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Original Articles

A Single European Market for Oil and Gas—The Legal Obstacles

Pages 77-104 | Published online: 08 Jun 2015

  • For a useful and concise summary of the various measures adopted, see Vaughan, ed., Law of the European Communities, ch. 11.
  • O.J. 1975, L178/24.
  • O.J. 1983, C283.
  • O.J. 1986, C241/1.
  • Com (88) 238, final: Brussels, May 2, 1988.
  • Commission of the EC, Proposal for a Directive on the Transit of Electricity Through Transmission Grids, Com (89) 335, July 1989; Proposal for a Directive on the Transit of Natural Gas Through Major Systems, Com (89) 334, final, September, 1989; Draft Council Regulation (EEC) amending Regulation (EEC) 1056/72 on notifying the Commission of investment projects of interest to the Community in the petroleum, natural gas and electricity sectors. Com (89) 335, July, 1989; Proposal for a Council Directive on Transparency of Gas and Electricity Prices Charged to Industrial End-users, Com (89) 332, final, September, 1989.
  • Com (88) 238, supra, n. 5, p. 12; Council Resolution of 1986, supra, n. 4; Commission of the EEC, Communication from the Commission to the Council Concerning Energy and the Environment, November 29, 1989.
  • See generally, Communication from the Commission to the Council on Natural Gas, Com (86) 518, final: December 11, 1986.
  • Council Directive 75/404, supra n. 2.
  • Com (82) 653; Com (84) 120; Com (84) 583.
  • Com (86) 518, supra, n. 8, pp. 41–42.
  • See further, Com (88) 238, supra, n. 5, p. 61.
  • Com (89) 334, supra, n. 6.
  • Com (88) 238, p. 40.
  • Ibid, Annex VI.
  • The Draft Law on the Implementation of the Italian National Energy Plan 1989, introduces a limited form of common carriage in natural gas transportation in Italy.
  • Gas Act 1986, s. 17.
  • Com (88) 238, p. 60.
  • OFGAS: The EEC Industrial Gas Market, January 1989, pp. 18–21.
  • Com (88) 238, p. 61.
  • See Annex VI, p. 86 of Com (88) 238 for full details.
  • Commission of the EC, Proposal for a Council Directive on the Procurement Procedures of Entities Providing Water, Energy and Transport Services, Com (88) 377, final: October 11, 1988, p. 5; Amended Commission Proposal for a Council Directive on the Procurement Procedures of Entities Operating in the Water, Energy, Transport and Telecommunications Sectors, Com (89) 380 final, July 1989 (citations refer to this Draft).
  • Commission of the EC, White Paper on the Completion of the Internal Market, Com (85) 310 final: October 1985.
  • Council Directive 77/62/EEC, O.J. 1977, L13/1 on Public Supplies, as amended by Council Directive 88/295/EEC, O.J. 1988, L127/1; Council Directive 71/305/EEC, O.J. 1971, L185/1 on Public Works. The Council adopted a common position on the Commission's proposed amendments to the 1971 Directive in July 1989.
  • Com (88) 377, supra, n. 22.
  • These are 400,000 ECUs for contracts involving supply of goods and 5,000,000 ECUs for public works and construction contracts. A supply contract is a contract for the purchase, lease, rental or hire-purchase of products with or without options to buy. The contract may in addition cover siting and installation operations provided that their value is lower than that of the products. A works contract is a contract for either the execution or both the execution or design of works…or the realisation by whatever means of building or civil engineering works taken as whole that are sufficient in themselves to fulfill an economic or technical function for the user (Article 1(5)(a) and (b)).
  • Member States may still seek to rely on either the public health or public security exceptions in Article 36 in the case of measures applying solely to imported products, or, alternatively, on the so-called “rule of reason” developed by the Court in Case 120/78 Cassis de Dijon [1979] ECR 649 in the case of measures applying equally to domestically produced and imported products, provided always the principles of justification and proportionality are respected.
