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COMMISSIONFTHEEUROPEANOMMUNITIES

SECRETARIAT.GENERAL

Brussels,SG-Greffe2009)DlSTALEZASTUPENIESRPRI EU BRUSELAvenuedeCortenbergh9,1000BruxellesLN 226 EC/casesotherthanfailuretonotifvmeasures

Commission urop6enne,-1049BruxellesEuropeseommissie,-1049Brussel Belgium.elephone:32-2)9911 11Office:BERL 05125.elephone:irectine32-2)296.93.35.ax:32-2)296.43.35.http://ec. uropa.u/ds/secretariat_general/indexf.htm

Subject:LetterofformalnoticeInfrinsement No 2008 4268TheSecretariat-Generalhouldbe obliged fyouwouldforwardtothe Ministerfor ForeignAffairs the enclosedetter fromthe Commission.For the Secretarv-General.Karl VON KEMPISEncl.C(2009)

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COMMISSIONFTHEEUROPEANOMMUNITIES

Brussels,200814268c(200e)YourExcellencY,withthisletterofformalnotice,wishto drawtoyour attentionacomplaintsubmittedotheCommissionandregisteredunderreferencenumber200814268,egardingthecompatibilityofcertainprovisionsoftheActoftheNationalCounciloftheSlovakRepublicNo.5g1/2004collof21october2004onHealthInsuranceompaniesandHealthcareSupervision,samendedyanumberofActssuchasActNo'53012007Collof25october2007and,mostrecently,byActNo.19212009,ithcommunitylaw.TheSlovakRepublichasbeennvolvedin healthsectoreforminitiativesthroughouthe1990s,aimedatimprovingtheprovisionofhealthcareoitspeople.Inparticular,anambitiousreformstrategywasimplementedbyActsNo.58012004collandNo'5g1/2004coll.ThoseActsplacedemphasisnreformingthepublichealthinsurancesystembycreatinganenvironmentforbothpubliclyandprivately-ownedhealthinsurancecompaniesoenterheSlovakpublichealthnsurancemarketandcompetenprovidingpubichealthinsuranceoindividuals.Thiswasdon.by,amongotherthings,transformingthefivepublic healthinsuranceundsintopubliclyandprivately-ownedjoint-stockcompanieswhichwereallowedtomakeprofits andencouragingfurtherprivately-ownedhealthinsurancecompaniesocompetewiththeexistingjointstockcompaniesbyofferinghealthcarecoveroverandabovethestatutoryminimumandsuperiorcustomerservice.competitionwasintendedtobethemaindriverofimprovementsnquality,accessohealthcare,costcontrolandefficiency'ActNo.5Bl/2004Coll,asnitiallyadopted,idnotcontainanyimitationsonthelevelofexpenditurehathealthnsuranceompaniesmayuseocoverheiroperatingexpensesandonlyminor,technicallimitationsontheuseofanyprofitsresultingfromtheprovisionofpublichealthinsurancebyprivatehealthinsurancecompaniesandonthetransferofinsuranceportfolios.Indeed,section2(2)oftheActNo.58112004Collprovided(andstillpiovides) thathealthinsurancecompaniesareregulatedbytheCommercialCode,unlessotherwisestipulatedntheAct.Accordingly,forseveralyears'healthnsurancecompaniesreelydecidedontheleveloftheiroperatingexpensesndontheuseofanyprofitsresultingfromtheprovisionofpublic healthinsurance,helattersubjectonlyto fulfilmentofcertainminortechnicalconditions.However,since2006,aseriesof amendmentsoActsNo.58012004Coll andNo.5g1/2004Coll,havebeenadoptedwhichhavemposedanumberofrestrictionson thebusinessactivitiesofhealthinsuranceompanies,speciallyaffectingthosewhichare

privately-owned.Inparticular,on25 October 20A7the SlovakParliamentadoptedActNo.53012007oll which, amongotherhings:a)precludeshealth insurancecompaniesromfreely disposingofanyprofitsresulting fromtheprovisionofpublic healthinsurancen theSlovakRepublic;b)further reduceshemaximumlimitofgrosswrittenpremiums thathealthinsurancecompanies may usetocovertheiroperatingexpenses,irstintroducedyAct No.52212006 oll,from4o/oo 3,5o.Most recently,afurther amendmentoActNo. 58112004Collwas adoptedon29 May2009(ActNo. 19212009Coll) whichprovideshatthe transferof theportfolio of ahealthinsurance ompanyhaso takeplacewithoutpaymentand oeithera State-ownedealthinsurance ompany n caseof liquidationor to aState-ownedrprivately-owned ealthinsurance ompanynother,undefined,ircumstances.1. RelevantEC and Slovak awA. PrimaryTreaty lawThe freemovementofcapitalArticle 56(l)ECstipulateshat:"Withintheframeworkof tlzeprovisionsset outin this Chapter,allrestrictionsonthe movementofcapital betweenMemberStatesand betweenMemberStatesandthirdcountries hall beprohibited."The free rnovementofcapital,as a fundamentalprincipleof EClaw, canonly berestrictedbynationaluleswhichareustifiedbyreasonseferred o in Article58(1)ECor by overridingrequirements nthegeneralnterestecognisedy the ECJ.Thefreedomof establishmentArticle 43 ECstipulateshat"Withintheframeworko.f heprovisionssetout below, restrictions onthefreedomo.f establishment of nationalsofa MemberState in the territoryof anotherMemberState shallbeprohibited.Suchprohibitionshallalso applytorestrictionson the setting-upof agencies,branchesor subsidiariesbynationals o.fany MemberStateestablisltedn theterritoryof anyMemberState.Freedom ofestablishmenthall includetherightto take up andpursueactivitiesas self-employedpersonsand to setupandmanageundertakings,nparticularcompaniesorfirmswithinthemeaning of the secondparagraphof Article 48,under theconditions laiddownforits ownnationals by the law of thecountrytwheresuchestablisltmentseffected,subjectto theprovisionsof the Chapterrelating tocapital."