Services Liberalisation in the Internal Market

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The content is relevant to the areas that I address and the articles are written by counsel who are very experienced in these areas and can communicate in a meaningful and effective way. Back Forward.

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Share Facebook Twitter Linked In. Follow Please login to follow content. Register now for your free, tailored, daily legal newsfeed service. European Union October 2 The draft Services Directive is fatally flawed The draft Services Directive is the latest, and one of the most blatant, examples of competition taking precedence over social and environmental concerns. It symbolises many of the issues we are concerned about. However, how will the different services covered by the Directive be affected?

This will counter the objective of achieving quality SGI for all. There are grave concerns about healthcare and social services EPSU rejects in particular the proposals in the draft Directive governing healthcare, social services and community care to the elderly or disabled persons. It is not possible to inject competition into national, solidarity-based services without undermining their operation.

The draft Directive is contrary to Article of the Treaty, which puts healthcare firmly under the responsibility of Member States and also to the new proposed Article III-6 of the draft Constitution. Member States need a wide range of regulatory instruments in order to manage public healthcare expenditure and to ensure quality and accessibility of healthcare. EPSU fears that, if adopted, the Directive will weaken national regulatory control, lead to more legal uncertainty and encourage deregulation and privatisation of healthcare services.

Social, employment and trade union rights must be safeguarded EPSU is also deeply concerned by the application of the 'country-of-origin principle' with respect to its consequences on the capacity of public authorities at national and local level to monitor and identify abuses, especially in the labour market. EPSU has serious doubts about the feasibility of monitoring and overseeing providers of cross-border services from their country of origin. Closely connected to this is the question of how, in the face of Member State diversity, the ECJ is able to maintain a form of unity within European law.

In maintaining unity in the face of diversity, the Court is constantly performing a balancing act. The challenge is that demanding too much unity may leave Member States too little margin for socio-economic policy choices that are embedded within their own cultural, historical and political backgrounds. Indeed, this is a pertinent issue and one that political opportunists across Europe may prey on when advancing an anti-EU agenda. On the other hand, allowing too many restrictions on trade based on social diversity may allow too much divergence and cause legal fragmentation across the Union.

Where exactly the balance should fall and how it should be achieved remains salient, therefore, and represents a continuing challenge that lies at the core of European market integration. However, where exactly this dividing line is, remains the subject of much contentious case law and debate. This question can be considered from many angles and areas of European law. One could for example consider the use of different types of legal instruments to achieve different levels of harmonisation in market regulation or how the debt crisis has given the European Commission new means to pursue a one size fits all strategy on the basis of the European Semester and other legislative instruments, which challenges the social diversity of the Member States.

In this contribution, however, I revisit the intricate balance between unity and diversity in the case law of the Court and ask whether we can unveil any consistent adjudicative methods with respect to the balancing act that is performed by the Court.

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To do so, I will revisit some long-standing adjudicative techniques of the Court as a means to achieve unity of European integration. I will analyse strands of case law developed in the area of economic free movement to distill ideal type forms of reason by the Court. It is an exceedingly controversial method of the Court because it has essentially subjected all Member State policy that can be qualified as imposing cross-border trade burdens to judicial approval. Concomitantly, the Court has developed a proportionality assessment that is able to accommodate, in the second stage of the legal assessment, a plethora of Member State policy choices that can justify the restrictions on cross-border trade.

The unity is eventually achieved by prescribing how Member States pursue objectives that are restrictive of inter-state trade. In particular, by introducing requirements of transparency, coherence and consistency for the local governance contexts in which these restrictive objectives are pursued.

The Court has developed this model in a seemingly incoherent fashion. I will discuss in section IV that the proportionality rationales that the Court employs to adjudicate in the area of economic free movement law can be categorised in three ideal types. Trade restrictive Member State rules are assessed on the basis of the principles of substantive efficiency, a margin of appreciation or procedural good governance standards. The Court has not provided an immediately visible operational rationale as to when a certain principle will be adopted to evaluate a restrictive Member State scheme.

However, recent case law suggests that in fields where Member States have been accorded wide discretion, 3 the Court is mostly concerned with the overarching objective of maintaining a dialogue with the Member States. Through this dialogue a perspective of European unity is enforced with respect to the way that Member States develop and embed policy in their wider governance context. Particularly striking and often referred to examples are the Scottish minimum alcohol pricing case, 4 where Scotland was asked to reconsider its policy to restrict alcohol consumption, taking into account the fundamental principle of free price formation which should not be disrupted, and also the infamous Viking case, 5 where the right to strike of workers was arguably made conditional on it causing no uneven disruption of cross-border services.

In section V, I will challenge this neoliberal consensus to some extent and point towards the emerging model in the socially salient AGET Iraklis case, which suggests that the Court is willing to accommodate socio-economic diversity that restricts cross-border trade, provided that Member States conform to a set of good governance standards: that is, these States must adopt systematic policy choices that conform to a certain level of transparency, accountability and coherent logic.

It may very well be that market-centered policy is simply easier to administer and also to defend in Court. The supranational market rationale that EU free movement rules purport in its most simplistic form is concerned with an area without internal frontiers, in which the free movement of goods, persons and capital are ensured in accordance with the provisions of the Treaties Art. Free movement rights are granted to ensure market access and can be utilised to challenge obstacles to trade within the Member States.

