No CrossRef data available.
Article contents
One Law, Two Competitions: An Enquiry into the Contradictions of Free Movement Law
Published online by Cambridge University Press: 27 October 2017
Abstract
The long-established contradictions of free movement law are caused by the implicit reference to two contradictory paradigms of economic integration. The first paradigm seeks to avoid the competition among private businesses being distorted by national regulations, therefore aiming at the creation of a ‘level playing field’ (regulatory neutrality paradigm). The second paradigm seeks to ensure the proper functioning of the process of competition among Member States, and accordingly aims at maximising the opportunities for ‘regulatory arbitrage’ (regulatory competition paradigm). In more detail, the tension between those two paradigms of economic integration results in three central nodes of internal market law: the eventuality of a positive harmonisation, the negative harmonisation conundrum, and the regulatory mobility dilemma. In sum, one (free movement) law is assigned the contradictory mission of ensuring the proper functioning of two competitive processes: the competition among private businesses (regulatory neutrality) and among Member States (regulatory competition).
- Type
- Research Article
- Information
- Copyright
- Copyright © Centre for European Legal Studies, Faculty of Law, University of Cambridge 2011
References
1 The indeterminacy of the ‘free movement test’ has been highlighted on numerous occasions: see inter alia Maduro, M, We the Court: the European Court of Justice and the European Economic Constitution (Oxford, UK and Evanston, Ill, Hart Publishing and Northwestern University Press, 1998) Ch 3 Google Scholar; Barnard, C and Deakin, S, ‘Market Access and Regulatory Competition’ in Barnard, C and Scott, J, The Law of the Single Market: Unpacking the Premises (Oxford, Hart Publishing, 2002)Google Scholar; Snell, J, ‘The Notion of Market Access: A Concept or a Slogan?’ (2010) 47 Common Market Law Review 437 Google Scholar.
2 Marenco, G, ‘Pour une interprétation traditionnelle de la notion de mesure d’effet équiva lent à une restriction quantitative’ (1984) 20 Cahiers de Droit Européen 291 Google Scholar.
3 White, E, ‘In Search of the Limits to Article 30 of the EEC Treaty’ (1989) 26 Common Market Law Review 235 Google Scholar.
4 Weiler, J, ‘The Constitution of the Common Market Place: Text and Context in the Evolution of the Free Movement of Goods’ in Craig, P and De Burca, G, The Evolution of EU Law (Oxford, Oxford University Press, 1999)Google Scholar; and updated version in Weiler, J, ‘Mutual Recognition, Functional Equivalence and Harmonization in the Evolution of the European Common Market and the WTO’ in Padoa-Schioppa, F, The Principle of Mutual Recognition in the European Integration Process (Basingstoke, Palgrave Macmillan, 2005)Google Scholar.
5 M Maduro, above n 1, Ch 5.
6 See, eg, K Armstrong, ‘Mutual Recognition’ in Barnard and Scott above n 1, 228–30; Barnard and Deakin ‘Market Access and Regulatory Competition’ above n 1, 204 ff; Deakin, S ‘Regulatory Competition after Laval’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 581, 584 ffCrossRefGoogle Scholar.
7 By way of illustration, the awareness of regulatory competition as a paradigm of economic integration shaping free movement law is roughly limited to its association with the ‘home country principle’. Maduro, for instance, conflates home country regulation and regulatory competition into a ‘competitive model’ (above n 1, 126 ff), before conceding that the ‘decentralized model’ of host regulation ‘is still, to a great extent, a model based on competition’ (ibid, 143). See also Armstrong above n 6, 243; J Pelkmans ‘Mutual Recognition in Goods and Services: an Economic Perspective’ in Padoa-Schioppa above n 4, 114; Kerber, W and Van Den Bergh, R, ‘Mutual Recognition Revisited: Misunderstandings, Inconsistencies, and a Suggested Reinterpretation’ (2008) 61 Kyklos 447, 452CrossRefGoogle Scholar; Trachtman, J, ‘Embedding Mutual Recognition the WTO’ (2007) 14 Journal of European Public Policy 780, 785CrossRefGoogle Scholar.
8 See below s IV.B. The Ambivalent Status of Differentials of Regulation (Regulatory Diversity).
9 Chen and Hanson constructed the concepts of meta-script, macro-script and micro-script in an attempt to describe ‘knowledge structures that shape how we view the world’ and the ‘ways in which schemas and scripts have influenced how policy theorists, policymakers, lawyers, and many others … understand and approach policymaking’: see Chen, R and Hanson, J, ‘The Illusion of Law: The Legitimating Schemas of Modern Policy and Corporate Law’ (2004) 103 Michigan Law Review 1, 3CrossRefGoogle Scholar; see also Chen, R and Hanson, J ‘Categorically Biased: The Influence of Knowledge Structures on Law and Legal Theory’ (2004) 77 US California Law Review 1103 Google Scholar.
10 Maduro, above n 1, ch 5; Armstrong above n 6, 228–30.
11 In particular, see the ‘restricted choice of Home Law’ and the ‘Free Choice of host Law’ two ‘heterogeneous’ regulatory modes of the internal market. See below, s III.D The Regulatory Mobility Dilemma.
12 Case 120/78 Rewe-Zentral (Cassis de Dijon) [1979] ECR 649.
13 ‘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 the Treaties.’
14 See Case 15/81 Schul [1982] ECR 1409, para 33: ‘The concept of a common market … 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.’ (emphasis added)
15 Pescatore, P, ‘Some Critical Remarks on the Single European Act’ (1987) 24 Common Market Law Review 9, 16Google Scholar (emphasis added).
16 Commission Staff Working Paper, The 1996 Single Market Review, 16 December 1996, SEC (96) 2378.
17 London Economics, Competition Issues (London, Kogan Page, 1997) 23 Google ScholarPubMed (emphasis added).
18 Dougan, M, ‘Minimum Harmonization and the Internal Market’ (2000) 37 Common Market Law Review 853, 860CrossRefGoogle Scholar (emphasis added).
19 Deakin, S and Wilkinson, F, ‘Rights vs Efficiency? The Economic Case for Transnational Labour Standards’ (1994) 23 Industrial Law Journal 289, 301–02CrossRefGoogle Scholar (emphasis added).
20 Opinion of the European Economic and Social Committee, The Creation of a Common Consolidated Corporate Tax Base in the EU, OJ C88/12, 11/04/2006, 48–53, n 6.2 ‘Neutrality’: ‘Genuine economic considerations must decide where companies choose to locate and where the technical tax base will be. A neutral tax base helps to create free and fair competition between companies’.
21 Recitals 7 and 8 in the Preamble to Council Dir 79/695/EEC of 24 July 1979 on the harmonisation of procedures for the release of goods for free circulation, OJ L205, 13/8/1979, 19–26; Recital 3 in the Preamble to Eighth Council Dir 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes—Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, OJ L331, 27/12/1979, 11–19; Recitals 5 and 6 in the Preamble to Council Dir 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, OJ L157, 26/6/2003, 38–48; Commission Communication, Proposal for a Directive of the European and the Council on measures and procedures to ensure the enforcement of intellectual property rights, 30/01/2003, COM (2003) 46 final; Case C-84/09 X [2010] ECR I-0000, para 24; Case C-7/08 Har Vaessen [2009] ECR I-5581; Case C-260/95 DFDS [1997] ECR I-1005, para 23.
