A Critical Mind: Hanns Ullrich’s Footprint in Internal Market Law, Antitrust and Intellectual Property 3662659735, 9783662659731

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MPI Studies on Intellectual Property and Competition Law  30

Christine Godt Matthias Lamping  Editors

A Critical Mind Hanns Ullrich’s Footprint in Internal Market Law, Antitrust and Intellectual Property

Max Planck Institute for Innovation and Competition

More information about this series at http://www.springer.com/series/7760

MPI Studies on Intellectual Property and Competition Law Volume 30

Edited by Josef Drexl Reto M. Hilty Joseph Straus

Christine Godt • Matthias Lamping Editors

A Critical Mind Hanns Ullrich’s Footprint in Internal Market Law, Antitrust and Intellectual Property

Editors Christine Godt Law Institute Carl von Ossietzky University Oldenburg Oldenburg, Germany

Matthias Lamping Max Planck Institute for Innovation and Competition Munich, Germany

ISSN 2191-5822 ISSN 2191-5830 (electronic) MPI Studies on Intellectual Property and Competition Law ISBN 978-3-662-65973-1 ISBN 978-3-662-65974-8 (eBook) https://doi.org/10.1007/978-3-662-65974-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer-Verlag GmbH, DE, part of Springer Nature. The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany

Preface

This book aims to outline the academic footprint of Hanns Ullrich. It is not a classic ‘Festschrift’—he was presented with one of those in 2009. The purpose of this sequel is to shine a spotlight on Hanns Ullrich’s outstanding thoughts on law and policy, and illustrate how they have inspired other scholars. He may not think of himself this way, but in many areas Hanns Ullrich has become known as a trailblazer. He loves to challenge the prevailing opinion, picking holes in arguments and ideas which are thought of as incontestable. The emphatic way in which he intervenes in discussions triggers reflexive contemplation and provides food for thought. It is for this reason that others devour his publications, in search of alternative ways to think and argue about the integration of markets, the relationship of competition and intellectual property, innovation, technology development, and policy balancing in economic law. This book tries to trace how the ‘five major aspects of his leitmotif’, as impeccably described by Peter Behrens in his personal preface to Hanns Ullrich’s Festschrift of 2009, have played out in more recent scholarship. We therefore asked disciples, colleagues, friends, and professional companions to honour this outstanding academic personality by participating in a symposium at Hanns Ullrichs’ preferred conference location Schloss Ringberg in February 2020, and by sharing their take on his academic legacy in this book. Hanns Ullrich’s major research interests serve as a basis for the structure of this book: First, he is and has always been a believer in a strong European legal order which confines both markets and states, for the sake of individual freedom—yet being well aware of the necessities of the power of state, and the risks of collusion of state and economic power. For purely formal reasons, we devote two separate chapters to competition and intellectual property, although Hanns Ullrich has always seen them as two sides of the same coin. The exploration of the interface between these two areas became the heart of his particularly outspoken position on regulatory policy. To him, these institutions are upheld for a purpose. Neither one of them, competition or intellectual

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property, is a given fact. They need to be justified in a deliberate process in which opposing policy goals are to be balanced. Fourth, Hanns Ullrich has always been interested in new technologies and how they can be integrated into the legal and regulatory framework. Whether it is software, information technologies, biotechnology, or artificial intelligence, he has never shied away from getting to the bottom of it. Last but not least, he has a passion for international economic integration as a means to secure peace and ensure economic development. Hanns Ullrich has become an inexhaustible source of inspiration for other academics. While we are well aware that some important contributions of his have not been addressed in this book—such as his analysis of the European patent and court system, intergovernmentalism as a source of national manoeuvring, and the tension between research and industrial politics, among others—those that have been taken up by the authors present conclusive evidence of how his ideas have provided inspiration for new or alternative academic thought. What we hope this book shows is that Hanns Ullrich belongs to a rare species of academics. He wears his heart on his sleeve and is always up for a controversial debate. It is this tenacity paired with his great passion that has allowed him to contribute so much to the progress of thought in so many areas of law. Oldenburg, Germany Munich, Germany

Christine Godt Matthias Lamping

Contents

Part I

European Legal Order

Market Access and Competition Rules of the EU: Was Their Constitutionalization Based on a Judicial Error? . . . . . . . . . . . . . . . . . . Peter Behrens

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Renewing the Van Gend Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thomas Jaeger

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Why Is the Regulation of Enforcement Through the EU So Difficult? . . Hans-W. Micklitz

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Part II

Competition

On the Political Nature of Competition Law: A Critical Essay . . . . . . . . Oles Andriychuk

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Competition Law and Political Influence of Large Corporations: How Antitrust Analysis Can Capture the Link Between Political and Economic Institutions That Affect Market Competition . . . . . . . . . . 111 Francisco E. Beneke Avila Cutting into Diamonds: Competition Law, IPR, Trade Secrets and the Case of ‘Big Data’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Jens Schovsbo and Olga Kokoulina FRAND Declarations and the ‘Third-Party Effect’: A Contract Law and Competition Law Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Matthias Leistner and Lukas Kleeberger In Rem Effect of Licensing Declarations: Hanns Ullrich’s Traces in FRAND Case Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Peter Georg Picht

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Part III

Contents

Intellectual Property

Mapping the Intangible Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Adrian Kuenzler and Gregor Rauch Exclusive Rights for a Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Matthias Lamping From a Rights-Based to a Procedural Approach: Re-Purposing the Exercise of Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . 237 Michael Grünberger How to Stay Modern Feudalism? Comparing EU and US Methodologies in Containing Post-Sale Restraints by Way of IP Exhaustion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Christine Godt Virtual Patent Networks and Their Network Effects . . . . . . . . . . . . . . . 303 Alexander Peukert The Public Interest in Compulsory Licensing: Examining the Complementarity Between IP and Competition Law . . . . . . . . . . . . 331 Geertrui Van Overwalle and Amandine Léonard Part IV

Data Economy

Digital Sovereignty and Governance in the Data Economy: Data Trusteeship Instead of Property Rights on Data . . . . . . . . . . . . . . . . . . . 369 Ingrid Schneider Incentives for Data Sharing as a Case on (Regulating) Knowledge Externalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 Daria Kim Some Remarks on the Subjective Profiles of the EOSC Project, Especially from the Perspective of IP Law . . . . . . . . . . . . . . . . . . . . . . . 441 Vincenzo Di Cataldo Part V

Artificial Intelligence

Inventorship in the Age of Artificial Intelligence . . . . . . . . . . . . . . . . . . . 455 Alfred Früh Artificial Intelligence and the Technicality Requirement of Patent Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471 Rainer Moufang Patent Infringement by Development and Use of Artificial Intelligence Systems, Specifically Artificial Neural Networks . . . . . . . . . . . . . . . . . . . 489 Christian Heinze

Contents

Part VI

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Digital Media

Copyright, News, and ‘Information Products’ Under the New DSM Copyright Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 Gustavo Ghidini and Francesco Banterle Media, Legal Tech and Modern Copyright Law . . . . . . . . . . . . . . . . . . . 535 Thomas Hoeren Media Policy and Copyright in Europe: The Progressive Expansion of the Law for Broadcasters to Online Platforms . . . . . . . . . . . . . . . . . . 557 Giuseppe Mazziotti Part VII

Biotechnology

Gene Editing Technology Patents or Monopolization of Scientific Knowledge and Health Care? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593 Agnieszka A. Machnicka A Comprehensive Approach to Plant Variety Rights and Patents in the Field of Innovative Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619 Axel Metzger and Herbert Zech Part VIII

Global Market Order

TRIPS Through a Military Looking Glass . . . . . . . . . . . . . . . . . . . . . . . 657 Peter Drahos A Transactional Approach to Intellectual Property . . . . . . . . . . . . . . . . 681 Henning Grosse Ruse-Khan Manufacturing for Export: A TRIPS-Consistent Pro-Competitive Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705 Carlos M. Correa and Juan I. Correa Reductionist Intellectual Property Protection and Expansionist (and ‘Prodevelopment’) Competition Rules as a Human Rights Imperative? Enhancing Technology Transfer to the Global South . . . . . 733 Klaus D. Beiter Caught Between Post- and Neo-Colonialism: IP for Traditional Knowledge, Traditional Cultural Expressions and Indigenous Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785 Thomas Dreier

Part I

European Legal Order

Market Access and Competition Rules of the EU: Was Their Constitutionalization Based on a Judicial Error? Peter Behrens

Contents 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Grimm’s Critique of the ECJ’s Jurisprudence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 From ‘Common Market’ to ‘Internal Market’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Legal Content of the ‘Internal Market’ Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Treaty Interpretation by the ECJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 The Market Access Rules (Economic Freedoms) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Direct Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 Supremacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Competition Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Direct Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 Supremacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Elements of Grimm’s Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 The Court’s Method of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 The Court’s Alleged Self-Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Lack of Democratic Legitimacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Grimm’s Proposal for a Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Prof. Dr. Peter Behrens, MCJ (NYU), is Professor Emeritus at the Faculty of Law of the University of Hamburg and member of the Board of Directors of the Europa-Kolleg Hamburg. This contribution is partly based on the author’s previous contribution to the book “The Internal Market 2.0” edited by Sacha Garben und Inge Govaere and published by Hart 2020. The author appreciates the publisher’s reprint permission. P. Behrens (*) University of Hamburg, Hamburg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 C. Godt, M. Lamping (eds.), A Critical Mind, MPI Studies on Intellectual Property and Competition Law 30, https://doi.org/10.1007/978-3-662-65974-8_1

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1 Introduction The tension between intellectual property rights (IPR) protection and the market access and competition rules of the EU has been the focus of Hanns Ullrich’s lifelong research activities. He has always insisted that individual rights based on IPRs cannot be enforced contrary to the rules granting free market access and protecting competition but only within the framework of these rules, on the basis of which the internal market was established. Since the European Court of Justice (ECJ) has constitutionalized these rules by interpreting them so as to grant individual rights, potential conflicts between IPRs and the economic freedoms or the competition rules have proven to be conflicts between individual rights granted by primary (Treaty) law of the Union and individual rights granted by national laws of Member States. To the extent that EU law takes precedence over national laws, this constitutionalization of the internal market therefore limits the IPR protection granted by the national laws enacted by Member States’ legislatures. Hanns Ullrich’s research focus may therefore be said to have always been focused on the relationship between EU law and national laws, and this is even true beyond the specific field of IPR protection. Already his very first monograph (his doctoral thesis) was devoted to a central issue of European competition law in its formative phase, namely the relationship between centralized (administrative) enforcement of the competition rules by the Commission and their decentralized (private) enforcement by the Member States’ civil courts (Art. 9 of Regulation 17/62).1 I still remember with great admiration the time when he was preparing his book for publication while—50 years ago—we were fellow students in the postgraduate ‘Master of Comparative Law’ program at New York University (NYU) offered to foreign law students, a program that has—unfortunately—been discontinued in the meantime. Throughout the entire academic year that we spent at NYU, Hanns resisted all the attractive cultural temptations of the ‘Big Apple’ and instead with astounding discipline devoted all his spare time to editing his monograph for publication. The logical precondition that triggered his analysis was the early jurisprudence of the European Court of Justice (ECJ) that had constitutionalized the economic freedoms as well as the competition rules. It seems, therefore, not inappropriate to honor Hanns by a contribution which attempts to invalidate the heavy criticism which the former judge of the Federal Constitutional Court of Germany Dieter Grimm has recently launched against the ECJ’s constitutionalization of the internal market.2 His arguments have met with widespread attention and they deserve careful analysis.

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Hanns Ullrich, Das Recht der Wettbewerbsbeschränkungen des Gemeinsamen Marktes und die einzelstaatliche Zivilgerichtsbarkeit (Duncker & Humblot 1971). 2 Dieter Grimm, Europa ja – aber welches? – Zur Verfassung der europäischen Demokratie (Beck 2016).

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2 Grimm’s Critique of the ECJ’s Jurisprudence Grimm argues that the ECJ’s interpretation of the economic freedoms and the competition rules (which include state aid control), in particular by extending the economic freedoms from rules against discrimination to general prohibitions of restrictive regulations, has overly limited Member States’ political control even in areas of law which at national level would be subject to the democratic legislative decision-making process and hence to the changing political preferences of national parliaments. By turning political issues into legal questions, Grimm accuses the ECJ of having empowered itself and caused the much-deplored democratic deficit of the EU, which can, for practical reasons, hardly be cured by amendments to the Treaty that would correct the ECJ’s jurisprudence. The basic error which has led the ECJ to the constitutionalization of the internal market law was, according to Grimm, an incorrect method of interpretation: Instead of dealing with the Rome Treaty as an instrument of public international law, he argues that the Court bent it into an integration constitution. Only by erroneously interpreting the economic freedoms and the competition rules as elements of a supranational constitution was the ECJ, according to Grimm, able to establish their direct effect in and supremacy over Member States’ national laws. Is the internal market as developed by the jurisprudence of the ECJ therefore based on a fundamental judicial error of interpretation? In order to refute his line of reasoning, it is indispensable to again evaluate the ECJ’s reasoning in the wellknown leading cases which established the principles of the Treaty’s direct effect and the supremacy of the economic freedoms and the competition rules. After a short account of the notions of ‘common market’ and ‘internal market’ within the framework of the Treaty, this paper will set out their substantive legal content. This is followed by an analysis of the ECJ’s interpretation of the Treaty on which the constitutionalization of the internal market is based. Against this background, the elements of Grimm’s critique of the ECJ’s interpretation of the Rome Treaty as well as the remedy that he has suggested will be assessed. Finally, the conclusions at the end of the contribution will summarize the critique of Grimm’s critical arguments.

3 From ‘Common Market’ to ‘Internal Market’ The establishment of a market that would cover all Member States has been the leitmotif of the Treaty in all its different versions. The Treaty establishing the European Economic Community (EEC) of 1957 (Treaty of Rome) declared the ‘establishing of a common market’ to be a ‘task’ of the Community (Art. 2). It was only in the course of time that the ECJ began to define the ‘common market’ in terms of an ‘internal market’, for the first time in the Gaston Schul judgment of

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5 May, 1982.3 This judgment was triggered by a request for a preliminary ruling on the question whether it was compatible with Art. 95 EEC [now Art. 110 TFEU] on the prohibition of discriminatory taxation, if a Member State of importation imposed value-added tax on goods imported by a private person from another Member State, while no such tax was levied on the supply of similar products by a private person within the territory of the Member State of importation, and the Member State of importation did not take into account the value-added tax paid in the Member State of exportation to the extent to which the residual part of the value-added tax paid in the Member State of exportation was still contained in the value of the imported product. The starting point of the ECJ’s reasoning was the notion of the ‘common market’ which the Court defined in the following terms:4 The concept of a common market as defined by the Court in a consistent line of decisions involves the elimination of all obstacles to intra-Community trade in order to merge the national markets into a single market bringing about conditions as close as possible to those of a genuine internal market.

From this proposition, the ECJ drew the following conclusion, which guaranteed a single internal market for products even though the imposition of value-added tax was still a matter of Member States’ national laws:5 Accordingly, in so far as [. . .] an imported product supplied by a private person may not lawfully benefit from a remission of tax on exportation and so remains burdened upon importation with part of the value-added tax paid in the Member State of exportation the amount of value-added tax payable on importation must be reduced by the residual part of the value-added tax of the Member State of exportation which is still contained in the value of the product when it is imported.

The Treaty on European Union of 1992 (Treaty of Maastricht) as well as its amended version of 1997 (Treaty of Amsterdam) nevertheless continued to use the term ‘common market’ in Art. 2 of the ‘Treaty establishing the European Community’ (EC) as it now came to be named. However, Art. 13 of the ‘Single European Act’ of 19866 had already amended the EEC Treaty by adding an Art. 8a providing for the establishment of an ‘internal market’ (by the end of 1992), the definition of which followed closely the notion developed by the ECJ: ‘The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty.’ This provision then became Art. 7a EC Treaty (Maastricht version) and later Art. 14 EC Treaty (Amsterdam version). When the Treaty of Lisbon of 2007 replaced the EC Treaty (which in turn had replaced the original EEC Treaty) by the Treaty on the Functioning of the European Union (TFEU), the term ‘common market’, which used 3

CJEU, 05.05.1982, Case C-15/81 Gaston Schul v Inspecteur der Invoerrechten en Accijzen [1982] ECR-01409 ECLI:EU:C:1982:135. 4 Ibid para 33 (emphasis added). 5 Ibid para 34 (emphasis added). 6 OJ of 27.06.1987, L-169/1.

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to define the economic objective of the EEC and the EC respectively, was dropped. Instead, the Lisbon Treaty, which now lays down the EU’s objectives in Art. 3(3) EU Treaty, uses the term ‘internal market’. The content of this concept is now defined in Art. 26(2) TFEU, which copies the wording initially introduced by Art. 13 of the of Single European Act of 1986 and later adopted by the Maastricht and the Amsterdam versions of the Treaty. Hence, the term ‘common market’ has now been fully replaced by the term ‘internal market’.

4 The Legal Content of the ‘Internal Market’ Concept According to Art. 14(2) EC Treaty in its Amsterdam version of 1997, the ‘internal market’ comprises an area without internal frontiers ‘in accordance with the provisions of this Treaty’ (i.e. the EC Treaty). The same approach was already reflected in the initial EEC Treaty of Rome, whose Art. 2 defined the establishing of a ‘common market’ as a ‘task’ of the Community that should, according to Art. 3, be accomplished ‘as provided in this Treaty’. The meaning of ‘common market’ and ‘internal market’ is therefore identical, since the legal contents of both is determined by a reference to the economic freedoms and the competition rules laid down in the Treaty (as interpreted by the ECJ). The economic freedoms were already expressly referred to in Art. 3(a) and (c) EEC Treaty; the same reference is now mentioned in Art. 26(2) TFEU. And Art. 3(f) EEC also provided that the establishment of a common market should comprise ‘the institution of a system ensuring that competition in the common market is not distorted’; this principle is now laid down in Protocol No. 27 on the internal market and competition, which was annexed to the Lisbon Treaty and has the same legal status as the TFEU itself.7 Within the context of economic integration, the economic freedoms, which are designed to open national markets of Member States, and the competition rules, which ensure effective competition of market players, have always mutually complemented each other. Both sets of rules were from the outset designed to establish a market that comprises all Member States of the Union.8 As a result, the continuity and validity of the ECJ’s jurisprudence regarding market access and competition rules from the initial EEC Treaty of Rome to the TFEU of Lisbon is unbroken. In particular, the ECJ’s Gaston Schul judgment shows that the term common market was already to be understood in

7 The High Contracting Parties to the Protocol expressly stated “that the internal market as set out in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted.” 8 See in this regard CJEU, 25.10.1977, Case C-26/76 Metro SB-Großmärkte GmbH & Co KG v Commission [1977] ECR-01875, ECLI:EU:C:1977:167, para 20: “The requirement contained in Articles 3 and 85 of the EEC Treaty that competition shall not be distorted implies the existence on the market of workable competition, that is to say the degree of competition necessary to ensure the observance of the basic requirements and the attainment of the objectives of the Treaty, in particular the creation of a single market achieving conditions similar to those of a domestic market.”

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the sense of the internal market definition, i.e. in the sense of a market free of national barriers to transactions between economic entities of different Member States. Only those measures of the Member States affecting cross-border economic transactions are valid which, exceptionally, could be justified, in accordance with the provisions of the Treaty or the ECJ’s jurisprudence,9 by ‘mandatory requirements’ (i.e. public policy considerations in the general interest) provided the protective measures are proportionate (capable of protecting the relevant public interest, necessary to provide such protection and adequate in terms of the least restrictive alternative). Whereas the market access rules (i.e. the economic freedoms) are coached in terms of prohibitions primarily addressed to Member States with the aim of eliminating or preventing all (non-justifiable) measures which impede cross-border transactions between market participants, the competition rules contain prohibitions which, by their very wording, are addressed directly to undertakings in order to prevent market strategies which restrict competition between them and thus consumer freedom of choice. Immediately after the entry into force of the Rome Treaty, the question naturally arose as to who should be competent for enforcing these prohibitions. The EEC Treaty in its original Rome version provided for a right of the Commission (Art. 169 EEC, now Art. 258 TFEU) and of the Member States (Art. 170 EEC, now Art. 259 TFEU) to bring an action for violation of the Treaty (infringement action) against any Member State that had unlawfully interfered with any of the economic freedoms. Apart from that, the Commission could only take legislative action by submitting to the Council, on the basis of Art. 33(7) EEC (pertaining to the freedom of movement of goods) or Art. 63 EEC (pertaining to the freedom to provide services), proposals for liberalization directives10 or, more generally, on the basis of Art. 100 EEC (now Art. 115 TFEU), directives for the approximation (harmonization) of national laws which ‘directly affect the establishment or functioning of the common market’ (because national differences in law may in themselves constitute disincentives if not obstacles to cross-border trade). However, since no direct vertical effect in favor of individuals was initially attributed to the directives before the ECJ's decision in van Duyn,11 the rights based on directives would have been dependent on the willingness of the Member States to transform such directives into their respective national legal systems. Such rights would then not be based directly on Community law, but rather on the national laws of Member States as adjusted to the provisions of directives. The instrument of

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See in this regard already CJEU, 20.02.1979, Case C-120/78 Rewe-Zentralverwaltung v Bundesmonopolverwaltung für Branntwein – ‘Cassis de Dijon’ [1979] ECR-00649, ECLI:EU: C:1979:42, para 8; in more detail CJEU, 30.11.1995, Case C-55/94 Gebhard v Consiglio dell’ordine degli avvocati e procuratori di Milano [1995] ECR I-04165, ECLI:EU:C:1995:411 para 37. 10 A typical early example was eg Directive 70/50/EEC on the abolition of measures which have an effect equivalent to quantitative restrictions on imports, OJ of 24.10.1979, L-13/29. 11 CJEU, 04.12.1974, Case C-41/74 Yvonne van Duyn v Home Office [1974] ECR-01337, ECLI: EU:C:1974:133, para 12.

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directly applicable regulations was initially not available according the original version of the Treaty of Rome (Art. 110a EEC, now Art. 114 TFEU), it was introduced only later by the Single European Act of 1986. As far as the competition rules were concerned, the Commission, as ‘guardian of the Treaty’, was also obliged to ensure their application under the control of the ECJ ‘in order to ensure the proper functioning and development of the common market’ (Art. 155 EEC, now Art. 17 TEU). To this end, Regulation 17/62/EEC of the Council (Cartel Regulation)12 empowered the Commission to enforce the prohibitions contained in the competition rules directly against undertakings, thereby ensuring their uniform application. Thus, the competence to enforce all internal market law (market access and competition rules) initially lay primarily with the Community institutions, i.e. the Commission and, where referred to it by the Commission or a Member State, the Court of Justice. As is well known, this changed fundamentally when the ECJ began to receive the first requests for preliminary rulings from national courts on the interpretation of the economic freedoms and the competition rules.13 Pursuant to Art. 177 of the EEC Treaty (now Art. 267 TFEU), the Court of Justice was from the outset competent to give an authoritative interpretation of the prohibitions contained in the market access and competition rules whenever a Member State court considered it necessary for the Court to give such an interpretative ruling in order to give its own judgment. Art. 177 EEC thus appeared to imply that, in order to be able to rule on a dispute pending before it, a national court should be required to apply, on a case-by-case basis, the provisions of Community law establishing the common market. It was therefore reasonable to assume that the Treaty of Rome thus presupposed the possibility of the direct applicability of these provisions in the Member States.14 It could be deduced from Art. 177 of the EEC Treaty that the prohibitions contained in the economic freedoms and the rules on competition must also be enforceable before the national courts on the initiative of the economic operators benefiting from them, without prejudice to the possibility of infringement actions by the Commission or the Member States.

12

Regulation (EEC) No 17/62 of the Council, First Regulation implementing Articles 85 and 86 of the Treaty, OJ of 21.02.1962, No 13/204. 13 See for an in-depth historical analysis of the background of the ECJ’s emerging jurisprudence Morten Rasmussen, ‘Revolutionizing European Law: A History of the Van Gend en Loos Judgment’ (2014) ICON Vol 12 No 1 136-161. 14 It is worth noting that the Schuman Declaration of 1950 for the creation of the European Coal and Steel Community already provided for a High Authority and a President whose decisions should apparently have direct effect, since they were supposed to be binding not only for the Member States but also “in France, in Germany and the other participating countries” (emphasis added).

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5 The Treaty Interpretation by the ECJ 5.1 5.1.1

The Market Access Rules (Economic Freedoms) Direct Effect

As is well known, this hypothesis was tested in 1962 in the Van Gend & Loos case15 in relation to the free movement of goods. The question was whether the increase in import duty applied by the Netherlands after the entry into force of the EEC Treaty to a certain category of goods imported from another Member State infringed the free movement of goods, in particular Art. 12 of the EEC Treaty, which prohibited any increase in import duties during the transitional period, after which duties were to be abolished altogether. The importer, Van Gend & Loos, considered the levying of the increased import duty to be unlawful, not under Netherlands law, since the increase in the duty levied by the Netherlands tax authorities was justified by a change in the relevant national law, but as a result of an infringement by the Netherlands of Art. 12 EEC. The breach of the standstill obligation contained in that provision could have led Van Gend & Loos to request the Commission to initiate infringement proceedings against the Netherlands, which could have resulted in a judgment finding that Art. 12 of the EEC Treaty had been infringed. Had the Netherlands behaved in accordance with the Treaty, the Dutch customs tariff legislation would then have been corrected accordingly. Instead, after the dismissal of its objection against the imposition of the increased customs tariff by the Inspector of Customs and Excise, Van Gend & Loos lodged an appeal before the competent Dutch administrative court against the Netherlands Inland Revenue Administration alleging infringement of Community law. The Dutch court was therefore confronted with the question of whether Art. 12 only obliged the Member States or whether the standstill obligation also corresponded to a direct (subjective) right of the beneficiaries thereof, which national courts had to safeguard. It is a historical merit of the Dutch court to have recognized that this was a question of the interpretation of the EEC Treaty that was relevant to the decision and which fell within the jurisdiction of the ECJ under Art. 177 EEC. The court therefore felt obliged to ask the Court of Justice for a preliminary ruling. In his opinion, Advocate General Roemer questioned the admissibility of the request. He suggested that a distinction must be made between the interpretation of a provision in the sense of ‘the general construction of the meaning of a provision, the sense and purpose of which are not clear from the wording’, and its application in a specific case, i.e. the determination of ‘whether certain facts fall within a particular legal provision and the resulting evaluation of those facts’.16 Since the question of

15

CJEU, 05.02.1963, Case C-26/62 Van Gend & Loos v Netherlands Inland Revenue Administration [1963] ECLI:EU:C:1963:1. 16 See CJEU, Case C-26/62, Van Gend & Loos v Netherlands Inland Revenue Administration [1962] ECLI:EU:C:1962:42, Opinion of AG Roemer II.1.

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the Netherlands court had, according to the Advocate General, as its object ‘the direct application [of Art. 12 EEC] to a specific case’, he argued that it was outside the limits of the ECJ’s jurisdiction to interpret the Treaty. The Advocate General therefore suggested that the Court must refrain from making any determination as to whether the Netherlands’ conduct in question was compatible with the Treaty or constituted an infringement thereof. Such a determination could only be made in the context of infringement proceedings under Art. 169/170 of the EEC Treaty. However, the reference for a preliminary ruling from the Netherlands court concerned the ‘internal effect’ of Art. 12 of the EEC Treaty, that is to say, the question ‘whether nationals of Member States may derive rights directly from that article which the judge must respect’, and thus the legal status of that provision with regard to its binding force as a rule on which the courts of the Member States must, where appropriate, base their decisions. Accordingly, the answer to this question required of the ECJ—in the words of the Advocate General—no more than a ‘general interpretation of the meaning of Art. 12 of the EEC Treaty if its meaning and purpose is not clear’. The ECJ had in fact not been asked to rule on the specific dispute between Van Gend & Loos and the Dutch tax authorities, for which the Court of Justice would indeed not have had jurisdiction. For the purposes of deciding the reference for a preliminary ruling, however, the facts underlying the dispute before the Dutch court were of no relevance. The Netherlands court remained at liberty to rule on that dispute by itself. For that very reason, the Court did not follow the Advocate General's line of reasoning but qualified the question referred to it as a problem of interpretation of the Treaty as regards the direct effect of Art. 12 of the EEC Treaty in national law. The Court described the method of interpretation to be used in that regard as follows: ‘To ascertain whether the provisions of an international treaty extend so far in their effects it is necessary to consider the spirit, the general scheme and the wording of those provisions.’ Accordingly, the ECJ first of all emphasized the objective of the EEC Treaty, namely ‘the creation of a common market, the functioning of which directly affects individuals belonging to the Community’; the Treaty was therefore held to be more ‘than an agreement which merely creates mutual obligations between the contracting States’. And the Court saw this confirmed in particular by Art. 177 of the EEC Treaty, which proved that ‘the States have assumed that citizens must be able to rely on Community law before the national courts’. Therefore, the Community constituted a ‘new legal order of international law’ in favor of which the States had to a limited extent restricted their sovereign rights. Thus, Art. 12 of the EEC Treaty—in systematical terms an integral part of the ‘foundations of the Community’—was said to contain, according to its wording, an unconditional prohibition which does not require any further legal act in order to be effective and which is therefore capable of ‘producing direct effects in legal relations between Member States and individuals subject to their law’. Hence the ECJ concluded that ‘[t]he very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between Member States and their subjects’.

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5.1.2

Supremacy

After the recognition of the possibility that a rule such as Art. 12 of the EEC Treaty is directly applicable and thus creates rights of individuals which must be protected by the courts of the Member States, the question naturally arose as to the relationship between such rules of Community law and national law which is incompatible with these rules. In Van Gend & Loos, the Court of Justice could avoid dealing with this problem because the constitutional law of the Netherlands already provided that directly applicable (self-executing) rules of international agreements take precedence over national law.17 The ECJ was soon confronted with the issue in a request for a preliminary ruling submitted by an Italian court in the case of Costa v. E.N.E. L.18 An Italian citizen, who as an electricity consumer and shareholder in an electric power company was affected by the nationalization of the company by an Italian law, challenged the legality of an electricity bill from the now nationalized company before the Milan Justice of the Peace , because in his opinion the nationalization law violated the EEC Treaty (inter alia the freedom of establishment). The Justice of the Peace asked the ECJ for a preliminary ruling under Art. 177 of the EEC Treaty on the interpretation of the relevant provisions of Community law with regard to their relationship to subsequent national laws. In this case, the Court was more explicit in explaining its view, as indicated in the Van Gend & Loos judgment, that the EEC Treaty had created a ‘new legal order’. The Costa v. E.N.E.L. judgment now laid down: ‘By contrast with ordinary international treaties, the EEC Treaty has created its own legal system which, on the entering into force of the Treaty, became an integral part of the legal systems of the Member States and which their courts are bound to apply.’ This finding was based on the consideration—merely alluded to in the Van Gend & Loos judgment—that the Community had its own institutions with legal personality, legal capacity and capacity of representation ‘albeit within limited fields’ and ‘real powers stemming from a limitation of sovereignty or a transfer of powers from the States to the Community’. The Member States thus created ‘a body of law which binds both their nationals and themselves’. The terms and spirit of the EEC Treaty would therefore ‘make it impossible for the States, as a corollary, to accord precedence to a unilateral and subsequent measure over a legal system accepted by them on the basis of reciprocity. Such a measure cannot therefore be inconsistent with that legal system.’ Otherwise, the uniform application of Community law in the Member States would not be guaranteed, since it would be subject to different subsequent national legislation. ‘From all this’ the ECJ concluded that the law stemming from the Treaty, an independent source of law, could not, because of its special and original nature, be overridden by domestic legal provisions, however framed,

17

Ibid III.1. CJEU, 15.07.1964, Case C-6/64 Flaminio Costa v Ente Nazionale Energia Elettrica [1964] ECLI:EU:C:1964:66.

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without being deprived of its character as Community law and without the legal basis of the Community itself being called into question.

To put it more radically: Community law would not be law if it did not have full uniform application throughout the Community. In the case of the economic freedoms, this meant that Member States would no longer be able to unilaterally revoke the renunciation of their sovereignty to exercise trade-restrictive measures contained in those rules. Thus the constitutionalization of economic freedoms was achieved: the subjective rights of individuals conveyed by them by virtue of their direct applicability have since then, in principle, no longer been at the disposal of national legislators, unless the Member States could justify restrictions of these rights by the protection of imperative general interests within the framework of proportionality (appropriateness, necessity, adequacy) in accordance with the Treaty (e.g. Art. 36 EEC, now Art. 36 TFEU) or with the principles developed in the case law of the ECJ.19 Since then, the courts of the Member States have been obliged to enforce economic freedoms in a manner similar to that of fundamental rights against national legal restrictions; in this sense, they have become executive organs of the Community.20 Thus the Treaty of Rome, which was signed as an agreement of public international law, turned out to be a transnational constitution.21

5.2 5.2.1

Competition Rules Direct Effect

It is worth noting that the ECJ had raised the question of direct applicability in relation to the competition rules even before the Van Gend & Loos judgment in the case De Geus v Bosch and van Rijn.22 In this case, the ECJ was asked for a preliminary ruling on the question of whether a contractual agreement by which Bosch prohibited its customers from exporting the refrigerators it manufactured in Germany to the Netherlands in order to protect van Rijn, who had sole distribution rights there, from import competition by foreign exporters, was to be regarded as an agreement restricting competition which infringed the prohibition of cartels in Art.

19 See in this regard already CJEU, Case C-120/78 Cassis de Dijon [1979] (supra n 9) para 8; in more detail CJEU, Case C-55/94, Gebhard v Consiglio dell’ordine degli avvocati e procuratori di Milano [1995] (supra n 9) para 37. 20 To consider this as a weakness of the Community legal order [Morten Rasmussen (2014 supra n 13) 156] is not convincing; the decentralized enforcement of Community law is rather an advantage, since it empowers even individuals who defend their rights before national courts to act as agents of European integration. 21 See in this regard already Eric Stein, ‘Lawyers, Judges, and the Making of a Transnational Constitution’ 75 AJIL (1981) 1-27; Joseph Weiler, ‘The Transformation of Europe’ (1991)100 YaleLJ 2403-2453. 22 CJEU, 06.04.1962, Case C-13/61 De Geus v Bosch and van Rijn [1962] ECLI: EU:C:1962:11.

