Council of the European Union Brussels, 12 May 2015 (OR. en)

Conseil UE Council of the European Union Brussels, 12 May 2015 (OR. en) Interinstitutional File: 2013/0305 (COD) 8592/15 LIMITE OPINION OF THE LEGAL SERVICE 1 From: To: Subject: Legal Service COREPER PUBLIC JUR 296 CORDROGUE 30 DROIPEN 42 MI 304 Proposal for a Regulation on new psychoactive substances - Appropriateness of Article 114 TFEU as the legal basis for the proposal I. INTRODUCTION 1. At several meetings of the Horizontal Drugs Group (HDG) during the first months of 2015, the representative of the Council Legal Service analysed various aspects of the proposal for a Regulation on new psychoactive substances 2 (NPS, proposed NPS Regulation) as concerns the appropriateness of Article 114 of the Treaty on the Functioning of the European Union (TFEU) as a legal basis for that proposal. This contribution confirms and develops in writing the indications given orally by the representative of the Legal Service. 1 This document contains legal advice protected under Article 4(2) of Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, and not released by the Council of the European Union to the public. The Council reserves all its rights in law as regards any unauthorised publication. 2 See proposal for a Regulation of the European Parliament and of the Council on new psychoactive substances, submitted by the Commission on 20 September 2013, set out in doc. 13857/13 (initial Commission proposal). 8592/15 1

A. Existing control mechanism to criminalise new psychoactive substances 2. The existing EU acquis consists of two legal acts which belong to the ex-third pillar (i.e. pre- Lisbon police and judicial cooperation in criminal matters): - Framework Decision 2004/757/JHA, 3 which defines the criminal offences and sanctions in the field of drug trafficking; - Decision 2005/387/JHA, 4 which provides for a mechanism of exchange of information and risk assessment, leading to the identification of the NPS that need to be submitted "to control measures across the Union" by an implementing decision adopted by the Council (see Article 8(3) of Decision 2005/387/JHA 5 ). Member States have then to criminalise such NPS in their national legal orders. B. Proposed new control mechanism 3. The proposed NPS Regulation, together with the proposal for a Directive amending Framework Decision 2004/757/JHA 6, aims at replacing the present control mechanism set up under Decision 2005/387/JHA by a new mechanism and at qualifying as a "drug", in Framework Decision 2004/757/JHA, certain of the NPS identified through the new mechanism. 4. The new system would consist of two elements: i. a mechanism of information exchange (see Articles 5 and 6 of the proposed NPS Regulation), the procedures for a risk assessment by the EMCDDA (Article 7) and for determination by the Commission of the "level of risk" represented by a NPS (Articles 10(1), 12(1) and 13(1) ) as well as a temporary market ban introduced through an implementing act of the Commission (Article 9). This part of the new system would be established through a Regulation based on Article 114 TFEU (internal market) replacing Decision 2005/387/JHA. 3 Council Framework Decision 2004/757/JHA of 25 October 2004 laying down minimum provisions on the constituent elements of criminal acts and penalties in the field of illicit drug trafficking (OJ L 335, 11.11.2004, p. 8). 4 Council Decision 2005/387/JHA of 10 May 2005 on the information exchange, risk-assessment and control of new psychoactive substances (OJ L 127, 20.5.2005, p. 32). 5 By its judgement of 16 April 2015, the Court confirmed that the Council could validly adopt such implementing measures on the basis of that provision (cf. Cases, C-317/13 and C-679/13, Parliament / Council, ECLI:EU:C:2015:223). 6 See Proposal for Directive amending Council Framework Decision 2004/757/JHA laying down minimum provisions on the constituent elements of criminal acts and penalties in the field of illicit drug trafficking, as regards the definition of drug, submitted by the Commission on 20 September 2013, set out in doc. 13865/13. 8592/15 2

