LEU

Creating an internal market

Positive integration vs Negative integration

Positive integration

Adopting EU-wide legislation to create common rules (=harmonisation), based on a specific legal basis in the Treaty, replaces national legislation in a certain area

Negative integration

Prohibitions in the Treaty directed at MSs and private parties; directly applicable and does not require legislative action by EU institutions; national legislation remains in place; CJEU

Three pillars of free movement

1. Prohibition of custom duties

2. Prohibition of discriminatory indirect taxation

3. Prohibition of quantitative restrictions (unless….)

Prohibition of custom duties

> Art. 30 TFEU → no minimum threshold, no justifications to custom duties

> Customs union → pecuniary charge on goods to enter/exit a country

- Internal dimension (abolishment of all customs duties + charges having equivalent effect) and external dimensions (common customs tariff + common commercial policy)

Prohibition of discriminatory indirect taxation

> Art. 110 TFEU

Only applicable to indirect taxation → taxes that can be passed on to another person (e.g. VAT)

Prohibition of discrimination and protectionism against foreign products (‘international’ model)

> Outokumpu – about 110(1), direct discrimination

- Ruling: Direct discrimination! Finland’s responsibility to find out how the electricity they were buying was produced

> Humblot → about 110(1), indirect discrimination

- Ruling: Indirect discrimination and protectionism!

> Beer/Wine case → about 110(2), protective taxation

- Ruling: Violation of para 2, protective taxation! Wine and Beer are competing goods, but beer which is produced locally has a lower taxation

Prohibition of quantitative restrictions (unless….)

> Art. 34 TFEU

> Quantitative restriction → restriction on the amount

> Measure having equivalent effect → not a quota but the same effect (=restricts trade)

How to apply art 34 TFEU (1/3)

Is art. 34 applicable?

1. Is the case about goods?

- Italian Art: ‘Products which can be valued in money and which are capable of forming the subject of commercial transactions’ (nothing about the uniqueness of the product)

- Jagersköld: ‘Tangible physical characteristics’

2. Is there applicable harmonisation at EU level?

- Always no!

3. Is there a cross-border element in the case?

4. Can the claimant invoke art. 34?

- Has vertical direct effect, can be invoked against MS measures

→ Angry farmers: MSs are obliged to enforce against restrictions to free movement caused by individuals

- Cannot be invoked against private parties

How to apply art 34 TFEU (2/3)

Material scope

1. Is the measure a ‘quantitative restriction’ or a ‘measure having equivalent effect’?

- Dassonville → MEE definition

- Cassis de Dijon → product requirement

→ Dassonville and Cassis de Dijon → no minimum threshold of effects, no actual effects or evidence required

- Krantz

→ National measures that affect the flow of goods are not MEEs if the effect on trade is ‘uncertain and indirect’

2. If a MEE, what is the relevant measure?

- Keck → selling arrangement

→ National measures restricting certain selling arrangements are not MEEs if they apply to all traders and do not discriminate against foreign products in law or in fact

- Familiapress → distinction between selling arrangement and product requirement

→ If you have to change the marketing of a product to sell it in a MS, it constitutes as a product requirement and therefore a MEE

- Gourmet International → discriminatory rules regarding selling arrangements

- Italian Trailers → Restriction of use

How to apply art 34 TFEU (3/3)

Justifications

1. Can the MS invoke…

I. A ground justification in art. 36 TFEU or

Consider ground of justification + whether it is a mean of arbitrary discrimination or a disguised restriction on trade

II. A ‘mandatory requirement’?

1. Ground justification in case law

- Cassis de Dijon → public health (also. Art 36 TFEU)

- Cassis de Dijon → consumer protection

- Italian trailers → road safety

- Familiapress → fundamental rights

2. No direct discrimination

2. Is the measure proportionate?

I. Suitability

- Is it suitable to attain its purpose?

II. Necessity

- Is it necessary to attain its purpose, are there any alternatives that achieve the purpose in a less restrictive way?

How to apply art 45 TFEU (1/3)

Is art. 45 applicable?

1. Is this case about workers? Autonomous concept of EU law independent of national legislation

> Lawrie-Blum:

1. For a certain period of time

2. For and under the direction of another person

3. In exchange for remuneration

> Levin → definition also extends to part-time/below minimum-wage workers, but not to activities that are ‘purely marginal and ancillary’

2. Is there applicable harmonisation at EU level?

- If yes, apply that!

