Network-Based Governance in EC Law: The Example of EC Competition and EC Communications Law 9781472560636, 9781841132563

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JOBNAME: De Visser PAGE: 5 SESS: 6 OUTPUT: Tue Aug 11 09:26:05 2009

Foreword I am very pleased to have the opportunity to write this Foreword to a book which I am convinced is a truly valuable addition to academic scholarship. It is a piece of work that operates on several levels, all of them intriguing. EC law is largely made at EC level but implemented and enforced at national level. This is its strength and its weakness. This model permits reliance on established national systems rather than requiring the costly invention of European-level enforcement agencies, but any failings in the faithful application of EC law at national level may lie buried, invisible. This book provides two powerful case studies in competition and communications and aims to understand the possibility of ‘network governance’ as a way to bring together those involved in the application of EC rules without imposing heavily hierarchical solutions—to achieve consistency without damaging the virtuous aspects of diversity in Europe. In this vein the book is rich in its exploration of how national agencies, national courts and the Commission operate together in pursuit of consistency. In my view the greatest of this book’s many merits lies in its subtle and skilful blend of, on the one hand, close analysis of detail—pertaining to the institutional features and practical operation of networks—and, on the other, the thematic understanding that faithful enforcement of EC-sourced laws is no technical matter but rather one that connects to the EU’s deeper aspirations to provide a legitimate form of governance. Networks themselves generate intriguing constitutional questions. Preserving their independence may strengthen effective problem-solving but may raise acute anxieties about accountability. So this book is deeply concerned with normative questions of institutional design. The book is based on the PhD thesis submitted by Dr de Visser at the University of Tilburg. I was delighted to be invited to participate as a member of the jury, and after witnessing a brilliant defence on a rainy day in January 2009, I was happy to be party to the unanimous recommendation of the examiners that the qualification be awarded cum laude. I was especially pleased to play a small part in this triumph because Maartje de Visser was a postgraduate student in Oxford in 2003–04. In my seminar class on European Business Regulation she was an extraordinarily positive and constructive influence. I was very pleased when she—entirely deservedly—won the Winter Williams prize for the best examination performance in the subject and took the Magister Juris degree with distinction, acquiring a glittering set of marks. I sincerely hope she will enjoy a successful career as an academic, and I fully anticipate this book will be very warmly received. Stephen Weatherill Oxford, July 2009 v

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Acknowledgments Writing a book is a solitary pursuit, or so it is generally accepted. And yet I have come across preciously few books that do not first introduce to readers a host of persons that have been of invaluable support in completing the task at hand. This is true, too, of myself. I make mention of the following people to whom I am indebted for making this book a reality. My supervisor, Professor Pierre Larouche, for giving me room to discover and develop my academic abilities. You have provided me with an intellectually challenging environment—and your high standards have been a constant source of motivation. I have learned much from you. Professors Monica Claes, Eric van Damme, Sacha Prechal, Linda Senden and Stephen Weatherill. Thank you for the time and effort you spent scrutinising my manuscript. Your comments will always be as valuable to me as your verdict. You inspire me to greater academic pursuits. My friends and colleagues at Tilburg University, who have been invaluable in creating a very gezellige work environment. I wish to mention in particular Christophe, Michelle and Simone. Kelly, Annemiek, Tessa and Nathalie, lifelong friends who kept me (in)sane and amused through four years of writing. I hope to do the same for you. Richard, Lisa, Mel, Jo and the rest of the team at Hart Publishing. Without your tremendous support and keen editorial skills, this book would not be able to capture with such precision what I would otherwise have wanted to say. The Netherlands Organization for Scientific Research (NWO), through whose support this research was made possible. My parents and sister. Intellectual pursuits are undoubtedly important, but so is family—your unconditional love and care constantly remind me of this. My partner, Gary Low, for a never-ending supply of support and trust, through trying times and moments of laughter. For just being you. I owe to you an indelible mark of gratitude.

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List of Tables and Figures Tables Table 1.1 Agencies in European Law .................................................................... Table 1.2 Networks, Markets and Hierarchies Compared and Contrasted .......... Table 2.1 Overview of the NCAs and NRAs in Germany, France, the Netherlands and the United Kingdom .............................................................. Table 2.2 National Legislation and Abbreviations ............................................... Table 2.3 Implementation of Article 8 Objectives in Germany, France, the Netherlands and the United Kingdom .............................................................. Table 2.4 Implementation of Article 8(1) of the Framework Directive by Germany, France, the Netherlands and the United Kingdom .......................... Table 2.5 Legislative Operationalisation of Competences Covered by Articles 5 and 29(2) of Regulation 1/2003 ........................................................................ Table 2.6 Legislative Implementation of Wholesale Remedies in Germany, France, the Netherlands and the United Kingdom ........................................... Table 2.7 Dispute Settlement Powers in National Electronic Communication Market: Legislative Implementation of Article 20 Framework Directive and Article 5(4) of the Access Directive in Four Member States ............................. Table 2.8 Sanctions Available to National Competition Authorities in Germany, France, the Netherlands and the United Kingdom .......................... Table 2.9 Sanctions Available to National Regulatory Authorities in Germany, France, the Netherlands and the United Kingdom .......................... Table 2.10 Designated NCAs and NRAs in Germany, France, the Netherlands and the United Kingdom ................................................................................... Table 2.11 Staff and Budgets of NCAs and NRAs in Germany, France, the Netherlands and the United Kingdom .............................................................. Table 2.12 Conflict of Interest Rules in Germany, France, the Netherlands and the United Kingdom ................................................................................... Table 2.13 Conflict of Interest Rules in Germany, France, the Netherlands and the United Kingdom (Continued) ............................................................. Table 2.14 NCA and NRA Decision-Making Units in Germany, France, the Netherlands and the United Kingdom .............................................................. Table 2.15 The Status and Location of NCAs and NRAs in Germany, France, the Netherlands and the United Kingdom ........................................................ Table 2.16 Governmental Intervention in NCA and NRA Affairs in Germany, France, the Netherlands and the United Kingdom .......................... Table 2.17 Individual Independence of NCA and NRA Staff in Germany, France, the Netherlands and the United Kingdom ...........................................

