The EEA Surveillance System

 

 

by Sven Norberg*

 

Introduction
Two keywords — dynamic and homogeneous — characterise perhaps more than anything else the enormous enterprise embodied in the creation of the EEA. To qualify the EEA as both dynamic and homogeneous, which has been done in all relevant Joint Ministerial EC-EFTA Declarations since 1986 and also is done in the EEA Agreement, leads to considerable political and legal consequences. The basic idea behind this ambitious and cumbersome work, which in practice, inter alia, might be looked upon as a kind of widening of the internal market, can only be realized if the same legal rules will be applied through all the nineteen countries concerned. It is only thereby and if the application is homogeneous that it will be possible to achieve equal treatment and non-discrimination of the economic operators and some 380 million inhabitants of these countries. In the areas covered by the Agreement the results shall thus in principle be the same whether Community rules or EEA rules are applied. If the individuals and economic operators cannot get guarantees that that will be the case, it will seem that a primary objective behind this work would not be fulfilled. The word homogeneous does therefore not only concern homogeneity as to the application of the EEA rules as such in the relationship between the EFTA and the EC states, but also homogeneity between these rules and corresponding EC rules. Furthermore, homogeneity should not only prevail at the entry into force of the Agreement, but also during the dynamic development of the Agreement in step with the development of the Community in corresponding areas. Obviously, it has been a major challenge for the negotiators to secure this in the Agreement, while at the same time guaranteeing the independence and autonomy of the parties. It should also be underlined that the result could hardly be the intended one, if the Contracting Parties had not seen to it in the Agreement itself that this objective was very apparent. It is addressed in many places in

 

* Director, Legal Affairs, EFTA Secretariat. Opinions expressed are those of the author. Artikeln utgjorde författarens bidrag till det 8:e Kolloquiet i Europarätt arrangerat av universitetet i Neuchâtel den 7-9 maj 1992 med tema EES-avtalet.

the text of the Agreement but it is perhaps most clearly expressed by the following sentence of the preamble:

 

Whereas, in full deference to the independence of the courts, the objective of the Contracting Parties is to arrive at and maintain a uniform interpretation and application of this Agreement and those provisions of the Community legislation which are substantially reproduced in this Agreement and to arrive at an equal treatment of individuals and economic operators as regards the four freedoms and the conditions of competition.

 

Although there, thus, formally will be two separate legal orders, the EC law and the EEA law, the two will in practice form a common European legal system. It is against this background that great importance must be attributed in particular to the surveillance of the implementation, application and interpretation of the Agreement. It is well known how important this is within the Community, where the EC Commission has been given special competences as the guardian of the Treaty of Rome to supervise the application by the Member States of Community law. The Court in Luxembourg has also been entrusted with the task to interpret EC law in a way which is binding for the Member States. The Community legal system offers no doubt a very high standard as to the legal security for the individuals and his rights under the provisions of Community law. Against this background it was clear that a corresponding mechanism to the EC one would have to be created also for the EEA, since otherwise the risk might be that a ”legal imbalance” between, on the one hand, the situation in the EC States and, on the other, that in the EFTA States might arise to the detriment for individuals and economic operators1. This was since the beginning of the negotiations very clear to the EFTA States, the Heads of Government of which gave particular emphasis to these questions already in their declaration in Oslo of 15 March 1989.2 It has also been very clear to the Contracting Parties that in order to secure that the EEA functions in a correct way there is a need

1 As to earlier discussions before 1989 on those subjects see Norberg: ”The creation of a European Economic Space. Legal challenges seen from an EFTA point of view.” p. 160 et seq. in ”L’avenir du Libre-échange en Europe: vers un Espace économique européen?” edited by O. Jacot-Guillarmod, Zürich 1990. Se också författarens artikel: ”Skapandet av EES-rättsliga och institutionella frågor”. SvJT 1990 s. 111. 2 After referring to the need for ”equally strong and reliable surveillance and enforcement procedures” in the EES the EFTA Heads of Government stated furthermore: ”17. We consider EFTA as our principal platform for multilateral negotiations with the EC and agree to intensify co-operation under EFTA’s auspices in all fields related to the EES. We will take the necessary steps to strengthen EFTA’s decision-making process and collective negotiating capacity. We will also strengthen our mechanisms for surveillance and enforcement of treaty obligations in order to ensure their harmonious and uniform application and interpretation throughout the whole of the EES.”