22 Art 67(1) ECSC provided for the notification to the High Authority of ‘any action of a Member State which might have noticeable repercussions on the conditions of competition in the coal and steel industries’. The High Authority had the power to impose corrective measures if such an action was ‘liable to provoke a serious disequilibrium by increasing the differentials in costs of production’ (Art 67(2) ECSC).
23 In such a case, the High Authority addressed to the enterprise or government concerned a recommendation ‘intended to assure the labour force of compensatory benefits to be paid for by the enterprise in question’ (Art 68(3) ECSC). If the enterprise failed to conform to the recommendation, the High Authority could even impose ‘fines and daily penalty payments not to exceed twice the amount of the savings in labour costs unjustifiably effected’ (Art 68(6) ECSC).
24 Rapport du Comité intergouvernemental créé par la Conférence de Messine (Rapport Spaak), 21 April 1956 (emphasis added) available at aei.pitt.edu/996/01/Spaak_report_french. pdf, 60, free translation. More generally, see Title II, Ch 2: ‘Correction of Distortions and Approximation of Legislations’.
25 The indeterminacy of the concept of ‘restriction to free movement’, central to the ‘negative integration’ imposed through the free movement provisions, has been underlined on many occasions: see eg, M Maduro, above n 1, Ch 3—’The Classical Readings of Article 30 and the European Economic Constitution’; Barnard and Deakin ‘Market Access and Regulatory Competition’ above n 1, 204 ff; Deakin above n 6, 584 ff.
26 Case 8/74 Dassonville [1974] ECR 837, para 5.
27 For instance, see Commission Report, The State of the Internal Market for Services, 30 July 2002, COM(2002) 441 final, 14: ‘The term “legal barriers“ covers all obstacles to the development of [economic] activities between Member States deriving directly or indirectly from a legal constraint and which are liable to prohibit, impede or otherwise render less advantageous such activities.’ (emphasis added)
28 P Genschel, ‘Mutual Recognition in Regulation and Taxation’ European Union Studies Association (EUSA), 2005 Biennal Conference, available at aei.pitt.edu/3087/01/eusagenschel-290305.pdf, 3.
29 See in particular Schammo, P, ‘Arbitrage and Abuse of Rights in the EC Legal System’ (2008) 14 European Law Journal 351 CrossRefGoogle Scholar; Barnard and Deakin above n 1; Deakin, S ‘Is Regulatory Competition the Future for European Integration?’ (2006) 13 Swedish Economic Policy Review 71 Google Scholar; Deakin above n 6; Deakin, S, ‘Regulatory Competition versus Harmonization in European Company Law’ in Esty, D and Geradin, D, Regulatory Competition and Economic Integration: Comparative Perspectives (Oxford, New York, Oxford University Press, 2001)Google Scholar; Deakin, S, ‘Two Types of Regulatory Competition: Competitive Federalism versus Reflexive Harmonisation’ (1999) 2 Cambridge Yearbook of European Legal Studies 231 CrossRefGoogle Scholar; Kerber, W, ‘Interjurisdictional Competition within the European Union’ (1999–2000) 23 Fordham International Law Journal 217 Google Scholar; Pelkmans, J and Sun, J-M, ‘Regulatory Competition in the Single Market’ (1995) 33 Journal of Common Market Studies 67 Google Scholar.
30 Kerber, above n 29, 234.
31 Weatherill, S, ‘Why Harmonise?’ in Tridimas, T and Nebbia, P, European Union Law for the Twenty-First Century Volume 2: Internal Market and Free Movement Community Policies (Oxford and Portland, Oregon, Hart Publishing, 2004) 18 Google Scholar (emphasis added).
32 Ribstein, L and O’Hara, E, The Law Market (Oxford, New York, Oxford University Press, 2009)CrossRefGoogle Scholar.
33 See Deakin, S, ‘Legal Diversity and Regulatory Competition: Which Model for Europe?’ (2006) 12 European Law Journal 440 CrossRefGoogle Scholar, 442, n 5, referring to Saville, J, ‘Sleeping Partnership and Limited Liability, 1850–1856’ (1956) 8 Economic History Review (NS) 418 Google Scholar.
34 Tiebout, C, ‘A Pure Theory of Local Expenditure’ (1956) 64 Journal of Political Economy 416 CrossRefGoogle Scholar.
35 Hirschman similarly identifies Exit and Voice as two lines of communication permitting to correct institutional malfunctions: see Hirschman, A, Exit, Voice, and Loyalty (Cambridge, Mass, Harvard University Press, 1978)Google ScholarPubMed. Exit consists in leaving altogether a particular organisation (eg consumers refusing to buy a firm’s products; citizens leaving a state’s territory; states leaving an international organisation). Voice, on the other hand, is defined as ‘any attempt at all to change, rather than to escape from, an objectionable state of affairs’ (ibid, 30).
36 Pelkmans above n 7, 114: ‘But, since mutual recognition is a static notion, no more than a one-time adjustment would take place. Regulatory competition is dynamic and takes this process further. It is defined as changes in national regulation in response to the actual or expected impact of cross-border mobility of goods or services on national economic activity, itself prompted by mutual recognition.’
37 Schammo above n 29, 353: ‘Commonly, regulatory arbitrage is understood as the action by which mobile economic actors seek to take advantage of regulatory differences between jurisdictions in order to reduce costs or to gain an advantage.’
38 Pelkmans and Sun above n 29, 69: ‘One can interpret … regulatory adjustment as an attempt to “compete” for the mobile factor, which will arbitrage across the various existing market opportunities.’
39 Tiebout, above n 34, 419.
40 See Cary, W, ‘Federalism and Corporate Law: Reflections upon Delaware’ (1974) 83 Yale Law Journal 663 CrossRefGoogle Scholar, in which he famously coined the expression ‘race to the bottom’.
41 See, among countless others, Kahan, M and Kamar, E, ‘The Myth of State Competition in Corporate Law’ (2002) 55 Stanford Law Review 679 CrossRefGoogle Scholar; Bebchuk, L, Cohen, A and Ferrell, A, ‘Does the Evidence Favor State Competition in Corporate Law?’ (2002) 90 California Law Review 1775 CrossRefGoogle Scholar; Greenfield, K, ‘Democracy and the Dominance of Delaware in Corporate Law’ (2004) 67 Law and Contemporary Problems 135 Google Scholar; Subramanian, G, ‘The Disappearing Delaware Effect’ (2004) 20 Journal of Law, Economics and Organization 32 CrossRefGoogle Scholar; Roe, M, ‘Delaware’s Competition’ (2003) 117 Harvard Law Review 588 CrossRefGoogle Scholar.
42 L Bebchuk, ‘The Desirable Limits in State Competition in Corporate Law’ (1992) 105 Harvard Law Review 1435, 1495; referring to ‘State Competition: Panel Response’ (1986–87) 8 Cardozo Law Review 779, 783.
43 The Schuman Declaration (Paris, 9 May 1950) available at www.ena.lu/schuman_ declaration_paris_1950-2-613.
44 P Drouin, ‘Le Projet de Pool Charbon-Acier: les Chances et les risques de l’Economie Française’ Le Monde, 24 May 1950, 3; ‘Les Dangers du Plan Schuman’ L’Écho de la Bourse, 10 December 1950; J Duclos, ‘Lettre de Jacques Duclos’ L’Humanité, 5 December 1951, 4; ‘Plan Schuman et Souveraineté Fiscale des Etats’ Luxemburger Wort, 9 July 1954, 7; L Charvet, ‘La Sidérurgie Française Devant le “Pool”‘ (1951) 16–17 Nouvelle Revue de l’Economie Contemporaine 36; D Gobbi, ‘La CECA ha ridotto ancora la produzione di car bone belga’ L’Unità, 30 May 1959, 7; all available at www.cvce.eu.