13 26 46 47 50 55 58 62

65 69 72 81 82 87 88 91 93 95 98

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List of Tables and Figures Table 2.18 The Funding of NCAs and NRAs in Germany, France, the Netherlands and the United Kingdom ............................................................ Table 3.1 The Legal Basis for Amicus Curiae Interventions by NCAs ............... Table 3.2 Locus Standi before National Courts vis-à-vis NCA and NRA Decisions .......................................................................................................... Table 3.3 Suspensory Effect of NCA and NRA Decisions at Member State Level ................................................................................................................. Table 6.1 The Chairs of the European Regulators Group (ERG) to Date .......... Table 7.1 Assessing the Options for Case Allocation within the European Competition Network (ECN): Formalised Decisions versus Ex Ante Procedural Harmonisation .............................................................................. Table 7.2 A Cost-Benefit Analysis of Judicial Review for Information Collection within the European Competition Network (ECN) ......................

101 122 126 128 211

293 311

Figures Figure 1.1 Traditional Modes of Governance Compared and Contrasted ........... 15 Figure 1.2 The Emergence of Networks in European Law ................................... 38 Figure 3.1 Judicial Review of NCA and NRA Decisions in Germany ............... 108 Figure 3.2 Judicial Review of NCA and NRA Decisions in France ................... 109 Figure 3.3 Judicial Review of NCA and NRA Decisions in the Netherlands .... 110 Figure 3.4 Judicial Review of NCA and NRA Decisions in the United Kingdom .......................................................................................................... 112 Figure 5.1 The Role of the Commission in the Adoption of NCA Decisions (Article 11 of Regulation 1/2003) ................................................................... 171 Figure 5.2 The Adoption of NRA Measures (Article 7 of the Framework Directive) ......................................................................................................... 172 Figure 5.3 Procedural Tools for Consistency Applicable to National Authorities ....................................................................................................... 188 Figure 6.1 The Organisational Structures of the ECN and ERG ....................... 213 Figure 6b.1 Summarising Network-Based Governance ...................................... 249 Figure 7.1 The Case Allocation Process in the European Competition Network (ECN) ............................................................................................... 293 Figure 7.2 Exchange of Information within the European Competition Network (ECN) ............................................................................................... 303

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Abbreviations ARCEP

Autorité de Régulation des Communications électroniques et des Postes Awb Algemene Wet Bestuursrecht BKartA Bundeskartellamt BNetzA Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen CA 1998 Competition Act 1998 CAT Competition Appeal Tribunal CBB College van Beroep voor het Bedrijfsleven CdC Code de Commerce CESR Committee of European Securities Regulators CFI Court of First Instance COCOM Communications Committee Code PCE Code des postes et des communications électroniques CommA 2003 Communications Act 2003 DGCCRF Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes DG COMP Directorate-General for Competition DG INFSO Directorate-General Information Society & Media EA 2002 Enterprise Act 2002 ECHR European Convention for the Protection of Human Rights and Fundamental Freedoms ECMS Electronic Case Management System ECN European Competition Network EEA European Environment Agency EECMA European Electronic Communications Market Authority ERG European Regulators Group ESBC European System of Central Banks GWB Gesetz gegen Wettbewerbsbeschränkungen IRG Independent Regulators Group Mw Mededingingswet NCA national competition authority NRA national regulatory authority NMa Nederlandse Mededingingsautoriteit Ofcom Office of Communications OFT Office of Fair Trading ONP Open Network Provision xvii

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Abbreviations OPTA SMP TKG Tw

Onafhankelijke Post en Telecommunicatie Autoriteit Significant Market Power Telekommunikationsgesetz Telecommunicatiewet

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Introduction

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HERE IS A growing awareness of the importance of the successful administration of European rules. Consider the European Commission’s recent Communication ‘A Europe of Results: Applying Community Law’, in which we are told: ‘Laws do not serve their full purpose unless they are properly applied and enforced.’1 This observation is as trite as it is fundamental. It focuses our attention squarely on the notion of effectiveness—a leitmotiv in European integration.2 For most of its existence, the European Community (and later also the European Union) has been concerned with the promulgation of new rules and principles—to allow citizens and firms to reap the benefits that an integrated Europe should bring. Since 1992, however, there has been a particular, been a shift in emphasis: with the body of Internal Market legislation largely in place, attention has naturally turned to its application and enforcement.3 The continuous widening and deepening of the European enterprise only serves to reinforce the relevance of this topic. How can we ensure that 27 national administrations correctly, diligently and coherently apply the ever-expanding acquis communautaire to the benefit of just under 500 million Europeans? This question begets no easy answers or quick-fix solutions. This book engages in the debate on the better application of European law. To that end, it examines the new institutional frameworks introduced for the administration of EC competition and EC communications law in 2002. The 1 European Commission (EC), ‘A Europe of Results: Applying Community Law’ (Communication) COM (2007) 502 final, 5 September 2007, 1. 2 Evident in such celebrated cases as Case 26/62 NV Algemene Transport en Expeditie Onderneming van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECR 1; Case 6/64 Flaminio Costs v ENEL [1964] ECR 585; Cases C-6 & 9/90 Andrea Francovich and Danila Bonifaci and Others v Italian Republic [1991] ECR I-5357. See also F Snyder, ‘The Effectiveness Of European Community Law: Institutions, Processes, Tools And Techniques’ (1993) 56 Modern Law Review 19. 3 P Sutherland, ‘The Internal Market after 1992: Meeting the Challenge’ (The Sutherland Report) SEC (92) 2044, 28 October 1992; European Commission (EC), ‘Operation of the Community’s Internal Market after 1992: Follow-up to the Sutherland Report’ SEC (92) 2277, 2 December 1992; European Commission (EC), ‘Reinforcing the Effectiveness of the Internal Market’ (Communication) COM (93) 256 final, 2 June 1993; European Commission (EC), ‘Making the Most of the Internal Market: Strategic Programme’ (Communication) COM (93) 632 final, 22 December 1993; European Commission (EC) ‘The Development of Administrative Cooperation in the Implementation and Enforcement of Community Legislation in the Internal Market’ (Communication) COM (94) 29 final, 16 February 1994; European Commission (EC), ‘The Impact and Effectiveness of the Internal Market’ (Communication) COM (96) 520 final, 30 October 1996; European Commission (EC), ‘Action Plan for the Internal Market’ (Communication) CSE (97) 1 final, 4 June 1997; European Commission (EC), ‘The Strategy for Europe’s Internal Market’ (Communication) COM (1999) 624 final, 24 November 1999; European Commission (EC), ‘Internal Market Strategy: Priorities 2003– 2006’ (Communication) COM (2003) 238 final, 7 May 2003.