for a surveillance mechanism which is both efficient and independent. Through such a mechanism there must be a possibility both to take initiatives in relation to the individual Contracting Parties and to receive complaints from parties as well as companies or individuals and further to initiate legal proceedings concerning infringements of the EEA rules before a Court. The main discussions during the negotiations thus more concerned the organisational structure of than the need for an EEA surveillance mechanism, i.e. whether to create one joint structure for the surveillance of all Contracting Parties or not. The finally agreed solution consists of a kind of two-pillar structure where, on the one hand, the EC Commission will survey the application as far as the EC Member States are concerned and, on the other, a new surveillance authority, the EFTA Surveillance Authority (ESA), is established by the EFTA States in order to supervise the application as far as the EFTA States are concerned. As a parallel to the role played in the surveillance procedure in the EC by the EC Court of Justice, the EFTA States will also create a Court of Justice, the EFTA Court. The ESA will with regard to the surveillance tasks be totally independent from the EFTA Secretariat as well as from the EFTA States. Formally, it will be established as a new international organization. The ESA will have equal functions and similar competences with regard to surveillance as the EC Commission has. It shall in other words be as efficient and have the same means at its disposal as the Commission. An important difference is, however, that the ESA will not play the kind of role in the decisionmaking process in the EEA as the Commission is doing in the Community legislative procedure. The ESA will thus not take legislative initiatives, which is the major part of the Commission's tasks in the EC. In order for this surveillance system to function well, there must furthermore be a close and intimate co-operation between the EC Commission and the ESA. This is especially important in order to secure a uniform surveillance policy throughout the EEA as far as all Contracting Parties are concerned, and in order for it to be possible really to treat equal cases alike. Not least vital will this be in such fields as competition, state aid and public procurement. As to proceedings before the EFTA Court the ESA will, for example, be able to bring an action against an EFTA State before the EFTA Court (cf. Article 31 ESA-EFTA Court Agreement) in the same way as the EC Commission can bring an action concerning an infringement of EC law against a Member State before the EC

Court of Justice (cf. Article 169 EEC). Each of these two courts will also have the competence to try appeals against decisions of the EC Commission (cf. Article 173 EEC) and the ESA (cf. Article 36 ESAEFTA Court Agreement), respectively. Decisions by the ESA can thus be appealed against by an EFTA State or by an individual who is concerned thereof before the EFTA Court. Assuming that the role of the EC Commission’s surveillance activities is already sufficiently well known3 I will here mainly concentrate on describing the particularities of the EEA surveillance system as well as somewhat the rules governing the future activities of the ESA.

 

Treaty rules governing the EEA surveillance
I General provisions
The general provisions regarding the surveillance in the EEA are to be found in Part VIII, Chapter 3 of the EEA Agreement, which has the title Homogeneity, Surveillance Procedure and Settlement of Disputes. Section 2 of that Chapter is called Surveillance Procedure, and it is here in Articles 108 and 109 where the main obligations regarding the surveillance procedure in the EEA are to be found. Article 108(1) thus lays down the general obligation for the EFTA States ”to establish an independent surveillance authority, (EFTA Surveillance Authority), as well as procedures similar to those existing in the Community including procedures for ensuring the fulfilment of obligations under this Agreement and for control of the legality of acts of the EFTA Surveillance Authority regarding competition”. From this provision follows the main obligation regarding the establishment of an EFTA Surveillance Authority, the independence of which must be ensured in relation both to the EFTA States and to any body established by them. Moreover, the EFTA States shall establish procedures which are similar to those which exist in the Community in the field of surveillance. Such procedures shall include those for ensuring the fulfilment of obligations under this Agreement, which means infringement procedures similar to those under Articles 169 and 171 of the EEC Treaty. There should also be procedures for control of the legality of acts of the EFTA Surveillance Authority regarding competition, which means procedures similar to those under Article 173 of the EEC Treaty. The second paragraph of Article 108 lays down the obligation for the EFTA States to establish a Court of Justice (EFTA Court). This