- Regulation 492/2011 or Directive 2004/38 (workers’ rights)

3. Is there a cross-border element?

- Moving to another MS to take up employment/returning to your own MS after having exercised your free movement right

- Saunders → wholly internal situations are not covered by art. 45 TFEU

4. Can the claimant invoke art. 45 against the defendant?

- Van Duyn → sufficiently clear and unconditional, so it has vertical direct effect

- Walrave, Bosman → can be invoked against private entities who are exercising their “legal autonomy” and who are regulating in a collective manner paid labour

- Angonese → prohibition of nationality discrimination in Article 45(2) TFEU can be invoked against all private party action

How to apply art 45 TFEU (2/3)

Material scope

1. Does the measure restrict the free movement of workers?

> Angonese → indirect discrimination
> Bosman, 3+2 rule → direct discrimination

> Bosman, transfer sum rule → direct discrimination

How to apply art 45 TFEU (3/3)

Justifications

1. Can the MS invoke…

I. A ground justification in art. 45 TFEU or

> Adoui and Cornuaille

II. A ‘mandatory/imperative requirement’?

1. Ground justification in case law

> Cassis de Dijon → public health (also. Art 36 TFEU)

> Cassis de Dijon → differential tax rules based on objective factors

> Bosman → ‘financial and competitive balance between football clubs’ and ‘support the search for talent and training of young players’

2. No direct discrimination

2. Is the measure proportionate? Bosman para 104

1. Suitability

Is it suitable to attain its purpose?

2. Necessity

Is it necessary to attain its purpose, are there any alternatives that achieve the purpose in a less restrictive way?

Public service exception → 45(4) TFEU

- Some types of public employment can be reserved for own nationals, e.g. military, police, tax authorities…

Regulation 492/2011 - How to apply

1. Is there a workers

- Lawrie Blum criteria

2. Cross-border element

- Applicable to workers in other MSs; not applicable to workers returning to their own MSs!

3. Vertical and horizontal direct effect

- Sufficiently clear and unconditional; this is the case with the most important provisions of the regulation

4. Virtually no justifications for infringements of the non-discrimination rights in the Regulation

Directive 2004/38 - How to apply

1. Is there a worker

- Lawrie Blum criteria

2. Cross-border element

- Art. 3(1); not applicable to EU citizens returning to their own Member State 

3. Vertical direct effect only!

- Sufficiently clear and unconditional provisions

4. Limited justifications for infringements of the rights in the Directive

- Articles 27-29

Art. 49 TFEU - How to apply (1/3)

Personal scope

1. Is there an establishment?

> Gebhard

- Criteria for freedom of establishment:

1. Duration of staying in the MS

2. Regularity of going to the MS

3. Set up infrastructure in the MS

- ‘Stable and continuous basis’

- Differs from free movement of workers (no hierarchical relationship, risk of business, direct payment for services)

• Art. 54 TFEU → also applicable to companies or firms (legal persons)

2. Is there applicable harmonisation at EU level?

> Professional Qualifications Directive (2005/36) and the Services Directive (2006/123)

- Check whether the case falls under any of the excluded activities in art. 2 of the Services Directive

3. Is there a cross-border element in the case?

> Vlassopoulou = moving to another MS to take up self-employed activity

> Daily mail = transfer a company to another MS

> Centros = set up secondary establishment in another MS

> Knoors (not in reader but relevant to understanding) = return to your own MS after having exercised free movement of rights

> Wholly internal situations not covered

4. Can the claimant invoke art. 49 TFEU against the defendant?

- Art. 49 is sufficiently clear and unconditional, so it has vertical direct effect

- Viking Line = art. 49 can also be invoked against private entities who are exercising their “legal autonomy” and who are regulating in a collective manner the free movement of establishment (e.g. trade unions)

Art. 49 TFEU - How to apply (2/3)

Material scope

- Prohibition of non-discriminatory obstacles

> Vlassopoulou

- National requirements concerning qualifications may hinder nationals of other MSs to exercise their freedom of establishment, if nationals rules take no account of the qualifications the person already possesses

→ There must be a comparative examination of diplomas, and if they correspond sufficiently, the MS must recognize the diploma (duty of mutual recognition)

→ Examination must be carried out in accordance with EU law and it must be appealable

> Gebhard

- “National measures liable to hinder or make less attractive the exercise of fundamental freedoms must be justified” (para. 37) → whether it’s discrimination or not does not matter

1. Applied in non-discriminatory manner

2. Justified by imperative requirements in the general interest

3. Suitable for securing the attainment of of the objective

4. Must not go beyond what is necessary to attain the objective

→ MSs may not ignore the knowledge and qualifications acquired by the person in another MS

→ Now largely harmonised in Directive 2005/36 (professional qualifications)

> Viking Line

- Can art. 49 TFEU be invoked against trade unions? → Yes!

