Abstract
The EU Single Market, as a multi-layered marketplace, is characterised by a considerable diversity among the institutional models of local capitalisms in Europe. For the legal instruments applied in its implementation—both legislation and judicial practice, this diversity presents a significant challenge. EU legislative measures are forced to promote responses that are able to accommodate and reconcile local diversity. The EU Court of Justice’s jurisprudence is expected to contribute to the realisation of the market integration objective without unnecessarily removing or homogenising the institutions of national market economies. With the launching of the European Pillar of Social Rights pursuing a clear objective of further institutional convergence among the Member States, a closer attention must be paid to how law in the governance of the Single Market addresses these difficulties.
The research leading to this publication was supported by the Lendület-Programme of the Hungarian Academy of Sciences. This manuscript was finalised for publication in 2018.
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Notes
- 1.
- 2.
See the analysis, following from the premise that ‘neoliberalism’s breadth and ambiguities’ allow great flexibility in seeking to ‘satisfy diverse internal and external preferences’, that the EU neoliberal model ‘is well equipped to accommodate (Member State) diversity’ and that national varieties of capitalism can ‘find their place and adapt to the EU’s framework, while continuing to follow distinct paths of institutional development’, Thatcher (2013), pp. 184–187.
- 3.
In other words, complete institutional convergence/full harmonisation is not a valid policy (political) objective for the EU.
- 4.
- 5.
It was also raised that under frameworks, such as the Single Market diversity in local varieties of capitalism is likely to increase as a result of the pressure on national governments to experiment creatively so as to find new means for satisfying local economic interests, which will then increase the necessity for the EU political and legal framework being able to accommodate and promote that variety as well as the necessity for local choices being spared from undemocratic and illegitimate repression, in particular in the course of the enforcement of EU legal obligations, Clift and Woll (2012), pp. 309–312.
- 6.
National governments are no longer in exclusive control of ‘large parts of economic governance’, Clift and Woll (2012), pp. 311–312.
- 7.
EU law was said to threaten both neoliberal and regulated capitalisms: while liberal market economies are constrained by measures of positive harmonisation implementing common social objectives, coordinated market economies are threatened by ‘neoliberal positive harmonisation’, liberalisation through negative integration, and by the perceived consequences of cross-border regulatory competition, Snell (2012), pp. 428–429. See in regards EU State aid law, Clift (2013), p. 110.
- 8.
The arguments used by Snell against EU law being available to impose a single model of capitalism in the Member States were the following: the EU lacking democratic legitimacy to interfere with such local economic policy choices, in particular with redistributive policies, and the rule that the EU must not unnecessarily and unjustifiably eliminate national comparative advantages, Snell (2012), pp. 433–434.
- 9.
Overall, market integration in Europe has been more favourable to liberal market economies than to regulated capitalism. First, achieving regulated capitalism by legislation at EU level (positive integration) faces a politically nearly impossible decision-making process as affected by Member State heterogeneity. Second, the neoliberal project can proceed through (may even be facilitated by) judicially enforced market integration even under conditions of political-economic heterogeneity. See Höpner and Schäfer (2012), p. 3, 25.
- 10.
These are relied upon in particular when EU initiatives target ‘highly sensitive institutions’ that constitute the different political-economic regimes of the Member States. The importance of preserving national regulatory autonomy and defending national prerogatives has led to different Member State reactions in the EU decision-making process, such as the refusal to transfer competences, the Member States insisting on subsidiarity, or the Member States passing EU legislation which aims primarily at protecting national autonomy, Höpner and Schäfer (2012), pp. 15–16.
- 11.
Their ultimate aim is to shelter ‘sensitive areas of national sovereignty from being transformed by European law’, Höpner and Schäfer (2012), p. 23.
- 12.
This involves both the ignoring of the compromises secured in EU legislation and the pushing of the market integration agenda without regard to its impact on locally agreed and established models of capitalism.
- 13.
