Professional Documents
Culture Documents
EU is taking too many competences from the MS v EU does not have enough competences (such as the
health crisis and economic recovery)
• Principle of conferral (art 1 TEU + 5(2) TEU limits); EU does not have the possibility to create its
own competences; unlike federal states it has a defined mandate
○ Basis of the requirement of a legal basis --> whenever an act is adopted it must be traced to an
article in the Treaties (Commission must identify); contains area, purpose, instrument and
procedure (for adoption) ==> art. 16 TEU - protection of personal data + art. 153 TEU on
social policy
• CJEU case law: choice must be based on aim and content of the legislation and on its 'center of
gravity' --> check center of gravity
○ Titanium Dioxide litigation (C-300/89 Comm v Council)
○ Hungary challenge to the Posted Workers' Directive (C-620/18 Hungary v EP & Council)
Voted against but lost cuz of QMV; complained to court for basis which allows for
unanimity
• Expansion of EU competences
○ 1957 - common market + little else (and before even less)
○ 2022 - common internal market + much else --> distinctive element of EU (still a purpose-
based organization) but distinctive breadth and depth of competences; environment, migration,
common currency, non-discrimination, data protection, social policy etc etc part III of TFEU
○ Gained through Treaty amendments --> MS giving the EU new competences (how it should
happen)
Maas 1992 - common currency, migration, asylum, judicial coop
NB: MS agree to confer more competences on EU level
□ Though at times they opt to maintain higher control of certain areas conferred on
EU level
Some of those areas for example require unanimity than QMV
Changing the Treaties is a long process and becomes more and more complex over
time -- new expansion would make it even more complicated
○ In-between treaty revisions or after: political institutions expland EU competences (when they
find it necessary to act) - more controversial than a treaty amendment
MS have to agree (or anyway QMV of MS have to agree) in the Council; ministers
meeting in the Council are "Eurosocialized" (one possible explanation);
Main legal basis for expansive practices: art. 114 TFEU (internal market) + art. 352
TFEU (flexibility clause)
□ 114 -- extremely broad, doesn't specify a specific area and it is rather horizontal as
it identifies only the purpose; through 114 the EU can reach to more policy areas;
to stimulate integration
CJEU case law: two alternative conditions for its use -- existence of a
serious obstacle to trade OR of a distortion of competition ('level playing
field')
Possible overlap with "retained competences" of the MS - the regulation of
tobacco products and health policies
◊ To a large extent still MS policies but not entirely; Eu has been able
to adopt legislation with the aim of limiting (eg the ads of tobacco
products) under 114
Argument - if different in MS then it disrupts the internal
market through creating unequal conditions
Basically helps the EU arrive at competences where it normally would not
regulate
National laws that hinder the operation of the internal market may protect public policy
Tutorial Notes
In this tutorial, we will examine three recent examples of EU legislative measures (or proposals) that aim
to respond to new challenges and developments and raising competence issues.
The EU’s Covid recovery plan (named ‘Next Generation EU’), which was adopted in 2020 and rolled out in
the autumn of 2021, is a major shift in the nature and content of the European Union’s macro-economic
policy. It was made possible by a creative use of the legal resources offered by the EU Treaties, as is
documented in the article by De Witte. Consider in particular the use of the legal bases of Art. 122 and Art.
175 TFEU.
a) How were these two legal bases used to set up the NGEU structure?
- TFEU provides an explicit legal basis for financial assistance in its art. 122 (entered primary law with
the Maas Treaty as part of the detailed rules on the EMU)
○ Allows for financial solidarity between EU countries under certain conditions
"exceptional occurrences" --> assistance must be temporary in nature
"certain conditions" --> countries benefitting from the assistance must respect certain
conditions to be defined in the assistance measure
"assistance" --> broad and can include loans and non-repayable subsidies
- Under the principle of conferral of competences, every EY legal measure must be connected directly,
or via an immediate act, to a Treaty article allowing the Union to act in a particular domain, for a
particular purpose, and in a particular manner. Since almost all EU legislation is proposed by the
Commission, that institution takes the initiative in choosing the appropriate legal basis for whatever
new policy objectives it seeks to achieve with that piece of legislation. Preamble is used to justify the
choice of the legal basis.
