or Union level. It contributes to a better functioning single market by fostering and promoting better compliance with Union law.
   III.   SERVICE OFFERED BY SOLVIT

   Member States should ensure that applicants can benefit from the following minimum service:

               1.

               SOLVIT centres should be available by telephone or e-mail, and should provide a prompt reply to communications directed to them.

               2.

               Applicants should receive within one week a first reaction to their problem, including an indication whether or not SOLVIT could take on their case, if such indication is possible on the basis of the information provided. If necessary, they should at the same time be invited to submit any documentation needed to process their file. Within one month after this first assessment and provided their file is complete, applicants should receive a confirmation of whether their case is accepted by the Lead centre and therefore opened as a SOLVIT case.

               3.

               When a problem cannot be taken up as a SOLVIT case, applicants should be given reasons and be advised of another possible course of action that might help them overcome the problem, including signposting or transferring the problem, where possible, to another relevant information or problem-solving network or to the relevant national competent authority.

               4.

               Within 10 weeks from the date of opening of the case, the applicant should receive a solution to its problem, which may include a clarification of the applicable Union law. In exceptional circumstances and in particular where a solution is close at hand or where it concerns a structural problem, the case can be kept open beyond the deadline, subject to informing the applicant, up to a maximum of 10 weeks.

               5.

               Applicants should be informed about the informal nature of SOLVIT and the procedures and timeframes that apply. This information should include information about other possible means of redress, a warning that handling a case in SOLVIT does not put on hold national deadlines for appeal, and that solutions offered by SOLVIT are informal and cannot be appealed. Applicants should also be informed that SOLVIT is free of charge. Applicants should be regularly informed about the state of their case.

               6.

               Whereas SOLVIT proceedings are of an informal nature, it does not preclude an applicant from launching formal proceedings at national level, which will result in closure of the SOLVIT case.

               7.

               When a successful outcome has been found, the applicant should be advised on actions to take in order to benefit from the proposed solution.

               8.

               As soon as it becomes apparent that a case will not be resolved within SOLVIT, the case should be closed and the applicant should be informed without delay. In such case, SOLVIT should also advise the applicant on other possible ways of redress at national or Union level. When advising complainants to file a complaint with the Commission, SOLVIT centres should encourage them to refer to prior proceedings in SOLVIT (by giving a reference number and shortly summarising these proceedings). Unresolved cases should be systematically reported to the Commission through the database.

               9.

               After closing the case, applicants should be invited to give their feedback on how the case has been handled by SOLVIT.

         IV.   ORGANISATION OF SOLVIT CENTRES

               1.

               Each Member State should have a SOLVIT centre.

               2.

               To secure that SOLVIT centres can fulfil the tasks set out in this Recommendation, Member States should ensure that SOLVIT centres:

                           (a)

                           have sufficient and well-trained staff with an operational knowledge of more than one Union language where needed to ensure fast and transparent communication with other SOLVIT centres;

                           (b)

                           have adequate legal expertise or relevant experience with the application of Union law in order to be able to make independent legal assessments of cases;

                           (c)

                           are situated in the part of the national administration with sufficient powers of coordination to be able to ensure the correct implementation of Union law within their administration;

                           (d)

                           are able to establish a network within the national administration in order to have access to the specific legal expertise and support needed in order to find practical solutions to cases.

         V.   SOLVIT PROCEDURE

   A.   Principles governing the handling of SOLVIT cases

               1.

               All SOLVIT cases should be handled by two SOLVIT centres, the Home centre and the Lead centre.

               2.

               The Home and Lead centres should cooperate in an open and transparent manner with a view to finding fast and effective solutions for applicants.

               3.

               The Home and Lead centres should agree what language they use to communicate with each other, bearing in mind the aim of resolving the problems through informal contacts as quickly and efficiently as possible and ensuring transparency and reporting.

               4.

               All problems received, the assessments done by the SOLVIT centres involved in the case, steps taken and outcomes proposed should be registered in the SOLVIT database in a clear and comprehensive manner. Where a case presents structural problems, it should be flagged as such in the database so as to enable the Commission to systematically monitor such cases.

               5.

               All proposed solutions need to be always in full conformity with Union law.

               6.

               SOLVIT centres should abide by the detailed case handling rules set out in SOLVIT’s case handling manual, which the Commission will regularly review in cooperation with the SOLVIT centres.

         B.   Home centre

               1.

               The Home centre should register all legal problems received, whether or not they qualify as a SOLVIT case.

               2.

               Once the Home centre has accepted to take up a complaint as a SOLVIT case, it should constitute a complete file and carry out a comprehensive legal analysis of the problem before submitting it to the Lead centre.

               3.

               When receiving a proposal for a solution from the Lead centre, including a clarification of the applicable Union law, it should check that the solution is in conformity with Union law.

               4.

               The Home centre should provide the applicant with timely and appropriate information during the relevant steps of the procedure.

         C.   Lead centre

               1.

               The Lead centre should confirm acceptance of a case within one week after it is submitted by the Home centre.

               2.

