1 18 September 2019 EUROPEAN FREE TRADE ASSOCIATION · >New adaptation text to Regulation (EC) No...

EUROPEAN FREE TRADE ASSOCIATION18 September 20191

EUROPEAN FREE TRADE ASSOCIATION

Principle of homogeneityInternal market legislation should be implemented, interpreted and applied uniformly throughout the EEA

Dynamic agreementNew internal market legislation should be continuously incorporated into the EEA Agreement ( Joint Committee Decision (JCD))

These two objectives require an institutional framework :To ensure a uniform application of EEA law throughout the EEA

To allow for new internal market legislation to be continuously made part of EEA law

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> EEA Agreement establishes that this objective of homogeneity is to be achieved:>without the transfer of legislative powers to supranational

institutions.

>by separate and independent EU and EFTA pillars

> This two-pillar structure was informed by:>Constitutional considerations by the EFTA States

>EU’s wish to preserve the autonomy of its own institutions

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> Part VII of the EEA Agreement contains the institutional provisions of the Agreement>Chapter 1: Establishes the joint institutions of the Agreement (EEA

Council, EEA Joint Committee, EEA Joint Parliamentary Committee and the EEA Consultative Committee).

>Chapter 3: Provides that the EFTA States establish an independent surveilance authority and a court of justice

> EFTA States regulate the competences and functions of the EFTA institutions in an agreement between themselves (SCA)

> The EU and the EFTA sides supervise and control their internal matters separately – but the EEA provides for procedures to address possible conflicts arising out of conflicting decisions

> .......18 September 20194


Two-pillar system:

Acts are incorporated:

Decisions by the EEA

Joint Committee

No transfer of legislative

competence

Separate system of

surveillance and

judicial control


> Maintaining homogeneity in a two-pillar system raises two types of issues:

> The more general one: How to ensure that EEA law is implemented, interpreted and applied uniformly across the EEA.

> The more specific one: When EU legislations grants certain tasks and competences to EU institutions, how should they be mirrored in the EFTA pillar?

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> In order to achieve homogeneity within the two-pillar system, specific tasks and competences that EU legislations grants to EU institutions must be entrusted to a counterpart in the EFTA pillar.

> Who are these counterparts?:> The EFTA Surveillance Authority

> The EFTA Standing Committee

>National authorities

> In some cases, the EEA Agreement may regulate how to address such issue (e.g. Protocol 1).

> In other cases, an adaptation text to a JCD incorporating such acts may be needed

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> Regulatory agencies and bodies

> Fines or financial penalties

> Surveillance acts vs regulatory acts

> Markets authorisations

> Recognitations of professional qualifications

> Verfication and approval

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> Adaptations texts adapt the content of EU legal acts for the purposes of the EEA Agreement (e.g. add, amend, derogate)

> Protocol 1 EEA – horizontal adaptations>Provides general adaptations that apply to all acts in the EEA

Annexes, e.g. regarding the execution of certain functions of the Commission in the EFTA pillar

> Sectoral adaptations>Apply to all acts within an annex, e.g. Annex XIV specifies that the

term “Commission” shall be read as “competent competition authority” (as defined in Art. 56 EEA)

> Specific adaptations>Provide ad hoc solutions to two-pillar challenges in specific legal acts

>Part of the EEA Joint Committee Decision (JCD)

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> EEA Agreement does not provide for the competence to impose fines/penalties on undertakings for breaches of EEA law (except in the area of competition)

> Consequently, a legal basis needs to be created in each specific case to assign such competence to a body in the EFTA pillar

>National authorities

>EFTA Surveillance Authority

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> Medicinal products>Original adaptation text to Art. 84 of Regulation (EC) No 726/2004

(JCD 61/2009):

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> Medicinal products>New adaptation text to Regulation (EC) No 726/2004 (JCD 92/2017):

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Protocol 1(4)(d) EEA:

“Functions of the EC Commission in the context of procedures for verification or approval, information, notification or consultation and similar matters shall for the EFTA States be carried out according to procedures established among them […]” (emphasis added)

In practice, covers many of the typical tasks of the Commission

However, not always clear whether a task falls into the categories of Protocol 1(4)(d)

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Marketing authorisations for medicinal products

Regulation (EC) No 726/2004 (JCD 61/2009)

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> “EU agencies are distinct bodies from the EU institutions –separate legal entities set up to perform specific tasks under EU law” (europa.eu)

> Agencies not foreseen in the EEA Agreement

> Constitutional challenges

> Two-pillar system of EEA Agreement>Participation rights?

>Cooperation mechanisms?

>Dispute-settlement mechanisms?

>Binding decisions?

>Access to court?

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The European Financial Supervisory Authorities

> European Banking Authority (EBA) [Regulation (EU) No 1093/2010]

> European Insurance and Occupational Pensions Authority (EIOPA) [Regulation (EU) No 1094/2010]

> European Securities and Markets Authority (ESMA) [Regulation (EU) No 1095/2010]

> European Systemic Risk Board (ESRB) [Regulation (EU) No 1092/2010]



> EBA, EIOPA and ESMA together entrusted with improving the micro-prudential supervision of financial institutions.

> They have powers to adopt binding decisions addressed at financial market participants and national competent authorities.

> Also direct supervision (in specific instruments, only specific categories of market participants, e.g. CRA, trade repositories, in future also securitisation repositories [STS]).

> Also coordination of supervisory activities of national authorities and involvement in development of regulatory framework.



> Specific two-pillar challenges:

> Dilemma: How to maintain the advantages of a centralised and harmonised supervision while safeguarding the two-pillar principle?

> Solution: The European financial supervisory authorities do the technical work, but the EFTA Surveillance Authority has the formal decision-making powers as regards the EFTA States, their authorities and their market participants.

> However: «on the basis of drafts prepared by the agencies».



> Participation

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> Competence of the EFTA Surveillance Authority

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> Modalities for cooperation, dispute settlement

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EUROPEAN FREE TRADE ASSOCIATION18 September 201922

For more information and practical examples, see EFTA Bulletin ( June 2019), available at

https://www.efta.int/sites/default/files/publications/bulletins/efta_bulletin_legal_notes.pdf

https://www.efta.int/sites/default/files/publications/bulletins/efta_bulletin_legal_notes.pdf

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