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Introduction enforcement of European competition law was thoroughly reformed for the first time in 40 years with the finalisation of Regulation 1/2003, applicable as of 1 May 2004.4 While Regulation 1/2003 does not purport to change the substance of the law, it does mark a significant decentralisation of the institutional and procedural framework. The main modifications concern Article 81(3) EC, which allows for exemptions to the prohibition on restrictive practices found at Article 81(1) EC. First, under the old regime of Regulation 17, Article 81(3) could only be applied by the Commission.5 The latter was therefore placed in a leading position for the application and development of EC competition law. In principle, other authorities, including national courts and national competition authorities, could only apply the prohibition in Article 81(1) (as well as Article 82) but could not grant exemptions.6 Regulation 1/2003 puts an end to the exclusive competence of the Commission over Article 81(3) and empowers all actors (the Commission, national courts and national authorities) to use the whole of Article 81 EC. Secondly, under Regulation 17, the Commission exercised its powers to grant exemptions under Article 81(3) through a notification system, whereby agreements had to be notified to the Commission before any exemption could be given. Under Regulation 1/2003, Article 81(3) is made applicable without any prior decision being required. The overall thrust of the reform is to shift the burden of enforcing Articles 81 and 82 from the Commission onto the national authorities and courts, so as to enable the Commission to free its resources for the most important cases. The changes brought about by Regulation 1/2003 were extensively debated in the run-up to the adoption of the Regulation.7 One of the most frequently voiced

4 Council Regulation No 1/2003/EC on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1. 5 Council Regulation (EEC) No 17 (First Regulation implementing Articles 85 and 86 of the Treaty) [1959–62] OJ Spec Ed 87, Art 9(1). 6 In practice, the situation was slightly less clear-cut, since national courts could give effect to block exemption regulations issued by the Commission or assess the likelihood of an individual exemption of a given agreement or practice: Commission Notice on cooperation between national courts and the Commission in applying Articles 85 and 86 of the EEC Treaty [1993] OJ C39/6 [24] ff. Similarly, national competition authorities could assess the likelihood of an individual exemption under Art 81(3) EC (with the help of the Commission if necessary) before deciding on whether to proceed with a case before them: Commission Notice on cooperation between national competition authorities and the Commission in handling cases falling within the scope of Articles 85 or 86 of the EC Treaty [1997] OJ C313/3 [57] ff. 7 See eg the contributions in CD Ehlermann and I Atanasiu (eds), The Modernisation of EC Antitrust Policy, European Competition Law Annual 2000 (Oxford, Hart Publishing, 2001) 145; B Hawk (ed), Annual Proceedings of the Fordham Corporate Law Institute: EC Competition Law Reform (New York, Juris Publishing, 2002); D Geradin (ed), Modernisation and Enlargement: Two Major Challenges for EC Competition Law (Antwerp, Intersentia, 2004); CD Ehlermann, ‘The Modernization of EC Antitrust Policy: A Legal and Cultural Revolution’ (2000) 37 Common Market Law Review 537; I Forrester, ‘The Reform of the Implementation of Articles 81 and 82 following Publication of the Draft Regulation’ (2001) 28 Legal Issues of Economic Integration 173; H Gilliams, ‘Modernisation: From Policy to Practice’ (2003) 28 European Law Review 451; L Idot, ‘“Le future ‘règlement d’application des articles 81 et 82 CE”: chronique d’une révolution annoncée’ (2001) 17 Dalloz 1370; W Jaeger, ‘Die möglichen Auswirkungen einer Reform des EG-Wettbewerbsrecht für die nationale

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Introduction criticisms concerned the risk that the uniform application of EC competition law would be unwound through the independent actions of the various actors. To counter that, Regulation 1/2003 provides for close cooperation between all the authorities, for control mechanisms and in particular for the creation of a network regrouping the Commission and the national competition authorities: the European Competition Network. Its task is to ensure consistency in the work of the national authorities. As regards electronic communications, the old EC regulatory framework that completed the liberalisation of the telecom sector8 was entirely replaced by a new set of directives, which had to be implemented mostly by 24 July 2003.9 These new directives effected significant changes in the substantive law. For one, the scope of the regulatory framework was extended beyond telecommunications to cover all networks and services used to convey ‘electronic communications’ (including also broadcasting infrastructure, for instance). Undoubtedly the most

Gerichte’ (2000) 50 Wirtschaft und Wettbewerb 1062; B Rodger, ‘The Commission White Paper on Modernisation of the Rules Implementing Articles 81 And 82 of the EC Treaty’ (1999) 24 European Law Review 653; A Schaub, ‘Modernization of EC Competition Law: Reform of Regulation No 17’ (2000) 23 Fordham International Law Journal 752; M Siragusa, ‘A Critical Review of the White Paper on the Reform of the EC Competition Law Enforcement Rules’ (2000) 23 Fordham International Law Journal 1089; J Venit, ‘Brave New World: The Modernisation and Decentralisation of Enforcement under Articles 81 and 82 of the EC Treaty’ (2003) 40 Common Market Law Review 545; R Wesseling, ‘The Commission White Paper on Modernisation of EC Antitrust Law: Unspoken Consequences and Incomplete Treatment of Alternative Options’ (1999) 8 European Competition Law Review 420. 8 The so-called Open Network Provision (ONP) Framework, made up of Commission Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets [1996] OJ L74/13 and Directive 97/51/EC of the European Parliament; and of the Council Directive of 6 October 1997 amending Council Directives 90/387/EEC and 92/44/EEC for the purpose of adaptation to a competitive environment in telecommunications [1997] OJ L295/23; Directive 97/13/EC of the European Parliament and of the Council of 10 April 1997 on a common framework for general authorisations and individual licences in the field of telecommunications services [1997] OJ L117/15; Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP) [1997] OJ L199/32; and Directive 98/10/EC of the European Parliament and of the Council of 26 February 1998 on the application of open network provision (ONP) to voice telephony and on universal service for telecommunications in a competitive environment [1998] OJ L101/24. See also P Larouche, Competition Law and Regulation in European Telecommunications (Oxford, Hart Publishing, 2000) ch 1. 9 Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services (the Framework Directive) [2002] OJ L108/33; Directive 2002/20/EC of the European Parliament and of the Council on the authorisation of electronic communications networks and associated services (the Authorization Directive) [2002] OJ L108/21; Directive 2002/19/EC of the European Parliament and of the Council on access to and interconnection of electronic communications networks and associated facilities (the Access Directive) [2002] OJ L108/7; Directive 2002/22/EC of the European Parliament and of the Council on universal service and users’ rights relating to electronic communications networks and associated services (the Universal Service Directive) [2002] OJ L108/51; Commission Directive 2002/77/EC on competition in the markets for electronic communications networks and services [2002] OJ L249/21; and Directive 2002/58/EC of the European Parliament and of the Council concerning the processing of personal data and the protection of privacy in the electronic communications sector [2002] OJ L201/37.