3 cf. The Eighth Annual Report to the European Parliament on Commission Monitoring of the Application of Community Law, Official Journal of the European Communities 31 December 1991 C338 and the EC Commission’s Twenty-first Report on Competition Policy, 1991.

became logical when the possibility of establishing a joint court for EEA matters was considered by the EC Court of Justice not to be compatible with EC law.4 The EFTA Court shall under this provision, in accordance with a separate agreement between the EFTA States, with regard to the application of the EEA Agreement be competent, in particular, for:

 

(a) actions concerning the surveillance procedure regarding the EFTA States (see further Article 31 of the ESA-EFTA Court Agreement);
(b) appeals concerning decisions in the field of competition taken by the EFTA Surveillance Authority (see further Article 36 of the ESA-EFTA Court Agreement); and
(c) the settlement of disputes between EFTA States (see further Article 32 of the ESA-EFTA Court Agreement).

 

The competences and procedures under (a), (b) and (c) correspond to what is laid down in Articles 169, 173 and 170 of the EEC Treaty, respectively. Article 33 of the ESA-EFTA Court Agreement obliges further the EFTA States concerned to take the necessary measures to comply with the judgments of the EFTA Court, while Article 35 of the same Agreement gives the EFTA Court jurisdiction in regard to penalties imposed by the ESA. As can be seen from the text of the EEA Agreement, the listing of competences under paragraph 2 of Article 108 is not exhaustive. The most important further competence for the EFTA Court will no doubt be the competence entrusted it in Article 34 of the ESAEFTA Court Agreement to give, upon request from a national court in an EFTA State, advisory opinions regarding the interpretation of provisions of the EEA Agreement. Although Article 108 of the EEA Agreement may seem to be addressed exclusively to the EFTA States, it is clear that it is drafted as a parallel obligation to what already follows for the EC and its member States from EC law. This becomes even more clear from the wording of Article 109(1), which clearly spells out that the ”fulfilment of the obligations under the EEA Agreement shall be monitored by, on the one hand, the EFTA Surveillance Authority and, on the other, the EC Commission acting in conformity with the treaty establishing the European Economic Community, the treaty establishing the European Coal and Steel Community and this Agreement”. The importance of a uniform surveillance throughout the EEA is underlined in paragraph 2 of the same Article, where it is said that in order to ”ensure a uniform surveillance throughout the EEA, the EFTA Surveillance Authority and the EC Commission shall co-operate, exchange information

 

4 Cf. EC Court of Justice Opinion 1/91 of 14 December 1991.

and consult each other on surveillance policy issues and individual cases”. Paragraph 3 of Article 109 provides that the EC Commission and the EFTA Surveillance Authority shall receive any complaints concerning the application of the EEA Agreement and that they shall inform each other of complaints received. Under paragraph 4 each of these bodies shall further examine all complaints falling within its competence and shall pass to the other body any complaints which fall within the competence of that body. Although the importance of a close co-operation between the two surveillance bodies is underlined in many other places in the EEA Agreement, there may anyhow occur a disagreement between the two bodies. For such a case paragraph 5 of Article 109 states that ”in case of disagreement between the two bodies with regard to the action to be taken in relation to a complaint, or with regard to the result of the examination, either of the two bodies may refer the matter to the EEA Joint Committee which shall deal with it in accordance with Article 111”. Article 111 deals with the dispute settlement procedure, which I, however, will not comment upon to-day. The section on the surveillance procedure contains one further article, Article 110, which lays down obligations regarding the enforcement of decisions under this agreement by the EFTA Surveillance Authority and the EC Commission which impose a pecuniary obligation on persons other than states as well as with regard to such judgments under this Agreement by the Court of Justice of the European Communities, the Court of First Instance of the European Communities and the EFTA Court. It corresponds very closely to Article 192 of the EEC Treaty. The main principle is that enforcement shall be governed by the rules of civil procedure in force in the state or the territory of which it is carried out.