- In some MS working conditions are determined by collective agreements concluded by Trade Unions (=private persons), and therefore limiting the application of art. 49 TFEU to only public authorities would risk creating inequality

- Trade unions have legal autonomy and can regulate in a collective manner the free movement of establishments

> Art. 54 TFEU, non-discriminatory obstacles in company law

→ Company in the meaning of art. 54 → have their registered office, central administration, or principal place of business within the Union → treated the same way as natural persons who are nationals of a MS

- Incorporation theory

- Real set theory

> Daily mail

- No restriction to freedom of establishment! Companies are ‘creatures of the (national) law’, and therefore it is up to the national law to determine the criteria for being a national company

> Centros

- Companies are entitled to carry on their business in another MS through an agency

- Choosing a MS with the least restrictive company laws is not an abuse of right of establishment

- Conducting business only in a MS where one of its’ branches is established is not sufficient to prove fraud

- Refusal to register secondary establishment restricts freedom of establishment (non-discriminatory obstacle)

- The four requirements for lawfully hindering freedom of establishment are not met in this case

Art. 49 TFEU - How to apply (3/3)

Justifications

Treaty derogations in art. 52 TFEU → specifically for ‘special treatment of foreigners’!

1. Ground of justification

   1. Public policy, public security, public health

2. Proportionality

   1. Suitability

   2. Necessity

Imperative requirements

1. Legitimate objective of public interest

   1. Centros → reinforce financial soundness of companies and protect creditors (court unconvinced by suitability and necessity)

   2. Gebhard →  ensure that certain activities are restricted to persons holding formal qualifications

      1. Duty of mutual recognition!

2. No direct discrimination, indistinctly applicable

3. Proportionality

   1. Suitability

   2. Necessity

Incorporation theory

To establish a company you register in the MS and the chamber of commerce; it is irrelevant where you do your business

Real set theory

Registration is not enough, you need to ensure your central administration and principal place of business is in the MS; if not met, registration becomes void

Directive 2004/38/EC

- Art. 3(1) → applicability

- Art. 7 → right of residence

- Art. 24 → right to equal treatment

- Art. 7(1)(d) and (2) → derivative right of residence

Directive 2006/123 (Services Directive)

Applicable to freedom of establishment as well!

- Art. 2 → applicability

- Art. 9 → authorization schemes

- Art. 10(1) and (2) → criteria for granting authorization

- Art. 11(1) → rules on duration of authorization

Visser Vastgoed → applies also to purely internal situations!

Art. 56 TFEU - How to apply (1/3)

Is art. 56 TFEU applicable in this case?

1. Is the case about services?

Art. 57:

1. Service/performance (not a tangible good)

2. Normally provided for remuneration

3. Gebhard → temporary nature

2. Is there applicable harmonisation at EU level?

> Directive 2006/123 (Services Directive)

→ Check especially exclusion of wide range of services in Article 2

- Also Posted Workers Directive; need to understand its relationship with art. 56 TFEU but no need to apply it to new cases!

3. Is there a cross-border element in the case?

> Säger and Laval → the service provider moves across borders to provide services in another MSs

> Luisi and Carbone → the service recipient moves across borders to receive services in another MSs

> Alpine Investments → the service itself moves while neither provider nor recipient move

4. Can the claimant invoke art. 56 against the defendant?

> Van Binsbergen → art. 56 TFEU is sufficiently precise and unconditional, and therefore has direct vertical effect

> Walrave, Laval → art. 56 TFEU can be invoked against private entities who are exercising legal autonomy and who are regulating in a collective manner the provision of services

Art. 56 TFEU - How to apply (2/3)

Material scope of art. 56 TFEU

1. Is there a restriction to the free movement of services?

I. Discrimination

> Van Binsbergen → indirect discrimination

- Residency requirement is indirectly discriminatory

- Disadvantages foreign providers of such services

- However, specific requirements can be compatible with the Treaty if they are justified by the general goods and are binding upon persons established in the State in which the service is provided

II. Non-discriminatory measures which ‘directly affect market access’

> Säger → non-discriminatory restriction 

- Art. 56 requires the abolition of any restriction, even if it is not discriminatory

- Any national law which limits the freedom to provide or receive services is a restriction; abolition of such restriction is required when the person can lawfully provide a similar service

- Needing an administrative license for professional qualifications also constitutes a restriction on the freedom to provide services; prevents companies from providing services in the national territory

- Home State is the principle regulator of service provider

→ Not as far reaching as Cassis de Dijon

> Alpine Investments → non-discriminatory restriction 

- Constitutes a restriction on free movement of services; directly affects access to the market in services in other MSs

- No Keck-exception

> Mobistar → non-discriminatory tax measures

- National measures which only aim to create additional costs in respect of the service in question and which affect the same way services between MSs and within one MSs are not restrictions

- If a foreign service is equally burdened as national service, there is no restriction!