ii. a mechanism for an automatic (ex lege) inclusion of the NPS considered by the Commission to present a "severe level of risk" into the definition of a "drug" contained in Article 1 of Framework Decision 2004/757/JHA. That part of the new system would be established through a Directive based on Article 83(1) TFEU (substantive criminal law) amending Framework Decision 2004/757/JHA to that end. 5. According to Article 1 of the proposed NPS Regulation, which defines its "Subject matter and scope", that Regulation "establishes rules for restrictions to the free movement of new psychoactive substances in the internal market. For that purpose it sets up a mechanism for information exchange on, risk assessment and submission to market restriction measures of new psychoactive substances at Union level". 6. Article 3, entitled "Free movement", of the proposed NPS Regulation provides that "New psychoactive substances and mixtures shall move freely in the Union for commercial and industrial use, as well as for scientific research and development purposes". 7. Article 4, entitled "Prevention of barriers to free movement", of the proposed NPS Regulation provides that "Insofar as the Union has not adopted measures to subject a new psychoactive substance to market restriction under this Regulation, Member States may adopt technical regulations on such new psychoactive substance in accordance with Directive 98/34/EC. Member States shall immediately communicate to the Commission any such draft technical regulation on new psychoactive substances, in accordance with Directive 98/34/EC". 8. Following the discussions in the HDG, the Greek Presidency issued a revised version of the proposed NPS Regulation 7. That revised text includes a "safeguard clause" allowing each Member State to "maintain or introduce more stringent measures" at national level in order to "ensure the protection of public health". This may be done when that Member State considers that a given NPS, notably presenting a "moderate" level of risk, "poses a higher level of health, social and safety risks in [that] Member State, in particular because of the modalities or scale of consumption of the [NPS]" (see Articles 4 and 12(3) to (6) of the revised proposal). In addition, the free movement clause in Article 3 was amended so as to no longer be entitled "Free movement" but be restricted it to movement "only for commercial and industrial use, and for scientific research and developments purposes, without prejudice to a high level of protection of human health". 7 See doc. 5690/14 issued on 31 January 2014. 8592/15 3

C. Treaty provisions at stake 9. Article 114(1) and (3) TFEU reads as follows: "1. Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. ( ) 3. The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective" (emphasis added). 10. Article 83(1) TFEU reads as follows: "The European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis. These areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime". II. LEGAL ANALYSIS 11. According to the settled case-law of the Court of Justice (the Court) on the choice of legal bases, that choice must rest on objective factors which are amenable to judicial review, including in particular the aim and content of the measure. 8 8 See, for example, judgments of the Court: of 23 October 2007 in Case C-440/05, Commission / Council (ECLI:EU:C:2007:625), point 61; of 17 March 1993 in Case C-155/91, Commission / Council (ECLI:EU:C:1993:98), point 7; and of 10 January 2006 in Case C-178/03, Commission / Parliament and Council (ECLI:EU:C:2006:4), point 34. 8592/15 4

If a Union measure pursues a twofold purpose or has twofold or manifold components, and if one of those is the main or predominant purpose or component, whereas the other is merely incidental, the measure must be based on a single legal basis, namely that required by the main or predominant purpose or component. 9 Only exceptionally, if it is established that the act simultaneously pursues a number of objectives, inextricably linked, without one being secondary and indirect in relation to the other, may such an act be founded on the various corresponding legal bases if these legal bases are compatible. 10 A. Appropriateness of Article 114 TFEU as the legal basis of the proposed NPS Regulation 12. According to settled case-law of the Court, in order to rely upon Article 114 TFEU as a legal basis, the Union legislature must demonstrate that the envisaged measure "must genuinely have as its object the improvement of the conditions for the establishment and functioning of the internal market" 11 (emphasis added). Moreover, such measure must "actually contribut[e] to the elimination of obstacles to the free movement of goods, ( ) to the removal of distortions of competition [or] prevent the emergence of future obstacles to trade resulting from multifarious development of national laws" 12 (emphasis added). In the same vein, the Court held that Article 114 TFEU may be "used as a legal basis only where it is actually and objectively apparent from the legal act that its purpose is to improve the conditions for the establishment and functioning of the internal market" 13 (emphasis added). 9 See, for example, judgment of the Court of 29 April 2004 in Case C-338/01, Commission / Council (ECLI:EU:C:2004:253), point 55. 10 See, for example, judgment of the Court of 11 June 1991 in Case C-300/89, Commission / Council (ECLI:EU:C:1991:244), points 13 and 17. 11 See notably the judgement of the Court of 5 October 2000 in Case C-376/98, Tobacco Advertising Directive (ECLI:EU:C:2000:544), point 84. 12 See notably the judgement of the Court of 10 December 2002in Case C-491/01, British American Tobacco (ECLI:EU:C:2002:741), points 60 and 61. 13 See judgement of the Court of 2 May 2006 in Case C-217/04, ENISA, (ECLI:EU:C:2006:279), point 42. 8592/15 5