45 See above, s II.A. The Regulatory Neutrality Paradigm.
46 Schammo above n 29, 370; see also Barnard and Deakin above n 1, 197: ‘The stated aim of the EC rules on free movement is not regulatory competition, but market integration’.
47 In the same sense, see Barnard and Deakin above n 1, 198; Deakin, S, ‘Legal Diversity and Regulatory Competition: Which Model for Europe?’ (2006) 12 European Law Journal 440–54, 440CrossRefGoogle Scholar. Deakin also notes a similar evolution (‘market integration’ leading to regulatory competition) in the United States: Deakin, ‘Is Regulatory Competition the Future for European Integration?’ above n 29, 76–78.
48 Commission White Paper, Completing the Internal Market, 14 June 1985, COM (1985) 310 final, para 61.
49 See the seminal Stein, E, ‘Lawyers, Judges, and the Making of a Transnational Constitution’ (1981) 75 American Journal of International Law 1 CrossRefGoogle Scholar; Mancini, G,’The Making of a Constitution for Europe’ (1989) 26 Common Market Law Review 595 Google Scholar; and Weiler, J, ‘The Transformation of Europe’ (1991) 100 Yale Law Journal 2403 CrossRefGoogle Scholar.
50 See below, s III.A. Protectionism and Regulatory Multiplicity.
51 Schammo above n 29, 360, emphasis added.
52 Kerber above n 29, 221: ‘The core of the problem is that simultaneous realization of mobility and decentralization logically implies the existence of competition among jurisdictions.’
53 Case C-212/97 Centros [1999] ECR I-1459. See also Case C-210/06 Cartesio [2008] ECR I-9641; Case C-167/01 Inspire Art [2003] ECR I-10155; Case C-208/00 Überseering [2002] ECR I-9919.
54 See, in particular, AG La Pergola, Case C-212/97 Centros [1999] ECR I-1459, 20: ‘[I]n the absence of harmonisation, competition among rules must be allowed free play in corporate matters.’
55 See, among many others, Ringe, W-G, ‘Sparking Regulatory Competition in European Company Law—The Impact of the Centros Line of Case-Law and its Concept of “Abuse of Law”’ in de la Feria, R and Vogenauer, S (eds), Prohibition of Abuse of Law: A New General Principle of EU Law? (Oxford and Portland, Oregon, Hart Publishing, 2011)Google Scholar; Johnston, A and Syrpis, P, ‘Regulatory Competition in European Company Law after Cartesio’ (2009) 34 European Law Review 378 Google Scholar; Benedettelli, M ‘Conflicts of Jurisdiction and Conflicts of Law in Company Law Matters Within the EU “Market for Corporate Models”: Brussels I and Rome I after Centros’ (2005) 16 European Business Law Review 55 Google Scholar; Kirchner, C, Painter, R and Kaal, W, ‘Regulatory Competition in EU Corporate Law after Inspire Art: Unbundling Delaware’s Product for Europe’ (2005) 2 European Company and Financial Law Review 159 CrossRefGoogle Scholar; Holst, C, ‘European Company Law After Centros: is the EU on the Road to Delaware?’ (2002) 8 Columbia Journal of European Law 323 Google Scholar; Lombardo, S, Regulatory Competition in Company Law in the European Community: Prerequisites and Limits (Frankfurt am Main, New York, P Lang, 2002)Google Scholar; Deakin ‘Two Types of Regulatory Competition’ above n 29.
56 See Opinion of the Economic and Social Committee, Mutual Recognition in the Single Market, OJ C116, 20 April 2001, 14–9, n 3.6.1; Commission Communication, Mutual recognition in the context of the follow-up to the action plan for the single market, 16 June 1999, COM(1999) 299 final; Pelkmans and Sun ‘Regulatory Competition in the Single Market’ above n 29, 88; G Majone ‘Mutual Recognition in Federal Type Systems’ EUI Working Paper SPS, n 93/1, hdl.handle.net/1814/231, 11: ‘[T]he great merit of the principle [of mutual recognition ] is that it replaces centralized by decentralized decision making, in the spirit of the subsidiarity principle, and thus makes possible competition among different regulatory approaches .’ (emphasis added)
57 Armstrong above n 6, 225.
58 ‘Functional equivalence’ is a variant of the home country principle, under which the host State is only precluded from applying host law where the home law fulfils an equivalent function: see J Weiler, ‘Mutual Recognition, Functional Equivalence and Harmonization’, above n 4; Pelkmans, above n 7, at 87; Armstrong, above n 6, at 235 ff; Commission Communication, The Consequences of the Judgment given by the Court of Justice on 20 February 1979 in Case 120/78 (Cassis de Dijon), [1980] OJ C256, 2–3.
59 Commission White Paper, Completing the Internal Market, 14 June 1985, COM (1985) 310 final, paras 11–2, 24–56 and 60, ‘physical barriers impede trade flows and add unacceptable administrative costs’.
60 Ibid, para 5: ‘Goods and people moving within the [Union] should not find obstacles inside the different Member States as opposed to meeting them the border’.
61 Council Programme, General Programme for the abolition of restrictions on freedom of establishment, [2962] OJ 2, 36–45; Council Programme, General Programme for the abolition of restrictions on freedom to provide services, [1962] OJ 2, 32–35.
62 Case 2/74 Reyners [1974] ECR 631 (Belgian nationality requirement to exercise the profession of lawyer in Belgium); Case C-47/08 Commission v Belgium (Notaries) [2011] ECR I-0000 (Belgian nationality requirement to exercise the profession of notary in Belgium); Case 197/84 Steinhauser [1985] ECR 1819 (French nationality requirement to participate in a public tendering procedure in France); Case 21/84 Commission v France (‘Postal franking machine’) [1985] ECR 1355 (French manufacture requirement for letter-franking machines used by French postal services).
63 Case 6/64 Costa v ENEL [1964] ECR 1141, para 3 (emphasis added).
64 This distinction is explicitly made in Commission Communication, Co-ordinating Member States’ direct tax systems in the Internal Market, 19 December 2006, COM (2006) 823 final, 3.
65 Armstrong above n 6, 229 (emphasis added).
66 M Maduro, above n 1, 143 (emphasis added).
67 According to Court, Member States have no obligation to prevent international double taxation under European law: see eg, Case C-128/08 Damseaux [2009] ECR I-6823, para 27: ‘[D]isadavantages which could arise from the parallel exercise of tax competences by different Member States, to the extent that such an exercise is not discriminatory, do not constitute restrictions prohibited by the EC Treaty.’ (emphasis added) See also Case C-67/08 Block [2009] ECR I-883, paras 28–31; Case C-194/06 Orange European Smallcap Fund [2008] ECR I-3747, para 47; Case C-513/04 Kerckhaert and Morres [2006] ECR I-10967, paras 20–24; Englisch, J, ‘Taxation of Cross-Border Dividends and EC Fundamental Freedoms’ (2010) 38 Intertax 197, 208Google Scholar.