               The Lead centre should aim at finding solutions for applicants, including clarification of the applicable Union law and should regularly inform the Home centre about how it is progressing.

               3.

               Where the problem submitted by the applicant is a structural problem, the Lead centre should assess as soon as possible whether the problem can be resolved through the SOLVIT procedure. If it considers that this is not possible, it should close the case as unresolved and inform the relevant national authorities responsible for the correct implementation of Union law in that Member State, so as to secure that the breach of Union law is effectively put to an end. The Commission should also be informed through the database.

         VI.   ROLE OF THE COMMISSION

               1.

               The Commission assists and supports the functioning of SOLVIT by:

                           (a)

                           organising regular training sessions and network events in cooperation with national SOLVIT centres;

                           (b)

                           drafting and updating the SOLVIT case-handling manual in cooperation with national SOLVIT centres;

                           (c)

                           providing case-handling assistance at the request of SOLVIT centres. In complex cases this may include providing informal legal advice. The Commission services should reply to requests for informal legal advice within two weeks. Such advice is informal only and cannot be considered as binding on the Commission;

                           (d)

                           managing and maintaining the SOLVIT database and a public interface and providing specific training and materials to facilitate its use by the SOLVIT centres;

                           (e)

                           monitoring the quality and performance of SOLVIT centres and the cases they handle. In cases presenting a structural problem, the Commission will closely monitor the case and, where needed, lend advice and assistance to ensure that the structural problem is put to an end. The Commission will consider whether unresolved structural problems require further follow-up;

                           (f)

                           securing appropriate communication between SOLVIT, CHAP (5) and EU Pilot (6) in order to ensure an appropriate follow up of unresolved SOLVIT cases, to monitor structural cases and to avoid duplication of the handling of complaints;

                           (g)

                           informing SOLVIT centres, at their request, about the follow-up given by the Commission to unresolved cases, where a complaint has been lodged with the Commission.

               2.

               Where appropriate, the Commission may refer complaints it has received to SOLVIT with a view to finding a rapid and informal solution, subject to the consent of the complainant.

         VII.   QUALITY CONTROL AND REPORTING

               1.

               SOLVIT centres should conduct regular quality checks of cases they handle as Home centre and as Lead centre as detailed in the case handling manual.

               2.

               The Commission services will conduct regular overall quality checks of all cases and signal possible problems to the SOLVIT centres concerned, which should take appropriate action to redress the shortcomings identified.

               3.

               The Commission will regularly report on the quality and performance of SOLVIT. It will also report on the type of problems SOLVIT has received and cases handled within SOLVIT, with a view to defining trends and identifying remaining problems in the internal market. Within this reporting framework, the Commission will separately report on structural cases.

         VIII.   VISIBILITY OF THE NETWORK

               1.

               The Commission will promote the knowledge and use of SOLVIT with European stakeholder organisations and Union institutions and will improve the accessibility and presence of SOLVIT via on-line means.

               2.

               Member States should ensure that user-friendly information and easy access to the SOLVIT services is available, in particular on all relevant websites of the public administration.

               3.

               Member States should also undertake activities to raise awareness about SOLVIT amongst its stakeholders. The Commission will provide assistance to such activities.

         IX.   COOPERATION WITH OTHER NETWORKS AND CONTACT POINTS

               1.

               To ensure that applicants get effective help, SOLVIT centres should cooperate with other European and national information and help networks, such as Your Europe, Europe Direct, Your Europe Advice, the Enterprise Europe Network, European Consumer Centres, EURES, Fin-net and European Network of Ombudsmen. SOLVIT centres should also establish good working relationships with the respective national members of the Administrative Commission for the Coordination of Social Security, to enable an effective handling of social security cases.

               2.

               SOLVIT centres should be in regular contact and cooperate closely with their national EU Pilot Contact Points, in order to secure a proper exchange of information on cases and complaints received.

               3.

               The Commission will facilitate such cooperation by, among others, organising joint network events and establishing technical means of connection, with such networks and contact points as indicated in point 1 (7).

         X.   PROTECTION OF PERSONAL DATA AND CONFIDENTIALITY

   The processing of personal data for the purposes of this Recommendation, including, in particular, transparency requirements and the rights of data subjects, is governed by the IMI Regulation. In line with that Regulation, the following should apply:

               1.

               Applicants should be able to submit their complaints to SOLVIT through a public interface linked to the Internal Market Information System, put at their disposal by the Commission. Applicants do not have access to the SOLVIT database.

               2.

               Home and Lead centres should have access to the SOLVIT database and be able to deal with the case they are involved in through this database. This includes access to personal data of the applicant.

               3.

               Other SOLVIT centres not involved in a particular case and the Commission should have read-only access to anonymous information on the case.

               4.

               The Home centre should normally disclose the applicant’s identity to the Lead centre to facilitate problem solving. The applicant should be informed of this at the start of the process and offered the opportunity to object, in which case the applicant’s identity should not be disclosed.

               5.

