The provision underlying the four freedoms (and therefore also the Home Country Control) is the prohibition of discrimination based on nationality: Article 12(ex 6) of the EC Treaty. Over the course of years, this policy evolved to include prohibition on some behaviors that were non-discriminatory, based on the fact that their implementation created obstacles to trade between states. In the sphere of goods, what these “non-discriminatory” obstacles were and how they were to be removed was clarified in Cassis (C-120/78,  ECR 649) and Keck (Joined Cases C-267 and 268/91, 1993 [ECR] I-6097) cases of the Court of Justice. In services, this was done in Säger (C-76/90,  ECR I-4221), and in establishment in Gebhard (C-55/94,  ECR I-4165). The power of these cases lies in making the products and services legally made in one state (Home State) available in other state (Host State), where the latter is only exceptionally able to apply its law to the said good or service. In other words, once a good or a service gains a “passport” in its Home State, it can be freely exported into any other Member State.
and was based on prohibition of non-discriminatory obstacles to trade.
The first part, minimum harmonization, aims to unify the absolute minimum of necessary standards. This would, in turn enable mutual recognition of laws, where the bulk of legal control takes place in the country of origin (Home State) and the country of destination acknowledges the former's regulatory power. This was considered practical, as control would be exercised at first port of call and, since the minimum of mutual standards would exist, there would be no danger of reducing the stringency to the standards of the least developed state.
For example, a banking service is part of wider efforts to harmonize financial services. A French bank is able to open a branch in the United Kingdom and all prudential supervision is conducted in France. The consolidated Directive on the business of credit institutions from 2000 represents the minimum of harmonized EC law. Britain (Host State) is obliged to recognize the fact that France only, as the country of origin (Home State) is entitled to conduct prudential supervision. Thus, there is only one control, in the Home State, and dual-burden of control in both states, which makes the service less competitive, disappears. The only option for Britain to apply its law to this banking service is to justify it under the General Good test.
CRISIS MANAGEMENT ARRANGEMENTS FOR A EUROPEAN BANKING SYSTEM "BUILDING A CRISIS MANAGEMENT FRAMEWORK FOR SINGLE MARKET".
Mar 19, 2010; WASHINGTON -- The following information was released by the International Monetary Fund: As Prepared for Delivery Introduction I...