  • See most recently, the litigation involving the Dundalk Water Authority—Case 45/87 Re Dundalk Water Supply Scheme: EC Commission v Ireland ([1989] 1 CMLR 225), where the Court ruled in enforcement proceedings brought by the Commission that the inclusion in an invitation to tender for a public works contract of an unqualified requirement that a material shall be certified by a national standards body as complying with a national technical standard and supplied by a manufacturer who has also been certified as meeting the standard, thereby excluding materials from other Member States which meet the standard but have not been so certified, was a barrier to inter-State trade contrary to Article 30. It is of note that the Court also ruled [recital 17] that the fact that a public works contract related to the supply of services did not remove the application of Article 30, EEC to any clauses in the invitation which restricted the materials to be used.
  • Case 120/78 Cassis de Dijon, supra, n. 27.
  • Commission of the EC, Proposal for a Council Directive Co-ordinating the Laws, Regulations and Administrative Procedures for the Award of Public Supply and Public Works Contracts, Com (87) 134 final, July, 1987; the Council has now adopted a common position on this proposal.
  • See further, Commission, The Oil Market and the Refining Industry in the Community: Recent Developments and Prospects until 1995. Com (88) 491 final: September 23, 1988, p. 52.
  • A proposal for the Council Directive on the use of fuel-oils with the aim of decreasing sulphurous emissions (O.J. 1976, C54/79) failed to win support from the Member States.
  • Council Directive 85/210/EEC (O.J. 1985, L96/25) defines leaded petrol as all petrol other than unleaded petrol whose lead content may not be greater than 0.40g/l nor less than 0.15g/l. The Directive also provides that Member States will reduce the lead content of leaded petrol to 0.15g/l as soon as they judge appropriate to do so.
  • Council Directive 87/219/EEC (O.J. 1987, L91/19) provides that after January 1, 1989 the sulphur content of diesel fuel may not exceed 0.3 per cent, by weight. It also lays down that Member States may make it obligatory to use diesel fuel whose sulphur content is 0.2 per cent, by weight.
  • Directive 87/416/EEC (O.J. 1987, L225/33) allows Member States to ban the sale of leaded regular petrol; a ban has been in force in Germany since February 1, 1988. Directive 88/76/EEC (O.J. 1988, L36/1) provides that as of October 1,1990 Member States may forbid the putting into circulation of new vehicles if they are not designed to operate on unleaded petrol.
  • For a review of the legal basis of the existing energy-related legislation, see L. Hancher, “Energy and the Environment: Striking a Balance?”, (1989) 26 CM. L. Rev. The European Court has now been asked to review the legal basis chosen by the Council for the Titanium Oxide Directive 89/428, O.J. 1989, L201.
  • For a detailed assessment, see L. Hancher, “Energy and the Environment: Striking a Balance?”, supra, n. 36.
  • See further, C.D. Ehlermann, “The Single European Act”, (1987) 4 C.M.L.Rev., pp. 361–404.
  • Energy Council, June 9, 1988, President's Conclusions, reproduced in Energy in Europe, Special Issue, January 1989, p. 59; Commission of the EC, Communication to the Council on Energy and the Environment, November 29, 1989, para. 10.
  • See Memorandum of Understanding between Department of Energy and United Kingdom Offshore Operators Association Limited, November 3, 1975; supplemented February 2, 1981 and March 30, 1983.
  • Case 249/81 Commission v. Ireland [1982] ECR 4005.
  • Commission Press Release of July 4, 1985, reproduced in [1985/86] O.G.L.T.R., D., p. 23.
  • Quoted in Daintith and Willoughby, UK Oil and Gas Law (Sweet and Maxwell, 1988), para. 1–212, p. 1023.
  • Agence Europe, no. 5137, November 23, 1989, p.9.
  • The changes to indirect tax rates proposed by the Commission do not involve complete uniformity in indirect taxes across all Member States: in other words the Commission is seeking to bring tax rates closer together and has abandoned its earlier insistence on complete harmonisation or equality of tax rates in all Member States.
  • Com (87) 320, final: August 21, 1987.
  • Commission, Proposal for a Council Directive on the Approximation of the Rates of Excise Duty on Mineral Oils, Com (87) 327, final: August 21, 1987.
  • See further, Proposal for a Council Directive on the Harmonisation of Excise Duties, O.J. 1973, C92/5.