 

II Specific provisions
The provisions so far dealt with concern what can be qualified as general surveillance of Treaty obligations, which in the end might end up with an infringement procedure of the kind contained in Article 169 of the EC Treaty. There are, however, also those other more particular surveillance competences entrusted with the EC Commission which also are to be carried out under this Agreement. These competences, which will be dealt with in the following, concern above all the fields of competition rules applicable to undertakings, state aid and public procurement.

While the Commission in these fields will maintain its present competences, the fact that certain of these rules are applicable to undertakings requires special provisions regarding the attribution of cases between the two surveillance authorities. Furthermore, the co-operation between the two surveillance authorities require also particular provisions.

 

(a) The field of competition It is not my intention here to go into the very details of the substantive provisions in the field of competition or of the surveillance activities there. May it suffice to recall that Articles 55 to 60 of the EEA Agreement and Protocols 21 (on the implementation of competition rules applicable to undertakings), 23 (concerning the co-operation between the surveillance authorities), 24 (on cooperation in the field of control of concentrations) and 25 (on competition regarding coal and steel) to that Agreement contain provisions on the surveillance in the field of competition. These provisions contain both the substantive competition rules as well as all the procedural rules. They are drafted in such a way that in the EEA the common rules on competition applicable to undertakings are the same as those applicable in the Community. There is, however, one important nuance due to the fact that the territory for the application of these provisions is not the Community territory but the territory of all the Contracting Parties. The main criterion is thus that trade between Contracting Parties shall be affected. Another important principle during the negotiations in this field was to apply a ”one-stop-shop principle” implying that it should be clear from the outset which of the two surveillance authorities should be the competent one and further that the authority seized, if competent, would be the one finally also to deal with the matter. Rules regarding the attribution of cases are laid down in Article 56 and 57 of the EEA Agreement. Article 56 deals with the cases regulated in Article 53 (cf. 85 EEC) regarding agreements between undertakings and cases regulated in Article 54 (cf. 86 EEC) concerning abuse of dominant positions, while Article 57 deals with merger control. With regard to the former categories the main principle is that if there is a pure case, which means a case where the effect of the anti-competitive behaviour arises either only within the EFTA territory or only within the EC territory, it is the EFTA Surveillance Authority or the EC Commission, respectively, which deals with the matter. For the cases under Article 54 of

abuse of dominant position the corresponding situation is based upon where the dominance exists. As for the so-called mixed cases, which are the cases where the effect of the anti-competitive behaviour is felt both within the EC territory and in the EFTA territory, the Commission will handle all cases where trade between EC Member States is affected. The ESA will handle those cases where trade between EFTA States and one EC Member State only is affected. As to such cases the ESA will handle those where 33 per cent of the turnover are achieved within the EFTA territory.5 The ESA will also be competent to handle mixed cases where the effect on trade between EC Member States or on competition within the Community is not appreciable (”de minimis” cases). With regard to merger control the EC Commission will handle the cases falling under the present merger regulation where the effect on competition is in the whole of the EEA. The ESA will handle the other merger cases, if the thresholds are realized in the EFTA territory. The importance of the co-operation between the Commission and the ESA is emphasized in Article 58 of and Protocols 23 and 24 to the EEA Agreement. The objective thereof is thus said to be ”to developing and maintaining a uniform surveillance throughout the European Economic Area in the field of competition and to promoting a homogeneous implementation, application and interpretation of the provisions of the Agreement”. This cooperation will comprise exchange of information and views on both individual cases and on surveillance policies. Special mention should here be made of the co-operation as to investigations. If thus the ESA investigates a case involving a company located in the EC territory, the EC Commission is obliged to assist with the necessary inspections. Correspondingly, if the EC Commission in a case where the EEA rules are applicable needs to have an inspection made of the premises of a company located in an EFTA country, it will have to ask ESA to carry out the inspection. This will then normally be done with assistance of the competent national authority. One particular aspect of the co-operation will of course be the participation in the advisory Committees on competition established by the Commission or to be established among the EFTA States to assist the ESA. In these Committees both representatives from Member States and the surveillance authorities will participate.