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85(1) of the EEC Treaty (now Art. 101(1) TFEU) and was therefore void under Art. 85(2) of the EEC Treaty (now Art. 101(2) TFEU). The question arose in proceedings between Bosch and van Rijn, on the one hand, and de Geus, on the other, who had succeeded in obtaining Bosch refrigerators from Germany in order to resell them in the Netherlands, in circumvention of the export ban. De Geus had been successfully sued for injunctive relief by Bosch and van Rijn before the competent court in Rotterdam. In order to be able to decide the case on appeal, however, the court of appeal in The Hague, to which de Geus had appealed, felt obliged to first ask the ECJ for an interpretation of Art. 85 of the EEC Treaty in accordance with Art. 177 of the Treaty. Already in this preliminary ruling, the ECJ had made the statement (which would later become a key element of its Costa v E.N.E.L. judgment) that ‘the municipal law of any Member State, whose courts request a preliminary ruling from this Court, and Community law constitute two separate and distinct legal orders’. And at the very beginning of the discussion on the interpretation of Art. 85 of the EEC Treaty, the Court of Justice also stated that this provision of the Treaty was ‘applicable’ from the date of its entry into force. This was obviously also the assumption of The Hague Court of Appeal when it asked the ECJ for a preliminary ruling under Art. 177 of the EEC Treaty. Under the Treaty of Rome, the application of the ban on cartels (Art. 85(1), now Art. 101(1) TFEU) was the responsibility not only of the Commission (under Art. 89 EEC, now Art. 105 TFEU), but also of the Member State authorities (Art. 88 EEC, now Art. 104 TFEU), and this applied initially also to a possible exemption from the ban on cartels (Art. 85(3) EEC, now Art. 101(3) TFEU). From this, the ECJ concluded that the sanction of nullity under Art. 85(2) of the EEC Treaty (now Art. 101(2) TFEU) applied in any event to those agreements whose anticompetitive nature had been established by the Commission or an authority of a Member State in the absence of an exemption. As regards the specific export prohibition imposed by Bosch on its customers, the Court of Justice left the assessment of that prohibition to the Netherlands court and confined itself to the general statement that such an export prohibition was ‘in principle’ ‘capable’ of falling within the scope of the cartel prohibition, subject to a possible exemption under Art. 85(3) of the EEC Treaty. However, such an exemption would have required notification to the Commission after the entry into force of Regulation 17/62/EEC (Cartel Regulation).23 Thus, the ECJ implicitly assumed that the nullity sanction of Art. 85 (2) EEC Treaty (now Art. 101 (2) TFEU) was in any case applicable to those cartel agreements which had to be notified for an exemption but had not been notified or on which the Commission or a national authority had already taken a negative decision in this regard. The sanction of nullity is, by its very nature, a civil law sanction to be pronounced by the civil courts of the Member States. From this normative context, at least implicitly, followed the direct applicability of both the ban on cartels and the nullity sanction. (The tension between the civil court’s competence to impose sanctions and the

23

See supra n 12.

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Commission’s exclusive competence to grant exemptions was the subject of Hanns Ullrich’s doctorate dissertation as mentioned at the beginning of this contribution).24 While the direct applicability of the competition rules by national civil courts was still implicit in the grounds for the ECJ’s preliminary ruling in De Geus v Bosch and van Rijn, the Court of Justice later stated expressis verbis in BRT v SABAM I,25 which concerned the invalidity of unreasonable contractual terms negotiated by a market-dominant association for the administration of copyright with the authors, in very clear terms as follows: ‘As the prohibitions of Arts. 85(1) and 86 tend by their very nature to produce direct effects in relations between individuals, these Articles create direct rights in respect of the individuals concerned which the national courts must safeguard.’

5.2.2

Supremacy

The question of the relationship between the competition rules of Community law and the competition rules of the Member States was referred to the ECJ for a preliminary ruling in the context of a dispute pending before the Kammergericht (Berlin Court of Appeal) between a board member of a German paint manufacturer, Walt Wilhelm, and the Bundeskartellamt (German Cartel Office). The case related to the famous dyestuffs cartel, which was the object of penalty proceedings initiated by the Commission for infringement of the Community ban on cartels26 and parallel penalty proceedings initiated by the Bundeskartellamt for infringement of the German ban on cartels. Since the Kammergericht denied the Bundeskartellamt’s authority to conduct the penalty proceedings in a case in which the Commission had already taken action, the Kammergericht referred the question to the ECJ for a preliminary ruling as to whether it was permissible to apply cumulatively to conduct which could fulfill the factual requirements of Art. 85(1) of the EEC Treaty (now Art. 101(1) TFEU), the national cartel prohibition in addition to the cartel prohibition of the EEC Treaty. The ECJ’s decision27 was based on the consideration that Community and national cartel law do not assess cartels according to the same criteria. Community law is primarily concerned with the obstruction of trade between Member States. Therefore, a cartel could be the object of two parallel proceedings, ‘one before the Community authorities under Art. 85 of the EEC Treaty, the other before the national authorities under national law’.28 However, in view of the general objective of the

24

Hanns Ullrich (1979, supra n 1). CJEU, 30.01.1974, Case C-127/73 BRT v SABAM I [1974] ECR-00051, ECLI: EU:C:1974:25, para 16. 26 See CJEU, 04.07.1972, Case C-48/69 Imperial Chemical Industries Ltd v Commission [1972] ECLI:EU:C:1972:70. 27 CJEU, 13.02.1969, Case C-14/68 Walt Wilhelm v Bundeskartellamt [1969] ECLI:EU:C:1969:4. 28 Ibid para 3. 25

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Treaty, the parallel application of national law is permitted only in so far as it does not affect the uniform application of Community competition law and the full effectiveness of the measures adopted to implement it throughout the common market.29 And then follow considerations of the Court of Justice which are already known from the Costa v E.N.E.L. judgment:30 The EEC Treaty has established its own system of law, integrated into the legal systems of the Member States, and which must be applied by their courts. It would be contrary to the nature of such a system to allow Member States to introduce or to retain measures capable of prejudicing the practical effectiveness of the Treaty. The binding force of the Treaty and of measures taken in application of it must not differ from one state to another as a result of internal measures, lest the functioning of the Community system should be impeded and the achievement of the aims of the Treaty placed in peril. Consequently, conflicts between the rules of the Community and national rules in the matter of the law on cartels must be resolved by applying the principle that Community law takes precedence.

The ECJ did not solve the problem of concurrent sanctions under Community law and national law in the light of the criminal law principle of ne bis in idem (prohibition of double jeopardy). The Court merely referred to a ‘general requirement of natural justice’ according to which any previous sanction must be taken into account in determining any sanction which is to be imposed.

6 The Elements of Grimm’s Criticism 6.1

The Court’s Method of Interpretation

The jurisprudence of the ECJ that resulted in the constitutionalization of the internal market has been heavily criticized by Dieter Grimm from the point of view of the interpretation methodology applied by the ECJ. He argues that for the interpretation of the Treaty of Rome as an international treaty, the will of the signatory states should have been decisive and norms restricting the sovereignty of Member States (such as the market access and competition rules) should have been interpreted narrowly. He argues that the ECJ instead mistakenly interpreted the EEC Treaty like a constitution by putting the emphasis primarily on its objectified purpose. In this way, the ECJ has allegedly defined itself not as the guardian of the rights of the Member States but as the driving force behind the integration program. In short, he submits that the ECJ sees itself as a court with an agenda! This methodological criticism is misplaced. In any case, the subjective approach to the interpretation of international treaties which relies predominantly on the will of the contracting parties is outdated at least to the extent that it relies on the ideas of the parties as they may be documented in the materials (travaux préparatoires). The

29 30

Ibid para 4. Ibid para 6 (emphasis added).

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modern approach focusses instead on the ideas of the parties to an international agreement as reflected in the text of the treaty itself.31 Thus, in international treaty law, the wording, the system and the objectives have gained decisive importance as criteria for interpretation.32 The Vienna Convention on the Law of Treaties of 1969, which essentially codified customary international law, orients the interpretation of an international treaty expressly towards the ‘customary meaning which its provisions have in their context and in the light of its object and purpose’ (Art. 31 (1) ECC). Admittedly, the teleological interpretation is not intended to override the wording of treaty provisions.33 But, in particular, treaties establishing an international organization are generally interpreted objectively in the light of their organizational purpose. The International Court of Justice (ICJ) stated in Nuclear Weapons in Armed Conflict34 that ‘the constituent elements of international organizations are multilateral treaties, to which well-established rules of treaty interpretations apply’, but the ICJ at the same time acknowledged that such treaties display ‘certain special characteristics’: [T]he constituent instruments of international organizations are also treaties of a particular type; their object is to create new subjects of law endowed with a certain autonomy, to which the parties entrust the task of realizing common goals. Such treaties can raise specific problems of interpretation owing, inter alia, to their character which is conventional and at the same time institutional; the very nature of the organization created, the objectives which have been assigned to it by its founders, the imperatives associated with the effective performance of is functions, as well as its own practice, are all elements which may deserve special attention when the time comes to interpret these constituent treaties.35

The EEC was, beyond any doubt, created as an international organization. Art. 210 EEC of the Rome Treaty expressly provided that the Community should have legal personality. Furthermore, the Treaty of Rome specified in crystal-clear terms a hierarchy of objectives and means. It seemed therefore almost imperative to interpret the wording of a specific provision such as Art. 12 EEC Treaty in the light of the overriding objective of establishing the EEC as a customs union (Art. 3(a) and Arts. 12-17 EEC Treaty) which in turn was a means of establishing a common market (Art. 2 EEC Treaty). The ordinary meaning of the prohibition of raising customs duties provided for in Art. 12 EEC was therefore clear in the context of the section on the customs union. From this prohibition, there resulted with the same clarity a corresponding renunciation of sovereignty by the Member States with regard to the fixing of import duties. The significance of this renunciation of sovereignty resulted furthermore from the overall context of the EEC Treaty, especially from Art. 177 EEC Treaty, to which the European Court of Justice paid particular attention. See Albert Bleckmann, ‘Teleologie und dynamische Auslegung des Europäischen Gemeinschaftsrechts’ (1979) EuR 239-260, 239. 32 See Rudolf Bernhardt, Die Auslegung völkerrechtlicher Verträge insbesondere in der neueren Rechtsprechung internationaler Gerichte (Heymann 1971). 33 Albert Bleckmann (1979, supra n 31). 34 ICJ, Nuclear Weapons in Armed Conflict (ICJ Reports 1996) 66. 35 Ibid 74-5 (emphasis added). 31

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This provision obviously implied the possibility that norms of Community law had to be considered relevant in disputes before national courts. Since such disputes could be initiated by private parties who are the beneficiaries of a prohibition like the standstill clause in Art. 12 EEC Treaty, it quite naturally followed that Treaty rules which establish an unconditional obligation for Member States could create direct rights for the individuals concerned which Member States could not unilaterally withdraw. To criticize this as an inadmissibly ‘broad’ interpretation is inappropriate in the light of the establishment of a common market as the aim and purpose of the EEC Treaty. A common market is not an intergovernmental event. Rather, it is based on direct relations between economic entities which organize their economic transactions according to the rules of private law. If the enforcement of the corresponding economic freedoms of market participants to engage in such transactions had been made dependent upon infringement proceedings initiated by the Commission or the Member States, the realization of the integration program provided for in the Treaty of Rome would have been undermined from the outset. Moreover, an essential condition for the functioning of a market is the legal equality of all market participants. If the European Court of Justice had qualified the EEC Treaty not as an integration constitution but as an ordinary international treaty, the domestic effect of the economic freedoms which are eligible for direct effect would have had to be assessed according to the national constitutions. Since national constitutional laws are very different with regard to the internal status and the direct effect of international treaty provisions, the market access and competition rules of the EEC Treaty would not have been interpreted and enforced uniformly in all Member States. In order to avoid precisely this, Art. 177 of the EEC Treaty transferred the monopoly of interpretation to the ECJ. As far as the ‘agenda’ of the Court of Justice is concerned, it should be noted that, according to Joseph Weiler, Van Gend & Loos ‘is not the work of an activist court’.36 The agenda of the ECJ was nothing but the legal development of the integration program formulated by the parties to the Treaty of Rome. This Treaty was not, from the outset, an ordinary international agreement. Its conventional as well as institutional character evidently called for a teleological approach to its interpretation by the ECJ.37 By creating a Community with institutions to which the Member States had transferred sovereign rights, the exercise of which was to be binding on the Member States, and by entrusting the enforcement of the provisions of the Treaty—to the extent that they would be suitable for this purpose—to the courts of the Member States in Art. 177 of the EEC Treaty, it proved to be a sui generis treaty, which Hans Peter Ipsen aptly interpreted as a collective act of the

Joseph Weiler, ‘Van Gend en Loos: The Individual as Subject and Object and the Dilemma of European Legitimacy’ (2014) ICON Vol 12 No 1, 94-103, 95. 37 See with regard to treaties constituting an organization generally James Crawford, Brownlie’s Principles of Public International Law (8th edn, OUP 2012) 187. 36

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contracting parties to constitute a supranational community.38 The idea of the emergence of a supra-individual legal subject on the basis of an agreement between contracting parties is a concept that is familiar to all legal systems. It then also became the conceptual basis of the ‘Hamburg School’ of European law39 founded by Hans Peter Ipsen and continued and further developed above all by Gert Nicolaysen.40

6.2

The Court’s Alleged Self-Empowerment

By constitutionalizing the internal market, the ECJ has taken on a central role in the implementation of Community law. Grimm alludes to voices which have characterized this as self-empowerment (self-authorization) by the Court at the expense of other Community institutions.41 It is true that the enforcement of market access and competition rules is no longer dependent solely upon the initiative of the Commission or a Member State. The contracting parties may have originally intended that internal market law would be enforced by the Commission and the Member States by means of the infringement procedure (Arts. 169 and 170 of the EEC Treaty). However, until about 1980 neither the Commission nor the Member States made any significant use of this procedure.42 The Commission was very reluctant to take legal action against a Member State. And the Member States themselves were all the more reluctant to take each other to the Court of Justice; only in one single case was a judgment reached on the basis of an action brought by a Member State.43 Protectionist measures taken by Member States in violation of Community law would therefore normally not have been eliminated. Even after 1980, the Member States continued to show diplomatic consideration for each other, leaving the enforcement of Community law to the Commission. Jürgen Gündisch has pointed out that this phenomenon is a sign that Member States do not always properly safeguard the See Hans Peter Ipsen, ‘Aktuelle Fragen des Gemeinschaftsrechts: Das Verhältnis des Rechts der europäischen Gemeinschaft zum nationalen Recht’ in Abhandlungen aus dem gesamten bürgerlichen Recht, Handelsrecht und Wirtschaftsrecht 29 (Verlag Recht und Wirtschaft 1965) 1; see also id, Europäisches Gemeinschaftsrecht (Mohr Siebeck 1972) 58-62. 39 See Armin Hatje, ‘Die Hamburger Schule des Europarechts’ in Tilmann Repgen, Florian Jeßberger, Markus Kotzur (eds), 100 Jahre Rechtswissenschaft an der Universität Hamburg (Mohr Siebeck 2019) 669-692. 40 See for the notion of supranationality Gert Nicolaysen, Europarecht I – Die Europäische Integrationsverfassung (2nd edn, Nomos 2002) § 3 69-115. 41 Dieter Grimm (2016, supra n 2). 42 Hjalte Rasmussen, ‘The Court of Justice’ in Commission of the European Communities (ed), Thirty Years of Community Law, Chapter VII (Office for Official Publications of the European Communities 1983) 151 para 33. 43 CJEU, 04.10.1979, Case C-141/78 French Republic v United Kingdom of Great Britain and Northern Ireland [1979] ECR-02923, ECLI:EU:C:1979:225 [the case was about a fisheries regulation]. 38

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interests of their citizens, who often suffer from the non-application of Community law in a Member State, and thus distort competition.44 The practical shortcomings of the instrument of infringement proceedings are overcome by the constitutionalization of internal market law. The case law of the ECJ empowers individuals, where necessary, to fight for the freedom of cross-border transactions guaranteed by the market access and competition rules. The individual rights derived by the ECJ from the Treaty enable market participants to take their economic affairs into their own hands. Even if the Union is conceived of as a hierarchical structure, therefore, the ECJ’s constitutionalization of the market access and competition rules implies not a bottom-up transfer of competences from the Member States to the Community (now the Union), but rather a top-down transfer of competences from the Member States to the individual market participants who are the direct beneficiaries of Member States’ renunciation of sovereignty. By interpreting internal market law at the request of national courts, the Court of Justice does not exercise any sovereign rights at the expense of other institutions, but only ensures Member States’ observance of the rules of European Union law in accordance with its task (originally regulated in Art. 164 of the EEC Treaty, now in Art. 19 of the EU Treaty). There can therefore be no question of self-empowerment or self-authorization of the Court. It is true, though, that internal market law does not merely provide individual rights, but also defines legislative competences of the Union institutions, which may, on the basis of the powers granted in the Treaty, enact in particular directives and regulations, to the extent necessary, for the promotion of the internal market. In this respect, however, the corresponding shift of competences from the Member States to the Union institutions does not result from the case law of the European Court of Justice on the direct effect and supremacy of the economic freedoms and the rules of competition, but rather from the corresponding authorizations in the Treaty itself.

6.3

The Lack of Democratic Legitimacy

A central argument put forward by Grimm against the ECJ’s constitutionalization of the internal market is the de facto impossibility of legislative (democratic) control of the Court’s jurisprudence. The rules providing for the economic freedoms as well as the rules on competition (including the rules on state aid) contain prohibitions that, according to the jurisprudence of the ECJ, can be enforced by individuals against the Member States even in areas of law that are, on the national level of Member States, subject to democratic control by parliaments. National regulations pertaining to economic activities may be changed by national parliaments at any point of time according to changing political preferences. Similar changes of the market access and competition rules provided in the TFEU would require amendments of the

44

Jürgen Gündisch, Rechtsschutz in der Europäischen Union (Boorberg 1994) 71-2.

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Treaty, which are extremely difficult to achieve because they would require a consensus of all the Member States who are parties to the Treaty. This is why, according to Grimm, the constitutionalized internal market rules lack democratic legitimacy. He argues that the development brought about by the ECJ is not backed by the political will of ‘those concerned’ and that that is the reason why ‘they’ now react by a ‘withdrawal of legitimation’ of European integration.45 Grimm is not the only one to have highlighted the problem of the democratic legitimation of the internal market. J.H.H. Weiler also cites a democratic deficit as the flip side of the ECJ's case law on the direct applicability and supremacy of the market access and competition rules.46 Far from rejecting the ECJ’s constitutionalization of the internal market, however, he nevertheless emphasizes that ‘the much vaunted Community rights which serve, almost invariably, the economic interests of individuals were ‘bought’ at least in some measure at the expense of democratic legitimation’. Weiler starts from the undeniably correct proposition that any kind of public exercise of power requires democratic legitimation. And he identifies two constitutive elements of a democracy, namely the principle of accountability and the principle of representation. These two principles are, according to Weiler, not guaranteed in the European Union. Hence the ‘dilemma of European legitimacy’. The crucial question with which this criticism must be confronted concerns the proper scope of the principle of democracy. There is no doubt that the exercise of sovereign power is illegitimate if it is not democratically controlled. And it is obvious that the scope of the requirements inherent in the democratic principle has grown in parallel with the constant expansion of the political competences of the Union. Whether the institutional structures and decision-making procedures within the framework of the increasingly political Union meet the requirements of the democratic principle has long been the subject of heated debate. It is not the purpose of this contribution, nor is it necessary, to enter into this debate. The decisive question here is whether the individual freedoms conveyed by the constitutionalization of the internal market require democratic legitimation in the first place. Individual freedoms of a fundamental nature such as those derived by the ECJ from the EEC Treaty have the very purpose of removing their exercise from the democratic decision-making process and leaving their use to the individuals themselves. The subjects of the internal market freedoms are, moreover, identical with those whose vote would be relevant in the democratic decision-making process. Have they not in fact positively approved of the freedoms granted, according to the ECJ’s jurisprudence, by the EEC Treaty by engaging in cross-border economic transactions on a daily basis? The constitutionalization of the internal market as such cannot, therefore, be held responsible for the much-lamented democratic deficit. However, in the context of internal market law, the problem of democratic legitimacy does in fact arise in so far as the market access and competition rules not only grant individual rights, but at the same time also confer legislative powers on the Union, in particular

45 46

Dieter Grimm (2016, supra n 2). Joseph Weiler (2014, supra n 36) 98-103.

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regarding the enactment of directives on the approximation of national laws and of regulations providing for uniform rules pertaining to market transactions. The distinction between the two different aspects of internal market law is crucial. Whereas the use by individuals of their freedom to engage in cross-border market transactions and to compete on the market without restrictions does not require the exercise of sovereign power by the Union, the exercise of such power is per se inherent in any legislative act of the Union. This latter aspect of the internal market lies beyond the scope of its constitutionalization, however. Grimm’s criticism of the ECJ’s jurisprudence on the direct applicability and supremacy of the economic freedoms and the competition rules for lack of democratic legitimacy is therefore not apposite. It should, finally, not go without notice that the rules of the Rome Treaty as interpreted by the ECJ were negotiated by the democratically elected governments of the contracting parties and approved by Member States’ parliaments.

7 Grimm’s Proposal for a Remedy Grimm does not stop at his fundamental criticism of the ECJ’s jurisprudence, but at the same time proposes the following remedy: Since the Treaties are now constitutionalized, it would be consistent to downgrade all non-constitutional provisions to simple law, i.e. essentially the entire TFEU. Unwanted interpretation results can then be corrected by amendments to the law, as is the case in any democratic state.

In the context of the Union, ‘simple law’ would be secondary Union law. Economic freedoms and competition rules would thus be given the status of regulations (not directives, because they would have to be transformed into the national laws of Member States and would thus be dysfunctional in this respect). However, regulations are also directly applicable according to Art. 288(2) TFEU and take precedence over the national laws of Member States. So, what would be gained in comparison with the direct effect and supremacy of primary Union law? Grimm’s assumption seems to be that regulations would be easier to ‘correct’, i.e. to control and to amend in accordance with the democratic decision-making process. This, however, is not a very realistic assumption with regard to the constitutionalized economic freedoms and competition rules. Nor is it desirable. To hand over the Union’s economic constitution, which is based on individual freedoms, to changing political majority decisions by the Member States would undermine the internal market as the core element of European integration. It is in fact precisely this element which still enjoys the comparatively broadest support among the Member States and citizens who benefit from it. The Member States always have the option of amending the Treaty however. The fact that this has never really happened with regard to the market access and competition rules indicates the high degree of acceptance with which the ECJ’s interpretation of the internal market law still meets.

Market Access and Competition Rules of the EU: Was. . .

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8 Conclusion The criticism that Dieter Grimm has aimed at the constitutionalization of the internal market brought about by the ECJ is not well founded. His allegation that the Court has led European integration in the wrong direction is politically unjustified and legally untenable. The principle of the direct effect of the economic freedoms and the competition rules as well as the principle of their supremacy over national laws of Member States were not achieved by an inappropriate method of interpretation of the Rome Treaty. The ECJ’s characterization of the Rome Treaty as an integration constitution rather than as an ordinary international agreement was methodologically sound. Since the Treaty was designed to create a new entity with legal personality and an organizational structure of its own, the Court had very good reasons to apply a teleological approach to its interpretation and focus predominantly on its objects and purpose. The creation of a common market, which the Treaty of Rome had defined as the main task of the EEC, could not have been achieved by traditional intergovernmental cooperation but required an empowerment of the market participants themselves to engage in cross-border transactions free from Member States’ protectionist interventions. Leaving it to the Commission or the Member States to implement the market access and competition rules by infringement proceedings before the ECJ in each and every individual case would have undermined the project of economic integration into an internal market without barriers from the very beginning. If the Court had an ‘agenda’ as Dieter Grimm is arguing, it was nothing other than the fulfillment of the Court’s obligation to ensure Member States’ compliance with the Treaty. In the light of the preliminary reference procedure laid down in the Rome Treaty, which clearly indicated that national courts were bound to apply Community law in any litigation before them if relevant, it is inconceivable how the ECJ could have avoided the constitutionalization of the internal market. Finally, Dieter Grimm’s attribution of the increasing skepticism with which the EU is confronted today to the ECJ’s jurisprudence on the direct effect and supremacy of internal market law is unconvincing. In order for individual market participants to make use of their subjective rights derived from the market access and competition rules, no sovereign act of the Union is necessary that would require democratic legitimation. This is true only with regard to legislative or other sovereign acts of the Union based on respective powers which are also granted by internal market rules. As far as the economic freedoms granted by these rules are concerned, the requirement of democratic legitimation is not apposite, however, because the beneficiaries of these freedoms are identical with those who would have to be asked to vote. Individual freedom bears its legitimation in itself; its legitimacy does not depend on a democratic majority vote. The democratic principle is safeguarded to the extent that Member States are, according to the jurisprudence of the ECJ, justified in restricting the freedoms whenever this is appropriate to protect an important public policy (‘mandatory requirement’). Dieter Grimm’s suggested remedy against the constitutionalization of the internal market, i.e. the downgrading of the internal

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market rules from Treaty law to secondary Union law, is therefore neither necessary nor realistic; it would rather be counterproductive for the economic integration of Europe.

References Rudolf Bernhardt (1971) Die Auslegung völkerrechtlicher Verträge insbesondere in der neueren Rechtsprechung internationaler Gerichte, Heymann: Cologne. Albert Bleckmann (1979) ‘Teleologie und dynamische Auslegung des Europäischen Gemeinschaftsrechts’ Zeitschrift Europarecht 239-260. James Crawford (2012) Brownlie’s Principles of Public International Law, 8th edition, Oxford University Press: Oxford. Dieter Grimm (2016) Europa ja – aber welches? – Zur Verfassung der europäischen Demokratie, Beck: Munich. Jürgen Gündisch (1994) Rechtsschutz in der Europäischen Union, Boorberg: Stuttgart. Armin Hatje (2019) ‘Die Hamburger Schule des Europarechts’ in Tilmann Repgen, Florian Jeßberger, Markus Kotzur (eds), 100 Jahre Rechtswissenschaft an der Universität Hamburg, Mohr Siebeck: Tuebingen 669-692. Hans Peter Ipsen (1965) ‘Aktuelle Fragen des Gemeinschaftsrechts: Das Verhältnis des Rechts der europäischen Gemeinschaft zum nationalen Recht’ in Abhandlungen aus dem gesamten bürgerlichen Recht, Handelsrecht und Wirtschaftsrecht, Verlag Recht und Wirtschaft: Heidelberg/Frankfurt/Stuttgart 29. — (1972) Europäisches Gemeinschaftsrecht, Mohr Siebeck: Tuebingen. Gert Nicolaysen (2002) Europarecht I – Die Europäische Integrationsverfassung, 2nd edition, Nomos: Baden-Baden. Hjalte Rasmussen (1983) ‘The Court of Justice’ in Commission of the European Communities (ed), Thirty Years of Community law, Office for Official Publications of the European Communities: Luxembourg 151. — (2014) ‘Revolutionizing European Law: A History of the Van Gend en Loos Judgment’ International Journal of Constitutional Law Vol 12 No 1 136-161. Eric Stein (1981) ‘Lawyers, Judges, and the Making of a Transnational Constitution’ 75 American Journal of International Law 1-27. Hanns Ullrich (1971) Das Recht der Wettbewerbsbeschränkungen des Gemeinsamen Marktes und die einzelstaatliche Zivilgerichtsbarkeit, Duncker & Humblot: Berlin. Joseph Weiler (1991) ‘The Transformation of Europe’ 100 Yale Law Journal 2403-2453. — (2014) ‘Van Gend en Loos: The Individual as Subject and Object and the Dilemma of European legitimacy’ International Journal of Constitutional Law Vol 12 No 1 94-103.

Renewing the Van Gend Pledge Continuity and Resilience in the Court’s Construction and Defense of the Supranational Character of EU Law Thomas Jaeger

Contents 1 2

Hanns Ullrich and the EU Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Evolving Supranational Character of EU Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Retracing Van Gend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Elements of Supranationality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 No Peer Resistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 The Example of Primacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 The Example of Direct Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Interim Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 Supranationality as a Stability Tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Conclusions: A Maximum Intensity for Supranationality? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25 28 28 30 34 35 44 53 54 61 63

1 Hanns Ullrich and the EU Courts In the legal community, the honoree Hanns Ullrich is reputed and renowned for his expertise particularly in three related areas of law, namely general EU law,1 antitrust law2 and patent law.3 Already Hanns Ullrich’s doctoral thesis submitted to the Prof. Dr. Thomas Jaeger is Professor of European Law at Vienna University. The author expresses his gratitude to Ms Daniela Gschwindt for her valuable contributions in finalizing the manuscript. Hanns Ullrich, ‘Der zeitliche Geltungsbereich der Assoziation der assoziierten afrikanischen Staaten und Madagaskars an die Europäische Wirtschaftsgemeinschaftʼ (1968) ZHR 298. 2 Hanns Ullrich, ‘EuGH, 18.03.1970 – Rechtssache 43/69 Bilger/Jehle’ (1970) 19 GRUR Int 382. 3 Hanns Ullrich, ‘Court of Customs and Patent Appeals, 01.07.1971 – Autorückspiegel (In re Talbott)’ (1972) 21 GRUR Int 248. 1

T. Jaeger (*) Vienna University, Vienna, Austria e-mail: [email protected] © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 C. Godt, M. Lamping (eds.), A Critical Mind, MPI Studies on Intellectual Property and Competition Law 30, https://doi.org/10.1007/978-3-662-65974-8_2

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Free University Berlin, entitled Das Recht der Wettbewerbsbeschränkungen des Gemeinsamen Marktes und die einzelstaatliche Zivilgerichtsbarkeit (The Law of Restraints of Competition and National Civil Courts), published in 1971, is exemplary for the combination of these fields of law and seminal for the quality of his academic work. The dissertation, which is much cited to this day,4 had been mentored by Ernst Steindorff and supervised by Arwed Blomeyer. Steindorff had in turn been a doctoral student of Walter Hallstein, the first president of the Commission of the European Economic Community and one of the founding fathers of the European Union. It is impossible to understand Hanns Ullrich’s thinking and work without appreciating this European background and the pioneering spirit that went along with integration at the time. His mastery of the details and depths in the areas of his particular interest, antitrust and IP, especially patents, is clearly impressive. But what makes Hanns Ullrich truly unique is his creativity and liveliness in elaborating nonobvious crosslinks and exploring hidden overarching principles. Above all, Hanns Ullrich has comprehended his areas of interest as different, connectable bits of the same box of tools for European policy and market integration. In this sense, Hanns Ullrich has always been an ardent European. Yet more, Hanns Ullrich is an ardent European who is able to elaborate and defend his views on the basis of facts and outstanding legal arguments. It is not only the latter characteristic that establishes a bond between the honoree and this author, who is also a committed proponent of European integration, especially through market tools. Unsurprisingly, we share an interest in the same research fields. Likewise, we follow a common perspective: The honoree has always looked at European law through the lens of private law and not, as is notably common in the German and Austrian academic tradition, the public law lens. It is fair to say that this change of perspective, which the honoree and this author share, translates into off-mainstream views on certain dogmatic questions of European law. In the end, this boils down to the conviction of Hanns Ullrich and this author that not every solution and challenge of EU law must be inspired by the tools and traditions of the German legal system and, in particular, German public law. Owing to both senior age and grander talent, the honoree’s excellence in these fields by far supersedes the author’s own. This confession is not mere lip service paid to a distinguished professor, but is based on the experience accumulated by this author throughout roughly 10 years of learning from Hanns Ullrich at the Munichbased Max Planck Institute for Innovation and Competition (before 2013: Max Planck Institute for Intellectual Property and Competition Law). Back then, this author was a post-doc researcher, impressed and inspired by Hanns Ullrich, and it is fair to acknowledge that over the past years of parallel and joint research and discussion, the honoree exerted decisive influence on the author’s perception of EU law, its challenges, potential and, above all, dogmatics.

4

Walter Frenz, Handbuch Europarecht: Band 2: Europäisches Kartellrecht (Springer 2006) 410.

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Several publications have emerged from joint research projects between this author and the honoree.5 They all revolve around the evolution of the EU court system, enforcement and remedies, as well as the decades-long, ever-changing plans to establish an EU patent and related judiciary, the so-called Unified Patent Court (UPC). Even if the honoree was not an official member or co-author, his ideas and work inspired and enriched this author’s analyses. This is particularly true of the two most important books written or co-written by the author at the Max Planck Institute. The former is the author’s habilitation on reform options of the EU IP court system,6 which is indeed one of Hanns Ullrich’s central subjects, and the latter, the Institute’s grand manifesto on the functionalities and untapped potentials of IP protection in the internal market,7 again a question and approach close to Hanns Ullrich’s interests and thinking. Above and beyond his manifold research interests in competition, IP and internal market law, Hanns Ullrich has always been a genuine European lawyer, boasting a deep and mature understanding of the principles of the EU’s constitutional legal order. So what better essay could to honor Hanns Ullrich’s example and excellence than an essay on the foundations of EU law and the core functions of the EU’s judicial system today? It pays tribute to Hanns Ullrich’s profound and still active8 interest in the role and functioning of the courts, in the interaction between the EU and national courts and in the potentials and deficits of court systems in general and the EU system in particular. This contribution therefore markedly deals neither with competition nor with IP or internal market law, but with the foundations of EU law, the key principles and mechanisms of supranationality and their evolution within the EU courts. These processes, as will be shown, begin in the early 1960s with the 1963 and 1964 judgments of Van Gend and Costa and thus at the time when Hanns Ullrich graduated from Tübingen University. He has been following, commenting and contributing to the shaping of the European body of law ever since. Hanns Ullrich is the embodiment and living encyclopedia of the evolution of EU law, which this contribution is intended to honor.

5 Thomas Jaeger and others, ‘Comments of the Max Planck Institute for Intellectual Property, Competition and Tax Law on the 2009 Commission Proposal for the Establishment of a Unified European Patent Judiciary’ (2009) 40 IIC 817; Reto Hilty and others, ‘The Unitary Patent Package: Twelve Reasons for Concern’ (2012) Max Planck Institute for Intellectual Property & Competition Law Research Paper No 12-12; Reto Hilty and others, ‘Comments on the Preliminary Set of Provisions for the Rules of Procedure of the Unified Patent Court’ (2013) Max Planck Institute for Intellectual Property & Competition Law Research Paper No 13-16. 6 Thomas Jaeger, System einer europäischen Gerichtsbarkeit für Immaterialgüterrechte: Grundlagen – Struktur – Verfahren (Springer 2013). 7 Reto Hilty and Thomas Jaeger, Europäisches Immaterialgüterrecht: Funktionen und Perspektiven (Springer 2018). 8 Matthias Lamping and Hanns Ullrich, The Impact of Brexit on Unitary Patent Protection and its Court (Max Planck Institute for Innovation and Competition 2018).

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2 The Evolving Supranational Character of EU Law EU law is a legal order of its own, a sui generis regime detached and independent of both international and national law. This is true for two reasons: First, the ECJ said so, and second, the assertion has remained uncontradicted.9 Under a different Court composition, with a different set of mind, with a more fractious political background in the Member States or with less cooperative national courts, things could have moved in a quite different direction back then. This observation is important to heed when discussing today’s developments. To begin with, we shall take a look at the evolution of the concept of supranationality in case law.