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Introduction important change in substance concerned the core of regulation, namely the heavier obligations imposed on firms enjoying Significant Market Power (SMP)—a position equivalent to dominance under Article 82 EC. There, the rather formalistic and inflexible provisions of the old regime were replaced by a new approach, closely aligned with competition law. On the institutional side, the new directives strengthen the position of national regulatory authorities as the main actors in charge of the application and enforcement of the law. At the same time, in order to alleviate concerns not unlike those expressed in relation to the decentralisation process under competition law, the work of the national authorities is subject to a number of control mechanisms to ensure consistency across the EU. To allow these coordination procedures to work efficiently, the new framework makes room for the creation of a network of regulators that includes the Commission and the national authorities, called the European Regulators Group.10 The question this book seeks to answer is whether this ‘network-based’ model as it has been introduced in competition and communications law can and should be considered as a promising new institutional paradigm for the administration of Community law. The selection of these regimes as our case studies is based on two interlinked considerations. Firstly, competition and communications law were among the first areas in which networks were introduced to aid in the enforcement of the European rules. Secondly, the networks in place for these two fields of law are particularly sophisticated and thus a valuable source of information as well as inspiration. It is fitting to mention here that similar or comparable structures have been contemplated or introduced for other areas of the law as well.11 This book aims to serve a useful function by indicating the direction of future institutional change in European law beyond the fields under discussion. The book is divided into three parts. Part I analyses the traditional models for the application and enforcement of EC law to show that there is room for improvement and that, hence, the network model may meet a need on the part of Community institutions. Three traditional models are identified: centralised,

10 Commission Decision 2002/627/EC of 29 July 2002 establishing the European Regulators Group for Electronic Communications Networks and Services [2002] OJ L200/38 as amended by Commission Decision 2004/641/EC of 14 September 2004 and Recital 36 Framework Directive (above n 9). 11 See ch 1, section IV. Consider the European Regulators Group for Electricity and Gas (ERGEG), established by Commission Decision 2003/796/EC of 11 November 2003 [2003] OJ L296/34; and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), established by Commission Decision 2004/6/EC of 5 November 2003 [2004] OJ L3/30. See also European Commission (EC), ‘State Aid Action Plan: Less and Better Targeted State Aid: A Roadmap for State Aid Reform, 2005–2009’ (Consultation document) COM (2005) 107 final, 7 June 2005 in which the Commission considers the creation of a network of independent authorities in the Member States that would share responsibility for the enforcement of Arts 87–89 EC in terms of detection and recovery of illegal aid, while also facilitating the horizontal flow of information and exchange of best practices.

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Introduction decentralised and agency-based governance. Drawing on examples from the competition and the communications fields, the discussion highlights the difficulty of allocating competences in a multi-level governance structure and the need for meaningful interaction between the various governance levels. This challenge leads to a further question: how do we strike a balance between the need for coherence as a basic condition for the Internal Market on the one hand and the importance of respect for local traditions, preferences and particularities on the other hand? The emergence of networks for the administration of European law is chartered so that we may understand where to situate the network model in relation to the traditional regimes. Part II is an explanatory analysis of the institutional frameworks as they have been introduced by Regulation 1/2003 and the EC electronic communications framework. Chapters two, three and four consider the role of the three major players—namely the national authorities, the national courts and the Commission—and the regulatory environment in which they operate. In particular, we shall focus on the extent to which European law specifies their institutional characteristics and the procedures they must follow. Chapters five and six then discuss the inter-institutional relationships between these principal actors—how the law has designed relationships and how they actually work in practice. Chapter five deals with the specific methods for consistency on offer— above and beyond the traditional tools of infringement proceedings and preliminary references. Chapter six considers the European Competition Network and the European Regulators Group: their internal organisation, their functioning and their contribution to coherency. Finally, Part III provides an external critique of the network-based model to assess its wider normative attractiveness. To that end, we inquire how it fares in the light of three complementary perspectives: that of the firms and consumers that are subject to the system; that of the Member States that administer the system; and that of society as a whole, which should benefit from the system. The concluding chapter pulls together all the relevant arguments discussed in the three Parts and offers a view on whether, in the final analysis and given its relative merits and demerits, the network model is worthy of wider use within the European legal system. This book is written from a legal perspective. The methodology is accordingly largely classical: legislation, case law and literature are used to ascertain and assess the state of the art. In Part II we also engage in functional comparative legal research. Since the respective bodies of European law do not deal conclusively with all the relevant issues that impact on the way in which the legal rules are administered—or require implementation or operationalisation for their proper functioning—it is necessary also to examine selected national legal systems to obtain an overarching view of the general legal state of affairs. For our purposes, we have chosen France, Germany, the United Kingdom and the Netherlands as sample Member States. Both normative and pragmatic reasons have inspired these choices. In normative terms, France, Germany and the United Kingdom are xxiii

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Introduction generally considered the most influential legal systems in the European Union. The Netherlands is often presented as an interesting case study, since it usually tries to synthesise the best elements from the systems of its larger neighbours. In pragmatic terms, most of the national working materials of the Member States are only available in their original languages, which presents obvious linguistic limits for a single researcher. Functionalist methodology takes a particular issue (which may be a provision of EC law) as its starting-point and then examines how each of the legal systems has dealt with it. To illustrate, rather than describing one after another of the institutional set-ups for the enforcement of the competition rules in the four Member States, we identify a single issue—say the independence of the authority in relation to market parties—and look at what the law and practice of the Member States provide on this. By proceeding in this way, we can respect as much as possible the integrity of the national legal systems while at the same time making comparisons between the various jurisdictions and allowing similarities and differences to appear more clearly than under a classical comparative law approach. Another deviation from the traditional legal paradigm is the interdisciplinary approach featured in certain parts of this book. Thus, chapters one and six rely on political science to explain the workings of the network structure, and Part III makes use of insights from the literature of economics in considering the wider normative credentials of the network-based model. Scattered throughout the book are highlighted text boxes, which provide supplementary points and additional information. Foreign words or expressions are purposively left in the original languages so that readers who are familiar with the foreign system in question will recognise the concepts. Where the foreign concept is mentioned for the first time, a brief English translation is provided for other readers. The book has been written on the basis of the law as it stood on 1 May 2008. Major developments after that date have, when necessary and possible, been considered and incorporated into the discussion.