- Art. 122 + 175 TFEU ==> both are purposive competences, in that their use is defined by a broad
policy objective rather than a well-defined policy domain. This made them useful tools for the
adoption of the broad ranging, policy overarching measures contained in the NGEU. There was no
need to use the general flexibility clause of art. 352 TFEU thus confirming the decline of its
importance in the integration process
- Art. 122 --> contains two legal bases for EU action in economic crisis situations (a generic (122(1))
and a specific one (122(2)))
○ Proposed by the Commission and accepted by the Council as the legal basis of the SURE
instrument; the preamble refers to 122 without specifying either paragraph
COM explanatory memorandum says both paragraphs are concerned thus SURE in
reality has 2 legal bases although the preamble doesn't say this
□ Financial assistance provided under SURE is based on 122(2) while the collective
guarantee provided by MS for repayment of loans is based on 122(1)
Combination is possible since both provide for the same decision-making rule (Council
by qualified majority based on COM proposal)
○ Need to use this as a legal basis --> the need to mitigate the effects of COVID-19 crisis on
public expenditures by the MS, and the fact that it's temporary
○ EURI regulation --> same thing with the legal basis; explanatory memorandum does not
mention why
Used as a basis in both loans and non-repayable subsidies
□ Competence perspective - not problematic since the term "financial assistance"
used in 122 is broad enough to cover both
b) In what sense was the adoption of the recovery plan a case of ‘creative legal engineering’, when
it comes to the issue of EU competences?
- Policy shift through legal engineering:
○ The entire plan was enacted within the bounds of EU legal order and thus unlike what
happened during the Euro crisis, without recourse to intergovernmental agreements between
the MS
○ We saw how unused, overlooked or reinterpreted rules provide the legal bedrock for renewed
attempts to integrate Europe in ways unimaginable a few months ago
- Use of 122 + 175 not unprecedented but daring as their use for the purposes of the recovery plan
required some stretching of their scope of application
○ Art. 122 which had served for truly exceptional situations, serves now as the legal ground for a
huge funding programme that amounts to a second budget for the EU
○ Art. 175 now serves as the basis for EU macro-economic policy measures, eclipsing the
modest legal resources offered by the economic policy chapter of EMU
- Legal engineering was mostly needed for the other dimension of the recovery plan, namely the
changes of the institutional practices of EU public finance law
c) Do you consider that the limits of the EU’s competences were exceeded, as some
commentators have argued?
- As regards the vertical division of powers between the EU and the MS, we have seen some stretching
of the EU's competences in art. 122 and 175 and the frank acceptance that the EU can incur massive
debt in the common interest of its MS; but those developments were willingly accepted by all the
national governments and have not affected the stranglehold of the MS on the EU's public finance
system
- As regards the horizontal division of powers between the EU institutions, each of the institutions
played the role expected from them and the institutional balance was not breached; this conclusion
does not imply that the horizontal division of powers is optimal, but in the absence of a realistic
possibility to rewrite the treaties the authors of the recovery plan had to work with the available legal
tools
Art. 114 TFEU is a broad competence basis for any kind of measure of harmonisation that contributes to
the good functioning of the internal market. This legal basis has been used, in the course of time, for a
wide variety of EU legislative measures, whose link with the functioning of the internal market is not always
very obvious (see this week’s Lecture on this legislative practice).
One recent example of this is the proposed Regulation on ‘political advertising’. The draft Regulation
is one of the key initiatives proposed in the context of the ‘European Democracy Action Plan’, with
which the Commission strives to build ‘more resilient democracies’ across the EU. The proposed
regulation seeks to ensure greater transparency and accountability in the area of sponsored political
content, which in turn would contribute to safeguarding electoral integrity in the Member States. The
proposal is based on Art. 114 TFEU and also Art. 16 TFEU. Have a look at the proposal and the
explanatory memorandum.
a) What justification is offered for the use of Art. 114 TFEU as legal basis?
b) Do you consider that Art. 114 has been overstretched in this case?
- Considering the potentially very wide scope of the proposed regulation, the legal basis needs to be
considered in tandem with the principles of proportionality and subsidiarity.
- The Commission bases its proposal on Article 114 TFEU - allows for the adoption of provisions for
the establishment and functioning of the internal market to approximate the laws of the Member
States
○ questionable to what extent an internal market legal basis can be used in the context of political
advertising and (national) elections. The Commission seems to argue that there is a cross-
border element simply because many of the proposed rules concern the online environment
(see p. 6 of the proposal, see also Tobacco Advertising I and Tobacco Advertising II for
interesting analogies).
- The proposal is not intended to harmonise electoral legislation. This is clear because national
elections as such fall under the competence of the Member States.
○ considering the wording of the proposed provisions, it seems undeniable that the regulation
would apply to a wide range of communications in the context of national election
Article 3(1) of the proposal, which states that Member States should not, for reasons of
transparency, maintain or introduce provisions or measures that derogate from the
provisions of the regulation.