2.1

Retracing Van Gend

In the Van Gend judgment, the Court famously established that the Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights (. . .) and the subjects of which comprise not only Member States but also their nationals. Independently of the legislation of Member States, Community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights.10

This was, equally famously, confirmed and elaborated in Costa: Not only are the rights and obligations created by EU law self-standing, they also constitute ‘an integral part of the legal systems of the Member States (. . .) which their courts are bound to apply’.11 Upon application, it is ‘impossible (. . .) to accord precedence to a unilateral (. . .) measure over [the EU] legal system’.12 Van Gend and Costa are the foundations and cornerstones of the EU’s supranational character discussed in more detail below. All subsequent case law elaborating elements of supranationality directly or indirectly draws on their principles.13 When the Van Gend and Costa landmark judgments were handed down in 1963 and 1964, the 1952-established Court had been working for roughly 10 years.14

9

Werner Schroeder, Das Gemeinschaftsrechtssystem: eine Untersuchung zu den rechtsdogmatischen, rechtstheoretischen und verfassungsrechtlichen Grundlagen des Systemdenkens im Europäischen Gemeinschaftsrecht (Mohr Siebeck 2002) 104 ff, 162 ff. 10 CJEU, 05.02.1963, Case 26/62 Van Gend en Loos [1963] ECLI:EU:C:1963:1 12. 11 CJEU, 05.07.1964, Case 6/64 Costa v ENEL [1964] ECLI:EU:C:1964:66 593. 12 Ibid 593 ff. 13 For an overview Ditlev Tamm, ‘The History of the Court of Justice of the European Union since its Origin’ in Allan Rosas and Egils Levits and Yves Bot (eds), The Court of Justice and the Construction of Europe: Analyses and Perspectives on Sixty Years of Case-law (Springer 2013) 9, 25 ff; Werner Schroeder (2002, supra n 9) 107 ff. 14 After drawing up its Rules of Procedure in March 1953 and appointing a Registrar, the Court delivered its very first judgments on 21 December 1954 in CJEU, 21.12.1954, Case 1/54 France v

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Most of its practice then had, however, been on cases concerning the 1951 ECSC Treaty. The first case based on the 1957 EEC Treaty had been an action for annulment decided in 1960,15 while the first preliminary reference by a national court only dates from 1961.16 The scope and significance of preliminary references had been very limited under the ECSC regime. Inspired by the Italian legal tradition and upon the initiative of later judge Nicola Catalano,17 the EEC Treaty made preliminary references available regarding any issues of interpretation of (now) EU law, thereby transforming them into a powerful instrument for securing its uniform application. The Van Gend proclamation of a self-standing character of the EU legal order and its swift reinforcement in Costa were both preliminary references under the EEC Treaty’s new and powerful regime. Hence, they had been bold moves already shortly after the Court had just commenced to exercise the full range of its new competences under the EEC Treaty. This audacity was not undisputed among the judges at this time. The vote on Van Gend was characterized by scholars as ‘extremely close’:18 Both the rapporteur for the case, Charles Hammes, and the President of the Court, André Donner, had allegedly advocated a traditional international law approach emphasizing the contractual nature of the Rome Treaty and thus its applicability only between states.19 By contrast, the Italian judge Alberto Trabucchi proposed that the Court should take a firm supranational approach establishing the direct effect of the EEC provisions at issue. Fearing opposition from national courts, Trabucchi also proposed not to declare primacy in Van Gend.20 This clarification was, as shown, reserved for the Costa judgment 1 year later. While the authoring of Van Gend was attributed to the French judge, Robert Lecourt, it had been Trabucchi’s position that eventually convinced the bench by a narrow 4:3 majority.21 Lecourt, in turn, was the rapporteur for the subsequent Costa case. Lecourt, President of the Court as of 1967, and Trabucchi, Advocate General as of 1973, are thus commonly named as the minds and driving forces behind the legal revolution taking place in Luxembourg in the 1960s until they both left the Court in 1976.22

ECSC High Authority [1954] ECLI:EU:C:1954:7; and Case 2/54 Italy v ECSC High Authority [1954] ECLI:EU:C:1954:8. 15 CJEU, 15.07.1960, Joined Cases 43/59, 45/59 and 48/59 Von Lachmüller and Others v Commission of the EEC [1960] ECLI:EU:C:1960:37. 16 CJEU, 06.04.1962, Case 13/61 De Geus en Uitdenbogerd v Bosch and Others [1962] ECLI:EU: C:1962:11. 17 Ditlev Tamm (2013, supra n 13) 19 ff. 18 Morten Rasmussen, ‘From Costa v ENEL to the Treaties of Rome: A Brief History of a Legal Revolution’ in L Miguel Poiares Pessoa Maduro and Loïc Azoulai (eds), The Past and Future of EU Law: The Classics of EU Law Revisited on the 50th Anniversary of the Rome Treaty (Bloomsbury 2010) 69, 76 ff. 19 Ibid 76. 20 Ibid 76. 21 Ibid 76. 22 Ibid 77.

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The brief recount of the history of the Van Gend and Costa judgments highlights the fragile nature of the course of integration. It constantly needs to be adjusted and updated, so that every new judgment becomes part of an ongoing debate on this course of integration. Achievements shall not be taken for granted. The role of judges is decisive in safeguarding not only the word, but more importantly the spirit of the EU treaties and the acquis. In Lecourt’s words, ‘[l’]univers dans lequel se situe le juge est (. . .) celui d’une création continuée’23 (A judge’s universe is one of continued creation). This despite the fact that (and perhaps even all the more important because) the Court is not a political actor: [Par] les traités mêmes, [le juge] est obligé de se placer au cœur de la perspective dynamique par eux tracée: non qu’il puisse dépasser les limites naturelles d’un pouvoir purement judiciaire[.] Il ne peut rien ajouter aux traités, mais il doit leur donner tout leur sens et faire porter à leurs dispositions toutes les conséquences, explicites ou implicites que la lettre et l’esprit commandent.24 (The Treaties themselves oblige the judge to place himself at the heart of their markedly dynamic perspective: not that he can exceed the natural limits of a purely judicial power. He cannot add to the Treaties but must give them their full meaning and make their provisions subject to all consequences, explicit or implicit, which the letter and spirit command.)

While it was by no means certain that the Court would assume this kind of role, the above recount of the Van Gend deliberations shows how the ECJ has acted over the past almost 70 years. Moreover, Lecourt’s depiction helps to understand the Court’s current determined approach in tackling new types of challenges to integration in the area of rule of law, as will be discussed further below, and allows us to predict the future course of its jurisprudence.

2.2

Elements of Supranationality

The term supranationality has no uniform definition.25 It is not only used to describe the EU and its legal order, but sometimes also the more or less classic bodies of international law.26 In spite of the gradient bounds of the term, it is still best fit to 23

Robert Lecourt, L’Europe des juges (E Bruylant 1976) 236. Ibid 237; similarly Pierre Pescatore, Les Objectifs de la Communauté Européenne comme principe d’interprétation dans la jurisprudence de la Cour de Justice: Miscellanea WJ Ganshof van der Meersch. Studia ab discipulis amicisque in honorem egregii professoris edita Volume 2 (E Bruylant 1972) 325, 325 ff; Pierre Pescatore, Le droit de l’intégration: émergence d’un phénomène nouveau dans les relations internationales selon l’expérience des Communautés européennes (E Bruylant 1972), 107. 25 Reuben Efron and Allan S Nanes, ‘The Emerging Concept of Supranationality in Recent International Agreements’ (1955) 44 Ky LJ 201, 201 ff; Reuben Efron and Allan S Nanes, ‘The Common Market and Euratom Treaties: Supranationality and the Integration of Europe’ (1957) 6 IntCompLQ 670, 670 ff; Alexander Somek, ‘On Supranationality’ (2001) 5 EIoP 1 (3). 26 E.g. for the EPO: German Constitutional Court (Bundesverfassungsgericht, hereinafter BVerfG) 1 BvR 2310/05 (2006), para 13: ‘Die Europäische Patentorganisation ist eine supranationale 24

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summarize the differences between the EU and general international law and organizations. It serves to emphasize the self-standing character of EU law, distinct from state law and classic international law. The distinguishing elements of supranationality are derived from the case law of the ECJ, beginning with the aforementioned judgments Van Gend and Costa in the early 1960s. The first element is the principle of autonomy of the EU legal order, i.e. a selfstanding legal order of its own kind (sui generis) existing in parallel to the established legal systems of national law and international law.27 In the literature, this was succinctly characterized as follows: ‘Das Unionsrecht bestimmt den Status des Unionsrechts’28 (Union law determines the status of Union law). EU law thus operates under its own terminology and methodology, for which third legal systems offer no authoritative guidance. The principle of autonomy has not yet been codified and is still exclusively determined by case law.29 The second element of supranationality, postulated in Costa,30 is direct applicability:31 EU law enters into force in the Member States with immediate binding force and alongside national law. There is no need or possibility to add or detract obligations on the part of the Member States or their parliaments. For regulations, direct applicability was already laid down at the time of the Costa judgment in ex-Art 189 EEC Treaty, now Art 288 TFEU. Regarding other types of acts, such as directives, direct applicability is still uncodified and therefore, again, exclusively based on the case law of the ECJ. The third element of supranationality is the direct effect of EU law, which was laid down in the early Van Gend case.32 Like the previous two elements, it has not yet been codified and is thus based on case law only,33 in which it was substantially developed over the years.34 While direct applicability deals with the entry into force Organisation im Sinne von Art 24 Abs 1 GG’ (tr The European Patent Organization is a supranational organization within the meaning of Art 24(1) German Basic Law). 27 Martin Nettesheim, ‘Art 1 AEUV’ in Eberhard Grabitz and Meinhard Hilf and Martin Nettesheim (eds), Das Recht der Europäischen Union (76th edn, Beck 2022) paras 60 ff. 28 Koen Lenaerts, ‘Kooperation und Spannung im Verhältnis von EuGH und nationalen Verfassungsgerichten’ (2015) 50 EuR 3, 12. 29 On related discussions at the occasion of the Constitution for Europe see Paul Craig, The Lisbon Treaty: Law, Politics, and Treaty Reform (OUP 2010) 145 ff. 30 CJEU, Case 6/64 Costa [1964] (supra n 11) 593 ff. 31 Martin Nettesheim (2022, supra n 27) para 67. 32 CJEU, Case 26/62 Van Gend en Loos [1963] (supra n 10) 12. 33 Whether direct effect is laid down in Art 288 TFEU is already disputed. In fact, that norm speaks only about applicability (‘general application’, ‘directly applicable’) and not about direct effect; Michael Dougan, ‘When Worlds Collide! Competing Visions of the Relationship between Direct Effect and Supremacy’ (2007) 44 CMLR 931, 943; For the opposite view see e.g. Marcus Klamert, EU-Recht (3rd edn, Manz 2021) para 76. 34 E.g. CJEU, 05.04.1979, Case C-148/78 Ratti [1979] ECLI:EU:C:1979:110, paras 14 ff (vertical direct effect of directives); CJEU, 14.07.1994, Case C-91/92 Faccini Dori v Recreb [1994] ECR I-3325, ECLI:EU:C:1994:292, paras 20 ff (no horizontal direct effect of directives).

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of EU law-based rights and obligations, direct effect concerns their individual enforceability before national authorities and courts.35 The requirements and limits of direct effect differ depending on the type of act and enforcement constellation.36 Eventually, however, direct effect boils down to the central question of the sufficiently precise and unconditional delineation of the claim. In other words, the EU law provision relied upon must be sufficiently capable of being applied by a judge (justiciability). Where the claim turns out to be sufficiently determined and founded, national courts must determine all necessary consequences within the scope of their judicial powers.37 Fourth, the interplay of autonomy, direct application and direct applicability leads to the principle of primacy of EU law over national law.38 Again, primacy was established in Costa39 and further developed later on.40 Primacy is in essence a simple conflict resolution rule for cases of contradiction between the autonomously juxtaposed legal system of EU law and national law. Primacy stipulates that where contradictions exist, EU law is to be applied, whereas national law is not.41 Like many other principles, primacy has still not been codified in primary law and remains solely based on case law.42 Therefore, its precise limits vis-à-vis the core elements of national constitutions and/or national legal identity remain unclear. For this reason, its limits have been formulated exclusively in national doctrine43 and jurisprudence.44 They are, however, still not generally recognized by the ECJ. This tension will be elaborated further below. Exclusively from the point of view of EU law, there is no exception to the principle that EU law takes unlimited precedence over national law. Accordingly, primacy is only limited by bounds arising out of EU

35

Paul Craig and Gráinne de Búrca, EU Law: Text, Cases, and Materials (7th edn, OUP 2020) 218 ff; Theo Öhlinger and Michael Potacs, EU-Recht und staatliches Recht: die Anwendung des Europarechts im innerstaatlichen Bereich (7th edn, LexisNexis 2020) 64 ff. 36 On the limits of direct effect see Paul Craig and Gráinne de Búrca (2020, supra n 35) 223 ff and 233 ff; Thomas Eilmansberger, ‘Zur Direktwirkung von Richtlinien gegenüber Privaten’ (2004) JBl 283, 364. 37 CJEU, 21.11.1991, Case C-354/90 FNCE [1991] ECR I-5505, ECLI:EU:C:1991:440, para 12; CJEU, 11.07.1996, Case C-39/94 SFEI [1996] ECR I-3547, ECLI:EU:C:1996:285 para 40. 38 For terminological disambiguation see Matej Avbelj, ‘Supremacy or Primacy of EU Law – (Why) Does it Matter?’ (2011) 17 ELJ 744. 39 CJEU, Case 6/64 Costa [1964] (supra n 11) 593 ff. 40 CJEU, 09.03.1978, Case 106/77 Simmenthal II [1978] ECR 00629, ECLI:EU:1978:49 para 24; CJEU, 22.06.10, Joined Cases C-188/10 and C-189/10 Melki and Abdeli [2010] ECR I-5667, ECLI: EU:C:2010:363, paras 53 ff; CJEU, 11.09.2014, Case C-112/13 A [2014] ECLI:EU:C:2014:2195 paras 41 ff; Case C-409/06 Winner Wetten [2010] ECR I-8015, ECLI:EU:2010:503, para 67. 41 Paul Craig and Gráinne de Búrca (2020, supra n 35) 218 ff. 42 The Treaty Establishing a Constitution for Europe [2004] OJ C310/1 envisaged codification in its Art I-6; this was moved to Declaration No 17 of the Lisbon Final Act [2012] OJ C326/337. 43 E.g. in Austria Rudolf Streinz, ‘Österreich und die Europäische Union’ (2013) 68 ZÖR 319, 323 ff; Theo Öhlinger and Michael Potacs (2020, supra n 35) 60 and 89 ff. 44 E.g. in Austria cf Theo Öhlinger and Michael Potacs (2020, supra n 35) 89 ff.

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law itself (e.g. respect for national procedural autonomy, conflicts with general principles or fundamental rights). Fifth and last, the follow-up question to primacy relates to the distribution of competences for the implementation and enforcement of EU law: The competence catalogue laid down in Arts 2 ff TFEU concerns legislative vertical competences only. Vertical enforcement competences lie with the Member States, unless specifically otherwise provided. This enforcement logic is thus similar to what can be found in federal state systems, such as Austria, where the Länder are equally responsible for the enforcement of federal laws, unless the Bund exceptionally enforces them directly.45 EU law does not, however, afford an unlimited guarantee of national procedural autonomy, which is subject to the loyalty-based correctives of equivalence and sufficient effectiveness of the national enforcement framework. The principles of procedural autonomy, on the one hand, and those of equivalence and effectiveness, on the other hand, are codified in Arts 4(3) and 19(1) TEU and Art 291 TFEU. A different line of jurisprudence has evolved regarding their requirements and bounds.46 In short, EU law additionally comprises the level of national procedures and remedies for its enforcement. Ultimately, if a problem of inequivalent or insufficient remedies cannot be resolved (e.g. by way of interpretation in conformity with EU law), the same primacy requirements and effects of substantive law come into play.47 These five initial elements form the essence of the supranational nature of EU law. As emphasized, all of them can ultimately be traced back to the judgments of Van Gend and Costa. Their effect is to distance EU law from international law and approximate it to the regular characteristics of national laws. These initial elements are flanked by additional key features of EU law, which are equally unknown to international law. Among those additional features, as a sixth element, figures the principle of liability of (the Union and) the Member States for damages resulting from infringements of EU law towards individuals. Tortious liability is relevant in situations in which the primary claim is unenforceable (e.g. in certain horizontal situations) and where, thus, the primacy mechanism, for one reason or another, fails to apply to individual claims.48 The principle of liability

Cf Thomas Jaeger, Einführung in das Europarecht: Grundlagen – Institutionen – Durchsetzung – Binnenmarkt (3rd edn, Facultas 2020) 18. 46 E.g. CJEU, 19.06.1990, Case C-213/89 Factortame I [1990] ECR I-2433, ECLI:EU:C:1990:257 paras 21 ff; CJEU, 13.03.2007, Case C-432/05 Unibet [2007] ECR I-2271, ECLI:EU:C:2007:163 paras 65, 77 and 83; CJEU, 09.11.1983, Case C-199/82 San Giorgio [1983] ECR 03595, ECLI:EU: C:1983:318 para 14; CJEU, 11.01.2001, Case C-1/99 Kofisa Italia [2001] ECR I-207, ECLI:EU: C:2001:10, paras 46 ff; CJEU, 13.01.2004, Case C-453/00 Kühne & Heitz [2004] ECR I-837, ECLI:EU:C:2004:17, para 28; CJEU, 15.04.2008, Case C-268/06 Impact [2008] ECR I-2483, ECLI:EU:C:2008:223, paras 42 ff. 47 Paul Craig and Gráinne de Búrca (2020, supra n 35) 244 ff; Theo Öhlinger and Michael Potacs (2020, supra n 35) 102 ff. 48 For more (and criticism) see Marcus Klamert (2021, supra n 33) para 1065. 45

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is codified in the Union,49 while the liability of Member States remains uncodified case law.50 Last but not least, a seventh essential feature assimilating supranational EU law to national law is the existence of fundamental rights protection vis-à-vis EU law acts. Before its codification in Art 6 TEU and the CFR, fundamental rights protection on the EU level had long been based on general legal principles established by case law.51 The coarse and necessarily superficial overview of the characteristics of supranationality serve only an indicative purpose for a general trend in the development of EU law: The judgments Van Gend and Costa triggered a process of dissociation of Union law from international law and, therefore, probably constitute the most striking ruptures and turning points in that regard. For a subsequent period of roughly 30 years, jurisprudence condensed, differentiated and developed the principles established in these judgments into the EU legal system we know today. In fact, each of the consecutive judgments fine-tuning the elements of supranationality may be described as a further small break with international law and, at the same time, an element of continuity towards a consolidation of the EU’s supranational character. This process of fine-tuning and differentiation of the functional features of EU law, carving out its contours and edges vis-à-vis international law and its approximation to features of national law, is by no means complete. It continues up until today. Indeed, as will be shown in the following, we may again have reached another turning point in the development of the elements of supranationality.

2.3

No Peer Resistance

Remarkably, the ECJ’s jurisprudence remained essentially uncontested already at the time of Van Gend and Costa and in the decades to follow: There was no fundamental opposition from peers, especially national courts and constitutional courts52 nor from national politics. This is underscored by the first major objection to the proclaimed effects of EU law, which came from the Italian and German constitutional courts in the early

49

Cf Art 340(2) TFEU. CJEU, 19.11.1991, Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci [1991] ECR I-5357, ECLI:EU:C:1991:428, paras 31 ff; CJEU, 05.03.1996, Case C-46/93 Brasserie du Pêcheur [1996] ECR I-1029, ECLI:EU:C:1996:79, paras 37 ff. 51 Derived from the common constitutional traditions of the Member States, cf CJEU, Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1125, ECLI:EU:C:1970:114, para 3; CJEU, Case 4/73 Nold [1974] ECR 491, ECLI:EU:C:1974:51, para 13; CJEU, 13.12.1979, Case 44/79 Hauer [1979] ECR 3727, ECLI:EU:C:1979:290 paras 14 ff. 52 Given that not all Member States have constitutional courts in the strict sense, that term is used in a broad and functional understanding here; Koen Lenaerts (2015, supra n 28) 4. 50

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1970s.53 While the objection was fundamental in the sense that it established borders for the notion of primacy, national courts did not, however, call primacy as such into question, nor any other functional principle (autonomy, direct applicability and effect).54 Peer criticism of the Court, in other words, remained singular and limited. There was (and still is) no general resistance against the notion of supranationality of EU law or against the authority of the Court. This assumption is further substantiated in the present section by means of the two particularly illustrative examples of primacy and direct effect. The lack of fundamental peer resistance is all the more remarkable as most of the principles of the supranational character of EU law are still not codified.55 This is due to two good reasons: A recurrent fear associated with codification on the occasion of Treaty reforms was that a tightening of the principles in codification would necessarily narrow them down and restrict their further development.56 In response to this fear, codification would have run into opposition from the more integration-weary. The best example of this dilemma is primacy, which would either be limited in scope if set out in detail or otherwise (in the absence of such specifications) be potentially boundlessly invasive.

2.3.1

The Example of Primacy

The first example illustrating a lack of genuine peer opposition to the intensification and widening of the supranational character of EU law promoted by the ECJ is the much-debated57 issue of the conflict between primacy and core parts of national constitutions and constitutional identity.58 Situations where this conflict arises are

53 Italian Constitutional Court (Corte Costituzionale), No 185/1973 Frontini (1973); BVerfG 2 BvL 52/71 Solange I (1974) 281 ff. 54 Ibid: The ‘continuing compatibility of the Treaty with [. . .] basic principles is to be guaranteed via the legal control of this court’ (tr TJ); similarly Solange I (1974, supra n 53) 281 ff. 55 Koen Lenaerts (2015, supra n 28). 56 Cf the cautious wording in the Subsidiarity Protocol to the 1997 Amsterdam Treaty: ‘The application of the principles of subsidiarity and proportionality shall respect the general provisions and the objectives of the Treaty, particularly as regards the maintaining in full of the acquis communautaire and the institutional balance; it shall not affect the principles developed by the Court of Justice regarding the relationship between national and Community law’. Older drafts were more ambitious in terms of explicit references to the primacy of EU law: cf Kai Hasselbach, ‘Der Vorrang des Gemeinschaftsrechts vor dem nationalen Verfassungsrecht nach dem Vertrag von Amsterdam’ (1997) JZ 942, 944. 57 Cf e.g. Gabriele Kucsko-Stadlmayer, ‘Der Vorrang des EU-Rechts vor österreichischem Recht’ (1995) ecolex 338; Theo Öhlinger and Michael Potacs (2020, supra n 35) 59 ff; Alexander Thiele, ‘Die Integrationsidentität des Art 23 Abs 1 GG als (einzige) Grenze des Vorrangs des Europarechts’ (2017) EuR 367; Stefan Griller, Öffentliches Recht: Die Neuordnung der Gerichtsbarkeit des öffentlichen Rechts: Gutachten (Manz 2018) 22 ff. 58 Cf Art 4(2) TEU.

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diverse: They often relate to fundamental rights conflicts, but also to alleged EU action ultra vires. The background of such situations is, however, irrelevant to the point made here. As just specified, as of the 1970s, national constitutional courts began to set limits to the doctrine of primacy. The first of these judgments came from Italy with Frontini and Germany with Solange I.59 Later on, the literature60 and, more importantly, the courts of other Member States (e.g. France, Spain, Ireland and many more),61 fell in line and established primacy limits for their respective systems. Yet, as was likewise emphasized, national doctrine did not lead to a broad or open conflict. Its effects were after all more constructive than obstructive in two ways: First, the dialogue with national courts helped to shape the limits of primacy (notwithstanding the fact that the ECJ has never confirmed those limits). Second, by way of this shaping exercise, national courts indirectly reinforced the legitimacy and acceptance of the primacy doctrine. Indeed, the ECJ would typically react to the voiced concerns and try to defuse the debate. This was specifically done, for example, through the recognition of ECHR-based human rights as general principles of EU law from the 1979 Hauer62 judgment onward. Hauer was expressly designed to react to the Frontini and Solange I concerns. It did not miss its mark: As of 198663 and the judgment Solange II,64 the German constitutional court found a consonance between the various acts of EU law brought before it and the requirements and limitations of the Grundgesetz. In not a single German case, therefore, did the limits on primacy imposed by national constitutional limits and constitutional identity become effective. The applicability and effect of EU law was never denied on German soil—up to, of course, the infamous PSPP decision of May 2020. This complacency until (and indeed: since) PSPP particularly holds true for prominent cases which were discussed from the point of view of a potential conflict between the German Bundesverfassungsgericht and the ECJ, such as Solange III of 2015.65 That judgment concerned the protection of fundamental rights under the European Arrest

59

Italian Constitutional Court No 185/1973 Frontini (1973, supra n 53); BVerfG Solange I (1974, supra n 53). 60 Gabriel Kucsko-Stadlmayer (1995, supra n 57); Theo Öhlinger and Michael Potacs (2020, supra n 35); Alexander Thiele (2017, supra n 57); Stefan Griller (2018, supra n 57). 61 For an overview of Denmark, Germany, France, Italy, Great Britain, Poland, Spain, Czech Republic see Armin Von Bogdandy and Stephan Schill, ‘Die Achtung der nationalen Identität unter dem reformierten Unionsvertrag’ (2010) 70 ZaöRV 701, 716 ff; Paul Craig and Gráinne de Búrca (2020, supra n 35) 317 ff; Franz C Mayer, ‘Verfassungsgerichtsbarkeit’ in Armin Von Bogdandy and Jürgen Bast (eds), Europäisches Verfassungsrecht: Theoretische und dogmatische Grundzüge (Springer 2009) 559, 578 ff; Koen Lenaerts (2015, supra n 28) 17; Theo Öhlinger and Michael Potacs (2020, supra n 35) 59 ff and 89 ff. 62 CJEU, Case 44/79 Hauer [1979] (supra n 51) para 15. 63 Koen Lenaerts (2015, supra n 28) 14 ff. 64 BVerfG 2 BvR 197/83 (1986) 385 ff. 65 BVerfG 2 BvR 2735/14 Solange III (2015), ECLI:DE:BVerfG:2015:rs20151215.2bvr273514.

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Warrant. The same is true, among others,66 of the Gauweiler67 and Weiss68 judgments of 2015 and 2018 involving the ECB’s expansionary monetary policy. The prevailing view in legal literature was that these developments presented an everincreasing Europe-friendly tendency of the Bundesverfassungsgericht after Solange II.69 The constitutional courts of other Member States followed the Solange II line of consolidation,70 in particular Italy (which had been the first to impose limits to primacy, even before the Bundesverfassungsgericht). The counterpart to Solange II is the Fragd judgment of 1989,71 which seeks to establish conflict prevention. In more recent times, the parallelism of developments in Italy and Germany in terms of the judicial dialogue over the limits of primacy was exemplified by the Taricco saga from the years 2015 to 2018. It concerns the effectiveness of sanctions for VAT fraud versus (exculpatory) national limitation periods and the nulla poena principle. In a first preliminary ruling, the ECJ requested the court of lower instance to disapply national provisions that prevented the imposition of sanctions for fraud.72 Later, in the same case, the Italian Corte Costituzionale seized the ECJ over the concern that disapplying national limitations might infringe the national constitutional principle of nulla poena and that, consequently, the court might be forced to disregard EU law. In its second preliminary reply, the ECJ clarified that the nulla poena principle did of course take precedence over the effectiveness of VAT provisions from the point of view of EU law.73 The Corte Costituzionale was ultimately content with this and, albeit with a critical undertone,74 followed the preliminary ruling.75 Incidentally, a Taricco-like constellation of a tension between national fundamental rights protection and primacy recurred for Germany in the case of Bastei, 66

A similar validity question raised by the Irish Supreme Court in CJEU, 27.11.12, Case C-370/12 Pringle [2012] ECLI:EU:C:2012:756 paras 77 ff. 67 CJEU, 16.06.15, Case C-62/14 Gauweiler [2015] ECLI:EU:C:2015:400; cf Koen Lenaerts and Thilo Stapper, ‘Grenzen des Rechts’ (2016) AnwBl 197, 198 ff; Philipp Matti, ‘Entwicklungen im Europarecht 2015’ in Gerhard Baumgartner (ed), Jahrbuch Öffentliches Recht 2016 (NVW 2016) 307, 318 ff; Rainer Palmstorfer, ‘Judicial Control of the ECB by the CJEU, Exemplified by the OMT Judgment’ (2016) 71 ZÖR 449; Claudia Wutscher, ‘Zur unionsrechtlichen Zulässigkeit von Staatsanleihenkäufen durch die EZB’ (2015) 19 ZfRV 155. 68 CJEU, 11.12.2018, Case C-493/17 Weiss and Other [2018] ECLI:EU:C:2018:1000; Tobias Bauerfeind, ‘EuGH: PSPP-Anleihekaufprogramm der EZB mit EU-Recht vereinbar’ (2019) GWR 9; Mathias Ruffert, ‘Anleihekäufe der EZB’ (2019) JuS 181. 69 Koen Lenaerts (2015, supra n 28) 26. 70 Ibid 15 ff. 71 Cf Corte Costituzionale No 232/1989 (1989). 72 CJEU, 08.09.2015, Case C-105/14 Taricco I [2015] ECLI:EU:C:2015:555 para 58. 73 CJEU, 05.12.2017, Case C-42/17 M.A.S. and M.B. (Taricco II) [2017] ECLI:EU:C:2017:936 para 62. 74 Chiara Amalfitano and Oreste Pollicino, ‘Two Courts, Two Languages? The Taricco Saga Ends on a Worrying Note’ (Verfassungsblog, 05 June 2018) accessed 22 September 2022. 75 Cf Corte Costituzionale No 115/2018 (2018).

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decided by the ECJ in 2018.76 Similarly to Taricco, Bastei concerned the tension between the requirement of effectiveness in EU law enforcement, in this case copyright, and German fundamental rights standards. The ECJ ordered the referring court again to prioritize EU law over more far-reaching rights of defense laid down in national law. The most recent example of a well-functioning dialogue between national courts and the CJEU is the La Quadrature du Net ruling of the French Conseil d’Etat in 2021, which dealt with the reconciliation of EU fundamental rights and data protection guarantees with constitutionally relevant national security interests in data retention. The Conseil d’Etat rejected the admissibility of an ultra vires review of CJEU rulings and reached a result in conformity with EU law.77 What can be observed in these and a few other cases78 is a working dialogue between supreme courts, among them the ECJ, on how to best coordinate crosseffects between the mutually autonomous legal system of EU law and national law.79 This dialogue is sometimes conducted with critical tones or even (albeit often exaggerated in literature) uproar.80 Ultimately, each side, including the national supreme courts, adds to shaping a system everyone accepts, of which the ECJ was initially and still is chiefly responsible.81 National judgments on the implementation of preliminary rulings, therefore, typically end harmoniously, in the sense that consistency between the courts’ own position and that of the ECJ is highlighted. The main point to be drawn from all this for the present context is that the functional principles of supranationality, as developed by the ECJ, are not called into question by the national courts in a fundamental or broad manner. The process of dissociating EU law from international law and aligning it to the functions of national law continues with the consent and interaction of the ECJ’s national counterparts.

76 Cf CJEU, 18.10.2018, Case C-149/17 Bastei Lübbe [2018] ECLI:EU:C:2018:841, paras 19 ff and 55; cf BVerfG Sekundäre Darlegungslast bei Urheberrechtsverletzungen durch Filesharing, NJW 2019, 1510. 77 French Conseil d’Etat, No 393099 La Quadrature du Net (2021), ECLI:FR: CEASS:2021:393099.20210421; CJEU, 06.10.2020, Joined Cases C-511/18, C-512/18 and C520/18 La Quadrature du Net [2020] ECLI:EU:C:2020:791, paras 81 ff; cf Cour constiutionnelle belge, No 57/2021 Ordre des Barreaux francophones et germanophones (2021). 78 For more examples cf Koen Lenaerts (2015, supra n 28) 5 ff. 79 Koen Lenaerts (2015, supra n 28) 5. 80 The president of the Bundesverfassungsgericht speaks of ‘all those who consider it appropriate to describe the relationship between the Federal Constitutional Court and the European Court of Justice with martial vocabulary as supposedly highly tense and intricate. The relationship between the European Court of Justice and national constitutional courts is not about super- or subordination, but about an appropriate division of responsibility and assignment in a complex multi-level network’: author’s translation from Andreas Voßkuhle, ‘Verfassungsgerichtsbarkeit und europäische Integration’ (Festvortrag anlässlich des Festaktes zum Österreichischen Verfassungstag 01 October 2012) accessed 22 September 2022; cf Andreas Voßkuhle, ‘Verfassungsgerichtsbarkeit und europäische Integration’ (2013) NVwZ Beilage 27, 28. 81 Koen Lenaerts (2015, supra n 28) 25 ff.

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An excerpt from the Bundesverfassungsgericht’s Solange III judgment perfectly illustrates this kind of critical, but approving and mediating approach among national courts: The Framework Decision on the European Arrest Warrant, in principle, enjoys primacy in the German legal system. [. . .] However, this does not exempt an appeal court from the obligation to ensure the principles of Art 1(1) Grundgesetz even upon extradition on the basis of a European Arrest Warrant. [. . .] In this context, the principle of consistent interpretation with EU law requires national courts to do everything in their competence to ensure full effectiveness of EU law and to reach an outcome that is in line with the aim pursued by the Framework Decision. In doing so, they take into account all national law and the interpretation methods recognized therein.82

The Bundesverfassungsgericht comprehensively applies this logic over a number of subsequent pages to ultimately ascertain full congruence between EU law and its own fundamental understanding: There is no need to refer the case to the ECJ under Art 267 TFEU. The correct application of EU law is so obvious that there is no room for reasonable doubt [. . .]. EU law does not conflict with the human rights protection of the Grundgesetz in the present case. As stated, the Framework Decision on the European Arrest Warrant does not oblige German courts and authorities to enforce an arrest warrant without examining its compatibility with the requirements of Art 1(1) Grundgesetz.83

This approach is symptomatic of the way fundamental conflicts between national supreme courts and the ECJ on issues of primacy and others are resolved in practice.84 An open conflict in the sense that a national court expressly denied the ECJ allegiance is virtually non-existent. Singular exceptions, which however remained without repercussions for the overall system and spirit of judicial cooperation, are

82

BVerfG 2 BvR 2735/14 Solange III [2015] (supra n 65) paras 76 and 77 (author’s translation from German): ‘Dem Rahmenbeschluss über den Europäischen Haftbefehl kommt in der deutschen Rechtsordnung grundsätzlich Anwendungsvorrang zu. [. . .] Das entbindet das Oberlandesgericht jedoch nicht von der Verpflichtung, auch bei einer Auslieferung auf der Grundlage eines Europäischen Haftbefehls die Grundsätze des Art. 1 Abs. 1 GG [. . .] sicherzustellen. [. . .] In diesem Zusammenhang verlangt der Grundsatz der unionsrechtskonformen Auslegung, dass die nationalen Gerichte unter Berücksichtigung des gesamten innerstaatlichen Rechts und unter Anwendung der dort anerkannten Auslegungsmethoden alles tun, was in ihrer Zuständigkeit liegt, um die volle Wirksamkeit des Unionsrechts zu gewährleisten und zu einem Ergebnis zu gelangen, das mit dem von dem Rahmenbeschluss verfolgten Ziel in Einklang steht.’ 83 Ibid para 125 (tr): ‘Einer Vorlage an den Gerichtshof der Europäischen Union gemäß Art. 267 AEUV bedarf es nicht. Die richtige Anwendung des Unionsrechts ist derart offenkundig, dass für einen vernünftigen Zweifel keinerlei Raum bleibt [. . .]. Das Unionsrecht gerät mit dem Menschenwürdeschutz des Grundgesetzes nach Art. 1 Abs. 1 GG in Verbindung mit Art. 23 Abs. 1 Satz 3 in Verbindung mit Art. 79 Abs. 3 GG im vorliegenden Fall nicht in Konflikt. Der Rahmenbeschluss über den Europäischen Haftbefehl verpflichtet, wie dargelegt, deutsche Gerichte und Behörden nicht, einen Europäischen Haftbefehl ohne Prüfung auf seine Vereinbarkeit mit den aus Art. 1 Abs. 1 GG folgenden Anforderungen zu vollstrecken.’ 84 Koen Lenaerts (2015, supra n 28) 25 ff.