               The information provided by the applicant should be used by the Lead centre and the public authorities concerned by the complaint only for the purpose of trying to resolve the case. Officials dealing with the case shall process the personal data only for the purposes for which they were transmitted. Appropriate steps should also be taken to safeguard commercially sensitive information not including personal data.

               6.

               A case can be transferred to another problem-solving network or organisation only with consent of the applicant.

               7.

               Staff of the Commission should only have access to personal data of applicants where this is necessary in order to:

                           (a)

                           avoid parallel treatment of the same problem submitted to the Commission or another Union institution by means of another procedure;

                           (b)

                           offer informal legal advice in accordance with Section VI;

                           (c)

                           decide on the possible follow-up to cases already handled by SOLVIT;

                           (d)

                           resolve technical issues affecting the SOLVIT database.

               8.

               Personal data related to SOLVIT cases should be blocked in the Internal Market Information System 18 months after the closure of a SOLVIT case. Anonymised descriptions of SOLVIT cases should remain in the SOLVIT database and may be used for statistical, reporting and policy development purposes.

         XI.   OTHER PROVISIONS

   This Recommendation replaces Recommendation 2001/893/EC. All references to Recommendation 2001/893/EC should be understood as references to this Recommendation.
   XII.   DATE OF APPLICATION AND ADDRESSEES

   This Recommendation applies from 1 October 2013
   This Recommendation is addressed to the Member States.

      Done at Brussels, 17 September 2013.

            For the Commission

         Michel BARNIER

            Member of the Commission

      (1)  OJ L 331, 15.12.2001, p. 79.

      (2)  COM(2012) 259 final.

      (3)  COM(2013) 269 final.

      (4)  OJ L 316, 14.11.2012, p. 1.

      (5)  Complaint handling/Accueil des plaignants – Commission complaint registration system.

      (6)  COM(2007) 502 final.

      (7)  At the time of the adoption of this Recommendation the technical means are established with Your Europe Advice and are being developed with Europe Direct.


title: Commission Recommendation of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law

text:
               26.7.2013

               EN

               Official Journal of the European Union

               L 201/60

         COMMISSION RECOMMENDATION
   of 11 June 2013
   on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law
   (2013/396/EU)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
   Whereas:

               (1)

               The Union has set itself the objective of maintaining and developing an area of freedom, security and justice, inter alia, by facilitating access to justice, as well as the objective of ensuring a high level of consumer protection.

               (2)

               The modern economy sometimes creates situations in which a large number of persons can be harmed by the same illegal practices relating to the violation of rights granted under Union law by one or more traders or other persons (‘mass harm situation’). They may therefore have cause to seek the cessation of such practices or to claim damages.

               (3)

               The Commission adopted a Green Paper on antitrust damages actions in 2005 (1) and a White Paper in 2008, which included policy suggestions on antitrust-specific collective redress (2). In 2008 the Commission published a Green Paper on consumer collective redress (3). In 2011 the Commission carried out a public consultation ‘Towards a more coherent European approach to collective redress’ (4).

               (4)

               On 2 February 2012 the European Parliament adopted the resolution ‘Towards a Coherent European Approach to Collective Redress’, in which it called for any proposal in the field of collective redress to take the form of a horizontal framework including a common set of principles providing uniform access to justice via collective redress within the Union and specifically but not exclusively dealing with the infringement of consumer rights. The Parliament also stressed the need to take due account of the legal traditions and legal orders of the individual Member States and enhance the coordination of good practices between Member States (5).

               (5)

               On 11 June 2013 the Commission issued a Communication ‘Towards a European Horizontal Framework for Collective Redress’ (6), which took stock of the actions to date and the opinions of stakeholders and of the European Parliament, and presented the Commission’s position on some central issues regarding collective redress.

               (6)

               It is a core task of public enforcement to prevent and punish the violations of rights granted under Union law. The possibility for private persons to pursue claims based on violations of such rights supplements public enforcement. Where this Recommendation refers to the violation of rights granted under Union Law, it covers all the situations where the breach of rules established at Union level has caused or is likely to cause prejudice to natural and legal persons.

               (7)

               Amongst those areas where the supplementary private enforcement of rights granted under Union law in the form of collective redress is of value, are consumer protection, competition, environment protection, protection of personal data, financial services legislation and investor protection. The principles set out in this Recommendation should be applied horizontally and equally in those areas but also in any other areas where collective claims for injunctions or damages in respect of violations of the rights granted under Union law would be relevant.

               (8)

               Individual actions, such as the small claims procedure for consumer cases, are the usual tools to address disputes to prevent harm and also to claim for compensation.

               (9)

               In addition to individual redress, different types of collective redress mechanisms have been introduced by all Member States. These measures are intended to prevent and stop unlawful practices as well as to ensure that compensation can be obtained for the detriment caused in mass harm situations. The possibility of joining claims and pursuing them collectively may constitute a better means of access to justice, in particular when the cost of individual actions would deter the harmed individuals from going to court.

               (10)

               The aim of this Recommendation is to facilitate access to justice in relation to violations of rights under Union law and to that end to recommend that all Member States should have collective redress systems at national level that follow the same basic principles throughout the Union, taking into account the legal traditions of the Member States and safeguarding against abuse.