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However, the EU Treaties and the Court have always allowed national measures to take precedence over free movement rights when they serve important public interests recognized by the Union, including national identity. Free movement law recognizes explicitly that in the absence of EU harmonization and insofar as there are no national measures producing a protectionist effect, Member States enjoy leeway in safeguarding certain objectives, which are deemed fundamental to their identity.

This builds on the idea that the social diversity of preferences and orientations in the EU is the product of specific historical experiences, political contestation, societal learning and continuous political decision-making. Critiques on the case law of the Court tend to identify a structural bias in favour of market access and deregulation. In most cases before the Court, it is said, where there is found a restriction on free movement pursuant to the pursuit of a regulatory objective, the conflict is decided in favour of EU free movement.

Diagonal conflicts involve on the one hand economic freedoms and on the other hand collective goods closely related to national competences, such as social policies. For example, a system of solidarity within a Member State may fundamentally conflict with the market integration objective of full and effective competition.

Thus, diagonal conflicts represent the constitutionally most challenging type of conflict. In such cases, adjudicating on the basis of the supremacy of EU law would be unpersuasive.


It is indeed from this moment onwards that many conflicts have become salient in policy substantive terms. There is a certain inherent and continuing structure in the free movement case law of the Court that follows partly from the structure of the Treaty and partly from precedent based case law. Importantly, as has been discussed, the starting point of the adjudicative model developed by the Court is to apply a broad and unqualified market access test for all free movement rights, 21 which imposes jurisdiction over most Member State regulatory choices that can be considered restrictive to economic activities, and subsequently, in a second stage, resolve conflicts in the course of a proportionality exercise.

As such, within a market access approach, all restrictions are potentially in breach of EU free movement law. As such, this view is informed by, seemingly, the most obvious empirical facts that characterise the European Union today: the diversity of socio-economic constellations of the Member States and the increasing asymmetry of interests amongst the Member States.

However, and this point has been made most forcefully by Alexander Somek, it matters on the basis of what terms the dialogue is enacted:. In fact, this is clearly revealed in how its focus on transnational effects is mediated by the equal distrust of national regimes burdening, in one way or another, international economic mobility.

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Anchoring the mitigation of transnational effects in the facilitation of market access modifies the focus of the argument. It is thereby made subservient to an altogether different aim, namely, economic due process. The potential out of state interest that finds insufficient access within another Member State is identified, solely, on the basis of market access.

In the famous Supreme Court decision Lochner v. To further understand this line of argument, it is useful to take a closer look at the exact reasoning the Court employs. It may be argued that the Court provides for some qualifications to market access. The Court disagreed, describing the measure as directly affecting access to the market in services in the other Member States.

AG Tizzano agreed with this approach in Caixa Bank where he argued that the freedom of establishment is violated only if a measure either discriminates or directly affects market access. The case concerned a Belgian authorisation requirement for certain insurance premiums. According to Belgian law, insurers could only alter the premium annually on the basis of the consumer price index.


If they required higher premium increases, this could only be done after authorisation from the banking, finance and insurance commission. These rules were aimed at protecting consumers, particularly with a view to preventing them from being faced with sharp, unexpected increases in insurance premium rates. The logical step would have been for the Court, at this point, to qualify the market access test. The Court demonstrates here what unqualified market access entails and it is contradictory to the idea that regulatory differences as such do not entail, automatically, restrictions on freedom of movement as meant in the Treaty.

It is, thereby, automatically unfavourable towards the out of state trader. This is then introduced as the substantial criterion of market access in this case. It follows that, where an obstacle to market access is found to exist, there is no need to undertake a comparative examination between the situation of the domestic products and that of the imported products in order to establish the existence of a difference in treatment between them.

This approach can, of course, be critiqued, and it has been the subject of much commentary. This also appeared to be a concern of AG Trstenjak, who argued in Commission v. Germany occupational pensions that: Such an analytical approach suggests, in fact, the existence of a hierarchical relationship between fundamental freedoms and fundamental rights in which fundamental rights are subordinated to fundamental freedoms and, consequently, may restrict fundamental freedoms only with the assistance of a written or unwritten ground of justification.

This may obviously lead to tensions with the Member States and the Court has over time established a long list of potential justifications. The point seems to be, however, that the Court wants to keep control and maintain an on-going dialogue with Member States. This is why the market access approach of the Court can be considered a means to preserve unity.

By not excluding anything from the potential reach of the scrutiny of the Court, internal market law becomes a constant overarching presence that makes all restrictive forms of social-economic regulation subject to the conditionality of judicial approval. The important question that next arises is how the Court has formulated the exceptions. In other words, how does the CJEU manage to accommodate or not the socio-economic diversity of the Member States within this imposing adjudicative model?

The three stages of proportionality assessment are standardized and consist of an inquiry into i whether a measure was suitable to achieve the desired end in the form of a rational connection between means an end ; ii whether it was necessary to achieve the desired end in the form of a test if there was a less restrictive measure available ; and iii whether the measure imposed a burden on the individual that was excessive in relation to the objective sought to be achieved proportionality stricto sensu.

The third part of the test is often not applied by the Court and, as Paul Craig has noted, the Court will normally only consider part three when an applicant explicitly addresses an argument concerning this stage of the inquiry. Indeed, the Court will sometimes engage in a comparative review of solutions adopted in other Member States on the basis of the principle of mutual recognition. The first model can be labelled the substantive efficiency model and, as an ideal type, comes to the conclusion of a conflict by way of questioning whether a measure is necessary to achieve the desired end.

If there exists a less restrictive measure, the test is failed.

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