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Summary European Law December 2009 by Natalja Heybroek

Introduction to the European Union (EU)
Stages of Economic cooperation (integration):
1. Free Trade Area: No internal tariffs
2. Customs Union: One external tariff
3. Common Market: Free movement of goods, persons, services and capital
4. Monetary Policy: One coin, shared fiscal system
5. (Political Union)
EU somewhere between 3rd and 4th stage.
Important Treaties:
Date - Name; Acheivment
1951 - Treaty of Paris; European Coal and Steal Community treaty (ECSC: now expired)
1957 - Treaty of Tome; European Economic Community treaty (EEC: now EC) &
EUROTOM
1986 - Treaty of Luxembourg; Single European Act (SEA), single market
1992 - Treaty of Maastricht; European Union treaty (EU) New structure
1997 - Treaty of Amsterdam; Renumbering treaties, institutional reform & amendments
2001 - Treaty of Nice; Institutional reform, amendments
2007 - Treaty of Lisbon; EU President: Van Rompuy
Key provisions of the EU treaty:
- Name change (EEC = EC)
- Subsidiarity (in art. 5)
- Citizenship
- Economic and Social Cohesion
- Economic policy:
- Internal market
- Free competition
Monetary Policy
- New currency (Euro): Fixing of exchange rates
- Cooperation on justice and home affairs (coop. in crime matters)
- The common foreign and security policy
EU Structure:
- Communities (EC & EURATOM)
- CFSP common/foreign policy & security
- PJCCI Police and Juridical Corp
Terms:
Supernational
intergovernmental
EC
EURATOM

= supernational
= intergovernmental
= supernational (as of Lisbon
Treaty)

= supremacy of of Eu law over national law

= need consensus across the board
= European Community
= peaceful use of atomic energy

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EU objectives:
promote economic and social progress
EU international identity common foreign and security policy
strengthen individual rights EU citizenship
area of - freedom, security and justice
maintain existing laws of the Community acquis communautaire

Institutions and Sources

The EU has no legal personality of its own, it uses the ECs sources and intitutions.

Institutions of the EC and EU:

Institutions:
EU Parliament
The Council of The European Union (Council of Ministers)
European Commission
European Court of Justice
- Court of First Instance
Court of Auditors
The Economic and Social Committee
Committee of the Regions
European Investment Bank (European Central Bank)
The European Parliament (voice of the EU citizens)
Background:
- elected by citizens, voted every 5 years
- consists of approximately 785 people, meetings 11 times a year
- represents the citizens: nearly 500 million people
- 27 countries
- Voting: *Qualified Majority Vote (QMV): 62% of vote + majority of countries
(number of votes per country determined by economy not size of country)
*Unanimous vote: 1 vote per person
Supervisory tasks:
- investigate maladministration
- EU citizen petitions
- EU citizen complaints
- Questions the Commission
- Question the Council
- Debate Commisions annual report
- By two thirds majorty, can require whole Commission to resign

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The Council of The European Union (Council of Ministers) (voice of the MSs)
Background:
- consists of the Foreign Ministers of the Member States (discuss foreign affairs and
issues of general concern)
- Specialized area under discussion: ministers from that polic area, eg. Traffic,
agriculture, education, trade etc.
- Rarely meet
- President: Van Rompuy
Voting: QMV or unanimus
The European Commission (independent: not national representatives)
Background:
- one commissioner from each member state
- commissioners - appointed for 5 year periods, approved by the Parliament
- Weekly meetings
- Voting: Simple majority vote
Main principles:
- Guardianship of the EC Treaty
- Formulation of Policy
Proposal for action (for the Council to adopt for co-decision with Parliament)
The draft budget (drafting annual EC budget)
Policy decisions (based on the EC treaty)
- Execution and administration of policy
The European Court of Justice (independent)
Background:
- one judge from each member state
Jurisdiction:
- Disputes about power: between MS and EC institutions about balance of power
- Disputes about the obligations of MS: Commission or MS alleges that another MS is
not fulfilling its Treaty obligations
- Damages: in cases concerning the award of non-contractual damages against the EC
- Disputes about interpretation: debate of interpretation of Eurpean law in a national court
- Preliminary reference (question of interpretation): must be requested by a party
during a dispute in a national court, putting the national court proceedings on
hold.
- takes 2 years
- Appellate jurisdiction: appeals from the Court of First Instance (mostly concerning
competition policy)
(- Limitations on jurisdiction)
Procedures:
- Procedure of direct actions: started in the ECJ or CFI
- Procedure of preliminary rulings: questions referred from a national court

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The Court of First Instance (CFI):

- one judge from each member state
- jurisdiction over the following cases:
- brought by non-privileged applicants (companies and individuals)
- between EC and its staff
The Court of Auditors: (independent)
- 15 members from different member states
- Function: To examine the accounts of the EC to confirm reliability and legality,
drawing up an annual report