 

5 Protocol 22 of the EEA Agreement contains the provisions concerning the definition of ”undertaking” and ”turnover” (Article 56).

As to sanctions, procedures, investigatory powers etc., the ESA will have the same competences and powers as the EC Commission has. The general rules as well as the specific rules thereon are laid down in the ESA-EFTA Court Agreement, especially in Articles 5 and 25 and in Protocol 4 thereto. (b) The field of state aid The general rules on state aid are laid down in Articles 49 and 61 to 64 and Annexes XIII, section (iv), and XV to the EEA Agreement. Apart from the general provisions in Articles 108 and 109 in the EEA Agreement, the powers and functions of ESA in the field of State aid is also defined in Protocol 26 which stipulates that ESA shall be entrusted with equivalent powers and similar functions to those of the EC Commission for the application of the competition rules applicable to State aid of the EEC Treaty. The ESA shall also according to that Protocol have such powers to give effect to the competition rules applicable to state aid relating to products falling under the Treaty establishing European Coal and Steel Community as are referred to in Protocol 14. The functions of ESA in this field, which are laid down mainly in Articles 5 and 24 and in Protocol 3 to the ESA-EFTA Court Agreement, can be summarized as follows:

 

— ESA shall in co-operation with the EFTA States, keep under constant review all systems of aid existing in those States. The EFTA States will be obliged to notify in advance to the ESA any plans to grant or alter aid which they wish to implement. These will have to be approved by ESA before any aid can be granted — Within two months from the date it receives the notification the ESA shall make an initial assessment (preliminary examination) of the compatibility of an aid measure. If it suspects that the aid scheme is not compatible with the EEA Agreement, it has to open a formal procedure. While the aid measure is examined, the EFTA State will have to refrain from implementing it. — Upon opening the formal procedure the ESA will have to give notice to the other EFTA States in order for them and other third parties concerned to be able to submit comments. At the end of the procedure ESA may decide that the aid measure shall be abolished or altered or that an illegally paid aid shall be recovered from the recipients undertaking. It will be possible for the EFTA States to appeal against such a decision to the EFTA Court. — If the EFTA State in question does not comply with the ESA decision within a prescribed time, ESA or any other interested EFTA State may directly refer the matter to the EFTA Court.

 

In accordance with Protocol 27 to the EEA Agreement, ESA will have to co-operate closely and continuously with the EC Commission in order to ensure mutual transparency and uniform application of the

EEA State aid rules. The co-operation will concern both individual aid cases and surveillance policies of a general character. Exchanges of views will be held periodically or at request. This also means that ESA will monitor state aid programmes in the EC. This function is particularly important in view of Article 64 of the EEA Agreement:

 

”1. If one of the surveillance authorities considers that the implementation by the other surveillance authority of Articles 61 and 62 and Article 5 of Protocol 14 is not in conformity with the maintenance of equal conditions of competition within the territory covered by this Agreement, exchange of views shall be held within two weeks according to the procedure of Protocol 27, paragraph (f). If a commonly agreed solution has not been found by the end of this two weeks period, the competent authority of the affected Contracting Party may immediately adopt appropriate interim measures in order to remedy the resulting distortion of competition. Consultations shall then be held in the EEA Joint Committee with a view to finding a commonly acceptable solution. If within three months the EEA Joint Committee has not been able to find such a solution, and if the practice in question causes or threatens to cause distortion of competition affecting trade between the Contracting Parties, the interim measures may be replaced by definitive measures, strictly necessary to offset the effect of such distortion. Priority shall be given to such measures that will least disturb the functioning of the EEA. The provisions of this Article will also apply to State monopolies, which are established after the date of signature of the Agreement.”

