European Union Law in a Nutshell

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EUROPEAN UNION LAW IN A NUTSHELL

Satu Pitkänen

2016

CONTENTS
PART I :
FRAMEWORK OF THE EUROPEAN UNION
1. Brief history of the European Integration … 3
2. Sources of the European Union law andlegislative acts … 7
3. European Union law related to the member states … 10
4. Institutions and bodies of the European Union … 11
PART II:
INTERNAL MARKET
1. Freedom of movement of goods … 18
2. Freedom of movement of persons … 20
3. Freedom to provide services … 24
4. EU competition law … 25
4.1. Agreements restricting or distorting competition … 25
4.2. Abuse of a dominant position … 29
4.3. Control of reorganizations … 31
4.4. Enforcement of competition law … 33
Sources of reference … 34

PART I

FRAMEWORK OF THE EUROPEAN UNION

1. BRIEF HISTORY OF THE EUROPEAN INTEGRATION

FOUNDING TREATIES

The European Union (later: EU) used to consist of three communities, the European Atomic Energy Community, the European Economic Community and the European Coal and Steel Community.The founding treaties of these three communities later became part of the law of the EU. Six countries, Belgium, the Netherlands, Luxembourg, France, Germany and Italy were the original signatories to these treaties and later, each of the member states of the EU has signed the treaties.

1. 1951 Treaty establishing the European Coal and Steel Community

The European Coal and Steel Community (ECSC) was established in Paris in 1951 in order to create a single market in coal and steel. The ECSC had three administrative and judicial institutions which later gave the model of the institutional framework of the EU: the High Authority, the Council, the Assembly and the Court of Justice.

The ECSC Treaty expired on July 23, 2002.

2. 1957 Treaty of Rome:

The Treaty of Rome is regarded as the founding treaty of the EU. It consists of two treaties, the Treaty Establishing the European Atomic Energy Community (Euratom) and the Treaty Establishing the European Economic Community (EEC).

The aim of the Euratom Treaty was to create co-operation within and control over the production of atomic energy to restrict its use only for peaceful purposes.

Of these two treaties the EEC Treaty was by far the most important. Its target was to gradually create the single market of Europe by eliminating customs duties, by setting up common agriculture policy, and by establishing a common tariff market for non-EC goods.

THE COMMUNITIES ENLARGING

The communities were functioned by the original six members for the first two decades. There were differing opinions of the parameters of the communities varying from purely nationalistic views to more federalistic ideas. As a result of this, there were periods of stagnation in the communities’ development and not until later the communities were able to enlarge.

Access treaties of new member states became part of the EU law:

1973: Accession of UK, Denmark and Ireland

1982: Accession of Greece

1986: Accession of Spain and Portugal

1995: Accession of Austria, Finland and Sweden

2004: Accession of Latvia, Lithuania, Estonia, Hungary, Poland, Malta, Cyprus, Slovakia, Slovenia and CzechRepublic

2007: Accession of Bulgaria and Romania

2013: Accession of Croatia

AMENDMENTS TO THE TREATIES

1965: Merger Treaty

By the Merger Treaty the institutions of the ECSC, the EURATOM and the EEC were merged. The High Authority merged with the Commission of the Euratom and that of the EEC to form the Commission of the European Communities, and the Councils of the communities merged to form the Council of the European Communities.

1986: Single European Act (SEA)

A White Paper issued by the Commission in 1985 had revealed that many barriers still existed to the achievement of the single internal market. To eliminate the barriers, the SEA was signed. The SEA included a comprehensive program of harmonising and a number of procedural changes. As the result of this the internal market was to be complete by the year 1993.

1992: “Maastricht Treaty”

In Maastricht, the Treaty on European Union (TEU) was signed. The TEUled to formation of the European Union, which was to consist of three pillars:

1. The European Communities (= EC, ECSC and EURATOM)

2. Common foreign and security policy

3. Internal affairs

The TEU replaced the treaty establishing the European Economic Community (‘EEC treaty’) by the Treaty establishing the European Community (TEC).The most prominent amendments were the provisions on plans and schedule for the European Monetary Union (EMU) and introducing the concept of the Union citizenship. The United Kingdom and Denmark opted out of the EMU in the negotiations, but otherwise the EMU process was scheduled complete by 1999.

To rationalize the decision-making process of the enlarging Union the Treaty provided for the co-decision procedure.

The TEU entered into force in November 1993.

1997: The Treaty of Amsterdam (TA)

By the TA, further administrative changes were included in the TEC in order to prepare the Community for an expansion in membership. The Union’s institutional structure was made more efficient and the powers of the European Parliament were increased.

The TA made closer cooperation possible for groups of member states which were willing to move forward faster than others. Thus the abstention of a member state would not prevent a decision being made, and any member state which abstained could choose whether or not to participate in the action. This flexibility enabled the principle of“multi-speed Europe”, which practically wasa prerequisite for enlargement of the Union.