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the Landtová conflict with the Czech Constitutional Court already dating from 2012 and the 2016 Ajos judgment of the Danish Supreme Court. The Landtová85 case concerned the application of the former Coordination Regulation 1408/7186 to an allegedly discriminatory pension scheme of the Czech Republic.87 The rather peculiar rule in question aimed at coordinating pension burdens following the division of the former Czechoslovakia. It raised questions of retroactivity and cross-border effect. The ECJ in 2011, answering preliminary questions submitted by the Czech Supreme Administrative Court, found the rule to be discriminatory on grounds of nationality and thus in violation of EU law.88 Ultimately, the Czech Constitutional Court was seized with the claim that the ECJ judgment constituted an ultra vires act. The Constitutional Court upheld that argument.89 In its view, the ECJ had misinterpreted and misapplied Regulation 1408/71 in the specific context of the division of Czechoslovakia. It stated that the result prescribed by the ECJ was not covered by the competences conferred on the EU, so that the interpretation prescribed by the preliminary judgment did not have to be followed. A very similar picture emerges in the latter case, Ajos,90 where the Danish Supreme Court refused to follow a 2016 ECJ preliminary ruling91 on grounds of ultra vires. The case concerned a breach of the prohibition of age discrimination under the Professional Equal Treatment Directive 2000/78/EC.92 The ECJ found age discrimination to be present and held that, because non-discrimination was a general legal principle of EU law, the prohibition also extended to private contractual relationships.93 The Danish Supreme Court openly rejected this finding and the implementation of the judgment: In its view, the ECJ had failed to recognize that the prohibition of age discrimination, as a general rule of law, did not apply in

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CJEU, 22.06.2011, Case C-399/09 Landtová [2011] ECR I-5573, ECLI:EU:C:2011:415. Council Regulation (EEC) 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community [1971] OJ L 149/2; replaced by Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems [2004] OJ of 07.07.1971, L-166/1. 87 Attila Vincze, ‘Das tschechische Verfassungsgericht stoppt den EuGH’ (2013) EuR 194; Koen Lenaerts (2015, supra n 28) 17 ff; Jan Komárek, ‘Playing With Matches: The Czech Constitutional Court’s Ultra Vires Revolution’ (Verfassungsblog, 22 February 2012) accessed 22 September 2022. 88 CJEU, Case C-399/09 Landtová [2011] (supra n 85) para 51. 89 Attila Vincze (2013, supra n 87). 90 Cf Danish Supreme Court (Højesteret) No 15/2014 (2016). 91 CJEU, 19.04.2016, Case C-441/14 Dansk Industri [2016] ECLI:EU:C:2016:278 paras 27 and 36. 92 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ of 02.12.2000, L 303/16. 93 Cf CJEU, 07.03.2014, Case C-176/12 Association de médiation sociale (AMS) [2014] ECLI:EU: C:2014:2 para. 47; Nicole Lazzerini, ‘(Some of) the Fundamental Rights Granted by the Charter May Be a Source of Obligations for Private Parties: AMS’ (2014) 51 CMLR 907. 86

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Denmark, since that area had been excluded in the Danish Accession Treaty.94 Like the Czech Constitutional Court in Landtová, the Danish Supreme Court in Ajos, therefore, categorized the ECJ ruling as an ultra vires act not capable of benefiting from the primacy doctrine. The main reason why the conflicts in Landtová and Ajos remained unresolved was probably that, unlike in Taricco, the national courts in question did not enter into a second round of dialogue with the ECJ to underscore the fundamental nature of their concerns. In other words, the conflict was sparked less by the provisions at issue than by a simple lack of sufficient dialogue.95 In Landtová, the Czech Constitutional Court expressly complained that its amicus curiae brief submitted to the ECJ in the course of the preliminary rulings procedure had (according to the ECJ: for reasons of procedural law)96 not sufficiently been taken into account.97 The atmospheric tension between the two courts might explain why the Constitutional Court did not turn the substance of its initial amicus curiae brief into a second, independent preliminary ruling request to the ECJ. A similar observation can be made regarding the Danish Supreme Court’s failure to bring its ultra vires concerns to the ECJ’s attention and give it the opportunity to comment. Had this happened in either of these proceedings, the ECJ would supposedly have been inclined to better differentiate its statements to create leeway for legitimate issues of national constitutional law and to reconcile them with EU law principles. In PSPP, however, the Bundesverfassungsgericht for the first time denied the validity of a Union act in a general manner.98 The background was a preliminary ruling to the ECJ on the compatibility of the European Central Bank’s (ECB) Public Sector Purchase Programme (PSPP) with the TFEU. According to the Bundesverfassungsgericht, the Weiss judgment, in which the ECJ ruled that the ECB acted within the scope of its competences, was no longer methodologically defensible, the proportionality test was inappropriate or funtionless, and the judgment was thus not binding as an ultra vires act. As a result, the Commission initiated infringement proceedings, which were closed after Germany formally declared that it recognized the principles of autonomy, primacy and uniform application of Union law, as well as the decisions of the ECJ, and that it would use all means to avoid ultra

Cf Mikael Rask Madsen, Henrik Palmer Olsen and Urška Šadl, ‘Legal Disintegration? The Ruling of the Danish Supreme Court in AJOS’ (Verfassungsblog, 30 January 2017) accessed 22 September 2022; Ruth Nielsen and Christina Tvarnø, ‘Danish Supreme Court Infringes the EU Treaties by Its Ruling in the Ajos Case’ (2017) Europaraettslig Tidskrift 303. 95 Koen Lenaerts (2015, supra n 28) 19 ff. 96 Ibid 19. 97 Ibid 19. 98 BVerfG 2 BvR 859/15 PSPP (2020). 94

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vires control in the future.99 The PSPP ruling added fuel to the fire of the debate on primacy.100 Nevertheless, Taricco is a much more typical example of the relationship between the ECJ and national supreme courts and a more typical case of the application of the principles of supranationality. This is also evidenced by a number of similar cases, where conflicts might have arisen in the absence of dialogue.101 However, unlike in Landtová and Ajos, a dialogue in those cases was successful and enabled the ECJ to incorporate the concerns voiced by national courts into its own delineation of the concept and requirements of supranationality.102 Even where such dialogue does not lead to EU law adapting or taking back its bounds and requirements,103 the ECJ is given an opportunity to address national concerns and to explain its views, thereby typically reinforcing acceptance of its rulings by national courts.104 Moreover, cases such as Landtová, Ajos and PSPP remain an exception, because some initially reluctant constitutional courts have slowly become more proactive in lodging preliminary rulings with the ECJ.105 Important examples are first preliminary requests lodged by the Italian,106 Austrian107 and German108 constitutional courts in the years 2011, 2012 and 2014. Summarizing the point on national respect for EU law primacy, Landtová, Ajos and PSPP allow for two observations: First, irrespective of the attention they enjoyed, the cases and their context are very specific and singular. They do not stand for a wider trend among national supreme courts nor for a rejection of the principle of primacy or its contours as developed by the ECJ. This is particularly true for the Czech Republic and Denmark, where adherence to the primacy principle has been and still is unquestioned on a more general scale. Second, the judgments do not alter the finding of a generally cooperative and constructive relationship between the

Commission Press Release, 02.12.2021, INF/21/6201; see also Thomas Jaeger, ‘Update PSPPUrteil: Kein Showdown in Luxemburg’ (2022) 3 ÖJZ 9; Moriz Kopetzki, ‘Ein Hahnenkampf der Höchstgerichte? Das PSPP-Urteil des BVerfG aus unionsrechtlicher Perspektive’ (2020) 3 juridikum 286. 100 See Polish Trybunal Konstytucyjny K 3/21 (2021), in which the constitutional court confirmed the primacy of Polish constitutional law over EU law. 101 Ibid 19 ff. 102 E.g. CJEU, 14.10.2004, Case C-36/02 Omega [2004] ECR I-9609, ECLI:EU:2004:614, para 41; CJEU, 22.12.2010, Case C-208/09 Sayn-Wittgenstein [2010] ECR I-13693, ECLI:EU:2010:806, para 92 (priority of the republican principle to EU citizenship). 103 E.g. CJEU, 26.02.2013, Case C-399/11 Melloni [2013] ECLI:EU:2013:107 paras 60 ff (cumulative application of national and EU fundamental rights protection); CJEU, 13.04.2010, Case C-73/ 08 Bressol and Others [2010] ECR I-2735, ECLI:EU:2010:181 para 62 (university enrollment numerus clausus and EU citizenship). 104 Koen Lenaerts (2015, supra n 28) 21. 105 Ibid 26. 106 CJEU, Case C-399/11 Melloni [2013] (supra n 100). 107 Cf Collection of the Austrian Constitutional Court (VfSlg) 19632/2012 Asylgesetz 2005 (2013). 108 CJEU, Case C-62/14 Gauweiler [2015] (supra n 67). 99

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ECJ and national supreme courts. They do not, in particular, invalidate the observation made earlier of a general tendency of conflict avoidance and the lack of effective opposition to an extended development of the characteristics of supranationality by the ECJ. In the context of the primacy principle, finally, the ECJ’s recent Rimšēvičs judgment deserves to be mentioned. In Rimšēvičs, the Court, for the first time, directly annulled an administrative act of a Member State body (the Latvian antifraud office).109 That finding was made in the very specific context of Art 14.2 subpara 2 ECB Statute,110 which gives the Court of Justice jurisdiction to review any dismissal of a governor of a national central bank available under national law. This had been the case in Rimšēvičs. However, the scope and implications of the ECJ’s powers were unclear from the mere wording of the Statute: The ECB suggested the Court should give a declaratory judgment, as in the case of infringement proceedings, while the plaintiff (the deposed governor) sought an immediate annulment by the Court.111 Between these two possible lines of argument, the ECJ opted for the more invasive one: It qualified the Art 14.2-type action as a variant of the action for annulment under Art 263 TFEU, thereby allowing for an immediate annulment of the act of the Member State in question.112 In the academic world, Rimšēvičs was qualified as a revolution: ‘[T]he Court has crossed a Rubicon, a constitutional Rubicon that allows no turning back.’113 Still, the very specific context of Rimšēvičs cannot be left out entirely when assessing its ramifications. Quick conclusions for other areas of EU law are to be avoided. Nevertheless, it is correct that the ECJ in Rimšēvičs, for the first time, permeated the skin of national law and operated directly beneath it, directly affecting the validity of national law. It went beyond the markings established for primacy in terms of a merely preferred application of EU law over conflicting national law without affecting the validity of that national law. Albeit in a materially limited area, Rimšēvičs affirms the possibility of a direct invalidation (possibly also derogation) of national law by EU law and institutions. Consequently, Rimšēvičs is to some extent a mere token for the transition process examined here as a wider trend in EU law. It reflects the evolution of the doctrine of primacy from a concept heavily influenced by international law and the respect for sovereign acts towards a more federalist logic.114 According to this logic, federal law directly affects or even breaks the laws passed by federal states. This is particularly the case, given that the ECJ could easily have opted for a less invasive understanding 109

Joined CJEU, 26.02.2019, Cases C-202/18 and C-238/18 Rimšēvičs [2019] ECLI:EU:C:2019: 139 para 97. 110 Protocol (No 4) of 26 October 2012 on the Statute of the European System of Central Banks and of the European Central Bank [2012] OJ of 25.10.2012, C 326/230. 111 Cf CJEU, C-202/18 and C-238/18 Rimšēvičs [2019] (supra n 106) para 64. 112 Ibid paras 66 ff. 113 Daniel Sarmiento, ‘Crossing the Baltic Rubicon’ (Verfassungsblog, 04 March 2019) accessed 22 September 2022. 114 Cf Koen Lenaerts, ‘EU-Federalism in 3-D’ in Elke Cloots, Geert De Baere and Stefan Sottiaux (eds), Federalism in the European Union (Hart 2012) 13, 13 ff.

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of the type of action in question (mere declaration of infringement), an interpretation that was even suggested by the ECB.115

2.3.2

The Example of Direct Effect

The second illustration of the existence and dynamics of a fine-tuning process in the ECJ’s case law on the characteristics of supranationality deals with direct effect.116 More specifically, the examples will focus on direct effect of EU law between private individuals. The fact that EU law can function as a basis for individual claims before national courts, provided that they are sufficiently clear, precise and unconditional, has been a cornerstone of supranationality since Van Gend and Costa.117 Claims are in principle directed against the immediate addressees of the respective provisions. For many EU law-based claims, particularly under primary law and in directives, that addressee is the Member State.118 Therefore, in proceedings between private parties, such claims would be unenforceable if the Member State had failed to comply with its EU law obligations. Historically, the ECJ sought to strike a balance between the enforcement of individual rights in situations of a breach of EU law on the part of Member States and the principle of legality and avoidance of undue effects for private opponents.119 The ECJ initially developed substitutes to remedy the obstacle of the addressees in certain EU law provisions. The Court clarified and distinguished patterns where direct effect yielded an acceptable balance of the interest involved and devised auxiliary instruments to give at least some (less invasive) legal effect to the provisions at issue. The oldest line of case law concerns the prohibition of gender discrimination, starting with the judgments in Von Colson,120 Marshall121 and Foster122 of the late 115

CJEU, C-202/18 and C-238/18 Rimšēvičs [2019] (supra n 106) para 64. For terminological disambiguation and in-depth discussions of the concept see the diverse contributions in Jolande M Prinssen and Annette Schrauwen, Direct Effect. Rethinking a Classic of EC Legal Doctrine (CUP 2002). 117 Cf CJEU, Case 26/62 Van Gend en Loos [1963] (supra n 10) 12; CJEU, Case 6/64 Costa [1964] (supra n 11) 593 ff; Eleni Frantziou, ‘The Horizontal Effect of the Charter of Fundamental Rights of the EU: Rediscovering the Reasons for Horizontality’ (2015) 21 ELJ 657, 661 ff; Elise Muir, ‘Of Ages in – and Edges of – EU Law’ (2011) CMLR 39, 39 ff; Aliki Semertzi, ‘The Preclusion of Direct Effect in the Recently Concluded EU Free Trade Agreements’ (2014) 51 CMLR 1125, 1125 ff. 118 On the definition of the state in EU law cf Francesco de Cecco, State Aid and the European Economic Constitution (Hart 2013) 59 ff. 119 For insight on the historic debate see Morten Rasmussen, ‘How to Enforce European Law? A New History of the Battle over the Direct Effect of Directives, 1958–1987’ (2017) 23 ELJ 290; Matej Avbelj (2011, supra n 38) 756. 120 CJEU, 10.04.1984, Case 14/83 Von Colson and Kamann [1984] ECLI:EU:1984:153, para 26. 121 CJEU, 26.02.1986, Case 152/84 Marshall II [1986] ECLI:EU:C:1986:84, paras 46 ff. 122 CJEU, 12.07.1990 Case C-188/89 Foster v British Gas plc [1990] ECR I-3313, ECLI:EU: C:1990:313, para 20. 116

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1980s. The ECJ excluded a horizontal effect of the relevant directives and principles.123 However, the Court did lay the foundation for a subsequent step-by-step strengthening of the requirement of effectiveness by devising alternative sanctioning mechanisms. Specifically, this line of case law lies at the roots of key doctrinal concepts such as the broad understanding of the notion of the state,124 the conform interpretation of national law125 and the principle of effective, dissuasive sanctions.126 Each of them is a substitute for the lack of immediate direct effect of the provision relied upon in the case at hand. Von Colson, Marshall and Foster, where the substitutes were initially developed, all concerned labor law. Subsequent case law expanded those tools to other areas of law and developed them further.127 Examples128 include the Faccini Dori129 judgment, pinned against a consumer law background, which confirmed the exclusion of the horizontal direct effect of directives, as well as the obligation to interpret national law in conformity with EU directives.130 Other judgments to be named are Marleasing,131 Pafitis,132 CIA,133 Unilever,134 and others,135 which concern issues

123 Cf Koen Lenaerts and José A Gutiérrez-Fons, ‘The Constitutional Allocation of Powers and General Principles of EU Law’ (2010) CMLR 1629, 1638; Sacha Prechal, ‘Remedies After Marshall’ (1990) 27 CMLR 451. 124 Cf Thomas Jaeger (2020, supra n 45) 76 ff.; recently CJEU, 19.12.2019, Case C-168/18 Pensions-Sicherungs-Verein [2019] ECLI:EU:C:2019:1128 para 57. 125 Ibid 77 ff. 126 Cf Thomas Jaeger, ‘Gerichtsorganisation und EU-Recht’ (2018) EuR 611, 616 ff; Marcus Klamert, ‘Die Durchsetzung finanzieller Sanktionen gegenüber den Mitgliedstaaten’ (2018) EuR 159, 159 ff. 127 Cf Stefan Enchelmaier, ‘Supremacy and Direct Effect of European Community Law Reconsidered, or the Use and Abuse of Political Science for Jurisprudence’ (2003) 23 OJLS 281, 294 ff. 128 Of more recent jurisprudence cf. e.g. Case C-351/12 OSA [2014] ECLI:EU:C:2014:110, paras 43 ff; CJEU, Case C-441/14 Dansk Industri [2016] (supra n 91) paras 23 ff. 129 CJEU, Case C-91/92 Faccini Dori v Recreb [1994] (supra n 34) paras 20 ff. 130 Cf Thomas Jaeger (2018, supra n 45) 111 ff. 131 CJEU, 13.11.1990, Case C-106/89 Marleasing [1990] ECR I-4135, ECLI:EU:1990:395 paras 6 ff. 132 CJEU, 27.04.2004, Case C-441/93 Pafitis and Others [1996] ECR I-1347, ECLI:EU:C:1996:92 para 57. 133 CJEU, 30.04.1996, Case C-194/94 CIA Security [1996] ECR 2201, ECLI:EU:1996:172 para 54. 134 CJEU, 26.09.2000, Case C-443/98 Unilever [2000] ECR I-7535, ECLI:EU:C:2000:496 paras 49 ff. 135 E.g. CJEU, 11.08.1995, Case C-431/92 Großkrotzenburg [1995] ECR I-2189, ECLI:EU: C:1995:260 para 26; CJEU, 28.03.1996, Case C-129/94 Ruiz Bernáldez [1996] ECR I-1829, ECLI:EU:C:1996:143 para 24; CJEU, 24.10.1996, Case C-72/95 Kraaijeveld and Others [1996] ECR I-5403, ECLI:EU:C:1996:404 para 56; CJEU, 12.11.1996, Case C-201/94 Smith & Nephew [1996] ECR I-5819, ECLI:EU:C:1996:43, para 39; CJEU, 22.04.1997, Case C-180/95 Draehmpaehl [1997] ECR I-2195, ECLI:EU:C:1997:208 para 43; CJEU, 16.08.1998, Case C-226/ 97 Lemmens [1998] ECR I-3711, ECLI:EU:C:1998:296 paras 34 ff; CJEU, 16.09.1998, Case C-435/97 WWF and Others [1999] ECR I-5613, ECLI:EU:C:1999:418 paras 68 ff; CJEU,

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ranging from company law to the free movement of goods to environmental protection and which fine-tuned the horizontal invocability of directives in (permitted) exclusion versus (excluded) substitution situations.136 In the labor law case Francovich,137 finally, Member State liability for breaches of EU law was devised as a secondary remedy and safety net to render EU law obligations effective where the primary claim was unenforceable (e.g. because the respondent is unavailable, as in Francovich).138 Those different lines of the effectiveness jurisprudence are drawn together and illustratively put to work in the more recent preliminary ruling of Smith, concerning the (prohibition of) substitution of an insurance policy clause by a directive provision.139 It was only recently that the ECJ commenced differentiating effects according to the importance of the claims: What principles of EU law are of such a fundamental character as to be directly enforceable against private individuals, even though the initial addressee of the obligation to implement EU law was a Member State? This question and the related case law to date fuels intense discussions in literature, in particular regarding labor law, non-discrimination and the scope of fundamental rights both under the CFR and as general principles of EU law.140 Hence, labor law was the forerunner also regarding this aspect of direct effect. The respective case law is particularly interesting as it cross-connects a triangle of rights which are typically laid down in directives, while at the same time also constituting general principles of EU law and now also mirrored in the CFR.141

14.09.2000, Case C-348/98 Ferreira [2000] ECR I-6711, ECLI:EU:C:2000:442 para 40; CJEU, 09.11.2000, Case C-381/98 Ingmar GB [2000] ECR I-9305, ECLI:EU:C:2000:605, paras 25 ff; CJEU, 13.12.2001, Case C-481/99 Heininger [2001] ECR I-9945, ECLI:EU:C:2001:684 para 40; CJEU, 07.01.2004, Case C-201/02 Wells [2004] ECR I-723, ECLI:EU:C:2004:12 paras 57 ff. 136 Cf Paul Craig and Gráinne de Búrca (2020, supra n 35) 216 ff; Michael Dougan (2007, supra n 33) 935 ff; Thomas Eilmansberger (2004, supra n 36) 293 ff. 137 CJEU, Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci [1991] (supra n 50) paras 31 ff. 138 Cf Thomas Jaeger (2020, supra n 45) 85 ff. 139 CJEU, 10.04.2018, Case C-122/17 Smith [2018] ECLI:EU:C:2018:631 paras 22 ff. 140 Critical of direct horizontal effects for fundamental rights e.g. Angela Ward, ‘Art 51, para 51.44’ in Steve Peers and others (eds), EU Charter of Fundamental Rights (Hart/Beck 2014); Martin Borowsky, ‘Art 51 GRC, para. 31’ in Jürgen Meyer (ed), Charta der Grundrechte der Europäischen Union (4th edn, Nomos 2014); Hans D Jarass, Charta der Grundrechte der EU (3rd edn, Beck 2016) Art 51 paras 36 ff; Eleni Frantziou (2015, supra n 114) 674 ff; advocates of direct horizontal effects for fundamental rights are e.g. Aurelia Colombi Ciacchi, ‘European Fundamental Rights and Private Litigations: Judicial Dialogue and Judicial Governance’ in Fabrizio Cafaggi and Stephanie Law (eds), Judicial Cooperation in European Private Law (Edward Elgar 2017); Aurelia Colombi Ciacchi, ‘Judicial Governance in Private Law through the Application of Fundamental Rights’ (2014) ALJ 120; Christoph U Schmid, ‘Judicial Governance in the European Union: the ECJ as a Constitutional and a Private Law Court’ in Erik Oddvar Eriksen and Christian Joerges and Florian Rödl, Law, Democracy and Solidarity in a Post-National Union: The Unsettled Political Order of Europe (Routledge 2008). 141 Cf Jochen Mohr, ‘GRC Art 21, 23’ in Martin Franzen, Inken Gallner and Hartmut Oetker, Kommentar zum europäischen Arbeitsrecht (4th edn, Beck 2022) para 6.

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An illustrative and substantial example for the horizontal direct effect of directive provisions overlapping with fundamental principles of EU law is the Mangold142 and Kücükdeveci143 line of case law concerning the prohibition of age discrimination.144 Directive 2000/78145 enshrines equal treatment in employment and occupation. Enforcing this principle in horizontal employment situations based directly on the Directive alone would, on the one hand, seem to run counter to the principles established since Von Colson up until Smith. On the other hand, equal treatment on grounds of age may be seen as a specific application of the general principle of non-discrimination, which, according to the ECJ, is in turn open to horizontal application.146 The Court held that in such a situation [t]he need to ensure the full effectiveness of the principle of non-discrimination on grounds of age, as given expression in Directive 2000/78, means that the national court, faced with a national provision falling within the scope of European Union law which it considers to be incompatible with that principle, and which cannot be interpreted in conformity with that principle, must decline to apply that provision, without being either compelled to make or prevented from making a reference to the Court for a preliminary ruling before doing so.147

As of Mangold and Kücükdeveci, the Court started to get around the restrictions of the horizontal direct effect of directives by, first, identifying matching general legal principles and, second, pointing out that they, unlike the directive itself, were capable of producing third-party effects.148 It is indeed precisely this line of argument and case law149 which led to the ECJ’s aforementioned conflict with the Danish

142 CJEU, 22.11.2005, Case C-144/04 Mangold [2005] ECR I-9981, ECLI:EU:C:2005:709 paras 64 ff and 74 ff. 143 CJEU, 19.01.2010, Case C-555/07 Kücükdeveci [2010] ECR I-365, ECLI:EU:C:2010:21 paras 41 ff. 144 For a critical analysis Jürgen Basedow, ‘General Principles of European Private Law and Interest Analysis: Some Reflections in the Light of Mangold and Audiolux’ (2016) 24 ERPL 331; Martin Moser, ‘Allgemeine Rechtsgrundsätze in der Rechtsprechung des EuGH als Katalysatoren einer europäischen Wertegemeinschaft’ (2012) ZfRV 4, 15 ff. 145 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (2020, supra n 92). 146 CJEU, Case C-144/04 Mangold [2005] (supra n 139) paras 74 ff; CJEU, Case C-555/07 Kücükdeveci [2010] (supra n 140) para 50. 147 CJEU, Case C-555/07 Kücükdeveci [2010] (supra n 140) para 53; CJEU, Case C-144/04 Mangold [2005] (supra n 139) para 77; just recently confirmed (albeit in vertical disputes) in CJEU, 08.05.2019, Case C-24/17 ÖGB [2019] ECLI:EU:C:2019:373 para 55; CJEU, 08.05.2019, Case C-396/17 Leitner [2019] ECLI:EU:C:2019:375 para 69. 148 It is argued in the literature that the general principle only allows the review and non-application of national law (as a consequence of primacy), but no actual (direct) third-party effect; cf WulfHenning Roth, ‘Europäische Verfassung und europäische Methodenlehre’ (2011) 75 RabelsZ 825, 825 ff; Matteo Fornasier, ‘The Impact of EU Fundamental Rights on Private Relationships: Direct or Indirect Effect?’ (2015) 23 ERPL 29, 44; differently Mirjam de Mol, ‘Kücükdeveci: Mangold Revisited - Horizontal Direct Effect of a General Principle of EU Law’ (2010) ECLR 293, 301. 149 CJEU, Case C-441/14 Dansk Industri [2016] (supra n 91) paras 35 ff.

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Supreme Court in the Ajos150 judgment and which gave rise to (albeit eventually dismissed) ultra vires concerns for the German Bundesverfassungsgericht.151 From the entry into force of the CFR onward, the ECJ was able to draw on a new basis to justify the horizontal direct effect of such EU law principles, which found a corresponding match in CFR provisions.152 Again, the forerunners were employment-related cases and claims under labor law. Examples of this new line of case law prominently drawing on the CFR for its argumentative basis include the judgment AMS153 from 2014, on employee participation, and the judgments G4S,154 Egenberger,155 IR/JQ156 and Achatzi,157 dating from 2017 to 2019 and all dealing with issues of religious discrimination at work.158 Particularly instructive in that regard are the many judgments dealing with (and affirming the horizontal applicability of) different aspects of the both CFR-based159 and directive-based160 right to paid leave,161 namely Williams,162 Heimann,163 King,164

150

Højesteret No 15/2014. Cf BVerfG, 2 BvR 2661/06 Honeywell (2010) ECLI:DE:BVerfG:2010: rs20100706.2bvr266106, paras 58 and 68 ff. 152 Cf Hans D Jarass, ‘Die Bedeutung der Unionsgrundrechte unter Privaten’ (2017) ZEuP 310. 153 Cf Association de médiation sociale (AMS) (n 93); Nicole Lazzerini (2014, supra n 93). 154 CJEU, 14.03.2017, Case C-157/15 G4S Secure Solutions [2017] ECLI:EU:C:2017:203 paras 25 ff; cf Eleanor Spaventa, ‘Should We “Harmonize” Fundamental Rights in the EU?’ (2018) 55 CMLR 997, 1017 ff. 155 CJEU, 17.04.2018, Case C-414/16 Egenberger [2018] ECLI:EU:C:2018:257 paras 76 ff; Claus D Classen, ‘Das kirchliche Arbeitsrecht unter Druck’ (2018) EuR 752, 763 ff; Eleni Frantziou, ‘Mangold Recast? The ECJ’s Flirtation with Drittwirkung in Egenberger’ (European Law Blog, 24 April 2018) accessed 22 September 2022; Luísa Lourenco, ‘Religion, Discrimination and the EU General Principles’ Gospel: Egenberger’ (2019) 56 CMLR 193. 156 CJEU, 11.09.2018, Case C-68/17 IR v JQ [2018] ECLI:EU:C:2018:696 paras 67 ff. 157 CJEU, 22.01.2019, Case C-193/17 Achatzi [2019] ECLI:EU:C:2019:43 paras 70 ff. 158 Cf Art 21(1) CFR. 159 Cf Art 31(2) CFR. 160 Cf Art 7 Directive 2003/88/EC concerning certain aspects of the organisation of working time [2003] OJ L 299/9. 161 Initial assessments that the Mangold and Kücükdeveci line of case law might remain restricted to non-discrimination were thus disproved; e.g. Elise Muir (2011, supra n 114) 60 ff. 162 CJEU, 15.09.2011, Case C-155/10 Williams and Others [2011] ECR I-8409, ECLI:EU:C:2011: 588 para 18. 163 Joined Cases, CJEU, 08.11.2012, C-229/11 and C-230/11 Heimann [2012] ECLI:EU:C:2012: 693 para 22. 164 CJEU, 29.11.2017, Case C-214/16 King [2017] ECLI:EU:C:2017:914 para 33. 151

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Dicu,165 Shimizu,166 Bauer167 and Hein,168 all dating from 2011 to 2018. As the Court states in Bauer (and similarly in Shimizu): With respect to the effect of Article 31(2) of the Charter on an employer who is a private individual, it should be noted that, although Article 51(1) of the Charter states that the provisions thereof are addressed to the institutions, bodies, offices and agencies of the European Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing EU law, Article 51(1) does not, however, address the question whether those individuals may, where appropriate, be directly required to comply with certain provisions of the Charter and cannot, accordingly, be interpreted as meaning that it would systematically preclude such a possibility.169

With Bauer and Shimizu thus, horizontal applicability of CFR-based rights is, in principle, accepted on a general scale, particularly beyond non-discrimination. Earlier judgments on the same issue of interpretation of the directive’s right to paid leave, such as Robinson-Steele of 2006, speak of a ‘particularly important principle of Community social law’,170 but do not label it a fundamental right (before the CFR’s entry into force in 2009 protected as general principle of law) nor demand horizontal application (but just conform interpretation). The change of tack at the ECJ to move from important principles and conform interpretation to fundamental rights warranting, as a last resort, horizontal direct effects must, therefore, have occurred between 2006 and 2011. Conform interpretation, of course, is still the Court’s preferred way forward. This is, for example, underscored in Hein.171 The Court there stressed that the national court was not required to interpret national law contra legem in order to achieve conformity.172 Nonetheless, the Court stressed at the same time that even ‘in proceedings between individuals in which it is apparent that the national legislation at issue is contrary to EU law, (. . .) it is for that court to provide the legal protection which individuals derive from the provisions of EU law and to ensure that those provisions are fully effective’,173 citing Kücükdeveci in that context. 165

CJEU, 04.10.2018, Case C-12/17 Dicu [2018] ECLI:EU:C:2018:799 para 25. CJEU, 06.11.2018, Case C-684/16 Shimizu [2018] ECLI:EU:C:2018:874 paras 76 ff; Moriz Kopetzki, ‘Das Grundrecht auf Jahresurlaub: Neues zur Charta und ihrer Drittwirkung’ (2019) ecolex 97. 167 CJEU, 06.11.2018, Joined Cases C-569/16 and C-570/16 Bauer [2018] ECLI:EU:C:2018:871 paras 87 ff; Philip Weinkogl, ‘Horizontalwirkung von EU-Sozialgrundrechten in der verbundenen Rechtssache Bauer’ (2018) NJOZ 1921; Christian Baldus and Thomas Raff, ‘Good News, Bad News zu horizontaler Direktwirkung und europäischer Methodenlehre: Weitere Konstitutionalisierung des unionalen und nationalen Privatrechts?’ (2018) 15 GPR 175. 168 CJEU, 13.12.2018, Case C-385/17 Hein [2018] ECLI:EU:C:2018:1018 para 23. 169 CJEU, Case C-569/16 Bauer [2018] (supra n 164) para 87; similarly CJEU, Case C-684/16 Shimizu [2018] (supra n 163) para 76. 170 CJEU, 16.03.2003, Joined Cases C-131/04 and C-257/04 Robinson-Steele and Others [2006] ECR I-2531, ECLI:EU:C:2006:177 para 48. 171 CJEU, Case C-385/17 Hein [2018] (supra n 165) paras 48 ff. 172 Ibid para 51. 173 Ibid para 48. 166

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The recent judgment in CCOO of 2019, also on the interplay between the working time Directive and Art 31(2) CFR, stopped short of including a Kücükdeveci-type effectiveness requirement and restricted itself to demanding conform interpretation.174 However, the AG’s Opinion in that case, instead, stressed the potential for direct horizontal applicability of the CFR: The Court has already held, with reference to the right to annual leave, that Article 31(2) of the Charter can have direct effect in horizontal relations between individuals. Given that the structure of the right to the limitation of maximum working hours and to daily and weekly rest periods is the same as that of the right to annual leave, and given that these rights are all closely connected and are all intended to secure working conditions which respect the health, safety and dignity of workers, and that they are provided for in the same article of the Charter, the Court’s case-law on the direct effect of Article 31(2) of the Charter in horizontal relationships between individuals can, in my opinion, be applied also with regard to the right to the limitation of maximum working hours and to daily and weekly rest periods. (. . .) Those rights can, therefore, be asserted directly vis-à-vis employers in situations which fall within the scope of EU law, as does the situation in the present case, given that the national provisions here at issue transpose Directive 2003/88, which concerns certain aspects of the organisation of working time.175

The entry into force of the CFR in 2009 did likely boost ambitions to carry the Mangold and Kücükdeveci logic of non-discrimination as a horizontally effective principle on to other areas, such as paid leave. Whatever may have prompted the change of mind, the high number of recent cases clearly shows that the jurisprudence on the horizontal direct effect of fundamental rights has intensified and that the ECJ seems to have waived its previous restraint.176 The majority of those judgments is decided in favor of the plaintiffs, but by no means all of them. As G4S indicates, this is true even in alleged cases of discrimination. There, the ECJ ruled that a headscarf ban at work can be justified under certain circumstances. Moreover, as the Achatzi ruling on a right of leave for non-confessional workers on Good Friday demonstrates, this expansionary judicature is by no means entirely uncontroversial and solidified even within the ECJ: The AG’s Opinion in Achatzi merely affirmed the CFR’s exclusionary effect, but denied (unlike the subsequent ECJ ruling)177 the right to financial compensation against the private employer (i.e. the substitution effect). Instead, it relegated the claimants to state liability.178

174

CJEU, 14.05.2019, Case C-55/18 CCOO [2019] ECLI:EU:C:2019:402 paras 68 ff. Ibid, Opinion of AG Pitruzzella, paras 94 and 95. 176 A few years earlier, the ECJ left open the question of horizontal direct effect of Art 31 CFR and instead pointed to Member State liability; cf CJEU, 24.01.2012, Case C-282/10 Dominguez [2012] ECLI:EU:C:2012:33 para 43; the AG’s Opinion made a strong point against horizontal direct effect; cf CJEU Case C-282/10 Dominguez [2011] ECLI:EU:C:2011:559, Opinion of AG Trstenjak, paras 80 ff. 177 CJEU, Case C-193/17 Achatzi [2019] (supra n 154) para 89. 178 Ibid, CJEU Case C-193/17 Achatzi [2019] ECLI:EU:C:2018:614, Opinion of AG Bobek, para 196. 175

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First of all, Achatzi demonstrates that even in seemingly clear-cut cases concerning non-discrimination and fundamental rights, the solutions chosen by the ECJ are by no means set in stone, but are the result of a certain margin of appreciation. In other words, the case law on the gradual extension and consolidation of obligations under EU law forms part of a clear judicial determination in favor of such effects. The allegation that the ECJ traditionally follows an integration-friendly line is, therefore, still correct today and has not significantly changed since Van Gend and Costa. ECJ jurisprudence to this day is deeply rooted in the tradition that has begun with those judgments. Secondly, Achatzi and the other judgments up until Bauer and Hein also make it clear that when directive-based claims are exchanged for—or at least flanked with— CFR-based claims, the largely academic discussion about an invocability of exclusion versus substitution effects for directives has become immaterial: Insofar as a claim is (at least partly) CFR-based or mirrored therein, such as in the AchatziBauer-type cases,179 the distinction is no longer relevant. It seems that whenever the ‘Charter is sufficient in itself to confer on individuals a right’180 without need for further clarification as to the scope of a claim, fundamental rights are capable of direct effect, including direct horizontal effect. In particular, and contrary to doubts in the literature in that regard,181 Art 51(1) CFR does not preclude the potential horizontal direct effect of Charter-based rights.182 By allowing direct reliance on the CFR in all those horizontal cases and including private individuals among the CFR’s addressees, the ECJ comprehensively and lastingly broadens both the scope and the intensity of EU law obligations. The Opinion in CCOO shows how far this might potentially go: The AG argued in favor of Art 31(2) CFR creating an obligation for private employers to create systems for the effective monitoring of working hours, even though such a right or obligation was nowhere mentioned in the relevant directive.183 Rightly, such developments, which under the current open reasoning of the Court might potentially spread to any Charter right, were heavily criticized by AG Bobek in his Achatzi Opinion: He argued for more judicial (. . .) restraint [to safeguard] predictability, legal certainty, and, on the constitutional level, the separation of powers. Bills of rights tend to be quite abstract and thus vague, as is the Charter. They are generally in need of further legislation to give them justiciable content. Imbuing those provisions with horizontal direct effect in and of themselves, for the rights and obligations of private individuals, opens the door to extreme forms of judicial creativity.