> Laval → non-discriminatory restriction 

- Even though union exercises its fundamental right to strike, actions are subject to Article 56 TFEU

- Actions make it less attractive to provide services in Sweden, so there is a restriction to free movement

Art. 56 TFEU - How to apply (3/3)

Justification

Treaty derogations in art. 52 TFEU → applicable to services via art. 62 TFEU

1. Ground of justification

   1. Public policy, public security, public health

2. Proportionality

   1. Suitability

   2. Necessity

Imperative requirements

1. Legitimate objective of public interest

   1. Laval → overriding reasons of public interest

2. No direct discrimination → distinctly applicable

3. Proportionality → Laval para 101; very strict approach towards labour union actions

   1. Suitability

   2. Necessity

      1. Säger → national measures can be justified if they ‘are not protected by the rules of the (home state)’ and they do not ‘exceed what is necessary to attain (the reason)’

Services Directive (2006/123/EC)

- Strict country of origin principle (only home state control)

- Deregulation with very little re-regulation

- Politically untenable because of MSs concerns

Artt. 20 or 21 TFEU or Directive 2004/38/EC - How to apply (1/3)

Is Article 20 or 21 TFEU or Directive 2004/38/EC applicable in this case?

1. Is the case about an EU citizen?

> Art. 20 TFEU → citizen of an EU MS is an EU citizen

→ Grelczyk, Rottman → EU citizenship is “destined to be the fundamental status of the nationals of the Member States”

> Under PIL, MSs decide who are their nationals

→ Micheletti

> However,

→ Deprivation of national citizenship can be compatible with EU law if it is proportionate (suitability and necessity) → Rottmann

→ MSs may not ‘sell’ their nationality by offering naturalization in exchange for money → Commission v Malta

2. Does the case fall within the scope of Directive 2004/38/EC?

> Art. 3(1) Directive

- Scope limited to EU citizens moving to or residing in another MS

- Restrictions by own MS are generally not covered by the Directive (except art. 4)

- The directive does not govern the return of the person

→ In these cases use art. 21 TFEU

3. Is there a cross-border element in this case?

I. Yes → art. 21 TFEU

- MSs preventing or hindering its citizens from moving to or residing in another MS

- Return to one’s own MS after having exercised free movement rights

- Mostly not relevant for EU citizens’ own rights, but for their family members from third countries → under treaty provisions there can be derivative rights

II. No → art. 20 TFEU

- In exceptional situations grants rights in a wholly internal situations

4. Can the claimant invoke the applicable provision against the defendant?

> Art. 21 TFEU

- Is sufficiently clear and unconditional, so it has vertical direct effect

> Relevant provisions of Directive 2004/38

- Are sufficiently clear and unconditional, so they have vertical direct effect → Marshall

- Prohibition of horizontal direct effect of directives → Marshall, Faccini Dori

Artt. 20 or 21 TFEU or Directive 2004/38/EC - How to apply (2/3)

Material scope of art. 20 and 21 TFEU

• Art. 21 TFEU → does the measure constitute a restriction to the free movement of EU citizens?

> O. and B

- Not entitled to derivative right of residence on the basis of the Directive → use 21(1) TFEU

- If a Union citizen has resided with a family member who is a third country national in a MS other than their own for a period exceeding 2.5 years and 1.5 years respectively, and was employed there, the third country national should have a derivative right of residence

- Application of Articles 7 and 16 Directive 2004/38 "by analogy"

- There needs to be genuine resident of the Union citizen in the host MS, and family life needs to be created or strengthened in that MS

- Only a period of residence satisfying the conditions in art. 7 and 16 of the Directive will give rise to derivative residence

- Conditions should not be more strict than those provided by the Directive

> Coman

- Restricts freedom of movement; requires a justification that has a public interest aim and is proportionate → not the case, not proportionate

- MSs can have different definitions of marriage, however it cannot impose a restriction on the freedom of movement

- ‘Spouse’ is gender-neutral and can refer to a same-sex spouse

• Art. 20 TFEU → does the measure deprive the EU citizen de jure or de facto of the enjoyment of the substance of the rights of EU citizenship?

> Rottman

- Citizenship of the Union is a fundamental status of the nationals of the MSs

- If stripping someone of their nationality results in also stripping them of their EU citizenship, you must consider proportionality of this (suitability and necessity)

> Ruis Zambrano

- Wholly internal situation → art. 20!