  • The respective average rates (in ECU per 1,000 litres) for each product and the proposed rate are as follows:
  • Product Arithmetic Weighted Proposed
  • Average Average Rate
  • Petrol—leaded 340 336 340
  • —unleaded—- 310
  • Diesel 153 177 177
  • Heating gas oil 62 50 50
  • Heavy fuel oil
  • (per 1,000 kg) 26 17 17
  • Source: Economic and Social Committee of the EC, Horizon 1992: The Economic and Social
  • Committee Supports the Removal of Fiscal Frontiers. Brussels, July 1988.
  • Com (88) 238, supra, n. 5, p. 54.
  • See further, Economic and Social Committee, Opinion (CES, 745/88) on Com (87) 327 final, Rapporteur M. Broicher, July, 1988; and C. Lee, M. Pearson, and S. Smith Fiscal Harmonisation: An Analysis of the European Commission's Proposals (London: Institute for Fiscal Studies, 1988). The ESC added further criticisms about the administrative procedures for collecting fiscal duties.
  • Com (87) 324 final/3: August, 1987.
  • Article 100A(2).
  • Article 130S(1) provides for unanimity. Article 130S(2) provides, however, “the Council shall define those matters on which decisions are to be taken by a qualified majority”.
  • See further, Daintith and Hancher, Energy Strategy in Europe: The Legal Framework, 1986, especially ch. 7.
  • Case 8/74 Procureur du Roi v. Dassonville [1974] ECR 837.
  • [1984] ECR 277.
  • See further, J. Currall, “Articles 30–36 and Article 100 EEC”, (1984) 4 Yearbook of European Law, pp. 169–205, where it is suggested at p. 190 that this particularly strict test will in the future be reserved to the application of the public security exception; “the true test for displacement of Article 36 remains, save in that limited area” the test for determining whether Community measures provide the necessary protection, that is to say necessary and feasible”. Currall also points out that the Community measures were based on Article 103 and not on the Community's general powers under Article 100.
  • C.D. Ehlermann has argued that Campus should be confined to its facts: i.e. the special position of crude oil and the lack of substitutability and Ireland's total dependence on imports of these products. “Die rechtlichen Instrumentarien zur Verwirklichung eines Gemeinsamen Marktes nach dem EWG Vertrag” in R. Lukes, ed., Ein EWG Binnenmarket für Elektrizitaet, 1988, p. 30.
  • British National Oil Corporation (Dissolution) Order 1986 S.I. 1986/585, dissolving BNOC with effect from March 3, 1986.
  • Oil and Pipelines Act 1985, s. 1.
  • These included trading in royalty oil and the management of the Government's land pipelines and storage system. Most participation agreements had expired or had been discontinued through negotiation by this date. See generally, Daintith and Willoughby, supra, n. 43.
  • 135 H.C. Debs. vol. 135, col. 182, June 17, 1988.
  • Currently these restrictions are to be found in the Petroleum (Production (Seaward Area)) Regulations 1988, S.I. 1988/1213, cl. 30.
  • The Arco and Shell cases; these cases were referred to during proceedings on the Oil and Gas (Enterprise) Bill, House of Commons, Standing Committee Reports, col. 1081, (26th sitting: March 23, 1982).
  • Case 15/79 Groenveld v. Produktschap voor Vee en Vlees [1979] ECR 3409; Case 1745/84 Bulk Oil Ag v Sun International [1986] ECR 559.
  • Petroleum (Production) (Seaward Area) Regulations 1988, S.I. 1988/1213, Sched. 4, cl. 42(1)(g).
  • In the UK at least this requirement is of less significance following the enactment of the Finance Act 1973, s. 38 which renders the profits and gains derived from exploration and exploitation activates in designated areas subject to UK tax irrespective of the residence of the licensee.
  • Case 39/75 Coenen v. Social-Economische Raad 1975] ECR 1547.
  • Articles 56(1) and 66.
  • Case 205/84 Germany v. The Commission, [1987] 2 CMLR 69; Case 45/85 Verband Der Sachversicherer E.V. v. The Commission (the insurance and fire insurance cases), [1988] 1 CMLR 841; Case 247/81 Commission v. Germany [1984] ECR 1111; Cases 87–88/85 Pharmacie Legia v. Ministry for Health [1986] ECR 1707.
  • Case 247/81 Commission v. Germany [1984] ECR 1111; Case 45/85, supra, n. 71.