68 In particular, see Joined Cases C-316/07, C-358/07 to C-360/07, C-409/07 and C-410/07 Markus Stoß and others [2010] ECR I-0000, paras 112–13:
Having regard to that margin of discretion and the absence of any Community harmonisation in the matter, a duty mutually to recognise authorisations issued by the various Member States cannot exist having regard to the current state of EU law.
It follows in particular that each Member State retains the right to require any operator wishing to offer games of chance to consumers in its territory to hold an authorisation issued by its competent authorities, without the fact that a particular operator already holds an authorisation issued in another Member State being capable of constituting an obstacle. (emphasis added)
69 Case 136/78 Auer [1979] ECR 437; Case C-61/89 Bouchoucha [1990] ECR I-3551, paras 14–16.
70 For instance, on border controls, see Sorensen, P, ‘Tax coordination in the European Union: What are the issues?’ (2001) 8 Swedish Economic Policy Review 143, 157Google Scholar: ‘[W]ith the implementation of the Single Market Programme, border controls within the EU area were abolished … because border formalities tended to increase the transactions costs of cross-border trade, thereby inhibiting the creation of a truly integrated European market .’ (emphasis added)
71 Commission White Paper, Completing the Internal Market, 14 June 1985, COM (1985) 310 final, paras 57–159 and 13: ‘An example of [technical barrier] are the different standards for individual products adopted in different Member States for health or safety reasons, or for environmental or consumer protection’.
72 Barnard, C, The Substantive Law of the EU: the Four Freedoms 2nd edn (Oxford and New York, Oxford University Press, 2007) 97 (emphasis added)Google Scholar; A Suwa-Eisenmann and T Verdier, ‘Reciprocity and the Political Economy of Harmonization and Mutual Recognition of Regulatory Measures’ Centre for Economic Policy Research, Discussion Paper No 3147, 2002, www.cepr.org/pubs/dps/DP3147.asp, 4 (emphasis added); S Weatherill, ‘Pre-emption, Harmonisation and the Distribution of Competence to Regulate the Internal Market’ in C Barnard and J Scott above n 1, 66 (emphasis added); M Maduro, above n 1, 69 (emphasis added).
73 Barnard and Deakin, above n 1, 203 (emphasis added).
74 For instance, see S Weatherill, ‘Fitting ‘Abuse of Rights’ into EU Law Governing the Free Movement of Goods and Services’ in de la Feria and Vogenauer, above n 55, 56.
75 Council Programme, General Programme for the elimination of technical barriers to trade which result from disparities between the provisions laid down by law, regulation or administrative action in Member States, 28 May [1969] OJ C76, 1.
76 Von Quitzow, C, State Measures Distorting Free Competition in the EC (The Hague and London, Kluwer Law International, 2002) 29 Google Scholar; differences in national laws ‘result in distortions of cross-border competitive relations. The only way to clear away such distortions according to the existing Treaty rules is harmonisation.’ see also chs 7–9.
77 Genschel, P, ‘Why no Mutual Recognition of VAT? Regulation, Taxation and the Integration of the EU’s Internal Market for Goods’ (2007) 14 Journal of European Public Policy 743, 747CrossRefGoogle Scholar.
78 M Maduro, above n 1, 110.
79 Weatherill, above n 31, 14–15.
80 See Arts 67, 81, 82, 83, 113, 114, 115 and 191 TFEU.
81 Case C-376/98 Germany v Parliament and Council (Tobacco Advertising I) [2000] ECR I-8419, para 5.
82 Weatherill, S, ‘The Limits of Legislative Harmonization Ten Years after Tobacco Advertising: How the Court’s Case Law has become a “Drafting Guide”’ (2011) 12 German Law Journal 827 Google Scholar.
83 De Witte, B, ‘A Competence to Protect: The Pursuit of Non-Market Aims through Internal Market Legislation’ in Syrpis, P, The Judiciary, the Legislature and the EU Internal Market (Cambridge, Cambridge University Press, 2011)Google Scholar.
84 Fallon, M, ‘La Délocalisation comme Instrument de Fraude lié à la Circulation des Biens et des Personnes’ in Verhoeven, J, La Loyauté: Mélanges offerts à Etienne Cerexhe (Brussels, Larcier, 1997) 166 Google Scholar, free translation, (emphasis added).
85 The concept of ‘positive harmonization’ aims the role of the Union legislature in a particular area of law, and ‘negative harmonization’ the role of the Court of Justice: see Barnard, C and Deakin, S, ‘Negative and Positive Harmonization of Labor Law in the European Union’ (2002) 8 Columbia Journal of European Law 389 Google Scholar.
86 Genschel above n 78, 746 (emphasis added).
87 ‘[The free movement of workers] shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment’. See also Art 7(2) of Regulation (EEC) n 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community; Article 13 of Regulation (EEC) n 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community; Article 8 of Regulation (EC) n 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I).
88 In relation to social security schemes, Article 13 of Regulation n 1408/71 clearly stipulates that the ‘persons to whom this Regulation applies shall be subject to the legislation of a single Member State only’.
89 See, among many others, Case C-269/07 Commission v Germany [2009] ECR I-7811; Case C-158/07 Förster [2008] ECR I-8507; Case C-138/02 Collins [2004] ECR I-2703; Case 316/85 Lebon [1987] ECR 2811, para 11; Case 175/78 Saunders [1979] ECR 1129, para 10; Case C-164/99 Portugaia Construções [2002] ECR I-787, para 21; Joined Cases C-369/96 and C-376/96 Arblade and Others [1999] ECR I-8453, para 41; Case C-113/89 Rush Portuguesa [1990] ECR I-1417, para 18.
90 For instance, with regard to goods, see the VAT system and Art 110 TFEU on internal taxation; with regard to the freedom of establishment, see Case C-379/92 Peralta [1994] ECR I-3453, paras 30–35 and Case C-168/91 Konstantinidis [1993] ECR I-1191, para 12; with regard to services, see Case C-177/94 Perfili [1996] ECR I-161; with regards to citizens, see Case C-456/02 Trojani [2004] ECR I-7573; Case C-365/02 Lindfors [2004] ECR I-7183; Case C-184/99 Grzelczyk [2001] ECR I-6193.
91 Case C-446/04 FII Group Litigation [2006] ECR I-11753, paras 43–53; Order in Case C-201/05 CFC and Dividend Group Litigation [2008] ECR I-2875, paras 38–42; see also Englisch, above n 67, 205; Graetz, M and Warren, A Jr, ‘Income Tax Discrimination and the Political and Economic Integration of Europe’ (2006) 115 Yale Law Journal 1186, 1209CrossRefGoogle Scholar; Santos, A Dos, L’Union Européenne et la Régulation de la Concurrence Fiscale (Brussels, Bruylant, 2009) 47–49Google Scholar.
92 See W Kerber and R Van Den Bergh above n 7, 454.
93 Dir 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications, [2005] OJ L255, 22–142; Council Dir 91/439/ EEC of 29 July 1991 on driving licences, [1991] OJ L237 1–24.
94 See below, s III.D The Regulatory Mobility Dilemma, in particular nn 123–25. On the ‘single passport’ technique, see Dassesse, M, ‘Localization of Financial Services: Regulatory and Tax Implications’ in Andenas, M and Roth, W-H, Services and Free Movement in EU Law (Oxford, Oxford University Press, 2003) 385 Google Scholar:
All ‘single passport’ Financial Services Directives (banks, insurance, investment services) have a principle in common: a financial services provider which has been incorporated in accordance with the laws of a Member State (and has its head office therein) is entitled to a so-called ‘single passport’ which gives it the right to sell its services in all other Member States.