Depending on the circumstances, "those appropriate measures may consist in requiring all the Member States to authorise the marketing of the product or products concerned, subjecting such an obligation of authorisation to certain conditions, or even provisionally or definitively prohibiting the marketing of a product or products" 14. 13. To that effect, the Union legislature has to be able to demonstrate its diligence in analysing the relevant sources of evidence allowing it to conclude in an informed, evidence-based manner that the envisaged legislation satisfies the above conditions with regard to the relevant market. 14. The proposed NPS Regulation should be analysed in the light of the foregoing considerations with a view to determine whether Article 114 TFEU is the appropriate legal basis for the proposed NPS Regulation. a) The condition of improvement of internal market - upstream 15. The Commission justified the choice of Article 114 TFEU as a legal basis for the proposed NPS Regulation by analysing the situation on the relevant market 15. It concluded that some 20% of NPS have dual use (licit and illicit). 16. Moreover, the Commission concluded further, in its Explanatory Memorandum accompanying the proposed NPS Regulation, that uncoordinated action of the Member States, who submit the newly appearing NPS (which, by default, have to be considered as placed on the market legally, unless and until they are banned from it) to different levels of restrictions on national level, is likely to lead to distortions of the market with regard to the licit use. 14 See judgement of the Court of 14 December 2004 in case C-210/03, Swedish Match (ECLI:EU:C:2004:802), point 34. 15 See Section 3.1 of the Explanatory Memorandum accompanying the proposed NPS Regulation (doc. 13857/13). 8592/15 6

17. However, during the debates held in the HDG, many delegations called in question those conclusions, pointing out, based on their national experiences, to the fact that the dual use was a marginal phenomenon concerning only few per cent of the NPS, whereas the vast majority of the NPS had no licit use and was developed (chemically synthesised) exclusively for illicit purposes and with the sole intention of circumventing the existing prohibitions concerning known drugs and psychoactive substances. Basically, those Member States claimed that the real life situation on their territories did not correspond to the conclusions reached by the Commission in its Impact Assessment and that, on the contrary, there was no licit market as such for this kind of substances. 18. Finally, the Commission repetitively put forward the argument of the broader geographical scope of application of a Regulation based on Article 114 TFEU, as opposed to an act based on one of the legal bases in Title V of Part Three of the TFEU (area of freedom, security and justice), such as Article 83(1) TFEU, which (i) would automatically exclude Denmark from that scope, (ii) would subject the participation therein of Ireland and the UK to the application of Protocol 21 (opt in/out) and (iii) would prevent the extension of the scope of its application to the third countries belonging to the European Economical Area (EEA). 19. To start with, the Legal Service must note that, in the light of the case-law quoted in point 11 above, the argument of the desirable territorial scope of application of the proposed NPS Regulation is not among the relevant factors on which the choice of a legal basis can be founded. From the abovementioned arguments raised by the Commission it seems that, through its choice of Article 114 TFEU, it intended to avoid triggering the application of Protocols 21 and 22 and thereby influence the territorial scope of application of the intended Regulation so as to cover Member States or third States (EEA) which would not be covered if a Title V legal basis were used. 8592/15 7