 

This provision lays a particular responsibility upon the surveillance authorities to monitor and apply the state aid provisions with the objective of providing equal conditions of competition for the economic co-operators concerned. It should thus be noted that the right for ”the competent authority of a Contracting Party” (in the EC the Commission and on the EFTA side a Member State concerned) to adopt measures to remedy the situation will depend upon whether the surveillance authority concerned has fulfilled its surveillance tasks properly and does not arise if, in spite thereof, a Government of a Member State has violated the rules.

 

(c) The field of procurement The substantive rules on public procurement are contained in Article 65(1) and Annex XVI of the EEA Agreement. The legal basis in the EEA Agreement for the functions and powers of the ESA and for the cooperation between the ESA and the EC Commission in the field of procurement is contained in Articles 108 and 109 respectively. In addition, it should in particu-

lar be recalled that in this field the Community has adopted secondary legislation, the so-called First legal remedies directive, which also is part of the EC ”acquis” integrated into the EEA Agreement.6 That directive above all obliges the Member States to provide on a national level appropriate legal remedies for securing an open and competitive procurement market. In this context also particular responsibilities have been entrusted with the EC Commission and under the EEA Agreement also with the ESA While the Commission will monitor the activities in EC States, the ESA will monitor the implementation and application by the EFTA States of the EEA rules on procurement. The functions of the ESA in this field are laid down in Articles 5 and 23 of and Protocol 2 to the ESA-EFTA Court Agreement. From this follows that the ESA will monitor in particular three aspects: national laws, contract notices and complaints. In case of clear and manifest infringements of the procurement rules ESA may notify the EFTA State concerned and the contracting authority of the reasons which have led it to conclude that such infringements have been committed and request their correction. If the EFTA State does not answer, or if it does not confirm that the infringement has been corrected or otherwise gives a satisfactory answer, the ESA may bring the State before the EFTA Court. In that context ESA will also have the possibility of applying for interim measures and/or suspension of the procurement procedure.

 

III Surveillance related functions
As already mentioned above, the EC Commission is in the EEC Treaty and the ECSC Treaty entrusted with a number of particular competences of administrative, executive and surveillance related character. Most of these functions are entrusted to the EC Commission through provisions in the secondary legislation. During the negotiations on the EEA Agreement a special reference technique was developed to be able to integrate into the Agreement the around 1,700 EC legal acts, mainly Directives and Regulations, which have been found to be relevant to the EEA. All these acts are listed in Annexes I to XXII to the EEA Agreement mainly through references to their publication in the Official Journal of the European Communities. Protocol 1 to the Agreement contains the horizontal adaptations to the provisions of the acts referred to in the Annexes to the

6 The so-called Second legal remedies Directive adopted by the EC Council on 25 February 1992 (OJ No L 76, 23.3.1992, p.14) concerning the procedures of entities operating in the water, energy, transport and telecommunications sectors will be added to the EEA and ESA Agreements by Additional Protocols.