Trias Politicas
- Executive - Commission
- Legislative - EU Parliament & Council
- Judiciary
- European Court of Justice (ECJ)

Sovereignty
- All MS have surrendered their absolute national sovereignty to the EC
- EC law prevails over national laws
- with exceptions where the EC has no competence, eg. Defence
Federalism
- Separation of powers between EC and MSs
- EC is not the classic federal system as aspects are missing: EC limited powers in
defence, foreign affairs and taxation.
- Although increasing tendancies to federalism: subsidiarity
single currency
EC citizenship

Powers of the EC
Community may take action when:
- Must be necessary in order to fulfill one of the objectives of the EC
- The EC Treaty failed to provide the necessary power in another article
When it takes action it must act (art 5):
- Within the powers laid down in the EC Treaty
- In accordance with subsidiarity (except in the areas which fall within its exclusive
competence)
- In proportion to the objectives to the acheived
Power to act externally
- international agreements
- applies only when the EC has internal competence in all areas covered by the proposed
measures

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Subsidiarity
- is the principle whereby the Union does not take action unless it is more effective than
action taken at national, regional or local level (except in the areas which fall within its
exclusive competence).1
Layers of law, each law obliging to the law above it:
International (EU Treaty)
----------National
----------Federal State
----------Regional

Sources of EC law
The treaty or Act of Parliament can not be challenged. However secondary legislation
(provides the detail) and can be challenged.

The treaties
Body of a Treaty:
- Principles
- Citizenship of the EU
- Community policies (including: free movement of goods and persons; visas, asylum,
and immigration; competition; economic and monetary policy; employment; social
policy; consumer protection; the environment
- Association of overseas territories
- Institutions of the Community
- General and final provisions

Secondary Legislation
- Commission (eg. In competition policy)
- Council - Consultation procedure: formal opinion on draft by Parliament may or may
not be taken into account by Council
- Council & Parliament - Co-decision procedure: Council drafts a legislation and then
follows the Parliament must accept the measure before Council can adopt it
democratic deficit = Parliament and Council must make decisions together
1

http://europa.eu/scadplus/glossary/subsidiarity_en.htm

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Legal acts which the EC may use:

Binding:
- Regulations: apply across the EC and have the force of law as soon as they are adopted.
- Directives: set out provisions which MSs must ensure are reflected in national law.
- Decisions: are addressed to particular entities (MS, companies or individuals) and are
legally binding on them as soon as they are adopted.
Not binding:
- Recommendations
- Opinions

European Court of Justice Decisions

ECJ: decisions made are authoritative on all aspects of the Treaties and other (secondary)
legislation

General Principles of EC law:

-

equality
proportionality: legislation should not go beyond what is necessary (solve relevant
problem, or achieve desired objective)
legal certainty: always possible to ascertain the law applicable to the circumstances
at the time

Enforcement of EC Law in National Courts

Direct Effect
Where EC law is relied upon directly.
Treaty Articles, Regulations and Decisions (+ +)
The ECJ has ruled in a number of cases that in order for a Treaty Article, Regulation, or
Decision to be directly effective it must:
- have no scope for the exercise of MS discretion in implementing it.
- be sufficiently clear and unconditional for reliance to be placed on it.
Directives (+ +)
Are binding to their result, leaving the detail of implementation to the MSs.
Recommendations and Opinions (- -)
Not binding therefore can only be taken into consideration by national law.

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Indirect Effect
Where EC law influences the interpretation of national law.
Treaty Articles, Regulations and Decisions (- -)
Unlikely to have indirect effect as they have to be sufficiently clear and unconditional.
Directives (++)
It may be used in a national court in interpreting the relevant national legislation (even if
the directive is too vague to be applied itself), or if the action is against another
individual.
Recommendations and Opinions(+ -)
Have indirect effect (as they can not have direct effect), they should be taken into
consideration when interpreting national implementing measures.

Remedies
The full range of remedies available in respect of national law is applicable to EC law.
Most important are: disapplying national legislation and damages.
Disapplying national legislation
- National courts have a responsibility to disapply national law which conflicts with
EC law.
- Temporary suspension of an Act which conflics with EC law while pending a
decision by the ECJ.
Damages
- against individual, private or public body for breach of a directly effective Treay
Article, Regulation or Decision
- Against a public body which is an emanation of the MS for breach of a directly
effective Directive
- Against the EC for breaches committed by its institutions, employees or agents.
- Against a MS for its breaches

Principles Governing the Award of a Remedy

Non-discrimination
- Same as equivalent breach of national law
Must be effective
- Time limits on bringing action (eg. Mostly 3 years in UK)
- Amounts of Damages (maximum amout of damages of national law may make the
remedy ineffective to protect the applicants EC law rights)