20. However, none of these "geographical" considerations can serve as a valid reason justifying the choice of the legal basis, as these would in reality constitute a circumvention the Treaty rules, notably those contained in Protocols 21 and 22. The geographical scope is a consequence of the choice of the legal basis, no an objective criterion amenable to judicial review within the meaning of the case law. 21. It has to be ascertained whether the choice of Article 114 TFEU in the light of the aim and content of the intended measure may rest on relevant objective factors, as required by the case-law referred to above. 22. It follows from the case-law quoted in point 12 above that the very existence of a relevant licit market of the NPS is a prerequisite for analysing whether the proposed NPS Regulation can genuinely contribute to the improvement of the functioning of the internal market, as provided in that case-law. This necessity to improve the functioning of the internal market is the reason why these kinds of "internal market measures" normally include a standard "free movement" clause such as that in Article 3 of the proposed NPS Regulation which provides the default rule that NPS "shall move freely in the Union" (see point 6). 23. In the light of the arguments put forward by the delegations as referred to in point 17 above, the Legal Service notes however that the NPS constitute products of a specific nature, given that most often they are indeed developed with the exclusive aim of their illicit placing on the market to be used as drugs. In practice, as soon as such NPS are detected on the market, relevant public authorities proceed to their subjecting to control measures which depending on the Member State may take the form of either administrative bans or incrimination enforced through criminal law. It appears from the explanations given by delegations on their real life experience about the NPS that there is in effect no licit market for these products and no will to secure for these substances free movement in a licit market by applying to them by default the "free movement" rule referred to above. 8592/15 8

Public authorities are rather in a situation of hunting down such products as soon as they appear on the "market" in order to ban them. A licit market entails the existence of legitimate trade, commercial exchange in the products concerned. There is of course some movement of the NPS, for instance between scientific laboratories of law enforcement authorities, for analysis and research purposes, but movements of this kind do not constitute trade or commercial exchange in such products. 24. It is true that Union law knows precedents of harmonisation of the internal market through the introduction of market restrictions with regard to certain products which take the form of prohibitions of their placing on the market. The following products may be quoted as an example: drug precursors 16, goods able to be used as instruments of torture and death penalty 17, cat and dog fur 18, seal products 19 and explosives precursors 20. 25. However, all of the abovementioned products considerably differ by their nature from the NPS. In fact, they constitute originally licit products allowed for circulating in the relevant existing segments of the internal market. The punctual prohibitions established by the abovementioned Union acts concerns the placing on the market of some categories of those products present on the relevant markets or their placing on the market for only some specific purposes or under specific conditions, while contributing to the overall functioning of the rest of the existing relevant markets. 16 Regulation (EC) No 273/2004 of the European Parliament and of the Council of 11 February 2004 on drug precursors (OJ L 47, 18.2.2004, p. 1). 17 Council Regulation (EC) No 1236/2005 of 27 June 2005 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment (OJ L 200, 30.7.2005, p. 1). 18 Regulation (EC) No 1523/2007 of the European Parliament and of the Council of 11 December 2007 banning the placing on the market and the import to, or export from, the Community of cat and dog fur, and products containing such fur (OJ L 343, 27.12.2007, p. 1). 19 Regulation (EC) No 1007/2009 of the European Parliament and of the Council of 16 September 2009 on trade in seal products (OJ L 286, 31.10.2009, 9-p. 36). 20 Regulation (EU) No 98/2013 of the European Parliament and of the Council of 15 January 2013 on the marketing and use of explosives precursors (OJ L 39, 9.2.2013, p. 1). 8592/15 9