179

CJEU, Joined Cases C-569/16 and C-570/16 Bauer [2018] (supra n 164) paras 79 ff. Ibid para 89; similarly Case C-684/16 Shimizu [2018] (supra n 163) para 74; by contrast, Art 27 CFR was considered not sufficiently concrete in CJEU, Case C-176/12 Association de médiation sociale (AMS) [2014] (supra n 93) para 45. 181 Angela Ward (2014, supra n 137); Martin Borowsky (2014, supra n 137); Hans D Jarass (2016, supra n 137); Eleni Frantziou (2015, supra n 114) 674 ff. 182 CJEU, Joined Cases C-569/16 and C-570/16 Bauer [2018] (supra n 164); CJEU, Case C-684/16 Shimizu [2018] (supra n 163) para 76. 183 CJEU, Case C-55/18 CCOO [2019] (supra n 171) para 96 ff. 180

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T. Jaeger (. . .) In the end, it is that problem of predictability and legal certainty, coupled, admittedly, with a distinct flavour of circumvention of one’s own previously imposed limits, that brings me to the final point: if indeed this were to be the future approach of the Court, it would perhaps be advisable to revisit the issue of horizontal direct effect of directives. The persistence in formally denying horizontal direct effect to directives while moving heaven and earth to ensure that that restriction has no practical consequences whatsoever, such as importing the content of a directive into a Charter provision, appears increasingly questionable.184

Between these two lines of development, i.e. the effectiveness of substitutes for the lack of direct effect and the imposition of directly effective obligations on private parties by virtue of their fundamental importance, exists a third line of case law. It shall be mentioned here for the sake of completeness.185 It relates to the horizontal applicability of the fundamental market freedoms and some other Treaty provisions. Corresponding judgments, to name the most prominent ones, range from Walrave,186 Defrenne187 and Bosman188 via Deliège,189 Angonese,190 Ferlini,191 Viking Line192 or Raccanelli193 to Fra.Bo.194 In the end, that jurisprudence stands in the tradition of Marshall and Foster too, given that it seeks to broaden the notion of the state and of state-like regulation to provide a makeshift tool for the enforcement of individual claims, where this would

184

CJEU C-193/17 Achatzi [2019] Opinion of AG Bobek (supra n 175) paras 141, 145. Thomas Jaeger (2020 supra n 45) 167 ff and 77; Thomas Jaeger, Materielles: Lehr- und Handbuch zum Recht des EU-Binnenmarkts (2nd edn, LexisNexis 2020) 23; critically Arthur Hartkamp, ‘The Effect of the EC Treaty in Private Law: On Direct and Indirect Horizontal Effects of Primary Community Law’ (2010) 18 ERPL 527, 527 ff; Harm Schepel, ‘Constitutionalising the Market, Marketising the Constitution, and to Tell the Difference: On the Horizontal Application of the Free Movement Provisions in EU Law’ (2012) 18 ELJ 177, 177 ff. 186 CJEU, 12.12.1974, Case 36/74 Walrave [1974] ECR 01405, ECLI:EU:C:1974:140 paras 16 ff (compatibility of collective rules of a cycling federation with the free movement of workers). 187 CJEU, 08.04.1976, Case 43/75 Defrenne v SABENA [1976] ECR 00455, ECLI:EU:C:1976:56 paras 38 ff (compatibility of a private employment contract with Art 157 TFEU). 188 CJEU, 15.12.1995, Case C-415/93 Bosman [1995] ECR I-4921, ECLI:EU:C:1995:463 paras 82 ff (compatibility of collective rules of a soccer association with the free movement of workers). 189 CJEU, 11.04.2000, Joined Cases C-51/96 and C-191/97 Deliège [2000] ECR I-2549, ECLI:EU: C:2000:199 paras 47 ff (compatibility of collective rules of a judo sports association with the freedom to provide services). 190 CJEU, 06.04.2000, Case C-281/98 Angonese [2000] ECR I-4139, ECLI:EU:C:2000:296 para 36 (binding effect of the free movement for workers on a private employer). 191 CJEU, 03.04.2000, Case C-411/98 Ferlini [2000] ECR I-8081, ECLI:EU:C:2000:530 para 50 (binding effect of Art 18 TFEU on a hospital association). 192 CJEU, 11.12.2007, Case C-438/05 Viking Line [2007] ECR I-10779, ECLI:EU:C:2007:772 para 61 (compatibility of collective measures of a trade union with the freedom of establishment). 193 CJEU, 17.07.2008, Case C-94/07 Raccanelli [2008] ECR I-5939, ECLI:EU:C:2008:425 para 46 (binding effect of the free movement for workers on a private association). 194 CJEU, 12.07.2012, Case C-171/11 Fra.bo [2012] ECLI:EU:C:2012:453 paras 26 ff (compatibility of the activities of a private standardization and certification body with the free movement of goods). 185

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otherwise be blocked. At least ideologically, this case law is distinct from the case law on the horizontal direct effect of directives and CFR-based rights, insofar as it is probably inspired by the great importance of the fundamental market freedoms. Put differently, that case law may, to some extent, have paved the way for a horizontal direct effect in the narrower sense of Mangold and Kücükdeveci. Therefore, it comes as no surprise that the ECJ in Egenberger pointed to that line of case law to explain the horizontal direct effect accorded to the CFR.195

2.3.3

Interim Conclusions

The supranational character of EU law separates it from international law and assimilates it to the functioning of national law. Based on the above analysis, four observations can be made in this regard. First, the functional characteristics of supranationality have reached a high level. Yet, the process of differentiation from international law is still ongoing. Second, the processes of differentiation and shaping of the supranational character of EU law through ECJ case law remain essentially uncontested by Member State courts. Third, an important contributing factor to the essential consent of Member State courts to the ECJ’s definition and shaping of supranationality elements is their invitation to participate in this process by way of judicial dialogue. Only in the absence of such judicial dialogue, as in the judgments of Ajos and Landtovà, do irreconcilable conflicts arise. Such singular case law, however, is neither capable of tilting the system of judicial dialogue nor the continuous and consensual evolution of supranationality. Fourth, although the ECJ’s case law shaping the characteristics of supranationality inevitably shows some meandering, it is ultimately stringent and consistent. The Court continues its straightforward course along the initial lines of Van Gend and Costa towards compressed and intensified functional characteristics of EU law and its effectiveness. While the crises that have shaken the EU over the past years might have created the impression that the supranational integration model had possibly reached its maximum intensity, an examination of the case law—and indeed: of the uninhibited functioning of EU law in court practice—conveys just the opposite picture. Instead, recent jurisprudence shows that the ECJ continues to further consolidate the functional foundations of EU law and remains unchallenged therein. This reflection will be elaborated in the next section.

195

CJEU, Case C-414/16 Egenberger [2018] (supra n 152) para 77, citing CJEU, 08.04.1976, Case 43/75, Defrenne v SABENA [1976] (supra n 184), CJEU, Case C-281/98 Angonese [2000] (supra n 187), CJEU, C-411/98 Ferlini [2000] (supra n 188) and CJEU, Case C-438/05 Viking Line [2007] (supra n 189).

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2.3.4

Supranationality as a Stability Tool

As a result of more recent developments, the ECJ has begun to use its case law on supranationality as a means of tackling the EU’s political crisis: From 2017 onwards, the ECJ has repeatedly withstood challenges to the rule of law196 by reinforcing the principles of supranationality and the effects of the primacy doctrine in particular. Four recent moves by the Court are to be named in this context.

2.3.4.1

Order in Białowieska

The first of these actions was the preliminary order for temporary suspension of forest logging in the Polish Natura 2000 area of Białowieska, issued in 2017.197 That order is remarkable for three reasons.198 Firstly, Polish regional politicians had expressly declared that they did not intend to follow EU law or Commission demands. The logging had indeed not been halted following initial Commission demands. Secondly, in view of this, the ECJ devised a powerful tool of compliance with its interim orders by reading the possibility of financial sanctions into the open wording on legal basis of Art 279 TFEU. Guided by an effet utile logic, the Court held that (. . .) the Court hearing the application for interim measures must satisfy itself that the measures that it is minded to order are sufficiently effective to achieve their aim. It is specifically for that purpose that Article 279 TFEU grants the Court a broad discretion, in the exercise of which it is empowered, inter alia, having regard to the circumstances of each case, to specify the subject matter and the scope of the interim measures requested, and also, if it deems appropriate, to adopt, where necessary of its own motion, any ancillary measure intended to guarantee the effectiveness of the interim measures that it orders.199 (. . .) Consequently, an ancillary measure consisting in the imposition of a periodic penalty payment if the Member State concerned fails to comply with the interim measures ordered falls within the scope of Article 279 TFEU.200

196

Thomas Jaeger (2018, supra n 123) 611. CJEU, 17.04.2018, Case C-441/17 R Commission v Poland [2017] ECLI:EU:C:2017:877, paras 28 ff. 198 Cf Ulrich Karpenstein, ‘Europa zeigt Zähne’ (2018) EuZW 97; Daniel Sarmiento, ‘Interim Revolutions: The CJEU Gives Its First Interim Measures Ruling on the Rule of Law in Poland’ (EU Law Analysis Blog, 22 October 2018) accessed 22 September 2022; Laurent Pech and Patryk Wachowiec, ‘1095 Days Later: From Bad to Worse Regarding the Rule of Law in Poland (Part I)’ (Verfassungsblog, 13 January 2019) accessed 22 September 2022. 199 CJEU, Case C-441/17 R Commission v Poland [2017] (supra n 194) para 99. 200 Ibid para 108. 197

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Again, that finding is remarkable. Of necessity, the Court, once again, did not hesitate to develop its jurisdictional competences to safeguard the functioning of the EU legal order. This time however, unlike similar recent developments,201 that move was not intended to mend shortcomings of individual rights protection. Instead, in Białowieska, the Court readjusted the vertical balance of power in the area of enforcement of EU law at the expense of the Member States. While the Court has previously undertaken similar adjustments in the context of a horizontal distribution of competences,202 such move is unprecedented in the vertical enforcement setting. Thirdly, the interim measures in Białowieska were adopted under Art 160(7) ECJ Rules of Procedure.203 That provision allows for the adoption of interim measures in cases of exceptional urgency before the other party is heard. In proceedings of EU law infringements by Member States, interim measures are generally rare. However, measures adopted inaudita altera parte are virtually inconceivable.204 The ECJ explained that ‘there is sufficient material in the file to give the Court grounds for doubting that the Republic of Poland has complied with that order or that it is prepared to comply with the present order from now until the date of the final decision.’205 Having regard to the particular circumstances of the present case, (. . .) the Court therefore considers it necessary to enhance the effectiveness of the interim measures set out in the present order by providing for a periodic penalty payment to be imposed in the event of the Republic of Poland failing to comply immediately and fully with those interim measures, in order to deter it from delaying its compliance with the present order.206

That threat proved effective. Poland complied without the need to impose penalties. The final judgment did, as expected, confirm the existence of an infringement on the part of Poland.207

Cf Case C-72/15 Rosneft [2017] ECLI:EU:C:2017:236 paras 61 ff; Elizaveta Samoilova, ‘Die Zuständigkeiten des EuGH in der GASP – Ein Kommentar zur EuGH Rechtssache C-72/15, Rosneft’ in Thomas Jaeger (ed), Europa 4.0? (Jan Sramek 2018) 309, 328 ff. 202 CJEU, 23.04.1986, Case 294/83 Les Verts [1986] ECR 1339, ECLI:EU:C:1986:166 paras 23 ff; Markus Klamert (2018, supra n 33) para 1124; Koen Lenaerts, ‘The Rule of Law and the Coherence of the Judicial System of the European Union’ (2007) CMLR 1625, 1625 ff. 203 CJEU, Case C-441/17 R Commission v Poland [2017] (supra n 194) paras 16 ff. 204 Daniel Sarmiento (2018, supra n 195). 205 CJEU, Case C-441/17 R Commission v Poland [2017] (supra n 194) para 109. 206 Ibid para 114. 207 Ibid para 268. 201

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2.3.4.2

Judgments ASJP and LM

The judgments in ASJP208 and LM209 are to be mentioned in the second and third place in the context of bolstering the rule of law in the Union. While both relied on pre-existing case law defining independence and impartiality as key elements of the notion of a court,210 the two judgments applied these concepts to an entirely new area and thereby reinforced the applicability of EU law in the Member States. The ASJP judgment of February 2018 concerned salary cuts for judges imposed in the framework of Portuguese budget austerity measures. The judges’ union argued that such cuts threatened judicial independence. The ECJ did eventually not uphold that argument in the ASJP case, but used the occasion to stress that [t]he very existence of effective judicial review designed to ensure compliance with EU law is of the essence of the rule of law (. . .) It follows that every Member State must ensure that the bodies which, as ‘courts or tribunals’ within the meaning of EU law, come within its judicial system in the fields covered by that law, meet the requirements of effective judicial protection.211

Thereby, the ASJP judgment laid the foundations for allowing EU law-based interventions in the structure and organization of the Member States’ judiciary:212 The EU system of legal protection yields compulsory minimum requirements from which the Member States cannot derogate. In other words, the prohibition of substantial intrusion on the specific (impartial, independent etc.) character of Member States courts or tribunals is based directly on Art 19 TEU and 267 or 291 TFEU. There is no need for any other procedures like Art 7 TEU213 or the Commission’s proposals214 for budgetary sanctions.

208

CJEU, 27.02.2018, Case C-64/16 ASJP [2018] ECLI:EU:C:2018:117 paras 36 ff; cf Laurent Pech and Sébastien Platon, ‘Judicial Independence Under Threat: The Court of Justice to the Rescue in the ASJP case’ (2018) CMLR 1827; Armin von Bogdandy and others, ‘Guest Editorial: A Potential Constitutional Moment for the European Rule of Law - The Importance of Red Lines’ (2018) CMLR 983. 209 CJEU, 25.08.2018, Case C-216/18 PPU LM [2018] ECLI:EU:C:2018:586 para 79. 210 CJEU, 17.07.2014, Joined Cases C-58/13 and C-59/13 Torresi [2014] ECLI:EU:C:2014:2088, para 18; CJEU, Case, 19.09.2006, C-506/04 Wilson [2006] ECR I-8613, ECLI:EU:C:2006:587, para 51; CJEU, 09.10.2014, Case C-222/13 TDC [2014] ECLI:EU:C:2014:2265 paras 30 ff. 211 CJEU, Case C-64/16 ASJP [2018] (supra n 205) paras 36- 37. 212 Thomas Jaeger (2019, supra n 123) 626 ff. 213 Waldemar Hummer, ‘Nebeneffekte des Sanktionsverfahrens gegen Polen wegen dessen Rechtsstaatlichkeitsdefizit. Scheitert die Vollstreckung eines “Europäischen Haftbefehls” in Polen wegen “systemischer Mängel” in Bezug auf die Unabhängigkeit der Justiz?’ (2018) 53 EuR 653, 657 ff. 214 Communication from the Commission of 2 May 2018 on a Modern Budget for a Union that Protects, Empowers and Defends The Multiannual Financial Framework for 2021–2027, COM (2018) 321 final; European Commission Proposal for a Regulation of 2 May 2018 on the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States, COM(2018) 324 final; Opinion of the Legal Service of the Council of the EU of 25 October 2018 on the compatibility with the EU Treaties of the proposal for a Regulation of the European

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These structural requirements were confirmed in the preliminary ruling of LM of July 2018. The Irish court expressed its worries over the execution of a European arrest warrant issued in Poland because of systemic shortcomings of legal protection in that Member State.215 LM confirmed the referring court’s concerns that extradition to Poland would be inadmissible under the given circumstances. Deficiencies in the judicial system, and thus rule of law, of a Member State are able to undermine the mutual trust on which judicial cooperation in criminal matters is based: The high level of trust between Member States on which the European arrest warrant mechanism is based is (. . .) founded on the premiss that the criminal courts of the other Member States (. . .) meet the requirements of effective judicial protection, which include, in particular, the independence and impartiality of those courts. (. . .) It must, accordingly, be held that the existence of a real risk that the person in respect of whom a European arrest warrant has been issued will, if surrendered to the issuing judicial authority, suffer a breach of his fundamental right to an independent tribunal and, therefore, of the essence of his fundamental right to a fair trial (. . .) is capable of permitting the executing judicial authority to refrain, by way of exception, from giving effect to that European arrest warrant.216

On the same day as LM, the preliminary ruling in ML217 was decided, where similar considerations played a role in a slightly different context. ML concerned a refusal of the execution of an arrest warrant for systemic deficiencies of detention in Hungary. The ECJ clarified in ML that systemic deficiencies of detention (duration of appeal procedures) could, in principle, also constitute a reason to refuse an execution of a European arrest warrant if there was a specific individual risk of inhuman or degrading treatment contrary to Art 4 CFR.

2.3.4.3

Order and Judgment in Sąd Najwyższy

The judgments in ASJP and LM paved the way for the Court Order in Sąd Najwyższy in October 2018.218 It involved interim measures in an infringement procedure brought by the Commission over the independence of Polish Supreme Court judges (Sąd Najwyższy). The Polish government had introduced a new, lower retirement age for Supreme Court judges, including those in post. Nevertheless, judges could still remain subject to prolongation in the discretion of the Polish President.

Parliament and of the Council on the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States, Document ST 13593/18. 215 Thomas Jaeger (2018, supra n 123) 651; Leandro Mancano, ‘Storming the Bastille: Detention Conditions, the Right to Liberty and the Case for Approximation in EU Law’ (2019) 56 CMLR 61, 83 ff; Laurent Pech and Sébastien Platon (2018, supra n 205) 1852 ff. 216 CJEU, Case C-216/18 PPU LM [2018] (supra n 206) paras 58–59. 217 Ibid para 117. 218 CJEU, 24.06.19, Case C-619/18 R Commission v Poland [2018] ECLI:EU:C:2018:852 paras 18 ff.

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The Court confirmed the need for interim measures halting the dismissal of judges. The Order was given retroactive effect: Insofar as the Polish law had already become effective, the dismissals were to be reversed.219 Just as in the aforementioned case Białowieska, the interim decision in Sąd Najwyższy was likewise based on Art 160(7) ECJ Statute and had, therefore, been adopted inaudita due to its urgency. The proceedings were subsequently accelerated under Art 23a ECJ Statute and Art 133 ECJ Rules of Procedure.220 In December 2018, the Order that had initially been issued inaudita was approved by the Court after hearing Poland in the oral pleadings.221 The AG’s Opinion in the case confirmed the Commission’s concerns.222 The far-reaching interim measures adopted by the Court reflected its concern about the potentially serious and irreparable harm the measures could have on the rule of law: The Court stressed that removing the independence of Supreme Court judges could run counter to (. . .) the combined provisions of the second subparagraph of Article 19(1) TEU and Article 47 of the Charter of Fundamental Rights (. . .) Indeed, according to [the judgments in ASJP and LM], every Member State must ensure that the bodies which, as ‘courts or tribunals’ within the meaning of EU law, come within its judicial system in the ‘fields covered by EU law’ as referred to in the second subparagraph of Article 19(1) TEU meet the requirements of effective judicial protection. In order for that protection to be ensured, maintaining the independence of those bodies is essential, as confirmed by the second paragraph of Article 47 of the Charter, which refers to access to an ‘independent’ tribunal as one of the requirements linked to the fundamental right to an effective remedy.223 (. . .) [T] he fact that the independence of the supreme court may not be guaranteed pending delivery of the final judgment is likely to cause serious damage to the EU legal order and thus to the rights which individuals derive from EU law and to the values, set out in Article 2 TEU, on which the European Union is founded, in particular the rule of law. Furthermore, national supreme courts play a crucial role, within the judicial systems of the Member States of which they form part, in the implementation, at national level, of EU law, so that any threat to the independence of a national supreme court is likely to affect the entirety of the judicial system of the Member State concerned. In addition, the serious damage referred to above is also likely to be irreparable.224

This judicial pressure exercised on the Polish government proved effective. The forced retirement measures were suspended.225 The conflict has not yet been fully

219

CJEU, Case C-441/17 R Commission v Poland [2017] (supra n 194). CJEU, Case C-619/18 R Commission v Poland [2018] (supra n 215) para 29. 221 Ibid. 222 Ibid, CJEU Case C-619/18 R Commission v Poland [2018] ECLI:EU:C:2019:325 Opinion of AG Tanchev, para 95. 223 CJEU, 19.10.2018, Case C-619/18 R Commission v Poland [2018] (supra n 215) Summary pt 2. 224 Ibid Summary pt 3. 225 BBC, ‘Poland Reverses Law on Removing Judges following EU Court Ruling’ (BBC News Online, 21 November 2018) accessed 22 September 2022. 220

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settled, though: Other issues of judicial independence remain.226 Hitherto, the order in Sąd Najwyższy exemplifies that the ECJ employs effective tools for the defense of the rule of law. The judgment in Sąd Najwyższy was delivered in June 2019.227 It fully confirmed the findings of the order: [B]y (. . .) lowering the retirement age of the judges of the Sąd Najwyższy (Supreme Court) [for] judges in post (. . .) and (. . .) by granting the President of the Republic the discretion to extend the period of judicial activity of judges of that court beyond the newly fixed retirement age, the Republic of Poland has failed to fulfil its obligations under the second subparagraph of Article 19(1) TEU.228

The Court’s judgment, at the same time, expands the Member States’ obligations as well as its own competence: Member States must not only ensure the effectiveness of judicial remedies, but also that the courts or tribunals themselves meet the basic requirements for an effective judicial protection. The Court’s competence, therefore, now also entails the examination of the organization and structure of the national judiciary.229 In November 2019, a judgment was rendered in the Commission’s parallel infringement proceedings brought against the law reorganizing the ordinary courts.230 Similar issues were handled there, namely the difference in the retirement age for men and women, the lowering of the retirement age applicable to judges and the ministerial right to decide whether or not to authorize the extension of the period of active service. Again, the Court’s findings were straightforward and the Commission’s action was upheld in its entirety.231 Only a few days later, the judgment in A.K. and Others232 continued the saga concerning the new Polish legislation, calling into question the independence of hundreds of judges.233 The Court provided further guidance, but left the decision whether the Disciplinary Chamber in question was in fact independent to the Polish Supreme Court.234 Earlier this year, the Court found proceedings concerning measures for a disciplinary procedure regime for Polish judges not to be sufficiently connected with EU law and declared the preliminary

226 Adam Easton, ‘Not That Much of a Defeat’ (BBC News Online, 21 November 2018) accessed 22 September 2022; for more see Laurent Pech and Patryk Wachowiec (2019, supra n 195). 227 CJEU, 24.06.19, Case C-619/18 Commission v Poland [2019] ECLI:EU:C:2019:531. 228 Ibid para 124. 229 Aida Torres Pérez, ‘From Portugal to Poland: The Court of Justice of the European Union as Watchdog of Judicial Independence’ (2020) 27 Maastricht Journal of European and Comparative Law 105 (108–109). 230 CJEU, 05.11.2019, Case C-192/18 Commission v Poland [2019] ECLI:EU:C:2019:924. 231 Ibid para 136. 232 CJEU, 19.11.2019, Joined Cases C-585/18, C-624/18 and C-625/18 AK and Others [2019] ECLI:EU:C:2019:982. 233 Ewa Zelazna, ‘The Rule of Law Crisis Deepens in Poland After AK v Krajowa Rada Sadownictwa and CP, DO v Sad Najwyzszy’ (2019) 4 European Papers 907 (908–909). 234 CJEU, C-585/18, C-624/18 and C-625/18 AK and Others [2019] (supra n 229) paras 132, and 153.

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ruling inadmissible.235 In a Court Order236 issued 2 weeks later, the Court again granted interim measures applied for by the Commission in order to suspend the application of Polish provisions regarding disciplinary cases so as to preserve the rule of law from being seriously harmed.237 It seems that this debate will continue in the near future.

2.3.4.4

Assessment: Renewing the Tradition of Van Gend and Costa

The decisions in Białowieska, ASJP, LM and Sąd Najwyższy successively shaped the substance of the principle of rule of law under Art 2 TEU, endowed it with meaning and a clear scope of application and thereby rendered it justiciable. That case law is marked by the Court’s determination to tackle threats to the rule of law in a swift and effective manner. Ultimately, the Court is successful in this quest. The Court’s determination is proven in particular where it readily places Union interest over party rights of the defendant Member States, as in the case of retroactive injunctions inaudita in Białowieska and Sąd Najwyższy: While (. . .) there would be a risk that the general interest of the European Union in the proper functioning of its legal order would be seriously and irreparably affected, (. . .) the interest of the Member State concerned in the proper functioning of the supreme court is not likely to be thus affected (. . .), given that [interim measures] would merely have the effect of maintaining, for a limited period, the application of the legal system which existed.238

The same kind of determination is clear where the ECJ merges pre-existing lines of case law with diverse issues, such as loyalty, effectiveness and the notion of courts, in order to develop barriers to intervention, as in ASJP, LM and Sąd Najwyższy. Finally, firm determination to defend the rule of law and the effectiveness of EU law is equally manifest where, as in the case of Białowieska, Art 279 TFEU is developed beyond its wording to include penalty payments in case of non-compliance. Thereby, the Court offers working legal solutions to entrenched political problems. Those solutions are fully in line with EU law and ECJ traditions, which render them convincing. The Court indeed pursues its traditional role and inherent selfunderstanding as the ultimate guardian of the EU legal order and its autonomy: Resolutely stepping in to combat deficits in the integration policy is a task the Court has traditionally taken on. Without the jurisprudence, the level of integration would not be where it is today—both in terms of the density of substantive law provisions and in terms of the dogmatic principles of EU law. 235 CJEU, 26.03.2020, Joined Cases C-558/18 and C-563/18 Miasto Łowicz [2020] ECLI:EU: C:2020:234 para 49. 236 CJEU, 08.04.2020, Case C-791/19 R Commission v Poland [2020] ECLI:EU:C:2020:277. 237 Ibid para 114; Laurent Pech, ‘Protecting Polish Judges from the Ruling Party’s “Star Chamber”: The Court of Justice’s Interim Relief Order in Commission v Poland (Case C-791/19 R)’ (Verfassungsblog, 09 April 2020) accessed 22 September 2022. 238 CJEU, Case C-619/18 R Commission v Poland [2018] (supra n 220) Summary pt 4.

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The actual novelty of the Court’s role and actions is thus not vested in the approach as such, but in the background and context against which its proactive stance is pinned: The Court no longer steps in to overcome mere disagreement or stasis on regulatory issues, but disagreements over the core values and foundations of integration. Through its case law, the Court performs open surgery on the vital parts of primary law to remedy its functional deficits and keep the whole system operative. ASJP, LM and Sąd Najwyższy directly answer to the effectiveness of the Art 7 TEU procedure and the inability of institutions and Member States to endow the values of Art 2 TEU with a commonly agreed meaning.239 The ECJ truly renews the very foundations of EU law and its supranational characteristics in the same tradition as Van Gend and Costa. The Court’s recent decisions to remedy the crisis of EU law have a similar key importance for the course and future of legal integration as those old, initial judgments on supranationality. Indeed, these judgments have a revolutionary character in the sense that the ECJ boldly entered and occupied a previous terra incognita.240 Similar developments, taking the supranationality of EU law to a new level, are also to be observed outside of the crisis context:241 Recently in the Rimšēvičs judgment, discussed above in the context of jurisprudence on EU law primacy, the ECJ declared the direct invalidity of national law. Consequently, it deliberately242 abandoned the pre-established dogma that EU law would leave the validity of national law intact, in line with international law’s acts of state doctrine. The act of state doctrine, therefore, no longer constitutes an absolute limit to supranational EU law. There, too, both gesture and legal import are comparable to those of Van Gend and Costa.243 Rimšēvičs is a clear sign of unfettered confidence and determination of the ECJ in evolving the supranationality concept and further assimilating EU law to national law. Decisions like Rimšēvičs, Białowieska, ASJP, LM or Sąd Najwyższy do not only reinforce supranationality: Together, as well as one by one, they constitute a qualitative change, thereby setting the course for future jurisprudence.

3 Conclusions: A Maximum Intensity for Supranationality? As Hanns Ullrich was prompted to do many times in academic and scientific debate over the years, the ECJ has shown remarkable resilience in the defense of EU law values and principles. Faced with challenges to the rule of law in the EU, the ECJ has

239 Egils Levits, ‘Die Europäische Union als Wertegemeinschaft’ in Thomas Jaeger, Europa 4.0? (Jan Sramek 2018) 243 ff. 240 Daniel Sarmiento (2018, supra n 195). 241 Daniel Sarmiento (2019, supra n 110). 242 CJEU, 26.02.2019, Cases C-202/18 and C-238/18 Rimšēvičs [2019] (supra n 106) para 64. 243 Daniel Sarmiento (2019, supra n 110).

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chosen not to yield ground but to double down on the intensity of legal integration and the effects and requirements of EU law. The Court, thereby, safeguards the fundamental nature of ‘the European Union [a]s a union based on the rule of law’.244 This is not entirely new in relation to the ECJ’s traditional role in integration, in general, and its vigorous expansion of the elements of EU law’s supranationality, in particular, but it takes those activities and traditions to a new level in a similar manner as Van Gend and Costa did then. As in Van Gend, Costa and the subsequent jurisprudence, the Court currently remains essentially uncontested by its peers, the national courts. In fact, the courts in Poland appear supportive of the Court’s jurisprudence in defense of the rule of law, as is evidenced by their own preliminary ruling requests on pertinent issues. Once again, the Court is the spokesbody and spearhead of the process of re-shaping the concept of supranationality, but we may safely assume that it does not stand there alone. Especially as regards the rule of law and the evolution and empowerment of the value basis of the EU, ECJ jurisprudence likely rests on consensus shared with national courts. The Van Gend and Costa judgments were part of Lecourt’s ‘[l’]univers (. . .) d’une création continuée’ (the universe of a continuous creation).245 Back then and even today, that jurisprudence was and is not political, but ‘un pouvoir purement judiciaire[:] rien ajout[é] aux traités, mais (. . .) leur sens (. . .) que la lettre et l’esprit commandent’ (a purely judicial power: nothing is added to the treaties, but their meaning which the letter and the spirit command).246 The ECJ’s current jurisprudence intensifying the scope and effects of supranationality is, therefore, not only needed and compelled by the times, but more importantly, it is intrinsically convincing from its purely legal point of argument. That jurisprudence may indeed ring in a systemic change. The crisis-related decisions, Rimšēvičs, Białowieska, ASJP, LM or Sąd Najwyższy, are fundamental in transforming the EU’s value basis from a hitherto merely formal pledge and lip service into hard law in terms of enforceable obligations and limits for Member States actions. Beyond the development of legal and procedural tools and precedents, the decisions safeguarding the principle of rule of law are vital, being the first strong evidence that the EU is indeed a community of values. The Court has started to articulate for Member States and in their stead what it means to be a member of the EU and to what shared responsibility membership amounts. Policy shortcomings in that regard, particularly those of the Art 7 TEU procedure, are thereby eliminated. In that sense, the crisis-related decisions in Białowieska, ASJP, LM or Sąd Najwyższy go hand in hand with the Court’s recent jurisprudence on the horizontal direct effect of the CFR: Cases like Achatzi, Bauer and others are another proof of the common value basis of EU law and the hard law character of those values. The judgment in Rimšēvičs commits to the Court’s case law in the area of primacy, which was co-developed with the consent of national constitutional courts.

244

CJEU, 03.10.2013, Case C-583/11 P Inuit [2013] ECLI:EU:C:2013:625 para 91. Robert Lecourt (1976, supra n 23) 236. 246 Ibid 237; similarly Pierre Pescatore (1972, supra n 24) 107. 245

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Via Rimšēvičs, the primacy doctrine is now taken to an entirely new level in terms of potential invasive effects for national law. The act of state doctrine as the previous ultimate safeguard against such effects has effectively been removed. Is there any limit to ever more intense implications of supranational EU law? Is there a maximum intensity supranational law can possibly reach before the balance tilts and the legal order finally leaves the international law context and becomes a genuine national legal order? Can EU law reach a point of singularity where the principles of supranationality are so condensed that the EU is in fact no longer a confederation of sovereign states—i.e. no longer a legal order where sovereign Member States remain ultimately the responsible addressees of rights and obligations—but rather where sovereignty is, by virtue of the density of obligations, effectively surpassed? Arguably, such a turning point would be reached where, by reason of the density of EU law obligations and their ample supranational effects, Member States would no longer have the ultimate control over the course of integration. Have we reached this point of maximum supranational intensity with the judgment in Rimšēvič and its direct intervention in national law? Most likely not, as the Rimšēvič precedent, for now, remains limited to its specific context. Nonetheless, cases like Rimšēvič, Sąd Najwyższy or Bauer push the door wide open for further jurisprudence in that regard, just the way Van Gend and Costa did in the early days of integration. The Court’s proactive role in defense of unity and the rule of law in the EU and in shaping the scope and implications of common values and fundamental rights is to be fully welcomed. It is a fitting gift to the honoree Hanns Ullrich: The respective jurisprudence is ground-breaking and bold. Those developments also provide an opportunity to reflect upon the concept of supranational maximum intensity and its implications in the context of the Treaty reform debate before us. In politics and academia, the concept of a federal Europe, with few exceptions,247 essentially went out of fashion after 2005, when the Constitution for Europe failed.248 Jurisprudence, by contrast, might be on course to outdo them both.

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Why Is the Regulation of Enforcement Through the EU So Difficult? Hans-W. Micklitz

Contents 1

Clarifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Law Without Enforcement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 The Black Box of Enforcement: What We Do Not Know . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 The Search for an Explanation and a Tentative Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Ambiguities of the Competence Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Competition Law Is Different . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 The Non-Particularities of the Damages Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Structural Bias Towards Centralised Public Enforcement: Is the Directive the Game Changer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Infringement Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Preliminary Reference Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Regulated Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 The Game Changer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Multi-Level Governance Structure and Institutional Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Verticalisation of Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Horizontalisation Through Institutional Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Prof. Dr. Hans-Wolfgang Micklitz is Professor of Economic Law, Robert Schuman Centre for Advanced Studies at the European University Institute and Finland Distinguished Professor at the University of Helsinki. Hans-W. Micklitz would like to thank Katri Havu, Mel Marquis and Giorgio Monti for their helpful comments. The usual disclaimer applies. H.-W. Micklitz (*) European University Institute, Fiesole, Italy e-mail: [email protected] © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 C. Godt, M. Lamping (eds.), A Critical Mind, MPI Studies on Intellectual Property and Competition Law 30, https://doi.org/10.1007/978-3-662-65974-8_3

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1 Clarifications This is an essay on the reasons lying behind the virtually endless difficulties of getting to grips with regulating enforcement within the EU. An example of this is the 15-year-long story of the Directive on Antitrust Damages Actions.1 I will not try to define the oscillating concept of enforcement. I will use it in a rather pragmatic sense, so that it covers the making of the enforcement rules, their transposition into national law and their application in practice. Any attempt to discuss these difficulties requires putting the enforcement issue into context, into the particularities of the European legal order. Although competition law might be different in that it is foundational for the European legal order,2 and in that it precedes and impacts the development of the enforcement of EU rules per se, the regulation of enforcement in competition law is still no more than one specific field of law in which all the difficulties are condensed in a nutshell.