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1 Modes of Governance in EC Law

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HIS CHAPTER ANALYSES the traditional enforcement paradigms for European law. Following some reflections on the notion of governance in section I, we shall begin by describing the main institutional structures and methods presently available (section II). Drawing on examples from the fields of competition and communications, we shall adopt a critical approach to highlight the perceived advantages and drawbacks of the traditional regimes (section III). The emergence of the network model is charted in section IV, and some concluding remarks are offered in section V.

I. THINKING ABOUT GOVERNANCE

In 1962, with rumours of a communist coup rife in Fifth Republic France, de Gaulle famously wondered how anyone can be expected to govern a country that has 246 kinds of cheese.1 The roi juste might just as well have been addressing the regulation of a European Union comprising 27 Member States. As the European polity expands, so do the dilemmas of governance it faces. What do we mean by ‘governance’? The term is generally taken to correspond to the post-modern form of economic and political constellations that ‘have escaped the narrow confines of traditional national systems of government’.2 The literature on governance is vast.3 Ideas of governance appear to straddle several disciplines: law, political 1

E Mignon, Les Mots du General de Gaulle (Paris, Fayard, 1962). P Schmitter, How To Democratize The European Union. . . And Why Bother? (Lanham, Rowman & Littlefield, 2000). 3 In relation to the European Union, consider, eg, http://ec.europa.eu/governance/index_en.htm; G De Búrca and J Scott (eds), Law and New Governance in the EU and the US (Oxford, Hart Publishing, 2006); D Curtin and RA Wessel (eds), Good Governance and the European Union (Antwerp, Intersentia, 2005); B Kohler-Koch (ed), Linking EU and National Governance (Oxford, Oxford University Press, 2003); O De Schutter, N Lebessis and J Paterson (eds), Governance in the European Union, Forward Studies Unit Series (Luxembourg, Office for Official Publications of the European Communities, 2001); the articles included in European Law Journal (2002) 8(1); S Hix, ‘The Study of the European Union II: The “New Governance” Agenda and its Rival’ (1998) 5 Journal of European Public Policy 38; A Stone Sweet and W Sandholtz, ‘European Integration and Supranational Governance’ (1997) 4 Journal of European Public Policy 297; G Majone, ‘From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance’ (1997) 17 Journal of European Public Policy 139; G Marks, L Hooghe and K Blank, ‘European Integration from the 1980s: 2

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Modes of Governance in EC Law science, economics—to name only the most usual suspects. The term ‘governance’ is used in relation to national, European and international orders, and it crosses the public–private divide. Almost by necessity, the term is ambiguous and capable of carrying several layers of meaning.4 For our purposes a functional definition is sufficient. Accordingly, and as defined in the Oxford English Dictionary, ‘governance’ is the act, manner or function of governing, with governing in turn referring to the exercise of power.5 Governance thus encompasses all stages of the policy chain, from drafting to enacting to implementing to enforcing rules. In their seminal article ‘Mind the Gap: Law and New Approaches to Governance in the European Union’, Joanne Scott and David Trubek direct an inquiry into new modes of governance in the EU’s lego-political landscape.6 They distinguish two categories of new governance.7 Their first category is ‘new, old governance’ (NOG). NOG is a hybrid, a blend of traditional characteristics of the Community Method and innovative features.8 Scott and Trubek outline the enhanced participation of civil society in the preparation of Community measures,9 the increasing popularity of framework directives10 and the comitology

State-centric v Multi-level Governance’ (1996) 34 Journal of Common Market Studies 341; M Pollack, ‘The New Institutionalism and EC Governance: The Promise and Limits of Institutional Analysis’ (1996) 9 Governance: An International Journal of Policy and Administration 429. Outside the EU, consider the International Monetary Fund (IMF) policy on good governance; the work of the Organisation for Economic Co-operation and Development (OECD) on public governance and public management; and the research produced by the World Bank Institute in governance and anti-corruption. 4 Thus, Roderick Rhodes has identified at least six different uses in the context of social sciences (the minimal state, corporate governance, new public management, good governance, sociocybernetic systems and self-organising networks): R Rhodes, ‘The New Governance: Governing without Government’ (1996) 44 Political Studies 652. 5 This corresponds closely to the definition adopted by the European Commission in ‘European Governance’ (White Paper) COM (2001) 428 final, 25 July 2001, 8: ‘the rules, processes and behaviour that affect the way in which powers are exercised at European level’. 6 J Scott and D Trubek, ‘Mind The Gap: Law And New Approaches To Governance In The European Union’ (2002) 8 European Law Journal 1. 7 They remark, however, that the two categories cannot be hermetically separated and might be better conceived as situated on a continuum. 8 Following the White Paper on Governance (above n 5), Scott and Trubek explain the Community Method as premised on the Commission’s exclusive right of initiative, with the Council of the European Union and European Parliament adopting binding legislation (preferably using qualified majority voting in Council), with execution of EU policies entrusted to the Commission and national authorities and with the Court of Justice exercising supervisory jurisdiction to uphold the rule of law. 9 See the White Paper on Governance (above n 5) 11–18; European Commission (EC), ‘Towards a Reinforced Culture of Consultation and Dialogue: General Principles and Minimum Standards for the Consultation of Interested Parties by the Commission’ (Communication) COM (2002) 704 final, 11 December 2002; Art 11 TEU as amended by the Lisbon Treaty; and ‘Interactive Policy Making’, the principal component of ‘Your Voice in Europe’, two internet-based instruments to collect feedback from citizens, consumers and business. 10 See the EC Treaty (Treaty of Rome as amended) Protocol on the Application of the Principles of Subsidiarity and Proportionality [6]–[7].