26. From the indications given by delegations, the NPS are quite different in nature, given that they are intended to circumvent the existing prohibitions of drug trafficking introduced with regard to previously known psychoactive substances or drugs, with the sole purpose of illicitly placing on the market the most recently developed NPS. As soon as one NPS is banned, another NPS is developed with chemical particularities which are enough for it not to fall within the definition of the already banned NPS. These characteristics of the NPS trigger the inherent difficulty to identify the relevant market which would be supposed to benefit from the harmonisation of the NPS notably through the introduction of the prohibitions of their placing on the market. 27. Admittedly, the above assessment is based on the consideration of the facts in which the Legal Service stands to be corrected. But no convincing information to the opposite has at present been provided to the debate. 28. In light of the nature of the NPS and of the serious doubts as to the existence and the nature of the relevant market, that have not been effectively discarded in the course of the debate, the Legal Service considers that the existence of a genuine contribution of the proposed NPS Regulation to the functioning of the internal market has not been demonstrated to the required legal standard. b) The condition of improvement of internal market - downstream 29. As mentioned above in point 8, at the request of the vast majority of the Member States, the Greek Presidency issued a revised version of the proposed NPS Regulation. It amended the initial Commission proposal by adding to it a "safeguard clause" allowing the Member States to adopt "more stringent measures" at national level. That modification reflects the Member States' concern to keep their national competence to adopt more stringent rules with regard to substances qualified at Union's level to belong to the "low" or "moderate" categories of risk. 8592/15 10

30. In principle, the inclusion of a safeguard clause is possible in accordance with paragraph 10 of Article 114 TFEU which reads "the harmonisation measures referred to above shall, in appropriate cases, include a safeguard clause authorising the Member States to take, for one or more of the non-economic reasons referred to in Article 36, provisional measures subject to a Union control procedure". However, added to the above near impossibility to identify any licit market for the NPS, the opening of a wide possibility for Member States as provided in the draft text submitted by the Greek Presidency raises additional legal concerns with regard to the compatibility of the envisaged solution with the Treaty. 31. Firstly, this would allow Member States to introduce or maintain more stringent national measures in the areas harmonised by Union law. Those national measures would be allowed in parallel and would coexist with the Union measures established with regard to the same NPS, despite the fact that the national measures are clearly intended to derogate from those Union measures. 32. In the opinion of the Legal Service, such a possibility of "disharmonisation" further annihilates the prospect of demonstrating the existence of a genuine contribution of the Regulation to the smooth functioning of the internal market, in the light of the intermediary conclusion contained in point 28 above. 33. Secondly, in accordance with the case-law of the Court, a safeguard clause needs to be accompanied by a free movement clause, which ensures free movement of those products which comply with the Union legislation, notwithstanding the existence of more stringent national requirements or standards allowed by that legislation and applied locally 21. 21 In its judgement in Case C-376/98, referred to above (see footnote 11), the Court annulled the Tobacco Advertising Directive, notably on the grounds that it foresaw in its Article 5 the possibility for the Member States to lay down, in accordance with the Treaty, such stricter requirements concerning the advertising or sponsorship of tobacco products as they deemed necessary to guarantee the health protection of individuals, while it contained no provision ensuring the free movement of products which conformed to its provisions (see points 103 and 104 of that judgement). 8592/15 11

34. However, as seen above (notably point 23), such free movement clause seems to be clearly at odds with the very idea of banning the NPS (otherwise considered to present "low" or "moderate" risk on the Union level) on a territory of a single Member State in accordance with national law. In fact, such national ban (administrative or criminal, as the case may be) aims at prohibiting not only the NPS produced on the national territory, but also prohibiting the importation, transport or any form of placing on the market of that Member State of the NPS "legally" produced or placed on the market in other Member States. 35. Therefore, the introduction of the envisaged safeguard clause confirms the absence of any reasonable prospect of meeting the conditions for the use of Article 114 TFEU as a legal basis. 36. For all the reasons explained above, Article 114 TFEU does not appear to constitute the appropriate legal basis for the proposed NPS Regulation. 2. Appropriateness of Article 83(1) TFEU as a legal basis 37. In light of the fundamental nature of the above conclusion, it seems opportune to analyse whether, alternatively, the proposed NPS Regulation or at least some of its elements could be based on Article 83(1) TFEU. Article 83(1) allows for minimum harmonisation of substantive criminal law with regard to the definition of criminal offences and sanctions in the areas of particularly serious crime. 8592/15 12