Some of the issues of the third pillar were incorporated into the TEC thus becoming part of the first pillar. Therefore, the Schengen Agreement signed in1985 by some of the member states, now became part of the EU law as Schengen Acquis. The UK and Ireland, not willing to become bound by the Schengen Acquis, were excluded. AlsoDenmark has a partial opt out from the Schengen Acquis.

As a technical amendment, the numbering of the Treaty Articles was changed.

The TA added a principle of openness to the TEC. The Council of Ministers was granted more power to foster fundamental human rights of the citizens. The treaty entered into force in 1999.

2001: Treaty of Nice

The Nice Summit focused on the biggest enlargement in the history of the EU preparing its organisational framework for the change. The Treaty of Nice amended the TEC regarding the distribution of votes in the Council of Ministers and the seats of the European Parliament and themembers of the Commission. The treaty entered into force in 2003.

Main stages of the institutional reform of the EU

On basis of the declaration of Nice, the Laeken Summit issued a Declaration on the Future of the EU indicating the necessary steps to meet the expectations of the citizens of the EU. The Union was to increase in democracy, transparency and efficiency and the way for a Constitution for the Citizens of Europe was to be prepared.

The Laeken Summit set up a committee, the European Convention, to begin contemplating the most important issues of the future of the Union. The Convention began working in 2002 and it presentedits accomplishment, the draft European Constitution to the Summit gathered in Thessaloniki in June 2003.

Final decision on the agreement of the draft was to be made in the Summit of Rome in December 2003, but the efforts to agree on the draftfailed. Instead, an Intergovernmental Conference, launched in October 2003, carried on discussing the proposed text.

At the Brussels European Council of 16-17 June, 2004 there was a political agreement on the text ofthe draft Treaty establishing a Constitution for Europe (the Constitutional Treaty), which would have replaced the existing treaties. The Constitutional Treaty wassigned by all of the member states on 29 October 2004. However, in order to enter into force and to replace the existing treaties the Constitutional Treaty should also have been ratified by all of the member states. During the ratification procedure in 2004-2006 several states failed, France and theNetherlands among others.

2007: Treaty of Lisbon

At Brussels Summit on 23 June 2007, the EU leaders agreed on a mandate for an Intergovernmental Conference which completed a new Treaty on Institutional Reform. The treaty was signed on 13 Dec 2007 at a summit in Lisbon, and it became known asthe Treaty of Lisbon. The treaty introduced amendments, and the TEC was renamed as the Treaty on the Functioning of the European Union (TFEU).

The Treaty of Lisbon was eventually ratified by each of the member states and it entered into force on1 Jan2009.

Formally the structure of the EU was simplified because the three-pillar structure was discarded. The European Union became a legal subject, replacing the Communities. Some changes were made to the names of the institutions of the EU, Foreign Affairs Council was established as well as two new posts: the President of the Council of the EU, and Minister for Foreign Affairs.

The Treaty of Lisbon made changes in decision making. Co-decision procedure became the main procedure causing increase in the power of the Parliament. Qualified majority voting increased as the Council voting practice, and the member Sates’ veto rights were diminished. The requirement of transparency must be met in the legislative Council deliberations.

2. SOURCES OF THE EUROPEAN UNION LAWAND LEGISLATIVE ACTS

The treaties currently in force are the primary source of the EU Law. They set the framework and the main rules but leave the EU institutions to fill the gaps. This derived legislation is called secondary law.

PRIMARY LAW

The primary law consists of the EU treaties and protocols and the access treaties of the member states.

Primary Law can be changed only by unanimous decision of the member states. – The debate preceding the Treaty of Lisbon shows how difficult it is to make amendments to the primary law.

SECONDARY LAW

Secondary law is derived from the primary law. The EU institutions have been given legislative powersto fill the gaps in the primary law. These are laid down in the TFEUArt288:

To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions.

Enacting secondary law is what the everyday law-making in the EU actually is. The legally binding acts, regulations, directives and decisions, are adopted in accordance with one of the decision-making procedures referred to in the TFEU. There is a variety of these:Codecision procedure,consultation procedure, co-operation procedure, and consent procedure, the codecision procedure being the main one.

Each decision-making procedure involves several institutions: the Commission, the Council, the Parliament, the Economic and Social Committee and the Committee of the Regions. The main disparities lie in the Parliament’s role in the process and in the number of readings of the proposal. The general phases of decision-making and the institutions’ roles are illustrated by the picture “Legislative roles of EU institutions and bodies” in chapter4.

Legislative Acts

Regulation

A regulation is a normative rather than individual act and it is designed to apply to situations in the abstract. It is published in the Official Journal and it becomes binding once published.

A regulation shall have general application. It shall be binding in its entirety and directly applicable in all member states (Art 288).