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Thinking about Governance system.11 Their second category of governance comprises ‘fully-fledged alternatives’ to the Community Method: recourse to partnerships between the Commission and Member States in the context of Community structural funding;12 the social dialogue that sees management and labour as drivers that can propose legislation, which can then be made into formal law by the EC institutions;13 or the Open Method of Coordination (OMC).14 The examples used by Scott and Trubek predominantly concern evolution in lawmaking processes. This chapter (and this book) focuses on the logical next step: developments in the administration of legislative outcomes—in particular, the institutional structures and regulatory methods for the application and enforcement of EC rules. Although lawmaking and law enforcement can no longer be seen in a strict dichotomy, Renauld Dehousse is still correct to point out that implementation of European policies is constrained by choices made in the legislative phase and generally perceived to be of less importance.15 He is also correct to criticise this ‘legislative bias’. Indeed, it is clear that one cannot assume that success in enforcement is guaranteed once Community rules are sustainable in substance.16 The need for a strategy for the administration of EC rules was firmly put on the Community agenda by the 1992 Sutherland Report.17 This Report identified three principal objectives that ought to guide the Community in successfully managing its Internal Market: enhancing the transparency of EC law for the

11 Council Decision 2006/512/EC of 17 July 2006 amending Decision 1999/468/EC laying down the procedures for the exercise of implementing powers conferred on the Commission [2006] OJ L200/11. 12 The Structural Funds comprise the European Regional Development Fund, the European Social Fund, the European Agricultural Guidance and Guarantee Fund and the Financial Instrument for Fisheries Guidance. These contribute towards the financing of regional and horizontal operations at national level to promote social and economic cohesion. Consider Council Regulation (EC) No 1260/99 of 21 June 1999 laying down general provisions on the Structural Funds [1999] OJ L161/1 as amended by Council Regulation (EC) No 1447/2001 of 28 June 2001 [2001] OJ L198/1, by Council Regulation (EC) No 1105/2003 of 26 May 2003 [2003] OJ L158/3 and by Council Regulation (EC) No 173/2005 of 24 January 2005 [2005] OJ L29/3, of which Art 8 deals with partnerships. 13 Arts 138–39 EC. Agreements concluded by management and labour may also be implemented through collective bargaining in the Member States: Art 139(2) EC. See further C Barnard, EC Employment Law, 3rd edn (Oxford, Oxford University Press, 2006) ch 2. 14 Under the OMC Member States agree on common objectives and measuring instruments (such as statistics, indicators, guidelines), and their performance in achieving these objectives is evaluated using processes of peer pressure. The role of the European Parliament and Court of Justice is extremely limited under OMC. For a general overview, see P Craig, EU Administrative Law (Oxford, Oxford University Press, 2006) ch 6 and the references mentioned therein. The OMC operates in the areas of economic policy, employment policy and social inclusion. 15 R Dehousse, ‘Misfits: EU Law and the Transformation of European Governance’ in C Joerges and R Dehousse (eds), Good Governance in Europe’s Integrated Market (Oxford, Oxford University Press, 2002). 16 Consider in particular the classic article by F Snyder, ‘The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques’ (1993) 56 Modern Law Review 19. 17 P Sutherland, ‘The Internal Market after 1992: Meeting the Challenge’ (The Sutherland Report) SEC (92) 2044, 28 October 1992. Stephen Weatherill speaks of ‘market management’: S Weatherill, ‘New Strategies for Managing the EC’s Internal Market’ (2000) 53 Current Legal Problems 595.

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Modes of Governance in EC Law public; administrative cooperation between Member States and the Commission; and decentralisation of application of EC rules.18 The Sutherland Report was followed by a host of Commission documents on the attainment of the Internal Market, which in greater or lesser degree echoed these objectives in securing the effectiveness of EC law.19 Around the turn of the century the Commission’s White Paper on European Governance stimulates renewed interest in the matter.20 One section of the White Paper dealt specifically with the question of the administration of EC law. For the Commission, the emphasis is no longer just on the efficiency gains to be achieved; reference is also made to the normative concern with legitimacy: ‘More effective enforcement of Community law is necessary not only for the sake of efficiency of the internal market but also to strengthen the credibility of the Union and its policies’.21 In its recent Communication ‘A Europe of Results: Applying Community Law’, the Commission lucidly summarises the problem and outlines the steps to be taken: Laws do not serve their full purpose unless they are properly applied and enforced. The body of legislation is significant—over 9000 legislative measures of which nearly 2000 are directives, each requiring between 40 and 300 measures for transposition into national and regional legislation. The EU encompasses 27 national administrations and over 70 autonomous regions. Over 500 million Europeans enjoy the possibility to query their rights under these laws. Citizens’ expectations of the benefits that the EU brings should be met. That is why, in pursuing the objective of Better Regulation,22 it is

18 On the timing of the Report, the Commission remarked that with the 1992 deadline for the creation of the Internal Market in sight, the Community now logically ‘embarked on a phase of administering the existing body of rules’: European Commission, ‘Operation of the Community’s Internal Market after 1992: Follow-up to the Sutherland Report’ SEC (92) 2277, 2 December 1992. 19 Consider, eg, European Commission, ‘Reinforcing the Effectiveness of the Internal Market’ (Communication) COM (93) 256 final, 2 June 1993; European Commission, ‘Making the Most of the Internal Market: Strategic Programme’ (Communication) COM (93) 632 final, 22 December 1993; European Commission, ‘The Development of Administrative Cooperation in the Implementation and Enforcement of Community Legislation in the Internal Market’ (Communication) COM (94) 29 final, 16 February 1994; European Commission, ‘The Impact and Effectiveness of the Internal Market’ (Communication) COM (96) 520 final, 30 October 1996; European Commission, ‘Action Plan for the Internal Market’ (Communication) CSE (97) 1 final, 4 June 1997; European Commission, ‘The Strategy for Europe’s Internal Market’ (Communication) COM (1999) 624 final, 24 November 1999; and European Commission, ‘Internal Market Strategy: Priorities 2003–2006’ (Communication) COM (2003) 238 final, 7 May 2003. 20 Above n 5. 21 Ibid, 5. 22 The ‘Better Regulation’ initiative was launched in 2005 as part of the revised Lisbon Strategy: European Commission, ‘Better Regulation for Growth and Jobs in the European Union’ (Communication) COM (205) 97 final, 16 March 2005; European Commission, ‘Implementing the Community Lisbon Programme: A Strategy for the Simplification of the Regulatory Environment’ (Communication) COM (2005) 535 final, 25 October 2005. One of the components of Better Regulation is better implementation, application and enforcement of Community law: European Commission, ‘Better Monitoring of the Application of Community Law’ (Communication) COM (2002) 725 final, 16 May 2003; European Commission, ‘A Europe of Results: Applying Community Law’ (Communication) COM (2007) 502 final, 5 September 2007. Other action points include simplification of existing regulation, the use of impact assessments, the reduction of administrative burdens for firms and consumers and more efficiency in infringement proceedings: http://ec.europa.eu/governance/better_

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Governance Models, the EC and its Member States necessary to attach high priority to the application of law, to identify why difficulties in implementation and enforcement may have arisen and to assess whether the present approach to handling issues of application and enforcement can be improved.23

It is thus appropriate to consider the present institutional environment by examining available enforcement models in European law. That is the object of the subsequent sections.

