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Legal Limits On European Law Making Notes

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Legal limits on European law-making:

1. Competence
Article 5(1) TEU- The limits of Union competences are governed by the principle of conferral.
The use of Union competences is governed by the principles of subsidiarity and proportionality.
Note the distinction between Article 114 TFEU, which permits qualified majority voting, and
Article 113 TFEU, which requires that the Council act unanimously. The breadth of EU policy making may be demonstrated by Directive 93/13 EEC, Unfair Contract Terms, having a concern both for harmonisation issues but equally for consumer protection.
Equally, not that even in the absence of specific EU legislation, the Treaty may have a wide impact: Article 18 prohibits any discrimination on grounds of nationality.

Germany v Parliament and Council (Tobacco Advertising)

EU introduces Directive which bans tobacco advertising.
Germany argues that they do not have competence in this area, as tobacco advertising is not an activity which extends beyond the borders of individual member states (it tends to be on static objects). It is not enough for the internal market merely to be mentioned for the purposes of Article 114- it must actually contribute.
The Court HELD
- A measure adopted on the basis of Article 114 must genuinely have as its object the improvement of the conditions for the establishment and functioning of the internal market.
- If this condition is fulfilled, the legislature cannot be prevented from relying on that legal basis on the ground that public health protection is a decisive factor in the choices to be made.
- It is clear that differences in advertising may cause barriers to trade. Equally, the trend to increasing hostility to tobacco advertising in Member States makes it probable that obstacles to the free movement of persons will arise in the future.
However, this is not the case for 'static' advertising, in hotels, restaurants and cafés.
- The distortion must be appreciable: must actually contribute to eliminating appreciable distortions of competition.
- RESULT- Directive annulled in its entirety.

QUESTION: Do subsequent cases indicate a general power to regulate the internal market?
Craig argues that the limits on Article 114 have been loosened or relaxed by subsequent case law. Craig: Two possible readings of the case law delineating the scope of Article 114 TFEU
The positive reading :
Article 114 is central to the scheme of the treaty, the principle vehicle for the passage of harmonising measures. It is therefore legitimate for it to be given a broad interpretation, so as to provide the legal base for EU measures designed to enhance the establishment and functioning of the internal market. It is therefore legitimate for it to be given a broad interpretation, so as to provide the legal base for EU measures designed to enhance the establishment and functioning of the internal market.
The cautious reading:
While adhering to the (positive) decision in Tobacco advertising in form, subsequent case law has in reality undermined it in substance, and comes close to affording the EU a general regulatory power. This is so for a number of reasons: the ECJ has been willing to find some connection between national disparities and the four freedoms so as to trigger Art 114,
without too close an inquiry as to the reality of the impact on those freedoms; it has legitimated resort to Article 114 where there are national disparities which could in the future impact on the internal market, subject only to the relatively lax standard that obstacles to trade must be likely to result; and it has affirmed that recourse to 114 is possible where the preceding conditions are met, notwithstanding that protection of, for example, public health is a decisive feature of the contested legislation.

Ex parte BAT-

The likelihood of member states implementing divergent rules on labelling and tar yields justified a Directive harmonising the area.
Weatherill: there were significant arguments to the effect that the size required under the Directive for the health warning labels precluded a trader labelling effectively in compliance with the rules of more than a small number of Member
The Court dealt with the subsidiarity issue by simply cross-referring to the paragraphs of the judgement which dealt with proportionality.

Swedish MatchAn attack on the banning of the placing on the market of snus. The litigation was driven by a Swedish producer of snus unable to sell the product anywhere in the --EU apart from Sweden itself, who had negotiated a derogation in its act of accession.
The Court ruled that the presence of public health considerations as a decisive factor in the shaping of the regime did not deprive it of a valid basis in Article 95
EC where conditions for recourse to that Article were satisfied.
It was common ground that there were differences at the time of adoption of that directive, between the laws, regulations and administrative provisions of the
Member States.
Thus, the conditions were satisfied.
The CONTRAST with the original Tobacco Advertising case is that the requirement of a genuine intention to improve the conditions for the establishment and functioning of the internal market was found.
Weatherill: a revealing case: even a ban on a product may fall within the legitimate scope of harmonisation measures. This improves the functioning of the market as to safe products. There is a 'kinder' reading of the case, that the specific ban fell within the general legislative measure. One bans unsafe products in order to foment the trade of safe products. However, this is still extraordinarily permissive, and encourages the drafting of legislative measures which are broad not targeted.

Germany v Parliament v Council-

The Tobacco Advertising Directive annulled in Case C-376/98 was replaced. This new Directive was more narrowly drawn, focusing in particular on obstacles to free movement resulting from differences in national rules governing tobacco advertising. It focused particularly on the obstacles arising from advertising in the press and distortions of competition arising from sponsorship of sporting events.
The Court found this Directive to be valid: the measure genuinely had the object of improving the conditions for the functioning of the internal market.
Interestingly, the judgment set the bar for harmonization of laws in anticipation of future obstacles to trade as it being 'likely' they would emerge.


A regulation was adopted which aimed to establish a common framework for the imposition of network charges throughout the EU.
This was based on the probability that the issue of high charges while travelling abroad would eventually be tackled by the Member States individually: the EU
chose to act in order to forestall measures which would probably have been taken by the Member States based on their residual competence as regards consumer protection rules. (Likely)
A divergent development of national laws seeking to lower retail charges only,
without affecting the level of costs for the wholesale provision of Communitywide roaming services, would have been liable to cause significant distortions of competition and to disrupt the orderly functioning of the Community-wide roaming market. (Appreciable)

Weatherill: odd because why would MS lower roaming charges? IT would only harm the individual MS.