95 Maduro similarly identifies two types of equality, distinguishing between reverse discriminations (breaches of intra-jurisdictional equality) and legislative disparities (breaches of inter-jurisdictional equality): Maduro, above n 1, 154–57.
96 In Auer, the Court observed that mutual recognition (home country principle) promoted a type of equality in conformity with the prohibition of discrimination on grounds of nationality: Case 136/78 Auer [1979] ECR 437, para 24.
97 M Graetz and A Warren Jr, above n 92, 1216–17. Under this version of the Conundrum ‘capital export neutrality’ (intra-jurisdictional equality) and ‘capital import neutrality’ (interjurisdictional equality) cannot be simultaneously achieved, except if taxation is identical in both countries.
98 Cf above, in particular the case law mentioned n 90.
99 Case C-403/03 Schempp [2005] ECR I-6421, para 34 (free movement of citizens, taxation); Case C-67/08 Block [2009] ECR I-883, para 35 (free movement of capital, taxation); Case C-379/92 Peralta [1994] ECR I-3453, para 34 (freedom of establishment, criminal law); Case C-365/02 Lindfors [2004] ECR I-7183, para 34 (free movement of citizens, taxation); Case C-208/07 von Chamier [2009] ECR I-6095, para 85 (free movement of citizens, social security); Case C-392/05 Alevizos [2007] ECR I-3505, para 76 and Case C-387/01 Weigel [2004] ECR I-4981, para 55 (free movement of workers, taxation); Case C-3/08 Leyman [2009] ECR I-9085, para 45; Joined Cases C-393/99 and C-394/99 Hervein II [2002] ECR I-2829, para 51; Case 1/78 Kenny [1978] ECR 1489, para 18 (free movement of workers, social security); Case C-177/94 Perfili [1996] ECR I-161, para 17 (freedom to provide services, criminal law).
100 See below, s IV.A. The Acceptance of Reverse Discriminations (Regulatory Diversity).
101 Case C-341/05 Laval [2007] ECR I-11767.
102 Under Art 14(1)(a) of Regulation No 1408/71, the home country principle applies to the social security of posted workers: see Case 35/70 Manpower [1970] ECR 1251, para 11; Case C-404/98 Plum [2000] ECR I-9379, para 20; Case C-202/97 Fitzwilliam [2000] ECR I-883, para 29.
103 Case C-341/05 Laval [2007] ECR I-11767, para 74–75; Case C-445/03 Commission v Luxembourg [2004] ECR I-10191, para 28; Case C-43/93 Vander Elst [1994] ECR I-3803, para 25.
104 Weatherill above n 73, 54 (emphasis added).
105 Case C-110/99 Emsland-Starke [2000] ECR I-11569; Case C-255/02 Halifax [2006] ECR I-1609; Case C-196/04 Cadbury Schweppes [2006] ECR I-7995. See below s IV.C. The Erratic Prohibition of Abuses of Law (Regulatory Mobility).
106 See above s A. Protectionism and Regulatory Multiplicity.
107 Case C-251/06 ING. AUER [2007] ECR I-9689, para 42: ‘The protection afforded by Community law does not therefore apply to situations in which a natural or legal person intends to rely abusively or fraudulently on Community provisions with the sole aim of putting itself out of reach of the legislation of a Member State.’ (emphasis added)
108 Joined Cases C-316/07, C-358/07 to C-360/07, C-409/07 and C-410/07 Markus Stoß [2010] ECR I-0000, para 112–13.
109 Case C-46/08 Carmen Media Group [2010] ECR I-0000, paras 43–44.
110 Case C-452/04 Fidium Finanz [2006] ECR I-9521, para 49.
111 AG Mengozzi, Case C-46/08 Carmen Media Group [2010] ECR I-0000, para 46; AG Stix-Hackl, Case C-452/04 Fidium Finanz [2006] ECR I-9521, para 83.
112 Case 115/78 Knoors [1979] ECR 399, para 27 (emphasis added); see also Case C-446/03 Marks & Spencer [2005] ECR I-10837, para 58; Case C-212/97 Centros [1999] ECR I-1459, para 28.
113 Case 205/84 Commission v Germany (Insurance) [1986] ECR 3755.
114 Commission Interpretative Communication, Freedom to Provide Services and the General Good in the Insurance Sector, OJ C43, 16/2/2000, 5–27.
115 Case C-255/02 Halifax [2006] ECR I-1609, para 67; Commission Communication, Towards tax co-ordination in the European Union: a package to tackle harmful tax competition, 1 October 1997, COM (97) 495 final, point 21; Amand, C, ‘Prohibition of Abusive Practices in European VAT: Court Aid to National Legislations Bugs?’ (2008) 36 Intertax 189, 194–95Google Scholar. On the need for harmonisation in order to abolish the distortions of competition stemming from the transitional arrangements of the Sixth Directive, see Case C-240/05 Eurodental [2006] ECR I-11479, para 57; Case C-36/99 Idéal Tourisme [2000] ECR I-6049, para 39; Case C-305/97 Royscot [1999] ECR I-6671, para 31.
116 Wymeersch, E, ‘The Transfer of the Company’s Seat in European Company Law’ (2003) 40(3) Common Market Law Review 661–95, 661Google Scholar.
117 Case C-210/06 Cartesio [2008] ECR I-9641, para 110–114; Case C-167/01 Inspire Art [2003] ECR I-10155; Case C-208/00 Überseering [2002] ECR I-9919; Case C-212/97 Centros [1999] ECR I-1459; Case 79/85 Segers [1986] ECR 2375.
118 de la Feria, R, ‘Prohibition of Abuse of (Community) Law: the Creation of a New General Principle of EC Law through Tax’ (2008) 45(2) Common Market Law Review 395–441, 405 Google Scholar; T Tridimas, ‘Abuse of Rights in EU Law: Some Reflections with Particular Reference to Financial Law’, in de la Feria and Vogenauer, above n 55, 178: ‘[Centros] may be seen as a triumph for the doctrine of incorporation and a corresponding defeat for the real seat doctrine’.
119 See Johnston and Syrpis, above n 55; A de Sousa, ‘Company’s Cross-border Transfer of Seat in the EU after Cartesio’ Jean Monnet Working Paper, No 07/09, available at centers.law. nyu.edu/jeanmonnet/papers/index.html.
120 W-G Ringe above 55, 115; H Eidenmüller, ‘Abuse of Law in the Context of European Insolvency Law’, in de la Feria and Vogenauer, above n 55, 137; Barnard and Deakin above n 86, 395: ‘The effect of the incorporation approach is that the applicable law is a matter of choice for managers of the company or, in the final analysis, for its shareholders’ (emphasis added).
121 Dammann, J C, ‘Freedom of Choice in European Corporate Law’ (2004) 29(2) Yale Journal of International Law 477–544, 480 Google Scholar; Barnard and Deakin above n 86, 395; Case C-210/06 Cartesio [2008] ECR I-9641, para 105; Case C-208/00 Überseering [2002] ECR I-9919, paras 15–16.
122 See Recital 10 in the Preamble and Art 11(2) of Dir 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast), [2006] OJ L177, 1–200.