- Derivative residence rights for essential family members to ensure ‘genuine enjoyment of the substance of the rights’ of EU citizenship (of the children)

Artt. 20 or 21 TFEU or Directive 2004/38/EC - How to apply (3/3)

Justification

Imperative requirements

1. Is there an imperative requirement in the public interest?

2. For imperative requirements only, is the measure indistinctly applicable?

3. Is the measure proportionate?

   1. Suitability

   2. Necessity

Directive 2004/38

Art. 7(1)(b) → sufficient resources for themselves and their family members to not become a burden on the social support system + comprehensive sickness insurance

Relevant case law:

> Zhu and Chen → residence right for EU citizens with nationality of another MS

- Directive applies, as the family is staying in another MS (based on an older directive that now corresponds to art. 21 TFEU)

- Cross-border element without crossing a border → the daughter having a nationality of another state is sufficient

- Source of financial resources is not relevant

- The mother is not a family member in the sense of art. 2(2), because she is not dependent on the child in the same way the child would be dependent on her

- However, depriving the mother the right of residence would ‘deprive the child’s right of residence of any useful effect’

> Dano  → equal treatment for non-economically active persons

- To have a right of residence, one must either have sufficient resources or be a work-seeker

- Therefore, as no residence right under art. 7 → no right to equal treatment under art. 24(1) Directive and art. 18 TFEU

- MS can refuse to grant social benefits if the person has no right of residence and also if they are economically inactive (no chance of getting a job) to prevent nationals of other MS from becoming an unreasonable burden on the social assistance system

> Grzelczyk  → equal treatment for students

- EU citizenship is a ‘fundamental statuts’; right to equal treatment in all situations that fall within scope of Community law

- However, when a union citizen pursues university studies in a MS other than their own, they can deprive themselves of the possibility of relying on prohibition of all discrimination on grounds of nationality Article 18 TFEU

- Art. 3 of Directive 96/93 excludes equal treatment regarding maintenance grants, but also does not deny equal treatment regarding social security benefits

- Belgium has to show a certain degree of financial solidarity; not determined what this means

> Förster → equal treatment for students

- MS may ensure that study assistance ‘does not become an unreasonable burden’ (to the State) and that foreign students demonstrate a certain level of integration

- Requirement of 5 years is not disproportionate

- Art. 24(2) = no right to equal treatment regarding study maintenance grants before permanent residence

Justifications:

- Articles 27-29 and 24(2)

- Since this is another harmonisation measure, you can only rely on the justifications within the Directive → these justifications should be interpreted strictly

Non-Discrimination

Art. 157 TFEU → norm for social equality; has both economic and social purpose

> Defrenne

- Art. 157 TFEU has a double aim; makes this distinction because of direct and indirect discrimination

- While the whole of Art 157 is not sufficiently clear and unconditional because it calls for States to gradually implement the Article, discrimination is so clear that this article does have a direct effect

- Direct effect of Article 157 TFEU can only be applied after this judgement not to prior payments

General Principles in EU Law

- Applicable to all acts of EU institutions and to some acts of MSs

> Internationale Handelsgesellschaft

- Fundamental rights are protected in the general principles of EU law

- All the EU MS were parties to the ECHR → ECHR is still not binding as such on EU institutions, but indirectly applicable through art. 6(3) TFEU

Member state actions

> Wachauf: MSs are bound by EU fundamental rights when they are “implementing EU law”

> Member States also bound by EU fundamental rights when they “derogate” from a fundamental freedom (ERT) or an imperative requirement (Familiapress)

→ Fundamental rights themselves are also “imperative requirements”

→ Equals to acting within the scope of EU law

CFR - codified principles

> Structure

- Arts. 1-50 → rights and principles

- Art. 51 → applicability

- Art. 52 → justifications of interference with fundamental rights

→ Provided by law, respect the essence of rights, proportionality

- Art. 53 → different levels of protection

Confirmed Charter provisions have direct effect:

- Art. 31(2) CFR (Bauer)

- Art. 21 CFR

- Art. 47 CFR

→ In horizontal disputes, the Charter often applies because of applicable Directives, hence the focus on indirect effect first 

Art. 19 TFEU

Legal basis for Directive 2000/78 on employment equality and Directive 2000/43 on race discrimination

> Mangold → non-discrimination in respect of age

> Kücükdeveci → non-discrimination in respect of age

- Transposition deadline by now passed; however could have not been used anyways as it was a situation of a horizontal dispute

- But, she can rely on the general principle of EU law protecting her against discrimination on the grounds of age

- The German law violates this principle

→ Codified now in art. 21 CFR

Area of Freedom, Security and Justice

3(2) TEU, 67 TFEU

European Arrest Warrant Framework Decision

Member State A issues an European arrest warrant in a shared database; other Member States are obliged to execute the arrest warrant and surrender the requested person

> Melloni

- Article 53 CFR interpreted in light of the primacy and effectiveness of EU law

- Spanish authorities can rely on this higher standard, however it cannot disregard the unity, primacy, and effectiveness of EU law → they have to abide to the EAW

- Since this is in the scope of the EU charter, Spain cannot rely on their constitution → establishes the primacy of EU law and the principle of mutual trust

> Aranyosi and Caldararu

- Rebuttal of the presumption of mutual trust ‘in exceptional circumstances’

- Two step test:

1. Is there a real risk of a breach of Article 4 CFR because of systemic or generalised deficiencies in fundamental rights protection?