The examples identified (Höpner and Schäfer 2012, pp. 18–23): the jurisprudence enabling the abusive circumvention of applicable domestic regulatory burdens, the case law fuelling regulatory competition among the Member States, the judgments preventing the Member States from stepping up against races to the bottom in regulatory competition, the decisions expanding the legal effect of EU obligations to third parties, for instance to cover non-public law arrangements, such as trade union collective action.
- 14.
Even the balanced accounts of the Court’s operation admit that there have been some adventurous judgments, for instance those in Viking and Laval (Case C-438/05, International Transport Workers’ Federation and Finnish Seamen’s Union EU:C:2007:772 and Case C-341/05, Laval un Partneri EU:C:2007:809) pushing liberalisation further than what was perhaps necessary, Snell (2012), pp. 428–429.
- 15.
The liberalisation attempts in question ‘would not be possible either as outcomes of the political processes inside member states or as outcomes of negotiations between them’, as they would not agree to them, Höpner and Schäfer (2010), pp. 355–356.
- 16.
As a further problem, common political action to correct the asymmetry caused by the Court’s jurisprudence is prevented by the diversity of Member State positions fuelled by the variety of local capitalisms, Höpner and Schäfer (2012), p. 23.
- 17.
They claimed that while political integration can serve both models of capitalism, judicial integration affects different capitalism in different ways, in particular it puts pressure on organised capitalisms to deregulate/de-institutionalise, Höpner and Schäfer (2012), p. 2.
- 18.
The Court was claimed to have assaulted local capitalisms and challenged ‘institutional differences as such’ in different capitalisms, especially the institutional frameworks of organised economies, Höpner and Schäfer (2010), p. 352.
- 19.
Snell, nevertheless, warned that cautiousness, modesty and sensitivity are needed in regards the potential negative, disruptive or destabilising impacts of EU legal developments, especially those coming from the Court, Snell (2012), p. 434. In regards EU legislation, both measures of positive harmonisation and ‘neoliberal directives’, he claimed that the political safeguards provided in the EU decision-making process can prevent that fundamental damages are inflicted by such measures upon national capitalisms, either liberal or regulated, Snell (2012), pp. 428–431.
- 20.
- 21.
See, in this regard, Dawson and Durana (2017).
- 22.
The EU competences regime was also shaped with a view to ensuring that the market integration agenda does not interfere unduly with fundamental institutional arrangements at the local level, such as wages, social protection, or labour law.
- 23.
- 24.
See Deakin’s analysis of a European model of regulatory competition, labelled as ‘reflexive harmonisation’, where in the context of harmonising corporate and labour law the preservation of national diversity had paramount importance and where there were conscious efforts to ‘reconcile the conflicting demands of transnational economic integration and national legal diversity’, Deakin (2006).
- 25.
See, in this regard, the analysis of the impact of varieties of capitalism on the Regulation on the statute of a European company (Regulation 2157/2001, [2001] OJ L294/251), Biermeyer (2011).
- 26.
Directive 2004/25 on takeover bids, [2004] OJ L142/12.
- 27.
The Commission’s proposal was threatening to damage local interests (capitalisms) asymmetrically because it was to be implemented in very different takeover markets covering very different production regimes, Höpner and Schäfer (2010), pp. 359–361.
- 28.
Council Directive 93/104 concerning certain aspects of the organization of working time, [1993] OJ L307/18, now replaced by Council Directive 2003/88, [2003] OJ L299/9. See the national discrepancies in the implementation of the directive and the use of derogations by the Member States in Commission (2017c).
- 29.
The UK’s legal challenge against the directive received a reserved response from the Court which argued in connection with the central claim that the principle of subsidiarity had been violated that once the need for harmonisation is established in the EU political process (by the Member States) there remains no doubt that EU action is necessary, para. 47, Case C.84/94, United Kingdom v Council EU:C:1996:431.
- 30.
Directive 96/71 concerning the posting of workers in the framework of the provision of services, [1997] OJ L18/1 (see Article 1(1)). In Article 1(2), it declares that’s its provisions do not affect ‘the exercise of fundamental rights’ applicable to collective labour law ‘in accordance with national law and/or practice’.
- 31.