Agreement and these horizontal adaptations are applicable unless otherwise provided in the respective Annex. In almost every EC act special provisions are contained regarding various tasks to be carried out by the EC Commission relating to the implementation or application of the Act. Such tasks may, for instance, concern information or approval procedures or procedures for amending an Annex to an act. Where thus tasks are entrusted to the EC Commission reference is made in Protocol 1 to procedures among the EFTA States or to the Standing Committee of EFTA States or the EFTA Surveillance Authority. The further division of these Commission functions between the ESA and the Standing Committee of EFTA States has then been undertaken in the ESA-EFTA Court Agreement and in the Agreement on the Standing Committees of EFTA States. One main guideline for this division has been to entrust all surveillance related Commission functions to the ESA. Where, for certain cases, it has been considered to be too politically sensitive to entrust those functions to ESA the functions have been given to the Standing Committee of EFTA States which for these cases has been empowered to take decisions by majority. This means first of all, that the ESA shall under the EEA rules in a considerable number of cases receive certain information from an EFTA State or a competent national authority. That information shall by the ESA be passed on to the EC Commission. Corresponding information from the EC Commission shall be received by ESA and distributed to the EFTA States or their competent authorities. Other more specific examples of what may follow from provisions of the acquis integrated into the EEA Agreement are:

 

— when an EFTA State under the rules in the acquis takes precautionary measures or safeguard measures it shall notify ESA thereof and ESA shall inform the State whether the measures were justified, for instance where an EFTA State takes a measure to withdraw a toy, bearing an EC mark, from the market because it jeopardizes health and safety; — before an EFTA State grants or undertakes an exemption or derogation from a provision of an Act it shall consult ESA, e.g. in relation to the Directive on road worthiness tests for motor vehicles and concern certain vehicles operated or used in exceptional conditions and vehicles which are never, or hardly ever used on public highways; — in certain specific cases of the veterinary acquis ESA may agree or authorize an EFTA State to grant or undertake an exemption or derogation for provision of an act and specify the conditions under which this is allowed.

 

Particular competences are given to ESA with regard to the veterinary and the phytosanitary area. The ESA will thus here make or arrange for assessments, tests and on-the-spot checks. It will also

give approvals or make recommendations regarding plans, programmes, emergency vaccinations, high risk areas etc. It shall furthermore draw up lists regarding for instance approved zones, approved farms etc. In addition the ESA will have the competence to carry out on-the-spot checks and inspections in the EFTA States for routine controls or in order to examine alleged infringements of the EEA rules. Such inspections will be carried out either in case of disputes or as routine controls according to an established programme. In a number of cases the EC Commission when carrying out these functions is to consult a committee of experts of the Member States. In the corresponding cases the ESA will also consult a corresponding committee of experts of EFTA States.

 

IV Other functions of the surveillance authorities
The EC Commission in quite a number of cases formulates recommendations, delivers opinions and issues notices or guidelines on various matters. In a corresponding way the ESA will do the same in relation to matters dealt with in the EEA Agreement. In the fields of competition and state aid this will be done already at the entry into force of the ESA-EFTA Court Agreement. Another function of ESA will be to monitor the rules of the EEA Agreement by the EC side. This will mainly be carried out through the co-operation with the Commission, through which the ESA will be able to request and receive information. As already mentioned in cases of disagreement between the two surveillance authorities with regard to the action to be taken in relation to a complaint or with regard to the result of an examination, either of them, according to Article 109 (5) of the EEA Agreement, refer the matter to the EEA Joint Committee which shall deal with it in accordance with the dispute settlement rules. In addition the particular position with regard to state aid laid down in Article 64 of the Agreement should be recalled. Not least in view of the absence of a joint judicial body for settlement of disputes it must be expected that the ESA and the EC Commission through their co-operation will play an important role with regard to avoiding that disputes between the Contracting Parties have to be brought before the EEA Joint Committee under the procedures of the EEA Agreement. A very important role for ESA will be to provide advice and information to the EFTA States, their competent authorities and individuals on the interpretation, implementation and application of the EEA and the ESA-EFTA Court Agreements. As can be seen

from the practice of the Commission in recent years, such assistance has been welcome and proved to be very useful to the EC Member States not least if it is given at an early stage before implementing decisions have been taken.