123 Art 5(4) of Dir 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Dirs 85/611/EEC and 93/6/EEC and Dir 2000/12/EC of the European Parliament and of the Council and repealing Council Dir 93/22/EEC, [2004] OJ L145, 1–44; Arts 1(e), 4 and 6(3) of Dir 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance, [2002] OJ L345, 1–51; Arts 13(8), 14(2), and 20 of Dir 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), [2009] OJ L335, 1–155; Art 7(1)(d) of Dir 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), [2009] OJ L302, 32–96.
124 Recitals 40 to 43 in the Preamble to and Art 2(3) of Dir 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services, [2010] OJ L095, 1–24. See de La Feria, above n 119, 400.
125 Case C-196/04 Cadbury Schweppes [2006] ECR I-7995; see also Case C-524/04 Thin Cap Group Litigation [2007] ECR I-2107; Case C-231/05 Oy AA [2007] ECR I-6373; Case C-251/06 ING. AUER [2007] ECR I-9689; Case 33/74 Van Binsbergen [1974] ECR 1299, para 13; Case 115/78 Knoors [1979] ECR 399, para 25; Case 130/88 van de Bijl [1989] ECR 3039, para 26; Case C-23/93 TV10 [1994] ECR I-4795, para 20; Case C-148/91 Veronica [1993] ECR I-487, para 12.
126 Case C-103/08 Gottwald [2009] ECR I-9117, para 35 (‘certain degree of integration’); Case C-158/07 Förster [2008] ECR I-8507, para 49 (‘certain degree of integration’); Case C-209/03 Bidar [2005] ECR I-2119, para 57 (‘certain degree of integration’); Joined Cases C-22/08 and C-23/08 Vatsouras [2009] ECR I-4585, para 38 (‘real link’); Case C-138/02 Collins [2004] ECR I-2703, para 67 (‘genuine link’); Case C-224/98 D’Hoop [2002] ECR I-6191, para 38 (‘real link’).
127 Golynker, O, ‘Jobseekers’ Rights in the European Union: Challenges of Changing the Paradigm of Social Solidarity’ (2005) 30(1) European Law Review 111–22, 117 Google Scholar.
128 Case C-209/03 Bidar [2005] ECR I-2119, para 57–60; Case C-158/07 Förster [2008] ECR I-8507, para 51–60.
129 Barnard, C, ‘Case C-209/03 Bidar’ (2005) 42(5) Common Market Law Review 1465–89Google Scholar, 1478: ‘[T]he longer migrants reside in the Member State, the more integrated they are in that State and the greater the number of benefits they receive on equal terms with nationals’; see also O’Brien, C, ‘Real Links, Abstract Rights and False Alarms: The Relationship between the ECJ’s “Real Link” Case Law and National Solidarity’ (2008) 33(5) European Law Review 643–65Google Scholar; Jacobs, FG, ‘Citizenship of the European Union—A Legal Analysis’ (2007) 13(5) European Law Journal 591–610CrossRefGoogle Scholar; Barnard, C, ‘Solidarity and New Governance in Social Policy’ in De Búrca, G and Scott, J, Law and New Governance in the EU and the US (Oxford/Portland, OR, Hart Publishing, 2006)Google Scholar.
130 Arts 6, 7 and 16 of Dir 2004/38/EC. See KS Ziegler, ‘Abuse of Law in the Context of the Free Movement of Workers’ in de la Feria and Vogenauer, above n 55, 310; Barnard, C, ‘EU Citizenship and the Principle of Solidarity’ in Dougan, M and Spaventa, E, Social Welfare and EU law (Oxford, Hart Publishing, 2005) 166 Google Scholar; Golynker, O, ‘Analysis and Reflections— Student Loans: The European Concept of Social Justice According to Bidar’ (2006) 31(3) European Law Review 390–401, 397Google Scholar.
131 Case C-413/01 Ninni-Orasche [2003] ECR I-13187, paras 25, 36 and 46; Joined Cases C-22/08 and C-23/08 Vatsouras [2009] ECR I-4585, para 29.
132 Case 53/81 Levin [1982] ECR 1035, para 17; Case 139/85 Kempf [1986] ECR 1741, para 14; Case 66/85 Lawrie-Blum [1986] ECR 2121, para 21; Case C-3/90 Bernini [1992] ECR I-1071, para 16; Case C-357/89 Raulin [1992] ECR I-1027, para 14.
133 Case 66/85 Lawrie-Blum [1986] ECR 2121, para 21; Case 139/85 Kempf [1986] ECR 1741, para 14; Case 53/81 Levin [1982] ECR 1035, para 16.
134 C Barnard, ‘Case C-209/03 Bidar’, above n 130, 1488:
[T]here is a key difference between economically active and non-economically active citizens: those who are economically active enjoy full equal treatment from the first day of their arrival in the host State. And since it is perceived that they contribute to the economy of the host State, the Court does not have to work hard to justify their equality of treatment. By contrast, those who are not economically active do not enjoy full equality of treatment from the first day of their arrival … Instead, the Court has offered a more nuanced approach to equality, based on the length of stay in the host State and the depth of integration into the society of the host State. (emphasis added)
135 Golynker, above n 128, 115: ‘Economically active migrants such as workers and self-employed persons are a priory deemed bona fide contributors to the host society entitled to equal treatment’; Ziegler, above n 131, 299.
136 Schammo, above n 29, 352: ‘Arbitrage and abuse of rights can be situated at opposing ends’.
137 A similar distinction is made in Schammo above n 29, 361: ‘Regulatory competition … might occur despite the point that consumers are immobile. However, conceptually, this scenario is based on product selection, rather than regulatory arbitrage’.
138 See above nn 74 and 105.
139 See W Kerber and R Van Den Bergh above n 7, 452 (emphasis added).
140 Case 15/81 Schul [1982] ECR 1409, para 33.
141 Opinion of the European Economic and Social Committee, The Creation of a Common Consolidated Corporate Tax Base in the EU, OJ C88/12, 11/04/2006, 48–53, n 6.2 ‘Neutrality’: ‘Genuine economic considerations must decide where companies choose to locate and where the technical tax base will be. A neutral tax base helps to create free and fair competition between companies’.
142 London Economics, above n 17, 23.
143 Opinion of the European Economic and Social Committee, The Commission Report on the rates of excise duty applied on alcohol and alcoholic beverages, OJ C69, 21/03/2006, 10–15, n 4.1. See also C Elschner and W Vanborren, Corporate Effective Tax Rates in an Enlarged European Union, DG TAXUD Taxation Papers, April 2009, 5: ‘From the point of view of economic efficiency, tax systems should ideally be as ‘neutral’ as possible in terms of economic choices’; Kaplow, L, ‘Chapter 10: Taxation’ in Polinsky, MA and Shavell, SM, Handbook of Law and Economics (Amsterdam, North-Holland, 2007) 651–755, 652Google Scholar.
144 Case C-260/95 DFDS [1997] ECR I-1005, para 23 (emphasis added).
145 For example, ‘obstacle to free movement’ ‘barrier to trade’ ‘restriction to market access’ ‘discrimination on grounds of nationality’ or ‘non-discriminatory restriction’.