1.1

Law Without Enforcement?

Enforcement is a basic function of any system of governance. All actors within a polity are bound to respect the rules adopted under that governance structure. Walter Hallstein3 spoke of the European Union as a product of law—founded by the Treaty of Rome; as a source of law—being granted power unlike most other international organisations to produce a secondary community; and as a legal order—at least in the understanding of the European Court of Justice since Van Gend & Loos, more than 50 years ago (eine Schöpfung des Rechts, eine Rechtsquelle und eine Rechtsordnung). The Single European Act established the Internal Market as an objective which is still to be achieved—via regulation. Whether it is law and the rule of law alone that tie Europe together, or whether it is the common European culture that does so, is subject to a debate that has gotten fiercer in the last few years.4 However, there is overall agreement that ‘law’ plays a crucial role in the European

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Directive (EU) 2014/104 of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, OJ of 05.12.14, L349/1. 2 Ernst-Joachim Mestmäcker, ‘Auf dem Wege zu einer Ordnungspolitik für Europa’ in ErnstJoachim Mestmäcker, Hans Möller, Hans-Peter Schwartz (eds), Eine Ordnungspolitik für Europa. Festschrift für Hans von der Groeben (Nomos 1987) 9-49; for a discussion of Ernst-Joachim Mestmäcker, in English Hans-Wolfgang Micklitz, ‘Multi-Level Governance and Economic Constitution – Chapter 24’ in Stefan Grundmann, Moritz Renner, Hans-W Micklitz (eds) New Private Law Theory. A Pluralist Approach (CUP 2021). 3 Walter Hallstein, Der unvollendete Bundesstaat (Econ 1969) 33. 4 Franz Wieacker, ‘Foundations of European Legal Culture’ (1990) AJCL 38 (tr into English by Edgar Bodenheimer) 1-29; Joseph H Weiler, ‘Deciphering the Political and Legal DNA of European Integration: An Exploratory Essay’ (2012) in Julie Dickson and Pavlos Eleftheriadis

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integration process. The so-called European acquis, the set of primary and secondary Union law and the rulings of the European Courts—all this amounts to 60,000 pages.5 At least this is the figure which was touted during the EU enlargement process. How can all of this be enforced? The sheer quantity is already frightening, let alone the much deeper question of ‘legal transplants’ and ‘legal culture’, and of whether and how Member States, even if they are ready to enforce EU law, are transforming the set of legal rules and adapting it to their legal systems.

1.2

The Black Box of Enforcement: What We Do Not Know

A look into the legal nature of the EU, whether it is a constitutional order with a small ‘c’, a true constitution with a big ‘C’,6 a mere constitutional composite, a ‘Verfassungsverbund’ in the reading of the German Constitutional Court,7 or a supranational entity with a quasi-constitutional character, does not really lead us any further, although the PSPP (Public Sector Purchase Programme) judgment of the German Constitutional Court8 might bring about an indirect effect on the judicial activism of the CJEU9 far beyond the competences of the ECB. For the European Union as a ‘polity’, not only the implementation of all these rules in the now 27 national legal systems but their application through national courts, national administrative agencies, through national traders, national consumer and environmental organisations, through national service providers, national employers, national employees, and through the European citizens (as of the Treaty of Maastricht in 1991) has to be guaranteed. Otherwise, the overall project of European integration is jeopardised. Despite the overwhelming importance of the ‘enforcement’ of EU law, we know very little about the degree to which EU law is applied and by whom. The European Commission is in love with statistics on all sorts of economic activities and on the growth potential of EU measures promoting the new ‘darling’ of

(eds), Philosophical Foundations of European Union Law 137, speaks of European ‘messianism’ 151. 5 It is not evident whether anybody ever counted all the rules and where the figure stems from. However, 60,000 pages—this figure has taken on a life of its own. 6 Neil Walker, ‘Big ‘C’ or Small ‘c’?’, (2006) 12 EurLawJ 12. 7 In its Maastricht judgment: German Constitutional Court (Bundesverfassungsgericht, hereinafter BVerfG), 12.10.1993 BVerfGE 89, 155 Brunner v European Union Treaty [1994] CMLR 57. 8 BVerfG, 05.05.2020, BvR 859/15 paras 1-237 accessed 1 March 2022. 9 Hans-W Micklitz and Bruno de Witte, The European Court of Justice and the Autonomy of the Member States (Intersentia 2012).

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the European Commission, the Digital Internal Market.10 However, we have no concrete knowledge about the judiciary and the executive in the Member States.11 We know very little about the correlation between population, gross income and productivity and the national resources put into the judiciary or the executive as a whole or put into, more specifically, administrative agencies in charge of enforcement, such as cartel authorities. The list of open issues can easily be extended. The ‘who is in charge’ question brings us to the public/private distinction, or the administrative versus the judiciary, or the individual versus the collective.12 There are no Europe-wide statistics on how long litigation before courts lasts, how much it costs or what the success rates are. Even more concretely, we lack statistics on which subject matters were involved and on which (EU) laws were invoked. The huge black box called enforcement has never really been opened during the long history of EU law. The Damages Directive is in no way different. All the Commission was interested in was the level of substantive laws and the degree to which national legal orders differ and to what extent this should be remedied in order to enhance private litigation. The 2007 study coordinated by Andrea Renda13 is nearly 700 pages long but there are no statistics on competition authorities, competent courts or law firms. This is characteristic of each and every law-making initiative of the European Commission. The whole focus rests on substantive rules, and little to nothing is invested in gaining an understanding of the particular institutional setting and the interplay between national competition authorities, national courts, law firms and the litigation community in which the Damages Directive will have to operate. There is no sound re-construction of antitrust injuries in the EU—even for the most famous cases, which have led to Courage and Manfredi.14 If the Commission does not tender a study with regard to, e.g., what kind of enforcement infrastructure is needed to render the Damages Directive effective, nobody will. The Commission holds a de facto monopoly on legal research. None of the Member

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On the role of governance and knowledge in the designing of the Internal Market, see Marija Bartl ‘Internal Market Rationality, Private Law and the Direction of the Union: Resuscitating the Market as the Object of the Political’ (2015) 21 EurLawJ 572-598. 11 The only statistics on the judiciary I am aware of stem from the Council of Europe and are based on a query sent around to the members: accessed 1 March 2022. 12 For an attempt with regard to consumer law, see in particular our introduction and the conclusion in Fabrizio Cafaggi and Hans-W Micklitz (eds), New Frontiers of Consumer Protection: The Interplay between Private and Public Enforcement (Intersentia 2009). 13 Andrea Renda and others, ‘Making Antitrust Damages Actions More Effective in the EU: Welfare Impact and Potential Scenarios. Final Report for the European Commission Contract DG Comp/2006/A3/012’ accessed 1 March 2022. 14 For the need of such an analysis, see Mathias Reimann, ‘Präventiv-Administrative Regulierung oder Private Law Enforcement?’ in Gesellschaft für Rechtspolitik, Trier und Institut für Rechtspolitik an der Universität Trier (eds) Privatautonomie in der transnationalen Marktwirtschaft – Chancen und Gefahren (Bitburger Gespräche Jahrbuch, C.H. Beck 2009) 105-46.

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States of the EU is prepared to develop a European research policy which counterbalances the dominance of Commission-driven research and which looks into the way in which EU law is enforced throughout the EU. I would not be astonished if such a project, if any, were undertaken outside the EU,15 given the way the funding structure of projects affects the potential output—or put differently, given the extent to which Member States have lost authority due to the fact that they have (too?) long accepted that the Commission is and will remain the leading player in what I call here legal research.16

1.3

The Search for an Explanation and a Tentative Argument

In the following I will try to explain why regulating enforcement is so difficult. It will become clear that searching for explanations brings us deeper and deeper into the intricacies of the European Union, into the building of a quasi-statutory supranational entity beyond the nation state, one that requires linking the EU level to the national level and taking full account of the actors operating at these two levels, authorities, courts, trade and consumer organisations and law firms. I will focus on competition law, although it is impossible to avoid detours in order to catch the full picture. My overall hypothesis runs like this: the steadily increasing uncertainties concerning how far the EU competences reach and the unwillingness of the Member States to bring the ever-growing field of EU law into line with an adequate and adjusted enforcement architecture has strengthened the bias towards centralised public enforcement through opaque transnational governance. The Damages Directive is the first serious attempt of the EU to stop the ever-stronger verticalisation of public enforcement and to tilt the balance towards horizontal private enforcement. It goes hand in hand with the horizontalisation of enforcement institutions, which, however, challenges the self-standing character of competition law. In developing my argument, I will first look into the competence order of enforcement in the Treaty, its original clear-cut distinction between the responsibilities of the EU and the responsibilities of the Member States, and how the organisation of enforcement in competition law fits into the picture, first via public enforcement, now via private enforcement promoted by the Damages Directive. The competence order reveals the outstanding and rather singular importance of the Damages Directive. In a second step I will elaborate on and try to explain the deeper

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Daniel Kelemen could be such a candidate. See his book Eurolegalism (HUP 2011). I will not go into the different methodology and the bias which is becoming ever more obvious in European-sponsored research, in particular in preparation or in the context of a particular law-making initiative: Rob van Gestel and Hans-W Micklitz, ‘Comparative Law and EU Legislation: Inspiration, Evaluation or Justification?’ in Maurice Adams and Dirk Heirbaut (eds), The Method and Culture of Comparative Law: Essays in Honour of Marc van Hoecke (Hart 2014) 301-319; Hans-W Micklitz, ‘The Measuring of the Law through EU Politics’ in Marija Bartl and others (eds), The Politics of European Legal Research – Beyond the Method (Hart 2022). 16

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reasons behind the structural bias towards centralised public enforcement built into the Treaty through the design of the infringement and the preliminary reference procedure, prolonged and deepened via secondary law-making with competition law taking the lead. Understanding and casting the EU as a multi-level system or multilevel legal order (and not as a federation), this is my third point, wonderfully catches the ‘mess’ which the Member States promoted and accepted in the aftermath of the adoption of the Single European Act. The clear-cut distinction in the Treaty, the market making for the EU and the enforcement of EU rules through the Member States, was replaced by networks of public authorities and courts that are vertically, horizontally and transversally interlinked. The tendency towards ‘institutional change’—the merging of competition authorities with other specialised regulatory agencies—could be understood has an overall shift towards horizontalisation of cross-country public enforcement.

2 The Ambiguities of the Competence Order Since Margret Thatcher, there has been one particularly bad ‘ism’—federalism. However, the European legal order is built on Vollzugsföderalismus—enforcement federalism, ever since its foundation in 1957.17 The EU has the power to adopt secondary law as far as the Member States agreed to transfer competences, but the enforcement of the EU-made rules remains in the hands of the Member States. They may choose the appropriate legal means of transposing the EU rules into national law, be it an act of parliament or an administrative regulation. All that is regulated is that the national transposition rules must be legally binding. References to recommendations or even to established case law do not suffice.18 Member States also have the authority to decide whether enforcement is put into the hands of courts or of administrative agencies, and on who has standing in courts and within the administrative procedure.19 The disconnect between law-making at the EU level and law enforcement at the national level has facilitated the adoption of the above-mentioned

17 Robert Schütze, European Union Law (CUP 2015) p. 43; paradigmatic with regard to product safety Hans-W Micklitz, ‘Organizational Structures of Product Safety Regulation’ Conference on Product Safety’ in Bernd Stauder (ed), La sécurité des produits de consommation: Intégration européene et consommateur suisse (OPUS 1992) 49-69. 18 With regard to the enforcement of the Unfair Contract Terms Directive, the CJEU obliged the Netherlands to explicitly anchor the transparency principle in the national legislation. See CJEU, 10.05.2001, Case C-144/99 Commission of the European Communities v Kingdom of the Netherlands [2001] ECR I-0354, ECLI:EU:C:2001:257. 19 The standard rhetoric in EU rules and in judgments of the CJEU reflects the respect for the original decision. For a very critical stance, see Michal Bobek, ‘Why There Is No Principle of “Procedural Autonomy” of the Member States’ in Bruno de Witte and Hans-W Micklitz (eds), The ECJ and the Autonomy of the Member States (Intersentia 2012) 305.

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60,000 pages of law and regulation in the last 50 years. It might even serve as a deeper reason for the ‘enforcement difficulties’.20

2.1

Competition Law Is Different

Competition law forms part of the constitutional architecture of the EU, in that the substance of competition law and the organisation of enforcement are laid down in the Treaty. This is unique. No Treaty amendment has touched upon the foundational division of EU law-making and Member State law enforcement, and no Treaty amendment has changed the particular design of the competition law rules. The sole exception is the reference to the ‘social market economy’ in the Lisbon Treaty.21 I will come back to the possible politicising effect and the impact on enforcement later on. Article 103 TFEU grants the EU the power to design public (!) enforcement. There is nothing in Article 103 TFEU that pre-determines the sharing of responsibilities between the EU and the Member States as potential enforcers. Maybe two messages can be taken from Article 103(2): first, enforcement should be administrative in nature (under b); and second, the European Commission must be involved (under d). Indeed, Regulation 17/62 centralised the enforcement of EU competition law in the hands of the Commission. This decision triggered a debate about whether and to what extent enforcement at EU level should be outsourced to a European competition agency, independent from the Commission, a debate which never really vanishes. Forty years later, Council Regulation 1/2003 went in the opposite direction: decentralisation of administrative enforcement. The position of national cartel authorities was institutionally strengthened, whilst the Commission retained powers for cross-border infringements of competition law. This radical move serves to show that the Treaty leaves room for politics to shape enforcement, based on the explicit power granted in the Treaty itself, Article 103. The Internal Market competence (Article 114 TFEU) is also called upon to legitimise the Damages Directive, as can be seen in the Directive’s 8th recital: (8) As the differences in the liability regimes applicable in the Member States may negatively affect both competition [emphasis added] and the proper functioning of the internal market

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From a political science perspective, see Adrienne Héritier, Policy-Making and Diversity in Europe: Escape from Deadlock (CUP 1999). 21 There is a debate about whether and to what extent the new rules affect the constitutive role of competition. See Josef Drexl, ‘Wettbewerbsverfassung’ in Armin von Bogdandy and Jürgen Bast (eds), Europäisches Verfassungsrecht (2nd edn, Springer 2009) 905-958; in English, Josef Drexl, ‘Competition Law as Part of the European Constitution’ in Armin von Bogdandy and Jürgen Bast (eds) Principles of European Constitutional Law (2nd edn, Hart 2010) 659-698. For a much more critical view, see Christian Joerges, ‘A Renaissance of the European Constitution?’ in Ulla Neergaard, Ruth Nielsen and Lynn M Roseberry (eds), Integrating Welfare Functions into EU Law: From Rome to Lisbon (Djøf 2009) 29-52.

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H.-W. Micklitz [emphasis added], it is appropriate to base this Directive on the dual legal bases of Articles 103 and 114 TFEU.

In a nutshell, recital 8 demonstrates the ambiguities of the EU competence order when it comes to the question of whether the EU has competence to regulate private enforcement. The role of national courts in competition law litigation is in no way defined; neither is the role of private parties. It required a bold step by the CJEU to read into Article 101(2) TFEU that ‘any party’ affected by a cartel should have the opportunity to claim damages.22 In blunt language it remained for the CJEU to lay down the foundations on which or from which the European legislature could deduce the competence to regulate antitrust damage claims. Once the Court reads a damage claim into Article 101 TFEU, then the EU must have the competence under Article 103 TFEU to give shape to the liability regime. All that is needed is a reference to the standard formula that differences in the liability regime are negatively affecting competition. Whether and to what extent differences in national private law affect the trade between Member States and eventually competition is subject to controversy.23 All efforts to build that link via impact assessments and the like do not overcome the inherent doubts about the claimed effects and about the methodology used in that exercise. The references to Article 114 TFEU introduced in last-minute negotiations between the Commission and the European Parliament is no more than another crutch in the argumentation. Article 114 TFEU does not contain a single word on enforcement. Again, it was the CJEU that had to read into the EU competence order a kind of an ‘annex competence’. The EU has power not only to regulate the substance but also the enforcement if the latter forms an integral part of the measures needed to complete the Internal Market.24 This means the already shaky assumption that different national (private) laws affect the Internal Market and justify substantive harmonisation25 is stretched so as to impose minimum standards of enforcement on the Member States. The interconnection between

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CJEU, 20.09.2001, Case C-453/99 Courage Ltd v Bernard Crehan [2001] ECR I-7079, ECLI: EU:C:2001:257; CJEU, 13.07.2006, Joined cases C-295/04 to C-298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA, Antonio Cannito v Fondiaria Sai SpA and Nicolò Tricarico and Pasqualina Murgolo v Assitalia SpA [2006] ECR I-06619, ECLI:EU:C:2006:461. 23 From the competition law perspective Damian Chalmers, Gareth Davies and Giorgio Monti, European Union Law: Text and Materials (4th edn, CUP 2019) 1001; from the private law perspective Arthur Hartkamp, Carla Sieburgh and Wouter Devroe, Cases, Materials and Text on European Law and Private Law, Part 2: Competition Law (Hart 2017). 24 CJEU, 09.08.1994, Case C-359/92 Federal Republic of Germany v Council of the European Union [1994] ECR I-3681, ECLI:EU:C:1994:306. 25 Two recent examples stand out: the legislative history of Directive 2011/83/EU on Consumer Rights; thereon Hans-W Micklitz, ‘The Targeted Full Harmonisation Approach: Looking Behind the Curtain’ in Geraint Howells and Reiner Schulze (eds) Modernising and Harmonising Consumer Contract Law (Sellier 2009) 47-86 and the legislative history behind the draft proposal of a Common European Sales Law. From the abundant literature it might suffice to consult the contributions from an event organized by the University of Leuven a couple of months before the draft proposal was published in the official journal: Reiner Schulze and Jules Stuyck, Towards a European Contract Law (Sellier 2011).

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substance and procedure could be demonstrated in the regulation of various policy fields as well as in regulated markets. Here the EU legislature made extensive use of the annex competence to gradually establish substance-related enforcement mechanisms in regulated markets and even the establishment of regulatory agencies.26 This already goes far and has provoked strong criticism.27

2.2

The Non-Particularities of the Damages Directive

The Damages Directive, however, does not fit into that scenario. It does not regulate the substance of competition law. All that it does is to link a particular aspect of competition law to a new European remedy—compensation for antitrust injuries. It has one single purpose—the introduction of a horizontal liability regime against antitrust injuries. One might argue that there are predecessor regimes for selfstanding enforcement rules: Directive 98/27/EC (now 2009/22/EC)28 on Injunctions and Directive 2004/48/EC on the Enforcement of Intellectual Property Rights. In both fields the EU had established a dense set of substantive rules over the last decades. Somewhat overstated, the implicit understanding behind these three pieces of EU law seems to be that the EU may be (is) empowered to regulate enforcement under Article 114 TFEU provided there is a solid body of substantive secondary or— in the case of the Damages Directive—primary Union law. Read this way, Article 114 TFEU would extend the regulatory competences of the EU considerably, if not endlessly. All sorts of legislative means could then be adopted to complement the substantive body of the EU legal order. In the field of unfair terms, the CJEU has taken the harmonisation of substantive law as a starter to define ever more requirements on how the Member States have to enforce the law.29 This is certainly not what the Damages Directive stands for. Article 103 TFEU read in connection with the case law of the CJEU provides for a more solid legal competence. The irritating element in recital 8 is the reference to Article 114 TFEU. Whether enforcement is or 26 The European Commission operates a genuine website of the different types, broken down into four groups, which runs to over 40 pages: accessed 1 March 2022. 27 From a constitutional federal perspective, Johan Lindholm, State Procedure and Union Rights: A Comparison of the European Union and the United States (Iustus Förlag 2007); Stephen Weatherill, ‘Competence and Legitimacy’ in Catherine Barnard and Okeoghene Odudu, The Outer Limits of EU Law (Hart 2009) 17. 28 Currently under review, it may be extended to collective compensation claims: accessed 1 March 2022. 29 Federico Della Negra, ‘The Uncertain Development of the Case Law on Consumer Protection in Mortgage Enforcement Proceedings: Sánchez Morcillo and Kušionová’ (2015) 52 CMLR 10091032, on the development of the CJEU case law in the field of unfair terms, Hans-W Micklitz and Betül Kas, ‘Rechtsprechungsübersicht zum Europäischen Vertrags- und Deliktsrecht (2014–2018)’ (2018) I, II EWS 181-219 and 241-300.

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is not covered by the competence rules of the Treaty seems much more the object of political discretion than the subject of hard rules in the Treaty. The unwillingness of the Member States to introduce clear guidance in the Treaty, and to question the idea of enforcement federalism, contrasts with the need to adopt in concreto EU enforcement rules that affect the constitutional architecture of the EU per se. The already existing enforcement rules in anti-discrimination law, in public procurement, in consumer law and now in competition law provide ample evidence for the evergrowing constitutional weight of a correct shaping of enforcement.30 What is really needed is an open political discussion on the future enforcement structure of the EU. The constant creep of competences via Article 114 TFEU might be functional in that it helps to ensure the enforcement of EU rules, but the gulf between the original architecture of the Treaty of Rome and the emerging verticalisation of enforcement yields tensions when cannot be solved by sophisticated interpretation of EU competences. One might wonder whether the PSPP judgment of the GCC will help to trigger such a process.

3 The Structural Bias Towards Centralised Public Enforcement: Is the Directive the Game Changer? The quest for uniform application of EU law throughout the Member States, this is the argument, is tilting the balance of the freedom left to Member States in designing their architecture towards public enforcement. Any attempt by the European legislature or by the CJEU, as in Courage31 and Manfredi,32 to shift the focus from vertical administrative to horizontal judicial enforcement clashes with the structural bias towards public enforcement that has always been enshrined in the Treaty. The vertical bias can be identified in the infringement procedure and the preliminary reference procedure; it is most obvious in the secondary EU law governing regulated markets. Here private law is enforced through public agencies. The question is 30

See my account of the overall development with regard to private law issues in Hans-W Micklitz, ‘The Transformation of Enforcement in EU Private Law’ (2015) ERPL 491-524; with regard to private administrative enforcement in energy, telecom and financial services Lucila de Almeida, Integration Through Self-Standing European Private Law: Insights from the Internal Point of View to Harmonization in Energy Market (PhD thesis, European University Institute 2017); Marta Cantero Gamito, The Private Law Dimension of the EU Regulatory Framework for Electronic Communications: Evidence of the Self-Sufficiency of European Regulatory Private Law (PhD thesis, European University Institute 2015); Federico Della Negra, Private Law and Private Enforcement in the Post-Crisis EU Retail Financial Regulation (PhD thesis, European University Institute 2017). 31 CJEU, 20.09.2001, Case C-453/99 Courage Ltd v Bernard Crehan [2001] ECR I-7079 ECLI:EU: C:2001:465. 32 CJEU, Joined cases C-295/04 to C-298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA (Antonio Cannito v Fondiaria Sai SpA, Nicolò Tricaricoand Pasqualina Murgolo v Assitalia SpA [2006].

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whether the structural bias could be somewhat horizontalised and what would it mean for the enforcement architecture of the EU legal order as a whole. There are tendencies towards horizontalisation, but they are mostly informal and legally underdeveloped. The Damages Directive could turn into a game changer, strengthening the shift from vertical to horizontal. The envisaged revision of the Directive for Injunctions fits into such a horizontal perspective.33

3.1

Infringement Procedure

In theory the infringement procedure can be initiated by the European Commission, by the Member States or, within limits, by private parties (Article 263(4) TFEU). In the past, Member States used the infringement procedure only twice.34 Member States prefer to push the Commission to initiate an infringement procedure. In a way, this helps to neutralise the conflict, as the Commission acts as an intermediary. The conflict is shifted from the horizontal—Member State governments as claimants—to the vertical—the Commission as claimant. Indirectly the Member States thus strengthen the discretionary power of the Commission to select out of the complaints those that are ‘appropriate’.35 Where the line between correct transposition of EU rules and enforcement of EU-based rules is blurred, the infringement procedure may even serve as a substitute for enforcement powers the Commission lacks. This is particularly true in the field of environmental policy, which is the field with the most prominent and most pronounced implementation deficit.36 In competition law there is less room for an infringement procedure, though a possible conflict could arise if national competition law were to contradict EU competition law or if Member States fail to transpose the Damages Directive.37 The political decision of the EU legislature, based on Article 103 TFEU, to entrust

For a deeper analysis Axel Halfmeier and Peter Rott, ‘Reform of the Injunctions Directive and Compensation for Consumers: Study commissioned by BEUC’ (BEUC March 2018) accessed 1 March 2022. 34 See the references to the CJEU in Hans von der Groeben, Jürgen Schwarze and Armin Hatje, Europäisches Unionsrecht: Vertrag über die Europäische Union – Vertrag über die Arbeitsweise der Europäischen Union – Charta der Grundrechte der Europäischen Union (7th edn, Nomos 2015) Art 227 No. 37. 35 Illustrative on how the Commission works and which fields are relevant: European Commission, ‘Monitoring the Application of European Union Law’ (Annual Report, EC 2019) accessed 1 March 2022. 36 Richard Macrory, Regulation, Enforcement and Governance of Environmental Law (2nd edn, Hart 2014). 37 It does not make much sense to launch an infringement procedure against a MS for non-transposition in the field of antitrust, or for general breaches of competition law—there might be a remote chance in national merger law. 33

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the Commission with the enforcement of EU law enables the Commission to take regulatory action against possible infringers, who may then challenge the decision before the European Courts. Here it might be a complainant, in all likelihood not the Member State, but a possible competitor or an NGO, who would like to push the Commission into action.38 The infringement procedure under the Treaty is equally triggered by the Commission but it is the CJEU that decides on the existence of an infringement and it is for the Member States to remedy the potential effects where the Court finds against them. What looks institutionally different at first glance might procedurally look similar or at least comparable. What is the difference between the ‘administrative’ practice which precedes regulatory action by the Commission within its administrative powers and the administrative practice, the interplay first between the Commission and the complaining Member States, and later the defending Member States which forego the official launch of an infringement procedure before the Court of Justice? Functionally, both look very much alike. This is what lies behind the Commission’s attempt to use the infringement procedure outside its proper enforcement competences. Companies which are the addressees of regulatory action taken by the Commission under Article 101 or 102 TFEU always have standing before the European Courts. However, there is a difference with regard to the role and function of third parties in the two procedures. Article 263(4) TFEU grants ‘third parties’ standing in formal infringement procedures. Its role and function has been subject to various attempts in particular of environmental NGOs to gain standing against EU measures.39 These attempts failed, by and large, and the slightly revised new wording of Article 263(4) TFEU has not yet been tested before the CJEU. So Article 263(4) does not seem a promising avenue for the rare cases of infringement procedures in competition law. The alternative of using the differences between the Member States’ procedural rules as a justification for establishing a level playing field, a strategy so successfully executed by business and trade organisations,40 never gained ground in

38

The notification to the authority of an infringement with others with whom the complainant was cooperating is only a variation thereof; for details of the policy of the European Commission see European Commission, Antitrust Manual of Procedures: Internal DG Competition Working Documents on Procedures for the Application of Articles 101 and 102 TFEU (EC 2019) under 2.2.2. Empowerments relating to the Leniency Notices accessed 1 March 2022. 39 In particular CJEU, 03.05.2002, Case T-177/01 Jégo-Quéré & Cie SA v Commission [2002] ECR II-2365, ECLI:EU:T:2002:112 and CJEU, 25.07.2002, Case C-50/00P Unión de Pequeños Agricultores v Council [2002] ECR I-667, ECLI:EU:C:2002:462, where AG Jacobs tried but failed to reshape the narrow interpretation of the CJEU; Norbert Reich, Understanding EU Law (2nd edn, Intersentia 2005) 260. 40 In the fight of the European tobacco industry against a ban on advertising, the tobacco industry used the much more accessible UK rules to challenge the legal basis of the adopted Directive before it was implemented. Many Member States would, however, deny access to courts, as the parties are not yet directly concerned and would have to wait for the national implementing measure. See

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non-economic policy fields.41 The situation looks different with regard to third parties in normal enforcement procedures under Regulation 1/2003. The only recourse available to them is to try to convince the European Commission to start an investigation. There is no reliable or sure knowledge available on the success or failure rates of third parties. The most famous case, in which BEUC, the Bureau Européen des Unions de Consommateurs, succeeded in convincing the European Commission to take action, is the ‘Ford Case’.42 In EU law there is no equivalent to the super complaint procedure in the UK, which allows consumer organisations to request the Competition and Markets Authority (CMA—former Office of Fair Trading) to investigate when ‘any feature, or combination of features, of a market in the UK for goods or services is or appears to be significantly harming the interests of consumers’. The consumer organisations are entitled to challenge the regulatory action of the CMA in court.43 In the Ford Case BEUC carved out the right to intervene in the proceedings before the CJEU.44 But this presupposes that the European Commission has already taken regulatory action which the infringer challenges in the Court.

3.2

Preliminary Reference Procedure

The launch of the preliminary reference procedure lies in the hands of national courts, not in the hands of private parties. In this regard, there are no constitutional differences between competition law and any other field of (Europeanised) law. All fields of law are treated alike. Two questions have to be answered. Firstly, does the

CJEU, 12.12.2006, Case C-380/03 Federal Republic of Germany v European Parliament and Council of the European Union [2006] ECR I-11573, ECLI:EU:C:2006:772. 41 While market players have realised the opportunities of the Internal Market, European society— as represented by NGOs—has not yet been able to make active use of a level playing field. NGOs around Europe very much think in ‘national’ terms: they defend national positions before European Courts, and they do not defend European positions before national courts; Geraint Howells and Hans-W Micklitz, ‘Consumer Law Enforcement Forum Project: Guidelines for Consumer Organisations on Enforcement and Collective Redress’ (September 2009) accessed 1 March 2022; BEUC, ‘Consumer Justice Enforcement Forum II. Enforcement of Consumer Rights: Strategies and Recommendations’ (BEUC May 2016) accessed 1 March 2022. 42 ECJ, 30 June 1966, Case C-56-65, Société Technique Minière (L.T.M.) v Maschinenbau Ulm GmbH (M.B.U.). Reference for a preliminary ruling: Cour d’appel de Paris—France, ECLI:EU: C:1966:38 For a reconstruction of the facts and the story behind the case, Eckhard Rehbinder and Richard Stewart (1985), Environmental Protection Policy (Berlin: de Gruyter) 180-181. 43 Section 11(1) of the Enterprise Act 2002 for details on how the procedure works accessed 1 March 2022. 44 CJEU, 28.02.1984, Joined cases C-228 and 229/82 Ford of Europe Inc and Ford-Werke Aktiengesellschaft v Commission [1984] ECR-01129, ECLI:EU:C:1984:80.

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preliminary reference procedure play a role in competition law? Secondly, why and how does the preliminary reference procedure fit into the structural bias towards public enforcement and to what extent does it allow for new forms of horizontalisation? The first question is easy to answer, as national competition laws have to avoid conflicts with European competition law, both in substance and in the division of responsibilities between national cartel authorities. The second question raises more complicated issues. First and foremost, private parties (litigants to a conflict) are dependent on national courts with regard to whether or not they are willing to refer ‘their’ case to Luxembourg. Lower courts can, and high courts must, make use of the preliminary reference procedure. But what happens in case of disagreement between the parties concerned and the deciding national court? EU law does not provide any remedy to private parties against the refusal of a Member State court to refer a case to the CJEU. The considerations of Advocate General Colomer45 in deducing such a remedy from the Treaty have not yet been heard by the CJEU and the Member States have not been willing to introduce such a remedy in the Treaty. The result is that the Member State courts and sometimes even the national ministries exercise control of the ‘discretion’ of their courts to make a reference. Whether or not parties may reach the CJEU therefore depends upon national legal requirements and political circumstances.46 Strong private claimants may ‘choose’ the appropriate legal order, where judges may be more inclined to send questions to Luxemburg. The history of the preliminary reference procedure is full of examples.47 A comparable situation in competition law could arise if in situations where there are differences between stricter national and more lenient European competition law standards. Competitors might have in interest in seeking a clarification of where they stand and which standards apply. The competitors might seek clarification from the European Commission first and then from the European Court of Justice. But how can this be managed if the European Commission is not willing to embark on the procedure? Competitors have no other choice than to provoke a conflict under a legal regime where they are fairly well convinced that national cartel authorities are ready to either push the European Commission through the ECN network or seek clarification before a national court, which then refers the case to Luxemburg. Again what is missing is a means for market participants to seek a clarification outside and beyond the national and European administrative bodies.

45

CJEU, 24.03.2011, Case C-14/08 La Roda Golf [2011] ECR I-5439, ECLI:EU:C:2011:174 at 29. There are countries, like Denmark, where the Ministry of Justice exercises control over references to the ECJ. The same is true of some of the new Member States; see the references in Michal Bobek, Central European Judges Under the European Influence: The Transformative Power of the EU Revisited (Hart 2015). 47 For instance the litigation of the airline industry against the Montreal Convention, CJEU, 10.01.2006, Case C-344/04 The Queen, on the application of International Air Transport Association and European Low Fares Airline Association v Department for Transport [2006] ECR I-00403, ECLI:EU:C:2006:10. 46

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Regulated Markets

The structural bias is even more obvious in secondary EU lawmaking, in particular in regulated markets, where the EU is trying to establish competition via regulation. In the search for an appropriate design of the organisation of enforcement, the two Regulations 17/62 and 1/2003, and the agreed sharing of responsibilities, might be in the minds of law enforcers and lawmakers. After the enactment of the Single European Act, the Commission started its liberalisation policy, thereby promoting directly or indirectly privatisation, with regard to the former public sectors of telecom, postal services, energy, transport and, to some extent, financial services. Over time, the EU managed to establish national regulatory agencies in charge of creating, monitoring and surveying the ‘new’ competitive markets. It seemed to be within the logic of a market-related approach that each regulated market has its own network of national and European regulatory agencies. National agencies have to co-ordinate, and co-ordination needs to be exercised by a superior body. Who else could this be but the European Commission? The last 30 years clearly demonstrate the streamlining of national regulatory agencies toward an explicit or implicit centralisation of powers in the hands of the Commission, and respectively in those of the emerging European agencies.48 Just as in competition law, the Commission is striving for ever more executive competences along the lines of the distinction which underpins Regulation 1/2003. ‘Serious’ antitrust practices with an EU-wide impact should be decided at the EU level, while the less serious with a more local impact may be handled by the Member State authorities. The CJEU49 is prepared to grant the European agencies decision-making power, which due to the rather broad functional rules in secondary EU law might even reach further than the powers enshrined in Regulation 1/2003, which must have their basis in primary Union law.50 Even where the European sector-specific agencies have co-ordinating powers only, one might wonder whether and to what extent the Commission will manage to streamline the enforcement activities of the national authorities via soft means— guidance, exchange and education. Giving shape to the agentification51 would imply

48

Whether this is still in line with the Meroni doctrine of the CJEU is subject to discussion; see Takis Tridimas, ‘Community Agencies, Competition Law, and the ECSB Initiatives on Securities Sharing and Settlement’ (2009) 28(1) Yearbook of European Law 216. 49 With regard to ESMA: CJEU, 22.01.2014, Case C-270/12 United Kingdom of Great Britain and Northern Ireland v European Parliament, Council of the European Union Case [2014] ECLI:EU: C:2014:18; Heikki Marjosola, ‘Bridging the Constitutional Gap in EU Executive Rule-Making: The Court of Justice Approves Legislative Conferral of Intervention Powers to European Securities Markets Authority: Court of Justice of the European Union (Grand Chamber) Judgment of 22 January 2014, Case C-270/12, UK v. Parliament and Council’ (2014) EuConst 500-527. 50 One may also wonder to what extent institutional independence might matter. See Saskia Lavrijssen and Annetje Ottow, ‘Independent Supervisory Authorities: A Fragile Concept’ (2012) 39 LIEI 419. 51 Mira Scholten and Marloes v Rijsbergen, ‘The Limits of Agentification in the European Union’ (2014) 15 German LawJ 1123.