- considering the principles of proportionality and subsidiarity the Commission is not able to present a
compelling argument for the choice of a fully-harmonising regulation, one that precludes the Member
States to exercise their own legislative competence in this area
○ not clear how the interests of the internal market lie at the basis of this proposal, and even if
they did, how can they override the need to protect the freedom of political speech? It seems
somewhat strenuous to argue that such a regulation could be proposed for the purposes of
market harmonisation, even though the Commission argues this by reference to the increasing
compliance costs for service providers caused by the currently fragmented rules (see p. 5-6 of
the proposal).
- According to the Commission, the need for harmonisation is justified also by the fact that data
protection is harmonised at EU level and therefore additional measures should be taken at EU level
as well (see p. 3 of the proposal).
○ This argument can be considered somewhat misleading:
data protection has not been fully harmonised, but in many areas Member States still
retain legislative competence (see especially Article 6(2) and Article 9(2-4) GDPR)
the fact that data protection is largely harmonised does not require the adoption of a
regulation on political advertising. If data protection is to be further regulated, it could
equally – and more logically – be done within the framework of data protection
regulation. This proposal for data protection in the context of political advertising is
likely to cause confusion
it is not clear from the wording of the proposal how exactly it should be applied
alongside the GDPR’s transparency rules
Another important piece of legislation under discussion at the EU level is the proposed directive on
minimum wages. Here the question of ‘reserved competences’ of the Member States is central to the
debate, as Art. 153(3) TFEU could be interpreted as excluding the use of the EU social policy legal basis on
issues of ‘pay’. Yet, the Commission relied on Art. 153(1) and (2) TFEU as the legal bases of the proposed
directive.
a) How did the Commission, in its explanatory memorandum, meet the objection that
harmonising national rules on minimum wages might be excluded by Art. 153(5) TFEU?
(19) In full respect of Article 153(5) TFEU, this Directive neither aims to harmonise the level of minimum
wages across the Union nor to establish an uniform mechanism for setting minimum wages. It does not
interfere with the freedom of Member States to set statutory minimum wages or promote access to
minimum wage protection provided by collective agreements, according to the laws, practices and
specificities of each country and in full respect of national competences and social partners’ right to
conclude agreements. This Directive does not impose and should not be construed as imposing an
obligation on the Member States where minimum wage protection is ensured exclusively via collective
agreements to introduce a statutory minimum wage nor to make the collective agreements universally
applicable. Also, this Directive does not establish the level of pay, which falls within the right of the social
partners to conclude agreements at national level and within the relevant competence of Member States.
b) Are you convinced about the soundness of the chosen legal basis?
- the necessity and added value of an EU legislative measure on wages have been proven. That
the EU should act does not mean it can, however. In line with the principle of conferral, the EU will
have to find an appropriate legal basis in the Treaties.
- The limited pathway under Article 153 TFEU:
○ art.153(1)(b) TFEU as the potential legal basis for its measure obvious choice as it allows
the EU to adopt legislation in the field of working conditions. However, art.153(5)
TFEU states unequivocally that the "provisions of this Article shall not apply to pay".
○ In competence matters, however, Article 153 TFEU has been the legal basis for measures
dealing with pay as previous directives have been adopted on the basis of it, although the EU
legislator has given a restrictive reading of art. 153(5).
Interpretation upheld by ECJ; 153(5) cannot hollow out the competence under social
policy, particularly, as regards the field of working conditions that would otherwise be
deprived of much of its substance. The limitation instead refers to "the equivalence of all
or some of the constituent parts of pay and/or the level of pay in the Member States, or
the setting of a minimum guaranteed wage" (Impact v Minister for Agriculture and
Food) --> case law indicates that para.5 does not preclude art.153 TFEU measures from
covering issues related to "pay", as long as they do not directly regulate the level of
"pay". Neither does the exclusion of "pay" preclude the legislator from adopting
measures that have financial consequences, provided that a provision does not establish
the level of some of the constituent parts of pay. What kind of
"minimum wage Directive" could be adopted within these prescriptions?
- The mere fact that the measure’s main aim is to regulate wages, not in terms of equal treatment for a
specific group of workers or merely incidentally to guarantee the effectiveness of a right to leave from
work, but as a matter of social protection for all workers, means that it raises tensions with the letter
and spirit of art.153(5) TFEU.
○ an argument could be made that a minimum wage instrument under art.153 TFEU could set
the conditions under which individuals are awarded a certain level of pay insofar as the level of
pay has been determined beforehand by the national competent authority, and that it could set
procedural and transparency provisions.
Following this rather generous interpretation, the Commission has put forward a strong
proposal that emphasises the role of social partners, the promotion of collective
bargaining in wage setting mechanisms and limitations to variations and deductions.
In June 2022, the EP and the Council reached an informal agreement on the draft Directive, which should
be formally adopted in the next months.
c) Does the final draft of the legislative text confirm or modify the Commission’s choices on the
legal basis of the Directive?