• Looking at the prison system as such, you check the statistics and data regarding the prison system in a MS → would have to confirm the deficiencies

2. In the particular circumstances of the case, are there substantial grounds for believing that the individual concerned will be subject to a violation of Article 4 CFR?

• Looks at the individual situation of the person concerned

• Only if both steps are fulfilled, then you cannot execute the sentence; systemic/general deficiencies alone are not enough for non-execution

> L.M

- Application to art. 47 CFR → effective remedy, impartial and independent judge

- Confirmation of the two-step step from Aranyosi and Caldararu:

1. Are there systematic or generalized deficiencies? → in regard to judicial independence of Polish courts

2. Individualized risk

• They would have to check who would be the judge sitting and hearing the case → would have to determine whether the judge on hand was appointed lawfully

• Risk of breach of right to fair trial in individual case
  
  

Principle of Mutual Trust

Execution of EAWs based on mutual recognition (however also obligation to respect fundamental rights!); mutual recognition of national court judgements and mutual trust for police

Centralised enforcement of Acts

> Art. 258 TFEU → enforcement by the Commission against a MSs

→ Commission has discretion so can decide which cases they want to initiate proceedings against; in recent decades has tried to address big issues rather than small ones

- Four stages in the procedure:

1. Pre-contentious stage

2. Formal notice and MS reply

3. Reasoned opinion by the Commission

4. Referral to the CJEU

> Commission v Luxembourg and Belgium → another MS/EU institution not complying with EU law is not an excuse for another MS to not comply with EU law

> Art. 259 TFEU → enforcement by a MS against another MS

- However, Commission must be consulted first and they must provide reasons for why they are not initiating proceedings themselves

- Rarely used!

> Art. 260 TFEU → possible outcome under art. 258/259 (failure to fulfill obligations); starts the judicial process

- Structure:

1. MS is obliged to comply (terminate the violating law)

2. If a MS does not comply, Commission can bring a new case to the Court to impose a lump sum and/or periodic penalty payment (for each day that the MS fails to bring its law in line with EU law, they pay a fine)

→ If a MS does not pay, EU takes money from the allocated EU funds for that MS and withhold that money

> Commission v Belgium → internal political problems are not relevant for not complying with art. 258 (and 259?)

> Art. 7 TEU → lex specialis for enforcement of the EU values in art. 2 TEU

- Political enforcement, safeguards the values of the EU; is legally binding but follows a ‘political’ logic

- Conditions for starting proceedings against a MS:

1. Council acting by 4/5 majority and with the consent of the European Parliament

2. European Council acting by unanimity

→ Has to establish a severe risk of fundamental rights by unanimity (excluding the MS accused) → hard to establish; often at least two governments support each other

3. Council acting by qualified majority 
   
   

> Art. 7 TFEU and art. 258 are complementary but the outcome is different:

- Art. 7 TFEU → heavier (political) outcomes, e.g. stripping the MS of voting rights in the Council

- Art. 258 → judicial outcomes, ECJ established a violation of EU law

Decentralised enforcement

Enforcement before national courts

- Made possibly by doctrines of direct and indirect effect and supremacy, preliminary reference procedure, and willingness of national courts to apply EU law

- Direct conflicts → direct conflicts between EU and national law; related to direct effect and supremacy

- Indirect conflicts → national procedural rules preventing or hindering the possibility to rely on EU law

- National procedural autonomy → in the absence of EU harmonisation of procedural rules, MSs have autonomy to design their own procedural rules

> Manfredi

- Principle of equivalence and effectiveness

• Equivalence → procedural rules for claims based on EU law must be at least as favourable as those for similar claims based on national law

  • E.g. appeal time can’t be shorter for claims based on EU law

• Effectiveness → procedural rules may not make the exercise of EU law rights impossible in practice or excessively difficult 

→ Examples of national procedural rules which may conflict → limitation rules, strict evidence rules (preclude bringing certain evidence), high court fees, absence of remedy

> Factortame

- About principle of effectiveness

- Absence of a remedy conflicts with the principle of effectiveness (double check!!)