 

The organization and functioning of the ESA
The further provisions regarding the ESA and its organization and functioning are laid down in the ESA-EFTA Court Agreement, which all in all contains 53 Articles, seven Protocols, two Annexes and around 250 pages. The main part of the Agreement contains mainly provisions regarding the setting up and organization of the ESA and the EFTA Court. Four of the Protocols concern specifically the functioning of ESA in various fields of surveillance or surveillance related activities. The most voluminous of these Protocols is Protocol 4 which contains all the rules regarding the functions and powers of the EFTA Surveillance Authority in the field of competition and which are the same as corresponding EC rules in the field of competition (e. g. Regulation 17/62 and all the Regulations on block exemption). According to Article 7 of the ESA-EFTA Court Agreement the ESA shall consist of seven Members, who shall be chosen on the ground of their general competence and whose independence is beyond doubt. They shall be nationals of EFTA States. From Article 8 follows that the Members of the ESA shall be completely independent in the performance in their duties. They shall neither seek nor take instructions from any government or other body and they shall refrain from any action incompatible with their duties. Each EFTA State undertakes to respect this principle and not to seek to influence the Members of the ESA in the performance of their tasks. Articles 7 and 8 correspond to Article 157 of the EEC Treaty. The Members of the ESA shall be appointed by common accord of the Governments of the EFTA States for a period of four years, which is renewable. A President of the ESA shall further be appointed from among its Members for a period of two years by common accord of the Governments of the EFTA States. These and the other provisions regarding the requirements for the Members of the ESA and the appointments thereof correspond to the provisions in Articles 157 to 161 of the EEC Treaty. With regard to the work of the ESA, Article 15 of the ESA-EFTA Court Agreement lays down that the ESA shall act by a majority of its Members and that in the event of an equal number of votes the President shall have a casting vote. The rules of procedure shall

determine the quorum. Other provisions lay down that decisions shall state the reasons on which they are based, that normally decisions of the ESA shall be notified to whom they are addressed, that decisions take effect upon such notification and that decisions shall be published in accordance with the provisions of this Agreement and of the EEA Agreement (Articles 16 to 18). Decisions imposing a pecuniary obligation shall be enforceable in accordance with Article 110 of the EEA Agreement (Article 19). According to Article 20 individuals and economic operators are entitled to address and be addressed by the ESA in any official language of the EFTA States and the European Communities as regards notifications, applications and complaints. The ESA shall also, according to Article 21, annually publish a general report on its activities. The EFTA States have set up a Preparatory Committee to prepare for the setting up of the ESA in order to have it fully operational by the expected entry into force of the EEA Agreement on 1 January 1993. It is one of the immediate tasks of the Committee to prepare the organizational structure of the ESA and to recruit the personnel required. The EFTA Ministers on 11 December 1991 decided that the headquarters of the ESA should be located in Geneva but that, in particular, competition should be located in Brussels.

 

Some concluding remarks
A well-functioning and efficient EEA surveillance system is vital for the functioning and development of a homogeneous EEA. It will be a major challenge for the EFTA States to set up the EFTA Surveillance Authority and to ensure that it already from the entry into force of the Agreement can fulfil in a reliable way the tasks entrusted to it. No doubt the credibility of the functioning of the whole of the EEA will very much depend thereon. As repeatedly stated in the EEA Agreement the homogeneous EEA requires a uniform implementation, application and interpretation of the EEA rules. Although from the outset different views may have existed with regard how to organise the surveillance system in the EEA it is now the commonly negotiated and accepted solution to have two surveillance structures, the EC Commission and the EFTA Surveillance Authority. This solution will enhance the importance of a good and smooth co-operation between those two bodies in order to be able to guarantee the economic operators and individuals the same and equal treatment throughout the EEA. Evidently this is not less important than the securing that the case

law of the EC Court of Justice and of the EFTA Court with regard to the EEA rules and corresponding EC rules is developed in a homogeneous way. Paradoxically as it may seem, the EFTA States ought to-day, in the absence of a joint EEA Court that could settle disputes between Contracting Parties, be rather happy that the EC did not accept their initial ideas to have the EEA surveillance carried out by one joint body. With the two-pillar structure they have instead an important means for avoidance of disputes between Contracting Parties.