Directive 2014/67 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services, [2014] OJ L159/11.
- 32.
Proposal for a Directive of the European Parliament and of the Council amending Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, COM (2016) 128 final.
- 33.
For a preliminary analysis, see Richard (2016).
- 34.
Directive 2006/123 on services in the internal market, [2006] OJ L376/36.
- 35.
The obligations of directives operate rather as binding incentives for the Member States to actively keep an eye on legal and regulatory frameworks, and thus their objectives are achieved by means of coordination instead of hard legal regulation or harmonisation, Wiberg (2014), p. 278. See, in connection with the Services Directive, Commission (2014).
- 36.
Proclamation of the European Pillar of Social Rights, Luxembourg: Publications Office of the EU (2017).
- 37.
See Commission (2017d).
- 38.
- 39.
See Commission (2017d).
- 40.
Further limitations include the presence of primary or exclusive Member State competences and national redistributive powers, as affected by financing capacities, which will be taken ‘full account’ of and will be fully respected in the course of the EPSR’s implementation.
- 41.
See Commission (2017d).
- 42.
Proposal for a Directive on work-life balance for parents and carers and repealing Council Directive 2010/18/EU, COM (2017) 253 final.
- 43.
Article 4: a minimum of 10 working days paternity leave; Article 5: a minimum of 4 months of parental leave for each parent; Article 6: a minimum of 5 working days of carers’ leave; Article 7: right to time off from work on grounds of force majeure. Article 8 poses the requirement of the Member States providing to workers on leave regulated in Articles 4, 5 or 6 a payment or an adequate allowance at least equivalent to what the worker concerned would receive in case of sick leave. Article 10 secures the employment rights of workers on leave under Articles 4, 5, or 6.
- 44.
Article 9: the right to request flexible working arrangements for parents and workers, the duration of which may be subject to a ‘reasonable limitation’; the obligation of employers to consider and respond to such requests having regard to the needs of both employers and workers, and the obligation to justify refusals of such requests; the right to return to the original working pattern at the expiry of the flexible arrangement permitted and whenever ‘a change of circumstances so justifies’, and the corresponding obligation of employers to consider and respond to such request in light of the needs of both employers and workers.
- 45.
Variation within a single national regime may be a possibility as a result of the directive, as in case of the earlier mentioned Takeover Directive, on the basis of the opt-out offered to individuals and families from organising their lives according to the provisions of the directive.
- 46.
Para. 20, Case C-57/95 Commission v France EU:C:1997:164. This acceptance of the central relevance of the EU political process in the delivery of common policies led to the Court recognising a communication adopted pursuant a ‘deadlock in the negotiations with Member States in the Council’, which covered the subject-matter of a directive withdrawn by the Commission, as constituting an ‘act intended to have legal effects of its own’, paras. 21–25, ibid.
- 47.
Para. 12, Joined Cases 110 and 11/78, van Wesmael EU:C:1979:8.
- 48.
Para. 26, ibid.
- 49.
Paras. 10–13, Case C-340/89, Vlassopoulou EU:C:1991:193. The Court also accepted that in case EU directives ‘provide for harmonization of the measure necessary to ensure the protection’ of a ground for derogation, the derogation opportunity offered by the Treaty will no longer be available (‘recourse to it is no longer justified’) and ‘the appropriate checks must be carried out and the measures of protection adopted within the framework outlined by the harmonising directive’, para. 42, Case C-421/98, Commission v Spain EU:C:2000:646.
- 50.
In this connection, the Court confirmed that the EU institutions enjoy broad discretion as to the scheduling (‘the stages’) of legislative activity having regard to the difficulty of drawing up common rules when national rules are ‘diverse’ and ‘complex’ and having regard to the challenge of having those measures accepted by the Member States in the Council, paras10–11, Case C-63/89, Les Assurances EU:C.1991:152.
- 51.
The same rule provided that in case the ‘General Programme’ is not adopted, implementing directives are passed to ‘complete one stage in the liberalisation of a specific service’. See also ex Article 54 EEC.
- 52.