II. GOVERNANCE MODELS, THE EC AND ITS MEMBER STATES

There are generally three models in use for the administration of EC law. Many variants are possible and indeed occur in practice.24 Our aim, however, is not to provide an exhaustive account of the workings of specific sectors such as the Common Agricultural Policy (CAP) or fisheries. Instead, we intend to paint the background against which the emergence of networks can be understood.

A. Centralised Governance Centralised governance refers to the application and enforcement by EC institutions of European legislation. The archetypal EC application and enforcement institution is the Commission.25 A textbook example in which such a model is

regulation/index_en.htm; European Commission, ‘A Strategic Review of Better Regulation in the European Union’ (Communication) COM (2006) 689 final, 14 November 2006; European Commission, ‘Second Strategic Review of Better Regulation in the European Union’ (Communication) COM (2008) 32 final. See also the essays collected in S Weatherill (ed), Better Regulation, Series of the Oxford Institute of European and Comparative Law 6 (Oxford, Hart Publishing, 2007). 23 ‘A Europe of Results’, ibid, 2. 24 For a more detailed taxonomy, see C Scott, ‘Agencies for European Regulatory Governance: A Regimes Approach’ in D Geradin, R Munoz and N Petit (eds), Regulation Through Agencies: A New Paradigm for EC Governance (Cheltenham, Edward Elgar, 2005). Consider also A Sapir et al, An Agenda for a Growing Europe: The Sapir Report (Oxford, Oxford University Press, 2004) ch 6, which identifies four basic approaches. In order of centralisation or delegation to the European level, these are delegation, commitment, coordination and autonomy. 25 We are thus not concerned with the implementation powers of the Commission under Art 202 third indent EC or its competence to make delegated legislation under supervision of a comitology committee. Delegated legislation and comitology committees exist for all three modes of governance discussed here. Since they are considered to belong to the legislative rather than enforcement phase, we will not discuss them further in this book. For information on the workings of the comitology system, consider CF Bergström, Comitology: Delegation of Powers in the European Union and the Committee System, Oxford Studies in European Law 8 (Oxford, Oxford University Press, 2005); C Joerges and E Vos (eds), EU Committees: Social Regulation, Law and Politics (Oxford, Hart Publishing, 1999); Craig (above n 14); M Andenas and A Turk (eds), Delegated Legislation and the Role of Committees in the EC (The Hague, Kluwer Law International, 2000). Nor are we concerned with direct management as addressed by the two reports of the Committee of Independent Experts in the wake of the fall of the Santer Commission and Council Regulation (EC, Euratom) 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities [2002] OJ

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Modes of Governance in EC Law used is the regulation of anti-competitive conduct from the 1960s to the turn of the century.26 The Treaty of Rome envisages an important position for competition rules. Article 3(f) of the Treaty calls for ‘the institution of a system ensuring that competition in the Common Market is not distorted’. Articles 81–89 provide the foundation for the competition policy of the Community. The competition rules are directed against both private undertakings and national governments. Policy towards private undertakings is controlled by Articles 81 and 82. Article 81 bans agreements and practices that restrict or distort competition, subject to the possibility of an exemption, while Article 82 prohibits the abuse of a dominant position. The Treaty endows the Commission with independent powers to ensure the application of the competition rules against recalcitrant undertakings.27 It investigates, prosecutes and fines perceived anti-competitive behaviour. The role of the Commission is further buttressed in secondary legislation. Due to Franco-German disagreement, the Treaty is intentionally vague on how to apply Article 81’s bifurcated structure.28 Two possible methods of implementation are conceivable. Under the Verbot mit Erlaubnisvorbehalt a restrictive agreement is automatically void, unless it has received the prior authorisation of a public authority to which the agreement has been notified. Using the system of exception légale,29 undertakings themselves decide if their agreements are in accordance with the law, but the competition authority can elect to challenge them and, if successful, declare them unenforceable with retrospective effect. The adoption of Regulation 17 in 1962 meant the introduction of a prior authorisation regime for competition enforcement.30 The Commission obtained the exclusive competence to receive notifications and grant exemptions.31 L248/1, ie the implementation of the Community budget through the Commission in fields as emergency aid, humanitarian assistance etc. For an analysis of direct management, consult Craig (above n 14) ch 2. 26 For a detailed examination of the origins of the competition rules, see DG Goyder, EC Competition Law, 4th edn (Oxford, Oxford University Press, 2003). For an explanation of the substance and procedure of the competition rules, see inter alia, R Whish, Competition Law, 5th edn (London, LexisNexis, 2003); M Motta, Competition Policy: Theory and Practice (Cambridge, Cambridge University Press, 2004); C Kerse and N Khan, EC Antitrust Procedure (London, Thomson, Sweet & Maxwell, 2004). 27 Art 85 EC. Reaffirmed by the Court of Justice in Case C-344/98 Masterfoods Ltd v HB Ice Cream Ltd [2000] ECR I-11369. 28 A Deringer, ‘Les Règles de la Concurrence au Sein de la C.E.E. (Analyse et Commentaire des Articles 85 à 94 du Traité) [1964] 7 Revue du Marché Commun 560. 29 The German and French terminology respectively is used to indicate the origin of either principle. In English, the terminology is that of prior authorisation and legal exception. 30 Council Regulation (EEC) No 17 (First Regulation implementing Arts 85 and 86 of the Treaty) [1959–62] OJ Spec Ed 87. 31 Ibid, Arts 4 and 9(1). The centrality of the Commission’s role was further enhanced by a high degree of autonomy in decision-making, as it had only to consult an advisory comitology committee. In addition, in 1965 the Council granted the Commission broad powers to ‘legislate’ without its approval through the adoption of block exemption regulations: Council Regulation 19/65/EEC on the application of Article 85(3) of the Treaty to certain categories of agreements and concerted practices [1965] OJ Sp Ed 35, amended by Council Regulation 1215/99/EC [1999] OJ L148/1.