146 See, inter alia, Dautricourt, C and Thomas, S, ‘Reverse Discrimination and Free Movement Of Persons under Community Law: All for Ulysses, Nothing for Penelope?’ (2009) 34 European Law Review 433 Google Scholar; Garcia, D, ‘Are There Reasons to Convert Reverse Discrimination into a Prohibited Measure?’ (2009) 18 EC Tax Review 179 Google Scholar; Tryfonidou, A, ‘Reverse Discrimination in Purely Internal Situations: An Incongruity in a Citizens’ Europe’ (2008) 35 Legal Issues of Economic Integration 43 Google Scholar; Ritter, C, ‘Purely Internal Situations, Reverse Discrimination, Guimont, Dzodzi and Article 234’ (2006) 31 European Law Review 690 Google Scholar; Maduro, M, ‘The Scope of European Remedies: the Case of Purely Internal Situations and Reverse Discrimination’ in Kilpatrick, et al (eds), The Future of European Remedies (Oxford, Hart Publishing, 2000)Google Scholar; Cannizzaro, E, ‘Producing “Reverse Discrimination” Through the Exercise of EC Competences’ (1997) 17 Yearbook of European Law 29 CrossRefGoogle Scholar; Pickup, D, ‘Reverse Discrimination and Freedom of Movement for Workers’ (1986) 23 Common Market Law Review 135 Google Scholar.
147 AG Léger, Case C-152/03 Ritter-Coulais [2006] ECR I-1711, para 46; Dautricourt and Thomas, above n 147, 433; Garcia, above n 147, 180; Tryfonidou, above n 147, 46; Ritter, above n 147, 691.
148 See, inter alia, Case 44/84 Hurd [1986] ECR 29, para 55; Case 98/86 Mathot [1987] ECR 809, para 9; In particular, see Case C-379/92 Peralta [1994] ECR I-3453, para 27; Joined Cases C-29/94 to C-35/94 Aubertin and others [1995] ECR I-301, paras 6 and 13; Joined Cases C-64 and C-65/96 Uecker and Jacquet [1997] ECR I-3171, paras 22–3; Case C-127/08 Metock and others [2008] ECR I-6241, paras 76–78.
149 See, inter alia, Garcia, above n 147, 191; Tryfonidou, above n 147, 63–64; Pickup, above n 147, 156.
150 The Oxford Dictionary defines fallacy as a ‘failure in reasoning that renders an argument invalid’.
151 See above, s III.C. Regulatory Diversity and the Negative Harmonisation Conundrum. Maduro similarly identifies two types of equality, distinguishing between reverse discriminations (breaches of intra-jurisdictional equality) and legislative disparities (breaches of interjurisdictional equality): Maduro, above n 1, 154–57.
152 Case C-177/94 Perfili [1996] ECR I-161, para 19 (emphasis added).
153 Cf, above n 101.
154 Maduro, above n 1, 131, describing the ‘New Approach to Harmonization’; see also AG Jacobs, Case C-168/91 Konstantinidis [1993] ECR I-1191, para 49.
155 AFP ‘Europe: après le plombier polonais, le moniteur de ski anglais’ Libération, 8 February 2011; AG Sharpston, Case C-200/08 Commission v France (‘Snowboarders’) [2011] ECR I-0000.
156 Joined Cases C-29/94 to C-35/94 Aubertin and others [1995] ECR I-301, paras 6 and 13 (emphasis added); see also Case C-286/06 Commission v Spain [2008] ECR I-8025, paras 80–81 (obligation to recognise foreign diplomas of engineering obtained after a shorter period of education than domestic diplomas); Case 246/80 Broekmeulen [1981] ECR 2311, para 27 (obligation to recognise foreign diplomas of medicine despite lesser training requirements than domestic diplomas); Driguez, L, ‘Reconnaissance mutuelle des diplômes’ (2008) 12 Europe 412 Google Scholar, at 1, free translation: ‘Member States had first to get used … to admitting the value of diplomas granted abroad’.
157 Case 229/83 Leclerc [1985] ECR 1; see the French government’s argument at para 22: ‘The restriction on retail price competition does not in any way restrict imports. Imported and domestic books are treated identically in that respect’; and the Court’s reply at paras 25–26.
158 Case C-346/06 Rüffert [2008] ECR I-1989 paras 14 and 37 (emphasis added).
159 See above, s III.B.
160 Case C-376/98 Germany v Parliament and Council (‘Tobacco Advertising I’) [2000] ECR I-8419 para 95.
161 See above, s II.A.
162 Barnard, C, ‘Fifty Years of Avoiding Social Dumping? The EU’s Economic and Not So Economic Constitution’ in Dougan, M and Currie, S, 50 Years of the European Treaties (Oxford and Portland, Oregon, , Hart Publishing, 2009) 316–17Google Scholar; Barnard and Deakin above n 86, 400–01; Von Quitzow, above n 77, 205–06.
163 Case 43/75 Defrenne II [1976] ECR 455 para 9.
164 Case C-196/04 Cadbury Schweppes [2006] ECR I-7995, para 46.
165 Case C-298/05 Columbus [2007] ECR I-10451, paras 39–40.
166 See eg, Edwards, V and Farmer, P, ‘The Concept of Abuse in the Freedom of Establishment of Companies: a Case of Double Standards?’ in Jacobs, F et al (eds), Continuity and Change in EU Law: Essays in Honour of Sir Francis Jacobs (Oxford, Oxford University Press, 2007)Google Scholar.
167 See above, s III.D. This logical sequence appears very clearly in Fitzwilliam, in which the Court recalled thunder Art 14(1)(a) of Reg 1408/71, the home country principle applies to the social security of posted workers (para 29), before impeding regulatory mobility (para 30).
168 Case C-255/02 Halifax [2006] ECR I-1609, para 67.
169 Case C-196/04 Cadbury Schweppes [2006] ECR I-7995, para 59.
170 Case C-212/97 Centros [1999] ECR I-1459; see also Case C-210/06 Cartesio [2008] ECR I-9641; Case C-167/01 Inspire Art [2003] ECR I-10155; Case C-208/00 Überseering [2002] ECR I-9919; Case 79/85 Segers [1986] ECR 2375.
171 Case C-231/05 Oy AA [2007] ECR I-6373; see also Case C-196/04 Cadbury Schweppes [2006] ECR I-7995; Case C-524/04 Thin Cap Group Litigation [2007] ECR I-2107; Case C414/06 Lidl Belgium [2008] ECR I-3601, para 32; Case C-446/03 Marks and Spencer [2005] ECR I-10837, para 46.
172 Schammo above n 29, 352: ‘Arbitrage and abuse of rights can be situated opposing ends’.
173 Barnard, C, ‘Social Dumping And the Race to the Bottom: Some Lessons for the European Union from Delaware?’ (2000) 25 European Law Review 57 Google Scholar; Barnard above n 163, 311, n 2 (quoting Mr Zitting, chairman of the FSU): ‘The idea that you replace an employee with a cheaper one coming from somewhere else’; and 314: ‘[C]apital may well be attracted to particular locations, not because of the abundance of the location’s workforce or capital, but for other, less worthy reasons such as a more favourable social security regime for employers … and cheaper wage costs … This migration is often referred to … as social dumping.’ (emphasis added)
174 Case C-445/03 Commission v Luxembourg [2004] ECR I-10191, para 18 (repeated para 28); Case C-164/99 Portugaia Construções [2002] ECR I-787, para 12; Case C-244/04 Commission v Germany [2006] ECR I-885, para 61; Case C-341/05 Laval [2007] ECR I-11767, para 103.