               (11)

               In the area of injunctive relief, the European Parliament and the Council have already adopted Directive 2009/22/EC on injunctions for the protection of consumers’ interests (7). The injunction procedure introduced by the Directive does not, however, enable those who claim to have suffered detriment as a result of an illicit practice to obtain compensation.

               (12)

               Procedures to bring collective claims for compensatory relief have been introduced in some Member States, and to differing extents. However, the existing procedures for bringing claims for collective redress vary widely between the Member States.

               (13)

               This Recommendation puts forward a set of principles relating both to judicial and out-of-court collective redress that should be common across the Union, while respecting the different legal traditions of the Member States. These principles should ensure that fundamental procedural rights of the parties are preserved and should prevent abuse through appropriate safeguards.

               (14)

               This Recommendation addresses both compensatory and — as far as appropriate and pertinent to the particular principles — injunctive collective redress. It is without prejudice to the existing sectorial mechanisms of injunctive relief provided for by Union law.

               (15)

               Collective redress mechanisms should preserve procedural safeguards and guarantees of parties to civil actions. In order to avoid the development of an abusive litigation culture in mass harm situations, the national collective redress mechanisms should contain the fundamental safeguards identified in this Recommendation. Elements such as punitive damages, intrusive pre-trial discovery procedures and jury awards, most of which are foreign to the legal traditions of most Member States, should be avoided as a general rule.

               (16)

               Alternative dispute resolution procedures can be an efficient way of obtaining redress in mass harm situations. They should always be available alongside, or as a voluntary element of, judicial collective redress.

               (17)

               Legal standing to bring a collective action in the Member States depends on the type of collective redress mechanism. In certain types of collective actions, such as group actions where the action can be brought jointly by those who claim to have suffered harm, the issue of standing is more straightforward than in the context of representative actions, where accordingly the issue of legal standing should be clarified.

               (18)

               In the case of a representative action, the legal standing to bring the representative action should be limited to ad hoc certified entities, designated representative entities that fulfil certain criteria set by law or to public authorities. The representative entity should be required to prove the administrative and financial capacity to be able to represent the interest of claimants in an appropriate manner.

               (19)

               The availability of funding for collective redress litigation should be arranged in such a way that it cannot lead to an abuse of the system or a conflict of interest.

               (20)

               In order to avoid an abuse of the system and in the interest of the sound administration of justice, no judicial collective redress action should be permitted to proceed unless admissibility conditions set out by law are met.

               (21)

               A key role should be given to courts in protecting the rights and interests of all the parties involved in collective redress actions as well as in managing the collective redress actions effectively.

               (22)

               In fields of law where a public authority is empowered to adopt a decision finding that there has been a violation of Union law, it is important to ensure consistency between the final decision concerning that violation and the outcome of the collective redress action. Moreover, in the case of collective actions following a decision by a public authority (follow-on actions), the public interest and the need to avoid abuse can be presumed to have been taken into account already by the public authority as regards the finding of a violation of Union law.

               (23)

               With regard to environmental law, this Recommendation takes account of the provisions of Article 9(3), (4) and (5) of the UN/ECE Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (‘the Aarhus Convention’) which, respectively, encourage wide access to justice in environmental matters, set out criteria that procedures should respect, including criteria that they be timely and not prohibitively expensive, and address information to the public and the consideration of assistance mechanisms.

               (24)

               The Member States should take the necessary measures to implement the principles set out in this Recommendation at the latest two years after its publication.

               (25)

               The Member States should report to the Commission on the implementation of this Recommendation. Based on this reporting, the Commission should monitor and assess the measures taken by Member States.

               (26)

               Within four years after publication of this Recommendation, the Commission should assess if any further action, including legislative measures, is needed, in order to ensure that the objectives of this Recommendation are fully met. The Commission should in particular assess the implementation of this Recommendation and its impact on access to justice, on the right to obtain compensation, on the need prevent abusive litigation and on the functioning of the single market, the economy of the European Union and consumer trust,

         HAS ADOPTED THIS RECOMMENDATION:
   I.   PURPOSE AND SUBJECT MATTER

               1.

               The purpose of this Recommendation is to facilitate access to justice, stop illegal practices and enable injured parties to obtain compensation in mass harm situations caused by violations of rights granted under Union law, while ensuring appropriate procedural safeguards to avoid abusive litigation.

               2.

               All Member States should have collective redress mechanisms at national level for both injunctive and compensatory relief, which respect the basic principles set out in this Recommendation. These principles should be common across the Union, while respecting the different legal traditions of the Member States. Member States should ensure that the collective redress procedures are fair, equitable, timely and not prohibitively expensive.

         II.   DEFINITIONS AND SCOPE

               3.