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No new remedies
(Although more recent cases indicate that new remedies may be necessary in the
interests of effectivesness)
No further substantive conditions
- No more conditions may be imposed by national law

Prilimary References
Question of interpretation by any national court to tribunal of EC law.
EU purposive approach
Examples of outcome:
- Broad interpretation (eg. Worker)
- Narrow intperpretation (eg. Relevant Product Market)
Doctrine of acte clair:
- Absolute clarity
- ECJ: law clear in all its language versions

Internal Market: Free movement

Rules for MSs
Free movement of:
- Goods
- Persons
- Services
- Capital

Free movement of Goods

Customs Union consists of an agreement between countries to operate:
- free trade area for goods to pass without restriction
- common level of duty charged on goods imported from non MS countries.
Custom duties Art. 23 - 25
No custom duties allowed between MS or charges with equivalent effect (CEE)
Example Case: Van Gent of Loos: Custom duties at German borders. Outcome: Not
allowed
Tax Art. 90 - 93
No distinction between imported goods from MS and domestic goods. (or similar/like
goods)

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Example Case: French tax system on cars. French made cars have low horse power (hp)
and imported cars have higher hp. They taxed higher hp cars more than lower hp cars.
This is no longer allowed as it was making a distinction between domestic and imported
goods.
Quota Art. 28/29
No quotas between MS or measures with an equivalent effect to quantative restrictions
(MEQR)
MEQR = All trading rules by MS that distort trade: actually/potentially;
directly/indirectly are considered as measures having an equivalent effect.
Directive 50/70: Distincly applicable MEQRs (DAM)
Indistinctly applicable MEQRs (IDAM)
- DAM: Measures that apply equally to domestic and imported products.
Eg. Dassonville: A Belgian rule requiring the production of certificates or origin
for imported goods bearing a designation of origin
- IDAM: Measures other than those which apply equally to domestic and imported
products.
Eg. Walter Rau: A Belgian law requiring margarine for retail sale to be in cube
shaped form or packaging.
Mutual Recognition
- If something is allowed in one MS, it must be allowed in another
Rule of Reason (Applies only to IDAM)
- Necessary: If the measure is necessary to protect mandatory requirements, then it will
not be prohibited.
Manditory requirements within the rule of reason:
- effectiveness of fiscal supervision
- protection of public health
- fairness of commercial transations
- defence of the consumer
- Proportionality: IDAM measures adopted to satisfy a mandatory requirement be
proportionate (go no further than the relevant mandatory requirement)
Example case: Cassis de Dijon: German cassis contains 27% alc and French cassis
contains 17% alc. Germany wanted to restrict imports of French cassis due to health
issues.
- Mutual recognition: Germany had to allow the product to be sold there as there is no
restriction in France.

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Rule of Reason: Necessary: protection of public health is a mandatory requirement

therefore Germany was allowed some kind of protection. Proportionality: The bottle
could be re-labeled to make the German consumer aware of the difference in
product.

Exeptions art. 30
Exeptions to quota restrictions: art. 28/29, when protecting:
- public morality, policy and security
- humans, animals or plants
- artistic, historic or archaelogical value
- industrial and commercial property

Free movement of Persons

Substantive law: civil rights and responsibilities in civil law
- Vertical: Between MS and citizens
- Horizontal: Between MS and MS, or citizens and citizens
Citizens
EU citizenship
- Rights to non-discrimination on the grounds of nationality.
Example Case: Bosman: Footballer discriminated against on the grounds of
nationality. Was refused a job at another team because they did not want too many of
his nationality. Outcome: The team was sued by him through the ECJ vertical
direct effect of article 39.
All Union citizens and their families
- May enter and reside in a MS for up to 3 months without conditions or formalities.
- MS not obliged to grant entitlement to social assistance during the first three months.
Worker, the self-employed and their families (art 39)
- Have the right to enter and reside in another MS for more than 3 months.
Examples of protection of article 39:
Case: Hoekstra: Term worker. Still considered part of the working force for up to
3 months of unemployment.
Case: Levin: Subsidising part time work to ensure minimum wage.
Persons of Independent means and their families
- With sufficient health insurance and financial resources.
- May be entitled to social assistance for up to 3 months as unemployed.
Students and their families
- With sufficient health insurance and financial resources.