175 As is well known, the original concept of ‘dumping’ aims distortions of competition created by undertaking selling products below-cost price. For instance, see Art 1(2) of Council Reg (EC) 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community, [2009] OJ L343, 51–73: ‘A product is to be considered as being dumped if its export price to the Community is less than a comparable price for the like product, in the ordinary course of trade, as established for the exporting country.’
176 See AG Colomer, Case C-207/04 Vergani [2005] ECR I-7453, para 21, connecting the Defrenne II rationale (regulatory neutrality) to the concept of ‘social dumping’: ‘The scant provisions which granted rights specifically with regard to employment, such as equal pay for men and women (former Art 119 of the EC Treaty), were designed to avoid ‘social dumping’, which would distort competition between the Member States.’ (emphasis added)
177 For a definition of the concepts of regulatory competition and regulatory arbitrage, see above: s B. Barnard reaches the same conclusion in ‘Social Dumping And the Race to the Bottom’ above n 174, 57 (emphasis added):
A race to the bottom is said to arise when, in a deregulated internal market, a state unilaterally lowers its social standards in an attempt to attract business from other states. Businesses moving their place of operations in response are said to be engaged in social dumping.
178 Barnard ibid, 68.
179 AG Mischo, Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 Finalarte and Others [2001] ECR I-7831, paras 32–33, emphasis added.
180 Case C-244/04 Commission v Germany [2006] ECR I-885, para 61:
Finally, as regards the defence based on the prevention of social dumping, the Court has held that the Member States may extend their legislation or collective agreements relating to minimum wages to any person who is employed, even temporarily, within their territory (Arblade and Others, paragraph 41). That prerogative is also recognised by Article 3 of Dir 96/71. (emphasis added)
Barnard above n 163, 314:
Thus, in one (unreasoned) paragraph [Rush Portuguesa, para 18], the Court put a stop to a threat of social dumping—without using this language—by allowing the host state to extend its labour laws and conditions to the staff employed by service providers working in its country. (emphasis added)
181 Opinion of the European Economic and Social Committee, The Lisbon Agenda and the Internal Market, [2010] OJ C347, 8–18, Appendix (rejected amendments):
The use of the term of ‘social dumping’ directed against the new Member States is offensive and should be avoided. To indicate the differences in wages and labour conditions as a problem of the Single Market is contradictory to the simple fact that wages are always part of the competition among the companies which is the basis of the free market economy and is beneficial to the consumers. (emphasis added)
182 Case C-438/05 Viking [2007] ECR I-10779, in particular paras 72–74.
183 Case C-202/97 Fitzwilliam [2000] ECR I-883, paras 29–30 and 35–43; see also Case C-178/97 Barry Banks and Others [2000] ECR I-2005, paras 24–27.
184 On that point, Simon Deakin is more univocal: Deakin above n 6, 592: ‘Laval, Viking and Centros together open up new possibilities of employers accessing low-cost labour law regimes’.
185 Barnard, C, ‘The Notion of Abuse and the Freedom to Provide Services: A Labour Lawyer’s Perspective’ in de la Feria, R and Vogenauer, S, Prohibition of Abuse of Law: a New General Principle of EU Law? (Oxford and Portland, Oregon, Hart Publishing, 2011) 102 Google Scholar:
[T]here was no suggestion by the Court that Laval was using the services provisions of the Treaty deliberately to circumvent the rules that would have applied had it been established in Sweden. Laval was a Latvian company and was operating out of Latvia.
186 In the same sense, Maduro, above n 1, 136: ‘The choice between EC regulation and mutual recognition depends to a great degree on the beliefs on economic regulation and public intervention’. It is interesting to note how the debate on the paradigms of economic integration within European law rejoins Chen and Hanson’s discussion of the current meta-script of American law, namely the neo-liberal motto ‘markets good, regulation bad’: see Chen and Hanson, above n 9.
187 See Edwards and Farmer above n 167; AG Maduro Case C-210/06 Cartesio [2008] ECR I-9641, para 29.
188 Already before the adoption of the Services Dir, the freedom to provide services largely resorted to the home country principle (or at least a milder form of mutual recognition, ‘Functional Equivalence’: cf n 93), under the influence of the Court’s case law and of several sectoral directives. The main innovation of the initial Dir Proposal was the generalisation of the principle to all services, subject to certain exceptions. See B De Witte, ‘Setting the Scene: How did Services get to Bolkestein and Why?’ EUI Law Working Papers, No 2007/20, cadmus.eui.eu/handle/1814/6929; Hatzopoulos, V, ‘Assessing the Services Directive’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 215 CrossRefGoogle Scholar; Hatzopoulos, V, ‘Que reste-t-il de la Directive sur les Services?’ (2007) 43 Cahiers de Droit Européen 299 Google Scholar.
189 In May 2005, the ‘Polish plumber’ became the symbol of cheap labour coming from Eastern Europe to France, during the public debate preceding the referendum in which the EU Constitution was rejected. See A Asthana, ‘The Polish plumber who fixed the vote’ The Observer, 29 May 2005; E Sciolino, ‘Unlikely Hero in Europe’s Spat: The “Polish Plumber”‘ New York Times, 26 June 2005. See also V Hatzopoulos, ‘Que reste-t-il de la Directive sur les Services?’ above n 189, 313; Opinion of the European Economic and Social Committee, Proposal for a Directive of the European Parliament and of the Council on services in the internal market, 10 February 2005, COM (2004) 2 final, 3.5.2, 3.5.3 and 4.2.1.
190 On those questions, see inter alia Barnard above n 163; Barnard, C, ‘Viking and Laval: An Introduction’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 463 CrossRefGoogle Scholar; Dashwood, A, ‘Viking and Laval: Issues of Horizontal Direct Effect’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 525 CrossRefGoogle Scholar; Deakin above n 6.
191 According to the classical statement (qualified by Laval ), introduced by Case C-113/89 Rush Portuguesa [1990] ECR I-1417, para 18; and later confirmed in Case C-43/93 Vander Elst [1994] ECR I-3803, para 23; Case C-272/94 Guiot [1996] ECR I-1905, para 12; Joined Cases C-369/96 and C-376/96 Arblade and Others [1999] ECR I-8453, para 41; Case C165/98 Mazzoleni and ISA [2001] ECR I-2189, para 28; Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 Finalarte and Others [2001] ECR I-7831, para 58; Case C-164/99 Portugaia Construções [2002] ECR I-787, para 21: ‘Community law does not preclude Member States from extending their legislation, or collective labour agreements entered into by both sides of industry, to any person who is employed, even temporarily, within their territory, no matter in which country the employer is established.’
192 See Recitals 5, 12, 13 and 17 in the Preamble to Dir 96/71. See AG Mengozzi, Case C-341/05 Laval [2007] ECR I-11767, para 249; Case C-244/04 Commission v Germany [2006] ECR I-885, para 61; AG Geelhoed, Case C-244/04 Commission v Germany [2006] ECR I-885, para 36; Opinion of the European Economic and Social Committee, The Social and Environmental Dimension of the Internal Market, [2009] OJ C182, 1–7; Commission Communication, Posting of workers in the framework of the provision of services: maximising its benefits and potential while guaranteeing the protection of workers, 13 June 2007, COM/2007/0304 final; European Parliament Resolution, The Application of Directive 96/71/ EC on the Posting of Workers, [2006] OJ 313 E, 452–57; C Barnard ‘Social Dumping And the Race to the Bottom’ above n 174, 74–75.
- 5
- Cited by