               For the purposes of this Recommendation:

                           (a)

                           ‘collective redress’ means: (i) a legal mechanism that ensures a possibility to claim cessation of illegal behaviour collectively by two or more natural or legal persons or by an entity entitled to bring a representative action (injunctive collective redress); (ii) a legal mechanism that ensures a possibility to claim compensation collectively by two or more natural or legal persons claiming to have been harmed in a mass harm situation or by an entity entitled to bring a representative action (compensatory collective redress);

                           (b)

                           ‘mass harm situation’ means a situation where two or more natural or legal persons claim to have suffered harm causing damage resulting from the same illegal activity of one or more natural or legal persons;

                           (c)

                           ‘action for damages’ means an action by which a claim for damages is brought before a national court;

                           (d)

                           ‘representative action’ means an action which is brought by a representative entity, an ad hoc certified entity or a public authority on behalf and in the name of two or more natural or legal persons who claim to be exposed to the risk of suffering harm or to have been harmed in a mass harm situation whereas those persons are not parties to the proceedings;

                           (e)

                           ‘collective follow-on action’ means a collective redress action that is brought after a public authority has adopted a final decision finding that there has been a violation of Union law.

                     This Recommendation identifies common principles which should apply in all instances of collective redress, and also those specific either to injunctive or to compensatory collective redress.

         III.   PRINCIPLES COMMON TO INJUNCTIVE AND COMPENSATORY COLLECTIVE REDRESS

      Standing to bring a representative action

               4.

               The Member States should designate representative entities to bring representative actions on the basis of clearly defined conditions of eligibility. These conditions should include at least the following requirements:

                           (a)

                           the entity should have a non-profit making character;

                           (b)

                           there should be a direct relationship between the main objectives of the entity and the rights granted under Union law that are claimed to have been violated in respect of which the action is brought; and

                           (c)

                           the entity should have sufficient capacity in terms of financial resources, human resources, and legal expertise, to represent multiple claimants acting in their best interest.

               5.

               The Member States should ensure that the designated entity will lose its status if one or more of the conditions are no longer met.

               6.

               The Member States should ensure that representative actions can only be brought by entities which have been officially designated in advance as recommended in point 4 or by entities which have been certified on an ad hoc basis by a Member State’s national authorities or courts for a particular representative action.

               7.

               In addition, or as an alternative, the Member States should empower public authorities to bring representative actions.

      Admissibility

               8.

               The Member States should provide for verification at the earliest possible stage of litigation that cases in which conditions for collective actions are not met, and manifestly unfounded cases, are not continued.

               9.

               To this end, the courts should carry out the necessary examination of their own motion.

      Information on a collective redress action

               10.

               The Member States should ensure that it is possible for the representative entity or for the group of claimants to disseminate information about a claimed violation of rights granted under Union law and their intention to seek an injunction to stop it as well as about a mass harm situation and their intention to pursue an action for damages in the form of collective redress. The same possibilities for the representative entity, ad hoc certified entity, a public authority or for the group of claimants should be ensured as regards the information on the ongoing compensatory actions.

               11.

               The dissemination methods should take into account the particular circumstances of the mass harm situation concerned, the freedom of expression, the right to information, and the right to protection of the reputation or the company value of a defendant before its responsibility for the alleged violation or harm is established by the final judgement of the court.

               12.

               The dissemination methods are without prejudice to the Union rules on insider dealing and market manipulation.

      Reimbursement of legal costs of the winning party

               13.

               The Member States should ensure that the party that loses a collective redress action reimburses necessary legal costs borne by the winning party (‘loser pays principle’), subject to the conditions provided for in the relevant national law.

      Funding

               14.

               The claimant party should be required to declare to the court at the outset of the proceedings the origin of the funds that it is going to use to support the legal action.

               15.

               The court should be allowed to stay the proceedings if in the case of use of financial resources provided by a third party:

                           (a)

                           there is a conflict of interest between the third party and the claimant party and its members;

                           (b)

                           the third party has insufficient resources in order to meet its financial commitments to the claimant party initiating the collective redress procedure;

                           (c)

                           the claimant party has insufficient resources to meet any adverse costs should the collective redress procedure fail.

               16.

               The Member States should ensure, that in cases where an action for collective redress is funded by a private third party, it is prohibited for the private third party:

                           (a)

                           to seek to influence procedural decisions of the claimant party, including on settlements;

                           (b)

                           to provide financing for a collective action against a defendant who is a competitor of the fund provider or against a defendant on whom the fund provider is dependant;

                           (c)

                           to charge excessive interest on the funds provided.

      Cross-border cases

               17.

               The Member States should ensure that where a dispute concerns natural or legal persons from several Member States, a single collective action in a single forum is not prevented by national rules on admissibility or standing of the foreign groups of claimants or the representative entities originating from other national legal systems.

               18.

               Any representative entity that has been officially designated in advance by a Member State to have standing to bring representative actions should be permitted to seize the court in the Member State having jurisdiction to consider the mass harm situation.

         IV.   SPECIFIC PRINCIPLES RELATING TO INJUNCTIVE COLLECTIVE REDRESS

      Expedient procedures for claims for injunctive orders

               19.