Inuit Tapiriit Kanatami-

A regulation was imposed with the purpose of establishing a harmonised and very restrictive set of rules concerning the placing on the market of seal products.
Held, that the measure was within the competence of the EU.

Phillip Morris v Secretary of State for Health--A tobacco directive appeared by its terms to allow the Member States to create further regulation, in relation to the standardisation of packaging of tobacco products.
If Article 24(2) of Directive 2014/40 were interpreted as permitting Member
States to maintain or introduce further requirements in relation to all aspects of the packaging of tobacco products, including those which have been harmonised by the directive, that would amount, in essence, to undermining the harmonisation effected by the directive with regard to the packaging of those products. Indeed, the consequence of such an interpretation would be to permit
Member States to replace the requirements relating to packaging which have been harmonised by the directive with other requirements, introduced at national level, and to do so in breach of the rules laid down in Article 114(4) to
(10) TFEU relating to the retention and introduction of national provisions derogating from a harmonisation measure.
However, the Court accepted the interpretation which rendered the Directive compatible- that the Article permitting creation of further protection only applies to aspects of packaging which have not yet been harmonised. As such, there was no inconsistency with Article 114.
This case is IMPORTANT for challenging the idea that harmonisation is based in economics and not in social policy- expressly permitting the creation of new,
higher standards in some areas seems to be encouraging the distortions which the Court will eventually have to act on.
AG Kokott: 'Certainly, this kind of partial harmonisation means that products cannot automatically be exported from one Member State to another, even if their labelling and packaging complies with the requirements of the Directive in every respect, as each Member State may impose further requirements for nonharmonised aspects of product packaging. Nevertheless, such partial harmonisation also undeniably offers advantages for the functioning of the internal market, since whilst it does not eliminate all obstacles to trade, it does eliminate some.'

Weatherill- What is 'likely'? And what is appreciable?
It seems that likely must involve anticipated development of Member States laws regulating their markets further. Likely needs a trigger. Weatherill:
Central thesis: The pattern has become circular: the Court presents a formula which defines the proper scope of harmonisation and which sets out the control exercised by the principles of subsidiarity and proportionality, the EU legislature duly adopts the approved but reliably vague vocabulary, and provided the drafting is well-chosen, the Court has no plausible basis on which to set aside the legislative act.-

Whilst on one level, this seems like a constitutionally proper standard of review,
the Court places enormous weight on slippery adjectives and adverbs in an attempt to define the limits of Article 114. 'Genuinely', 'appreciable', 'direct'
The Treaty denies the Court an operationally useful role in checking the limits of
Article 114. It is able to exploit the broad and fuzzy contours of Article 114 to convert compliance with the principle of conferral into little more than a drafting exercise.

The effect of the Lisbon reforms:-

The Court's function was decided not to be adjusted, rather that it needed to be supplemented by political controls. Thus, for the first time national parliaments are formally granted a direct involvement in the EU law-making process.
The yellow (third of national parliaments think non-compliant with principle of subsidiarity and orange (majority) system introduced.
The brandishing of either will amount to political pressure which is damaging if not fatal to the proposed measure's vitality.
Equally, if the objections of the national Parliaments are swept aside, it may be that the court in its ex post control will bury the legislation.

Article 352 v 114-

Article 352 is commonly accepted as the threat to the Union, but it has been constrained by the Court: it may not be used where a sector specific legal base is available. This was then inserted into Article 352(3) in specific form: the use of
Article 352 shall not entail harmonisation of Member States' or laws in cases where the Treaties exclude such harmonisation.
Article 114 on the other hand is not so limited. This *may* indicate a certain lack of appreciation of the bit of Article 114.
The Bunderverfassungsgericht's suspicion seems to only be applied to 352.

Criticisms:National Parliaments tend to be dominated by national executives, so need to be careful in identifying what fresh critical thinking national Parliaments may be able realistically to contribute, and what they may not. Proportionality

Article 5(4) TEUUnder the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.


A case concerning pigmeat. The argument was made that it was disproportionate for the entire deposit to be sacrificed because a subsidiary obligation has been breached. Breach arose out of the failure to send certain storage operations within the required time.
Held, that the measure was disproportionate as it does not permit the penalty for which it provides to be made commensurate with the degree of failure to implement the contractual obligations or with the seriousness of the breach of those obligations.


An obligation to purchase skimmed-milk powder at an inflated price to get rid of surplus stocks.
It was held that the obligation was not necessary in order to attain the objective in view, namely the disposal of stocks of skimmed milk powder. The obligation to purchase at a disproportionate price constituted a discriminatory distribution of the burden of costs between the various agricultural sectors.
AG Capotorti:
 …the principle of proportionality means that the burdens imposed on the persons concerned must not exceed the steps required in order to meet the public interest involved.
 Proportionality breach occurred because the sacrifice could have been distributed more evenly if it had been indirectly shared by all citizens of the Community by making the Community budget bear the whole of the cost, and the unnecessary cost of the remedying procedure.

Galileo Zaninotto v Ispettorato Centrale-

The legality of a measure adopted in a sphere in which the Community has legislative discretion can only be affected if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue.
The measure here, the criterion of yield per hectare, is not manifestly inappropriate as it is designed to place the burden on those who are principally responsible.

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