The Services Directive, Authorisation Schemes & Proportionality

Following the introduction of the Services Directive 2006/123/EC, all EU member states were obliged to implement the directive. The Directive came into force on December 28th 2009. Ireland enacted the Directive into Irish Law as Statutory Instrument 533, European Union (Provision of Services) Regulations 2010.

Prior to the legislation coming into force the Dept. of Enterprise, Trade and Employment directed local authorities to complete a statutory screening process of their Casual Trading authorisation systems. (The systems and processes employed in the granting of a casual trading licence.) The Department then issued a note to inform local authorities of their obligations under the Directive. Unfortunately the guidelines only refer to articles of European law contained in the EU Services Directive and not their transposition into Irish law. The subsequent arguments will therefore refer to the Departments’ guidelines first, then the articles of European law referred to in those guidelines, followed by the same articles of European law as they are enacted into Irish law.

The Initial Legal Screening Process

Department of Enterprise, Trade and Employment (2009)

Casual Trading Legislation & the Services Directive

Gudelines – Services Directive 2006/123/EC

Important notice Regarding the Implications of the Directive on Casual Trading Bye-laws.

The Department of Enterprise, Trade and Employment is responsible for the policy on trading in public places. The relevant legislation is the Casual Trading Act, 1995. All local authorities have been sent a copy of the Directive and asked to comment on the screening process led by the Department. The screening process has now been completed. For those local authorities who did not participate in the screening process, it is essential that they make preparations for the successful implementation of the Directive. The screening process is there to enable Member States to justify their authorisation systems. The purpose of this note is to inform local authorities of their obligations under the Directive.

This note represents the Department’s understanding of what local authorities need to do arising from the Directive.

This note does not purport to deal with every aspect of the Directive. The note is based on those provisions of the Directive, which appear to the Department to be most relevant to casual trading.

Services Directive: Assessment of Implementation Measures in Member States

National Report for Ireland, Part II.

1. Introduction

In addition to introducing the European Union (Provision of Services) Regulations 2010, Ireland was also supposed to screen its existing sector-specific legislation in the light of the new legal regime for the provision of services. This screening process was designed to enable Ireland to identify prohibited requirements and to remove them before a specified deadline of 28 December 2009. As the Services Directive was not transposed into Irish law until 10 November 2010, the removal process – in respect of prohibited requirements – appears to have been delayed indefinitely. Nor is there any evidence that Ireland has, at this point in time, adapted its sector-specific legislation in order to bring it in line with the provisions of the Services Directive. Specific instances of sector-specific legislation – in force in Ireland and in conflict with the Services Directive – will be identified in this Report.

EU Services Directive 2006/123/EC

Article 15 Requirements to be evaluated

Article 15(1) Member States shall examine whether, under their legal system, any of the requirements listed in paragraph 2 are imposed and shall ensure that any such requirements are compatible with the conditions laid down in paragraph 3. Member States shall adapt their laws, regulations or administrative provisions so as to make them compatible with those conditions.

Article 15(2) Member States shall examine whether their legal system makes access to a service activity or the exercise of it subject to compliance with any of the following non-discriminatory requirements:

Article 15(3) Member States shall verify that the requirements referred to in paragraph 2 satisfy the following conditions:

(a) non-discrimination: requirements must be neither directly nor indirectly discriminatory according to nationality nor, with regard to companies, according to the location of the registered office;

(b) necessity: requirements must be justified by an overriding reason relating to the public interest;

(c) proportionality: requirements must be suitable for securing the attainment of the objective pursued; they must not go beyond what is necessary to attain that objective and it must not be possible to replace those requirements with other, less restrictive measures which attain the same result.

S.I. 533 European Union (Provision of Services Legislation) Regulations 2010

Article 21(1)

Requirements relating to gaining access to, and performing, a service activity

Article 21(1). A competent authority in the State shall not make access to, or the exercise of, a service activity by a provider or recipient subject to any of the requirements set out in paragraph (2) unless those requirements are non-discriminatory, necessary and proportionate.

Article 21(3) For the purpose of paragraph (1)—

(a) a requirement is non-discriminatory if it is does not directly or indirectly discriminate against a person according to the person’s nationality or, if the person is a company, according to the location of the company’s registered office;

(b) a requirement is necessary only if it is justified by an overriding reason relating to the public interest;

(c) a requirement is proportionate if the requirement—

(i) is suitable for attaining the objective sought to be achieved,

(ii) does not go beyond what is necessary to attain that objective, and

(iii) cannot be replaced with another, less restrictive requirement that attains the same result.

Authorisation Schemes and Proportionality

A local authority’s authorisation scheme or the system it uses to grant a Casual Trading Licence begins with a statutory application form. The Statutory application form for a casual trading licence was enacted into Irish law as Statutory Instrument 146 of 1996. The ‘National Report for Ireland’ (below) expressed doubts as to the proportionality of some of its requirements.

The National Report for Ireland on the Implementation of the Services Directive

Services Directive: Assessment of Implementation Measures in Member States

National Report for Ireland, Part II.