               The courts and the competent public authorities should treat claims for injunctive orders requiring cessation of or prohibiting a violation of rights granted under Union law with all due expediency, where appropriate by way of summary proceedings, in order to prevent any or further harm causing damage because of such violation.

      Efficient enforcement of injunctive orders

               20.

               The Member States should establish appropriate sanctions against the losing defendant with a view to ensuring the effective compliance with the injunctive order, including the payments of a fixed amount for each day’s delay or any other amount provided for in national legislation.

         V.   SPECIFIC PRINCIPLES RELATING TO COMPENSATORY COLLECTIVE REDRESS

      Constitution of the claimant party by ‘opt-in’ principle

               21.

               The claimant party should be formed on the basis of express consent of the natural or legal persons claiming to have been harmed (‘opt-in’ principle). Any exception to this principle, by law or by court order, should be duly justified by reasons of sound administration of justice.

               22.

               A member of the claimant party should be free to leave the claimant party at any time before the final judgement is given or the case is otherwise validly settled, subject to the same conditions that apply to withdrawal in individual actions, without being deprived of the possibility to pursue its claims in another form, if this does not undermine the sound administration of justice.

               23.

               Natural or legal persons claiming to have been harmed in the same mass harm situation should be able to join the claimant party at any time before the judgement is given or the case is otherwise validly settled, if this does not undermine the sound administration of justice.

               24.

               The defendant should be informed about the composition of the claimant party and about any changes therein.

      Collective alternative dispute resolution and settlements

               25.

               The Member States should ensure that the parties to a dispute in a mass harm situation are encouraged to settle the dispute about compensation consensually or out-of-court, both at the pre-trial stage and during civil trial, taking also into account the requirements of Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters (8).

               26.

               The Member States should ensure that judicial collective redress mechanisms are accompanied by appropriate means of collective alternative dispute resolution available to the parties before and throughout the litigation. Use of such means should depend on the consent of the parties involved in the case.

               27.

               Any limitation period applicable to the claims should be suspended during the period from the moment the parties agree to attempt to resolve the dispute by means of an alternative dispute resolution procedure until at least the moment at which one or both parties expressly withdraw from that alternative dispute resolution procedure.

               28.

               The legality of the binding outcome of a collective settlement should be verified by the courts taking into consideration the appropriate protection of interests and rights of all parties involved.

      Legal representation and lawyers’ fees

               29.

               The Member States should ensure that the lawyers’ remuneration and the method by which it is calculated do not create any incentive to litigation that is unnecessary from the point of view of the interest of any of the parties.

               30.

               The Member States should not permit contingency fees which risk creating such an incentive. The Member States that exceptionally allow for contingency fees should provide for appropriate national regulation of those fees in collective redress cases, taking into account in particular the right to full compensation of the members of the claimant party.

      Prohibition of punitive damages

               31.

               The compensation awarded to natural or legal persons harmed in a mass harm situation should not exceed the compensation that would have been awarded, if the claim had been pursued by means of individual actions. In particular, punitive damages, leading to overcompensation in favour of the claimant party of the damage suffered, should be prohibited.

      Funding of compensatory collective redress

               32.

               The Member States should ensure, that, in addition to the general principles of funding, for cases of private third party funding of compensatory collective redress, it is prohibited to base remuneration given to or interest charged by the fund provider on the amount of the settlement reached or the compensation awarded unless that funding arrangement is regulated by a public authority to ensure the interests of the parties.

      Collective follow-on actions

               33.

               The Member States should ensure that in fields of law where a public authority is empowered to adopt a decision finding that there has been a violation of Union law, collective redress actions should, as a general rule, only start after any proceedings of the public authority, which were launched before commencement of the private action, have been concluded definitively. If the proceedings of the public authority are launched after the commencement of the collective redress action, the court should avoid giving a decision which would conflict with a decision contemplated by the public authority. To that end, the court may stay the collective redress action until the proceedings of the public authority have been concluded.

               34.

               The Member States should ensure that in the case of follow-on actions, the persons who claim to have been harmed are not prevented from seeking compensation due to the expiry of limitation or prescription periods before the definitive conclusion of the proceedings by the public authority.

         VI.   GENERAL INFORMATION

      Registry of collective redress actions

               35.

               The Member States should establish a national registry of collective redress actions.

               36.

               The national registry should be available free of charge to any interested person through electronic means and otherwise. Websites publishing the registries should provide access to comprehensive and objective information on the available methods of obtaining compensation, including out of court methods.

               37.

               The Member States, assisted by the Commission should endeavour to ensure coherence of the information gathered in the registries and their interoperability.

         VII.   SUPERVISION AND REPORTING

               38.

               The Member States should implement the principles set out in this Recommendation in national collective redress systems by 26 July 2015 at the latest.

               39.

               The Member States should collect reliable annual statistics on the number of out-of-court and judicial collective redress procedures and information about the parties, the subject matter and outcome of the cases.

               40.

               The Member States should communicate the information collected in accordance with point 39 to the Commission on an annual basis and for the first time by 26 July 2016 at the latest.

               41.