  • Case 91/78 Hansen GmbH v. Hauptzollampt Flensburg, [1979] ECR 935.
  • Case 59/75 Pubblico Ministero v. Manghera [1976] ECR 91.
  • For a useful summary of the Court's case law on the meaning of this term, see the Opinion of Advocate General Capotorti, Cases 117/76,16/77 Ruckdeschel v. Hauptzollamt Hamburg St-Annen [1977] ECR 1795.
  • At lease in the absence of a common commercial policy; see further Case 174/84 Bulk Oil, supra, n. 66, for export restrictions.
  • Ninth Competition Report, point 205.
  • Act of Accession, Article 40.
  • An enabling Law 1571/85 on “settlement of issues of petroleum policy and on the marketing of petroleum products” (Government Gazette, Part One, no. 192/14, November, 1985) made provision for certain adjustments. A subsequent Act no. 156 (Government Gazette, Part One, no. 210/18 December, 1985 allowed private oil companies to import quantities of up to 15 per cent, of domestic consumption from any source. Presidential Decree no. 619 (Government Gazette, Part One, no. 227/31, December, 1985 set out a formula to be used for fixing oil product prices (See (1986)4 J.E.R.L. p. 202).
  • Sixteenth Competition Report, point 302.
  • Act no. 163/1986 of the Ministerial Council (Government Gazette, Part One, no. 193), reducing the State-Oil Market Monopoly as of January 1, 1987 to 75 per cent, of the domestic market, with provision for an additional 10 per cent, reduction by July 1987.
  • For further information on the Greek energy industry see Petroleum Economist, October, 1987, pp. 376–377.
  • Case 231/83 Cullet v. Centre Leclerc [1985] ECR 305.
  • Seventeenth Competition Report, 1987, point 289.
  • For Spain: Article 48 of the Act of Accession: for Portugal, Article 208 of the Act of Accession.
  • Sixteenth Competition Report, 1986, points 304 and 305.
  • Seventeenth Competition Report, point 290.
  • Royal Decree 645/1988 [1987/88] 12 OGTLR, D. p. 136.
  • For a useful overview, see Petroleum Economist, October, 1987, pp. 375–376.
  • O.J. 1988, L58.
  • Seventeenth Competition Report, point 291.
  • At present international firms now share 45 per cent. of the petrol sector, 35 per cent, of gas oil, 23 per cent, of fuel oil and 53 per cent, of kerosene. European Energy Report, January, 1989, no. 225, p. 5.
  • EC Energy Market, January 1989, p. 2.
  • Com (88) 238, supra, n. 5, p. 21.
  • Case 271/81 Société d'Insémination Artificielle [1983] ECR 2957; Case 30/87 Corine Bodson v. S.A. Pompes Funèbres des Régions Libérées, Judgment May 4, 1988, not yet reported.
  • On the complex nature of the relationship between Article 37 and Articles 30–34, see, Case 119/78 Grandes Distilleries [1979] ECR 975.
  • Case 30/87 Bodson, supra, n. 95.
  • Case 59/75, supra, n. 74.
  • Case 45/85, supra, n. 71.
  • Re International Energy Agency (O.J. 1983, L376/30; [1984] CMLR 186). See also, N. Green, “Emergency Oil Sharing: the interface between energy policy and competition policy” (1985) 9 European Law Review, 449.
  • Wyatt and Dashwood, The Substantive Law of the EEC, 2nd ed. (1987), p. 517.
  • Case 41/83 Italy v. Commission [1985] ECR 873.
  • Case 155/73 Saachi [1974] ECR 409.
  • R. Schulte-Braucks, “European Telecommunications Law in the Light of the British Telecom Judgment” (1986) 23 C.M.L.Rev., pp. 39–60.
  • Case 155/73, supra, n. 103, recital 14 (emphasis added). See also, Case 311/84 TéléMarketing v. Compagnie Luxembourgeoise de Télédiffusion [1985] ECR 3261.
  • This term has been given a wide interpretation by the Court. In Joined Cases 188–190/80 France, Italy and the UK v. Commission ([1982] ECR 2545) it appeared to accept the Commission's definition of such an undertaking as “…any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it.”