38. In the opinion of the Legal Service, with appropriate redrafting to fit the new context, nearly all the key elements of the proposed NPS Regulation could alternatively be based on Article 83(1) TFEU. This includes notably: i. the establishment of the mechanism of exchange of information between the competent services of the Member States, the Commission and the relevant Union agencies (see Articles 5 to 6 of the proposed NPS Regulation); ii. the risk assessment procedures involving the Commission and EMCDDA (Article 7); iii. iv. the temporary ban leaving the Member States the discretion as to its administrative or criminal nature (Article 9); the implementation procedures, using delegated or implementing acts 22, depending on the final shape of the envisaged basic legislation (Articles 10(1), 12(1) and 13(1) ). 22 As recalled in footnote 5 above, in its recent case-law (see judgements of 16 April 2015 in cases C-317/13, C-540/13 and C-679/13, referred to above) the Court confirmed the validity of the present procedure for submitting the individual NPS to control measures through implementing decisions adopted by the Council based on Article 8(3) of Decision 2005/387/JHA, with the consequence that those NPS are qualified as a "drug" and are therefore criminalised. In particular, the Court did not uphold the argumentation of the European Parliament which claimed that this amounted to regulating an essential element of the basic legislation and that such prerogative should have been reserved for the EU legislature instead of being delegated to the Council. 8592/15 13

39. In fact, all the above elements, which constitute the mechanism leading to the identification of the different NPS, may be considered as being incidental to the main objective of the legislation which is to criminalise these NPS through their inclusion into the definition of a "drug" in the sense of Article 1 of Framework Decision 2004/757. All those elements, even if they had to constitute several provisions within the envisaged legislation, are in reality devoid of any distinct, autonomous objective and instead serve the main purpose indicated above 23. Therefore, the elements of the mechanism leading to the identification of the NPS to be criminalised could be validly based of Article 83(1) TFEU, as they were in Decision 2005/387/JHA which was based on Article 31(1)(e) ex-teu 24 which was the predecessor of Article 83(1) TFEU. 23 See by analogy, point 4 of the CLS opinion on maritime spatial planning, doc. 12283/13. In addition, a number of precedents for such a solution can be found in recently adopted legislation based on Article 83 TFEU. See, for example: i) Proposal for a Directive on the fight against fraud to the Union s financial interests by means of criminal law (most recent version in doc. DS 1194/15), where the elements concerning the jurisdiction (Article 11), exchange of information and the administrative cooperation (Article 15) were considered secondary under the chosen (single) legal basis (Article 83(2) TFEU); ii) Directive 2014/57/EU on criminal sanctions for market abuse (market abuse directive) (OJ L 173, 12.6.2014, p. 179), where the elements concerning the jurisdiction and training (Articles 10 and 11) were considered secondary under the chosen (single) legal basis (Article 83(2) TFEU); iii) Directive 2013/40/EU on attacks against information systems (OJ L 218, 14.8.2013, p. 8), where the elements concerning the jurisdiction and exchange of information (Articles 12 and 13) were considered secondary under the chosen (single) legal basis (Article 83(1) TFEU); iv) Directive 2014/62/EU on the protection of the euro and other currencies against counterfeiting by criminal law (OJ L 151, 21.5.2014, p. 1), where the elements concerning the jurisdiction, investigative tools and the obligation to transmit counterfeit euro notes and coins for analysis and detection of counterfeits (Articles 8, 9 and 10) were considered secondary under the chosen (single) legal basis (Article 83(1) TFEU). 24 This paragraph of the ex-teu (former third pillar) was formulated as follows: "progressively adopting measures establishing minimum rules relating to the constituent elements of criminal acts and to penalties in the fields of organised crime, terrorism and illicit drug trafficking". 8592/15 14