               The Commission should assess the implementation of the Recommendation on the basis of practical experience by 26 July 2017 at the latest. In this context, the Commission should in particular evaluate its impact on access to justice, on the right to obtain compensation, on the need to prevent abusive litigation and on the functioning of the single market, on SMEs, the competitiveness of the economy of the European Union and consumer trust. The Commission should assess also whether further measures to consolidate and strengthen the horizontal approach reflected in the Recommendation should be proposed.

      Final provisions

               42.

               The Recommendation should be published in the Official Journal of the European Union.

      Done at Brussels, 11 June 2013.

            For the Commission

            The President

         José Manuel BARROSO

      (1)  COM(2005) 672, 19.12.2005.

      (2)  COM(2008) 165, 2.4.2008.

      (3)  COM(2008) 794, 27.11.2008.

      (4)  COM(2010) 135 final, 31.3.2010.

      (5)  2011/2089(INI).

      (6)  COM(2013) 401 final.

      (7)  OJ L 110, 1.5.2009, p. 30.

      (8)  OJ L 136, 24.5.2008, p. 3.


title: Council Recommendation of 14 July 2015 on the 2015 National Reform Programme of the United Kingdom and delivering a Council opinion on the 2015 Convergence Programme of the United Kingdom

text:
               18.8.2015

               EN

               Official Journal of the European Union

               C 272/21

         COUNCIL RECOMMENDATION
   of 14 July 2015
   on the 2015 National Reform Programme of the United Kingdom and delivering a Council opinion on the 2015 Convergence Programme of the United Kingdom
   (2015/C 272/06)
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
   Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(2) thereof,
   Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the resolutions of the European Parliament,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   Having regard to the opinion of the Economic and Financial Committee,
   Having regard to the opinion of the Social Protection Committee,
   Having regard to the opinion of the Economic Policy Committee,
   Whereas:

               (1)

               On 26 March 2010, the European Council agreed to the Commission's proposal to launch a new strategy for growth and jobs, Europe 2020, based on enhanced coordination of economic policies. The strategy focuses on the key areas where action is needed to boost Europe's potential for sustainable growth and competitiveness.

               (2)

               On 14 July 2015, the Council, on the basis of the Commission’s proposals, adopted a Recommendation on the broad guidelines for the economic policies of the Member States and the Union and, on 21 October 2010, it adopted a decision on guidelines for the employment policies of the Member States (3). Together these form the ‘integrated guidelines’ which Member States were invited to take into account in their national economic and employment policies.

               (3)

               On 8 July 2014, the Council adopted a Recommendation (4) on the United Kingdom's National Reform Programme for 2014 and delivered its opinion on the United Kingdom's updated Convergence Programme for 2014.

               (4)

               On 28 November 2014, the Commission adopted the Annual Growth Survey, marking the start of the 2015 European Semester for economic policy coordination. On the same day, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report, in which the United Kingdom was identified as one of the Member States for which an in-depth review would be carried out.

               (5)

               On 18 December 2014, the European Council endorsed the priorities for fostering investment, intensifying structural reforms and pursuing responsible growth-friendly fiscal consolidation.

               (6)

               On 26 February 2015, the Commission published its 2015 country report for the United Kingdom. This assessed the United Kingdom's progress in addressing the country-specific recommendations adopted on 8 July 2014. The country report also includes the results of the in-depth review under Article 5 of Regulation (EU) No 1176/2011. The Commission's analysis leads it to conclude that the United Kingdom is experiencing macroeconomic imbalances which require policy action and monitoring. In particular, risks related to the high level of household indebtedness, also linked to structural characteristics of the housing market, continue to require attention. The resilience of the economy and the financial sector has increased. However, a shortage of housing will persist and is likely to underpin high house prices in the medium term and continue to leave the sector less resilient in the face of risks.

               (7)

               On 26 March 2015, the United Kingdom submitted its 2015 National Reform Programme and its 2015 Convergence Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

               (8)

               The United Kingdom is currently in the corrective arm of the Stability and Growth Pact. In its 2014-15 Convergence Programme, the Government plans an improvement in the headline deficit from 4,3 % of GDP in 2015-16 to 2,2 % of GDP in 2016-17 so that a surplus of 0,1 % of GDP is reached in 2019-20. The Convergence Programme does not include a medium-term objective. The government debt-to-GDP ratio is expected to peak in 2015-16 at 88,8 % and to gradually decline to 81,4 % in 2019-20. Based on the Commission's 2015 spring forecast, the United Kingdom is not expected to have corrected its excessive deficit by the 2014-15 deadline set by the Council. Furthermore, the fiscal effort was below what was recommended by the Council. For this reason, on 19 June, the Council decided in accordance with Article 126(8) TFEU that the United Kingdom had not taken effective action in response to the Council recommendation under the excessive deficit recommendation of 2 December 2009 and issued a new recommendation asking the United Kingdom to correct the excessive deficit by 2016-17. The Convergence Programme is compatible with the new 2016-17 deadline under the excessive deficit procedure. The macroeconomic scenario underpinning these budgetary projections is plausible. Based on the Commission's 2015 spring forecast, the United Kingdom is forecast to correct its excessive deficit by the 2016-17 deadline and to deliver the recommended fiscal effort. Measures to support the planned deficit rates from 2015-16 onwards are already specified but greater detail is required on ear-marked departmental expenditure limits. Based on its assessment of the Convergence Programme and taking into account the Commission's 2015 spring forecast, the Council is of the opinion that the United Kingdom is expected to comply with the provisions of the Stability and Growth Pact.