General Programme for the abolition of restrictions on freedom to provide services, [1962] OJ 2/32. See also General Programme for the abolition of restrictions on the freedom of establishment, [1961] OJ 2/36.
- 53.
See also ex Articles 52, 54, 56 and 57 EEC concerning freedom of establishment. For workers, the categorically stated obligations of ex Article 48 EEC were followed by ex Article 49 holding that progressive liberalisation was to be achieved, especially in the specific regulatory areas identified by the Treaties, by way of adopting directives or regulations. Ex Article 51 EEC ordered the adoption of legislation under unanimity in the Council concerning the social protection of migrant workers.
- 54.
Ex Article 68 EEC ordered the application of the non-discrimination principle in respect of the Member States applying their domestic provisions on capital movements ‘freed’ in accordance with the Treaty in the capital market and credit system.
- 55.
See also the requirement that the provisions of EU legislation must be interpreted so as to achieve consistency with the relevant Treaty provisions rather than developing an interpretation ‘which leads to it being incompatible with the Treaty’, para. 15, Case 220/83, Commission v France EU:C:1986:461. See also paras. 69–70, Case 48/75, Royer EU:C:1976:57, concerning the discretion available to the Member States in the implementation of the particular directive and para. 15, Case 90/76, van Ameyde EU:C:1977:101, holding that specific harmonisation measures cannot be regarded as authorising national provisions or agreements which are incompatible with the Treaty provisions.
- 56.
Inter alia, para. 15, Case 81/87, Daily Mail EU:C:1988:456 and para. 19, Case 33/74, van Binsbergen EU:C:1974:131.
- 57.
Paras. 23–24, ibid. The applicability of the Treaty provisions was no longer ‘conditional on the harmonization or the coordination of the laws of the Member States’, para. 16, Case 220/83, Commission v France; para. 25, Case 205/84, Commission v Germany EU:C:1986:463.
- 58.
Para.26, Case 33/74, van Binsbergen, ‘the fulfilment of which by the Member States cannot be delayed or jeopardised by the absence of provisions which were to be adopted in pursuance of powers conferred’ under the Treaties. See also paras. 28–29, Case 2/74, Reyners EU:C:1974:68.
- 59.
Paras. 26–27, ibid. and para.12, Joined Cases 110 and 111/78, van Wesmael, the fulfilment of which was made easier by, ‘but not made dependent on’, the implementation of the Treaty’s legislative programme.
- 60.
Paras. 30–31, Case 2/74, Reyners. See also para. 17, Case 11/77, Patrick EU:C:1977:113 in regard the delayed adoption of directives regulating the non-discrimination requirement.
- 61.
Contrast Case 203/80, Casati EU:C:1981:261 with para. 33, Case C-358/93, Bordessa EU:C:1995:54 and paras. 41–47, Joined Cases C-163, C-165 and C-250/95, Sanz de Lera EU:C:1995:451.
- 62.
Directive 88/361 for the implementation of Article 67 of the Treaty, [1988] OJ L178/5.
- 63.
Inter alia, para.62, Case 13/83, Parliament v Council EU:C:1985:220; paras. 8–9, Case 4/88, Lambregts EU:C:19898:320; para. 11, Case C-49/89, Corsica Ferries France EU:C:1989:649.
- 64.
Para. 63, Case 13/83, Parliament v Council; paras. 13–14, Case 4/88, Lambregts.
- 65.
Paras. 10–12, Case 4/88, Lambregts; paras. 13–14, Case C-49/89, Corsica Ferries France. This also meant that the Member States were allowed to maintain the restrictions on the freedom to provide in services that were not covered by EU legislation, paras13–14, Corsica Ferries France (C-49/89).
- 66.
Generally, liberalisation under free movement of services cannot undermine the liberalisation programme under the free movement of capital and the liberalisation programme under the free movement of capital must not hinder the exercise of the freedom to provide services, paras. 19–20, Case 205/84, Commission v Germany.
- 67.
Para. 9, Case C-222/95, Parodi EU:C:1997:345.
- 68.
Paras. 8–10, ibid.
- 69.