Effective Judicial Protection

- Relevance of art 47 CFR and art. 19 TEU

> Portuguese Judges

- Requirement of judicial independence in art. 19 TEU is directly enforceable

- The EU provides effective judicial protection to individuals and art. 19 TEU applies to all fields covered by EU law

- National judges are asked to interpret legislation in the light of EU law → national judges need to be independent!

State liability

- EU law-based action for damages before national court; compensation for harm individuals experienced

> Brasserie du Pecheur

- ECJ → criteria for state liability

1. Sufficiently serious breach of EU law by a MS

→ MS ‘manifestly and gravely disregards the limits on its rule-making powers’ (in Dillenkofer, para 25)

2. Breached provision grants rights to individuals

3. Causal link between breach and damages

> Dillenkofer

- ECJ → sufficiently serious breach

- Failure to take any measures necessary to implement a Directive is a sufficiently serious breach 

> British Telecommunications

- ECJ → sufficiently serious breach

- Good faith misinterpretation of EU law requirements is not a sufficiently serious breach 

Judicial Breaches of EU law

- State liability applies regardless of which Member State authority was responsible for the breach (so also breaches by national courts)

> Köbler

- Possibility for State liability due to a breach of EU law by national court of last instance (e.g. when they interpret national rules in a way not consistent with EU law)

- Applies only in exceptional cases because of the specific nature of the judicial function!

Preliminary Reference Procedure

- Art. 267 TFEU

I. Either questions about interpretation of EU law or validity of acts of EU institutions

II. Either cases involving EU law before any national court versus cases involving EU law before the national court of last instance

- Division of tasks in interpretation:

- ECJ interprets EU law; can only invalidate EU law, not national law

- National court applies ECJ’s preliminary ruling to the case

• Costa/ENEL → supremacy

• Simmenthal I → duty to set aside conflicting national law, including constitutional laws

Admissibility → obligation for the ECJ to answer admissible questions 

- Any ‘court or tribunal’ can refer a preliminary question

> Dorsch Consult → establishes conditions for a court

1. Established by law

2. Permanent nature

3. Compulsory jurisdiction

4. Independent

> Da Costa

- Questions that have been already answered are also admissible

National courts ‘against whose decisions there is no judicial remedy under national law’ are obliged to refer to the ECJ!

- Courts of last instance are principally not allowed to interpret EU law themselves

- Usually courts of last instance, but could also be regional district courts

- Exception in CILFIT; national courts do not have to refer an interpretive question if:

• The ECJ has already ruled on a materially identical question (acte éclairé doctrine), they still can but are not obliged to

• Or the answer to the question is so clear that the national court can decide itself (acte clair doctrine)

  • Only in very strict circumstances (paras. 17–20)

Art. 4 & 5 TEU → principle of conferral

Art. 3 TFEU → exclusive competences

Art. 4 TFEU → shared competences

Art. 6 TFEU → complementary competences

Legal basis → who, what, how

• Titanium dioxide → ‘objective factors amenable to judicial review’ and ‘aim and content of the measure’

• Chernobyl → ‘center of gravity’ test

How to create an internal market

Positive integration → adopting EU-wide legislation to create common rules (harmonisation); always based on a specific legal basis; replaces national legislation in a certain area

Tobacco Advertising I

How to create an internal market

Negative integration → prohibitions in the Treaty directed at MSs and private parties; directly applicable and does not require legislative action by EU institutions; national legislation remains in place but it must not breach Treaty prohibitions

The international model

• Each MS commits itself to limiting its external sovereignty when opening its borders to foreign goods

• Each MS maintains own rules; must not be discriminatory and must apply to all imported products

• The ‘host state’ rule

The federal model

• Only the rules of the ‘home state’ apply → goods are entitled to move freely within the common market once they comply with the law of their home state 

• Mutual recognition → ensures market access for goods that are not, or are only partly subject to EU harmonisation legislation

The national model

• No MS rule may restrict trade, no matter how small, or whether imposed by the home / host state

• If a MS adopts rules higher than the single EU standard, this higher State standard will violate the free movement provisions → no hindrance to trade is allowed

Cassis de Dijon

Autonomy of EU law - cases

- Van Gend en Loos

- Costa v Enel

- Simmenthal II

Direct Effect of EU law - Treaty provisions

- Van Gend en Loos: art. 30 TFEU has direct effect

- Cassis: art. 34 TFEU has direct effect

- Walrave: horizontal direct effect of art. 56 TFEU

Direct Effect of EU law - Regulations

- Art. 288 TFEU → directly applicable within national legal orders; also Leonesio para 5

- Simmenthal → horizontal disputes

- Leonesio → vertical disputes

Direct Effect of EU law - Decisions

- Art. 288 TFEU → binding in its entirety specifically to those whom it is addressed