               (9)

               A high, and possibly excessive, level of household indebtedness has been identified as potentially constituting a macroeconomic imbalance that poses risks to the United Kingdom's economy. While household sector indebtedness continues to fall modestly, it remains high and leaves the United Kingdom vulnerable to risks that could affect economic growth and financial stability. In mid-2014, the Financial Policy Committee of the Bank of England announced two measures to mitigate risks associated with high household indebtedness. They recommended that mortgage lenders apply an ‘interest rate stress test’ to assess borrowers' ability to meet their mortgage obligations if interest rates rise. They also recommended that mortgage lenders limit the proportion of mortgages at loan-to-income ratios of 4,5 and above to 15 % of new mortgages. The impact of these measures should be monitored carefully.
               A number of reforms of the national planning policy framework have been undertaken but these are unlikely to have a short-term impact. The response of the local authorities to the reform in raising housing supply needs to be closely monitored.

               (10)

               The United Kingdom's labour market has performed well in recent years and is set to remain strong. The employment rate reached 76,5 % in 2014 while the unemployment rate continued to fall, to 6 %, and is projected to decline further in 2015. Despite the positive trends in relation to labour market outcomes, social challenges persist. The rate of people living in households with very low work intensity increased slightly, from 13 % in 2012 to 13,2 % in 2013, compared with the EU average of 10,7 %. The difference in the share of part-time work between women (42,6 % in 2013) and men (13,2 % in 2013) is one of the highest in the Union. The percentage of women who are inactive or work part-time due to personal and family responsibilities (12,5 %) was almost twice as high as the EU average (6,3 %) in 2013. Youth employment and employer engagement in the area of apprenticeships are further challenges. Another area to focus on, linked to youth employment, is education and skills. A large proportion of young people have comparatively low levels of basic skills. The implementation of measures to address welfare reform and childcare has been limited. The proportion of children living in jobless households in the United Kingdom is still one of the highest in the Union. In addition, even if supply in the childcare system has increased recently, the availability of affordable, high-quality, full-time childcare remains a key issue.

               (11)

               Boosting public and private investment would help improve productivity and competitiveness which are key challenges for the United Kingdom. The need to ensure high-quality infrastructure investment is reflected in the December 2014 national infrastructure plan which has been updated and widened in scope. The private sector is expected to finance a major share of the plan but questions remain over how much it will commit. This poses risks to the plan's success, even if there has been substantial progress in providing timely information on its implementation. The United Kingdom should ensure that business tax systems are pro-investment, in particular through the forthcoming review of business rates.

               (12)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of the United Kingdom's economic policy and published it in the 2015 country report. It has also assessed the Convergence Programme and the National Reform Programme and the follow-up given to the recommendations addressed to the United Kingdom in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in the United Kingdom but also their compliance with EU rules and guidance, given the need to strengthen the overall economic governance of the Union by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations (1) to (3) below.

               (13)

               In the light of this assessment, the Council has examined the Convergence Programme, and its opinion (5) is reflected in particular in recommendation (1) below.

               (14)

               In the light of the Commission's in-depth review and this assessment, the Council has examined the National Reform Programme and the Convergence Programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations (2) to (3) below,

         HEREBY RECOMMENDS that the United Kingdom take action in 2015 and 2016 to:

               1.

               Ensure effective action under the excessive deficit procedure and endeavour to correct the excessive deficit in a durable manner by 2016-17, in particular by prioritising capital expenditure.

               2.

               Take further steps to boost supply in the housing sector, including by implementing the reforms of the national planning policy framework.

               3.

               Address skills mismatches by increasing employers' engagement in the delivery of apprenticeships. Take action to further reduce the number of young people with low basic skills. Further improve the availability of affordable, high-quality, full-time childcare.

      Done at Brussels, 14 July 2015.

            For the Council

            The President

         P. GRAMEGNA

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  OJ L 306, 23.11.2011, p. 25.

      (3)  Maintained by Council Decision 2014/322/EU of 6 May 2014 on guidelines for the employment policies of the Member States for 2014 (OJ L 165, 4.6.2014, p. 49).

      (4)  Council Recommendation of 8 July 2014 on the National Reform Programme 2014 of the United Kingdom and delivering a Council opinion on the Stability Programme of the United Kingdom, 2014 (OJ C 247, 29.7.2014, p. 136).

      (5)  Under Article 9(2) of Regulation (EC) No 1466/97.


title: Recommendation for a Council opinion in accordance with the third paragraph of Article 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 on the updated convergence programme of Sweden, 2001-2004

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