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Governance Models, the EC and its Member States National competition authorities were still able to decide on infringements of the primary prohibition.32 In actual fact, their importance was greatly reduced, because of their lack of competence to complete the assessment. Member States were thus not particularly forthcoming in the setting up of competition bodies.33 Alternatively, they denied these bodies the competence to apply Articles 81 and 82.34 National courts were also accorded a limited role.35 In Belgische Radio en Televisie v SV SABAM and NV Sonior the Court of Justice ruled that only the prohibition in Article 81 had direct effect.36 The judgment eliminated incentives to bring suits in the national courts, because they too could decide only one of the two issues relevant to the application of Article 81.37 Finally, we must mention the special mechanism incorporated in Regulation 17 under which the jurisdiction of the national authorities was terminated as soon as the Commission initiated proceedings.38 While used sporadically, its existence was yet another disincentive for application of the EC rules at national level. It is clear, then, that the Commission is accorded pride of place within centralised governance.

B. Decentralised Governance Centralised governance is the exception.39 As a general rule, it falls to the national authorities to bridge the gap between general EC legislation and individual cases.

32 Reg 17 Art 9(3). Until the entry into force of Reg 17, Member State competition authorities still had the primary competence to apply Arts 81 and 82 EC. In reality, for the six years that they could do so, no meaningful national-level enforcement practice ensued. For the reasons, see the text to n 58. 33 For instance, the Dutch Nederlandse Mededingingsautoriteit (NMa) was established only in 1998. See further A Haslam-Jones, ‘A Comparative Analysis of the Decision-Taking Process in Competition Matters in Member States of the European Union, the European Commission and the United States’ (1995) 16 European Competition Law Review 154. 34 Only Belgium, France, Germany, Greece, Italy, the Netherlands, Spain and Portugal had done so. 35 Article 81(2) EC enables only national courts to determine the civil law effects (damages, injunctive relief) of an infringement of the prohibition on restrictive agreements: Case 48/72 Brasserie de Haecht v Wilkin-Janssen [1973] ECR 77. 36 Case 127/73 Belgische Radio en Televisie v SV SABAM and NV Sonior [1974] ECR 51 [16]. 37 In addition, the Court clarified in Masterfoods (above n 27, [48]) that the Commission could at any time adopt an individual decision, even if the case had already been decided by a national court and the Commission decision would conflict with this judgment. 38 Reg 17 Art 9(3). The importance of this provision increased as the Court read Art 81(1) very broadly and thereby increased the scope of the Commission’s competences. See Case 56/65 Société Technique Minière (STM) v Maschinenbau Ulm GmbH (MBU) [1966] ECR 235; Case 22/78 Hugin Kassaregister AB and Hugin Cash Registers Ltd v Commission [1979] ECR 1869 [16]; Case C-234/89 Stergios Delimitis v Henninger Bräu AG [1991] ECR I-935. 39 In addition to the enforcement of the EC competition rules until 2003, the only other fields in which centralised governance is practiced are state aid (Arts 87–89 EC); merger control (Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings [2004] OJ L24/1); and trade law (Arts 131–34 EC).

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Modes of Governance in EC Law To illustrate, we will consider the situation in telecommunications from the 1980s until 2003.40 In the wake of the liberalisation of the telecommunications sector, the Commission called for the establishment of national regulatory authorities to administer the new European telecommunications legislation.41 The Member States could determine which public bodies would carry out at national level the tasks assigned to these regulatory authorities. So too could they decide on the position of these bodies within the overall state administration, their institutional characteristics, as well as the applicable procedural rules. Unsurprisingly, a survey of the institutional landscape thus revealed considerable divergences across the Member States. For instance, regulatory authorities in Belgium, Sweden and the United Kingdom were headed by a single director, whereas their counterparts in Austria, Italy and Germany practiced collegiate regulation. Ministers in the Netherlands, Denmark and Cyprus could issue general instructions to the authority, a possibility that did not exist in France. Some Member States (such as Belgium and Portugal) left ‘sensitive’ matters such as licensing and price regulation to the Ministry, which in other Member States were granted to independent bodies. National courts ensured that the decisions of the national administrations at least complied with basic provisions of national law, both as regards procedure and substance, and in some cases engaged in full-fledged review of the merits. In addition, national courts protected the legal rights individuals derived from Community law through the doctrines of direct effect42 and supremacy.43 As such, national courts ruled on the compatibility of national decisions (or even

40 For a detailed account of the substance of telecommunications regulation in that time as well as the initial liberalisation moves, see P Larouche, Competition Law and Regulation in European Telecommunications (Oxford, Hart Publishing, 2000) esp ch 1. The European approach contrasts with that chosen in most federal regimes, such as the United States, Australia and Canada, where the bulk of regulatory duties are entrusted to a federal telecommunications regulator. See M Kerf and D Geradin, ‘Controlling Market Power in Telecommunications: Antitrust vs Sector-Specific Regulation—An Assessment of the United States, New Zealand and Australian Experiences’ (1999) 14 Berkeley Technology Law Journal 919. 41 Commission Directive 88/301/EEC on competition in the markets in telecommunications terminal equipment [1988] OJ L131/73, affirmed by the Court in Case C-18/88 Régie des télégraphes et des telephones v GB-Inno-BM SA [1991] ECR I-5941. The Community term ‘national regulatory authority’ was officially coined in Council Directive 92/44/EEC on the application of open network provision to leased lines [1992] OJ L96/35. 42 Regarding Treaty provisions, see Case 26/62 NV Algemene Transport en Expeditie Onderneming van Gend en Loos v Nederlandse Administratie der Belastingen [1963] ECR 1. Regarding regulations, see Case 39/72 Commission v Italy [1973] ECR 101 and the language of Art 249 EC. Regarding the vertical direct effect of directives, see Case 41/74 Van Duyn v Home Office [1974] ECR 1337. In horizontal relations, standing case law still holds, notwithstanding an apparent relaxing attitude that directives cannot be directly effective. The negative effects of this stance have to some extent been mitigated by the possibility of ‘indirect effect’ or the principle of implementation, requiring national courts to read national law in such a way as to conform to the provisions of the directives. See Case 14/83 Von Colson and Kamann v Land Nordrhein-W