3. Practical implications of changing the legal basis to Article 83(1) TFEU 40. First, the immediate consequence of the modification of the legal basis to provide for Article 83(1) TFEU would be the necessity to change the type of legal instrument from a regulation to a directive which is the only type of instrument allowed under Article 83(1). Given that, as a consequence, both elements of the NPS legislative "package" (as referred to in points 2 and 3 above) would take the form of a directive, it is advisable to merge them into one single directive. 41. More specifically, when it comes to the choice of the legislative technique, the Legal Service believes that from the point of view of legal certainty, readability and economy of procedure the most appropriate would be to proceed to a replacement of the current Framework Decision 2004/757/JHA by using the technique of a recast of the Framework Decision which would then be replaced by the new Directive. In addition, that Directive would repeal Decision 2005/387/JHA 25. 42. Second, the above modification of the legal basis would also trigger the application of Protocols 21 and 22 annexed to the Treaties 26. The appropriate standard clauses (recitals) should be inserted in the proposed legislation. 43. Third, Articles 3 and 4 of the proposed NPS Regulation would need to be deleted without being taken over in the merged directive, as they lack relevance in the field of harmonisation of substantive criminal law. 25 This approach would enable the delegations to work on the basis of a consolidated version of the text of the envisaged "merged" directive. However, as an alternative solution to the "replacement with recast" solution, the Council may also consider limiting itself to adopt an amending directive, i.e. a directive that would amend only the required elements of Framework Decision 2004/757/JHA and of Decision 2005/387/JHA in order to obtain the desired result, without repealing or replacing them. However, this would result in having less readable texts. 26 The three months time limit for exercising the rights to opt-in provided in Protocol 21 will start for the Member States concerned as from the date when Coreper or the Council, as the case may be, approves the modification of the legal basis and decides to inform the European Parliament of the proposed new legal basis. For reasons of certainty, this could be noted in the minutes of the relevant meeting (for a similar situation, see CLS opinion on the change of legal basis in the so called "PIF file" (proposal for a Directive on the fight against fraud to the Union's financial interests by means of criminal law), doc. 15309/12). 8592/15 15

44. Finally, it has to be noted that Article 83 TFEU provides for the establishment of "minimum rules concerning the definition of criminal offences and sanctions" (emphasis added). Therefore, the harmonisation at Union level based on this Treaty provision will not affect the competence of the Member States to adopt more stringent national measures of administrative or criminal nature 27. This possibility will not depend on the need to demonstrate the conformity of national measures with the principles of the internal market resulting from Article 114 TFEU. This would seem to address more adequately the abovementioned concerns of numerous Member States. 45. With regard to the procedural consequences, the file would remain submitted to the ordinary legislative procedure (and qualified majority in the Council). However, it is recalled that, in accordance with Article 293 TFEU, in the event the Commission would formally oppose the modification of the legal basis of its proposal for the NPS Regulation, such amendment would be subject to unanimity in Council. III. CONCLUSIONS 46. The Legal Service concludes that: i. Article 114 TFEU does not constitute the appropriate legal basis for the proposed NPS Regulation; ii. iii. Article 83(1) TFEU constitutes the appropriate legal basis for setting up the mechanism as proposed in the draft NPS Regulation, i.e. most of the key elements of the proposed NPS Regulation; the modification of the legal basis would entail a series of practical and procedural consequences, as specified above in points 40 to 45. 27 This possibility would stand for an equivalent of the suggested "safeguard clause" (see combined Article 4 of the proposed NPS Regulation and Article 12(3) to (6) of the revised proposal). 8592/15 16