  • See A.C. Page, “Member States, Public Undertakings and Article 90”, (1982) 7 European Law Review, pp. 19–28, at pp. 22–26 especially.
  • See most recently, Case 311/85 Vereniging van Vlaamse Reisbureaus v. Social Dienst [1989] 4 CMLR 213.
  • Supra, n. 103.
  • Case 172/82 Syndicat National des Fabricants Raffineurs d'Huile de Graissage v. Groupement d’ Intérêt Economique Inter-Huiles [1983] ECR 555.
  • Judgment of April 11, 1989, not yet reported.
  • Wyatt and Dashwood, supra, n. 101, p. 526.
  • Oil refineries, it would seem, could qualify as operating services of a general economic interest. In Case 72/83 Campus Oil, supra, n. 57, the Court did not appear to refute the Green Government's contention that the Irish state-owned refinery could benefit from Art. 90(2).
  • Case 41/83 Italy v. Commission, supra, n. 102.
  • Case 155/73 Saachi, supra, n. 103; Case 311/84 Télémarketing, supra, n. 105.
  • In this context, the Court's wide interpretation of the notion of “public security” in Case 72/83 supra, n. 57, could pose problems, but it should be emphasised that the Court went to some length to point out that the Article 36 exceptions to free movement could not be used for economic ends.
  • Case 78/82 Commission v. Italy (Tobacco Margins) [1983] ECR 1955.
  • Case 41/83 Italy v. Commission, supra n. 104.
  • Com (89) 334, supra, n. 6.
  • Cases 188–190/80 France, Italy and the UK v. Commission [1982] ECR 2545. The Directive itself concerned the Transparency of Financial Relations Between Public Undertakings and National Governments (O.J. 1980, L195).
  • Com (87) 290, June 30, 1987.
  • Commission Directive 88/30, O.J. 1988 L131/73.
  • Case registered as Case 202/88; O.J. 1988, C216/6.
  • Agence Europe, no. 5056, July 13, 1989, p. 6.
  • Cases 67, 68 and 70/85R Gebroeders van der Kooy v. Commission [1986] ECR 1315.
  • The Court has in fact rules that no distinction should be drawn between aid granted in the form of loans and aid granted in the form of a holding acquired in the capital of an undertaking—Case 323/82 Intermills [1984] ECR 3809. The Commission's views on the state aid element of capital transfers are set out in its Fourteenth Competition Report, 1984, point 198. See also, K. Hellingham, “State Participation as State Aids”, (1986) 23 C.M.L.Rev., pp. 111–119.
  • Council Recommendation on Natural Gas Prices and Tariffs, O.J. 1983, C123.
  • Council Directive 85/412, O.J. 1985 L229/20. 129 Com (84) 490, final.
  • Agence Europe, no. 5056, op. cit.
  • The Commission submited its original proposal to the Council in 1983: Commission Proposal for a Council Directive on the limitation of emissions into the air from large combustion plants, COM (83) 704 final: December 1983.
  • See further, Commission of the EC, The Oil Market and the Refining Industry in the Community: Recent Developments and the Prospects Until 1995, Com (88) 491, final: September 23, 1987.
  • Council Directive 88/609 on the Limitation of Emissions of Pollutants into the Air from Large Combustion Plants. O.J. 1988, L336/1.
  • “New plant” is defined as plant which received a construction or operation licence on or after July 1, 1987.
  • See Annex 1 of the Directive.
  • Article 3.
  • O.J. 1985, L175/40.
  • Article 4(1).
  • Agence Europe, no. 4889, November 9, 1988, p. 6; At its meeting on May 11, 1989, the Energy Council agreed that any solution to the specific problem of the refining sector must adhere to the general principles of the SEA.
  • Re investment aids at Antwerp [1982] 3 CMLR 138; O.J. 1973, C270/22.
  • Seventh Competition Report, 1980, points 209 et seq. Sixteenth Competition Report, 1987, point 259.
  • On the legal problems, see D. Vandermeersch “The Single European Act and the Environmental Policy of the EEC”, (1987) 12 European Law Review, pp. 407–421; L. Kramer, “The Single European Act and Environmental Protection”, (1987) 25 C.M.L. Rev., pp. 664–688.

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