> Graz → provision of a decisions have direct effect if…

1. Clear

2. Unconditional

3. Capable of producing effects in the legal relationship between MS and those subject to their jurisdiction

Direct Effect of EU law - Directives

- Art. 288 TFEU → must be implemented by the deadline

> Van Duyn & Marshall → vertical direct effect

1. Provision is sufficiently clear and unconditional

2. MS has not transposed the provision of the Directive, or has done so incorrectly

> Marshall & Faccini Dori → no horizontal direct effect

> Kolpinghuis → no inverse vertical direct effect

- MS may not benefit from its own failure to implement a Directive

Indirect Effect of EU law

- Interpretation of national law in light and in conformity with EU law; applies to all national law, even if not intended to implement a directive

> Faccini Dori → vertical and horizontal

> Kolpinghuis → inverse vertical

- Limits to indirect effect of Directives

• Only after the implementation deadline (Adeneler)

• Interpretation methods must be recognised by national law

• Compliance with general principles of law (legal certainty and non-retroactivity)

• May not result in a contra legem interpretation of national law (Adeneler)

Fundamental rights

- Has direct effect if clear and unconditional, in vertical and horizontal disputes

> Defrenne → general principle of non-discrimination

> Bauer → direct effect of art. 31(2) CFR

> Egenberger, Dansk Industri → direct effect of art. 21 CFR

Art. 101 TFEU

1. Prohibits cooperation that restricts competition

2. Such cooperation is null and void

3. Unless it makes economic sense

How to measure/quantify competition? Identify…

1. The relevant market(s)

2. The positions of companies and consumers on the market(s)

   1. Number of companies selling similar products and the number of products they produce; do consumers easily switch brands of the product

3. The amount of competition between these companies

Anti-competitive object

> Dole

ECJ → how to establish an anticompetitive object

1. Threshold

- Whether there is falls in production and prices increases

- Resulting in poor allocation of resources to the detriment, in particular, of consumers

2. Method

- Check objectives and the economic and legal context of which the behaviour  forms a part

- When determining the context, take into consideration nature of the goods or services affected and the real conditions of the functioning and structure of the market

Classic ‘by object’- restrictions

Price fixing (either competitors fixing the price or producer boxing the price for distributors), market partitioning, and output restrictions

• If not an anti-competitive object, do a full effect analysis to establish an appreciable effect on competition (defined in market shares!!)

Concerted practises

> Dole

• Commission does not need to prove the actual price agreed upon; needs evidence of concentration that causes a certain practises in the market

• Needs to prove:

  • Concertation

  • Causing

  • A practice

• In cases of exchange of information, there is no need to prove resulting effects and causal relation is presumed

Art. 101(3) TFEU

Four cumulative requirements

1. Technical/economic progress

2. Fair share for consumers (hard to define)

3. Proportionality

4. Residual competition

• The Commission has not made a decision in 101(3) in a decade! Usually uses the VBER

Art. 102 TFEU

Dominant position of companies; abuse of dominance is prohibited

Exploitative abuse

Abuses against consumers; e.g. charging an unfairly high price

Exclusionary abuse

Abuses against the market structure; abuses directed to keep (potential) competitors out

Two-step cumulative test for abuse

1. Excessive difference between costs and price

2. Price is unfair in itself or when compared to competing products (UBC)

Determining State Aid

> Art. 107 TFEU

1. Concept of state aid

2. State aids that are compatible with the internal market

3. State aids that may be compatible with the internal market

> Art. 108 TFEU

- Standstill, notification, and preliminary investigation

- Formal investigation

> Congregacion

- Steps for determining state aid

1) State aid definition

• Congregacion → definition in para 65

  • Also subsidies and measures with the same effect (para 66)

2) Undertaking → is there economic activity

• Congregacion → criteria in paras 44-49

3) Selectivity

• Congregacion → definition in para 70

  • Exception for differentiation that arises from the nature or overall structure in para 71

4) Intervention through state resources

• Congregacion → definition in para 74

1. Attribution to the state

2. Financed (directly or indirectly) by the State

5) Affects trade between MSs and distorts competition

• Congregacion → reasoning in paras 79, 80

• De minimis regulation in para 82

  • Aid <€200K/3 years is considered not to impact trade/distort competition (does not apply to agriculture; only for transparent aid)

> Adria-Wien

Compatibility of State Aid with the Internal Market

State aid is not banned; it just needs to be compatible with the internal market on the basis of art. 107(3)(c)

• Requires a prior notification to the Commission

• Two stage procedure; preliminary phase takes 169 days on average and formal investigation can take 1-2 years

However, on the basis of art. 109 TFEU Council can enable the Commission to adopt exemption regulations!

General Block Exemption Regulation

Applies to a wide variety of state aid objectives!