Para. 11, Case 98/85, Bertini EU:C:1986:246. See also paras. 14–15, Case C-15/90, Middleburgh EU:C:1991:377 concerning the Member States’ freedom to regulate social security entitlements in the context of freedom of movement in the absence of an EU measure to that effect. In Hervein, the advantageous or disadvantageous social security implications of exercising the right of establishment in the different Member States were held to be as not contravening Article 49 TFEU, paras. 50–51, Joined Cases C-393/99 and C-394/99, Hervein EU:C:2002:182. In contrast, when the matter regulated in national law has a direct basis in a generally applicable measure of EU law, the application of EU requirements faces no impediment, even when national laws diverge to a considerable degree, paras. 32–32, Case C-249/04, Allard EU:C:2005:329.
- 70.
Paras. 12–16, Case 98/85, Bertini. After the adoption of the 1988 Capital Directive, this meant that restrictions in these service domains were examined under the free movement of capital as well as under the freedom to provide services, para. 11, Case C-484/93, Svensson EU:C:1995:379.
- 71.
The interpretative formula that the fundamental freedoms and the measures adopted for the implementation of those provisions must be regarded as specific manifestations of that general principle (para. 6, Case 13/76, Donà EU:C:1976:115) allowed the Court to expand (clarify) the scope of application of the fundamental obligations arising from the non-discrimination requirement.
- 72.
See, in particular, paras. 29–31, Case C-164/94, Arantis EU:C:1996:23 discussing the applicability of the relevant EU directive and the non-discrimination principle in the circumstance when the particular economic activity was not subject to regulation at the national level.
- 73.
Para. 19, Case C-381/93, Commission v France EU:C:1994:370. Previous jurisprudence recognised the relevance of the central ‘clearly defined’ prohibition of discrimination in regards the implementation of the common transport policy, paras. 64–65, Case 13/83, Parliament v Council.
- 74.
Para. 20, Case C-381/93, Commission v France.
- 75.
Paras. 21–31, Case 2/74, Reyners.
- 76.
Para. 29, Case 29/84, Commission v Germany EU:C:1985:229.
- 77.
Para. 20, Case 220/83, Commission v France; para. 34, Case 205/84, Commission v Germany.
- 78.
Paras. 34–36, ibid.
- 79.
Para. 41, ibid. The Court recognised that an administrative regime (a licensing system), that is a genuine alternative in the EU of the Member States operating individually their own administrative and supervisory systems, may only be set up by means of legislative action at the EU level, and that until those common rules are introduced the Member States are entitled to retain local institutional frameworks governing national markets, with the condition that their operation does not entail the duplication of equivalent legal conditions and supervision in the different Member States, para.47, ibid.
- 80.
Paras. 61–62, 67–69, Joined Cases C-369/96 and C-376/96, Arblade EU:C:1999:575.
- 81.
Para. 79, ibid.
- 82.
Paras. 23–28, Case C-222/95, Parodi. The Court may determine the parameters that need to be taken into account by the national court when assessing the local impact of the relevant EU measure, in particular the issue of whether at the given time the Member State concerned may be permitted, despite the availability of common EU rules, to rely on general interest grounds of its own, paras. 26–27, ibid. In Essent, the Court set the interpretative scope for the general interest grounds on the basis of the relevant EU directive and was generally favourable to the grounds which coincided with the objective pursued by EU policy as defined that directive, which had been duly implemented in domestic law, paras. 58–65, Joined cases C-105/12–C-107/12 Essent EU:C:2013:677.
- 83.
Paras. 22–25, Case C-410/96, Ambry EU:C:1998:578. The usual benchmarks are applied: the national measure must be adequately targeted and there must not be less restrictive alternatives, paras. 32–34, 36–38, ibid.
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Varju, M., Papp, M. (2020). Member State Capitalism(s) and EU Law: Protecting Local Varieties in the Single Market. In: Nagy, C. (eds) World Trade and Local Public Interest. Studies in European Economic Law and Regulation, vol 19. Springer, Cham. https://doi.org/10.1007/978-3-030-41920-2_6
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