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openly addressing the division of responsibilities between the European and the national agencies with regard to rule-making and rule enforcement, a dividing line which is gradually vanishing.52 On the rule-making side, the question would be whether and to what extent common standards are needed for the participation of non-parties, in particular NGOs representing the public interest. So far, this is a domain which lies entirely in the hands of the Member States. In theory, NGOs could follow the example of repeat players in infringement procedures and search for the national legal order which guarantees the easiest and most advanced access to administrative rulemaking via agencies. In practice, this does not happen. The consequences of the blurred line are even more dramatic. Whilst the national agency may appear as the enforcer which takes regulatory action against infringers, the rules forming the basis of the conflict might have been agreed upon in a complicated co-ordination process horizontally between the national agencies as monitored by the European agencies and/or by the Commission. The party affected can only sue the national agency that is ‘enforcing’ rules or policies which have been agreed upon at a higher level. The situation could get even more complicated were the sectoral agencies empowered to manage compensation claims of non-parties to the conflict. Christopher Hodges53 promotes collective compensation through agencies, in particular with regard to competition law, due to its cost-benefit advantages in comparison to private litigation. Article 30(8) of the Draft 4th Telecom Directive pointed clearly in this direction. However, Art. 108(6) of the version ultimately adopted no longer addresses national agencies.54 A rather cryptic wording could already be found in Article 52(2) MIFID Directive 2004/39/EC, now Article 74(2) MIFID Directive II 2014/65/EU. The new formula, inserted into MIFID II, imposes an obligation on Member States to provide for adequate means of compensation, although it only indirectly refers to the collective dimension of possible misconduct.55 This new formula has to be read in connection with the changing responsibilities of financial market supervision authorities. They now have to take investor protection into account. An even softer version is to be found in the revised Regulation 1734/ 2017 on cooperation on the Enforcement of Consumer Protection Laws, Art. 21 52

See Christopher Hodges, The Reform of Class and Representative Actions in European Legal Systems: A New Framework for Collective Redress in Europe (Hart 2008); Hans-W Micklitz, ‘Editorial: The Public and the Private – European Regulatory Private Law and Financial Services’ (2014) ERCL 473. 53 Christopher Hodges (2008, supra n 52). 54 Compare Art 30(8) Draft Regulation concerning the European single market for electronic communications and to achieve a Connected Continent—COM(2013) 627 (11.09.2013) accessed 1 March 2022, with Art 106(8) Directive 2018/ 1972. 55 Article 69, last paragraph, MIFID II: “Member States shall ensure that mechanisms are in place to ensure that compensation may be paid or other remedial action be taken in accordance with national law for any financial loss or damage suffered as a result of an infringement of this Directive or of Regulation (EU) No 600/2014.”

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(1) lit. d) and e).56 At least with regard to regulated markets it seems correct to speak of a certain tendency towards the administrative enforcement of private law matters, where the Commission keeps pushing and the Member States defending their procedural autonomy.57

3.4

The Game Changer

There are counter-movements against this trend. In financial services, the CJEU in Bankinter58 seems ready to impose a duty on the Member States to provide for adequate private law remedies within the scope of the MIFID Directive.59 However, the Damages Directive, broadly understood, could function as a game changer, despite all the uncertainties on the degree to which the Directive harmonises the prerequisites of compensation claims. What is left to the Member State Courts and what to the CJEU?60 For the first time ever, the EU explicitly strengthened private law remedies in one of the most important areas of EU law, namely competition law. If my reading is correct that it was the CJEU that set the tone, then a similar EU remedy could be imaginable in all fields of primary EU law which are directly and horizontally applicable.61 What would be needed is a directive shaped along the line of the Damages Directive covering all potential damages claims for harm caused by the infringement of primary EU law.62

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d) the commitments that the trader responsible for the infringement proposed are insufficient to ensure the cessation of the infringement or, where appropriate, to provide a remedy to consumers harmed by the infringement; or, e) the trader responsible for the infringement has failed to implement the commitments to cease the infringement or, where appropriate, to provide a remedy to consumers harmed by the infringement, within the time limit referred to in Article 20(3). 57 Hans-W Micklitz, ‘Administrative Enforcement of Private Law’ in Roger Brownsword, Hans-W Micklitz, Leone Niglia and Stephen Weatherill (eds), Foundations of European Private Law (Hart 2011) 563-591. 58 CJEU, 30.05.2013, Case C-604/11, Genil 48 SL and Comercial Hostelera de Grandes Vinos SL v Bankinter SA and Banco Bilbao Vizcaya Argentaria SA [2013] ECLI:EU:C:2013:344, OJ of 03.08.2013, C 32, 15-16. 59 Stefan Grundmann, ‘The Bankinter Case on MIFID Regulation and Contract Law’ (2013) 9(3) ERCL 267–280. 60 Magnus Strand, Vladimir Bastidas Venegas and Marios C Iacovides, EU Competition Litigation: Transposition and First Experiences of the New Regime (Hart 2020); Claudio Lombardi, Causation in Competition Law Damages Actions (CUP 2020). 61 The horizontal applicability of primary EU law is one of the most debated issues in European law. See e.g. Norbert Reich, General Principles of EU Civil Law (Intersentia 2014) and the contributions in Dorota Leczykiewicz and Stephen Weatherill (eds), The Involvement of EU Law in Private Law Relationships (Hart 2013). 62 This would include looking into the impact the Francovich Doctrine has on the development of a European tort law; Rónán Condon, Tort Law Beyond the Reasonable Man: Re-Thinking Tort Law Beyond the State (PhD thesis, European University Institute 2017).

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However, what would it mean for regulated markets? Read this way, the Damages Directive would and could encourage national and EU legislatures to test the adequacy of private law remedies in regulated markets. Could one consider a horizontal directive on private redress in regulated markets or the integration of sector-related private law remedies in telecoms, in energy, in transport and in financial services as a counterpart to Directive 771/2019 on consumer sales? Remaining within the regulatory silos might enhance the legitimacy and the acceptability of private law remedies. This seems to be exactly the way in which EU secondary law is progressing towards sector-specific compensation rules, the shaping of which largely depends on political feasibility and not on systematic considerations, as is the case with the Damages Directive. However, tilting the balance back from public administrative enforcement to private judicial enforcement in a more systematic approach, be it with regard to infringements against directly applicable primary EU law or with regard to a horizontal approach for compensation claims in regulated markets, would bring such a policy closer to the failed project of the Draft Common Frame of Reference. Here the Member States strongly defended the identity of their respective private law orders. Fifteen years ago, a serious attempt to look into private law remedies in regulated markets might have had a more promising future. After the failure of CESL, the ground seems spoilt. If any, it seems more likely that the European legislature—supported by outspoken dicta of the CJEU on the need for private law remedies, might take sector-related action. The price to pay is obvious—ever more fragmentation, ever more verticalisation and ever more EU-level public enforcement of private law remedies. It would take a series of strong judgments of the CJEU in the spirit of Courage and Manfredi to make horizontal compensation claims a realistic EU perspective in these other regulatory settings.

4 The Multi-Level Governance Structure and Institutional Change This is not the place to go deeper into the governance debate. It suffices—and is already complicated enough—to look at the interplay between the different institutions which are involved in the enforcement over two different levels, national and European. I will focus on public enforcement authorities, the competition authorities and the specialised authorities in regulated markets, the courts of the Member States, and the European Courts. I will set aside private actors, be they individuals or collectively organised actors. The agencies and the courts have to share competences vertically between the EU and national institutions but also horizontally between national institutions. The ‘mess’, the ‘confusion’ and the irritation results from the fact that national enforcement authorities have to apply a mix of national and EU

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rules, a phenomenon called diagonal63 or hybrid64 enforcement, depending on one’s perspective. The EU authorities, the Commission and the European Courts, can only ‘interpret’, or in the rare cases where the EU enjoys enforcement competences, ‘apply’ European rules. There is a dividing line between competition law and the law of the regulated markets: the former lies in the hands of the Commission, which enforces the law in accordance with Regulation 1/2003; the latter is in the hands of the Member State regulatory agencies—in principle. It is inherent in the EU governance structure that the lines between national law and EU law, between interpretation and application, between guidance and instruction, and between norms and facts are difficult to draw. The overlap and mutual entanglements are mirrored in the institutional enforcement architecture. EU governance is characterised in the first stage through the emergence of ever more sophisticated networks, or networks of networks, that the Commission is keen to ‘manage’ in order to strengthen its top-down influence within the networks outside and beyond all formal competences. In the ongoing second stage, Member States ‘react’ to the agentification policy of the EU by engaging in institutional mergers. Again competition law and competition authorities are at the forefront of the development. This new trend could be understood as a horizontalisation of public enforcement, which strikingly complies with the understanding of the Damages Directive as being a game changer. Both read together might in the most ambitious language lay down the basic elements for a new enforcement structure. This will be developed in the last part of the paper.

4.1

Verticalisation of Networks

Agentification and network building went hand in hand. The development in competition law worked as a forerunner. The ECN seems to be the most developed among the European agency networks. Indirectly or directly it serves as a blueprint for the development of the more recent networks in regulated markets. In this perspective the decisive step is the establishment of national regulatory agencies. They were gradually established in the context of the liberalisation and privatisation process of public services. These national regulatory agencies, once established, need to co-operate in order to secure the uniform application of the European law. Just to recall, the EU is not a fully-fledged federation under which one national regulatory agency may bind another regulatory agency and thus preclude deviating decisions. Not even in competition law does such a mechanism of mutual

Christian Joerges, ‘Sozialstaatlichkeit in Europe? A Conflict-of-Laws Approach to the Law of the EU and the Proceduralization of Constitutionalisation’ (2009) 10:4 German LawJ 335-360. 64 Norbert Reich, ‘Horizontal Liability in EC Law: Hybridisation of Remedies for Compensation in Case of Breaches of EU Rights’ (2007) 44 CMLR 705. 63

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recognition exist, which explains the importance of the ECN.65 It is really amazing to see how the different committees in which the national regulatory constituencies were bound together gradually transformed into European agencies66 yet without making horizontal network-building between the regulatory agencies superfluous. Quite to the contrary: the vertical move towards agentification yielded new horizontal forms of networking. The result of this first wave of agentification is the establishment of sector-related networks, built and organised around markets. A network is composed of national and European agencies, one in which the European agency does not replace the national agency, where the sharing of competences has to be organised vertically between the EU level and the national level, but also horizontally between the national agencies. The network building around markets leads to ever deeper fragmentation. NEON (the national energy ombudsman network) belongs to one of the more recent phenomena.67 The European Union is pushing towards the establishment of alternative dispute settlement bodies, not only in energy but also in telecommunications, transport and financial services. These bodies, being institutionally integrated into the regulatory agency or, quite to the contrary, established as institutionally independent bodies, exchange information on the handling of disputes. It might well be that similar networks will emerge in other regulated markets. The more fragmented the networks are, the easier it is for the Commission to function as the spider in the web.68 Networks of courts are different, although judicial co-operation through and via networks are strongly promoted by the Commission.69 Unlike administrative enforcement, however, the EU does not enjoy any competence at all to influence the way in which Member States organise their judiciary. More precisely: while the EU in competition law and in the field of regulated markets could use its shaky competence to push for the establishment of national regulatory agencies, not least under reference to the duty of loyal co-operation, the Commission is not empowered

65

See Jürgen Basedow’s important overview of the different forms of recognition which should be clearly kept separate. His article was written in reaction to the first unofficial draft directive, which the European Commission had withdrawn. Jürgen Basedow, ‘Recognition of Foreign Decisions within the European Competition Network’ in Jürgen Basedow, Jörg P Terhechte and Luboš Tichý (eds), Private Enforcement of Competition Law (Nomos 2011) 169. 66 Hans-W Micklitz, ‘Regulatory Strategies on Services Contracts in EC Law’ in Fabrizio Cafaggi and Horatia Muir Watt (eds), The Regulatory Function of European Private Law (Edward Elgar 2009) 16-62 = EUI Law Working Papers 2008/06. 67 Workshop organised by the FSR and the ERPL, ‘Out-of-Court Dispute Settlement in the Energy Sector’ (19-20 February 2015) accessed 1 March 2022. 68 For a similar phenomenon, think of the possibilities the online consultation procedure during the legislative process opens up for the Commission. A seemingly democratic—horizontal—mechanism leads to exactly the opposite outcome. It strengthens the administrative state. Alexander Somek, The Cosmopolitan Constitution (OUP 2014); Christian Joerges and Carola Glinski, The European Crisis and the Transformation of Transnational Governance: Authoritarian Managerialism versus Democratic Governance (Hart 2014). 69 accessed 1 March 2022.

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to push Member States to set up specialised courts or chambers. Let us recall the situation in competition law. The clear European structure, and in particular the distinction between the General Court and the CJEU, has no counterpart in the Member States. Litigation between competition authorities and possible infringers could be adjudicated by separate and specialised courts or by general courts. The situation gets even more complex if one takes compensation claims between private litigants into account. Antitrust injury claims are generally treated as tort law claims. That is why they end up in general courts, even in countries with specialised jurisdictions. Conflicts in regulated markets are at least to my knowledge not yet governed by specialised courts. However, the distinction between administrative law cases—the infringer against the regulatory agency—and private law cases—B2B or B2C conflicts—remains equally relevant. The latter end up before general courts, which makes it very hard to obtain statistics on the importance of court litigation in regulated markets.70 All sorts of networks between courts are therefore imaginable and maybe even necessary to reach a degree of specialisation similar to that achieved at the administrative level of enforcement. However, in practice the number of existing networks of courts is much more limited and much more ‘general’.71 One of the reasons might be that litigation in regulated markets is the exception to the rule. This is true for both types of conflicts, vertical ones between the agency and the infringer, and horizontal ones between the parties. The prominent type of conflict resolution in both constellations is settlement. This scenario allows the Commission to use the administrative networks to get involved in dispute resolution, which in theory could and sometimes maybe should end up in court. Out-of-court settlement mechanisms facilitate centralised administrative management, at least as far as regulatory agencies are actively involved in their governance. 72

It would be a research project in itself to find out what kind of litigation ends up before courts in, say, the telecoms and energy sectors. In the ERC project on European regulatory private law, we tried to use national statistics, but without much success. 71 See documentation for the EUI conference in 2011 on the pros and cons of establishing a European Law Institute, see Fabrizio Cafaggi, Francesco Francioni, Hans-W Micklitz and Miguel Poiares Maduro, ‘A European Law Institute? Towards Innovation in European Legal Integration’ (2010) 2010/03 RSCAS Policy Papers, accessed 1 March 2022. 72 On ADR as a new layer of jurisdiction and the institutional implications for work-sharing between courts and ADR bodies, see Horst Eidenmüller and Martin Engel, ‘Against False Settlement: Designing Efficient Consumer Rights Enforcement Systems in Europe’ (2014) 29:2 Ohio State Journal on Dispute Resolution 261-297; Burkhard Hess and Stephanie Law (eds), Luxembourg Report on European Procedural Law, Vol II: Implementing EU Consumer Rights by National Procedural Law (C.H. Beck 2019). 70

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Horizontalisation Through Institutional Change

The second stage in the development of European multi-level governance is not triggered, managed or influenced through the European Union or by the Commission. In the deepest sense of the word, the Member States are making use of their ‘procedural autonomy’ to redesign the administrative enforcement institutions. The Member States may no longer be free in their decisions of whether or not to establish a public agency in competition law and in regulatory markets—EU law requires them to have one—but they remain free as to what the institution should look like, and as to what kinds of legal fields are merged under one roof, so to speak. Again, competition law sets the tone. At the EUI’s 19th annual Competition Law and Policy Workshop in July 2014,73 several member agencies of the ECN discussed the implications of striving for institutional change in competition law. In recent years there has been a growing tendency in the Member States to merge competition law authorities with sector-related national agencies in various combinations, between sectoral agencies and competition authorities (Netherlands and Spain) and/or between competition authorities and consumer protection authorities (Finland, Ireland, UK).74 Just where this development will lead is absolutely open. The only regulated market which seems exempt from the overall trend is financial services. None of the Member States is considering a merger of competition authorities or any other specialised authority with financial services institutions. The Commission does not seem to appreciate this tendency, particularly not in competition law. In 2014 the Commission published a working staff document75 aiming at improving the enforcement of EU competition law by national competition authorities. The first aspect on which the Commission puts emphasis is the ‘independence’ of the national enforcement authority. Is this intended to mean that competition authorities should remain self-standing? Bringing together competition law and consumer law in one institution might compromise the self-standing character of European competition law and thereby change the foundations of the European legal order.76 Similar statements with regard to regulated markets do not (yet) exist. It is certainly too early to draw conclusions, but a number of burning questions are easy to formulate. How does the fact that the Member States are taking ‘procedural autonomy’ seriously affect the substance of competition law and the 73 19th Annual EU Competition Law and Policy Workshop, organized by Philip Lowe, Mel Marquis and Giorgio Monti, ‘Institutional Change and Competition Authorities’ (European University Institute Law Department, 11-12 July 2014). 74 Annetje Ottow, Market and Competition Authorities: Good Agency Principles (OUP 2015); id, ‘Europeanization of the supervision of competitive markets’ (2012) 18 EPL 191-221. 75 Enhancing competition enforcement by the Member States’ competition authorities: institutional and procedural issues, SWD(2014) 0231 final (09.07.2014); Saskia Lavrijssen and Annetje Ottow (2012, supra n 50). 76 There is a lot at stake: the European Economic Constitution, the impact of the Lisbon Treaty and the famous reference to the ‘social market economy’; but even deeper are the questions whether and to what extent consumer law should and must change the substance of competition law.

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substance of fragmented EU law in regulated markets, and how does the institutional change at the Member State level affect the market-related agentification at EU level? Will the institutional change at the Member State level lead to a merger of agencies at the EU level? Probably not, in particular due to the competence restrictions in the Treaty. But if the institutional design of regulatory agencies between the EU and the Member States differs considerably, how does this affect the overall enforcement of EU law? Similar questions could be raised with regard to the role of courts. Does the horizontalisation of national enforcement structures strengthen the role of general courts to the detriment of specialised courts? More particularly with regard to the Damages Directive: will its implementation increase the number of actions before general courts, or will competition authorities use the Directive as a trigger to integrate private compensation claims into administrative management? Will the regulation of specific sectorial industries follow suit? Will there be a horizontal directive on damages claims in regulated sectors, or will the EU continue to promote horizontalisation via sector-related rules, as in MIFID and in the 4th-generation telecoms legislation?

5 Concluding Remarks The reader of this little essay might understand the difficulties of regulating enforcement in the European Union. The ambiguities of the competence order, and the structural bias towards vertical and centralised administrative enforcement in the Treaty as enhanced in numerous secondary EU law instruments highlight the outstanding importance of the Damages Directive, which could prove to be a game changer. Europe’s multi-level governance structure leaves space for the Member States to tilt the balance towards a more horizontal approach through institutional mergers. But so far, these two trends towards a horizontalisation of enforcement look more like a by-product than a true strategy behind which there is a political concept—of the EU as a whole. This would make it sensible to openly address the ‘enforcement issue’ and to look for a new architecture which is politically designed, and not erratically elaborated through piecemeal legislation, open wordings and unclear and non-transparent responsibilities of the Member States and the EU in the application and interpretation. If there is a political undertone it is the ambiguous one of re-nationalising competences, at least in the field of law enforcement. Here, however, lies a risk. The globalisation of the economy and internet technology has ‘transnationalised’ all forms of infringements. They are either transnational in nature, or they are only seemingly national, since the same or a similar type of infringement shows up in all Member States. Is there any advice to give? It is for the legal community to think the new architecture through and to come up with new ideas and proposals for action. The EU might very well continue with piecemeal

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legislation. At the same time Member States may reject ‘grand solutions’ but will remain willing to agree to pragmatic solutions for identifiable enforcement problems.

References Lucila de Almeida (2017) Integration Through Self-Standing European Private Law: Insights from the Internal Point of View to Harmonization in Energy Market, PhD thesis, European University Institute. Marija Bartl (2015) ‘Internal Market Rationality, Private Law and the Direction of the Union: Resuscitating the Market as the Object of the Political’ 21 European Law Journal 572. Jürgen Basedow (2011) ‘Recognition of Foreign Decisions within the European Competition Network’ in Jürgen Basedow, Jörg P Terhechte and Luboš Tichý (eds), Private Enforcement of Competition Law, Baden Baden: Nomos, 169. BEUC (2016) ‘Consumer Justice Enforcement Forum II. Enforcement of Consumer Rights: Strategies and Recommendations’ accessed 1 March 2022. Michal Bobek (2012) ‘Why There Is No Principle of “Procedural Autonomy” of the Member States’ in Bruno de Witte and Hans-W Micklitz (eds), The ECJ and the Autonomy of the Member States 305, Cambridge/Antwerp: Intersentia. ——— (2015) Central European Judges Under the European Influence: The Transformative Power of the EU Revisited, Hart: Oxford. Fabrizio Cafaggi and Hans-W Micklitz (eds) (2009) New Frontiers of Consumer Protection: the Interplay between Private and Public Enforcement, Cambridge/Antwerp: Intersentia. ———, Francesco Francioni, Hans-W Micklitz and Miguel Poiares Maduro (2010) ‘A European Law Institute? Towards Innovation in European Legal Integration’ 2010/03 RSCAS Policy Papers.

accessed 1 March 2022. Marta Cantero Gamito (2015) The Private Law Dimension of the EU Regulatory Framework for Electronic Communications: Evidence of the Self-Sufficiency of European Regulatory Private Law, PhD thesis, European University Institute. Damian Chalmers, Gareth Davies and Giorgio Monti (2019) European Union Law: Text and Materials, 4th edn, Cambridge University Press: Cambridge. Rónán Condon (2017) Tort Law Beyond the Reasonable Man: Re-thinking Tort Law Beyond the State, PhD thesis, European University Institute. Paul Craig and Gráinne De Búrca (2020) EU Law: Text, Cases, and Materials, 7th edn, Oxford: Oxford University Press. Josef Drexl (2009) ‘Wettbewerbsverfassung’ in Armin von Bogdandy and Jürgen Bast (eds) Europäisches Verfassungsrecht, 2nd edn, Springer: Dordrecht 905. ——— (2010) ‘Competition Law as Part of the European Constitution’ in Armin von Bogdandy and Jürgen Bast (eds) Principles of European Constitutional Law, 2nd edn, Hart: Oxford 659. Horst Eidenmüller and Martin Engel (2014) ‘Against False Settlement: Designing Efficient Consumer Rights Enforcement Systems in Europe’ 29 Ohio State Journal on Dispute Resolution 261. European Commission (2019a) Antitrust Manual of Procedures: Internal DG Competition Working Documents on Procedures for the Application of Articles 101 and 102 TFEU accessed 1 March 2022. ——— (2019b) ‘Monitoring the Application of European Union Law: 2018 Annual Report’ accessed 1 March 2022.

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Rob van Gestel and Hans-W Micklitz (2014) ‘Comparative Law and EU Legislation: Inspiration, Evaluation or Justification?’ in Maurice Adams and Dirk Heirbaut (eds), The Method and Culture of Comparative Law: Essays in Honour of Marc van Hoecke, Hart: Oxford 301. Hans von der Groeben, Jürgen Schwarze and Armin Hatje (2015) Europäisches Unionsrecht: Vertrag über die Europäische Union – Vertrag über die Arbeitsweise der Europäische Union. – Charta der Grundrechte der Europäischen Union, 7th edn Nomos: Baden Baden. Stefan Grundmann (2013) ‘The Bankinter Case on MIFID Regulation and Contract Law’ 9 ERCL 267–280. Axel Halfmeier and Peter Rott (2018) ‘Reform of the Injunctions Directive and Compensation for Consumers: Study commissioned by BEUC’ accessed 1 March 2022. Walter Hallstein (1969) Der unvollendete Bundesstaat, Econ: Düsseldorf. Arthur Hartkamp, Carla Sieburgh and Wouter Devroe (2017) Cases, Materials and Text on European Law and Private Law, Hart: Oxford. Adrienne Héritier (1999) Policy-Making and Diversity in Europe: Escape from Deadlock, Cambridge University Press: Cambridge. Burkhard Hess and Stephanie Law (2019) Luxembourg Report on European Procedural Law, Volume II: Implementing EU Consumer Rights by National Procedural Law, C.H. Beck: Munich. Christopher Hodges (2008) The Reform of Class and Representative Actions in European Legal Systems: A New Framework for Collective Redress in Europe, Hart: Oxford. Geraint Howells and Hans-W Micklitz, ‘Consumer Law Enforcement Forum Project: Guidelines for Consumer Organisations on Enforcement and Collective Redress’ (September 2009)

accessed 1 March 2022. Christian Joerges (2009) ‘A Renaissance of the European Constitution?’ in Ulla Neergaard, Ruth Nielsen and Lynn M Roseberry (eds), Integrating Welfare Functions into EU Law: From Rome to Lisbon, Djøf Publishing: Copenhagen 29. ——— and Carola Glinski (2014) The European Crisis and the Transformation of Transnational Governance: Authoritarian Managerialism Versus Democratic Governance, Hart: Oxford. R. Daniel Kelemen (2011) Eurolegalism: The Transformation of Law and Regulation in the European Union, Harvard University Press: Harvard. Saskia Lavrijssen and Annetje Ottow (2012) ‘Independent Supervisory Authorities: A Fragile Concept’ LIEI 39, 419. Dorota Leczykiewicz and Stephen Weatherill (2013) The Involvement of EU Law in Private Law Relationships, Hart: Oxford. Johan Lindholm (2007) State Procedure and Union Rights: A Comparison of the European Union and the United States, Uppsala: Iustus Förlag Claudio Lombardi (2020) Causation in Competition Law Damages Actions, Cambridge University Press: Cambridge. Richard Macrory (2014) Regulation, Enforcement and Governance of Environmental Law, 2nd edn, Hart: Oxford. Heikki Marjosola (2014) ‘Bridging the Constitutional Gap in EU Executive Rule-Making: The Court of Justice Approves Legislative Conferral of Intervention Powers to European Securities Markets Authority: Court of Justice of the European Union (Grand Chamber) Judgment of 22 January 2014, Case C-270/12, UK v. Parliament and Council’ EuConst 500. Ernst-Joachim Mestmäcker (1987) ‘Auf dem Wege zu einer Ordnungspolitik für Europa’ in ErnstJoachim Mestmäcker, Hans Möller and Hans-Peter Schwartz (eds), Eine Ordnungspolitik für Europa. Festschrift für Hans von der Groeben, Nomos: Baden-Baden 9. ——— (2021) in English Hans-W Micklitz, ‘Multi-Level Governance and Economic Constitution – Chapter 24’ in Stefan Grundmann, Moritz Renner, Hans-W Micklitz (eds) New Private Law Theory. A Pluralist Approach, Cambridge University Press: Cambridge.

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Hans-W Micklitz (1992) ‘Organizational Structures of Product Safety Regulation - Conference on Product Safety’ in Bernd Stauder (ed), La sécurité des produits de consommation: Intégration européene et consommateur suisse, OPUS: Bamberg 49. ——— (2009a) ‘Regulatory Strategies on Services Contracts in EC Law’ in Fabrizio Cafaggi and Horatia Muir Watt (eds), The Regulatory Function of European Private Law, Edward Elgar: Cheltenham, 16. ——— (2009b) ‘The Targeted Full Harmonisation Approach: Looking Behind the Curtain’ in Geraint Howells and Reiner Schulze (eds) Modernising and Harmonising Consumer Contract Law, Sellier: Munich 47. ——— (2011) ‘Administrative Enforcement of Private Law’ in Roger Brownsword, Hans-W Micklitz, Leone Niglia and Stephen Weatherill (eds), Foundations of European Private Law, Oxford: Hart, 563. ——— and Bruno de Witte (2012), The European Court of Justice and the Autonomy of the Member States, Intersentia: Cambridge/Antwerp. ——— (2014) ‘Editorial: The Public and the Private – European Regulatory Private Law and Financial Services’ 10 ERCL 473. ——— (2015) ‘The Transformation of Enforcement in EU Private Law’ European Review of Private Law, 491. ——— and Betül Kas (2018) Rechtsprechungsübersicht zum Europäischen Vertrags- und Deliktsrecht (2014–2018) I, II 181-219 and 241-300 Europäisches Wirtschafts- und Steuerrecht. ——— (2022) ‘The Measuring of the Law through EU Politics’ in Marija Bartl, Pola Cebulak, Christina Eckes and Jessica Lawrence (eds), The Politics of European Legal Research – Beyond the Method, Hart: Oxford. Federico Della Negra (2005) ‘The Uncertain Development of the Case Law on Consumer Protection in Mortgage Enforcement Proceedings: Juan Carlo Sánchez Morcillo and Kušionová’ 52 Common Market Law Review 1009. ——— (2017) Private Law and Private Enforcement in the Post-Crisis EU Retail Financial Regulation, PhD thesis, European University Institute. Annetje Ottow (2005) Market and Competition Authorities: Good Agency Principles, Oxford University Press: Oxford. ——— (2012) ‘Europeanization of the Supervision of Competitive Markets’ 18 European Public Law 191-221. Norbert Reich (2005) Understanding EU Law 260, 2nd edn, Intersentia: Cambridge/Antwerp. ——— (2007) ‘Horizontal Liability in EC Law: Hybridisation of Remedies for Compensation in Case of Breaches of EU Rights’ (2007) 44 Common Market Law Review 705. ——— (2013) in Dorota Leczykiewicz and Stephen Weatherill (eds), The Involvement of EU Law in Private Law Relationships, Hart: Oxford, 253. ——— (2014) General Principles of EU Civil Law, Intersentia: Cambridge/Antwerp. Mathias Reimann (2009) ‘Präventiv-Administrative Regulierung oder Private Law Enforcement?’ in Gesellschaft für Rechtspolitik, Trier und Institut für Rechtspolitik an der Universität Trier (eds) Bitburger Gespräche Jahrbuch, C.H. Beck: Munich 105. Eckhard Rehbinder and Richard Stewart (1985) Environmental Protection Policy, de Gruyter: Berlin. Andrea Renda, John Peysner, Alan J Riley, Barry J Rodger, Roger J Van Den Bergh, Sonja Keske, Luiss G Carli, Roberto Pardolesi, Enrico Camilli, Paolo Caprile, (2007) ‘Making Antitrust Damages Actions More Effective in the EU: Welfare Impact and Potential Scenarios. Final Report for the European Commission Contract DG Comp/2006/A3/012’ accessed 1 March 2022. Mira Scholten and Marloes v Rijsbergen (2014) ‘The Limits of Agentification in the European Union’ 15 German Law Journal 1123. Robert Schütze (2015) European Union Law, Cambridge: Cambridge University Press. Reiner Schulze and Jules Stuyck (2011), Towards a European Contract Law, Sellier: Munich.

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Alexander Somek (2014) The Cosmopolitan Constitution, Oxford: Oxford University Press. Magnus Strand, Vladimir Bastidas and Marios C Iacovides (2020) EU Competition Litigation: Transposition and First Experiences of the New Regime, Hart: Oxford. Takis Tridimas (2009) ‘Community Agencies, Competition Law, and the ECSB Initiatives on Securities Sharing and Settlement’ Yearbook of European Law, Vol 28, 216-307, Oxford University Press: Oxford. Neil Walker (2006) ‘Big ‘C’ or Small ‘c’?’ European Law Journal 12. Stephen Weatherill (2009) ‘Competence and Legitimacy’ in Catherine Barnard and Okeoghene Odudu, The Outer Limits of EU Law 17, Hart: Oxford. Joseph H Weiler (2012) ‘Deciphering the Political and Legal DNA of European Integration: An Exploratory Essay’ in Julie Dickson and Pavlos Eleftheriadis (eds), Philosophical Foundations of European Union Law 137, Oxford University Press: Oxford. Franz Wieacker (1990) ‘Foundations of European Legal Culture’ The American Journal of Comparative Law 38 (tr into English by Edgar Bodenheimer) 1-29.

Part II

Competition

On the Political Nature of Competition Law: A Critical Essay Oles Andriychuk

Contents 1 Competition Law, Economics and Politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Two Historical Stages of Competition Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Main Shortcomings of the Modernist Competition Law and Economics . . . . . . . . . . . . . . . . . . 4 Competition Policy Will Never Be the Same Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Emergence of the Postmodern Competition Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1 Competition Law, Economics and Politics For decades competition law and competition economics proudly positioned themselves as being beyond (and above) politics. Law and economics have their conceptual roots in two comprehensive, normatively closed, self-referential and selfsufficient systems of knowledge: legal Themis and economic Hermes draw their legitimacy from the apolitical neutrality of law and the apolitical rationality of economics. In contrast, political Zeus is usually seen as a multifaceted compromise. The system of law and the system of economics are perceived in competition cycles as inherently deductive, systematic and predictable whereas politics, in contrast, is seen as a rather ad hoc induction—a choice, a balance. While the former disciplines

Prof. Oles Andriychuk, Newcastle University Law School, is Director of Digital Markets Research Hub and Visiting Senior Researcher at Vytautas Magnus University, Kaunas, Lithuania. I am very pleased to contribute to this very special book honouring outstanding research of remarkable Thinker and Teacher – Professor Hanns Ullrich. O. Andriychuk (*) Newcastle University, Newcastle, UK © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 C. Godt, M. Lamping (eds.), A Critical Mind, MPI Studies on Intellectual Property and Competition Law 30, https://doi.org/10.1007/978-3-662-65974-8_4

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typically proclaim their scientific purity, objectivity and impartiality, the latter is usually seen as inescapably biased, opportunistic and arbitrary. Law and economics have never had a particularly easy relationship. Competition is, perhaps, one of the few fields in which lawyers and economists have had an abundance of opportunities to interact in an articulate and nuanced way. The communicative process is often quite turbulent, and attempts to transpose an issue from the language of economics to that of the law (or vice versa) can sometimes lead to nothing more than multiplied uncertainties. It is only relatively recently that the conflict between the legal and economic discourses in competition policy appeared to be settled, and the new ‘interdisciplinary discipline’ of neoclassical Competition Law & Economics became more than just a theoretical antitrust Esperanto that had been developed by one discipline as a way of muscling-in on another. We had entered then the era of scientific competition policy. The inherently ‘invisible’ and ‘incalculable’ phenomena of the competitive process and entrepreneurial discovery had been appropriated by sophisticated, mathematised and peremptory Science of Law & Economics. History had successfully ‘ended’ there, and any further problematisation of the topic was essentially limited to a mere fine-tuning of the concept and discussing the means of spreading its axiomatic hegemony across the globe. It was exactly at the time when the new Law & Economics consensus was about to mature, expanding to cover ever more areas of competition policy, that a series of external and rather unconnected events (summarised below) challenged both the validity and the practicality of this disciplinary symbiosis.