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Limitations
MSs right to restrict entry and residence on the grounds of:
- Public Service (MSs are allowed to reserve posts for nationals eg. Army, police, tax
authorities, juridiciary)
- Official Authority
- Public: Policy, Security & Health
Example Case: Ms. Van Duyn: Dutch woman who applied to work for a
Scientologist church in the UK. UK refused her on grounds of public service.
Outcome: ECJ stated that it was up to the discresion of

Introduction to EC Competition Law

Rules for companies practicing business within the EC.
Purpose:
The Commission makes decisions in the interest of the consumer:
- choice
- lowest price/best quality
- innovation
level playing field = equal chances on the market in the EC
fortress Europe = no trade barriers within EC, high trade barriers import/export outside
of EC.
Objectives: (From a business standpoint)
- Restrictions of trademark protection
- Basic features of EU policies:
o restrictions on monopolies
o restrictions on mergers
Investigate: Regulation 1/2003
Both commission and national authorities can investigate alleged infringements, issue
decisions and impose fines.
Fines and Penalties
Breaches of art. 81/82 can result in:
- Fines up to 10% of total turnover
- In case of continuing infringement, daily penalties up to 5% of daily turnover
Intellectual Property rights
Existence
- Trademark/Patent
Exercise
- Ability to sell the product with the trademark/patent
Exaustion (of rights doctrine)

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After the first sale in the EC, the goods can be imported and exported to any MS
(rule does not apply outside the EC)

Example case: Centrafarm vs Sterling/Winthrop

Winthrop (in the UK) was a licencee buying pharmaceutical drugs from licencor Sterling
(in the US). Winthrop sold the drugs in the UK. The UK being a MS, Centrafarm bought
the cheaper drugs there and sold them in the Netherlands where it was more expensive.
- Outcome: parallel importing in the EC is allowed due to the exhaustion of rights
doctrine. Therefore a company can not prohibit the movement of the products within the
EC after the first time they sold them.
Extraterritoriality
Any businesses, inside or outside of the EC, conducting business within the EC must
obide to the EC competition law, same rules and fines apply.

Anti-competative agreements art 81

The article:
Prohibition of agreements or concerted practises between undertakings that distort trade
Horizontal agreements between companies are never allowed.
Block Exception: regulation 2790/99
art. 81(3): Some agreements allowed:
o Technology transfer: such as licensing and franchising
o Vertical agreements
o Horizontal agreement: Research and Development (R&D) is sometimes
allowed after applying for it: promote innovation. However with limits, such
as length of time the undertakings may work together.
o Unless the undertaking has a market share of >30%
Examples:
Case: Cartel between: Toshiba, Fuji, Siemens (Horizontal agreement)
- Whistle blower = entity that informs the EC of the cartel
In this case, Siemens was the whistle blower and the members of the cartel were
fined except Siemens.
Case: Grundig, making absolute territorial protection (vertical agreement that distorts
trade) agreements with distributors. Not allowed.

Abuse of a Dominant Position art. 82

dominant position = independent of competitors, consumers, customers (the market)
Abuse:
Exploitative Abuse
- Eg. Unfair prices (exploiting customers)

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Eg. Discriminatory pricing: charging different customers different prices for the
same product.

Anti-competitive Abuse
- Eg. Microsoft selling Windows Media Player within their operating system.
Mergers
concentration = merger or acquisition
community dimension = if the concentration has more than $5 billion turnover
worldwide
Community Dimension:
- All concentrations must be notified to the Commission
- Commission will take 25 days to investigate if the concentration has a community
dimension.
- If not, further investigation done by national authorities
- If so, further investigation of 90 days by commission:
- Merger Regulation 139/2004
Commission Investigation (checking for dominance):
-

Relative Market Share

o Absolute (<20% = not dominant, >80%
o Relative (between 20 and 80 and the size of the gap between competitors)

Relative Product Market (RPM)

o Relevant Geographic Market
o Relevant Temporal Market (eg seasonal)
-Key test = test of interchangablility (substitutability)
Demand Side (can consumers choose a similar alternative product?)
Supply Side (can the company choose a similar alternative supplier?)

Commissions decision:
- Allowed: The concentration may go ahead as it will not become dominant.
- Change: The concentration must divest or other measures in order to be allowed.
- Block: Merger or acquisition may not go ahead due as it would significantly impede
the competition on the market
Example case: Merge of KLM and Air France
- More than 5 billion investigated by commission
- Relative Product Market: Landing rights:
- Parts of their landing rights were complementary and parts over lapped.
- Outcome: too dominant, divest in overlapping landing rights to be allowed to merge

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Sources:
Books:
European Union Law textbook, Second Edition; by Elspeth Berry and Sylvia Hargreaves
E-Syllabus Legislation on international business 2009, text and websites; compiled by
Anne-Sophie Andela LLM, lecturer International and European Law
Lectures:
Lectures and Power point presentations by Anne-Sophie Andela
Websites:
Europa: http://europa.eu/scadplus/glossary/subsidiarity_en.htm
http://en.wikipedia.org/wiki/Substantive_law