This means that a regulation is to become part of the national legal systems automatically without the need (or permit) for separate national legal measures. It also means that even“non-privileged applicants”, private individuals, have right to enforce their rights in their own name through national courts.

Directive

A directive shall be binding, as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of form and methods (Art 288).

A directive is binding to the member states imposing them a duty of implementation. Only after being implemented, a directive becomes effective law in themember states. The method of implementation is left to the discretion of the national governments as long as the required result is achieved within the period laid down in the directive. A directive, which is addressed to all member states, is published in the Official Journal.

A directive has direct effect, i.e. can be relied on by individual parties, only vertically and only if it meets certain requirements. In these cases individuals can appeal to a national court demanding implementation of a directive.

Decision

A decision shall be binding in its entirety. A decision which specifies those to whom it is addressed shall be binding only on them. (Art288).

A decision is an individual act addressed to a specified person or group of persons. It is binding to them after being notified to them. It is often given by the Commission on basis of power delegated by the Council.

Recommendations and opinions

Recommendations and opinions shall have no binding force (Art 288).

Recommendations and opinions are given by the Commission. Although they are not legally binding, they have to be taken into consideration by national courts when interpreting national law.

Summary:

LEGISLATIVEACTS

AGREEMENTS WITH THIRD COUNTRIES

Agreements between the European Communities and third countries are binding to the member states and thus part of the EU Law.

JURISPRUDENCE OF THE EUROPEAN COURTS

The rulings and principles, even opinions provided by the Court of Justice of the European Union and the General Courtare a fundamental source of theEU law.

3. EUROPEAN UNION LAW RELATED TO THE MEMBER STATES

SUPREMACY

By accession to the Community the member states have transferred the jurisdiction to the Community, thus the Community Law has supremacy over conflicting domestic law. This means that the member states are bound to apply Community law and they may not give effect to any national law inconsistent with applicable EU rules.

The principle of supremacy is not written in the TFEU but was first established by theCourt of Justiceof the European Union(CJEU) in case van Gend en Loos (case 26/62):

“…the Community constitutes a new legal order in international law, for whose benefit the States have limited their sovereign rights, albeit within limited fields.”

DIRECT EFFECT

Individuals are allowed to rely on Community provisions before national courts in all of the member states. To be pursued similarly in all states, the provisions must meet certain standards. They must be clear, unconditional and precise and not subject to any further measures on the part of the member state. Community provisions which do not fulfil these requirements do not have direct effect. This is sometimes the case with directives.

The CJEU has set out criteria for direct effect in many cases, such as Van Gend en Loos (case 26/62), Costa v. Enel (case 6/64), Reyners v. Belgium (case 2/74).

SUBSIDIARITY

Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member states, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.

Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties. (TFEU Art5).

Subsidiarity means that the EU shall take action only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member states.

Exclusive competence

Subsidiarity does notapply in areas within the EU's exclusive competence.The difficulties start with attempts to determine these areas.

According to the Commission, the EU has exclusive competence in areas where a duty to act is imposed on the Union by the TFEU. These areas relating to the creation of the internal market, such asfor example freedom of movement of goods, persons, services and capital, the common commercial policy, competition,the common agricultural policyand transport policy. However, this conception of exclusive competence is often considered too wide and it is challenged by many divergent interpretations.

The TFEU gives a possibility to member states to establish enhanced cooperation in some areas except those of the exclusive competence of the Union. Authorisation to proceed with enhanced cooperation requires a third of the member states and will be granted by the Council.

Enhanced cooperation means that the participating states can voluntarily deepen their cooperation in some areas. The states not participating can take part in Council meetings but they will not be involved in the decision-making. The system was preceded by the principle of “multi-speed Europe” set out by the Treaty of Amsterdam.

4. INSTITUTIONS AND BODIES OF THE EUROPEAN UNION

INSTITUTIONS OF THE EU

Legislative institutions

• European Parliament
• Council of the European Union
• European Commission

Other institutionsdealing with the EU Law

• European Council
• Court of Justice of the European Union
• General Court

Advisory bodies

• Committee of the Regions
• European Economic and Social Committee

EUROPEAN PARLIAMENT

The European Parliament (EP) negotiates and adopts legislative acts in most cases together with the Council of the European Union. It has 751 members. They are elected by the citizens of the member states by direct universal suffrage every five years, no country can have fewer than 6 or more than 96 MEPs. The MEPs represent political groupings. The Parliament works by 20 parliamentary standing Committees.

Legislative powers of the Parliament in the law-making process

There are several legislative procedures in the EU, and the legislative role of the Parliament depends on which one is used. Originally the Parliament was an advisory and supervisory body in the European Communities, in conformation with the consultation procedure. In this procedure the Council consults the Parliament before it adopts an act. In the assent procedure the Council has to obtain the European Parliament's assent before certain very important decisions are taken.