2 Two Historical Stages of Competition Policy If someone had fallen asleep sometime around the emergence of the EU competition policy and woken up half a century later, their awakening would actually be rather smooth and nonproblematic. In those fifty years there were of course many theoretical conflicts and disagreements, clashes and discrepancies. But there was a linear evolutionary development, a predictable continuity between events, a meaningful communication between competing theories and a certain common denominator ultimately encapsulated in the more economic approach. If the same person had fallen asleep in 2010 and woken up ten years later, their awakening would have been much less idyllic. They would very likely be perplexed by the cacophony of theories and doctrines often talking past each other; the normative polarisation of vocabulary and contexts; the revival of ideological ‘Holy Wars’ and the emergence of very selective, politics-driven—yet still pro forma scientifically sound and sufficiently nuanced—interpretations of competition rules by some newly converted antitrust jurisdictions. Competition policy today is at a crossroads. One way leads towards attempting to comprehend the incomprehensible, squeezing the ever-more complex and challenging reality into the ever-more complex mathematical equilibrium by ever-more

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sophisticated disciplinary toolkits. The other heads towards shaping the argument for a need of the revision of the normative foundations and methodological apparatus of competition policy. The former lacks a broader contextual vision, the latter lacks a robust theory. They label each other pejoratively with two traditional antitrust taboos: technocracy and industrial policy, and along with a more traditional leftright ideological divide, they represent another important dimension of the contemporary polarised competition policy. In some sense perhaps, the current situation can be conceptualised in broader philosophical terms as a clash between modernity and postmodernity. It is beyond the ambit of this essay to elaborate a detailed explication of the modern and postmodern competition policy as such—it is sufficient for now to highlight the most important paradigmatic differences between these two stages and approaches.1 The most important of these differences is the approach to, and perception of, the phenomenon of certainty. The discipline of law and the discipline of economics (at least their mainstream versions as well as their perception in competition circles) are inherently embedded in certainty—be it the systematicity of norms or the rationality of models. In this sense competition law and competition economics—let alone competition law & economics—are inherently modernist. They aim to be comprehensive and scientific; they aim to discover the axiomatic truth in all its entirety; and they assume their own ‘unfalsifiability’ unless the falsity is proven within their internal mechanism.

3 Main Shortcomings of the Modernist Competition Law and Economics The axiomatic nature of the modernist competition policy inevitably implies another logical conclusion: leaving aside perverse authoritarian dystopias, competition (qua scientific competition policy based on microeconomic premises) is universal. The level of the development of the economy, its scope and size, its integration into the global production chain, its regional position, its priorities and ambitions, its place in various commercial races, and its socio-economic specificities and overall capacities are all seen as rather irrelevant. Such universalisation and axiomatisation of competition policy lead inter alia to a reductionist belief in the effectiveness of legal transplants and uncritical ‘antitrust evangelism’. It is hard to disagree with the overall idea of spreading the principles of economic competition to as many jurisdictions as possible and it is hard not to see many efficiency gains generated from such advocacy. Yet it is still important to ask in each case if the economy of the country-recipient of the transplant ready for such

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I attempted to offer a detailed elaboration of this and concurrent epistemological issues in Oles Andriychuk, ‘Between Microeconomics and Geopolitics: On the Reasonable Application of Competition Law’ (2022) 85 Modern Law Review 598.

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socio-legal ‘surgery’. Otherwise, we witness countries adopting verbatim the provisions of EU/US competition rules without having the clear intention and capacity to pursue this complex and nuanced policy, aiming instead to just ‘tick the boxes’ in order to receive some structural financial support. Such a policy becomes mechanistic and can often backfire in many respects. The problem is not confined to the area of competition and development, being equally relevant for mature antitrust jurisdictions. Countries’ intentions to adapt to and succeed in the global competitive race—be it in the sector of mechanical engineering or transport, digital technologies or pharmaceuticals, agriculture or automotive industry—are immediately labelled as incompatible with competition policy whenever they cannot be framed in the mainstream scientific apparatus of competition law & economics. If only one version of truth exists, and if this version is only discoverable by the neoclassical economic protocols, any deviation becomes unscientific and interventionist political encroachment into the unbiased, mathematically provable, fair and efficient competition policy algorithm. If the algorithm works better for the priorities of one country than another, you’d better change your priorities; if the model works well on the paper, it should work equally well in real life; if it works for one jurisdiction, it should work everywhere. Or take another sensitive area—the relationship between governments and national competition authorities. For decades the independence of NCAs was seen almost consensually as an important achievement and an undisputable precondition of an effective competition policy. If the economic antitrust truth is discoverable, and the legislative mandate for pursuing competition policy is given, the autonomy from the inherently political governments should be maintained as this is the only way to protect the purity of competition analysis from the pollution of ‘non-scientific choices’. Some explicit exceptions, limited to some sensitive sectors of the economy or to some really extraordinary circumstances, were the most that competition policy circles could tolerate in terms of eventual governmental interferences. Pragmatic counterarguments (maintaining that the other side of the coin of the autonomy is selfisolationism and autarchy) are usually muted, neglected or marginalised, as is the fact that the very idea of competition policy is harmoniously embedded into a much broader set of public policy interests. Such a reductionist vision of competition policy was the only possible one in the modernist stage. This stage was characterised by the monopoly of the wisdom of scientific modelling and empiricism, by the existence of one true meaning of the competitive process, that meaning being discoverable and justifiable exclusively within the apparatus of neoclassical microeconomics using the formula ‘we are right, and you are not – and here is the proof’. Disagreement with such conclusions could be raised only within the neoclassical apparatus: when talking about welfare or choice, for example, whose welfare are we discussing, and what choice?—and can it be quantified, optimised, measured or modelled? The question list could be long, but the end-task is always the same: discovering the true meaning, the true condition, the true reality and thus proposing the right remedy. The passionate discussions about the proper scope of the norms and models defining competition policy have overshadowed three interrelated and obvious

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facts: (i) competition policy is not the only means for achieving socially desirable economic outcomes—it is our societal choice rather than a predetermined given; (ii) even if chosen, there is no single, axiomatic way for perceiving and pursuing competition policy; and (iii) it is only one of many public policies, and the choice between (and within) them is ultimately a political one.

4 Competition Policy Will Never Be the Same Again Over the last decade the consensus about such conceptual perception of the normative and functional aspects of competition policy has become subject to significant external challenges. A number of rather independent concurrent factors have made a substantial qualitative reconfiguration of the competition policy metrics leading to an undermining of the premises of modernist competition policy, and to the emergence of its postmodern successor. Among the most important factors are the following six. (i) The 2008 financial crisis, which overshadowed our canonical belief in the omnipotence of neoclassical economics to predict, analyse, comprehend and remedy competition-related problems. While we always knew that economics is a social rather than natural science, we have now also realised that the more colossal the claims of neoclassical competition economics were, the more attention should be paid to the feet of the Colossus. (ii) The rapid development of post-socialist, hybrid, planned economies and their very successful adaptation to the globalised international trade—in particular their ability to internalise selectively some principles and mechanisms of market economy while still remaining centrally planned. Such hybrid, asymmetric relationships allow undertakings within such jurisdictions to benefit from both systems, while their counterparts in jurisdictions where neoclassical scientific orthodoxy is dominant play a much more demanding and rather different game – often losing momentum and thus sinking in various league tables. (iii) An existential threat to the very idea of a European integration project epitomised by the phenomenon of Brexit and more generally in the revival of populist Eurosceptic movements. European competition policy is part and parcel of the establishment and protection of the Internal Market. The enforcement priorities of competition authorities, the jurisprudence of the CJEU, and the very wording ‘the following shall be prohibited as incompatible with the internal market’ imply the instrumental role of European competition policy. The end-goal could easily be shifted from market integration to consumer welfare, but the very principle of competition policy as a means was never seriously doubted. The crisis of market integration by definition implies the crisis of the modernist competition policy. (iv) The increased antagonism of political elites and interests, alongside a broader radicalisation of societies. The emergence of digital post-truth narratives

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fragmented reality. Now everybody is served with multidimensional microtargeted messages, the vocabulary of globalised cooperation has been gradually replaced in international talks by the vocabulary of multipolarity. (v) The digital revolution and the exponential growth of Big Tech companies, most of which are based outside Europe. One of the core principles of the platform data-driven ‘free’ economy is market tipping and winner-takes-all. In such a format the gatekeepers play the fundamental role in the channelling of data and information. They have a unique ability to match informational supply and demand, and enjoy generous regulatory preferences (e.g., Net Neutrality) inherited from earlier digital times when the Internet was seen as the ultimate tool for global liberalism and big internet companies were perceived as its main heralds. In this new digital reality European societies are positioned as net-payers. Europe’s active and loyal consumers feed the mostly non-European Big Tech companies with their valuable data, making their algorithms stronger and profits higher with every click. Having mature research clusters and an established academic base, but not being able to commercialise their competitive advantages proportionately, the EU and some national governments try to remedy the ever-increasing gap mainly by other modernist regulatory equilibristics. Most of these ex ante initiatives backfire as Big Tech companies are capable of smoothly internalising all externalities to their own advantage, but some of the most recent ex ante and mainly ex post actions may well succeed if they are well-calibrated and pragmatically targeted. It is most important in this respect that these political initiatives continue to become more explicit and nuanced, and while there are still many points of disagreement between the EU and its most proactive Member States, the global digital challenge appears to be comprehended and wills are in the process of synchronisation. (vi) Last but not least, the current covid-19 crisis and the newly emerging (post-) pandemic reality reinforces and invigorates most of the above five factors: (i) microeconomics does not work in the abnormal situations; (ii) even in liberal democracies the role of the governments and central planning (and spending) only becomes stronger in times of such crises—thus the momentum is shifting to those that have better skills, instruments and experience in such hybrid manual macroeconomic control; (iii) European mobility is under an existential threat and compartmentalisation and country-centric trends are becoming dominant; (iv & v) life is moving online, which multiplies microtargeting, filter bubbling, populism and post-truth radicalisation—and strengthens still further the power of Big Tech companies.

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5 The Emergence of the Postmodern Competition Policy It is against this background that the new postmodern competition policy is emerging. Postmodernism means many things to many people, so let me briefly clarify what is meant by it in this essay. First of all, I mean nothing esoteric or philosophical—it is a purely descriptive and pragmatic definition. Its key motto could be defined as ‘harmonious discord’ or ‘relative relativism’; and its scope is limited to social sciences (one does not have to go back to Kelsen to see why the meaning of truth in physics should not be extrapolated to the meaning of truth in law, economics or any other social domain—and, again, this Kelsen observation explains the futility of modernist law and modernist economics). Modernism encapsulates the belief in the unlimited ability of the human mind to comprehend, classify, categorise, predict and manage reality. Modernism is inherently encyclopaedic. It is about the triumph of ratio. In a sense, the transition from modernist to postmodern competition policy mimics the transition from the era of Encyclopaedia Britannica to the era of Wikipedia. The latter does not negate the former, but the former becomes more of an element of office decoration than an indispensable reference point. In some sense, the postmodern approach will always remain a countertheory. Its key postulates of relative indeterminacy of economic modelling, legal rules and empirical facts and relative flexibility of the decision-making process will always need the contrast of modernism: absolute definability of economic modelling, legal rules and empirical facts and mechanical determinism of the decision-making process—so the modernist features will always remain a default option. The human mind is also inherently modernistic: we give sense to things, systematise chaos, harmonise cacophony. We construct, not destruct. Postmodernism will always be associated with something rebellious, something provocative, something disruptive but destructive. Unlike modernist theories, postmodernism is inherently non-scientific. It does not have the inquisitorial ambition to discover the truth or to comprehend reality, implying that the pursuit of these concepts is a futile endeavour because they are too complex, unfixed and fragmented. It proposes to live in harmony with uncertainty and relativism. Different versions/interpretations of facts and truths compete with each other and selecting one does not (necessarily) negate the validity of others. It de-pathologizes inconsistencies and indeterminacies enabling genuine adversarial process between different versions of the truth. In fact, many mainstream legal philosophers (e.g. HLA Hart and Ronald Dworkin) 2 and non-neoclassical economists (e.g. Friedrich Hayek)3 have successfully confronted the reductionist

2

It is sufficient to mention Hart’s enthusiasm about Wittgenstein’s philosophy of language epitomised inter alia in his work on legal hermeneutics and Dworkin’s theories of interpretation and argumentation. 3 One does not have to adhere to Hayekian tradition to see that the key problem of neoclassical vision of competition policy lays in its wrong assumption that the concept of perfect competition

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modernist legal and economic theories (while not labelling themselves post- or antimodernists explicitly), paving the way to such non-prescriptive, analytical postmodernism in law and in economics. Another feature of postmodern competition policy is its apagogical nature. It is a purely critical theory which does not aim to either replace or abolish the modernist competition law, and limits itself mainly to relativizing the categorical nature of its scientific components. Postmodern competition policy is non-scientific, but it is not anti-scientific. Finally—and this is the key component of my argument—if the reality and its interpretations are so complex and never absolutely comprehensible, and if several conflicting argumentative approaches can equally claim correctness, then competition policy is inherently political, and the external nature of the difficult choices in hard competition cases implies that the ultimate legitimacy mandate of competition policy is derived not from the science but from the politics. At least in democratic societies, the nature of political choice does not imply arbitrariness, populism, protectionism or hostility. While they are not absolutely immunised from these features, mature democracies have many filters minimising the toxicity of these elements of politics. Political decision-makers are bounded by strict institutional requirements. These requirements significantly limit the room for manoeuvre of the decision-makers without eliminating it outright. Unlike modernist competition policy, the postmodern theory perceives this bounded political discretion as unproblematic and, in fact, as the only one possible. It is important to emphasise that modernist legal and economic approaches are themselves among the main cornerstones of such institutional constraints. This implies that in the postmodern constellation an option must not only be politically suitable in order to be selected by policymakers, but it must also be scientifically correct and it must be shaped in a sound legal and economic fashion. It is perfectly possible to envisage situations when the best option is not selected precisely because of its institutional weakness. The opposite correlation functions too: the less politically suitable the option is, the less likely it is for scientifically sound arguments to be selected (other than in trivial cases). So, the postmodern approach is not antagonistic to the solutions proposed by the scientific competition law & economics as such. It is only antagonistic to its dogmatic determinism and canonical categoricalness, to the absolutist causality with which it shapes its propositions. Being postmodernist, this approach relativizes the scientific appeal to exclusivity. Thus, when confronted with two (or several) more-or-less equally sound legal and economic arguments/positions, the modernist

has something to do with competition qua normative economic value (protected and enhanced by competition policy). In fact, the concept of perfect competition is just a theoretical assumption, necessary for the equilibrium model. The idea of perfect competition is in opposition to the essence of a competitive process in any meaningful sense of the term. Perfect competition qua societal desideratum can be promoted only in communist, anti-entrepreneurial societies, and it is surprising how many otherwise reputable antitrust thinkers operate with the idea of perfect competition as a desirable (though realistically non-achievable) normative idea and look at the constitutional value of competitive process through the lens of this purely methodological assumption.

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decision-maker would be expected to deduce the true one whereas the postmodernist could select the most politically suitable one (but the less scientifically sound the position is, the more difficult it would be to substantiate the choice—and thus the relativism of postmodernism is itself relative). The modernist would imply that by discovering the true position they diminish/discredit the validity of the confronting approaches. The postmodernist would not need any disqualification of the non-selected approaches, provided the selected one can be shaped as more-or-less equally appealing, convincing and substantiated. The increased role of political deliberation in adjudicating hard competition cases takes place using exclusively the existing modernist economic and legal languages—both of which are internal and the most natural for competition discourse. The facade of the decision-making practices remains the same. What changes is a belief and an expectation that the wisdom of neoclassical economics and legal precedents always contain the inner monovalent truth and as such, are capable of revealing it to the decision-makers if a competent, objective interpreter would apply the formulas and models correctly.

6 Conclusion The descriptive nature of the postmodern theory implies that the processes, interactions and perceptions which it aims to articulate take place in the current competition policy discourse anyway. However, they can hardly be captured or squeezed into the modernist matrix of the Science of Competition Law & Economics because they negate many of its core premises. Thus, paradoxically, by being prima facie iconoclastic and relativist, it contributes to more conceptual certainty de-pathologizing many objectively unavoidable processes in current competition policy. The kaleidoscopically changing, non-linear and fragmented reality necessitates a fundamental revision of our perception of the very nature of competition policy. This policy was designed, nurtured and dogmatised as a theoretical construct, as a closed system with no (or minimal) considerations about foreign or international dimensions. Its economic formulas, models, assumptions and methodologies may all be perfectly sound and reasonable in theory, but this does not make them legitimate automatically. The main feature of the current paradigm is the expectation that the ultimate definability of competition processes consequently enables the design of absolutely correct remedies. The main feature of the emerging paradigm is, on the contrary, an acknowledgment of the futility of the belief in the absolute and categorical definability of competition, leading thereby to the recognition of the relative epistemic flexibility of the available remedies. Economic markets are too complex, influenced by too many spontaneous factors, and driven by too many societal interests to be regulated with the categoricalness and the absolute determinism of the natural sciences. Competition policy cannot have an absolute mathematically measured and ethically noble algorithm of actions, which—if applied in complete

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wisdom—could be discovered and proved by the yardstick of equilibrium economics. The elements of the postmodern competition policy were always present in the previous evolutionary stage, and the elements of modernism are even more obviously present in the new theory. It is not a radical shift in the doctrine, postulates, ideology or methodology. The shift is only epistemic and concerns only our perception of the economic and legal methods, their scientific ability to understand competition problems in their entirety and to offer the only right remedy. A reasonable political decision taken within the postmodern competition policy account is a decision meeting three cumulative requirements: (i) An absolute requirement for the decision is to comply all the time with the minimal requirements of microeconomic soundness, legal validity and factual correctness. A decision cannot be reasonable if it does not formally comply with the letter of law, economics and facts, and it ceases to be reasonable if it stops complying with a meaningful interpretation of economic theory, legal rules and empirical facts. (ii) If two or more options available to the decision-maker comply formally with the first requirement (and the de-axiomatisation of competition policy makes such a situation possible—particularly in hard cases), the priority could be given at the decision-maker’s discretion to the one, which while complying with the first requirement, contributes simultaneously to another aspect of competition policy (e.g. protection or promotion of competition in specific markets or participation in specific undertakings, inter- vs. intra-brand competition) and/or to another legitimate economic policy (e.g. innovation, industrial growth, digital transformation, international trade) and/or to another legitimate non-economic policy (e.g. human rights) and/or a mixture of the above (e.g. sustainability, privacy). The selection of the specific choice could be done either within the existing mechanisms of competition law (e.g., Art 101(3) TFEU) if such a mechanism is sufficient, or within any other legitimate instrument of EU law (e.g., Art 11 TFEU) or the law of the Member States (if competence permits). (iii) The discretion of the decision-maker to adopt a reasonable competition law decision is further constrained by universal and specific institutional factors. Among the most important universal ones are procedural fairness, rule of law, transparency, accountability, legitimacy, and legal culture. The specific factors include clarity and understanding of the selected choice from the perspective of competition policy, and its minimal support by the epistemic community of competition law. Cumulatively, the requirements of all three groups of boundaries are very demanding. Yet still they make a room for discretion in hard competition cases.

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Reference Oles Andriychuk (2022), ‘Between Microeconomics and Geopolitics: On the Reasonable Application of Competition Law’, 85 Modern Law Review 598

Competition Law and Political Influence of Large Corporations: How Antitrust Analysis Can Capture the Link Between Political and Economic Institutions That Affect Market Competition Francisco E. Beneke Avila

Contents 1 2 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Link Between Economic and Political Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Brief Historical Overview of the Relationship Between Antitrust Law and Democracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Is Competition Law an Adequate Tool To Address Concerns Arising from the Political Power of Large Corporations? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Legal Standards and Evidence That Captures the Relationship Between Competition in Markets and Political Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Legal Standards and Evidence on Anticompetitive Political Activism . . . . . . . . . . . . . . 5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111 113 116 120 122 124 126 127

1 Introduction Successful firms can become market leaders and enjoy economic profits as a reward. Some of these industry leaders may operate at a large scale either at the national or international level. In such cases, aggregate profits can be orders of magnitude above that of a typical firm in the countries where they operate. These resources allow firms to embark upon activities that would not be possible otherwise, such as research and development. However, profits may not always be used in welfare-enhancing or welfare-neutral ways. A firm may use a part of its financial resources in influencing

Dr. Francisco E. Beneke Avila is Senior Research Fellow at the Max Planck Institute for Innovation and Competition. F. E. Beneke Avila (*) Max Planck Institute for Innovation and Competition, Munich, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 C. Godt, M. Lamping (eds.), A Critical Mind, MPI Studies on Intellectual Property and Competition Law 30, https://doi.org/10.1007/978-3-662-65974-8_5

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economic policy to its benefit, which may not always align with that of consumers or the public at large. This dynamic, which is by no means hypothetical, shows that there is a clear link between market power and the political process by which economic policy is determined. Therefore, the question of whether political considerations should play a role in competition law becomes relevant. The issue is also important in a broader economic policy context. As will be described later in this paper, political economy considerations are widely studied in the context of technological progress of leaders and the catching up of laggards. In the case of industrialized nations, the right political economy setting can lead to policies that maintain open markets, which in turn lead to innovation that can give firms a technological edge in the global economy.1 Regarding developing countries, the issue is much more fundamental. Technological catch up leads to sustained growth that lifts people from extreme poverty. Therefore, it is important to curtail the influence of firms that oppose policies that promote innovation and ensure that antitrust at the very least does not enable market structures that run against this goal. The purpose of this paper is to ground the discussion from the point of view of legal administrability. Therefore, the main question of interest is whether we can design legal standards and identify evidence that courts can use to evaluate the links between economic and political institutions that underpin competition in markets. In this regard, this contribution departs from one of the main proposals of the New Brandeis movement, which is a focus on the competitive process and not on outcomes.2 If political influence of large corporations is a concern, then this should be made explicit in the analysis and not just be a guiding principle of competition law enforcement, to the extent that such analysis is manageable by courts and administrative agencies.3 In this way we can capture the mutual reinforcement between economic and political institutions and avoid at the same time the problems encountered in the pre-Chicago era in the United States. We should not enforce competition law in such a way that almost any increase in market concentration is objectionable4 and the expansion of dominant firms through construction of plants and factories is

1

On the specific case of the political economy of international rules on the protection of intellectual property, see Hanns Ullrich, ‘The Political Foundations of TRIPS Revisited’ in Hanns Ullrich, Reto Hilty, Matthias Lamping, and Josef Drexl (eds), TRIPS Plus 20 (Springer 2016). Specifically, on the political tensions that the TRIPS Agreement has caused between and within countries, see p. 101 and ff., and on how geo-political changes spurred a discussion of the prevailing rules see p. 115 and ff. 2 Lina Khan, ‘The New Brandeis Movement: America’s Antimonopoly Debate’ (2018) JECL & Pract 131, 132. 3 Otherwise, the treatment can be worse than the disease. As Becker puts it, demonstrating that a set of interventions can improve welfare does not mean that in reality government intervention will achieve a better result. The contrary is the equivalent logic of equating the model of perfect competition with how markets actually work. Gary S Becker, ‘Competition and Democracy’ (1958) JL & Econ 5. 4 See Brown Shoe Co, Inc v United States, 370 US 294 (1962); United States v Philadelphia Nat Bank, 374 US 321 (1963).

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viewed as anticompetitive.5 These outcomes were the result of enforcing the law based on assumptions and not on evidence. If political considerations can be analyzed on a case-by-case basis, within a coherent framework, and based on useful evidence at hand, then this problem can be overcome. This paper focuses on the competition law implications of the use of a firm’s financial resources to influence policymaking through legal means, such as lobbying and campaign contributions. It leaves out the analysis of harm that can be caused by firms that provide important services for the functioning of democracy, such as news reporting, and at the same time have market power.6 These two threats are different in nature and therefore their analysis should be conducted separately.7 This paper is structured as follows. Section 2 provides an overview of the theoretical underpinnings of the relationship between economic and political institutions that affect market competition. Section 3 describes how this relationship has been approached throughout history in the United States and the EU in the context of competition law enforcement. Based on historical lessons and the current state of the art in the literature, Sect. 4 analyzes whether we can design manageable legal standards to introduce political economy considerations in antitrust analysis. Section 5 concludes.

2 The Link Between Economic and Political Institutions Income growth requires economic institutions that enable complex transactions such as long-term capital investment to develop or adopt the latest technologies.8 Some countries have been successful in fostering such institutions and others have not. That is why we observe large differences in income per capita around the world. Adjusted for purchasing power, the average resident in the European Union has an annual gross income of over US$ 46,000 while the average Bangladeshi makes do with US$ 5000. In Burundi, the poorest country in the world, that figure is US$ 782.9 5

United States v Alcoa, 148 F.2d 416 (2nd Cir 1945). For an analysis of media markets, see Josef Drexl, ‘Competition Law in Media Markets and Its Contribution to Democracy: A Global Perspective’ (2015) World Competition 367; id, ‘Economic Efficiency versus Democracy’ in Damien Gerard and Ioannis Lianos (eds), Reconciling Efficiency and Equity: A Global Challenge for Competition Policy (CUP 2017). 7 Activities such as lobbying and contributing to political campaigns can be viewed as an investment. A firm that provides a service related to the functioning of democracy, on the other hand, can affect political processes without committing financial resources, for example, by changing the way it provides the service. Therefore, the decisions are different from an economic standpoint. 8 The study of economic growth from an institutional perspective can be traced back to Douglas North, ‘Institutions and Economic Growth: An Historical Introduction’ (1989) World Development 1319. 9 accessed 1 March 2022. The magnitude of these differences is a relatively new phenomenon from a historical perspective. According to economic historian Angus Maddison, just before the Industrial 6

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We have known for quite some time that institutional settings in which financial resources flow efficiently, the political situation is stable, skilled labor is available, and economic policy is less volatile are associated with higher productivity and incomes. However, the question of why some countries succeed in establishing such an environment and others do not has been the subject of great debate, prompting the Economist to write that ‘economists understand little about the causes of growth’.10 To solve these shortcomings, there is a growing body of literature that incorporates the study of politics, which growth theory used to leave out. Economic and political institutions are mutually reinforcing. The degree of competition in markets depends on political decisions. Trade policy, for example, determines how much pressure national firms face from international markets. Depending on how much influence incumbents have relative to other stakeholders such as consumers, politicians may be more or less inclined to dismantle trade barriers. There is a large body of literature that studies this mutual feedback from a historical, theoretical, and empirical perspective. Economic historical approaches focus on identifying the circumstances under which prosperity increased in past civilizations.11 The current level of wealth enjoyed in the world, mostly in the developed nations, can be traced back more directly to the historical context of the Industrial Revolution, so it is useful to start there. The Industrial Revolution was preceded by the Glorious Revolution, which resulted in the Bill of Rights that stripped economic policy away from the Crown and vested it under the British Parliament’s power. The Glorious Revolution itself was preceded by a long period in which most monopolies in the United Kingdom’s economy were abolished, which opened economic opportunity to segments of society other than the nobility and clergy. All these developments happened as a result of power struggles between different segments of society, usually one side demanding more political say to be able to shape economic rules and another side bent on maintaining the status quo.12 These developments put in place the economic institutions that were a prerequisite for the string of innovations, such as the steam engine, that spurred unprecedented economic growth. These disruptive innovations caused a political cataclysm, which is why it is unsurprising to find historical

Revolution, the wealthiest economies in the world, the United Kingdom and the Netherlands, had a per capita income level of around 4 times that of the poorest region in the world, back then (and still to this day) Africa. Angus Maddison, The World Economy: Historical Statistics (Development Centre Studies, OECD 2003) 262. 10 ‘Economists Understand Little About the Causes of Growth’ The Economist (London, 12 April 2018) accessed 1 March 2022. 11 See Angus Maddison (2003, supra n 8); Douglas North (1989, supra n 7); Daron Acemoglu and James A Robinson, Why Nations Fail: The Origins of Power, Prosperity and Poverty (Crown Publishers 2012). 12 For a more detailed account, see ibid, 102.

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evidence of monarchs and ruling elites continuously opposing the protection of inventions and the spread of innovation.13 Inspired by historical insights and more contemporaneous examples of successful and disastrous industrial policies, there have been efforts to model and explain why some countries are able to transition to innovation economies and catch up with the technological frontier. Acemoglu et al. model a ‘political economy trap’ that causes countries’ economic growth to stagnate as a result of a positive feedback loop between incumbency rents and the pay-offs that politicians derive from different policy choices. The model describes the choice of competition policy or political openness that politicians promote as a function of the relative pay-offs they obtain from incumbent firms compared to the pay-off that that can come in the form of votes from the general public when promoting policies that increase productivity. If incumbency rents are high enough, which also depends on the level of competition, established firms will be able to buy a protectionist policy.14 In other words, low competition leads to high incumbency rents, which increases the likelihood that the state will favor policies that close markets to the benefit of politically powerful constituencies.15 There is also empirical evidence on how effective political influence is in shaping economic policy. Jung and Duso find that campaign donations from telecommunications companies at the state level in the US have been effective in promoting favorable regulation regarding costs of operation (for example, distance from antenna to antenna) and price caps.16 In Brazil, Claessens et al. find that campaign donations to winning candidates for congress and contributions to candidates affiliated with the president are associated with better access to finance from statecontrolled banks.17 The influence of companies and organized interest groups need not be a problem if there are competing interests that balance each other, which in the end can result in policies favorable to all. That is why Mitra finds that free trade can be an equilibrium with endogenous lobby formation, since different levels of the supply chain have

13

Ibid., 227 and ff. Daron Acemoglu, Philippe Aghion and Fabrizio Zilibotti, ‘Distance to Frontier, Selection, and Economic Growth’ (2006) JJEA 37, 65. 15 On similar models regarding innovation policy choices and organized interest groups, see also Per Krusell and José-Víctor Ríos-Rull, ‘Vested Interests in a Positive Theory of Stagnation and Growth’ (1996) RevEconStud 301; Gene M Grossman and Elhanan Helpman, ‘Electoral Competition and Special Interest Politics’ (1996) RevEconStud 265. 16 Tomaso Duso and Astrid Jung, ‘Market Conduct and Endogenous Lobbying: Evidence from the US Mobile Telecommunications Industry’ (2007) JICT 9. 17 Stijn Claessens, Erik Feijen and Luc Laeven ‘Political Connections and Preferential Access to Finance: The Role of Campaign Contributions’ (2008) JFinEcon 554, 566, 568–569, and 571–573 (tables 5–10). 14

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different preferences regarding the market price of inputs and end-consumer products.18 However, the evidence does not support a theory of balancing between interest groups that can ultimately benefit the general public. Based on a study of 1779 policy issues in the United States, Gilens and Page find that median voter interests do not align with those of the higher-income population and interest groups. In addition, median voter preferences appear to have no bearing on the likelihood that a policy will be adopted. In contrast, the preferences of interest groups are found to have a significant effect on policy outcomes.19 Lastly, regarding factors closely related to competition law, firm size—both in absolute and relative terms—has been found to be a good predictor of lobbying activity. Kerr et al. examine lobbying data in the United States on publicly traded companies. They find that, even within large firms, there is great variation of lobbying activity associated with market cap size.20 Akcigit et al. find similar results in Italy, where market leaders are more likely to invest in political connections and at the same time reduce their research and development efforts.21 Throughout history, politicians and judiciaries have made choices on how antitrust law approaches this mutual feedback. The next section provides an overview focusing mainly on the US and the EU.

3 A Brief Historical Overview of the Relationship Between Antitrust Law and Democracy At its inception, antitrust law in the US was indeed conceived as a measure against concentration of economic power that was incompatible with a democratic system of government.22 This approach was dominant in the case law in the pre-Chicago era.23 18 Devashish Mitra, ‘Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination’ (1999) AmEconRev 1116. 19 Martin Gilens and Benjamin I Page, ‘Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens’ (2014) Perspectives on Policies 564. 20 William R Kerr, William F Lincoln and Prachi Mishra ‘The Dynamics of Firm Lobbying’ (2014) AEJ:EconPol 343. 21 Ufuk Akcigit, Salome Baslandze and Francesca Lotti, ‘Connecting to Power: Political Connections, Innovation, and Firm Dynamics’ (2018) National Bureau of Economic Research. 22 Although there were attempts to frame efficiency as the legislative intent—most notably by Robert Bork, ‘Legislative Intent and the Policy of the Sherman Act’ (1965) JL & Econ 7—currently the consensus is that antitrust law was conceived as an instrument against special interests. See Herbert Hovenkamp, The Antitrust Enterprise: Principle and Execution (HUP 2005) 40; Spencer Weber Waller, ‘Antitrust and Democracy’ (2019) FlaStULRev 807, 809; Eleanor M Fox, ‘Antitrust and Democracy: How Markets Protect Democracy, Democracy Protects Markets, and Illiberal Politics Threatens to Hijack Both’ (2019) LIEconI 317, 319-320. 23 See Brown Shoe Co, Inc v United States, 370 US 294, 316 (1962); United States v Aluminum Co. of America 148 F2d 416, 428 (1945).

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Indeed, concerns that the concentration of wealth could put an end to democracy were prominent at different milestones of US competition law, such as the Standard Oil decision,24 the subsequent presidential election, when the future of antitrust enforcement was discussed, the Great Depression, Franklin D. Roosevelt’s antimonopoly speech before Congress in 1938, post WWII de-cartelization and de-monopolization of defeated powers as part of the post-war world order, and bipartisan support to strengthen antitrust enforcement during the Cold War.25 This concern regarding the compatibility of concentrated economic power and democracy disappeared from the case law following the Chicago revolution in the late 1970s. However, the topic has gained prominence in both the political and academic agenda in the US with the New Brandeis movement.26 The antitrust component of the Better Deal espoused by Democrats states that ‘because concentrated market power leads to concentrated political power, [large] companies deploy armies of lobbyists to increase their stranglehold on Washington.’27 In the Republican Party, political power concerns were one of the main focus points during the recent congressional hearing with the CEOs of Amazon, Apple, Facebook and Google. Specifically, a number of Republican representatives were concerned with the threat from platforms such as Facebook and Google to censor conservative content.28 During the same hearing, Democratic representatives echoed historical concerns from Jefferson, Brandeis, and Sherman on the perils posed by the concentration of economic and political power. Representative Cicilline closed his opening statement with the following remark: ‘Our founders would not bow before a king nor should we bow to the emperors of the online economy.’ In Europe, after WWII, the most influential school of thought behind the amendments and adoption of new competition laws was ordoliberalism, which emerged as a fusion of ideas between the Freiburg School and other neo-liberal schools of

24

Standard Oil v United States, 221 US 1, 83 (1910) (Harlan, J, concurring). For a more detailed overview, see Spencer Weber Waller (2019, supra n 21) 807, 809-811; and Eleanor M Fox (2019, supra n 21) 317, 319-321. 26 For a summary of the main ideas behind the New Brandeis movement, see Lina Khan (2018, supra n 1) 131. 27 ‘A Better Deal: Crack Down on Corporate Monopolies & the Abuse of Economic and Political Power’ accessed 1 March 2022. 28 See, for example, opening statements of Rep Jim Sensenbrenner (R-Wisconsin) and Rep Jim Jordan (R-Ohio), and questionings from Rep Gregory Steube (R-Florida) and Jim Jordan. Full & t=10715s> accessed hearing