To ensure that all new regulatory measures imposed by Member States are non-discriminatory, justified by public interest objectives, and proportionate, the Services Directive obliges Member States to notify the Commission of new regulatory measures affecting services. Notifications concern both the establishment of a services provider in a Member State and the cross-border provision of services. Despite this, there are still many varying national rules and regulations not complying with the notification procedure. The notifications are sometimes selective or delayed. Moreover, 90% of notified measures have already been adopted by the Member States. Moreover, notifications are often not transparent, as consumers and businesses have no access to them. The existing notification framework does not provide for an in-depth proportionality assessment, which makes it difficult to Member States to assess the proportionality of new requirements for services.

In order to prepare a proposal to address these issues, the Commission held a public consultation in 2016 in which a large majority considered the current services notifications system unsatisfactory.

In January 2017, the Commission proposed legislation to improve the notification procedure under the Services Directive (2006/123/EC). Member States would be obliged to notify measures via the Internal Market Information System before the final adoption, when adjustments can still be made. Also, they would need to provide more information on proportionality measures, and the obligation to notify would also cover additional key requirements, such as authorisation schemes. Furthermore, the new procedure would allow better access to the notifications for external stakeholders. After notification, a 3 months consultation period would allow the Member States and the Commission to engage in a dialogue. If after that period, the Commission had substantive concerns over the compatibility of a proposed measure with the Services Directive, it could issue an alert, followed by a decision on the legality of a given measure. The Decision to bring a measure in line with the Services Directive would be binding on the Member State and could only be challenged in the EU Court of Justice.

The Council agreed on its general approach on 29 May 2017. The Council's text attempted to balance the need to improve the existing notification procedure with the need to respect the principles of proportionality and of subsidiarity, particularly the prerogatives of national parliaments and administrative authorities. The Council specified areas where the notification procedure is not to apply (e.g. collective agreements negotiated by social partners) and clarified various steps of the procedure (such as withdrawal of the notification).

In Parliament, the report on the proposal was voted by the IMCO Committee on 4 December 2017, which also agreed to enter into interinstitutional negotiations (rapporteur Sergio Gutiérrez Prieto, S&D). The Committee proposed to exclude from the scope decisions made for an individual service provider or draft rules laid down in collective agreements negotiated by social partners. The Commission would prepare guidelines to new notification obligation. The report also proposed to exclude amendments or modifications to draft notified measures - already subject to an ongoing notification procedure - introduced by legislative assemblies at national or regional level from ex-ante notification obligation. It should be notified at the latest two weeks after adoption. However, adding substantive amendments to draft law under notification is to be communicated at least a month before the adoption. The Committee also introduced derogation allowing Member States to adopt measures rapidly in unforeseen circumstances. The report supports giving the Commission power to issue alerts that allow the Member State one month from their receipt to either explain the adequacy of the draft measure or modify it to ensure compliance. Receipt of alert means that the measures should not be adopted for three months. Furthermore, the Commission is to offer stakeholders the possibility of providing electronically feedback on the published notifications, or of alerting the Commission of draft measures or adopted measures, which have not been notified in accordance with this Directive. On 14 December 2017, the EP voted in favour of commencing the trilogues, which started on 20 February 2018.

Both the parliamentary chambers in France and Germany issued reasoned opinions concerning the proposal arguing that it is in breach of principles of subsidiarity and proportionality. Austria, Italy and Portugal also made contributions. A number of delegations asked for the file to be included in the agenda of the Competitiveness Council on the 18 and 19 February 2019. In the conclusions of the meeting "the Council took note of the possibility of finalising the negotiations (...) on the basis of a potential compromise. It was also noted that the Commission remains opposed to this particular compromise."

The proposal was included in the list of pending files of the IMCO Committee for the new legislature. On 18 July 2019, IMCO coordinators decided to request resumption of work on the basis of the negotiating mandate, as approved by plenary on 8 December 2017, and to reappoint a rapporteur from the same political group (S&D - Andreas Schieder).

In the 2021 Commission Working Programme, adopted on 19 October 2020, the Commission announced that it intended to withdraw the proposal within six months, giving the following reason: "No foreseeable agreement: prospects of finding a compromise without jeopardising the objectives of the proposal are unlikely. The Commission will take measures to ensure the full enforcement of the Services Directive."

The proposal was officially withdrawn on 23 April 2021, ending the procedure. 

References:

• Withdrawal of Commission proposals, OJ C 143, 23.4.2021, p. 4–5, 23 April 2021
• EP Legislative Observatory, Procedure file Services in the internal market: notification procedure for authorisation schemes and requirements related to services, 2016/0398(COD)
• European Commission, Proposal for a directive on the enforcement of the Directive 2006/123/EC on services in the internal market, laying down a notification procedure for authorisation schemes and requirements related to services, COM(2016) 821
• European Economic Area – Standing Committee, EEA/EFTA Comment on the need for improvement of the notification procedure for national legislation pursuant to Articles 15(7) and 39(5) of the Services Directive, 15 November 2016
• Council, Services package: Council agrees conditions to ease provision of services and mobility of professionals, Press release, 29 May 2017
• European Economic and Social Committee, Opinion on the Services Package, 31 May 2017
• European Committee of the Regions, Opinion on the Services Package: A services economy that works for Europeans, 11 October 2017

Further reading:

• European Parliament, EPRS, Reform of services notification procedure, Briefing, August 2017

Author: Guillaume Ragonnaud, Members' Research Service, legislative-train@europarl.europa.eu