2.4 Restrictions to the Freedom to Provide Services – Article 16(2) analysis

In Ireland, licences are necessary in order to engage in occasional and casual trading. As explained below, the authorisation requirements – especially in relation to casual trading (under the Casual Trading Act 1995 (Forms) Regulations 1996) – are markedly stringent and could be categorised as being disproportionate.

Findings with respect to the Article 16(2) prohibitions, including justification analyses

As regards authorisation schemes, it is important to point out that Ireland does not have an all encompassing authorisation scheme for wholesale and retail services. The vast majority of the authorisation schemes for the wholesale and retail distribution of goods in this country fall into two main categories: (i) authorisation schemes linked to specific types of trading; (ii) authorization schemes connected to the wholesale or retail distribution of a specific product.(i) Specific types of trading: As explained in Section 2.3 supra, licences are required in order to engage in either occasional or casual trading in the State (in accordance with the provisions of the Occasional Trading Act 1979 and the Casual Trading Act 1995 respectively). The requirements relating to casual trading are somewhat onerous insofar as the applicant must complete a statutory application form containing details of his/her name, address, phone number, occupation and personal public service number. Companies are obliged to give details of either their tax reference numbers or, in the case of a limited company, its registration number. Although the above requirements are non-discriminatory, doubts must be expressed as to the proportionality of these requirements. Indeed, it is salutary to point out that Germany recently abolished its authorisation scheme for itinerant cross-border sales activities because it was considered unjustified and disproportionate.

2.5 Conclusions for retail sector

It may appear necessary to regulate both occasional and casual trading. However, from a cross-border perspective, the authorisation requirements in respect of casual trading in Ireland are quite onerous. This raises the question of whether the Irish regime is disproportionate. The Irish regulatory regime is difficult to reconcile with the principle of proportionality, especially in an era in which the freedom to provide services is gaining an ever increasing purchase in the European Union marketplace.

EU Services Directive 2006/123/EC

Freedom to Provide Services

Article 16(1)

The Member State in which the service is provided shall ensure free access to and free exercise of a service activity within its territory. Member States shall not make access to or exercise of a service activity in their territory subject to compliance with any requirements, which do not respect the following principles:

Article 16(1)(a) non-discrimination: the requirement may be neither directly nor indirectly discriminatory with regard to nationality or, in the case of legal persons, with regard to the Member State in which they are established;

Article 16(1)(b) necessity: the requirement must be justified for reasons of public policy, public security, public health or the protection of the environment;

Article 16(1)(c)Proportionality: the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective.

S.I. 533 European Union (Provision of Services Legislation) Regulations 2010

Chapter 1 Providers

Reference to Freedom to Provide a Service

5) A reference in this Chapter to a provider established in another Member State having the freedom to provide a service in the State includes a reference to the provider having the freedom to have access to, and to perform, a relevant service activity in the State.

S.I. 533 European Union (Provision of Services Legislation) Regulations 2010

Freedom to Provide a Service

Article 6(1) Subject to Regulation 7 and Regulation 8, a relevant competent authority in the State may impose on a provider established in another Member State a requirement restricting the provider’s freedom to provide a service in the State only if the requirement is non-discriminatory, necessary and proportionate.

Article 6(2) For the purpose of paragraph (1)—

(a) a requirement is non-discriminatory if it is neither directly nor indirectly discriminatory with regard to nationality or, in the case of a provider who is a legal person, with regard to the Member State in which that provider is established;

(b) a requirement is necessary if it is justified for reasons of public policy, public security, public health or the protection of the environment;

(c) a requirement is proportionate if it is necessary for attaining the objective pursued and does not exceed what is necessary to attain that objective.

The Statutory Application Form

While ‘the information requested in the form prescribed’ [Section 4(9) Casual Trading Act 1995 (below)] may be disproportionate, the statutory application form is still on the Irish statute book as S.I. No. 146/1996 Casual Trading Act, 1995 (Forms) Regulation, 1996. Changing the conditions set out in the statutory application form would require the intervention of the Minister for Enterprise Employment and Innovation, or the involvement of the Houses of the Oireachtas. The conditions set out in the S.I. 146/1996 form are therefore required by law to be included on any licence application form.

Information Required to Decide on an Application

Casual Trading Act 1995

Section 4—(9)

A person who applies to a local authority for a casual trading licence shall furnish to the local authority the information requested in the form prescribed together with such further information as the local authority may request for the purposes of the exercise of its powers and functions under this section and, if the person fails to comply with this subsection, the local authority may refuse to grant the person the licence.

The phrase ‘together with such further information as the council may request for the purposes of the exercise of its powers and functions under the Act, has to be read with regard to the EU Services Directive, Freedom to Provide Services [Article 16].

There is a requirement that the authorisation procedures defined in Article 16(2)(b) (the granting of a casual trading license) have to be proportionate [Article 16(1)(c)] and not go beyond what is necessary to attain an objective. Therefore the ‘further information’ that may be requested by a local authority in a casual trading licence application, must be proportionate, and must not go beyond what is necessary to attain that objective. In doing so casual traders are not restricted in their freedom to provide a service (sell their goods in a market).

However in the light of the new legal regime established by the EU Services Directive, requests for ‘further information’ by a local authority, over and above what is required on the statutory application form, may only be considered for inclusion, if the information was deemed to be necessary and proportionate.